SECOND RESTATED ELECTRIC POWER AND ENERGY
                       SUPPLY AND TRANSMISSION AGREEMENT


                                    between


                         THE CITY OF GILLETTE, WYOMING

                                      and

                      BLACK HILLS POWER AND LIGHT COMPANY
























       Date:  February 28, 1995
<PAGE>






                                TABLE OF CONTENTS

                                                                    Page


       1.   RECITALS AND DEFINITIONS. . . . . . . . . . . . . . . . .  1

            1.1  Recitals . . . . . . . . . . . . . . . . . . . . . .  1
            1.2  Definitions. . . . . . . . . . . . . . . . . . . . .  2

       2.   TERM. . . . . . . . . . . . . . . . . . . . . . . . . . .  3

       3.   SALE OF CAPACITY AND ENERGY . . . . . . . . . . . . . . .  4

            3.1  Base Load Capacity Obligation. . . . . . . . . . . .  4
            3.2  Base Load Energy Obligation. . . . . . . . . . . . .  4
            3.3  Gillette's Capacity and Energy Obligations . . . . .  4
            3.4  Inadvertent Energy Account . . . . . . . . . . . . .  5
            3.5  Additional Capacity Supplied by Black Hills Without
                 Agreement. . . . . . . . . . . . . . . . . . . . . .  5
            3.6  Capacity and Energy Technicalities . . . . . . . . .  6
            3.7  Scheduling and Metering. . . . . . . . . . . . . . .  6
            3.8  Coal Agreements. . . . . . . . . . . . . . . . . . .  7

       4.   POWER AND ENERGY RATE SCHEDULES AND REGULATION. . . . . .  8

       5.   OTHER SOURCES OF CAPACITY AND ENERGY. . . . . . . . . . . 17

       6.   POINT OF DELIVERY, FACILITIES, AND METERS . . . . . . . . 18

            6.1  Point of Delivery. . . . . . . . . . . . . . . . . . 18
            6.2  Calibrate Meters . . . . . . . . . . . . . . . . . . 18
            6.3  Rights of Way. . . . . . . . . . . . . . . . . . . . 19
            6.4  Facilities to be Provided by Gillette. . . . . . . . 19

       7.   GILLETTE'S PROJECTIONS. . . . . . . . . . . . . . . . . . 20

       8.   TRANSMISSION CAPACITY AND SERVICES. . . . . . . . . . . . 21

            8.1  Definitions. . . . . . . . . . . . . . . . . . . . . 21
            8.2  Transmission Capacity to be Furnished by Black
                 Hills. . . . . . . . . . . . . . . . . . . . . . . . 22
            8.3  Transmission Service at 230 kV to be Furnished by
                 Black Hills for Net Other Sources. . . . . . . . . . 23
            8.4  Compensation for 230 kV Transmission Capacity and
                 Service. . . . . . . . . . . . . . . . . . . . . . . 24
            8.5  Transmission Service at 69 KV to be Furnished by
                 Black Hills for Net Other Sources. . . . . . . . . . 25
                 8.5.1  Obligation of Black Hills . . . . . . . . . . 25
                 8.5.2  Obligation of Gillette. . . . . . . . . . . . 25
                 8.5.3  Coordination. . . . . . . . . . . . . . . . . 25
            8.6  Compensation for 69 kV Service . . . . . . . . . . . 26
            8.7  Losses . . . . . . . . . . . . . . . . . . . . . . . 26
            8.8  Regulation of Rates by FERC. . . . . . . . . . . . . 27
            8.9  Scheduling and Metering. . . . . . . . . . . . . . . 30
            8.10 Power Factor . . . . . . . . . . . . . . . . . . . . 30

       9.   IMPOSSIBILITY OF PERFORMANCE. . . . . . . . . . . . . . . 30

       10.  INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 31

       11.  FILING WITH FERC. . . . . . . . . . . . . . . . . . . . . 31

       12.  SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 32

       13.  NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . 33

       14.  COMPLETE AGREEMENT. . . . . . . . . . . . . . . . . . . . 33

<PAGE>
       SECOND RESTATED ELECTRIC POWER AND ENERGY SUPPLY
       AND TRANSMISSION AGREEMENT


            This Second Restated Electric Power and Energy Supply and
       Transmission Agreement, dated as of February 28, 1995 ("Agreement"),
       is entered into between the City of Gillette, a municipal corporation
       of Gillette, Wyoming ("Gillette"), and Black Hills Power and Light
       Company, an assumed business name of Black Hills Corporation, a South
       Dakota corporation ("Black Hills"), as a restatement of the Restated
       Electric Power and Energy Supply and Transmission Agreement, dated as
       of December 21, 1987 ("First Restated Agreement"), which Agreement
       superseded the Electric Power and Energy Supply and Transmission
       Agreement, dated as of August 6, 1985 ("Original Agreement").

            1.   RECITALS AND DEFINITIONS.

                 1.1  Recitals.  Gillette operates a municipal electric
       system within its city and therefore requires electric current for its
       own uses and for resale to operate that system.  Black Hills is
       engaged in the business of generation, transmission, distribution and
       sale of electric capacity and energy at retail and wholesale for
       resale.  Black Hills furnishes electric capacity and energy service to
       Gillette to be resold in the operation of its municipal electric
       system pursuant to the terms and provisions of the First Restated
       Agreement, which was accepted for filing with the Federal Energy
       Regulatory Commission.

                 The purpose of this Agreement is to restate the First
       Restated Agreement for the purpose, among other things, of modifying
       the obligations of each party to furnish the electric capacity and
       energy requirements of Gillette and to determine rates charged for
       such service.  At such time regulatory requirements are satisfied as
       set forth in Section 11, this Agreement supersedes and replaces the
       First Restated Agreement.

                 1.2  Definitions.  The terms "capacity" and "energy" used
       in this Agreement refer to electric capacity and electric energy,
       respectively.

                 "Base Load Capacity" is Black Hills' obligation to furnish
                 Gillette capacity as set forth in Section 3.1.

                 "Base Load Energy" is Black Hills' obligation to furnish
                 Gillette energy as set forth in Section 3.2.

                 "Date of First Commercial Operation of NS #2" is the first
                 day of the month during which Black Hills determines that
                 NS #2 has commenced commercial operation, but for the
                 purposes of this Agreement shall not be earlier than
                 September 1, 1995.  Such determination shall be made on the
                 basis of standards of the electric utility industry and in
                 conformance with Prudent Utility Practice.

                 "Gillette's Requirements" refers to Gillette's entire
                 electric capacity and energy requirements needed for local
                 distribution for resale purposes and for its own use and
                 shall include Gillette's Successors and Assigns' entire
                 electric capacity and energy requirements for distribution
                 within the city limits of Gillette as those limits exist
                 from time to time; provided, however, that if Gillette
                 annexes territory, Gillette's requirements will not include
                 any electric capacity and energy requirements until such
                 time as Gillette (or its Successors and Assigns) serves such
                 requirements.

                 "Gillette's Successors and Assigns" are those persons,
                 corporations, cooperatives or any other entities to whom
                 Gillette sells or leases any portion or all of its municipal
                 electric system or with whom Gillette contracts, the effect
                 of which allows those persons, corporations or entities to
                 sell capacity and energy to customers for consumption within
                 the city limits of Gillette as those limits exist from time
                 to time.

