CHEYENNE – Consumer advocates with the Wyoming Public Service Commission are investigating a Black Hills Energy proposal to consolidate and raise natural gas rates statewide.
The Office of Consumer Advocate, an independent audit division of the PSC, is reviewing a recent Black Hills request to increase rates by an average of 17.3% across multiple service areas by 2020.
Earlier this month, Black Hills Energy asked the commission to consolidate the company’s four Wyoming gas utilities into one new legal entity, Black Hills Wyoming Gas. The company also submitted a rate review application to consolidate the rates, tariffs and regulations of existing gas territories in Wyoming.
Company executives say the rate changes will streamline service to 129,500 Wyoming customers and help Black Hills recover investments more reliably.
But, as proposed, some residential customers would see steep increases in their natural gas bills. In Casper and Gillette, customers could expect increases of 15-30%, and Cheyenne and Cody customers could see increases from 2-15%, according to the consumer advocate office.
Both residential and small commercial Laramie County consumers would see increases of 2-4%.
“As proposed, the residential rate increase in Cheyenne would be approximately $1.43 per month,” Black Hills spokeswoman Laurie Farkas said Tuesday. “The rates, as proposed, for small commercial customers would increase by approximately $3.26 per month, and for medium commercial customers, the rate, as proposed, would increase approximately $6.03 per month.”
The current average monthly residential bill in Cheyenne is $49.84.
“We will be reviewing the application and conducting on-site audits to make sure (Black Hills) is only granted rates that are required to fairly compensate the company for the cost of delivering natural gas to its customers,” said OCA Administrator Bryce Freeman.
The OCA will investigate to determine if the rate increases are an accurate reflection of recent investment costs, said Christopher Leger, an attorney at the organization.
Black Hills representatives say the utility plans to invest $106 million in 2019 to replace, upgrade and maintain nearly 6,000 miles of transmission and distribution pipelines in Wyoming – infrastructure required to ensure safe and reliable delivery.
Leger said, on average, natural gas, electric and water utilities file five to 10 rate increases a year, which the OCA then investigates. The Wyoming Public Service Commission only has jurisdiction over private and investor-owned utilities.
If the OCA investigation finds Black Hills has overstated what it realistically costs to provide natural gas in these service areas, they could recommend ways to decrease those costs and lessen the burden on consumers.
“We may also propose a reduction to the allowed return, or profit, that the company is allowed to earn,” Freeman said.
Freeman said this particular review will require the office’s full attention.
“This is the equivalent of four individual utility rate cases, and will require all of the OCA’s six staff members to dedicate substantial time and effort to determine a fair recommendation and offer our recommendations to the commission,” he said.
The OCA believes that while utilities are entitled to earn a return on investment, company success should not fall squarely on the backs of consumers.
Leger said the majority of requests to increase rates are contested by the OCA, consumer groups, environmental groups or other stakeholders.
“The commission usually does a very good job in taking every intervening party’s opinion and evidence into account when they are making their decision,” Leger said. “It’s uncommon for utilities to receive everything they ask for. But at the end of the day, it really depends on what the utility is asking for and what the other parties in the case agree and disagree with.”
The investigation will likely wrap up in September. The proposal would then go before the PSC in December for consideration.