10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2015
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________.

Commission File Number 1-7978

Black Hills Power, Inc.

Incorporated in South Dakota  IRS Identification Number 46-0111677

625 Ninth Street, Rapid City, South Dakota 57701

Registrant’s telephone number (605) 721-1700

Former name, former address, and former fiscal year if changed since last report

NONE

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of April 30, 2015, there were issued and outstanding 23,416,396 shares of the Registrant’s common stock, $1.00 par value, all of which were held beneficially and of record by Black Hills Corporation.

Reduced Disclosure

The Registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

TABLE OF CONTENTS

		Page
	GLOSSARY OF TERMS AND ABBREVIATIONS	3
PART 1.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Statements of Income and Comprehensive Income - unaudited	4
	Three Months Ended March 31, 2015 and 2014
	Condensed Balance Sheets - unaudited	5
	March 31, 2015 and December 31, 2014
	Condensed Statements of Cash Flows - unaudited	7
	Three Months Ended March 31, 2015 and 2014
	Notes to Condensed Financial Statements - unaudited	8
Item 2.	Managements’ Discussion and Analysis of Financial Condition and Results of Operations	14
Item 4.	Controls and Procedures	18
PART II.	OTHER INFORMATION	19
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 6.	Exhibits	19
	Signatures	20
	Exhibit Index	21

2

GLOSSARY OF TERMS AND ABBREVIATIONS

The following terms and abbreviations appear in the text of this report and have the definitions described below:

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.
CPCN	Certificate of Public Convenience and Necessity
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
Fitch	Fitch Ratings
GAAP	Generally Accepted Accounting Principles in the United States of America
Global Settlement	Settlement with a utilities commission where the dollar figure is agreed upon, but the specific adjustments used by each party to arrive at the figure are not specified in public rate orders.
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
SDPUC	South Dakota Public Utilities Commission
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

3

BLACK HILLS POWER, INC.

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	Three Months Ended March 31,
(unaudited)	2015			2014
	(in thousands)
Revenue	$	70,283		$	71,267
Operating expenses:
Fuel, purchased power and natural gas	22,104			27,045
Operations and maintenance	17,091			18,110
Depreciation and amortization	8,125			6,887
Taxes - property	1,473			1,679
Total operating expenses	48,793			53,721
Operating income	21,490			17,546
Other income (expense):
Interest expense	(5,692		)	(4,947		)
AFUDC - borrowed	39			72
Interest income	104			58
AFUDC - equity	70			145
Other income (expense), net	35			43
Total other income (expense)	(5,444		)	(4,629		)
Income from continuing operations before income taxes	16,046			12,917
Income tax expense	(5,643		)	(4,274		)
Net income	10,403			8,643
Other comprehensive income (loss):
Reclassification adjustments of cash flow hedges settled and included in net income (net of tax (expense) benefit of $336 and $(6) for the three months ended March 31, 2015 and 2014, respectively)	352			10
Reclassification adjustment of benefit plan liability - net gain (loss) (net of tax (expense) benefit of $(8) and $(4) for the three months ended March 31, 2015 and 2014, respectively)	15			7
Other comprehensive income	367			17
Comprehensive income	$	10,770		$	8,660

The accompanying Notes to Condensed Financial Statements are an integral part of these Condensed Financial Statements.

4

BLACK HILLS POWER, INC.

CONDENSED BALANCE SHEETS

(unaudited)	March 31, 2015			December 31, 2014
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	55,084		$	6,620
Receivables - customers, net	28,227			34,684
Receivables - affiliates	5,030			5,350
Other receivables, net	341			259
Money pool notes receivable, net	33,515			68,626
Materials, supplies and fuel	21,374			20,965
Deferred income tax assets, net, current	7,456			13,661
Regulatory assets, current	13,240			10,257
Other, current assets	30,131			4,954
Total current assets	194,398			165,376
Investments	4,628			4,584
Property, plant and equipment	1,116,634			1,115,061
Less accumulated depreciation and amortization	(313,475		)	(309,767		)
Total property, plant and equipment, net	803,159			805,294
Other assets:
Regulatory assets, non-current	67,095			68,427
Other, non-current assets	13,336			11,708
Total other assets	80,431			80,135
TOTAL ASSETS	$	1,082,616		$	1,055,389

The accompanying Notes to Condensed Financial Statements are an integral part of these Condensed Financial Statements.

5

BLACK HILLS POWER, INC.

CONDENSED BALANCE SHEETS

(unaudited)	March 31, 2015			December 31, 2014
	(in thousands, except common stock par value and share amounts)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	16,254		$	30,543
Accounts payable - affiliates	17,588			19,242
Accrued liabilities	45,823			16,415
Regulatory liabilities, current	5,808			3,073
Total current liabilities	85,473			69,273
Long-term debt, net of current maturities	342,753			342,752
Deferred credits and other liabilities:
Deferred income tax liability, net, non-current	191,938			193,042
Regulatory liabilities, non-current	52,045			51,916
Benefit plan liabilities	21,421			20,981
Other, non-current liabilities	3,422			2,631
Total deferred credits and other liabilities	268,826			268,570
Commitments and contingencies (Notes 5, 6 and 8)
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	324,025			313,622
Accumulated other comprehensive loss	(1,452		)	(1,819		)
Total stockholders’ equity	385,564			374,794
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	1,082,616		$	1,055,389

The accompanying Notes to Condensed Financial Statements are an integral part of these Condensed Financial Statements.

6

BLACK HILLS POWER, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)	Three Months Ended March 31,
	2015			2014
	(in thousands)
Operating activities:
Net income	$	10,403		$	8,643
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization	8,125			6,887
Deferred income tax	4,962			4,254
Employee benefits	601			324
AFUDC - equity	(70		)	(145		)
Other adjustments, net	85			(1,014		)
Change in operating assets and liabilities -
Accounts receivable and other current assets	7,951			(7,768		)
Accounts payable and other current liabilities	(9,244		)	8,111
Other operating activities, net	(719		)	(1,419		)
Net cash provided by (used in) operating activities	22,094			17,873
Investing activities:
Property, plant and equipment additions	(8,697		)	(21,885		)
Change in money pool notes receivable, net	35,111			6,220
Other investing activities	(44		)	(63		)
Net cash provided by (used in) investing activities	26,370			(15,728		)
Financing activities:
Other financing activities	—			(6		)
Net cash provided by (used in) financing activities	—			(6		)
Net change in cash and cash equivalents	48,464			2,139
Cash and cash equivalents, beginning of period	6,620			2,259
Cash and cash equivalents, end of period	$	55,084		$	4,398

See Note 7 for supplemental cash flow information.

The accompanying Notes to Condensed Financial Statements are an integral part of these Condensed Financial Statements.

7

BLACK HILLS POWER, INC.

Notes to Condensed Financial Statements

(unaudited)

(Reference is made to Notes to Financial Statements

included in our 2014 Annual Report on Form 10-K)

(1) MANAGEMENT’S STATEMENT

The unaudited condensed financial statements included herein have been prepared by Black Hills Power, Inc. (the “Company,” “we,” “us,” or “our”), pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, we believe that the footnotes adequately disclose the information presented. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto, included in our 2014 Annual Report on Form 10-K filed with the SEC.

Accounting methods historically employed require certain estimates as of interim dates. The information furnished in the accompanying condensed financial statements reflects all adjustments, including accruals, which are, in the opinion of management, necessary for a fair presentation of the March 31, 2015, December 31, 2014 and March 31, 2014 financial information and are of a normal recurring nature. The results of operations for the three months ended March 31, 2015 and March 31, 2014, and our financial condition as of March 31, 2015 and December 31, 2014 are not necessarily indicative of the results of operations and financial condition to be expected as of or for any other period.

Recently Issued and Adopted Accounting Standards

We have implemented all new accounting pronouncements that are in effect and may impact our financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position, results of operations, or cash flows.

Simplifying the Presentation of Debt Issuance Costs, ASU 2015-03

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. Debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts, rather than as an asset. Amortization of these costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted. We are currently evaluating the impact of adoption that ASU 2015-03 will have on our financial position, results of operations, or cash flows.

Revenue from Contracts with Customers, ASU 2014-09

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. On April 1, 2015, FASB voted to propose to defer the effective date of ASU 2014-09 by one year. The proposed guidance would be effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. We are currently assessing the impact, if any, that ASU 2014-09 will have on our financial position, results of operations or cash flows.

8

(2) ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Following is a summary of Receivables - customers, net included in the accompanying Condensed Balance Sheets (in thousands) as of:

	March 31, 2015			December 31, 2014
Accounts receivable trade	$	19,539		$	24,946
Unbilled revenues	8,941			9,999
Allowance for doubtful accounts	(253		)	(261		)
Receivables - customers, net	$	28,227		$	34,684

(3) REGULATORY ACCOUNTING

Our regulated electric operations are subject to regulation by various state and federal agencies. The accounting policies followed are generally subject to the Uniform System of Accounts of the FERC.

