United States

UNITED STATES
Securities and Exchange CommissionSECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549

Form 10-Q

X    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

        For the quarterly period ended March 31, 2003.June 30, 2003

OR

___

____   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

        For the transition period from __________________________________ to _______________.__________________

        Commission File Number 1-7978

BLACK HILLS POWER, INC.

Black Hills Power, Inc.
Incorporated in South Dakota                                                                                                     IRS Identification Number 46-0111677

625 Ninth Street
Rapid City, South Dakota 57701

Registrant’s telephone number (605)number(605) 721-1700

Former name, former address, and former fiscal year if changed since last report



NONE

Indicate by check mark whether the registrantRegistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrantRegistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

         YesYES   X   No______   NO____

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes______        NoYES ____  NO      X

As of April 30,July 31, 2003 there were issued and outstanding 23,416,396 shares of the Registrant’sRegistrant's common stock, $1.00 par value, all of which were held beneficially and of record by Black Hills Corporation.

Reduced Disclosure

The Registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

TABLE OF CONTENTS


                                                              Page
                                                              ----
PART 1.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Condensed Statements of Income -
              Three Months Ended March 31, 2003 and 2002        3

           Condensed Balance Sheets -
              March 31, 2003 and December 31, 2002              4

           Condensed Statements of Cash Flows -
              Three Months Ended March 31, 2003 and 2002        5

           Notes to Condensed Financial Statements            6-10

Item 2.    Results of Operations                              10-12

Item 4.    Controls and Procedures                            12-13

PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings                                   14

Item 6.    Exhibits and Reports on Form 8-K                    14

           Signatures                                          15

           Certifications                                     16-19

           Exhibit Index                                       20
Page
PART 1FINANCIAL INFORMATION

Item 1		Financial Statements

Condensed Statements of Income -
Three and six months ended
June 30, 2003 and 20023

Condensed Balance Sheets -
June 30, 2003 and December 31, 20024

Condensed Statements of Cash Flows -
Six months ended June 30, 2003 and 20025

Notes to Condensed Financial Statements		6-10

Item 2		Results of Operations10-13

Item 4		Controls and Procedures13

PART II		OTHER INFORMATION

Item 1		Legal Proceedings14

Item 6		Exhibits and Reports on Form 8-K14

Signatures15

Exhibit Index16

2

BLACK HILLS POWER, INC.
CONDENSED STATEMENTS OF INCOME
(unaudited)


                                                 Three Months Ended
                                                       March 31
                                                 2003          2002
                                                 ----          ----
                                                    (in thousands)

Operating revenue                               $43,762      $37,192
                                               --------      -------

Operating expenses:
   Fuel and purchased power                      14,436        9,088
   Operations and maintenance                     5,424        5,625
   Administrative and general                     3,437        1,830
   Depreciation and amortization                  4,729        4,247
   Taxes, other than income taxes                 2,084        2,075
                                               --------      -------
                                                 30,110       22,865
                                               --------      -------

Operating income                                 13,652       14,327
                                               --------      -------

Other income (expense):
   Interest expense                              (4,103)      (2,765)
   Other income                                     484          147
                                               --------      -------
                                                 (3,619)      (2,618)
                                               --------      -------

Income before income taxes and
  discontinued operations                        10,033       11,709
Income taxes                                     (3,334)      (3,886)
                                               --------      -------
   Income from continuing operations              6,699        7,823
Discontinued operation, net of income
  taxes (Note 2)                                  1,906        4,161
                                               --------      -------

