Black Hills Corp. (NYSE: 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.

distributed by