Core Viewpoint - Black Hills Corp. has received approval for its Lange II Project, which will enhance energy reliability in South Dakota and eastern Wyoming by addressing capacity deficits and increasing planning reserve margins [1][2]. Group 1: Project Details - The Lange II Project will consist of six reciprocating internal combustion engines (RICE) with dual-fuel capabilities (natural gas and diesel) and related interconnection facilities [2]. - The estimated cost of the Lange II Project is $280 million [2]. - Construction is set to begin in the third quarter of 2025, with the project expected to start serving customers in the second half of 2026 [3]. Group 2: Company Overview - Black Hills Corp. is a growth-oriented utility company based in Rapid City, South Dakota, serving 1.35 million natural gas and electric utility customers across eight states [4]. - The company aims to provide safe, reliable, and cost-effective electric service, enhancing the resiliency of the electric system to respond to demand fluctuations [3].

Industry Overview - The utility sector is experiencing a shift in demand, which is expected to boost growth in an industry traditionally viewed as stable and low-growth [1] - Energy demand is projected to increase significantly, with estimates rising from 22% growth between 2020 and 2040 to 55% growth by 2025, marking a substantial increase compared to the previous 20-year period [2] - Key drivers of this demand surge include artificial intelligence (AI), data centers, and electric vehicles (EVs), with demand from AI and data centers expected to rise by 300% and EV demand projected to increase by 9,000% by 2050 [3] Company Analysis: Dominion Energy - Dominion Energy has faced challenges, including a dividend cut while restructuring its asset portfolio to focus solely on electric utility operations [4] - The company is working on reducing leverage and aligning its payout ratio with industry peers, currently offering a dividend yield of 4.7%, significantly higher than the average utility yield of 2.9% [6] - Dominion holds a monopoly in a major data center market, experiencing strong demand for power, and is expected to achieve annual earnings growth of 5% to 7% due to this demand and a large offshore wind project [7] - Investors can benefit from above-average yields while awaiting dividend growth, which could lead to a higher stock premium once dividends are restored [8] Company Analysis: Black Hills - Black Hills has a strong dividend history, having increased its dividend annually for 55 consecutive years, earning the title of Dividend King [9] - Despite its small market cap of $4 billion, Black Hills offers a high dividend yield of 4.6% and is positioned to benefit from increasing demand in its service markets, projecting earnings growth of 4% to 6% annually [10] - The company represents a stable investment option in the utility sector, appealing to investors seeking consistent returns in a regulated industry [11]

Core Viewpoint - U.S. utilities present attractive investment opportunities for dividend-seeking investors, with NextEra Energy, Black Hills, and American Electric Power being notable examples of companies with distinct strengths in dividend growth, reliability, and growth potential respectively [1][13]. Group 1: NextEra Energy - NextEra Energy offers a dividend yield of approximately 3% and has achieved a 10% annualized dividend growth over the past decade, with expectations to maintain this growth rate for the next few years [2][4]. - The company's business is primarily supported by regulated utility assets in Florida, benefiting from population growth and a strong renewable energy operation [3][4]. - NextEra is a leader in the clean energy sector, being one of the largest solar and wind companies globally, positioning itself well for future growth as the world shifts towards lower carbon energy options [4]. Group 2: Black Hills - Black Hills boasts a remarkable 55-year streak of increasing dividends, qualifying it as a Dividend King, with a current yield of 4.6% [6][7]. - The company operates in markets that are growing at approximately three times the rate of the U.S. population, projecting earnings growth of 4% to 6% annually [8]. - While Black Hills may not offer rapid growth like NextEra, its high yield and steady dividend increases make it appealing for conservative investors focused on income generation [9]. Group 3: American Electric Power (AEP) - AEP has a dividend yield of around 3.6% and is in a growth phase with a five-year capital investment plan of approximately $54 billion, which could increase by another $10 billion [10][11]. - The company anticipates a 55% rise in electricity demand by the end of the decade, which could drive significant earnings growth [11][12]. - AEP's regulated spending is expected to provide more reliable growth compared to NextEra's unregulated clean energy initiatives, with projected earnings growth of 6% to 8% [12].

Group 1 - The article emphasizes the volatility of stocks, indicating that all investors will eventually experience market fluctuations [1] - It highlights that most investors have been in the market for over a month, suggesting a shared experience of volatility [1] Group 2 - The content does not provide specific insights or data related to companies or industries [2]

The utility sector has been a sleepy industry over the years. These companies generate very stable earnings backed by government-regulated rate structures. Because governments set rates, utilities don't grow that fast. However, these companies tend to generate lots of stable income, which gives them money to pay lucrative dividends. Black Hills (BKH -0.65%), Dominion (D 0.13%), and Duke Energy (DUK 0.21%) currently stand out to a few Fool.com contributors for their high-yielding payouts. Here's why they bel ...

