Black Hills, which supplies electricity for much of the Arkansas Valley, has been told by one of its largest suppliers, Xcel Energy, that its contract with Xcel won't be renewed in 2012.
That will be a big loss, because Black Hills receives about 75 percent of its electricity from Xcel, according to Gary Stone, vice president operations of Black Hills Energy's Colorado electric utility.
That's why Black Hills has filed papers with the Colorado Public Utilities Commission to build a natural gas-powered power plant somewhere in Colorado and have it operational by Jan. 1 2012. Additionally, Black Hills will look for suppliers for another 64 megawatts of power from renewable sources, according to spokesman Roger Kort.
About 60 megawatts will come from wind power and the remainder will come from solar power. Kort said it's not known yet if the utility company will build its own wind and solar power sources or buy power from companies or individuals who have wind and solar power generators.
Rates will increase because of the project, Stone said. But he said Black Hills' electricity still will be cheaper for customers than if the company bought it from another company. The company hasn't picked a site for the power plant yet, according to Kort, although "I'd assume we're looking at several different locations." But the new plant will be located near existing gas and electrical transmission lines in order to keep costs for the plant as low as possible, he said.
Plans for the plant, its location and the company's new rates all must be approved by the Public Utilities Commission, Kort said. Black Hills supplies electricity for about 93,000 customers in 21 Southern and Southeastern Colorado counties.