Ladies and gentlemen thank you for standing by and welcome to the Black Hills Corporation quarterly earnings and 2008 financial results conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer period. Instructions will be given at that time. (Operator instructions) As a reminder, today’s conference call is being recorded. I would now like to turn the conference over to your host Mr. Jason Ketchum with Investor Relations. Please go ahead.

Thank you, Operator. Good morning and welcome to our 2008 full year and fourth quarter conference call. During the course of this call some of the comments we make may contain forward-looking statements as defined by the Securities and Exchange Commission, and there are a number of uncertainties inherent in such comments. Although we believe that our expectations and beliefs are based on reasonable assumptions actual results may differ materially. We direct you to our earnings release, Slide 2 of investor presentation on our website and our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results to differ materially from our expectations. I will now turn the call over to David Emery, Chairman and CEO of Black Hills Corporation.

Thank you, Jason. Good morning everyone. Thank you for joining us this morning. For those of you following along on the webcast presentation that we posted last night, I will try to at least mention page numbers as we go. If you do not have I think you will still be fine as far as keeping up for the information but I will try to reference at least some points to the slide numbers so you can follow along. Today, we will talk about several things. First, I will give an overview of the year. Tony Cleberg, our CFO will give an overview of the financial results both for the fourth quarter and for the year of 2008 and then I will get back on and talk more about future and future growth plans and things like that before we open it up for question and answer. Year 2008 was 125th anniversary of our corporation and it was truly a transformational year for the Company. We closed the two largest transactions in our Company’s history on consecutive business days in the middle of July. Those deals included the sale of seven of our IPP plants for $840 million and the purchase of five utility properties from Aquila for $940 million. The result of those two deals was a significant increased in the Company’s utility assets and that resulted in a more defined growth plan and a lower overall corporate risk profile as we go into the future. Operational performance in most of our units was very strong in 2008 and the utilities in addition to the acquisition and integration of the Aquila utilities, we continued construction of mine-mouth coal fired power plants at our Wyodak mine site in Wyoming. We completed the 95 MW Wygen II plant and placed it…

Thank you, Dave. Good morning. As Dave mentioned the operational performance for the fourth quarter produced solid results but the bottom line financial results generated a large loss driven by the two items he mentioned. First, the non-cash impairment charge on the oil and natural gas assets for the ceiling test calculation; and second, an unrealized loss on a mark to market of interest rate swaps. I do not mean to discount these charges in our explanations but to help you understand our performance, I believe it is necessary to share with you the with and without the impact of both the ceilings test in the mark to market interest rate swap on various line item. For example, if you exclude these two items from the loss from continuing operations of $2.52 in the fourth quarter you would have income from continuing operations of $0.62. That compares to $0.47 in the fourth quarter of 2007 and $0.51 in the third quarter of this year. So, overall the operations did improve in the fourth quarter. Moving to Slide 13, which compares our November 24th, 2008 EPS guidance to the actual results. We estimated earnings to be in the range of $2 to $2.10 but the range included a $0.38 gain on sale for our interest in Wygen I. The sale occurred in January adding $51 million in cash to our liquidity. So, if you exclude that gain from the guidance range of our earnings and before the mark to market and the ceiling test, we performed better than expected. The next slide provides an overview of the positives and the negatives included in income or loss from operations for the year. The electric utilities improved primarily from increased cost recovery in their rates. The gas utilities reflected performance from the acquired…

Thanks, Tony. Moving on to slide 22 and looking to the future here, we have really one of the most clearly defined growth plans in our history and we are very well positioned, as Tony said, from our financial perspective. We are in good shape as we move some of our short-term debt, our longer-term debt financings will be even stronger and be in a good position to move forward. Our asset mix has shifted dramatically and Tony referenced that related to earnings but now we are approximately 2/3 regulated utility and 1/3 non-regulated energy assets that is almost a complete flip flop from where we were last year at this time. So, a substantial improvement in our overall corporate risk profile, more predictable earnings and cash flows with which to continue to grow in the future. Slide 23 is simply a reminder that we changed our reporting segments for financial reporting purposes beginning in the third quarter of 2008 and we will continue to utilize these six different business segments for financial reporting going forward. Slide 24 highlights key growth oriented opportunities that face the Company today and there are truly some great projects and opportunities there. A couple of things worth noting; oil and gas, we show a planned level of $65 million to $90 million for capital spending. We already announced back in November that our plans for 2009 were reduced to $35 million to $40 million. If prices continue to stay low, it is possible we could spend even less than that. We are basing our decisions on economics and if prices do not cooperate, we are not going to invest as much capital there. So that one has a qualifier on it for 2009 but we do believe we have good properties that assuming economic…

(Operator's instruction)Your first question comes from the line of Eric Beaumont of Copia Capital.

