Every project that brings vital resources to a community is an important one. However, the Pue­blo Airport Generation Station projects in Pueblo, Colo., had an added dimension of urgency that drove Black Hills Corp. to go the extra mile and ensure that it was brought in on time and on budget. As Vice President and General Manager of Power Delivery for Black Hills Corp., Mark Lux explains Black Hills Corp. was working against the clock to avoid an interruption to 94,000 customers in southern Colo­rado served by Black Hills Energy – a subsidiary of Black Hills Corp. – based on a purchase power agreement that expired Dec. 31, 2011. 

One of the company’s largest service areas is Pueblo, where the company previously had received about 75 percent of its energy from Public Service Company of Colorado, a division of Xcel Energy. However, Xcel Energy notified Black Hills Energy in 2008 that it would not be renewing the power purchase agreement it had with the company, putting Black Hills Energy’s customers at risk. 

Lux says Black Hills Energy filed an energy resource plan with the Col­orado Public Utilities Commission soon after Xcel’s decision, and in March 2009, the commission approved plans to build up to 200 megawatts (MW) of electrical generation capacity. Black Hills Corp.’s independent power provider subsidiary, Black Hills Colorado IPP was selected as the winning bidder in a competitive solicitation process to build a portion of the new generation. Black Hills Energy signed a 20-year power purchase agreement with BHCI to secure the remaining energy needed to serve their utility customers when the Xcel contract expires, Lux says. 

Even with a tight schedule and sometimes-challenging weather conditions, Lux says Black Hills Corp. was able to bring the Pueblo Airport Gen­eration Station online in time for the end of the Xcel Energy agreement. As of Jan. 1, 2012, the Black Hills Energy utility-owned plant was supplying more than 180 MW of power to the 21 Colorado communities – including Pueblo – that comprise Black Hills Energy’s service territories. Lux says the success of the projects was due to teamwork, careful scheduling and the company’s extensive experience. 

Highly Proficient

The Pueblo Airport Generation Sta­tion involved the installation of two Black Hills Energy utility-owned Gen­eral Electric LMS-100 natural gas-fired turbines and four Black Hills Col­orado IPP-owned LM6000 natural gas turbines and two steam turbines, totaling 380 MW of generation capacity. Lux says the natural gas turbines are top-of-the-line when it comes to efficiency and emissions, and serve to regulate the intermittency of wind turbines that also supply power to the area. The projects are located approximately five miles east of Pueblo, adjacent to Pueblo Memorial Airport. 

Because of the length of time it took to receive approvals and permits from the Colorado Public Utilities Comm­ission, construction on the projects didn’t begin until 2010, meaning Black Hills Corp. needed a “very aggressive schedule” to have the Pueblo Airport Generation Station completed and operational by the end of 2011, Lux says. Fortunately, the project benefitted from the entire team’s experience. 

“We had three primary contractors on these projects that were very proficient in terms of managing the craft resources and keeping productivity where it needed to be,” Lux says. 

For example, the project’s foundations were constructed by Kiewit, and the contractor worked an accelerated schedule to have the foundations ready in time for the equipment to be installed immediately on its arrival. “That was a real key factor to start the projects on the right foot,” Lux says, who also credits the project’s mechanical and electrical contractors with exceptional work. 

Meeting Challenges

Because the Xcel Energy agreement ex­piring at the end of 2011, there was little to no room for de­lays on the Pueblo Airport Gener­ation Station. For all the care and attention Black Hills Corp. put into scheduling, there was still one particular aspect of the work that the company had no control over. “The No. 1 challenge on these projects oftentimes is the weather,” Lux says. 

Not only did stormy weather threaten to hold up work in Colorado, but the weather also held up the delivery of crucial components from around the world. For example, storms in South America delayed the delivery of some of the main transformers, and the Panama Canal was shut down at times due to violent weather. 

Another new element for the Pueblo Airport Generation Station was the fact that Black Hills was im­plementing new technology. Lux says the LMS-100 turbines were relatively new to the marketplace when the comp­any purchased them from Gen­eral Electric. Less than 30 of these turbines are in commercial operation worldwide so far, making the Pueblo Airport Generation Stations something of a living laboratory for this modern technology.

“Starting up new technology is always a challenge,” Lux says, but he notes that Black Hills Energy worked closely with GE, and the equipment is operating at 99 percent reliability. 

