THE OUTSIDE DIRECTORS
                               STOCK BASED COMPENSATION PLAN
                                 

     This Outside Directors Stock Based Compensation Plan ("Plan"), is adopted 
by Black Hills Corporation ("Company") effective the 1st day of January, 1997.  
     
   1.RECITALS.

     This Plan is an amendment and restatement of the prior Retirement Plan for 
Outside Directors which was adopted by Company effective the 1st day of January,
1993 ("Prior Plan"). The purpose of the Plan is to provide to Participants 
certain benefits in order to attract and retain competent and hardworking 
outside directors whose abilities, experience and judgment can contribute to 
the well-being of the Company and its shareholders and to further align the
long-term interests of the outside directors with those of the shareholders by 
converting the outside directors' vested benefits under the Prior Plan into 
Company common stock equivalent accounts and providing that future benefits 
will also be based on Company common stock equivalents, as more particularly 
set forth hereafter. 

    2.PARTICIPANTS.

     Those persons eligible for participation in the Plan ("Participants") are 
the present and future outside directors of the Company.  Outside directors 
are directors who are not full-time employees of the Company.  A Participant's 
eligibility for benefits under this Plan shall cease upon the Participant no 
longer being an outside director of the Company.

     3.   ESTABLISHMENT OF COMPANY COMMON STOCK EQUIVALENT
          ACCOUNT.

     For each Participant, the Company shall establish a Company common stock 
equivalent memorandum account ("Account") and shall credit the Account with 
Company common stock equivalents, including fractional equivalents.  The stock 
equivalents shall be determined by using the closing price of the Company 
common stock on the New York Stock Exchange on the date of determination.  
Appropriate adjustments shall be made to the Account for stock splits, stock
dividends, merger, consolidation and similar circumstances affecting the Company
common stock.

     4.   CONVERSION OF VESTED BENEFITS AND PROVISION OF ANNUAL
          BENEFITS.

      a.In lieu of the benefits payable under the Prior Plan, the present value 
of the vested benefits of those Participants who had vested benefits under the 
Prior Plan as of January 1, 1997, shall be converted to Company common stock 
equivalents and credited to the Participant's Account.  The present value of 
the vested benefits under the Plan has been determined using a 7 percent 
discount rate and a determination date of  January 1, 1997. The present value of
the vested benefits and the number of Company common stock equivalents is as 
follows:

     OUTSIDE                      PRESENT VALUE OF           COMMON STOCK 
     DIRECTORS                    VESTED BENEFITS            EQUIVALENTS
                                    
     Glenn C. Barber                $  86,126.00              3,055 shares
     Bruce B. Brundage                 86,126.00              3,055 shares
     John R. Howard                    66,493.00              2,359 shares
     Kay S. Jorgensen                  17,398.00                617 shares


      b.In addition, beginning with the Plan year beginning January 1, 1997, and
in each Plan year thereafter, each Participant shall be entitled to a monthly 
addition to their Account in the amount of the number of Company common stock 
equivalents determined by dividing the sum of $291.67 by the market price of 
the Company common stock on the last day of the month for each month of each 
Plan year that the Participant is eligible for benefits.  

      c.By their signatures below, all Participants hereby consent to the 
conversion of their vested benefits under the Prior Plan as set forth in this 
Section 4a above and the provision of monthly additions to their Account as set 
forth Section 4b above in lieu of any continuing earning of vesting service 
under the Prior Plan.  The Participants agree that the benefits provided
in this Plan are in full substitution for any and all benefits that they may 
have been entitled to under the Prior Plan.  

