Black Hills Corp.’s (BKH - Free Report) subsidiary, Black Hills Energy, announced that it has received approval from The South Dakota Public Utilities Commission to pass $7.7 million annual tax savings to the customers of South Dakota by reducing electricity bills in 2018. The benefit of the Tax Cuts and Jobs Act will be transferred to customers through a one-time credit on their October 2018 bill.
In 2019, customers will witness an aggregate reduction of $8.9 million in base rates, which will lead to lower monthly electricity bills. Moreover, Black Hills received approval from five state utility commissions, including South Dakota, to provide the benefits of federal tax reform to utility customers amounting to $26.6 million.
Black Hills supplies natural gas and electricity to customers in eight states and owns regulated as well as non-regulated business. Regulated electric utility companies require huge amount of capital to upgrade their assets.
In the month of April, Black Hills received approval to purchase 60 megawatts of wind energy through a 25-year power purchase agreement, which helped the company to meet renewable energy standard in Colorado. In July, South Dakota Electric subsidiary placed a transmission line into service running from Rapid City to Stegall, NE. This was the first 48-mile line segment of a planned 175-mile transmission line, which is worth $70 million.
Over the 2018-2022 time periods, the company is expected to invest $2,331 million to strengthen infrastructure and improve the reliability of its system.
Passing the Tax Reform Benefits
The latest tax reform has resulted in lower accrued tax expenses for the utilities. Lately, various companies are passing on this benefit to customers, which have been lowering utility rates and bills.
Recently, Avangrid Inc (AGR - Free Report) , NextEra Energy, Inc (NEE - Free Report) and Duke Energy Corp (DUK - Free Report) directed the federal tax savings to reduce bills for customers.
Shares of the company have gained 15.0% in the past six months compared with the industry’s rise of 6.4%.
Black Hills currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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