SD PUC: MidAmerican Energy South Dakota Customer Refunds Totaling $4.2M Approved

• The South Dakota Public Utilities Commission approved a settlement granting MidAmerican Energy customers $4.23 million in refunds and $1.56 million in annual rate reductions.
• Natural gas customers will receive $3,308,988 in refunds and a $1,205,376 annual rate reduction, while electric customers get $921,476 in refunds and a $359,811 annual rate reduction.
• Refunds will be credited to customer bills over six months, starting in July, a unique method designed for quicker customer benefit.
• This action is part of the SD PUC's investigation into the Tax Cuts and Jobs Act, which has resulted in $28.8 million in total refunds and $10.5 million in annual rate reductions across multiple South Dakota utilities.
• The investigation, initiated in December 2017, has secured benefits for customers of Black Hills Energy, Montana-Dakota Utilities Co., Xcel Energy, NorthWestern Energy, Otter Tail Power Co., and MidAmerican Energy.

Lawyers advising South Dakota businesses or large consumers should be aware of these approved utility rate reductions and refunds from MidAmerican Energy, stemming from the Tax Cuts and Jobs Act investigation, to assess potential cost savings or similar actions for other regulated utilities in the state.

Customers of MidAmerican Energy Co. in South Dakota are set to receive significant financial relief through a combination of refunds and ongoing rate reductions. The South Dakota Public Utilities Commission (SD PUC) unanimously approved a settlement agreement on May 14, 2019, which was jointly presented by PUC staff and MidAmerican Energy. This decision directly impacts MidAmerican Energy South Dakota customer refunds, providing tangible benefits to both natural gas and electric service users.

The settlement mandates MidAmerican Energy to refund a total of $3,308,988 to its natural gas customers and an additional $921,476 to its electric customers in South Dakota. Beyond these one-time refunds, the agreement also includes permanent reductions to the company's base rates. Natural gas rates will decrease by $1,205,376 annually, while electric rates will see a yearly reduction of $359,811. Furthermore, the settlement revises the energy cost adjustment to account for the reduced federal income tax rate, specifically related to the company's production tax credits.

Unlike previous one-time payouts, the approved refund procedure for MidAmerican Energy customers will distribute credits over a six-month period, commencing in July. This unique methodology, highlighted by PUC Chairman Chris Nelson, aims to allow customers to begin seeing the benefits on their bills sooner than other traditional refund approaches would have permitted. This structured approach ensures a consistent, albeit temporary, reduction in monthly utility expenses for affected consumers.

The approval of the MidAmerican Energy settlement marks a significant milestone in the South Dakota Public Utilities Commission's investigation into the effects of the federal Tax Cuts and Jobs Act (TCJA) on utility rates. This comprehensive inquiry, designated as docket GE17-003, began in December 2017 when PUC staff requested the commission to examine how the federal tax cut would impact rates for customers of regulated electric and natural gas utilities. The commission subsequently ordered that any rate adjustments resulting from the tax cut be effective as of January 1, 2018.

To date, the commission's efforts have resulted in substantial savings for South Dakota residents. Across all investor-owned electric and natural gas utilities in the state, the SD PUC has approved a cumulative $28.8 million in customer refunds. In addition to these refunds, the commission has secured an impressive $10.5 million in ongoing annual base rate reductions for customers served by Black Hills Energy, Montana-Dakota Utilities Co., and MidAmerican Energy. This broad impact underscores the commission's commitment to ensuring that the benefits of federal tax changes are passed on to consumers.

Beyond MidAmerican Energy, the TCJA investigation has led to approved refunds for customers of several other major utility providers, including Xcel Energy, Black Hills Energy, NorthWestern Energy, and Montana-Dakota Utilities Co. The impact of the federal tax act on Otter Tail Power Co. customers was addressed separately through a rate settlement agreement accepted by the commission in March, further demonstrating the widespread regulatory adjustments stemming from this initiative. Lawyers advising South Dakota businesses or large consumers should be aware of these approved utility rate reductions and refunds from MidAmerican Energy, stemming from the Tax Cuts and Jobs Act investigation, to assess potential cost savings or similar actions for other regulated utilities in the state.

Members of the South Dakota Public Utilities Commission expressed strong satisfaction with the outcomes of the TCJA investigation, particularly the recent South Dakota Public Utilities Commission settlement with MidAmerican Energy. Commissioner Gary Hanson lauded the overall success of the commission's work, emphasizing the substantial financial benefits delivered to consumers. He noted that these efforts are providing an additional $10 million annually for families and individuals across the state, underscoring the significant and sustained impact of the regulatory actions.

PUC Vice Chairperson Kristie Fiegen extended her gratitude to the PUC staff for their diligent work over many months, describing the MidAmerican Energy settlement as the 'icing on the cake' of their comprehensive investigation. She highlighted the staff's exceptional performance in securing over $28 million in refunds and decreasing rates for three companies by more than $10 million annually, acknowledging their dedication to South Dakota consumers. Compliance officers should note the specific six-month credit methodology for refunds and monitor for comparable regulatory adjustments in other jurisdictions or for other utility providers, as this approach could set a precedent for future utility regulation.

Lawyers advising South Dakota businesses or large consumers should be aware of these approved utility rate reductions and refunds from MidAmerican Energy, stemming from the ongoing Tax Cuts and Jobs Act investigation, to assess potential cost savings or similar actions for other regulated utilities in the state. Compliance officers should note the specific six-month credit methodology for refunds and monitor for comparable regulatory adjustments in other jurisdictions or for other utility providers.

Source: Original reporting via South Dakota Public Utilities Commission