The Wyoming Public Service Commission has delayed ruling on a Black Hills Wyoming Gas rate hike for its 133,000 natural gas customers in the state that, if approved, would increase the average monthly bill by $7.25.
Though the 3-person commission is generally satisfied with a settlement hashed out between the company and the Wyoming Office of Consumer Advocate that pares down the request from $19.3 million to about $14 million, it had heartache over several provisions within the deal, including how the company markets its Choice Gas program in the state. Commissioners also disagreed among themselves about a proposal to move up implementation of the new rates from February to January.
The panel recently directed the company to provide more information to resolve its outstanding issues with the settlement, effectively delaying the rate hike until at least February.
Commission Chair Mary Throne repeated that Black Hills Wyoming Gas had not made thorough efforts to inform its customers of the pending “base rate” increase to their bills. She also noted that many of the company’s customers are also facing a hike in their Rocky Mountain Power electric rates beginning in January.
“I know [pushing back the new rates to February] has monetary implications for the company,” Throne said on Dec. 21 as the commission deliberated the case, “but it certainly has monetary implications for the thousands of Black Hills Gas customers across the state of Wyoming who were not told that their gas rates were going to go up on January 1.”
In fact, rather than a hike, Black Hills Wyoming Gas customers might anticipate their monthly natural gas bills will be lower than those of last winter. The company issued a press release in November noting that market prices for natural gas — a “pass-on” cost that the regulated utility doesn’t earn a markup on — are forecast to be 48% lower for its customers this season.
Those anticipated savings due to currently favorable but notoriously volatile markets may indeed result in lower monthly natural gas bills. But the utility still seeks to raise its “base rates,” mostly to cover costs related to systemwide updates and safety improvements to meet federal regulations, according to the company.
Black Hills Wyoming Gas, a division of Black Hills Energy, will share more information regarding the rate hike “once the rate review process is complete,” company spokesperson Stacie McDonald told WyoFile via email. McDonald referenced two past posts on the company’s website (here and here) about the pending rate increase request.
Throne also suggested the settlement agreement negotiated with the Office of Consumer Advocate would result in more money for the company due to a proposed rate-of-return on equity of 9.85%. That’s likely more favorable to Black Hills Wyoming Gas than if left to the commission, she said.
“I know [pushing back the new rates to February] has monetary implications for the company, but it certainly has monetary implications for the thousands of Black Hills Gas customers across the state of Wyoming who were not told that their gas rates were going to go up on January 1.”
Mary Throne, Wyoming Public Service Commission
Another negotiated compromise that Throne said she might push back on if the commission were to throw out the settlement agreement is a provision to split the cost of a $1 million “dry hole” 50-50 with ratepayers. The company hired a contractor to replace a defective well vital to accessing a geologic natural gas “storage unit” in Fremont County, but the new well didn’t work and the company will have to drill another one, utility officials told the commission.
If the $14 million settlement proposal is approved without major changes, Black Hills Wyoming Gas’ business and industrial customers will see a smaller percentage increase than residential customers. That’s due to an effort to more fairly equalize the actual cost of service among the different customer classifications, according to the Office of Consumer Advocate.
Dustin thank you and WYOFILE for your article and exercising the FIRST AMENDMENT and just as importantly for the opportunity for “We the people” of this Constitutional Republic to do the same WYOFILE it’s important to have reporting as your Reporters bring and have brought to us in Wyoming! I for one enjoy and very often SHARE your page as far and wide as possible, especially reporting as this, again thank you, Semper Fi!
Mr. Campbell that’s a narrative that on the surface seems to be an almost perfect solution to this “pending increase” but as you know but did not let the readers know that commodities traditng is the most volatile trading there probably is?
Do you know or anyone know if this region is, can, do or want to participate in the commodities?
Could it be that “our” regional support and supplies come directly from the “well head” and “delivery” issues are the true subject of concern(s)?
The folks at Rawtown have their choice(es) as to who will be their supplier for their supply I’m not to sure of other surrounding “Communities” in other countries in Wyoming.
The variables are probably more concerning and intricate than the largest majority of the “general public” could, would or want to understand, can we agree? I’m very appreciative that you did bring up the subject to your reply but become very diappointed by your ending comment.
Now if you would like to inform us that or trying to imply that this corporation’s involvement or activities could or would be questionable, thank you and “We the people” need to know this even it takes the character of what is known as a “whistleblower” thank you for your courage. Hopefully you will take this knowledge to the Governor or your Representative.
Fellow Americans and my Wyoming neighbors every facet of our lives is and being influenced by delivery issues at the place of hauling, pumping, air, over the road transportation and ALL costs associated with it right down to the oil can that lubricates the devices for transportation.
Me. Campbell thank you again for your insight and education, enlightenment, Semper Fi!
In order to control the actual cost of natural gas, Black Hills Wyoming Gas must utilize the NYMEX futures market and lock in low natural gas prices for months in the future. In the past I ran into this situation with Black Hills oil well production and explained to the President of the company how they could sell forward their oil production from wells in the Osage/ Newcastle area. He had never heard of trading commodities before and looked into the matter and presented it to the Board in Rapid City who didn’t have a clue either. They weren’t able to execute the favorable commodity trades and left an easy $7 million on the table. So, I question whether Black Hills has learned how to lock in favorable rates for their customers. Most ranchers and farmers fully understand the commodities markets and how it works but I was dismayed to find out a large corporation like Black Hills wasn’t able to trade back in the 1990s. Maybe they have learned since then; however this article shows the excellent graph of natural gas prices but doesn’t further explore whether or not Black Hills is actively trading favorable natural gas prices.
Thanks. I am a Black Hills consumer and this is a big New Year’s Eve surprise to me. I am also a Rocky Mountain Electric consumer, and in my personal budget I planned for their hike and where I could cut in other budget categories to make those payments. I didn’t plan on Black Hills making an increase. My income is primarily Social Security, but I know others in my age category even have less annual income and will hit them even harder, not to mention struggling families living on low wages.