Couple of things. First, just to check the map here, the fourth quarter E&P even without the ceiling test would have been a loss and I am just wondering, was that just run rate or does it have more to do with the LOE or depletion change from write downs?

Well, the specifics of it, we have not put out Eric but certainly the change in reserves result in an increase in depletion even not including the ceilings test and the reserve reductions were primarily driven by price as well.

So, I think or obviously we do not know where things ultimately end up but just thinking about you were down about 11% in production. Anything we should think about for production levels for 2009 or is that up in the air right now?

Really, it is dependent on and that is part of the guidance issue, Eric. It really depends on what we are going to do for capital spending and frankly at current price levels, we are not really enthused about spending a lot of capital so it is very difficult for us to give accurate guidance on production right now and that is why we have chosen not to. We did have a decline in 2008, I think it is about 4 some percent, 5% quarter-over-quarter. I do not think it was 11%. I think the annual number was 7.5%, something like that but anyway, we did have a decline. I would say, going forward we are hoping we can continue to replace some of our production but is very difficult to say that we can do that. It just depends on what the levels of prices are and how that contributes to our willingness to make investment decisions but year-over-year decline is about 7.5% in production.

If we take a look on the marketing side again, volatility and things up in the air, I guess what I am getting at is I understand pulling the guidance but you should have a decent handle on utilities if you thought about just giving kind of breakdown to pieces that you cannot quantify because just the full thing in their entirety causes a little bit more of uncertainty than you may want to have out there.

Yes, clearly does and we have talked about that a lot and as I alluded to before, we are continuing to evaluate what we want to do from a guidance perspective and I think related to the utilities and the corporation in general, one of the large drivers is going to be what we end up doing for financing and how we replace our current short term debt which is based off of LIBOR with long term financing and the timing of that financing and the rates at which we obtain that financing will have a real significant impact on earnings. So we definitely need some clarity there before we are comfortable with putting numbers out.

And your point is well taken. I mean the utility are producing and they are very solid.

I guess a couple real quick things here. On financing, we are seeing the Hold Co is still kind of maybe open but not really open and you thought about pushing anything down the Op Co or is that all the debt you are looking still to the Hold Co people?

Well, we were continuing to investigate both holding company debt and the potential for utility first mortgage bonds. I think we are a little bit cautious about utilizing a lot of utility first mortgage bonds and having separate financings at multiple utilities and have separate issuers and all of those issues but I think as you note, there is not a whole lot of Hold Co issues being done right now and with the extension of the bridge, we have the luxury of being able to watch the markets there for a while which I think is a benefit.

Okay and I guess the last thing and put you on spot and I am sure I will not get that clear answer but if prices stay about where they are and let us say the strip plays out the way it is for 2009, we would anticipate probably lower production in the 2009 than we saw on 2008 and E&P would probably not be much of the profitability and if that does play out through so much volatility, the marketing probably would not be as robust, unless we see summer or winter spread blow out for as far as transportation and basis differentials. Is that a fair assumption?

Well, marketing is kind of a different game. I would say E&P probably reasonable assumptions to make depending on what price is due but as I said before we are not going to spend as much if prices stay low which means we probably will not replace production. How much we will replace remains to be seen. It depends on what we do choose to invest and how successful it is but on the marketing side, certainly the absolute price levels may have an impact but we will make a lot of our profit in our marketing entity based on day to day volatility and price. We also make it on seasonal spreads and related to gas storage and then of course basis differentials related to transport. In any given year, there are various contributions of those different segments - producer services and proprietary trading included. It has a tendency to vary and so it is very possible that even though absolute price levels might be low, you could have potentially better storage numbers or transport numbers or so.

I got you but again, it would be more along the lines of what we saw in 2008 definitely without some change. We are not looking at anything near, what 2007 once again?

