SECOND RESTATED AND AMENDED POWER SALES AGREEMENT
                                  BETWEEN
                                PACIFICORP
                                    AND
                          BLACK HILLS CORPORATION
                              TABLE OF CONTENTS

                                                                         Page

          RECITALS.. ........................................................1
          Section 1: Definitions.............................................1
          Section 2: Term....................................................4
          Section 3: Sale and Delivery of Capacity and Energy................4
          Section 4: Scheduling..............................................6
          Section 5: Prices and Payments.....................................7
          Section 6: Governmental Regulation................................10
          Section 7: FERC Reporting; Past Audit Issues......................10
          Section 8: Arbitration............................................11
          Section 9: Uncontrollable Forces..................................12
          Section 10: Notices...............................................13
          Section 11: Waiver............................................. ..13
          Section 12: Several Obligations...................................14
          Section 13: Amendments............................................14
          Section 14: Assignment............................................14
          Section 15: Choice of Law.........................................14
          Section 16: Replacement of Original Agreement.....................14

               Appendix A - Annual Fixed Cost
               Appendix B - Variable Costs



           SECOND RESTATED AND AMENDED POWER SALES AGREEMENT
                                 BETWEEN
                               PACIFICORP
                                   AND
                        BLACK HILLS CORPORATION

          This Second Restated and Amended Power Sales Agreement,
     dated  as of the 29th day of September, 1997 ("Agreement"), is entered into
     by and between  PacifiCorp ("PacifiCorp"), an Oregon corporation, and Black
     Hills Power and Light Company, predecessor to Black Hills
     Corporation ("Black  Hills"),  a  South Dakota corporation.  PacifiCorp and
     Black Hills are referredto herein individually  as "Party" and collectively
     as "Parties".

                                       RECITALS
          WHEREAS, on December 31, 1983, Black Hills and  Pacific  Power & Light
     Company (a predecessor to PacifiCorp) entered into a Power Sales  Agreement
     which  was modified by a letter agreement between the Parties dated  August
     31, 1995 ("Original Agreement"); and

          WHEREAS,  the Parties desire to further restate and amend the Original
     Agreement as modified as of the Effective Date of this Agreement; and

          WHEREAS, this  Agreement  will  supersede and replace the Restated and
     Amended  Power Sales Agreement dated February  27,  1997  which  had  never
     become effective;

          NOW, therefore, the Parties agree as follows:

                  Section 1:  Definitions

          As used  in  this  Agreement,  the  following  terms  shall  have  the
     following meanings:

          1.1"Adjusted  Variable  Cost Rate" is the cost for energy as defined
     and adjusted in Appendix B, Section 1.

          1.2  "Agreement" is this Second  Restated  and  Amended  Power  Sales
     Agreement,together with the Appendices A through C, attached hereto.

          1.3 "Annual  Fixed  Costs"  are  the costs for capacity as determined
     pursuant to Appendix A to this Agreement.

          1.4  "Black  Hills' System" is Black  Hills'  entire  electric  power
     generating and transmission system as it exists from time to time.

          1.5"Colstrip Project"  is  PacifiCorp's share in Unit Nos. 3 and 4 of
     the coal-fired electric generating plant near Colstrip, Montana.

          1.6 "Effective Date" is 0000 hours Mountain prevailing time August 1,
     1997.

          1.7 "FERC" is the Federal Energy  Regulatory Commission of the United
     States.

          1.8 "Net Colstrip Generation" is PacifiCorp's  combined  share of the
     output of the Colstrip Project Unit Nos. 3 and 4 generation.  Net  Colstrip
     Generation,  when  expressed  as  capacity,  shall,  for  purposes  of this
     Agreement, be deemed to be 150 megawatts ("MW"). When
     expressed   as  energy,  Net  Colstrip  Generation  is  the  actual  energy
     production less  station  service  requirements  and less generator step-up
     transformer  losses  expressed  in megawatt-hours ("MWh")  as  reported  in
     PacifiCorp's FERC Form No. 1.

          1.9 "Original Agreement" is  the  Power  Sale Agreement between Black
      Hills  and  PacifiCorp dated December 31, 1983 as  amended  by the  letter
      agreement dated August 31, 1995.

          1.10 "Original  Investment"  shall be that dollar amount specified in
      Subsection A.2.1 of Appendix A to this Agreement.

          1.11  "PacifiCorp's System" is  PacifiCorp's  entire  electric  power
      generating and transmission system as it exists from time to time.

          1.12 "Prudent  Utility  Practice"  is, at any particular time, either
      any  of  the  practices, methods, and acts engaged  in  or approved  by  a
      significant portion of the electrical utility industry
      prior thereto or  any  of  the  practices,  methods, or acts which, in the
      exercise of reasonable judgment the light of the facts known at the time
      the decision was made, could have been expected to accomplish the  desired
     result  at  the  lowest reasonable cost consistent with reliability,safety,
     and expedition.  Prudent  Utility Practice is not intended to be limited to
     the optimum practice, method,  or  act  to the exclusion of all others but,
     rather, to be a spectrum of possible practices,  methods, or acts.  Prudent
     Utility Practice shall also include those practices, methods, and acts that
     are  required  by  applicable  laws  and  final  orders or  regulations  of
     regulatory agencies having jurisdiction; provided,  that  the definition of
     Prudent Utility Practice shall not be construed to allow regulatory  bodies
     to  amend the fixed formulae used to determine prices under this Agreement,
     nor any  other  provision of this Agreement. Prudent Utility Practice shall
     not be interpreted  as  justification  for  discriminating among customers,
     including Black Hills.

