Consumer Advisory: Black Hills Energy seeks increase to residential monthly minimum charge

DENVER (July 20, 2017) -- The Colorado Office of Consumer Counsel (OCC), which advises and advocates on behalf of consumers regarding state regulated utility costs, is advising consumers to be aware of a request by Black Hills Energy to increase the monthly minimum charge to some of its residential customers in southern Colorado. Black Hills serves Colorado communities in Cañon City, Florence, Pueblo, Rocky Ford and Westcliffe.

Under the rate design proposed by Black Hills, the minimum monthly residential Customer Charge (also known as the Service and Facilities Charge) would be increased by $3.24. Some residential customers would see a charge of $20.13 instead of the current rate of $16.89 depending on their monthly energy usage. This charge is intended to recover customer-related costs, such as the customer’s meter and connection to the Black Hills electric system, as well as the provision of customer service.

Background

The Colorado Public Utilities Commission (PUC) regulates Black Hills Energy in Colorado. As required by the PUC, Black Hills filed its "Phase II" electric rate case on Friday, July 7 in order to implement the PUC’s decision, issued on December 19, 2016, which lowered Black Hills’ proposed rate increase of approximately $8.5 million to $636,267.

In the current rate case, known as the rate design phase, Black Hills is required to divide the approved rate increase between its residential and business customers. New rates, based upon the approved increase, began being charged on January 1, 2017, on a temporary basis and were based on the existing rate design. However, the current phase may result in a new rate design that may change the temporary rates charged to residential and business customers. The PUC must approve Black Hills’ proposed rate design or may order modifications to it.

Proposed Tiered Energy Usage Rate

For residential customers, Black Hills is proposing a two-tiered energy usage rate structure, known as an inclining block rate structure, whereby rates increase if a customer uses more electricity in any given month. For residential customers using 500 kWh or less, there would be no rate increase. However, if a customer were to use more than 500 kWh per month, the amount used over and above 500 kWh would be charged a higher rate. Black Hills states that an average residential customer uses approximately 624 kWh per month, and for a customer using 600 kWh per month, the rates would increase by $2.41 or 2.48 percent.

Finally, for a customer using 1200 kWh per month, rates would increase by $16.85, or 9.57 percent. Black Hills recommends an inclining block rate structure because it states that such a rates structure benefits lower usage customers and creates a conservation incentive for higher usage customers to reduce their energy consumption. Black Hills proposes a medical exemption for qualified customers that retains a uniform flat rate regardless of the amount of electricity consumed.

For residential, net metered solar customers, Black Hills proposes a monthly Service and Facilities Charge of $25.45 primarily to recover the cost of the second meter (production meter) and a higher energy charge resulting in an overall increase of approximately 50 percent. Black Hills states that since its last "Phase II" electric rate case in 2012, the number of net metered customers has increased by 400 percent and that its cost to serve these customers has increased by 140 percent.

Quick facts about Black Hills Energy:

  • 95,000 customers
  • More than 140 employees
  • 3,655 total miles of electric transmission and distribution lines
  • 224.5 MW of generation
  • 52 communities served in:
    • Canon City
    • Florence
    • Pueblo
    • Rocky Ford
    • Westcliffe

Get More Information
For more information and detail on the filing you may access the filing and responses through the PUC electronic filings system at the link below and search using proceeding No. 17AL-0477E. https://www.dora.state.co.us/pls/efi/EFI.homepage

Information can also be found at Black Hills Energy’s website at:
https://www.blackhillsenergy.com/rates/rate-applications/rate-case-files/part-two

How to Comment
If you would like the Commission to know your concerns about this particular issue, you may register your comments by filling out an online comment form at the link below, by email to dora_PUC_complaints@state.co.us, or mail to: 1560 Broadway, suite 250, Denver, CO 80202.

On-Line Comment Form: http://www.dora.state.co.us/pls/real/CCTS_oWEB.comment_form

The Colorado Office of Consumer Counsel (OCC), a division within the Department of Regulatory Agencies (DORA), represents residential, small business, and agricultural utility consumers as a class in electric and natural gas proceedings before the Colorado Public Utilities Commission (PUC). The OCC does not regulate; it advises and advocates on behalf of consumers. The OCC helps consumers by lowering or eliminating proposed utility rate increases and by ensuring that utility rates, regulations and policies are more equitable for residential, small business, and agricultural consumers.

 
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About DORA
The Department of Regulatory Agencies (DORA) is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission. DPO, a DORA division, provides consumer protection through its regulation of nearly 400,000 licensees within more than 50 professions, occupations, and entities in the State of Colorado. Visit www.dora.colorado.gov for more information or call 303-894-7855 / toll free 1-800-886-7675 outside of Denver. 

Media Contact:
Rebecca Laurie
Department of Regulatory Agencies
p: 303-894-2338 | c: 720-724-0612