Good day ladies and gentlemen, and welcome to the Black Hills Corporation first quarter 2010 conference call. My name is Janeda and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks there will be a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Jason Ketchum, Director of Investor Relations of Black Hills Corporation. Please proceed, sir.

Thank you, Operator. Good morning, everyone. Before I turn the call over to our Chairman and CEO, Dave Emery, I need to remind you that 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 the 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 Dave Emery.

Thank you, Jason. Good morning, everyone. Thanks for joining my call today. I will be referring to the webcast presentation that was posted last night and so for those of you who have it, I’ll try mention slide numbers so you can follow along. And for those of you who don’t, I don’t think that will be a problem, the information is essentially contained in the press release for the most part. Starting on Slide 5, we’re off to a really good start in the first quarter of 2010, basically a 23% improvement in income from continuing operations over the first quarter of 2009; $0.81 per share as opposed to $0.66. So, things are off to a good start in all of our companies essentially. On the utility side, up several million dollars over the prior year, several things led to that. Gas utilities did very well, and we’re continuing to work on our efficiencies there. We also had colder than normal weather in some of our territories, which helped. On the electric side our off-system sales of excess electricity improved this year over last year despite continued lower natural gas prices, and that improvement was primarily driven by several other plant outages in the region which allowed us to have a little bit stronger local markets to sell our excess energy to. Another item that contributed on the gas utility side was a small gain on sale related to our gas property in Nebraska that was annexed into the city of Omaha, and we had to then essentially sell that territory to the municipal utilities district in Omaha. So there was a gain on the sale recognized from that transaction as well. On the non-regulated side; a significant improvement, $13 plus million over the prior year, overall. Oil and…

Thank you Dave, good morning. As Dave indicated, we are pleased with a good start to 2010. If you take all of the noise out of both 2009 and 2010 first quarter numbers, the EPS has adjusted increased 34% year-over-year. The 2010 results have minimal help from the economy, so we’re obviously pleased with the improvement. Moving to the EPS analysis on Slide 11 consistent with the past quarters, we adjusted our first quarter income from continuing operations to display the impact of notable items recorded during the quarter. 2010 was fairly straight forward with a 4% reduction for the gain on sale of the Elkhorn property that Dave mentioned, and the [price] and addition for an unrealized loss on the interest rate swaps. So the income from continuing operations as adjusted was $0.82, which compares to $0.61 in 2009. As mentioned earlier, last year we had several sizable items going both ways that reconciled the income from operations as adjusted. Moving to the next slide, here we display the last four quarters of income from continuing operations. On the top line reconciled to income from continuing ops as adjusted on the bottom line. This included to display our performance over the last 12 months, which now is a $1.64. Just continuing to move on to the income statement, what we have here is Slide 14 displays our income statement for the first quarter of 2010 and 2009. Highlights include higher revenue and margins driven by improved off system sales and retail sales in the electric utilities offset by lower gas prices and gas utilities. So that drove the revenue and some of the margin. In addition we had improvements in both oil and gas and energy marketing on a year-over-year basis. Our operating expenses declined in 2010 compared to…

Hello and thank you Tony, moving on to future strategy, Slide 18. As we've been saying for a couple of years, we're well positioned for growth and we have several key initiatives going on right now. We have a substantial CapEx budget for 2010 and approximately 477 million from those capital expenditures come the potential for significant future earnings growth potential. We're excited about that. We've got sufficient cash flows, good balance sheet, clearly demonstrated access to the capital markets with all the financings we have been doing. Overall corporate risk profile continues to improve and overall we're in a great shape to continue our growth initiatives. On slide 19, we speak with some of those initiatives. Key projects here have remained essentially the same. We've added a significant projection for capital investment in the utility AMI or smart meter projects as a result of the matching grant we got from the DOE. We've also narrowed the cost estimate range of our Colorado Electric generation facility, previously it was $225 million to $275 million estimate as we have continued to sign contracts for equipment and receive bids for construction. We've narrowed that to $240 million to $260 million range which does include the transmission interconnection capital we expect to spend as well. Grand total of all these projects is roughly $1 billion worth of investment over the several periods here that are specifically related to grow projects. Does not include the recurring routine maintenance capital and those sorts of investments or capital for new customer hooks ups and things so a huge growth initiative for us and one that we're well underway of. Slide 20 related to Wygen III. We've already mentioned this but again a significant accomplishment ahead of schedule and under budget. We've now built four plants at…

Ladies and gentlemen we are ready to open the lines up for your questions. (Operator Instructions) Please standby for your first question. And your first question comes from the line of Ella Vuernick with RBC Capital Market, please proceed.

