Black Hills Corp. requests a $21.6 million rate increase for its Kansas natural gas utility to fund infrastructure improvements.
Quiver AI Summary
Black Hills Corp. has filed a rate review application with the Kansas Corporation Commission, seeking to recover costs related to natural gas service for 120,000 customers in Kansas. Since its last rate filing in 2021, the company has invested about $118 million in its natural gas infrastructure, covering over 4,765 miles of pipeline to ensure safety, reliability, and regulatory compliance. The proposal seeks an estimated additional $17.2 million in annual revenue, along with $4.4 million from rider revenue, leading to a total increase of $21.6 million in base rates. This application will also allow for continued funding of pipeline replacements through the Gas System Reliability Surcharge (GSRS). New rates are anticipated in the latter half of 2025, as the company aims to maintain service quality amid rising operational costs.
Potential Positives
- Black Hills Corp. is pursuing a rate review to recover capital infrastructure and operational costs, ensuring the continued delivery of safe and reliable natural gas service to 120,000 customers in Kansas.
- The company has invested approximately $118 million in safety, reliability, and system integrity for over 4,765 miles of natural gas pipeline, demonstrating a commitment to enhancing service quality.
- The proposed rate increase will allow Black Hills Corp. to manage rising operational costs effectively while continuing to invest in critical infrastructure in a high inflationary environment.
- The filing satisfies regulatory requirements for future revenue adjustments, positioning the company for continued compliance with state and federal regulations regarding service delivery.
Potential Negatives
- The request for an estimated $21.6 million annual base rate revenue increase may face pushback from customers and regulators amid a high inflationary environment, potentially impacting customer satisfaction and trust.
- The necessity for a rate review application indicates ongoing financial pressure and capital requirements, which could reflect negatively on the company's management of resources and prior financial planning.
- The reliance on the Gas System Reliability Surcharge (GSRS) and the need for a new rate case filing by the end of 2026 might suggest underlying issues with the sustainability and resilience of the current financial model.
FAQ
What is the purpose of Black Hills Corp's rate review application?
The application aims to recover capital infrastructure and operational costs for delivering natural gas to 120,000 customers in Kansas.
How much has Black Hills Energy invested in Kansas natural gas infrastructure?
Black Hills Energy has invested approximately $118 million in safety, reliability, and system integrity for over 4,765 miles of pipeline.
What is the estimated annual revenue increase requested by Black Hills Corp?
Black Hills Corp is requesting an estimated $21.6 million annual base rate revenue increase, including rider revenue.
When does Black Hills Energy expect new rates to take effect?
The company is seeking new rates to be implemented in the second half of 2025.
What customers does Black Hills Corp serve?
Black Hills Corp serves 1.34 million natural gas and electric utility customers across eight states in the U.S.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
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Full Release
RAPID CITY, S.D., Feb. 03, 2025 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE: BKH) today announced that its Kansas natural gas utility has filed a rate review application with the Kansas Corporation Commission requesting recovery of the necessary capital infrastructure and operational costs required to deliver safe, reliable natural gas service for 120,000 Kansas customers.
Since its last general rate filing in 2021, Black Hills Energy will have invested approximately $118 million in safety, reliability and system integrity for more than 4,765 miles of natural gas pipeline infrastructure in Kansas. These critical investments were required to meet system growth, ensure the safe and reliable delivery of natural gas to customers’ homes and businesses, and meet compliance requirements of state and federal regulations.
“Our customers deserve safe and reliable natural gas, and these investments adjust for the rising cost of operating, maintaining and upgrading our Kansas natural gas system,” said Linn Evans, president and CEO of Black Hills Corp. “Our rate review proposal will enable the company to continue investing in critical infrastructure to meet the needs of customers while prudently managing in a high inflationary environment that has impacted every business sector.”
The application requests an estimated $17.2 million per year in additional revenue and rolling in approximately $4.4 million of rider revenue into base rates for a total annual base rate revenue increase of $21.6 million. The request is based on a capital structure of 50.44% equity and 49.56% debt and a return on equity of 10.50%. Black Hills Energy is seeking new rates in the second half of 2025.
This rate application also allows the company to continue using the Gas System Reliability Surcharge (GSRS) to fund accelerated, safety-focused pipeline replacement across the state. This application satisfies the requirement to file a general rate case in Kansas by the end of 2026 to remain eligible for commission approval of future GSRS filings.
Black Hills Corporation
Black Hills Corp. (NYSE: BKH) is a customer-focused, growth-oriented utility company with a tradition of improving life with energy and a vision to be the energy partner of choice. Based in Rapid City, South Dakota, the company serves 1.34 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. More information is available at www.blackhillscorp.com.
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