Financial Data and Key Metrics Changes - The company is reaffirming its 2025 earnings guidance range of $4 to $4.2, representing a 5% growth rate at the midpoint over 2024 EPS [9][10] - Year-over-year earnings drivers for Q1 2025 included $0.29 per share of new margins, with $0.26 from new rates and rider recovery, and $0.03 from customer growth and usage [13][14] - O&M expenses increased by $0.24 per share, primarily due to higher employee costs, outside services, and insurance costs [15][16] Business Line Data and Key Metrics Changes - The company has successfully implemented new rates through five rate reviews since early 2024, recovering over $1.3 billion of new system investments [6][8] - The data center demand is expected to reach approximately 500 megawatts by the end of 2029, with EPS contribution from data centers projected to double to over 10% of total EPS in 2028 [12][21] Market Data and Key Metrics Changes - The company is experiencing strong customer growth, with new all-time customer peak loads in Wyoming Electric reflecting nearly a 10% increase over the previous peak [7][8] - The company is well-positioned to maximize growth opportunities due to favorable land prices, business climates, and a quality workforce [8][10] Company Strategy and Development Direction - Key objectives for the year include achieving 5% year-over-year earnings growth, executing regulatory initiatives, and a $1 billion capital plan [5][6] - The company is focusing on safety and system integrity projects, modernization programs, and infrastructure expansion to support growing demands [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 guidance and long-term EPS growth target of 4% to 6%, driven by a robust balance sheet and capital forecasts [10][11] - The company is optimistic about the impact of new legislation in Wyoming that provides liability protections related to wildfire mitigation [8][29] Other Important Information - The company plans to invest $4.7 billion over a five-year period through 2029, prioritizing safety and system integrity [11][12] - The company has a strong liquidity position with nearly $700 million available under its revolving credit facility [17][18] Q&A Session Summary Question: Can you discuss the electric rate case and the request for rehearing? - Management confirmed an increase in new annual revenue of about half a million and is reviewing the decision for potential next steps [33][34][36] Question: What is the outlook for the franchise agreement in Pueblo? - Management noted that the franchise was retained through a vote and emphasized the importance of affordability and economic development in the area [37][39][40] Question: Can you elaborate on the timing of equity needs? - Management indicated that equity issuance is based on capital project timing and maintaining credit metrics, with expectations for lower annual equity needs in the future [42][45] Question: How are wildfire mitigation efforts progressing in Colorado and South Dakota? - Management anticipates similar outcomes in Colorado and South Dakota as seen in Wyoming, with ongoing legislative efforts [48][49] Question: Is there interest in capital light strategies in South Dakota? - Management confirmed ongoing interest from large customers in Colorado and South Dakota, with potential for customized tariffs based on customer needs [56][57]

