The Colorado Public Utilities Commission (PUC) on Nov. 30 slashed by about 85% 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, the PUC noted in a Nov. 30 statement. 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 unit is replacing the power generation previously provided by the W.N. Clark coal-fired plant in Canon City, which was retired earlier this decade 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 said it 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.