Revenue-neutral filing outlines adjustments to previously approved Phase 1 electric rates
PUEBLO, Colo., July 7, 2017 – Black Hills Energy today submitted a “Phase 2 Rate Review” proposal to the Colorado Public Utilities Commission (PUC) that outlines a plan to appropriately allocate among customer groups the revenue that was approved by the PUC in December 2016 as part of its Phase 1 filing. The proposed changes to customer bills must be approved by the PUC and are revenue-neutral, meaning they would not result in any additional revenue for Black Hills Energy. The Company expects any changes in bills associated with this filing will not become effective until March 2018.
The approved Phase 1 filing determined the total cost Black Hills Energy was authorized to collect from all customers. The Phase 2 filing allocates costs by customer group based on energy use by group and proposes new rates to recover the amounts previously approved by the PUC and implemented on Jan. 1, 2017. These costs include building, operating and maintaining the system of power plants, wires, poles and equipment to generate and deliver electricity.
As proposed, typical residential bills are expected to increase by $2.41 per month (2.5 percent) based on an average use of 600 kilowatt-hours (kWh). Typical small-business customer bills would decrease by $48.77 per month
(13.3 percent) based on an average use of 2,300 kWh.
To arrive at the proposed Phase 2 allocation, Black Hills Energy leveraged advanced metering infrastructure (AMI), or smart meters, to accurately record customer usage every 15 minutes. This data is used as the basis for allocating energy use and associated costs to the various customer groups. The result is a proposed rate structure that allocates the actual cost of providing energy service to our six different customer groups.
Meter data showed that residential customers, making up 90 percent of Black Hills Energy customers, are responsible for more energy use than is recovered through current rates. As a result, other customer groups, like business customers, have been paying a disproportionally greater share of the cost of service.
“The availability of new technology, like AMI, provides us more accurate data to appropriately measure energy use by customer group,” said Fred Stoffel, Black Hills Energy director of regulatory services. “Our proposed rate structure prompts a shift in the way costs are spread across customer groups that more fairly represents costs for producing and delivering energy to Southern Colorado homes and businesses. This is balanced with a need to maintain stability and predictability of rates for our customers.”
Black Hills Energy has also requested approval of a Residential Tiered Rate plan, a payment structure that sets a lower price level for basic energy use. Use above the basic level is priced at a higher rate and encourages energy conservation. This is the first time Black Hills Energy has proposed charging less per unit of electricity consumed for residential customers who only use 500 kWh each month or less.
The first rate tier will apply to customers using between 0-500 kWh a month, and the second tier will apply to customers using more than 500 kWh a month. The proposed rate for Tier 1 is $0.08251/kWh and the proposed rate for Tier 2 is $0.11254/kWh. The intent is to provide an incentive to reduce energy consumption and offer benefits to customers who on average use less energy.
“We want to make it easy and rewarding for our customers to make smart decisions about how they consume energy,” said Christopher Burke, vice president of electric operations for Black Hills Energy. “We want to improve our pricing structure by giving customers more control over what they pay. The Residential Tiered Rate plan as proposed allows our lower-usage customers, including our low-income customers, to pay less when they use less energy.”
Additionally, Black Hills Energy has proposed for the first time piloting a Time of Use program for small commercial customers that would provide better pricing signals to encourage efficient energy use. The program would provide support for customers with high, intermittent energy use, like sports fields that use lights for short periods of time or churches that primarily run air conditioning on Sunday mornings. Time of Use programs help customers potentially avoid demand charges that can make up more than 75 percent of a total bill. A previous pilot program for large commercial customers proved successful and the Phase 2 filing proposes making this a standard rate option, available year-round.
Customers can find Phase 2 filing information, including customer group details, and information about the company and its services at www.blackhillsenergy.com/energyfuture and through Black Hills Energy’s Facebook page and Twitter feed.
Julie C. Rodriguez