Electric utility provider, Black Hills Corporation BKH won the approval of the South Dakota Public Utilities Commission (“PUC”) to increase its electric rates in the state.
The approval will allow the company to increase electric rates for its customer base of 65,500 in South Dakota starting from Apr 1, 2015. The hiked rates will boost the utility’s revenues by $6.89 million per year.
The market reacted positively to the news and the share price of Black Hills increased 0.5% in the last trading session.
This sanction is associated with the rate case application that Black Hills filed with the PUC in Mar 2014 requesting for the reimbursement of operational cost and other infrastructure investments related to the natural gas-fired Cheyenne Prairie Generating Station in Cheyenne, WY and reliability investments made for South Dakota customers
The132-megawatt Cheyenne Prairie Generating Station was constructed to comply with air emissions regulations mandated by the Environmental Protection Agency. This plant replaced two of Black Hills’ coal-fired facilities in Wyoming and one in South Dakota. The facility commenced commercial operation in Oct 2014.
Another electric utility, Consolidated Edison, Inc. ED filed for a rate hike to recover investments made for system reliability, storm hardening, better technology and online service enhancements.
As safeguarding the environment has become the center of discussion with the regulators, the utility companies will see their capital expenses rise in order to remain in compliance with the standards. This will lead to more rate-hike applications in the future.
Zacks Rank
Black Hills Corporation currently carries a Zacks Rank #3 (Hold). Stocks with a better rank in the electric utility space are Abengoa Yield plc ABY and Enersis S.A. ENI sporting a Zacks Rank #1 (Strong Buy).
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