Edgar Filing: BLACK HILLS CORP /SD/

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )


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Black Hills Corporation
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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BLACK HILLS CORPORATION

Notice of 2010
Annual Meeting of Shareholders
and Proxy Statement

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BLACK HILLS CORPORATION
625 Ninth Street
Rapid City, South Dakota 57701

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2010

April 13, 2010

Dear Shareholder:

You are invited to attend the annual meeting of shareholders of Black Hills Corporation to be held on Tuesday, May 25, 2010 at 9:30 a.m., local time, at the Dahl Arts Center, 713 Seventh Street, Rapid City, South Dakota. The purpose of our annual meeting is to consider and take action on the following:

1.: Election of three directors in Class I: Jack W. Eugster, Gary L. Pechota and Thomas J. Zeller.
2.: Ratification of Deloitte & Touche LLP to serve as our independent registered public accounting firm for the year 2010.
3.: Authorization to amend the Black Hills Corporation 2005 Omnibus Incentive Plan to (i) increase the number of shares of common stock reserved for issuance under the Plan by 500,000 shares, and (ii) the renewal of the material terms of the performance-based goals under the Plan.
4.: Any other business that properly comes before the annual meeting.

The enclosed proxy statement discusses the important matters to be considered at this year's meeting. Our common shareholders of record as of April 6, 2010 can vote at the annual meeting.

Your vote is very important. You may vote your shares by telephone, by the Internet or by returning the enclosed proxy. If you own shares of common stock other than the shares shown on the enclosed proxy, you will receive a proxy in a separate envelope for each such holding. Please vote each proxy received. To make sure that your vote is counted if voting by mail, you should allow enough time for the postal service to deliver your proxy before the meeting.

Sincerely,

ROXANN R. BASHAM
Vice President—Governance and Corporate Secretary

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BLACK HILLS CORPORATION

625 Ninth Street
Rapid City, South Dakota 57701

PROXY STATEMENT

A proxy in the accompanying form is solicited by the Board of Directors of Black Hills Corporation, a South Dakota corporation, to be voted at the annual meeting of our shareholders to be held Tuesday, May 25, 2010, and at any adjournment of the annual meeting.

The enclosed form of proxy, when executed and returned, will be voted as set forth therein. Any shareholder signing a proxy has the power to revoke the proxy in writing, addressed to our secretary, or in person at the meeting at any time before the proxy is exercised.

We will bear all costs of the solicitation. In addition to solicitation by mail, our officers and employees may solicit proxies by telephone, fax, or in person. We have retained Georgeson Inc. to assist us in the solicitation of proxies at an anticipated cost of $7,000 plus out-of-pocket expenses. Also, we will, upon request, reimburse brokers or other persons holding stock in their names or in the names of their nominees for reasonable expenses in forwarding proxies and proxy materials to the beneficial owners of stock.

This proxy statement and the accompanying form of proxy are to be first mailed on or about April 13, 2010. Our 2009 annual report to shareholders is being mailed to shareholders with this proxy statement.

VOTING RIGHTS AND PRINCIPAL HOLDERS

Only our shareholders of record at the close of business on April 6, 2010, will be entitled to vote at the meeting. Our outstanding voting stock as of such record date consisted of 39,173,784 shares of our common stock.

Each outstanding share of our common stock is entitled to one vote. Cumulative voting is permitted in the election of our Board of Directors. Each share is entitled to three votes, one each for the election of three directors, and the three votes may be cast for a single person or may be distributed among two or three persons.

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Commonly Asked Questions and Answers About the Annual Meeting Process		1
Proposal 1—Election of Directors		4
Corporate Governance		7
Meetings and Committees of the Board		11
Director Compensation		14
Security Ownership of Management and Principal Shareholders		16
Executive Compensation		18
	Compensation Discussion and Analysis	18
	Compensation Committee Report	30
	Summary Compensation Table	31
	Grants of Plan Based Awards in 2009	34
	Outstanding Equity Awards at Fiscal Year-End 2009	35
	Option Exercises and Stock Vested During 2009	36
	Pension Benefits for 2009	37
	Nonqualified Deferred Compensation for 2009	41
	Potential Payments Upon Termination or Change in Control	41
	Equity Compensation Plan Information	46
Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm		47
Fees Paid to the Independent Registered Public Accounting Firm		47
Audit Committee Report		48
Proposal 3—Approve Amendment No. 2 to the 2005 Omnibus Incentive Plan and Code Section 162(m) Renewal		49
Transaction of Other Business		56
Shareholder Proposals for 2011 Annual Meeting		57
Shared Address Shareholders		57
Annual Report on Form 10-K		58
Notice Regarding Availability of Proxy Materials		58
Appendix A—Second Amendment to the Black Hills Corporation 2005 Omnibus Incentive Plan		A-1

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COMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE
ANNUAL MEETING PROCESS

Q: Who is soliciting my proxy?

A:: The Board of Directors of Black Hills Corporation.

Q: Where and when is the annual meeting?

A:: 9:30 a.m., local time, May 25, 2010 at the Dahl Arts Center, 713 Seventh Street, Rapid City, South Dakota.

Q: What am I voting on?


A:		• Election of three directors in Class I: Jack W. Eugster, Gary L. Pechota and Thomas J. Zeller.
		• Ratification of Deloitte & Touche LLP as our independent registered public accounting firm for 2010.
		• Authorization to amend the Black Hills Corporation 2005 Omnibus Incentive Plan to (i) increase the number of shares of common stock reserved for issuance under the Plan by 500,000 shares, and (ii) the renewal of the material terms of the performance-based goals under the Plan.

Q: Who can vote?

A:: Holders of our common stock as of the close of business on the record date, April 6, 2010, can vote at our annual meeting. Each share of our common stock gets one vote. Cumulative voting is permitted in the election of directors. Each share is entitled to three votes, one each for the election of three directors, and the three votes may be cast for a single person or may be distributed among two or three persons.

Q: How do I vote?

A:

There are three ways to vote by proxy:

•: by calling the toll free telephone number on the enclosed proxy;
•: by using the Internet; or
•: by returning the enclosed proxy in the envelope provided.

You may be able to vote by telephone or the Internet if your shares are held in the name of a bank or broker. If this is the case, you will need to follow their instructions.

If we receive your signed proxy before the annual meeting, we will vote your shares as you direct. You can specify on your proxy whether your shares should be voted for all, some or none of the nominees for directors. You can also specify whether you approve, disapprove or abstain from the other proposals.

If you do not mark any sections, your proxy card will be voted:

•: in favor of the election of the directors named in Item 1; and
•: in favor of Items 2 and 3.

Q: Who will count the vote?

A:: Representatives of Wells Fargo Bank, N.A. will count the votes and serve as judges of the election.

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Q: What constitutes a quorum?

A:: Shareholders representing at least 50 percent of our common stock issued and outstanding as of the record date must be present at the annual meeting, either in person or by proxy, for there to be a quorum. Abstentions and broker non-votes are counted as present for establishing a quorum. A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner.

Q: What vote is needed for these proposals to be adopted?

A:

Item 1—Election of Directors. The affirmative vote of a plurality of the votes cast at the meeting is required for the election of directors. This means that the nominees with the largest number of votes "for" will be elected as directors, up to the maximum number of directors to be chosen at the election. A properly executed proxy marked "Withhold authority" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum.

Item 2—Ratification of Auditors. The appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year 2010 will be ratified if a majority of the shares represented at the meeting and entitled to vote on the item, vote in favor. A properly executed proxy marked "Abstain" with respect to the ratification of the appointment of Deloitte & Touche as our independent registered public accounting firm has the effect of a negative, or "no" vote.

Item 3—Amendment to the 2005 Omnibus Plan. The amendment to the 2005 Omnibus Incentive Plan and the renewal of the material terms of the performance-based goals requires the affirmative vote of the holders of a majority of the votes cast, provided that the total votes cast represent over 50 percent in interest of all securities entitled to vote on the Plan. In determining whether the number of votes cast represent more than 50 percent of the shares of common stock entitled to vote, abstentions will count as votes cast and broker non-votes will not count as votes cast.

Q: How will my shares be voted if they are held in a broker's name?

A:: If you hold your shares through an account with a bank or broker, the bank or broker may vote your shares on some matters even if you do not provide voting instructions. Brokerage firms have the authority under the New York Stock Exchange rules to vote shares on certain matters (such as the ratification of auditors) when their customers do not provide voting instructions. However, on other matters (such as the election of directors and the amendment to the 2005 Omnibus Incentive Plan), when the brokerage firm has not received voting instructions from its customers, the brokerage firm cannot vote the shares on that matter and a "broker non-vote" occurs. Please note that the New York Stock Exchange rules have changed and an uncontested election of directors is no longer considered a routine matter. This means that brokers may not vote your shares on the election of directors if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted.

Q: What happens if I do not give my broker instructions?

A:: Absent your instructions, the broker will not be able to vote your shares for the election of directors and the amendment to the 2005 Omnibus Incentive Plan. Therefore, we urge you to instruct your broker in writing to vote shares held in street name.

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Q: Is cumulative voting permitted for the election of directors?

A:: In the election of directors, you may elect to cumulate your vote. Cumulative voting will allow you to allocate among the director nominees, as you see fit, the total number of votes equal to the number of director positions to be filled multiplied by the number of shares you hold. For example, if you own 100 shares of stock, and there are three directors to be elected at the annual meeting, you could allocate 300 "For" votes (three times 100) among as few or as many of the three nominees to be voted on at the annual meeting as you choose.

If you choose to cumulate your votes, you will need to submit a proxy card or a ballot and make an explicit statement of your intent to cumulate your votes, either by indicating in writing on the proxy card or by indicating in writing on your ballot when voting at the annual meeting. If you hold shares beneficially in street name and wish to cumulate votes, you should contact your broker, trustee or nominee.

Q: What should I do now?

A:: You should vote your shares by telephone, by the Internet or by returning your signed and dated proxy card in the enclosed envelope as soon as possible so that your shares will be represented at the annual meeting.

Q: Who conducts the proxy solicitation and how much will it cost?

A:: We are asking for your proxy for the annual meeting and will pay all the costs of asking for shareholder proxies. We have hired Georgeson Inc. to help us send out the proxy materials and ask for proxies. Georgeson Inc.'s fee for these services is anticipated to be $7,000, plus out-of-pocket expenses. We can ask for proxies through the mail or by telephone, fax, or in person. We can use our directors, officers and employees to ask for proxies. These people do not receive additional compensation for these services. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation material to the beneficial owners of our common stock.

Q: Can I revoke my proxy?

A:: Yes. You can change your vote in one of four ways at any time before your proxy is used. First, you can enter a new vote by telephone or Internet. Second, you can revoke your proxy by written notice. Third, you can send a later dated proxy changing your vote. Fourth, you can attend the meeting and vote in person.

Q: Who should I call with questions?

A:: If you have questions about the annual meeting, you should call Roxann R. Basham, Vice President—Governance and Corporate Secretary, at (605) 721-1700.

Q: When are the shareholder proposals for the annual meeting held in 2011 due?

A:: In order to be considered for inclusion in our proxy materials, you must submit proposals for next year's annual meeting in writing to our Corporate Secretary at our executive offices at 625 Ninth Street, P.O. Box 1400, Rapid City, South Dakota 57709, prior to December 14, 2010.

A shareholder who intends to submit a proposal for consideration, but not for inclusion in our proxy materials, must provide written notice to our Corporate Secretary in accordance with Article I, Section 9 of our Bylaws. In general, our Bylaws provide that the written notice must be delivered not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of shareholders. Our 2010 annual meeting is scheduled for May 25, 2010. Ninety days prior to the first anniversary of this date will be February 24, 2011, and 120 days prior to the first anniversary of this date will be January 25, 2011.

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Proposal 1

ELECTION OF DIRECTORS

In accordance with our Bylaws and Article VI of our Articles of Incorporation, members of our Board of Directors are elected to three classes of staggered terms consisting of three years each. At this annual meeting of our shareholders, three directors will be elected to Class I of the Board of Directors to hold office for a term of three years until our annual meeting of shareholders in 2013, and until their respective successors shall be duly elected and qualified in accordance with the Company's Bylaws.

All three nominees for directors are presently members of our Board of Directors. The proxy attorneys will vote your stock for the election of the three nominees for directors, unless otherwise instructed. If, at the time of the meeting, any of such nominees shall be unable to serve in the capacity for which they are nominated or for good cause will not serve, an event which the Board of Directors does not anticipate, it is the intention of the persons designated as proxy attorneys to vote, at their discretion, for such nominees as the Governance Committee may recommend and the Board of Directors may propose to replace those who are unable to serve. The affirmative vote of a plurality of the votes cast at the meeting is required for the election of the nominees to the Board of Directors.

The following information, including principal occupation or employment for the past five or more years and a summary of each individual's experience, qualifications, attributes or skills that have led to the conclusion that each individual should serve as a director in light of our current business and structure, is furnished with respect to each nominee and each of the continuing members of the Board of Directors.

The Board of Directors recommends a vote FOR the election of the following nominees:

Class I—Nominees for Election Until 2013 Annual Meeting

Jack W. Eugster, 64, has been a director of the Company since 2004.

Retired. Former Chairman, Chief Executive Officer and President of Musicland Stores, Inc., a retail music and home video company, from 1980 until his retirement in 2001. Currently Director of Donaldson Co., Inc. since 1993, Graco, Inc. since 2004 and Life Time Fitness, Inc. since 2009. Previously Director of Golf Galaxy, Inc. from 2000 to 2007 and Director of Shopko Stores, Inc. from 1991 to 2005, serving as Non-Executive Chairman from 2001 to 2005.

Mr. Eugster has been a director of several other public company and non-profit boards in addition to those identified above. He has experience as chairman and chief executive officer of a high-growth public company, and other extensive experience on public company boards, including service on the board of a regulated utility. His past experience lends special expertise relating to acquisitions, divestitures and finance. Mr. Eugster provides in-depth business, financial and strategic acumen that strengthens our Board's collective qualifications, skills and experience and enables him to be an effective Compensation Committee Chairman.

Gary L. Pechota, 60, has been a director of the Company since 2007.

President and Chief Executive Officer of DT-TRAK Consulting, Inc., a medical billing services company, since 2007. Retired from 2005 to 2007. Former Chief of Staff of the National Indian Gaming Commission from 2003 to 2005. Previously held executive positions in the cement industry, including serving as the chief executive officer of a publicly-traded company, and positions in finance and accounting. Currently Director of Insteel Industries, Inc. since 1998 and Texas Industries, Inc. since 2009.

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Mr. Pechota's background in finance and accounting provides the necessary expertise to serve on our Audit Committee. An enrolled member of the Rosebud Sioux Tribe, supports our Company's interest in promoting diverse perspectives, as well as expertise relating to our business interests on tribal lands. In addition, his experience as an executive leader at several companies, his public company board experience, and his knowledge of mining and extracting minerals and the associated environmental issues, strengthens our Board's collective qualifications, skills and experiences.

Thomas J. Zeller, 62, has been a director of the Company since 1997.

President, RESPEC, a technical consulting and services firm with expertise in engineering, information technologies, and water and natural resources specializing in emerging environmental protection protocols, since 1995.

Mr. Zeller is a Past Chairman of our Audit Committee. His industry experience at RESPEC relates to many of our Company's activities concerning technology, engineering and environmental matters. This expertise, in addition to his experience as an executive leader, provides valuable knowledge to our Board and strengthens its collective qualifications, skills and experiences relating to technical aspects of our Company operations and contract relationships.

