One year after 6.7% increase, Black Hills wants to raise rates again

Just over a year after Black Hills Energy’s southern Colorado ratepayers saw their bills increase by nearly 7%, the energy utility is seeking another increase, this time nearly 9%.

On March 12, 2025, the Colorado Public Utilities Commission (PUC) approved a 6.7% Black Hills rate increase — a significantly lower amount than the 18% the investor-owned utility initially requested to keep up with rising company costs — and it took effect 10 days later.

Prior to that increase, which amounted to about $7.40 per month for average customers, a January 2024 survey by the Colorado Association of Municipal Utilities concluded that Black Hills customers were already paying higher rates than customers of any other utility in Colorado.

Now, Black Hills is asking the PUC to increase its rates by another 8.8%, which would increase residential customers’ average monthly bill by $10.90, according to a Black Hills news release.

“Nearly half of our Colorado electric distribution system equipment is over 50 years old,” Campbell Hawkins, Black Hills Energy’s vice president of Colorado Utilities, said in the release.

“Each year, we are prudently investing in the safety and reliability of the electric system so our customers have the energy they can count on. This includes everyday investments needed to maintain, update, and replace aging electric system infrastructure. As a result of these investments, our customers are experiencing fewer interruptions and less disruption to homes and businesses.”

In a statement to the Chieftain, Pueblo Mayor Heather Graham — a vocal opponent of Black Hills’ past rate increases who pushed for Pueblo to sever its franchise agreement with the utility company through a special election last year — said the proposal is “not surprising.”

“This rate increase proposal from Black Hills is not surprising, they said we’d probably see this for the next several years,” Graham said. “We anticipate that Pueblo rate payers will continue to see Black Hills take and take from us as long as they’re able to do so.”

Black Hills’ release says the company is seeking to increase its rates again to “recover the cost” of recent investments and improvements in its electric system.

According to Black Hills, those investments include improving nearly 200 miles of distribution lines, strengthening a “transmission backbone” near Cañon City with two new transmission lines, upgrading the Erie Avenue substation, expanding the distribution system infrastructure serving the Pueblo Industrial Park, and extending the life of key generation infrastructure by completing extensive maintenance at the Pueblo Airport Generating Station.

The nearly $11 increase in monthly bills is based on an average usage of 600 kilowatt-hours, and the increase for commercial customers would vary, “based on rate class, load factors, and usage,” according to the release.

If approved by the PUC, the new rates would go into effect in March 2027. 

“When Black Hills Energy submitted its last rate review in 2024, it had been eight years since the company had requested an update in base electric rates,” Hawkins said in the release. “With this filing, we are seeking to update rates on a more regular cadence, so bill impacts are more modest each time and customers can plan for them, just like they plan for other rising household expenses. This adds more transparency to the rate-making process.”

Black Hills officials said that a “core component” of the new rate proposal is a “$38 million customer refund, which would help reduce the customer bill impact.”

“To help fund the renewable energy projects needed for the State of Colorado’s required Clean Energy Plan, customers have paid monthly surcharges on their bills through the Clean Energy Plan Rider and the Renewable Energy Standard Adjustment Rider,” the Black Hills website states. “With the commission’s recent approval of our Clean Energy Plan, there remains a balance in these accounts of approximately $38 million. We are proposing to refund this amount to customers to help lower the bill impact of this rate review.”

Black Hills proposes to direct a portion of that $38 million to develop a pilot program that would provide a monthly discount to income-qualified customers participating in the Black Hills Energy Affordability Program (BHEAP), according to the release.

The program would establish a flat rate for residential energy usage to lower energy costs for income-qualified customers, eliminating its current inclining block rate that charges a higher rate per kilowatt-hour for usage over 500 kilowatt-hours per month.

“In general, income-qualified customers have higher average energy usage than other residential customers, so they are more likely to be impacted by the inclining block rate structure,” the website states.

Under the proposal, the $38 million would be refunded over two years, if approved, showing up as a credit on a line item on customers’ bills.

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Pueblo has tried twice, and failed, to end relationship with Black Hills

When Black Hills proposed its last increase in 2024, city and county leaders — including Graham, City Council President Mark Aliff, and all three Pueblo County commissioners at the time — and many Pueblo residents decried the proposed increase and lobbied the PUC to deny it at public meetings and PUC hearings.

The city then held a special election asking Puebloans whether the city should terminate its franchise agreement with Black Hills.

Pueblo City Council passed a resolution in April 2025 to encourage Puebloans to vote yes on Ballot Initiative 2A, which asked voters if the city should cancel the franchise agreement and acquire the “generation, transmission and distribution assets” of Black Hills, if “determined feasible.”

However, a study conducted by GDS Associates and commissioned by the city showed it was not feasible for the city of Pueblo to purchase all of Black Hills Energy’s assets and operate its own electric utility. A previous study commissioned by Black Hills Energy and conducted by the Brattle Group had concluded that the municipalization of Pueblo’s electric utility would cost the city over $1 billion.

In the May 2025 special election, Puebloans resoundingly shot down the proposal, with nearly 78% voting against it. That vote came just five years after a similar measure was put to voters in 2020 and was shot down by more than 75% of voters.

Chieftain Editor Zach Hillstrom can be reached at zhillstrom@usatodayco.com or on X at @ZachHillstrom. Support local news; subscribe to the Pueblo Chieftain at subscribe.chieftain.com