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Reliable Arkansas

Providing you with the energy you depend on


Every day, we provide the essential energy that our customers rely on. From cooking and heating to fueling manufacturing and agriculture, Black Hills Energy is here for you.
 

Public evidentiary hearing


Tuesday, August 30, 2022 − 9:30 a.m.
Arkansas Public Service Commission Building
Commission Hearing Room
1000 Center Street, Little Rock, AR 72201

Public comment hearings


Tuesday, September 6, 2022 − 6 p.m.
Fayetteville Public Library
Willard and Pat Walker Community Room
401 W. Mountain St., Fayetteville, AR 72701

Thursday, September 8, 2022 − 6 p.m.
Blytheville High School Auditorium
600 N. 10th St., Blytheville, AR 72315

Rate Review Order No. 3 Approving Procedural Schedule

 

Notice of Application for Change in Rates for Arkansas Customers

 

Why is Black Hills Energy seeking a rate increase?

On December 10, 2021, Black Hills Energy submitted a proposal to the Arkansas Public Service Commission (ASPC) asking to recover cost increases and over $220 million of investments made in our natural gas system since the last rate review in 2017. These investments include pipeline replacement and reliability projects, safeguarding meters and growth projects. Maintaining, upgrading and replacing critical infrastructure provides our nearly 180,000 customers in 100 Arkansas communities the natural gas energy they need, when they need it.

In addition, we’re asking for approval of an enhanced Safety, Integrity, and Reliability Rider (SIR) to allow the company to efficiently continue its replacement and upgrade efforts to support the ongoing safe and reliable operation of its natural gas pipeline system.

Natural gas is dependable, economical, clean, abundant and an incredible resource for our customers. It’s also a resource that must be treated with the utmost focus on safety and maintenance for safe transport and delivery to customers. The investments we have made have improved safety and reliability by replacing aging infrastructure and complying with state and federal regulations.

When was the last rate review?

Black Hills Energy’s last request for rate change was in late 2017. We’ve worked hard to keep customer bills notably stable over recent years. We prudently manage our operating expenses and carefully consider project investments, helping us to keep base rates more stable.  Keeping customers a top priority continues even with this proposed rate review. We remain committed to providing safe, reliable and affordable energy into the future.

What is a rate review?

Black Hills Energy is required to submit a detailed request to the APSC to change base rates. The APSC and its staff will thoroughly review the utility’s proposal and carefully consider public comments along with testimony from the Office of Consumer Advocate under the Arkansas Attorney General’s Office, Black Hills Energy representatives and other interested parties.

Following consideration, the APSC will issue an order detailing changes to terms and conditions of service, including rates customers pay for service.

The ASPC regulates utilities so that reasonably priced, reliable, environmentally responsible and safe utility services are available to all Arkansas residents. If you’d like more information, visit http://www.arkansas.gov/psc/.

What is a system safety and integrity rider?

A Safety, Integrity, and Reliability (SIR) Rider enables Black Hills to continue replacing aging infrastructure while meeting the required state and federal pipeline regulations and requirements associated with our Storage, Transmission, and Distribution Integrity Management Programs.

Our current SIR proposal includes, but is not limited to, the following programs:

  • Main Replacement
  • At-Risk Meter Relocations
  • Data Infrastructure Improvement
  • Advanced Metering Infrastructure investments
  • Additional gas feeds and receipt points to improve reliability

For the continued safe and reliable delivery of natural gas, infrastructure should be:

  • Comprised of acceptable materials
  • In good operating condition
  • Documented regarding installation and maintenance
  • In a safe location
  • Locatable

When will rates take effect?

Following the ASPC’s final rate approval, new rates will go into effect the fourth quarter of 2022.

Will rate changes impact how much we pay for the natural gas itself?

No. The cost of natural gas makes up a significant portion of customers’ bills. The gas cost surcharge on customer bills is adjusted up or down semi-annually to recover the cost of gas delivered to customers. The increase, or decrease, for customers will vary, based on rate class, load factors and total usage. The rate review doesn’t affect the cost of the natural gas delivered by Black Hills Energy or costs incurred during the February extreme winter event. The cost of the natural gas commodity is a direct pass-through to customers, meaning there is no mark-up or profit.

