Black Hills reaches deal with Kansas regulators to add $11.47 to monthly bills for five years

Settlement is result of high gas prices the utility paid to keep customers warm during February cold snap

By: - November 10, 2021 9:58 am

Black Hills Energy reached an agreement with the Kansas Corporation Commission and Citizens’ Utility Ratepayer Board for increases to customers’ rates. (Getty Images)

TOPEKA — Kansas regulators have reached an agreement with Black Hills Energy to recoup $87.9 million in costs tied to excessive natural gas prices during a week in February when an arctic chill dropped temperatures more than 20 degrees below zero.

The natural gas utility’s residential customers will pay, on average, an additional $11.47 each month for five years under the agreement with the Kansas Corporation Commission and Citizens’ Utility Ratepayer Board. Black Hills’ original proposal would have increased bills by an average $12.23, but it agreed to trim its carrying costs under the settlement.

Black Hills general manager Jerry Watkins said the costs were necessary “to keep our customers warm and safe when they needed us most.” The utility serves 117,000 Kansas customers in 66 communities.

“We’re committed to providing the safe, reliable energy that our communities need to thrive,” Watkins said.

The settlement is pending a final hearing and approval by the KCC.

Suppliers of natural gas multiplied their rates by more than 200 as demand accelerated in February and natural gas supplies became hard to come by. Natural gas shortages were considered one of the main drivers of disruption to the electrical grid that forced rolling blackouts in the region to avoid complete collapse.

In another regulatory case, attorneys representing large-scale natural gas customers have pushed for more public release regarding which suppliers charged such high prices during the disaster. The KCC declined to subpoena a national natural gas price index despite an attorney’s concern there was evidence of a dysfunctional market. The prices utilities pay are often tied to that index.

The total bill for Kansas ratepayers appears to be nearly $1 billion and growing.

Kansas Attorney General Derek Schmidt said the price increases “appear to violate Kansas law” prohibiting price gouging during an emergency. He said his office would seek outside counsel to investigate.

The state’s largest natural gas utility, Kansas Gas Service, has proposed increasing customers bills by anywhere between about $5 and $11 for five, seven or 10 years to recoup $451 million in excess natural gas costs and carrying cost.

Watkins encouraged residents who can’t pay their bills to ask the company’s customer service team about financing options.

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Sherman Smith
Sherman Smith

Sherman Smith is the editor in chief of Kansas Reflector. He writes about things that powerful people don't want you to know. A two-time Kansas Press Association journalist of the year, his award-winning reporting includes stories about education, technology, foster care, voting, COVID-19, sex abuse, and access to reproductive health care. Before founding Kansas Reflector in 2020, he spent 16 years at the Topeka Capital-Journal. He graduated from Emporia State University in 2004, back when the school still valued English and journalism. He was raised in the country at the end of a dead end road in Lyon County.