I had just a couple of follow-up questions. The first is regarding some plant outages that you’ve mentioned. You mentioned that those -- this quarter both benefited electric in terms off system sales and also resulted in lower volumes at coal. Could you expand a little bit on the nature of those plant outages in the region and whether they were planned?

Yeah the ones that affected us most dramatically, particularly on the coal side as I mentioned the Wyodak plant of PacifiCorp. was down, essentially had an issue related to a scrubbing vessel and they were down for a period of time and were able to operator with basically two or three vessels on the scrubber side, so they came back up but they are one of our largest coal customers. Also doing some other outages, you know small plant, maintenance outages as well. Now the ones I was referring to is primarily, effective off-system sales are certainly the Wyodak outage. Also the continued delay in Southern Colorado of getting the new Comanche plant online there has helped us in off system sales. You know we've forecasted that Xcel would have plant in operation early in the year which would have been a negative from an off system sales prospective and you know they are not having that plant and services helped us on better market prices for off system sales in that Colorado region.

And when is that Xcel plant now scheduled online?

I don’t know the answer to that

I had one other question then about turning to gas utilities, helped obviously, by the colder winter, which you've mentioned. In your slide deck you also referred to increased efficiencies. I was wondering if you could quantify the weather impact and also expand a little bit about what those efficiencies are that you're seeing?

The efficiencies are just good cost control from the standpoint that we're really not letting our own O&M and G&A go up, even though you're having some normal inflation year-over-year. So that provides a little bit of help. The real driver was the weather, the 10% more of decatherms.

Your next question comes from the line of Chris Ellinghaus with Shields & Company. Please proceed. Chris Ellinghaus - Shields & Company: I don't know if I missed this, but did you give the gross proceeds of the Elkhorn sale?

I don’t believe so Chris, they will be in the queue. But I don’t think they are included in the press release. Chris Ellinghaus - Shields & Company: Yeah, I didn’t think I saw it or heard it anywhere.

The details of that transaction would be included but…

It is in the press release, it is $6.1 million. Chris Ellinghaus - Shields & Company: Okay, great. Thanks, Tony. Just trying to figure out how much of it might help offset equity. David, in terms of Enserco, it feels a lot like it's shaping up to be a year like last year. Can you give us any color in terms of what you're expecting for the rest of the year? And does it seem like you might be challenged to make your guidance at this point?

Well we've talked about guidance in the press release and I think you know we said basically that our transport strategy is probably doing a little worse than we’d hope because those basis differentials have continued to be very narrow particularly out of the Rockies. Our other segments in Enserco are doing reasonably well. Producer services continues to be pretty strong, proprietary trading depends on volatility and some price levels but we don’t expect that to be particularly negative. Overall guidance what we said is that Enserco is a little bit weaker primarily driven by transport but because our other business is off to a good start and we’re basically holding our own on the guidance and maintaining that guidance. As far as Enserco per se, probably not wanting to put a specific number out there obviously for income but in the context of the overall corporation and guidance we believe it will do reasonably well which allows us to keep our guidance towards that. Chris Ellinghaus - Shields & Company: Okay. And on the E&P front, based on your sort of continuing declining production, would it be fair to say that the first quarter -- unless prices do something a little more dramatic, that first quarter might be sort of peak quarterly earnings?

You know, production was down a little in the first quarter because of weather-related issues, which has a tendency to happen in the first quarter. Chris Ellinghaus - Shields & Company: Correct.

And you also don’t typically see much for drilling results in the first quarter and for drilling activity. So anything you typically would see for new production in the first quarter would have been drilling in the third, fourth quarter of ‘09 and we just didn't do much late last year. So that kind of exacerbated the decline in the first quarter. Going forwardly we do have a little bit of drilling activity going on and certainly we won’t have that typical first quarter weather issues in second, third and fourth quarter. So I wouldn’t necessarily say that it’s all downhill from there. Chris Ellinghaus - Shields & Company: Okay. And one more thing on Enserco. Can you give us any color on what you did with your storage position in terms of drawing down for the quarter?

