By PETER HUSSMANN
The Iowa Utilities Board today said it would not approve all parts of a proposed settlement agreement filed in Black Hills Energy's natural gas rate case due to concerns about automatic rate increases proposed by the utility provider.
The case came to the Utilities Board today as a settlement agreement between Black Hills and the Iowa Office of Consumer Advocate, the state office that represents consumers in rate cases.
The proposed settlement was rejected by the Board because "certain components of it did not meet applicable standards," a press release issued by the Board late this afternoon stated.
"In particular, the Board was concerned about an automatic adjustment mechanism, or tracker, proposed by the company," the release states. "While the Board was comfortable with some aspects of the tracker, not all components met the standards necessary to implement such a mechanism."
In previous filings, Black Hills had sought Board approval to make automatic rate increases of up to 36 cents per month for residential customers and up to 90 cents per month for commercial natural gas users.
Black Hills' initial rate increase filing requested a permanent annual revenue increase of approximately $4.7 million (2.9 percent). Under the settlement proposed, that annual revenue increase fell to $3.4 million, a number the Board today found "reasonable."
Had it been approved, the settlement agreement would have retained the utility's monthly customer charges of $18.25 for residential customers and $29 for general service customers that have been in effect since Black Hills' implemented temporary rate hikes shortly after the filing. Those temporary rate hikes resulted in a $2.6 million annual revenue increase and did not require pre-approval by the Utilities Board.
The proposed settlement between Black Hills and the Office of Consumer Advocate was filed last August.
A written order will be issued in the near future with details about extending the case. This will allow Black Hills and other parties in the case to continue to work toward a solution. The parties also have the option of filing another settlement proposal with the Utilities Board.
General gas rate increases approved by the Utilities Board apply only to the service and distribution portion of natural gas bills, which accounts for roughly 30 percent of Iowa residential bill costs. The remaining 70 percent of the typical bill is the cost of the actual natural gas used and pipeline charges to bring it to Iowa. The Utilities Board does not regulate those costs.