Our regulatory assets and liabilities were as follows (in thousands) as of:

	Recovery/Amortization Period (in years)	March 31, 2015		December 31, 2014
Regulatory assets:
Unamortized loss on reacquired debt (a)	10	$	2,306	$	2,377
AFUDC (b)	45	8,332		8,365
Employee benefit plans (c)	12	24,418		24,418
Deferred energy and fuel cost adjustments - current (a)	Less than 1 year	15,189		14,696
Flow through accounting (a)	35	11,564		11,171
Decommissioning costs (a)	10	11,311		11,786
Other (a)	10	7,215		5,871
Total regulatory assets		$	80,335	$	78,684

Regulatory liabilities:
Cost of removal for utility plant (a)	53	$	36,174	$	35,510
Employee benefit plans (c)	12	14,538		14,538
Other	13	7,141		4,941
Total regulatory liabilities		$	57,853	$	54,989

____________________

(a) Recovery 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.

9

(4) RELATED-PARTY TRANSACTIONS

Receivables and Payables

We have accounts receivable and accounts payable balances related to transactions with other BHC subsidiaries. The balances were as follows (in thousands) as of:

	March 31, 2015		December 31, 2014
Receivables - affiliates	$	5,030	$	5,350
Accounts payable - affiliates	$	17,588	$	19,242

Money Pool Notes Receivable and Notes Payable

We have entered into a Utility Money Pool Agreement (the “Agreement”) with BHC, Cheyenne Light and Black Hills Energy. We are the administrator of the Money Pool. Under the Agreement, we may borrow from BHC; however the Agreement restricts us from loaning funds to BHC or to any of BHC’s non-utility subsidiaries. The Agreement does not restrict us from paying dividends to BHC. Borrowings and advances under the Agreement bear interest at the weighted average daily cost of our parent company’s credit facility borrowings as defined under the Agreement, or if there are no external funds outstanding on that date, then the rate will be the daily one-month LIBOR plus 1.0%. At March 31, 2015, the average cost of borrowing under the Utility Money Pool was 1.38%.

We had the following balances with the Utility Money Pool (in thousands) as of:

	March 31, 2015		December 31, 2014
Money pool notes receivable, net	$	33,515	$	68,626

Our net interest income (expense) relating to balances with the Utility Money Pool was as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Net interest income (expense)	$	258	$	(781	)

Other related party activity was as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Revenue:
Energy sold to Cheyenne Light	$	326	$	679
Rent from electric properties	$	1,124	$	1,023
Fuel and purchased power:
Purchases of coal from WRDC	$	4,045	$	5,014
Purchase of excess energy from Cheyenne Light	$	476	$	629
Purchase of renewable wind energy from Cheyenne Light - Happy Jack	$	549	$	664
Purchase of renewable wind energy from Cheyenne Light - Silver Sage	$	936	$	1,094
Gas transportation service agreement
Gas transportation service agreement with Cheyenne Light for firm and interruptible gas transportation	$	103	$	—
Corporate support:
Corporate support services and fees from Parent, Black Hills Service Company and Black Hills Utility Holdings	$	7,033	$	7,853

10

(5) EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plan

The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands):

	Three Months Ended March 31,
	2015			2014
Service cost	$	199		$	176
Interest cost	739			748
Expected return on plan assets	(984		)	(926		)
Prior service cost	11			11
Net loss (gain)	549			235
Net periodic benefit cost	$	514		$	244

Defined Benefit Postretirement Healthcare Plan

The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands):

	Three Months Ended March 31,
	2015			2014
Service cost	$	58		$	56
Interest cost	54			60
Prior service cost (benefit)	(84		)	(84		)
Net loss (gain)	—			—
Net periodic benefit cost	$	28		$	32

11

Supplemental Non-qualified Defined Benefit Plans

The components of net periodic benefit cost for the Supplemental Non-qualified Defined Benefit Plans were as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Interest cost	$	36	$	37
Net loss (gain)	23		11
Net periodic benefit cost	$	59	$	48

Contributions

We anticipate we will make contributions to the benefit plans during 2015 and 2016. Contributions to the Defined Benefit Pension Plan are cash contributions made directly to the Pension Plan Trust accounts. Contributions to the Healthcare and Supplemental Plans are made in the form of benefit payments. Contributions and anticipated contributions are as follows (in thousands):

	Contributions Three Months Ended March 31, 2015		Remaining Anticipated Contributions for 2015		Anticipated Contributions for 2016
Defined Benefit Pension Plan	$	—	$	1,657	$	1,657
Defined Benefit Postretirement Healthcare Plan	$	130	$	389	$	577
Supplemental Non-qualified Defined Benefit Plans	$	54	$	163	$	184

(6) FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance on fair value measurements establishes a hierarchy for grouping assets and liabilities, based on significance of inputs. For additional information see Note 1 included in our 2014 Annual Report on Form 10-K filed with the SEC.

The estimated fair values of our financial instruments were as follows (in thousands) as of:

	March 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents (a)	$	55,084	$	55,084	$	6,620	$	6,620
Long-term debt, including current maturities (b)	$	342,753	$	442,121	$	342,752	$	430,497

_________________

(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.

12

(7) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Three months ended March 31,	2015			2014
	(in thousands)
Non-cash investing and financing activities -
Property, plant and equipment acquired with accrued liabilities	$	2,042		$	11,760
Cash (paid) refunded during the period for -
Interest (net of amounts capitalized)	$	(2,718	)	$	(3,264	)
Income taxes, net	$	—		$	—

(8) COMMITMENTS AND CONTINGENCIES

Other than the item discussed below, there have been no significant changes to commitments and contingencies from those previously disclosed in Note 11 of our Notes to the Financial Statements in our 2014 Annual Report on Form 10-K.

Oil Creek Fire

On June 29, 2012, a forest and grassland fire occurred in the western Black Hills of Wyoming. A fire investigator retained by the Weston County Fire Protection District concluded that the fire was caused by the failure of a transmission structure owned, operated and maintained by us. On April 16, 2013, a large group of private landowners filed suit in the United States District Court for the District of Wyoming. There are approximately 36 Plaintiff groups (including property jointly owned by multiple family members or entities), or approximately 73 individually named private plaintiffs. In addition, the State of Wyoming has intervened in the lawsuit. Both the private landowners and the State of Wyoming assert claims for damages against us. The claims include allegations of negligence, negligence per se, common law nuisance and trespass. In addition to claims for compensatory damages, the lawsuit seeks recovery of punitive damages. We have denied and will vigorously defend all claims arising out of the fire. We cannot predict the outcome of expert investigation, the viability of alleged claims or the outcome of the litigation.

Civil litigation of this kind, however, is likely to lead to settlement negotiations, including negotiations prompted by pre-trial civil court procedures. We believe such negotiations would effect a settlement of all claims. Regardless of whether the litigation is determined at trial or through settlement, we expect to incur significant investigation, legal and expert services expenses associated with the litigation. We maintain insurance coverage to limit our exposure to losses due to civil liability claims, and related litigation expense, and we will pursue recoveries to the maximum extent available under the policies. The deductible applicable to some types of claims arising out of this fire is $1.0 million. Based upon information currently available, we believe that a loss associated with settlement of pending claims is probable. Accordingly, we recorded a loss contingency liability related to these claims and we recorded a receivable for costs we believe are reimbursable and probable of recovery under our insurance coverage. Both of these entries reflect our reasonable estimate of probable future litigation expense and settlement costs; we did not base these contingencies on any determination that it is probable we would be found liable for these claims were they to be litigated.

Given the uncertainty of litigation, however, a loss related to the fire, the litigation and related claims in excess of the loss we have determined to be probable is reasonably possible. We cannot reasonably estimate the amount of such possible loss because expert investigations and our review of damage claim documentation are ongoing, and there are significant factual and legal issues to be resolved. Further claims may be presented by these claimants and other parties. We have received claims seeking recovery for fire suppression, reclamation and rehabilitation costs, damage to fencing and other personal property, alleged injury to timber, grass or hay, livestock and related operations, and diminished value of real estate. Based on the legal standard for measuring damages that we believe applies to this matter, we estimate the current total claims to be approximately $55 million; however the actual amount of allowed claims and any loss will depend on the resolution of certain factual and legal issues. We are not yet able to reasonably estimate the amount of any reasonable possible losses in excess of the amount we have accrued. Based upon information currently available, however, management does not expect the outcome of the claims to have a material adverse effect upon our consolidated financial condition, results of operations or cash flows.

13

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Amounts are presented on a pre-tax basis unless otherwise indicated.

Minor differences in amounts may result due to rounding.

Significant Events

Regulatory Matters

On March 2, 2015, the SDPUC issued an order approving a rate stipulation and agreement authorizing an annual electric revenue increase for us of $6.9 million. The agreement was a Global Settlement and did not stipulate return on equity and capital structure. The SDPUC’s decision provides us a return on our investment in Cheyenne Prairie and associated infrastructure, and provides recovery of our share of operating expenses for this natural gas fired facility. We implemented interim rates on October 1, 2014, coinciding with Cheyenne Prairie’s commercial operation date. Final rates were approved on April 1, 2015, effective October 1, 2014.

On July 22, 2014, we filed a CPCN with the WPSC to construct the Wyoming portion of a $54 million, 230-kV, 144 mile-long transmission line that would connect the Teckla Substation in northeast Wyoming, to the Lange Substation near Rapid City, South Dakota. We are awaiting approval of the CPCN from the WPSC. We received approval on November 6, 2014 from the SDPUC for a permit to construct the South Dakota portion of this line. Assuming timely receipt of remaining approvals, we plan to commence construction in the third quarter of 2015.

