Minnesota Power, first incorporated in 1906, serves 141,000 electric customers and 16 municipal systems across a 26,000 square mile service territory in central and northeastern Minnesota. Superior Water, Light and Power, a subsidiary, sells electricity to 14,000 customers, natural gas to 12,000 customers and provides water services to 10,000 customers in northwest Wisconsin.
Low-cost Power
Minnesota Power produces energy at a very low cost. According to statistics compiled by the Edison Electric Institute (EEI), Minnesota Power’s average retail rates are among the lowest in the U.S. Minnesota Power’s retail rates are also the lowest in Minnesota and the lowest in EEI’s West North Central Region, which includes Iowa, Kansas, Minnesota, Missouri, North Dakota and South Dakota.
Coal-fired steam plants account for about 62 percent of Minnesota Power’s generation (figures based on year-end 2007 statistics). Purchased power accounts for approximately 35 percent of the electric requirements, the largest purchase being a contract expiring in 2026 to buy 55 percent of the output of 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 hydropower stations provide about three percent of Minnesota Power’s electricity. The latest data show Minnesota Power with a net peak load of 1,498 MW and a net winter capability of 1,701 MW.
Unique Characteristics
Minnesota Power’s northern location and high percentage of industrial customers who operate around-the-clock make Minnesota Power a winter-peaking utility. Twelve Large Power customers (requiring at least eight megawatts of generating capacity) purchase about half the electricity Minnesota Power sells. This contributes to a very high load factor, which means that our power supply fluctuates less than most other generators. These factors contribute to the extremely low-cost structure of Minnesota Power.
Retail Electric Sales
Minnesota Power’s Large Power customers include six taconite producers who mine and process the iron-bearing rock that underlies the Mesabi Iron Range roughly 70 miles northwest of Duluth. More than 60 percent of the ore consumed by integrated steel facilities in the U.S. originates from these taconite customers of Minnesota Power. Taconite processing requires large quantities of electric power. Strong worldwide steel demand, driven largely by extensive infrastructure development in China, has resulted in very robust world iron ore and steel pricing and high demand. This globalization of demand has poitively impacted Minnesota taconite producers, who produced near their rated capacities in 2007. Annual taconite production in Minnesota was 39 million tons in 2007. Our other Large Power customers include four paper and pulp manufacturers and two petroleum pipeline companies.
Renewable Energy on the Upswing
In December of 2006, Minnesota Power began purchasing all the energy generated from the new 50-MW Oliver Wind I Energy Center built by FP&L Energy near Center, N.D. In 2007, Minnesota Power entered into a second 25-year wind power purchase agreement with FPL. A 48-MW facility was built adjacent to the intital Oliver County wind farm, and the new generators began commercial operation in November of 2007.
In September of 2007, the Minnesota Public Utilities Commission approved Minnesota Power's site permit application and construction began on the $50 million Taconite Ridge wind farm, located on land near Virginia, Minn. owned by Minnesota Power's largest power customer, U.S. Steel. When completed in mid-2008, Taconite Ridge will contibute up to 25 MW of clean, renewable energy to the electric grid.
Minnesota Power is investigating additional renewable energy resources, partcularly a 25-MW biomass generating unit at its Laskin Energy Center in Hoyt Lakes, Minn.
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