One major component in the success of the Pueblo Airport Generation Station has been the approach Black Hills Corp. took in managing it. Lux says the company utilized multiple fixed-price contracts, essentially giving the company the role of the general contractor and providing it with greater control over budget and schedule. Lux says the multiple fixed-price contracts provided the commercial terms to protect the schedule and budget risk for the company. 

Thanks to the cooperation and hard work of the team, the Pueblo Airport Generation Station were operational on time. Not only did the projects meet its goal in terms of budget and schedule, but Lux says it also achieved an equally important goal: zero lost-time accidents on the job site. In fact, with more than 1.3 million man-hours on the project, the Pueblo Airport Gen­eration Station logged a case incident rate of 1.3, compared to the national average of 5.2. “It is considered a phenomenal safety performance,” Lux says.

History of Innovation

Black Hills Corp. has a long and distinguished history that dates back to its inception in 1883 in Deadwood, S.D. “More than 125 years later, Black Hills is a diversified energy leader committed to providing affordable energy today and sustainable energy for years to come,” Lux says. 

The history of Black Hills Corp. has been one of innovation, according to Lux. The Pueblo Airport Generation Station represents one of the most advanced utility models in the country, with the natural gas turbines providing the highest simple cycle efficiency in the industry and up to 25 percent fewer carbon dioxide emissions than similar gas turbines. Before the Pueblo Airport Generation Station, Black Hills Corp. was the first to pioneer air-cooled condensing technology at its plant in Gillette, Wyo., significantly reducing the amount of water required by the plant. The company estimates that billions of gallons of water have been conserved at its Gill­ette plant since this technology was introduced. 

“In order to meet the continuously changing energy demands and environmental regulations of the 21st century, Black Hills Corp. will continue to invest in new technology and explore partnerships with vendors that will allow us to continue environmental stewardship while ultimately serve our customers better,” Lux says.

To go along with that spirit of innovation, Black Hills Corp. says its reliability has made it one of the leaders in the marketplace. “Black Hills Corp­oration has an excellent track record of building and completing generation projects on time and on budget – many times ahead of schedule and under-budget,” Lux says. “That can translate into cost savings for our customers and a reliable or enhanced return on in­vest­ment for our shareholders.

“There are many factors that contribute to this success,” Lux continues. “We hire our staff during the construction process so they learn about, test and commission the facility – thus are fully trained and ready to operate the plant on day one. We think this is why our reliability from our new plants is top-tier right from the start.”

Environmental Stewards

The reliability of its plants isn’t the only thing Black Hills Corp. pays close attention to. The company says it also prides itself on its environmental record and strives to train all of its employees to take care of the environment in everything they do. “It is Black Hills Corp.’s policy to manage its business in an environmentally responsible manner,” Lux says. “We strive to protect the quality and diversity of our environment. We will comply with all applicable laws and regulations and work with all government agencies regulating our activities. We also work with responsible citizen organizations in the communities we serve.”

“In support of our environmental policy, we will continually seek out and investigate alternative methods of performing our services,” Lux adds. “When more environmentally sound methods are identified, we will move promptly – when economic circumstances allow – to adopt these practices.”

Black Hills Corp. says its environmental policy is an extension of the values that form the foundation of the company, and that these values have been essential to the company for more than 125 years. “Black Hills Corp. employees follow a standard of business conduct guided by our vision to be the energy partner of choice, and our mission for improving life with energy,” Lux says. “Values impact every aspect of our organization and are demonstrated in our interactions with others and the service we provide.”

With its core values of agility, communication, creating value, customer service, integrity, leadership, partnership and respect, the company is confident of its success. “We have an outstanding employee team at Black Hills, and our values and ideals guide our conduct in the workplace, at home and in our communities.”

Community Focus

Forging links to the community is one of Black Hills Corp.’s core values, and the company works to be a good citizen everywhere. “We at Black Hills Corp. recognize that social responsibility plays a vital role in helping us fulfill our vision and mission,” Lux says. “We partner with the communities we serve and work tirelessly to improve the lives of our neighbors, friends and family.

“Our employees donate tens of thousands of hours in service to our communities each year,” Lux continues. “Whether it’s organizing a blood drive, coaching a youth sports team, raising funds to find a cure for cancer or leading a nonprofit board, our employees help out when they’re call­ed upon, wherever they live.”

Black Hills Corp. employees also donate hundreds of thousands of dollars to philanthropic causes and organizations every year, including their local United Way chapters. “For more than 125 years, Black Hills Corp. has been committed to improving the quality of life in the communities it serves, and we plan to continue that commitment for the next 125 years and beyond,” Lux says.