Black Hills Corporation (Black Hills) has said that its Black Hills Colorado IPP (BHCI) subsidiary has been selected through a competitive bid process as the least-cost option to provide 200MW of power to the Black Hills Energy-Colorado Electric, a utility subsidiary of Black Hills.
BHCI will build the 200MW of natural gas-fired electric generation in Colorado and sell the power to Black Hills Energy-Colorado Electric through a 20-year power purchase agreement.
The BHCI generation facility will consist of two 100MW units, each with two 40MW LM6000 natural gas-fired combustion turbines and one 20MW steam turbine, operated in a combined cycle mode.
The BHCI facility is expected to cost $240m to $265m and to be completed and ready to deliver power by January 1, 2012. The power purchase agreement between BHCI and Black Hills Energy – Colorado Electric is also subject to approval by the Federal Energy Regulatory Commission (FERC).
David Emery, chairman, president and CEO of Black Hills Corporation, said: “We are pleased with the opportunity to add new generation capacity to serve the Black Hills Energy – Colorado Electric utility customers.
“Our ability to build generation facilities on time and on budget is a core strength of our diversified energy company, and our experienced team has the proven ability to manage the planning and construction process to a successful result.”
Sites near the Black Hills Energy-Colorado Electric service area are being considered for the BHCI facility and the final selection could impact the capital costs for the BHCI project, Black Hills said.
The preferred plan is to locate the BHCI generation assets at the same site where Black Hills Energy-Colorado Electric will build its utility-owned generation. If a co-located site is selected by BHCI, it will include BHCI’s 200MW power plant and Black Hills Energy-Colorado Electric’s two utility-owned, natural gas-fired 100MW LMS100 turbines.
The power from the combined utility and BHCI resources will serve 93,300 Black Hills Energy – Colorado Electric utility customers in the Pueblo, Canon City and Rocky Ford-area communities in southeastern Colorado.
On March 31, 2009, the Colorado Public Utilities Commission issued an order pertaining to the August 5, 2008 Electric Resource Plan (ERP) for Black Hills Energy – Colorado Electric, providing the utility the opportunity to construct and operate two General Electric LMS100 natural gas turbines to serve a portion of the customer requirements when the utility’s current power purchase agreement expires on December 31, 2011.
On March 25, 2009, Black Hills Energy – Colorado Electric issued a 2009 Non-intermittent Resource Solicitation requesting bids to determine how the remaining customer requirements will be supplied, and in June BHCI submitted a response to the utility’s request for proposals.
Black Hills said that the BHCI proposal was identified as the least-cost proposal in the resource solicitation process. That process was established by the Colorado Public Utilities Commission and was conducted with the oversight of an independent evaluator.