Results of Operations

The following discussion includes financial information prepared in accordance with GAAP, as well as another financial measure, gross 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. Gross margin (revenue less cost of sales) is a non-GAAP financial measure due to the exclusion of depreciation from the measure. The presentation of gross margin is intended to supplement investors’ understanding of our operating performance.

Gross margin is calculated as operating revenue less cost of fuel, purchased power and natural gas. Our gross margin is impacted by the fluctuations in power purchases, natural gas and other fuel supply costs. However, while these fluctuating costs impact gross margin as a percentage of revenue, they only impact total gross margin if the costs cannot be passed through to our customers.

Our gross margin measure may not be comparable to other companies’ gross margin measure. Furthermore, this measure is not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.

14

The following tables provide certain financial information and operating statistics:

	Three Months Ended March 31,
	2015			2014			Variance
	(in thousands)
Revenue	$	70,283		$	71,267		$	(984	)
Fuel and purchased power	22,104			27,045			(4,941		)
Gross margin	48,179			44,222			3,957
Operating expenses	26,689			26,676			13
Operating income	21,490			17,546			3,944
Interest income (expense), net	(5,549		)	(4,817		)	(732		)
Other income (expense), net	105			188			(83		)
Income tax expense	(5,643		)	(4,274		)	(1,369		)
Net income	$	10,403		$	8,643		$	1,760

	Electric Revenue by Customer Type
	Three Months Ended March 31,
	(in thousands)
	2015		Percentage Change	2014
Residential	$	20,140	—%	$	20,061
Commercial	24,741		15%	21,528
Industrial	8,299		13%	7,335
Municipal	858		8%	792
Total retail revenue	54,038		9%	49,716
Contract wholesale	5,420		(3)%	5,598
Wholesale off-system	6,635		(27)%	9,075
Other revenue	4,190		(39)%	6,878
Total revenue	$	70,283	(1)%	$	71,267

15

	Megawatt Hours Sold by Customer Type
	Three Months Ended March 31,
	2015	Percentage Change	2014
Residential	146,963	(14)%	171,311
Commercial	195,078	6%	184,448
Industrial	111,859	11%	100,851
Municipal	7,700	—%	7,686
Total retail quantity sold	461,600	(1)%	464,296
Contract wholesale	84,271	(12)%	95,228
Wholesale off-system	245,638	(4)%	254,796
Total quantity sold	791,509	(3)%	814,320
Losses and company use	26,646	(26)%	36,037
Total energy	818,155	(4)%	850,357

	Megawatt Hours Generated and Purchased
	Three Months Ended March 31,
Generated -	2015		Percentage Change	2014
Coal-fired	376,834	(a)	(10)%	417,248
Gas-fired	2,878		25%	2,308
Total generated	379,712		(9)%	419,556
Total purchased	438,443		2%	430,801
Total generated and purchased	818,155		(4)%	850,357

__________________

(a) Decrease reflects the retirement of Neil Simpson I on March 21, 2014.

	Power Plant Availability
	Three Months Ended March 31,
	2015		2014
Coal-fired plants (a)	87.7	%	94.5	%
Other plants	95.2	%	99.8	%
Total availability	92.0	%	96.5	%

__________________

(a) Decrease is due to an outage at Neil Simpson II during the three Months Ended March 31, 2015.

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	Degree Days
	Three Months Ended March 31,
	2015			2014
	Actual	Variance from 30-year Average		Actual	Variance from 30-year Average
Heating degree days:
Heating degree days	2,873	(11	)%	3,410	6	%

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014. Net income was $10.4 million compared to $8.6 million for the same period in the prior year primarily due to the following:

Gross marginincreased primarily due to a return on capital investment in Cheyenne Prairie which increased gross margin by$4.0 million. Wholesale margins increased by $0.6 million, driven by reliability improvements on generation related to unit contingent contracts. Commercial and industrial load increased resulting in $0.4 million from higher megawatt hours sold. These increases are partially offset by $1.7 million from lower residential MWh sold driven by a 16% decrease in heating degree days compared to the same period in the prior year.

Operations and maintenance was comparable to the prior year, reflecting an increase in depreciation expense primarily due to a higher asset base driven by the addition of Cheyenne Prairie, offset by employee costs and lower maintenance costs.

Interest expense, net increased primarily due to interest costs from the $85 million of permanent financing put in place during the fourth quarter of 2014 for Cheyenne Prairie.

Other income, net was comparable to the same period in the prior year.

Income tax expense: The effective tax rate is higher in 2015 primarily due to the increase in liability with respect to uncertain tax positions related to research and development credits.

Financing Plans and Activity

On October 1, 2014, in a private placement to provide permanent financing for Cheyenne Prairie, we issued $85 million of 4.43% coupon first mortgage bonds due October 20, 2044.

On September 30, 2014, we repaid in full $12 million in principal on the 5.35% Pollution Control Revenue Bonds originally due to mature on October 1, 2024.

Credit Ratings

Credit ratings impact our ability to obtain short and long-term financing, the cost of such financing, and vendor payment terms, including collateral requirements. As of March 31, 2015, our credit ratings for our Senior Secured Debt, as assessed by the three major credit rating agencies, were as follows:

Rating Agency	Rating
S&P	A-
Moody’s	A1
Fitch	A

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FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements as defined by the SEC. Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words “anticipates”, “estimates”, “expects”, “intends”, “plans”, “predicts” and similar expressions, and include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature, including statements contained within Item 2 - Management’s Discussion & Analysis.

Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. The Company’s expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Nonetheless, the Company’s expectations, beliefs or projections may not be achieved or accomplished.

Any forward-looking statement contained in this document speaks only as of the date on which the statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all of the factors, nor can it assess the effect of each factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are expressly qualified by the risk factors and cautionary statements described in Item 1A of our 2014 Annual Report on Form 10-K, including statements contained within Item 1A - Risk Factors and Part II, Item 1A of this Quarterly Report on Form 10Q.

ITEM 4. CONTROLS AND PROCEDURES

This section should be read in conjunction with Item 9A, “Controls and Procedures” included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of March 31, 2015. Based on their evaluation, they have concluded that our disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015, that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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BLACK HILLS POWER, INC.

Part II - Other Information

Item 1. Legal Proceedings

For information regarding legal proceedings, see Note 11 of Notes to Financial Statements in Item 8 of our 2014 Annual Report on Form 10-K and Note 8 of our Notes to Condensed Financial Statements in this Quarterly Report on Form 10-Q, which information from Note 8 is incorporated by reference into this item.

Item 1A. Risk Factors

There are no material changes to the Risk Factors previously disclosed in Item 1A of Part I in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 6. Exhibits

Exhibit 3.1 Restated Articles of Incorporation of the Registrant dated March 30, 2015.

Exhibit 3.2 Amended and Restated Bylaws of the Registrant dated March 30, 2015.

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)). 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.

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BLACK HILLS POWER, INC.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BLACK HILLS POWER, INC.

/S/ DAVID R. EMERY

David R. Emery, Chairman

and Chief Executive Officer

/S/ RICHARD W. KINZLEY

Richard W. Kinzley, Senior Vice President

and Chief Financial Officer

Dated: May 7, 2015

20

EXHIBIT INDEX

Exhibit Number Description

Exhibit 3.1 Restated Articles of Incorporation of the Registrant dated March 30, 2015.

Exhibit 3.2 Amended and Restated Bylaws of the Registrant dated March 30, 2015.

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)). 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.

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EX-3.1

Exhibit 3.1

RESTATED ARTICLES OF INCORPORATION

OF

BLACK HILLS POWER, INC.

Black Hills Power, Inc., a corporation duly organized and existing under the provisions of Chapter 49-33 of the South Dakota Codified Laws, does hereby certify as follows:

1.    The name of the Corporation is Black Hills Power, Inc. The name under which the Corporation was originally incorporated was Black Hills Power and Light Company. Articles of Amendment were filed to change the name to Black Hills Corporation, Black Hills Power and Light Company, and Black Hills Power, Inc. respectively.

2.    The original Articles of Incorporation were filed with the South Dakota Secretary of State on August 27, 1941.

3.    Black Hills Power, Inc. does hereby restate its Articles of Incorporation as of March 30, 2015, and by doing so includes the Restated Articles of Incorporation adopted by the Board of Directors on May 24, 1994 and filed on June 1, 1994, and all subsequent amendments, exchanges and corrections thereto, including the amendment dated March 30, 2015.

ARTICLE I.

The name of the Corporation is Black Hills Power, Inc., and its principal corporate offices are located at 625 Ninth Street, Rapid City, Pennington County, South Dakota.

The Corporation is formed for the purpose of generating, transmitting and distributing electricity within the State of South Dakota or elsewhere, the same to be sold to and used by the public for heat, light or power, pursuant to the provisions of Chapters 49-33 and 49-34 of the South Dakota Codified Laws, and shall have all the powers, rights and privileges therein provided and set forth, together with such additional powers, rights and privileges as may otherwise be provided by the laws of the State of South Dakota.

