x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2014 | |
OR | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________. |
Incorporated in South Dakota | IRS Identification Number 46-0111677 |
Yes x | No o |
Yes x | No o |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | x | Smaller reporting company | o |
Yes o | No x |
Page | ||
GLOSSARY OF TERMS AND ABBREVIATIONS | ||
PART 1. | FINANCIAL INFORMATION | |
Item 1. | Financial Statements | |
Condensed Statements of Income and Comprehensive Income - unaudited | ||
Three and Nine Months Ended September 30, 2014 and 2013 | ||
Condensed Balance Sheets - unaudited | ||
September 30, 2014 and December 31, 2013 | ||
Condensed Statements of Cash Flows - unaudited | ||
Nine Months Ended September 30, 2014 and 2013 | ||
Notes to Condensed Financial Statements - unaudited | ||
Item 2. | Managements’ Discussion and Analysis of Financial Condition and Results of Operations | |
Item 4. | Controls and Procedures | |
PART II. | OTHER INFORMATION | |
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 6. | Exhibits | |
Signatures | ||
Exhibit Index |
AFUDC | Allowance for Funds Used During Construction |
ASU | Accounting Standards Update |
BHC | Black Hills Corporation, the Parent Company |
Black Hills Energy | The name used to conduct the business of Black Hills Utility Holdings, Inc., and its subsidiaries |
Black Hills Utility Holdings | Black Hills Utility Holdings, Inc. a direct, wholly-owned subsidiary of BHC |
Black Hills Service Company | Black Hills Service Company, LLC, a direct, wholly-owned subsidiary of BHC |
Cheyenne Light | Cheyenne Light, Fuel and Power Company, a direct, wholly-owned subsidiary of BHC |
Cheyenne Prairie | Cheyenne Prairie Generating Station is a 132 MW natural gas-fired generating facility in Cheyenne, Wyoming, jointly owned by Cheyenne Light and Black Hills Power. Cheyenne Prairie was placed into commercial operations on October 1, 2014. |
Cooling degree day | A cooling degree day is equivalent to each degree that the average of the high and low temperature for a day is above 65 degrees. The warmer the climate, the greater the number of cooling degree days. Cooling degree days are used in the utility industry to measure the relative warmth of weather and to compare relative temperatures between one geographic area and another. Normal degree days are based on the National Weather Service data for selected locations over a 30-year average. |
CPCN | Certificate of Public Convenience and Necessity |
CT | Combustion Turbine |
EPA | Environmental Protection Agency |
FASB | Financial Accounting Standards Board |
FERC | Federal Energy Regulatory Commission |
Fitch | Fitch Ratings |
GAAP | Generally Accepted Accounting Principles in the United States of America |
Happy Jack | Happy Jack Wind Farms, LLC, a subsidiary of Duke Energy Generation Services |
Heating degree day | A heating degree day is equivalent to each degree that the average of the high and the low temperatures for a day is below 65 degrees. The colder the climate, the greater the number of heating degree days. Heating degree days are used in the utility industry to measure the relative coldness of weather and to compare relative temperatures between one geographic area and another. Normal degree days are based on the National Weather Service data for selected locations over a 30-year average. |
kV | Kilovolt |
LIBOR | London Interbank Offered Rate |
Moody’s | Moody’s Investor Services, Inc. |
MW | Megawatts |
MWh | Megawatt-hours |
SEC | U.S. Securities and Exchange Commission |
Silver Sage | Silver Sage Windpower, LLC, a subsidiary of Duke Energy Generation Services |
S&P | Standard & Poor’s Rating Services |
WPSC | Wyoming Public Service Commission |