                 "NS #2" is the Neil Simpson Unit #2, an 80 MW coal-fired
                 electric power plant now under construction in Campbell
                 County, Wyoming.

                 "Prudent Utility Practice" at a particular time means any of
                 the practices, methods and acts, which, in the exercise of
                 reasonable judgment in light of the facts (including but not
                 limited to the practices, methods and acts engaged in or
                 approved by a significant portion of the electric utility
                 industry prior thereto) known at the time the decision was
                 made, would be 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 optimal practice, method or
                 act, to the exclusion of all others, but rather represents a
                 spectrum of possible practices, methods or acts.

                 "Total Demand" is the total of Gillette's and Gillette's
                 Successors and Assigns' highest average demand measured in
                 kilowatts to satisfy Gillette's Requirements.  For the
                 purpose of measuring demand for transmission service under
                 Section 8, measurement shall be based on sixty-minute
                 intervals; and for determining any Unauthorized Overrun
                 under Exhibit A, measurement shall be based on fifteen-
                 minute intervals.

                 Other defined terms and phrases used in this Agreement are
       set forth throughout this Agreement where such terms and phrases are
       first used.


            2.   TERM.

                 The term ("Term") of this Agreement shall comprise an
       initial period from the date of this Agreement until and including
       June 30, 2012, and shall continue thereafter until and unless
       terminated by either party giving to the other party notice in writing
       not less than seven years prior to the termination of said initial
       period or of any succeeding Contract Year, unless the parties agree in
       writing to a shorter notice period.  For the purposes of this
       Agreement, a "Contract Year" of this Agreement ends the thirtieth day
       of every June of the Term.


            3.   SALE OF CAPACITY AND ENERGY.

                 3.1  Base Load Capacity Obligation.  Black Hills shall sell
       and Gillette shall purchase Base Load Capacity in the amount of 23,268
       KW during each month of the Term prior to the date of First Commercial
       Operation of NS #2 and 23,000 KW commencing on the date of First
       Commercial Operation of NS #2 and every month of the Term thereafter.

                 3.2  Base Load Energy Obligation.  Black Hills shall sell
       and Gillette shall purchase all energy needs of Gillette measured in
       kilowatt hours associated with all kilowatts of Base Load Capacity as
       if those kilowatts were the first kilowatts needed from day to day for
       Gillette's Requirements.

                 3.3  Gillette's Capacity and Energy Obligations.  Gillette
       shall have the obligation to supply firm capacity and energy to be
       purchased from others or self-generation for all of that capacity and
       energy required to meet that portion of Gillette's Requirements that
       are not required to be furnished by Black Hills under Sections 3.1 and
       3.2.  Nothing herein shall prevent the parties from agreeing from time
       to time to cause Black Hills to serve additional capacity and
       associated energy to meet Gillette's obligations herein.

                 3.4  Inadvertent Energy Account.  An Inadvertent Energy
       Account (hereinafter referred to as "Inadvertent Account") for
       overscheduled energy deliveries from each party to this Agreement
       (rounded to the nearest megawatt) shall be established.  The parties
       shall exercise reasonable care to minimize, to the extent practicable,
       overscheduled deliveries of electric energy.  The parties recognize,
       however, that despite their best efforts to prevent overscheduled
       deliveries, such deliveries of electric energy may occur.  Electric
       energy delivered in such event shall be settled by the return of
       equivalent energy at times satisfactory to the parties or by such
       other equitable arrangements as may be mutually agreed upon.

                  Gillette shall use its best efforts to include, in its
       contracts to purchase power from third parties, provisions to require
       those third parties to establish an Inadvertent Account between Black
       Hills and those third parties and provisions for settling by the
       return of energy by Black Hills to the third parties on Gillette's
       account.
  
               3.5  Additional Capacity Supplied by Black Hills Without
       Agreement.  If, due to the unavailability of a Gillette-supplied
       resource that Gillette was required to furnish under Section 3.3,
       Black Hills furnishes Gillette capacity to meet a portion of
       Gillette's Requirements that was Gillette's obligation to provide
       under Section 3.3 without any subsequent agreement to do so, Black
       Hills shall charge and Gillette shall pay, on a monthly basis, the
       Unauthorized Overrun charge provided for in Exhibit A of this
       Agreement.  No Unauthorized Overrun charge shall be payable unless the
       entity responsible for scheduling a Gillette-supplied resource fails
       to meet scheduled energy deliveries as arranged by Black Hills with
       the entity responsible for such scheduling.  Energy accompanying such
       additional capacity will be reflected in the Inadvertent Account.

                 3.6  Capacity and Energy Technicalities.  All capacity and
       energy delivered under this Section 3 shall be three phase,
       alternating current, approximately 60 hertz, at a nominal voltage of
       69,000 volts or such higher voltage as may be agreed to by the
       parties.

                 3.7  Scheduling and Metering.  All capacity and energy
       including that sold by Black Hills pursuant to Section 3 and that
       delivered by Black Hills from Net Other Sources as defined and
       provided at Section 8, shall be scheduled by Black Hills for the
       purpose of showing compliance with this Agreement and for billing
       under Exhibit A.  Black Hills shall provide one 69 kV meter and
       associated equipment.  Gillette shall furnish all other meters and
       associated equipment required to measure the portion of the Total
       Demand and the portion of the capacity and energy furnished from
       sources other than from Black Hills.  The associated equipment shall
       include (i) equipment allowing Black Hills to monitor and to switch
       from Rapid City, South Dakota, such portion or portions of the Total
       Demand and the power and energy related portions thereof furnished by
       the parties to areas of the Gillette municipal electric system which
       are directly connected via Gillette's facilities to Black Hills'
       point(s) of delivery set forth in Section 6.1 and (ii) other than
       where Black Hills maintains communications with power suppliers for
       reasons other than to deliver capacity and energy acquired by
       Gillette, communication equipment and services required for Black
       Hills to communicate on a 24-hour basis with Gillette's power
       suppliers.  Gillette shall provide telemetering equipment so as to
       allow Black Hills to monitor demand and energy from Gillette's Total
       Demand.  All equipment furnished by Gillette and its installation
       shall be subject to Black Hills' approval.  All costs incurred by
       Black Hills in scheduling and metering that capacity and energy
       furnished by Gillette from sources other than Black Hills shall be
       included as a part of the transmission charges made pursuant to
       Section 8.4.

                 3.8  Coal Agreements.  Commencing with the date of the
       commercial operation of NS #2, coal prices to be paid by Black Hills
       to its affiliated coal supplier, Wyodak Resources Development Corp.
       ("Wyodak Resources"), for the coal supply for Black Hills' interest in
       existing coal-fired power plants and NS #2 shall be determined by the
       Coal Supply Agreement for Neil Simpson Unit #2, dated as of
       February 12, 1993 ("Coal Agreement"), a copy of which is attached
       hereto as Exhibit B.  The parties agree that, for purposes of Black
       Hills' charges to Gillette, the methodology set forth in Exhibit B to
       determine the coal prices for the affiliated transactions between
       Black Hills and Wyodak Resources will be deemed to result in just and
       reasonable prices, will be deemed to yield a fair return to Wyodak
       Resources for such sales to its affiliate and will be deemed to result
       in charges to Gillette under this Agreement that are not unreasonable
       or unjust.