To help hold down costs, Black Hills Energy buys a portion of physical gas supply on a set, or fixed, price basis for the November to March heating season.  The Company also purchases gas through short-term contracts and, when necessary, on the open market. 

Usage is a primary factor in overall utility bills, and outdoor temperatures are a key driver in determining how much natural gas customers use to heat their homes and businesses.  

How will the proposed changes impact my bill?

Black Hills Energy has worked hard to keep customer bills stable in recent years, which has allowed us to not increase base rates since 2018.

If the ASPC approves the proposed rate requests, a typical Black Hills Energy residential customer using an average of 57 Ccf of energy a month would be $8.65 per month. The increase experienced by Black Hills Energy’s commercial, industrial and governmental customers will vary depending on rate class and the level of energy demand and usage. The rate review does not affect the cost of the natural gas delivered by Black Hills Energy. The cost of the natural gas commodity is a direct pass-through to customers, meaning there is no mark-up or profit.

Is there anything I can do to reduce my natural gas bill?

There are many things you can do to save money by saving energy in your home. And you won’t have to sacrifice comfort. For example:

  • Replace old, inefficient appliances, furnaces and water heaters with energy-efficient natural gas appliances with the Energy Star designation.
  • Check your furnace filter – make sure it’s clean and properly installed facing the correct direction.
  • Reduce hot water usage. Use low-flow faucets and shower heads and take short showers instead of baths. Set the temperature on your water heater to 120 degrees or put it on the “warm” setting.
  • Visit www.blackhillsenergy.com for more energy efficiency tips and our other programs and services.

Does black hills energy offer any energy assistance programs?

Black Hills Energy offers many programs to help customers manage their bills.

  • Budget Billing — Our budget billing level payment plan is a payment option that takes seasonal peaks out of the customer’s bill for a more even monthly payment. This is a free service for residential customers. The customer monthly balance is calculated based on the average of the previous 12 months’ actual bills.
  • Customers who experience trouble paying their bills are encouraged to contact us at our 24/7 customer service number as soon as they think they may be experiencing financial difficulties to discuss payment arrangements.
  • Customers can consider joining Black Hills Energy in providing energy assistance through Hearts Warming Homes, the company’s Black Hills Cares program. Black Hills Energy matches donations from customers and employees to Black Hills Cares, and forwards the funds to nonprofit partners for distribution throughout the state. Customers can designate one-time or monthly donation(s) to Black Hills Cares on their bill stub, or by going to www.blackhillsenergy.com.

 

Arkansas rate review FAQs


On December 10, 2021, Black Hills Energy Arkansas Gas (ARG) requested a rate review with the Arkansas Public Service Commission (APSC) for the natural gas service we provide to customers in Arkansas.


What is a rate review?


The Arkansas Public Service Commission (APSC) regulates jurisdictional utilities, including Black Hills Energy. In order to change tariffs and rates for service, Black Hills Energy must request approval from the Commission. Filing for a rate review with the APSC is the standard process for a public utility to recover costs and investments, as well as make changes to its tariffs, or governing documents.

Black Hills Energy has followed the APSC’s formal process to renew special project riders, return funds to customers when appropriate and adopt new tariffs that allow the company to recover allowable costs and system investments necessary to meet our responsibility to provide safe, reliable natural gas service for our customers. Prior to deciding on proposed changes, the APSC carefully reviews the request and considers public comment along with testimony from the Attorney General acting as the Public Advocate, Black Hills Energy representatives and other interested parties.


Why is Black Hills Energy seeking a rate increase?


Black Hills has requested a rate review to increase customer rates to recover investments made in Arkansas since 2017. These investments in safety, integrity, and reliability projects have allowed Black Hills to continue to fund accelerated replacement of aging pipe throughout Arkansas, while making investments to system reliability for the customers we serve.

Black Hills Energy owns and maintains over 7,200 miles of natural gas system infrastructure in Arkansas. Ongoing investments are necessary to maintain safe, reliable service for our 180,000 natural gas customers in 100 communities across Arkansas, and to meet system demands stemming from growth in our service areas. Filing a rate request with the APSC is the standard process for a regulated utility to recover those costs and investments.