WRDC | Wyodak Resources Development Corp., an indirect, wholly-owned subsidiary of BHC |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(unaudited) | 2014 | 2013 | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||||
Revenue | $ | 67,729 | $ | 67,268 | $ | 199,736 | $ | 187,917 | |||||||
Operating expenses: | |||||||||||||||
Fuel, purchased power and natural gas | 23,919 | 22,454 | 72,242 | 65,676 | |||||||||||
Operations and maintenance | 16,261 | 17,744 | 51,709 | 51,693 | |||||||||||
Depreciation and amortization | 7,090 | 7,036 | 20,949 | 21,058 | |||||||||||
Taxes - property | 1,452 | 1,330 | 4,502 | 3,990 | |||||||||||
Total operating expenses | 48,722 | 48,564 | 149,402 | 142,417 | |||||||||||
Operating income | 19,007 | 18,704 | 50,334 | 45,500 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (4,992 | ) | (4,974 | ) | (14,923 | ) | (14,745 | ) | |||||||
AFUDC - borrowed | 76 | 25 | 205 | 124 | |||||||||||
Interest income | 201 | 144 | 470 | 207 | |||||||||||
AFUDC - equity | 165 | 45 | 427 | 228 | |||||||||||
Other income (expense), net | 5 | (52 | ) | 100 | 174 | ||||||||||
Total other income (expense) | (4,545 | ) | (4,812 | ) | (13,721 | ) | (14,012 | ) | |||||||
Income from continuing operations before income taxes | 14,462 | 13,892 | 36,613 | 31,488 | |||||||||||
Income tax expense | (4,546 | ) | (4,594 | ) | (11,824 | ) | (9,956 | ) | |||||||
Net income | 9,916 | 9,298 | 24,789 | 21,532 | |||||||||||
Other comprehensive income (loss): | |||||||||||||||
Reclassification adjustments of cash flow hedges settled and included in net income (net of tax (expense) benefit of $(6) and $(6) for the three months ended September 30, 2014 and 2013 and $(17) and $(18) for the nine months ended September 30, 2014 and 2013, respectively) | 10 | 10 | 31 | 30 | |||||||||||
Reclassification adjustment of benefit plan liability - net gain (loss) (net of tax (expense) benefit of $(4) and $(5) for the three months ended September 30, 2014 and 2013 and $(12) and $(17) for the nine months ended September 30, 2014 and 2013, respectively) | 8 | 12 | 22 | 34 | |||||||||||
Other comprehensive income | 18 | 22 | 53 | 64 | |||||||||||
Comprehensive income | $ | 9,934 | $ | 9,320 | $ | 24,842 | $ | 21,596 |
(unaudited) | September 30, 2014 | December 31, 2013 | ||||
(in thousands) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 4,641 | $ | 2,259 | ||
Receivables - customers, net | 31,419 | 25,799 | ||||
Receivables - affiliates | 5,448 | 4,934 | ||||
Other receivables, net | 312 | 579 | ||||
Money pool notes receivable, net | — | 17,292 | ||||
Materials, supplies and fuel | 24,311 | 23,278 | ||||
Deferred income tax assets, net, current | — | 2,170 | ||||
Regulatory assets, current | 9,924 | 4,891 | ||||
Other, current assets | 4,549 | 4,933 | ||||
Total current assets | 80,604 | 86,135 | ||||
Investments | 4,554 | 4,431 | ||||
Property, plant and equipment | 1,163,813 | 1,095,884 | ||||
Less accumulated depreciation and amortization | (351,298 | ) | (334,174 | ) | ||
Total property, plant and equipment, net | 812,515 | 761,710 | ||||
Other assets: | ||||||
Regulatory assets, non-current | 45,630 | 40,373 | ||||
Other, non-current assets | 9,546 | 8,524 | ||||
Total other assets | 55,176 | 48,897 | ||||
TOTAL ASSETS | $ | 952,849 | $ | 901,173 |
(unaudited) | September 30, 2014 | December 31, 2013 | ||||
(in thousands, except common stock par value and share amounts) | ||||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 32,538 | $ | 26,144 | ||
Accounts payable - affiliates | 22,271 | 21,082 | ||||
Accrued liabilities | 19,064 | 14,966 | ||||
Money pool notes payable, net | 19,433 | — | ||||
Deferred income tax liabilities, net, current | 621 | — | ||||
Regulatory liabilities, current | 364 | 161 | ||||
Total current liabilities | 94,291 | 62,353 | ||||
