FOR IMMEDIATE RELEASE: Nov. 5, 2026              
MEDIA CONTACT: Leah Mohr, South Dakota Public Utilities Commission, (605) 773-3201 or (605) 280-4327

PUC approves reduced Black Hill Energy electric increase in
settlement agreement

PIERRE, SD – The South Dakota Public Utilities Commission signed off on a comprehensive settlement agreement that will allow Black Hills Energy to increase electric rates for South Dakota customers by $27.354 million annually. Across all rate classes, the increase will translate to a 21.28% increase in base rate revenue and a 13.62% increase in total bills. The action, taken at the commission’s Nov. 4, 2026, meeting in Pierre, followed a lengthy discussion delving into many points of the joint settlement and the negotiations that led to it.  As a result of the change in base rates, a typical residential customer using an average of 650 kilowatt-hours per month will see their bill rise by approximately $16.34.

“I want South Dakotans to know that we did not make this decision lightly. Earlier in this meeting, we discussed whether commissioners could simply say ‘no’ to this increase. While we could, such a decision would likely be overturned by the courts because it would not be a decision based on the laws that govern our state,” said PUC Chairman Chris Nelson.

“Annual inflation since BHP’s last base rate increase in 2014 has averaged approximately 3.5% per year. The settlement in this rate case, including all other rate changes since 2014, averages approximately 3.0% per year for the typical residential customer. While any increase is hard, preventing this increase from exceeding general inflation, given the facts of the case, should be noted,” Nelson further explained.

The joint settlement was presented to the Commission for consideration by PUC staff, Black Hills Energy and intervenor South Dakota Large Customer Group, an unincorporated association of eight large energy consumers including Dakota Panel, Fischer Furniture, Forest Products Distributors, GCC Dacotah, Monument Health Rapid City Hospital, Pete Lien & Sons, South Dakota Science and Technology Authority, and Spearfish Forest Products.

“While reviewing the proposed settlement, my main focus was to ensure the settlement protected the residential ratepayer to the fullest extent possible while still meeting the requirements of the law. After hours of tough, fact-finding questions, it became clear that the PUC staff worked diligently to protect all customers, including the residential customers. The settlement reduced the company’s original request by approximately 46% while also securing a four-year base rate moratorium that will help ratepayers. The PUC’s role is to follow the law, and therefore I am required to ensure customers receive safe, reliable electric service at fair and reasonable rates, while at the same time allowing the utility the opportunity to earn a fair return on the investment needed to provide that safe and reliable service. I found that the settlement does just that,” PUC Vice Chairperson Kristie Fiegen stated.

In their application to the PUC, Black Hills Energy outlined four primary factors as driving the need for a rate increase. Those factors include additional capital investment and the associated depreciation expense, increases in operating costs, on-going and planned investments in infrastructure and increases in the cost of capital.

“As a commission, we have a responsibility to ensure the utility services people depend on in their daily lives are reliable. We also have responsibility to citizens to ensure rates are reasonable. Finding a balance between both is not always easy, but when I look at this docket, I see the extraordinary amount of work that went into it and I am pleased with the outcome,” commented PUC Commissioner Gary Hanson.

Black Hills Energy filed its application requesting approval to increase electric rates for its South Dakota customers on Feb. 19, 2026. Proposed rate increases are based on a historical test year, adjusted for what Black Hills Energy believed to be known and measurable changes, along with the allowed rate of return for investors. In their original filing, Black Hills Energy requested to increase revenues for electric service from customers in its South Dakota retail service territory by approximately $50.6 million annually.

Once filed, PUC staff began a comprehensive analysis of the company’s application, gathered additional information from the company and intervenors, engaged three outside consultants to assist in review, and entered multiple weeks of negotiations with parties to reach a comprehensive settlement on all issues. In total, PUC staff sent 16 sets of formal discovery requests to the company, including approximately 350 total formal discovery requests and approximately 780 total requests when including all the subparts. Each of those requests and subparts helped PUC staff determine what is and is not appropriate to include in a rate increase for South Dakota customers and reach a result that balances the public’s need for reasonable, reliable service and the utility’s need to collect revenues that cover both the cost of providing service and the opportunity to earn a fair and reasonable return as allowed and defined by South Dakota Codified Law.

New rates will go into effect on Dec. 1, 2026. Interim rates were implemented on August 18, 2026, across Black Hills Energy’s South Dakota territory. The approved settlement is less than interim rates and as a condition of the agreement, the company agreed to refund customers the difference between interim rates and new rates collected, plus interest.

Black Hills Energy’s last rate increase was approved by the commission in March of 2015. Under the approved settlement, the company has agreed to a rate moratorium that would not allow them to increase base rates before Aug. 18, 2030.

The full docket can be viewed on the PUC website at puc.sd.gov, Commission Actions, Electric Dockets, 2026 Electric dockets, EL26-003 - In the Matter of the Application of Black Hills Power, Inc. dba Black Hills Energy for Authority to Increase Rates For its Utility Service in South Dakota.

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