United States
Securities and Exchange Commission
Washington, D.C. 20549

Form 10-Q

X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003.

___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934

For the transition period from _______________ to _______________.

Commission File Number 1-7978

Black Hills Power, Inc.
Incorporated in South Dakota IRS Identification Number 46-0111677

625 Ninth Street
Rapid City, South Dakota 57701

Registrant’s telephone number (605) 721-1700

Former name, former address, and former fiscal year if changed since last report

NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No______

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes______ No X

As of October 31, 2003 there were issued and outstanding 23,416,396 shares of the Registrant’s common stock, $1.00 par value, all of which were held beneficially and of record by Black Hills Corporation.

Reduced Disclosure

The Registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

TABLE OF CONTENTS

		Page
PART 1	FINANCIAL INFORMATION
Item 1	Financial Statements
	Condensed Statements of Income -
	Three and nine months ended
	September 30, 2003 and 2002	3
	Condensed Balance Sheets -
	September 30, 2003 and December 31, 2002	4
	Condensed Statements of Cash Flows -
	Nine months ended September 30, 2003 and 2002	5
	Notes to Condensed Financial Statements	6-10
Item 2	Results of Operations	10-13
Item 4	Controls and Procedures	14
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	15
Item 6	Exhibits and Reports on Form 8-K	15
	Signatures	16
	Exhibit Index	17

BLACK HILLS POWER, INC.
CONDENSED STATEMENTS OF INCOME
(unaudited)

	Three months ended September 30						Nine months ended September 30
	2003			2002			2003			2002
	(in thousands)
Operating revenue	$	46,268		$	45,291		$	129,238		$	120,786

Operating expenses:
Fuel and purchased power		15,545			13,702			41,426			32,144
Operations and maintenance		6,564			6,585			18,667			18,385
Administrative and general		2,837			2,646			9,940			7,525
Depreciation and amortization		4,809			4,431			14,346			13,110
Taxes, other than income taxes		2,018			1,952			6,114			5,967

		31,773			29,316			90,493			77,131

Operating income		14,495			15,975			38,745			43,655

Other income (expense):
Interest expense		(4,499	)		(3,620	)		(12,704	)		(9,577	)
Other income		335			181			1,360			398

		(4,164	)		(3,439	)		(11,344	)		(9,179	)

Income before income taxes and
discontinued operations		10,331			12,536			27,401			34,476
Income taxes		(3,559	)		(4,232	)		(9,208	)		(11,558	)

Income from continuing operations		6,772			8,304			18,193			22,918
Discontinued operations, net of
income taxes (Note 2)		--			2,709			1,906			9,212

Net income	$	6,772		$	11,013		$	20,099		$	32,130

The accompanying notes to condensed financial statements are an integral part of these condensed financial statements.

BLACK HILLS POWER, INC.
CONDENSED BALANCE SHEETS
(unaudited)

	September 30			December 31
	2003			2002
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	1,081		$	518
Receivables (net of allowance for doubtful accounts		15,242			16,391
of $895 and $871, respectively)
Receivables - related party		41,615			54,253
Materials, supplies and fuel		9,354			9,743
Deferred income taxes		--			5,397
Assets from discontinued operations		--			1,008,901

		67,292			1,095,203

Investments		2,880			2,681

Property and equipment		633,756			613,926
Less accumulated depreciation		(223,913	)		(211,992	)

		409,843			401,934

Other assets:
Regulatory asset		4,320			4,350
Other		7,053			7,159

		11,373			11,509

Total	$	491,388		$	1,511,327

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt	$	1,985		$	3,095
Accounts payable		23,798			14,653
Accounts payable - related party		646			2,585
Accrued liabilities		12,895			15,575
Deferred income taxes		966			--
Liabilities from discontinued operations		--			964,759

		40,290			1,000,667

Long-term debt, net of current maturities		210,064			212,042

Deferred credits:
Deferred income taxes		56,488			58,539
Regulatory liability		3,478			5,395
Other		12,485			16,456

		72,451			80,390

Stockholder's equity:
Common stock $1 par value; 50,000,000 shares		23,416			23,416
authorized; 23,416,396 shares issued
Additional paid-in capital		39,549			80,961
Retained earnings		114,202			131,906
Accumulated other comprehensive loss		(8,584	)		(18,055	)

		168,583			218,228

Total	$	491,388		$	1,511,327

The accompanying notes to condensed financial statements are an integral part of these condensed financial statements.