There’ll be a little bit of information in the queue related to that, that should explain some of our forward positions and the value of some of those forward positions. I think that will help a little bit.

Your next question comes from the line Gordon Howald with East Shore Partners. Please proceed.

When I look out at the opportunities you have over the next few years, it certainly looks like things are coming together as you assimilate Aquila and the generation build-out. That said, I realize you won't give us possible changes in strategy, but from a big-picture standpoint, could the E&P strategy under John Vering include acquisitions or maybe taking a more aggressive operating stake in fields? Or you maybe stated in another way, what in hindsight could have been improved in the direction that you guys had taken at E&P over the past couple of years?

Yes certainly I would say all options are open for E&P and clearly by putting someone like John in who’s got wealth of knowledge and experience and particularly in the Rockies and some of the plays that we're involved in, I think allows kind of a fresh set of (inaudible) if you will on all of the different play activities there that we are involved in, the ones that we're considering becoming involved in and others that we may want to become involved in and I would say everything is on the table. Certainly drilling and optimizing the properties that we have now is on that list. But what we consider additional opportunities if the economics wanted, yes we would. So I think that the timing may provide opportunities low price environments typically provide opportunities and we wanted to have a basically a fresh set of wires and different twist on our leadership there to help us look at things a little more objectively and trying to formulate which activities we want to focus on as prices improve. So really anything that you mentioned I think is on the table as far as being (inaudible).

Okay, and if I could just follow up with one other quick question here. You proposed settlement with Black Hills Power, a $32 million rate case. You've got interim rates in effect. I think that's $24 million. I realize it's typically a black box, but could you maybe provide a little bit color on the settlement? And how does the early completion and lower cost of Wygen III impact the rate case, or will it impact the rate case at all?

It really the early completion really won't have any significant impact on the rate case. By the time we filed and through the discovery process basically provided information that we did expect to come in under budget about where we came in and ahead of schedule a little bit, so the case was filed to where hopefully it would be effective April 1 and we did implement interim rates April 1. Now the settlement itself is not filed yet and so we its still part of confidential negotiations and things at this point. And you obviously if we agreed to a settlement, we view it as overall a satisfactory result for shareholders.

Your next question comes from the line of Jack Moore with Harpswell Capital. Please proceed.

Good morning. I was wondering if you could talk a bit about your capital structure and where you'd like it to be over the next few years.

Well we've talked about it in the past, it being in that range of debt to equity probably 50 to 55% and there is depending on the construction and things like that at times will be at the higher end of that range. But that’s a basic overall strategy that was communicated in the past, Jack.

Right. So, no change from that?

No.

So your BBB minus now it seems like you are comfortable with that?

Well we certainly like it to be higher and I think as we get the major projects completed and get those into rate case, with the strength of those earnings, we are optimistic that we'll improve our ratings.

That makes sense. And finally share count; do you see any movers there in your share now?

Yes, what we've talked about in the past and in several calls is that with this large capital spend over the next few years we will probably issue equity. So, that isn’t our plan and that helps us in effect keep in that 53% range but that’s why I mentioned the city of Gillette that will help us offset some of the capital expenditures in the requirement we might need there.

Your next question comes from the line of Jeff Gildersleeve with Millennium Partners. Please proceed.

The question on corporate expenses, when I sort of normalized the charges for the two different quarters; first quarter ‘09, first quarter ‘10, it looks like actually corporate is going down a little. In other words improving Q1 ‘09, can you just break out how much of that is interest? How much it is integration expenses that are going away?

Yes. I think from the operating income line we have a corporate line there and you can see that that went down $900,000. A lot of that is just less integration expenses in the first quarter of this year versus last year. We are up year-over-year in total by the $2.9 million, which is comparable to the fourth quarter. In the fourth quarter year-over-year we were up $2.8 million, and that’s really a function of just more long-term debt versus short-term debt and also just even though renewal of the credit facility, the rates were up.

Right. And so how much is allocated to corporate, and are you able to capitalize some of that interest expense?

