Press Releases

REVIEW OF SECOND QUARTER 2006 AND RECENT EVENTS

Financial results of the second quarter of 2006 mainly reflect strong results of energy marketing and the anticipated and previously disclosed adverse effects of power plant outages and related lower coal sales, and lower earnings from certain power fund investments. In addition, results were affected by the combination of lower natural gas prices and higher exploration and production expenses.

David R. Emery, Chairman and CEO of Black Hills Corporation, said, "The second quarter of 2006 was very active on the operations front, and we successfully addressed several previously identified challenges. Repair of our non-regulated Las Vegas II power plant was completed in stages, with its two heat recovery units returning to service in mid-June and early July. Results also were affected by ongoing maintenance at the Las Vegas I plant, which returned to service in late April 2006. Earnings from power fund investments were particularly strong in 2005, and experienced a $0.7 million loss in 2006. These funds have been liquidating over time through sales of the underlying power plant investments and consequently diminishing their remaining earnings potential. The Wyodak power plant, of which we are a 20 percent owner, resumed full commercial operations in the first week of July 2006 after an extensive planned maintenance outage. With its return to service, we expect our electric utility performance to improve with the availability of 72 megawatts of low-cost base-load energy, and our coal mine should resume normal sales.

Emery said, "Energy marketing margins benefited from successful natural gas transportation and storage strategies, and from Rocky Mountain-based crude oil marketing business, which began in April of this year. Overall oil and gas production increased 6 percent in the second quarter, with a 10 percent increase in natural gas production, offset partially by an 8 percent decline in oil production. Lease operating expenses reflect the recent expansion of operations and continued industry-wide cost increases for oil field goods and services.

"We filed a request with the South Dakota Public Utilities Commission for a 9.5 percent rate increase from Black Hills Power's South Dakota customers," Emery said. "Our last increase was more than 10 years ago. We asked for the increase to become effective January 1, 2007, providing us the opportunity to strengthen our commitment to provide reliable power and excellent customer service, while earning a fair and adequate return for our shareholders.

"We continue to focus on long-term shareholder value as we proceed with several projects," Emery stated. "We recently signed definitive agreements to obtain additional interests in the Piceance Basin properties we acquired from Koch Exploration earlier this year. This expansion is expected to increase our proven reserves and production in that region as we advance our drilling and development program in the months and years ahead. Construction of Wygen II, our latest 90 megawatt, coal-fired, mine-mouth power plant remains ahead of schedule. Wygen II is expected to be a rate-based asset, providing regulated returns to our investors and stable, reasonably-priced energy for our Cheyenne Light customers. We also are progressing with the permitting process for a replicate plant, Wygen III. In addition, each of these plants would utilize approximately 500,000 tons of coal annually from our coal mine, further augmenting our future earnings profile."

CONSOLIDATED FINANCIAL RESULTS

(a) Presentation of our 2005 revenues has changed to reflect the reclassification of the Company's crude oil marketing and transportation business and communications segment financial results to discontinued operations.
(b) 2006 discontinued operations reflect the after-tax results of operations at the Company's crude oil marketing and transportation business. 2005 discontinued operations reflect the after-tax results of operations of the crude oil marketing and transportation business, the communications segment, and the Pepperell power plant.

BUSINESS UNIT QUARTERLY PERFORMANCE SUMMARY

Retail Services Group
Income from continuing operations from the Retail Services business group for the three-month period ended June 30, 2006 was $3.3 million, compared to $4.1 million in 2005. Business segment results were as follows:

The following tables provide certain Retail Services operating statistics:

Wholesale Energy Group
Income from continuing operations from the Wholesale Energy business group for the three-month period ended June 30, 2006 was $9.7 million, compared to $14.1 million in 2005. Business segment results were as follows:

The following tables contain certain Wholesale Energy operating statistics:

Corporate
Unallocated corporate expenses for the three-month period ended June 30, 2006 decreased to $0.7 million, compared to $2.8 million for the same period in 2005. The decrease was primarily due to increased allocations of corporate costs and interest expense to subsidiaries and decreased legal and professional fees.

AGREEMENTS TO ACQUIRE ADDITIONAL OIL AND GAS INTERESTS
The Company has signed definitive agreements to acquire from a third party most of the remaining working interests associated with the property acquired in March 2006 from Koch Exploration Company. The acquisition includes approximately 22.4 billion cubic feet equivalent (Bcfe) of proven reserves, of which 17.9 billion cubic feet equivalent are proved undeveloped reserves. Current annual net production from such assets is slightly less than 0.5 Bcfe. As part of the transaction, the Company shall also acquire rights to more than 15,000 net acres of undeveloped leasehold adjacent or near existing operations in the Piceance Basin of Colorado. Upon completion, the Company's leasehold position in the Piceance Basin would total approximately 75,000 net acres. The purchase price for the transaction is approximately $24.1 million. The Company anticipates completion of the acquisition in the third quarter of 2006.

UPDATED 2006 EARNINGS GUIDANCE
The Company's guidance for earnings from continuing operations for 2006 is $2.10 to $2.25 per share. The Company currently expects results to be in the lower end of that range, primarily due to decreases in prices for natural gas.

EARNINGS CONFERENCE CALL
The Company will conduct a conference call on Thursday, August 10, 2006 beginning at 11:00 a.m. Eastern Time to discuss recent financial and operating performance. The conference call will be open to the public. The call can be accessed by dialing, toll-free, (800) 762-6067 (USA) or (480) 629-9566 (international). When prompted, indicate that you wish to participate in the "Black Hills Quarterly Earnings Conference Call." A replay of the conference call will be available through August 17, 2006 by dialing (800) 475-6701 (USA) or (320) 365-3844 (international). The access code is 837578.

ABOUT BLACK HILLS CORPORATION
Black Hills Corporation is a diversified energy company. Black Hills Energy, the wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. Our retail businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyoming vicinity. More information is available at our Internet web site: www.blackhillscorp.com.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release includes "forward-looking statements" as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including the risk factors described in Item 1A of Part I of our 2005 Annual Report on Form 10-K and in Item 1A of Part II of our quarterly reports on Form 10-Q filed with the SEC, and the following:

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.