Black Hills Energy bills to rise by $16 a month in South Dakota

The South Dakota Public Utilities Commission approved a new electric rate Wednesday that will add approximately $16 to the average residential monthly bill.

The commission voted unanimously to accept a settlement that allows Black Hills Energy to collect an extra $27.4 million annually from its roughly 75,000 customers in western South Dakota. This figure is significantly lower than the $50.6 million the utility initially sought, which would have raised the typical residential bill by $25 per month. The settlement was negotiated by commission staff with the company and a group representing large industrial customers, including Monument Health, Pete Lien & Sons, and Wharf Resources.

Black Hills Energy had not raised its rates since 2014. The company stated that the increase is necessary to cover infrastructure improvements, inflation, and rising operating costs. A higher monthly rate has been in effect on an interim basis since August. The final approved rate will take effect in December. Customers will receive refunds for the overages paid during the interim period.

Commissioner Kristie Fiegen addressed the financial pressure on residents during a public meeting in Pierre. She noted that many customers are struggling with inflation and healthcare costs. Fiegen emphasized that these residents often lack legal representation at the negotiation table, but commission staff advocated on their behalf. Staff attorney Amanda Reiss stated that the commission is legally obligated to allow utilities to recover reasonable costs and earn a return on investments. Reiss described the settlement as defensible and noted that the commission cannot reject a rate increase solely because customers are facing financial hardship.

The settlement includes smaller increases for specific commercial and industrial customer types. It also prevents another general rate increase from taking effect before August 2030. However, other charges on customer bills remain subject to change.

A separate financial burden is approaching for Black Hills Energy customers. The company has requested a surcharge to recover costs associated with the $320 million Lange II natural gas power plant under construction in Rapid City. This surcharge would add an estimated $19.70 to a typical residential monthly bill. It is scheduled to take effect on an interim basis in December. If the commission later rejects or reduces the surcharge, customers will receive refunds.