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���������ֳ�-New York-19 November 2013: ���������ֳ� has assigned a 'BBB' rating to Black Hills Corporation's (BKH) $525 million 4.250% senior unsecured notes due Nov. 30, 2013. The Rating Outlook is Positive.

The notes will rank pari passu with BKH's existing unsecured obligations. Proceeds will be used to redeem the company's 9.000% $250 million senior unsecured notes due in 2014 and for general corporate purposes, which may include a reduction of other company borrowings.

KEY RATING FACTORS

Significantly Improved Business and Financial Profile
Substantially all cash flows and earnings are derived from regulated activities or investments that are under long-term contract to BKH's utilities. Following the sale of Enserco, BKH's energy marketing business in March 2012, non-regulated investments consists of a legacy upstream energy exploration and development business. ���������ֳ� considers BKH's coal and competitive generation businesses, which are largely contracted to BKH's utilities, as possessing relatively low risk.

Capex will peak in the 2013 to 2014 time period as BKH completes the build-out of its $222 million, 132 MW natural gas fired Cheyenne Prairie Generating Station to be owned jointly by sister utilities Black Hills Power ('BBB'/Positive Outlook) and Cheyenne Light Fuel and Power (not rated by ���������ֳ�). The plant is expected to achieve commercial operation in 2014.

BKH also has limited exposure to environmental rules to be enacted in 2015 as its coal-fired generation is relatively new and already meets proposed federal standards. Environmental capex is estimated by management at less than $10 million over the next three years.

Constructive Regulatory Environment
BKH operates regulated electric and natural gas utilities in seven states all of which allow for pass through of commodity and/or purchased power costs and many features other riders or recovery mechanisms that enhance timely recovery of expenses and invested capital. Transmission investments are regulated by the Federal Energy Regulatory Commission (FERC). The diversity by regulated jurisdiction further enhances the predictability of cash flows and minimizes the effects of exogenous factors.

Authorized return on equity (ROE) across its state jurisdictions ranges from 9.6% to 10.5%, about average for the industry.

Improved Credit Metrics
���������ֳ� expects higher earnings, reduced debt levels, and significantly lower interest expense to produce strong and improving credit measures over the next few years. The redemption of the $225 million of 6.5% notes results in annual interest expense savings of $14.6 million in 2013.

Along with further growth in regulated investments, ���������ֳ� expects EBITDA to Interest coverage to improve from 3.4x in 2012 to 5.0x over the 2013 - 2015 forecast period. Funds from operations (FFO) to debt, which already benefit from the debt reduction in 2012, are expected to remain relatively stable and average 22% over the same time period.

Financial and Operational Integration
BKH's utilities are individually relatively small and share centralized treasury functions with working capital financed through a money pool. While BHP as well as its sister utility Cheyenne Light Fuel and Power issue long term debt in their own names, the utilities purchased in 2008 including the four natural gas LDCs and Colorado Electric are held in a second tier holding company, Black Hills Utility Holdings, Inc., which is largely financed by intercompany advances from BKH.

���������ֳ� considers BKH's liquidity adequate. BKH's $500 million bank credit facility contains cross default covenants if BKH or its subsidiaries failed to make timely payments of debt obligations.

Along with jointly owned power plants and contracted purchase agreements by the utilities for coal from BKH's coal subsidiary and power purchase agreements from the competitive generation subsidiary, ���������ֳ� considers BKH's various subsidiaries to be highly integrated amongst themselves.

RATING SENSITIVITIES
Positive: Developments that could contribute to a positive rating action, either individually or collectively, include further redeployment of capital from non-regulated business into the regulated utilities or higher earnings from utility capital investments completed on time and on budget.

Negative: Regulatory outcomes that restrict the adequate and timely return on capital investments could result in a lower rating.

Contact:

Primary Analyst
Glen Grabelsky
Managing Director
+1-212-908-0577
���������ֳ�, Inc.
One State Street Plaza
New York, NY 10004

Secondary Analyst
Daniel Neama
Associate Director
+1-212-908-0561

Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com.

Additional information is available at ''.

Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 8, 2012);
--'Recovery Ratings and Notching Criteria for Utilities' (May 3, 2012);
--'Rating North American Utilities, Power, Gas, and Water Companies' (May 16, 2012);
--'Parent and Subsidiary Rating Linkage' (Aug. 8, 2012).

Applicable Criteria and Related Research:




Additional Disclosure