Decade of the 80's
The new Rapid City Service Center was completed in late 1980. Construction of the $2.3 million structure was supervised by Don Harris, Manager of Real Estate and Facilities. The Service Center, located adjacent to Ben French Station on Deadwood Avenue, contains more than 59,000 square feet of space for storage of materials and office space for 100 employees. Located in the new facilities are the Rapid City District Office and line service crews, warehouse and material storage yard, vehicle repair and electrical maintenance shop, meter department, line crews and the power resources department. Previously these departments were scattered in six different locations in Rapid City.
A new meeting and training room was constructed in the Rapid City Service Center building. The room is 30'x 50' with a capacity to seat fifty people at tables, or eighty people without tables. It includes permanent tables, chairs, audio visual equipment, and two storage rooms for equipment. There is an 8 'x 8' portable step-up stage and a coffee bar.
The old office at 621 Sixth Street was sold to the United Corporation and the old warehouse and linemens' headquarters on Canal Street were traded for property adjacent to the substations and plant property on West Chicago and Deadwood Avenue. The old Rapid City plant building on Oshkosh Street was sold to Landstrom's Jewelry Manufacturing Company.
The Company proposed a new residential electric rate in 1980 based on a monthly peak demand charge. The customers on the new rate would have to manage their electric usage in such a way as to keep capacity requirements as low as possible to reduce electric bills. Load control or energy management devices may be needed. The rate is known as the Customer Energy Demand (CED), rate. The commission made the rate voluntary rather than mandatory as the Company had requested.
There was another format change when the Public Affairs Outlet employee newspaper was changed back to the Lamplighter with the November 1980 issue. Joe Rovere remained as Editor and Julio "Mutch" Usera, Photographer.
A number of changes were made on the executive level during 1980. Effective September 15, 1980, Larry M. Owen was elected President and Chief Executive Officer of the Company to succeed Robert G. Asheim who announced his early retirement. Larry Owen had been Vice President-Administration for nearly ten years and a member of the Board of Directors for about one year. Robert Asheim was employed by Black Hills Power and Light Company for 36 years. George T. Locke, Senior Vice President was elected to replace Robert Asheim on the Board of Directors, Daniel P. Landguth was elected Vice President- Administration, replacing Larry Owen, and Richard J. Tupper was elected Vice President, Corporate Development and Vice President of Wyodak Resources Development Corp.
William Birrenkott was elected Assistant Treasurer and Controller.
Removal of the four old generating units in the Wyodak Plant, now a part of the Neil Simpson Station, was completed in 1980. The units ranged in size from 1,000 to 3,000 kW. The units were no longer economical to operate because of age.
Fire destroyed much of the north pit coal conveyor system at Wyodak on July 29, 1980. That conveyor was used as a backup system to supply coal to Neil Simpson Station, the Wyodak Plant, and other customers when the main system was not operable.
During 1980 the market price for common stock and consolidated earnings per share reflected a significant input from Wyodak Resources Development Corp., the wholly-owned coal mining subsidiary. Wyodak contributed 35 percent of the available consolidated net earnings that year with the increase in production from 2.4 million tons in 1979 to 2.6 million tons in 1980. Production for 1981 was estimated at 2.8 million tons.
In preparation for a possible Unit 2 at Wyodak, efforts were continuing with government agencies to acquire additional coal reserves adjacent to the existing mining operation. This would involve acquisition of coal reserves in exchange for coal lost through the construction of the highway through the mine, as well as the opportunity to acquire additional resources through competitive bidding which could be offered by the federal government in 1982.
During 1980, regulatory bodies allowed the Company to increase electric rates in several areas.
In January, wholesale rates were increased and in February, Wyoming and South Dakota increases were approved. Montana rates were increased in June and wholesale rates increased again in July, followed by a second South Dakota increase in November. Increased costs of operation caused by high inflation created the problem.
The increases collectively resulted in annualized revenues of $7.6 million. Because of the particular problems related to regulatory lag, coupled with inflation, the Company management was committed to file rate applications as needed during the coming year.
1981
The energy forecast for 1981 was a 3.5 percent increase. Over the next 10 years the system energy sales were expected to increase at an annual compound rate of 7.5 percent per year for the period 1974 to 1980. There were three factors contributing to the reduced forecast growth: (1) national and local economic growth, (2) response to price increases of the Company's product, and (3) increased use of conservation methods.
The permitting process for the Wyodak #2 unit at the coal mine and negotiations between PP&L and Wyodak Resources Development Corp. to determine the price of coal were both progressing on schedule. It was anticipated that construction would start in 1981 with a completion date scheduled for late 1986. The Company expected to have a 20 percent interest in Wyodak #2. Planning for a 100 megawatt unit at the Osage site was canceled as a result of plans for the new Wyodak Unit #2.
The route selection, permitting, and right-of-way process continued on the additional 120 miles of 230 kV transmission line between Wyodak and Hot Springs. A series of public information meetings for potentially affected landowners was held and construction was scheduled for 1982 and 1983.
