Black Hills raising gas rates

Black Hills Energy is hiking natural gas rates by 6.5 percent starting in March 2010.

The company, which serves 197,000 customers in eastern Nebraska, said residential customers would pay an average of $5.48 more a month, and bills for commercial users would increase $2.65 a month.

The increases are tied to $28.8 million in higher operating expenses and investments Black Hills made to its gas distribution systems since 2006, including $3.7 million in upgrades to its automated meter reading system in Lincoln and surrounding communities. Other items like replacing obsolete pipes and other equipment, and installing new technologies so that gas distribution systems are "safe, reliable and efficient" were also included in the investments, said Dan Mechtenberg, Black Hills Energy vice president of Nebraska natural gas operations.

"While these improvements are necessary to serve our customers, the associated costs are not reflected in our current rates," Mechtenberg said.

The proposed increase was filed with the Nebraska Public Service Commission on Monday, and in a press release Black Hills said it will institute interim rate hikes starting March 2010. The Nebraska PSC has 210 days to approve or amend the proposal.

In the case that the PSC-approved rates are lower than the 6.5 percent interim hike, customers will be fully-refunded any amount they overpaid, plus interest, said Bob McKeon, a Black Hills spokesman.

The increase would be a fixed cost associated with customer and delivery charges and wouldn't change based on the amount of natural gas a customer uses.

Black Hills last requested a similar Nebraska rate increase of 4.36 percent in June 2006 and was approved by the Nebraska PSC in Feb. 2007.

Black Hills Energy, a subsidiary of Rapid City, S.D.-based Black Hills Corp., provides natural gas to customers in 110 eastern Nebraska communities.

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