Long-term debt, net of current maturities | 257,751 | 269,948 | ||||
Deferred credits and other liabilities: | ||||||
Deferred income tax liability, net, non-current | 178,368 | 167,309 | ||||
Regulatory liabilities, non-current | 42,020 | 43,357 | ||||
Benefit plan liabilities | 10,766 | 12,105 | ||||
Other, non-current liabilities | 2,957 | 4,247 | ||||
Total deferred credits and other liabilities | 234,111 | 227,018 | ||||
Commitments and contingencies (Notes 5, 6 and 10) | ||||||
Stockholders’ equity: | ||||||
Common stock $1 par value; 50,000,000 shares authorized; 23,416,396 shares issued | 23,416 | 23,416 | ||||
Additional paid-in capital | 39,575 | 39,575 | ||||
Retained earnings | 304,849 | 280,060 | ||||
Accumulated other comprehensive loss | (1,144 | ) | (1,197 | ) | ||
Total stockholders’ equity | 366,696 | 341,854 | ||||
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ | 952,849 | $ | 901,173 |
(unaudited) | Nine Months Ended September 30, | |||||
2014 | 2013 | |||||
(in thousands) | ||||||
Operating activities: | ||||||
Net income | $ | 24,789 | $ | 21,532 | ||
Adjustments to reconcile net income to net cash provided by operating activities- | ||||||
Depreciation and amortization | 20,949 | 21,058 | ||||
Deferred income tax | 11,803 | 9,630 | ||||
Employee benefits | 971 | 2,322 | ||||
AFUDC - equity | (427 | ) | (228 | ) | ||
Other adjustments, net | (55 | ) | 1,070 | |||
Change in operating assets and liabilities - | ||||||
Accounts receivable and other current assets | (11,368 | ) | 952 | |||
Accounts payable and other current liabilities | 12,787 | (1,797 | ) | |||
Contributions to defined benefit pension plan | (1,696 | ) | (2,299 | ) | ||
Other operating activities, net | (6,851 | ) | 724 | |||
Net cash provided by (used in) operating activities | 50,902 | 52,964 | ||||
Investing activities: | ||||||
Property, plant and equipment additions | (72,460 | ) | (52,242 | ) | ||
Change in money pool notes receivable, net | 17,292 | (733 | ) | |||
Other investing activities | (123 | ) | (43 | ) | ||
Net cash provided by (used in) investing activities | (55,291 | ) | (53,018 | ) | ||
Financing activities: | ||||||
Change in money pool notes payable, net | 19,433 | — | ||||
Long-term debt - repayments | (12,200 | ) | — | |||
Other financing activities | (462 | ) | — | |||
Net cash provided by (used in) financing activities | 6,771 | — | ||||
Net change in cash and cash equivalents | 2,382 | (54 | ) | |||
Cash and cash equivalents, beginning of period | 2,259 | 3,805 | ||||
Cash and cash equivalents, end of period | $ | 4,641 | $ | 3,751 |
(1) | MANAGEMENT’S STATEMENT |
(2) | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS |
September 30, 2014 | December 31, 2013 | |||||
Accounts receivable trade | $ | 23,261 | $ | 16,300 | ||
Unbilled revenues | 8,382 | 9,719 | ||||
Allowance for doubtful accounts | (224 | ) | (220 | ) | ||
Receivables - customers, net | $ | 31,419 | $ | 25,799 |
(3) | REGULATORY ASSETS AND LIABILITIES |
Recovery/Amortization Period (in years) | September 30, 2014 | December 31, 2013 | ||||||
Regulatory assets: | ||||||||
Unamortized loss on reacquired debt(a) | 10 | $ | 2,447 | $ | 2,257 | |||
AFUDC(b) | 45 | 8,386 | 8,327 | |||||
Employee benefit plans(c) | 13 | 15,314 | 15,233 | |||||
Deferred energy and fuel cost adjustments - current (a) | 1 | 14,418 | 7,711 | |||||
Flow through accounting(a) | 35 | 11,031 | 9,723 | |||||
Other(a) | 2 | 3,958 | 2,013 | |||||
Total regulatory assets | $ | 55,554 | $ | 45,264 |
Regulatory liabilities: | ||||||||
Cost of removal for utility plant(a) | 53 | $ | 30,852 | $ | 30,467 | |||
Employee benefit plans | 13 | 10,328 | 10,177 | |||||
Other | 13 | 1,204 | 2,874 | |||||
Total regulatory liabilities | $ | 42,384 | $ | 43,518 |