What is the nature of the rate review?


The rate review is necessary to recover the non-rider eligible capital expenditures and operating expense increases since ARG’s last rate review filed in Q4 2017.  The Company also plans to propose a new Safety, Integrity, and Reliability Rider with a forward-looking approach to cost recovery and expanding the eligible capital spending categories as compared to its existing riders.  The Company does not intend to request a Formula Rate Plan Rider in this rate review.


What is the rate review process?


Black Hills Energy is required to submit a detailed request to the APSC to change rates. The APSC and its staff will thoroughly review the utility’s proposal and carefully consider public comments along with testimony from the Office of Consumer Advocate under the Arkansas Attorney General’s Office, Black Hills Energy representatives and other interested parties. Following consideration, the APSC will issue an order detailing changes to terms and conditions of service, including rates customers pay for service.


If the APSC approves new rates as you requested, how will it impact my rates?


Prudent investments, existing riders, customer growth, and expense management have allowed us to not increase base rates in over 3 years, despite the significant investments to serve customers. If the APSC approves the proposed rate requests, the average residential customer bill would increase by $8.65 per month based on an average monthly use of 57 Ccf (100 Cubic Feet). The increase experienced by Black Hills Energy’s’ commercial, industrial and governmental customers will vary depending on rate class and the level of energy demand and usage.

The rate review does not affect the cost of the natural gas delivered by Black Hills Energy, including costs incurred during the February Polar Vortex. The cost of the natural gas commodity is a direct pass-through to customers, meaning there is no mark-up. For customer-specific rate information, visit the  Arkansas rates and regulatory information page.


How can Black Hills Energy ask customers to pay more after Covid-19 caused widespread unemployment and negatively impacted small businesses?


Black Hills Energy acknowledges the challenges to our communities, businesses and homes due to Covid-19, and it has worked tirelessly since the virus was declared a pandemic so that everyone would continue to have access to affordable, reliable natural gas. This includes temporarily suspending disconnections of utilities and providing additional energy assistance funds.

Efforts that have helped customers who may be facing economic hardships included:

  • Black Hills suspended nonpayment disconnects from March 2020 to May 2021.
  • Black Hills waived late fee payments through December 31, 2020.
  • Black Hills launched an outreach campaign December 2020 to encourage residential customers to take advantage of its utility assistance funding.
  • Black Hills wrote support of federal legislation to help with bad debt
  • Black Hills charitable giving arm initially gave $20,500 for covid-19 relief to non-profits across the state.
  • Black Hills Cares -- through donations and a Foundation match -- in 2019 gave $50,000 to utility assistance partners and $42,366 in the first half of 2020.


When will the new rates start?


If approved, new rates will go into effect in the fourth quarter of 2022.


Would this increase impact how much we pay for the natural gas itself?


The cost of natural gas makes up a significant portion of customers’ bills. The gas cost surcharge on customer bills is adjusted up or down semi-annually to recover the cost of gas delivered to customers. The increase, or decrease, for customers will vary, based on rate class, load factors and total usage. The rate review doesn’t affect the cost of the natural gas delivered by Black Hills Energy or costs incurred during the February extreme winter event. The cost of the natural gas commodity is a direct pass-through to customers, meaning there is no mark-up or profit.

To help hold down costs, Black Hills Energy buys a portion of physical gas supply on a set, or fixed, price basis for the November to March heating season.  The Company also purchases gas through short-term contracts and, when necessary, on the open market. 

Usage is a primary factor in overall utility bills, and outdoor temperatures are a key driver in determining how much natural gas customers use to heat their homes and businesses.


What is a Safety, Integrity, and Reliability Rider (SIR)?


A Safety, Integrity, and Reliability Rider enables Black Hills, without having to file a rate review, to continue replacing aging infrastructure while also meeting the required state and federal pipeline regulations and requirements associated with our Storage, Transmission, and Distribution Integrity Management Programs.