      5.TIME AND MANNER OF BENEFIT PAYMENTS.

      a.For the purposes of this section, the term "Payment Date" shall mean the
date that a Participant is no longer an outside director of the Company.  Not 
more than 90 days prior to or 90 days subsequent to the Payment Date, the 
Participant shall elect:  (1) either to defer the commencement of payment of 
benefits until the anniversary date of the Payment Date ("Deferral
Election"); or (2) to receive payment of the benefits represented in the 
Participant's Account from the following choices:

     (1)  A lump sum payment in cash in an amount equal to the Participant's
          Account determined as of  the Payment Date due 30 days after the later
          of the Payment Date or the date of election;

     (2)  Payment of shares of common stock of the Company equal to the number
          of shares of Company common stock equivalents credited to the
          Participant's Account as of the Payment Date due 30 days after the 
          later of the Payment Date or the date of election;

     (3)  Payment in monthly installments of either cash or shares of Company
          common stock over a period of up to 15 years with the first 
          installment being due 30 days after the later of the Payment Date 
          or the date of election.  The installment payout period shall be 
          specified in the election. The installment size shall be fixed on 
          the Payment Date and on each anniversary of the Payment Date as 
          though equal installments were to be paid for the then entire 
          balance of the Account over the remaining payment period including 
          any accrued interest or dividends or stock appreciation or 
          depreciation.  The installment payout election, once made,
          may only be changed by the Participant's giving written notice of the
          Participant's election to change the installment payout period within
          30 days prior to any anniversary date of the Payment Date.  Said 
          election to change the installment period shall include, without 
          limitation, the right to elect to have the then remaining entire 
          balance of the Account paid in a lump sum in cash or shares of 
          common stock.

      b.In the event the Participant makes a Deferral Election, then the 
Participant shall, within 30 days of the anniversary date of the Payment Date, 
either make another Deferral Election until the next anniversary date of the 
Payment Date (with the right in the Participant to make further Deferral 
Elections in like manner) or make a payment election in accordance with
the payment choices set forth in 5.a above.  In the event of any Deferral 
Election, Account values shall be determined upon a payment election being 
made as of the anniversary date of the Payment Date subsequent to the payment
election.

      6.PAYMENTS UPON DEATH.

     In the event of the death of a Participant, the benefits which would have 
been payable to the Participant if not for the Participant's death shall be paid
as follows:

     (1)  In the event of the death of a Participant prior to the Participant's 
          payment election, the Participant's beneficiary designated under 
          Section 8 below, or if there is no designated beneficiary, the 
          personal representative of the Participant's estate shall have the 
          right to make the payment election under Section 5 above.  Such 
          payment election shall be made within 90 days of the death of the 
          Participant.  

     (2)  If the Participant dies subsequent to the commencement of payment of
          benefits under the Plan, then the Participant's beneficiary, or if 
          there is no designated beneficiary, the Participant's personal 
          representative, shall have the right to continue the payment of  
          benefits at the same time and manner that payments were made to the 
          Participant prior to Participant's death; provided, that the 
          beneficiary or personal representative of the Participant may elect to
          receive a lump sum payment in cash or shares of common stock equal to 
          the Participant's remaining balance on the date of Participant's 
          death.  

      7.LOSS OF BENEFITS.

     Notwithstanding any other provision in this Plan, if a Participant is 
removed as a director of the Company because of misconduct or dishonesty, the 
Participant shall forfeit all right to any benefits payable under this Plan, 
including vested benefits.

      8.DESIGNATION OF BENEFICIARY.

     A Participant may designate a beneficiary or beneficiaries to receive 
benefits after the death of the Participant.  The designation shall be effective
upon filing written notice with the Compensation Committee of the Board of 
Directors of the Company ("Committee") on the form provided for that purpose.
If more than one beneficiary designation has been filed, the beneficiary or 
beneficiaries designated in the notice bearing the most recent date will be 
deemed the valid beneficiary or beneficiaries.

      9.PLAN TO BE UNFUNDED.

     All benefit payments under the Plan will be made from the general assets of
the Company and Participants and their beneficiaries are to be unsecured general
creditors of the Company. No special or separate fund is to be established nor 
other segregation of assets made to create Plan assets or cause the Plan to be a
funded plan.  Notwithstanding the foregoing, however, the Company may, in its 
sole discretion, place assets in a trust that may be used to meet Company's
obligations under the Plan and any right of a Participant to any benefit payment
under the Plan shall be reduced by any payment received by the Participant from 
the trustee under such a trust. In the event such a trust is established, the 
assets of such trust shall be available to the general creditors of the Company 
in the event of the insolvency or bankruptcy of the Company (a "Rabbi trust").  