(a) | Recovery or return of costs, but we are not allowed a rate of return. |
(b) | In addition to recovery of costs, we are allowed a rate of return. |
(c) | In addition to recovery of costs, we are allowed a return on a portion of this amount or a reduction in rate base, respectively. |
(4) | PROPERTY, PLANT AND EQUIPMENT |
Cost of Plant | Accumulated Depreciation | Net Book Value | ||||||
$ | 54,230 | $ | (49,718 | ) | $ | 4,512 |
(5) | RELATED-PARTY TRANSACTIONS |
September 30, 2014 | December 31, 2013 | ||||||
Receivables - affiliates | $ | 5,448 | $ | 4,934 | |||
Accounts payable - affiliates | $ | 22,271 | $ | 21,082 |
September 30, 2014 | December 31, 2013 | ||||||
Money pool notes receivable, net | $ | — | $ | 17,292 | |||
Money pool notes payable, net | $ | 19,433 | $ | — |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Net interest income (expense) | $ | (3 | ) | $ | 132 | $ | 81 | $ | 420 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Revenue: | ||||||||||||
Energy sold to Cheyenne Light | $ | 391 | $ | 238 | $ | 1,467 | $ | 595 | ||||
Rent from electric properties | $ | 1,126 | $ | 987 | $ | 3,200 | $ | 2,961 | ||||
Fuel and purchased power: | ||||||||||||
Purchases of coal from WRDC | $ | 4,854 | $ | 4,822 | $ | 13,886 | $ | 14,087 | ||||
Purchase of excess energy from Cheyenne Light | $ | 1,117 | $ | 964 | $ | 2,330 | $ | 2,898 | ||||
Purchase of renewable wind energy from Cheyenne Light - Happy Jack | $ | 264 | $ | 228 | $ | 1,393 | $ | 1,293 | ||||
Purchase of renewable wind energy from Cheyenne Light - Silver Sage | $ | 430 | $ | 414 | $ | 2,274 | $ | 2,210 | ||||
Corporate support: | ||||||||||||
Corporate support services and fees from Parent, Black Hills Service Company and Black Hills Utility Holdings | $ | 6,274 | $ | 7,583 | $ | 20,433 | $ | 22,637 |
(6) | EMPLOYEE BENEFIT PLANS |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Service cost | $ | 176 | $ | 213 | $ | 528 | $ | 639 | |||||||
Interest cost | 748 | 742 | 2,244 | 2,226 | |||||||||||
Expected return on plan assets | (925 | ) | (941 | ) | (2,776 | ) | (2,823 | ) | |||||||
Prior service cost | 11 | 11 | 32 | 33 | |||||||||||
Net loss (gain) | 235 | 652 | 705 | 1,956 | |||||||||||
Net periodic benefit cost | $ | 245 | $ | 677 | $ | 733 | $ | 2,031 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Service cost | $ | 56 | $ | 54 | $ | 168 | $ | 162 | |||||||
Interest cost | 60 | 60 | 180 | 180 | |||||||||||
Prior service cost (benefit) | (84 | ) | (69 | ) | (252 | ) | (207 | ) | |||||||
Net loss (gain) | — | 2 | — | 6 | |||||||||||
Net periodic benefit cost | $ | 32 | $ | 47 | $ | 96 | $ | 141 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Interest cost | $ | 36 | $ | 33 | $ | 109 | $ | 99 | |||||||
Net loss (gain) | 11 | 17 | 33 | 51 | |||||||||||
Net periodic benefit cost | $ | 47 | $ | 50 | $ | 142 | $ | 150 |
Contributions Nine Months Ended September 30, 2014 | Remaining Anticipated Contributions for 2014 | Anticipated Contributions for 2015 | |||||||
Defined Benefit Pension Plan | $ | 1,696 | $ | — | $ | 2,193 | |||
Non-Pension Defined Benefit Postretirement Healthcare Plan | $ | 415 | $ | 138 | $ | 595 | |||
Supplemental Non-qualified Defined Benefit Plans | $ | 163 | $ | 54 | $ | 215 |
(8) | FAIR VALUE OF FINANCIAL INSTRUMENTS |
September 30, 2014 | December 31, 2013 | ||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||
Cash and cash equivalents (a) | $ | 4,641 | $ | 4,641 | $ | 2,259 | $ | 2,259 | |||||
Long-term debt, including current maturities (b) | $ | 257,751 | $ | 330,397 | $ | 269,948 | $ | 317,531 |
(a) | Carrying value approximates fair value due to either short-term length of maturity or variable interest rates that approximate prevailing market rates and therefore is classified in Level 1 in the fair value hierarchy. |
