David Emery - Chairman, President and Chief Executive Officer Tony Cleberg - Executive Vice President and Chief Financial Officer Jason Ketchum - Director, Investor Relations

Eric Beaumont - Copia Capital Gordon Howald - Calyon Securities Christopher Ellinghaus - Shields & Company John Hanson - Praesidis Asset Management James Bellessa - D.A. Davidson & Co.

Michael Worms - BMO Capital Markets

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 in service January 1st of 2008 to serve Cheyenne Light, Fuel & Power customers.

We also commenced construction on the 100 MW Wygen III plant in early spring and that will be completed in mid-2010 and will serve the customers of Black Hills Power. Despite the economic times we have been in and particularly even in light of the last quarter, quarter and a half year we have had very minimal past due accounts in our utility companies, very, very remarkable numbers, I really have not seen any significant increase there.

We continue to work very diligently to make sure that our customers are paying their bills. On the non-regulated energy front, our energy marketing unit finished 2008 with a strong year and excellent quarter and really one of our better years that we have had with that unit despite a pretty slow start early in the year.

We aggressively managed our counterparty credit risk and energy marketing through some of the most tumultuous times in the credit market that we have ever seen and had no credit losses to speak of which is truly a remarkable accomplishment given the economic times we were in and marketing continues to be a well performing unit for us and they are off to a good start in 2009. Generation and coal mining units also had a good year in 2008.

Earnings at our coal mine from a net income standpoint were down somewhat despite a record of 6 million tons of production and the reason for the income decline was primarily due to a huge increase in overburden removal and some other expenses there which were anticipated. The oil and gas side, we posted declines in both production and reserves compared to 2007.

Permit delays and weather early in the year and then reduced drilling activity and even production shut-ins in the third quarter basically due to low oil and gas prices impacted our performance in the oil and gas unit. We took the position as the year went on and prices continued to fall that we are better off spending less money and not focusing on production growth and reserved growth as much as really focusing on the true economics of our investments which led us to spend less in the second half of the year.

The gain on the sale of our IPP plants in July resulted in nearly $140 million gain from a net income perspective and through tax planning and then utilization of the proceeds from the IPP sale to purchase the Aquila properties, we were able to defer income tax payments of $135 million to $160 million which played the key role in helping us finance our Aquila transaction. Last week our Board increased our quarterly dividend to half percentage share to $35.5 per share which is the annual equivalent of a $1.42.

Although that increase of $0.02 on an annualized basis is less than the $0.04 we have done in recent years, we believe it is prudent to conserve cash and liquidity and be a little more conservative with our increase in light of the current economic times. So, we are very confident in our future and our ability to continue paying dividends but just took a more cautious approach this time around.

That increase represents our 39th consecutive annual dividend increase which is one of the longest streaks in the industry and something we are very proud of. Moving on the Slide 6, there were two notable non-cash charges to earnings in the fourth quarter and Tony will talk more about the numbers about some of the details, I guess if you will but our operational performance in the fourth quarter and even the year was really overshadowed by those non-cash charges which total almost $120 million.

First, the ceilings test impairment at our oil and gas unit. We have to perform a quarterly ceilings test for E&P companies because we utilize the full cost method of oil and gas accounting.

That test utilizes December 31st product prices. It holds them constant for the life of your production then you take the net present value based on that and compare it to book and adjusting for taxes and a few other things but long story short that resulted in a $59 million after tax impairment for us.

At year end the NYMEX gas prices were $5.71. Crude oil was $44.60.

Since that time, prices have fallen more - almost $1 on natural gas and about $4 a barrel. If those prices continue to stay at that level through the end of the first quarter and we do not have significant reserve adds at low cost during that time it is possible we could have another impairment in the first quarter.

This really depends on where those quarter end price levels end up. I think it is important to note that in December, the SEC issued new ceilings test rules that will not take effect until December 2009 but in the proposed new rules or in the approved new rules rather than use a December 31st product price to evaluate the future value of your reserves, they are proposing using a 12-month average of the first of month prices which is essentially a proxy for an annual average price.

Under that methodology, we would not have had ceilings test impairment this year if prices continue to stay low for a whole year, of course, you still would have one but it has a tendency under the new rules to tend to temper the highs and lows of prices which we believe is a good change. On the interest rate swaps, we disclosed this in the third quarter and spent a lot of time talking about it.