            4.   POWER AND ENERGY RATE SCHEDULES AND REGULATION.

                 Gillette shall pay Black Hills monthly upon invoices
       submitted for all electric capacity and energy supplied hereunder
       pursuant to the rates, charges, terms and conditions set forth in
       Exhibit A attached hereto and made a part of this Agreement as if
       specifically set forth herein and upon all other terms and conditions
       in this Agreement.  It is understood and agreed that this Agreement
       and the rates charged hereunder are subject to the regulatory
       jurisdiction of FERC, a regulatory commission of the United States,
       pursuant to the Federal Power Act (16 U.S.C.  791a et seq.) and all
       rules and regulations pertaining thereto, all as amended from time to
       time.

                 (a)  Black Hills and Gillette agree that, except as
                      provided in Section 4(b) and Section 8 below and as
                      authorized in Exhibit A, the provisions of this
                      Agreement and the rate schedules attached as Exhibit A
                      will not be changed unless Black Hills and Gillette
                      agree to such a change in writing.  The parties have
                      bargained at arm's length in good faith and on equal
                      terms for economic benefits to each party which are
                      closely interrelated and which produce an overall
                      result which is considered by the parties to be just
                      and reasonable.  Therefore, the parties agree that,
                      except as provided in Section 4(b) and Section 8
                      below, in any, proceeding, however initiated, whether
                      under Section 206 of the Federal Power Act or under
                      any law or regulation which now is or may hereafter be
                      applicable, relating to any attempt to alter, change
                      or amend the rates, charges, penalty provision, terms
                      and conditions set forth in this Agreement (including
                      Exhibit A), the standards which relate to the burden
                      of proof required for FERC or any regulatory body to
                      alter the terms of a contract without agreement of the
                      parties thereto as expressed in FPC v. Sierra Pacific
                      Power Co., 350 U.S. 348 (1956) and United Gas Pipe
                      Line Co. v.  Mobile-Gas Service Corp., 350 U.S. 332
                      (1956), (commonly referred to as the Sierra-Mobile
                      doctrine in subsequent case holdings) shall apply with
                      respect to the parties.  However, such standards shall
                      not prevent FERC from using a "just and reasonable"
                      standard either sua sponte or pursuant to a complaint
                      from persons or entities who are not a party to this
                      Agreement at such times and under such circumstances
                      as FERC deems appropriate in order to protect the
                      interests of nonparties.  Each of the parties to this
                      Agreement covenants that it will not encourage any
                      nonparty through monetary assistance or otherwise to
                      institute any legal proceeding, including a complaint
                      under Section 206 of the Federal Power Act to cause
                      this Agreement to be applied and administered in any
                      way that would result in any modification of the
                      charges to be made hereunder.

                 (b)  Except as limited by the provisions of Sections 4(c),
                      4(d), 4(e) and 4(f) below, Black Hills shall have the
                      right from time to time for the purpose of
                      establishing just and reasonable rates and achieving a
                      reasonable return to Black Hills to make application
                      unilaterally to FERC under Section 205 of the Federal
                      Power Act (16 U.S.C.  824d) and pursuant to FERC's
                      rules and regulations promulgated thereunder for a
                      change or adjustment in the dollar levels of the rates
                      and charges set forth in Exhibit A and any superseding
                      schedule upon delivering a written notice thereof to
                      Gillette.  Any such changes or adjustments shall
                      become effective on the date specified therein,
                      subject to suspension or other action duly taken by
                      FERC, and without final approval by FERC.  Except as
                      limited by Sections 4(c), 4(d), 4(e) and 4(f) below,
                      Gillette has the right under Section 205 of the
                      Federal Power Act (16 U.S.C.  824d) and rules and
                      regulations thereunder to oppose any such change or
                      adjustment proposed by Black Hills and also has the
                      right at any time to unilaterally make application to
                      FERC under Section 206 of the Federal Power Act (16
                      U.S.C.  824e) and pursuant to FERC's rules and
                      regulations promulgated thereunder for a change or
                      adjustment in the dollar levels of the rates and
                      charges set forth in Exhibit A and any superseding
                      schedule.  The formula to be applied in determining
                      the Unauthorized Overrun penalty and the Fuel and
                      Economic Power Adjustment clause in Schedule A shall
                      not be subject to change under this Section 4(b).

                 (c)  Other than where specifically authorized in Exhibit A,
                      Black Hills shall not change or adjust or file with
                      FERC for authority to change or adjust, and Gillette
                      shall not contest, the dollar levels of the rates and
                      charges set forth in Exhibit A prior to January 1,
                      1998; provided, however, that Black Hills may tender a
                      filing prior to January 1, 1998 that proposes an
                      effective date of January 1, 1998 or later.
                      Notwithstanding the previous sentence, if prior to
                      January 1, 1998, either of the following events
                      occurs:

                      (i)    the annualized inflation rate for any
                             consecutive 12-month period ending on the last
                             day of the month after the date of this
                             Agreement is 8 percent or more based upon the
                             Producers Price Index published by the Bureau
                             of Labor Statistics in its monthly report
                             entitled "Producers, Prices, and Price
                             Indexes" (if the publication is discontinued,
                             a similar publication of the Bureau of Labor
                             Statistics), or

                      (ii)   any damage occurs after the date of this
                             Agreement to Black Hills' owned or leased
                             generating and transmission plant which costs
                             more than $5,000,000 to repair.

                      Black Hills may file for an increase to take effect
                      prior to January 1, 1998, and Gillette may oppose such
                      increase as provided in Section 4(b).

                 (d)  The parties hereto agree that, in consideration of the
                      length of this Agreement and the benefits to the
                      parties arising therefrom, the rates to be charged
                      during the Term of this Agreement for the furnishing
                      of capacity and energy shall be based on the following
                      cost principles, which underlie Black Hills' capacity
                      and energy rates to Gillette in this Agreement, and
                      that neither party will propose capacity and energy
                      rates based on conflicting cost principles:

                      (i)    Black Hills shall be entitled to reflect the
                             revenues received under the contract dated
                             March 12, 1975 with Rushmore Electric Power
                             Cooperative, Inc. and Basin Electric Power
                             Cooperative, as restated by the Agreement for
                             Transmission Service and the Common Use of
                             Transmission Systems, dated as of January 1,
                             1986 among Black Hills, Rushmore Electric
                             Power Cooperative, Inc., Basin Electric Power
                             Cooperative, Tri-County Electric Association,
                             Inc., Black Hills Electric Cooperative, Inc.
                             and Butte Electric Cooperative, Inc. ("REC
                             Contract") as being equivalent to the costs
                             properly allocable to service under the
                             contract.  If the REC Contract is renegotiated
                             by the parties thereto, the revenues received
                             by Black Hills from the new contract for its
                             transmission system as it exists as of the
                             date of this Agreement shall be deemed to be
                             equivalent to the costs properly allocable to
                             service from the present transmission system,
                             providing that the revenues received therefor
                             are not less than that which would have been
                             received if the REC Contract had not been
                             renegotiated.

                      (ii)   Black Hills shall continue to assign directly
                             to any customer or customer group(s) the cost
                             of transmission facilities which serve that
                             customer (or group of customers) and over
                             which energy flows only to such customer(s).

