Black Hills Corp. Natural Gas Utility Requests Rate Review and Rider Renewal in Kansas

Rhea-AI Summary

Black Hills Corp. (NYSE: BKH) has filed a rate review application with the Kansas Corporation Commission, seeking an increase of $5.3 million in annual revenues. The utility has invested around $130 million in natural gas infrastructure over the past seven years to enhance safety and reliability, directly responding to demand issues during extreme weather conditions. Additionally, the company seeks renewal of its Gas System Reliability Surcharge, pivotal for maintaining investments. If approved, the new rates are expected in Q1 2022 and will shift approximately $4.9 million of rider revenue to base rates.

Positive

• Black Hills Energy's $130 million investment improves pipeline safety and reliability.
• Renewal of the Gas System Reliability Surcharge supports infrastructure upgrades.
• The rate increase will contribute to reducing greenhouse gas emissions.

Negative

• Approval of the rate increase is uncertain and contingent on regulatory approval.

WICHITA, Kan., May 07, 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, filed a rate review application with the Kansas Corporation Commission requesting $5.3 million in new annual revenue.

Black Hills Energy has invested approximately $130 million in safety, reliability and system integrity for more than 4,600 miles of natural gas pipeline infrastructure in Kansas since its last general rate filing seven years ago. These critical investments were required to meet system growth, ensure the safe and reliable delivery of natural gas to customers’ homes and businesses, and meet compliance requirements of state and federal regulations. The importance of these investments was recently demonstrated by the excellent performance of our pipeline system to serve extraordinary demand during the extreme cold conditions of Winter Storm Uri.

Black Hills Energy is also seeking renewal of its safety and reliability rider, the Gas System Reliability Surcharge. This legislatively approved rider allows gas utilities to recover capital investments for infrastructure upgrades. According to state law, a gas utility is required to periodically file a rate review application to continue recovering these investments through the GSRS.

“This request is a win-win for our customers and Black Hills,” said Linn Evans, president and CEO of Black Hills Corp. “Our customer-focused strategy and rider mechanism has delivered safe and reliable service to our Kansas customers for seven years since our last rate review in the state. Renewal of the rider will continue our ability to prioritize our investments to benefit customers while providing a fair return on investments for shareholders.”

The investments that Black Hills Energy has made in modern pipeline materials for Kansas customers has also contributed to more than a one-third reduction in greenhouse gas emissions intensity for the company’s pipeline system since 2005. Renewal of the rider will not only support the company’s efforts for safety and reliability but also its clean energy goals for reducing greenhouse gas emissions.

If approved as filed, the request will shift approximately $4.9 million of rider revenue to base rates and will generate an estimated $5.3 million per year in additional revenue. The request is based on a capital structure of 50.34% equity and 49.66% debt and a return on equity of 10.15%. Black Hills Energy is seeking new rates in the first quarter of 2022.

Black Hills Corp.
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 Statement
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 anticipated revenues from the new rate increase and renewal of the rider and our ability to deliver an appropriate return to investors. 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 purpose of Black Hills Corp.'s recent rate review application?

Black Hills Corp. seeks to increase annual revenues by $5.3 million through a rate review application filed with the Kansas Corporation Commission.

How much has Black Hills Energy invested in natural gas infrastructure in Kansas?

The company has invested approximately $130 million in natural gas infrastructure over the last seven years.

What is the expected impact of the rate increase on Black Hills Corp.'s revenue?

The approved rate increase is expected to generate an estimated $5.3 million in additional annual revenue for Black Hills Corp.

When does Black Hills Corp. expect new rates to be implemented?

Black Hills Corp. is seeking to implement the new rates in the first quarter of 2022.

What does the Gas System Reliability Surcharge entail?

The Gas System Reliability Surcharge allows Black Hills Energy to recover capital investments for necessary infrastructure upgrades.