We had entered into interest rate hedges on $250 million worth of anticipated long term debt that we expected to issue in late 2008 to retire some of our short term debt and a part of the bridge financing that we did for the Aquila acquisition. Those swaps because we were not intending to actually place the long term debt we did designate those hedges and then as a consequence had to mark them to market and that resulted in about $61 million charge to earnings and those will continue to be marked to market on a going forward basis.

So as the spreads continue to get better on those hedges, it is possible we could be actually recognizing unrealized mark to market income on a going forward basis just depending on whether those spreads continue to get better as they have been recently or if they get worse again. Earnings guidance, due to the economic environment we are in and several significant uncertainties really make it impractical for us to accurately forecast our 2009 earnings and in several key things that contribute to that but because of that we withdrew the guidance that we had issued on November 24.

The factors that influenced this decision are several but one is the continued low crude oil and natural gas prices will most likely impact the level of capital spending we do in oil and gas. If the prices continue to stay low that in turn impacts production, reserves and certainly earnings for the oil and gas segment.

In addition, there is some volatility associated with our energy marketing segment and although we are pleased with the performance of our marketing entity, absolute price levels have dropped, some basis differentials have narrowed, and things that make it a little more challenging to predict right now what we think the performance of that unit will be, although we think it will be good. The timing and pricing of our planned debt offerings for this year, until we actually get the debt placed and know at what rates it will be placed at, it would be very difficult for us to accurately forecast our overall 2009 earnings.

We are very confident in our operational performance going forward and we will continue to evaluate the feasibility of reinitiating guidance but really cannot accurately predict or when we might even choose to provide updated guidance. We just really need to wait and see how quickly a lot of these uncertainties clear themselves up.

Slide 8 is just a recap of 2008 significant events and also shows you some of the key milestones that we are working towards in the future. I will not spend much time on that.

Slide 9 is a list of accomplishments for 2008. I have already mentioned several of these and I will cover a few others later in the regulatory and rates discussion.

There is a couple that I think are worth mentioning here now. We set new peaks in all three of our electric utilities this year and by a fairly large amount actually.

They are all pretty large increases for us. Cheyenne Light actually moved from a summer peak to a winter peak, setting an all time peak this winter.

Black Hills Power set a new winter peak, still below their summer peak but set a new winter peak this year and then our Colorado electric utility that we acquired from Aquila, set a new summer peak and all time peak last summer as well. As far as the Aquila properties we have been aggressively rebranding those companies under the name Black Hills Energy.

Most of that rebranding is complete now and we have had good receptivity to our new brand in the service territories that we are operating in and then of course in December we extended the $383 million acquisition facility for the Aquila transaction until the end of 2009 to give us more time and flexibility to really watch the capital markets and have a little more flexibility and control over the timing and when we do our long term financing to replace that bridge. Slide 10 gives an overview of the key integration activities.

We have made tremendous progress on integrating and we basically picked up 600,000 new customers and 1,200 new employees, almost 1,300 new employees which was a huge undertaking and the progress has been excellent really as good as or better than we could have expected from a customer perspective. Things really have been seamless, which is a tremendous accomplishment for our employee groups.

Slide 11, we are going to continue the integration of systems and processes, using the integration and the systems conversation projects that we have planned, we plan to relook at essentially everything we do from a process standpoint in an effort to continue to improve our efficiency and reduce our operating expenses going forward. Now, I will turn it over to Tony Cleberg, our Chief Financial Officer for an overview of the financial situation.

Tony?

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 Aquila property. The former Aquila properties or Black Hills Energy generated net earnings of $4.4 million.

This includes a net after tax integration expense of $5.4 million or $0.14 per share. This integration expenses were lower than anticipated.

In addition, $4.3 million or $0.11 per share had been incurred at the corporate level for a pre-close integration expenses on these transactions. Moving to the non-regulated businesses, you can see the impact of the ceilings test impairment.

The impairment reduced overall performance from $35.5 million to a loss of $23.5 million. Even excluding the ceilings test, these businesses under performed in 2007 by $14 million but as a reminder our energy marketing business had a record year in 2007 and setting the bar very high for comparison.

