FOR IMMEDIATE RELEASE: March 29, 2023                
MEDIA CONTACT: Leah Mohr, South Dakota Public Utilities Commission, (605) 773-3201 or (605) 280-4327

PUC settles MidAmerican Energy Co.’s request to increase natural gas rates for South Dakota customers

PIERRE, S.D. — The South Dakota Public Utilities Commission, after final deliberation, approved a settlement stipulation for MidAmerican Energy Co. to increase rates for natural gas service to customers in its South Dakota retail service territory at their regular meeting yesterday, March 28, 2023.

The commission’s action came after a nearly year-long analysis of MidAmerican Energy’s request to increase customer base rates to generate approximately $7.037 million in additional annual revenues which would be reflected as an approximate 6.4% increase in the average customer’s total bill. Through settlement discussions between MidAmerican Energy, PUC staff and intervenor Steven Wegman, the parties settled on a final revenue requirement of $5,946,541. For MidAmerican’s South Dakota customers, this revenue requirement translates to an average 20.1% increase in base rates, or a 5.4% increase in the average total bill when purchased gas costs are included.

This will be MidAmerican’s first base rate increase in eight years. The company attributed the increase to a major effort in replacing an aging system and expanding infrastructure to serve growth in southeastern South Dakota, as well as inflation.

“When I look at MidAmerican’s request in this docket, there are a few things that jump out at me. First, it’s clear that the company has made significant and necessary capital investments throughout nearly a decade in South Dakota to assure long-term, vitally important, safe and reliable service essential for all who face South Dakota weather. These efforts are serving an area experiencing substantial growth and economic development. The investments, now being placed into base rates, will position MidAmerican to greatly improve safety and quickly fulfill future customer needs,” said PUC Chairperson Kristie Fiegen.

“The other thing that jumps out at me in this settlement agreement is the emphasis both PUC staff and the company have placed on ensuring South Dakota customers are paying just and reasonable rates while balancing customer and utility needs. This agreement includes creative, customer-beneficial terms like 2023 capital investments and a three-year moratorium that will protect rate stability for the future,” Fiegen continued.

Parties participated in several settlement meetings, beginning in November 2022, and ultimately reached a comprehensive agreement that was filed jointly with the PUC on March 14, 2023. Along with the agreed upon revenue requirement, the filed stipulation included additional terms to best balance the interests of all parties including a three-year rate moratorium that will prevent MidAmerican Energy from filing for an increase to base rates that would go into effect prior to Nov. 1, 2025, and bill credits that will gradually decrease during 2023 as additional capital projects go into service and are added to MidAmerican’s revenue requirement. This approach ensures that ratepayers will not be paying for projects until they are in service and of use. MidAmerican separately filed a proposal for its Interim Rate Refund Plan, specifying the method for returning to customers a portion of the interim rates collected since Nov. 15, 2022, with interest.

PUC Vice Chairman Gary Hanson commented, “I appreciate the work that PUC staff have done and the cooperation MidAmerican Energy and our intervenor have shown to bring us this settlement agreement. There is an immense amount of work that goes into a rate case like this. To get through the mountain of information they are given, they have to do a lot of number crunching, a lot of sleuthing and have a lot of discussions. It is a piece of art at this juncture and it is work well done.”

Commissioner Chris Nelson acknowledged the various factors in an average natural gas bill.

“I want customers to clearly understand this increase,” Nelson said. “There are two portions to your natural gas bill. About 70% of your bill is for the actual gas itself. That is not regulated by this PUC and is not involved in the process we are discussing here today. That is all market driven. The other part, about 30% of your bill, is for the distribution. That is regulated by the PUC and that’s exactly what we are dealing with today. By law, your utility company is allowed to recover some of those costs. 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. 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,” Nelson explained.

MidAmerican Energy Co. filed its application to increase natural gas rates on May 18, 2022. The full docket can be viewed on the PUC’s website at puc.sd.gov, Commission Actions, Natural Gas Dockets, 2022 Electric Dockets, NG22-005 – In the Matter of the Application of MidAmerican Energy Company for Authority to Increase its Natural Gas Rates.

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