Black Hills Energy customers in Rapid City and across western South Dakota are looking at a second charge stacked behind the rate settlement regulators approved on Nov. 4. The utility wants $19.70 a month from the average home to pay for Lange II, a $320 million natural gas plant in northwestern Rapid City that is expected to start serving customers in December.
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The charge is a proposal and not an approved rate. The South Dakota Public Utilities Commission has it under review as docket EL26-024, and commissioners can still reduce it or turn it down entirely.
Lange II and the Phase In Plan Rate
Black Hills Energy describes the request on its South Dakota rates page as a monthly Phase-in Plan Rate, shortened to PIPR, that would show up as a separate line on bills and begin in December 2026, when the plant goes into service. The estimate there is $19.70 for regular residential service and $24.26 for small general service. For an average residential bill, that would lift the interim figure of $124.08 to $143.79.
The commission’s own order in EL26-024 shows the size of the filing from the regulator’s side. It records that the application was received Aug. 5, 2026, that the company sought roughly $39.5 million a year to recover actual and forecast Lange II costs, that Dec. 1 was the proposed effective date, and that the company could be billed a filing fee of up to $250,000 to cover consultants hired to review the case. The company’s rate review page confirms that Lange II sits outside the general rate case. Recovery runs through separate annual PIPR filings, and the plant was built to make up for capacity that disappears when the Ben French units retire in 2027.
The class-by-class table on the rates page shows how the cost spreads. Residential total-electric customers would pay $31.40 more, taking an average bill from $167.18 to $198.58. Residential demand customers would pay $51.52 more, and general service accounts would pay $291.89 more on an average monthly bill of $2,010.05, a rise of 14.52%. Small general service customers, at $24.26, land between the residential figures and the large accounts.
Timing runs on two clocks. The company announced the Lange II plan in a news release on Aug. 5, the same day the application reached the commission, and it started collecting its higher general rates on an interim basis on Aug. 18. The surcharge itself is expected to start when the plant is ready to deliver power in December, which leaves a narrow window for commissioners to act before bills change.
Adding the surcharge to the settlement
The Custer County Chronicle reported that the company was seeking both a general increase and the surcharge at once. As first filed, the general increase was about $25 a month, producing a combined average residential bill of $143.70, up from $98.96, or 45%. The settlement approved on Nov. 4 cut the general piece to about $16.34 a month.
Recomputed with approved numbers, $98.96 plus $16.34 plus $19.70 comes to $135.00 a month, still about a third above the starting bill. That sum assumes the surcharge is approved at the proposed level, which no one has decided. The Chronicle also reports the commission would review the surcharge annually, and that refunds would follow if regulators reject or reduce it.
The percentage changes in the table tell their own story. Regular residential service would rise 15.88%, total-electric homes 18.78%, residential demand customers 20.33%, small general service accounts 13.22%, and general service accounts 14.52%. Homes that heat with electricity and customers on demand-based billing would carry the steepest proportional hit, which is why households outside the standard residential class may want to read their own line on the rates page before December.
The same order also authorized the commission’s executive director to enter into consulting contracts, a sign that regulators plan to test the plant’s cost with outside help instead of relying on the company’s numbers alone. A fee of up to $250,000 is modest beside a $320 million project, but it pays for the independent analysis that will shape whether the $19.70 estimate survives. The annual review the Chronicle describes means the figure would be revisited every year, so even an approved charge would not be fixed for the life of the plant.
Large customers and households push back
A group of large customers that includes Monument Health filed comments in both proceedings, arguing the surcharge would greatly increase its members’ costs, the Chronicle reported. Rapid City resident John McKee filed comments warning of significant financial burdens for households. The company counters that the plant is not tied to data center demand, citing the planned Ben French retirement, infrastructure investment and inflation.
Dakota News Now reported on Nov. 7 that the surcharge could begin collecting before a final ruling, with refunds plus interest owed if it is later cut. The open question is timing: Lange II is due to start delivering power in December, and the commission has not said when it will rule on EL26-024.
This article was produced with the assistance of AI and reviewed by Morning Overview editors prior to publication.
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