Black Hills to Close Small Coal Units, Build New Gas-Fired Generator

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Utility subsidiaries of Black Hills Corporation (NYSE:BKH) (Rapid City, South Dakota) plan to construct a grassroot, 132-megawatt (MW), gas-fired generator near Cheyenne, Wyoming, to offset the premature closing of about 124 megawatts (MW) of coal-fired generating capacity in Colorado, Wyoming and South Dakota. These coal-fired units are being closed to comply with tougher power plant emissions regulations from the U.S. Environmental Protection Agency (Washington, D.C.) and the state of Colorado, which passed the Clean Air -Clean Jobs Act in 2010.

The Cheyenne Prairie Generating Station has a total investment value of $237 million. Construction is scheduled to start in early 2013, and the unit is scheduled to begin operating in late 2014. The project is expected to create up to 400 jobs during construction. Cheyenne Prairie will consist of a 37-MW, simple-cycle combustion turbine and a 95-MW, combined-cycle combustion turbine.

The Cheyenne generator will replace electric output from small, older, coal-fired generators that Black Hills has decided to retire. The coal plants to be retired are:

• The W.N. Clark Power Station, a 42-MW coal generator that began operating in 1955. This plant, located in Canon City, Colorado, will suspend operations by the end of 2012 and be retired by year-end 2013.
• The Ben French Power Station, a 50-year-old, 25-MW generator located in Rapid City, South Dakota. This station will suspend operations by the end of August and will be retired in March 2014.
• The 34.5-MW Osage Power Station, located in Osage, Wyoming, will be retired in March 2014. The three units at Osage commenced operation in 1948, 1949 and 1952. All three were closed in July 2010.
• The Neil Simpson Wygen Unit 1 Power Complex, located in Gillette, Wyoming, will be retired in March 2014. This 22-MW unit began operating in 1969.

Black Hills pointed out that suspending operations at the Clark and French stations allow those generators to be temporarily reactivated if their output is needed to meet peak electric demand.

"We are committed to providing our customers with reliable and low-cost energy," said David R. Emery, the chairman, president and chief executive officer of Black Hills, in a statement earlier this month. "After a thorough analysis of new environmental regulations, coupled with changing market and operating conditions, we identified 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."

In addition, Black Hills said it will suspend operations at Pueblo Power Station units 5 and 6, both gas-fired, effective at the end of 2012. Those steam turbine units have combined generating capacity of 29 MW. Unit 5 began operating in 1941, while Unit 6 began producing electricity in 1949. The plant is located in Pueblo, Colorado.

A Black Hills subsidiary has sought permission from the Colorado Public Utilities Commission (Denver, Colorado) to build an 80-MW, gas-fired generator to meet future customer needs, but the regulators refused that request. Black Hills will come back to the regulators with a proposal to build a 40-MW, gas-fired generator in southern Colorado. The issue is currently before Colorado regulators, and a decision is not expected for several months.

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