RAPID CITY, S.D., - Jan. 17, 2014 - Black Hills Corp. (BKH) subsidiary Black Hills Power today filed a rate request with the Wyoming Public Service Commission to increase the electric utility`s revenues to recover investments it has made in its electric infrastructure, including the natural gas-fired Cheyenne Prairie Generating Station under construction in Cheyenne, Wyo.
If approved as filed, Black Hills Power`s new Wyoming electric rates will generate an estimated $2.8 million per year in additional revenue for the utility, based on a capital structure of approximately 53 percent equity and 47 percent debt. The filing seeks a return on equity of 10.25 percent for investments Black Hills Power has made in its Wyoming electric systems.
The primary purpose for Black Hills Power`s rate request is to recover operating expenses and a return on its investment in the new Cheyenne Prairie facility and associated infrastructure to serve the electric utility`s Wyoming customers. The new facility will replace Black Hills Power`s Osage and Neil Simpson I plants in Wyoming, and the Ben French plant in South Dakota. Those three plants will be retired in March 2014 to comply with new Environmental Protection Agency air emissions regulations.
"Natural gas-fired generation has relatively low air emissions and is an effective solution to meet the increasingly strict EPA air emissions regulations," said Linn Evans, Black Hills Corp.`s president and chief operating officer of utilities. "Replacing Black Hills Power`s three oldest power plants is less expensive for customers than retrofitting the coal-fired plants to comply with the new EPA regulations. Our goal is to provide reliable, safe and cost-effective energy for our customers while earning an appropriate return on our capital costs for our investors."
Black Hills Power and another Black Hills Corp. utility, Cheyenne Light, Fuel & Power, will co-own the $222 million Cheyenne Prairie Generating Station. Black Hills Power is investing $95 million in its share of the new generating station and associated infrastructure, and will use electricity from the station to serve customers in both Wyoming and South Dakota.
Cheyenne Light filed a similar rate request with the Wyoming PSC on Dec. 2, 2013, to recover operating expenses and a return on the approximately $127 million it is investing in its share of the plant.
"The Black Hills Power/Cheyenne Light partnership benefits customers of both utilities, in part through economies of scale created by sharing construction and operating costs for the 132-megawatt Cheyenne Prairie Generating Station," Evans said.
The rate filing pertains to Black Hills Power`s investments and costs for serving its 2,700 electric customers in Wyoming. Any rate changes associated with the filing will only apply to the utility`s Wyoming customers. By the end of the first quarter, Black Hills Power plans to file a rate request in South Dakota to recover investments and costs for serving its 65,300 electric customers in that state.
Black Hills Power is seeking to implement the electric rate increase when the plant is placed into service, scheduled for Oct. 1, 2014. The Wyoming PSC and its staff will conduct an extensive review of the rate plans, a process that considers public comments and includes testimony from utility representatives, the Wyoming Office of Consumer Advocate and other interested parties.
Black Hills Power will provide rate request information at www.reliablebhp.com, and information on the company and its services is always available at www.blackhillspower.com and www.blackhillscorp.com. Black Hills Power`s Facebook page and Twitter feed also provide helpful information.
Black Hills Power, Inc.
Black Hills Power is the legacy utility business of Black Hills Corp. and has been delivering energy for more than 130 years. The electric utility serves 68,000 customers in 34 communities in western South Dakota, northeastern Wyoming, and southeastern Montana.
Cheyenne Light, Fuel & Power Company
Cheyenne Light, Fuel & Power Company, a subsidiary of Black Hills Corp., serves 40,000 electric customers and 35,000 natural gas customers in the greater Cheyenne, Wyo., area.
Black Hills Corporation
Black Hills Corp. (BKH), a growth-oriented, vertically-integrated 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. The company serves 769,000 natural gas and electric utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company generates wholesale electricity and produces natural gas, oil and coal. The 1,925 Black Hills employees partner to produce results that are improving 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 are forward looking statements, including our ability and the timing of receiving regulatory approval to recover our operating costs and a return on our investments. 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, our ability to obtain adequate cost recovery for our utility operations through regulatory proceedings and the timing in which new rates would go into effect, the risk factors described in Item 1A of Part I of our 2012 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.
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Source: Black Hills Corporation via GlobeNewswire