DENVER – June 24, 2021 – Black Hills Energy has filed applications with the Colorado Public Utilities Commission (CPUC) to recover costs associated with the extreme cold weather and additional expenses from an extraordinary spike in natural gas prices in February. Because the company operates separate electric and natural gas utilities in Colorado, two applications were filed with proposed methods for recovery. Black Hills Energy also provided additional background requested by the Commission, including steps taken to prepare teams and systems and customer communications in February.
“There were a confluence of factors in February, including extreme cold temperatures and record-high customer demand, plus the freeze off of natural gas production and processing facilities in other areas of the country that resulted in an unprecedented spike in natural gas prices across much of the U.S.,” said Vance Crocker, Black Hills Energy vice president of Colorado operations. “Despite these challenges, Black Hills Energy worked diligently to prudently procure gas supplies and deliver the safe, reliable energy services that our Colorado customers’ health and wellbeing depends on.”
Proposed Recovery Methods
In the applications, Black Hills Energy outlined several recovery scenarios and made a recommendation to the CPUC to consider – the CPUC will ultimately make the decision on the recovery and timeline.
Colorado Electric customers
For the electric utility, which saw increased demand and costs for fueling the natural-gas powered Pueblo Airport Generation Station (PAGS), the company has recommended a scenario that includes a $3.83 per month charge for the average residential electric customer over a two-year period. The average small commercial customer would see an increase of $14.67 per month over a two-year period.
Colorado Gas customers
Not all Colorado natural gas customers were impacted in the same way during the February extreme weather event. Black Hills Energy recommended scenarios and recovery periods based on location, aligned with the three existing Gas Cost Adjustment (GCA) regions in Colorado. For the Central region, the average residential natural gas customer would see an impact between $8.05 and 11.73 per month over a three-year period; small commercial customers would see an impact between $18.00 and $19.51 per month. For the North/Southwest region, the average residential natural gas customer would see an impact between $10.62 and 15.48 per month over a three-year period; small commercial customers would see an impact between $25.74 and $31.86 per month. For the Western Slope region, the average residential natural gas customer would see an impact of $12.46 per month over a one-year period; small commercial customers would see an impact of $25.65 per month.
It’s important to note that Black Hills Energy does not make money on natural gas; the price of natural gas is passed through to customers at cost. In each application, the company laid out several scenarios to recover the natural gas and related carrying costs. The applications include a recommendation to recover costs via a new temporary billing line item beginning November 2021.
“Our most important obligation is to deliver reliable service to our customers,” said Crocker. “We’re extremely proud of how our system and team performed during the record-breaking cold temperatures across Colorado and much of the country in February. That said, we recognize that there will be financial impacts and we will continue to work with the Commission to identify the recovery scenario that balances customer considerations with our ability to keep our system running efficiently and effectively.”