   Net income                                  $  8,605      $11,984
                                               ========      =======
Three months endedSix months ended
June 30June 30
2003
2002
2003
2002
(in thousands)
Operating revenue  $39,207 $38,303 $82,970 $75,494 
Operating expenses:  
   Fuel and purchased power   11,445  9,354  25,881  18,442 
   Operations and maintenance   6,679  6,176  12,103  11,801 
   Administrative and general   3,665  3,050  7,103  4,879 
   Depreciation and amortization   4,809  4,431  9,537  8,678 
   Taxes, other than income taxes   2,012  1,939  4,097  4,014 
    28,610  24,950  58,721  47,814 
Operating income   10,597  13,353  24,249  27,680 
Other income (expense):  
   Interest expense   (4,301) (3,267) (8,604) (6,491)
   Other income   741  146  1,424  752 
    (3,560) (3,121) (7,180) (5,739)
Income before income taxes and  
  discontinued operations   7,037  10,232  17,069  21,941 
Income taxes   (2,315) (3,440) (5,648) (7,327)
   Income from continuing operations   4,722  6,792  11,421  14,614 
Discontinued operations, net of  
   income taxes (Note 2)   --  2,339  1,906  6,501 
   Net income  $4,722 $9,131 $13,327 $21,115 

The accompanying notes to condensed financial statements are an integral part of these condensed financial statements.

3

BLACK HILLS POWER, INC.
CONDENSED BALANCE SHEETS
(unaudited)


                                                March 31     December 31
                                                  2003           2002
                                                  ----           ----
                 ASSETS                              (in thousands)

Current assets:
   Cash and cash equivalents                    $    809    $      518
   Receivables (net of allowance for doubtful
     accounts of  $884 and $871, respectively)    16,632        16,391
   Receivables - related party                    55,950        54,253
   Materials, supplies and fuel                    9,333         9,743
   Deferred income taxes                           1,264         5,397
   Assets from discontinued operations                 -     1,008,901
                                                --------    ----------
                                                  83,988     1,095,203
                                                --------    ----------

Investments                                        2,821         2,681
                                                --------    ----------

Property and equipment                           619,664       613,926
   Less accumulated depreciation                (216,429)     (211,992)
                                                --------    ----------
                                                 403,235       401,934
                                                --------    ----------
Other assets:
   Regulatory asset                                4,350         4,350
   Other                                           6,249         7,159
                                                --------    ----------
                                                  10,599        11,509
                                                --------    ----------

     Total                                      $500,643    $1,511,327
                                                ========    ==========

     LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
   Current maturities of long-term debt         $  2,546    $    3,095
   Accounts payable                               17,094        14,653
   Accounts payable - related  party               1,417         2,585
   Accrued liabilities                            17,579        15,575
   Liabilities from discontinued operations            -       964,759
                                                --------    ----------
                                                  38,636     1,000,667
                                                --------    ----------

Long-term debt, net of current maturities        212,034       212,042
                                                --------    ----------

Deferred credits:
   Deferred income taxes                          54,767        58,539
   Regulatory liability                            5,216         5,395
   Other                                          17,289        16,456
                                                --------    ----------
                                                  77,272        80,390
                                                --------    ----------

Stockholder's equity:
   Common stock $1 par value; 50,000,000 shares
     authorized; 23,416,396 shares issued         23,416        23,416
   Additional paid-in capital                     39,549        80,961
   Retained earnings                             118,341       131,906
   Accumulated other comprehensive loss           (8,605)      (18,055)
                                                --------    ----------
                                                 172,701       218,228
                                                --------    ----------

     Total                                      $500,643    $1,511,327
                                                ========    ==========
The accompanying notes to condensed financial statements are an integral part of these condensed financial statements.

BLACK HILLS POWER, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)


                                                Three Months Ended
                                                     March 31
                                               2003           2002
                                               ----           ----
                                                  (in thousands)

Cash flows from operations                   $17,527       $ 5,972
                                             -------       -------

Investing activities:
   Property additions                         (6,018)       (8,845)
   Change in notes receivable from
     associated companies, net                (2,427)        9,817
   (Increase) decrease in investments           (140)        1,410
                                            --------       -------
                                              (8,585)        2,382
                                            --------       -------
Financing activities
   Dividends paid                             (8,094)       (7,749)
   Long-term debt - repayments                  (557)         (531)
                                            --------       -------
                                              (8,651)       (8,280)
                                            --------       -------

   Increase in cash and cash equivalents         291            74

Cash and cash equivalents:
   Beginning of period                           518         1,079
                                            --------       -------
   End of period                            $    809       $ 1,153
                                            ========       =======

