PIERRE, S.D. (KELO) — One of South Dakota’s major utilities is refinancing some current debt and taking on more that can be used to pay for future projects.
Black Hills Power received approval from the South Dakota Public Utilities Commission on Tuesday to issue up to $450 million of promissory notes that will last two years or longer.
State law requires that public utilities such as Black Hills Power get authorization from the commission before issuing any security.
The commission’s staff analysts recommended approval.
Black Hills Power is a wholly owned subsidiary of Black Hills Corporation and conducts business
within its service area under the trade name Black Hills Energy.
Black Hills Power currently uses 364-day intercompany borrowings from Black Hills Corporation for some of its short-term debt.
“The use of the Intercompany Notes has allowed Black Hills Power to benefit from more timely and diversified access to capital by drawing from the proceeds of Black Hills Corporation’s diversified long-term bond portfolio rather than being subject to market demand and pricing at a specific point in time for the debt financing needs of Black Hills Power,” the utility said in its application.
BHP regulatory manager Jason Keil told the commission that some of the new debt would replace $190 million of existing short-term debt.
He said the remainder would be used for projects such as the Lange II electricity powerplant that the company plans to build at a site off Deadwood Avenue in Rapid City.
“We have been capitalizing long term assets with short term debt,” Keil said.
Commissioner Chris Nelson asked whether this transaction increases the company’s debt load. Keil said the promissory notes for the Lange II project won’t be issued until 2026.
Nelson observed that two-year notes didn’t seem appropriate for financing long-term assets. Keil said the new notes will be for “two years or greater” and could stretch out to five or 10 or 15 years.
