Black Hills Energy’s proposed one-year rate hike of 22 percent for many of Park County’s residential natural gas customers has drawn the ire of both officials with the City of Cody and Park County.
Both the county and the city have drafted letters asking the Wyoming Public Service Commission, a three-member board which must approve any such change, to either lower the increase or spread it out over a longer period of time to lessen the blow to lower-income residents.
At a 9 a.m. July 10 meeting before the Wyoming Public Services Commission in Cheyenne, the company is expected to argue that the $968,000 increase in projected revenues from the rate hike will help the company pay down debt and defray costs associated with the construction of new pipelines and other infrastructure improvements. The proposed hike is not driven by an increase in gas prices.
While he wasn’t positive his schedule will allow for a trip south, Cody Mayor Matt Hall indicated Tuesday morning he may make the trip to Cheyenne to testify against such a steep and abrupt increase.
“That’s why they hold these public meetings,” commissioner Tim French said after Hall said he may testify.
Those who cannot attend the meeting in person can follow along at psc.wy.us, where instructions for listening live will be posted.
The proposed 22 percent increase is the end-product of months of negotiations between BHE and the Wyoming Office of Consumer Advocate. But it must still pass muster with the Public Services Commission, which has the power to lower or raise the figure based on questioning of representatives of both bodies July 10.
Chris Petrie, chief counsel for the commission, said Tuesday, “Both [the OCA and BHE], I suspect, would support the stipulation [of a 22 percent residential uptick]” arrived at June 8 by OCA and BHE.
Originally, BHE had asked for a residential rate hike of almost 33 percent (amounting to $1.41 million more in revenue), but that figure was lowered “following intervention by OCA,” and after tax breaks from the Tax Cuts and Jobs Act of 2017 dropped costs for the utility, Petrie said.
OCA, meanwhile, initially contended that a rate hike producing increased revenues of only $839,000 was reasonable to ask for.
OCA and BHE met at a $968,000 increase in revenue as a “just and reasonable rate,” Petrie said.
With roughly 7,200 natural gas customers in the Cody area, BHE “is kind of a monopoly in our area,” Hall told Park County Commissioners at the June 26 meeting. That level of market dominance is why BHE is subject to regulation by the Public Service Commission.
The week before, Hall’s office had sent a letter opposing the uptick to the PSC.
And on July 3, commissioners joined that charge, penning their own letter asking for a lower or more staggered rate increase.
Petrie said he expects the July 10 meeting to take one to two full days, and at the hearing commission members “may question [representatives of BHE and OCA] on any aspect of the agreement [arrived at June 8].”
The last such rate hike was requested by now-defunct Energy West of Wyoming, which in 2002 asked for an 11-12 percent increase for residential consumers.
Energy West got slightly less than that figure, with the new rates going into effect in June 2003 and then staying flat until the present request.
In 2015, BHE bought Energy West’s former holdings, and began making extensive investments in the area’s infrastructure.
In December, BHE’s vice president of utility operations Shirley Welte told the Enterprise BHE had invested $6 million in various infrastructure projects since 2015.
A June 20 letter signed by Hall acknowledges those investments, “The City of Cody certainly understands the need for a utility provider to recover operating expenses and investments made to a system for more efficient service.”
But, Hall continues a “one-year increase of approximately 32 percent [since lowered to 22 percent] to our residents is certainly something we cannot support.”
Tuesday morning, he convinced the commissioners to take the same stand.
Twenty-two percent is still “a pretty big amount for people that are on a fixed income and have a hard time affording utilities, to swallow,” Hall said.
Commissioner Jake Fulkerson agreed. “Some of these older homes that have electric heat – 22 percent? That’s huge,” he said. “In one year? If you’re on a fixed-income that’s just crazy.”
And Fulkerson said the long period without a rate increase was no reason to sandbag residents with a dramatic one-year increase.
“That’s just poor planning,” he said of the flat rates followed by a proposed spike. “That’s nothing to brag about, that’s just them not doing their homework.”
French pointed out that what BHE has invested in amounted to “a pricey endeavor.”
“They definitely need to recapture their investment – and we appreciate their investment,” Fulkerson said. But he reiterated his desire for the utility to “stretch [the increase] out for a few years.”
A more gradual rise, Hall agreed would “make this more tolerable, particularly for the people that have a little more hard of a time affording these kinds of things.”
After the meeting, the mayor added, “As commissioner Fulkerson suggested, it would be nice if we could ask them if there would be a potential rate decrease in the future once [BHE] recoups their investment.”
“We’re not going to get in the business of [weighing in] every year on whether the rates are too high,” commission chair Loren Grosskopf said.
But he concurred with his fellow commissioners (Lee Livingston, not in attendance) who voted unanimously to oppose the increase.
“We need to get this out this week,” Grosskopf said of the letter.