Supplemental disclosure of cash flow
  information
   Cash paid during the period for:
      Interest (net of capitalized
        interest of $199 and $458,
        respectively)                       $  6,386       $ 4,180
      Income taxes                          $      -       $     -

Stock dividend distribution to Black
  Hills Corporation, the parent company of
  Black Hills Power, Inc. (Note 2)          $ 45,687       $     -
June 30
2003
December 31
2002
(in thousands)
ASSETS
Current assets:      
   Cash and cash equivalents  $1,976 $518 
   Receivables (net of allowance for doubtful accounts of $889 and
      $871, respectively)		   14,356  16,391 
   Receivables - related party   50,403  54,253 
   Materials, supplies and fuel   10,187  9,743 
   Deferred income taxes   1,540  5,397 
   Assets from discontinued operations   --  1,008,901 
    78,462  1,095,203 
Investments   2,860  2,681 
Property and equipment   624,308  613,926 
   Less accumulated depreciation   (219,992) (211,992)
    404,316  401,934 
Other assets:  
   Regulatory asset   4,350  4,350 
   Other   6,591  7,159 
    10,941  11,509 
     Total  $496,579 $1,511,327 
                              LIABILITIES AND STOCKHOLDER'S EQUITY  
Current liabilities:  
   Current maturities of long-term debt  $2,547 $3,095 
   Accounts payable   19,413  14,653 
   Accounts payable - related party   563  2,585 
   Accrued liabilities   17,816  15,575 
   Liabilities from discontinued operations   --  964,759 
    40,339  1,000,667 
Long-term debt, net of current maturities   210,072  212,042 
Deferred credits:  
   Deferred income taxes   55,257  58,539 
   Regulatory liability   3,564  5,395 
   Other   19,547  16,456 
    78,368  80,390 
Stockholder's equity:  
   Common stock $1 par value; 50,000,000 shares authorized;
         23,416,396 shares issued		   23,416  23,416 
   Additional paid-in capital   39,549  80,961 
   Retained earnings   113,430  131,906 
   Accumulated other comprehensive loss   (8,595) (18,055)
    167,800  218,228 
     Total  $496,579 $1,511,327 

The accompanying notes to condensed financial statements are an integral part of these condensed financial statements.

4

BLACK HILLS POWER, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)

Six months ended
June 30
2003
2002
(in thousands)
Cash flows from operations  $30,760 $21,606 
Investing activities:  
   Property additions   (11,724) (15,301)
   Change in notes receivable from associated companies, net   2,846  9,817 
   (Increase) decrease in investments   (179) 1,317 
    (9,057) (4,167)
Financing activities  
   Dividends paid   (17,727) (15,536)
   Long-term debt - repayments   (2,518) (2,492)
    (20,245) (18,028)
   Increase (decrease) in cash and cash equivalents   1,458  (589)
Cash and cash equivalents:  
   Beginning of period   518  1,079 
   End of period  $1,976 $490 
Supplemental disclosure of cash flow information  
   Cash paid during the period for:  
      Interest  $8,529 $6,618 
      Income taxes paid (refunded), net  $(3,886)$10,100 
Stock dividend distribution to Black Hills Corporation, the  
  parent company of Black Hills Power, Inc. (Note 2)  $45,687 $-- 

The accompanying notes to condensed financial statements are an integral part of these condensed financial statements.

5

BLACK HILLS POWER, INC.

Notes to Condensed Financial Statements
(unaudited)
(Reference is made to Notes to Financial Statements
included in the Company’s Annual Report on Form 10-K)

(1)

     MANAGEMENT’S STATEMENT


 The financial statements included herein have been prepared by Black Hills Power, Inc. (the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the footnotes adequately disclose the information presented. These financial statements should be read in conjunction with the financial statements and the notes thereto, included in the Company’s 2002 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

 Accounting methods historically employed require certain estimates as of interim dates. The information furnished in the accompanying financial statements reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the March 31,June 30, 2003, December 31, 2002 and March 31,June 30, 2002, financial information and are of a normal recurring nature. The results of operations for the threesix months ended March 31,June 30, 2003, are not necessarily indicative of the results to be expected for the full year.

