PUEBLO — A Chicago-based steel company is seeking assurances of low electricity prices before it commits to a $500 million upgrade at a Colorado mill that would add 200 jobs.

State and utility officials said that without the guarantee, EVRAZ North America could pick another state for the project and eventually close its mill in Pueblo, the Pueblo Chieftain reported.

The Pueblo mill, which makes railroad rails, pipes and other products, is the largest Colorado customer for utility Xcel Energy and a major employer for the Pueblo area.

The Colorado Economic Development Commission has pledged up to $17.3 million in incentives toward its potential expansion.

It was located near Xcel’s Comanche Power Station in part to keep company’s electricity costs competitive.

Xcel is planning to demolish two of the three generating units at the power station and replace them with power from natural gas, wind and solar.

If EVRAZ were to close the Pueblo mill, the move would require the utility to re-examine its long-term electricity supply needs, including the scope of its current planning, said David Eves, the Colorado president of Xcel Energy, which is based in Minnesota.

The loss of EVRAZ also could impact Xcel’s rates in the Denver area. Eves’ comments about the project were included in his Nov. 28 written testimony filed with the state Public Utilities Commission. One idea under consideration is the construction of a 175-megawatt solar farm on EVRAZ Pueblo’s property, Eves said.

“EVRAZ has been considering its future in Pueblo for some time with potential outcomes ranging from making substantial new capital investments to relocating (the) Pueblo operation to another location outside of Colorado,” Eves stated in his testimony.

The proposed expansion was disclosed as a result of the pledge by the development commission to offer incentives to EVRAZ. The state panel did not identify the company by name, but its description of the project fits only the Pueblo mill.

EVRAZ has offered little public comment on the expansion proposal or its talks with Xcel.

Information from: The Pueblo Chieftain