BLACK HILLS ENERGY FILES TO REDUCE NATURAL GAS RATES 28 PERCENT FOR THE COMPANY'S COLORADO CUSTOMERS

FOUNTAIN, Colo., Feb. 6, 2009 — Black Hills Energy has filed a request with the Colorado Public Utilities Commission to reduce the cost per unit of natural gas for its residential, commercial and industrial customers by 28 percent. The request is based on lower natural gas prices. The company proposes to apply the new lower rate to usage beginning Feb. 24, 2009.

Under the filed request, a typical residential customer would, during peak monthly usage (typically the colder winter months), see a monthly bill of approximately $156, compared to $214 prior to the proposed reduction. The decrease over the next 12 months would average $27 per month for a typical residential customer.

The monthly bill for a typical commercial customer during a peak month would be $610, as opposed to $838. The average decrease over the 12-month period would be approximately $109 per month.

The reduction per Ccf (one hundred cubic feet) of natural gas would apply to the total of transportation, upstream cost (supplier pipeline fees) and commodity costs. As proposed, the total for those three items would decrease from $1.17061 per Ccf to $.84769 per Ccf for residential and commercial customers. Upstream and commodity costs account for about 80 percent of the bill. The remainder is for the customer charge and transportation, which includes the non-commodity costs for Black Hills Energy to provide safe, reliable service. The customer charge and transportation rate are regulated by the Colorado Public Utilities Commission and are currently under review in a separate rate case before the Commission.

"We're very pleased to be proposing this rate decrease as a result of lower natural gas prices," said Ivan Vancas, operating vice president for Black Hills Energy's natural gas networks in Colorado and Kansas. "We don't profit from higher gas prices, and our experts work diligently to purchase gas that is competitively priced," Vancas said. "It's great to be able to pass these savings on to our customers."

Black Hills Energy purchases up to 70 percent of its gas supplies throughout the spring and summer in preparation for winter, utilizing fixed-price contracts and options contracts, and placing gas in storage. Remaining supplies are purchased at market prices on a monthly basis throughout the heating season.

The company must purchase gas throughout the year in preparation for winter, so xceptionally high prices the first half of 2008 caused recent bills to be double what they were last year, when Colorado customers enjoyed prices that were much lower than the national average. Recently, the volatile gas market has followed oil prices in a steady decline. This lower priced gas is now in the Black Hills Energy natural gas portfolio, and both the company and its customers benefit.

This Gas Cost Adjustment (GCA) filing reconciles the amount Black Hills Energy charges customers for natural gas and the price it actually pays suppliers for the gas. The company provides gas supplies to its customers without a price mark-up, so what the company pays, customers pay.

The new rate would apply to Black Hills Energy gas customers in these Colorado counties: Cheyenne, Douglas, Elbert, El Paso, Kit Carson, Lincoln, Teller, Washington and Yuma.

Black Hills Energy firmly believes that helping customers manage their utility bills and save energy are valued components of providing safe, reliable energy service. An optional Budget Billing program, which spreads bills out evenly over the year to avoid high winter price spikes, and other payment options make it easier for customers to do business with the company. The company's Black Hills Cares program helps customers in need. Customer and employee donations to Black Hills Cares are matched by the company and forwarded to local energy assistance agencies to help customer in need. Further details, energy-saving tips, assistance agency listings and other information can be found at blackhillsenergy.com, and by calling the customer service center toll-free at 1-888-890-5554.

Black Hills Energy, a division of Black Hills Corp. (NYSE: BKH), serves 68,000 natural gas customers in 28 Colorado communities. Black Hills Corp. — a diversified energy company with a tradition of exemplary service and a vision to be the energy partner of choice — is based in Rapid City, S.D., with corporate offices in Golden, Colo., and Omaha, Neb. The company serves 750,000 utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The company’s non-regulated businesses generate wholesale electricity, produce natural gas, oil and coal, and market energy. We partner to produce results that improve life with energy. More information is available at www.blackhillscorp.com.

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