(2)

     NON-CASH DIVIDEND AND DISCONTINUED OPERATIONS


 During the quarter ended March 31, 2003, the Company distributed a non-cash dividend to its parent company, Black Hills Corporation (Parent). The dividend consisted of 10,000 common shares of Black Hills Generation, Inc., formerly known as (f/k/a) Black Hills Energy Capital, Inc., (Generation), which represents 100 percent ownership of Generation. The Company therefore no longer operates in the independent power production business. As a result, the Company no longer has any subsidiaries and operates only in the electric utility business. The Company’s investment in Generation at the time of the distribution was $45.7 million.

 The disposition was accounted for under the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144). Accordingly, results of operations have been classified as “Discontinued operations, net of income taxes” in the accompanying Condensed Statements of Income, and prior periods have been restated. For business segment reporting purposes, Generation’s business results were previously included in the segment “Independent Power Production”. The assets and liabilities of Generation are shown in the accompanying Condensed Balance Sheets under the captions “Assets offrom discontinued operations” and “Liabilities offrom discontinued operations.”

6

Revenues and net income from the discontinued operations are as follows:



                                        Three Months Ended   Three Months Ended
                                          March 31, 2003       March 31, 2002
                                          --------------       --------------
                                                     (in thousands)

        Revenue                              $ 41,485             $ 29,479
                                             ========             ========
        Income before income taxes and
          change in accounting principle     $  2,833             $  5,805
        Income taxes                             (927)              (2,540)
        Change in accounting principle,
          net of tax                                -                  896
                                             --------             --------
        Net income from the discontinued operations $  1,906             $  4,161
                                             ========             ========
Assets and liabilities of discontinued operations included on the accompanying Condensed Balance Sheets are as follows:
are as follows:

Three months ended
June 30		Six months ended
June 30
2003
2002
2003
2002
(in thousands)

Revenue		  $-- $37,206 $41,485 $67,600 
Income before income taxes and  
  change in accounting principle  $-- $4,153 $2,833 $9,362 
Income taxes   --  (1,814) (927) (3,757)
Change in accounting principle,  
  net of tax   --  --  --  896 
Net income from discontinued  
  operations  $-- $2,339 $1,906 $6,501 


                                       March 31        December 31
                                        2003              2002
                                        ----              ----
                                             (in thousands)

        Current assets                 $    -           $  77,213
        Non-current assets                  -             931,688
        Current liabilities                 -            (555,100)
        Non-current liabilities             -            (409,659)
                                       ------           ---------
        Net assets of discontinued
          operations (including
          accumulated other
          comprehensive loss of
          $9,440)                      $    -           $  44,142
                                       ======           =========

June 30
2003
December 31
2002
(in thousands)
Current assets  $-- $77,213 
Non-current assets   --  931,688 
Current liabilities   --  (555,100)
Non-current liabilities   --  (409,659)
Net assets of discontinued  
  operations (including  
  accumulated other  
  comprehensive loss of  
  $0 and $9,440)  $-- $44,142 

(3)

     RECLASSIFICATIONS


 Certain 2002 amounts in the financial statements have been reclassified to conform to the 2003 presentation. These reclassifications did not have an effect on the Company’s total stockholder’s equity or net income as previously reported.

(4)           RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

(4)     RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

 In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (SFAS 143). SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred with associated asset retirement costs being capitalized as part of the carrying amount of the long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Management adopted SFAS 143 effective January 1, 2003 and it had no impact on the Company’s financial statements.

7

(5)           COMPREHENSIVE INCOME

(5)     COMPREHENSIVE INCOME

The following table presents the components of the Company’s comprehensive income:



                                                   Three Months Ended
                                                        March 31
                                                   2003          2002
                                                   ----          ----
                                                     (in thousands)

        Net income                               $ 8,605       $11,984
        Other comprehensive income (loss):
          Fair value adjustment on derivatives
            designated as cash flow hedges,
            included in Discontinued operations     (351)        1,838
                                                 -------       -------

        Comprehensive income
                                                 $ 8,254       $13,822
                                                 =======       =======
(6)           RELATED-PARTY TRANSACTIONS

Receivables

income:

