Decade of the 70's
During 1978 rates were increased in all jurisdictions. The heavy construction program of the past several years culminated when the Wyodak Plant commenced generating electricity on June 8, 1978, and permanent financing was arranged for the new plant by a leveraged lease. The cost of the plant was $265 million, twice the original estimate. The 230 kV transmission line and installation of precipitators on existing plants was completed. Planning was also started for the addition of a 100 mW coal-fired plant at Osage, along with additional 230 kV facilities to interconnect between Wyodak, Osage, and Hot Springs.
Neil Simpson, upon reaching age 65, retired as Chief Executive Officer effective February 28, 1978, after more than 40 years of employment with the Company. Neil Simpson was elected Chairman of the Board, President, and Chief Executive Officer of both Black Hills Power and Light Company and Wyodak Resources in 1972. He continued as Chairman of the Board of Directors. Robert Asheim was elected as President and Chief Executive Officer of Black Hills Power and Light Company and Wyodak Resources Development Corp.
J. B. French, founder of the Black Hills Power and Light Company, died October 20, 1978, at the age of 86. He was a creative and aggressive leader during the formative years of the Company. He began a utility career in 1912 that spanned over 60 years. In 1929, he came to Rapid City as Manager of Dakota Power Company. Under his guidance, Black Hills Power and Light Company was formed in 1941 and he became President and General Manager. In 1957 he was elected Chairman of the Board of Directors, a position he held until retirement in 1972.
Wyodak Resources Development Corp. increased its coal production from 857 thousand tons in 1977 to 1.52 million tons in 1978. Coal production is expected to increase to approximately 2.5 million tons by 1979. In August 1978, the Coal Company negotiated a coal supply agreement with the city of Grand Island, Nebraska. Under the agreement WRDC will supply 6.7 million tons of coal over a 20 year period beginning in 1981.
Manufacturers Hanover Trust Company became the Company's stock Transfer Agent, Registrar and Dividend Disbursing Agent on January 2, 1978.
Thomas A. Lockhart was elected Vice President-Engineering and Operations effective March 20, 1978.
The Company changed its year-end for financial and income tax reporting from a fiscal year ending October 31, to a calendar year ending December 31.
For many years the Company gave Reddy Kilowatt nitelights to each baby born to an employee of Black Hills Power and Light Company or Wyodak Resources Development Corp. The program was dropped in 1978 because the lamps were no longer available.
Butte Electric Cooperative connected service to the new Spearfish High School in 1978. It is located 84 percent in the certified territory of the Company and 16 percent in the Butte Electric area. The Company filed a complaint with the Public Utilities Commission after several efforts to settle the dispute with the Coop. Hearings were held and a decision favorable to the Company was rendered by the Commission.
A new Easi-Miner purchased by Wyodak Resources Development Corp. can mine and load nearly 3,000 tons of coal an hour. The machine was not reliable enough and after many attempts to correct the problems, the effort was abandoned.
On June 8, 1978, Pacific Power & Light and the Company arranged for the purchase of the Wyodak Plant by a group of institutional investors who leased the plant to Pacific Power and Light and the Company. The lease has an initial term of 25 years with renewal options aggregating 20 years. The Company receives 20 percent of the Plant's output and is committed to pay 20 percent of the lease rent, replacements, operating expenses and maintenance. The Plant started operation on June 8, 1978, and it is estimated it will consume about 1.4 million tons of coal per year.
In 1978 Barry Wilson resigned as Treasurer of the Company and George M. Bashara was elected to fill the vacancy.
Five new Company directors were elected during 1979. They were: Robert Knecht, President of Knecht Industries; Larry Owen, Vice President-Administration, Black Hills Power and Light Company; Dale E. Clement, Vermillion, Dean of the Business School and Professor of Finance at the University of South Dakota; Reynold Klay, Executive Vice President for the National Bank of South Dakota; and Paul Godfrey, Cheyenne, Wyoming, Senior Partner in the law firm of Godfrey and Sundahl. Two directors were elected to replace James 0. Harder and Lester R. Kennedy who retired from the Board, and one was elected to fill the vacancy created by the resignation of C. Wilson Burnette. The others are new positions created through expansion of the Board.
