BLACK HILLS CORP SD

Operating results for the years ended December 31 for the Gas Utilities were as follows:

Gas Utility margin increased as a result of:

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.

Depreciation and amortization increased primarily due to a higher asset base driven by capital expenditures.

Taxes other than income taxes were comparable.

Operating Statistics

(a)

Includes Black Hills Energy Services revenue under the Choice Gas Program.

(b)

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.

(c)

Includes inter-segment rent and non-regulated services under the Service Guard Comfort Plan, Tech Services, and HomeServe.

(a)

Arkansas and Kansas have weather normalization mechanisms that mitigate the weather impact on Gas Utility margins.

(b)

Heating degree days are calculated based on a weighted average of total customers by state excluding Kansas due to its weather normalization mechanism. Arkansas Gas is partially excluded based on the weather normalization mechanism in effect from November through April.