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South Dakota Interim Rates - Q&A
1. What are interim rates?
2. Why did Black Hills Power make another filing with the South Dakota Public Utilities Commission on Monday,
March 1, 2010?
3. Why are Black Hills Power’s interim rates different from the original rate request?
4. How long will interim rates be in effect?
5. How much will Black Hills Power South Dakota customer bills go up on April 1, 2010?
6. When will the interim rate increase be effective?
7. What happens if interim rates are more than the rates approved by the South Dakota Public Utilities Commission
in their final order?
8. Why is Black Hills Power raising customer rates?
9. What is the status of the Wygen III generation facility?
10. When was the last rate increase for Black Hills Power South Dakota customers?
1. What are interim rates?
In the event the South Dakota Public Utilities Commission does not complete its review and issue a final order pertaining to a utility rate
request within six months, South Dakota state law allows utilities like Black Hills Power to adjust customer rates on an interim basis until a
final order is received from the South Dakota Public Utilities Commission.
2. Why did Black Hills Power make another filing with the South Dakota Public Utilities Commission on Monday,
March 1, 2010?
According to South Dakota state law, if the interim rates the utility plans to implement differ from the original rate request, the utility must
make an additional filing with the South Dakota Public Utilities Commission that contains information regarding the variation and the
proposed interim rates.
The utility must get the approval of the South Dakota Public Utilities Commission to implement interim rates that are different from the
utility’s original rate request, even if the proposed interim rates are lower..
3. Why are Black Hills Power’s interim rates different from the original rate request?
When Black Hills Power filed its original rate request on September 30, 2009 it contained the most accurate assumptions and
information available at that time. As is typical in a regulatory process that extends over a six month period or more – following a filing
the utility continues operating and there are known and measurable costs that change, and in this case have reduced, the amount of
Black Hills Power’s original rate request.
Black Hills Power understands that any rate increase can be difficult for customers. Black Hills Power wants to ensure the interim rates for
electricity service on and after April 1, 2010 are implemented using the best information possible.
An example of a known and measurable cost that has changed Black Hills Power’s rate request is the recent issuance of long term debt at
more favorable than expected rates – thus reducing the interest expenses contained in Black Hills Power’s initial rate request.
4. How long will interim rates be in effect?
Interim rates for Black Hills Power South Dakota customers are applicable to electricity service on and after April 1, 2010 and are
anticipated to remain in effect until a final order pertaining to Black Hills Power’s South Dakota rate request is received from the South
Dakota Public Utilities Commission.
The interim rates will apply to electricity consumption on and after April 1, 2010 that will be included in bills received by Black Hills Power
South Dakota customers beginning in April 2010.
5. How much will Black Hills Power South Dakota customer bills go up on April 1, 2010?
The interim rates Black Hills Power plans to implement for South Dakota customers receiving electricity service on and after April 1, 2010
are an overall increase of $24 million or approximately 20 percent.
- As compared to Black Hills Power’s original rate application filed on September 30, 2009 requesting an overall increase of $32
million or approximately 26.6 percent.
A typical Black Hills Power South Dakota residential customer using 600 kilowatt-hours (kWh) of power each month will see an interim
increase of $12.18 per month, or about 40¢ per day.
- As compared to Black Hills Power’s original rate application filed on September 30, 2010 that proposed a typical Black Hills
Power South Dakota residential customer using 600 kilowatt-hours (kWh) of power each month would see a rate increase of
$17.99 per month, or about 59¢ per day.
The interim rate increase implemented for Black Hills Power’s South Dakota commercial and industrial customers receiving electricity
service on and after April 1, 2010 will vary depending on the rate class, load factor and amount and nature of use.
- Black Hills Power will meet with key accounts to discuss the rate changes specific to commercial and industrial customer bills.
6. When will the interim rate increase be effective?
The interim rate increase will be effective for electricity service on and after April 1, 2010 and will be included in Black Hills Power South
Dakota customer bills beginning in April 2010.
7. What happens if interim rates are more than the rates approved by the South Dakota Public Utilities Commission
in their final order?
Once a final order is received, if new rates approved by the South Dakota Public Utilities Commission are lower than the interim rates being
charged, Black Hills Power South Dakota customers will receive an adjustment on their bill.
8. Why is Black Hills Power raising customer rates?
In Black Hills Power’s South Dakota filing made on September 30, 2009, the utility is requesting recovery of costs associated with
construction and operation of the newly-constructed Wygen III power plant and other generation, transmission and distribution assets, along
with increased operating expenses.
9. What is the status of the Wygen III generation facility?
Nearing completion, the Wygen III generation facility is progressing through final testing to make sure everything is working properly and
ready to deliver electricity to Black Hills Power customers as expected on April 1, 2010.
- Engineering and procurement is completed.
- Construction of the facility is 99 percent complete and the testing of the equipment is well underway.
- During the week of February 15 the boiler was fired with natural gas.
- On Friday, February 19 tests using mine-mouth coal as the fuel source went well.
- Testing of emissions monitoring and other turbine /plant operating systems is on track and additional tuning on the pulverizers,
burners and other equipment is being completed.
- All work to finish Wygen III is continuing on schedule and as planned.
10. When was the last rate increase for Black Hills Power South Dakota customers?
Black Hills Power’s last base rate increase of 7.8 percent was based on 2005 costs and became effective in January 2007. Prior to that
increase, Black Hills Power had not requested or received an increase in rates since 1995.
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