           1.13  "Transmission  Losses" are the product  of  the  system  energy
     scheduled  by  Black  Hills  multiplied   by   the   applicable  real  time
     transmission loss factor pursuant to the Transmission Tariff.

           1.14 "Transmission Tariff" is PacifiCorp's FERC pro forma open access
     tariff  on  file with FERC as PacifiCorp's FERC Electric  Tariff,  Original
     Volume No. 11, as such may be amended or replaced from time to time.

           1.15  "Variable  Cost  Rate"  is the variable cost rate as calculated
     from the FERC Form No. 1 as demonstrated in Appendix B Sections B2 and B3.

           1.16 "Western Energy" is the coal  company  or  its successor company
     through  which  the  Colstrip  Project purchases its coal supply  and  coal
     transportation.

                    Section 2:   Term

           2.1 Term.  This Agreement  shall  become  effective  on the Effective
     Date pursuant to Subsection 1.6.  Subject to the provisions of Section 2.2,
     it shall terminate on December 31, 2023.

           2.2 Regulatory Approval.  PacifiCorp, at its expense, shall file this
     Agreement with the Federal Energy Regulatory Commission (FERC)  as provided
     for in Subsection 6.1. PacifiCorp shall provide Black Hills with  a copy of
     the filing prior to its submittal to the FERC. Black Hills shall file  with
     the  FERC  an  intervention  in  support  of  PacifiCorp's  filing  of this
     Agreement.    Upon  FERC's  acceptance  of  this  Agreement,  the  Original
     Agreement shall  terminate  as of the Effective Date.  If the FERC does not
     accept or approve this Agreement  and  the transmission service agreement s
     under  the  Transmission  Tariff for filing  in  toto,  the  Parties  shall
     exercise best efforts to amend  these  agreements  to  comply with the FERC
     action in a manner consistent with the Parties' original  intent.   Failure
     of  the  FERC  to accept or approve these agreements after the Parties have
     exercised best efforts shall terminate these agreements,
     and the Original Agreement shall remain in full force and effect.

          Section 3:   Sale and Delivery of Capacity and Energy

        3.1  Sale of  Capacity.   For  the  term of this Agreement, PacifiCorp
     shall sell, and Black Hills shall purchase, system capacity as shown below:
                                                 Capacity
                                                  Amount
                           Commencing               MW           
                         Effective Date             75
                         January 1, 2000            70
                         January 1, 2001            65
                         January 1, 2002            60
                         January 1, 2003            55
                         January 1, 2004            50

         3.2 Minimum Energy Purchases.  Each month  Black Hills shall purchase a
     minimum  of  22,500  MWh  of  system energy multiplied  by  the  applicable
     capacity pursuant to subsection 3.1 and divided by 75 MW.

         3.3 Points of Delivery.   PacifiCorp  shall  provide system power and
    energy purchased under this Agreement to Black Hills  under  the  terms and
    conditions  of  separate  service agreements under the Transmission Tariff.
    Black  Hills  shall cause such  service  agreements  to  be  executed  with
    PacifiCorp to reserve  the  amount of transmission capacity and the type of
    service which in Black Hills'  determination  is required for the amount of
    capacity purchased pursuant to  Subsection 3.1 and Black Hills shall pay
    separately  for such transmission wheeling charges and shall be responsible
    for either the return of energy or the payment for applicable energy charges
    for  transmission  losses  under  the  Transmission  Tariff.   However, the
    merchant  function  of  PacifiCorp shall purchase any capacity requirements
    for losses, Spinning Reserve  Service, Supplemental Reserve Service and any
    other required ancillary service on behalf of Black Hills at the expense of
    the merchant function of PacifiCorp.  In addition, the merchant function of
    PacifiCorp shall provide Black  Hills with non-firm transmission service on
    PacifiCorp's transmission system  for deliveries to the Wyodak  Substation  
    from PacifiCorp's  multiple  generation  units  as  defined in such service
    agreements  for  transfers not to exceed 5 megawatt-hours per hour for  all
    hours from the Effective  Date  through  the  earlier of the termination of
    Black  Hills'  Power  Integration  Agreement with Montana-Dakota  Utilities
    Company dated September 9, 1994 or December  31,  2006.   Black Hills shall
    use its best efforts in scheduling transmission services under such service 
    agreements so as to  minimize  its use  of  the  nonfirm  transmission  
    service  to  be  made available by the merchant function of PacifiCorp.  
    Black Hills shall be  responsible for any amounts  of  additional  firm  
    transmission service or nonfirm  service  in excess of the amount made 
    available to Black Hills by the merchant function of PacifiCorp pursuant 
    to the terms of the Transmission  Tariff.  On a monthly basis Black Hills 
    may purchase  energy  in  addition  to that energy associated with the
    capacity purchases under Subsection 3.1, at  the  Adjusted Variable Rate
    applicable for such month, under the terms of this Agreement to replace
    the Transmission Losses required under the Transmission Tariff pursuant
    to Subsections 4.1 and 4.2.

