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Despite setback in Colorado, Black Hills actively pursuing cost-of-service gas program

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Despite setback in Colorado, Black Hills actively pursuing cost-of-service gas program

Despite therecent setback in Colorado, BlackHills Corp. continuesto "actively pursue" its cost-of-service gas program in six states, Chairman, President and CEO David Emery saidduring the May 4 earningscall.

Hearings are "underway actually this week in the stateof Nebraska, and they're set for Iowa, Kansas, South Dakota and Wyoming overthe course of the next few months," Emery said.

In Colorado,the company will evaluate its options and determine how best to proceed once itreceives the state Public Utilities Commission's written order. The PUC hadrecently rejectedBlack Hills Colorado Gas UtilityCo. LP's move to acquire natural gas reserves, saying the plan is a"serious risk to [taxpayers]."

The optionsmay include refiling with a specific property for PUC approval and inclusion inthe program, the executive noted.

Emery also clarified that the company had sought approval ofthe program in two separate phases when it filed requests with regulators in Iowa, Kansas,Nebraska, South Dakota, Wyoming and Colorado. However, commissioners inColorado "seemed to indicate a preference" for combining the twophases into a single proceeding, he added.

"So just to be clear, a Phase 1 approval will notimpact customer rates. It will simply establish the financial and othercriteria we need to select properties for inclusion in the program. The Phase 2process will provide approval to include specific gas properties and theassociated customer impact," Emery said.

Separately,Black Hills on May 3filed an application with Colorado regulators for an $8.9 million rate increaseto recover costs tied to the construction of a new 40-MW natural gas-firedcombustion turbine at the PuebloAirport power plant.

The ratecase covers both the investment and the expenses for the project, which isbeing developed to fulfill obligations under the Colorado Clean Air-Clean JobsAct. "Construction is about one-third complete and progressing very well,"Emery said.

The projectis expected to go online in late 2016, and will the power generated by thenow-retired W.N. Clarkcoal-fired plant in Fremont County, Colo.

Typicalresidential customers using 600 kWh would see an increase of 4.78%, or $4.99per month, in their bills. Meanwhile, the bills for small business customerswould increase $17.31 per month, or 4.37%, based on an average use of 2,300kWh. If approved, the new rates will go into effect Jan. 1, 2017.