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State postpones $14M natural gas rate hike deal, but increase is coming

Black Hills Wyoming Gas agreed to a settlement that would trim its $19.3 million hike to $14 million, but regulators pushed back a final ruling.

A residential natural gas meter in Casper. (Dustin Bleizeffer/WyoFile)

The Wyoming Public Service Commission has delayed ruling on a Black Hills Wyoming Gas rate hike for its 133,000 natural gas customers in the state that, if approved, would increase the average monthly bill by $7.25. 

Though the 3-person commission is generally satisfied with a settlement hashed out between the company and the Wyoming Office of Consumer Advocate that pares down the request from $19.3 million to about $14 million, it had heartache over several provisions within the deal, including how the company markets its Choice Gas program in the state. Commissioners also disagreed among themselves about a proposal to move up implementation of the new rates from February to January.

The panel recently directed the company to provide more information to resolve its outstanding issues with the settlement, effectively delaying the rate hike until at least February. 

Commission Chair Mary Throne repeated that Black Hills Wyoming Gas had not made thorough efforts to inform its customers of the pending “base rate” increase to their bills. She also noted that many of the company’s customers are also facing a hike in their Rocky Mountain Power electric rates beginning in January.

The U.S. Energy Information Administration predicts the price of natural gas will be lower than last winter’s heating season, due in part to a “warmer-than-average start to the winter.” (U.S. Energy Information Administration)

“I know [pushing back the new rates to February] has monetary implications for the company,” Throne said on Dec. 21 as the commission deliberated the case, “but it certainly has monetary implications for the thousands of Black Hills Gas customers across the state of Wyoming who were not told that their gas rates were going to go up on January 1.”

In fact, rather than a hike, Black Hills Wyoming Gas customers might anticipate their monthly natural gas bills will be lower than those of last winter. The company issued a press release in November noting that market prices for natural gas — a “pass-on” cost that the regulated utility doesn’t earn a markup on — are forecast to be 48% lower for its customers this season.

Those anticipated savings due to currently favorable but notoriously volatile markets may indeed result in lower monthly natural gas bills. But the utility still seeks to raise its “base rates,” mostly to cover costs related to systemwide updates and safety improvements to meet federal regulations, according to the company.

Black Hills Wyoming Gas, a division of Black Hills Energy, will share more information regarding the rate hike “once the rate review process is complete,” company spokesperson Stacie McDonald told WyoFile via email. McDonald referenced two past posts on the company’s website (here and here) about the pending rate increase request.

Throne also suggested the settlement agreement negotiated with the Office of Consumer Advocate would result in more money for the company due to a proposed rate-of-return on equity of 9.85%. That’s likely more favorable to Black Hills Wyoming Gas than if left to the commission, she said.

Another negotiated compromise that Throne said she might push back on if the commission were to throw out the settlement agreement is a provision to split the cost of a $1 million “dry hole” 50-50 with ratepayers. The company hired a contractor to replace a defective well vital to accessing a geologic natural gas “storage unit” in Fremont County, but the new well didn’t work and the company will have to drill another one, utility officials told the commission.

If the $14 million settlement proposal is approved without major changes, Black Hills Wyoming Gas’ business and industrial customers will see a smaller percentage increase than residential customers. That’s due to an effort to more fairly equalize the actual cost of service among the different customer classifications, according to the Office of Consumer Advocate.

This article was originally published by WyoFile and is republished here with permission. WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.


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