Black Hills Power Will Not Build Wind Farm Near Belle Fourche

RAPID CITY, S.D., June 13, 2011 /PRNewswire/ -- Black Hills Corp. (NYSE: BKH) utility subsidiary Black Hills Power indicated today that it will not proceed with a previously announced 20 megawatt wind farm near Belle Fourche, S.D., after the South Dakota Public Utilities Commission's recent decision to dismiss the utility's request for a declaratory ruling. Black Hills Power had requested commission confirmation that the proposed $38 million project was reasonable and cost effective considering other electricity alternatives and would be an appropriate generation resource addition to meet the energy needs of the utility's customers.

"Black Hills Power had a unique opportunity to use time-sensitive cost savings, including federal tax credits set to expire at the end of 2012, to reduce the cost of providing renewable generation for our customers and to support South Dakota's renewable energy objective," said Chuck Loomis, vice president of operations, Black Hills Power. "We moved quickly and efficiently to determine the most cost-effective renewable resource for our customers and to locate land with sufficient wind resources near our service territory to take advantage of that opportunity. With the commission's dismissal of our request for a declaratory ruling, we had to make a timely decision based on what is best for our customers and our shareholders. We determined it was best to discontinue the project."

The South Dakota legislature in 2008 enacted a voluntary renewable energy objective that calls for 10 percent of all electricity sold in the state to be obtained from renewable, recycled and conserved energy resources by 2015. Typically, when considering generation resource additions, a utility is expected to demonstrate that the resource is needed and cost effective. Black Hills Power recognized the relatively high cost of adding renewable wind generation compared to other alternatives. It sought the commission's ruling to determine support for meeting the state's renewable objective, since doing so would have potentially increased customer rates. South Dakota does not have a statutory procedure, as do other states, for utilities to seek commission pre-approval before constructing generation facilities. Black Hills Power therefore filed a request for declaratory ruling, an alternative legal procedure aimed at soliciting a finding from the commission regarding the wind farm project before construction. In its order to dismiss the request for a declaratory ruling, the commission said that it does not have the legal statutory authority to make such a determination.

As a regulated utility, Black Hills Power works diligently to serve its customers and support public policy in the areas where it conducts business, all while providing an appropriate rate of return for Black Hills Corporation's shareholders. This balance requires the company to remain prudent while making decisions for future growth projects in a changing energy policy landscape. Black Hills Power will continue to seek opportunities to prudently add wind generation or other renewable resources to its resource mix.

Black Hills Power

Black Hills Power is the legacy utility business of Black Hills Corp. (NYSE: BKH) and has been delivering energy for more than 127 years. The electric utility serves 68,000 customers in 25 communities in western South Dakota, northeastern Wyoming and southeastern Montana.

Black Hills Corporation

Black Hills Corp. — a diversified energy company with a tradition of exemplary service and a vision to be the energy partner of choice — is based in Rapid City, S.D., with corporate offices in Denver and Papillion, Neb. The company serves 762,000 natural gas and electric utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company's non-regulated businesses generate wholesale electricity, produce natural gas, oil and coal, and market energy. Black Hills' 2,100 employees partner to produce results that improve life with energy. More information is available at www.blackhillscorp.com.

SOURCE Black Hills Power