Minnesota Power on Tuesday announced plans to acquire a direct-current transmission line for about $80 million and use it to transport additional wind-generated electricity from North Dakota to its Northland customers.
The line belongs to Square Butte Electric Cooperative, and Minnesota Power aims to complete its purchase in 2009.
The direct-current line currently transports electricity from the coal-fired Milton R. Young Generating Station in Center, N.D., to Minnesota Power’s distribution network, 465 miles east. But Minnesota Power intends to reduce its reliance on coal power and use the line instead to carry electricity from North Dakota wind farms.
Don Shippar, CEO of Allete, Minnesota Power’s parent corporation, said the DC line was built three decades ago to help supply low-cost, coal-generated electricity to the Iron Range’s growing taconite industry. Direct-current lines offer a more economical and efficient means of transporting power long distances than traditional alternating-current lines.
Shippar said the line “has the potential to become a wind power superhighway.”
Within the next decade, Minnesota Power expects to help develop another 500 to 700 megawatts of North Dakota wind power and move it to the Northland via the newly acquired line.
Before Minnesota Power can buy the DC line, however, new transmission capacity will need to be built, providing Minnkota Power Cooperative, an affiliate of Square Butte Cooperative, with a way to deliver electricity from coal-fired generators in Center, N.D., directly to customers in the Red River Valley. Those customers are now back-fed electricity through Minnesota Power’s transmission system.
Despite diversification efforts, Shippar said coal will remain an important part of Minnesota Power’s fuel mix. He said the company cannot depend on intermittent power sources such as wind to meet the needs of large-baseload industrial customers that operate around the clock.
He also suggested nuclear power could play a role as a source of baseload power in the future if regulators continue to clamp down on greenhouse gas emissions. Shippar said Minnesota Power has no specific plans in regards to nuclear power, but that national interest in the atom as a power source has been growing.
Minnesota Power’s push to find alternatives to coal is driven largely by legislation.
The state of Minnesota will require utilities to derive at least 25 percent of their energy from renewable resources by 2025, and Shippar said the Duluth-based company aims to reach that threshold well in advance of the deadline.
In 1995, Minnesota Power relied on coal for 95 percent of its energy. But by 2025, the utility expects to derive 65 percent of its electricity from the fossil fuel.
The drive to reduce emissions of carbon dioxide and remove pollutants from the mix has big economic implications.
“It’s certainly good for the environment, but there are costs involved,” Shippar said.
To meet new standards and keep pace with anticipated growth in demand, Shippar said Minnesota Power expects it will need to invest $1.5 billion in capital improvements during the coming five years.
In order to cover some of those expenses, Minnesota Power recently announced it would seek an overall retail rate increase of about 10 percent.
Meanwhile, several major industrial projects remain in development. These new prospective power customers include an iron nugget plant, multiple copper-nickel-precious metals operations, plus a mill that would produce slab steel. Potential expansions also are in the works at Keetac, North Shore Mining Co. and Murphy Oil USA.
“We haven’t seen growth like this in 30 years,” Shippar said.
Shippar said Minnesota Power is fortunate to have capacity within its existing system to accommodate additional demand. The company recently took a 225-megawatt plant at Taconite Harbor that had been supplying power to often distant wholesale markets and redirected it to Northland customers. Shippar pointed out that Minnesota Power also allowed another wholesale contract for 70 megawatts from its Boswell Energy Center to expire.
14 May 2008
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