Kansas Regulator Authorizes Black Hills Energy to Recover $88 Million in Weather-Related Costs

The Kansas Corporation Commission on Jan. 28 approved a settlement agreement allowing Black Hills Energy to recover $87.9 million in deferred costs related to natural gas service provided during the winter storm Uri in February 2021. The storm affected the south-central U.S., causing widespread outages and forcing natural gas processing plants to shut down. As a result, the commission issued an emergency order to maintain supply and comply with increases in the consumption of natural gas and electricity generated by prolonged sub-zero temperatures throughout the state of Kansas.

During the weather event, stress on utility and gas providers resulted in increased energy demand and gas supply constraints across Kansas and wholesale natural gas prices rose from 10 to 100 times higher than normal. Pursuant to the commission’s emergency powers , all natural gas utilities in the area were authorized to defer extraordinary costs to a regulatory asset account for subsequent investigation and development of a customer impact plan.

In the middle of last year, Black Hills Energy presented its strategy to minimize the financial effects and recovery of costs related to the weather event.

The recently approved plan is based on the Black Hills Energy proposal, which will allow the extraordinary costs of customers to be distributed over a period of five years from Feb. 1, 2022  through Jan. 31, 2027. This financial agreement will be reflected in the monthly bills during the indicated period of time. Residential customers are expected to receive average increases of $11.47 defined within the bills as “Storm Uri Gas Charge.”

Each annual period ending Jan. 31, the company may adjust the current cost recovery rate based on the expected recovery. Similarly, any cost recovery resulting from the weather event, such as federal or state investigations into price gouging, market manipulation, or civil litigation, will be passed on to customers.

Black Hills Energy’s cost recovery agreement is the third adjustment plan approved by the regulatory commission. Plans from other utility companies are currently under evaluation, including: Southern Pioneer, Evergy Atmos and Kansas Gas Service. Liberty Utilities – Empire District has not yet submitted its proposal.