BLACK HILLS POWER, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)

	Nine months ended September 30
	2003			2002
	(in thousands)
Cash flows from operations	$	38,321		$	29,349

Investing activities:
Property additions		(21,992	)		(21,029	)
Notes receivable from associated companies - issuance		--			(53,774	)
Notes receivable from associated companies - repayments		11,249			9,817
(Increase) decrease in investments		(199	)		1,277

		(10,942	)		(63,709	)

Financing activities
Dividends paid		(23,728	)		(23,334	)
Long-term debt - issuance		--			75,000
Long-term debt - repayments		(3,088	)		(18,036	)

		(26,816	)		33,630

Increase (decrease) in cash and cash equivalents		563			(730	)
Cash and cash equivalents:
Beginning of period		518			1,079

End of period	$	1,081		$	349

Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest	$	14,996		$	10,722
Income taxes paid (refunded), net	$	(4	)	$	11
Stock dividend distribution to Black Hills Corporation, the
parent company of Black Hills Power, Inc. (Note 2)	$	45,687		$	--

The accompanying notes to condensed financial statements are an integral part of these condensed financial statements.

BLACK HILLS POWER, INC.
Notes to Condensed Financial Statements
(unaudited)
(Reference is made to Notes to Financial Statements
included in the Company’s Annual Report on Form 10-K)

(1)

MANAGEMENT’S STATEMENT

The financial statements included herein have been prepared by Black Hills Power, Inc. (the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the footnotes adequately disclose the information presented. These financial statements should be read in conjunction with the financial statements and the notes thereto, included in the Company’s 2002 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Accounting methods historically employed require certain estimates as of interim dates. The information furnished in the accompanying financial statements reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the September 30, 2003, December 31, 2002 and September 30, 2002, financial information and are of a normal recurring nature. The results of operations for the nine months ended September 30, 2003, are not necessarily indicative of the results to be expected for the full year.

(2)

NON-CASH DIVIDEND AND DISCONTINUED OPERATIONS

During the quarter ended March 31, 2003, the Company distributed a non-cash dividend to its parent company, Black Hills Corporation (Parent). The dividend consisted of 10,000 common shares of Black Hills Generation, Inc., formerly known as Black Hills Energy Capital, Inc., (Generation), which represents 100 percent ownership of Generation. The Company therefore no longer operates in the independent power production business. As a result, the Company no longer has any subsidiaries and operates only in the electric utility business. The Company’s investment in Generation at the time of the distribution was $45.7 million.

The disposition was accounted for under the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144). Accordingly, results of operations have been classified as “Discontinued operations, net of income taxes” in the accompanying Condensed Statements of Income, and prior periods have been restated. For business segment reporting purposes, Generation’s business results were previously included in the segment “Independent Power Production”. The assets and liabilities of Generation are shown in the accompanying Condensed Balance Sheets under the captions “Assets from discontinued operations” and “Liabilities from discontinued operations.”

Revenues and net income from the discontinued operations are as follows:

	Three months ended September 30			Nine months ended September 30
	2002			2003			2002
	(in thousands)
Revenue	$	32,391		$	41,485		$	96,958

Income before income taxes and change
in accounting principle	$	4,479		$	2,833		$	13,844
Income taxes		(1,770	)		(927	)		(5,528	)
Change in accounting principle, net of tax		--			--			896

Net income from discontinued operations	$	2,709		$	1,906		$	9,212

Assets and liabilities of discontinued operations included on the accompanying Condensed Balance Sheets are as follows:

	December 31 2002 (in thousands)
Current assets	$	77,213
Non-current assets		931,688
Current liabilities		(555,100	)
Non-current liabilities		(409,659	)

Net assets of discontinued operations (including
accumulated other comprehensive loss of $9,440)	$	44,142

(3)

RECLASSIFICATIONS

Certain 2002 amounts in the financial statements have been reclassified to conform to the 2003 presentation. These reclassifications did not have an effect on the Company’s total stockholder’s equity or net income as previously reported.

(4)

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (SFAS 143). SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred with associated asset retirement costs being capitalized as part of the carrying amount of the long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Management adopted SFAS 143 effective January 1, 2003 and it had no impact on the Company’s financial statements.

(5)

COMPREHENSIVE INCOME

The following table presents the components of the Company’s comprehensive income:

	Three months ended September 30					Nine months ended September 30
	2003		2002			2003		2002
	(in thousands)
Net income	$	6,772	$	11,013		$	20,099	$	32,130
Other comprehensive income (loss):
Fair value adjustment on
derivatives designated as cash
flow hedges		--		(1,192	)		--		(1,192	)
Reclassification adjustment on
interest rate swap included in
net income		10

Reduced Disclosure

BLACK HILLS POWER, INC. CONDENSED STATEMENTS OF INCOME(unaudited)

BLACK HILLS POWER, INC.CONDENSED BALANCE SHEETS(unaudited)

BLACK HILLS POWER, INC. CONDENSED STATEMENTS OF CASH FLOWS(unaudited)

BLACK HILLS POWER, INC.
CONDENSED STATEMENTS OF INCOME
(unaudited)

BLACK HILLS POWER, INC.
CONDENSED BALANCE SHEETS
(unaudited)

BLACK HILLS POWER, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)