ARTICLE II.

The amount of total authorized capital stock of the Corporation shall be 50,000,000 shares of Common Stock having a par value of $1.00 per share.

ARTICLE III.

The Corporation shall have perpetual existence.

ARTICLE IV.

The name and address of the Corporation’s registered agent is:

Corporation Service Company

503 South Pierre Street

Pierre, SD 57501

ARTICLE V.

The business of the Corporation shall be governed by a board of not less than three (3) Directors and such greater number as the Bylaws shall designate, their qualifications and terms of office to be determined by the Bylaws of the Corporation.

The Directors shall serve as Trustees of the shareholders of the Corporation solely for the purpose of satisfying the minimum stock ownership requirements of SDCL 49-33-15.

ARTICLE VI.

Each person who is or was a director or officer of the Corporation and each person who serves or served at the request of the Corporation as a director or officer shall be indemnified by the Corporation in accordance with and to the fullest extent authorized by the South Dakota Business Corporation Act of the State of South Dakota as the same now exists or may be hereafter amended. No amendment to or repeal of this Article VI shall apply to or have any effect on the liability or alleged liability of any director or officer of the Corporation for or with respect to acts or omissions of such individual occurring prior to such amendment or repeal.

ARTICLE VII.

The Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in these Restated Articles of Incorporation in the manner now or hereafter prescribed by the laws of the State of South Dakota.

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IN WITNESS WHEREOF, Black Hills Power, Inc., as authorized and directed by resolutions adopted by its Board of Directors at a regular meeting held on March 30, 2015, pursuant to authority at SDCL 49-33-1, executes these Restated Articles of Incorporation on March 30, 2015, through its duly authorized officer.

/s/ Roxann R. Basham

Roxann R. Basham

Vice President - Governance and

Corporate Secretary

STATE OF SOUTH DAKOTA

COUNTY OF PENNINGTON

On this 30^th day of March, 2015, before me, the undersigned officer personally appeared Roxann R. Basham, known to me or satisfactorily proven to be the person whose name is subscribed to the foregoing instrument and she acknowledged to me that she executed the same for the purposes contained therein.

Subscribed and sworn to before me this 30^th day of March, 2015.

/s/ LeeAnn Steckler

Notary Public

My commission expires: 06/23/17

(SEAL)

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EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

BLACK HILLS POWER, INC.

(a South Dakota corporation)

ARTICLE I

Offices and Fiscal Year

SECTION 1.01. Registered Office. The registered office of the Corporation shall be 503 South Pierre Street, Pierre, South Dakota 57501, until otherwise changed by a vote of a majority of the Board of Directors, and a statement of such change is filed in the manner provided by statute.

SECTION 1.02. Principal Office. The principal office of the Corporation is 625 Ninth Street, Rapid City, South Dakota 57701.

SECTION 1.03 Other Offices. The Corporation may also have offices at such other places within or without the State of South Dakota as the Board of Directors may from time to time determine or the business of the Corporation requires.

SECTION 1.04 Fiscal Year. The fiscal year of the Corporation shall be the calendar year unless otherwise fixed by resolution of the Board of Directors.

ARTICLE II

Meeting of Shareholders

SECTION 2.01. Place of Meeting. Meetings of the shareholders shall be held at the principal office of the Corporation or at such other place within or without the State of South Dakota as shall be designated by the Board of Directors in the notice of such meeting.

SECTION 2.02. Annual Meeting. The annual meeting of the shareholders shall be held at such date and time as shall be designated by the Board of Directors for the purpose of electing directors and for the transaction of any business as may be brought before the meeting.

SECTION 2.03. Action in Lieu of Meeting. Unless otherwise provided by law, any action required or permitted to be taken at a meeting of the shareholders, may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action shall be evidenced by one or more written consents or by electronic transmission setting forth the action so taken, signed by all the shareholders entitled to vote on the action, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records.

SECTION 2.04. Special Meetings. Special meetings of the shareholders of the Corporation, for any purpose or purposes, unless otherwise prescribed by statute, may be called by resolution of the Board of Directors or by the President or Chairman of the Board or upon written request of any person or persons authorized by the South Dakota Business Corporation Act to request such a meeting. Only business within the purposes described in the meeting notice may be conducted at a special shareholders’ meeting.

SECTION 2.05. Quorum. The holders of a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all shareholder meetings except as otherwise provided by law.

SECTION 2.06. Notice of Meetings. Written notice of the place, date and time of every meeting of the shareholders, whether annual or special, shall be given by the Chairman of the Board, the President, a Vice President, the Secretary or an Assistant Secretary of the Corporation to each shareholder of record having voting power with respect to the business to be transacted at such meeting not less than 10 nor more than 50 days before the date of the meeting. If the shareholders are to vote on an increase in the stock or indebtedness of the Corporation, the written notice shall be delivered not less than 60 nor more than 80 days before such meeting. Each notice of a special meeting shall state the purpose or purposes for which the meeting is being called. Any meeting at which all shareholders having voting power with respect to the business to be transacted thereat are present, either in person or by proxy, shall be a valid meeting for the transaction of business, notwithstanding that notice has not been given as hereinabove provided.

SECTION 2.07. Conduct of the Meeting. At each meeting of shareholders, the Chairman of the Board or, in his or her absence, the President shall act as chairman of the meeting. The chairman of the meeting shall determine the order of business and may establish rules for the conduct of the meeting.

ARTICLE III

Board of Directors

SECTION 3.01. Powers. The Board of Directors shall have full power to manage the business and affairs of the Corporation except those specifically reserved or granted to the shareholders by statute, the Articles of Incorporation or these Bylaws.

SECTION 3.02. Number and Term of Office. The Board of Directors shall consist of such number of Directors as may be determined from time to time by resolution of the Board of Directors, and shall consist of not less than three (3) Directors.

Each Director shall serve until the next annual election and until his or her successor shall have been elected and qualified. Directors of the Corporation need not be residents of the State of South Dakota.

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SECTION 3.03. Resignations. Any Director of the Corporation may resign at any time by giving written notice to the President or the Secretary of the Corporation. Resignations shall become effective upon receipt or at such later time as shall be specified therein and, unless otherwise specified therein, the acceptance of a resignation shall not be necessary to make it effective.

SECTION 3.04. Vacancies and Newly-Created Directorships. Vacancies and newly-created Directorships resulting from any increase in the authorized number of Directors may be filled by the shareholders, or by a majority vote of the Directors then in office, though less than a quorum. Each Director so chosen shall hold office until the next annual election and until his or her successor shall have been duly elected and qualified unless such Director dies, resigns or is removed prior to such time. If at any time, by reason of death or resignation or other cause, the Corporation should have no Directors in office, then an election of Directors may be held by the shareholders or in the manner provided by statute.

SECTION 3.05. Organization. At every meeting of the Board of Directors, the Chairman of the Board, if any, or, in the case of a vacancy in the office or absence of the Chairman of the Board, the President or, in his or her absence, a chairman chosen by a majority of the Directors present, shall preside, and the Secretary or, in his or her absence, an Assistant Secretary or any person appointed by the chairman of the meeting, shall act as secretary of the meeting.

SECTION 3.06. Place of Meeting. The Board of Directors may hold its meetings, both regular and special, at such place or places within or without the state of South Dakota as the Board of Directors may from time to time appoint, or as may be designated in the notice calling the meeting. The Board may permit any or all Directors to participate in a meeting by any means of communication by which all Directors participating may simultaneously hear each other during the meeting. A Director participating in a meeting by this means is deemed to be present at the meeting.

SECTION 3.07. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall be designated from time to time by resolution of the Board of Directors.

SECTION 3.08. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by or at the request of the Chairman of the Board, if any, the President or by two or more of the Directors. Notice of each such meeting shall be given to each Director at any time before the special meeting either personally or by telephone (including by message or recording device), facsimile or e-mail not less than two (2) hours before the meeting or by mail not less than three days (3) before the meeting.

SECTION 3.09. Quorum, Manner of Acting and Adjournment. At all meetings of the Board a majority of the Directors shall constitute a quorum for the transaction of business. The vote of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the Directors present may adjourn the meeting from time to time without further notice.

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SECTION 3.10. Committees. The Board of Directors, by resolution adopted by a majority of the full Board, may designate from among its members one or more committees, each of which, except to the extent limited by law, the Articles of Incorporation, these Bylaws, and the resolution establishing the committee, shall have and may exercise all of the authority of the Board of Directors, and may also prescribe rules of operation of the committee.

SECTION 3.11. Action in Lieu of Meeting. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or the committee consent thereto in writing by one or more written consents or by electronic transmission, and the writing or writings are filed with the minutes of proceedings of the Board or the committee.

SECTION 3.12. Presumption of Assent. A Director who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action unless such Director’s dissent shall be entered in the minutes of the meeting or unless such Director shall file his or her written dissent to such action with the person acting as Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.

SECTION 3.13. Compensation of Directors. The Board of Directors shall have the authority to fix the compensation of Directors.

