As Rapid City, SD-based Black Hills Corp. puts its exploration and production days and other diversions into the history books, the company plans to consolidate its natural gas utilities in three of the eight states where it operates -- Colorado, Nebraska and Wyoming -- according to CEO David Emery.
Black Hills more than doubled its utility customers when it acquired SourceGas Holding LLC three years ago. Since then it has added 425,000 gas utility customers in four states and a 512-mile intrastate gas transmission pipeline in Colorado.
During a conference call with analysts Tuesday, Emery said the company intends to consolidate the mixture of multiple gas utilities operating under its Black Hills Energy brand. "We strongly believe that consolidating those entities in each of the three states will provide long-lasting benefits for all of our stakeholders," he said.
Planned improvements in the customer billing process and customer service generally are the incentives for the changes, which would have to be approved by state regulators in the three jurisdictions. A rate review filing is expected in Colorado by the end of next month, Emery said.
"We already need a rate review for our gas utilities in Colorado, so we intend a request to legally consolidate two gas local distribution companies this quarter," Emery said. "Once that is done, we hope to file a consolidated rate review” for the newly merged utilities request by year’s end.
Wyoming would likely be next, with a consolidated utility filing expected later this year in a process that should be finished in early 2019. The timing for a filing in Nebraska is still being evaluated.
The recent multi-state utility additions gave Black Hills "a much larger utility transmission and distribution system" for both gas and electric utilities, Emery said, "and with that increase in size comes increased opportunities for investment to serve a much larger customer base."
“Strong capital spending" will continue to drive the company’s earnings growth, he said. Black Hills plans to invest more than $2.3 billion over the next five years.
Emery said that all of the company's former oil and gas assets have been sold. However, one or two small sales still need to be completed this quarter. The company's oil and gas office plans to close for good in August.
Black Hills reported 2Q2018 net income from continuing operations of $24 million (45 cents/share), compared to $22 million (40 cents) for the same period last year.