Dive Brief:
- The Colorado Public Utilities Commission voted 3-0 to dismiss a bid by Black Hills Colorado to acquire natural gas reserves, stating the plan posed “serious risks to ratepayers," the Pueblo Chieftain reports.
- Black Hills in October filed an application seeking approval of proposed investments in natural gas reserves for a period of 20 years, along with a hedging agreement with an affiliate to acquire 50% of the company’s forecasted annual firm gas demand.
- In December, regulators asked for more information on the plan, but said Black Hills failed to provide the information they sought in supplemental testimony.
Dive Insight:
Colorado appears to be following a growing trend of states examining the pros and cons of utilities investing in natural gas reserves.
Black Hills was unable to satisfy regulators concerns over the cost of its gas reserves proposal, leading the PUC to unanimously reject the plan. "The PUC said granting this particular gas hedging program without adequate information to determine sufficient ratepayer protections was not in the public interest," according to a statement from regulators.
Last year, Black Hills Corp. asked regulators in five states to allow its utility subsidiaries to make ratepayer-financed investments in gas resources, including reserves and drilling operations.
“Our goal is to provide cost-effective energy for our customers, while mitigating the volatility of natural gas prices,” Black Hills president and COO of utilities Linn Evans said in a statement last year, announcing the plan.
But Colorado regulators didn't buy in, leaving the utility to decide whether or not to re-apply. The Pueblo Chieftain reports the vote this week was triggered by the state's Office of Consumer Counsel (OCC) when it challenged a lack of cost specificity in the proposal.
“The concerns we raised about the impacts on consumers and the costs that would be imposed seemed to be of concern to the commissioners as well,” Cindy Schonhaut, director of the Office of Consumers' Counsel, told the Chieftain.
Black Hills vice president Kyle White told the newspaper the utility is still considering whether to reapply. “We considered this to be a great opportunity to obtain gas at low prices for our customers,” he said. “The commission wanted more specific customer economics.”