Black Hills Energy allowed to raise electric bills by $17M for 309,000 southern Colorado customers

Black Hills Energy was granted a $17 million electric rate increase by state utility regulators Wednesday — over the protests of customers and southern Colorado officials.

The Colorado Public Utilities Commission trimmed the company’s $25 million request by about a third. South Dakota-based Black Hills has about 309,000 customers in Colorado with Pueblo, Cañon City and Florence in its service area.

The company originally sought a $37 million increase, which would have raised the average monthly electricity bill, for 600 kilowatt-hours, by 18% to $129 a month.

Coming on the heels of a March $1.50 monthly surcharge on bills to pay for the company’s state-mandated Clean Energy Plan, the proposed rate increase sparked a wave of protest from consumers and local officials.

Black Hills then cut the request to $25.1 million, but the opposition continued. Pueblo, Cañon City and Florence officials, as well as the Colorado Office of Utility Consumer Advocate, all argued that Black Hills should get no increase at all.

“The burden of this increase on the city’s most vulnerable residents and the city itself is too great to ignore,” Andrew Hayes, Pueblo’s director of public works, told a PUC hearing last October.

Black Hills Energy said it needs the increase to cover the cost of necessary equipment and service upgrades. Black Hills did not respond to a request by The Sun for comment.

The approved $17 million increase will raise the average residential monthly bill by 7% or $7.40 a month. The bills of small commercial customers will also go up by 7% or about $17.50 a month.

“It’s a mixed bag,” said Emily Tracy, a Cañon City council member. “We appreciate the smaller increase. I think all the activism helped, but the south-central part of the state is already paying the highest electricity costs in Colorado.”

Cañon City and Pueblo are high poverty areas where people are “already struggling,” Tracy said. The median income in Fremont County in 2023 was 39% below the median state income. Pueblo County was 37% below the state average.

“For years high electric rates have been a major challenge for residents, businesses and economic development efforts — it seems the ruling of the Public Utilities Commission will continue this trend for Pueblo and our southern Colorado neighbors,” Pueblo Mayor Heather Graham said in a statement to the Sun.

“The reality is that this is a win for the pocketbooks of the shareholders in Black Hills Energy and their executives, all while increasing the cost to the detriment of our Pueblo residents,” Graham said. 

Pueblo City Councilman Joe Latino said “people in my district are already strapped. Another $7.40 is big.”

Seven years ago, Tracy started Cañon City’s Energy Future, a group exploring alternatives to getting its electricity from Black Hills. The city did not renew its franchise agreement with the utility paying for its service year to year.

However, the city could not find a viable alternative. “We hit a brick wall,” Tracy said. “The law doesn’t make it easy.”

A referendum to create a municipal utility in Pueblo to replace Black Hills also failed in 2020 with 77% of the voters against the alternative. However, Pueblo voters will once again weigh in on whether to opt out of Black Hills in a special election in May.

“This has been one of the most difficult cases I’ve had at my time at the PUC as I was moved and deeply concerned by the comments we heard regarding the impact of this rate increase on these customers and communities,” PUC Chairman Eric Blank said in voting for the rate hike.

“At the same time, we clearly have legal and fiduciary duties to the utility that limit and constrains us,” Blank said. “I am really unhappy about raising rates. We have no choice and are doing the best we can do given the $370 million in capital increases in spending.”