Black Hills Energy serves roughly 309,000 electric and gas customers across southern Colorado, with the largest concentration in Pueblo, Cañon City, Florence, Rocky Ford, Westcliffe, Cripple Creek, and Penrose. Rates on this grid are among the highest residential electric rates in Colorado, and two rate actions inside the last 13 months have stacked on top of each other. The first was the contested decision in Proceeding 24AL-0275E, which the Colorado Public Utilities Commission approved in March 2025. The second is the Electric Cost Adjustment in Proceeding 26AL-0079E, which became effective on April 1, 2026.

If you live in Pueblo West, Belmont, South Side Pueblo, Cañon City, Lincoln Park, Florence, or the rural stretches of Pueblo County, your electric bill is not the same bill it was two summers ago. That change is what makes rooftop solar a different conversation in 2026 than it was in 2023 or 2024.

Proceeding 24AL-0275E was Black Hills Energy’s first full electric rate review in Colorado in eight years. The original ask was roughly $37 million in additional annual revenue. The Colorado Public Utilities Commission cut that request sharply and approved an increase of about $17 million, or roughly 7 percent on the revenue requirement side. New rates took effect on March 22, 2025.

The way that increase showed up on residential bills depended on how much electricity the household used. Low usage homes saw roughly a $3.50 per month increase. High usage homes saw closer to $7.40 per month. The decision also rolled the General Rate Schedule Adjustment rider of about 3.6 percent into the base rates, so a line that used to appear as a percentage surcharge now sits inside the energy charge instead. That makes the bill simpler to read, and it also bakes the increase in permanently.

Just over a year later, on April 1, 2026, the Electric Cost Adjustment in Proceeding 26AL-0079E went into effect. The ECA rate for secondary voltage service, which covers residential and small commercial accounts, moved from $0.04778 per kWh to $0.04954 per kWh. For the average residential Black Hills Energy customer, that adds another $1.12 per month to the bill. Stacked on top of the March 2025 increase, a typical Pueblo household has absorbed between about $4.60 and $8.50 per month in new recurring cost in 13 months. That is real money on a 12 year time horizon. The PUC’s Black Hills Electric Rate Case page has the full docket.

Black Hills Energy’s residential rates sit meaningfully above the rates paid by Xcel customers in Denver and above the rates paid by most electric cooperative members in Colorado. That has been true for years, and the 2025 and 2026 rate actions widened the gap further.

Part of the reason is structural. Black Hills serves a smaller customer base spread across a larger rural footprint than Xcel, and southern Colorado has a different generation and transmission portfolio. Part of it is policy, including the specific resource decisions and return on equity terms that the PUC has approved over the past decade. The practical effect for a Pueblo homeowner is that every kilowatt-hour consumed off the grid costs more than it would if the same home sat on an Xcel meter in Denver or Lakewood.

That same dynamic flips in your favor when you are on the production side of the meter. A solar array that offsets a kilowatt-hour at a higher retail rate is simply more valuable per kWh than a solar array offsetting a kilowatt-hour at a lower retail rate. This is the core reason that solar payback math in 2026 favors Black Hills Energy customers more strongly than it favors their Xcel counterparts in similar sized homes.

Below is a rough bill progression for three representative Black Hills residential usage profiles. Numbers are rounded and do not include taxes, riders outside of the GRSA rollup, or seasonal fuel adjustments. Actual monthly bills vary. The goal of the table is to show the direction and magnitude of change between early 2025 and April 2026.

The 90 percent offset column assumes a right sized solar system that covers roughly 90 percent of annual consumption after accounting for seasonal mismatch between production and load. The remaining dollars on the bill are fixed charges, demand components, and the portion of usage that solar does not cover on a net basis. This is not a guarantee. It is a realistic design target for a Pueblo home with a south or south-southwest roof plane and minimal shading.

Black Hills Energy offers net metering in Colorado for residential solar systems sized up to 120 percent of the home’s average annual usage, measured in kilowatt-hours. That cap is similar to the one Xcel uses and different from the 10 kW hard cap that CORE Electric applies to retail rate net metering. In practice, Black Hills will let you size a little larger than your last 12 months of consumption if you are planning for an EV, a heat pump, or population growth in the household.

Settlement is monthly. Every kilowatt-hour your system exports to the grid during the billing period reduces the kilowatt-hours you pulled from the grid during that same period at the full retail rate. If you produced more than you consumed in a given month, the excess carries forward as a credit to future months. At the end of the annual true-up period, any remaining net excess generation is paid out at Black Hills’ avoided cost rate, which is far below retail. That is why sizing tight to your actual 120 percent ceiling matters.

The interconnection process is straightforward for most residential systems. Your installer submits the application, Black Hills reviews the single line diagram and equipment list, and after approval the physical install proceeds. County inspection and utility final approval follow. In 2026 the Black Hills interconnection timeline for a standard 7 to 9 kW residential system is generally four to eight weeks from application to permission to operate, depending on queue and whether any distribution upgrades flag during review. Black Hills posts rate schedules and regulatory information here.