Financial Data and Key Metrics Changes - The company is reaffirming its 2025 earnings guidance range of $4 to $4.2, representing a 5% growth rate at the midpoint over 2024 EPS [9][10] - Year-over-year earnings drivers for Q1 2025 included $0.29 per share of new margins, with $0.26 from new rates and rider recovery, and $0.03 from customer growth and usage [13][14] - O&M expenses increased by $0.24 per share, primarily due to higher employee costs, outside services, and insurance costs [15][16] Business Line Data and Key Metrics Changes - The company has successfully implemented new rates through five rate reviews since early 2024, recovering over $1.3 billion in new system investments [6][8] - The data center demand is projected to reach approximately 500 megawatts by the end of 2029, with expectations for EPS contribution from data centers to double to over 10% of total EPS by 2028 [12][21] Market Data and Key Metrics Changes - The company reported strong customer growth, with two new all-time customer peak loads at Wyoming Electric, reflecting nearly a 10% increase over the previous peak in January 2024 [7][8] - The company is experiencing favorable business and regulatory climates, which are contributing to ongoing growth opportunities [8][10] Company Strategy and Development Direction - Key objectives for the year include achieving 5% year-over-year earnings growth, executing regulatory initiatives, and a $1 billion capital plan [5][6] - The company is strategically expanding its infrastructure to serve growing customer demands, particularly in data centers and blockchain operations [8][12] - The capital plan prioritizes safety, system integrity projects, and infrastructure expansion to support growing demands [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 guidance and long-term EPS growth targets of 4% to 6% [10][31] - The company is well-positioned to maximize growth opportunities while mitigating risks, such as through wildfire legislation in Wyoming [8][29] - Management noted that the future of the Inflation Reduction Act is uncertain, but the company's strategic exposure is minimal [10][11] Other Important Information - The company has a strong liquidity position with nearly $700 million available under its revolving credit facility [17][18] - The company has a history of 55 consecutive years of dividend payments, targeting a payout ratio of 55% to 65% [18][19] Q&A Session Summary Question: Can you elaborate on the electric rate case and the request for rehearing? - Management confirmed an increase in new annual revenue of about half a million and is reviewing the decision for potential next steps [33][34][36] Question: What is the outlook for the franchise agreement in Pueblo? - Management expressed satisfaction with the recent vote to keep the franchise agreement and emphasized the importance of affordability and economic development in the area [37][39][40] Question: Can you discuss the timing of equity needs and the lower levels expected in the future? - Management clarified that equity issuance is based on timing of capital projects and maintaining credit metrics, with expectations for lower equity needs in 2026 and beyond [42][45] Question: What is the status of wildfire mitigation efforts in Colorado and South Dakota? - Management anticipates similar outcomes in Colorado and South Dakota as seen in Wyoming, with ongoing legislative efforts [48][49] Question: Is there interest in capital light strategies in South Dakota? - Management noted continued interest from large customers in Colorado and South Dakota, with potential for customized tariffs based on customer needs [56][57] Question: How are insurance costs being handled in Colorado? - Management indicated that insurance cost recovery will be rolled into rate reviews in Colorado, similar to the approach taken in Wyoming [62]

Financial Data and Key Metrics Changes - The company is reaffirming its 2025 earnings guidance range of $4 to $4.2, representing a 5% growth rate at the midpoint over 2024 EPS [7][9] - Year-over-year earnings drivers for Q1 2025 included $0.29 per share of new margins, with $0.26 from new rates and rider recovery, and $0.03 from customer growth and usage [12][13] - O&M expenses increased by $0.24 per share, primarily due to higher employee costs, outside services, and insurance costs [13][14] Business Line Data and Key Metrics Changes - The company has successfully implemented new rates through five rate reviews since early 2024, recovering over $1.3 billion in new system investments [5][6] - The data center demand is expected to contribute more than 10% of total EPS by 2028, with a forecast of approximately 500 megawatts of data center demand by the end of 2029 [11][19] Market Data and Key Metrics Changes - The company is experiencing strong customer growth, with record peaks in demand, including a nearly 10% increase over the previous all-time peak in January 2024 [5][6] - The company’s multistate footprint provides valuable regulatory, weather, and customer diversification, supporting EPS stability and growth [9] Company Strategy and Development Direction - Key objectives for the year include achieving 5% year-over-year earnings growth, executing regulatory initiatives, and a $1 billion capital plan [4] - The company is strategically expanding its infrastructure to serve growing customer demands, particularly in data centers and blockchain operations [6][11] - The capital plan includes investing $4.7 billion over five years, prioritizing safety, system integrity, and infrastructure expansion [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 guidance and long-term EPS growth target of 4% to 6%, driven by strong customer demand and a robust pipeline of growth opportunities [9][28] - The company is well-positioned to mitigate risks and capitalize on opportunities due to favorable business and regulatory climates [6][9] Other Important Information - The company has a strong liquidity position with nearly $700 million available under its revolving credit facility [15] - The company has a history of 55 consecutive years of dividend payments, targeting a payout ratio of 55% to 65% [16] Q&A Session Summary Question: Can you discuss the electric rate case and the request for rehearing? - Management confirmed an increase in new annual revenue of about half a million and is reviewing the decision for potential next steps [31][32] Question: What is the outlook for the franchise agreement in Pueblo? - The franchise agreement was voted to be kept in place, and management is focused on maintaining affordability and economic development in the area [34][36] Question: Can you elaborate on the equity raised this quarter? - The company raised approximately $46 million in equity, with plans to meet the $215 million to $235 million guidance for the year [38][40] Question: What is the status of wildfire mitigation efforts in Colorado and South Dakota? - Management anticipates similar outcomes in Colorado and South Dakota as seen in Wyoming, with ongoing legislative efforts [44][45] Question: Is there interest in capital light strategies in South Dakota? - There is significant interest from large customers in Colorado and South Dakota, and the tariff structure will be tailored to customer needs [52][53]

