Kansas regulators approve $11.47 bill hike for Black Hills customers

The hike will allow the gas utility to recoup costs from last February’s deep freeze

By: - January 27, 2022 2:30 pm

A weeklong cold wave in February sparked an energy crisis which drove the price of natural gas to 200 times its price a few days before. Black Hills Energy will see, on average, another $11.47 on their bills each month. (Sherman Smith/Kansas Reflector)

KANSAS CITY, Mo. — Natural gas bills will go up next month for 117,000 Kansans, including in the Wichita metro area, following last winter’s deep freeze. 

Customers of Black Hills Energy will see, on average, another $11.47 on their monthly bills attributed to Winter Storm Uri under a settlement agreement with regulators and consumer advocates. The hike lasts five years.

“Today’s order acknowledges that while no customer welcomes bill increases, the five-year repayment period provides some relief to ratepayers,” the Kansas Corporation Commission said in a news release after approving the settlement Thursday. 

The news release says customers’ bills would have risen by an average $53.51 per month had they been required to pay the costs of the storm over one year. 

Last February, temperatures across the Midwest plunged below freezing for days on end, causing fear the grid would be unstable. During that time, natural gas was difficult to come by and prices shot up by 200 times in a matter of days. According to the National Oceanic and Atmospheric Administration, it was the coldest February in more than 40 years.

All told, utilities in Kansas incurred about $1 billion in excess gas costs from the storm. Gas and electric utilities have been filing plans with the KCC to pass those costs onto customers over time rather than all at once.

Black Hills incurred $87.9 million tied to the February freeze — about a year’s worth of gas charges in a month. It initially proposed raising bills, on average, by $12.23, but trimmed the carrying costs under the settlement agreement. 

The state’s largest gas utility, Kansas Gas Service, has proposed recouping $390 million costs over five, seven or 10 years. KCC regulators are still reviewing those plans. 

James Williams, a spokesman for Black Hills, noted the company offers budget billing and energy assistance programs and encouraged customers struggling to pay bills. 

“The cost of natural gas is often the largest portion of our customers’ bills during the winter heating season and it’s a pass-through cost – meaning we do not make money on natural gas, even when prices increase,” Williams said. 

The Kansas Attorney General’s Office has been investigating potential price-gouging, and in a statement, the Natural Gas Transportation Customer Coalition said the settlement includes clawbacks should government or private investigations or litigation lower the prices.

“No reasonable view of the natural gas market can support natural gas price increases that escalated from $2.54 per unit on February 1 to $622.78 on February 17, 2021,” the coalition’s attorney, Jim Zakoura said in an email. 

The prices posted to the index used to set natural gas prices by many utilities, he said, “either do not accurately reflect prevailing market prices for natural gas or reflect a market that was subject to manipulation — or both.”

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Allison Kite
Allison Kite

Allison Kite is a data reporter for The Missouri Independent and Kansas Reflector, with a focus on the environment and agriculture. A graduate of the University of Kansas, she’s covered state government in both Topeka and Jefferson City, and most recently was City Hall reporter for The Kansas City Star.