ARTICLE IV

Notices - Waivers

SECTION 4.01. Waivers of Notice. Whenever any notice is required to be given under the provisions of the Articles of Incorporation, these Bylaws, or by statute, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE V

Officers

SECTION 5.01. Number, Qualifications and Designation. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, Vice President, Secretary, Treasurer and such other officers as may be deemed necessary. One person may hold more than one office. Officers may be, but need not be, Directors of the Corporation.

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SECTION 5.02. Election and Terms of Office. The officers of the Corporation shall be elected by the Board of Directors. Each such officers shall hold his or her office until such officer’s successor shall have been duly elected and qualified, or until his or her earlier death, resignation or removal. Any officer may resign at any time upon written notice to the Corporation or may be removed, with or without cause, by the Board of Directors.

SECTION 5.03. Duties. Each officer shall have the authority and shall perform the duties as may be assigned by the Board of Directors, the Chairman of the Board, or the President, or as shall be conferred or required by law or these Bylaws, or as shall be normally incidental to the office. Unless otherwise restricted by the Board of Directors from time to time, (i) the officers may execute and deliver instruments and contracts on behalf of the Corporation and otherwise may bind the Corporation, and (ii) any officers or the Board of Directors may delegate to any person, in writing, the authority to execute and deliver instruments and contracts on behalf of the Corporation and otherwise bind the Corporation.

SECTION 5.04. Vacancies. A vacancy in any office may be filled in the same manner as provided for election to the office.

SECTION 5.05. Action with Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the Chairman of the Board of Directors, if any, the President or any Vice President of the Corporation shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of security holders, or with respect to any action of security holders, of any other Corporation in which the Corporation may hold securities and shall have power to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other Corporation.

ARTICLE VI

Share Certificates and Transfer of Shares

SECTION 6.01. Regulations Regarding Certificates. Except as otherwise provided by law, the Board of Directors shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issuance, transfer and registration or the replacement of certificates for shares of capital stock of the Corporation.

SECTION 6.02. Certificates for Shares. Shares of stock of the Corporation may, at the discretion of the Board of Directors, be represented by certificates or may be uncertificated. Certificates representing shares of the Corporation shall be in such form as provided by statute and approved by the Board of Directors. The stock record books and the blank stock certificate books shall be kept by the Secretary of the Corporation.

SECTION 6.03. Lost, Stolen, Destroyed or Mutilated Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to its issuance, require the

5

owner of such lost, stolen or destroyed certificate or certificates, or such owner’s legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

SECTION 6.04. Transfer of Shares. Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation by the holder of record thereof or by his or her legal representative, who shall furnish proper evidence of authority to transfer, and on surrender for cancellation of the certificate of such shares.

SECTION 6.05. Registered Shareholders. The Corporation shall be entitled to treat the holder of record of any share or shares as the holder in fact of those shares.

ARTICLE VII

Indemnification of Officers, Directors, Employees and Agents

SECTION 7.01. Indemnification in Third Party Proceedings. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any “third party proceeding” (which shall include, for purposes of this Article VII, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including without limitation attorneys’ fees, judgments, fines, and amounts paid in settlement, actually and reasonably incurred by such person in connection with such third party proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal third party proceeding, had no reasonable cause to believe such conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal third party proceeding, had reasonable cause to believe that such conduct was unlawful.

SECTION 7.02. Indemnification in Corporate Proceedings. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any “corporate proceeding” (which shall mean, for purposes of this Article VII, any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor) by reason of the fact that such person is or was a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including without limitation attorneys’ fees, actually and reasonably incurred by such person in connection with the defense or settlement of a corporate proceeding if the person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in

6

respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation, unless and only to the extent that the court in which the corporate proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

SECTION 7.03. Mandatory Indemnification. To the extent that a present or former Director or officer of the Corporation has been successful on the merits or otherwise in defense of any third party or corporate proceeding referred to in Section 7.01 or 7.02 above or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses, including without limitation attorneys’ fees, actually and reasonably incurred by such person in connection therewith.

SECTION 7.04. Determination of Entitlement to Indemnification. Any indemnification under Section 7.01, 7.02 or 7.03 of this Article VII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of a present or former Director or officer of the Corporation is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 7.01, 7.02 or 7.03 of this Article VII. This determination shall be made, with respect to a person who is a Director or officer at the time of the determination:

(a) By a majority vote of the Directors who are not parties to the third party or corporate proceeding, even though less than a quorum;

(b) By a committee of Directors designated by a majority vote of Directors, even though less than a quorum;

(c) If there are no such Directors, or if such Directors so direct, by independent legal counsel in a written opinion; or

(d) By the shareholders.

SECTION 7.05. Burden of Proof. In the event a claim for indemnification by any person who was or is a party or is threatened to be made a party to any third party or corporate proceeding is denied by the Corporation (except for a claim by a person described in Section 7.08 hereof), the Corporation shall, in any subsequent legal proceedings relating to such denial, have the burden of proving that indemnification was not required under Section 7.01, 7.02 or 7.03 of this Article VII, with regard to Section 7.04 hereof, or under any other agreement or undertaking between the Corporation and such person, or was not permitted under applicable law.

SECTION 7.06. Advancing Expenses. Expenses incurred by a Director or officer or former Director or officer in defending a third party or corporate proceeding shall be paid by the Corporation in advance of the final disposition of such third party or corporate proceeding upon receipt of an undertaking by or on behalf of the Director or officer or former Director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VII. Expenses incurred by

7

other employees and agents may be so paid upon the terms and conditions, if any, as the Corporation deems appropriate.

SECTION 7.07. Employee Benefit Plans. For purposes of this Article VII, references to “other enterprises” shall include, but are not limited to, employee benefit plans; references to “fines” shall include, but are not limited to, any excise taxes assessed on a person with respect to an employee benefit plan; references to “serving at the request of the Corporation” shall include, but are not limited to, any service as a Director, officer, employee or agent of the Corporation which imposes duties on, or involves service by, the Director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation.”

SECTION 7.08. Employees and Agents. The Corporation may, but is not required to, indemnify any employee or agent of the Corporation who is not also a Director or officer of the Corporation if the determining group as specified in Section 7.04 determines that indemnification is proper in the specific case.

SECTION 7.09. Scope of Article. The indemnification and advancement of expenses, as authorized by this Article VII, shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding an office.

SECTION 7.10. Reliance on Provisions. Each person who shall act as a Director or officer of the Corporation, or a person serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be deemed to be doing so in reliance upon rights of indemnification provided by this Article VII, and the provisions of this Article VII shall be deemed a contract between the Corporation and such person.

SECTION 7.11. Insurance. The Corporation shall have the power to, but shall not be obligated to, purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VII.

SECTION 7.12. Rights Continue. The indemnification and advancement of expenses provided by or granted pursuant to this Article VII, unless otherwise provided when authorized or ratified, shall continue as to a person who has ceased to be a Director, officer, employee or agent of the Corporation, or a person serving at the request for the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall inure to the benefit of the heirs, executors and administrators of such a person.

8

ARTICLE VIII

General Provisions

SECTION 8.01. Dividends. The Board of Directors may from time to time declare, and the corporation may pay dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Incorporation.

SECTION 8.02. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

SECTION 8.03. Checks. All checks, notes, bills of exchange or other orders in writing shall be signed by such person or persons as the Board of Directors may from time to time designate.

SECTION 8.04. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and state of its incorporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.

SECTION 8.05. Exclusive Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or any director of officer or other employee of the Corporation arising pursuant to any provision of Chapters 49-33 and 49-34 of the South Dakota Codified Laws (as may be amended from time to time), or the Articles of Incorporation or these Bylaws, or (iv) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine shall be a state court located within the State of South Dakota (or, to the extent that no state court located within the State of South Dakota has jurisdiction, the federal district court for the District of South Dakota).

SECTION 8.06. Severability. A determination that any provision of these Bylaws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provisions of these Bylaws.

SECTION 8.07. Amendment of Bylaws. These Bylaws may be altered, amended or repealed or new Bylaws may be adopted by a majority vote of the Board of Directors at any Board of Directors meeting when the proposed amendment has been set out in the notice of such meeting. These Bylaws may also be altered, amended or repealed by a majority vote of the shareholders notwithstanding that these Bylaws may also be amended or repealed by the Board of Directors.

9

Dated this 30^th day of March, 2015.

By:/s/ Roxann R. Basham

Roxann R. Basham, Corporate Secretary

10

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, David R. Emery, certify that:

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:	May 7, 2015
		/S/ DAVID R. EMERY
		David R. Emery
		Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Richard W. Kinzley, certify that:

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:	May 7, 2015
		/S/ RICHARD W. KINZLEY
		Richard W. Kinzley
		Senior Vice President and
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Black Hills Power, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David R. Emery, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13 (a) or

15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material

respects, the financial condition and results of operations of the Company.

Date:	May 7, 2015
		/S/ DAVID R. EMERY
		David R. Emery
		Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Black Hills Power, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard W. Kinzley, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13 (a) or

15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material

respects, the financial condition and results of operations of the Company.

Date:	May 7, 2015
		/S/ RICHARD W. KINZLEY
		Richard W. Kinzley
		Senior Vice President and
		Chief Financial Officer

XML

Regulatory Accounting:

3 Months Ended

Mar. 31, 2015

Regulated Operations [Abstract]

Regulatory Assets and Liabilities

REGULATORY ACCOUNTING

Our regulated electric operations are subject to regulation by various state and federal agencies. The accounting policies followed are generally subject to the Uniform System of Accounts of the FERC.