Class II—Directors with Terms Expiring at 2011 Annual Meeting

David R. Emery, 47, has been a director of the Company since 2004.

Chairman, President and Chief Executive Officer of Black Hills Corporation, since 2005. Formerly held various positions with Black Hills Corporation, including President and Chief Executive Officer, President and Chief Operating Officer—Retail Business Segment and Vice President—Fuel Resources. Mr. Emery has 20 years of experience with Black Hills Corporation. Prior to joining the Company, he served as a petroleum engineer for a large independent oil and gas company.

Mr. Emery is the only officer of the Company currently on our Board. With over 20 years of experience at our Company, he has a deep knowledge and understanding of each of our business units and related industries. An enrolled member of the Cheyenne River Sioux Tribe, supports our Company's interest in promoting diverse perspectives. He has demonstrated leadership abilities serving as our Chairman, President and Chief Executive Officer since 2005. His strategic capabilities, knowledge and industry expertise provide critical leadership to the Board.

Kay S. Jorgensen, 59, has been a director of the Company since 1992.

Owner and Chief Executive Officer of KSJ Enterprises, LLC, providing marketing and development services since 2006. Former owner and Chief Executive Officer, Jorgensen-Thompson Creative Broadcast Services, Inc., a radio broadcast services company, from 1997 to 2005.

Ms. Jorgensen previously served in the South Dakota State Legislature, as well as on various state and local boards and commissions. She served on the board of Wellmark, Inc. from 2002 to 2009, and on the board of Wellmark Blue Cross Blue Shield of South Dakota since 1999. Ms Jorgensen's experience in communications, marketing, regional politics, and healthcare contributes valuable insight into the political and regulatory concerns of the Company, and strengthens the Board's collective qualifications, skills and experiences, particularly relating to employee relations and benefit plans. Ms. Jorgensen has served as our Presiding Director since 2006.

Warren L. Robinson, 60, has been a director of the Company since 2007.

Retired. Former Executive Vice President, Treasurer and Chief Financial Officer of MDU Resources Group, Inc., a diversified energy and resources company, from 1992 to January 2006. Director of TMI Systems Design Corporation, a private manufacturer of laminate casework since 2006.

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Mr. Robinson has 29 years of experience in the utility industry, 18 of those years with MDU Resources Group. His industry experience at MDU included regulated utility finance and operations, and oil and gas exploration and production, two critical business segments for our Company. Mr. Robinson's service as a chief executive for accounting and finance activities relating to our industries provides the necessary financial reporting expertise to serve as Chairman of our Audit Committee. His experience as an executive financial leader at a publicly traded energy company provides our Board with current knowledge and understanding of the regulated business model, and unique challenges of the geographic and regulatory environment in which we operate.

John B. Vering, 60, has been a director of the Company since 2005.

Managing Director of Lone Mountain Investments, Inc., agricultural and oil and gas investments, since 2002. Partner in Vering Feed Yards LLC, a privately owned agricultural company, since March 2010. Previously held several executive positions in the oil and gas industry. Director of Broad Oak Energy, Inc., a privately held oil and gas exploration and production company, since 2006.

Mr. Vering has over 30 years of experience, including executive leadership, in the oil and gas industry. He served for 23 years with Union Pacific Resources Company in several positions, including Vice President of Canadian Operations. Mr. Vering is our only non-employee director with direct operating experience in oil and gas transportation, marketing, exploration and production, important business segments for our Company. His knowledge and understanding of the trans-national oil and gas business, and his executive leadership experience strengthens our Board's collective qualifications, skills and experiences.

Class III—Directors with Terms Expiring at 2012 Annual Meeting

David C. Ebertz, 64, has been a director of the Company since 1998.

President, Dave Ebertz Risk Management Consulting, a firm specializing in insurance and risk management services for schools and public entities, since 2000. Previous experience in the insurance industry.

Mr. Ebertz resides in the Gillette, Wyoming area, the location of a substantial aggregation of our power generation assets and our coal mine. His service on various local and community boards provides insight into the political, business and regulatory concerns of Wyoming and the Northern Powder River Basin in particular. Mr. Ebertz' experience in insurance and risk management strengthens our Board's collective qualifications, skills and experiences relating to oversight of enterprise risk.

John R. Howard, 69, has been a director of the Company since 1977.

Retired. Former President, Industrial Products, Inc., an industrial parts distributor, providing equipment and supplies to the mining and manufacturing industries, from 1992 to 2003 and Special Projects Manager for Linweld, Inc. in Lincoln, Nebraska.

Mr. Howard is our longest serving board member, and currently is serving his last term as a director pursuant to the mandatory retirement age established in our Bylaws. His extensive experience with our Company included oversight of different management teams throughout a period of substantial growth and change in our industries. Mr. Howard's knowledge of our Company and industries strengthens our Board's collective qualifications, skills and experiences, particularly relating to corporate governance and strategic planning.

Stephen D. Newlin, 57, has been a director of the Company since 2004.

Chairman, President and Chief Executive Officer of PolyOne Corporation, a global provider of specialized polymer materials, services and solutions, since 2006. Former President, Industrial Sector, Ecolab, Inc., a global leader of services, specialty chemicals and equipment serving industrial and

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institutional clients, from 2003 to 2006. Served as President and a Director of Nalco Chemical Company, a manufacturer of specialty chemicals, services and systems, from 1998 to 2001 and Chief Operating Officer and Chairman from 2000 to 2001. Currently Director of Valspar Corporation since 2007.

Mr. Newlin has been a director of several other public company and non-profit boards in addition to those identified above. He has industry experience in chemicals, water treatment, power generation, mining, energy, petro-chemical and polymer compounds. Mr. Newlin's experience as an active chairman and chief executive officer of a public company and experience on other public company boards, provides an in-depth business, financial and strategic acumen that strengthens our Board's collective qualifications, skills and experience and enables him to be an effective Governance Committee Chairman.

CORPORATE GOVERNANCE

Corporate Governance Guidelines. Our Board of Directors has adopted corporate governance guidelines titled "Corporate Governance Guidelines of the Board of Directors" which set the tone for operation of our Board and assist the Board in fulfilling its obligations to shareholders and other constituencies. The guidelines lay the foundation for the Board's responsibilities, operations, leadership, organization and committee matters. The Governance Committee reviews the guidelines annually, and the guidelines may be amended at any time, upon recommendation by the Governance Committee and approval of the Board.

Board Independence. In accordance with New York Stock Exchange rules, the Board of Directors through its Governance Committee affirmatively determines the independence of each director and director nominee in accordance with guidelines it has adopted, which include all elements of independence set forth in the New York Stock Exchange listing standards. These guidelines are contained in our Policy for Director Independence, which can be found in the "Governance" section of our website (www.blackhillscorp.com/corpgov.htm). Based on these standards, the Governance Committee determined that each of the following non-employee directors is independent and has no relationship with the Company, except as a director and shareholder of the Company:


David C. Ebertz	Jack W. Eugster	John R. Howard
Kay S. Jorgensen	Stephen D. Newlin	Gary L. Pechota
Warren L. Robinson	John B. Vering	Thomas J. Zeller

In addition, based on such standards, the Governance Committee determined that Mr. Emery is not independent because he is our Chairman, President and Chief Executive Officer (the "CEO").

Board Leadership Structure. As noted above, our Board is currently comprised of nine independent directors and one employee director. Mr. Emery has served as our Chairman of the Board and CEO since 2005, and has been a member of our Board since 2004. Mr. Emery provides strategic, operational, and technical expertise and context for the matters considered by our Board. After considering alternative board leadership structures, our Board chose to retain the ability to balance an independent Board structure with the flexibility to appoint as Chairman a CEO-Director with knowledge of and experience in the operations of our Company. At this time, our Board believes that having a single person serve as Chairman and CEO provides unified and responsible leadership for our Company.

Our Board has been, and continues to value a high degree of Board independence. As a result, our corporate governance structure and practices promote a strong, independent Board, and include several independent oversight mechanisms, including only independent directors serving on our Audit, Compensation and Governance Committees and appointing a Presiding Director. Our Board believes these practices ensure that experienced and independent directors will continue to effectively oversee

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management and critical issues related to financial and operating plans, long-range strategic issues, enterprise risk and corporate integrity. All of our Board Committees may seek legal, financial or other expert advice from a source independent of management.

Our Board annually appoints a Presiding Director. Kay S. Jorgensen has served as our Presiding Director since May 2006. The responsibilities of Presiding Director, as provided in the Board's Governance Guidelines, are to chair executive sessions of the non-management directors and communicate the Board's annual evaluation of the CEO. The Presiding Director, together with the non-management directors, establishes the agenda for executive sessions, which are held at each regular Board meeting. The Presiding Director serves as a liaison between the non-management members of the Board and the CEO, and discusses, to the extent appropriate, matters raised by the non-management directors in executive session. The Presiding Director also presides over regular meetings of the Board in the absence of the Chairman. This leadership structure provides consistent and effective oversight of our management and our Company.

Risk Oversight. Our Board oversees an enterprise approach to risk management that supports the operational and strategic objectives of the Company. The Corporate Governance Guidelines of our Board of Directors provide that the Board will review major risks facing our Company and the options for risk mitigation presented by management. Our Board delegates oversight of certain risk considerations to its committees within each of their respective areas of responsibility; however, the full Board monitors risk relating to strategic planning and execution, as well as executive succession. Financial risk oversight falls within the purview of our Audit Committee. Our Compensation Committee oversees compensation and benefit plan risks. Each committee reports to the full Board.

Our Board reviews any material changes in the Company's key enterprise risk management issues with management at each quarterly Board meeting, following a presentation of quarterly financial results. In so doing, our Board seeks to ensure appropriate risk mitigation strategies are implemented by management on an ongoing basis. Operational and strategic plan presentations by management to our Board include consideration of the challenges and risks to our business. Our Board and management actively engage in discussions of these topics and utilize outside consultants as needed. Our Board oversees development of the Company's strategic plan risks as part of its annual strategic planning meeting. In addition, our Board receives environmental, safety, legal and compliance reports at least annually.

Our Audit Committee oversees management's strategy and performance relative to the significant financial risks of the Company. In consultation with management, the independent auditors and the internal auditors, the Audit Committee discusses the Company's risk assessment, risk management and credit policies, and reviews significant financial risk exposures along with steps management has taken to monitor, mitigate and report such exposures. At least twice a year, our Chief Risk Officer provides a Risk and Credit Report to the Audit Committee. The Company adopted Risk Policies and Procedures for our energy marketing operations that address governance, control infrastructure, authorized commodities and trading instruments, prohibited activities, employee conduct and other concerns. The Company also adopted a Credit Policy that establishes guidelines, controls and limits to manage and mitigate credit risk within risk tolerances established by the Committee. The Audit Committee reviews these policies as the Internal Audit Department regularly reports audit findings concerning compliance with these policies to them.

Our Compensation Committee adopted an executive compensation philosophy that provides the foundation for our executive compensation program. The executive compensation philosophy states that the executive pay program should be market-based and maintain an appropriate and competitive balance between fixed and variable pay elements, short- and long-term compensation and cash and stock-based compensation. The Committee establishes company-specific performance goals and potential incentive payouts for our executive officers to motivate and reward performance, consistent

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with the long-term success of the Company. The target compensation for our senior officers is heavily weighted in favor of long-term incentives, aligning performance incentives with long-term results for our shareholders. Our Compensation Committee also sets minimum performance thresholds and maximum payouts in the incentive programs, and maintains the discretion to reduce awards if excessive risk is taken. Stock ownership guidelines established for all our officers require our executives to hold 100 percent of all shares awarded to them until the ownership guidelines are achieved. Our Compensation Committee also instituted "claw-back" provisions in our incentive plans, which may require an executive to return incentives received, if the Committee determines, in its discretion, that the executive engaged in specified misconduct or wrongdoing.

Our management is responsible for day-to-day risk management. Reporting to the senior management team, our Treasury, Risk Management, Compliance and Internal Audit groups provide the primary monitoring and testing services in accordance with company-wide policies and procedures, and oversee the day-to-day risk management strategy for our ongoing businesses. Their oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, and compliance and reporting levels.

We believe this division of risk management responsibilities described above is an effective approach for addressing the risks facing our Company.

Director Nominees. The Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Committee regularly assesses the appropriate size of the Board, and whether any vacancies on the Board are expected due to retirement or otherwise. In the event vacancies are anticipated, or otherwise arise, the Committee considers various potential candidates for director. Board candidates are considered based upon various criteria, including diverse business, administrative and professional skills or experiences; an understanding of relevant industries, technologies and markets; financial literacy; independence status; the ability and willingness to contribute time and special competence to Board activities; personal integrity and independent judgment; and a commitment to enhancing shareholder value. The Committee considers these and other factors as it deems appropriate, given the needs of the Board and the Company. Our goal is a balanced and diverse Board, with members whose skills, background and experience are complementary and, together, cover the spectrum of areas that impact our business. The Committee considers candidates for Board membership suggested by a variety of sources, including current or past Board members, members of management and shareholders. There are no differences in the manner by which the Committee evaluates director candidates recommended by shareholders from those recommended by other sources. The Committee also retains a third-party executive search firm at times to identify candidates.

Shareholders who intend to nominate persons for election to the Board of Directors must provide timely written notice of the nomination in accordance with Article I, Section 9 of our Bylaws. Generally, our Corporate Secretary must receive the written notice at our executive offices at P.O. Box 1400, 625 Ninth Street, Rapid City, South Dakota, 57709, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. The notice must set forth at a minimum the information set forth in Article I, Section 9 of our Bylaws, including the shareholder's identity and status, contingent ownership interests, description of any agreement made with others acting in concert with respect to the nomination, specific information about the nominee and supply certain representations by the nominee to the Company.

Communications with the Board. Shareholders and others interested in communicating directly with the Presiding Director, with the non-management directors as a group, or the Board of Directors may do so in writing to the Presiding Director, Black Hills Corporation, P.O. Box 1400, 625 Ninth Street, Rapid City, South Dakota, 57709.

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Corporate Governance Documents. The charters of the Audit, Compensation and Governance committees, as well as the Board's Corporate Governance Guidelines, Policy for Director Independence, Code of Business Conduct and the Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Corporate Controller, and certain other persons performing similar functions can be found in the "Governance" section of our website (www.blackhillscorp.com/corpgov.htm). Copies may also be obtained upon request from our Corporate Secretary. Please note that none of the information contained on our website is incorporated by reference in this proxy statement.

Certain Relationships and Related Party Transactions. We recognize related party transactions can present potential or actual conflicts of interest and create the appearance that decisions are based on considerations other than the best interests of the Company and our shareholders. Accordingly, as a general matter, it is our preference to avoid related party transactions. Nevertheless, we recognize that there are situations where related party transactions may be in, or may not be inconsistent with, the best interests of the Company and our shareholders, including but not limited to situations where we may obtain products or services of a nature, quantity or quality, or on other terms, that are not readily available from alternative sources or when we provide products or services to related parties on an arm's length basis on terms comparable to those provided to unrelated third parties or on terms comparable to those provided to employees generally. Therefore, our Board of Directors has adopted a policy for the review of related party transactions. This policy requires directors and officers to promptly report to our Vice President—Governance all proposed or existing transactions in which the Company and they, or persons related to them, are parties or participants. Our Vice President—Governance presents to our Governance Committee those transactions that may require disclosure pursuant to Item 404 of Regulation S-K (typically, those transactions that exceed $120,000). Our Governance Committee reviews the material facts presented and either approves or disapproves entry into the transaction. In reviewing the transaction, the Governance Committee considers the following factors, among other factors it deems appropriate: (i) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances; (ii) the extent of the related party's interest in the transaction; and (iii) the impact on a director's independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer.

