Black Hills Energy seeks rate increase

By Jason Ferguson

Black Hills Energy (BHE) is attempting to receive a rate increase that, if approved by the South Dakota Public Utilities Commission (PUC), would increase its customer rates by 25 percent.
On Feb. 18 BHE filed its rate review proposal with the PUC, which it says is its first such filing since 2013.
“That means our electric base rates have been unchanged for more than a decade,” said Lynn Kendall, regional public affairs manager for BHE. “This extended time has provided our customers rate stability, which is a priority for us.  Since then, we have made significant investments in electric infrastructure to strengthen the electric grid, maintain reliability, and reduce wildfire risk.”
Kendall said providing safe and reliable energy to customers requires continuous investment in the critical electric system infrastructure that serves homes and businesses across its  South Dakota service territory. Electric rates, she said, are established through a “highly regulated and transparent process guided and approved by the South Dakota Public Utilities Commission.”
“This allows utility companies to recover the prudent costs of providing service to customers,” Kendall said. “The rate review process is led by our regulatory and finance teams with participation by multiple Black Hills Energy departments and subject matter experts who sponsor testimony to explain the reasons behind the rate request and establish appropriate rates based upon the costs to provide service.”
Kendall said BHE seeks the raise to account for investments and improvements BHE has made in its system over the past 12 years, which she said has made Black Hills Energy among the top 10 in the nation in reliability.
How did BHE arrive at a 25 percent increase?
Kendall said that is an average increase of 2 percent per year over the past 12 years since BHE’s last rate review, adding during that same period inflation rates have been “significantly higher” than the proposed increase.
“Preparing to file a rate review takes over a year of prep work,” she said. “It’s the standard process for a public utility to set new rates that allow the company to recover allowable costs and system investments necessary to meet our responsibility to provide safe, reliable electric service for our customers.”
In this case, Kendall said a team of BHE experts performed a detailed analysis of the costs to provide service, as well as investments it has made in power generation, transmission and distribution over the last 12 years to make the system more resilient. Among the examples she cites include:
• Investment in utility  infrastructure improvements in rural parts of our service territory. Kendall said crews and contractors have rebuilt power lines from Edgemont to Ardmore, throughout Hot Springs and around Buffalo Gap. These rebuilds replace older poles, wires and other infrastructure to improve system reliability and wildfire resilience in rural areas.
• Replacement of overhead power lines along I-90 from Blucksberg to Sturgis and Rapid City to Summerset with underground lines, making them less vulnerable to wind and weather and improving reliability. Crews and contractors also have been working on installing underground lines from Whitewood to Newell.
One of the most important and ambitious projects they have undertaken recently, Kendall said, is rebuilding a 140-mile 230 kilovolt transmission line delivering power to Rapid City from BHE’s Neil Simpson generating plant in Gillette, Wyo.
“This major project increases system reliability, reduces wildfire risk and will help ensure we have the capacity to serve current customers throughout our service territory,” Kendall said.
If approved, the rates would go into effect in August, with final rates implemented in the first quarter of 2027.
In response to pushback the increase is too much of an ask at one time, Kendall said BHE understands no one wants to see higher electric bills, and understands many people are facing challenging times.
“We work hard to maintain the electric system in a way that is safe and fiscally responsible. We don’t take lightly the impact maintaining the grid has on customers,” she said. “That is why we put intentional focus on programs and partnerships to help our customers manage their energy bills through less energy consumption and help with bills in times of need.”
BHE supports energy assistance programs in South Dakota through financial contributions and by educating customers on assistance options, Kendall said and works primarily through the Black Hills Cares program, which is funded by employees, customers, and the Black Hills Corporation Foundation, a 501(c)(3) nonprofit organization.
“We also offer programs such as bill assistance and levelized billing to help customers manage the ups and downs they see in their billing due to weather,” Kendall said. “We also put a large emphasis on educating customers in ways they can consume less energy in their homes. Making small tweaks throughout a household can have large impacts on bills.”
Customers who experience challenges paying their bills are encouraged to contact BHE at 888-890-5554 or submit an online form on itscustomer service page as soon as they think they may be experiencing financial difficulties, to discuss payment arrangements.
Customers can find more information about the rate filing process and impact on our webpage at blackhillsenergy.com/reliable-sd.