24-April-2007 — Black Hills Corp. announced the signing of a power purchase agreement to provide electric power to Public Service Company of New Mexico. Under the terms of the agreement, Black Hills will supply electricity from a 149 MW, simple-cycle gas turbine generation facility to be constructed near Albuquerque, N.M. The project is expected to cost approximately $101 million, and has a commercial operation in-service date of June 1, 2008. The agreement is a customary tolling arrangement, where Black Hills receives variable and fixed fees for the plant’s availability and operation, and Public Service Company of New Mexico will be responsible for providing fuel for the operation. The duration of the power purchase agreement is 20 years. The agreement also allows Public Service Company of New Mexico the option to acquire an equity interest of up to 50 percent in the project.
David R. Emery, Black Hills Corp.’s chairman, president and CEO, said, “This independent power project is an excellent strategic fit for us. Importantly, we have secured a long-term tolling arrangement that assures strong cash flows from a load-serving utility. Adding a power plant expands our presence in New Mexico, where we already have extensive wholesale energy operations. We look forward to serving PNM and its customers.”
The Company’s non-regulated wholesale power generation subsidiary, Black Hills Generation, is responsible for the construction and operation of this facility, which will be called the Valencia Power Plant.