           3.4 Deliveries.   PacifiCorp  does  now and will continue to maintain
    available  transmission  facilities  sufficient   to   meet   its  delivery
    obligations under this Agreement for the Term hereof.

             Section 4:   Scheduling

           4.1 Amounts of Capacity and Energy.  Commencing on the Effective Date
    of this Agreement, and continuing during the Term hereof, PacifiCorp  shall
    make  available  from  PacifiCorp's System, and Black Hills shall schedule,
    energy associated with purchased  capacity;provided,  that PacifiCorp shall
    not  be  obligated under this Agreement to schedule and deliver  energy  to
    Black Hills  in excess of the following amounts plus Transmission Losses if
    elected by  Black Hills pursuant to Subsection 4.2:

              Hourly    --   75 MWh multiplied by the applicable purchased
                             capacity ofSubsection 3.1 and divided by 75 MW.
              Weekly    --   10,050 MWh multiplied by the applicable purchased
                             capacity of Subsection 3.1 and divided by 75 MW.
              Monthly   --   One hundred ten percent (110%) of the estimated
                             monthly energy under Section 4.2.

          4.2 Estimated  Monthly  Energy.   At least five (5) days prior to the
     commencement  of each month, Black Hills shall  deliver  to  PacifiCorp  by
     facsimile a written estimate of expected energy purchases for the following
     month.  Such estimate  of  expected energy purchases shall not be less than
     the minimum monthly requirement  pursuant  to  Subsection 3.2.  Included in
     the  written estimate Black Hills shall notify PacifiCorp  if  Black  Hills
     elects  to  purchase  or  not  purchase  the Transmission Losses under this
     Agreement for such month.

          4.3 Schedules.  Black Hills shall preschedule all deliveries of power
     and energy purchased under this Agreement  no later than 1000 hours Pacific
     prevailing time on each workday prior to the  day  of  such schedule and in
     accordance with normal scheduling practices.   Such schedules of power 
     and energy shall be deemed to be  delivered during the  hours and in the  
     amounts  scheduled; provied, that if scheduled deliveries are interrupted 
     due to forces beyond either Party's control, including but not limited to 
     loss of facilities, such scheduled deliveries shall be adjusted to reflect 
     such interruptions.

           4.4 Limitations  on  Variations.   Black  Hills  shall  use  its best
     efforts,  consistent  with  Prudent  Utility  Practice,  to  minimize rapid
     changes  in deliveries hereunder; provided, that, unless otherwise  agreed,
     the hour-to-hour variation in such scheduled deliveries shall be limited to
     25 MWh per hour.

         Section 5:   Prices and Payments.

          5.1  Annual Fixed Cost Payments.  Beginning on the Effective Date and
     continuing until  December  31, 1999, by the fifteenth (15th) of each month
     Black Hills shall pay PacifiCorp  one-twelfth  of  the Annual Fixed Cost of
     $164.59 per kW-yr. multiplied by the capacity  purchased pursuant to 
     Subsection 3.1.Commencing on  January 14, 2000, and by  the  fifteenth  
     (15)  of each month thereafter, Black Hills  shall  pay PacifiCorp 
     one-twelfth (1/12)  of  the  Annual Fixed  Cost  as  determined pursuant
     to Appendix  A,  multiplied by the capacity purchased pursuant  to 
     Subsection 3.1.  Black Hills'  last and final Annual Fixed Cost payment
     for the Original Investment shall be  December 15, 2018 pursuant to 
     Appendix A. The last and final Annual Fixed Cost payment for each of the  
     associated subsequent annual levelized fixed charge for capital additions, 
     replacements  and  betterments shall be after the completion of the 35th 
     year of Annual Fixed Cost payments for the associated subsequent  capital
     addition. For  example,  the  final  Annual  Fixed  Cost  Payment for 
     1986 subsequent capital additions, replacements and betterments shall be 
     December 15, 2021.

          5.2 Annual Fixed Cost Payment Reduction.  For  the  invoices for each
     month  of  the  calendar  years  2000  through  2009, the amount calculated
     pursuant to Subsection 5.1 shall be reduced by $95,564, irrespective of the
     reduced sale of capacity pursuant to Subsection 3.1.

         5.3 Adjusted Variable Cost Payments.

         5.3 Adjusted Variable Cost Payments for Estimated  Energy.   By  the
     fifteenth  (15th) of each month after the Effective Date, Black Hills shall
     pay PacifiCorp  an  amount  determined by multiplying the Adjusted Variable
     Cost  Rate, as expressed in dollars  per  MWh  ($/MWh),  by  the  estimated
     monthly MWh of energy including any elected Transmission Losses as provided
     under Subsection 4.2.

