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Black Hills has path to rate relief as broadband project ups gas locating costs

Amid a push for high-speed internet installation, Nebraska regulators gave Black Hills Nebraska Gas Utility Co. permission to set up a special account to handle ballooning costs as the utility works to prevent fiber optic cable installation from damaging the gas system.

Black Hills has estimated that the cost of locating its gas lines to avoid excavation damage for this accelerated project giving the residents of Lincoln, Neb., access to high-speed internet could reach $1.5 million for 2017 through 2018. The Nebraska Public Service Commission agreed that the company could not have known about these cost increases when it last asked to set customer rates.

The PSC on March 20 ordered the Black Hills Corp. subsidiary to track these expenses and said the commission will allow the utility to recover costs associated with the project during a future rate proceeding.

Black Hills and other underground utility operators are responsible for locating and marking their infrastructure within 48 hours of being notified that someone intends to dig in the vicinity of the subsurface facilities. Allo Communications has been installing high-speed internet service with the goal of having all businesses and residences in and around Lincoln connected by 2019, and the project has dramatically driven up Black Hills' locating costs.

The utility said it has tried to recover the mounting expenses from Allo itself, but state law says operators of existing underground systems have to cover the costs of locating their infrastructure to prevent excavation damage.

"In order to meet the company's statutorily mandated obligation, Black Hills Energy has significantly increased its line- locating staffing resources. However, the extraordinary demand resulting directly from the Allo project is overwhelming the company's established natural gas line locate resource model," the company said in its application to the Nebraska PSC. "Black Hills Energy does not have the resources to meet the demands of the Allo project in the time and scope necessary to comply with existing laws."

A state legislator earlier in 2018 proposed to change the relevant law. Sen. Curt Friesen in January introduced legislation that would change cost allocation under the Nebraska One-Call Notification System Act, which governs how companies locate and mark underground infrastructure.

For large projects, the entity doing the excavating would be responsible for the locating costs related to the project even if those expenses were originally incurred by another operator. The bill was last scheduled for committee hearing in mid-February.