SD PUC Approves Otter Tail Power Settlement and Levies Penalty Against Black Hills Energy
- Steve Jurrens
- 6 minutes ago
- 3 min read
Northeast Radio SD News – Watertown, SD - The South Dakota Public Utilities Commission (PUC) convened on Tuesday, March 10, at the Matthews Training Center to address a heavy agenda dominated by utility rate settlements, pipeline safety violations, and a growing wave of consumer concerns regarding rising energy costs.
Chairman Kristie Fegan and Commissioner Chris Nelson presided over the meeting, while Commissioner Gary Hanson was noted as absent as he continues to recover from a successful cancer surgery.
Otter Tail Power Reaches Rate Increase Settlement
A primary focus of the meeting was the approval of a settlement in docket EL25-022, concerning Otter Tail Power Company’s request to increase its electric rates in South Dakota.
Originally, the company filed for an increase of approximately $5.7 million, representing a 12.5% jump. However, following months of collaboration with PUC staff, a settlement was reached for a net increase of $3.3 million, or 7.74%.
Lauren Donofrio, counsel for Otter Tail, emphasized the company’s commitment to affordability, stating:
“The residential rates as proposed in the settlement stipulation are 35% lower than the national average and 11% lower than the state average.”
The agreement includes a 7.09% Return on Equity (ROE) and a moratorium on new rate filings effective until December 1, 2029. Additionally, customers can expect an interim rate refund to be credited to their May billing statements.
The Rise of the “Large Load” and Data Centers
The commission spent time discussing the potential impact of “Large Load” customers, specifically data centers, on the electrical grid and existing ratepayers. This follows recent legislative discussions in Pierre regarding Senate Bill 135, which aims to ensure that such high-demand customers cover their own infrastructure costs.
Commissioner Fegan pressed the utility on how these loads are managed to prevent cost-shifting to residential users:
“We want to make sure data centers pay for all their costs... there’s a benefit for residential, business, and commercial customers because the fixed cost of Otter Tail will be spread out among more customers with a large load.”
Otter Tail representatives confirmed they are currently drafting a specific tariff for large loads to be filed in all three of their service jurisdictions (South Dakota, North Dakota, and Minnesota) to ensure uniform protections for native customers.
Black Hills Energy Fined $40,000 for Pipeline Safety Violations
In a rare move, the PUC staff filed a formal complaint (PS25-003) against Black Hills Power (doing business as Black Hills Energy) regarding an unpermitted natural gas transmission line.
The line, known as Lang 1 and Lang 2, was discovered during a routine inspection. Staff alleged that the company had been operating the line for roughly 24 years without the necessary permits required by state statute.
The settlement includes a $40,000 civil penalty. While the company agreed to the fine, there was visible tension over the investigation’s transparency. Douglas Law, representing Black Hills Energy, attributed the issues to miscommunication:
“I think there was miscommunication that led to frustration... our goal going forward is to get a stronger relationship... so that if there’s an issue they perceive, it’s not just them stumbling on it after an inspection.”
In response, Commissioner Fegan praised the PUC’s pipeline safety staff for their diligence, awarding them a metaphorical “gold star” for identifying the violation and holding the utility accountable.
Consumer Frustration on the Rise
The meeting opened with a report from Deb Gregg, the PUC’s Consumer Affairs Manager, who noted a significant uptick in inquiries. Since the last report in late February, the commission received 125 contacts, with the vast majority (94) related to electric services.
Gregg noted that many of these calls are driven by pending rate increase requests from Black Hills Energy, Xcel Energy, and several regional cooperatives. Chairman Nelson noted that while utility costs are rising, the commission’s efforts have kept them significantly below general inflation trends over the last decade.
Looking Ahead
The commission also handled housekeeping items for a new Black Hills Power rate case (EL26-003), officially suspending the proposed tariff for 180 days to allow for a full staff investigation.
The next regular meeting of the South Dakota PUC is scheduled for Thursday, March 26, 2026, at 1:30 PM in Room 413 of the State Capitol Building in Pierre. The meeting will be reported on once the audio is available for review.