We offer a relocation program through a third-party relocation company for employees who relocate at the Company's request and, in appropriate circumstances, to new employees who relocate in connection with their employment by the Company. We believe this program offers a valuable incentive to attract and retain key employees. Our program covers the cost of most of the reasonable expenses associated with relocation, including, but not limited to, disposition of current residence, home finding, temporary living and transportation and storage of household goods. For our executives, the relocation program includes a buyout provision for the pre-move residence. The relocation company manages the home sale process, including purchasing the home at either an appraised market value or at the value offered by a bona fide third-party purchaser and reselling the home. The Company is responsible for any costs associated with the subsequent maintenance and sale of the home, including the payment of a service fee to the relocation company. In November 2008, in connection with the hiring of Anthony Cleberg as our Executive Vice President and Chief Financial Officer ("CFO"), the relocation company purchased Mr. Cleberg's home for $627,500. The relocation company sold Mr. Cleberg's home in 2009 for $538,450. Robert A. Myers, our Senior Vice President of Human Resources since January 2009, has until December 31, 2011 to exercise the home buyout provisions of his relocation package.

Section 16(a) Beneficial Ownership Reporting Compliance. Based solely upon a review of our records and copies of reports on Form 3, 4 and 5 furnished to us, we believe that during and with respect to 2009, all persons subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended, filed the required reports on a timely basis.

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MEETINGS AND COMMITTEES OF THE BOARD

The Board of Directors

Our directors review and approve our strategic plan and oversee management of the Company. Our Board of Directors held eight meetings during 2009. Directors' attendance at all Board and Committee meetings averaged 97 percent. During 2009, every director attended at least 75 percent of the combined total of Board meetings and Committee meetings on which the director served. Each regularly scheduled meeting of the Board includes an executive session of only non-management directors. We encourage our directors to attend the annual shareholders' meeting. All 10 directors were in attendance at the 2009 annual meeting of shareholders.

Committees of the Board

Our Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities. The committees are currently the Audit Committee, the Compensation Committee and the Governance Committee. In accordance with the New York Stock Exchange listing standards and our Corporate Governance Guidelines, the Audit, Compensation and Governance Committees are comprised solely of non-employee, independent directors. Each committee operates under a charter which is available on our website at www.blackhillscorp.com/corpgov.htm and is also available in print to any shareholder who requests it. In addition, our Board creates special committees from time to time for specific purposes.

Members of the Committees are designated by our directors upon recommendation of the Governance Committee. The table below shows current membership for each of the Board committees.

Audit Committee	Compensation Committee	Governance Committee

John R. Howard	David C. Ebertz	David C. Ebertz
Gary L. Pechota	Jack W. Eugster*	Jack W. Eugster
Warren L. Robinson*	Kay S. Jorgensen	Kay S. Jorgensen
John B. Vering	Stephen D. Newlin	Stephen D. Newlin*
	Thomas J. Zeller	John B. Vering

*: Committee Chairperson

Audit Committee. The Audit Committee held seven meetings in 2009. The Audit Committee's responsibilities, discussed in detail in its charter include, among other duties, the responsibility to:

•: assist the Board in fulfilling its responsibility for oversight of the quality and integrity of our accounting, auditing and financial reporting practices;
•: monitor the integrity of our financial reporting process, systems of internal controls and disclosure controls regarding finance, accounting and legal compliance;
•: review areas of potential significant financial risk to the Company;
•: review consolidated financial statements and disclosures;
•: appoint an independent registered public accounting firm for ratification by our shareholders;
•: monitor the independence and performance of our independent registered public accountants and internal auditing department;
•: pre-approve all audit and non-audit services provided by our independent registered public accountants;

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•: review the scope and results of the annual audit including reports and recommendations of our independent registered public accountants;
•: review the internal audit plan, results of internal audit work and monitor compliance with our Code of Conduct; and
•: periodically meet with our internal audit group, management, and independent registered public accounting firm.

In accordance with the rules of the NYSE, all of the members of the Audit Committee are financially literate. In addition, the Board determined that Messrs. Howard, Pechota, Robinson and Vering each have the requisite attributes of an "audit committee financial expert" as provided in regulations promulgated by the Securities and Exchange Commission, and that such attributes were acquired through relevant education and/or experience.

Compensation Committee. The Compensation Committee held five meetings in 2009. The Compensation Committee's responsibilities, discussed in detail in its charter include, among other duties, the responsibility to:

•: discharge the Board of Director's responsibilities related to executive and director compensation philosophy, policies and programs;
•: perform functions required by the Board of Directors in the administration of all federal and state statutes relating to employment and compensation;
•: consider and recommend for approval by the Board all executive compensation programs including executive benefit programs and stock ownership plans; and
•: promote an executive compensation program that supports the overall objective of enhancing shareholder value.

The Compensation Committee has authority under its charter to retain and terminate compensation consultants, outside counsel and other advisors as the Committee may deem appropriate in its sole discretion. The Committee has sole authority to approve related fees and retention terms. The Committee may delegate any of its responsibilities to subcommittees as the Committee may deem appropriate in its sole discretion. The Committee engaged Towers Perrin (now known as Towers Watson following the merger of Towers Perrin and Watson Wyatt), an independent consulting firm, to conduct an annual review of its 2009 total compensation program for executive officers and non-employee directors and to assist in the redesign of our defined benefit pension plan to a defined contribution plan for all eligible employees. In addition, Towers Perrin was engaged by management to provide certain other services, including the consolidation of salary grades and incentive integration for non-executive level positions. Management discussed with the Committee the other work to be performed by Towers Perrin. The following table sets forth the aggregate fees for services provided to us in 2009 by Towers Perrin.


Executive and Director Compensation				$	118,400
Other Services—
	Retirement Plan Changes	$	472,300
	Consolidation of Non-Executive Salary Grades		184,000
	Incentive Integration for Non-Executive Level Positions		102,600
	Other Miscellaneous Services		39,500

					798,400

Total Fees				$	916,800

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The Committee annually evaluates the CEO's performance in light of established goals and objectives, with input from the other independent directors. Based upon the Committee's evaluation and recommendation, the independent directors of the Board set the CEO's annual compensation, including salary, bonus, incentive and equity compensation and perquisites.

The CEO annually reviews the performance of each of our senior officers. He presents a summary of his evaluations of all of our senior officers to the Committee and thoroughly reviews the Chief Operating Officer—Utilities (the "COO-Utilities,") the Chief Operating Officer—Non-regulated Energy Group (the "COO-Non-regulated Energy") and the CFO evaluations with the Committee. Based upon the Committee's review and recommendation, the Board of Directors sets the annual compensation of the COO-Utilities, COO-Non-regulated Energy and CFO, including salary, bonus, incentive and equity compensation and perquisites.

The CEO also provides oversight of management's evaluations of our other officers. Senior officers assess performance of all officers reporting to them. Based upon these performance reviews, market analysis conducted by the compensation consultant and discussions with our Chief Human Resources Officer and Human Resources department staff, the CEO recommends the compensation of the officers to the Committee. The Committee may exercise its discretion in modifying any of the recommended compensation and award levels in its review and approval process.

More information describing the Compensation Committee's processes and procedures for considering and determining executive compensation, including the role of our CEO and consultants in determining or recommending the amount or form of executive compensation, is included in the Compensation Discussion and Analysis.

In setting non-employee director compensation, the Compensation Committee recommends the form and amount of compensation to the Board of Directors and the Board of Directors makes the final determination. In considering and recommending the compensation of non-employee directors, the Compensation Committee considers such factors as it deems appropriate, including historical compensation information, level of compensation necessary to attract and retain non-employee directors meeting our desired qualifications and market data. In the review of director compensation for 2009, the Compensation Committee retained Towers Perrin to provide market information on non-employee director compensation, including annual board and committee retainers, board and committee meeting fees, committee chairperson fees, number of Board meetings and stock based compensation.

Compensation Committee Interlocks and Insider Participation. The Compensation Committee is comprised entirely of independent directors.

Governance Committee. The Governance Committee held three meetings in 2009. The Governance Committee's responsibilities, discussed in detail in its charter include, among other duties, the responsibility to:

In addition, our Presiding Director and Committee Chairpersons received the following additional compensation:

Members of our Board of Directors are required to beneficially own 500 shares of common stock when they are initially elected a director and to apply at least 50 percent of his or her annual cash retainer toward the purchase of additional shares until the director has accumulated at least 7,500 shares of common stock. All of our directors have currently met their stock ownership guidelines.

Director Total Compensation for 2009 and Common Stock Equivalents Outstanding as of December 31, 2009(1)


Name(2)	Fees Earned or Paid in Cash		Stock Awards(3)		Total	Number of Common Stock Equivalents Outstanding at December 31, 2009(4)
David C. Ebertz	$	62,250		$	50,000	$	112,250	9,807
Jack W. Eugster	$	69,500		$	50,000	$	119,500	7,079
John R. Howard	$	65,750		$	50,000	$	115,750	16,299
Kay S. Jorgensen	$	76,000		$	50,000	$	126,000	11,795
Stephen D. Newlin	$	66,000		$	50,000	$	116,000	7,289
Gary L. Pechota	$	59,750		$	50,000	$	109,750	4,564
Warren L. Robinson	$	73,500		$	50,000	$	123,500	4,731
John B. Vering	$	69,750		$	50,000	$	119,750	6,470
Thomas J. Zeller	$	66,000		$	50,000	$	116,000	10,199

The following tables set forth the beneficial ownership of our common stock as of March 31, 2010 for each director, each executive officer named in the Summary Compensation Table, all of our directors and executive officers as a group, and each person or entity known by us to beneficially own more than five percent of our outstanding shares of common stock. Beneficial ownership includes shares a director or executive officer has the power to vote or transfer, and stock options that are exercisable currently or within 60 days of March 31, 2010.

Except as otherwise indicated by footnote below, we believe that each individual or entity named has sole investment and voting power with respect to the shares of common stock indicated as beneficially owned by that individual or entity.

This Compensation Discussion and Analysis seeks to provide shareholders with a better understanding of our compensation philosophy, core principles and decision-making process. It explains the compensation-related actions taken with respect to 2009 compensation for our executive officers included in the Summary Compensation Table (our "Named Executive Officers"). Our Named Executive Officers, based on 2009 positions and compensation levels, are:

The Compensation Committee of the Board of Directors (the "Committee," for purposes of this Compensation Discussion and Analysis) is composed entirely of independent directors and is responsible for approving and overseeing our executive compensation philosophy, policies and programs. The Committee has a written executive compensation philosophy which details the objectives of our executive compensation program. The Committee begins its executive compensation review process each year by discussing and updating, if appropriate, its compensation philosophy.

Compensation Program Objectives. Our long-term success depends on our operational excellence, providing reliable products and services to our customers and investing wisely for present and future shareholder return. To consistently achieve these outcomes, in turn, depends on our ability to attract, motivate, and retain highly talented professionals. For these reasons, the Committee seeks to promote an executive compensation program that supports the overall objective of enhancing shareholder value and is based on principles designed to:

Overall, our goal is to provide total direct compensation (the sum of base salary, annual bonus and long-term incentives) at the median of the appropriate market when our operating results approximate average performance in relation to our peers. An individual executive's compensation may vary from the median based on such factors as individual skills, experience, contribution and performance, historic compensation, internal equity, retention concerns and other factors relevant to the individual executive. Our executives' actual direct compensation should vary significantly based on these factors and based on how actual performance varies from average or target results.

Our executive compensation is designed to maintain an appropriate and competitive balance between fixed and variable pay components, short- and long-term compensation, and cash as well as stock-based compensation. We believe that the performance basis for determining compensation should differ by each reward component—base salary, annual bonus and long-term incentives.

Incentive measures (short- and long-term) should emphasize objective, quantitative operating measures. The Committee retains the discretion to positively or negatively adjust incentive payments based on their subjective evaluation of performance, including the materiality of certain extraordinary events.

Based upon this compensation philosophy, the Committee structures our executive compensation to motivate our officers to achieve specified business goals and to reward them for achieving such goals. The key steps the Committee follows in setting executive compensation are to:

The market for our senior executive talent is national in scope and is not focused on any one geographic location, area or region of the country. As such, our executive compensation should be competitive with the national market for senior executives. It should also reflect the executive's responsibilities and duties and align with the pay of executives at companies or business units of comparable size and complexity. The Committee gathers market information for our corporate executives from the utility and energy industry, recognizing the significant impact of our regulated utility operations on overall company strategy and performance.

The Committee selects and retains the services of an independent consulting firm to:

The Committee used the services of Towers Perrin for evaluating 2009 compensation. Towers Perrin gathered data from nationally recognized survey providers, as well as specific peer companies through public filings, which included:

The 25 peer companies ranged in revenue size from approximately $850 million to nearly $4 billion with the median at $1.5 billion. The survey data were adjusted for our size using a statistical technique known as single regression analysis. The peer group that the Committee chose for the January 1, 2009 to December 31, 2011 Performance Period of our Performance Share Program, disclosed under

Long-Term Incentive—Performance Shares, is included in the 25 peer companies used for this compensation analysis. The 25 peer companies include:

The salary surveys are one of several inputs into the Committee's decisions regarding appropriate compensation levels. Other factors include company performance, individual performance and experience, the level and nature of the executive's responsibilities, and discussions with the CEO, Chief Human Resources Officer and Human Resources department staff.

The components of our executive compensation program consist of a base salary, an annual incentive plan, and a long-term incentive award program. In addition, we provide income for our officers' retirement and other benefits.

An important component of the total compensation is derived from incentive compensation. Incentive compensation is intended to motivate and encourage our executives to drive performance and achieve superior results for our shareholders. The Committee reviews information provided by the compensation consultant to determine the appropriate level and mix of incentive compensation. Actual income in the form of incentive compensation is realized by the executive as a result of achieving Company goals and overall stock performance. The Committee believes that a significant portion of total target compensation should be comprised of incentive compensation. In order to reward long-term growth as well as short-term results, the Committee establishes incentive targets that emphasize long-term compensation at a greater level than short-term compensation.

The Committee annually reviews tally sheets on all components of each executive officer's compensation, including salary, bonus, equity and other long-term incentive compensation values granted, the actual value realized from stock option exercises and restricted stock and restricted stock units vested, the value of all perquisites and other personal benefits, and the projected annual benefit under our Pension and Pension Equalization Plans. The Committee uses the tally sheets as a resource that summarizes all elements of actual and potential future compensation of our officers, facilitating the Committee's analysis of both the individual elements of compensation as well as the total aggregate amount of actual and projected compensation and internal pay relationships between the officer positions. Upon completing its review of the tally sheets, the Committee concluded that both the annual compensation and the compensation mix were consistent with the Committee's expectations.


	Base Salary		Annual Incentive	Long-Term Incentive
David R. Emery, CEO		35	%	25	%	40	%
Anthony S. Cleberg, CFO		42	%	19	%	39	%
Thomas M. Ohlmacher, COO—Non-regulated Energy		39	%	19	%	42	%
Linden R. Evans, COO—Utilities		35	%	17	%	48	%*
Robert A. Myers, Sr. Vice President—Human Resources		49	%	20	%	31	%

The total target compensation in 2009 for the named executive officers was at a combined average of 95 percent of the median of the market.