                      (iii)  Black Hills shall reflect the revenues
                             received under the contract dated September 9,
                             1994 ("MDU Contract") with Montana-Dakota
                             Utilities Co. as a revenue credit against the
                             Black Hills cost of service as if being
                             equivalent to the costs properly allocable to
                             service under the contract.  If the MDU
                             Contract is renegotiated by the parties
                             thereto, the revenues received by Black Hills
                             from the new contract shall be deemed to be
                             equivalent to the costs properly allocable to
                             service from the new contract, providing that
                             the revenues received therefor are not less
                             than that which would have been received if
                             the MDU Contract had not been renegotiated.

                      (iv)   Black Hills shall reflect the unamortized
                             Wyodak Power Plant and Rushmore Power Plant
                             acquisition adjustments as a rate base
                             addition and shall continue to amortize such
                             acquisition adjustments at a rate no greater
                             than $154,000 per year in the Black Hills cost
                             of service until completely amortized.

                      (v)    Black Hills may maintain an energy charge at a
                             level no lower than $0.0222 per kWh, before
                             application of the Fuel and Economic Power
                             Adjustment clause in Exhibit A.  If the energy
                             charge is higher than the level of
                             appropriately allocated energy costs plus base
                             and adjusted fuel costs, the overage will be
                             reflected as a credit to Gillette under the
                             demand charge.

                      (vi)   The Basic Service Charge will be set no lower
                             than $5,400 per month.

                      (vii)  The cost of coal to fuel Black Hills' interest
                             in power plants to be included in the cost of
                             service shall be determined by the Coal
                             Agreement, attached as Exhibit B to this
                             Agreement.

                      (viii) The parties agree that Black Hills' decision
                             to construct NS #2 was prudent and that NS #2
                             is  used and useful for Black Hills to fulfill
                             its obligations under this Agreement.

                 (e)  In consideration of the mutual benefits herein
                      contained, including the moratorium at Section 4(c),
                      and in view of the fact that the parties have agreed
                      to the moratorium, the parties do hereby agree to the
                      Fuel and Economic Power Adjustment clause in Exhibit A
                      notwithstanding the fact that they recognize that in
                      allowing the Variable Costs, as defined therein, to be
                      included in "F", the clause is not in strict
                      conformance with 18 CFR  35.14.

                 (f)  In consideration of this Agreement, including the
                      moratorium at Section 4(c), Gillette waives all of its
                      rights to refunds due Gillette from Black Hills
                      because Variable Costs, as defined in Exhibit A, were
                      included and will continue to be included in "F" in
                      determining rate adjustments to charges made under the
                      fuel clause in Exhibit A of the Original Agreement.
                      When requested by Black Hills, Gillette agrees to sign
                      and deliver to Black Hills any documentation
                      reasonably requested by Black Hills to establish this
                      waiver with FERC.

                 In the event that regulatory jurisdiction over this
       Agreement and/or rates charged by Black Hills to Gillette is vested in
       any governmental body other than the FERC, this provision and the
       rights of Black Hills and Gillette as set forth herein shall be
       subject to applicable regulatory laws, regulations and rules of such
       governmental body.

            5.   OTHER SOURCES OF CAPACITY AND ENERGY.

                 Except for Gillette's obligation to purchase the Base Load
       Capacity and the Base Load Energy from Black Hills pursuant to
       Sections 3.1 and 3.2, nothing herein prevents Gillette from
       contracting with others for capacity and energy under this Agreement.
       If Gillette enters into contracts from other sources, Gillette shall
       keep Black Hills currently informed of the current status of those
       arrangements.

            6.   POINT OF DELIVERY, FACILITIES, AND METERS.

                 6.1  Point of Delivery.  Black Hills shall deliver the
       electric capacity and energy to be sold by Black Hills to Gillette
       under this Agreement at 69,000 volts or higher to the point of
       delivery where the facilities of Black Hills now interconnect to the
       facilities of Gillette, presently located near the corner of Warlow
       Drive and Gurley Avenue, City of Gillette, Wyoming, and/or at any
       future points of delivery upon which the parties may agree.

                 6.2  Calibrate Meters.  Black Hills shall test and
       calibrate the meters and recording devices by comparison with accurate
       standards at intervals of not more than twelve (12) months, and Black
       Hills shall notify Gillette of its intention to make such tests so
       that agents of Gillette can have the opportunity of witnessing the
       tests.  Black Hills shall also make special meter tests at any time at
       Gillette's request.  The cost of tests on each meter shall be borne by
       the party furnishing that meter.  Black Hills will calibrate the
       meters and recording devices as closely as practicable to the
       condition of one hundred percent (100%) accuracy (zero error), but, if
       any meter or recording device tested is found to be more than two
       percent (2%) in error, either fast or slow, proper correction shall be
       made of previous readings for the period of time the meter was in
       service since last tested or from the time that it can be ascertained
       the meter was in error, but in no case shall readings be adjusted for
       a period of more than six months immediately preceding the discovery
       of the error.  If any meter or recording device shall fail to register
       for any period, Gillette and Black Hills shall agree as to the amount
       of electric capacity and energy furnished, and Black Hills shall
       render a bill therefor.

                 6.3  Rights of Way.  Gillette shall provide Black Hills
       without cost a suitable location and rights of way for necessary lines
       and equipment immediately adjacent to the point(s) of delivery set
       forth in Section 6.1 for the purpose of fulfilling this Agreement.
       All equipment installed by and at the cost of Black Hills shall remain
       Black Hills' property and Black Hills shall have the right to inspect,
       repair or remove the same at its discretion and at its own cost.

                 6.4  Facilities to be Provided by Gillette.  Gillette shall
       install and maintain at its own expense all other facilities on
       Gillette's side of the point of delivery which are necessary for the
       proper reception of electric capacity and energy and for its use
       beyond such point including all facilities for the transformation of
       capacity and energy from the delivery voltage set forth in Section
       6.1.  Gillette shall provide or arrange for facilities and continuous
       staff in order to provide continuous information to and from Black
       Hills' system control to accommodate Gillette supplied resources.
       Gillette shall also provide facilities necessary for Gillette or Black
       Hills to cause load curtailment on those portions of the Gillette
       municipal electric system which are directly connected via Gillette's
       facilities, to Black Hills' point(s) of delivery set forth in  Section
       6.1 as required by Prudent Utility Practice.  Such facilities shall
       meet approved standards of construction and be of such types as will
       not interfere with other service rendered by Black Hills.

            7.   GILLETTE'S PROJECTIONS.

                 On the first day of each and every September thereafter,
       Gillette shall furnish Black Hills a written forecast for a period of
       five calendar years following such dates for which the forecasts are
       being furnished setting forth the following information:

                 (a)  Gillette's capacity and energy needs by season;

                 (b)  anticipated sources to meet the capacity and energy
                      needs in the months when the sources are reasonably
                      expected to be available and the anticipated
                      transmission path;

                 (c)  copies of contracts on which Gillette plans to rely to
                      fulfill its obligation to furnish capacity and energy
                      for Gillette's Requirements, pricing information to be
                      deleted from those contracts at Gillette's discretion;
                      and

                 (d)  transmission facilities, existing or to be
                      constructed, over which Gillette's capacity and energy
                      needs are expected to be delivered.

                 Gillette shall use its best efforts in formulating the
        forecasts to achieve as reliable a forecast as reasonably possible.

