Black Hills Energy officially has taken over as the natural-gas supplier for Neosho Rapids.
Black Hills’ purchase offer was accepted by Neosho Rapids as a result of a special election in April, when 107 registered voters unanimously voted to allow the South Dakota company to buy the city’s natural-gas system for $64,664.
Neosho Rapids officials had said the city could no longer operate the gas company efficiently, and that Black Hills long had been the contractor that maintained the system, doing tasks that city employees were not certified to perform.
Additionally, the costs of training and certifying employees to become certified, and owning equipment to do the work were expenses that would have pushed the cost of the city’s natural gas even higher.
One piece of evidence the city and Black Hills used to convince residents of the economies that could be derived from the sale was a comparison of costs of natural gas when billed by the city and if billed by Black Hills, according to company spokesman Curt Floerchinger.
They provided a month-by-month customer bill showing usage and costs for a 12-month period from Dec. 1, 2007, through Nov. 1, 2008.
With a total use of 70 mcf of natural gas, the customer paid $1,188.64 to the city; the cost of the same amount of gas through Black Hills would have been $893.33, a difference of $295.31.
“Our billing rate for the natural gas itself, for August, is 41 percent lower than it was a year ago,” Floerchinger said. “As with other publicly held natural gas utilities, we don’t mark up the price of the commodity. What we pay for natural gas, the customer pays.”
Black Hills and other utilities routinely bill for monthly customer charges, delivery and other costs, in addition to the cost of the natural gas. All of those added charges were included in the comparison figures.
The Kansas Corporation Commission approved the purchase price and, after an investigation and report by the KCC staff, on June 22 also approved the company’s application to purchase the system.
A news release from Black Hills stated that the KCC wrote that the company “has the financial, technical and managerial resources to purchase and operate the City of Neosho Rapids natural gas distribution facilities.”
Floerchinger said that Black Hills will offer a variety of products and services to Neosho Rapids customers, including automatic deductions and even-pay plans.
The KCC currently is reviewing Black Hills’ application to purchase the city-owned natural gas operations in Windom. Residents of Windom already have approved the transaction.
Black Hills serves about 108,600 natural-gas customers in 55 Kansas communities, Floerchinger said, and about 759,000 electric and natural gas customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company is part of Black Hills Corp. in Rapid City, S.D., a diversified energy company that is traded on the New York Stock Exchange. It also has main offices in Golden, Colo., and Omaha, Neb.