Black Hills Corp.'s newest power plant, Wygen II near Gillette, Wyo., began full-scale operation Jan. 1 as scheduled, the company announced.

Meanwhile, plans are under way for another power plant, Wygen III, at the same location. Construction could start as early as this spring, Dale Jahr, company spokesman, said.

Wygen II, a 95-megawatt, coal-fired plant, is owned by Black Hills Corp. subsidiary Cheyenne Light, Fuel & Power, which serves the southeastern corner of Wyoming, including the city of Cheyenne.

Black Hills Corp. acquired the gas-and-electric utility from Xcel Energy in January 2005. Until now, Public Service of Colorado has supplied power to Cheyenne under an agreement that expired at the end of 2007.

"To the credit of our power-generation team, we completed another successful construction project cost-effectively and in less than 30 months," said David R. Emery, chairman, president and chief executive officer of Black Hills Corp. "This power plant, with its use of state-of-the-art emissions-control technology, is among the cleanest in the United States."

Emery believes Wygen II is among the first coal-fired plants in the United States to reduce mercury emissions.

Wygen II is the newest resident of the so-called "Gillette Energy Complex," a neighborhood of power plants that together produce more than 700 megawatts of electricity.

All of the power plants are fueled by coal from the nearby Wyodak Mine, also owned by Black Hills Corp.

The biggest resident of the neighborhood is the giant 335-megwatt Wyodak Power Plant, owned and operated primarily by PacifiCorp - but Black Hills Power has a 20 percent stake. In addition, Black Hills Corp.'s 20-megawatt Neil Simpson I and two 40-megawatt natural-gas power plants - used only during peak demand - are also located at the site.

And a few hundred yards from Wygen II are the twin 90-megawatt plants, Neil Simpson II and Wygen I.

Wygen II was built with the same blueprints as the Neil Simpson II and Wygen I, but because of advances in technology, it can generate 95 megawatts of electricity, Jahr said. In fact, the same design will be used to build Wygen III, expected to produce even more electricity - as much as 100 megawatts.

The final cost of building the Wygen II has not been tallied, but Jahr said the utility had budgeted $182 million. That is nearly $50 million more than Wygen I five years ago.

He said the next power plant could be even more expensive. The cost of materials such as steel and copper has been soaring. Emission-control equipment is growing more expensive, and labor costs are rising.

Wygen III is still going through the regulatory process. The company has its air permit from the Wyoming Department of Environmental Quality and has applied for permit from the Industrial Siting Council and other agencies.

Contact Dan Daly at 394-8421 or at dan.daly@rapidcityjournal.com