Yes. Well, 2007 was a really exceptional year. A real exceptional marketing conditions, has really widened basis differentials and other things. It stopped to predict but I certainly do not see any basis differentials that are not wide right now.

Will you have anything assuming, any clarification in the case as far as hedge levels with regard to marketing? I know there has always been some competitive issues. We are not getting a whole lot there but anything that will be able to help figure out so we can come up with our sensitivities?

We are continuing to add some disclosure to our quarterly reporting, Eric. I am not sure if it is going to specifically meet your needs but we are continuing to try to expand what we do report related to the marketing unit and we do always update our oil and gas hedges for E&P in the K or Q as well. I am not sure. It is kind of a long gradual process on expanding our disclosures around our energy marketing unit and we basically try to add a little bit here as we go forward each time and add what we think makes sense so that we can continue to update going forward and so we are being cautious in the additional information we provide but we are trying to add items to that list to help you all.

Your next question comes from the line of Gordon Howald of Calyon Securities.

I think Eric had covered a lot of this but what is the cost of the current extended financing and maybe just a little more color on why you would not consider more operating company financing given that market of first mortgage fund is wide open? I am trying to get a sense of what kind of variability there maybe in financing cost for 2009.

You are talking about the bridge itself as far as what the cost of the bridge is?

Correct.

It is LIBOR plus 300 for the first quarter and then it bounces up each quarter by 50 basis points. Actually, it gets to LIBOR plus 450 towards the end of year. So, that is the bridge loan and LIBOR is very favorable right now so it would be a step up if we are talking what other people have been going into the market for, from an interest rate standpoint at the whole goal level.

And certainly on the Op Co bonds questions that you raised, it is certainly something we are considering, Gordon. You have to be a little bit cautious about issuing Op Co debt at all the different operating companies because then it impacts your overall corporate credit rating as well and there is a lot of considerations to that but clearly, Op Co debt is something that the market is open on right now for utility first mortgage bonds and we are an issuer from Black Hills Power so it is certainly something we have considered doing. Like I said right now, we have a luxury of a little bit of time. We watch the markets and make decisions related to whether we want to issue Hold Co debt, Op Co debt, term loans, equity or a combination of those to secure some of our long term financing.

And the Black Hills Power debt, if you are going to [43.17], what is that debt rated in the credit rating agencies?

It is one notch above our corporate ratings would be.

Okay, you are probably triple …

Two notches above.

Okay, got you and have you guys disclosed and I apologize if this has been answered, E&P realized prices for fourth quarter for 2008?

We have not disclosed those in the press release. I think we disclosed the yearend prices that were used for the ceilings test but we have not yet disclosed our average received prices. Those will be in the 10-K.

Okay, I saw that number. Is there an update on hedge positions? Are there any hedges in place at this point with E&P for 2009?

Oh, yes and we published that list, Gordon in our Q and you can look in the last quarter’s Q and see a significant list of hedges and some of them substantially in the money now and then we will update that list of hedges every quarter so there will be an update in the 10-K as well.

Your next question comes from the line of Christopher Ellinghaus of Shields & Company. Christopher Ellinghaus - Shields & Company: Couple of things; Tony, you mentioned tax benefits and I do not recall any individual periods with tax benefit. Were there any true-ups in the fourth quarter?

The true-ups in the tax or some of the audits were in 2007 so this year, our tax rate was pretty straightforward, 35% to 36% area but that is from an expense standpoint. From a cash standpoint with all these tax deferrals that we have been able to implement, our cash taxes have been nominal. Christopher Ellinghaus - Shields & Company: Were there any other unusual nonrecurring items in the fourth quarter?

Of any significance? Yes, there were some small things. For example, pension expenses a little bit higher, $0.03 a share on the Black Hills energy and there were some other small things but nothing of any real significance. Christopher Ellinghaus - Shields & Company: When do you expect to give us any additional insights into CapEx for this year? Is that a 10-K issue?

Yes, it is.

It really is. Christopher Ellinghaus - Shields & Company: Okay and last thing Tony, I thought when you were going through the litany of adjustments or items that you were thinking about in terms of issuing the new debt, did I hear the word equity and was that, were you referring to equity infusions into utilities or something?

