Minnesota Power meets renewable energy deadline, with a decade to spare
Talk about meeting a deadline early.
That’s 11 years early.
With substantial investments in wind energy in recent years, the Duluth-based utility will reach that 2025 mandate by the end of 2014, Al Hodnik, Allete’s chairman, president and CEO, told nearly 900 people gathered for the company’s annual shareholders meeting Tuesday at the Duluth Entertainment Convention Center.
Minnesota Power, which provides electric service to 143,000 customers in a 26,000-square-mile area in Northeastern Minnesota, is one of Allete’s utilities.
Its investment in wind energy includes nearly $800 million in the growing Bison wind energy operation in North Dakota — the largest in that state — which Minnesota Power will own and operate.
“Investing in wind makes economic and environmental sense and reflects in real terms our commitment to answering the call to transform the nation’s energy supply,” Hodnik told the gathering that included many Minnesota Power retirees who are shareholders.
Currently, Minnesota Power gets 20 percent of its electricity from renewable sources such as wind and hydropower and 75 percent from coal and energy market purchases, said Allan Rudeck Jr., Allete’s vice president of strategy and planning.
That will be boosted this summer when Minnesota’s Power’s Thomson Hydro Station resumes operation after two years of repairs and improvements, Hodnik also announced. The hydroelectric facility, 20 miles south of Duluth, had sustained major damage during the June 2012 flooding.
The Thomson station’s first of six turbines will start up again in July or August. By year’s end, all six will be generating renewable energy, the company said.
The cost to reconstruct and refurbish the Thomson Hydro Station, which is the state’s largest, is about $90 million. The work includes replacing much of the electrical infrastructure, cleanup of the turbines, which were underwater for several weeks, refurbishing the massive pipes that deliver water to the plant, and replacing and repairing valves.
With the help of the hydro station, Minnesota Power expects to generate 26 percent of its electricity from renewables by year’s end, and the rest largely from coal, Rudeck said.
The company plans to better that in the 2020s, by reaching an energy mix of one-third renewables, one-third coal and one-third natural gas, which is yet to be acquired.
In talking about Minnesota Power’s energy strategy, Hodnik said the company also is on track to meet future state and federal requirements on reducing mercury emissions.
He pointed to Minnesota Power’s coal-burning Boswell Energy Center Unit 4 in Cohasset as the “capstone” of the company’s initiative to reduce mercury emissions, which began in 2006.
When the Boswell 4 retrofit is complete in 2016, emissions will be reduced 80-90 percent, he said.
During the annual shareholders meeting, Hodnik also noted financial milestones Allete has reached, including surpassing $1 billion in revenue in 2013 and its total assets approaching
Allete common stock price rose from about $40 a share in early 2013 to an all-time high of $54.14 last year, and has stayed in the $50-range ever since. Meanwhile, dividends increased from 47.5 cents per share in January 2013 to 49 cents per share last January. And in the five-year period ending in 2013, Allete recorded a 97 percent total return for shareholders.
With projected capital expenditures of $640 million, including $430 million in major projects to reduce emissions and increase renewables, raising capital is a priority for Allete this year, Hodnik said.
A public offering of Allete’s common stock at $49.75 earlier this year raised $160 million. On Feb. 27, about $1.6 million shares changed hands, nearly 1,000 percent higher than the company’s average volume, he said.
“On that day, Allete stock was the biggest volume gainer on the entire New York Stock Exchange,” he said.