            8.   TRANSMISSION CAPACITY AND SERVICES.

                 8.1  Definitions.  For the purpose of this Section 8, the
       following capitalized terms shall have the respective meanings as
       follows:

                 (a)  "Additional 69 kV Facilities" are those transformation
                      and/or transmission lines and related facilities which
                      Black Hills determines under Prudent Utility Practice
                      are necessary from time to time to increase the
                      capacity of the Existing 69 kV Facilities to serve its
                      other customers and Gillette under this Agreement and
                      any other contracts and obligations.

                 (b)  "Black Hills' Bulk Transmission System" is all of the
                      230 kV and larger transmission lines in which Black
                      Hills has complete or partial ownership, leasehold or
                      other rights, both now and from time to time during
                      the Term, and all terminal facilities of said
                      transmission lines, and 69 kV and 230 kV step-up
                      transformation facilities from Black Hills' owned and
                      leased generation.

                 (c)  "East-West Ties" are those interconnections between
                      the transmission systems in the western part of the
                      United States and the transmission systems in the
                      eastern part of the United States which cannot be
                      interconnected without a DC converting facility.

                 (d)  "Existing 69 kV Facilities" are the Existing 69 kV
                      Transmission Line and 70 MVA Transformer.

                 (e)  "Existing 69 kV Transmission Line" shall mean the
                      present 69 kV transmission line and related facilities
                      from the Wyodak Substation to Gillette now used by
                      Black Hills to deliver capacity and energy to
                      Gillette.

                 (f)  "Other Sources" are capacity and energy provided by
                      Gillette to meet its capacity and energy obligations
                      under Section 3.3.

                 (g)  "Net Other Sources" is all capacity and energy
                      scheduled for Gillette's Requirements from Other
                      Sources regardless of whether it was scheduled or
                      delivered over Black Hills' Bulk Transmission System
                      or other systems; provided, Net Other Sources shall
                      not include capacity and energy from Gillette owned
                      generation delivered from that generation internal to
                      Gillette's distribution system.

                 (h)  "70 MVA Transformer" is the transformer in the Wyodak
                      Substation of which 48 megawatts is owned by
                      PacifiCorp and 22 megawatts is owned by Black Hills.

                 (i)  "PacifiCorp" is an Oregon corporation which operates
                      its electric utility division under the name of
                      Pacific Power & Light Company.

                 (j)  "Wyodak Substation" is the substation located near the
                      Wyodak 330 MW electric generating plant east of
                      Gillette in Campbell County, Wyoming.

                 8.2  Transmission Capacity to be Furnished by Black Hills.
       During the Term, Black Hills shall maintain capacity in the Black
       Hills' Bulk Transmission System capable of causing that portion of
       Gillette's Requirements which Gillette is required to furnish under
       Section 3.3 and may acquire from Net Other Sources under this
       Agreement and which Gillette may cause to be delivered at 230,000
       volts to any of the interconnections of Black Hills' Bulk Transmission
       System as they exist from time to time west of the East-West Ties to
       be available at 230,000 volts at the Wyodak Substation or other
       substations which hereafter may be constructed in the vicinity of
       Gillette and which are a part of Black Hills' Bulk Transmission
       System.
                 8.3  Transmission Service at 230 kV to be Furnished by
       Black Hills for Net Other Sources.  During the Term, Gillette shall
       cause its electric capacity and energy acquired from Net Other Sources
       to be delivered west of the East-West Ties at 230,000 volts to Black
       Hills' Bulk Transmission System to the extent such Net Other Sources
       are located such that delivery can be accomplished.  At this time the
       interconnections so located are the Wyodak Substation and the
       interconnection of Black Hills' Bulk Transmission System with the
       Western Area Power Administration ("WAPA") at Stegall, Nebraska.
       Because Black Hills' Bulk Transmission System is integrated with other
       systems in the vicinity of Gillette and performs an electrical
       function in causing such capacity and energy to be delivered to
       Gillette on a firm basis, capacity and energy from Net Other Sources
       which Gillette, or others from whom Gillette has contracted, causes to
       be delivered to the Wyodak Substation or other substations which may
       be hereafter constructed and interconnected to Gillette's electrical
       system, whether a part of the Black Hills' Bulk Transmission System or
       not, shall be considered for the purposes of this Section 8.3 and the
       compensation at Section 8.4 as having been delivered by Gillette to
       Black Hills' Bulk Transmission System and from which Black Hills in
       turn has delivered such capacity and energy to Gillette.  During the 
       Term, Black Hills shall cause electric capacity and energy from Net
       Other Sources which is delivered pursuant to this Section 8.3 to be
       delivered at 230,000 volts to Gillette at the Wyodak Substation or 
       other substations hereafter constructed which are interconnected to
       Black Hills' Bulk Transmission System and Gillette's electrical system.
       
              8.4  Compensation for 230 kV Transmission Capacity and
       Service.  Gillette shall pay Black Hills monthly upon invoices submitted
       for the transmission service on Black Hills' Bulk Transmission System
       and for reserving firm transmission capacity on Black Hills' Bulk
       Transmission System during the Term as provided in Sections 8.2 and 8.3
       an amount of $1.60 per kilowatt month times the greater of (i) 16,288
       KW, (ii) the highest kilowatt demand of capacity (other than any self
       generation internal to Gillette's system) recorded as received by
       Gillette for Gillette's Requirements during the Term in excess of
       23,268 KW prior to the Date of First Commercial Operation of NS #2 and
       23,000 KW commencing on the Date of First Commercial Operation of NS #2
       and thereafter, and (iii) that capacity in excess of 23,268 KW prior to
       the Date of First Commercial Operation of NS #2 and 23,000 KW commencing
       on the Date of First Commercial Operation of NS #2 and thereafter 
       scheduled for Gillette, during any one hour period during that calendar
       month.  All determinations of amounts of capacity under this Section 8.4
       shall be adjusted for losses under Section 8.7.  Payment of each monthly
       bill shall be due and paid at the same time and under the same procedures
       for the payment for capacity and energy purchased by Gillette from Black
       Hills.

                 8.5  Transmission Service at 69 KV to be Furnished by Black
       Hills for Net Other Sources.

                      8.5.1  Obligation of Black Hills.  Until such time
       that Black Hills either constructs Additional 69 kV Facilities or
       under Prudent Utility Practice requires Additional 69 kV Facilities to
       deliver the Net Other Sources capacity and energy at 69,000 volts to
       Gillette, Black Hills shall furnish Gillette transformation and
       transmission service to deliver to Gillette at 69,000 volts at the
       points of delivery referenced in Section 6.1 capacity and energy
       acquired by Gillette from Net Other Sources.  Black Hills shall give
       Gillette adequate lead notice before Additional 69 kV Facilities are
       to be constructed or are required so as to give Gillette the
       opportunity to provide facilities as provided at Section 8.5.2.

                      8.5.2  Obligation of Gillette.  Gillette shall
       furnish the facilities or contract with others so that after Black
       Hills' obligation under Section 8.5.1 terminates, Gillette will cause
       capacity and energy from Net Other Sources to be transformed and
       delivered from Black Hills' Bulk Transmission System to Gillette.

                      8.5.3  Coordination.  With just and reasonable
       sharing of costs under established regulatory principles, Black Hills
       shall coordinate its system with facilities furnished by Gillette or
       others to accommodate the delivery of Net Other Sources capacity and
       energy as provided at Section 8.5.2.