Financial Performance - Net income available for common stock rose by $6.4 million to $134.3 million, with diluted earnings per share remaining stable at $1.87 [118]. - Total revenue for the three months ended March 31, 2025, was $236.7 million, an increase of 6.8% compared to $222.2 million in the same period of 2024 [131]. - The Gas Utilities segment reported revenue of $572.4 million for Q1 2025, up 12.5% from $508.7 million in Q1 2024 [139]. - Total earnings increased by $27.3 million to $249.3 million for the three months ended March 31, 2025, primarily due to the sale of 2024 PTCs in January 2025 [159]. Operating Income - Electric Utilities operating income decreased by $10.3 million to $54.3 million due to higher operating expenses and unplanned generation outages [120]. - Gas Utilities operating income increased by $20.7 million to $151.5 million, driven by new rates and favorable winter heating season weather [120]. - Electric Utility margin increased by $2.1 million to $169.5 million, supported by retail customer growth and new rates [126]. - The Gas Utility margin increased by $33.0 million, driven by new rates and rider recovery contributing $21.5 million [140]. Customer and Sales Metrics - The company has a total of 1.35 million customers across eight states, focusing on operational excellence and growth strategies [108]. - Quantities sold decreased from 1,780.0 GWh in Q1 2024 to 1,889.4 GWh in Q1 2025, reflecting a growth of 6.1% [131]. - Total generated and purchased electricity decreased from 1,378.1 GWh in Q1 2024 to 1,287.4 GWh in Q1 2025, a decline of 6.6% [133]. Capital and Investment Activities - Capital expenditures for the three months ended March 31, 2025, were $162 million, with forecasts of $1,002 million for 2026 [165]. - Net cash used in investing activities decreased by $21.7 million to $155.2 million, primarily due to lower capital expenditures driven by project timing [158]. - The company plans to renew its Equity Distribution Sales Agreement in 2025 to fund its capital plan and strategic objectives [154]. Debt and Liquidity - The company’s total debt as of March 31, 2025, was $4,311.5 million, a slight decrease from $4,384.0 million at the end of 2024 [153]. - The availability of liquidity increased to $693.2 million as of March 31, 2025, from $628.8 million at the end of 2024 [153]. - Interest expense increased by $7.3 million to $51.3 million, primarily due to higher interest rates [120]. Cash Flow and Dividends - Net cash provided by operating activities decreased by $5.6 million to $227.8 million for the three months ended March 31, 2025, compared to $233.4 million in 2024 [157]. - Net cash used in financing activities increased by $62.1 million to $81.9 million, primarily due to increased debt repayments and higher dividends paid [160]. - Dividends paid on common stock totaled $48.6 million for the three months ended March 31, 2025, equivalent to $0.676 per share [167]. Operational Challenges - The company experienced unplanned outages at Wygen III, impacting coal generation and purchases during the quarter [137]. - Net outflows from changes in operating assets and liabilities increased by $35.0 million, primarily due to fluctuations in commodity prices and weather conditions [159]. Credit Ratings - The company’s credit ratings remain stable, with S&P rating at BBB+ and Moody's at Baa2 [162]. - The company has not experienced any triggering events related to its credit ratings that would affect its financial obligations [163].

Financial Performance & Outlook - Black Hills Corporation reaffirmed its 2025 EPS guidance range of $4.00 to $4.20[8] - The company is targeting a long-term EPS growth of 4% to 6% based off a 2023 base of $3.75 per share[8, 9] - Black Hills anticipates a capital investment of $1 billion in 2025 and $4.7 billion from 2025 to 2029[8] - The company targets a dividend payout ratio of 55% to 65%[8] Capital Investments & Growth Initiatives - Black Hills forecasts a capital investment of $4.7 billion from 2025 to 2029, with significant portions allocated to customer growth, system integrity, and modernization programs[10, 14] - The company expects to serve approximately 500 MW of data center demand by year-end 2029 through innovative tariffs with minimal capital investment[17] - Black Hills is making progress on the Ready Wyoming 260-mile electric transmission project, with the first phase completed and on track for completion by year-end 2025, the first phase cost about $40 million of the total $350 million project[50, 42] Regulatory & Operational Updates - New rates for Colorado Electric have been implemented, and gas rate reviews are actively being executed in Kansas and Nebraska[6, 58] - Wyoming HB192 was enacted, limiting wildfire-related liability[5, 62] - The company is adding 99 MW of dispatchable natural gas generation in 2026 (Lange II)[55]