Who We Are
Black Hills Corp. Company Profile
For nearly 135 years, Black Hills Corp. has delivered safe, reliable, affordable and environmentally responsible energy to our customers. Based in Rapid City, South Dakota, Black Hills Corp., doing business as Black Hills Energy, is an investor-owned U.S. electric and natural gas utility company with regulated operations spanning a geographically diverse, 8-state region.
Delivering valued service
It is our privilege to serve more than 1.25 million electric and natural gas customers with the energy they depend on to grow and thrive, and we work diligently – in every aspect of our business – to ensure we responsibly meet our customers’ energy needs today and well into the future.
Black Hills Energy is composed of regulated natural gas and electric utilities supported by vertically-integrated mining and power generation businesses. We employ 2,800 women and men to manage our operations and serve our customers. Our employees are located in communities across our service territory.
Strategic priorities
We are focused on meeting our customers’ current and future energy needs through operational excellence and by growing our core utility businesses. Our core strategic priorities are Valued Service, Great Workplace, Better Every Day, and Profitable Growth. We strive every day to achieve top-quartile performance in all we do and improve the way we deliver energy to our customers. Our more detailed strategic priorities are listed below.
Financial overview and charts
We are proud of our track record of delivering solid, long-term financial results, strong earnings, and dividend growth. Our 2017 earnings reflect the announcement in late 2017 that we would divest our oil and gas business. Earnings results for the previous five years have been restated to reflect oil and gas as discontinued operations.
The table below summarizes our stock performance and key financial indicators over the last three years. The financial information clearly shows the financial impact from our February 2016 acquisition of SourceGas, which added four natural gas utilities and a natural gas transmission system to our natural gas utility portfolio.
| Stock information (year-end) | 2017 | 2016 | 2015 |
|---|---|---|---|
| Stock price | $60.11 | $61.34 | $46.43 |
| Common shares outstanding | 53.5 | 53.4 | 51.2 |
| Market capitalization | $3,218 | $3,274 | $2,377 |
| Company key indicators | 2017 | 2016 | 2015 |
| Total capital expenditures* | $338 | $460 | $290 |
| Total assets | $6,659 | $6,542 | $4,627 |
| Total debt | $3,326 | $3,314 | $1,930 |
| Net income (loss) available for common stock | $177 | $73 | ($32) |
| Per share information | 2017 | 2016 | 2015 |
| Earnings per share: GAPP | $3.21 | $1.37 | ($0.71) |
| Earnings per share, as adjusted** | $3.36 | $3.13 | $3.27 |
| Dividend per share | $1.81 | $1.68 | $1.62 |
| Dividend yield: year-end | 3.0% | 2.7% | 3.5% |
| Dividend growth | 7.7% | 3.7% | 3.8% |
*Excludes discontinued operations and capital for SourceGas purchase in 2016
Black Hills Corp. – State Overview
Arkansas
- 169,300 utility customers
- 104 communities served
Colorado
- 278,000 utility customers
- 125 communities served
- 525 megawatts of owned power generation capacity
Iowa
- 157,400 utility customers
- 132 communities served
Kansas
- 114,000 utility customers
- 64 communities served
Montana
- 46 utility customers
- 2 communities served
Nebraska
- 290,200 utility customers
- 294 communities served
South Dakota
- 69,500 utility customers
- 23 communities served
- 130 megawatts of owned power generation
Wyoming
- 174,500 utility customers
- 57 communities served
- 195 million tons of coal reserves
- 556 megawatts of owned power generation capacity
Our business segments - at a glance
Regulated Electric Utilities: the generation, transmission and distribution of electricity
- 210,300 electric customers in Colorado, Montana, Wyoming, and South Dakota
- 941 megawatts (MW) of generation
- 8,839 miles of electric transmission and distribution lines
Regulated Natural Gas Utilities: the distribution and transportation of natural gas
- 1,042,000 natural gas utility customers in Arkansas, Colorado, Iowa, Nebraska, Kansas and Wyoming
- 4,656 miles of intrastate gas transmission pipelines
- 40,455 miles of gas distribution mains and service lines
- 16.54 Bcf working capacity of underground natural gas storage facilities located in Arkansas, Colorado and Wyoming
Non-regulated Energy Services
- 52,000 Choice Gas Program participants (retail gas distribution customers in Nebraska and Wyoming)
- 94,000 residential customers participating in natural gas appliance repair/protection plans delivered through Service Guard and Customer Appliance Protection Plan (CAPP).
Power Generation: the production of electric power
- 269 MW of owned generation
- Electric power produced from our generating plants is sold primarily to our utilities under long-term contracts
- Since 1995, Black Hills’ Power Generation segment has constructed 19 projects totaling 1,937 MW of electric generation
- Natural gas generation: 14 projects, 1,523 MW
- Coal-fired generation: 4 projects, 385 MW
- Wind generation: 1 project, 29 MW
Mining: the mining and production of coal for the purpose of generating electricity
- 4.2 million tons of low-sulfur Powder River Basin coal produced in 2017
- Nearly 100 percent of coal produced is contracted under long-term contracts to on-site, mine-mouth generation facilities under long-term supply contracts
- Wyodak Mine, located near Gillette, Wyo., is the oldest, continuously operated surface coal mine in the United States. It has been operated by Black Hills since 1956
- 47-year supply of coal reserves at current production rates
Safe, Reliable and Affordable Energy
We are committed to providing our customers with safe, reliable and affordable energy in an environmentally-responsible manner.
