Black Hills Corp. Requests Rate Review and Rider Renewal in Nebraska

Rhea-AI Summary

Black Hills Corp. (NYSE: BKH) has filed a rate review application with the Nebraska Public Service Commission, seeking $34.9 million in new annual revenue to cover infrastructure and operational costs. The utility company has invested over $453 million in natural gas infrastructure since its last rate filing in 2020, serving more than 304,000 Nebraska customers across 300 communities. The application includes rolling in $18.5 million of rider revenue, bringing the total annual base rate revenue increase to $53.4 million. The company's request is based on a capital structure of 50.52% equity and 49.48% debt, with a 10.50% return on equity. Black Hills Corp. aims to implement interim rates by August 1, 2025, with new rates expected in Q1 2026. Additionally, the company seeks to renew its System Safety and Integrity Rider (SSIR) to support accelerated pipeline replacement initiatives.

Positive

• Significant infrastructure investment of $453 million since 2020 demonstrates commitment to system improvements
• Large customer base of over 304,000 Nebraska customers provides stable revenue stream
• Proposed return on equity of 10.50% indicates potential for solid shareholder returns

Negative

• Requested $53.4 million total rate increase could face regulatory scrutiny and potential customer pushback
• Rate review process creates regulatory uncertainty until Q1 2026
• Operating in inflationary environment may pressure costs and margins

Insights

Utility Regulatory Expert

Black Hills Corp has filed for $53.4 million in total rate increases in Nebraska to recover $453 million in infrastructure investments since 2020, with a requested 10.50% ROE.

Black Hills Corp's Nebraska rate filing represents a significant regulatory development. The company is requesting $34.9 million in new annual revenue plus rolling in $18.5 million of existing rider revenue for a total base rate revenue increase of $53.4 million. This follows substantial capital deployment of $453 million since their 2020 filing, invested in safety, reliability, and system integrity across over 300 Nebraska communities.

The requested financial structure includes 50.52% equity and 49.48% debt with a return on equity of 10.50%. The company has established a clear timeline, seeking interim rates by August 2025 and anticipating final approved rates in Q1 2026.

Notably, Black Hills is also requesting renewal of their System Safety and Integrity Rider (SSIR), which would allow for accelerated recovery of safety-focused pipeline replacement investments outside the standard rate case process. These specialized riders have become increasingly common in the utility sector as mechanisms to address specific infrastructure needs.

The filing affects over 304,000 Nebraska customers across more than 300 communities. The company cites system growth, safe and reliable service delivery, and regulatory compliance as drivers behind these infrastructure investments.

Financial Analyst

The $53.4 million rate request could significantly enhance revenue recovery for Black Hills' Nebraska operations, with interim rates sought by August 2025.

Black Hills Corp's rate case filing represents a material financial event for the company's Nebraska natural gas operations. The $53.4 million total revenue increase (combining $34.9 million in new annual revenue and $18.5 million in rider revenue) would improve recovery on the $453 million in capital investments made since 2020.

The company's application shows a focus on capital structure optimization, requesting approval for 50.52% equity and 49.48% debt. The 10.50% requested return on equity would provide returns to shareholders if approved as filed.

From a cash flow perspective, the regulatory timeline is structured to minimize lag between investment and recovery. By seeking interim rates effective August 2025 while anticipating final rates in Q1 2026, the company aims to accelerate partial recovery of their investments.

The System Safety and Integrity Rider renewal request is financially significant as these mechanisms typically allow for more predictable recovery of ongoing infrastructure investments compared to traditional rate case processes. This approach helps utilities manage regulatory lag while continuing necessary safety investments.

This filing illustrates how regulated utilities like Black Hills must navigate formal regulatory processes to recover infrastructure investments and maintain financial health while serving their 304,000+ Nebraska customers.

RAPID CITY, S.D., May 01, 2025 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE: BKH) today announced that its Nebraska natural gas utility has filed a rate review application with the Nebraska Public Service Commission requesting $34.9 million in new annual revenue to recover the necessary capital infrastructure and operational costs required to deliver safe, reliable natural gas service for over 304,000 Nebraska customers.

Since its last general rate filing in 2020, the company will have invested over $453 million in safety, reliability and system integrity for its natural gas pipeline infrastructure serving over 300 communities in Nebraska. These critical investments were required to meet system growth, ensure the safe and reliable delivery of natural gas to customers’ homes and businesses, and meet compliance requirements of state and federal regulations.

“We are committed to serving our customers with the safe and reliable natural gas service they depend on,” said Linn Evans, president and CEO of Black Hills Corp. “We are prudently managing our costs in an inflationary environment as we make critical infrastructure investments in operating, maintaining, and upgrading our Nebraska natural gas system.”

The application requests $34.9 million per year in new revenue and rolls in an additional $18.5 million of rider revenue for a total annual base rate revenue increase of $53.4 million. The request is based on a capital structure of 50.52% equity and 49.48% debt and a return on equity of 10.50%. The company is seeking interim rates to be effective Aug. 1, 2025, with new rates anticipated in the first quarter of 2026.

This rate application also includes a request to renew the System Safety and Integrity Rider (SSIR) to support accelerated, safety-focused pipeline replacement across the state.

Black Hills Corporation
Black Hills Corp. (NYSE: BKH) is a customer-focused, growth-oriented utility company with a tradition of improving life with energy and a vision to be the energy partner of choice. Based in Rapid City, South Dakota, the company serves 1.35 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. More information is available at www.blackhillscorp.com.

Investor Relations
Sal Diaz
605-399-5079
Investorrelations@blackhillscorp.com

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888-242-3969

FAQ

How much is Black Hills Corp (BKH) requesting in new annual revenue from Nebraska customers?

Black Hills Corp is requesting $34.9 million in new annual revenue, with a total annual base rate revenue increase of $53.4 million when including $18.5 million of rider revenue.

When will BKH's new utility rates take effect in Nebraska?

Black Hills Corp is seeking interim rates effective August 1, 2025, with final new rates anticipated in the first quarter of 2026.

How many customers does Black Hills Corp serve in Nebraska?

Black Hills Corp serves over 304,000 natural gas customers across more than 300 communities in Nebraska.

How much has Black Hills Corp invested in Nebraska infrastructure since 2020?

Black Hills Corp has invested over $453 million in safety, reliability, and system integrity for its natural gas pipeline infrastructure in Nebraska since its last rate filing in 2020.

What is the proposed return on equity in BKH's Nebraska rate review application?

Black Hills Corp is requesting a 10.50% return on equity, with a capital structure of 50.52% equity and 49.48% debt.