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Minnesota Power adds hydro supply from Manitoba

Minnesota Power has signed a deal with Manitoba Hydro that will reduce the Duluth-based utility's dependence on carbon-based power generation beyond a 2025 state mandate.

Minnesota Power
Minnesota Power has signed a deal with Manitoba Hydro that will reduce the Duluth-based utility's dependence on carbon-based power generation beyond a 2025 state mandate. (2003 file / News Tribune)

Minnesota Power has signed a deal with Manitoba Hydro that will reduce the Duluth-based utility's dependence on carbon-based power generation beyond a 2025 state mandate.

Manitoba Hydro, based in Winnipeg and owned by the province of Manitoba, produces most of its power from hydroelectric stations in the northern reaches of the province. In the long-term agreement, Minnesota Power will buy 250 mega-watts of electricity from Manitoba Hydro for 15 years beginning in 2020. The move will reduce Minnesota Power's carbon emissions, boost its transmission system and help the company manage excess wind energy, according to a company news release.

On days when wind production is high or electric loads are low, electricity produced by Minnesota Power's wind farms in North Dakota will be transmitted to Canada. Manitoba Hydro will absorb the energy into its system in the form of unused water and store it, similar to a rechargeable battery.

The partnership will help Minnesota Power shift from coal-based energy sources to renewable ones. It will not, however, help the company meet the state mandate that utilities generate 25 percent of their electricity from renewable energy sources by 2025. That's because when the mandate was passed by the state Legislature in 2007, it excluded large-scale Canadian hydro power from being counted.

Minnesota Power, which currently produces 15 percent of its electricity from renewable energy sources, is on track to meet that 25 percent goal anyway, officials say.

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"We are entering into that contract to go above and beyond that 25 percent," said David McMillan, Minnesota Power executive vice president.

Minnesota Power's long-range goal is to derive 50 percent of its electricity from renewable sources and 50 percent from coal, he said.

The agreement, which requires regulatory approval in Minnesota and Canada, is Minnesota Power's lowest-cost option to meet the electric demands of its customers by 2020, company officials say.

Besides its agreement with Minnesota Power, Manitoba Hydro announced Wednesday that it has signed a similar agreement to sell 100 megawatts to Wisconsin Public Service from 2021 to 2027. It also previously agreed to sell 125 megawatts to Northern States Power.

The Minnesota Power agreement will go to the Minnesota Public Utilities Commission for approval in coming months. Costs and any related customer rate increases are yet to be determined but would be years down the road, McMillan said.

"We will not pay anything for quite a while," he said.

The deal, however, will require additional transmission capacity between Manitoba and the United States. Costs related to that construction, possibly five years down the road, could show up in a rate increase, he said.

Related Topics: ENVIRONMENTMINNESOTA POWER
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