Black Hills Corp. Kansas Gas Utility Reaches Settlement Agreement for Winter Storm Uri Cost Recovery Plan

Rhea-AI Summary

Black Hills Corp. (NYSE: BKH) announced a settlement agreement to recover $87.9 million in fuel costs incurred during Winter Storm Uri, affecting 117,000 customers in Kansas. The recovery will take place over five years, starting February 1, 2022, pending approval from the Kansas Corporation Commission. This settlement includes carrying costs associated with financing the fuel costs. CEO Linn Evans highlighted the importance of this agreement for continuing reliable service in extreme weather conditions, underlining the company’s commitment to its customers.

Positive

• Settlement agreement to recover $87.9 million in fuel costs over five years.
• Provides carrying costs tied to financing these fuel costs.
• Demonstrates commitment to delivering reliable service during extreme weather.

Negative

• Pending approval from the Kansas Corporation Commission could delay recovery.
• Significant incremental costs incurred from extraordinary demand during Winter Storm Uri.

WICHITA, Kan., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE: BKH) today announced that its Kansas natural gas utility, Black Hills / Kansas Gas Utility Company, LLC, doing business as Black Hills Energy, reached a settlement agreement for its plan to recover costs incurred to serve 117,000 customers across 66 communities in Kansas during Winter Storm Uri last February.

The agreement includes recovery over a five-year period of $87.9 million in incremental fuel costs incurred to serve extraordinary demand during Uri. The agreement also provides Black Hills a carrying cost associated with financing these fuel costs over the recovery period.

“We are pleased to reach a constructive agreement for recovery of fuel costs we incurred to keep our customers warm and comfortable when they needed us the most,” said Linn Evans, president and CEO of Black Hills Corp. “Our team is proud of our reliable service through the dangerously cold conditions of Winter Storm Uri. Recovery of these costs are essential to our ability to continue delivering safe and reliable service for our all our customers across Kansas.”

Black Hills’ commitment to customers was demonstrated by the excellent performance of its pipeline system during Winter Storm Uri. Due to record breaking cold weather, the company incurred significant costs to procure the critical natural gas supply to serve customers. Incremental costs were the result of extraordinary demand above and beyond the company’s procurement and hedging program to reduce commodity cost volatility for customers.

The settlement agreement is pending a final hearing and approval by Kansas Corporation Commission. If approved, the settlement will allow recovery of the $87.9 million in fuel costs beginning Feb.1, 2022. The agreement also allows recovery of carrying costs starting with the date that storm costs were incurred until the end of the five-year recovery period.

Black Hills Corporation
Black Hills Corp. (NYSE: BKH) is a customer focused, growth-oriented utility company with a tradition of improving life with energy and a vision to be the energy partner of choice. Based in Rapid City, South Dakota, the company serves 1.3 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. More information is available at www.blackhillscorp.com.

Investor Relations
Jerome E. Nichols
605-721-1171
jerome.nichols@blackhillscorp.com

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888-242-3969

Caution Regarding Forward Looking Statements
This news release includes “forward-looking statements” as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward looking statements, including approval of the settlement agreement and recovery of fuel costs and carrying costs. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, the risk factors described in Item 1A of Part I of our 2020 Annual Report on Form 10-K filed with the SEC, and other reports that we file with the SEC from time to time.

New factors that could cause actual results to differ materially from those described in forward looking statements emerge from time-to-time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

FAQ

What is the settlement agreement announced by Black Hills Corp. regarding Winter Storm Uri?

Black Hills Corp. announced a settlement agreement to recover $87.9 million in fuel costs incurred during Winter Storm Uri, which will be recovered over five years.

When will Black Hills Corp. start recovering fuel costs from Winter Storm Uri?

Black Hills Corp. plans to start recovering fuel costs on February 1, 2022, pending approval from the Kansas Corporation Commission.

How many customers were affected by the fuel costs during Winter Storm Uri?

The fuel costs affected 117,000 customers across 66 communities in Kansas.

What is the total amount Black Hills Corp. intends to recover from the fuel costs?

Black Hills Corp. intends to recover a total of $87.9 million in incremental fuel costs.

What does the settlement include besides the recovery of fuel costs?

The settlement also includes carrying costs associated with financing the fuel costs over the five-year recovery period.