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PUC significantly reduces Black Hills electric rate request

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The Colorado Public Utilities Commission (PUC) slashed by about 85 percent a request by Black Hills Energy to increase electric rates by $8.5 million annually.

Final rates won't be determined until after a technical conference on Dec. 7 to input the commission's decisions on various rate adjustments into the company's cost model, but it is expected that the increase will be less than $2 million.

Black Hills sought to recover costs related to a new gas-fired generation unit at the Pueblo Airport Generating Station. The new plant is replacing the power generation previously provided by the W.N. Clark coal-fired plant in Cañon City, which was retired to comply with Colorado's Clean Air-Clean Jobs Act (CACJA).

While the PUC said the company was allowed by state law to build the replacement generation, it expressed disappointment that less expensive options were not pursued.

The PUC made numerous decisions resulting in significant cuts to the company's proposed revenue requirement, including the areas of overall capital structure and return on equity; the specific rate of return on the new gas-fired generation unit; pension expenses for company employees; executive incentive and equity compensation; property tax allowances; cost recovery of investments made using federal stimulus grants; and additional cost categories.

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