THIRD RESTATED ELECTRIC POWER AND ENERGY
                SUPPLY AND TRANSMISSION AGREEMENT


                             between


                  THE CITY OF GILLETTE, WYOMING

                               and

               BLACK HILLS POWER AND LIGHT COMPANY



















Date:  January 1, 1998<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    Backup Supply Service. . . . . . . . . . . . . .4
         3.4    Capacity and Energy Technicalities . . . . . . .5
         3.5     Metering. . . . . . . . . . . . . . . . . . . .5
         3.6    Coal Agreements. . . . . . . . . . . . . . . . .5

4.       POWER AND ENERGY RATE SCHEDULES AND REGULATION. . . . .6

5.       OTHER SOURCES OF CAPACITY AND ENERGY. . . . . . . . . 12

6.       POINT OF DELIVERY, INTERCONNECTION, FACILITIES, AND METERS12
         6.1    Point of Metering. . . . . . . . . . . . . . . 12
         6.2    Point of Interconnection and Delivery. . . . . 12
         6.3    Calibrate Meters . . . . . . . . . . . . . . . 12
         6.4    Rights of Way. . . . . . . . . . . . . . . . . 13
         6.5    Facilities to be Provided by Gillette. . . . . 13

7.       NETWORK INTEGRATION TRANSMISSION SERVICE AGREEMENT. . 14

8.       CONTRACT REFORMATION. . . . . . . . . . . . . . . . . 14
         8.1    Contract Reformation Charge. . . . . . . . . . 14
         8.2    Conditional Contract Reformation Charge. . . . 15

9.       IMPOSSIBILITY OF PERFORMANCE. . . . . . . . . . . . . 16

10.      INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 16

11.      FILING WITH FERC. . . . . . . . . . . . . . . . . . . 17

12.      SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . 17

13.      NOTICE. . . . . . . . . . . . . . . . . . . . . . . . 18

14.      COMPLETE AGREEMENT. . . . . . . . . . . . . . . . . . 18

<PAGE>
        THIRD RESTATED ELECTRIC POWER AND ENERGY SUPPLY
                   AND TRANSMISSION AGREEMENT
                                
                                
    This Third Restated Electric Power and Energy Supply and Transmission 
Agreement, dated as of January 1, 1998 ("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
Second Restated Electric Power and Energy Supply and Transmission Agreement, 
dated as of February 28, 1995 ("Second Restated Agreement"), which agreement 
superseded 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 transmission
services and electric capacity and energy service to Gillette for its own use
and to be resold in the operation of its municipal electric system pursuant 
to the terms and provisions of the Second Restated Agreement, which was accepted
for filing with the Federal Energy Regulatory Commission.

    The purpose of this Agreement is to restate the Second Restated Agreement.  
At such time regulatory requirements are satisfied as set forth in Section 11, 
this Agreement supersedes and replaces the Second Restated Agreement.

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

         "Backup Supply Service"refers to Black Hills providing Gillette 
          capacity which Black Hills is not otherwise obligated to provide 
          per this Agreement, the Network Integration Transmission Service 
          Agreement, or any other agreement between Black Hills and Gillette.

         "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.

         "Black Hills' Transmission System" is the facilities owned, controlled
          or operated by Black Hills as defined in the Transmission Tariff.

         "Conditional Contract Reformation Charge" is the payment due from 
          Gillette to Black Hills consistent with Section 8.2.

         "Contract Reformation Charge" is the payment due from Gillette to 
          Black Hills consistent with Section 8.1.

         "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.

         "Good Utility Practice" is any of the practices, methods and acts 
          engaged in or approved by a significant portion of the electric 
          utility industry during the relevant time period, or any of the 
          practices, methods and acts which, in the exercise of reasonable 
          judgment in light of the facts known at the time the decision was
          made, could have been expected to accomplish the desired result at a 
          reasonable cost consistent with good business practices, reliability,
          safety and expedition.  Good Utility Practice is not intended to be 
          limited to the optimum practice, method, or act to the exclusion of
          all others, but rather to be acceptable practices, methods, or acts
          generally accepted in the region.
 
         "Network Integration Transmission Service Agreement" is the agreement
          under which transmission services are provided to Gillette by Black 
          Hills.

         "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 determining any Backup
          Supply Service under Exhibit A, measurement shall be based on fifteen-
          minute intervals.

         "Transmission Tariff" is Black Hills' FERC pro forma Open Access Tariff
          on file with the FERC as Black Hills Power and Light Company Open 
          Access Transmission  Tariff, Original Volume No. 2, as the same may be
          amended or replaced from time to time.

    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 23,000 KW during each month 
of the Term.

     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  Backup Supply Service.  Black Hills shall have no obligation to supply
firm capacity and energy to Gillette beyond  that capacity and energy required
under Sections 3.1 and 3.2.  In the event that Black Hills furnishes Gillette
capacity to meet a portion of Gillette's Requirements beyond the capacity 
required to be provided by Black Hills under Section 3.1 of this Agreement, 
the Network Integration Transmission Service Agreement or any other agreement
entered into between Black Hills and Gillette, Black Hills shall charge and 
Gillette shall pay, on a monthly basis, the Backup Supply Service charge 
provided for in Exhibit A of this Agreement.  No charge for Backup Supply 
Service shall be payable unless the entity responsible for scheduling a 
Gillette-supplied resource fails to meet scheduled energy deliveries
as arranged between Black Hills and the entity responsible for such scheduling.
Energy accompanying such additional capacity will be billed consistent with 
Exhibit A.

