Black Hills Energy, which serves about 100,000 customers in a slice of southeastern Colorado, is seeking a $36.7 million rate hike, which would increase the average residential bill by about $20 a month.
Rapid City, South Dakota-based Black Hills told the Colorado Public Utilities Commission it was seeking its first rate increase in eight years mainly to recoup $370 million in infrastructure investments.
The rate request comes after Black Hills added a $1.50 surcharge, or rider, to bills in March to pay for its Clean Energy Plan, which will add 400 megawatts of renewable energy resources. The plan is required by state law.
The announcement drew sharp criticism from officials in Pueblo and Cañon City, the utility’s two biggest service areas.
“We need to stop this,” said Ken Danti, chairman of the Pueblo’s Energy Advisory Commission. “We are already paying the highest rates in Colorado and this is a barrier to economic development in the city.”
Emily Tracy, a Cañon City councilmember who in 2017 led an effort to look for alternatives to Black Hills service, said, “this is just one more burden on a poor community.”
The average median household income in Cañon City is about $54,300 compared with $89,302 for the state, Tracy said, so that the high electricity bills are “a hardship.”
Tracy said that she has houses in Cañon City and Breckenridge, which is served by Xcel Energy. They are both small, comparable houses. “My Cañon City bill is double my Breckenridge bill,” she said.
Black Hills, whose shares are traded on the New York Stock Exchange, operates in eight states — Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming.
Its Colorado service territory stretches from Rocky Ford to Pueblo and Cañon City and north to Cripple Creek.
Black Hills filed the request for a rate hike with the PUC on Friday. Danti and Tracy said their cities may intervene at the commission to oppose the rate hike.
What the $370 million paid for and what was “disallowed”
In a filing with the PUC, Samantha Johnson, Black Hills’ regulatory director, said “the primary driver of the net increase in base rates is the magnitude of capital investments in the electric system since the company’s Electric Phase I in 2016.”
These included $23 million in new generation, $142 million in new transmission lines and $184 million in distribution line upgrades. There are also increases in employment and pension benefits.
Tracy said Cañon City was about to begin an independent evaluation of the city’s electric distribution system. “We are not convinced they are spending the money they need to spend on distribution,” she said.
In 2021, after Coloradans were hit with soaring utility bills because of high natural gas prices, the legislature passed Senate Bill 272, which aimed to curb some of the costs associated with rate requests.
Black Hills said that $728,000 was removed from the rate request in accordance with the legislation. This included $230,000 in disallowed advertising, $151,000 in entertainment or gifts and $117,000 in board compensation.
“We are very mindful of cost impacts to our customers, which is why we have avoided seeking a rate update for eight years,” Campbell Hawkins, Black Hills Energy’s vice president of Colorado utilities, said in a statement.
“We know that higher costs for everything — from groceries to gasoline to monthly energy bills — are a topic of conversation in the communities we serve,” Hawkins said. “We recognize the impact that bill increases have on our customers and we’re here to help.”