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Black Hills' Cost of Service Gas Program Filed in 5 States

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Rapid City, SD-based electric utility provider Black Hills CorporationBKH announced that along with its subsidiaries, it has filed for a Cost of Service Gas Program with utility regulators of five states. The states include Iowa, Kansas, Nebraska, South Dakota and Wyoming. The company plans to submit an application in Colorado this month.

This program has been devised to bring stability in natural gas prices for the company's utility customers as the spot market price of natural gas leads to fluctuation in the cost of production. Through this initiative, Black Hills intends to acquire natural gas reserves and/or drill wells to produce natural gas for the program.

The program will work on a specific formulated model and has a number of benefits to offer to different related parties:

To customers: Cost of Service Gas Program is expected to benefit Black Hills' customers through reasonable savings over the life of the program. The savings will be generated from crediting the difference between the market price and the Cost of Service Gas price to customers' Purchase Gas Adjustment account.

To shareholders: Management believes that this program has a two-fold benefit of providing cost-effective energy to its users while at the same time opening up different streams of growth opportunities and producing profit for the non-regulated utility.

Utilities venturing into energy efficiency programs are a common and a widespread phenomenon. To seize the opportunity of low natural gas prices, many utilities are rolling out various financial assistance or energy efficiency programs to their users. These initiatives not only help in curtailing the usage but also assist in lowering customer bills over the years.

Zacks Rank

Black Hills currently holds a Zacks Rank #2 (Buy). Some other well placed stocks in the utility space include Brookfield Infrastructure Partners L.P. BIP , Talen Energy Corporation TLN and Dynegy Inc. DYN . All three stocks currently sport a Zacks Rank #1 (Strong Buy).

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DYNEGY INC-NEW (DYN): Free Stock Analysis Report

BROOKFIELD INFR (BIP): Free Stock Analysis Report

BLACK HILLS COR (BKH): Free Stock Analysis Report

TALEN ENERGY CP (TLN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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