We do, I mean from an AFUDC standpoint. We do. And that will be all spelled out in 10-Q.

Okay. Thanks. The Enserco, the profile historically has varied but as far as the storage side of the business, it seems like first and fourth quarters typically tend to be the stronger ones. Should we expect any change in that profile going through the year?

Typically those two quarters are much stronger for Enserco than the summer months and there are some opportunities obviously in the summer months but the strong quarters were typically fourth and first. The only caveat I’d put on that Jeff is it’s very difficult to predict what might happen on the mark-to-market basis on quarterly earnings. So from a realized earnings perspective typically first and fourth quarter were the strongest, and that we would anticipate staying the same.

Okay. And my final follow-up is just, I noticed in the slides under energy marketing, the eastern expansion of gas marketing strategy underway, I just wondered if you could talk more about the opportunities you see there and what scale are we talking as far as expansion in the east?

I don’ think it’s anything of a huge scale or a huge impact, but what’s driving that is the Rockies express pipeline’s a good example where historically we would have stopped a little shorter, and we now have the ability to take some of those sales and markets as far east as that line goes. So that led us to look for and add some additional trading expertise, more in the eastern markets rather than just kind of stopping it at the mid continent. Not a huge push, but something that will gradually increase a little bit of our exposure over time in there.

Thank you very much.

Thank you.

Your next question comes from the line of Tim Winter with Gabelli & Company. Please proceed. Tim Winter - Gabelli & Company: Good afternoon, guys, and congrats on the quarter. David, I was wondering if you could maybe provide a little more color on the comment of firmly believing in the diversified strategy and the strategic review of the E&P business, along with the cut back in CapEx because of pricing and the need to issue equity. Might that be a business that you would consider monetizing to hold off on the need to issue equity?

We’ve had that question in the past and I have talked about that pretty openly in the past. We do have significant reserves that I would put in the probable and possible category at E&P. If you look at our year-end results our proved undeveloped reserves went down significantly. The reason for that was just the change in the pricing methodology. So all those reserves are still in the ground, they are still under lease. They’re just not included in our booked reserves because we have to use a price that was too low for those to be economic and so essentially zeroes them out. Bottom-line is we have a lot of probable, possible reserves and previously proved and developed reserves that are not developed and so the true value I think of E&P would not be recognized in the sales situation. Now that being said, I think you know as a public company we got to acknowledge that everything is for sale at the right price. But if our intent was to just simply sell E&P, would have been much easier to just go ahead and do that rather than make the management change in the strategy discussions and some of the other things we are going through right now. So, that’s not the intent that’s driving that change. Tim Winter - Gabelli & Company: Okay, great. Thank you.

Your next question comes from the line of James Heckler with Levin Capital Strategies

Hi, good morning.

Hey, good morning. How are you?

Doing well, thanks. I'm going back to marketing for just a moment. You hadn't given specific guidance for that segment in the past, but you did talk about some kind of bookends. We could look back a couple of years, years 2006, 2007 and 2008. And maybe I think about 2007 as being representative but maybe the other two years. When you put it in those terms, it represented a pretty decent amount of earnings. The commentary in the press release regarding the guidance made it seem as though maybe you're not going to meet those objectives that were originally set, but they're going to be made up from elsewhere in the business. And I was wondering, one, if maybe you could put new bookends on how we should be thinking about marketing earnings this year; and two, specifically where those earnings might be being made up for in 2010?

As far as expectations for energy marketing, I think what we would suggest is that at least the transport part of that business. We expect to probably be a little lower than we would originally contemplated. We’re just not seeing any improvement in transport margins particularly out of the Rockys. You know the base is differential. We essentially are down to variable costs on the pipeline. It really can't get a whole lot lower than they are right now, and they have not improved. And you know we’d hope that it improves slightly. We didn’t expect a big gain there but we did expect them to improve slightly and we have pretty large transport positions. So, we don’t expect that to happen. To the extent of that change that would modify what our overall thought is related to energy marketing. And you know we haven’t put out specific numbers and won't put out specific numbers on what we expect from E&P. But if you look at how we talked about it last year, that would be back to a more ‘normal year’, I think its how we phrased in our call. We certainly, probably won’t do quite that well because of transport. On the other side, we have disclosed that we have seen improvements in several of our other businesses and we would hope to hang on to at least a portion of that and potentially improve even a little more and a couple of those businesses as the year goes on and make up for anything that we would be short on the transport side of Enserco.

