Former PUC commissioner says Black Hills Energy cannot be trusted

Frances Koncilja jabs Pueblo-area utility

Text/photos by Allen Best

Even when she was on the Colorado Public Utilities Commission, Frances Koncilja had a reputation for speaking her mind. After leaving the commission in March, she loosened her tongue even more last Friday in an interview with proponents of replacing Black Hills Energy with a municipal electrical utility.

Most of her comments were directed at Black Hills, whom she described as devious. “You just can’t trust them,” she said, describing her four years as a regulator of Black Hills while on the PUC. Black Hills, she said, is “an energizer vampire,” sweet and cuddly during the day, that at night tries to “figure out every blood-sucking way they can take a dime out of the community.”

But she also threw verbal lances at a fellow PUC commissioner who had been legal counsel to Black Hills Energy prior to joining the PUC and also unspecified lawyers, in Pueblo and elsewhere, whom she accused of selling out in violation of their principles. “Ask them if their Judas silver was worth the price of selling out their principles,” she urges listeners.

Occasionally salty, she is always brash. “I had no idea that oil-and-gas roughnecks would be such snowflakes,” she said at one point. It was part of her explanation about why Black Hills sued to disqualify her “because I used the word ‘turd’ in a public hearing.” That is in a section of the following interview that has been abridged to minimize length.

See overview of the arguments: Colorado’s steel city calculates risks and rewards.

Koncilja is a Pueblo native from a prominent family with continued commercial interests in the city’s downtown area. She has practiced law in the Denver area and was president of the Colorado Bar Association.

She was interviewed in a Facebook livestream by David Cockrell from Bring Power Home 2020, a campaign issues committee formed to support municipalization. The video can be found here.

David Cockrell: Why are Black Hills’s electric rates in Pueblo so high?

Frances Koncilja: You have to go back to 2007 when Black Hills first acquired Aquila, the previous electrical supplier. That was a bad deal from day one. Pueblo opposed the transaction and the Office of Consumer Counsel opposed the transaction, and the (PUC’s) trial staff opposed it and told the commissioners to oppose it, but if you grant it, put these guardrails on. They put guard rails on, but not as many as they should have.

Frances Koncilja

Everyone knew at the time that the power-purchase agreement would expire, and commission (PUC) did tell them to come up with a plan to replace it.

They did what they have always done, they gamed the system. They delayed, they delayed, they delayed—because they didn’t want another power purchase agreement. They wanted to own generation, because the way you make your money and deliver profit to your shareholders is if you own generation. So finally the commission let them build a new (gas-fired) plant.

Then Clean Air, Clean Jobs came in (2010), and by god they used that with a vengeance. They replaced the coal plants with new gas plants. Unfortunately, that statute let them do that without competitive bidding. So once again they owned it.

Where I do fault the commission is that at some point they should have figured out what was going on. It’s not much more complicated than a numerator and a denominator. As long as you keep letting them build more stuff and getting a rate of return on the number, and the denominator stays the same, which is the usage and number of customers, the unit cost goes up.

That is why (electric costs in Pueblo have) gone up. It became a vicious cycle. You can’t get any economic development, because people will go to Colorado Springs, not Pueblo.

Between 2008 and 2012, it felt like the PUC was not protecting the public. It felt like there was capitulation to the companies. Can you explain the balancing act that the commission has to undertake and how you feel it has played out in the case of Black Hills?

Regulation of utilities is very complicated and challenging, and I think 10 years ago there was an attitude that you leave the utilities on their own to run things and you don’t get too involved and you trust them. Unfortunately, that didn’t work with Black Hills. Black Hills is the only utility I think that the PUC has admonished their chief regulatory officer twice in the last four years for lying to us.

When you have a rogue utility that is willing to lie to the commission you get bad results. I think it took the commission awhile to understand that you just couldn’t trust them because, in my opinion, they are the energizer vampire. You can’t beat them down, they are always out there moving around. During the day they look sweet and cuddly. Something happens at night when they go back to their office and they figure out every blood-sucking way they can take a dime out of the community.

What is offensive to me is they do it to smaller communities, rural communities, that don’t have as much money.

The other thing that goes on at the commission is that they have limited staff. There are three commissioners, there’s a huge amount of work, and not all commissioners in the past quite frankly have been diligent and/or knowledgeable, and it’s challenging if you want to do it right. You have to work hard and you have to read a lot. And I think in the past not all commissioners were like that, some had political agendas, others worked hard.

And the commission has a small staff, 98 people to help the commission make decisions in the areas of transportation, telecom, railroad, electric and gas utilities. So if you have a rogue utility, it is very hard to keep track of them.

And quite frankly, the attention is always going to go to Public Service, because they have 1.5 million ratepayers.

So Black Hills is not just behaving the same way that all investor-owned utilities behave.

Sweet Jesus, no. I have been stunned at the shenanigans they have pulled just in the four years I was on the commission. I wrote in the Chieftain about the cost of debt. Everyone knows that interest rates have been low. Colorado ratepayers, especially Pueblo ratepayers in the Black Hills service territory, have not benefitted from those rates.

Cost of gas has been next to nothing. Pueblo has not benefitted from that. And the way they calculate the cost of debt is they do it at the corporate level and they decide who will bear the costs. I can’t tell you what the numbers are because it’s confidential. Fascinating. The lowest cost debt goes to their unregulated entities, which is ridiculous because unregulated utilities are riskier than utilities. Black Hills does things no other utility has done.

