BLACK HILLS CORP SD
For the period ended Dec 31, 2024. Filed Feb 12, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 12, 2025
BKH$84.87+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-14.
0000950170-24-015090
Executive SummaryKey Elements of our Business StrategyRecent DevelopmentsResults of Operations - Consolidated Summary and OverviewNon-GAAP Financial MeasureElectric UtilitiesGas UtilitiesCorporate and OtherConsolidated Interest Expense, Impairment of Investment, Other Income (Expense) and Income Tax Benefit (Expense)Liquidity and Capital ResourcesCash Flow ActivitiesCapital ResourcesCredit RatingsCapital RequirementsCritical Accounting EstimatesCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-12.
0000950170-25-018647
Executive SummaryKey Elements of our Business StrategyRecent DevelopmentsResults of Operations - Consolidated Summary and OverviewNon-GAAP Financial MeasureElectric UtilitiesGas UtilitiesCorporate and OtherConsolidated Interest Expense, Other Income (Expense) and Income Tax Benefit (Expense)Liquidity and Capital ResourcesCash Flow ActivitiesCapital ResourcesCredit RatingsCapital RequirementsCritical Accounting EstimatesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 229 previous paragraphs and 221 current paragraphs.
129 unchanged; 60 reworded; 30 added; 38 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 24 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
Announced Partnership with Meta. On July 11, 2024, Wyoming Electric announced it will partner with Meta to provide power for its newest AI data center to be constructed in Cheyenne, Wyoming. Wyoming Electric plans to procure market energy under its LPCS Tariff with customized energy resources essential to Meta's operations and sustainability objectives.
Current report
Published Wildfire Mitigation Plan: In 2024, we published our first formal WMP, which is an overview of our three-layered approach to manage wildfire risks driven by asset-based risk assessments that include asset programs, integrity programs and operational response. Additionally, we continue to engage stakeholders including community and local agencies regulators, legislative bodies and our industry peers to define, review and advance our wildfire management and mitigation plans, including our PSPS, which we expect to formalize by mid-2025.
Current report
The value of controlling load to most effectively serve our customer demand; and
Current report
During the second quarter of 2024, we published our 2023 Corporate Sustainability Report, highlighting our environmental, social and governance impacts and our progress on major projects and climate goals. We reported a 27% reduction in GHG emissions from our natural gas distribution system since 2022 and are on track to achieve our goal of net zero emissions by 2035. Additionally, we have reduced our electric utility GHG emissions by nearly one-third since 2005 and are on track to achieve our goals to reduce electric emissions intensity by 40% by 2030 and 70% by 2040 compared to 2005.
Current report
The IRA, enacted in August 2022, features spending and tax incentives on clean energy provisions. Most notably, the IRA includes provisions that extend and expand the production and investment tax credits for wind and solar; includes energy storage, EVs, RNG, and carbon capture and sequestration; and contains a tax credit transferability provision that allows us to transfer (e.g. sell) PTCs produced after December 31, 2022, to third parties. In June 2024, under this transferability provision, we entered into an agreement with a third party to sell $16.9 million of our 2023 generated PTCs. In January 2025, we entered into a similar agreement with a third party to sell $17.0 million of our 2024 generated PTCs. We expect to continue to explore the ability to efficiently monetize our tax credits through third party transferability agreements. See Note 15 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for additional information.
Current report
In 2024, Wygen I and Pueblo Airport Generation #4-5 experienced unplanned generation outages that had a $8.3 million negative impact to Operating income. We are currently assessing insurance recovery opportunities.
Current report
See Note 8 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for information regarding our recent ATM program activity and our May 16, 2024, debt offering.
Current report
On May 31, 2024, we amended and restated our corporate Revolving Credit Facility. See Note 8 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for additional information.
Current report
Gas Utilities’ operating income increased $42.5 million primarily due to new rates and rider recovery driven by the Colorado Gas, Iowa Gas, RMNG and Wyoming Gas rate reviews, retail customer growth and usage, favorable mark-to-market on commodity contracts, and lower employee-related expenses partially offset by $15.9 million of unfavorable weather and higher depreciation driven by capital expenditures;
Current report
Corporate and other operating loss decreased $3.7 million due to lower unallocated operating expenses;
Current report
Other (expense), net decreased $1.8 million primarily due to higher AFUDC equity driven by higher construction work-in-progress balances;
Current report
Income tax (expense) increased $10.7 million driven by higher pre-tax income and a higher effective tax rate primarily due to an $8.2 million tax benefit in 2023 from a Nebraska income tax rate decrease; and
Current report
Net income attributable to non-controlling interest decreased $3.2 million due to lower net income from Black Hills Colorado IPP primarily driven by unplanned generation outages.
Current report
Operations and maintenance expense increased primarily due to $5.1 million of costs related to unplanned generation outages and $4.6 million of higher insurance expense partially offset by $3.5 million of lower employee-related expenses driven by lower headcount. In 2023, Electric Utilities benefited from one-time gains of $7.7 million on the sale of Northern Iowa Windpower assets and $3.9 million on sale of land.
Current report
The shift in purchases by fuel type for 2024 compared to 2023 is primarily due to Wyoming Electric's new wind and solar energy PPAs, which replaced market purchases from other fuel types, and are used to serve our LPCS customers. See Key Elements of our Business Strategy section above for additional information.
