KCC taking public comment on Black Hills Energy’s proposed gas rate hike

07/09/2014 12:14 PM

07/09/2014 12:31 PM

Customers of Black Hills Energy will have their chance to be heard on a proposed gas rate hike Thursday.

For Wichitans, that chance will come via teleconference.

The Kansas Corporation Commission will hold a public hearing in Lawrence with videoconferencing to take customer comments from Wichita, Garden City and Goodland.

Wichita’s meeting will be at 6 p.m. at the Hughes Metropolitan Complex, 5015 E. 29th St. North.

The hearing will be a chance for customers to give their thoughts on a proposal by Black Hills to raise its rates by about 6.7 percent – or $4.17 a month for the average customer.

Black Hills provides gas service to about 110,000 Kansas customers, about one-third of whom live in the Wichita area.

David Springe, the chief consumer counsel for CURB, is encouraging customers to turn out and speak at the meeting because the more people who testify, the more influence they can have on the outcome.

“If no one shows up, the commission will think you don’t care,” Springe said. “At some level, until the public demands that these rate increases be stopped, the commission will keep granting them.”

One major point of contention is the rate of return for Black Hills stockholders.

The company is proposing a 10.6 percent return for shareholders. CURB will argue for closer to 8.5 percent.

Black Hills argues that the higher rate of return is justified and has provided the commission a list of companies that have similar business risks and compete with Black Hills Energy to raise capital.

CURB argues that various legislative and commission actions have greatly reduced business risk for Kansas utilities and it’s unfair to require customers to pay for high returns to shareholders.

As in all gas rate cases, the commission’s decision will only affect the amount the company can collect to operate the gas system and deliver gas to homes and businesses.

The purchase price of the gas itself is passed straight through to customers and changes monthly based on market rates.

From the consumer’s point of view, the biggest change is in the monthly basic service charge that all customers pay, regardless of how much gas they use.

Black Hills proposes to raise that charge from $16 a month to $21.70 a month for residential customers.

The company is proposing a slight decrease in the component of its rates that is based on the amount of gas a customer uses.

The Citizens’ Utility Ratepayer Board, the state agency that represents residential and small-business customers in rate cases, is arguing that the higher customer charge and lower volumetric rates would discourage conservation.

Black Hills argues that it costs the same to deliver gas to a home whether the customer uses little or lots of gas, so the delivery charge should be based less on how much a customer uses.

The hearing will be divided into two parts:

It will start with an informal question-and-answer session about the proposed rate hike with representatives from the company, commission staff and the Citizens’ Utility Ratepayer Board, the state agency that represents residential and small-business customers.

That will be followed by a more formal process where customers can make their comments directly to the commission.

Only the comments made during the formal session will be considered by the commissioners when they deliberate whether to raise the rates and by how much.

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