The Company's common stock was listed on the New York Stock Exchange on July 9, 1980, under the symbol "BHP". The Company is the only South Dakota corporation listed on the Exchange. It was the opinion of management that common shareholders benefited from the listing and that it would make the company more attractive as an investment for both retail and institutional investors. Many people felt the coal mining subsidiary significantly improved the perception of the company in the market place as being a diversified energy company rather than an electric utility.
Coal shipments to the city of Hastings, Nebraska, began in October of 1980. The agreement involved sales of approximately 2.1 million tons of coal over a 10-year period. A ten year extension of an existing coal supply agreement with the South Dakota Cement Plant was executed for their needs at an estimated 300,000 tons per year. In the latter part of 1981, coal shipments were scheduled to begin with the city of Grand Island, Nebraska. This contract provided for the sale of 6.0 million tons over a 20-year period.
Wyodak Resources Development Corp. provided 43 percent of the earnings per share in 1981 even though utility earnings were up about nine cents per share. The less heartening aspect of the utility business at that time was the fact that utility earnings were significantly short of the level authorized by the various regulatory commissions. The market price of the Company's common stock during 1981 exceeded book value only in the month of January and during the balance of the year was priced at about 90 percent of book value. The current market to book price placed the Company in the top quadrant of performance as measured against all other investor-owned electric utilities.
The Company entered into a major coal supply agreement with Pacific Power and Light Company in 1981. This agreement provided for the sale of 50 million tons of coal as a fuel supply for a 330 megawatt electric power plant, Unit Number 2, to be built at Wyodak. If Pacific Power and Light Company does not build Unit Number 2, the agreement provides for the sale of 40 million tons of coal to Pacific Power and Light for use elsewhere. Delivery would take place over a 35-year period and would likely commence in the 1988 to 1990 time frame.
Rate increases were anticipated in 1982 to go along with authorized increases in 1981.
The city of Gillette began discussions to develop another source of power to replace the wholesale contract with the Company. This one customer currently represented 7.3 percent of the Company's gross revenue.
The construction of Wyodak Unit 2, which was announced in 1981, was delayed for several years at the request of Pacific Power and Light. The Company was exploring various other methods and resource alternatives in the long-range planning process.
Efforts to promote energy conservation moved into high gear in 1981 through a new home audit program called Residential Conservation Services. The RCS program was mandated by the federal government through the National Energy Act. The Company's program was introduced to customers in 1980.
The Company was involved in a number of projects to study supplemental and by-product energy sources. They included the burning of lumber mill wastes to generate electricity, the use of wind powered generators, active and passive solar energy, and the potential for small hydro projects. David Nicolarsen was named General Manager of Wyodak Resources Development Corp. on June 8, 1981. Nicolarsen, a graduate of the University of Nevada in 1970, had been employed since 1977 by the Tennessee Valley Authority. He succeeded Bud Westre who resigned.
The Company received an order dated September 10,1981, from the Public Service Commission of Wyoming authorizing an increase in annual revenue of approximately $615 thousand or 8.9 percent.
When Larry Owen was elected President and Chief Executive Officer he made the statement, "My general management philosophy is directed toward developing an internal process to encourage the involvement of the many creative and positive talents of the Company's 385 employees."
The reorganization that started in 1980 and was completed in late 1981, headed the Company in a new direction. A performance oriented plan was implemented covering management training programs for supervisors and management, performance appraisal procedures, accounting systems and budget procedure, regulation and rate making, labor contract, apprentice training programs, safety and loss control, customer services and purchasing procedures.
The Company's line crews have been called on to do some rather odd jobs in the past, so installing two bird houses on the Wyoming prairie didn't seem too far out of line. The bird houses, which are not really bird houses at all but specifically designed nesting platforms for eagles, were installed January 13,1981, by the line crew under the supervision of the U. S. Fish and Wildlife Service. The nesting platforms, about 30 feet off the ground on utility poles, would hopefully be adopted by the golden eagle pair which lost their nest in a wind storm several weeks earlier. The former nesting site of the eagles, classified as an endangered species, was located in the path of future mining activities so the birds had been closely watched for several years.
The National Geographic Society published a special energy edition of "The National Geographic Magazine" in February 1981. It featured Wyodak Resources Development Corp. in a story about the Powder River Basin. More than 8 million readers saw the story and pictures of Wyodak.
All full-time employees and eligible dependents as of October 1, 1981, received insurance coverage to pay a portion of the services provided for their dental needs. Prescription drugs are also covered under the major medical expense portion of the group insurance plan.
The TRASOP program started in October 1981, with the purchase of 15,210 shares of Black Hills Power and Light Company stock. The purchase price of $21.69 per share was determined by the average price of stock during September. On December 1 a dividend was paid on the shares of employee participants which will be used to acquire additional shares through the Dividend Reinvestment Plan at 95 percent of market value on that date.
Black Hills Power and Light Company and banks in the service area are cooperating to offer customers the opportunity to automatically pay electric bills each month through a Paid by Bank plan.