Our current SIR proposal includes, but is not limited to, the following programs:

  • Main Replacement
  • At-Risk Meter Relocations
  • Data Infrastructure Improvement
  • Advanced Metering Infrastructure investments
  • Additional gas feeds and receipt points to improve reliability

To provide the continued safe and reliable delivery of natural gas, infrastructure should be:

  • Comprised of acceptable materials
  • In good operating condition
  • Documented regarding installation and maintenance
  • In a safe location
  • Locatable

What is Black Hills Energy doing to control costs?


Black Hills Energy is committed to controlling costs and making prudent investments to deliver safe, reliable natural gas at a good value.

  • Black Hills Energy implements business process improvements that improve efficiencies and effectiveness and minimizes cost growth.
  • Black Hills Energy manages its assets and resources prudently to provide safe, reliable energy year-round.
  • Gas commodity prices are not marked up by Black Hills Energy and are pass through costs only. 
  • Black Hills Energy invests in technology that enables efficiency in our work and enhances the customer experience.
  • Black Hills Energy is using more data to proactively replace natural gas facilities on a period basis, which over the long-term reduces costs to customers and improves reliability.
  • Black Hills Energy is working with excavators to avoid line hits during construction, and to educate the general public about the dangers and costs of not calling AR811 before digging.
  • Black Hills Energy seeks competitive bids on construction services, and many other areas of expense.

We plan years in advance to make sure we’re ready to provide the energy our customers need when they need it. We use technology and embrace process improvements to hold down costs and work more efficiently, while retaining our commitment to safety and reliability.


Is there anything I can do to reduce my natural gas bill?


There are many things you can do to save money by saving energy in your home. And you won’t have to sacrifice comfort. For example:

  • Replace old, inefficient appliances, furnaces and water heaters with energy-efficient natural gas appliances with the Energy Star designation.
  • Check your furnace filter – make sure it’s clean and properly installed and facing the correct direction.
  • Reduce hot water usage. Use low-flow faucets and shower heads and take short showers instead of baths. Set the temperature on your water heater to 120 degrees or put it on the “warm” setting.
  • Visit www.blackhillsenergy.com for more energy efficiency tips and our other programs and services.
     

How is Black Hills Energy communicating this to its customers?


Black Hills is communicating through local media, as well as through discussions with customers and community and business leaders.


How is Black Hills Energy contributing to the Arkansas economy and its communities?  


Black Hills Energy is a good corporate citizen within each community that it serves in Arkansas.  For example, in 2020, Black Hills Energy’s Direct Economic Impact in Arkansas totaled $102 million dollars. This includes franchise fees, contributions, compensation to Arkansas employees, payments to suppliers and property, sales and use taxes paid.   

  • Black Hills Energy supports a strong community by focusing on economic development, assisting community organizations, and maintaining a commitment to invest in infrastructure to allow for safe, reliable energy.
  • In 2020, Black Hills Energy Arkansas gave nearly $519,000 in support of community events and organizations such as chambers of commerce and non-profits.
  • Black Hills Energy’s 2021 annual United Way Campaign resulted in Arkansas employees contributing $65,000. The Black Hills Corporation Foundation matching contribution brought this total to over $81,000 and all these contributions go directly into local Arkansas communities.  


What does this mean for our vulnerable customers?


Black Hills Energy offers many programs to help customers manage their bills.

  • Budget Billing — Our budget billing level payment plan is a payment option that takes seasonal peaks out of the customer’s bill for a more even monthly payment. This is a free service for residential customers. The customer monthly balance is calculated based on the average of the previous 12 months’ actual bills.
  • Customers who experience trouble paying their bills are encouraged to contact us at our 24/7 customer service number as soon as they think they may be experiencing financial difficulties to discuss payment arrangements.

Customers can consider joining Black Hills Energy in providing energy assistance through Hearts Warming Homes, the company’s Black Hills Cares program. Black Hills Energy matches donations from customers and employees to Black Hills Cares and forwards the funds to nonprofit partners for distribution throughout the state. Customers can designate one-time or monthly donation(s) to Black Hills Cares on their bill stub, or by going to www.blackhillsenergy.com. For more information, please visit our Arkansas payment assistance page.