Sep. 29, 2009 (PR Newswire) --

RAPID CITY, S.D., Sept. 29 /PRNewswire-FirstCall/ -- Black Hills Corporation (NYSE: BKH) announced today that its Black Hills Colorado IPP (BHCI) subsidiary was selected through a competitive bid process as the least-cost option to provide 200 MW of power to the Black Hills Energy-Colorado Electric, a utility subsidiary of Black Hills Corp. BHCI will build the 200 MW of natural gas-fired electric generation in Colorado and sell the power to Black Hills Energy-Colorado Electric through a 20-year power purchase agreement.

The BHCI generation facility will consist of two 100-MW units, each with two 40-MW LM6000 natural gas-fired combustion turbines and one 20-MW steam turbine, operated in a combined cycle mode. The BHCI facility is expected to cost $240 to $265 million and should be completed and ready to deliver power by Jan. 1, 2012. The power purchase agreement between BHCI and Black Hills Energy - Colorado Electric is also subject to approval by the Federal Energy Regulatory Commission (FERC).

"We are pleased with the opportunity to add new generation capacity to serve the Black Hills Energy - Colorado Electric utility customers," said David R. Emery, chairman, president and chief executive officer of Black Hills Corporation. "Our ability to build generation facilities on time and on budget is a core strength of our diversified energy company, and our experienced team has the proven ability to manage the planning and construction process to a successful result."

Sites near the Black Hills Energy-Colorado Electric service area are being considered for the BHCI facility and the final selection could impact the capital costs for the BHCI project. The preferred plan is to locate the BHCI generation assets at the same site where Black Hills Energy-Colorado Electric will build its utility-owned generation. If a co-located site is selected by BHCI, it would include BHCI's 200-MW power plant and Black Hills Energy-Colorado Electric's two utility-owned, natural gas-fired 100-MW LMS100 turbines. The power from the combined utility and BHCI resources will serve 93,300 Black Hills Energy - Colorado Electric utility customers in the Pueblo, Canon City and Rocky Ford-area communities in southeastern Colorado.

On March 31, 2009 the Colorado Public Utilities Commission issued an order pertaining to the Aug. 5, 2008 Electric Resource Plan (ERP) for Black Hills Energy - Colorado Electric, providing the utility the opportunity to construct and operate two General Electric LMS100 natural gas turbines to serve a portion of the customer requirements when the utility's current power purchase agreement expires on Dec. 31, 2011.