DES MOINES, Iowa, May 21 -- MidAmerican Energy issued the following news:
MidAmerican Energy is asking state regulators in South Dakota to approve a natural gas rate increase to support the investment of more than $100 million in its natural gas distribution system in the state.
If approved, the request filed Wednesday with the South Dakota Public Utilities Commission would be the first rate increase since the company's last request in 2014. The proposed adjustment addresses the approximately $108 million in capital investment and operating expenses incurred to maintain and upgrade natural gas infrastructure used to serve customers since the last rate increase.
In addition to supporting recent natural gas system improvement costs, the request also includes funding for planned infrastructure and safety improvements over the next two years. The projects will help serve a growing South Dakota customer base, relocate natural gas facilities to accommodate road work and help fund projects designed to enhance safety.
Overall, the company is requesting a 6.4% rate increase, which would increase revenue by approximately $7 million annually. The request would raise residential customer gas rates by an average of $4.16 per month or $49.87 per year.
"This rate adjustment will help us continue to provide safe natural gas service that our South Dakota customers rely on," Nick Nation, MidAmerican Energy vice president of gas delivery, said. "We understand that any increase affects our customers, who have also been impacted by higher nationwide energy supply prices. However, this is necessary to help us serve rapidly growing areas in South Dakota, ensure we can continue to invest in safety enhancements, and it reflects our rising costs to provide a critical service."
MidAmerican serves approximately 104,000 natural gas customers in 30 southeastern South Dakota cities, including Sioux Falls, Yankton and Vermillion. The company maintains more than 1,500 miles of larger gas mains in the state and 1,300 miles of smaller gas service lines that connect directly to customers.
Since MidAmerican last filed a proposed adjustment to its natural gas rates in 2014, according to the company's filing, MidAmerican has continually invested in capital improvements that provide benefits to South Dakotans. "MidAmerican's South Dakota natural gas service territory continues to grow due to the expanding economy, and the resulting revenue from increased sales has not kept pace with the cost of construction," the filing stated.
Requested rate adjustment affects delivery charge, not gas supply costs
If approved, the rate increase would affect the delivery charge that appears on customer bills. The delivery charge includes costs to maintain and upgrade the distribution system, ensure system safety, and administrative costs.
A rate increase would not affect supply charges, which include costs associated with the price of natural gas that MidAmerican buys through the market on behalf of customers. The gas supply charge is a pass-through cost without a markup - the customer pays what MidAmerican pays for each unit of natural gas that the customer uses.