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���������ֳ�-New York-17 May 2011: ���������ֳ� downgrades Black Hills Corp.'s (BKH) ratings and affirms Black Hills Power, Inc.'s (BHP) ratings as follows:

Black Hills Corp.
--Long-term Issuer Default Rating downgraded to 'BBB-' from 'BBB';
--Short-term IDR downgraded to 'F3' from 'F2';
--Senior Unsecured downgraded to 'BBB-' from 'BBB'.

Black Hills Power, Inc.
--Long-term IDR affirmed at 'BBB';
--Short-term IDR affirmed at 'F2';
--First mortgage bonds (FMB) affirmed at 'A-'.

Approximately $1.5 billion in outstanding debt is affected. The Rating Outlook for both issuers is Stable.

BKH's ratings reflect ���������ֳ�'s revised expectations for increased leverage (defined as debt to EBITDA) due to lower EBITDA projections and higher debt to fund growth projects. ���������ֳ�'s decreased EBITDA forecast comes from expected results at the non-regulated businesses which accounted for 18% of operating income in 2010.

The two segments of the non-regulated business that are impacting 2011's expected results include energy marketing and coal mining. Energy marketing tends to have volatile results and the first quarter of 2011 generated losses. Results from coal mining are expected to be hurt by rising expenses. Most of the contracts restrict BKH's ability to recover costs increases until 2012 or beyond.

At the end of 2010, leverage was 4.6 times (x) and ���������ֳ� previously expected to see a modest amount of deleveraging in 2011. ���������ֳ� now projects leverage may increase to 5.0x at the end of 2011. Balance sheet deleveraging is expected in 2012.

The Stable Outlook reflects ���������ֳ�'s expectations that in 2012, BKH should benefit from the commercialization of two large investments that add 380 megawatts of generation to Colorado Electric's operations. Of that total, 180 megawatts will be rate based and 200 megawatts will be built by the BKH's Independent Power Production subsidiary and sold to the Colorado Electric subsidiary under a long-term Purchased Power Agreement (PPA).

Growth through internal projects has pressured credit metrics in recent quarters. The current buildout of power generation for Colorado Electric's operations require spending of approximately $487 million and both projects should be completed at the end of 2011.

In 2012, the regulated utilities segment should benefit from a $40 million pending rate case with the Colorado Public Utilities Commission for new generation which should be on line Jan. 1, 2012. In March 2011, Colorado Electric filed for $102 million to construct another gas fired turbine. Including this project, the utilities filed for $167 million in new utility investments.

The company had sufficient liquidity at the end of the first quarter of 2011 consisting of $47 million of cash and $262 million available on its $500 million revolver which matures in April 2013. In addition, Enserco, the company's energy marketing segment, has a $250 million facility which matures in May 2012. At the end of the recent quarter $147 million was utilized for letters of credit.

In December 2011, a $100 million term loan matures and in 2013, $225 million of notes are due.

The ratings consider the stability from BKH's regulated segments which accounted for approximately 82% of operating income in 2010. The rating also considers the risks associated with BKH's nonregulated activities which include coal mining and oil and gas production, and energy marketing and trading operations.

The ratings at BHP are notched higher than BKH since the parent is viewed as having more risk adjusted leverage. BHP's leverage declined to 3.9x at the end of 2010 which was a significant drop from 6.2x at the end of the prior year. During 2010, BHP paid off a maturing $30 million FMB instrument and called two high coupon FMB issues totaling approximately $25 million using proceeds from a $180 million FMB issued in October 2009.


Contact:

Primary Analyst
Kathleen Connelly
Director
+1-212-908-0290
���������ֳ�, Inc.
One State Street Plaza
New York, NY 10004

Secondary Analyst
Glen Grabelsky
Managing Director
+1-212-908-0577

Committee Chairperson
Philip Smyth
Senior Director
+1-212-908-0531


Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com.

Additional information is available at ''.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' Aug. 16, 2010;
--'Credit Rating Guidelines for Regulated Utility Companies' July 31, 2007;
--'U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines' Aug. 22, 2007;
--'���������ֳ�'s Approach to Rating Competitive Generators', July 24, 2007;
--'Utilities Sector Notching and Recovery Ratings', March 16, 2010.

Applicable Criteria and Related Research: