LINCOLN, Neb. – Jan. 26, 2021 – Black Hills Corp. (NYSE: BKH) today announced that its Nebraska natural gas utility, Black Hills Nebraska Gas, LLC, doing business as Black Hills Energy, received approval from the Nebraska Public Service Commission of a settlement agreement providing the company a general rate increase and allowing consolidation of its base rates and tariffs.
The commission’s approval is the final step in Black Hills’ utility jurisdiction consolidation process in Nebraska. Previously, Black Hills received approval and legally consolidated its two natural gas utilities in the state. This settlement agreement allows Black Hills Energy to establish statewide uniform customer rates and consolidate general tariffs. “This approval is an important step toward simplifying how we operate our natural gas utilities in Nebraska,” said Linn Evans, president and CEO of Black Hills Corp. “Our consolidation effort will improve customer service and reduce the complexity and number of rate reviews and other regulatory filings.”
Black Hills Energy has invested more than $450 million in its 13,000-mile natural gas pipeline system in Nebraska since its last general rate filing 12 years ago in 2009. These investments include replacing, upgrading and maintaining more than 500 miles of natural gas transmission and distribution pipeline to serve approximately 300,000 customers in over 300 communities throughout the state. Not only have these investments in modern pipeline material improved safety and reliability for customers, they have contributed to more than a one-third reduction in greenhouse gas emissions intensity for the company’s pipeline system since 2005.
The approved settlement will shift approximately $4.6 million of rider revenue to base rates and will generate an estimated $6.5 million in new annual base rate revenues starting March 1, 2021, to recover Black Hills Energy’s investments in utility infrastructure and increased operating expenses. The new revenue is based on a return on equity of 9.5% and a capital structure of 50% equity and 50% debt.
The approved settlement agreement also allows Black Hills Energy to renew and expand its System Safety and Integrity Rider across all its Nebraska service area to recover the costs of safety infrastructure projects during the next five years.