(b) | Long-term debt is valued using the market approach based on observable inputs of quoted market prices and yields available for debt instruments either directly or indirectly for similar maturities and debt ratings in active markets and therefore is classified in Level 2 in the fair value hierarchy. The carrying amount of our variable rate debt approximates fair value due to the variable interest rates with short reset periods. |
(9) | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
Nine months ended September 30, | 2014 | 2013 | |||||
(in thousands) | |||||||
Non-cash investing and financing activities - | |||||||
Property, plant and equipment acquired with accrued liabilities | $ | 9,534 | $ | 9,495 | |||
Non-cash (decrease) to money pool notes receivable, net | $ | — | $ | (8,000 | ) | ||
Non-cash dividend to Parent | $ | — | $ | 8,000 | |||
Cash (paid) refunded during the period for - | |||||||
Interest (net of amounts capitalized) | $ | (13,301 | ) | $ | (12,784 | ) | |
Income taxes, net | $ | — | $ | 223 |
(10) | COMMITMENTS AND CONTINGENCIES |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2014 | 2013 | Variance | 2014 | 2013 | Variance | |||||||||||||
(in thousands) | ||||||||||||||||||
Revenue | $ | 67,729 | $ | 67,268 | $ | 461 | $ | 199,736 | $ | 187,917 | $ | 11,819 | ||||||
Fuel and purchased power | 23,919 | 22,454 | 1,465 | 72,242 | 65,676 | 6,566 | ||||||||||||
Gross margin | 43,810 | 44,814 | (1,004 | ) | 127,494 | 122,241 | 5,253 | |||||||||||
Operating expenses | 24,803 | 26,110 | (1,307 | ) | 77,160 | 76,741 | 419 | |||||||||||
Operating income | 19,007 | 18,704 | 303 | 50,334 | 45,500 | 4,834 | ||||||||||||
Interest income (expense), net | (4,715 | ) | (4,805 | ) | 90 | (14,248 | ) | (14,414 | ) | 166 | ||||||||
Other income (expense), net | 170 | (7 | ) | 177 | 527 | 402 | 125 | |||||||||||
Income tax expense | (4,546 | ) | (4,594 | ) | 48 | (11,824 | ) | (9,956 | ) | (1,868 | ) | |||||||
Net income | $ | 9,916 | $ | 9,298 | $ | 618 | $ | 24,789 | $ | 21,532 | $ | 3,257 |
Electric Revenue by Customer Type | |||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
(in thousands) | |||||||||||||||||||
2014 | Percentage Change | 2013 | 2014 | Percentage Change | 2013 | ||||||||||||||
Residential | $ | 15,941 | (6)% | $ | 16,951 | $ | 50,333 | 7% | $ | 46,928 | |||||||||
Commercial | 24,747 | 6% | 23,319 | 67,475 | 13% | 59,716 | |||||||||||||
Industrial | 6,816 | —% | 6,850 | 21,685 | 8% | 20,070 | |||||||||||||
Municipal | 964 | (11)% | 1,078 | 2,602 | (1)% | 2,639 | |||||||||||||
Total retail revenue | 48,468 | 1% | 48,198 | 142,095 | 10% | 129,353 | |||||||||||||
Contract wholesale | 5,551 | (5)% | 5,847 | 15,622 | (6)% | 16,540 | |||||||||||||
Wholesale off-system | 6,278 | (23)% | 8,123 | 20,764 | (7)% | 22,222 | |||||||||||||
Other revenue | 7,432 | 46% | 5,100 | 21,255 | 7% | 19,802 | |||||||||||||
Total revenue | $ | 67,729 | 1% | $ | 67,268 | $ | 199,736 | 6% | $ | 187,917 |
Megawatt Hours Sold by Customer Type | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | Percentage Change | 2013 | 2014 | Percentage Change | 2013 | ||||||||||
Residential | 120,117 | (9)% | 131,664 | 398,821 | (2)% | 406,159 | |||||||||
Commercial | 214,590 | 7% | 201,332 | 575,579 | 4% | 551,712 | |||||||||
Industrial | 96,443 | (2)% | 98,174 | 302,208 | 2% | 295,662 | |||||||||
Municipal | 9,387 | (12)% | 10,691 | 24,781 | (7)% | 26,621 | |||||||||
Total retail quantity sold | 440,537 | —% | 441,861 | 1,301,389 | 2% | 1,280,154 | |||||||||
Contract wholesale | 83,714 | (4)% | 87,092 | 250,941 | (7)% | 268,529 | |||||||||
Wholesale off-system | 171,189 | (35)% | 261,567 | 595,483 | (23)% | 777,854 | |||||||||
Total quantity sold | 695,440 | (12)% | 790,520 | 2,147,813 | (8)% | 2,326,537 | |||||||||