Current report
2024 included unplanned outages at Wygen I and Pueblo Airport Generation #4-5.
Current report
Operations and maintenance expense decreased primarily due to $10.8 million of lower employee-related expenses driven by lower headcount, $2.9 million decreased bad debt expense attributable to lower customer billings, and $1.2 million of lower training expense partially offset by $3.3 million of higher insurance expense and $2.8 million of higher IT-related expenses.
Current report
Includes Black Hills Energy Services revenue under the Choice Gas Program.
Current report
Retail gas revenues decreased in 2024 compared to 2023 primarily due to lower commodity prices. Our Utilities have regulatory mechanisms that allow them to pass prudently incurred costs of energy through to the customer. Customer billing rates are adjusted periodically to reflect changes in our cost of energy.
Current report
Operating (loss) decreased primarily due to lower unallocated outside services expenses and a gain on the sale of a Corporate asset.
Current report
Other (expense), net decreased primarily due to higher AFUDC equity driven by higher construction work-in-progress balances.
Current report
Cash outflows from capital expenditures (which are net of contributions in aid of construction) increased $188.6 million primarily as a result of Wyoming Electric's Ready Wyoming electric transmission expansion project and Black Hills Energy Renewable Resources' acquisition of a RNG production facility at a landfill in Dubuque, Iowa.
Current report
Cash inflows decreased $350 million due to issuances of $450 million of senior unsecured notes in May 2024 compared to issuances of $350 million of senior unsecured notes in March 2023 and $450 million of senior unsecured notes in September 2023; and
Current report
Cash outflows increased $75 million due to repayment of our $600 million senior unsecured notes in August 2024 compared to repayment of our $525 million senior unsecured notes in November 2023.
Current report
On January 17, 2025, Fitch affirmed its BBB+ rating for BHC and maintained a Negative outlook. Following the affirmation, the parties jointly withdrew the rating.
Current report
On January 17, 2025, Fitch affirmed its A rating for South Dakota Electric. Following the affirmation, the parties jointly withdrew the rating.
Removed paragraphs (38)
Previous report
Since 2005, we have reduced GHG emissions intensity from our Electric Utilities by one-third. We have plans in place today, without reliance on future technologies, to achieve our corporate climate goals calling for a 40% reduction in greenhouse gas emissions intensity from our electric utility operations by 2030 and 70% by 2040. Additionally, our Electric Utilities have reduced nitrogen oxide and sulfur dioxide emissions by more than 75% since 2005. Colorado Electric has achieved a nearly 50% reduction in GHG emissions since 2005 and is on track to reach the State of Colorado’s 80% carbon reduction goal by 2030. Our goals are based on prudent and proven solutions to reduce our emissions while minimizing cost impacts to our customers. This keeps our customers at the forefront of our decision-making, which is central to our values.
Previous report
The IRA, signed into law by President Biden in August 2022, features $370 billion in spending and tax incentives on clean energy provisions. Most notably, the IRA includes provisions that extend and expand the production and investment tax credits for wind and solar; includes energy storage, EVs, RNG, and carbon capture and sequestration; and allows for the transferability of clean energy tax credits on existing and qualifying new facilities. We see the IRA as generally supportive of our Energy Transition strategy with the potential to drive increased value for our customers and shareholders. We are still evaluating the impacts of the IRA provisions on our future capital projects.
Previous report
We continue to monitor challenging macroeconomic trends including supply chain disruptions, rising interest rates, potential recession and inflationary pressures on the prices of materials, outside services and employee costs. To date, we have experienced moderate net impacts from these trends. However, if current macroeconomic conditions deteriorate in 2024, adverse impacts to our businesses may be magnified.
Previous report
Inflation has increased our operating expenses, which included higher employee-related expenses in 2023 compared to the prior year.
Previous report
We are proactively managing increased costs of materials and supply chain disruptions to achieve our forecasted capital investment targets. To support our 2024 capital investment program, we have contracts in place with key suppliers and we have contracted services for a significant portion of our largest forecasted projects. We continue to forecast multi-year key material requirements with suppliers to enhance predictable material availability, challenge vendor price increases to ensure best value and cost transparency and invest in our distribution network to ensure the safety and reliability of our system. We have also evaluated each of our forecasted projects and will prioritize them depending on future constraints. Project delays may occur if costs rise significantly or if materials are not available.
Previous report
Rising interest rates have led to increased interest expense on recent debt issuances. These impacts were partially offset by lower short-term, variable rate borrowings and higher interest income on our cash equivalents when compared to the prior year.
Previous report
The deflationary trend in commodity prices throughout 2023 has partially offset macroeconomic headwinds from inflation and higher interest rates. Lower commodity prices have led to lower customer bills, lower cost of fuel, purchased power and natural gas sold, and improved cash flows from operations due to recoveries of deferred energy costs from customers (which were elevated at the end of 2022 and subsequently collected in 2023).
Previous report
More detailed discussion of the future uncertainties can be found in Item 1A - Risk Factors.
Previous report
Business Segment Highlights and Corporate Activity
Previous report
On January 11, 2024, Wyoming Electric set a new winter peak load of 314 MW, surpassing the previous winter peaks of 301 MW set on December 26, 2023, 299 MW set on October 31, 2023, and 281 MW set in December 2022.