Three months ended
June 30		Six months ended
June 30
2003
2002
2003
2002
(in thousands)
Net income  $4,722 $9,131 $13,327 $21,115 
Other comprehensive income (loss):  
  Reclassification adjustment on  
    interest rate swap included in  
    net income   10  --  20  -- 
  Fair value adjustment on  
    derivatives designated as cash  
    flow hedges, included in  
    discontinued operations   --  (3,080) (360) (1,242)
Comprehensive income  $4,732 $6,051 $12,987 $19,873 

(6)     RELATED-PARTY TRANSACTIONS

Receivables

 The Company has accounts receivable balances related to transactions with other Black Hills Corporation subsidiaries. The balances were $1.0$0.6 million and $1.7 million as of March 31,June 30, 2003 and December 31, 2002, respectively.

 The Company also has extended a line of credit to its Parent, Black Hills Corporation (the Parent), which is due on demand. However, the Company has formally agreed that such amounts will not be demanded until January 1, 2004 or until such time that the Parent has amounts available to repay the obligation and continue its normal operations through January 1, 2004. Outstanding advances were $54.9$49.8 million at March 31,June 30, 2003 and $52.5 million at December 31, 2002. Interest income received on the note was $0.4$0.9 million and $0 for the threesix month periods ended March 31,June 30, 2003 and 2002.June 30, 2002, respectively. Advances under these notes bear interest at a variable rate that does not exceed prime (4.25(4.0 percent at March 31,June 30, 2003) and is receivable monthly.

Other Balances and Transactions

Other Balances and Transactions

 In addition to the above transactions, in order to fuel its combustion turbine, the Company purchased natural gas from Enserco Energy, an indirect subsidiary of the Parent. The amount purchased during the three month periods ended March 31,June 30, 2003 and June 30, 2002 was approximately $1.7$1.0 million and $1.2$1.3 million, respectivelyrespectively. The amount purchased during the six month periods ended June 30, 2003 and isJune 30, 2002 was approximately $2.7 million and $2.5 million, respectively. These amounts are included in “Fuel and purchased power” on the Condensed Statements of Income.

8

The Company also received revenues of approximately $1.6$0.1 million for each of the three month periods ended June 30, 2003 and June 30, 2002, and $1.7 million and $0.1 million for the threesix month periods ended June 30, 2003 and June 30, 2002, respectively, from Black Hills Wyoming, Inc., an indirect subsidiary of Black Hills Corporation, for the transmission of electricity.

(7)           LEGAL PROCEEDINGS

Fires

(7)     LEGAL PROCEEDINGS

Fires

 In September 2001, a fire, which is known as the Hell Canyon fire,Fire, occurred in the southwestern portion of the Black Hills region of South Dakota. The State of South Dakota has alleged that the fire occurred when a high voltage electrical span maintained by the Company broke and electrical arcing from the severed line ignited dry grass. The fire burned approximately 10,000 acres of land owned by the Black Hills National Forest, the Oglala Sioux Tribe and other private landowners. The State of South Dakota initiated litigation against the Company in the Seventh Judicial Circuit Court, Fall River County, South Dakota, on January 31, 2003. The complaint seeks recovery of damages for alleged injury to timber, fire suppression and rehabilitation costs. A claim for treble damages is asserted with respect to the claim for injury to timber. It is expected that theThe United States Forest Service will asserthas asserted substantially similar claims against the Company. The Company’s investigation into the cause and origin of the fire is still pending. The total amount of damages claimed by the State of South Dakota isand the United States are not specified in the complaint.their complaints. The Company has denied all claims and will vigorously defend this matter, the timing or outcome of which is uncertain.

 In June 2002, a forest fire, sometimes referred to as the Grizzly Gulch fire,Fire, damaged approximately 11,000 acres of private and governmental land located near Deadwood and Lead, South Dakota. The fire destroyed approximately 20 structures and caused the evacuation of the cities of Lead and Deadwood for approximately 48 hours.

 The cause of the Grizzly Gulch fireFire was investigated by the State of South Dakota. Contact between power lines owned by the Company and undergrowth was alleged to be the cause. The Company has initiated its own investigation into the cause of the fire, including the hiring of expert fire investigators and that investigation is continuing.

