Natural gas customers in Mountain Home and surrounding north Arkansas communities are noticing higher bills after the Arkansas Public Service Commission approved a settlement in Black Hills Energy’s latest rate case. The new rates, effective October 12, increase monthly costs for the average residential customer using 4,900 cubic feet of gas by about $6.38, or 8.6%, according to regulatory filings. Black Hills Energy estimates the average increase to be closer to $6, or 8%.
The increase stems from the company’s December 2022 request to collect $29.4 million in additional annual revenue and secure a 10.5% return on equity. State regulators approved $17.9 million at a 9.8% return—approximately 61% of the company’s initial request. The Arkansas Public Service Commission approved the settlement, reached between Black Hills and its general staff, on October 2 but rejected $65,627 the utility sought to recoup for employee community service hours.
As part of the approved changes, the fixed monthly charge on residential bills rose from $15.51 to $17.67. Black Hills Energy had originally proposed increasing this charge to $28, a move that would have nearly doubled the fixed cost customers pay before using any gas. The company stated the rate increases cover roughly $147 million in pipeline and system investments made since its last rate adjustment in 2021. That previous case concluded in October 2022 with a $29.1 million base rate increase, meaning customers have absorbed two increases in two years.
The commission also ordered revisions to a pricing mechanism designed to protect the utility’s revenue in cases where demand falls short. The Arkansas Attorney General's Office had criticized this mechanism, which allowed Black Hills to collect additional funds from customers without issuing credits for excess revenue. Going forward, the mechanism will now include a provision for customer refunds if collections surpass the revenue target.
In addition to the rate changes, the commission directed Black Hills Energy to allocate $165,000 toward consumer education and outreach, with efforts to raise awareness about the federal Low-Income Home Energy Assistance Program. This program assists eligible families in paying energy bills during colder months.
The base rate increase does not affect the pass-through cost of natural gas itself, which is adjusted biannually without markup. Black Hills contends that despite the new rates, many customers are paying less per month compared to last winter. That savings is attributed primarily to the expiration of a separate charge used to recover costs from the February 2021 winter storm, which ended in May 2023. Removal of that charge lowered the average bill by $10.91 per month starting in June. However, customers comparing any post-June bill to their current charges will see the full $6.38 monthly rate increase reflected in recent invoices.
Black Hills Energy, based in Rapid City, South Dakota, supplies natural gas to approximately 189,000 customers across more than 100 Arkansas communities, including Mountain Home and Harrison. More details about the rate adjustment can be found at blackhillsenergy.com/reliableAR.