Black Hills nears construction on new gas unit, mulls wind rejection in Colorado

Black Hills Corp. (NYSE: BKH) said in its May 4 earnings statement that is moving forward in several areas, including with plans for a mid-year start of construction on a 40-MW combustion turbine at a Colorado power plant.

“Our electric utility and coal mining segments reported solid earnings growth during the quarter,” said David R. Emery, chairman, president and chief executive officer of Black Hills Corp. “The growth was largely offset by a negative impact at our utilities due to moderate weather compared to the same period last year and low commodity prices at our oil and gas business. To mitigate these negative impacts, we implemented corporate-wide cost containment efforts. Overall, financial results for the quarter were in line with the same period last year.

“We made progress on several key strategic projects in our utilities and oil and gas businesses to position the company for future earnings growth. We ordered a new 40 megawatt turbine for Colorado Electric and expect to start construction on the $65 million project mid-year. We are awaiting approval for a $54 million electric transmission line and hope to commence construction in the third quarter. Additionally, we expect to close the previously announced northwest Wyoming utility acquisition in the second quarter.

Black Hills updates include:


  • Construction of a new $65 million, 40-MW, natural gas-fired turbine at Colorado Electric’s Pueblo Airport Generating Station is moving forward. the company expects to commence construction mid-year with the turbine in service by the end of 2016.
  • On March 2, Black Hills Power received an order from the South Dakota Public Utilities Commission approving an increase in annual electric revenues of approximately $6.9 million.
  • On Oct. 14, 2014, Black Hills Corp. entered into an agreement to acquire a natural gas utility with 6,700 customers in northwest Wyoming and certain nearby pipeline assets for $17 million, subject to customary closing adjustments. The transaction requires approval by the Wyoming Public Service Commission, the Montana Public Service Commission and the Federal Energy Regulatory Commission. It is expected to close by the end of the second quarter of 2015.
  • On July 22, 2014, Black Hills Power filed for a certificate of public convenience and necessity with the Wyoming Public Service Commission to construct a new 144-mile, $54 million electric transmission line from northeastern Wyoming to Rapid City, South Dakota. It is awaiting approval of the CPCN. Black Hills Power received approval on Nov. 6, 2014, from the South Dakota Public Utilities Commission for a permit to construct this line. Assuming timely receipt of remaining approvals, the company plans to commence construction in the third quarter of 2015.
  • On May 5, 2014, Colorado Electric issued an all-source generation request, including up to 60 MW of eligible renewable energy resources to serve its customers in southern Colorado. Its own power generation segment submitted solar and wind bids in response to the request. An independent evaluator submitted a report to the Colorado Public Utilities Commission confirming the ranking of all bids. On Feb. 27, the commission determined that none of the renewable bids were cost effective. The commission reaffirmed that decision on April 16 in response to a request for reconsideration. In its written order, the commission noted precedent allowing utilities to secure new bid pricing. Colorado Electric, at its discretion, has 60 days to renegotiate bids and submit a revised contract or contracts for approval. It is reviewing its options. The PUC said in an April 16 statement that Black Hills’ proposal to acquire a 60-MW wind farm could cost as much as $246 million with resulting increases to ratepayers. That’s on top of expected increases in 2015, 2016 and 2017 for a third gas-fired generation unit at the Pueblo Airport Generating Station, which the PUC said it reluctantly approved because it had no choice under the Colorado legislature’s Clean Air-Clean Jobs Act.

Black Hills Corp. is a growth-oriented, vertically-integrated energy company, Based in Rapid City, South Dakota, it serves 785,000 natural gas and electric utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company also generates wholesale electricity and produces natural gas, crude oil and coal.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.