MidAmerican to raise natural gas bills following Public Utilities Commission settlement
For the first time in eight years, South Dakota Public Utilities Commission allowed MidAmerican Energy Co., a service provider covering Sioux Falls and the southeast corner of the state, to raise their rates on natural gas for 104,000 customers.
PUC approved the rate increase as part of a settlement stipulation between PUC staff, MidAmerican and intervenor Steven Wegman, a Sioux Falls resident, during a commission meeting on Tuesday. The energy company implemented an interim 6.4% increase in mid-November, but the final rate raise was scaled back slightly to 5.4%, which would generate more than $5.9 million in revenue for the company.
According to Tina Hoffman, MidAmerican's vice president of corporate communications, the rate increase will be put into effect on April 1.
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The rate increase comes at the request of MidAmerican, who first filed its application with the PUC on the matter on May 18, 2022. The company said in the filing their plant increased from $108.1 million to $255.1 million on account of investments in various system improvements and relocation projects associated with municipal infrastructure projects.
MidAmerican's original application argued some of their investments "do not generate revenue" and "have created a disparity between cost of service and revenue that has been exacerbated by significant increases in construction costs over time."
The final stipulation also will stagger the rate increase over time to account for MidAmerican projects that are not in service yet. This means the rate increase would start at 3.7% and increase to the final 5.4% raise once those projects are in service. PUC's decision also includes three-year moratorium on further rate increases that would go into effect before Nov. 1, 2025.
"This approach ensures that ratepayers will not be paying for projects until they are in service and of use," a Wednesday press release from the PUC read.
Commissioner Chris Nelson said the increase does not influence the actual gas portion of the bill, which is influenced by market and economic factors outside of the PUC's regulatory purview, but instead influences the delivery part of the bill, like costs associated with distribution lines, safety equipment and meters.
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"In this rate case, the company asked for a little over $7 million. Over the last year, PUC staff has very, very diligently picked through every one of their expenditures and has pared that down to the absolute minimum," Nelson said. "Now, we’re looking at a 20.1% increase in the portion we regulate. That’s a large number for the distribution portion of the bill, but it’s what is required by law so we are required to approve this particular settlement."
MidAmerican also filed a separate Interim Rate Refund Plan, which would refund affected customers the difference between the interim and new rates collected between Nov. 15 and March 31 with a 7% annual interest.
This article originally appeared on Sioux Falls Argus Leader: MidAmerican to start staggered natural gas rate increase in April