Electricity Generation
Black Hills produces energy using generation sources that balance reliability and affordability while being mindful of environmental impacts. To ensure our customers’ energy needs are met today and well into the future, our generation portfolio includes modern baseload coal plants and advanced, state-of-the-art natural gas-fired generating plants, and an increasing emphasis on renewable energy resources. Our electric utilities consistently deliver industry top quartile reliability performance for all U.S. utilities and have done so for the past 10 years.
Generation Capacity by Source
| Source | Owned generation (MW) as of Dec. 31, 2017 |
|---|---|
| Coal | 383.5 MW |
| Natural Gas and Oil | 752.0 MW |
| Wind | 74.5 MW |
| TOTAL | 1,210 MW |
Energy Mix by Source
The energy we deliver to customers comes from internally-generated energy production plus energy purchased from third parties.
| Source | 2017 | 2016 | 2015 |
|---|---|---|---|
| Coal | 32% | 33% | 33% |
| Natural Gas and Oil | 4% | 6% | 3% |
| Wind | 3% | 1% | 1% |
| Purchased energy | 60% | 60% | 63% |
| TOTAL* | 100% | 100% | 100% |
*Minor differences due to rounding.
Energy Mix by Regulated Utility Company
South Dakota Electric (year-end 2017)
- Customers – 72,200
- Total Owned Generation (MW)
- Coal: 219.6 MW
- Natural Gas: 215 MW
- Oil: 10 MW
| Unit | Fuel Type | Location | Ownership interest % | Owned capacity (MW) | Year installed |
|---|---|---|---|---|---|
| Cheyenne Prairie | Natural Gas | Cheyenne, Wyo. | 58% | 55.0 | 2014 |
| Wygen III | Coal | Gillette, Wyo. | 52% | 57.2 | 2010 |
| Neil Simpson II | Coal | Gillette, Wyo. | 100% | 90.0 | 1995 |
| Wyodak* | Coal | Gillette, Wyo. | 20% | 72.4 | 1978 |
| Neil Simpson Combustion Turbine (CT) | Natural Gas | Gillette, Wyo. | 100% | 40.0 | 2000 |
| Lange CT | Natural Gas | Rapid City, S.D. | 100% | 40.0 | 2002 |
| Ben French Diesel #1-5 | Oil | Rapid City, S.D. | 100% | 10.0 | 1965 |
| Ben French CTs #1-4 | Natural Gas/Oil | Rapid City, S.D. | 100% | 80.0 | 1977-1979 |
| TOTAL | 444.6 MW |
*Operated by PacifCorp
Wyoming Electric (year-end 2017)
- Customers – 42,100
- Total Owned Generation (MW)
- Coal: 95 MW
- Natural Gas: 77 MW
| UNIT | FUEL TYPE | LOCATION | OWNERSHIP INTEREST % | OWNED CAPACITY (MW) | YEAR INSTALLED |
|---|---|---|---|---|---|
| Cheyenne Prairie | Natural Gas | Cheyenne, Wyo. | 42% | 40.0 | 2014 |
| Cheyenne Prairie CT | Natural Gas | Cheyenne, Wyo. | 100% | 37.0 | 2014 |
| Wygen II | Coal | Gillette, Wyo. | 100% | 95.0 | 2008 |
| TOTAL | 172 MW |
Colorado Electric (year-end 2017)
- Customers – 96,000
- Total Owned Generation (MW)
- Natural Gas: 220 MW
- Oil: 30 MW
- Wind: 74.5 MW
| UNIT | FUEL TYPE | LOCATION | OWNERSHIP INTEREST % | OWNED CAPACITY (MW) | YEAR INSTALLED |
|---|---|---|---|---|---|
| Busch Ranch Wind Farm | Wind | Pueblo, Colo. | 50% | 14.5 | 2012 |
| Peak View Wind Farm | Wind | Pueblo, Colo. | 100% | 60.0 | 2016 |
| Pueblo Airport Generation | Natural Gas | Pueblo, Colo. | 100% | 180.0 | 2011 |
| Pueblo Airport Generation CT | Natural Gas | Pueblo, Colo. | 100% | 40.0 | 2016 |
| AIP Diesel | Oil | Pueblo, Colo. | 100% | 10.0 | 2001 |
| Diesel #1-5 | Oil | Pueblo, Colo. | 100% | 10.0 | 1964 |
| Diesel #1-5 | Oil | Rocky Ford, Colo. | 100% | 10.0 | 1964 |
| TOTAL | 324.5 MW |
Transmission and Distribution
We invest in transmission and distribution upgrades and new construction to meet our customers’ needs and to maintain the reliability of our electric system. Through our regulated electric utilities, we own electric transmission systems composed of high voltage transmission lines (greater than 69 kV) and low voltage lines (69 kV or less).
