Black Hills Corp. (NYSE:BKH) today announced that its Iowa natural gas utility, Black Hills / Iowa Gas Utility Company, LLC, doing business as Black Hills Energy, reached an agreement with all intervening parties to its rate review for a general rate increase to support the company's efforts to continue delivering safe and reliable natural gas service to its 161,000 customers in 133 communities throughout the state.
"We are pleased to reach a constructive agreement with the Iowa Office of Consumer Advocate and other key stakeholders in Iowa," said Linn Evans, president and CEO of Black Hills Corp. "The ongoing investments reflect our commitment to our Iowa customers for safe and reliable service, support economic growth in the communities we serve, and meet our clean energy goals."
Black Hills Energy has nearly tripled its investments in its natural gas pipeline system in Iowa since its last approved general rate filing more than 10 years ago. These investments include replacing, upgrading and maintaining more than 2,800 miles of natural gas pipelines and 164,000 system service lines in the state – critical infrastructure required to ensure the safe and reliable delivery of natural gas to customers' homes and businesses and support the growth needs of local communities.
The importance of these investments has been demonstrated by the excellent performance of Black Hills' pipeline system to serve extraordinary demand during extreme weather events. Investments in replacing and upgrading pipeline materials have also contributed to more than a one-third reduction in greenhouse gas emissions intensity for the company's pipeline system since 2005.
The settlement agreement is contingent upon final review and approval by the Iowa Utilities Board. If approved as filed, the request will shift approximately $2.2 million of rider revenue to base rates and will generate an estimated $3.7 million per year in additional revenue. The settlement proposes a capital structure of 50% equity and 50% debt and a return on equity of 9.6%. Black Hills is seeking new rates effective Jan. 1, 2022, replacing interim rates that were effective on June 11.