Previous report
On September 15, 2023, we completed a public debt offering of $450 million, 6.15% 10-year senior unsecured notes due May 15, 2034. Net proceeds from the offering were used to repay our $525 million principal amount outstanding notes and for other general corporate purposes. See Note 8 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
Previous report
On June 16, 2023, we filed a new shelf registration statement with the SEC and entered into a new Equity Distribution Sales Agreement. The new Equity Distribution Sales Agreement is similar to our prior agreement and allows us to sell shares of common stock up to an aggregate of $400 million through our ATM program utilizing our shelf registration statement. As of December 31, 2023, we have $329 million available to issue under this program. See Note 8 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
Previous report
On March 7, 2023, we completed a public debt offering of $350 million, 5.95% 5-year senior unsecured notes due March 15, 2028. The proceeds from the offering were used to repay notes outstanding under our commercial paper program and for other general corporate purposes. See Note 8 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
Previous report
The variance to the prior year included the following:
Previous report
Gas Utilities’ operating income decreased $15.4 million primarily due to unfavorable weather, a prior year one-time true-up of carrying costs accrued on Winter Storm Uri regulatory assets and higher operating expenses partially offset by new rates and rider recovery and retail customer growth and demand;
Previous report
Other expense, net increased $5.0 million primarily due to higher benefit plan non-service costs driven by higher discount rates and higher costs for our non-qualified deferred compensation plan driven by market performance.
Previous report
Primarily driven by favorable mining contract pricing and increased Black Hills Colorado IPP fired-engine hours.
Previous report
Operations and maintenance expense decreased primarily due to a one-time $7.7 million gain on the planned sale of Northern Iowa Windpower assets, a $3.9 million gain on a strategic sale of land in Wyoming to a customer to support continued load growth, and $2.9 million of lower outside services expenses partially offset by $8.7 million of higher employee-related expenses.
Previous report
Taxes - property and production were comparable to the same period in the prior year.
Previous report
Primarily related to transmission revenues from the Common Use System.
Previous report
Wind generation decreased due to the sale of Northern Iowa Windpower assets in March 2023.
Previous report
Gas Utility margin decreased over the prior year as a result of:
Previous report
In certain jurisdictions, we have commission approval to recover carrying costs on Winter Storm Uri regulatory assets which offset increased interest expense. Additionally, the carrying costs accrued during the year ended December 31, 2022 included a one-time, $10.3 million true-up to reflect commission authorized rates.
Previous report
Operations and maintenance expense increased primarily due to $14.8 million of higher employee-related expenses partially offset by $5.0 million of lower outside services expenses.
Previous report
Depreciation and amortization was comparable to the prior year.
Previous report
Taxes - property and production were comparable to the prior year.
Previous report
Operating (loss) was comparable to the prior year.
Previous report
Other (expense), net increased primarily due to higher benefit plan non-service costs driven by higher discount rates and higher costs for our non-qualified deferred compensation plan which were driven by market performance.
Previous report
Net debt to capitalization ratio is net of Cash and cash equivalents for both Total debt and Total capitalization.
Previous report
Cash outflows from capital expenditures (which are net of $33.8 million contributions in aid of construction) decreased $48.8 million as a result of lower programmatic safety, reliability and integrity spending at our Gas and Electric Utilities and higher receipts related to contributions in aid of construction driven by strategic projects in Wyoming;
Previous report
Cash outflow of $525.0 million due to repayment of our senior unsecured notes on their November 30, 2023 maturity date; and
Previous report
Cash inflow of $800.0 million from the March 7, 2023 and September 15, 2023 debt offerings.
Previous report
On January 26, 2024, Fitch reported BBB+ rating and revised to a Negative outlook.
Previous report
Certain fees and interest rates under our Revolving Credit Facility are based on our credit ratings at all three rating agencies. If all of our ratings are at the same level, or if two of our ratings are the same level and one differs, these fees and interest rates will be based on the ratings that are at the same level. If all of our ratings are at different levels, these fees and interest rates will be based on the middle level. Currently, our Fitch and S&P ratings are at the same level, and our Moody’s rating is one level below. Therefore, if Fitch or S&P downgrades our senior unsecured debt, we will be required to pay higher fees and interest rates under our Revolving Credit Facility.
Reworded paragraphs (60)
Previous wording
We are a customer-focused energy solutions provider with a mission of Improving Life with Energy for more than 1.3 million customers and 800+ communities we serve. Our aspiration is to be the trusted energy partner across our growing eight-state footprint, including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. Our strategy is centered on four critical priorities: Growth—to grow strategically and achieve strong financial performance, Operational Excellence—delivering safe, reliable and cost-effective energy to meet our customers’ needs, Transformation—be a simple and connected company positioned for growth, and People & Culture—retain and attract a talented, engaged and thriving team.
Current wording
We are a customer-focused energy solutions provider with a mission of Improving Life with Energy for 1.35 million customers and 800+ communities we serve. Our aspiration is to be the trusted energy partner across our growing eight-state footprint, including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Our strategy is centered on four priorities: People & Culture—build a team that wins together, Operational Excellence—relentlessly deliver on our commitment to serve our customers, Transformation—be a simple and connected company and Growth—grow to be a dominant long-term energy provider.
Previous wording
We have provided energy and served customers for 140 years, since the 1883 gold rush days in Deadwood, South Dakota. Throughout our history, the common thread that unites the past to the present is our commitment to serve our customers and communities. By being responsive and service focused, we can help our customers and communities thrive while meeting rapidly changing customer expectations.