Our regulatory assets and liabilities were as follows (in thousands) as of:

	Recovery/Amortization Period (in years)	March 31, 2015		December 31, 2014
Regulatory assets:
Unamortized loss on reacquired debt (a)	10	$	2,306	$	2,377
AFUDC (b)	45	8,332		8,365
Employee benefit plans (c)	12	24,418		24,418
Deferred energy and fuel cost adjustments - current (a)	Less than 1 year	15,189		14,696
Flow through accounting (a)	35	11,564		11,171
Decommissioning costs (a)	10	11,311		11,786
Other (a)	10	7,215		5,871
Total regulatory assets		$	80,335	$	78,684

Regulatory liabilities:
Cost of removal for utility plant (a)	53	$	36,174	$	35,510
Employee benefit plans (c)	12	14,538		14,538
Other	13	7,141		4,941
Total regulatory liabilities		$	57,853	$	54,989

____________________

(a) Recovery 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.

XML

Accounts Receivable and Allowance For Doubtful Accounts:

3 Months Ended

Mar. 31, 2015

Accounts Receivable, Net [Abstract]

Accounts Receivables

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Following is a summary of Receivables - customers, net included in the accompanying Condensed Balance Sheets (in thousands) as of:

	March 31, 2015			December 31, 2014
Accounts receivable trade	$	19,539		$	24,946
Unbilled revenues	8,941			9,999
Allowance for doubtful accounts	(253		)	(261		)
Receivables - customers, net	$	28,227		$	34,684

XML

Condensed Statements of Income and Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Revenue	$ 70,283	$ 71,267
Operating expenses:
Fuel, purchased power and natural gas	22,104	27,045
Operations and maintenance	17,091	18,110
Depreciation and amortization	8,125	6,887
Taxes - property	1,473	1,679
Total operating expenses	48,793	53,721
Operating income	21,490	17,546
Other income (expense):
Interest expense	(5,692)	(4,947)
AFUDC - borrowed	39	72
Interest income	104	58
AFUDC - equity	70	145
Other income (expense), net	35	43
Total other income (expense)	(5,444)	(4,629)
Income from continuing operations before income taxes	16,046	12,917
Income tax expense	(5,643)	(4,274)
Net Income	10,403	8,643
Other comprehensive income (loss):
Reclassification adjustments of cash flow hedges settled and included in net income (net of tax (expense) benefit of $336 and $(6) for the three months ended March 31, 2015 and 2014, respectively)	352	10
Reclassification adjustment of benefit plan liability - net gain (loss) (net of tax (expense) benefit of $(8) and $(4) for the three months ended March 31, 2015 and 2014, respectively)	15	7
Other comprehensive income	367	17
Comprehensive income	$ 10,770	$ 8,660

XML

Condensed Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Operating activities:
Net income	$ 10,403	$ 8,643
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization	8,125	6,887
Deferred income tax	4,962	4,254
Employee benefits	601	324
AFUDC - equity	(70)	(145)
Other adjustments, net	85	(1,014)
Change in operating assets and liabilities -
Accounts receivable and other current assets	7,951	(7,768)
Accounts payable and other current liabilities	(9,244)	8,111
Other operating activities, net	(719)	(1,419)
Net Cash Provided by (Used in) Operating Activities	22,094	17,873
Investing activities:
Property, plant and equipment additions	(8,697)	(21,885)
Change in money pool notes receivable, net	35,111	6,220
Other investing activities	(44)	(63)
Net Cash Provided by (Used in) Investing Activities	26,370	(15,728)
Financing activities:
Other financing activities	0	(6)
Net Cash Provided by (Used in) Financing Activities	0	(6)
Net change in cash and cash equivalents	48,464	2,139
Cash and Cash Equivalents:
Cash and cash equivalents, beginning of period	6,620	2,259
Cash and cash equivalents, end of period	$ 55,084	$ 4,398

XML

Regulatory Accounting: Regulatory Accounting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets	$ 80,335		$ 78,684
Regulatory Liabilities	57,853		54,989
Cost of removal for utility plant [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Liabilities Amortization Period, Unclassified	53 years
Regulatory Liabilities	36,174	[1]	35,510	[1]
Employee benefit plans [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Liabilities Amortization Period, Unclassified	12 years
Regulatory Liabilities	14,538	[2]	14,538	[2]
Other regulatory liabilities [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Liabilities Amortization Period, Unclassified	13 years
Regulatory Liabilities	7,141		4,941
Unamortized Loss on reacquired debt [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets Amortization Period, Unclassified	10 years
Regulatory Assets	2,306	[1]	2,377	[1]
Allowance For Funds Used During Construction [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets Amortization Period, Unclassified	45 years
Regulatory Assets	8,332	[3]	8,365	[3]
Employee benefit plans [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets Amortization Period, Unclassified	12 years
Regulatory Assets	24,418	[2]	24,418	[2]
Deferred energy and fuel cost adjustments - current [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets	15,189	[1]	14,696	[1]
Flow through accounting [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets Amortization Period, Unclassified	35 years
Regulatory Assets	11,564	[1]	11,171	[1]
Decommissioning costs [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets Amortization Period, Unclassified	10 years
Regulatory Assets	11,311	[1]	11,786	[1]
Other regulatory assets [Member]
Schedule of Regulatory Assets and Liabilities [Line Items]
Regulatory Assets Amortization Period, Unclassified	10 years
Regulatory Assets	$ 7,215	[1]	$ 5,871	[1]

[1] Recovery of costs, but we are not allowed a rate of return.

[2] In addition to recovery of costs, we are allowed a return on a portion of this amount or a reduction in rate base, respectively.

[3] In addition to recovery of costs, we are allowed a rate of return.

XML

Employee Benefit Plans: Employee Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Defined Benefit Pension Plan
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	$ 199	$ 176
Interest cost	739	748
Expected return on plan assets	(984)	(926)
Prior service cost (benefit)	11	11
Net loss (gain)	549	235
Net periodic benefit cost	514	244
Pension and Other Postretirement Benefit Contributions [Abstract]
Contributions made by Employer	0
Remaining Anticipated Contributions for Current Year	1,657
Anticipated Contributions for Next Year	1,657
Defined Benefit Postretirement Healthcare Plan
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	58	56
Interest cost	54	60
Prior service cost (benefit)	(84)	(84)
Net loss (gain)	0	0
Net periodic benefit cost	28	32
Pension and Other Postretirement Benefit Contributions [Abstract]
Contributions made by Employer	130
Remaining Anticipated Contributions for Current Year	389
Anticipated Contributions for Next Year	577
Supplemental Non-qualified Defined Benefit Plans
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Interest cost	36	37
Net loss (gain)	23	11
Net periodic benefit cost	59	48
Pension and Other Postretirement Benefit Contributions [Abstract]
Contributions made by Employer	54
Remaining Anticipated Contributions for Current Year	163
Anticipated Contributions for Next Year	$ 184

XML

Management's Statement:

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Management's Statement

MANAGEMENT’S STATEMENT

The unaudited condensed financial statements included herein have been prepared by Black Hills Power, Inc. (the “Company,” “we,” “us,” or “our”), pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, we believe that the footnotes adequately disclose the information presented. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto, included in our 2014 Annual Report on Form 10-K filed with the SEC.

Accounting methods historically employed require certain estimates as of interim dates. The information furnished in the accompanying condensed financial statements reflects all adjustments, including accruals, which are, in the opinion of management, necessary for a fair presentation of the March 31, 2015, December 31, 2014 and March 31, 2014 financial information and are of a normal recurring nature. The results of operations for the three months ended March 31, 2015 and March 31, 2014, and our financial condition as of March 31, 2015 and December 31, 2014 are not necessarily indicative of the results of operations and financial condition to be expected as of or for any other period.

Recently Issued and Adopted Accounting Standards

We have implemented all new accounting pronouncements that are in effect and may impact our financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position, results of operations, or cash flows.

Simplifying the Presentation of Debt Issuance Costs, ASU 2015-03

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. Debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts, rather than as an asset. Amortization of these costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted. We are currently evaluating the impact of adoption that ASU 2015-03 will have on our financial position, results of operations, or cash flows.

Revenue from Contracts with Customers, ASU 2014-09

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. On April 1, 2015, FASB voted to propose to defer the effective date of ASU 2014-09 by one year. The proposed guidance would be effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. We are currently assessing the impact, if any, that ASU 2014-09 will have on our financial position, results of operations or cash flows.