Miles in operation: Transmission and Distribution (as of Dec. 31, 2017)
| Regulated Utility | State(s) | Transmission (in line miles) | distribution (in line miles) |
|---|---|---|---|
| South Dakota Electric | South Dakota, Wyoming | 1,264 | 2,506 |
| South Dakota Electric - Jointly Owned* | South Dakota, Wyoming | 44 | - |
| Wyoming Electric | South Dakota, Wyoming | 49 | 1,281 |
| Colorado Electric | Colorado | 602 | 3,093 |
| TOTAL | 1,959 miles | 6,880 miles |
*South Dakota Electric owns 35 percent of a DC transmission tie that interconnects the Western and Eastern transmission grids, which are independently operated transmission grids serving the western U.S. and eastern U.S. respectively.
Natural Gas Utility Operations
When Black Hills acquired SourceGas in 2016, we not only greatly expanded our natural gas utility operations, we expanded our service territory beyond our traditional Midwestern and Rocky Mountain borders to incorporate the state of Arkansas. We serve 1,042,000 natural gas utility customers in Arkansas, Colorado, Iowa, Nebraska, Kansas and Wyoming and we own, operate and maintain approximately 45,000 miles of natural gas pipelines to serve those customers and communities.
Natural Gas System Infrastructure (as of Dec. 31, 2017)
| in line miles | Intrastate gas transmission pipelines | gas distribution mains | Gas distribution service lines |
|---|---|---|---|
| Arkansas | 926 | 4,654 | 919 |
| Colorado | 683 | 6,569 | 2,399 |
| Iowa | 163 | 2,777 | 2,653 |
| Kansas | 325 | 2,855 | 1,337 |
| Nebraska | 1,256 | 8,467 | 3,219 |
| Wyoming | 1,303 | 3,396 | 1,210 |
| TOTAL | 4,656 | 28,718 | 11,737 |
Regulated Underground Gas Storage Facilities (as of Dec. 31, 2017)
| STATE | WORKING CAPACITY (bCF) | CUSHION GAS (bCF) | TOTAL CAPACITY (bCF) | MAXIMUM DAILY WITHDRAWAL CAPACITY (bCFD) |
|---|---|---|---|---|
| Arkansas | 8.44 | 12.95 | 21.39 | 0.196 |
| Colorado | 2.36 | 6.17 | 8.53 | 0.030 |
| Wyoming | 5.73 | 17.15 | 22.88 | 0.033 |
| TOTAL | 16.54 | 36.26 | 52.80 | 0.259 |
Understanding the Regulatory Compact
Our electric and natural gas utilities operate under a set of regulations determined by state public utilities commissions and federal agencies. As a regulated utility company, Black Hills is granted the exclusive right to sell electricity and natural gas in a defined service territory. In exchange, Black Hills operates under a set of conditions known as the “regulatory compact:”
- Duty to serve: We will provide service to any residence or business that requests it within our defined service territory. Utilities cannot pick and choose their customers.
- Cost of service pricing: The pricing for electric and natural gas services is regulated and determined by the costs we incur to generate and deliver this energy to our customers. Utilities can only charge customers for investments that have been deemed “used and useful” for providing utility service. We are granted the ability to recover our costs of doing business and the opportunity to earn a reasonable rate of return on our utility capital investments.
- Resource planning process: Every few years, we go through a process governed by our state utility commissions to assess the resources necessary to serve customers’ future energy needs. Energy resource plans must be reviewed and approved by regulatory commissions in an open, public process so that our customers and other stakeholders are given the opportunity to provide input on the plans.
Awards and recognition
2018
- Most Admired Company in South Dakota (MSN)
2017
- Utility Community Forestry Award, Nebraska Forest Service (for our Energy Saving Trees partnership with the Arbor Day Foundation)
- Wyoming Governor's Workplace Safety Award (Wyodak Mine employees)
- SourceAmerica Business Partnership Award (national recognition for partnership with Black Hills Works)
2016
- America's Best Midsize Employers (Forbes)
- Wyoming Governor's Workplace Safety Award (Wyodak Mine employees)
2015
- Secretary of Defense Employer Support Freedom Award (the highest recognition given by the U.S. government for support of employees serving in the Guard and Reserve)
- Achievers 50 Most Engaged WorkplacesTM in North America
- Top Workplace Award (The Denver Post)
- Greater Cheyenne Chamber of Commerce Community Beautification Award
- 24-Karat Gold winners, Colorado Environmental Leadership Program for Energy Efficiency Education Program (Colorado Electric and Colorado Gas utilities)
- Wyoming Governor's Workplace Safety Award (Wyodak Mine employees)
2014
- Gold Leader, State of Colorado’s Environmental Leadership Program (in recognition of Black Hills’ achievement of environmental improvement and sustainability goals)
- Wyoming Governor's Workplace Safety Award (Wyodak Mine employees)
- Top 100 Places to Work in IT (ComputerWorld)