Black Hills Corporation Announces Settlement with Commodity Futures Trading Commission.
The Settlement Order recites findings of fact relating to conduct over a time period ending in June 2002. The CFTC Order states that the persons responsible for the misconduct no longer work for the Company. The CFTC found that the activity violated certain provisions of the Commodity Exchange Act relating to delivery of false market information. For its part, neither Black Hills Corporation nor Enserco admitted or denied these findings.
The CFTC stated that Enserco and Black Hills supplied an "extraordinary level of cooperation" with the CFTC, by "swiftly and aggressively investigating its trade reporting activities," and by providing detailed reports of its internal investigation to the CFTC. The CFTC found "no evidence that Black Hills had knowledge of, or participated in, the misconduct." In addition, the CFTC cited efforts of the Company, both before and after the inception of the investigation, to employ industry experts to assist the Company in enhancing risk management activities and internal controls on marketing activities, and the adoption by the Company of new procedures designed to prevent a reoccurrence of alleged misconduct.
The Company does not believe inaccurate trade reporting to trade publications affected the financial accounting treatment of any transaction recorded in its books and records. Enserco personnel no longer provide price or volume data about natural gas trades to industry publications.
The Company agreed to pay a civil monetary penalty of $3,000,000. Accordingly, a charge amounting to approximately $0.10 per share was recorded in second quarter 2003 financial statements. The Company is considering its rights relative to the individuals it believes to be responsible for the conduct in question.
Daniel P. Landguth, Chairman and CEO of Black Hills, said, "This settlement culminates a regrettable episode in our Company's longstanding history of ethical business conduct. We have a corporate culture that practices the highest degree of business ethics and integrity. We do not tolerate any violation of our code of conduct, in any of our businesses -- period. Once our executive team became aware of the issues, we moved swiftly and thoroughly with our own investigation and cooperated fully with federal authorities. Our conscientious effort was noted in the CFTC order. On the constructive side, this investigation helped us reaffirm existing risk management policies and create additional policies and controls designed to prevent potential employee abuses. With this action now concluded, we focus all of our attention on exciting opportunities that lie ahead for Enserco and our entire Company."
About Black Hills Corporation
Black Hills Corporation ( http://www.blackhillscorp.com/ ) is a diverse energy and communications company. Black Hills Energy, our non-regulated energy business group, generates electricity, produces natural gas, oil and coal and markets energy; Black Hills Power is our electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Black Hills FiberCom, a broadband communications company, offers bundled telephone, high speed Internet and cable entertainment services.
Caution regarding forward-looking statements
Some of the statements in this release include "forward-looking statements" as defined by the Securities and Exchange Commission, or SEC. Black Hills Corporation makes these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this release that address activities, events or developments that Black Hills expects, believes or anticipates will or may occur in the future are forward-looking statements. These forward-looking statements are based on assumptions, which Black Hills believes are reasonable based on current expectations and projections about future events and industry conditions and trends affecting Black Hills' business. However, whether actual results and developments will conform to Black Hills' expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, including, among other things: (1) unanticipated developments in the western power markets, including unanticipated governmental intervention, deterioration in the financial condition of counterparties, default on amounts due from counterparties, adverse changes in current or future litigation, adverse changes in the tariffs of the California Independent System Operator, market disruption and adverse changes in energy and commodity supply, volume and pricing and interest rates; (2) prevailing governmental policies and regulatory actions with respect to allowed rates of return, industry and rate structure, acquisition and disposal of assets and facilities, operation and construction of plant facilities, recovery of purchased power and other capital investments, and present or prospective wholesale and retail competition; (3) the State of California's efforts to reform its long-term power purchase contracts; (4) impact of environmental and safety laws; (5) weather conditions; (6) competition; (7) pricing and transportation of commodities; (8) market demand, including structural market changes; (9) unanticipated changes in operating expenses or capital expenditures; (10) capital market conditions; (11) legal and administrative proceedings that influence Black Hills' business and profitability; (12) the effects on Black Hills' business of terrorist actions or responses to such actions; (13) the effects on Black Hills' business resulting from the financial difficulties of Enron and other energy companies, including their effects on liquidity in the trading and power industry, and Black Hills' ability to access the capital markets on the same favorable terms as in the past; (14) the effects on Black Hills' business in connection with a lowering of Black Hills' credit rating (or actions Black Hills may take in response to changing credit ratings criteria), including, increased collateral requirements to execute Black Hills' business plan, demands for increased collateral by Black Hills' current counter-parties, refusal by Black Hills' current or potential counterparties or customers to enter into transactions with Black Hills and Black Hills' inability to obtain credit or capital in amounts or on terms favorable to Black Hills; and (15) other factors discussed from time to time in Black Hills' filings with the SEC.
CONTACT: Mark T. Thies, Executive Vice President and Chief Financial Officer, +1-605-721-2331, or Dale T. Jahr, Director of Investor Relations, +1-605-721-2326, firstname.lastname@example.org , both of Black Hills Corporation
Web site: http://www.blackhillscorp.com/
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|Date:||Jul 31, 2003|
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