 The State of South Dakota initiated a civil action in the Seventh Judicial Circuit Court, Pennington County, South Dakota seeking recovery of damages for fire suppression, reclamation and remediation costs, and treble damages for injury to trees. The United States government initiated a civil action in U.S. District Court, District of South Dakota, asserting similar claims. Neither the State of South Dakota nor the United States specified the amount of their alleged damages. In addition, the Company has been notified of potential private civil claims for property damage and business loss. The Company has denied all claims and will vigorously defend this matter. The State of South Dakota has subsequently joined its claim in the federal action.

 If it is determined that power line contact was the cause of either fire and that the Company was negligent in the maintenance of those power lines, the Company could be liable for some or all of the damages related to these claims. Although the Company cannot predict the outcome or the viability of potential claims with respect to either fire, based on information currently available, management believes that any such claims, if determined adversely to the Company, will not have a material adverse effect on the Company’s financial condition or results of operations.

9

Ongoing Proceedings

Ongoing Proceedings

 The Company is subject to various other legal proceedings, claims and litigation which arise in the ordinary course of operations. In the opinion of management, the amount of liability, if any, with respect to these actions would not materially affect the financial position or results of operations of the Company.

ITEM 2.   RESULTS OF OPERATIONS


                                             Three Months Ended
                                                  March 31
                                             2003          2002
                                             ----          ----
                                               (in thousands)

        Revenue                             $43,762      $37,192
        Operating expense                    30,110       22,865
                                            -------      -------
        Operating income                    $13,652      $14,327
                                            =======      =======
        Income from continuing operations   $ 6,699      $ 7,823
                                            =======      =======
Three Months ended
June 30		Six months ended
June 30
2003
2002
2003
2002
(in thousands)

Revenue		  $39,207 $38,303 $82,970 $75,494 
Operating expense   28,610  24,950  58,721  47,814 
Operating income  $10,597 $13,353 $24,249 $27,680 
Income from continuing operations  $4,722 $6,792 $11,421 $14,614 

 The following table provides certain operating statistics:


                                    Three Months Ended
                                         March 31
                                   2003             2002
                                   ----             ----
                                        (in MWh's)

        Firm (system) sales       505,482          505,543
        Off-system sales          245,727          161,112
Three months ended
June 30		Six months ended
June 30
2003
2002
2003
2002
(in MWh's)

Firm (system) sales		   447,400  462,000  952,900  968,000 
Off-system sales   234,100  210,000  479,800  371,000 

 Three Months Ended March 31,June 30, 2003 Compared to Three Months Ended March 31,June 30, 2002.RevenuesElectric utility revenues increased 182 percent for the three-month period ended March 31,June 30, 2003, compared to the same period in the prior year. The increase in revenue was primarily due to a 53an 11 percent increase in off-system electric megawatt-hour sales, andat a 4310 percent increase in average prices received. Firm residential, commercial, and commercialindustrial electricity revenues increased 2decreased 3 percent, 1 percent, and 47 percent, respectively, but were offset by a 9 percent declinerespectively. The decrease in industrial revenues was primarily due to the closing of Homestake Gold Mine and Federal Beef Processors.decreased electricity usage at the South Dakota Cement Plant.

 Electric operating expenses increased 3215 percent for the three month period ended March 31,June 30, 2003, compared to the same period in the prior year. The increase in operating expenses was primarily due to an increase in fuel and purchased power costs, additional costs incurred during a scheduled maintenance outage at our Osage plant, and an increase in depreciation, administrative and general costs. FuelPurchased power and purchased powerfuel costs increased $5.3$2.1 million due to the increase in off-system electric sales.sales and higher gas prices. Depreciation expense increased $0.4 million primarily due to the depreciation associated with the combustion turbines. Administrative and general expenses increased primarily due to a $0.5 million increase in pension expense and a $0.7 million increase in salaries.expense.

10

 Interest expense increased $1.3$1.0 million for the three month period, primarily due to interest associated with the $75 million first mortgage bonds issued in August 2002.

