Dive Brief:

• Black Hills Power will withdraw its proposal to the South Dakota Public Utilities Commission that would have added a surcharge to the bills of owners of customer-sited distributed generation like solar and wind. The proposal was part of a 13% electricity rate increase for its 66,000 customers that would increase the average bill $13 per month.
• Black Hills asked for the rate increase to cover grid repairs needed after last October’s record-breaking blizzard and new regulatory costs imposed on its coal plants. The utility said it was withdrawing the surcharge proposal until it could further educate its customers on the need for it.
• The surcharge proposal came with the concern that when bills to owners of distributed generation are reduced, the pro-rated charges for system costs are simultaneously reduced, become lost revenue to the utility, and shift the burden for covering those system costs to non-distributed-generation-owning utility customers.

Dive Insight:

One solar owner said the surcharge would have added $5 to $25 per month to his bill. That would further erode solar’s value proposition in South Dakota where, because it is one of seven states without net energy metering, the state leaves the rate paid to solar owners for electricity they send to the grid entirely up to utilities.

A spokesperson for advocacy group Dakota Rural Action said further educating customers will not discourage opposition to the surcharge and suggested the utility’s withdrawal of the proposal was an effort to minimize public awareness about the rate increase.

Dakota Rural Action accepted the need to cover blizzard-related costs but rejected the need to cover the utility’s coal-dependency costs. The organization argues Black Hills should have foreseen the downside of its dependency and moved away from coal sooner to protect its shareholders.