         5.3.1  Monthly  Adjustments.   PacifiCorp  shall  use  the  following
     formula to calculate an adjustment to each prior month's invoice to  adjust
     for actual versus estimated monthly usage:

                       z = [(a - b) x (c)] (1 +i)

           Where      z =     the amount of charge to Black Hills (if positive)
                              or credit to Black Hills (if negative);

                      a =     the minimum energy pursuant to Subsection 3.2 or
                              the actual energy scheduled for the prior month
                              in MWh (whichever is greater) including any
                              energy scheduled for elected Transmission Losses;

                      b =    the energy which was billed for such prior month,
                             in MWh, including any Transmission Losses
                             pursuant to Subsection 4.2;

                      c =    the applicable Adjusted Variable Cost Rate in
                             dollars per MWh ($/Mwh) for such prior month;

                      i =    the prime interest rate, expressed in decimal
                             form on an annual basis, as established by the
                             Morgan Guaranty Trust Company of New York as of
                             the first day of the prior month, divided by 
                             twelve (12).

           5.4  Payment  Schedules.  PacifiCorp shall send by facsimile to Black
    Hills an invoice for all services hereunder, by the third (3rd) working day
    of each month.  Black Hills shall pay such invoices by the fifteenth (15th)
    of such month.  Each monthly payment shall be made in immediately available
    funds by the due date.  Such payments to PacifiCorp shall be electronically
    wire transferred to:

                           The First National Bank of Chicago
                           A.B.A. No. 071000013
                           PacifiCorp-Wholesale & Trans.
                           Account No. 55-44688

    Simple interest shall  accrue  on any amount not paid when due at a rate of
    one hundred twenty-five percent  (125%) of the prime rate as established by
    the  Morgan  Guaranty Trust Company  of  New  York  during  the  period  of
    delinquency.

        5.5 Operation  of  the  Colstrip  Project.   It  is the intent of the
    Parties that the pricing provisions of this Section 5 shall account for all
    operational  variables  of the Colstrip Project. Subject to  exceptions  as
    specified in this Agreement,  the  pricing  for  the delivery of PacifiCorp
    system power to Black Hills is based upon PacifiCorp's  cost  of  ownership
    and  operation  of the Colstrip as provided in this Section 5.  Nothing  in
    this Agreement shall  be  construed  as  an  obligation  for  PacifiCorp to
    dispatch or control the Colstrip Project in any particular fashion.

              Section 6:  Governmental Regulation

         6.1  Filing.  The Parties shall submit this Agreement for  filing  to
    the FERC no later than October 15, 1997.  PacifiCorp shall seek a waiver of
    any FERC rules that require an earlier filing date.

         6.2 Fixed-Formulae Contract.  The terms, conditions, and formulae for
    prices for service  specified  herein  shall  remain in effect for the term
    hereof, and shall not be subject to change through  application to the FERC
    pursuant to the provisions of Section 205 of the Federal  Power  Act absent
    the  agreement  of  the  Parties hereto.  The Parties covenant that neither
    shall request relief from  any of the provisions of this Agreement pursuant
    to the provisions of Section  206  of  the  Federal  Power  Act  absent the
    agreement  of  the Parties hereto.  The foregoing statutory references  are
    intended to include any subsequent similar enactments.

              Section 7:   FERC Reporting: Past Audit Issues.

        7.1 Reporting.   For  purposes  of administering this Agreement, data
    reported in PacifiCorp's FERC Form No. 1 shall be deemed to be accurate for
    purposes of calculating the Variable Cost  Rate  and  the Adjusted Variable
    Cost Rate; provided, however, should the FERC as a result of an audit,
    require changes to PacifiCorp's FERC  Form No. 1 that are relevant to the
    calculation of the Variable Cost Rate or  the  Adjusted Variable  Cost  
    Rate,  the  billings  to Black Hills shall be retroactively adjusted to
    reflect such changes.  PacifiCorp  shall  fully comply with the Uniform 
    System of Accounts as promulgated by the FERC from  time to time in the 
    preparation of the Form No. 1 during the Term of this Agreement.

       7.2 Past Audit Issues.  It is agreed by the Parties that  any and all
    outstanding  audit  issues are resolved by this Agreement.  Any outstanding
    audit questions or requests  for information from Black Hills to PacifiCorp
    are deemed to be withdrawn and satisfied.

       7.3 Past Billings.  All  prior  invoices under the Original Agreement
    are deemed to be correct and not subject  to  further  audit  or adjustment
    unless mutually agreed by the Parties.

             Section 8:  Arbitration

       If  any dispute arises under this Agreement as to any factual  matter,
    the Parties  shall submit the factual dispute to a board of three arbiters,
    one to be selected by each Party and the Parties to agree  on  the 
    selection of a third arbiter.  If the Parties are unable to agree on the
    third arbiter, the Parties shall request the senior district judge of
    the United States District Court of the District of Wyoming to submit a 
    list of five (5) persons.  Each Party shall alternately strike one name  
    from  the  list,  the  first  exercise  to  be determined by lot.  The 
    last person remaining on the list shall serve as the third (3rd) arbiter. 
    Except as otherwise set forth herein,  the  arbitration  shall  be  held 
    under the rules of the American Arbitration Association.  The arbiters 
    shall render their decision in writing not later than thirty (30)  days 
    after  the matter has been  submitted  to  them, and the decision of a 
    majority of the  board  of arbiters of the factual dispute shall be
    binding on the Parties.  The arbiters  may,  in  their discretion, award
    arbitration costs and attorneys' fees to either Party.

             Section 9:  Uncontrollable Forces.

