Black Hills Corp. Secures Kansas Rate Approval for $15.2 Million Annual Increase, Supporting $118 Million in System Investments.

Black Hills Corp. has received approval from the Kansas Corporation Commission for a $15.2 million annual base rate revenue increase, supporting $118 million in system investments and becoming effective August 1, 2025. The new rates will facilitate the recovery of infrastructure investments, and the settlement continues the use of the Gas System Reliability Surcharge and introduces a new insurance tracker with deferred accounting treatment.

Black Hills Corp. has received approval from the Kansas Corporation Commission for a significant increase in natural gas rates for its Kansas customers. The new rates, effective August 1, 2025, will generate an annual base rate revenue increase of $15.2 million, supporting approximately $118 million in system investments since the company's last rate filing in 2021 [1].

The Kansas Corporation Commission approved a unanimous settlement agreement that will increase base rates by $10.8 million, less than the $17.2 million initially requested by Black Hills Energy. The increase is based on a residential average use of about 50 therms per month [1].

The settlement agreement includes several key provisions. It allows Black Hills Energy to refund nearly $3 million in excess deferred income tax to customers and permits the company to file an abbreviated rate case later this year to recover additional capital investments. Additionally, the settlement agreement continues the use of the Gas System Reliability Surcharge (GSRS) for pipeline replacements and introduces a new insurance tracker with deferred accounting treatment [1].

The approval of the rate increase is expected to enhance safety and reliability for Black Hills Corp.'s 120,000 Kansas customers. The new rates will support ongoing infrastructure and operational improvements, which are critical for maintaining the reliability and safety of natural gas service. The continuation of the GSRS will ensure that pipeline replacements are funded, promoting safety and reliability in natural gas service [2].

However, the approval of the rate increase may lead to customer dissatisfaction, especially in the context of ongoing inflation and increased costs of living. The use of a "black box" settlement agreement might raise concerns regarding transparency, as it obscures the specific details of the rate-setting process, which could lead to public skepticism [1].

Despite these potential negatives, the approval of the new rates represents a significant step forward for Black Hills Corp. in its efforts to recover infrastructure investments and maintain the reliability and safety of its natural gas service in Kansas.

References:
[1] https://kansasreflector.com/briefs/kansas-regulators-approve-9-rate-increase-for-black-hills-energy-customers/
[2] https://www.nasdaq.com/articles/black-hills-corp-receives-approval-new-natural-gas-rates-kansas