Current wording
We have provided energy and served customers for 141 years, since the 1883 gold rush days in Deadwood, South Dakota. Throughout our history, the common thread that unites the past to the present is our commitment to serve our customers and communities. By being responsive and service focused, we can help our customers and communities thrive while meeting rapidly changing customer expectations.
Previous wording
Explore opportunities as an energy solutions provider. A key strategic initiative is to grow our business through innovative energy solutions with new customers and partnerships. We see value creation by recruiting new customers and expanding existing partnerships with data centers and blockchain opportunities; exploring energy markets such as RTOs; and expanding our transmission capabilities, establishing a RNG program and expanding our RNG portfolio. A few recent examples of our initiatives to grow our business as an energy solutions provider include:
Current wording
Explore opportunities as an energy solutions provider. A key strategic initiative is to grow our business through innovative energy solutions with new customers and partnerships. We see value creation by recruiting new customers and expanding existing partnerships with data centers and blockchain customers; exploring energy markets; and expanding our transmission capabilities. A few recent examples of our initiatives to grow our business as an energy solutions provider include:
Previous wording
Contracted Renewable Energy to Grow Data Center Partnerships: In 2022, Wyoming Electric entered into two new PPAs with third parties to purchase up to 106 MW of wind energy and up to 150 MW of solar energy, upon construction of new renewable generation facilities (owned by third parties). The new wind generation facility was placed in service in December 2023 and the solar facility is expected to be completed in March 2024. The renewable energy from these PPAs will be used to serve our expanding partnerships with data centers.
Current wording
Innovatively served LPCS load: In 2022, Wyoming Electric entered into two new PPAs with third parties to purchase up to 106 MWs of wind energy and up to 150 MWs of solar energy, upon construction of new renewable generation facilities (owned by third parties). The new wind generation facility was placed in service in December 2023 and the solar facility was placed in service in March 2024. The renewable energy from these PPAs is used to serve our expanding partnerships with LPCS customers.
Previous wording
Developed BCIS Tariff to Facilitate Growth: We have supported enabling legislation in Wyoming for the growing blockchain businesses while implementing our own BCIS Tariff to serve these customers. In June 2022, Wyoming Electric completed its first agreement, with a new customer in Cheyenne, Wyoming, under this Tariff. This five-year agreement provides delivery of up to 45 MW with an option to expand service up to 75 MW, which was exercised by the customer in 2023. Energy is sourced through the electric energy market and delivered through our Electric Utilities’ infrastructure. Under the agreement, the customer is responsible for costs of service, and the load is interruptible to prioritize the needs of Wyoming Electric’s existing retail customers.
Current wording
Expanded BCIS Load: We have supported enabling legislation in Wyoming for the growing blockchain businesses while implementing our own BCIS Tariff to serve these customers. We currently have agreements with two customers to provide up to 130 MWs in Cheyenne, Wyoming under this Tariff. Energy is sourced through the electric energy market and delivered through our Electric Utilities’ infrastructure. Under these agreements, the customers are responsible for costs of service, and the load is interruptible to prioritize the needs of Wyoming Electric’s existing retail customers.
Previous wording
Modernize and operate utility infrastructure to provide customers with safe, reliable, cost-effective electric and natural gas service. Our utilities own and operate large electric and natural gas infrastructure systems with a geographic footprint that spans nearly 1,600 miles. Our Electric Utilities own and operate 1,394 MW of generation capacity and 9,106 miles of transmission and distribution lines and our Gas Utilities own and operate approximately 47,000 miles of natural gas transmission and distribution pipelines.
Current wording
Modernize and operate utility infrastructure to provide customers with safe, reliable, cost-effective electric and natural gas service. Our utilities own and operate large electric and natural gas infrastructure systems with a geographic footprint that spans nearly 1,600 miles. Our Electric Utilities own and operate 1,394 MWs of generation capacity and 9,196 miles of transmission and distribution lines and our Gas Utilities own and operate approximately 49,000 miles of natural gas transmission and distribution pipelines.
Previous wording
To meet our electric customers’ continued expectations of high levels of reliability, a key strength of the Company, our Electric Utilities utilize an integrity program to ensure the timely repair and replacement of aging infrastructure. In alignment with this program, in November 2021, Wyoming Electric announced its Ready Wyoming electric transmission expansion initiative. The 260-mile, multi-phase transmission expansion project will provide customers long-term price stability and greater flexibility as power markets develop in the Western States. Construction of the project commenced in late 2023 and is expected to take place in multiple phases or segments through 2025 and will interconnect South Dakota Electric’s and Wyoming Electric’s transmission systems.
Current wording
Continued Construction on Ready Wyoming Project: In November 2021, Wyoming Electric announced its Ready Wyoming electric transmission expansion initiative. Construction of the 260-mile, multi-phase transmission expansion project commenced in late 2023 and the first phase was placed in service in December 2024. The project is expected to be completed in multiple segments through 2025 and will interconnect South Dakota Electric’s and Wyoming Electric’s transmission systems. The project will provide customers long-term price stability and greater flexibility as power markets develop in the Western States. This project is also expected to attract data center and blockchain customers, enable economic growth in Wyoming, expand access to renewable resources and facilitate additional renewable development across wind- and sun-rich resource areas.
