Black Hills Energy briefs city leaders on future natural gas rates

Lawrence residents, get ready for changes in your natural gas bills this winter.

Just how large those changes will be in terms of dollars, though, will be up to Mother Nature and Kansas regulators, local officials were told Wednesday.

Leaders with Black Hills Energy, the largest natural gas provider in the city, told Lawrence officials at a Wednesday luncheon that they believe the price of natural gas will rise slightly this winter, as U.S. natural gas supplies are still trying to catch up from heavy usage that occurred during the bitterly cold 2013 winter season.

Officials with the natural gas company said they are still preparing specific numbers, but they don’t expect a large spike in the price of natural gas anytime soon.

“We’re still seeing long-term stability,” said Todd Jacobs, general manager for the company’s Kansas gas operations. “There is still a very good supply of natural gas in the U.S.”

If this winter is milder than last year’s, gas prices might go up but people’s total bills could still go down because they are using less gas to heat their homes. But Kansas regulators may erase some of those savings. Black Hills has requested an increase in rates, and regulators with the Kansas Corporation Commission currently are reviewing the request.

The company is seeking an increase that would amount to $4.17 per month for the average customer, the company has said. The state’s Citizens’ Utility Ratepayer Board has opposed the rate increase, and its consumer counsel said Wednesday that he’s confident the utility won’t be granted the full rate increase.

“I don’t think under any scenario that Black Hills comes out of this rate case with that type of increase,” said David Springe, consumer counsel for CURB.

Springe said he’s basing his opinion on the fact that the KCC recently reduced a proposed rate increase for Atmos Energy, a natural gas company that is similar in size and operations to Black Hills.

Jacobs declined to talk specifics of the rate case, citing that the company’s testimony already has been filed with the KCC board. He noted to city officials, though, that it has been eight years since Black Hills has had a rate increase and that the company has made about $50 million in investments in the Kansas gas system since 2006. The company is seeking to earn a 10.6 percent rate of return for its investors. CURB has proposed that an 8.75 percent rate of return is more reasonable. The KCC in the Atmos case allowed that company a 9.1 percent return, Springe said.

The KCC is expected to conduct its hearings on the rate case Nov. 12-16, although a settlement could occur before then. The KCC is expected to make a ruling by Jan. 6. That would allow rates to be adjusted in February or March, Jacobs said.