TOPEKA — Kansas Black Hills Energy customers may see their bills increase by nearly 9%, or about $5.96 per month for average residential use, if regulators approve a settlement agreement presented Monday.

That’s a better scenario than first proposed by Black Hills Energy, which supplies natural gas to 120,200 customers throughout Kansas, primarily in the southwest and south-central part of the state.

The Kansas Corporation Commission, which oversees Kansas utilities, questioned staff and parties involved in reaching a unanimous settlement agreement that dropped the initial Black Hill request from $12.8 million of new revenue to $10.8 million.

That would have raised customer bills by about $11 per month, or 17.6%, KCC filings showed.

The settlement agreement rolls the company’s current Gas System Reliability Surcharge of $4.4 million, which is already being collected on customer bills, into the new rates, resulting in a total rate increase of $15.2 million.

Parties to the settlement agreement are KCC staff, Black Hills Energy, Citizens’ Utility Ratepayer Board, WoodRiver Energy, Kansas Municipal Energy Agency, Symmetry Energy, Freedom Pipeline and Seaboard Energy Kansas.

The GSRS is a rider that shows up separately on customer bills and includes costs for improving the gas distribution system, integrity management programs and cybersecurity projects to maintain safe and reliable service, according to Black Hills breakdown of the average bill.

Robert Daniel, Black Hills director of regulatory affairs for Kansas and Arkansas, testified the company had one new revenue increase in the past decade. He said a 2014 rate case resulted in about $800,000 in new revenue and a 2021 rate case brought no new revenue.

“What that tells me is that we, as a Black Hills Kansas entity, have run our business very well in terms of controlling costs over a decade,” he said.

KCC commissioner Andrew French pushed Daniel on whether there were other costs besides acceleration of costs included in the new requested rates, such as capital investment.

“It really is just the baked-in costs have gone up,” Daniel said. “The company has not accelerated our Kansas capital investments and has done our absolute best to manage expenses throughout this time.”

The cost of maintenance and operational expenses were relatively flat from the 2014 to the 2021 rate case, he said.

“That was not the case for the last three or four years, really given the price of everything has gone up,” Daniel said. “I know customers feel that in many different ways, and so do we. It’s really just a general, overall increase in the cost of doing business.”

Daniel also said customer usage has gone down because of warmer weather.

“The simple fact is that the last 10 years have been warmer for whatever reason,” he said. “Customers are using less gas on a use-per-customer basis.”

More than 200 people submitted comments on the requested rate increase, most in opposition. Many said investors should have to absorb more costs rather than ratepayers.

“The 17.6% rate request is outrageous,” said Kerry Altenbernd, of Lawrence, in a written comment. “This is over seven times the current inflation rate. Black Hills needs to be more efficient in its use of ratepayers money, and make its investors shoulder the brunt of upgrades to their system, all of which expenses are tax deductible as business expenses. The KCC needs to protect Kansans from this kind of corporate excess.”

Black Hills asked for a return on equity for investors of 10.5%. The proposed settlement agreement is an ROE in the range of 9.45% to 10.05%, depending on factors such as cost of debt and capital structure.

Customers also will see a refund of $2.95 million between November 2025 and April 2026 that is associated with the Tax Adjustment Rider. The rider shows up on customer bills as a credit or charge, based on the percentage of actual monthly base billings.

French said a commission order on the settlement agreement is due by Aug. 29, but he noted that Black Hills asked that an order be issued by Aug. 1, as the company would like the new rates to go into effect on that date.