During my four years on the commission, I saw (Xcel Energy subsidiary in Colorado) Public Service Co. pull back from taking every dollar for themselves. For example, on the Colorado Energy Plan, which is Public Service’s plan to close the Comanche 1 and 2 coal plants. When the commission said you have to go to competitive bids for replacement generation, and the third parties bid much lower than Public Service on a lot of things.

Public Service did not fight the commission. They awarded the bids to the lowest cost.

Black Hills would never have done that. We would have litigated with them for years. The other thing that Pueblo people don’t understand is what Public Service did to keep (steel mill operator) Evraz in your community, my community.

Some of the things they (Black Hills) do is stunning. It’s just hard to keep track of them. They wear you out —which is why Pueblo should create its own utility. You don’t have to keep track of them, you don’t have to hire lawyers to track them down and see what they’re taking, and you don’t have their own sitting on the commission.

Energizer vampire. Great tagline. Do you think that Pueblo Board of Water Works is really capable of setting up and managing a professional and reliable electric utility?

Yes absolutely, no question. What annoys, me, what quite frankly pisses me off, is the implication that Pueblo is a group of rubes and can’t run an electric utility. I have seen (the Black Hill) ads. They create this false impression that going with the Board of Water Works is risky. It’s not risky. Staying with Black Hills is risky.

The other thing they do is, oh my god, Boulder has had a hard time. It’s 10 years and if Boulder can’t do it, Pueblo can’t do it. Because, you know, everybody in Boulder is much smarter. That’s not true. Boulder made numerous decisions that were not supported by the law. They took on fights they didn’t need to. And they lost them in Boulder District Court and the Court of Appeals. That’s what cost them years and hundreds of thousands of dollars. I think the Board of Water Works is smarter than the folks in Boulder, and I think they will learn from (Boulder’s) mistakes.

As for Black Hills, I don’t think they are a particularly competent public utility, and I could share some other stories. But what they are expert in is creating value for stockholders. Since they have been in Pueblo, their stock prices have almost doubled. They have brought back substantial rewards for their shareholders every quarter for the last 12 years.

And they have done that on the backs of poor people. Keep in mind that Pueblo has a high poverty rate. The statewide poverty rate is 10.3% and in Pueblo it’s 18.2%. At the same time, Pueblo residents use less electricity. 619 kilowatt hours on average per month. That is really low electric use. It puts Pueblo on par with those who have less than $20,000 of annual income.

Pueblo residents are poorer than average, poorer than the rest of the state, they use less electricity, yet they are paying higher rates, 30% more than Colorado Springs. Why does this make sense? Why would you stay with Black Hills?

I have no idea why the majority of the city council is backing these energizer vampires. And quite frankly what annoys me is that none of them called to ask my opinion. I have been on the front lines for four years. I know where the bodies are buried, I have scars to show for it.

And the fact is, I left the commission on March 13, and I didn’t get one phone call, asking, “Commissioner Koncilja, what do you think?” Because I would have told them.

The other people I am real disappointed in are the high-priced law offices, some in Pueblo, some outside Pueblo. Some I would count as my friends. But you should ask how many pieces of silver they got for turning their back on poor people. The Pueblo I grew up in, when they saw these wealthy lobbyists, they would have chased them down the street with pitchforks. I don’t expect people of Pueblo to do that now. I think you’ve become a little more civilized.

The next time you see these lobbyists, ask them what their hourly rate was, ask how much money they made, and tell them how bitterly disappointed you are. And ask them if their Judas silver was worth the price of selling out their principles. I didn’t sell mine out. My brothers didn’t sell theirs out.

What do you think the day after the election looks like for Pueblo if we do vote in favor of 2A public power?

Here again I fault the city council, all they are doing is focusing on the problems and some of the false problems. If Pueblo votes on May 5 in favor of municipalization that day will put Pueblo on the map nationally. That’s going to be a game changer for Pueblo.

That’s going to be the day that Pueblo ceases to be just being a steel-production city, but for wind, solar, batteries, storage—and taking control of its own destiny without having to worry about the political agenda of the Denver commissioners, and what the agenda of the governor will be, who he wants to be friends with and who he wants to off. Pueblo will be able to attract businesses because this will be a game changer.

You can create courses at the university and the community college to talk about an efficient grid, the resilience of grid with renewable energies and all these things.

The city council should be getting behind this, coming up with a new name, a new logo and a new name for Pueblo. Do you want to be called Super Charge? Sun City? You will be able to do something big and important in my home town as opposed to begging Black Hills to do the right things, as opposed to bringing in call center jobs at minimum wages. This is Pueblo’s opportunity at greatness.

Editor’s note: What you missed in this abridgment were sharp barbs where she alleges conflicts of interest by a former PUC commissioner, Wendy Moser. Previous to her time on the PUC, Moser had been the general counsel of Black Hills, and Koncilja said in that capacity she had threatened to sue the PUC if it did not allow Black Hills to build new generation.

She also discussed an attempt by Black Hills in 2018-2019 to use a new rate incentive provision approved by Colorado legislators to promote economic development. Black Hills wanted an expedited review for what it said would be a $100 million economic development via a new data center to be located along I-25. The data center proponent was living in what Koncilja said was a rented house in Denver’s Stapleton neighborhood.

For a brief writeup from June 2019 of that affair, see my story in Energy News Network. One of the PUC commissioners in that case faulted my story, pointing out that the decision adopted by the commissioners included provisions that protected existing ratepayers, and those provisions were not captured in my story.

Koncilja dissented in that decision but in her interview last Friday credited her fellow commissioners, Jeff Ackermann and John Gavan, with adding provisions to protect ratepayers. The data center proposal retreated from its September completion and then quietly died late last year.

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