         Neither Party to this Agreement  shall  be considered to be in default
    in performance of any obligation hereunder if  failure of performance shall
    be due to uncontrollable forces.  The term  "uncontrollable forces" means
    any cause beyond  the  control  of  the Party affected,  including,  but
    not  limited  to,  failure of facilities, flood, earthquake, storm, fire,
    lightning, epidemic, war, riot, civil disturbance, labor disturbance 
    sabotage, and restraint by court order  or public authority, which by 
    exercise of due foresight  such  Party could not reasonably have been 
    expected to avoid, and which  by  exercise of due diligence it shall be 
    unable to overcome.  A Party shall not, however, be relieved of liability
    for  failure  of performance if such failure be due to causes arising
    out of its own  negligence  or  to  removable or remediable causes which it
    fails to remove or remedy with reasonable  dispatch.   Any  Party  rendered
    unable  to fulfill any obligation by reason of uncontrollable forces  shall
    exercise  due  diligence  to  remove  such  inability  with  all reasonable
    dispatch.  Nothing contained herein, however, shall be construed to require
    a Party to prevent or settle a strike against its will.  It is specifically
    understood and agreed that PacifiCorp's delivery of capacity and  energy to
    Black  Hills under this Agreement comes from PacifiCorp's System and  shall
    not depend  upon  the  existence,  operation, or efficiency of the Colstrip
    Project  alone.   In determining any uncontrollable  force  justifying  any
    nonperformance by PacifiCorp  herein, the entire PacifiCorp System shall be
    taken into consideration.

             Section 10:  Notices.

          Any notice, demand, or request provided for in this Agreement shall be
     deemed properly served, given,  or  made  if delivered in person or sent by
     facsimile and registered or certified mail, postage paid and return 
     receipt requested,  to  the person so designated as its authorized 
     representative. The titles and addresses  of  the authorized 
     representatives hereunder are as follows:

               For Black Hills:    Vice President, Finance
                                   Black Hills Corporation
                                   625 Ninth Street
                                   P.O. Box 1400
                                   Rapid City, South Dakota 57709
                                   Fax No.: (605) 342-0945

               For PacifiCorp:     Vice President, Global Energy
                                   Trading & Wholesale Sales
                                   PacifiCorp, Suite 1600
                                   700 NE Multnomah
                                   Portland, Oregon 97232-4194
                                   Fax No.: (503) 731-2160

                With a copy to:    Manager, Contract Administration
                                   PacifiCorp, Suite 625
                                   825 NE Multnomah
                                   Portland, OR  97232-2153
                                   Fax No. (503) 275-2827

          Either  Party  may  change its authorized representative by  providing
    notice to the other Party pursuant to this Section 10.

              Section 11:  Waiver

          Any waiver by a Party of its rights with respect to default under this
    Agreement, or with respect  to  any other matter arising in connection with
    this Agreement, shall not be deemed  to  be  a  waiver  with respect to any
    subsequent default or matter. No delay in asserting or enforcing  any right
    hereunder shall be deemed a waiver of such fight.

               Section 12:   Several Obligations.

          Except  where  specifically  stated in this Agreement to be otherwise,
    the duties, obligations, and liabilities  of the Parties are intended to be
    several and not joint or collective. Nothing contained in this Agreement 
    shall ever  be  construed  to create an association, trust, partnership,
    or joint venture or to impose a  trust  or partnership duty, obligation,
    or liability on or with  regard  to  either  Party.   Each  Party  shall
    be  individually and severally liable for its own obligations under this
    Agreement.

              Section 13:  Amendments.

          No  amendment  of  this  Agreement shall be effective without  written
    approval of each Party.

              Section 14:  Assignment.

          This Agreement shall not be  assigned  by any Party to any third party
   without the written consent of the other Party,  and such consent shall not
   be withheld unreasonably.  No assignment of this Agreement shall operate 
   to discharge the assignor  of  any  duty or obligation hereunder without
   the written consent of the other Party.

              Section 15:   Choice of Law

          This Agreement shall be subject to and be construed under the laws  of
   the State of Wyoming.

             Section 16:  Replacement of Original Agreement.

          This  Agreement  represents  the  entire  agreement of the Parties and
   replaces  the Original Agreement in its entirety,  except  as  provided  in
   Subsection 2.2.

          IN WITNESS  WHEREOF,  the Parties hereto have caused this Agreement to
   be  executed  in  their  respective  names  by  their  respective  officers
   thereunder duly authorized.

               PACIFICORP


               By:___________________________________
               Vice President
               Date:  September 29, 1997


               BLACK HILLS CORPORATION


               By:____________________________________
               Vice President

               Date:___________________________________




                                                   Appendix A

                       APPENDIX A: ANNUAL FIXED COSTS

                                             Introduction

               This Appendix A sets forth the elements and techniques to
          calculate the Annual Fixed Cost under Subsection 5.1 for the term
          of the Agreement.

               The Annual Fixed Cost is the dollars per megawatt sum of:
          (a) initial levelized annual fixed cost, (b) subsequent levelized
          annual fixed costs for Colstrip Plant investments made through
          December 31, 1996, and (c) other fixed annual charges, including
          but not limited to property taxes, insurance, and taxes other
          than income tax.

