Black Hills Energy explains proposed rate hike

By Carrie Haderlie, Wyoming Tribune Eagle, Via Wyoming News Exchange

CHEYENNE — One of Wyoming’s largest natural gas suppliers is proposing a 7% increase in residential customers’ service charges.


Black Hills Energy filed a rate review application with the Wyoming Public Service Commission May 18 “seeking an increase in base rates of $19.3 million to recover the necessary capital infrastructure and operational costs required to enable safe, reliable natural gas service for customers in Wyoming,” the company said in a press release at the time of the filing.


If approved, new rates would be implemented during the first quarter of 2024.


The average residential customer would see an increase of around $6.74 per month, going from a current bill for 65 therms of $89.83 to $96.58 per month. Small commercial customers with an average usage of 155 therms would see an increase of about $13.70 per month, up from $193.19 per month to $206.89.


But local customers say gas prices have already shot up, and they are concerned about additional increases.


“Black Hills Energy has been charging local residents exorbitant delivery fees for gas and electric,” Cheyenne resident Heidi Argueta said in a letter to the Wyoming Tribune Eagle.“For example, my February gas and electric bill for a 2,500-square-foot property cost me $555. Of that amount, $342 was delivery fees.”


The public has until June 23 to comment on the request, and a hearing is still seven or eight months away, said John Burbridge, chief counsel with the Wyoming Public Service Commission.


The PSC, he explained, looks after utility customers “to try to make sure that the rates are reasonable, but at the same time, (we ensure) the utility is able to supply electric and gas at a reasonable price that is reliable so that your furnace comes on.”


Black Hills Energy operates, maintains and updates more than 6,400 miles of natural gas system infrastructure in Wyoming, according to Laurie Farkas, BHE senior community affairs manager.


Since its last rate review in 2019, the company completed more than $140 million in system safety, integrity and reliability projects.


Infrastructure replacement projects have included gas meter and yard line replacement projects, and from 2020 through 2022, Black Hills has “undertaken more than 40 integrity projects and more than 1,800-meter replacements in Wyoming cities, including Cody, Rawlins, Laramie, Casper, Wheatland, Riverton, and Cheyenne,” Farkas said in an email to the WTE.



“We take very seriously our responsibility to balance paying for necessary infrastructure improvements, while also keeping costs down and maintaining compliance requirements of state and federal regulations,” Farkas said.


Burbridge explained that utilities are only allowed to sell gas at the price they purchase it for, or a wholesale rate. Gas prices fluctuate, he continued, based on weather events, market shifts and other factors.


“The utility doesn’t make any money on the gas itself. They do make money on the infrastructure, the pipelines, the delivery system. They are allowed a return on that part of the investment,” he said.


Farkas said that the last year has been challenging for the industry, as natural gas prices doubled and even tripled during a record-breaking cold winter.


“Even though we provide the natural gas with no markup to customers, the high commodity prices and higher usage resulted in higher-than-normal bills,” Farkas said. “We understand the impact our investments can have on customers and prudently make the best and most cost-effective choices to support the safety and reliability of our natural gas system.”


Utilities periodically review customer rates to align with the actual cost of delivering natural gas service, including operating costs, infrastructure investments and other system expenses, she said. 


As a regulated public utility, Black Hills Energy must request approval from the Wyoming PSC for any change to tariffs or rates.


“Black Hills Energy will follow WPSC’s formal process to recover allowable costs and system investments necessary to meet our responsibility to provide safe, reliable natural gas service for our customers,” Farkas said. “WPSC will review our request and consider public comment and perspective from stakeholders.”


So while the utility has requested a rate review, it may not be approved as requested.


“So Black Hills has requested a 7% increase,” Burbridge said. “That is not necessarily what they will end up with.”


Anthony Ornelas, administrator for Wyoming’s Office of Consumer Advocate, said his organization is statutorily obligated to represent the interest of “all citizens of Wyoming, and the utility ratepayers of the state” on issues like this.


“We do that through the intervention and adjudication of these types of dockets,” Ornelas said in an interview with the WTE.


“At the moment, we don’t have an opinion we can share, as it is a very new filing. Our office will be filing a notice of intervention in that docket, if it hasn’t been filed already,” he continued. “We will do a thorough review of that case, providing testimony and recommendation on the matter before the Public Service Commission.”


The Office of Consumer Advocate will seek discovery and request information from the company throughout the process, he explained.


“We will be a party to this throughout the adjudication … up to and including in a public hearing, in which we would represent the citizens and the ratepayers of Wyoming,” Ornelas said.


This story was published on May 31, 2023.


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