Base Salary. Base salaries for all officers are reviewed annually. We also adjust the base salary of our executives at the time of a promotion or change in job responsibility, as appropriate. The base salary component is compared to the median of the market data provided by the compensation consultant. The actual base salary of each officer is determined by the executive's performance, the experience level of the officer, the executive's current position in a market-based salary range, and internal pay relationships. Evaluation of base salary adjustments for 2009 occurred in December 2008 and in January 2009. As a result of the economic downturn at the time and the uncertainty in when market conditions would improve, the Committee did not increase the base salaries of our officers in 2009.

Annual Incentive. Our annual Short-Term Incentive Plan is designed to recognize and reward the contributions of individual executives as well as the contributions that group performance makes to overall corporate success. The program's goal for our corporate officers is based on earnings per share targets in order to closely align interests with shareholders and to foster teamwork and cooperation within the officer team. The annual incentive, after applicable tax withholding, is distributed to the officer in the form of 50 percent stock and 50 percent cash, unless the officer has met his or her stock ownership guideline, in which case he or she may elect to receive the total award in cash, after deductions and applicable tax withholding. Target award levels are established as a percentage of each participant's base salary. A target award is comparable to the average annual incentive payout award of the comparator group at the 50^th percentile level. The actual annual payout will vary, based on performance, between zero and 200 percent of the individual executive's short-term incentive target award level.

The Committee approves the target level for each officer in January, which is applicable to performance in the plan year. Target levels are derived in part from competitive data provided by the compensation consultant and in part by the Committee's judgment regarding internal equity, retention and an individual executive's expected contribution to the achievement of the Company's strategic objectives. The target levels for the positions held by our Named Executive Officers in 2009 are shown below.

The threshold, target and maximum payout levels for our Named Executive Officers under the 2009 Short-Term Incentive Plan are shown in the Grants of Plan Based Awards in 2009 table under the heading "Estimated Possible Payouts Under Non-Equity Incentive Plan Awards."

Early in the first quarter, the Committee meets to establish the goals for the current plan year, to evaluate actual performance in relation to the prior year's targets and to approve the actual payment of awards related to the prior plan year. The Committee reserves the discretion to adjust any award, and will review and take into account individual performance, level of contribution, and the accomplishment of specific project goals that were initiated throughout the plan year.

Consistent with 2008, the Committee selected a composite earnings per share goal for the 2009 corporate goal that is weighted 80 percent on non-energy marketing earnings per share and 20 percent on energy marketing earnings per share. The Committee chose this weighted methodology because it addresses the volatility of our energy marketing segment's earnings and the potential for this volatility to disproportionately influence bonus outcomes for participants in the annual Short-Term Incentive Plan, both positively and negatively. It also continues to meet the objectives of the plan including:

The Committee approved the goals for the 2009 plan year for the corporate officers as follows:

The target earnings per share goal for 2009 was equal to budgeted earnings per share. On January 27, 2010, the Committee approved a payout of 56 percent of target under the 2009 Short-Term Incentive Plan comprised of a 56 percent payout from non-energy marketing earnings and no payout from energy marketing earnings. The actual consolidated non-energy marketing earnings for 2009 were $2.15 per share. After adjusting the earnings for the non-cash, mark-to-market gain on the forward interest rate swaps, the gain on the sale of a 23.5 percent interest in Wygen I, and the impact of the non-cash ceiling test write-down of oil and gas assets, adjusted non-energy marketing earnings were $1.47 per share. This resulted in a payout of 69.9 percent of target for the non-energy marketing earnings goal. Energy marketing had a net loss of approximately $0.04 per share in 2009, resulting in no payout for the energy marketing earnings goal. The 2009 award, after applicable tax withholding, was distributed in the form of 50 percent stock and 50 percent cash for Messrs. Cleberg and Myers. Messrs. Emery, Ohlmacher and Evans had met their stock ownership guidelines and elected to receive

their 2009 award in the form of 100 percent cash. Awards for corporate officers under the annual Short-Term Incentive Plan have varied significantly over the last five years as shown below.

Actual awards made to each of our Named Executive Officers under the annual Short-Term Incentive Plans for 2009 are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.

Long-Term Incentive. Long-term incentive compensation is comprised of grants made by the Committee under our 2005 Omnibus Incentive Plan ("Omnibus Incentive Plan") which was previously approved by our shareholders. Long-term incentive compensation is intended to:

The Committee oversees the administration of the Omnibus Incentive Plan with full power and authority to determine when and to whom awards will be granted, along with the type, amount and other terms and conditions of each award. The long-term incentive compensation component is currently composed of restricted stock (or restricted stock units) and performance shares. The Committee chose these components because they believe that executive compensation tied to stock price appreciation and total shareholder return is an effective way to align the interests of management with those of our shareholders. The Committee selected total shareholder return as the performance goal for the performance shares because it believes executive pay under a long-term, capital accumulation program such as this should mirror our performance in shareholder return as compared to our peer group of companies. None of our Named Executive Officers have received stock option grants since 2003.

The value of long-term incentives awarded is based primarily on competitive market-based data presented by the compensation consultant to the Committee, the impact each position has on our shareholder return and internal pay relationships. The Committee approved the target long-term incentive compensation level for each officer in December 2008, which was awarded in January 2009.

Long-term incentive compensation approved for the 2009 plan year for our Named Executive Officers is shown in the table below.


	Long-Term Incentive Value		Percentage of Base Salary
David R. Emery, CEO	$	630,000		112	%
Anthony S. Cleberg, CFO	$	300,000		95	%
Thomas M. Ohlmacher, COO—Non-regulated Energy	$	380,000		108	%
Linden R. Evans, COO—Utilities	$	380,000		139	%
Robert A. Myers, Sr. Vice President—Human Resources	$	175,000		64	%

The variance in percentage of base salary for the long-term incentive value of the Named Executive Officers reflects our philosophy that the CEO, CFO and COOs should have more of their total compensation at risk because they hold positions that have a greater impact on our long-term results. The long-term incentive value for these positions normally is in the range of 95 percent to 115 percent of base salary. Mr. Evans' long-term incentive value in 2009 was a larger percentage of base salary than would normally be seen. This is due to the impacts of the acquisition of the utility properties on his job responsibilities. The acquisition more than doubled our utility assets from $830 million to $2.2 billion and increased the number of state jurisdictions of our utility properties from three to seven. As a result, the Committee chose to increase his long-term incentive value while making no change to his base salary due to the economic downturn and uncertainty in market conditions at the time.

Restricted stock (or restricted stock units) is used to deliver 50 percent of the long-term incentive award amounts, with the remaining 50 percent delivered in the form of performance shares. The actual shares of restricted stock and performance shares granted in 2009 are reflected in the tables in the Restricted Stock and Restricted Stock Units and Performance Shares sections that follow.

Restricted Stock and Restricted Stock Units. Restricted stock and restricted stock units vest one-third each year over a three-year period, and automatically vest in their entirety upon death, disability or a change in control. Dividends are paid on the restricted shares and dividend equivalents accrue on restricted stock units. Unvested restricted stock or units are forfeited if an officer's employment is terminated for any reason other than death, disability or in the event of a change in control. Corporate officers may elect to receive the award in the form of restricted stock, or to defer the payment under the Nonqualified Deferred Compensation Plan, in the form of restricted stock units. The number of shares awarded in 2009 for each of our Named Executive Officers is shown below and is included in the Grants of Plan Based Awards in 2009 table under the heading "All Other Stock Awards: Number of Shares of Stock or Units" and "Grant Date Fair Value of Stock Awards."

Performance Shares. Participants are awarded a target number of performance shares based upon the value of the individual performance share component approved by the Committee, divided by the Beginning Stock Price. The Beginning Stock Price, as defined under the Performance Plan, is the average of the closing price of our common stock for the 20 trading days immediately preceding the beginning of the plan period. Entitlement to performance shares is based on our total shareholder return over designated performance periods, as measured against our peer group. In addition, in order for any performance shares to be awarded, our stock price must also increase during the performance period from the Beginning Stock Price. The final value of the performance shares is based upon the number of shares of common stock that are ultimately granted, based upon our performance in relation to the performance criteria. At the end of each respective performance period, actual awards may range from 0 percent to 175 percent of the target share amounts plus accrued dividends. A 100 percent payout of the target shares occurs if our total shareholder return exceeds the 50^th percentile of the peer group. A zero percent payout occurs if we are below the 40^th percentile and a maximum payout of 175 percent occurs if we perform at the 80^th percentile or above. The performance awards and dividend equivalents, if earned, are paid in 50 percent cash and 50 percent common stock. All payroll deductions and applicable tax withholding related to the award are withheld from the cash portion. Performance share target grant values are approved in the December/January timeframe for a three-year performance period beginning January 1.

Our peer group is comprised of the following companies for the performance period that ended in 2009:

This peer group was originally identified as the companies in the S&P MidCap Electric Utilities Index; however because of re-categorizing of companies in the index by S&P from time to time, the companies in the peer group must be tracked individually.

The Committee changed our peer group beginning with the January 1, 2008 to December 31, 2010 Performance Period, recognizing a peer group that is more reflective of Black Hills Corporation upon the closing of the acquisition of Aquila's electric utility in Colorado and its gas utilities in Colorado, Kansas, Nebraska and Iowa. The peer group for the performance periods that end in 2010 and 2011 is comprised of the following companies:

Each performance share period extends for three years. For the recently completed performance period, January 1, 2007 to December 31, 2009, our total shareholder return was negative 17 percent, which ranked at the 23^rd percentile of our peer group, resulting in no payout. The continued collapse of oil and gas prices in the second half of 2008 and through 2009, combined with the effects of the global credit crisis created significant negative impacts on our overall financial performance in 2008 and 2009.

Actual awards for the corporate officers under the Performance Share Plan over the last five years have varied significantly based on the Company's performance in relation to its peer group as shown below.

Target shares for each of our Named Executive Officers for the outstanding performance periods are as follows:

Actual payouts, if any, will be determined based upon the total shareholder return for the plan period in comparison to the peer group.

As part of Mr. Myers compensation package when he joined the Company as Senior Vice President—Human Resources, the Committee awarded him $100,000 of restricted stock (3,664 restricted shares) that vests one-third each year over a three-year period. These shares are in addition to the restricted shares awarded as part of his long-term incentive and disclosed under Long-Term Incentive and Restricted Stock and Restricted Stock Units above.

Role of Executive Officers in Compensation Decisions. The CEO annually reviews the performance of each of our senior officers. He presents a summary of his evaluation of all of our senior officers to the Committee and thoroughly reviews the COO—Utilities, COO—Non-regulated Energy and CFO evaluations with the Committee. Based upon these performance reviews, market analysis conducted by compensation consultants and discussions with our Chief Human Resources Officer and Human Resources department staff, the CEO recommends the compensation for this group of officers to the Committee. The Committee may exercise its discretion in modifying any of the recommended compensation and award levels in its review and approval process.

Role of the Committee and Board in Setting Executive Compensation. At the beginning of each year, the Committee reviews and establishes the corporation's financial targets and the CEO's goals and objectives for the year. At the end of each year the Committee evaluates the CEO's performance in light of established goals and objectives, with input from the other independent directors. Based upon the Committee's evaluation and recommendation, the independent directors of the Board set the CEO's annual compensation, including salary, bonus, incentive and equity compensation and perquisites.

The Committee reviews the CEO's evaluation of the performance of the COO—Utilities, COO—Non-regulated Energy and the CFO in light of established goals and objectives. Based upon the Committee's review and recommendation, the Board of Directors sets the annual compensation of the COO—Utilities, COO—Non-regulated Energy and CFO, including salary, bonus, incentive and equity compensation and perquisites. The Committee also reviews and approves the CEO's recommendations for compensation of our other corporate officers and business unit leaders. The Committee is required to approve all decisions regarding equity awards to our officers.

The Committee has implemented stock ownership guidelines that apply to all officers based upon their level of responsibility. We believe it is important for our officers to hold a significant amount of

our common stock to further align their performance with the interest of our shareholders. A "retention ratio" approach to stock ownership is incorporated into the guidelines. This approach requires officers to retain 100 percent of all shares owned, including shares awarded through our incentive plans (net of share withholding for taxes and in the case of cashless stock option exercises, net of the exercise price and withholding for taxes) until specific ownership goals are achieved. Ownership guidelines are denominated in share amounts which approximate a multiple of base pay.

The ownership guidelines and current stock ownership of our Named Executive Officers are shown below.

Perquisites and Other Personal Benefits. We provide a limited number of market-based perquisites to our executive officers, including personal use of a Company vehicle. The total value of these perquisites in 2009 did not exceed $9,000 for any one of our Named Executive Officers. In addition, Messrs. Cleberg and Myers also received moving expenses associated with their relocations. The specific amounts attributable to perquisites for 2009 are disclosed in the Summary Compensation Table. The Committee periodically reviews the perquisites and other personal benefits provided to our executive officers and believes the current perquisites are reasonable and consistent with our overall compensation program.

Retirement and Other Benefits. We maintain a variety of employee benefit plans and programs in which our executive officers may participate, including a 401(k) Retirement Savings Plan, a Qualified Defined Benefit Pension Plan (the "Pension Plan"), Nonqualified Pension Plans and a Nonqualified Deferred Compensation Plan. The Nonqualified Pension Plans include our Grandfathered Pension Equalization Plan, 2005 Pension Equalization Plan, 2007 Pension Equalization Plan and Pension Restoration Plan. We believe it is important to provide post-employment benefits to our executive officers and the benefits we provide approximate retirement benefits paid by other employers to executives in similar executive positions. The Committee periodically reviews the benefits provided with assistance from its compensation consultant to maintain a market-based benefits package.

The Black Hills Corporation 401(k) Retirement Savings Plan is offered to all eligible employees of the Company and its subsidiaries. The separate 401(k) plans covering employees of Cheyenne Light, Fuel and Power and Black Hills Energy were merged into the Black Hills Corporation 401(k) Retirement Savings Plan in October 2009. All of our Named Executive Officers are participants in the Black Hills Corporation 401(k) Retirement Savings Plan. Participants may elect to invest up to 50 percent of their eligible compensation on a pre-tax and/or after-tax basis up to maximum amounts established by the Internal Revenue Service. In 2009, the Black Hills Corporation 401(k) Plan provided a matching contribution of 100 percent of the employee's annual tax-deferred contribution up to a maximum of 3 or 6 percent of eligible compensation, depending on work location. Matching contributions vest at 20 percent per year and are fully vested when the participant has five years of service with the Company. The annual contribution for our Named Executive Officers ranged from $7,350 to $14,596 in 2009. The matching contribution is included as "All Other Compensation" in the Summary Compensation Table.

The Pension Plan covers the employees of Black Hills Corporation and a number of its subsidiary companies. Cheyenne Light, Fuel and Power and Black Hills Energy have their own plans. The Pension Plan is a qualified defined benefit pension plan that provides benefits at retirement based on length of employment service and certain average compensation levels during the highest five consecutive years of the last ten years of service. Our employees do not contribute to the plans. Each of our Named Executive Officers except Mr. Myers are participants in the Pension Plan and none of our Named Executive Officers have been granted additional years of credited service. Mr. Myers did not meet the eligibility requirements to be a participant prior to the effective date of the 2010 benefit changes discussed below.

