Black Hills Corp. (NYSE: BKH) said Aug. 1 that utility subsidiaries Black Hills Power and Cheyenne Light, Fuel & Power received approval from the Wyoming Public Service Commission for the certificate of public convenience and necessity for a new $237m, 132 MW, natural gas-fired plant.
The new Cheyenne Prairie facility will be located within the city limits of Cheyenne, Wyo.
“In order to meet continuously changing energy demands — including Environmental Protection Agency regulations, economic development and overall increasing energy demand — we regularly evaluate our business to ensure we’re providing cost-effective, reliable service to our customers,” said David Emery, chairman, president and CEO of BHC. “It is our responsibility to provide customers with reliable energy, and we are pleased we can continue to do so with the Wyoming PSC’s approval to construct the new Cheyenne Prairie Generating Station.”
Black Hills Power said it will retire 82 MW of its older, coal-fired generation in March 2014 to meet new EPA air emissions regulations, while Cheyenne Light will prepare for growing electricity demand due to an increase in economic development and the need to replace a 40 MW purchase power agreement for Cheyenne Light that terminates in 2014. The jointly owned generation facility allows each utility to serve the changing electricity needs of its customers.
The Cheyenne Prairie Generating Station will consist of a 37 MW simple-cycle combustion turbine owned entirely by Cheyenne Light and a 95 MW combined-cycle combustion turbine to be jointly owned by Black Hills Power and Cheyenne Light. Construction is slated to begin in 2013, and the facility will begin serving customers in late 2014.
A stipulation and agreement between Black Hills Power, Cheyenne Light and an intervenor was filed with the Wyoming PSC on July 13. The settlement with the intervenor includes provisions for a construction work-in-progress rate rider. Use of the CWIP rider would provide Black Hills Power and Cheyenne Light an allowed rate of return during construction, thereby eliminating the usual allowance for funds used during construction, and reducing the total construction cost of $237m to $222m.
Black Hills Power is the legacy utility business of Black Hills Corp. and has been delivering energy for more than 128 years. The electric utility serves 68,000 customers in 34 communities in western South Dakota, northeastern Wyoming and southeastern Montana.