Minnesota Power, a utility owned by Allete (NYSE: ALE), proposed to purchase a major transmission line from North Dakota in what the company is calling a "major move" to phase out a long-term contract to buy coal-based electricity, and add several hundred megawatts of wind generation.
The key element of this strategic shift is Minnesota Power’s purchase of a direct current (DC) transmission line that extends from the wind-rich plains of central North Dakota to the Arrowhead Substation in Hermantown, Minn.
The proposal calls for the DC line, now owned by Square Butte Electric Cooperative, to be sold to Minnesota Power for approximately $80 million in early 2009. It is now used to transmit electricity generated at the Milton R. Young Generating Station in Center, N.D. 465 miles eastward for purchase by Minnesota Power.
Minnesota Power supplies electric service to 141,000 retail customers, 16 municipalities and some of the largest industrial customers in the United States.
Direct current is a more economical way to transmit power over long distances than the standard AC, or alternating current, transmission line.
"Three decades ago, the DC line was built to move low-cost coal-based electricity from North Dakota to power the growing taconite industry in northeast Minnesota’s Iron Range," said Don Shippar, ALLETE CEO. "Back then, it was described as a way to transport ‘coal by wire.’ Now we will use the line to transmit ‘wind by wire’."
Electricity generated at the Young Station is presently shared by Minnesota Power and Minnkota Power Cooperative, an affiliate of the Square Butte Cooperative. Over the next several years, Minnesota Power will phase out its generation rights at Young Unit 2. Minnkota will pursue new options for delivering power from the Young Station to its primary customers in the Red River Valley.
Minnesota Power plans to add several hundred megawatts of new wind generation near Center, N.D., where the wind resources are considered among the best in the nation. This wind-generated power will be transmitted over the DC line. The additional wind generation will partially make up for the lost Young 2 power. It will also help Minnesota Power achieve its carbon reduction goals and help meet the state of Minnesota 25% renewable mandate.
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