The Pension Plan is limited by the Internal Revenue Code in the amount of annual payments received under the plan ($195,000 in 2009) and in the amount of compensation that can be taken into account in determining contributions and benefits ($245,000 in 2009). Because of these limitations we also have the Nonqualified Pension Plans. Messrs. Emery and Ohlmacher are participants in the Grandfathered Pension Equalization Plan and the 2005 Pension Equalization Plan. Messrs. Cleberg, Evans and Myers were participants in the 2007 Pension Equalization Plan. All of the Named Executive Officers are participants in the Pension Restoration Plan. The level of retirement benefits provided by the Nonqualified Plans for each of our Named Executive Officers is reflected in the Pension Benefits for 2009 table and explained in more detail in the accompanying narrative.

Effective January 1, 2010, the Company adopted a defined contribution plan design as our primary retirement plan and amended our Pension Plan for all eligible employees to incorporate a partial freeze in which the accrual of benefits cease for certain participants while other participants were allowed an election to continue to accrue benefits. Employees eligible to elect continued participation were those employees who were at least 45 years old and had at least 10 years of eligible service with the Company as of January 1, 2010. Messrs. Emery and Ohlmacher met the age and years of service requirement and elected to stay with the existing plans.

As a result of the change in the Pension Plan, the benefits for certain officers (including Messrs. Cleberg, Evans and Myers) under the non-qualified pension restoration plans were significantly reduced because the non-qualified benefit calculations were linked to the benefits earned in the Pension Plan. To overcome this deficit, the Committee eliminated the 2007 Pension Equalization Plan and amended the Non-Qualified Deferred Compensation Plan to provide non-elective non-qualified restoration benefits to those affected officers who were not eligible to continue accruing benefits under the Pension Plan and associated non-qualified pension restoration plan. The amended Non-Qualified Deferred Compensation Plan provides the affected officers with non-elective supplemental matching contributions equal to 6 percent of eligible compensation in excess of the Internal Revenue Code limit

plus matching contributions, if any, lost under the 401(k) Retirement Savings Plan due to nondiscrimination test results and provides non-elective supplemental points-based contributions that cannot be made to the 401(k) Retirement Savings Plan due to the Internal Revenue Code limit. It also provides supplemental target contributions equal to a percentage of compensation that may differ by executive, based on the executive's current age and length of service with the Company, as determined by the Plan's actuary.

Our Named Executive Officers may also receive severance benefits in the event of a change in control. Change in control agreements are common among our peer group and the Committee and our Board of Directors believe providing these agreements to our corporate officers protect our shareholder interests in the event of a change in control by helping assure management focus and continuity. Our change in control agreements have expiration dates and our Board of Directors conducts a thorough review of the change in control agreements at each renewal period. Our current change in control agreements expire June 1, 2011. In general, our change in control agreements provide a severance payment of up to 2.99 times average compensation for our CEO, and up to two times average compensation for our other corporate officers. The change in control agreements contain a "double trigger," providing benefits in association with a change in control only upon:

See the Potential Payments Upon Termination or Change in Control table and the accompanying narrative for more information regarding our change in control agreements and estimated payments associated with a change in control.

Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended, limits the tax deductibility by a corporation of compensation in excess of $1 million paid to its CEO and any of its four most highly compensated executive officers. Compensation which qualifies as "performance-based" is excluded from the $1 million limit, if, among other requirements, the compensation is payable only upon attainment of pre-established, objective performance goals under a plan approved by the corporation's shareholders. As a result, the Compensation Committee has designed a large share of our incentive compensation for our Named Executive Officers to qualify for the exemption of "performance-based" compensation from the deductibility limit. However, the Compensation Committee does have the discretion to design and use compensation elements that may not be deductible under Section 162(m) if it determines those elements are in line with competitive practice, our compensation philosophy, and our best interests. We believe the compensation paid to our Named Executive Officers in 2009 is fully deductible.

We have a policy that if an accounting restatement occurs after incentive payments have been made, due to the results of misconduct associated with financial reporting, the Committee will seek repayment of the incentive compensation from our CEO and CFO and has the discretion to request repayment of incentive compensation from our other officers, taking into consideration the individual roles and responsibilities prompting the restatement.

In addition, effective with 2009 award agreements for restricted stock and target performance shares we have included clawback provisions whereby the participant may be required to repay all income or gains previously realized in respect of such awards if their employment is terminated for

cause, or within one year following termination of employment, the Board determines that the participant engaged in conduct prior to their termination that would have constituted the basis for a termination of employment for cause.

The Committee and the Board of Directors did not increase the base salaries of our officers for 2009, due to the difficult external economic conditions and uncertainties that existed last year. While present conditions are still challenging, the Committee and the Board recognized that 15 of 19 corporate officers and business unit leaders had not received a base salary increase in 27 months and determined that measured and specific actions to support the Company's future plans and long-term goals were necessary. Therefore, the Committee and the Board increased base salaries for some, but not all executives, by market competitive rates, effective April 2010. Additionally, they established short-term and long-term incentive levels for our officers based on a structure similar to that used for the 2009 awards. Establishing the opportunity for our executives to earn incentive compensation if performance objectives are achieved, links the personal interests of our officers with those of our shareholders during these challenging economic times.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Company's Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The following table sets forth the total compensation paid or earned by each of our Named Executive Officers for the fiscal years ended December 31, 2009, 2008 and 2007. We have no employment agreements with our Named Executive Officers. Messrs. Cleberg and Myers joined us on July 16, 2008 and January 1, 2009, respectively.

Pension benefits for our Named Executive Officers in 2009 were comprised of a qualified defined benefit pension, a nonqualified pension restoration benefit and a supplemental pension benefit. None of our Named Executive Officers received any pension benefit payments during the fiscal year ended December 31, 2009.

We have a Defined Benefit Retirement Plan, a qualified pension plan, in which all of our Named Executive Officers, excluding Mr. Myers, are included. Participants become eligible for the benefit when they have been employed by us for at least one year and are at least 21 years of age. Mr. Myers did not meet the one year service requirement as of December 31, 2009. The plan provides benefits at retirement based on length of employment service and average compensation levels during the highest five consecutive years of the last ten years of service. For purposes of the benefit calculation, earnings include wages and other cash compensation received from the Company, including any bonus, commission, unused paid time off or incentive compensation. It also includes any elective before-tax contributions made by the employee to a Company sponsored cafeteria plan or 401(k) plan. However, it does not include any expense reimbursements, taxable fringe benefits, moving expenses or moving/relocation allowances, nonqualified deferred compensation, non-cash incentives, stock options and any payments of long-term incentive compensation such as restricted stock or payments under performance

share plans. The Internal Revenue Code places maximum limitations on the amount of compensation that may be recognized when determining benefits of qualified pension plans. In 2009, the maximum amount of compensation that could be recognized when determining compensation was $245,000 (called "covered compensation").

The benefit formula for the Named Executive Officers is the sum of (a) and (b) below.

Pension benefits are not reduced for social security benefits. The Internal Revenue Code places maximum limitations on annual benefit amounts that can be paid under qualified pension plans. In 2009, the maximum benefit payable under qualified pension plans was $195,000. Accrued benefits become 100 percent vested after an employee completes five years of service. None of our Named Executive Officers have been credited with extra years of credited service under the plan.

Normal retirement is defined as age 65 under the plan, however a participant may begin taking unreduced benefits at age 62 with five years of service. Participants who have completed at least five years of credited service can retire and receive defined benefit pension benefits as early as age 55, however the retirement benefit will be reduced by five percent for each year of retirement before age 62. For example, a participant with at least five years of credited service may retire at age 55 and receive a pension benefit equal to 65 percent of the normal retirement benefit. Mr. Ohlmacher is currently age 58 and is entitled to early retirement benefits under this provision.

If a participant is vested and leaves the Company before reaching his or her earliest retirement date, he or she may begin receiving the full value of his or her vested benefit at age 65 or can receive a reduced benefit as early as age 55 if he or she has at least five years of credited service when he or she leaves employment of the Company. The benefit will be reduced by five percent for each year he or she begins receiving benefits prior to age 65. For example, a participant who leaves the Company before reaching age 55 with at least five years of credited service may begin receiving benefits at age 55 equal to 50 percent of the normal retirement benefit and may begin receiving retirement benefits at age 65 on an unreduced basis.

If a participant is single, the benefit is paid as a life annuity. If a participant is married, the benefit is paid as a joint and 50 percent survivor annuity unless an optional form of payment is chosen.

Our employees do not contribute to the plan. The amount of the annual contribution by us to the plan is based on an actuarial determination.

Effective January 1, 2010, the Company adopted a defined contribution plan design as our primary retirement plan and amended our Defined Benefit Pension Plan for all eligible employees to incorporate a partial freeze in which the accrual of benefits cease for certain participants while other participants were allowed an election to continue to accrue benefits. Employees eligible to elect continued participation were those employees who were at least 45 years old and had at least 10 years

of eligible service with the Company as of January 1, 2010. Messrs. Emery and Ohlmacher met the age and years of service requirement and elected to continue with the existing plan.

Participants who did not meet the age and years of service requirement as of January 1, 2010, had their pension benefit frozen as of December 31, 2009 and effective January 1, 2010 began to receive an additional age and service points-based employer contribution under the 401(k) retirement savings plan. Messrs. Cleberg, Evans and Myers had their pension benefits frozen as of December 31, 2009, and began receiving the additional age and service points-based employer contribution effective January 1, 2010.

We also have a Grandfathered Pension Equalization Plan, a 2005 Pension Equalization Plan, a 2007 Pension Equalization Plan and a Pension Restoration Benefit, nonqualified supplemental plans, in which benefits are not tax deductible until paid. The plans are designed to provide the higher paid executive employee a retirement benefit which, when added to social security benefits and the pension to be received under the Defined Benefit Pension Plan, will approximate retirement benefits being paid by other employers to their employees in similar executive positions. The employee's pension from the qualified pension plan is limited by the Internal Revenue Code. The 2009 limit was set at $195,000 annually and the compensation taken into account in determining contributions and benefits could not exceed $245,000 and could not include nonqualified deferred compensation. The amount of deferred compensation paid under nonqualified plans is not subject to these limits.

As a result of the change in the Defined Benefit Pension Plan effective January 1, 2010, the benefits for certain officers (including Messrs. Cleberg, Evans and Myers) under the non-qualified pension restoration plans were significantly reduced because the non-qualified benefit calculations were linked to the benefits earned in the Defined Benefit Pension Plan. As a result of those amendments, effective January 1, 2010, the Compensation Committee eliminated the 2007 Pension Equalization Plan and amended the Non-Qualified Deferred Compensation Plan to provide non-elective non-qualified restoration benefits to those affected officers who were not eligible to continue accruing benefits under the Defined Benefit Pension Plan and associated non-qualified pension restoration plan. The amended Non-Qualified Deferred Compensation Plan provides the affected officers with non-elective supplemental matching contributions equal to 6 percent of eligible compensation in excess of the Internal Revenue Code limit plus matching contributions, if any, lost under the 401(k) Retirement Savings Plan due to nondiscrimination test results and provides non-elective supplemental age and service points-based contributions that cannot be made to the 401(k) Retirement Savings Plan due to the Internal Revenue Code limit. It also provides supplemental target contributions equal to a percentage of compensation that may differ by executive, based on the executive's current age and length of service with the Company, as determined by the plans' actuary.

Grandfathered Pension Equalization Plan and 2005 Pension Equalization Plan. The Grandfathered Pension Equalization Plan and the 2005 Pension Equalization Plan are bifurcated plans from the Original Pension Equalization Plan. The Grandfathered Pension Equalization Plan provides the pension equalization benefits to each participant who had earned and vested benefits under the Original Plan before January 1, 2005, and are not subject to the provisions of Section 409A of the Internal Revenue Code. The 2005 Pension Equalization Plan provides the pension equalization benefits to each participant that were earned and vested on or after January 1, 2005, and are subject to the provisions of Section 409A.

A participant under the Grandfathered and 2005 Pension Equalization Plans does not qualify for benefits until the benefits become vested under the following vesting schedule. The vesting is based on

years of employment under the plan, not total years of service with the Company. No credit for past service is granted under the Grandfathered and 2005 Pension Equalization Plans.

The annual benefit is 25 percent of the employee's average earnings, if salary was less than two times the Social Security Wage Base, or 30 percent, if salary was more than two times the Social Security Wage Base, multiplied by the vesting percentage. Average earnings are normally an employee's average earnings for the five highest consecutive full years of employment during the ten full years of employment immediately preceding the year of calculation. The annual benefit is paid on a monthly basis for 15 years to each participating employee and, if deceased, to the employee's designated beneficiary or estate, commencing at the earliest of death or when the employee is both retired and 62 years of age or more. A participant with vested benefits who is 55 years of age or older and no longer an employee of the Company may elect to be paid benefits beginning at age 55 or older, subject to a discount of such benefits according to the following schedule.

Participants in the Grandfathered and 2005 Pension Equalization Plans were designated by our Board of Directors upon recommendation of the Chief Executive Officer. Messrs. Emery and Ohlmacher are participants in the Grandfathered and 2005 Pension Equalization Plans. These plans have been frozen to new participants since 2002.

2007 Pension Equalization Plan. In 2007, the Board of Directors approved the 2007 Pension Equalization Plan and designated the corporate officers, including Mr. Evans, who were not participants in the Original Pension Equalization Plan as participants in the 2007 Pension Equalization Plan. The participants were given years of credited service equal to the number of years they served as a corporate officer. Mr. Evans received two years of credited service. Messrs. Cleberg and Myers were named participants in the 2007 Pension Equalization Plan effective with their employment with the Company in 2008 and 2009, respectively. Messrs. Cleberg and Myers did not receive any years of credited service. As discussed above, the 2007 Pension Equalization Plan was eliminated effective January 1, 2010. The annual benefit was 2 percent of the employee's average earnings multiplied by the participant's years of service as an officer (up to a maximum of 15 years) and the vesting percentage.

Pension Restoration Benefit. In the event that at the time of a participant's retirement, the participant's salary level exceeds the qualified pension plan annual compensation limitation ($245,000 in 2009) or includes nonqualified deferred compensation, then the participant shall receive an additional benefit, called a "Pension Restoration Benefit," which is measured by the difference between (i) the monthly benefit which would have been provided to the participant under the Defined Benefit Pension Plan as if there were no annual compensation limitation and no exclusion on nonqualified deferred compensation, and (ii) the monthly benefit to be provided to the participant under the Defined Benefit Pension Plan. The Pension Restoration Benefit applies to participants in the Pension Equalization Plans.

We have a Nonqualified Deferred Compensation Plan for a select group of management or highly compensated employees. A summary of the activity in the plan and the aggregate balance as of December 31, 2009 for our Named Executive Officers are shown in the following table. Our Named Executive Officers received no withdrawals or distributions from the plan in 2009.

Eligibility to participate in the plan is determined by the Compensation Committee and currently consists of only corporate officers. Eligible employees may elect to defer up to 50 percent of their base salary, up to 100 percent of their annual Short-Term Incentive Plan award, including Company stock, and elect to defer restricted stock grants in the form of restricted stock units. The deferrals are deposited into a trust account where the participants may direct the investment of the deferrals (except for Company stock and restricted stock unit deferrals) as allowed by the plan. The investment options are the same as those offered to all employees in the 401(k) Retirement Savings Plan except for a fixed rate option which was set at 5.22 percent in 2009. Investment earnings are credited to the participants' accounts. Upon retirement, we will distribute the account balance to the participant according to the distribution election filed with the Compensation Committee. The participants may elect either a lump sum payment to be paid within 30 days of retirement (requires a six month deferral for benefits not vested as of December 31, 2004), or annual or monthly installments over a period of years designated by the participant, but not to exceed 15 years.