Previous wording
In June 2021, South Dakota Electric and Wyoming Electric submitted an IRP to the SDPUC and WPSC. The IRP outlines a range of options for the two electric utilities over a 20-year planning horizon to meet long-term forecasted energy needs while strengthening reliability and resiliency of the grid. The analysis focused on the least-cost resource needs to best meet customers’ future peak energy needs while maintaining system flexibility and achieving the Company’s generation emissions reduction goals. The IRP’s preferred options for South Dakota Electric in the near-term planning period through 2026 are the addition of 100 MW of renewable generation, the conversion of Neil Simpson II to dual fuel (natural gas and coal) in 2025 and consideration of up to 20 MW of battery storage. In 2023, South Dakota Electric issued a request for proposals for 100 MW of utility-owned renewable energy resources to be in service in 2026. Negotiations are underway, with results to be presented to the SDPUC and included in a CPCN filing with the WPSC during the first quarter of 2024.
Current wording
Advanced South Dakota IRP: In June 2021, South Dakota Electric submitted an IRP to the SDPUC and WPSC. The IRP outlines a range of options over a 20-year planning horizon to meet long-term forecasted energy needs while strengthening reliability and resiliency of the grid. The analysis focused on the least-cost resource needs to best meet customers’ future peak energy needs while maintaining system flexibility and achieving the Company’s generation emissions reduction goals. South Dakota Electric's resource plan in the near-term planning period through 2026 includes the conversion of Neil Simpson II to dual fuel (natural gas and coal) in 2025, and addition of 99 MWs of utility-owned, dispatchable natural gas generation by the second half of 2026. Regarding the addition of 99 MWs of generation, South Dakota Electric expects to request a CPCN from the WPSC in the first quarter of 2025.
Previous wording
As of December 31, 2023, we estimate our five-year capital investment to be approximately $4.3 billion, with most of that investment targeted toward upgrading existing utility infrastructure supporting customer and community growth needs, and complying with safety requirements. Our actual 2023 and forecasted capital expenditures for the next five years from 2024 through 2028 are as follows (in millions). Minor differences may result due to rounding.
Current wording
As of December 31, 2024, we estimate our five-year capital investment to be approximately $4.7 billion, with most of that investment targeted toward upgrading existing utility infrastructure, supporting customer and community growth needs, and complying with safety requirements. Our actual 2024 and forecasted capital expenditures for the next five years from 2025 through 2029 are as follows:
Previous wording
Includes accruals for property, plant and equipment as disclosed as supplemental cash flow information in the Consolidated Statements of Cash Flows in the Consolidated Financial Statements in this Annual Report on Form 10-K. Capital expenditures are presented net of contributions in aid of construction in the Consolidated Statements of Cash Flows.
Current wording
Includes accruals for property, plant and equipment as disclosed as supplemental cash flow information in the Consolidated Statements of Cash Flows in the Consolidated Financial Statements in this Annual Report on Form 10-K. Capital expenditures are presented net of CIACs in the Consolidated Statements of Cash Flows.
Previous wording
Rate-Based Generation: We continue to believe that customers are best served when the power generation facilities are owned and rate-based by our Electric Utilities. Rate-based generation assets offer several advantages for customers and shareholders, including:
Current wording
Rate-Based Generation: Rate-based generation assets offer several advantages for customers and shareholders, including:
Previous wording
The lower-risk profile of rate-based generation assets contributes to stronger credit ratings which, in turn, can benefit both customers and investors by lowering the cost of capital; and
Current wording
The lower-risk profile of rate-based generation assets contributes to stronger credit ratings which, in turn, can benefit both customers and investors by lowering the cost of capital;
Previous wording
Generation Fuel Supply: Our generating facilities are strategically located close to energy hubs that help reduce fuel supply costs. Our Colorado and Wyoming gas-fired generating facilities are located close to major natural gas energy hubs that provide trading liquidity and transparent pricing. Due to their location in the resource rich areas of Colorado and Wyoming, natural gas supply to fuel our gas-fired generation can be sourced at competitive prices. Our coal-fired power plants, all located at the Gillette Energy Complex in northeastern Wyoming, are supplied by our adjacent WRDC coal mine. WRDC provides approximately 3.7 million tons of low-sulfur coal directly to these power plants via a conveyor belt system, minimizing transportation costs. The fuel can be delivered to our adjacent power plants at very cost competitive prices (i.e., $1.14 per MMBtu for year ended December 31, 2023) when compared to alternatives. Nearly all the mine’s production is sold to these on-site generation facilities under long-term supply contracts. Approximately one-half of our production is sold under cost-plus contracts with affiliates. A small portion of the mine’s production is sold to off-site industrial customers and delivered by truck.
Current wording
Generation Fuel Supply: Our generating facilities are strategically located close to energy hubs that help reduce fuel supply costs. Our Colorado and Wyoming gas-fired generating facilities are located close to major natural gas energy hubs that provide trading liquidity and transparent pricing. Due to their location in the resource rich areas of Colorado and Wyoming, natural gas supply to fuel our gas-fired generation can be sourced at competitive prices. Our coal-fired power plants, all located at the Gillette Energy Complex in northeastern Wyoming, are supplied by our adjacent WRDC coal mine. WRDC provides approximately 3.7 million tons of low-sulfur coal directly to these power plants via a conveyor belt system, minimizing transportation costs. The fuel can be delivered to our adjacent power plants at very cost competitive prices (i.e., $1.19 per MMBtu for year ended December 31, 2024) when compared to alternatives. Nearly all the mine’s production is sold to these on-site generation facilities under long-term supply contracts. Approximately one-half of our production is sold under cost-plus contracts with affiliates.