                 8.6  Compensation for 69 kV Service.  During that time
       Black Hills is furnishing 69 kV wheeling service for Net Other Source
       capacity as provided in Section 8.5.1, Gillette shall pay Black Hills
       monthly (at the same time and under the same procedures for payment
       under Section 8.4) for the 230/69 kV transformation and 69 kV
       delivery, including the stand-by ability to transform and deliver, of
       Net Other Sources capacity and associated energy a wheeling charge
       equal to $0.40 per KW-month times the greater of (i) 16,288 KW,
       (ii) the highest kilowatt demand of capacity (other than any self
       generation location internal to Gillette's system) recorded as
       received by Gillette at 69 kV during any one hour period that month
       and (iii) the highest kilowatt demand of capacity from Net Other
       Sources, delivered by Black Hills at 69 kV during any one hour period
       during the Term prior to the billing month.  All determinations of
       amounts of capacity under this Section 8.6 shall be adjusted for
       losses under Section 8.7.

                 8.7  Losses.  To compensate for transmission losses,
       including transformation losses where metered at 69 kV, the demand
       received, but not less than that scheduled for Gillette, from Net
       Other Sources shall be multiplied by:

                 (i)  for capacity from Net Other Sources metered at 69 kV,
                      1.05 during all times the Wyodak Plant is operating
                      and 1.07 during all times the Wyodak Plant is not
                      operating; or

                      Ev for capacity from Net Other Sources metered at 230 kV,
                      1.025 during all times the Wyodak Plant is operating
                      and 1.055 during all times the Wyodak Plant is not
                      operating,
       with the product thereof to constitute the quantity of capacity for
       which payment is to be made.  To compensate for transformation losses,
       the demand from Other Sources external to Gillette which are not
       delivered over Black Hills' Bulk Transmission System but which Black
       Hills transforms and delivers at 69 kV under Section 8.4 shall be
       multiplied by 1.015 if metered at 69 kV, with the product to
       constitute the quantity of transformed capacity received by Gillette
       under the provisions of Section 8.6.

                 8.8  Regulation of Rates by FERC.

                 The rates and facilities charges imposed pursuant to
       Sections 8.4 and 8.6 are subject to the regulatory jurisdiction of
       FERC pursuant to the Federal Power Act (16 U.S.C.  791(a) et seq.)
       and all rules and regulations pertaining thereto, all as amended from
       time to time.

                 Black Hills shall have the right from time to time for the
       purpose of establishing just and reasonable rates and achieving a
       reasonable return to Black Hills for the transmission and
       transformation service rendered to Gillette for capacity from Other
       Sources from Black Hills' Bulk Transmission System, the 230/69 kV
       transformation, and Black Hills' 69 kV transmission system, and for
       reserving long-term firm transmission and transformation capacity in
       its transmission system for Gillette to make application unilaterally
       to FERC under Section 205 of the Federal Power Act (16 U.S.C.
       824(d)) and pursuant to FERC's rules and regulations promulgated
       thereunder for a change or adjustment in the dollar levels of the
       rates and charges set forth in Sections 8.4 and 8.6 and any
       superseding rates upon delivering a written notice thereof to
       Gillette.  Any such changes or adjustments shall become effective on
       the date specified therein, subject to suspension or other action duly
       taken by FERC, and without final approval by FERC.  Gillette has the
       right under Section 205 of the Federal Power Act (16 U.S.C.  824(d))
       and rules and regulations thereunder to oppose any such change or
       adjustment proposed by Black Hills and also has the right at any time
       to unilaterally make application to FERC under Sections 206 or 211 of
       the Federal Power Act (16 U.S.C.  824(e) and 824(j)) and pursuant to
       FERC's rules and regulations promulgated thereunder for a change or
       adjustment in the dollar levels of the rates and charges set forth in
       Sections 8.4 and 8.6 and any superseding rate or for an order
       requiring Black Hills to provide other transmission services.

                 The rates to be charged for the transmission and
       transformation service and capacity shall be based on the following
       cost allocation principles which underlie the presently effective
       rates in Sections 8.4 and 8.6:

                 (a)  Black Hills shall continue to assign directly to any
                      customer or customer group(s) the cost of transmission
                      facilities which serve that customer (or group of
                      customers) and over which energy flows only to such;

                 (b)  the capacity and energy from Net Other Sources (as
                      defined for determining compensation at Section 8.4)
                      shall be considered to have been delivered over the
                      entire Black Hills' Bulk Transmission System other
                      than that portion referred to in (a) above, regardless
                      of whether the capacity and energy from Net Other
                      Sources is actually delivered to Gillette partially or
                      wholly over the transmission systems of others; and

                 (c)  Black Hills shall not be entitled to reflect the cost
                      allocation principles set forth at Sections 4(d)(i)
                      and (iv) for the purpose of determining just and
                      reasonable rates for the obligations undertaken by
                      Black Hills under Sections 8.3 and 8.5.

                 In the event that regulatory jurisdiction over this
       Agreement and/or rates charged by Black Hills to Gillette are vested
       in any governmental body other than FERC, this provision and the
       rights of Black Hills and Gillette as set forth herein shall be
       subject to applicable regulatory laws, regulations and rules of such
       governmental body.

                 8.9  Scheduling and Metering.  All scheduling and metering
       shall be as set forth in Section 3.7 of this Agreement.

                 8.10 Power Factor.  The power factor of Gillette's load at
       the point of delivery of power from Net Other Sources shall not be
       less than 95% lagging or 95% leading at the time of the maximum
       demand.  Gillette shall install power factor corrective equipment on
       its system so as to raise the power factor of its load at that point
       to at least 95% lagging or 95% leading.  In the event Gillette fails
       to maintain a power factor of not less than 95% lagging and does not
       install corrective equipment to raise its power factor as stipulated
       above, the maximum monthly demand for power from Other Sources will be
       increased by multiplying by 95% and dividing by the power factor
       expressed in percent.  This adjustment shall not apply for
       demonstrated power factors above 95% lagging.

            9.   IMPOSSIBILITY OF PERFORMANCE.
  
                 Black Hills shall not be liable for failure of delivery of
       electric capacity and energy, and Gillette shall not be liable for
       failure to take or receive electric capacity and energy, where either
       of such failures is due to an Act of God, governmental regulations,
       governmental interference, court or commission orders, acts of the
       public enemy, strikes or labor difficulties on the system of either
       party hereto or of others, accidents, fire, explosion, mob violence,
       droughts, floods, freeze-ups, weather conditions, failure of equipment
       or, without limitation of the foregoing, any other cause beyond the
       reasonable control of the party in default.

            10.  INDEMNIFICATION.

                 Neither party to this Agreement shall be liable for any loss
       or damage to property or injury to or death of persons, whether
       suffered by the other party, its agents or employees, or by any third
       person, persons or corporation(s), resulting from the location, use or
       operation of electrical or other equipment located on its side of the
       point of delivery including the failure of any electrical equipment
       caused by defects or inadequate capacity or from electric capacity and
       energy present therein, and each party agrees to indemnify and save
       the other party harmless from all such loss, damages, injuries or
       death.

