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Cheyenne Prairie Generating StationFrequently Asked QuestionsWhy are you filing jointly? The proposed joint ownership of a combined cycle resource by Cheyenne Light and Black Hills Power represents a win-win opportunity for each utility. Benefits of joint ownership of a combined cycle unit in Cheyenne include:
In late summer 2011, Black Hills Power began work on an IRP to identify the future resource needs of its customers. The future resource needs of Black Hills Power are driven primarily by the impact of environmental regulatory requirements on its existing older coal-fired generating facilities. Based on regulatory requirements and economics, the Ben French, Neil Simpson 1 and Osage coal-fired units owned by Black Hills Power will need to be retired in 2014. As a result of the preferred plan in Black Hills Power’s IRP, consideration was given to siting the combined cycle resource in Cheyenne, presenting an opportunity for both Cheyenne Light and Black Hills Power to benefit from ownership of a combined-cycle resource. Is BHC doing anything to impact future EPA regulations? Yes, we closely monitor and evaluate EPA and other regulations as they are proposed, considering operational and cost impacts and our ability to cost effectively ensure reliability for our customers. We often join other energy providers and businesses in weighing in with the EPA on rules, providing alternative options and explaining impacts to our business and our customers. It’s important that regulations balance benefits and costs, of ensuring clean air and water and cost effective service to customers. We also keep elected officials regularly informed about policy options and impacts. As regulations are proposed, we evaluate the impact on our ability to cost effectively meet customers’ energy needs. What is BHC’s position on EPA regulations? We’ve expressed concerns about the growing cost of regulations to Washington D.C. We work closely with our congressional delegations, state and local leaders to help them understand the potential impacts of regulations and options that balance environmental goals with reliability and costs. We also work with other energy providers and our associations to provide information and policy options for leaders to consider. Once regulations are finalized, we focus on compliance. We cost effectively comply with federal and state regulations. What’s the future for BHP’s other existing coal fired power plants? Wygen III and Neil Simpson 2 are well positioned to continue operation into the future. BHP used the best available technologies when constructing its Wygen III coal-fired generation. Neil Simpson 2 may require modifications based on currently proposed environmental regulations. BHP will evaluate the cost effectiveness of any modifications. BHP recently built Wygen III. Why didn’t you build natural gas generation then? In 2007, BHP completed an integrated resource plan that identified Wygen III as the most economic resource to meet the future need of its customers based on forecasted economic, commodity price and load growth assumptions. Why is BHP generation being built in Cheyenne? The Cheyenne location provides an opportunity to partner with another utility on the combined cycle unit, has adequate natural gas supply and proximity to water, gas and transmission infrastructure and allows BHP to diversify the location of its generating resources. What will the economic impact be for the community of Cheyenne? During construction, as many as 300 jobs will be created, with 10-14 permanent positions at the generating station. Why did you decide to partner on this project? Cheyenne Light recognized that we will need new electric resources to offset load growth and the expiration of long-term a power purchase contract occurring during the next several years and completed an integrated resource plan (IRP) in June 2011. Cheyenne Light’s integrated resource plan identified a preferred plan that included the addition of three combustion turbine generators for Cheyenne Light customers by 2014. In late summer 2011, Black Hills Power began work on an IRP to identify the future resource needs of our customers. The future resource needs of Black Hills Power are driven primarily by the impact of environmental regulatory requirements on its existing older coal-fired generating facilities. Based on regulatory requirements and economics, the Ben French, Neil Simpson 1 and Osage coal-fired units owned by Black Hills Power will need to be retired in 2014. The Black Hills Power IRP recommended the conversion of a combustion turbine generator to combined cycle operation in the 2014 time frame. As a result of the preferred plan in Black Hills Power’s IRP, consideration was given to siting the combined cycle resource in Cheyenne, presenting an opportunity for Cheyenne Light and Black Hills Power to benefit from ownership of a combined-cycle resource. What will the rate impact be to customers? We have applied to the Wyoming Public Service Commission for a CPCN. This filling requests the Wyoming PSC's approval to construct and operate the facility and does not address any potential rate impact. The Public Service Commission will thoroughly investigate the prudency, reasonableness and necessity for this project before any rate impact goes into effect.
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