Consider a typical 850 kWh per month Pueblo household with a 15-year roof in a neighborhood like Pueblo West, Belmont, or the South Side. An 8 kW south-facing system with modern panels and a string inverter, sized against that consumption profile, covers roughly 95 percent of annual usage in most years.

In January 2024, that system offset an average bill around $110. Monthly solar savings landed near $100, which translated to a simple payback period of roughly 10 to 11 years after the federal incentive and the Colorado sales tax exemption.

In April 2026, the same system offsets an average bill closer to $124. Monthly solar savings climb to around $113. The simple payback period on the same physical system compresses to about 9 to 10 years. Add a 13.5 kWh battery configured for backup plus peak shaving, and you capture the 25 percent up front federal incentive on the battery, the Colorado 10 percent residential storage credit on form DR-1307, and in most 2026 months, additional savings during the higher priced hours of the day. That same project in 2027 loses the 10 percent state storage credit entirely, because the credit expires on December 31, 2026. That delta alone is typically $1,200 to $1,800 depending on battery size and installed cost.

If you want to pressure test these numbers against your actual bills and roof, our solar savings calculator runs the math on your specific kWh usage, roof, and incentive capture.

The Colorado incentive stack applies to every residential solar customer in the state regardless of utility. Black Hills Energy customers in Pueblo, Cañon City, and Florence capture the same layers that an Xcel customer in Denver captures.

The first layer is the 25 percent up front federal incentive on residential solar. Basis includes panels, inverters, racking, wiring, labor, permits, and interconnection costs. Battery storage qualifies when it is charged primarily by the solar array. On an 8 kW system plus a 13.5 kWh battery in the $38,000 to $44,000 project range, the federal piece alone is between $9,500 and $11,000.

The second layer is the Colorado sales and use tax exemption on solar equipment, which removes the 2.9 percent state sales tax from the hardware line on your quote. Many cities and counties layer their own exemptions on top. In Pueblo County and in Fremont County, check with your installer on the local sales tax treatment because it varies.

The third layer is the Colorado property tax exemption. Solar on your roof does not increase your assessed property value even though it raises market value. This is an ongoing benefit that outlasts the federal and state credits by decades.

The fourth layer is the Colorado 10 percent residential energy storage tax credit, claimed on form DR-1307. Basis includes battery equipment, sales tax, and freight. Labor and permit fees are excluded from the basis. The credit is non-refundable, cannot be carried forward, and sunsets on December 31, 2026. For any Black Hills customer planning to add battery storage inside the next two years, 2026 is the right year to pull the trigger.

Southern Colorado throws different conditions at a solar install than Denver does. The Arkansas Valley sits between about 4,600 and 5,300 feet of elevation, lower than Denver, with more annual sun hours on average and a different wind profile. Pueblo West and the plains east of Pueblo see sustained high wind days, and racking choices need to reflect the local wind zone, not a generic Front Range spec. Long rural service drops in Pueblo County and Fremont County sometimes bring voltage rise and wire sizing questions that do not appear on a city lot.

Hail exposure in the Arkansas Valley is real, though typically less severe than the Palmer Divide just to the north. Modern solar modules carry IEC 61215 hail impact certifications and UL 61730 safety ratings that cover typical Colorado hail events. Ask your installer which module series they are using and what the impact rating is, especially if you are in an insurance market that has tightened roof coverage in southern Colorado.

Older Pueblo neighborhoods have clay tile and barrel tile roofs. Those are workable with the right flashing kits, but they take longer to install and require specialized racking. Metal roofs are more common at higher elevations in the Wet Mountains and the areas west of Cañon City, and those are among the easiest roofs to solarize cleanly. Wildfire defensible space rules apply in the foothills around Cañon City, Florence, and Penrose, and our design team accounts for that clearance in the system layout. For service area context, see our Pueblo solar page and the broader residential solar installation team page.

Southern Colorado homeowners also tend to value backup power more than Front Range homeowners do, and for good reason. Outages from wind, ice, wildfire proximity, and grid edge events happen more frequently on the rural portions of the Black Hills system. A properly sized battery, paired with solar, keeps critical loads running through those events and captures the state storage credit before it expires. Our guide to whole home battery backup in Colorado covers sizing, essential load selection, and brand comparisons.

Black Hills Energy rates are not coming back down. Proceeding 24AL-0275E baked the March 2025 increase into the permanent base rate structure, and the April 2026 ECA layered another adjustment on top. The direction of travel is clear. Every year a Pueblo, Cañon City, or Florence household waits to go solar is another year of paying the full retail rate for every kilowatt-hour, including the kilowatt-hours that rate increases have made more expensive.

The other clock running on every 2026 project is the December 31 expiration of the Colorado 10 percent residential battery storage credit. For a Black Hills customer adding storage for backup and savings, that credit is a one-time shot.

If your home is on a Black Hills Energy meter and you want to see real numbers on a system designed around your actual usage, your roof, and southern Colorado install conditions, we build every quote to your specific bills and not a generic model.