 Income from continuing operationsNet income decreased $1.1$2.1 million primarily due to the increase in purchased power expense, interest expense, depreciation expense and pension expense, partially offset by an increase in off-system electric sales and transmission revenues.

Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002. Electric utility revenues increased 10 percent for the six-month period ended June 30, 2003, compared to the same period in the prior year. The increase in revenue was primarily due to a 29 percent increase in off-system electric megawatt-hour sales at a 23 percent increase in average prices received. Industrial revenues decreased 8 percent, primarily due to the closing of Homestake Gold Mine and Federal Beef Processors and decreased electricity usage at the South Dakota Cement Plant.

Electric operating expenses increased 23 percent for the six-month period ended June 30, 2003 compared to the same period in the prior year. The increase in operating expense was primarily due to a $6.2 million increase in purchased power costs, a $1.3 million increase in fuel expense, and increased depreciation and general and administrative expenses. Purchased power and fuel costs increased due to the increase in electric sales and higher gas prices. The average cost of fuel and purchased power increased 17 percent in 2003 compared to the same period in 2002. Depreciation expense increased due to additional expense related to combustion turbines. A $1.0 million increase in pension expense contributed to the increase in general and administrative expense.

Interest expense increased $2.1 million for the six-month period, primarily due to interest associated with the $75 million first mortgage bonds issued in August 2002.

Net income decreased $3.2 million, primarily due to the increase in fuel cost and purchased power interest expense, depreciation expense and pension expense, and administrative and general salariespartially offset by thean increase in off-system electric and transmission revenues.

Forward Looking Statements

 Some of the statements in this Form 10-Q include “forward-looking statements” as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this Form 10-Q that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are based on assumptions, which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including:

11

the effects on our business resulting from the financial difficulties of other energy companies, including the effects on liquidity in the energy marketing and power generation businesses and markets and perceptions of the energy and energy marketing business;

the effects on our business resulting from a lowering of our credit rating (or actions we may take in response to changing credit ratings criteria), including demands for increased collateral by our current or new counterparties, refusal by our current or potential counterparties or customers to enter into transactions with us and our inability to obtain credit or capital in amounts or on terms favorable to us;

capital market conditions;

unanticipated developments in the western power markets, including unanticipated governmental intervention, deterioration in the financial condition of counterparties, default on amounts due from counterparties, adverse changes in current or future litigation, market disruption and adverse changes in energy and commodity supply, volume and pricing and interest rates;

pricing and transportation of commodities;

population changes and demographic patterns;

prevailing governmental policies and regulatory actions with respect to allowed rates of return, industry and rate structure, acquisition and disposal of assets and facilities, operation and construction of plant facilities, recovery of purchased power and other capital investments, and present or prospective wholesale and retail competition;

the continuing efforts by or on behalf of the State of California to restructure its long-term power purchase contracts and efforts by regulators and private parties in several western states to recover refunds for alleged price manipulation;

changes in and compliance with environmental and safety laws and policies;

weather conditions;

competition for retail and wholesale customers;

market demand, including structural market changes;

changes in tax rates or policies or in rates of inflation;

changes in project costs;

unanticipated changes in operating expenses or capital expenditures;

12

technological advances by competitors;

competition for new energy development opportunities;

the cost and other effects of legal and administrative proceedings that influence our business;

the effects on our business, including the availability of insurance, resulting from terrorist actions or responses to such actions; and

other factors discussed from time to time in our filings with the SEC.

 New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.

ITEM 4.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

 Evaluation of Disclosure Controls and Procedures

Within 90 days prior to the filing date of Form 10-Q, ourOur Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as(as defined in Rules 13a-14(c)13a-15(e) and 15d-14(c)15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act).) as of June 30, 2003. Based on their evaluation, they have concluded that our disclosure controls and procedures are adequate and effective to ensure that material information relating to us that is included in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods.