Thanks. Can you identify specifically where those other strengths were?

Well, we talked about utilities and particularly we talked about a little improvement in our coal mining operation. That’s the primary drivers.

You know we talked about off-system sales in the first quarter. That was better than what we expected. We talked about the fact that can actually Comanche is still offline. So, there are opportunities to improve on a year-over-year basis in those other areas. The gas utilities performed great in the first quarter, so we are ahead there.

Got it.

So we feel that the guidance range out is still appropriate.

The other thing we are realizing and Tony talked about it a little in response to an earlier question that is we are doing a good job and starting to realize the benefits of our integration activity. And you know overall expense increases are significantly less than an inflationary rate and that is the benefit, and we will continue hopefully as we complete additional integration projects to realize some slight benefits from those as well which will also help offset any loss in earnings from Enserco.

Great, that's very helpful. And one more if I could. On the financing plans, I understand you probably won't be needing a lot of the cash that you spend on the Colorado generation until later in the year and into 2011. But just given the strength of your stock year-to-date, I was wondering if you could comment on how you think about that strength of the stock price and issuing equity versus waiting for the time when you actually need the cash. Do you kind of strike when the iron is hot rather than necessarily waiting when the markets might not be as favorable for you?

On that front, what we’ve said in the past is that our goal is to issue as little equity as late as possible. I would say in general that’s still true but to your point, if our stock would have continued to perform really well, we are continually evaluating that. There is always a chance we could go to market a little sooner with the equity rather than just wait until say late this year, next year, if our stock price continues to do well. The last few days have been a little wild here. We’ll see how things sort out. But it’s something that we are continually evaluating. But in general, our plan would be to issue as little as we can as late as we can.

Got it, thanks so much.

And Tony did mention that you know if we do complete the sale of Wygen III that interested Gillette, that’s a significant amount of cash which would further delay issuance of any equities.

Absolutely, thank you.

Thank you.

Your next question comes from the line of Vedula Murti with CDP US. Please proceed.

Good morning.

Good morning, Vedula.

Let's see. Given the rate settlement and interim rates, is there any, I assume that then would cover the operating and depreciation and all types of thing of Wygen III such that there's not a timing issue for the second quarter?

Correct, yes, because we did implement interim rate effective April 1 which was the first commercial operation date of the plant.

Okay. You indicated that the rate increase in Colorado for the proposed new plant would be 8% to 15%. Can you put that in a dollar number or some ballpark of what that is, like in millions of dollars split?

Well, it's very difficult to do because the rate case after the current case and it's also net of the effect of the expiration of the Xcel contract. So currently we get about 75% of our energy and a large percentage of our capacity on a long-term power purchase agreement with Xcel. That contract expires December 31, 2011. We are putting both the IPP plant and the rate base electric utility plant in our rates effective January 1, 2012, and then any additional changes between now and then would also be included in that. So there is a lot of moving parts up and down in that estimate. We really frankly didn't want to put that number out but the commission specifically asked us to at least make a stab at it and we do intend to file that with them here so we wanted to go ahead and make it public because it would be public anyway. But it's very difficult to quantify the dollars of each of those individual pieces for you and we don't intend to do that. When we file that case, the details will become known. It's very unique situation when we would attempt to provide an estimate like that with all the different moving pieces with just the specific request from the commission and we qualified it saying, there is lots of ins and outs in there but here is our best estimate and that’s 8% to 15%.

And just lastly, given how low interest rates are at this point, in terms of meeting equity requirements, how seriously are you guys considering possibly using hybrids at this point?

You know we look at all options. What is the best way to get the lowest cost to capital? But that’s all I can really say. We look at all the options.

Thank you very much.

Thank you.

At this time there are no further questions in the queue. I would now like to turn the call back over to David and refer any closing remarks.

Well, thanks for being on the call today everybody. We are excited about a good start to 2010. We had strong first quarter results and lots of key progress made in all of our long-term strategic projects. So thank you for your continued interest in Black Hills and have a great weekend.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a good day.