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            August 24, 2007

Mr. William Thompson

Branch Chief

Division of Corporation Finance

United States Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549-7010

            Re:

            Black Hills Corporation (the “Company”, “we” or “our”)

Form 10-K for Fiscal Year Ended December 31, 2006

Filed March 1, 2007

Form 10-Q for Fiscal Quarter Ended March 31, 2007

Filed May 10, 2007

File No. 1-31303

Dear Mr. Thompson:

The purpose of this letter is to respond to your comments as set forth in your letter of July 17, 2007.  The headings used herein are the same as those set forth in your letter.  For ease of reference, we have set forth your comment before each response.

We have considered carefully your comments and are willing to enhance and, in some respects, clarify our disclosures as set forth in the responses below.  However, because we do not believe that our investors would consider any of these changes to be significant to an investment decision in the Company, we do not believe that the staff’s comments should require an amendment to our 2006 Form 10-K or to our first quarter 2007 Form 10-Q.  We respectfully request that we be allowed to include the requested information in future filings as indicated in the responses below.  If this is acceptable to the staff, we will modify our future filings accordingly.  Prior to providing this response letter to you, we filed our second quarter 2007 Form 10-Q with the SEC on August 9, 2007.  To the extent that your comments were applicable to that interim filing, we incorporated those comments as indicated in our responses below.

In connection with our response to your comments, we acknowledge the following:

            •     the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

            •     staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and

            •     the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

William Thompson

August 24, 2007

Page 2

FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 2006

Item 8. Financial Statements and Supplementary Data, page 85

Comment No. 1:

Please disclose accumulated balances for each classification of accumulated other comprehensive income on the face of the consolidated balance sheets, in the consolidated statements of common stockholders’ equity and comprehensive income or in the notes to the financial statements.  Refer to paragraph 26 of SFAS 130.

Company’s Response:

We will include the necessary information in future filings and have included the following table within Note 7 “Comprehensive Income” of our second quarter 2007 Form 10-Q filed with the SEC on August 9, 2007, which included the balances as of December 31, 2006:

Balances by classification included within Accumulated Other Comprehensive Loss on the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):

            Derivatives

            Employee

            Amount from

            Designated as

            Benefit

            Equity

            Cash Flow Hedges

            Plans

            Investees

            Total

            As of June 30, 2007

            $

            2,892

            $

            (8,404)

            $

            (156)

            $

            (5,668)

            As of December 31, 2006

            $

            8,119

            $

            (8,404)

            $

            (230)

            $

            (515)

            As of June 30, 2006

            $

            (1,699)

            $

            (2,936)

            $

            (203)

            $

            (4,838)

Consolidated Statements of Cash Flows, page 91

Comment No. 2:

We believe that the classification of proceeds from the sale of discontinued operations should be presented on a basis consistent with the classification of gains and losses on sale of discontinued operations in the consolidated statements of income.  Please revise to present proceeds from the sale of business operations classified in discontinued operations in accordance with SFAS 144 as cash provided by investing activities of discontinued operations or tell us why a revision is unnecessary.

William Thompson

August 24, 2007

Page 3

Company’s Response:

We understand that our classification of proceeds from the sale of discontinued operations on our statements of cash flows is not on a basis consistent with the classification of gains and losses on the sale of discontinued operations in our statements of income.  However, we believe our original presentation is in accordance with SFAS 95 and SFAS 144.

While the presentation of gains and losses on the sale of discontinued operations is explicit within SFAS 144, there is no clear guidance addressing the cash flow statement classification of cash generated from the sale of discontinued operations.  The fact that the related gains and losses are not recurring seems consistent with the intent of a discontinued operations presentation.  However, since the cash proceeds are available for our ongoing operations either for reinvesting, debt reduction, payment of dividends, etc., a discontinued operations presentation here would seem inconsistent with SFAS 95.  Paragraph 5 of SFAS 95 states:

“The information provided in a statement of cash flows, if used with related disclosures and information in the other financial statements, should help investors, creditors, and others to (a) assess the enterprise's ability to generate positive future net cash flows; (b) assess the enterprise's ability to meet its obligations, its ability to pay dividends, and its needs for external financing; (c) assess the reasons for differences between net income and associated cash receipts and payments; and (d) assess the effects on an enterprise's financial position of both its cash and noncash investing and financing transactions during the period.”