The following table describes the potential payments and benefits under our compensation and benefit plans and arrangements to which our Named Executive Officers would be entitled upon termination of employment. Except for (i) certain terminations following a change in control ("CIC") of the Company, as described below, (ii) pro-rata payout of incentive compensation and the acceleration of vesting of equity awards upon retirement, death or disability, and (iii) certain pension and nonqualified deferred compensation arrangements described under Pension Benefits for 2009 and Nonqualified Deferred Compensation for 2009 above, there are no agreements, arrangements or plans

that entitle the Named Executive Officers to severance, perquisites, or other enhanced benefits upon termination of their employment. Any agreement to provide such other payments or benefits to a terminating executive officer would be in the discretion of the Compensation Committee.

The amounts shown below assume that such termination was effective as of December 31, 2009, and thus include estimates of the amounts which would be paid out to our Named Executive Officers upon their termination. The table does not include amounts such as base salary, short-term incentives and stock awards which the Named Executive Officers earned due to employment through December 31, 2009 and distributions of vested benefits such as those described under Pension Benefits for 2009, Nonqualified Deferred Compensation for 2009 and vested stock options listed in the Outstanding Equity Awards at Fiscal Year-End 2009 tables. The table also does not include a value for outplacement services because this would be a diminimus amount. The actual amounts to be paid out can only be determined at the time of such Named Executive Officer's separation from the Company.

Payments Made Upon Termination. Regardless of the manner in which a Named Executive Officer's employment terminates, he may be entitled to receive amounts earned during his term of employment. These include:

Payments Made Upon Retirement: In the event of retirement of a Named Executive Officer, in addition to the items identified above, he will also receive the benefit of the following:

Payments Made Upon Death or Disability. In the event of death or disability of a Named Executive Officer, in addition to the items identified above, he will also receive the benefit of the following:

Payments Made Upon a Change in Control. Our Named Executive Officers have change in control agreements that terminate June 1, 2011. The renewal of the change in control agreements is at the discretion of the Compensation Committee and the Board of Directors. The change in control agreements provide for certain payments and other benefits to be payable upon a change in control and a subsequent termination of employment, either involuntary or for a good reason.

In the change in control agreements, a good reason for termination which would trigger payment of benefits is defined to include:

Upon a change in control, the CEO will have an employment contract for a three-year period and the non-CEO executive will have an employment contract for a two-year period, but not beyond age 65 ("employment term"). During this employment term, the executive shall receive annual compensation at least equal to the highest rate in effect at any time during the one-year period preceding the change in control and shall also receive employment welfare benefits, pension benefits, and supplemental retirement benefits on a basis no less favorable than those received prior to the change in control. Annual compensation is defined to include amounts which are includable in the gross income of the executive for federal income tax purposes, including base salary, targeted annual incentive bonus, targeted long-term incentive grants and awards; and matching contributions or other benefits payable under the 401(k) Retirement Savings Plan; but exclude restricted stock awards, performance units or stock options that become vested or exercisable pursuant to a change in control.

If a Named Executive Officer's employment is terminated prior to the end of the employment term by the Company for cause or disability, by reason of the Named Executive Officer's death, or by the Named Executive Officer without good reason, the Named Executive Officer will receive all amounts of compensation earned or accrued through the termination date. If the Named Executive Officer's employment is terminated because of death or disability, the Named Executive Officer or his beneficiaries will also receive a pro rata bonus equal to 100 percent of the target bonus for the portion of the year served.

If the CEO's employment is terminated during the employment term (other than by reason of death) (i) by the Company other than for cause or disability, or (ii) by the CEO for a good reason, then the CEO is entitled to the following benefits:

If the non-CEO executive's employment is terminated during the employment term (other than by death) (i) by the Company other than for cause or disability, or (ii) by the non-CEO for a good reason; then the non-CEO is entitled to the following benefits:

The change in control agreements contain an additional benefit to cover any excise tax imposed by Section 4999 of the Internal Revenue Code of 1986. The executive must sign a waiver and release agreement in order to receive the severance payment.

The following table includes information as of December 31, 2009 with respect to our equity compensation plans.

Proposal 2

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The firm of Deloitte & Touche LLP, independent registered public accountants, conducted the audit of Black Hills Corporation and its subsidiaries for 2009. Representatives of Deloitte & Touche LLP will be present at our annual meeting and will have the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions.

Our Audit Committee, subject to ratification by our shareholders, has appointed Deloitte & Touche LLP to perform an audit of our consolidated financial statements and those of our subsidiaries for the year 2010 and to render their reports. If shareholder approval for the appointment of Deloitte & Touche LLP is not obtained, the Audit Committee will reconsider the appointment.

The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP to serve as our independent registered public accountants for the year 2010

The following table sets forth the aggregate fees for services provided to us for the fiscal years ended December 31, 2009 and 2008 by our independent registered public accounting firm, Deloitte & Touche LLP.

Audit Fees. Fees for professional services rendered for the audits of our consolidated financial statements, review of the interim consolidated financial statements included in quarterly reports, opinions on the effectiveness of our internal control over financial reporting, and services that generally only the independent auditor can reasonably provide, such as comfort letters, statutory audits, consents and assistance with and review of documents filed with the Securities and Exchange Commission.

Audit-Related Fees. Fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under "Audit Fees." These services include internal control reviews; attest services that are not required by

statute or regulation; employee benefit plan audits; due diligence, consultations and audits related to mergers and acquisitions; and consultations concerning financial accounting and reporting standards.

Tax Fees. Fees for services related to tax compliance, and tax planning and advice including tax assistance with tax audits. These services include assistance regarding federal, state and Canadian tax compliance and advice, review of tax returns, and federal, state and Canadian tax planning. Approximately $594,000 of the cost in 2008 is related to tax planning associated with the acquisition of five utilities from Aquila and the divestiture of seven independent power plants.

The services performed by Deloitte & Touche LLP were pre-approved in accordance with the Audit Committee's pre-approval policy whereby the Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accountants. The Audit Committee will generally pre-approve a list of specific services and categories of services, including audit, audit-related, tax and other services, for the upcoming or current fiscal year, subject to a specified cost level. Any service that is not included in the approved list of services must be separately pre-approved by the Audit Committee. Further approval by the Audit Committee is also required if any previously approved service exceeds estimated or budgeted amounts by 25 percent, or if the sum of all pre-approval services exceeds budgeted amounts by 10 percent in the aggregate.

In connection with the financial statements for the fiscal year ended December 31, 2009, the Audit Committee has (1) reviewed and discussed the audited financial statements with management; (2) discussed with Deloitte & Touche LLP, the Company's independent registered public accounting firm (the "Auditors'), the matters required to be discussed by the statement on Auditing Standard No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Accounting Oversight Board in Rule 3200T; and (3) received the written disclosures and letter from the Auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the Auditors' communications with the Audit Committee concerning independence, and has discussed with the Auditors their independence from the Company.

Based upon these reviews and discussions, the Audit Committee recommended to the Board that the Company's audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission.

APPROVE AMENDMENT NO. 2
TO THE 2005 OMNIBUS INCENTIVE PLAN
AND CODE SECTION 162(m) RENEWAL

Our shareholders are being asked to approve (i) an amendment to the Black Hills Corporation 2005 Omnibus Incentive Plan (the "Plan") to increase the number of shares of our common stock reserved for issuance under the Plan by 500,000 shares and (ii) the renewal of the material terms of the performance-based goals under the Plan in order to allow certain grants and awards made to certain officers and other key employees to continue to qualify as performance-based compensation deductible under Internal Revenue Code Section 162(m) (the "Code Section 162(m) renewal").

Our Compensation Committee (the "Committee") and Board of Directors have approved the amendment to increase the number of shares reserved for issuance under the Plan, subject to shareholder approval at the annual meeting. The full text of the amendment is included as Appendix A to this proxy statement. Of the 1,150,000 shares of our common stock originally reserved for issuance under the Plan when approved by shareholders in 2005, 544,970 shares remain available for grant as of March 31, 2010, such that if the proposed amendment is approved, approximately 1,044,970 shares will be available for future grant under the Plan. The proposed amendment will assure a sufficient reserve of common stock remains available for issuance under the Plan in order to allow us to continue to issue shares under the Plan to assist us in achieving our goals of increasing profitability and shareholder value, while also receiving a federal income tax deduction for certain compensation paid under the Plan under Section 162(m) of the Internal Revenue Code, as amended (the "Code"), and for qualifying such shares for special tax treatment under Section 422 of the Code. We also use the Plan as a means through which we may attract able individuals to become employees or serve as directors and to provide a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company are of importance, can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company.

We are not proposing any amendment to the terms of the Plan with respect to reapproval of material terms of the performance-based goals under the Plan. Section 162(m) of the Code denies an employer a tax deduction for certain compensation in excess of $1 million paid to "covered employees" of a publicly held corporation unless the compensation is qualified performance-based compensation. The 162(m) regulations generally require that shareholders approve the material terms of the performance goals, and that performance goals be submitted for reapproval no later than five years after initial shareholder approval. Our shareholders initially approved the performance-based goals in the Plan approximately five years ago at our 2005 Annual Meeting. The performance-based goals are set forth in the bullet points under the caption "Grants under the Plan—Section 162(m)" below.

The following is a summary of the principal features of the Plan. The summary, however, does not purport to be a complete description of all provisions of the Plan. The Plan is filed with the Securities and Exchange Commission as an exhibit to our annual report on Form 10-K. In addition, any shareholder who wishes to obtain a copy of the actual plan document may do so without charge upon written request to the Corporate Secretary at our principal executive offices in Rapid City, South Dakota.

The Plan provides for administration by a Committee designated by the Board of Directors whose members meet the definition of non-employee director and outside director. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an employee.

Shares to be issued under the Plan may be authorized but unissued shares of common stock or treasury stock. The maximum number of shares reserved for issuance under the Plan is 1,150,000 plus shares subject to outstanding awards as of February 28, 2005, under the prior plans, that cease for any reason to be subject to such awards (such as lapse, expiration, termination or cancellation of any award prior to the issuance of the shares thereunder). By this proposal we are seeking shareholder approval to increase the number of shares reserved for issuance under the Plan by 500,000 additional shares.

As of March 31, 2010, awards for 527,837 shares are outstanding under the Plan, comprised of 303,961 stock options and 223,876 full value shares. The 303,961 stock options outstanding have a weighted average exercise price of $33.25 and a weighted average remaining life of 2.9 years. In addition, there are 282,225 shares of restricted stock outstanding that are already issued and are included in our total shares of common stock outstanding.

Shares covered by an award shall only be counted as used to the extent they are actually issued. Any shares related to awards which terminate by expiration, forfeiture, cancellation, or are not settled in shares of common stock may be reused for subsequent awards. If the option price of any option granted under the Plan or the tax withholding requirements with respect to any award granted under the Plan are satisfied by tendering shares, or if a stock appreciation right ("SAR") is exercised, only the number of shares issued, net of the shares tendered, will be counted as shares used under the Plan.

Persons eligible to participate in this Plan include all employees and Directors. We currently have approximately 2,200 employees and nine non-management Directors. The selection of participants from eligible employees and Directors is within the discretion of the Committee.

Section 162(m). Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to a covered employee. A covered employee means those persons specified in Section 162(m) of the Code—generally the CEO and the next four highly compensated officers. Certain performance-based compensation is specifically exempt from the deduction limit if it otherwise meets the requirements of Section 162(m). One of the requirements for equity compensation plans is that there must be a limit to the number of shares granted to any one individual under the Plan. Accordingly, unless and until the Committee determines that an award to a covered employee shall not be designed to comply with the performance-based exception of Section 162(m) of the Code, the following limits shall apply to grants of such awards under the Plan. Shareholder approval of this proposal will constitute shareholder approval of these limitations for Section 162(m).

(a) Stock Options. The maximum aggregate number of shares that may be granted in the form of Stock Options, pursuant to any award granted in any one fiscal year to any one single participant shall be 200,000 shares.

(b) SARs. The maximum aggregate number of shares that may be granted in the form of Stock Appreciation Rights, pursuant to any award granted in any one fiscal year to any one single participant shall be 200,000 shares.

(c) Restricted Stock or Restricted Stock Units. The maximum aggregate grant with respect to awards of Restricted Stock or Restricted Stock Units in any one fiscal year to any one participant shall be 100,000 shares.

(d) Performance Units, Performance Shares or Cash-Based Awards. The maximum aggregate grant with respect to awards of Performance Shares made in any one fiscal year to any one participant shall be 50,000 shares. The maximum aggregate amount awarded with respect to Performance Units or Cash-Based Awards made in any one fiscal year to any one participant shall not exceed $2,000,000.

(e) Other Stock-Based Awards. The maximum aggregate grant with respect to Other Stock-Based Awards in any one fiscal year to any one participant shall be 100,000 shares.

The performance goals upon which the payment or vesting of an award to a covered employee that is intended to qualify as performance-based compensation shall be limited to the following performance measures:

Any performance measure(s) may be used to measure the performance of the Company, subsidiary, and/or affiliate as a whole or any business unit of the Company, subsidiary, and/or affiliate or any combination thereof, as the Committee may deem appropriate, or any of the above performance measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Company may select performance measure (j) above as compared to various stock market indices.

Stock Options. The Committee may grant incentive stock options ("ISOs") as defined in Section 422 of the Code and nonqualified stock options ("NQSO"). Options shall be exercisable for such prices, shall expire at such times and shall have such other terms and conditions as the Committee may determine at the time of grant and as set forth in the award agreement, however the exercise price must be at least equal to 100 percent of the fair market value at the date of grant. The option price is payable in cash, by tendering previously acquired shares having an aggregate fair market value at the time of exercise equal to the total option price, by cashless exercise or any combination of the foregoing. No option may be repriced, replaced, or regranted through cancellation without shareholder approval (except in connection with a corporate event or transaction that changes the Company's capitalization, such as a stock dividend or a stock split).

Stock Appreciation Rights. The Committee may grant SARs with such terms and conditions as the Committee may determine at the time of grant and as set forth in the award agreement. SARs granted under the Plan may be in the form of freestanding SARs, tandem SARs, or any combination of these forms of SARs. The grant price of a freestanding SAR shall be determined by the Committee and shall be specified in the award agreement, however, the grant price must be at least equal to 100 percent of the fair market value of a share on the date of grant. The grant price of tandem SARs shall equal the option price of the related option. SARs issued under the Plan may not be repriced, replaced, or regranted through cancellation without shareholder approval (except in connection with a corporate event or transaction that changes the Company's capitalization, such as a stock dividend or a stock split).

Freestanding SARs may be exercised upon such terms and conditions as are imposed by the Committee and as set forth in the SAR award agreement. A tandem SAR may be exercised only with respect to the shares of our common stock for which its related option is exercisable.

Upon exercise of a SAR, a participant will receive the product of (a) the difference between the fair market value of a share on the date of exercise over the grant price and (b) the number of shares with respect to which the SAR is exercised. Payment upon exercise shall be in shares.