So, we would like to see our non-regulated businesses perform better in 2009 but it maybe difficult with the oil and gas prices. Moving to Slide 15, we are comparing the fourth quarter income statement for 2008 to 2007 and to the third quarter of 2008.

The revenue at $408 million is 165% over 2007 and 40% over the third quarter. The main driver of the revenue increase was the Aquila acquisition which you added $239 million in the fourth quarter of 2008, so without Aquila, our growth was about 10%.

The 40% increase over the third quarter was really driven by the gas utilities and cold weather. Moving down to the operating income or loss line, the $38 million loss includes the $92 million pretax charge for the ceiling test impairment.

Excluding this charge, the operating income would have been $53.9 million, an improvement from both 2007 and 2008. Continuing down the income statement, the interest expense was $19 million for the quarter, an increase of $12.5 million over 2007.

The main driver is the increased debt level of $536 million on slightly higher interest rates. From third quarter, the interest expense increased $2.6 million reflecting additional debt of $60 million in the quarter and also the spike in the LIBOR in October and November.

Almost all of our short term debt is LIBOR based which as of today the LIBOR is quite favorable again. Continuing down the income statement, income taxes for the third quarter are at a normal rate of 35%.

The 2007 amount was a tax rate of 22% which reflected the benefits of successfully closing tax audits and true ups on some other tax accounts. The 35% is consistent with our third quarter, so from a continuing operations standpoint, our loss was $2.52 per share versus an income of $0.47 in 2007.

As I mentioned before, if you exclude the impairment for the ceilings test and the unrealized mark to market, the continuing ops would have been $0.62 compared to $0.47 and $0.51 in the third quarter. Moving to discontinued operations, this quarter included an adjustment on the gain for the independent power production assets.

The gain on sale was reduced by $0.03 per share. This reflects part of the impact for the earn out settlement in the fourth quarter.

The earn out settlement increased the cost basis for certain IPP assets that has been sold in July. The bottom line loss for the quarter was largely impacted by the combination of the non-cash ceiling test impairment and the unrealized mark to market.

The total was $120.4 million or $3.14 per share for the quarter. I should mention that since we reported a loss from continuing operations, we must use basic shares to calculate EPS.

So, you will see some minor changes on certain numbers whether they are reported in the quarter or whether they are reported in the total year. I am just talking pennies.

Slide 16 displays a rollup of revenue and operating income. One notable item on this slide includes the gas utility revenue in the fourth quarter increasing over the third quarter by $109 million.

This reflects two things, moving from the slowest seasonal quarter to a much stronger seasonal quarter and then the higher revenue because of the cold weather. The earnings for the gas utilities reflect the volume of the gas sold.

Another notable item is the improved operating income for the electric utilities. The year-over-year improvement in operating income reflects a better cost recovery in our rates, compared to the third quarter we were slightly down because we saw the drop-off in off-system sales.

Another notable item is the improvement in earnings and energy marketing of $4.2 million over 2007 and $9 million over the third quarter. Market volatility is generally a good thing for our energy marketing business and needless to say the fourth quarter had market volatility.

The last item to note is the oil and gas financial performance including the $91.8 million pretax charge for the ceiling test impairment and the rest of that business lost $1.5 during the quarter. The precipitous drop in the commodity prices really drove the performance.

Moving to Slide 17, as a total year P&L for 2008 compared to 2007, one noteworthy item is we were profitable for the year driven by the gain of the IPP assets. Another noteworthy item is that the tax rate in 2007 was very low at 30% because of the true ups of the tax accounts and the successful results on some state audits.

A more normal rate is the 35% to 36% range. Moving to Slide 18, this is supposed to be a rollup of revenue and operating income for the total year.

Unfortunately, we used the Slide 16 on the quarterly slide again. A notable point to make is that if you exclude the ceiling impairment test the operating income would have been a $147.7 million.

If you compare the operating income from the utilities it is $92.8 million. So, 63% of our earnings on annual basis came from the utilities and this compares with last year where we had $53.3 million of operating income which was 42% of our total mix.

Moving to Slide 19, this shows the capitalization of our debt increase year-over-year by $536 million. Upon the acquisition of Aquila properties and the continued spend on capital projects such as Wygen III, we planned various financing in 2009 to move a considerable amount of the short term debt to long term.

