State gas utility’s rate hike approved

Black Hills OK’d for rise of $8.8M

A gas-lit flame burns on a natural gas stove in this Jan. 11, 2006, file photo. (AP/Thomas Kienzle)
A gas-lit flame burns on a natural gas stove in this Jan. 11, 2006, file photo. (AP/Thomas Kienzle)

FAYETTEVILLE -- The state Public Service Commission has given the go-ahead for a rate increase for Black Hills Energy, a natural gas provider with 180,000 Arkansas customers in 20 counties, mostly in northern Arkansas.

The commission issued a final order allowing an $8.8 million base rate increase or approximately $4 per month or 4.6% based on monthly use of 5,400 cubic feet of natural gas. The rate will vary based on rate class and usage, Black Hills said in a release Wednesday.

"Our priority is delivering the safe, reliable energy that our customers depend on," Chad Kinsley, vice president of operations at Black Hills Energy in Arkansas, said in a statement. "We are committed to supporting the growth in the Arkansas communities we serve while also prudently managing costs associated with operating a safe and sustainable natural gas system."

In September, Public Service Commission Chairman Ted Thomas resigned saying he was frustrated with sluggish efforts by energy providers to act on solar deployment and natural gas prices.

"I am frustrated by the impact that high natural gas prices are having on both electric and natural gas bills," Thomas said in a statement at the time. "It is going to be bad this winter when the first bills come out after the home heating season begins."

According to the U.S. Energy Information Administration Winter Fuels Outlook released this month, the average household expenditure for natural gas for the November though March period is predicted to be $931, a 28% increase when compared with last year. The report notes the higher expected expenditures are the result of higher fuel prices along with increased heating demand related to a forecast of slightly colder temperatures.

In December, Black Hills filed a rate review application to the Public Service Commission, asking for a base rate increase of $21.6 million or about 10% to the average residential customer -- a monthly increase of $8.65. It was the first rate increase request since 2017.

At the time, Black Hills said the rate increases would pay for $220 million in capital expenditures and operating expenses the company has incurred since its last rate increase in October 2018. Northwest Arkansas -- the fastest-growing region in the state -- has required investments in its natural gas infrastructure, the company said in its Public Service Commission filings. The company said it had added 11,000 new customers primarily to the Northwest Arkansas area since the last rate increase.

Black Hills provides natural gas to more than 100 Arkansas communities, including Blytheville, Fayetteville, Harrison, Lowell, Rogers and Ozark.

Black Hills is based in Rapid City, S.D. In Arkansas, it's based in Fayetteville and employs about 260.

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