SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: June 23, 1999
BLACK HILLS CORPORATION
State of South Dakota File Number 1-7978 IRS Number 46-0111677
625 Ninth Street
Rapid City, South Dakota 57709
Registrant's telephone number (605) 348-1700
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Item 5. Other Events
BLACK HILLS CORPORATION'S ELECTRIC UTILITY OPERATIONS AGREE TO RATE FREEZE
Black Hills Corporation's electric utility operations, Black Hills
Power and Light Company (Company) has agreed to extend its rate freeze for South
Dakota retail customers until January 1, 2005, barring extraordinary
circumstances. The Company froze electric rates in 1995 when the Company's new
power plant, Neil Simpson Unit #2, was placed in service: the current rate
freeze ends January 1, 2000. The extension of the rate freeze was approved by
the South Dakota Public Utilities Commission on June 22, 1999.
The rate freeze is subject to the following terms and conditions:
1. The Company will not file any additional applications with the
Commission, which would result in an increase in revenues for the
period between January 1, 2000 through December 31, 2004 ("Rate Freeze
Period"); provided, however, that the Rate Freeze Period does not
prevent the Company for filing for a rate increase subsequent to
January 1, 2005, or from filing for a rate increase if the Company's
cost of service is expected to increase as a result of an
"Extraordinary Event" as defined below, nor is the Rate Freeze Period
intended to prohibit the Company from filing a rate application that
requests changes in rates for reasons other than to obtain a general
rate increase.
An Extraordinary Event is defined as the occurrence of one of the
following:
(a) New federal, state or local governmental requirements or
governmental charges, including, but not limited to, income
taxes, taxes or charges imposed on energy, emissions,
environmental externalities or reclamation obligations,
imposed after January 1, 2000, upon the Company or its
subsidiary, Wyodak Resources Development Corp. that project to
cause the Company's cost of service to South Dakota customers
to increase in an material amount. Increases in the cost of
service of less than $2,000,000 will be presumed not to be
material for the purposes of this paragraph.
(b) Forced outages, caused by an act of nature or criminal
activity or resulting from fire or explosion from any cause,
occurring to both the Wyodak Plant and Neil Simpson Unit #2
which are projected to continue simultaneously over a period
exceeding 60 days.
(c) Forced outage occurring to either the Wyodak Plant or Neil
Simpson Unit #2 which has continued for a period of three
months and is projected to be nine months or more.
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(d) The Consumers Price Index, All Urban, as compiled by the
United States Department of Labor increases to a monthly rate
for six consecutive months which if continuing for the
following six months would result in a 10 percent or more
annual inflation rate.
(e) The loss of a South Dakota customer or revenue from an
existing South Dakota customer that, if projected, would
result in a loss of revenue to the Company of $2,000,000 or
more during any 12-month period.
(f) The cost of coal to the Company's South Dakota customers
increases and is projected to increase by more than $2,000,000
over the cost of the most recent calendar year.
(g) Electric deregulation as a result of either federal or state
mandate which allows any customer of the Company to choose its
provider of electricity at any time during the Rate Freeze
Period.
2. The Company shall not include a fuel and purchased power adjustment
tariff, nor make any application to reinstate a fuel and purchased
power adjustment tariff to take effect prior to January 1, 2005, except
if any Extraordinary Event occurs.
3. The Company shall continue to retain without adjustment to rates
charged its South Dakota customers all revenues and benefits realized
from the sale of wholesale capacity and energy.
4. The Company may effect a transfer and/or assignment of any right it has
in any sale of wholesale capacity and energy without review of the
consideration, subject to the Commission reviewing the reasonableness
and prudency of such actions in any subsequent general rate proceeding
which is initiated with the intent to raise or reduce rates.
5. The Company may enter into power purchase transactions or power
resource transfers with its affiliated exempt wholesale generator,
subject to the Commission's review for reasonableness and prudency in
any subsequent general rate proceeding which is initiated with the
intent to raise or reduce rates.
6. The Commission shall have the right in its discretion to adjust rates
if there is any material reduction in federal, state, or local taxes
occur which is projected to be material to the Company's cost of
service for its South Dakota customers. Decreases in the cost of
service of less than $1,000,000 are deemed to be not material for this
purpose.