      10.PLAN MAY BE MODIFIED OR DISCONTINUED.

     The Company reserves the right to amend, modify or discontinue the Plan 
except under the circumstances set forth in Section 11 below.  Any modification 
or discontinuance of benefits shall not reduce accrued and unpaid benefits.

      11.CHANGE IN CONTROL.

     In the event of a Change in Control, as hereafter defined, the Company 
shall, as soon as possible, but in no event longer than 30 days following the 
Change of Control, make an irrevocable contribution to the Rabbi trust referred 
to in Section 9 above, or in the event the Rabbi trust has not been created, 
create such a trust, and make an irrevocable contribution to the trust, in an 
amount that is sufficient to pay each Participant or beneficiary the benefits to
which the Participants or their beneficiaries would be entitled pursuant to 
the terms of this Plan as of the date of the Change in Control.

     For the purposes of this section, the term "Change in Control" shall mean 
any of the following events:

     (1)  An acquisition (other than directly from the Company) of any common
          stock of the Company (the "Common Stock") by any "Person" (as the term
          person is used for purposes of Section 13(d) or 14(d) of the 
          Securities Exchange Act of 1934, as amended (the "Exchange Act"), 
          immediately after which such Person has "Beneficial Ownership" (within
          the meaning of Rule 13d-3 promulgated under the Exchange Act) of 
          thirty percent (30%) or more of the Common Stock of the Company; 
          provided, however, in determining whether a Change in Control has 
          occurred, Common Stock which is acquired in a "Non-Control 
          Acquisition" (as hereinafter defined) shall not constitute an 
          acquisition which would cause a Change in Control. 
          A "Non-Control Acquisition" shall mean an acquisition by (i) an 
          employee benefit plan (or a trust forming a part thereof) maintained 
          by (A) the Company or (B) any corporation or other Person of which a 
          majority of its voting power or its voting equity securities ("Voting 
          Securities") or equity interest is owned, directly or indirectly, by 
          the Company (for purposes of this definition, a "Subsidiary"), 
          (ii) the Company or its Subsidiaries, or (iii) any Person in 
          connection with a "Non-Control Transaction" (as hereinafter defined);

     (2)  The individuals who, as of January 1, 1997 are members of the Board 
          (the "Incumbent Board"), cease for any reason to constitute at least 
          two-thirds of the members of the Board; provided, however, that if the
          election, or nomination for election by the Company's common 
          shareholders, of any new director was approved by a vote of at least 
          two-thirds of the Incumbent Board, such new director shall, for 
          purposes of this Plan, be considered as a member of the Incumbent 
          Board; provided further, however, that no individual shall be 
          considered a member of the Incumbent Board if such individual 
          initially assumed office as a result of either an actual or threatened
          "Election Contest" (as described in Rule 14a-11 promulgated under the 
          Exchange Act) or other actual or threatened solicitation of proxies or
          consents by or on behalf of a Person other than the Board (a "Proxy
          Contest") including by reason of any agreement intended to avoid or 
          settle any Election Contest or Proxy Contest; or

     (3)  Approval by shareholders of the Company of:

     (i)  A merger, consolidation or reorganization involving the
          Company, unless such merger, consolidation or reorganization is
          a "Non-Control Transaction."  A "Non-Control Transaction" shall
          mean a merger, consolidation or reorganization of the Company
          where:

     (A)  the shareholders of the Company, immediately before
          such merger, consolidation or reorganization, own directly
          or indirectly immediately following such merger,
          consolidation or reorganization, at least seventy percent
          (70%) of the combined voting power of the outstanding
          Voting Securities of the corporation resulting from such
          merger or consolidation or reorganization (the "Surviving
          Corporation") in substantially the same proportion as their
          ownership of the Voting Securities immediately before
          such merger, consolidation or reorganization.