Our presentation on the Consolidated Statement of Cash Flows was transparent, as the cash inflows related to the sale of discontinued operations were on a separate line titled, “Proceeds from sale of business operations”.  Further, our disclosure in Note 16 to the financial statements provides the reader with additional clarity to understand the cash flow implications of the sale.  We believe our presentation is an acceptable application of the standards as it provides the reader a clear picture of the actual investing cash flow activities for discontinued operations as well as provides an understanding of how the sale proceeds impact our ongoing ability to generate positive future cash flow, meet our obligations and external financing needs, and pay dividends.

Notes to Consolidated Financial Statements, page 93

Note 1.  Business Description and Summary of Significant Accounting Policies, page 93

Comment No. 3:

Please disclose the types of costs included in operations and maintenance and administrative and general expenses.  In doing so, please address production costs and ARO accretion expense.

Company’s Response:

We include our production related costs within the “Operations and maintenance” line item on our statements of income.  As discussed in more detail within our response to Comment No. 9 below, we include ARO accretion expense within the “Depreciation, depletion and amortization” line item on our statements of income.  In future filings, we will include in our footnotes to the financial statements language to clarify the location of these costs within our financial statements.

William Thompson

August 24, 2007

Page 4

Oil and Gas Operations, page 95

Comment No. 4:

Please tell us whether amortizable cost includes estimated future expenditures, including future ARO costs, to be incurred in developing proved reserves and estimated dismantlement and abandonment costs.  Please also tell us how you treat costs of investments in unproved properties and major development projects.  In addition, please clarify your disclosure regarding the costs included in the amortization base.  Refer to Rule 4-10(c)(3) of Regulation S-X.

Company’s Response:

In accordance with Rule 4-10(c) of Regulation S-X, within our costs to be amortized we include estimated future expenditures to be incurred in developing proved reserves as well as estimated dismantlement and abandonment costs, net of estimated salvage values.

We exclude those costs directly associated with unproved properties and major development projects, if any, from the costs to be amortized.  These excluded costs are subsequently included within the costs to be amortized when it is determined whether or not proved reserves can be assigned to the properties.  The properties excluded from the costs to be amortized are assessed for impairment at least annually and any amount of impairment is added to the costs to be amortized.

We intend to clarify our disclosures accordingly in our future filings.

William Thompson

August 24, 2007

Page 5

Note 3.  Investments in Associated Companies, page 107

Comment No. 5:

Please explain to us why an increase in your power fund partnership interests earned through fund performance triggered by “equity flips” resulted in impairment of goodwill.  In doing so, please describe the “equity flips” to us in detail.  Also, explain to us why the increase in partnership interests was triggered by the “equity flips” and any other facts useful to an understanding of the transactions, your accounting treatment and basis in GAAP therefore.

Company’s Response:

Our investments in multiple energy funds include performance based “equity flips” in the related limited partnership agreements.  The term “equity flip” has been used to describe a shifting in ownership interests among the fund partners.  The general partner’s interest in these partnerships originated at 1 percent and increased to 21 percent, in defined steps.  Each defined step is an “equity flip” that is structured to occur as the limited partners achieve a specified target internal rate of return based on actual cash distributions from the partnership.  Upon achieving a targeted return, the general partner’s interest in the fund income, losses and future cash distributions increases.

With cash distributions in 2005, the limited partners achieved the specified target rate that resulted in our recognizing the final “equity flip” to a 21 percent interest for the general partner.  For application of the equity method of accounting, Paragraph 6b of APB No. 18 states:  “The investment of an investor is also adjusted to reflect the investor's share of changes in the investee's capital”.   Accordingly, we recognized the earnings associated with the value of our additional general partnership interest.