XML

Condensed Statements of Income and Comprehensive Income OCI Parenthetical (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Parentheticals [Abstract]
Reclassification adjustment of cash flow hedges settled, (tax) benefit	$ 336	$ (6)
Reclassification adjustment of benefit and other postretirement plans included in net income, (tax) benefit	$ (8)	$ (4)

XML

Related Party Transactions: Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Schedule of Related Party Accounts Receivable and Payable

The balances were as follows (in thousands) as of:

	March 31, 2015		December 31, 2014
Receivables - affiliates	$	5,030	$	5,350
Accounts payable - affiliates	$	17,588	$	19,242

Schedule of Related Party Notes

We had the following balances with the Utility Money Pool (in thousands) as of:

	March 31, 2015		December 31, 2014
Money pool notes receivable, net	$	33,515	$	68,626

Schedule of Related Party Interest Income Expense

Our net interest income (expense) relating to balances with the Utility Money Pool was as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Net interest income (expense)	$	258	$	(781	)

Schedule of Revenues and Purchases from Related Parties

Other related party activity was as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Revenue:
Energy sold to Cheyenne Light	$	326	$	679
Rent from electric properties	$	1,124	$	1,023
Fuel and purchased power:
Purchases of coal from WRDC	$	4,045	$	5,014
Purchase of excess energy from Cheyenne Light	$	476	$	629
Purchase of renewable wind energy from Cheyenne Light - Happy Jack	$	549	$	664
Purchase of renewable wind energy from Cheyenne Light - Silver Sage	$	936	$	1,094
Gas transportation service agreement
Gas transportation service agreement with Cheyenne Light for firm and interruptible gas transportation	$	103	$	—
Corporate support:
Corporate support services and fees from Parent, Black Hills Service Company and Black Hills Utility Holdings	$	7,033	$	7,853

XML

Document and Entity Information Document	3 Months Ended
	Mar. 31, 2015	Apr. 30, 2015
Document Information [Line Items]
Entity Registrant Name	BLACK HILLS POWER INC
Entity Central Index Key	0000012400
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		23,416,396

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Employee Benefit Plans: Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2015

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Schedule of Net Benefit Costs

The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands):

	Three Months Ended March 31,
	2015			2014
Service cost	$	199		$	176
Interest cost	739			748
Expected return on plan assets	(984		)	(926		)
Prior service cost	11			11
Net loss (gain)	549			235
Net periodic benefit cost	$	514		$	244

Defined Benefit Postretirement Healthcare Plan

The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands):

	Three Months Ended March 31,
	2015			2014
Service cost	$	58		$	56
Interest cost	54			60
Prior service cost (benefit)	(84		)	(84		)
Net loss (gain)	—			—
Net periodic benefit cost	$	28		$	32

Supplemental Non-qualified Defined Benefit Plans

The components of net periodic benefit cost for the Supplemental Non-qualified Defined Benefit Plans were as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Interest cost	$	36	$	37
Net loss (gain)	23		11
Net periodic benefit cost	$	59	$	48

Schedule of Defined Benefit Plans Contributions

Contributions and anticipated contributions are as follows (in thousands):

	Contributions Three Months Ended March 31, 2015		Remaining Anticipated Contributions for 2015		Anticipated Contributions for 2016
Defined Benefit Pension Plan	$	—	$	1,657	$	1,657
Defined Benefit Postretirement Healthcare Plan	$	130	$	389	$	577
Supplemental Non-qualified Defined Benefit Plans	$	54	$	163	$	184

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Condensed Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 55,084	$ 6,620
Receivables - customers, net	28,227	34,684
Receivables - affiliates	5,030	5,350
Other receivables, net	341	259
Money pool notes receivable, net	33,515	68,626
Materials, supplies and fuel	21,374	20,965
Deferred income tax assets, net, current	7,456	13,661
Regulatory assets, current	13,240	10,257
Other, current assets	30,131	4,954
Total current assets	194,398	165,376
Investments	4,628	4,584
Property, plant and equipment	1,116,634	1,115,061
Less accumulated depreciation and amortization	(313,475)	(309,767)
Total property, plant and equipment, net	803,159	805,294
Other assets:
Regulatory assets, non-current	67,095	68,427
Other, non-current assets	13,336	11,708
Total other assets	80,431	80,135
TOTAL ASSETS	1,082,616	1,055,389
Current liabilities:
Accounts payable	16,254	30,543
Accounts payable - affiliates	17,588	19,242
Accrued liabilities	45,823	16,415
Regulatory liabilities, current	5,808	3,073
Total current liabilities	85,473	69,273
Long-term debt, net of current maturities	342,753	342,752
Deferred credits and other liabilities:
Deferred income tax liability, net, non-current	191,938	193,042
Regulatory liabilities, non-current	52,045	51,916
Benefit plan liabilities	21,421	20,981
Other, non-current liabilities	3,422	2,631
Total deferred credits and other liabilities	268,826	268,570
Commitments and contingencies (Notes 5, 6 and 8)
Stockholder’s 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	324,025	313,622
Accumulated other comprehensive loss	(1,452)	(1,819)
Total stockholder’s equity	385,564	374,794
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$ 1,082,616	$ 1,055,389

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Fair Value of Financial Instruments:

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance on fair value measurements establishes a hierarchy for grouping assets and liabilities, based on significance of inputs. For additional information see Note 1 included in our 2014 Annual Report on Form 10-K filed with the SEC.

The estimated fair values of our financial instruments were as follows (in thousands) as of:

	March 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents (a)	$	55,084	$	55,084	$	6,620	$	6,620
Long-term debt, including current maturities (b)	$	342,753	$	442,121	$	342,752	$	430,497

_________________

(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.

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Employee Benefit Plans:

3 Months Ended

Mar. 31, 2015

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Employee Benefit Plans Disclosure

EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plan

The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands):

	Three Months Ended March 31,
	2015			2014
Service cost	$	199		$	176
Interest cost	739			748
Expected return on plan assets	(984		)	(926		)
Prior service cost	11			11
Net loss (gain)	549			235
Net periodic benefit cost	$	514		$	244

Defined Benefit Postretirement Healthcare Plan

The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands):

	Three Months Ended March 31,
	2015			2014
Service cost	$	58		$	56
Interest cost	54			60
Prior service cost (benefit)	(84		)	(84		)
Net loss (gain)	—			—
Net periodic benefit cost	$	28		$	32

Supplemental Non-qualified Defined Benefit Plans

The components of net periodic benefit cost for the Supplemental Non-qualified Defined Benefit Plans were as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Interest cost	$	36	$	37
Net loss (gain)	23		11
Net periodic benefit cost	$	59	$	48

Contributions

We anticipate we will make contributions to the benefit plans during 2015 and 2016. Contributions to the Defined Benefit Pension Plan are cash contributions made directly to the Pension Plan Trust accounts. Contributions to the Healthcare and Supplemental Plans are made in the form of benefit payments. Contributions and anticipated contributions are as follows (in thousands):

	Contributions Three Months Ended March 31, 2015		Remaining Anticipated Contributions for 2015		Anticipated Contributions for 2016
Defined Benefit Pension Plan	$	—	$	1,657	$	1,657
Defined Benefit Postretirement Healthcare Plan	$	130	$	389	$	577
Supplemental Non-qualified Defined Benefit Plans	$	54	$	163	$	184

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Related Party Transactions: Related Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Related Party Transaction [Line Items]
Receivables - affiliates	$ 5,030		$ 5,350
Accounts payable - affiliates	17,588		19,242
Related Party Transaction, Utility Money Pool Interest Rate	1.38%
Money pool notes receivable, net	33,515		68,626
Parent [Member]
Related Party Transaction [Line Items]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	1.00%
Utility Money Pool [Member]
Related Party Transaction [Line Items]
Interest Income (Expense), Net	258	(781)
Subsidiary of Common Parent [Member] | Purchase Of Natural Gas, Cheyenne Light [Member]
Related Party Transaction [Line Items]
Costs and Expenses, Related Party	103	0
Subsidiary of Common Parent [Member] | Coal, Purchased [Member]
Related Party Transaction [Line Items]
Costs and Expenses, Related Party	4,045	5,014
Subsidiary of Common Parent [Member] | Purchase of Excess Energy, Cheyenne Light [Member]
Related Party Transaction [Line Items]
Costs and Expenses, Related Party	476	629
Subsidiary of Common Parent [Member] | Happy Jack Wind Purchase Power Agreeement [Member]
Related Party Transaction [Line Items]
Costs and Expenses, Related Party	549	664
Subsidiary of Common Parent [Member] | Silver Sage Wind Power Purchase Agreement [Member]
Related Party Transaction [Line Items]
Costs and Expenses, Related Party	936	1,094
Subsidiary of Common Parent [Member] | Allocated Costs From Related Parties [Member]
Related Party Transaction [Line Items]
Costs and Expenses, Related Party	7,033	7,853
Subsidiary of Common Parent [Member] | Energy sold to Cheyenne Light [Member]
Related Party Transaction [Line Items]
Revenue from Related Parties	326	679
Subsidiary of Common Parent [Member] | Lease Agreements [Member]
Related Party Transaction [Line Items]
Revenue from Related Parties	$ 1,124	$ 1,023

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Fair Value of Financial Instruments: Fair Value of Financial Instruments(Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Financial Instruments

The estimated fair values of our financial instruments were as follows (in thousands) as of:

	March 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents (a)	$	55,084	$	55,084	$	6,620	$	6,620
Long-term debt, including current maturities (b)	$	342,753	$	442,121	$	342,752	$	430,497

_________________

(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.