Restricted Stock or Restricted Stock Units. Restricted Stock or Restricted Stock Units may be granted in such amounts and subject to the terms and conditions as determined by the Committee at the time of grant and as set forth in the award agreement. Restricted Stock Units shall be similar to Restricted Stock except that no shares are actually awarded to the participant on the date of grant and they have no voting rights. The Committee may impose performance goals for Restricted Stock or Restricted Stock Units. The Committee may authorize the payment of dividends on the Restricted Stock and the accrual of dividends on the Restricted Stock Units during the restricted period.

Performance Units, Performance Shares and Cash-Based Awards. Performance Units, Performance Shares and Cash-Based Awards may be granted in such amounts and subject to such terms and conditions as determined by the Committee at the time of grant and as set forth in the award agreement. The Committee shall set performance goals, which, depending on the extent to which they are met, will determine the number and/or value of the Performance Units/Shares and Cash-Based Awards that will be paid out to the participant.

Participants shall receive payment of the value of Performance Units/Shares earned after the end of the performance period. Payment of Performance Units/Shares shall be made in cash, shares or a combination thereof that have an aggregate fair market value equal to the value of the earned Performance Units/Shares and Cash-Based Awards at the close of the applicable performance period as the Committee determines. Shares may be granted subject to any restrictions deemed appropriate by the Committee and the Committee may authorize the payment of dividend units with respect to dividends declared with respect to the shares.

Other Awards. The Committee may grant other types of equity-based or equity-related awards not otherwise described by the terms of the Plan, in such amounts and subject to such terms and conditions, as the Committee shall determine. Such awards may be based upon attainment of performance goals established by the Committee and may involve the transfer of actual shares to participants, or payment in cash or otherwise of amounts based on the value of shares.

Each award agreement shall set forth the participant's rights with respect to each award following termination of employment with us or service on our Board of Directors.

Except as otherwise determined by the Committee at the time of grant and subject to the provisions of the Plan, awards may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and a participant's rights shall be exercisable only by the participant. Notwithstanding the foregoing, an award may never be transferred for value.

The amount, type and terms of grants to be made under the Plan after the date of this proxy statement are not determinable at this time as they are within the discretion of Compensation Committee. The following table sets forth information about grants under the Plan in 2009.

The following is a brief description of the principal federal income tax consequences, as of the date of this proxy statement, associated with the grant of awards under the Plan. This summary is based on our understanding of present income tax law and regulations. The summary does not purport to be complete or applicable to every specific situation. Furthermore, the following discussion does not address state or local tax consequences.

Grant. There is no federal income tax consequence to the optionholder solely by reason of the grant of ISOs or NQSOs under the Plan.

Exercise. The exercise of an ISO is not a taxable event for regular federal income tax purposes if certain requirements are satisfied, including the requirement that the optionholder generally must exercise the ISO no later than three months following the termination of the optionholder's employment with us. However, such exercise may give rise to alternative minimum tax liability (see "Alternative Minimum Tax" below).

Upon the exercise of a NQSO, the optionholder will generally recognize ordinary income in an amount equal to the excess of the fair market value of the shares at the time of exercise over the amount paid by the optionholder as the exercise price. The ordinary income recognized in connection

with the exercise by an optionholder of a NQSO will be subject to both wage and employment tax withholding.

The optionholder's tax basis in the shares acquired pursuant to the exercise of an option will be the amount paid upon exercise plus, in the case of a NQSO, the amount of ordinary income, if any, recognized by the optionholder upon exercise thereof.

Qualifying Disposition. If an optionholder disposes of shares of our common stock acquired upon exercise of an ISO in a taxable transaction, and such disposition occurs more than two years from the date on which the option was granted and more than one year after the date on which the shares were transferred to the optionholder pursuant to the exercise of the ISO, the optionholder will realize long-term capital gain or loss equal to the difference between the amount realized upon such disposition and the optionholder's adjusted basis in such shares (generally the option exercise price).

Disqualifying Disposition. If the optionholder disposes of shares of our common stock acquired upon the exercise of an ISO (other than in certain tax free transactions) within two years from the date on which the ISO was granted or within one year after the transfer of shares to the optionholder pursuant to the exercise of the ISO, at the time of disposition the optionholder will generally recognize ordinary income equal to the lessor of (i) the excess of each such share's fair market value on the date of exercise over the exercise price paid by the optionholder or (ii) the optionholder's actual gain. If the total amount realized on a taxable disposition (including return on capital and capital gain) exceeds the fair market value on the date of exercise of the shares of our common stock purchased by the optionholder under the option, the optionholder will recognize a capital gain in the amount of the excess. If the optionholder incurs a loss on the disposition (the total amount realized is less than the exercise price paid by the optionholder), the loss will be a capital loss.

Other Disposition. If an optionholder disposes of shares of our common stock acquired upon exercise of a NQSO in a taxable transaction, the optionholder will recognize capital gain or loss in an amount equal to the difference between the optionholder's basis (as discussed above) in the shares sold and the total amount realized upon disposition. Any such capital gain or loss (and any capital gain or loss recognized on a disqualifying disposition of shares of our common stock acquired upon exercise of ISOs as discussed above) will be short-term or long-term depending on whether the shares of our common stock were held for more than one year from the date such shares were transferred to the optionholder.

Alternative Minimum Tax. Alternative minimum tax ("AMT") is payable if and to the extent the amount thereof exceeds the amount of the taxpayer's regular tax liability, and any AMT paid generally may be credited against future regular tax liability (but not future AMT liability). AMT applies to alternative minimum taxable income; generally regular taxable income as adjusted for tax preferences and other items is treated differently under AMT.

For AMT purposes, the spread upon exercise of an ISO (but not a NQSO) will be included in alternative minimum taxable income, and the taxpayer will receive a tax basis equal to the fair market value of the shares of our common stock at such time for subsequent AMT purposes. However, if the optionholder disposes of the ISO shares in the year of exercise, the AMT income cannot exceed the gain recognized for regular tax purposes, provided that the disposition meets certain third party requirements for limiting the gain on a disqualifying disposition. If there is a disqualifying disposition in a year other than the year of exercise, the income on the disqualifying disposition is not considered alternative minimum taxable income.

There are no federal income tax consequences to Black Hills Corporation by reason of the grant of ISOs or NQSOs or the exercise of an ISO (other than disqualifying dispositions).

At the time the optionholder recognizes ordinary income from the exercise of a NQSO, we will be entitled to a federal income tax deduction in the amount of the ordinary income so recognized (as described above), provided that we satisfy our reporting obligations described below. To the extent the optionholder recognizes ordinary income by reason of a disqualifying disposition of the stock acquired upon exercise of an ISO, we will be entitled to a corresponding deduction in the year in which the disposition occurs.

We are required to report to the Internal Revenue Service any ordinary income recognized by any optionholder by reason of the exercise of a NQSO. We are required to withhold income and employment taxes (and pay the employer's share of the employment taxes) with respect to ordinary income recognized by the optionholder upon exercise of NQSOs.

Unless a participant makes the election described below with respect to SARs, restricted stock, restricted stock units or performance awards granted under the Plan, a participant receiving a grant of such an award will not recognize income and we will not be allowed a deduction at the time such award is granted. While an award remains unvested or otherwise subject to a substantial risk of forfeiture, a participant will recognize compensation income equal to the amount of any dividends received and we will be allowed a deduction in a like amount. When an award vests or otherwise ceases to be subject to a substantial risk of forfeiture, the excess of the fair market value of the award on the date of vesting or the cessation of the substantial risk of forfeiture over the amount paid, if any, by the participant for the award will be ordinary income to the participant and will be claimed as a deduction for federal income tax purposes by us. Upon disposition of the shares received, the gain or loss recognized by the participant will be treated as capital gain or loss, and the capital gain or loss will be short-term or long-term depending upon the holding period. However, by filing a Section 83(b) election with the Internal Revenue Service within 30 days after the date of grant, a participant's ordinary income and commencement of holding period and the deduction will be determined as of the date of grant. In such a case, the amount of ordinary income recognized by such a participant and deductible by us will be equal to the excess of the fair market value of the award as of the date of grant over the amount paid, if any, by the participant for the award. If such election is made and a participant thereafter forfeits his or her award, no refund or deduction will be allowed for the amount previously included in such participant's income.

Certain of the benefits under the Plan may constitute "deferred compensation" within the meaning of Section 409A of the Code, a provision governing "nonqualified deferred compensation plans." Failure to comply with the requirements of the provisions of Section 409A regarding participant elections and the timing of payment distributions could result in the affected participants being required to recognize ordinary income for federal tax purposes earlier than expected, and to be subject to substantial penalties.

The Board of Directors recommends a vote FOR the approval of Amendment No. 2
to the Black Hills Corporation 2005 Omnibus Incentive Plan and the Code Section 162(m) renewal.

Our Board of Directors does not intend to present any business for action by our shareholders at the meeting except the matters referred to in this proxy statement. If any other matters should be properly presented at the meeting, it is the intention of the persons named in the accompanying form of proxy to vote thereon in accordance with the recommendations of our Board of Directors.

Shareholder proposals intended to be presented at our 2011 annual meeting of shareholders and considered for inclusion in our proxy materials must be received by our Corporate Secretary in writing at our executive offices at 625 Ninth Street, P.O. Box 1400, Rapid City, South Dakota 57709, prior to December 14, 2010. Any proposal submitted must be in compliance with Rule 14a-8 of Regulation 14A of the Securities and Exchange Commission.

Additionally, a shareholder may submit a proposal for consideration at our 2011 annual meeting of shareholders, but not for inclusion of the proposal in our proxy materials, if the shareholder gives timely written notice of such proposal in accordance with Article I, Section 9 of our Bylaws. In general, Article I, Section 9 provides that, to be timely, a shareholder's notice must be delivered to our Corporate Secretary in writing not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of shareholders.

Our 2010 annual meeting is scheduled for May 25, 2010. Ninety days prior to the first anniversary of this date will be February 24, 2011, and 120 days prior to the first anniversary of this date will be January 25, 2011. For business to be properly requested by the shareholder to be brought before the 2011 annual meeting of shareholders, the shareholder must comply with all of the requirements of Article I, Section 9 of our Bylaws, not just the timeliness requirements set forth above.

In accordance with a notice sent to eligible shareholders who share a single address, we are sending only one annual report and proxy statement to that address unless we receive instructions to the contrary from any shareholder at that address. This practice, known as "householding," is designed to reduce our printing and postage costs. However, if a shareholder of record residing at such an address wishes to receive a separate annual report or proxy statement in the future, he or she may contact Shareholder Relations at the below address. Eligible shareholders of record receiving multiple copies of our annual report and proxy statement can request householding by contacting us in the same manner. Shareholders who own shares through a bank, broker or other nominee can request householding by contacting the nominee.

We hereby undertake to deliver promptly, upon written or oral request, a separate copy of the annual report to shareholders, or proxy statement, as applicable, to our shareholders at a shared address to which a single copy of the document was delivered.

Please vote your shares by telephone, by the Internet or by promptly returning the accompanying form of proxy, whether or not you expect to be present at the meeting.

A copy of our Annual Report on Form 10-K (excluding exhibits), for the year ended December 31, 2009, which is required to be filed with the Securities and Exchange Commission, will be made available to shareholders to whom this Proxy Statement is mailed, without charge, upon written or oral request to Shareholder Relations, Black Hills Corporation, P.O. Box 1400, Rapid City, SD 57709, Telephone Number: (605) 721-1700. Our Annual Report on Form 10-K also may be accessed through our website at www.blackhillscorp.com.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 25, 2010

Shareholders may view this proxy statement, our form of proxy and our 2009 Annual Report to Shareholders over the Internet by accessing our website at www.blackhillscorp.com. Information on our website does not constitute a part of this proxy statement.

Whereas, Black Hills Corporation, a South Dakota corporation (the "Company"), maintains the 2005 Omnibus Incentive Plan (the "Plan"), which Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based Awards; and

Whereas, Article 18.1 of the Plan provides for the amendment of the Plan by the Board of Directors, subject to shareholder approval, and the Board of Directors have authorized an amendment to increase the number of shares of Common Stock reserved for issuance under the Plan by 500,000 additional shares.

Now, Therefore, the 2005 Omnibus Incentive Plan shall be amended as follows:

This Amendment No. 2 was approved by the Board of Directors of Black Hills Corporation on December 8, 2009, to be effective as of the date determined in accordance with the provisions of paragraph 2 hereof.

Name of Beneficial Owner					Percentage(3)

Directors and Named Executive Officers
Anthony S. Cleberg(4)	23,445			23,445	*
David C. Ebertz	6,596		10,387	16,983	*
David R. Emery(5)	102,173	30,882		133,055	*
Jack W. Eugster	9,000		7,624	16,624	*
Linden R. Evans	41,658	10,000		51,658	*
John R. Howard	16,864		16,962	33,826	*
Kay S. Jorgensen	7,615		12,400	20,015	*
Robert A. Myers	10,129			10,129	*
Stephen D. Newlin	2,605		7,837	10,442	*
Thomas M. Ohlmacher	56,727	2,500		59,227	*
Gary L. Pechota	4,085		5,077	9,162	*
Warren L. Robinson(6)	4,589		5,246	9,835	*
John B. Vering(7)	2,728		7,007	9,735	*
Thomas J. Zeller(8)	5,909		10,784	16,693	*
All directors and executive officers as a group (23 persons)	429,314	117,786	83,324	630,424	1.6%

Name of Beneficial Owner

Five Percent Shareholders
BlackRock, Inc.(1)		4,082,131	10.4	%
	40 East 52^nd Street New York, NY 10022
Dos Mil Doscientos Uno, Ltd.(2)		2,373,380	6.1	%
	Ronda Universitat, 31 1-1 Barcelona, Spain 08007
State Street Corporation(3)		2,984,575	7.6	%
	One Lincoln Street Boston, MA 02111
T. Rowe Price Associates, Inc.(4)		2,405,507	6.1	%
	100 East Pratt Street Baltimore, MD 21202


AGL Resources Inc.	Laclede Group, Inc.	Portland General Electric Company
ALLETE Inc.	MDU Resources Group, Inc.	Puget Energy, Inc.
Avista Corp	National Fuel Gas Co.	South Jersey Industries Inc.
CH Energy Group Inc.	Nicor Inc.	UIL Holdings Corporation
Cleco Corporation	Northwest Natural Gas Co.	UniSource Energy Corporation
DPL Inc.	NorthWestern Corporation	Vectren Corporation
Equitable Resources Inc.	Otter Tail Corporation	Westar Energy, Inc.
Great Plains Energy Incorporated IDACORP, Inc.	PNM Resources, Inc.	WGL Holdings, Inc.

Threshold	Non-energy Marketing Earnings Per Share Goal		Energy Marketing Earnings Per Share Goal

Minimum	$	1.386	$	0.495	30	%
Target	$	1.540	$	0.550	100	%
Maximum	$	1.771	$	0.633	200	%


Alliant Energy Corporation	IDACORP, Inc.	OGE Energy Corporation
DPL Inc.	Integrys Energy Group, Inc.	Pepco Holdings Inc.
Great Plains Energy	Northeast Utilities	PNM Resources Inc.
Incorporated	NStar	Wisconsin Energy Corp.
Hawaiian Electrics Inds.