               Prior to January 1, 2000 the Annual Fixed Cost shall be
          those as set forth in Subsection 5.1.  Commencing on January 1,
          2000 the Annual Fixed Cost shall be calculated as set forth in
          this Appendix A.  Capital additions, replacements, and
          betterments made after December 31, 1996 shall not be included
          for calculating the Annual Fixed Cost. During the balance of the
          Term, PacifiCorp shall continue to comply with generally accepted
          accounting principles in identifying capital additions,
          replacements and betterments to the Colstrip Project and
          capitalizing such for book purposes as opposed to expensing them
          and including them in the Variable Cost Rate calculation.

                        Section A1.  Discussion of Methodology

               A1.1  Levelized fixed charges are the basis of annual fixed
          costs hereunder.  While actual capital-related charges associated
          with an investment may vary considerably from year to year, the
          levelized fixed charge translates these charges into a level
          annual amount which remains constant over time.  The present
          values of the two streams (varying versus constant) are equal.

               A1.2  The levelized fixed charge includes three basic
          components: (a) return on investment, given a specific capital
          structure  and cost of capital;  (b)  recovery  of  investment,  given
          the appropriate  depreciation  period related to the investment;
          and (c) income tax  requirements, given tax  law  considerations.
          These  components  are commonly  expressed as: (a) interest expense
          on debt and return required by shareholders;  (b)  book  
          depreciation; and, (c) income taxes incorporating the effects of 
          investment tax credits and tax depreciation.

               A1.3  An initial levelized annual charge rate shall be
          applied to the original investment of Colstrip Project Unit Nos.
          3 and 4. The rate shall be recalculated effective each January 1
          only in the event of a change during the preceding calendar year
          in any of the following: (a) the capital structure; (b) cost of
          long-term debt; (c) preferred retum; (d) the return on common
          equity; or, (e) income tax law, but not to be applied
          retroactively.

               A1.4  Subsequent levelized annual fixed charge rates shall
          be calculated each year through December 31, 1996 to reflect the
          most current information and shall be applied each year to the
          amount of capital additions, replacements (less credit for net
          salvage and insurance proceeds, if any) and betterments of the
          Colstrip Project completed through the end of the preceding
          calendar year.

                   Section A2:  Determination of Annual Fixed Costs

               The Annual Fixed Costs for any year shall be determined by
          (a) adding the amounts calculated under Sections A2.1 through
          A2.5, and (b) dividing the total by Net Colstrip Generation in
          MW. The costs referred to above are:

               A2.1 The initial levelized annual fixed charge computed as
          the product of (1) PacifiCorp's initial levelized annual fixed
          charge rate determined annually in accordance with Section AS of
          this Appendix A, and (2) PacifiCorp's total Original Investment
          in the Colstrip Unit Nos. 3 and 4 of $194,965,667.  Black Hills
          shall pay no initial levelized annual fixed costs aver 2018,
          pursuant to Subsection 5.1.

               A2.2  The total subsequent an nual levelized fixed charge
          shall be computed as the sum of annual charges determined by the
          product of (a) PacifiCorp's subsequent levelized annual fixed
          charge rate, as calculated using the then current applicable cost
          of capital in accordance with Section A3 of this Appendix A and
          (b) the subsequent dollar investment in capital additions,
          replacements (less credit for net salvage and insurance proceeds,
          if any), and betterments of the Colstrip Project, completed for
          each year from January 1, 1986 through December 31, 1996.

               A2.3  All ad valorem taxes imposed upon the Colstrip Project
          by governmental agencies without limitation for excluded
          subsequent capital additions, replacements, and betterments.
          A2 4 All taxes, assessments, payments in lieu of taxes, or other
          charges imposed by any governmental body assessed or charged
          against PacifiCorp relating to the Colstrip Project, excluding ad
          valorem taxes, state and federal income taxes and excluding any
          tax included in the Variable Cost Rate calculation of Subsection
          B3.  It is understood that the current Montana electric energy
          license tax is included in the Variable Cost Rate.

               A2.4  Insurance premiums which shall be deemed to be
          $322,941.08 (0.16 percent of the Colstrip production plant
          investment as of December 31, 1996).

             Section A3:  Elements of Levelized Annual Fixed Charge Rates

               A3.1  Capital Structure:

               A3.1.1  Commencing January 1, 2000, for purposes of
          calculating the initial levelized annual fixed charge rate and
          subsequent levelized fixed charge rates in any year, PacifiCorp's
          then-current FERC approved capital structure as described further
          in Subsection A3.3 shall be utilized.  Such capital structure
          shall be updated as provided for in Section A3.3. The capital
          structure approved by the FERC the date of execution of this
          Agreement is as follows:
                                                     Percent
                  Long-Term Debt                      45.54%
                  Preferred Stock                      8.40%
                  Common Equity                       46.06%
                   Total Capital                        100%

                A3.2 Cost of Capital:

                A3.2.1 Long-Term Debt:  Commencing on January 1,
          2000, the long-term debt applicable in the calculation of the
          initial and subsequent levelized annual fixed charge rates shall
          be equal to PacifiCorp's then-current weighted average cost of
          longterm debt calculated using FERC prescribed methods.  As of
          the execution date of this Agreement, this rate is 7.11%.  The
          cost of long-term debt shall be updated as provided for in
          Subsection A3.3, below.