            11.  FILING WITH FERC.

                 Black Hills shall cause this Agreement to be filed with FERC
       as required by the Federal Power Act and rules and regulations
       relating thereto.  Gillette shall sign a letter of concurrence to be
       filed with FERC.  Both parties agree to use best efforts to achieve
       the acceptance by FERC of this Agreement for filing.  This Agreement
       shall not be in full force and effect nor shall any rights or
       obligations of either party arise herefrom until this Agreement has
       been permitted by FERC to become effective as a rate schedule without
       amendment under the rules and regulations relating hereto.

            12.  SUCCESSORS AND ASSIGNS.

                 This Agreement shall inure to the benefit of and be binding
       upon the parties hereto and their respective successors and assigns.
       This Agreement shall not be assignable by either party without the
       written consent of the other party except (i) to a successor in the
       operations of its properties by reason of a merger, consolidation,
       sale or foreclosure where substantially all such properties are
       acquired by such a successor or (ii) to a loaning agency, entity or
       institution for security purposes.  Nothing herein shall prohibit
       Gillette from becoming a participant in a governmental joint powers
       board where governmental entities have joined together for mutual
       benefit, but in that event this Agreement and Gillette's benefits and
       obligations therein remain with Gillette only or a successor referred
       to in (i).  The obligations of the parties under this Agreement shall
       survive and be binding on the parties during the entire Term
       notwithstanding that Gillette sells or leases its municipal electric
       system or a part thereof or executes other contracts the effect of
       which causes entities other than Gillette (Gillette's Successors and
       Assigns) to sell capacity and energy to customers for consumption
       within the city limits of Gillette.  Any of Gillette's Successors and
       Assigns shall be entitled to the benefits of this Agreement and shall
       be bound by the obligations herein.  Any creation by Gillette of
       Gillette's Successors and Assigns shall not relieve Gillette from its
       obligations in this Agreement.

            13.  NOTICE.

                 Notice required to be given hereunder shall be deemed to
       have been given if mailed, postage prepaid, to Black Hills
       Corporation, P. 0. Box 1400, Rapid City, South Dakota 57709 on behalf
       of Black Hills; and City of Gillette, P. 0. Box 3003, Gillette,
       Wyoming 82716 on behalf of Gillette.  Either party may from time to
       time change its mailing address for the purpose of receiving notice by
       notifying the other party in writing of such change.

            14.  COMPLETE AGREEMENT.

                 At the time that this Agreement has been accepted for filing
       and/or approved by FERC, this Agreement cancels and supersedes the
       First Restated Electric Power and Energy Supply and Transmission
       Agreement dated December 21, 1987.  This Agreement constitutes the
       complete and full agreement between the parties.

                 This Agreement is executed as of the day and year recited in
       the first paragraph hereof and each of the officers executing this
       Agreement represents that this Agreement has been approved and
       authorized by their respective governing bodies as required by law
       applicable thereto and that by such execution that authority to such
       officer has been legally authorized and delegated by the respective
       governing bodies of the parties.


                                             CITY OF GILLETTE



                                             By /c/Frank W. Latta
       ATTEST                                  Its Mayor



       Clerk
       (OFFICIAL SEAL)

                                             BLACK HILLS POWER AND LIGHT
                                             COMPANY



       ATTEST                                By /c/Everett E. Hoyt
                                               Its President and Chief
                                                 Operating Officer


       Its Secretary

       (OFFICIAL SEAL)
<PAGE>
                                EXHIBIT A

                       ELECTRIC SERVICE AGREEMENT


       APPLICABLE

           To the City of Gillette, Wyoming ("Gillette") for its service
           requirements, provided under Agreement with Black Hills Power and
           Light Company ("Black Hills"), for resale purposes and for its own
           uses.  Capitalized terms used herein shall have the same meaning
           as defined in the Agreement to which this is attached as Exhibit
           A.


       CHARACTER OF SERVICE

           Alternating current, 60 hertz, three phase, at the voltage of
           Black Hills' transmission line which is a part of Black Hills'
           existing interconnected transmission system.


       MONTHLY BASIS OF BILLING

            (a)  Prior to the Date of First Commercial Operation of
                 NS #2:

                 Basic Service Charge     $5,400 per month

                 Billing Demand Charge    $11.46 per kilowatt of the
                                          Billing Demand

                 Billing Energy Charge    2.22<cent> per kilowatt hour of
                                          Billing Energy

            (b)  From the Date of First Commercial Operation of NS #2
                 through December 31, 1996:

                 Basic Service Charge     $5,400 per month

                 Billing Demand Charge    $15.44 per kilowatt of the
                                          Billing Demand

                 Billing Energy Charge    2.22<cent> per kilowatt hour of
                                          Billing Energy

            (c)  January 1, 1997 and thereafter:

                 Basic Service Charge     $5,400 per month

                 Billing Demand Charge    $14.57 per kilowatt of the
                                          Billing Demand

                 Billing Energy Charge    2.22<cent> per kilowatt hour of
                                          Billing Energy

                 If the MDU Contract or any amended or substitute
                 agreement thereof is not approved or accepted for
                 filing by the Federal Energy Regulatory Commission for
                 any reason, this paragraph (c) shall not go into
                 effect and the rates under paragraph (b) above shall
                 continue to be in effect after December 31, 1996.

                 The Basic Service Charge is a given charge per month
                 to compensate Black Hills for the costs associated
                 with service which do not vary depending upon the
                 level of demand and energy provided by Black Hills.

       BILLING DEMAND

            The Billing Demand shall be 23,268 KW prior to the First
            Date of Commercial Operation of NS #2 and 23,000 KW
            commencing on the First Date of Commercial Operation and
            thereafter for the balance of the Term.

            Power Factor - The power factor of Gillette's load at the
            point of delivery shall not be less than 95% lagging or 95%
            leading at the time of the City's maximum demand during the
            month.  If the power factor of the City's load at the point
            of delivery is found to be below 95% lagging or 95% leading
            at the time of the maximum demand, the City shall install
            power factor corrective equipment on its system so as to
            raise the power factor of its load at that point to at least
            95% lagging or 95% leading.

            In the event the City fails to maintain a power factor of
            not less than 95% lagging and does not install corrective
            equipment to raise its power factor as stipulated above, the
            monthly billing demand will be increased by multiplying by
            95% and dividing by the power factor expressed in per cent.
            This adjustment shall not apply for demonstrated power
            factors above 95% lagging.


       BILLING ENERGY

            Billing Energy shall be measured in kilowatt hours as
            provided in Section 3.2 of the Agreement.


       PENALTY PROVISIONS -- UNAUTHORIZED OVERRUN

            Unauthorized Overrun is subject to a penalty provision.
            Unauthorized Overrun occurs when Black Hills furnishes
            Gillette capacity that was Gillette's obligation to serve
            under Section 3.3.

            The purpose of this penalty is to provide economic incentive
            to comply with the terms and conditions set forth in the
            Agreement for service rendered hereunder.  The level of the
            penalty charge set herein shall be 3 times the monthly
            Demand Charge applied to the amount of the Unauthorized
            Overrun.


