Steel deal showcases Pueblo’s solar prowess

Steel-maker Evraz threw its lot with Pueblo in deciding to build a new mill there. The mill will produce the 200-meter ribbons of rail preferred by railroads. That decision wasn’t a given. Other states, especially those with abundant low-priced hydroelectricity, made a hard run.

How Pueblo won says much about the evolving nature of the economy of Pueblo and that of Colorado. Prominent is the solar farm, the largest east of the Rocky Mountains when the deal was announced. It will provide about 90% of the electricity for the mill.

No Colorado town or city is better known for its manufacturing capabilities than Pueblo. First and long foremost was the steel mill. Operated by CF&I, it employed 5,000 people at its peak about 50 years ago. Employees enjoyed handsome union-bargained contacts. That was just before U.S. steel manufacturers lost out to global competitors in the 1970s. Pueblo became Colorado’s very own Rust Belt city.

This overstates Pueblo’s decline, for there was success, too. The largest was the arrival of Vestas, the manufacturer of wind turbines. A Colorado State University study found the direct, indirect and induced impacts of the Vestas blade factory to be $377 million. That’s the most for a manufacturing enterprise in Pueblo. (A hospital, Parkview Medical Center, actually has a greater impact.)

Now comes the $200 million investment by Evraz in equipment and other fixed assets. It committed to at least 10 years of 1,000 jobs from the new mill and two existing mills. A new study by CSU sees Evraz overtaking Vestas, leaping from the current $337 million in annual economic impacts to $512 million.

Pueblo offered incentives, including a one-time $15 million grant from the city’s half-cent sales tax for economic development. It also will benefit from tax-increment financing, a decades-old device authorized by Colorado that exempts new assessments on developments from added property taxes for a period of time. This arrangement will deliver at least $60 million in benefits to the new mill, which is scheduled to begin operating Dec. 31, 2021.

Jeffrey C. Shaw, chief executive of the Pueblo Economic Development Corp., says the city’s existing workforce was the biggest factor in securing the mill. “We have a long-established workforce. Making steel is in our blood, and it has been for over 100 years.”

There’s more. Evraz gets stabilized energy costs, while Xcel customers benefit from additional low-cost energy resources on the system when Evraz has a surplus. Strokes all around — including for Pueblo, with its stronger economic base. Kevin B. Smith, chief executive of the Americas for Lightsource BP, rates Pueblo’s solar resources as eight on a scale of 10.

Xcel Energy will purchase all the electricity from the solar farm as part of the agreement with Evraz, the largest single retail electric customer of Xcel.

In its own way, Pueblo is part of a global marketplace. Evraz is largely controlled by Russian oligarchs and is headquartered in London. That’s also the headquarters of BP, the mother of Lightsource. BP long stood for British Petroleum, although a decade ago the company began trying to rebrand itself, saying BP stands for Beyond Petroleum.

That energy shift is also evident in the Pueblo skyline. Two coal plants at the Comanche Generating Station were constructed in the early 1970s, in part to supply the steel mill. Those plants are scheduled to close in 2022 and 2025. The future of a third unit, Comanche 3, completed in 2010, is very much in doubt due to ongoing operational problems and questions about whether power can actually be delivered more cheaply from wind and solar backed by batteries.