Black Hills Corporation Announces Plans for 500 MW Independent Power Plant in Wyoming
Go-ahead contingent on accelerated permit process, transmission access and long-term contracts

RELEASE DATE: February 26, 2001

For Information Contact: Mark T. Thies, Senior Vice President and CFO; Dale T. Jahr, Director, Investor Relations

Rapid City, SD — Black Hills Energy Capital, Inc., the independent power subsidiary of Black Hills Corporation (NYSE: BKH) today announced that it has initiated the permitting process to build a coal-fired electric generating facility capable of up to 500 MW adjoining its other generating plants near Gillette, Wyoming.

The power plant could be operational in mid-2005. The project is contingent upon three primary factors: an expedited regulatory approval timetable, the availability of adequate electric transmission access to multiple markets, and the securing of long-term power contracts for the energy produced by the project.

The facility would be operated by the Company’s non-regulated Independent Energy business unit. It would be similar in features to the existing 362 MW Wyodak power plant operated by PacifiCorp at the same location. The energy produced would be sold in the wholesale energy markets.

Daniel P. Landguth, Chairman and CEO of Black Hills Corporation, said, “We are excited to announce the initiation of yet another significant independent power project. We have great potential to deliver low-cost, reliable electricity to a power-hungry marketplace. Our mine-mouth coal-fired power plants near Gillette are some of the most reliable and low-cost units in the nation, and we believe the time is right to significantly expand our capabilities there.”

“We are hopeful that our ambitious response to market opportunity is matched by the commitment of others so that we might proceed rapidly,” Landguth continued. “We appreciate the need for regulatory review and compliance, but we are hopeful that the review process can be expedited. We also believe that the State of Wyoming can position itself as an energy leader by facilitating private sector construction of additional electric transmission line infrastructure.”

The Company has been operating the Wyodak coal mine in the Powder River Basin near Gillette since acquiring the mine in 1955. Coal production approximates 3 million tons per year, and the mine contains an estimated 275 million tons of reserves. Black Hills pioneered air-cooled condensing power generation technology at the site in 1969, and presently has approximately 257 MW of coal-fired and gas-fired generation there. In addition, Wygen I, an independent 90 MW coal-fired plant, is under construction and is expected to be operational in mid-2003, and another 40 MW gas-fired unit is expected to be operational by mid-2001.

Black Hills Corporation is a diverse energy and communications company with three business units: Black Hills Energy Ventures, the Company’s independent energy unit which generates electricity and produces and markets natural gas, oil, and coal; Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Black Hills FiberCom, a broadband communications company offering bundled telephone, high speed Internet and cable entertainment services.

The above information includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts in this press release, which address activities, events, or developments which the Company expects or anticipates will or may occur in the future are forward-looking statements, including without limitation, statements concerning future revenues, earnings, and performance. Although the Company believes that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct. These forward-looking statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the forward-looking statements. In addition to the factors discussed above, the following are among the important factors that could cause actual results to differ materially from the forward-looking statements: market demand and prices of electricity and other commodities, fuel pricing, weather variations affecting customer energy usage, deployment of the Company’s fiber optic network, customer penetration rates relating to communications products and services, valuation changes in the U.S. energy industry, new regulatory developments, economic conditions, competition in power markets, counterparty credit risk, and continued availability of capital and financing. Any such forward-looking statements should be considered in conjunction with Black Hills Corporation’s most recent annual report on Form 10-K and its interim quarterly reports on Form 10-Q on file with the Securities and Exchange Commission. 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 the Company to predict all such factors, or to the extent to which any such factor of combination of factors may cause actual results to differ from those contained in any forward-looking statement. The Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise. Black Hills Corporation is an energy and communications company that supplies electric utility service to a 9,300 square-mile area in western South Dakota, northeastern Wyoming, and southeastern Montana; conducts independent energy operations including: 1) the mining and sale of coal from its mine located near Gillette, Wyoming; 2) the production, exploration, and operation of oil and gas interests located in the Rocky Mountain region, Texas, and California; 3) marketing of coal, natural gas, crude oil, electricity, and related services to customers in the Rocky Mountain region, Gulf Coast, Midwest, and East Coast markets and 4) operates and has interests in independent energy production facilities in various parts of the United States; and markets communications services in the Black Hills region.

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