You did hear the word equity but if you look at our total capital plan over the next several years, we will not do it all on debt. There are a lot of expenditures there so we have to look at equity into the total mix of whatever we do. Christopher Ellinghaus - Shields & Company: Okay but you are talking long term for the capital expansion and not for replacing the credit facility?

Yes.

Your next question comes from the line of John Hanson of Praesidis Asset Management.

Most of my questions have been answered by other folks here but the question I have though is in the E&P. I know it is going to be a little tough for CapEx here this year but have you seen any particular areas that you are in or are there any discoveries other people are doing or anything close by or anything that gets you interested in particular with your E&P areas?

There is some significant activity going on in several of the areas we are in. We are basically in three primary locations on the operated side, the San Juan Basin, the Powder River Basin and the Piceance Basin and really all three of those, you see some significant degrees of activity or you did when prices were higher, the activity is quickly diminishing but we were pretty optimistic about what we have for proved undeveloped reserves and even probables and possibles in those three basins and there is a lot of activity around us or again, was before prices started to fall now. It is diminishing and we also hold some non-operated interests and some other properties, shallow gas play in Northern Montana, a little bit on minority interests in the Bakken shale play in North Dakota and we have previously disclosed those, we do not give a lot of specifics around those but clearly, they are in areas that are very cost-effective and good recovery on reserve. So as prices improve, I think there will all be very viable drilling areas again.

Your next question comes from the line of James Bellessa of D.A. Davidson & Co. James Bellessa - D.A. Davidson & Co.: I have one comment. I concur with the first Q&A participant. It seems like there is an inconsistency when you move your portfolio to 2/3 being regulated and you are declaring yourself to having reduced the risk profile but you are not giving guidance in at least on that business and I would encourage you to think about that. And then the second is a small question, in the press release under the section about oil and gas explanation, in the second paragraph of the first bullet, it talks about ‘excluded from this guidance range.’ Was that an edit issue where that should have been edited out? Did you contemplate guidance range and then backed up on that?

Yes. That is exactly it, Jim. We did contemplate guidance range for a long time and as I talked about, we just could not get comfortable with the magnitude of some of the potential uncertainties and so we made the decision not to update guidance and in fact to withdraw it. As we discuss more and more about the magnitude or some of the potential uncertainties, it just did not make sense for us to put it out. So that is merely a missed omission. We should have taken that out. James Bellessa - D.A. Davidson & Co.: And the 10-K filing is expected when?

It is absolutely due March 2nd so we will meet that deadline. James Bellessa - D.A. Davidson & Co.: And when do you think you are going to get it out?

Well, we would always like to have it out sooner, Jim but…

This year's case is a lot of work. This is the first time… James Bellessa - D.A. Davidson & Co.: It is just reasonable to assume you will take the full amount of time.

More than likely. I mean if we can get it out there too early, we are going to try to but like I said, with the addition of all the Aquila properties and all the events of 2008, it is a pretty lengthy document. There is a lot of numbers in it and a lot of one-time significant transactions and non-cash charges and a lot of other things that just complicate any effort to really expedite that process too much. James Bellessa - D.A. Davidson & Co.: Understood. Thank you very much.

Your next question comes from the line of Michael Worms of BMO Capital Markets.

Can you just remind us Dave what your capital structure strategy is going forward? Where we are now and what you would want it to look like in a couple of years?

We have said for a long time, we like to be in the 50/50 range and that during periods when we are doing projects or we have power plant constructions and things like that going on, particularly when it is going to be for rate-based type asset, we will allow the short term debts to creep up a little bit in anticipation of long term financing. So, you may see it, right now it is 53%. You may see it creep up to 53%, 55% during period of construction but our long-term intent is to try to keep it in that 50/50 range and really being cognizant of what our overall corporate credit rating is and other factors.

(Operator Instructions) There are no additional questions. Please continue.

Alright, well thank you for being with us this morning everybody. We appreciate your time and certainly we appreciate your interest and support for Black Hills. Thanks for joining us. Goodbye.

And ladies and gentlemen, your conference will be available for replay after 11am today until February 10th at midnight and you can reach the access code by dialing 1800-475-6701 and entering the access code 984061. International participants may dial 320-365-3844 and also entering the access code 984061. And that does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.