Changes in Internal Control Over Financial Reporting

 Changes in Internal Controls

Our Chief Executive Officer and Chief Financial OfficerDuring the period covered by this Quarterly Report on Form 10-Q, there have concluded that there werebeen no significant changes in our internal controlscontrol over financial reporting that have materially affected or in other factors that could significantlyare reasonably likely to materially affect these controls subsequent to the date of their most recent evaluation of such controls, and that there were no significant deficiencies or material weaknesses in our internal controls.control over financial reporting.

13

BLACK HILLS POWER, INC.

Part II — Other Information

Item 1.

  Legal Proceedings


 For information regarding legal proceedings, see Note 11 toin Item 8 of the Company’s 2002 Annual Report on Form 10-K and Note 7 of our Notes to Condensed Financial Statements in this Quarterly Report on Form 10-Q.10-Q, which information from Note 7 is incorporated by reference into this item.

Item 6.

  Exhibits and Reports on Form 8-K


 (a)       Exhibits—Exhibits

 Exhibit 99.131.1 Certification pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.

Exhibit 31.2 Certification pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.

Exhibit 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 Exhibit 99.232.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of906 of the Sarbanes-Oxley Act of 2002.

 (b)Reports on Form 8-K

 We have filed no reportsthe following Report on Form 8-K during the three month periodquarter ended March 31,June 30, 2003:

Form 8-K dated April 11, 2003.

Reported under Items 2 and 7, that the Company distributed a non-cash dividend to its parent company, Black Hills Corporation, relinquishing its ownership of Black Hills Generation, and provided certain unaudited pro forma combined condensed financial information giving effect to such dividend.

14

BLACK HILLS POWER, INC.

Signatures

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


                                              BLACK HILLS POWER, INC.


                                              /s/  Daniel P. Landguth
                                              ----------------------------
                                              Chairman and
                                              Chief Executive Officer


                                              /s/  Mark T. Thies
                                              ----------------------------
                                              Executive Vice President and
                                              Chief Financial Officer

Dated: May 15, 2003

CERTIFICATION

I, Daniel P. Landguth, certify that:

1. 

I have reviewed this quarterly report on Form 10-Q of Black Hills Power, Inc.;

        BLACK HILLS POWER, INC.

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;


3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;


4.

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


   a) Designed such disclosure controls/s/Daniel P. Landguth
Daniel P. Landguth, Chairman and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
Chief Executive Officer


   b) Evaluated the effectiveness/s/Mark T. Thies
Mark T. Thies, Executive Vice President and
Chief Financial Officer

Dated: August 13, 2003

15

EXHIBIT INDEX

Exhibit Number
Description
Exhibit 31.1Certification pursuant to Rule 13a - 14(a) of the registrant’s disclosure controls and proceduresSecurities Exchange Act of 1934, as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

   c)adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. Presented in this quarterly report our conclusions about the effectiveness

Exhibit 31.2		Certification pursuant to Rule 13a - 14(a) of the disclosure controls and procedures based on our evaluationSecurities Exchange Act of 1934, as of the Evaluation Date;
5. 

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):


   a)adopted pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability

Exhibit 32.1		Certification pursuant to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and18 U.S.C. Section 1350, as adopted pursuant to Section 906

   b)of the Sarbanes-Oxley Act of 2002. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.
Exhibit 32.2		 

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent

Certification pursuant to the date of our most recent evaluation, including any corrective actions with regard18 U.S.C. Section 1350, as adopted pursuant to significant deficiencies and material weaknesses.

         Date: May 15, 2003


                                                     /s/  Daniel P. Landguth
                                                     ------------------------
                                                     Chairman and
                                                     Chief Executive Officer

CERTIFICATION

I, Mark T. Thies, certify that:

1.Section 906 

I have reviewed this quarterly report on Form 10-Q of Black Hills Power, Inc.;


2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;


3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;


4.

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


   a.Designed such disclosure controls and procedures to ensure that material information relating toof the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

Sarbanes-Oxley Act of 2002.  b.Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c.Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

16

5.

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):


a.All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

         Date: May 15, 2003


                                                 /s/  Mark T. Thies
                                                 ----------------------------
                                                 Executive Vice President and
                                                 Chief Financial Officer

EXHIBIT INDEX



Exhibit Number  Description
- --------------  -----------


Exhibit 99.1    Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 99.2    Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.