If you look at our total debt capitalizations of 53% we believe we are well positioned for our asset mix and have room to grow. On Slide 20, we have our credit and liquidity update and as we have described in the past we planned to issue $400 million to $500 in long term debt to replace the $383 million bridge facility.

We extended the bridge facility due now in December 2009 and we are considering various options to retire this debt and other short term debt during the year including term loans, issuance of bonds, equity and other items. We are pleased that the debt markets have improved since year end.

In addition, we are looking to obtain a committed facility for Enserco. Currently, we are managing Enserco, our energy marketing business with a very conservative capital structure.

We only have a $126 million in Letters of Credit drawn on a $300 million facility. I would like to add that we have a number of initiatives within the Company to defer and in some cases eliminate both capital spending and expenses; and although we are seeing improved performance in our businesses we are being very conservative about moving forward because of the continued overall economy and the declining commodity prices.

So, with those comments on the financial performance for the quarter and the year, I will turn it back to Dave.

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 conditions warrant that would justify continued investment.

Wygen III is on schedule and on budget. That $191 million represents our 75% interest.

We have disclosed previously that Montana Dakota Utilities expressed its intent to take the 25% interest on that plant. The other part, I think, we have talked about in prior years and have continued updates but overall, we are looking in the neighborhood of $900 million to $1.1 billion in growth opportunities over the next several years which has clearly defined growth plan for us and we are very confident in our ability to execute on those projects and also to access the capital market as we need to continue to support the spending associated with those projects.

On page 25 is an update on our Colorado Electric Resource Plan. We recall that the Black Hills Energy Utility as we call them now purchases a large portion of their power supply through a long term contract that expires at the end of the 2011 and that contract will not be renewed by the current supplier so we proposed the plan in August that proposed building five combustion turbines in Colorado.

Relying heavily on natural gas for generation fuel is the only way we could comply with the emissions rules and the renewable plans in Colorado. Proposed along with those turbines, the integration of some solar and wind into our system as well.

The Colorado PUC held hearings in January, a public input hearing on January 15th and then formal hearings at the Commission running from January 20th through the 26th. We expect an order from the Commission during the months of February.

We believe we presented an excellent case to the PUC on why our proposed plan is indeed in the best interest of the customers and now it is in the Commissioners court to make the decision and issue an order. Moving on to slide 26, in our various utilities, we have continued to make great progress on the regulatory front.

We have got excellent regulatory relationships and we worked very hard to establish good credible relationships in the new states that we acquired from Aquila and I believe we have done just that. Many of these items you have seen before that are on the slide as far as regulatory and rate initiatives, a couple of updates related to the Colorado Gas rate case and the Black Hills Power for transmission rate case, we have reached tentative settlements in both of those cases and expect final orders in February which is real positive news.

In the case of Colorado Gas, we cannot implement interim rate there so we are waiting for the final order before we disclose the amount of the settlement. In the case of Black Hills Power, the FERC transmission case, we settled for $3.8 million and implemented those rates on January 1 subject to refund.

The FERC case is notable in that it is a formulaic based rate so as we add continued investment in transmission which we intend to do in Black Hills Power over the next few years, it allows us to recover those with an annual true up via our calculation rather than having to go backward with separate new rate case for the additional investment. So, it is a very, very positive way of achieving regulatory recovery of our transmission investments going forward.

Finally, on 27, you have seen this slide in previous quarters. This is what I would consider to be our strategic plan scorecard if you will and it really outlines our accomplishments in 2008.

I think I have touched on all of those already so I will not reiterate them. Going forward, we will take off our 2008 progress and show you what we are working on for 2009 and in the future here.

We are indeed well positioned. We have got a very clear strategy, as I said before, one of the best, the most clearly defined growth plans we have had in our history, good access to capital markets, good financial position and really sets us up to continue to add long-term shareholder value as we go forward.

Now, I would be happy to entertain any questions you might have.

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.

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.

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.

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.

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.

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.

Okay but you are talking long term for the capital expansion and not for replacing the credit facility?

Yes.

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.

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.

And the 10-K filing is expected when?

It is absolutely due March 2nd so we will meet that deadline.

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…

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.

Understood. Thank you very much.

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.

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.