Black Hills Energy Files CPCN to Comply With Colorado PUC's Clean Air-Clean Jobs Act Order

Black Hills Energy proposes retirement of its two Pueblo steam turbines to construct replacement generation

Mar 14, 2011, 19:02 ET from Black Hills Corp.

PUEBLO, Colo., March 14, 2011 /PRNewswire/ -- Black Hills Corp. (NYSE: BKH) subsidiary Black Hills Energy – Colorado Electric today announced it has filed its certificate of public convenience and necessity (CPCN) to construct a General Electric LMS100 natural-gas-fired turbine in accordance with the Colorado Public Utilities Commission's Dec. 15, 2010, order. The order approved the retirement of the company's coal-fired W.N. Clark facility, and granted a "presumption of need" for 42 MW to replace the Clark capacity, under the Colorado Clean Air-Clean Jobs Act, also known as House Bill 1365.

In its CPCN filing, Black Hills Energy seeks approval to construct a third utility-owned GE LMS100 natural gas-fired turbine at its Pueblo Airport Generation Station site in Pueblo, Colo., where the company is currently constructing two GE LMS100 turbines. The filing proposes retiring the utility's two Pueblo steam turbine units, which together produce 29 MW, to justify a portion of the incremental capacity from the proposed GE LMS100 that will be used to serve customers in southern Colorado. The net power output capacity of the proposed GE LMS100 during the summer months is estimated to be 88 MW. An additional 18 MW of capacity need is also derived from the Dec. 31, 2010 expiration of a power swap agreement.

"Although we had no short-term plans to retire any generation before passage of Colorado's Clean Air-Clean Jobs Act, we've worked diligently to determine the most efficient plan to replace the capacity deficit from the 2013 closure of the W.N. Clark facility and expiration of the power swap agreement," said Christopher Burke, vice president of operations, Black Hills Energy – Colorado Electric. "At present, the Pueblo units that have been identified for retirement are primarily operated during July and August when the company experiences its peak demand for electricity. With substantial infrastructure already in place at our Pueblo Airport Generation Station, we can reduce costs associated with constructing and operating the replacement generation as we retire the Pueblo assets."

The two Pueblo steam turbines are 70 and 62-years old, respectively. The age of these units make them more expensive to operate and maintain than a new, efficient, state-of-the-art GE LMS100, which is more cost effective and fuel efficient at providing optimum peaking capacity.

The utility-owned turbine will require a capital investment of approximately $102 million, excluding investment in ancillary facilities such as transmission. Construction of the turbine would begin immediately after receipt of the CPCN and the plant would be operational no later than Dec. 31, 2013, as required by the commission's December order.

The Colorado Clean Air-Clean Jobs Act requires regulated utilities in Colorado to reduce emissions from coal-fired power plants in the state by replacing or repowering with natural gas or other low-emitting energy resources. Specifically, the Act requires all Colorado investor-owned utilities, including Black Hills Energy, to lower nitrous oxide emissions by a minimum of 70 percent on 50 percent of their coal-fired electric generating units in Colorado by the end of 2017.

Black Hills/Colorado Electric Utility Company, LP d/b/a Black Hills Energy

Black Hills Energy serves 93,300 electric customers in 21 southeastern Colorado communities and was ranked No. 6 in Total Solar Watts per Customers in Solar Electric Power Association's 2009 Utility Solar Rankings report. Black Hills Energy is a subsidiary of Black Hills Corp. (NYSE: BKH).

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 Omaha, Neb. The company serves 763,300 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 employees partner to produce results that improve life with energy. More information is available at


This news release includes "forward-looking statements" as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including statements regarding the reduction in costs associated with retiring the Pueblo assets and constructing and operating the replacement generation are forward-looking statements. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including the factors discussed above, the risk factors described in Item 1A of Part I of our 2010 Annual Report on Form 10-K filed with the SEC, and other reports that we file with the SEC from time to time.

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time-to-time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Black Hills Corp.