Losses and company use | 67,325 | 45% | 46,474 | 170,279 | 28% | 132,629 | |||||||||
Total energy | 762,765 | (9)% | 836,994 | 2,318,092 | (6)% | 2,459,166 |
Megawatt Hours Generated and Purchased | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
Generated - | 2014 | Percentage Change | 2013 | 2014 | Percentage Change | 2013 | |||||||||
Coal-fired | 414,551 | (a)(b) | (9)% | 457,329 | 1,168,641 | (a)(b) | (12)% | 1,334,441 | |||||||
Gas-fired | 12,054 | (c) | (34)% | 18,275 | 17,026 | (c) | (34)% | 25,953 | |||||||
Total generated | 426,605 | (10)% | 475,604 | 1,185,667 | (13)% | 1,360,394 | |||||||||
Total purchased | 336,160 | (7)% | 361,390 | 1,132,425 | 3% | 1,098,772 | |||||||||
Total generated and purchased | 762,765 | (9)% | 836,994 | 2,318,092 | (6)% | 2,459,166 |
(b) | The nine months ended September 30, 2014 reflects a planned annual outage at Neil Simpson II and an unplanned outage for a catalyst repair at Wygen III. |
(c) | The nine months ended September 30, 2014 include a planned outage at Ben French CT's #1 and #2 for a controls upgrade. |
Power Plant Availability | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||
Coal-fired plants (a) | 96.5 | % | 96.6 | % | 89.8 | % | 96.8 | % | |||
Other plants (b) | 91.4 | % | 92.6 | % | 91.0 | % | 96.1 | % | |||
Total availability | 94.2 | % | 95.0 | % | 90.3 | % | 96.5 | % |
(a) | The nine months ended September 30, 2014 reflects a planned annual outage at Neil Simpson II and an unplanned outage for a catalyst repair at Wygen III. |
(b) | The nine months ended September 30, 2014 include a planned outage at Ben French CT's #1 and #2 for a controls upgrade. |
Degree Days | Degree Days | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Actual | Variance from 30-year Average | Actual | Variance from 30-year Average | Actual | Variance from 30-year Average | Actual | Variance from 30-year Average | |||||||||
Heating and cooling degree days: | ||||||||||||||||
Heating degree days | 241 | 15 | % | 107 | (49 | )% | 4,676 | 6 | % | 4,544 | 6 | % | ||||
Cooling degree days | 382 | (32 | )% | 646 | 15 | % | 481 | (28 | )% | 724 | 8 | % |
Rating Agency | Rating |
S&P | A- |
Moody’s(*) | A1 |
Fitch (**) | A |
* | On January 30, 2014, Moody’s upgraded the BHP credit rating to A1 with a stable outlook. |
ITEM 4. | CONTROLS AND PROCEDURES |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
Exhibit 3.1* | Restated Articles of Incorporation of the Registrant (filed as an exhibit to the Registrant’s Form 8-K dated June 7, 1994 (No. 1-7978)). |
Exhibit 3.2* | Articles of Amendment to the Articles of Incorporation of the Registrant, as filed with the Secretary of State of the State of South Dakota on December 22, 2000 (filed as an exhibit to the Registrant’s Form 10-K for 2000). |
Exhibit 3.3* | Bylaws of the Registrant (filed as an exhibit to the Registrant’s Registration Statement on Form S-8 dated July 13, 1999). |
Exhibit 4.1* | Restated and Amended Indenture of Mortgage and Deed of Trust of Black Hills Corporation (now called Black Hills Power, Inc.) dated as of September 1, 1999 (filed as Exhibit 4.19 to the Registrant’s Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-3 (No. 333-150669-01)). First Supplemental Indenture, dated as of August 13, 2002, between Black Hills Power, Inc. and The Bank of New York Mellon (as successor to J.P. Morgan Chase Bank), as Trustee (filed as Exhibit 4.20 to the Registrant’s Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-3 (No. 333-150669-01)). Second Supplemental Indenture, dated as of October 27, 2009, between Black Hills Power, Inc. and The Bank of New York Mellon (filed as Exhibit 4.21 to the Registration Statement on Form S-3 (No. 333-150669-01)). |
