While its nonutility operations in coal, oil and natural gas were a mixed bag, Rapid City, SD-based Black Hills Corp. said Monday it is suspending prior to retirement several old coal and natural gas-fired power plants in Colorado and South Dakota as part of its utility operations in those two states.
Separately, the company announced its second quarter profits were up compared to the same period in 2011 ($15.1 million, or 34 cents/share in 2Q2012, compared with $8.8 million, or 22 cents/share in 2Q2011). It also reported taking a $17.3 million after-tax, noncash ceiling test impairment charge against the book value of its crude oil and gas properties for the second quarter.
CEO David Emery said the 55% increase in quarter-over-quarter results came mostly from the utility sector, where a record heat in June pushed power operations to maximum output, but that was partially offset by poor results on the natural gas side, both for utility and exploration and production (E&P) operations. There was a 32% drop quarter-over-quarter in gas utility sales and a 27% decrease in the average price Black Hills received for gas supplies from its E&P operations, Emery said.
Meanwhile, Black Hills Energy's Colorado utility and Black Hills Power announced suspension of operations at the W.N. Clark coal-fired generation plant in Canon City, CO, and natural gas-fired steam units Nos. 5 and 6 in its Pueblo, CO, generation complex. In addition, Black Hills said it will suspend operations Aug. 31 at its Ben French coal-fired plant in Rapid City, SD.
"Suspension of operations requires the units to still be available to generate electricity when necessary, especially during hot summer months when customers are using the most energy," a utility spokesperson said.
Emery said the company did a detailed analysis of new environmental regulations, along with changing market and operating conditions before "identifying an opportunity to make changes to our resource portfolio by suspending operations at some of our older generating facilities in advance of permanently retiring those plants."
The company expects the 42 MW Clark plant to close by Dec. 31, 2013, while the 25 MW French, 34.5 MW Osage and 22 MW Neil Simpson are all scheduled to be retired on March 21, 2014.
On July 31 Black Hills Power obtained state approvals to build the 132 MW gas-fired Cheyenne Prairie power plant, which is expected to make up for the three coal-fired plants being retired when it comes online in late 2014.
At the end of July Black Hills Energy's Colorado Electric utility filed a power resource plan with the state regulatory commission that embodies the suspensions and ultimate closures. The new plan recognizes that the Colorado Public Utilities Commission rejected the utility's request to build an 88 MW gas-fired peaking plant last year, and it proposes construction of a 40 MW simple-cycle gas-fired peaker instead that would begin operating in 2016 as a replacement for the Clark plant.
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