Ground was broken late in 1979 for a $2 million warehouse service center, district office, and engineering complex. The 59,000 square foot structure is located near the Ben French Station at Rapid City. The centralized facility will combine in one location, employees and departments that have daily interaction.
The company was authorized by the Public Utilities Commission of South Dakota to implement new electric rates on February 2, 1979, to provide for increased revenues of $2.48 million. The PUC decision resulted in a 9.3 percent increase based upon the test year.
The Company received approval in 1979 from the Federal Energy Regulatory Commission for an increase request filed in July 1978. The increase was for approximately $356,000 annually in base rates for energy at wholesale. The rates had been in effect since August 1978, subject to refund. The Company filed with the Commission for further rate relief in June 1979 in the amount of approximately $700,000.
The Company entered into a utility operations management agreement with the town of Upton, Wyoming. Under the agreement the Company will manage and operate the Upton municipal electric distribution system, which has approximately 600 accounts, in the same manner as the Company operates its own distribution facilities. Operations of the municipal system began in December 1979. The Company previously served the town as a wholesale customer.
A Lifeline Electric Rate proposal on the South Dakota General Election ballot was defeated state wide, 116,249 to 73,569. The proposal would have forced the PUC to establish a low rate for low usage of electricity and natural gas, the difference to be made up by the heavier users.
The South Dakota PUC allowed the Company to implement a one percent delinquent charge on the unpaid balance of a bill after the due date. They allowed the charge because delinquent accounts create an added cost for all customers.
The shell of the new Wyodak Resources Development Corp. office building was completed. in 1979. Steel work for a 4-bay equipment shop building is also in place.
Black Hills Power and Light Company and Pacific Power and Light Company were recognized by the Edison Electric Institute with the prestigious Edison Award for their distinguished contribution during 1978 to the development of the Electric Light and Power Industry. The focus of the selection was the Wyodak Plant which pioneered the air-cooled condenser use in the Western Hemisphere. It allows companies to locate power generation close to fuel sources where water is usually in short supply. Special recognition was given to the Company for pioneering efforts and years of study, research, and experimentation with the air-cooling process.
To provide additional power, the Company is working toward development of a 100 megawatt plant at Osage. If the project becomes a reality the plant would go on-line in December 1984.
Negotiations also were initiated between the Company and Pacific for the possible construction of a second 330 megawatt unit at Wyodak with the coal to be supplied by the Wyodak mine.
Construction of a new Whitewood substation was completed to serve the growing loads in the Sturgis and Whitewood area. Construction also began on 37 miles of 69kV transmission line. Preliminary line routing began on 125 miles of 230 kV transmission line from Wyodak via Osage to Hot Springs. Actual construction was expected to begin in about two years.
Because of the potential to increase coal sales in the future, Wyodak Resources Development Corp. took advantage of an opportunity to purchase 100 railroad cars. The cars were delivered in August of 1979, and they were immediately leased to an electric utility for an initial period of 18 months.
Increased electric rates were approved to be implemented in February 1980. These rates were estimated to increase annual revenue by $5.1 million. Management was determined to continue to seek rate relief on a timely basis to preserve the financial health of the Company. Utilities have the legal responsibility to provide the power necessary to serve their customers. Timely and adequate rate relief is necessary to insure that facilities are available to meet growing customer requirements and yet the Company has the responsibility of keeping rates at the lowest possible level.
In order to comply with Title I of the Public Utilities Regulatory Act, PURPA, the Company filed on four rate design standards with the South Dakota PUC. They were cost of service, time-of-day rates, seasonal rates and declining block rates. The information was to be used by the PUG to determine if rate design should be changed.
The purposes of PURPA, as set forth in the Act are to encourage conservation of energy supplied by electric utilities, the optimization of the efficiency of use of facilities and resources by electric utilities, and equitable rates to electric consumers.