Exhibit 10* | Third Supplemental Indenture, dated as of October 1, 2014, between Black Hills Power, Inc. and The Bank of New York Mellon (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on October 2, 2014). |
Exhibit 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a - 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. |
Exhibit 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a - 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. |
Exhibit 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. |
Exhibit 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. |
Exhibit 101 | Financial Statements for XBRL Format |
* | Previously filed as part of the filing indicated and incorporated by reference herein. |
Exhibit Number | Description |
Exhibit 3.1* | Restated Articles of Incorporation of the Registrant (filed as an exhibit to the Registrant’s Form 8-K dated June 7, 1994 (No. 1-7978)). |
Exhibit 3.2* | Articles of Amendment to the Articles of Incorporation of the Registrant, as filed with the Secretary of State of the State of South Dakota on December 22, 2000 (filed as an exhibit to the Registrant’s Form 10-K for 2000). |
Exhibit 3.3* | Bylaws of the Registrant (filed as an exhibit to the Registrant’s Registration Statement on Form S-8 dated July 13, 1999). |
Exhibit 4.1* | Restated and Amended Indenture of Mortgage and Deed of Trust of Black Hills Corporation (now called Black Hills Power, Inc.) dated as of September 1, 1999 (filed as Exhibit 4.19 to the Registrant’s Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-3 (No. 333-150669-01)). First Supplemental Indenture, dated as of August 13, 2002, between Black Hills Power, Inc. and The Bank of New York Mellon (as successor to J.P. Morgan Chase Bank), as Trustee (filed as Exhibit 4.20 to the Registrant’s Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-3 (No. 333-150669-01)). Second Supplemental Indenture, dated as of October 27, 2009, between Black Hills Power, Inc. and The Bank of New York Mellon (filed as Exhibit 4.21 to the Registration Statement on Form S-3 (No. 333-150669-01)). |
Exhibit 10* | Third Supplemental Indenture, dated as of October 1, 2014, between Black Hills Power, Inc. and The Bank of New York Mellon (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on October 2, 2014). |
Exhibit 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a - 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. |
Exhibit 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a - 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. |
Exhibit 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. |
Exhibit 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. |
Exhibit 101 | Financial Statements for XBRL Format |
* | Previously filed as part of the filing indicated and incorporated by reference herein. |
1. | I have reviewed this quarterly report on Form 10-Q of Black Hills Power, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 6, 2014 | |
/S/ DAVID R. EMERY | ||
David R. Emery | ||
Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Black Hills Power, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 6, 2014 | |
/S/ ANTHONY S. CLEBERG | ||
Anthony S. Cleberg | ||
Executive Vice President and | ||
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13 (a) or |
(2) | The information contained in the Report fairly presents, in all material |
Date: | November 6, 2014 | |
/S/ DAVID R. EMERY | ||
David R. Emery | ||
Chairman and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13 (a) or |
(2) | The information contained in the Report fairly presents, in all material |
Date: | November 6, 2014 | |
/S/ ANTHONY S. CLEBERG | ||
Anthony S. Cleberg | ||
Executive Vice President and | ||
Chief Financial Officer |
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