Billing its transformation away from coal-fired generation to more natural gas-fired power as a “21st Century model,” Rapid City, SD-based Black Hills Corp. said Wednesday its utility operations in Colorado would start the new year by firing up commercial operations of two new baseload gas-fired generation plants near the Pueblo, CO, airport.

Separate units of Black Hills Energy’s operations will own and operate the new facilities: a $227 million, 180 MW Black Hills Energy, Colorado Electric plant, and a $260 million, 200 MW Black Hills Colorado IPP plant. The power from both facilities will replace a power purchase agreement with Xcel Energy that expires at the end of this year.

The plants, which are adjacent to the airport, have completed most pre-commercial operations testing, including being synchronized to the grid, tested at full output and allowed to dispatch test energy, a Black Hills spokesperson said. “Final remaining activities will include completion of performance and emission testing and ensuring compliance with all air emission requirements.”

With the two new plants, Black Hills Energy-Colorado Electric will have replaced 75% of its resource capacity at one time, under a mandate from the Colorado Public Utilities Commission (PUC). The spokesperson called this unprecedented. The utility claims it completed the mandated transformation on time and under budget.

In March 2009, the PUC issued an order responding to Black Hills Energy-Colorado Electric’s revised resource plan filed the previous year. The PUC provided the opportunity for the utility to construct and operate new generation to serve a portion of its customer requirements when the Xcel power contract expired. That purchased power represented three-quarters of the utility’s capacity.

“During the previous 16 months, we have substantially rebuilt the electric infrastructure in our Black Hills Energy territory — from generation to transmission — in order to provide our utility customers long-term stability in rates, a secure supply of energy and the ability to effectively integrate renewable resources and protection from uncertain future carbon legislation,” said Black Hills CEO David Emery.

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