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Accounts Receivable and Allowance For Doubtful Accounts: Accounts Receivable (Tables)

3 Months Ended

Mar. 31, 2015

Accounts Receivable, Net [Abstract]

Schedule of Accounts Receivable

Following is a summary of Receivables - customers, net included in the accompanying Condensed Balance Sheets (in thousands) as of:

	March 31, 2015			December 31, 2014
Accounts receivable trade	$	19,539		$	24,946
Unbilled revenues	8,941			9,999
Allowance for doubtful accounts	(253		)	(261		)
Receivables - customers, net	$	28,227		$	34,684

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Supplemental Disclosure of Cash Flow Information:

3 Months Ended

Mar. 31, 2015

Supplemental Cash Flow Information [Abstract]

Cash Flow, Supplemental Disclosures

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Three months ended March 31,	2015			2014
	(in thousands)
Non-cash investing and financing activities -
Property, plant and equipment acquired with accrued liabilities	$	2,042		$	11,760
Cash (paid) refunded during the period for -
Interest (net of amounts capitalized)	$	(2,718	)	$	(3,264	)
Income taxes, net	$	—		$	—

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Commitment and Contingencies:

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure

COMMITMENTS AND CONTINGENCIES

Other than the item discussed below, there have been no significant changes to commitments and contingencies from those previously disclosed in Note 11 of our Notes to the Financial Statements in our 2014 Annual Report on Form 10-K.

Oil Creek Fire

On June 29, 2012, a forest and grassland fire occurred in the western Black Hills of Wyoming. A fire investigator retained by the Weston County Fire Protection District concluded that the fire was caused by the failure of a transmission structure owned, operated and maintained by us. On April 16, 2013, a large group of private landowners filed suit in the United States District Court for the District of Wyoming. There are approximately 36 Plaintiff groups (including property jointly owned by multiple family members or entities), or approximately 73 individually named private plaintiffs. In addition, the State of Wyoming has intervened in the lawsuit. Both the private landowners and the State of Wyoming assert claims for damages against us. The claims include allegations of negligence, negligence per se, common law nuisance and trespass. In addition to claims for compensatory damages, the lawsuit seeks recovery of punitive damages. We have denied and will vigorously defend all claims arising out of the fire. We cannot predict the outcome of expert investigation, the viability of alleged claims or the outcome of the litigation.

Civil litigation of this kind, however, is likely to lead to settlement negotiations, including negotiations prompted by pre-trial civil court procedures. We believe such negotiations would effect a settlement of all claims. Regardless of whether the litigation is determined at trial or through settlement, we expect to incur significant investigation, legal and expert services expenses associated with the litigation. We maintain insurance coverage to limit our exposure to losses due to civil liability claims, and related litigation expense, and we will pursue recoveries to the maximum extent available under the policies. The deductible applicable to some types of claims arising out of this fire is $1.0 million. Based upon information currently available, we believe that a loss associated with settlement of pending claims is probable. Accordingly, we recorded a loss contingency liability related to these claims and we recorded a receivable for costs we believe are reimbursable and probable of recovery under our insurance coverage. Both of these entries reflect our reasonable estimate of probable future litigation expense and settlement costs; we did not base these contingencies on any determination that it is probable we would be found liable for these claims were they to be litigated.

Given the uncertainty of litigation, however, a loss related to the fire, the litigation and related claims in excess of the loss we have determined to be probable is reasonably possible. We cannot reasonably estimate the amount of such possible loss because expert investigations and our review of damage claim documentation are ongoing, and there are significant factual and legal issues to be resolved. Further claims may be presented by these claimants and other parties. We have received claims seeking recovery for fire suppression, reclamation and rehabilitation costs, damage to fencing and other personal property, alleged injury to timber, grass or hay, livestock and related operations, and diminished value of real estate. Based on the legal standard for measuring damages that we believe applies to this matter, we estimate the current total claims to be approximately $55 million; however the actual amount of allowed claims and any loss will depend on the resolution of certain factual and legal issues. We are not yet able to reasonably estimate the amount of any reasonable possible losses in excess of the amount we have accrued. Based upon information currently available, however, management does not expect the outcome of the claims to have a material adverse effect upon our consolidated financial condition, results of operations or cash flows.

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Regulatory Accounting: Regulatory Accounting (Tables)

3 Months Ended

Mar. 31, 2015

Regulated Operations [Abstract]

Schedule of Regulatory Assets

Our regulatory assets and liabilities were as follows (in thousands) as of:

	Recovery/Amortization Period (in years)	March 31, 2015		December 31, 2014
Regulatory assets:
Unamortized loss on reacquired debt (a)	10	$	2,306	$	2,377
AFUDC (b)	45	8,332		8,365
Employee benefit plans (c)	12	24,418		24,418
Deferred energy and fuel cost adjustments - current (a)	Less than 1 year	15,189		14,696
Flow through accounting (a)	35	11,564		11,171
Decommissioning costs (a)	10	11,311		11,786
Other (a)	10	7,215		5,871
Total regulatory assets		$	80,335	$	78,684

Schedule of Regulatory Liabilities

Regulatory liabilities:
Cost of removal for utility plant (a)	53	$	36,174	$	35,510
Employee benefit plans (c)	12	14,538		14,538
Other	13	7,141		4,941
Total regulatory liabilities		$	57,853	$	54,989

____________________

(a) Recovery 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.

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Accounts Receivable and Allowance For Doubtful Accounts: Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Accounts Receivable [Line Items]
Allowance for doubtful accounts	$ (253)	$ (261)
Receivables - customers, net	28,227	34,684
Billed Revenues [Member]
Accounts Receivable [Line Items]
Accounts receivable, trade	19,539	24,946
Unbilled Revenues [Member]
Accounts Receivable [Line Items]
Accounts receivable, trade	$ 8,941	$ 9,999

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Supplemental Disclosure of Cash Flow Information: Supplemental Disclosures of Cash Flow Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Noncash Investing and Financing Items [Abstract]
Property, plant and equipment acquired with accrued liabilities	$ 2,042	$ 11,760
Interest and Income Taxes Paid Net [Abstract]
Interest paid, (net of amounts capitalized)	(2,718)	(3,264)
Income taxes, net	$ 0	$ 0

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Balance Sheet Parentheticals (USD $)	Mar. 31, 2015	Dec. 31, 2014
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
Common Stock, Par Value Per Share	$ 1	$ 1
Common Stock, Shares Authorized	50,000,000	50,000,000
Common Stock, Shares, Issued	23,416,396	23,416,396

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Related Party Transactions:

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure

RELATED-PARTY TRANSACTIONS

Receivables and Payables

We have accounts receivable and accounts payable balances related to transactions with other BHC subsidiaries. The balances were as follows (in thousands) as of:

	March 31, 2015		December 31, 2014
Receivables - affiliates	$	5,030	$	5,350
Accounts payable - affiliates	$	17,588	$	19,242

Money Pool Notes Receivable and Notes Payable

We have entered into a Utility Money Pool Agreement (the “Agreement”) with BHC, Cheyenne Light and Black Hills Energy. We are the administrator of the Money Pool. Under the Agreement, we may borrow from BHC; however the Agreement restricts us from loaning funds to BHC or to any of BHC’s non-utility subsidiaries. The Agreement does not restrict us from paying dividends to BHC. Borrowings and advances under the Agreement bear interest at the weighted average daily cost of our parent company’s credit facility borrowings as defined under the Agreement, or if there are no external funds outstanding on that date, then the rate will be the daily one-month LIBOR plus 1.0%. At March 31, 2015, the average cost of borrowing under the Utility Money Pool was 1.38%.

We had the following balances with the Utility Money Pool (in thousands) as of:

	March 31, 2015		December 31, 2014
Money pool notes receivable, net	$	33,515	$	68,626

Our net interest income (expense) relating to balances with the Utility Money Pool was as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Net interest income (expense)	$	258	$	(781	)

Other related party activity was as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Revenue:
Energy sold to Cheyenne Light	$	326	$	679
Rent from electric properties	$	1,124	$	1,023
Fuel and purchased power:
Purchases of coal from WRDC	$	4,045	$	5,014
Purchase of excess energy from Cheyenne Light	$	476	$	629
Purchase of renewable wind energy from Cheyenne Light - Happy Jack	$	549	$	664
Purchase of renewable wind energy from Cheyenne Light - Silver Sage	$	936	$	1,094
Gas transportation service agreement
Gas transportation service agreement with Cheyenne Light for firm and interruptible gas transportation	$	103	$	—
Corporate support:
Corporate support services and fees from Parent, Black Hills Service Company and Black Hills Utility Holdings	$	7,033	$	7,853

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Commitment and Contingencies: Oil Creek Fire (Details) (Pending Litigation [Member], Oil Creek Fire [Member], Loss from Catastrophes [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Minimum [Member]
Loss Contingencies [Line Items]
Insurance Coverage Deductible Per Occurrence	$ 1.0
Maximum [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	$ 55

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Supplemental Disclosure of Cash Flow Information: Supplemental Disclosures of Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2015

Supplemental Cash Flow Information [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

Three months ended March 31,	2015			2014
	(in thousands)
Non-cash investing and financing activities -
Property, plant and equipment acquired with accrued liabilities	$	2,042		$	11,760
Cash (paid) refunded during the period for -
Interest (net of amounts capitalized)	$	(2,718	)	$	(3,264	)
Income taxes, net	$	—		$	—