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Rapid City, S.D.-based Black Hills Corp., a utility subsidiary Black Hills Power, says that the Federal Energy Regulatory Commission (FERC) has approved a formulaic approach for setting transmission rates. This change will result in an increase to Black Hills Power's transmission revenue requirement from $5.6 million to $9.4 million. Under the formula approved by FERC, transmission rates will be set utilizing a return on equity of 10.8% and a capital structure consisting of 57% equity and 43% debt.

"The Federal Energy Regulatory Commission decision is notable in that it approves a formula-based rate process," says Chuck Loomis, vice president of operations for Black Hills Power. "This allows us to utilize an annual true-up calculation rather than having to file separate rate cases each time we make transmission investments."

SOURCE: Black Hills Corp.

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