Previous wording
Supporting the Energy Transition by proactively integrating alternative and renewable energy into our utility energy supply while mitigating customer rate impacts. A critical component of our strategy involves sustainable operations and supporting the Energy Transition. How we operate our company for the social good has never been more important. We are committed to cleaner energy and a low carbon future, integrating the Energy Transition and more renewable energy into our overall strategy and decision making. In addition, we are committed to a more sustainable future by better managing our impacts to the planet, whether that is water usage, recycling, biodiversity, or other important measures.
Current wording
Reducing our carbon footprint by proactively integrating alternative and renewable energy into our utility energy supply while mitigating customer rate impacts. A critical component of our strategy involves sustainable operations and reducing emissions. We are committed to cleaner energy and a low carbon future, integrating the Energy Transition and more renewable energy into our overall strategy and decision making. We strongly believe that multiple energy sources, working together, will provide the solutions for a cleaner and resilient energy future.
Previous wording
More of our customers, particularly our larger customers, are demanding cleaner sources of energy to meet their sustainability goals. In addition, there is more interest from consumers, regulators and legislators to increase the use of renewable and other alternative energy sources. Recent efforts to support this interest include:
Current wording
Our goals are based on prudent and proven solutions to reduce our emissions while minimizing cost impacts to our customers. This keeps our customers at the forefront of our decision-making, which is central to our values. More of our customers, particularly our larger customers, are demanding cleaner sources of energy to meet their sustainability goals. In addition, there is more interest from consumers, regulators and legislators to increase the use of renewable and other alternative energy sources. Recent efforts to support this interest include:
Previous wording
In March 2023, the CPUC approved a unanimous settlement for Colorado Electric's Clean Energy Plan filed on May 25, 2022. The Clean Energy Plan supports Colorado Electric's voluntary election to reduce carbon emissions 80% from 2005 levels by 2030. In July 2023, Colorado Electric issued a request for proposals for approximately 400 MW of new renewable resources to be in service by 2029 to achieve objectives in its Clean Energy Plan. Colorado Electric received a strong response to its request for proposal and provided a bids summary to the CPUC as part of the approval process. A report with Colorado Electric's recommended resources is due to the CPUC in the second quarter of 2024.
Current wording
Advanced Colorado Clean Energy Plan: Colorado Electric's Clean Energy Plan supports its voluntary election to reduce carbon emissions 80% from 2005 levels by 2030. On April 17, 2024, Colorado Electric filed its 120-Day report with the CPUC, recommending the addition of renewable energy resources to advance its Clean Energy Plan. In December 2024, the CPUC approved a preferred portfolio of 100 MWs of utility-owned solar generation, 50 MWs of utility-owned battery storage and a 200 MWs solar PPA. Colorado Electric plans to file a CPCN for utility-owned resources by mid-2025. New resources are expected to be placed in service in 2027-2028.
Previous wording
Established Green Forward: In 2022 and 2023, we filed regulatory applications to launch Green Forward, a voluntary RNG and carbon offset program, to eligible residential and small business natural gas customers to offset up to 100% or more of the emissions from their natural gas usage. Our teams continue to evaluate attractive RNG investment opportunities across our agriculture-rich service territories and explore value generation with our natural gas storage assets. We also continue to expand our RNG interconnections, with seven projects actively injecting RNG into our natural gas system.
Current wording
Established Green Forward and Expanded RNG Interconnect Projects: In 2022 and 2023, we filed regulatory applications to launch Green Forward, a voluntary RNG and carbon offset program, to eligible residential and small business natural gas customers to offset up to 100% or more of the emissions from their natural gas usage. Our teams continue to evaluate attractive RNG investment opportunities across our agriculture-rich service territories and explore value generation with our natural gas storage assets. We also continue to expand our RNG interconnections, with 10 projects actively injecting RNG into our natural gas system.
Previous wording
Expanded RNG Portfolio: In January 2024, Black Hills Energy Renewable Resources acquired a RNG production facility at a landfill in Dubuque, Iowa. The facility currently injects RNG into the natural gas distribution system serving Dubuque, which is owned and operated by Iowa Gas. This acquisition represents our entry into the production of RNG as a nonregulated business while leveraging our expertise in owning and operating regulated natural gas pipeline systems, including RNG interconnections. The RNG produced from the landfill facility captures methane that would otherwise vent into the atmosphere. It is delivered under long-term contracts to a third party that purchases the RNG and its related environmental attributes, in conformity with the EPA's Renewable Fuel Standard Program.
Current wording
Acquired RNG Production Facility: In January 2024, Black Hills Energy Renewable Resources acquired a RNG production facility at a landfill in Dubuque, Iowa. The facility currently injects RNG into the natural gas distribution system serving Dubuque, which is owned and operated by Iowa Gas. This acquisition represents our entry into the production of RNG as a nonregulated business while leveraging our expertise in owning and operating regulated natural gas pipeline systems, including RNG interconnections. The RNG produced from the landfill facility captures methane that would otherwise vent into the atmosphere. It is delivered under long-term contracts to a third party that purchases the RNG and its related environmental attributes, in conformity with the EPA's Renewable Fuel Standard Program.
