Minnesota Power, an operating division of ALLETE serving customers since 1906, generates, transmits and distributes electricity in a 26,000-square-mile region of northern Minnesota rich with mineral deposits and timber. Superior Water, Light and Power Co. (SWL&P) provides electric, gas and water service in northwest Wisconsin.
Minnesota Power produces energy at a low cost. According to recent statistics compiled by the Edison Electric Institute (EEI), Minnesota Power's average retail rates are the fourth lowest in the U.S. and consistently among the lowest in EEI's West North Central Region. SWL&P's rates are 23rd lowest in the EEI rankings.
Coal-fired steam plants produce about 62 percent of the electricity Minnesota Power sells (figures based on year-end 2013 statistics). Purchased power accounts for approximately 29 percent of its electric requirements, the largest purchase being a long-term contract to buy output from a North Dakota generator operated by the Square Butte Cooperative in North Dakota. This generating station buys its fuel from an ALLETE subsidiary, BNI Coal. Ten hydro-power stations, combined with the expanding Bison wind installation, account for a growing percentage of Minnesota Power's electricity.
The company is reducing the amount of coal it uses to generate power from 95 percent coal in 2005, to 75 percent coal in 2013, to about 50 percent coal by 2026 on a total energy basis. The latest data show Minnesota Power with a net generation capability of 1,723 megawatts (MW).
Minnesota Power sells a high percentage of its electric power to large industrial facilities. Our industrial customers represent more than half of total regulated utility sales. This unique customer mix means that our power supply fluctuates less than most other generators and contributes to the low-cost structure of Minnesota Power. Eleven of our customers require 10 megawatts or more of generating capacity. Among these are five taconite producing facilities. Taconite processing requires large quantities of electric power. The processing of taconite, an iron-bearing rock important as a source of raw material for steel, requires large quantities of electric power. Taconite producers mine and process the iron-bearing rock that underlies the Mesabi Iron Range roughly 70 miles northwest of Duluth. About 75 percent of the ore consumed by integrated steel facilities in the U.S. originates from the taconite customers of Minnesota Power.
Several natural resource-based companies are developing new projects in northeastern Minnesota. These industrial companies could require more than 600MW of new electric service if the projects are completed. PolyMet Mining, Essar Steel Limited and Magnetation are among the companies preparing for major industrial projects in the Minnesota Power service area.
At the end of 2009, Minnesota Power completed a $240 million upgrade at Boswell Energy Center's Unit 3 that dramatically reduced emissions of mercury, particulates, sulfur dioxide and nitrogen oxide. A similar upgrade is now underway at the company's largest and newest generating plant, Boswell Unit 4, which is projected to cost $310 million. Current cost recovery from retail customers through billing adjustments is used to pay for, and earn a return on, construction costs for these retrofits. Work on Boswell 3 followed emission control upgrades at the Laskin and Taconite Harbor Energy Centers.
Minnesota Power began construction in late 2013 on a 200-MW expansion of its Bison Wind Energy Center near New Salem, N.D., that will bring the company to the verge of meeting Minnesota's energy standard of 25 percent renewable energy by 2025. Bison 4 will increase the company's wind portfolio by more than 50 percent, making Minnesota Power's Bison project the largest single wind energy center in North Dakota. The Bison 2 and Bison 3 wind installations, completed at the end of 2012, added 210 MW to the company's renewable generation. The 82-MW Bison 1, the first wave of Minnesota Power wind farms constructed in south-central North Dakota, was completed in early 2012. The wind energy from North Dakota is moved to Minnesota Power's service area via a 250-kilovolt direct current (D.C.) transmission line between Center, N.D. and Hermantown, Minn. As part of a deal closed Dec. 31, 2009 to purchase this transmission line, Minnesota Power will gradually replace the coal-based electricity now transported by the 465-mile line with renewable energy generated at the Bison Project near Center.
Taconite Ridge, a 25-MW wind farm near Virginia, Minn., became operational in June of 2008. Built by Minnesota Power on property owned by the company's largest power customer, U.S. Steel, Taconite Ridge was the first commercial wind energy facility in northern Minnesota.
In 2007, Minnesota Power began purchasing all the energy generated from the 98-MW Oliver Wind Energy Center built in two phases by NextEra Resources near Center, N.D.
BNI Coal operates a lignite mine in Center, N.D., undergoing a major expansion. Two electric generating cooperatives consume virtually all of BNI Coal's production, about 4 million tons annually.
ALLETE Clean Energy was established as a wholly-owned subsidiary in August 2011 to develop or acquire capital projects with minimal environmental impact. The new subsidiary operates independently of utility division Minnesota Power in pursuit of projects in the areas of wind, hydro, biomass, solar and the emerging shale industry.
American Transmission Company (ATC): ALLETE owns about 8 percent of ATC, a public utility that owns and maintains electric transmission assets in four states. ALLETE's investment in ATC was about $115 million as of December 31, 2013.
CapX2020: Minnesota Power is a participant in three projects of CapX2020, a joint initiative of 11 transmission-owning utilities formed to upgrade the electric transmission grid.