Colorado Public Utilities Commission Approves Retirement of W.N. Clark to Comply With Clean Air, Clean Jobs Act

PUEBLO, Colo., Dec. 16, 2010 /PRNewswire-FirstCall/ -- Black Hills Corp. (NYSE: BKH) subsidiary Black Hills Energy – Colorado Electric today announced it has received a final order from the Colorado Public Utilities Commission regarding the utility's plan to comply with the Colorado Clean Air, Clean Jobs Act, also known as House Bill 1365. The Colorado PUC order approved the retirement of the utility's W.N. Clark coal-fired generation station in Canon City, Colo., and granted a "presumption of need" in the amount of 42 megawatts for replacement of the plant by constructing a third utility-owned 92 MW natural gas-fired turbine at its Pueblo Airport Generation Station site in Pueblo, Colo.  

"Although retirement of W.N. Clark was not considered before passage of HB1365, in order to comply with the law, we have chosen the least-cost option for our customers," said Christopher Burke, vice president of operations, Black Hills Energy – Colorado Electric. "With substantial infrastructure already in place at our Pueblo Airport Generation Station, we can reduce costs associated with constructing and operating the replacement generation. The plant's closure is slated to occur on or before Dec. 31, 2013."

Black Hills Energy – Colorado Electric made an initial filing with the Colorado PUC on Aug. 13, 2010, as required by the Colorado Clean Air, Clean Jobs Act and filed rebuttal testimony on Oct. 29, 2010. The rebuttal testimony recommended retirement of the W.N. Clark plant and suggested that the cost and reliability to convert the more-than-50-year-old coal-fired plant to biomass would be too costly to meet future generation needs and emission requirements. In the first quarter of 2011, Black Hills Energy – Colorado Electric will file an application with the Colorado PUC for a Certificate of Public Convenience and Necessity, which will provide additional details regarding how the 50 MW of incremental capacity from the proposed 92 MW General Electric LMS100 turbine will be used to serve utility customers in southern Colorado. The Colorado PUC is expected to act on the CPCN by mid-2011. The turbine will require a capital investment of approximately $85 million to $95 million, excluding investment in ancillary facilities such as transmission. Construction of the turbine would begin immediately after receipt of the CPCN for the full 92 MW capacity, and the plant would be operational no later than Dec. 31, 2013, as required by the commission's recent order.

The Colorado Clean Air, Clean Jobs Act requires regulated utilities in the 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 – Colorado Electric, 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 www.blackhillscorp.com.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

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 choosing the least-cost option for our customers, reducing costs associated with constructing and operating the replacement generation, and the planned plant closure occurring on or before Dec. 31, 2013, 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 2009 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.