New Black Hills Electric Utility and IPP Generation Facilities in Colorado Ready to Serve Customers Jan. 1

New facilities ensure reliability of electrical supply to customers in southern Colorado.

Dec. 22, 2011 -- Black Hills Corp. today announced that its new generation facilities will be ready to begin commercial operations Jan. 1. Black Hills Energy-Colorado Electric owns the $227 million, 180-MW facility, and Black Hills Colorado IPP owns the $260 million, 200-MW facility. The electricity from both facilities will replace a purchase power agreement with Xcel Energy Inc. that expires Dec. 31.

"This milestone ushers in a 21st-century utility model that is one of the most advanced in the country," said David R. Emery, chairman, president and CEO of Black Hills Corp. "During the previous 16 months, we have substantially rebuilt the electric infrastructure in our Black Hills Energy-Colorado Electric service territory—from generation resources to transmission—in order to provide our utility customers long-term stability in rates, a secure supply of energy, the ability to effectively integrate renewable resources and protection from uncertain future carbon legislation."

The two power plants are co-located near the Pueblo Memorial Airport. Black Hills Energy-Colorado Electric owns two 90-MW, natural-gas-fired units, and Black Hills Colorado IPP owns two combined-cycle units, each consisting of two 40-MW natural gas-fired turbines and one 20-MW steam turbine. To date, all the units have been synchronized to the grid successfully, tested at full output and effectively dispatched for test energy. Final remaining activities include completion of performance and emission testing and ensuring compliance with all air emission requirements.

"The successful completion of this project is a direct result of the effective partnerships forged between our power generation team and our numerous contractors," Emery said. "Additionally, the more-than 600 construction jobs during the peak of construction provided a substantial boost to the local economy. This plant was ruled as the least-cost option by the PUC in the unprecedented situation in which a Colorado utility, Black Hills Energy-Colorado Electric, was forced to replace 75 percent of its resource capacity at one time. To successfully complete these facilities under the time constraints of this project, on time and under budget is a significant achievement and a testament to the caliber of our project team."

On March 31, 2009, the Colorado Public Utilities Commission issued an order pertaining to the Aug. 5, 2008, electric resource plan for Black Hills Energy-Colorado Electric, providing the utility the opportunity to construct and operate new generation to serve a portion of the customer requirements when the utility's current power purchase agreement, which provides 75 percent of the utility's capacity needs, expires Dec. 31.

On March 25, 2009, Black Hills Energy-Colorado Electric issued a 2009 nonintermittent resource solicitation requesting bids to determine how the remaining customer requirements will be supplied, and in June, Black Hills Colorado IPP submitted a response to the utility's request for proposals. The Black Hills Colorado IPP proposal was identified as the least-cost proposal in the resource solicitation processes established by the Colorado Public Utilities Commission and conducted with the oversight of an independent evaluator. Under a 20-year agreement, Black Hills Energy will purchase 200 MW of natural gas-fired generation from Black Hills Colorado IPP.

Black Hills/Colorado Electric Utility Co., 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.

Black Hills Colorado IPP
Black Hills Colorado IPP LLC, a subsidiary of Black Hills Corp., was formed to construct, own and operate generation assets in Colorado. Black Hills Colorado IPP is part of Black Hills Corp.

Black Hills Corp.
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 nonregulated 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.

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