Black Hills Energy applies for $5.3M rate hike to cover Kansas pipeline upgrades, replacements

A new rate review application pushed by Black Hills Energy last week seeks an increase of roughly $2.27 per month for its average residential Kansas customer bills and renewal of its Gas System Reliability Surcharge (GSRS) to put toward pipeline upgrades and replacements.

Inclusive of federal and state tax reform credit as well, the total would apply to the company’s 117,000 customers. Investments would build on the approximately $130 million Black Hills has already invested into Kansas since 2014 for safety upgrades, reliability, system integrity, and customer additions. A further $5.3 million is being requested for the company’s new annual review beyond the GSRS request.

“Kansans deserve safe and reliable natural gas. That’s why we’ve been updating natural gas lines throughout the state to deliver resilient service to our customers,” Jerry Watkins, Black Hills Energy Kansas General Manager, said. “As a result, we’ve made significant improvements to our system since our last rate review almost seven years ago.”

Black Hills must submit rate review applications to the Kansas Corporation Commission (KCC) periodically under state law. Figures for this application were based on average monthly use of 56 therms, although exact amounts — and resulting costs — will vary by rate class, load factors, and total usage.

“Our efficient management and GSRS recovery have allowed us to delay a rate review for many years. This rate review is necessary to continue prioritizing customer needs by completing pipeline safety, and reliability system needs under the GSRS that is set to expire,” Watkins said. “This timing also works well for customers to receive tax reform benefits to help offset costs being requested for recovery.”

Many of the investments at Black Hills are going toward modern pipeline materials, which the company says have allowed for a more than one-third reduction in greenhouse gas emissions intensity throughout the pipeline system since 2005. The new rate review will not affect the costs of delivered natural gas itself.