CEO	70	%
COO—Non-regulated Energy	50	%
COO—Utilities	50	%
CFO	45	%
Sr. Vice President—Human Resources	40	%


David R. Emery, CEO			11,543
Anthony S. Cleberg, CFO			5,497
Thomas M. Ohlmacher, COO—Non-regulated Energy			6,962
Linden R. Evans, COO—Utilities			6,962
Robert A. Myers, Sr. Vice President—Human Resources			3,206


AGL Resources Inc.	IDACORP, Inc.	NV Energy, Inc.
ALLETE Inc.	MDU Resources Group, Inc.	UIL Holdings Corporation
Avista Corp	NorthWestern Corporation	UniSource Energy Corporation
CH Energy Group Inc.	Otter Tail Corporation	Vectren Corporation
Cleco Corporation	PNM Resources, Inc.	Westar Energy, Inc.
DPL Inc.	Portland General Electric	WGL Holdings, Inc.
Great Plains Energy	Company
Incorporated

Performance Period		Payout % of Target

January 1, 2007 to December 31, 2009			0
January 1, 2006 to December 31, 2008			0
January 1, 2005 to December 31, 2007			175
March 1, 2004 to December 31, 2006			37
March 1, 2004 to December 31, 2005			175



David R. Emery	6,900	12,319	11,982
Anthony S. Cleberg	NA	5,866	5,706
Thomas M. Ohlmacher	4,370	7,431	7,227
Linden R. Evans	2,748	7,431	7,227
Robert A. Myers	NA	3,422	3,328

Officer Level		Ownership Guideline (# of Shares)

CEO			90,000
COOs and CFO			40,000
Vice President and General Manager of Energy Marketing			40,000
Other Senior Executive Officers			25,000
Other Corporate Officers and Business Unit Leaders			10,000
Other Subsidiary Officers			5,000


		THE COMPENSATION COMMITTEE
		Jack W. Eugster, Chairperson David C. Ebertz Kay S. Jorgensen Stephen D. Newlin Thomas J. Zeller

Name and Principal Position			Salary		Stock Awards(1)		Non-Equity Incentive Plan Compensation(2)		Change in Pension Value and Nonqualified Deferred Compensation Earnings(3)		All Other Compensation(4)		Total

David R. Emery		2009	$	564,000	$	674,723	$	221,088	$	361,799	$	51,990	$	1,873,600
	Chairman, President	2008	$	563,269	$	867,400	$	205,296	$	549,730	$	42,293	$	2,227,988
	and Chief Executive	2007	$	544,231	$	578,930	$	763,000	$	312,524	$	36,583	$	2,235,268
	Officer
Anthony S. Cleberg		2009	$	315,000	$	321,300	$	79,380	$	102,058	$	198,778	$	1,016,516
	Executive Vice	2008	$	130,846	$	225,000	$	34,020	$	3,645	$	25,911	$	419,422
	President and Chief
	Financial Officer
Thomas M. Ohlmacher		2009	$	351,000	$	406,978	$	98,280	$	312,019	$	35,125	$	1,203,402
	President and Chief	2008	$	350,600	$	466,020	$	91,260	$	292,809	$	28,915	$	1,229,604
	Operating Officer—	2007	$	340,600	$	366,659	$	340,600	$	13,645	$	26,103	$	1,087,607
	Non-regulated
	Energy
Linden R. Evans		2009	$	274,000	$	406,978	$	76,720	$	102,553	$	29,086	$	889,337
	President and Chief	2008	$	273,212	$	395,908	$	71,240	$	125,292	$	24,421	$	890,073
	Operating Officer—	2007	$	253,035	$	230,621	$	253,500	$	53,952	$	20,166	$	811,274
	Utilities
Robert A. Myers		2009	$	261,322	$	287,404	$	61,600	$	28,938	$	101,990	$	741,254
	Senior Vice
	President
	Human Resources

	2009		2008		2007

David R. Emery	$	944,509	$	1,105,450	$	788,127
Anthony S. Cleberg	$	449,766	$	225,000		NA
Thomas M. Ohlmacher	$	569,717	$	616,785	$	499,153
Linden R. Evans	$	569,717	$	490,714	$	313,961
Robert A. Myers	$	362,347		NA		NA

		Defined Benefit Plan		PRB			PEP			Total Change in Pension Value

David R. Emery	2009	$	43,690	$	167,024		$	151,085		$	361,799
	2008	$	33,858	$	264,299		$	251,573		$	549,730
	2007	$	6,366	$	159,889		$	146,269		$	312,524
Anthony S. Cleberg	2009	$	36,790	$	12,762		$	52,506		$	102,058
	2008		—	$	3,645			—		$	3,645
Thomas M. Ohlmacher	2009	$	131,901	$	96,327		$	83,791		$	312,019
	2008	$	101,389	$	109,258		$	82,162		$	292,809
	2007	$	36,675	$	(18,858	)	$	(4,172	)	$	13,645
Linden R. Evans	2009	$	25,375	$	24,629		$	52,549		$	102,553
	2008	$	19,368	$	48,132		$	57,792		$	125,292
	2007	$	14,958		—		$	38,994		$	53,952
Robert A. Myers	2009		—		—		$	28,938		$	28,938



					Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2)						Estimated Future Payouts Under Equity Incentive Plan Awards(3)
																		Grant Date Fair Value of Stock Awards(5) ($)
			Date of Compensation Committee Action
Name	Grant Date		Date of Compensation Committee Action		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)
David R. Emery					$	118,440	$	394,800	$	789,600
		1/01/09		12/08/08								6,160		12,319		21,558		$	359,715
		1/02/09		12/08/08													11,543	$	315,008
Anthony S. Cleberg					$	42,525	$	141,750	$	283,500
		1/01/09		12/08/08								2,933		5,866		10,266		$	171,287
		1/02/09		12/08/08													5,497	$	150,013
Thomas M. Ohlmacher					$	52,650	$	175,500	$	351,000
		1/01/09		12/08/08								3,716		7,431		13,004		$	216,985
		1/02/09		12/08/08													6,962	$	189,993
Linden R. Evans					$	41,100	$	137,000	$	274,000
		1/01/09		12/08/08								3,716		7,431		13,004		$	216,985
		1/02/09		12/08/08													6,962	$	189,993
Robert A. Myers					$	33,000	$	110,000	$	220,000
		1/01/09		12/08/08								1,711		3,422		5,989		$	99,922
		1/02/09		12/08/08													6,870	$	187,482

	Option Awards						Stock Awards

Name	Number of Securities Underlying Unexercised Options Exercisable (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested(2) (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(2) (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
David R. Emery		5,000	$	55.36		5/30/11		24,142	$	642,901		9,610	$	255,901
		4,595	$	35.10		4/23/12
		7,500	$	27.49		3/31/13
		13,787	$	28.09		5/15/13
Anthony S. Cleberg		—		—		—		10,065	$	268,031		2,933	$	78,106
Thomas M. Ohlmacher		2,500	$	55.36		5/30/11		13,221	$	352,075		5,901	$	157,130
Linden R. Evans		2,000	$	32.34		6/17/12		12,987	$	345,844		5,090	$	135,533
		3,000	$	25.16		12/10/12
		5,000	$	29.83		12/31/13
Robert A. Myers		—		—		—		6,871	$	182,975		1,711	$	45,564

	Unvested Restricted Stock and Restricted Stock Units				Unvested and Unearned Performance Shares

Name	# of Shares		Vesting Date		# of Shares		Vesting Date
David R. Emery		3,848		1/02/10		—		12/31/09
		2,390		1/04/10		3,450		12/31/10
		2,742		1/05/10		6,160		12/31/11
		2,538		8/13/10
		3,848		1/02/11
		2,390		1/04/11
		2,538		8/13/11
		3,848		1/02/12
Anthony S. Cleberg		1,832		1/02/10		2,933		12/31/11
		2,284		8/13/10
		1,832		1/02/11
		2,284		8/13/11
		1,833		1/02/12
Thomas M. Ohlmacher		2,321		1/02/10		—		12/31/09
		1,514		1/04/10		2,185		12/31/10
		1,707		1/05/10		3,716		12/31/11
		761		8/13/10
		2,321		1/02/11
		1,514		1/04/11
		762		8/13/11
		2,321		1/02/12
Linden R. Evans		2,321		1/02/10		—		12/31/09
		952		1/04/10		1,374		12/31/10
		1,074		1/05/10		3,716		12/31/11
		1,523		8/13/10
		2,321		1/02/11
		952		1/04/11
		1,523		8/13/11
		2,321		1/02/12
Robert A. Myers		2,290		1/02/10		1,711		12/31/11
		2,290		1/02/11
		2,291		1/02/12

Age at Start of Payments			Age at Start of Payments

61	93.0	%	57	69.7	%
60	86.5	%	56	64.8	%
59	80.5	%	55	60.3	%
58	74.9	%

		401(k) Match		Dividends on Restricted Stock/Units		Relocation Expense Perquisites		Other Perquisites		Total Other Compensation

David R. Emery	2009	$	7,350	$	36,082		—	$	8,558	$	51,990
Anthony S. Cleberg	2009	$	7,350	$	15,913	$	168,358	$	7,157	$	198,778
Thomas M. Ohlmacher	2009	$	7,350	$	19,313		—	$	8,462	$	35,125
Linden R. Evans	2009	$	7,350	$	19,521		—	$	2,215	$	29,086
Robert A. Myers	2009	$	14,596	$	9,755	$	69,202	$	8,437	$	101,990

	Option Awards				Stock Awards(1)

Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
David R. Emery		30,000	$	121,989		10,134	$	274,694
Anthony S. Cleberg		—		—		2,283	$	60,477
Thomas M. Ohlmacher		—		—		5,766	$	156,847
Linden R. Evans		—		—		4,674	$	126,400
Robert A. Myers		—		—		—		—

Name	Plan Name		Present Value of Accumulated Benefit(2) ($)

David R. Emery	Defined Benefit Pension Plan	20.33	$	280,409
	Pension Restoration Benefit	20.33	$	920,305
	Grandfathered Pension Equalization Plan	10.00	$	382,745
	2005 Pension Equalization Plan	15.00	$	720,476
Anthony S. Cleberg	Defined Benefit Pension Plan	1.42	$	36,790
	Pension Restoration Benefit	1.42	$	16,407
	2007 Pension Equalization Plan	1.00	$	52,506
Thomas M. Ohlmacher	Defined Benefit Pension Plan	35.50	$	1,010,820
	Pension Restoration Benefit	35.50	$	1,434,642
	Grandfathered Pension Equalization Plan	13.00	$	1,166,698
	2005 Pension Equalization Plan	18.00	$	78,336
Linden R. Evans	Defined Benefit Pension Plan	8.58	$	107,784
	Pension Restoration Benefit	8.58	$	84,794
	2007 Pension Equalization Plan	5.00	$	163,783
Robert A. Myers	Defined Benefit Pension Plan	—		—
	Pension Restoration Benefit	—		—
	2007 Pension Equalization Plan	1.00	$	28,938


	0.9% of average earnings (up to covered compensation), multiplied by credited service after January 31, 2000 minus the number of years of credited service before January 31, 2000		Plus		1.3% of average earnings in excess of covered compensation, multiplied by credited service after January 31, 2000 minus the number of years of credited service before January 31, 2000


	1.2% of average earnings (up to covered compensation), multiplied by credited service before January 31, 2000		Plus		1.6% of average earnings in excess of covered compensation, multiplied by credited service before January 31, 2000

Years of Plan Participation			Years of Plan Participation

Less than 3 years	0	%	6 years but less than 7	65	%
3 years but less than 4	20	%	7 years but less than 8	80	%
4 years but less than 5	35	%	8 or more years	100	%
5 years but less than 6	50	%

	Cash Severance Payment		Incremental Pension Benefit (present value)(2)		Continuation of Medical/ Welfare Benefits (present value)(3)		Acceleration of Equity Awards(4)		Excise Tax and Gross-up(5)		Total Termination Benefits

David R. Emery
• Retirement		—		—		—	$	141,291		—	$	141,291
• Death or disability		—		—		—	$	711,173		—	$	711,173
• Involuntary termination		—		—		—		—		—		—
• CIC		—		—		—	$	642,901		—	$	642,901
• Involuntary or good reason termination after CIC(1)	$	2,866,812	$	401,700	$	277,500	$	642,901		—	$	4,188,913
Anthony S. Cleberg
• Retirement		—		—		—	$	32,509		—	$	32,509
• Death or disability		—		—		—	$	300,540		—	$	300,540
• Involuntary termination		—		—		—		—		—		—
• CIC		—		—		—	$	268,031		—	$	268,031
• Involuntary or good reason termination after CIC(1)	$	913,500		—	$	103,400	$	268,031	$	371,368	$	1,656,299
Thomas M. Ohlmacher
• Retirement		—		—		—	$	86,640		—	$	86,640
• Death or disability		—		—		—	$	393,258		—	$	393,258
• Involuntary termination		—		—		—		—		—		—
• CIC		—		—		—	$	352,075		—	$	352,075
• Involuntary or good reason termination after CIC(1)	$	1,053,000	$	415,800	$	20,900	$	352,075		—	$	1,841,775
Linden R. Evans
• Retirement		—		—		—	$	69,783		—	$	69,783
• Death or disability		—		—		—	$	387,026		—	$	387,026
• Involuntary termination		—		—		—		—		—		—
• CIC		—		—		—	$	345,844		—	$	345,844
• Involuntary or good reason termination after CIC(1)	$	822,000	$	63,900	$	231,700	$	345,844		—	$	1,463,444
Robert A. Myers
• Retirement		—		—		—	$	18,965		—	$	18,965
• Death or disability		—		—		—	$	201,939		—	$	201,939
• Involuntary termination		—		—		—		—		—		—
• CIC		—		—		—	$	182,975		—	$	182,975
• Involuntary or good reason termination after CIC(1)	$	770,000		—	$	126,300	$	182,975	$	308,092	$	1,387,367

Plan category			Weighted-average exercise price of outstanding options, warrants and rights (b)

Equity compensation plans approved by security holders(1)	481,868	(2)	$	32.24	(2)	751,996	(3)
Equity compensation plans not approved by security holders	—			—		—
Total	481,868		$	32.24		751,996

		2009		2008(1)

Audit Fees		$	3,026,815	$	3,381,900
Audit-Related Fees			121,700		151,800
Tax Fees			1,092,100		1,160,730

	Total Fees	$	4,240,615	$	4,694,430


		THE AUDIT COMMITTEE
		Warren L. Robinson, Chairperson John R. Howard Gary L. Pechota John B. Vering

		Restricted Stock				Performance Shares				Director Common Stock Equivalents

		($ Value)		(# Shares)		($ Value)		(# Shares)		($ Value)		(# Shares)
David R. Emery		$	315,008		11,543	$	359,715		12,319
	Chairman, President and Chief Executive Officer
Anthony S. Cleberg		$	150,013		5,497	$	171,287		5,866
	Executive Vice President and Chief Financial Officer
Thomas M. Ohlmacher		$	189,993		6,962	$	216,985		7,431
	President and Chief Operating Officer—Non-regulated Energy
Linden R. Evans		$	189,993		6,962	$	216,985		7,431
	President and Chief Operating Officer—Utilities
Robert A. Myers		$	187,482		6,870	$	99,922		3,422
	Senior Vice President Human Resources
Corporate Officers(1)		$	1,595,414		58,445	$	1,707,266		58,468
Non-Executive Directors										$	450,000		20,745
All Other Employees		$	800,848		31,090	$	574,305		19,668



		Shareholder Relations Black Hills Corporation P.O. Box 1400 Rapid City, SD 57709 (605) 721-1700



		By Order of the Board of Directors,

		ROXANN R. BASHAM Vice President—Governance and Corporate Secretary
Dated: April 13, 2010

Black Hills Corporation
P.O. Box 1400, Rapid City, SD 57709	PROXY

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