Microsoft announced its intent to purchase approximately 3,200 acres in Cheyenne, Wyoming, to build a new hyperscale data‑center facility. Black Hills Corporation will provide transmission and distribution services to the site under its Large Power Customer Service (LPCS) tariff, which allows large industrial customers to pay market prices while the utility recovers network costs.
The deal expands Microsoft’s footprint in the state, where the company already operates 11 data centers and is constructing three additional sites. For Black Hills, the contract is a key milestone in a strategy that aims to have data‑center revenue account for more than 10% of earnings by 2028.
Under the LPCS tariff, Microsoft will fund the necessary infrastructure upgrades directly, protecting other rate‑payers and ensuring that Black Hills can recover network costs while maintaining profitability on the new load. This structure gives Black Hills a competitive advantage over utilities that would need to rely on rate‑payer funding for similar projects.
The contract is expected to generate significant revenue and earnings, reinforcing Black Hills’ 4‑6% earnings‑per‑share growth trajectory. Management has highlighted the opportunity: “Our data center pipeline offers significant opportunities for new margins and capital investment.” and “Looking ahead, our core utility rate base growth and earnings from our growing data center demand provides strong confidence in our 4% to 6% long‑term EPS growth target.”
Black Hills reported fiscal‑year 2025 GAAP EPS of $3.98 and adjusted EPS of $4.10, a 5% increase over 2024. In the fourth quarter of 2025, GAAP EPS was $1.39 and adjusted EPS was $1.41. The Microsoft contract is expected to accelerate the data‑center pipeline and help the company meet its 2026 adjusted EPS guidance of $4.25 to $4.45.
Analysts at BMO Capital and Bank of America raised their price targets for Black Hills following the announcement, reflecting confidence in the company’s data‑center strategy and the favorable regulatory framework.
The deal also aligns with Black Hills’ ongoing merger with NorthWestern Energy, which will create a larger, diversified utility capable of further supporting data‑center growth.
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