Black Hills Corporation (BKH) Business Profile

What it does

Black Hills Corporation is a U.S. utility company that supplies electricity and natural gas to homes, businesses and other customers. Founded in 1941 and headquartered in Rapid City, South Dakota, it is led by President and Chief Executive Officer Linden R. Evans. Its utility operations generally use the Black Hills Energy name.

The company has two operating segments. Electric Utilities generates electricity and moves it over transmission and distribution lines to customers. It also buys power from other providers and sells excess electricity to utilities and marketing companies. Gas Utilities obtains natural gas and transports and distributes it through pipelines to customers. It also sells available pipeline capacity and gas to other utilities and marketers.

Black Hills owns power plants, electric lines, gas pipelines and gas storage sites. It also operates a coal mine whose production primarily supplies its own nearby power plants. Some power generation and mining assets are not regulated as utilities, but are integrated into and primarily support the electric business.

The company also offers services outside its regulated utility operations, including home-service plans and technical services. Its gas business supplies some customers through a program that allows them to choose a gas supplier. Black Hills employed 2,795 people at December 31, 2025.

How it makes money

Black Hills earns revenue by providing electric and gas utility service to retail customers. Its electric business generates and purchases power, delivers it over its network and sells excess power to other utilities and marketing companies. Its gas business transports and distributes gas and, when capacity is available, sells pipeline capacity and gas commodities to other utilities and marketers. These businesses provide ongoing service to customers in their respective territories.

State public utility commissions oversee utility rates and charges, while federal regulators oversee certain assets and transactions. Rate decisions take account of factors including the cost of service, capital spending, the prudence of costs incurred and views about appropriate returns. The regulatory arrangements differ by jurisdiction; a utility does not set all its customer prices independently.

Cost-recovery mechanisms allow the utilities to pass prudently incurred natural gas, fuel and purchased-power costs to customers. These mechanisms can collect or refund differences between costs included in base rates and actual costs without a general rate review. In some jurisdictions, approved charges called riders also allow recovery of certain costs or a return on capital investments placed in service between base-rate reviews.

Revenue also comes from services outside regulated utility operations. Black Hills Energy Services supplies gas to customers under the Choice Gas Program in Nebraska and Wyoming. The company offers Service Guard Comfort Plan, Tech Services and HomeServe services to regulated customers. Its integrated coal mine sells nearly all its production to on-site generation facilities under long-term supply contracts.

Gas revenue is seasonal: heating demand is often greater in winter, and a significant amount of natural gas revenue is normally recognized in the first and fourth quarters.

Customers and how it sells

Black Hills operates in the United States, predominantly in rural areas of the Rocky Mountains and Midwest. Its electric utilities serve customers in Colorado, Montana, South Dakota and Wyoming. Its gas utilities serve customers in Arkansas, Colorado, Iowa, Kansas, Nebraska and Wyoming.

The Electric Utilities segment serves approximately 227,000 electric utility customers, while Gas Utilities serves approximately 1,138,000 natural gas utility customers. Customer groups include residential, commercial and industrial users; the gas business also reports transportation customers. Black Hills delivers utility service through its own electric and gas networks.

The company also provides natural gas supply to approximately 48,000 retail distribution customers under the Choice Gas Program in Nebraska and Wyoming. When an independent marketer sells gas to an industrial or commercial customer in its territory, Black Hills can still collect a fee for transporting the gas through its distribution network.

Wyoming Electric serves data center customers Microsoft and Meta. Black Hills has identified large-load demand, including data centers, as a source of growth. Beyond retail customers, it sells excess electricity and available gas commodities and pipeline capacity to other utilities and marketing companies, including affiliates.

Suppliers and costs

Black Hills buys natural gas from a mix of producers, processors and marketers. It generally combines financial hedges, fixed-price physical purchases and market-based purchases in its gas portfolio. Most of the gas it procures travels on interstate pipelines under firm transportation agreements. The company also contracts with outside transportation providers for storage service and owns regulated underground storage assets.