       FUEL AND ECONOMIC POWER ADJUSTMENT

            For each month in which the cost of the fuel and purchased
            economic power per kWh of Sales during the second calendar
            month preceding the billing month exceeds or is less than
            "A" as defined below, the energy charge shall be increased
            or decreased, respectively by the following Adjustment
            Factor:

            Adjustment Factor = Fm - Fb ; Fb/Sb = A/kWh
                                Sm   Sb

            Where:  "F" is the expense of fossil (including fuel from
            company-owned or controlled sources) and nuclear fuel and
            purchased economic power in the base (b) and current (m)
            periods; "S" is the kWh sales in the base and current
            periods; and "A" is (i) 1.087<cent> prior to the First Date of
            Commercial Operation of NS #2, and (ii) 1.035<cent> on the First
            Date of Commercial Operation of NS #2 and thereafter, all as
            defined below:

            (a)  Fuel and purchased economic power costs (F) shall be
                 the cost of:

                 (i)    Fossil and nuclear fuel consumed in Black
                        Hills' owned plants, and Black Hills' share of
                        fossil and nuclear fuel consumed in jointly
                        owned or leased plants.

                 (ii)   The actual identifiable fossil and nuclear
                        fuel costs associated with energy purchased
                        for reasons other than identified in paragraph
                        (iii) following.  Fuel costs included in
                        Variable Costs are allowed by paragraph (vi)
                        following.

                 (iii)  The total cost of the purchase of economic
                        power, as defined herein, if the reserve
                        capacity of Black Hills is adequate
                        independent of all other purchases where non-
                        fuel charges are included in either Fb or Fm.

                 (iv)   Energy charges for any purchase if the total
                        amount of energy charges incurred for the
                        purchase is less than Buyer's total avoided
                        variable costs.

                 (v)    Less the cost of fossil and nuclear fuel
                        recovered through all intersystem sales
                        (including sales to Montana-Dakota Utilities
                        Co. under the MDU Contract).

                 (vi)   Notwithstanding anything in 18 CFR  35.14 to
                        the contrary, the Variable Costs paid by Black
                        Hills to Pacific Power & Light Company under
                        the Power Sales Agreement between Black Hills
                        and Pacific dated December 31, 1983 and
                        designated as Pacific Power & Light Company
                        Rate Schedule FERC No. 236.

            (b)  KWh sales(s) as used herein shall be the sum of (a)
                 net generation, (b) purchases, (c) interchange-in,
                 less (d) intersystem sales (including sales to
                 Montana-Dakota Utilities Co. under the MDU Contract),
                 and (e) losses at 3.5 percent.

            If the MDU Contract or any amended or substitute agreement
            thereof is not approved or accepted for filing by the
            Federal Energy Regulatory Commission for any reason, "A" in
            the above formula will continue to be 1.035<cent> on the First
            Date of Commercial Operation of NS #2 and thereafter.

            Said Adjustment Factor shall be rounded to the nearest 0.001
            cents for billing purposes and applied to each kWh delivered.

            For the purposes of the Fuel and Economic Power Adjustment
            herein, the following definitions apply:

            "Economic power" is capacity and energy purchased over a
            period of 12 months or less where the total cost of the
            purchase is less than Black Hills' total avoided variable
            cost.

            "Total cost of the purchase" is all charges incurred in
            buying economic capacity and having such power delivered to
            Black Hills' system.  The total cost includes, but is not
            limited to, capacity or reservation charges, energy charges,
            adders, and any transmission or wheeling charge associated
            with the purchase.

            "Total avoided variable cost" is all identified and
            documented variable costs that would have been incurred by
            Black Hills had a particular purchase not been made.  Such
            costs include, but are not limited to, those associated with
            fuel, startup, shutdown or any purchases that would have
            been made in lieu of the purchase made.

            The system reserve capacity criteria by which Black Hills'
            system operator decides whether a reliability purchase is
            required is as follows:

                 (i)    Black Hills is not a member of any power pool.
                        For both long-range planning and for daily
                        operations, Black Hills' system operator
                        determines that a reliability purchase is
                        required when it is necessary to increase its
                        available resources to an amount equal to the
                        total of its projected on-system firm peak
                        load demand plus the yield of its largest base
                        load generation source.

                 (ii)   Prior to the day NS #2 goes into commercial
                        operation, Black Hills' largest base load
                        generation source is its 20 percent leasehold
                        interest in the Wyodak Plant which yields
                        Black Hills 64 MW.  When NS #2 goes into
                        commercial operation, Black Hills' largest
                        base load generation source is its interest in
                        the Neil Simpson 2 Plant which yields Black
                        Hills 80 MW.

                 (iii)  When Black Hills' largest base load generation
                        is not in service, Black Hills has reserve
                        capacity it can call upon from PacifiCorp
                        under the Reserve Capacity Integration
                        Agreement, dated as of May 5, 1987 between
                        PacifiCorp and Black Hills.

                 (iv)   When Black Hills' largest base load generation
                        is not in service and Black Hills unexpectedly
                        loses additional generation or firm purchase
                        contract sources, or any combination thereof,
                        Black Hills then will purchase additional
                        power and energy for reliability purposes.

            Reserve capacity shall be deemed adequate if, at the time a
            purchase was initiated, Black Hills' system reserve capacity
            criteria was projected to be satisfied for the duration of
            the purchase without the purchase at issue.

            The total cost of the purchase must be projected to be less
            than total avoided variable cost, at the time a purchase was
            initiated, before any nonfuel purchase charge may be
            included in Fm.

            Black Hills shall make a credit to Fm after a purchase
            terminates if the total cost of the purchase exceeds the
            total avoided variable cost.  The amount of the credit shall
            be the difference between the total cost of the purchase and
            the total avoided variable cost.  This credit shall be made
            in the first adjustment period after the end of the
            purchase.  If Black Hills fails to make the credit in the
            first adjustment period after the end of the purchase, it
            shall, when making the credit, also include in Fm interest
            on the amount of the credit.  Interest shall be calculated
            at the rate required by 18 CFR  35.19a(a)(2)(iii), and
            shall accrue from the date the credit should have been made
            under this paragraph until the date the credit is made.

            If a purchase is made of more capacity than is needed to
            satisfy Black Hills' system reserve capacity criteria
            because the total costs of the extra capacity and associated
            energy are less than Black Hills' total avoided variable
            costs for the duration of the purchase, the charges
            associated with the non-reliability portion of the purchase
            may be included in F.


       INCOME TAX ADJUSTMENT

            At any time prior to January 1, 1998 that Black Hills incurs
            the burden of any state income tax or the federal corporate
            income tax rates applicable to Black Hills are changed from
            the current rate of 35 percent, the Energy Charge shall be
            adjusted to reflect the increase or the decrease in the tax
            costs as properly allocated to Gillette under the same
            allocation factors as used to determine the Energy Charge;
            provided, no bills or rates will be increased by this tax
            adjustment without filing with the Federal Energy Regulation
            Commission under laws, rules and regulations relating
            thereto.  In consideration of the moratorium at Section 4(c)
            and this Agreement, Gillette agrees that such adjustments
            shall be made and shall not object to or oppose such
            adjustments.  Any income tax changes effective after
            December 31, 1997 shall be taken into account in determining
            just and reasonable rates under Section 4(b).


       RIGHTS FOR CHANGE IN RATES

            The rights and limitations for changes in rates are set
            forth in Section 4 of the Agreement.


       PAYMENT

            Bills will be rendered monthly, due upon presentation, and
            paid by wire transfer (or similar method providing Black
            Hills readily available dollars on the date paid) within
            fifteen (15) days after the bill is received by Gillette.


       TERMS AND CONDITIONS

            Service will be rendered under the Company's Standard Rules
            and Regulations.