     3.4  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.

     3.5  Metering.  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.  
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.

     3.6  Coal Agreements.  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 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. Section 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) 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) 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) and 4(d), 
              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. Section 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) and 
              4(d), below, Gillette has the right under Section 205 of the 
              Federal Power Act (16 U.S.C. Section 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. Section 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 Backup Supply Service charge in Exhibit
              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 the dollar levels of the rate and 
              charges set forth on Exhibit A prior to January 1, 2002, provided,
              however, Black Hills may tender with the FERC a filing prior to 
              January 1, 2002, that proposes an effective date of January 1, 
              2002; and Gillette shall not contest, the dollar levels of the 
              rates and charges set forth in Exhibit A prior to January 1,
              2003, provided, however, Gillette may tender with the FERC a 
              filing prior to January 1, 2003, that proposes an effective date 
              of January 1, 2003, except Gillette may tender a filing with the 
              FERC earlier if a Black Hills filing is made  prior to January 1, 
              2003.  Notwithstanding the previous sentence, if prior to January
              1, 2002, 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  plant which costs more 
                     than $5,000,000 to repair.

              Black Hills may file for an increase to take effect prior to 
              January 1, 2002, 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 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.

              (ii)   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.  

              (iii)  Black Hills may maintain an energy charge at a level no 
                     lower than $0.0213 per kWh.  If the energy charge is higher
                     than the level of appropriately allocated energy costs, the
                     overage will be reflected as a credit to Gillette under the
                     demand charge.  

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

              (v)    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.

              (vi)   The Contract Reformation Charge shall be set not lower than
                     $16,000 and shall not be used to reduce Gillette's cost of 
                     service under this Agreement.

              (vii)  The Conditional Contract Reformation Charge shall be set 
                     not lower than $16,000 unless the conditions in Section 8.2
                     are satisfied and shall not be used to reduce Gillette's 
                     cost of service under this Agreement

    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 self generating or contracting with others for 
capacity and energy .  If Gillette enters into contracts from other sources, 
Gillette shall keep Black Hills currently informed of the arrangements.


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

     6.1  Point of Metering.  Black Hills shall meter 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 metering which is the Neil Simpson No. 1 69 kV 
Substation and/or at any future points of metering upon which the parties may 
agree.

     6.2  Point of Interconnection and Delivery.  The point of interconnection 
and delivery shall be where Black Hills facilities now interconnect to the  
facilities of Gillette, presently located near the corner of Warlow Drive and 
Gurley Avenue, City of Gillette, Wyoming, or at any future point of 
interconnection and delivery upon which the parties may agree.

     6.3 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.

     6.4  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 interconnection and delivery set forth 
in Section 6.2 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.

     6.5  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 interconnection and delivery with Black Hills' Transmission System 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 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 6.2 as 
required by  Good 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.  NETWORK INTEGRATION TRANSMISSION SERVICE AGREEMENT.

    Black Hills shall provide transmission services for Gillette's Requirements 
under this Agreement consistent with the Network Integration Transmission 
Service Agreement.  Gillette shall accept such service under the Transmission 
Tariff and be responsible for all charges and expense associated with the same, 
except that Gillette shall receive a credit against its bill calculated 
consistent with Exhibit A for the ancillary service charges as provided for in 
the Transmission Tariff excluding Energy Imbalances Services (Network 
Integration Transmission Service Agreement Section 4.4) related to Gillette's 
Requirements until there is a change in rates consistent with Section 4(c).  
Additionally, until there is a change in rates consistent with Section
4(c), Black Hills shall be responsible for the transmission losses under the 
Transmission Tariff for the Base Load Capacity and Base Load Energy.

     8.  CONTRACT REFORMATION.

     8.1  Contract Reformation Charge.  Section 8.4 of the Second Restated
Agreement obligated Gillette to make payment to Black Hills for reserved 
transmission capacity.  In consideration of extinguishing that obligation to 
Black Hills, Gillette shall pay Black Hills monthly upon invoices the sum 
identified on Exhibit A related to the Contract Reformation Charge.  This 
Contract Reformation Charge shall not be subject to change, modification, or
amendment as a result of any regulatory proceeding as otherwise set forth in 
Section 4 and shall remain an obligation of Gillette to Black Hills through June
30, 2012.