In understanding how the final “equity flips” resulted in an impairment of associated goodwill, it is important to note that these energy funds follow the provisions of the AICPA Audit and Accounting Guide, “Audits of Investment Companies”, whereby the funds underlying investments are carried at fair value.  The fact that we account for our investments in these funds under the equity method of accounting results in our associated book carrying value being equal to our pro rata interest in the fair value based underlying fund equity.  Given the funds’ fair value based accounting practices and the fund manager’s intention and progress toward liquidating the fund assets, we anticipated that the future cash distributions from the funds would approximate the recorded fund equity.

Prior to the final “equity flip” occurring, we were able to carry the excess value of the associated goodwill on our books due to the potential to realize value and subsequent cash distributions from the additional partnership interest related to the final “equity flip”.  Once the final “equity flip” occurred, this value was recognized, and any justification for a carrying value in the investments over our pro rata share of the fair value based underlying fund equity was eliminated.  Therefore, the associated goodwill was impaired at the same time the value of our additional partnership interest was recognized.

William Thompson

August 24, 2007

Page 6

Note 4.  Property, Plant and Equipment, page 108

Comment No. 6:

Please tell us what the plant acquisition adjustment line item represents and why the adjustment is not depreciated.

Company’s Response:

The plant acquisition adjustment relates to the acquisition of our ownership interest in the Wyodak power plant by our rate regulated utility subsidiary, Black Hills Power.  The plant acquisition adjustment represents the amount by which our acquisition purchase price exceeded the undepreciated original purchase price of the plant.  The plant acquisition adjustment has been and continues to be amortized over the remaining life of the acquired plant.  Our disclosure indicating the lack of an average useful life for amortization purposes was an oversight that will be corrected in future filings.  For reference, as of December 31, 2006, the $4.9 million unamortized plant acquisition adjustment was approximately 0.2 percent of our gross property, plant and equipment, which we believe to be immaterial to the overall presentation.

Note 18.  Commitments and Contingencies, page 135

Legal Proceedings, page 137

Comment No. 7:

Please tell us when you accrued the loss related to the settled governmental claims arising from the forest fires disclosed under the “Forest Fire Claims” heading.  Also, given the significance of the settlement amount as disclosed in Form 10-Q for the quarterly period ended September 30, 2006 to the amount of reported net income, please tell us why you believe the settlement should not be described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in accordance with Item 303(a)(3) of Regulation S-K.  In addition, tell us whether you have accrued estimated losses related to the private claims arising from the forest fires and, if so, the amounts accrued.  Further, with regard to loss contingencies disclosed pursuant to the requirements of SFAS 5, please disclose:

            •     the nature of accruals made pursuant to the provisions of paragraph 8 and to the extent material the amounts accrued; and

            •     in circumstances where no accrual is made because one or both of the conditions in paragraph 8 are not met, or if an exposure to loss exists in excess of the amount accrued, please give an estimate of the possible loss or range of loss or state that such an estimate cannot be made.

William Thompson

August 24, 2007

Page 7

Company’s Response:

We have sufficient confirmed insurance coverage for both the pending private party forest fire claims and the settled state and federal government forest fire claims.  Thus our assessment of the available facts at no time resulted in a loss accrual in accordance with SFAS 5.  As the estimated impact, net of insurance coverage, was immaterial to our results of operations, we did not expand our discussion into Management’s Discussion and Analysis of Financial Condition and Results of Operations in accordance with Item 303(a)(3) of Regulation S-K.

In addition to the forest fire claims, we disclosed certain additional contingencies pursuant to the provisions of SFAS 5.  In each instance we assessed the contingencies in accordance with paragraphs 8-10 of SFAS 5 to determine the applicable disclosure requirements.  Accordingly, we believe our original disclosures were in compliance with the disclosure requirements of SFAS 5.  The contingencies disclosed pursuant to SFAS 5 within our 2006 Form 10-K included the following:

            •     PPM Energ