                A3.2.2Preferred Stock:  Commencing on January 1,
          2000, the return on preferred stock applicable in the calculation
          of initial and subsequent levelized annual fixed charge rates
          shall be PacifiCorp's then-current weighted average cost of
          preferred stock calculated using FERC prescribed methods.  As of
          the execution date of this Agreement, this rate is 6.76%.  The
          cost of preferred stock shall be updated as provided for in
          Subsection A3.3, below.

               A3.2.3  Common Stock Equity:  Commencing on January 1,
          2000, the return on common stock equity applicable in the
          calculation of each initial levelized annual fixed charge rate,
          and each subsequent levelized annual fixed charge rate, shall be
          the then current FERC approved cost of common equity for
          PacifiCorp.  The current cost of common stock equity approved by
          the FERC at the date of execution of this Agreement is 10.40%.
          The cost of common stock equity shall be updated as provided for
          in Subsection A3.3 below.

                A3.3Updates to FERC-Based Elements of Fixed Charge Rates:
          At such times, subsequent to January 1, 2000, as new FERC orders
          establish a different capital structure, cost of long-term debt,
          cost of preferred stock or cost of common equity for PacifiCorp,
          or PacifiCorp enters into a settlement of a FERC rate proceeding
          where FERC staff reports known as "top sheets" provide for such
          differences, effective the following January 1, such different
          capital structure, cost of long-term debt, cost of preferred
          stock or cost of common equity shall be substituted in
          Subsections A3.1 through A3.2 as appropriate until the next FERC
          order or  settlement.  If more than three years have elapsed
          between the Effective Date of this Agreement and a FERC order or
          settlement (with FERC staff top sheets), or between FERC orders
          and/or settlements (with FERC staff top sheets) establishing a
          capital structure, cost of long-term debt, cost of preferred
          stock or cost of common equity, either Party may cause PacifiCorp
          to promptly apply to the FERC for an order establishing a current
          capital structure, cost of long-term debt, cost of preferred
          stock and cost of common equity and the FERC findings shall be
          substituted effective the January 1 following an order resulting
          from such application .

                A3.4 Book Depreciation:  Book Depreciation charges shall be
          at a straight-line rate based on a thirty-five (35) year life in
          calculating the initial and subsequent levelized annual fixed
          charge rate.

                A3.5 Income Tax Requirements:  Income tax requirements
          applicable in calculating both initial and subsequent levelized
          annual fixed charge rates shall be based on the following items:
          provided, subsequent changes in tax laws shall be incorporated in
          computing levelized annual fixed charge rates for periods
          following such tax law changes:

               A3.5.1  The actual federal corporate income tax rate
          beginning at 46% in 1984, and tracking the actual corporate tax
          and projected tax rates for the life of the investment, with tax
          rate at the execution date of this Agreement at 35%.

               A3.5.2  A state corporate income tax rate equal to the
          estimated composite weighted average of PacifiCorp's three-factor
          formula for unitary allocation of state taxable income based upon
          payroll, property, and revenue in each state in which PacifiCorp
          provides retail service. As of the execution date of this
          Agreement, the rate is four and four-tenths percent (4.4%).

               A3.5.3  Use of 1 5-year depreciation under Accelerated
          Cost Recovery System for original investment and additions prior
          to 1987, and 20-year depreciation under Modified Accelerated Cost
          Recovery System for additions beginning in 1987 through 1 996.

               A3.5.4  Regular investment tax credits allowed in
          accordance with the provisions of the Internal Revenue Code of
          1954, as amended, regardless of whether PacifiCorp is able to use
          such credits. The investment tax credit in calculating the
          initial levelized annual fixed charge rate shall be deemed to be
          9.65 percent of tax basis.

               A3.5.5  Tax basis shall be 75.98% of the book basis in
          calculating each initial levelized annual fixed charge rate, and
          100% of the book basis in calculating each subsequent levelized
          annual fixed charge rate.

               A3.5.6  The annual income tax amount included in the
          levelized annual fixed charge rate shall be calculated utilizing
          the methodology demonstrated in Item 3 of Appendix C of this
          Agreement.
                                                               Appendix B

                         APPENDIX B: VARIABLE COSTS

               This Appendix B sets forth the elements and techniques to
          calculate the Adjusted Variable Cost Rate and the Variable Cost
          Rate under Subsection 5.3 for each year of this Agreement.

                       Section B1: Adjusted Variable Cost Rate

               During the term of this Agreement, the Adjusted Variable
          Cost Rate expressed in dollars per megawatt-hour ($/MWh) in any
          year shall be determined by June 1 of each year, to be effective
          from such June 1 to May 31 of the following calendar year.  The
          Adjusted Variable Cost Rate for any year shall be the prior
          year's Adjusted Variable Cost Rate multiplied by the ratio of the
          prior calendar year's Variable Cost Rate, divided by the Variable
          Cost Rate as determined one calendar year earlier.  (The Variable
          Cost Rate shall be determined pursuant to Section B2.)  The
          calculation of the Adjusted Variable Cost Rate is as follows:

              AVCn=AVCn-1 *(VCmost recent year /VCmost recent year -1)
                       Where: AVC = Adjusted Variable Cost Rate
                               VC = Variable Cost Rate
                                   n = current year

               For example, the Adjusted Variable Cost Rate effective June
          1, 2000 is equal to the Adjusted Variable Cost Rate effective
          June 1, 1999 multiplied by the Variable Cost Rate based on 1999
          FERC Form No. 1 and divided by the Variable Cost Rate based on
          1998 FERC Form No. 1.