For electricity, Black Hills operates generating plants and buys power under purchase agreements to supplement its own supply. Its generation resources include coal, natural gas and wind. Its Wyoming coal mine supplies nearby power plants by conveyor, and nearly all of its output is sold to on-site facilities under long-term contracts.

Costs include fuel and purchased power, gas procurement, operating and maintenance expenses, depreciation, taxes and financing. Capital spending increases the asset base that must be maintained and depreciated. Cost-recovery mechanisms permit the pass-through of prudently incurred energy costs, although arrangements vary by jurisdiction. The company also needs cash for construction and experiences higher cash requirements during winter heating periods and periods of high natural gas prices.

Competitive position

Black Hills generally faces limited competition for retail electricity generation and distribution and for retail gas distribution in its service areas. No competing company is named in the supplied evidence. Independent gas marketers compete to sell gas to industrial and commercial customers, but Black Hills continues to collect transportation fees when those marketers use its distribution network.

In Colorado and Wyoming, electric utility rules can require competitive bidding for generation supply. When resource plans require additional capacity or energy, other utilities and independent power producers can compete to provide it. Black Hills’ non-regulated generation businesses also participate in a wholesale power market where utilities and non-utility sellers compete.

Coal from the company’s mine competes with other energy sources, including natural gas, nuclear, wind, solar and hydropower. The cost, availability, safety and environmental characteristics of those alternatives affect demand for coal. Electrification initiatives could increase electricity demand while reducing gas demand and future gas growth.

Our reading: Limited retail competition and ownership of the local delivery networks provide a meaningful competitive position, although gas marketers can compete for the commodity sale. Our reading: The adjacent mine and long-term on-site supply contracts support the electric business, but coal still competes with other energy sources.

Growth opportunities

Black Hills’ growth plans include investment in utility infrastructure and serving additional customer demand. Its Ready Wyoming transmission project was completed and placed in service in December 2025, connecting South Dakota Electric’s and Wyoming Electric’s transmission systems. The company expects the project to support economic growth in Wyoming and expand access to renewable resources.

Black Hills says large-load demand, led by hyperscale data centers, is a growth opportunity. In its second-quarter 2026 update, it identified more than 3 gigawatts of data center opportunities, of which only 600 megawatts was included in its current plan. The company said it was actively negotiating an additional pipeline of more than 2.5 gigawatts. It includes demand in that pipeline only when it is covered by nondisclosure agreements and subject to ongoing, active negotiation.

The company says its 99 megawatt Lange II generation project is on schedule to enter service later in 2026 in South Dakota. The project is intended to replace generation planned for retirement and support reserve requirements.

Black Hills also has a pending all-stock merger with NorthWestern Energy. The company says it received federal approval and approvals of settlements in Nebraska and South Dakota, and was awaiting a Montana decision as the last approval required for closing. Black Hills expects the transaction to close in the second half of 2026.

Structural risks

• Regulatory outcomes: Black Hills may face unfavorable or untimely federal and state regulatory decisions. Rate decisions depend on factors including the prudence of costs and views about appropriate returns; environmental compliance can also require substantial spending.
• Weather and operations: Electricity and gas demand vary with weather and customer requirements. Leaks, fires, explosions, equipment failures and generation outages can affect safety and reliability or increase the cost of securing replacement power.
• Cybersecurity and physical security: Cybersecurity incidents or malicious acts targeting technology systems could disrupt operations or lead to the loss or misuse of information. Physical attacks can damage facilities and lead to outages.
• Capital access and spending: The company needs significant cash to support and grow its businesses. A sub-investment-grade credit rating could affect its ability to access capital markets, while supply-chain challenges and cost overruns can increase capital and operating costs.
• Merger and integration: The NorthWestern merger remains subject to closing conditions and regulatory approval. Delay or failure to close could bring costs and divert management attention; if completed, combining operations and achieving expected savings may prove difficult.

Bottom line

Our reading

Black Hills is primarily a regulated utility whose customer relationships and delivery networks support recurring service revenue, with rates and cost recovery subject to regulators. Its growth opportunities include infrastructure investment and data center demand, but negotiated load is not the same as committed service. Weather, operating hazards and financing needs remain part of the business, while the proposed NorthWestern merger adds closing and integration risk.