Previous wording
Deliver a competitive total return to investors and maintain an investment grade credit rating. We are proud of our track record of annual dividend increases for shareholders. 2023 represented our 53rd consecutive year of increasing dividends. In January 2024, our Board of Directors declared a quarterly dividend of $0.65 per share, equivalent to an annual dividend of $2.60 per share. We intend to continue our record of annual dividend increases with a targeted dividend payout ratio of 55% to 65% of net income.
Current wording
Deliver a competitive total return to investors and maintain an investment grade credit rating. We are proud of our track record of annual dividend increases for shareholders. 2024 represented our 54th consecutive year of increasing dividends. In January 2025, our Board of Directors declared a quarterly dividend of $0.676 per share, equivalent to an annual dividend of $2.704 per share. We anticipate growing our dividend in line with our targeted dividend payout ratio of 55% to 65% of net income. A dependable and increasing dividend is an important component of our strategy for delivering long-term value for our shareholders.
Previous wording
See Note 2 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for recent rate review activity for Wyoming Electric.
Current wording
See Note 2 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for recent rate review activity for Colorado Electric.
Previous wording
See Key Elements of our Business Strategy section above for discussion of recent developments related to Ready Wyoming, Colorado Electric's Clean Energy Plan, and South Dakota Electric and Wyoming Electric's IRP.
Current wording
See Key Elements of our Business Strategy section above for discussion of recent developments related to our partnership with Meta, construction progress on our Ready Wyoming project, Colorado Electric's Clean Energy Plan, South Dakota Electric's IRP and the addition of 99 MWs of new generation, and publishing of our first formal WMP and plans to formalize our PSPS.
Previous wording
On July 24, 2023, Wyoming Electric set a new all-time and summer peak load of 312 MW, surpassing the previous peak of 294 MW set on July 21, 2022.
Current wording
On January 20, 2025, Wyoming Electric set a new all-time and winter peak load of 318 MWs, surpassing the previous all-time and winter peak load of 314 MWs set on January 11, 2024. Prior to 2024, the previous winter peak was 301 megawatts in December 2023 and the all-time peak was 312 megawatts in July 2023.
Previous wording
See Note 2 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for recent rate review activity for Arkansas Gas, Colorado Gas, RMNG and Wyoming Gas.
Current wording
See Note 2 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for recent rate review activity for Arkansas Gas, Colorado Gas, Iowa Gas, Kansas Gas and Wyoming Gas.
Previous wording
Electric Utilities’ operating income increased $34.5 million primarily due to new rates and rider recovery, a one-time gain on the planned sale of Northern Iowa Windpower assets, a gain on a strategic sale of land in Wyoming to a customer to support continued load growth, and a one-time recovery from our business interruption insurance related to the 2021 Wygen I unplanned outage partially offset by unfavorable weather, higher depreciation expense and higher employee-related expenses;
Current wording
Electric Utilities’ operating income decreased $15.8 million primarily due to unfavorable impacts from unplanned generation outages in 2024, lower off-system excess energy sales, higher insurance expense, and one-time benefits in 2023 from a gain on the sale of Northern Iowa Windpower assets, a gain on sale of land to support data center growth, and a recovery from our business interruption insurance. These unfavorable variances were partially offset by new rates and rider recovery and retail customer growth and usage.
Previous wording
Interest expense increased $6.9 million due to higher interest rates partially offset by increased interest income on higher cash and cash equivalents balances; and
Current wording
Net interest expense increased $13.8 million primarily due to higher interest rates partially offset by increased interest income and increased AFUDC debt driven by higher construction work-in-progress balances;
Previous wording
The following discussion includes financial information prepared in accordance with GAAP, as well as another financial measure, Electric and Gas Utility margin, that is considered a “non-GAAP financial measure.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Electric and Gas Utility margin (revenue less cost of sales) is a non-GAAP financial measure due to the exclusion of operation and maintenance expenses, depreciation and amortization expenses, and property and production taxes from the measure.
Current wording
The following discussion includes financial information prepared in accordance with GAAP and a “non-GAAP financial measure", Electric and Gas Utility margin. Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Electric and Gas Utility margin (revenue less cost of sales) is a non-GAAP financial measure due to the exclusion of operation and maintenance expenses, depreciation and amortization expenses, and taxes other than income taxes from the measure. Electric Utility margin is calculated as operating revenue less cost of fuel and purchased power. Gas Utility margin is calculated as operating revenue less cost of natural gas sold. Our Electric and Gas Utility margin is impacted by the fluctuations in power and natural gas purchases and other fuel supply costs. However, while these fluctuating costs impact Electric and Gas Utility margin as a percentage of revenue, they only impact total Electric and Gas Utility margin if the costs cannot be passed through to our customers. Our Electric and Gas Utility margin measure may not be comparable to other companies’ Electric and Gas Utility margin measures. Furthermore, this measure is not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.
Previous wording
Operating results for the years ended December 31 for the Electric Utilities were as follows (in millions):
Current wording
Operating results for the years ended December 31 for the Electric Utilities were as follows:
Previous wording
Electric Utility margin increased over the prior year as a result of:
Previous wording
In 2021, Wygen I experienced an unplanned outage which resulted in lost revenue. A claim for these losses was submitted under our business interruption insurance policy. During the third quarter of 2023, we recovered $5.0 million from our business interruption insurance which was recognized as Revenue. See Note 3 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
Current wording
In 2021, Wygen I experienced an unplanned outage which resulted in lost revenue. A claim for these losses was submitted under our business interruption insurance policy. In 2023, we recovered $5.0 million from our business interruption insurance which was recognized as Revenue.
