Wholesale Operations
Retail Operations

Wholesale Energy Operations A Regional Market Leader

Natural Gas and Oil Production

• Development strategy focuses on long-lived gas reserves.
• 2006 production – 14.4 Bcfe – was the ninth consecutive increase, up 5% over 2005.
• 199 Bcfe reserves at year-end 2006, with natural gas comprising 83% of the total.
• Acquired 18,000 net acre leasehold with approximately proven reserves located in the Piceance Basin in western in 2006; complements existing operations in that region; drilling program with substantial proven undeveloped
• Production is concentrated in San Juan Basin of New Piceance Basin of Colorado and Powder River Basin of with additional production in several other states.

Coal Mining

• Our Powder River Basin coal mine near Gillette, Wyoming supports low cost, mine-mouth power generation.
• 2006 production: 4.7 million tons.
• 285 million tons of coal reserves at year-end 2006 – a 50-plus year supply at expected production rates.

Energy Marketing

• Focusing on energy delivery, our primary business is marketing and moving natural gas from the Rockies and Canada to markets in the West.
• Natural gas marketing includes origination services for consumers and producer services for suppliers.
• Average daily marketing physical volumes in 2006:
natural gas – 1.6 million MMBtu, up 12%; crude oil – 8,800 barrels as of May 1, 2006.

Power Generation

• 989 MW of power generation capacity.
• Plants concentrated in Colorado, Nevada, Wyoming and California.
• Nearly all our capacity is under long-term contracts with load-serving electric utilities.
• We serve growth markets in the West by providing coal-fired and natural gas-fired generation for baseload and peaking power capacity.
• Power plant fleet availability of 93.4% reflects plant outages in Las Vegas earlier in 2006; availability in 4th quarter 2006 of 99% demonstrated a return to our superior service standard.

Retail Services... Committed To Our Customers

Black Hills Power

• Electric utility serving about 64,000 customers in western South Dakota, southeastern Montana, and northeastern Wyoming.
• 435 MW of power generation plus 50 MW of purchased power under long-term contract.
• Power plant fleet availability was an impressive 97.1%, even with the planned major maintenance outage of the Wyodak power plant.
• 415 MW peak demand, set in July 2006.
• In 2007, we increased rates for the first time in 11 years, with a $7.9 million, or 7.8% increase; automatic cost adjustments for transmission and coal fuel costs were included, with a provision for cost-sharing on natural gas and purchased power costs under certain conditions.
• Ability to sell surplus power off-system provides upside to investors and cost containment benefits for customers.
• Contract wholesale customers include City of Gillette, Municipal Energy Agency of Nebraska, and MDU, the utility serving Sheridan, Wyoming.
• Unique access to both eastern and western power grids; AC-DC-AC transmission tie provides 70 MW of bi-directional transmission capacity.

Cheyenne Light, Fuel & Power

• Electric and natural gas distribution company serving 39,000 electric customers and 33,000 gas customers in Cheyenne and other parts of Laramie County, Wyoming.
• 163 MW peak electric demand.
• 4.4 million dekatherm annual retail gas delivery and 920,000 MW-hours of electric sales.
• Construction under way for Wygen II, a 90 MW mine-mouth, coal-fired power plant with commercial service expected January 1, 2008; current rate case requests the facility to be a rate-base asset.