     8.2  Conditional Contract Reformation Charge.  In the event that Black 
Hills does not have the right under its Transmission Tariff to realize the 
benefits of 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. (now known as Powder River Energy 
Corporation), Black Hills Electric Cooperative, Inc., and Butte Electric 
Cooperative, Inc. (collectively "Cooperatives") ("REC Contract"), as being 
equivalent to the costs properly allocable to the service under the REC Contract
("Revenue Credit Methodology"), which right was otherwise set forth in the 
Second Restated Agreement, Gillette shall make payment to Black Hills of a
Conditional Contract Reformation Charge as set forth on Exhibit A.  This 
Conditional Contract Reformation Charge shall not be subject to change, 
modification, or amendment as a result of any regulatory proceeding as otherwise
set forth in Section 4 and shall remain an obligation of Gillette to Black Hills
through June 30, 2012.  In the event that this Conditional Contract
Reformation Charge is otherwise mitigated as a result of having the 
Cooperatives more fully pay the allocable charge as a result of application of 
the REC Contract provisions, regulatory proceedings or contract modifications 
associated with their use of the joint transmission system, Gillette's 
obligation for this Conditional Contract Reformation Charge shall be reduced to
reflect any mitigation in this expense.

     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 Power and Light Company, Attention: 
President, P. O. Box 1400, Rapid City, South Dakota 57709 on behalf of Black 
Hills; and City of Gillette, Attention:  Jon Young and Wayne Lindgren at P. O. 
Box 3003, Gillette, Wyoming 82717, and Attention:  Wayne Lindgren at 611 
Exchange, 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 and the Network Integration Transmission
Service Agreement have been accepted for filing and/or approved by FERC, this 
Agreement and the Network Integration Transmission Service Agreement cancel and
supersede the Second Restated Electric Power and Energy Supply and Transmission 
Agreement dated February 28, 1995.  This Agreement and the Network Integration 
Transmission Service Agreement constitute the complete and full agreements 
between the parties.

    This Agreement and the Network Integration Transmission Service Agreement
are executed as of the day and year recited in the first paragraph hereof and 
each of the officers executing this Agreement and the Network Integration 
Transmission Service Agreement represent that this Agreement and the Network 
Integration Transmission Service Agreement have 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                                                           
      ATTEST:Its Mayor


                                                                          
Clerk

(OFFICIAL SEAL)
         BLACK HILLS POWER AND LIGHT
         COMPANY 



     ATTEST:By                                                           
    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)  January 1, 1998 through December 31, 1998:

    Basic Service Charge          $5,400 per month

    Billing Demand Charge         $11.49 per kilowatt of the Billing
                                  Demand

    Billing Energy Charge         2.13 cents per kilowatt hour of Billing
                                  Energy

         Contract Reformation Charge   $16,000 per month

         Conditional Contract
          Reformation Charge$16,000 per month

     (b)January 1, 1999 through December 31, 1999:

         Basic Service Charge     $5,400 per month

         Billing Demand Charge    $10.59 per kilowatt of the Billing
                                  Demand

         Billing Energy Charge    2.13 cents per kilowatt hour of Billing
                                  Energy

         Contract Reformation Charge   $16,000 per month

         Conditional Contract
          Reformation Charge$16,000 per month

    (c)  January 1, 2000 and thereafter:

          Basic Service Charge$5,400 per month

         Billing Demand Charge    $8.77 per kilowatt of the Billing
                                  Demand

         Billing Energy Charge    2.13 cents per kilowatt hour of Billing
                                  Energy

         Contract Reformation Charge   $16,000 per month

         Conditional Contract
          Reformation Charge$16,000 per month

         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 23,000 KW 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.  


BACKUP SUPPLY SERVICE

    Backup Supply Service occurs when Black Hills furnishes Gillette capacity
    beyond Black Hills' obligations under this Agreement, the Network 
    Integration Transmission Service Agreement or any other agreements between 
    Black Hills and Gillette.

    When Black Hills provides capacity to Gillette beyond Black Hills' 
    obligation under this Agreement, the Network Integration Transmission 
    Service Agreement or any other agreements between Black Hills and Gillette, 
    Gillette shall pay to Black Hills 3 times the monthly Billing Demand Charge 
    for the capacity for such Backup Supply Service and the Billing Energy 
    Charge identified in this Exhibit A.


INCOME TAX ADJUSTMENT

    At any time prior to January 1, 2002 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, 2001 shall be taken into account in determining just and
    reasonable rates under Section 4(b).


GOVERNMENT IMPOSITION ADJUSTMENT

    At any time prior to January 1, 2002, that Black Hills incurs the burden of 
    any new federal, state, or local governmental impositions and governmental 
    charges of general applicability to electric utilities, including but not 
    limited their generating fuel source and purchase power obligations, 
    including but not limited to charges imposed upon energy and emissions, 
    environmental externalities, and reclamation requirements imposed after 
    January 1, 1998, which project to cause Black Hills at least a 5 percent 
    increase in costs of service, the Energy Charge shall be adjusted
    to reflect the increase associated with such charges; provided, no bills or 
    rates will be increased by this governmental imposition and charge 
    adjustment without filing with the Federal Energy Regulatory Commission 
    under laws, rules, and regulations related thereto.  In consideration of the
    moratorium at Section 4(c) of this Agreement, Gillette agrees that any such 
    adjustment shall be made and shall not object to or oppose such adjustments.
    Any governmental imposition to be effective after December 31, 2001, 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.