Previous wording
Depreciation and amortization increased primarily due to higher asset base driven by prior and current year capital expenditures.
Current wording
Depreciation and amortization increased primarily due to higher asset base driven by capital expenditures.
Previous wording
Includes Integrated Generation and non-regulated services to our retail customers under the Service Guard Comfort Plan and Tech Services.
Current wording
Primarily related to Integrated Generation, inter-segment rent, and non-regulated services to our retail customers under the Service Guard Comfort Plan and Tech Services.
Previous wording
Operating results for the years ended December 31 for the Gas Utilities were as follows (in millions):
Current wording
Operating results for the years ended December 31 for the Gas Utilities were as follows:
Previous wording
Includes Black Hills Energy Services and non-regulated services under the Service Guard Comfort Plan, Tech Services and HomeServe.
Current wording
Includes inter-segment rent and non-regulated services under the Service Guard Comfort Plan, Tech Services, and HomeServe.
Previous wording
Interest expense, net increased due to higher interest rates partially offset by increased interest income on higher cash and cash equivalents balances.
Current wording
Interest expense, net increased due to higher interest rates partially offset by higher interest income and higher AFUDC debt driven by higher construction work-in-progress balances.
Previous wording
Income tax (expense) and the effective tax rate were comparable to the same period in the prior year. The effective tax rate was 8.5% for both 2023 and 2022. The effective tax rate was comparable primarily due to a $8.2 million tax benefit from a current year Nebraska income tax rate decrease offset by $6.5 million of lower tax benefits from various current and prior year state tax rate changes and $3.6 million of lower wind PTCs resulting from the March 2023 sale of Northern Iowa Windpower assets. See Note 15 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for additional details.
Current wording
Income tax (expense) increased due to higher pre-tax income and a higher effective tax rate. The effective tax rate was 11.3% for 2024 and 8.5% for 2023. The effective tax rate was higher primarily due to a $8.2 million tax benefit in 2023 from a Nebraska income tax rate decrease. See Note 15 of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for additional details.
Previous wording
The following table provides an informational summary of our liquidity and capital structure as of December 31 (dollars in millions):
Current wording
The following table provides an informational summary of our liquidity and capital structure as of December 31:
Previous wording
We will continue to assess debt and equity needs to support our capital investment plans and other strategic objectives. We plan to fund our capital plan and strategic objectives by using cash generated from operating activities and various financing alternatives, which could include our Revolving Credit Facility, our CP Program, debt offerings, the issuance of common stock under our ATM program or in an opportunistic block trade. We also plan to re-finance our $600 million, 1.0375%, senior unsecured notes due August 2024, at or before maturity date.
Current wording
We plan to fund our capital plan and strategic objectives by using cash generated from operating activities and various financing alternatives, which could include our Revolving Credit Facility, our CP Program, and the issuance of common stock under our ATM program or in an opportunistic block trade. In 2025, we plan to renew our Equity Distribution Sales Agreement and assess the renewal of our shelf registration statement. Our Equity Distribution Sales Agreement allows us to sell shares of common stock, from time to time, through our ATM program utilizing our shelf registration statement. We also plan to re-finance our $300 million, 3.95%, senior unsecured notes due January 2026, at or before maturity date.
Previous wording
The following tables summarize our cash flows for the years ended December 31 (in millions):
Current wording
The following tables summarize our cash flows for the years ended December 31:
Previous wording
Net cash provided by operating activities was $359.6 million higher which was attributable to:
Current wording
Net cash provided by operating activities was $225.1 million lower which was attributable to:
Previous wording
Total earnings (net income plus non-cash adjustments) were $23.0 million higher than prior year primarily as a result of increased Electric and Gas Utility margins due to new rates and increased rider revenues partially offset by higher operating expenses and higher interest expense.
Current wording
Total earnings (net income plus non-cash adjustments) were $44.7 million higher primarily as a result of increased Electric and Gas Utility margins due to new rates, rider recovery and customer growth, partially offset by unfavorable weather, higher operating expenses and higher financing costs.
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Current report — wording carried from elsewhere
To meet our electric customers’ continued expectations of high levels of reliability, a key strength of the Company, our Electric Utilities utilize an integrity program to ensure the timely repair and replacement of aging infrastructure. Recent examples of our efforts within our integrity program include:
Current report — wording carried from elsewhere
Depreciation and amortization increased primarily due to a higher asset base driven by capital expenditures.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Electric Utility margin is calculated as operating revenue less cost of fuel and purchased power. Gas Utility margin is calculated as operating revenue less cost of natural gas sold. Our Electric and Gas Utility margin is impacted by the fluctuations in power and natural gas purchases and other fuel supply costs. However, while these fluctuating costs impact Electric and Gas Utility margin as a percentage of revenue, they only impact total Electric and Gas Utility margin if the costs cannot be passed through to our customers.
Previous report — wording carried elsewhere
Our Electric and Gas Utility margin measure may not be comparable to other companies’ Electric and Gas Utility margin measures. Furthermore, this measure is not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.