Rapid City, S.D. – Oct. 15, 2020 – Black Hills Corp. (NYSE: BKH) today announced that utility subsidiary Cheyenne Light, Fuel and Power Co., doing business as Black Hills Energy, and power generation subsidiary Black Hills Wyoming received approval of their joint application for a proposed 60-megawatt power purchase agreement from the Federal Energy Regulatory Commission.
Under the approved agreement, Black Hills Wyoming will continue to deliver 60 megawatts of base load capacity and energy to Cheyenne Light from its Wygen I power plant. The new agreement will commence on Jan. 1, 2022, replacing the existing power purchase agreement, and will continue for 11 years, ending Dec. 31, 2032. The Wygen I power plant is located near Gillette in northeast Wyoming and is a mine-mouth operation with the adjacent mining complex.
“This new contract will provide critical capacity for our Wyoming electric utility,” said Linn Evans, president and CEO of Black Hills Corp. “The Wygen I power plant is an extremely reliable, low-cost source of electric base load capacity and energy for Cheyenne Light and is the best long-term choice to cost-effectively meet our customers’ current and future needs.”
Cheyenne Light believes its long-term electric capacity and energy needs are best met utilizing a balanced mix of generation resources, including natural gas, coal, and renewable resources. The utility identified a near-term generation base load capacity shortfall of 60 megawatts stemming from expiration of the existing Wygen I power purchase agreement.
The new long-term power purchase agreement will provide the capacity and energy needed to help maintain grid stability and resiliency as Cheyenne Light integrates more intermittent renewable resources into its generating fleet. Cheyenne Light currently has 25 megawatts of wind generation resources on its system and is planning to add 20 megawatts of renewable wind energy when the 52.5-megawatt Corriedale wind project that it will jointly own with its affiliate Black Hills Power comes on-line later this year.
“The FERC approval allows the Wygen I power plant to continue serving our Wyoming electric utility customers with stable, low-cost, base load energy afforded by mine-mouth logistics and a low-cost, local Wyoming energy resource,” added Evans. “These operations will also help maintain stable, long-term mining and plant operations jobs within Wyoming.”