               The initial Adjusted Variable Cost Rate shall be deemed to
          be $12.20/MWh and shall be effective through May 31, 1998.  This
          Adjusted Variable Cost Rate shall be adjusted each successive
          year beginning June 1, 1998 pursuant to this Section B1.

                            Section B2: Variable Cost Rate

               During the term of this Agreement, the prior calendar year's
          Variable Cost Rate ($/MWh) shall be determined by June 1 of each
          year.  The Variable Cost Rate for each year shall be calculated
          from PacifiCorp's FERC Form No. 1 for the Colstrip Project as
          illustrated in Section B3.  The FERC Form No. 1 costs shall be
          adjusted to spread the fixed portion of PacifiCorp's fuel costs
          over the greater of (1) the actual PacifiCorp Net Colstrip
          Generation (MWh) or (2) the generation based on a deemed 150 MW
          of capacity at an 80% capacity factor.  The commodity component
          of the fuel costs shall be a separate calculation using actual
          Net Colstrip Generation (MWh).  The non-fuel variable cost shall
          be computed using the generation based on a deemed 150 MW of
          capacity at an 80% capacity factor.

                      Section B3: Variable Cost Rate Calculation

               B3.1  An example calculation is shown in Subsection B3.2.
          The input data for the calculation is from PacifiCorp's 1996 FERC
          Form No. 1 for the Colstrip Project and the sum of the Western
          Energy fixed charges (line 9 of Subsection B3.2) for contract
          coal and coal transportation paid in such calendar year.  The
          1996 Variable Cost Rate is $13.12 pursuant to Subsection B3.2.

               B3.2  Variable Cost Rate Calculation - 1996 Example
          1             1996 PacifiCorp Colstrip Project
          2                 Annual Variables
          3                                    Calendar Year            1996
          4    PacifiCorp FERC Form No.1 ("Form 1") Page No.           403.1
          5     Form 1, line 33, "Total Production Expenses"     $11,619,595
          6                          Form 1, line 19, "Fuel"      $7,594,943
          7     Form 1, line 12, "Net Generation, Exclusive
                                         of Plant Use", MWh          795,052
          8                   Hours in the Year (Leap Year)             8784
          9         Sum of Western Energy Fixed Charges for
                      Contract Coal and Coal Transportation         $567,744
          10
          11               Non-Fuel Variable Cost Component
          12    Non-fuel Production Expense (line 5-line 6)       $4,024,652
          13     Deemed Non-Fuel Variable Adjustment Factor
                    (Electrical energy license tax and A&G)             1.03
          14    Black Hills Adjusted Non-Fuel Variable Cost
                                        (line 12 x line 13)       $4,145,392
          15    Deemed Production for Non-Fuel Calculation
                                     (150 MW @ 80% OF), MWh        1,054,080
          16 Non-Fuel Variable Cost, S/MWh (line 14/line 15)            3.93
          17
          18                Fuel Cost-Fixed Component
          19           Western Energy Fixed Charges (line 9)        $567,744
          20    Deemed Production for FKed-Fuel Calculation,
                                                         MWh       1,054,080
                        (greater of 150MW @ 80% CF or line 7)
          21       Fuel - Fixed Cost, $/MWh (line 19/line 20)           0.54
          22
          23        Fuel Cost - Commodity Component
          24                 Fuel Production Expense (line 6)     $7,594,943
          25           Deemed Fuel Variable Adjustment Factor           0.98
          26                Black Hills Adjusted Fuel Expense
                                          (line 24 x line 25)     $7,443.044
          27             Western Energy Feed Charges (line 9)       $567,744
          28              Black Hills Fuel Commodity Expenses
                                           (line 26- line 27)     $6,875.300
          29                     Net Generation, MWh (line 7)        795,052
          30     Fuel Commodity cost, $/MWh (line 28/line 29)           8.65
          31
          32                   1996 Variable Cost Rate, $/MWh
                                (line 16 + line 21 + line 30)          13.12

            Section B4: Unavailability of Colstrip Variable Costs

                B4   In years in which the capacity factor of Colstrip Unit
          Nos. 3 and 4 together is less than forty percent (40%), or if
          Colstrip Project costs are not available for any reason, or if
          PacifiCorp is no longer a participant in the Colstrip Project,
          the Adjusted Variable Cost Rate shall not be updated for up to a
          year after its normal adjustment period.  During such time the
          Parties shall negotiate an appropriate alternative variable cost
          methodology.  If the Parties are unable to agree, the issue of
          the variable cost methodology shall be submitted to arbitration
          based on the fair market price for long term fuel and O&M for a
          project similar to Colstrip.  For the purpose herein, a "project
          similar to Colstrip" is a project located in the western part of
          the United States consisting of a generating station of two or
          more coal-fired steam electric generators of 500 megawatts or
          larger operating at an eighty percent (80%) load factor or more
          and situated in close proximity to a surface coal mine from which
          the generators are fueled.  The Annual Fixed Costs shall not be
          modified by such an event.