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Black Hills: Coal is Back
Black Hills Energy Capital Inc., the independent powersubsidiary of Black Hills Corp. announced it has initiated thepermitting process to build a coal-fired electric generatingfacility capable of up to 500 MW adjoining its other generatingplants near Gillette, WY.
The power plant could be operational in mid-2005. The project iscontingent upon three primary factors: an expedited regulatoryapproval timetable, the availability of adequate electrictransmission access to multiple markets, and the securing oflong-term power contracts for the energy produced by the project.The facility would be operated by the company’s non-regulatedIndependent Energy business unit. It would be similar in featuresto the existing 362 MW Wyodak power plant operated by PacifiCorp atthe same location. The energy produced would be sold in thewholesale energy markets.
“Our mine-mouth coal-fired power plants near Gillette are someof the most reliable and low-cost units in the nation, and webelieve the time is right to significantly expand our capabilitiesthere,” said Daniel P. Landguth, Black Hills chairman. Coal “is avery undervalued resource,” added Dale Jahr, the company’s directorof investor relations. “Because of the low cost of the raw fuel, westrongly believe coal will be cost competitive for a long, longtime.”
However, since it will take considerable time to complete acoal-fired facility, “time is of the essence. If we get intoprotracted negotiations or permitting takes forever, we will losethe market opportunity. We have energy-starved states right now.”Part of the economics of the Black Hills project is having the coalon-site. Transportation and on-site storage of the fuel is anexpensive proposition.
The company has been operating the Wyodak coal mine in thePowder River Basin near Gillette since acquiring the mine in 1955.Coal production approximates 3 million tons per year, and the minecontains an estimated 275 million tons of reserves. Black Hillspioneered air-cooled condensing power generation technology at thesite in 1969, and presently has approximately 257 MW of coal-firedand gas-fired generation there. In addition, Wygen I, anindependent 90 MW coal-fired plant, is under construction and isexpected to be operational in mid-2003, and another 40 MW gas-firedunit is expected to be operational by mid-2001.
Black Hills Corp. is a diverse energy and communications companywith three business units: Black Hills Energy Ventures, thecompany’s independent energy unit which generates electricity andproduces and markets natural gas, oil, and coal; Black Hills Power,an electric utility serving western South Dakota, northeasternWyoming and southeastern Montana; and Black Hills FiberCom, abroadband communications company offering bundled telephone, highspeed Internet and cable entertainment services.
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