Item 7c. Exhibits
Exhibit 99 Black Hills Corporations News Release announcing its agreement
to a five-year rate freeze.
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
BLACK HILLS CORPORATION
By /s/ Roxann R. Basham
Roxann R. Basham, Vice President -
Finance and Principal Financial Officer
Dated June 23, 1999
RELEASE DATE NEWS RELEASE
June 22, 1999 FOR INFORMATION CONTACT:
Barbara Thirstrup, Manager
Governmental & Public Affairs
(605)348-1700
[email protected]
Black Hills Corporation Agrees to Five-Year Electric Rate Freeze
Rapid City, SD--Black Hills Power and Light, the electric utility operations
company of Black Hills Corporation, agreed today at a South Dakota Public
Utilities Commission hearing to freeze electric rates until January 1, 2005,
barring extraordinary circumstances. Black Hills Power had frozen electric rates
in 1995 when the company's new power plant, Neil Simpson II, was placed into
service; and that rate freeze is scheduled to end January 1, 2000.
"The additional five-year rate freeze for Black Hills Power `s electric
customers confirms Black Hills Corporation's commitment to customers in the
Black Hills region--just as our bringing state-of-the art telecommunications
through Black Hills FiberCom," said Dan Landguth, President and Chief Executive
Officer of Black Hills Corporation. "We live and work with our customers, and we
want to do what we can to provide reliable electric service and competitive
telecommunications infrastructure in the Black Hills area."
"Our electric rates are below the national average, and, for most
customers, the lowest in the Black Hills region," said Everett Hoyt, President
and Chief Operating Officer of Black Hills Power. "We're proud of our
performance in bringing low-cost electricity to our customers. Because BHP's
electric rates will be frozen over a ten-year period while the costs of most
other goods and services will have increased due to inflation, BHP's customers
will actually experience an inflation-adjusted decline of about 30 percent in
the cost of their electricity over this period. We'll continue to explore new
ways to operate more efficiently, while providing excellent local customer
service."
"We recognize that as a result of electricity deregulation and retail
competition in California and the Southwest, wholesale electricity prices are
increasing," said Hoyt. "Black Hills Corporation has already formed a separate
subsidiary to construct and acquire power supply resources to sell in those
wholesale markets. A number of recent studies have shown that electric costs are
likely to increase in low-cost, rural regions such as South Dakota and Wyoming
if retail competition is introduced in those states, because low-cost power
supply resources presently used to serve those customers will be placed for
auction to bidders in other regions who are willing to pay higher prices."
"As we position Black Hills Corporation to compete in those higher-priced
wholesale electric markets, we want to make a public commitment to Black Hills
Power's electric customers that we will maintain our low-cost power resources
for their benefit, ensuring that their electric rates will remain stable for the
next five years while the electric industry sorts through the retail competition
pricing puzzle," said Hoyt.
During the freeze period, the Company is undertaking some risks of
generating plant outages, customer load loss, increased fuel and purchased power
costs, inflation, and other unexpected events; however, the rate freeze may be
lifted if certain significant extraordinary events occur.
Black Hills Power and Light (http://www.blackhillspower.com) is the
electric utility of Black Hills Corporation, an energy and communications
company headquartered in Rapid City. Black Hills Corporation supplies electric
utility service to over 56,000 customers in western South Dakota, northeastern
Wyoming, and southeastern Montana through Black Hills Power and Light; markets
communications services in Rapid City and the Northern Black Hills through Black
Hills FiberCom; engages in the mining and sale of coal from its mine located
near Gillette, Wyoming through Wyodak Resources Development Corp.; produces,
explores, and operates oil and gas interests located in the Rocky Mountain
region, Texas, Louisiana, Oklahoma and California through Black Hills
Exploration and Production; markets natural gas, oil, coal and related services
to customers in the Rocky Mountain region, Northwest region, Midwest, and East
Coast markets through its energy marketing companies; and develops and markets
internally-generated computer software through DAKSOFT.
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Note: The above information includes forward-looking statements that are
subject to certain risks, uncertainties, and assumptions. Although management
believes that its expectations are based on reasonable assumptions, it can give
no assurances that its goals will be achieved.