     (B)  the individuals who were members of the Incumbent
          Board immediately prior to the execution of the
          agreement providing for such merger, consolidation or
          reorganization constitute at least two-thirds of the
          members of the board of directors of the Surviving
          Corporation, or a corporation beneficially directly or
          indirectly owning a majority of the Voting Securities of
          the Surviving Corporation, and

     (C)  no Person other than (i) the Company, (ii) any Subsidiary,
          (iii) any employee benefit plan (or any trust forming a part
          thereof) maintained by the Company, the Surviving
          Corporation, or any Subsidiary, or (iv) any Person who,
          immediately prior to such merger, consolidation or
          reorganization had Beneficial Ownership of thirty percent
          (30%) or more of the then outstanding Voting Securities),
          has Beneficial Ownership of thirty percent (30%) or more
          of the combined voting power of the Surviving
          Corporation's then outstanding Voting Securities.
 
     (ii) A complete liquidation or dissolution of the Company; or
 
    (iii) An agreement for the sale or other disposition of all or
          substantially all of the assets of the Company to any Person other
          than (x) a transfer to a Subsidiary or (y) a sale or transfer of a
          Subsidiary by the Company except if such sale or transfer would
          be a sale or other disposition of all or substantially all of the
          assets of the Company.

     (4)  Notwithstanding the foregoing, (i) a Change in Control shall not be
          deemed to occur solely because any Person (the "Subject Person")
          acquired Beneficial Ownership of more than the permitted amount of the
          then outstanding Common Stock as a result of the acquisition of Common
          Stock by the Company which, by reducing the number of shares of
          Common Stock then outstanding, increases the proportional number of
          shares Beneficially Owned by the Subject Persons, provided that if a
          Change in Control would occur (but for the operation of this sentence)
          as a result of the acquisition of Common Stock by the Company, and 
          after such stock acquisition by the Company, the Subject Person 
          becomes the Beneficial Owner of any additional Common Stock which 
          increases the percentage of the then outstanding Common Stock 
          Beneficially Owned by the Subject Person, then a Change in Control 
          shall occur; and (ii) a Change in Control shall not be deemed to occur
          unless and until all regulatory approvals required to effect a Change 
          in Control of the Company have been obtained.

     12.WITHHOLDING.

    There shall be deducted from all benefits paid under this Plan the amount of
any taxes required to be withheld by any federal, state or local government.  
The Participants and their beneficiaries, distributees, and Personal 
Representatives, will bear any and all federal, foreign, state, local or 
other income or other taxes imposed on amounts paid under this Plan.

     13.ASSIGNABILITY.

    No right to receive payments under this Plan shall be subject to voluntary 
or involuntary alienation, assignment or transfer, sale, bankruptcy, pledge, 
attachment, charge, lien or encumbrance of any kind.

     14.ADMINISTRATION OF PLAN.

    The Amended Plan shall be administered by the Committee.  The Committee 
shall conclusively interpret the provisions of the Plan, decide all claims and 
shall make all determinations under the Plan.  The Committee shall act by vote 
or written consent of a majority of its members.

     15.GOVERNING LAW.

    This Plan shall be governed by and construed in accordance with the laws of 
the State of South Dakota. 

     16.NO CONTRACT.

    Neither the action of the Company in establishing the Plan or any action 
taken by it or by the Committee under the provisions hereof or any provisions of
the Plan shall be construed as giving to any Participant the right to be 
retained as a director of the Company.

     17.NO TAX-QUALIFIED OR ERISA PLAN.

    It is not intended that this Plan be a tax-qualified plan under the Internal
Revenue Code, nor is it intended that this Plan be an employee benefit plan 
subject to ERISA because none of the Participants are employees of the Company. 
The Participant's rights under the Plan are contractual.

    BLACK HILLS CORPORATION


     By/s/Daniel P. Landguth
     Its Chairman, President and CEO

ATTEST:

/s/Roxann R. Basham
Secretary and Treasurer

(SEAL)

    OUTSIDE DIRECTORS:


     /s/Glenn C. Barber
     Glenn C. Barber



     /s/Bruce B. Brundage
     Bruce B. Brundage


     /s/John R. Howard
     John R. Howard


     /s/Kay S. Jorgensen
     Kay S. Jorgensen


     /s/Adil M. Ameer
     Adil M. Ameer


     /s/Thomas J. Zeller
     Thomas J. Zeller