Minnesota Power proposes 250MW hydro purchase

Duluth, Minn.-based Minnesota Power said today it is considering a long-term agreement for 250 megawatts of hydro power from Manitoba Hydro-Electric in Canada.

Minnesota Power, a subsidiary of Allete (NYSE: ALE), announced that it was looking at an initial purchase of surplus energy to begin this year, and a 15-year-term purchase beginning in 2020.

Financial terms of the proposed deals were not disclosed.

"We are pleased to cooperate with our neighbor and long-term utility partner to secure this clean, carbon-free energy resource for our customers," said Don Shippar, chairman, president and CEO of Allete.

Minnesota Power said the long-term purchase would require construction of hydroelectric facilities in northern Manitoba and major new transmission facilities between Canada and the U.S.

Minnesota Power and Manitoba Hydro, owned by the government of Manitoba, each have one year to complete negotiations and sign definitive agreements.

"Manitoba Hydro is proceeding with plans for the development of new large hydroelectric projects in northern Manitoba," said Bob Brennan, president and CEO of Manitoba Hydro.

"Another benefit to both parties is the additional transmission capacity between the two utilities."

Minnesota Power, which supplies retail electric service to 141,000 customers and wholesale electric service to 16 municipalities, said the proposed power purchase agreements would be subject to the approval of the Minnesota Public Utilities Commission.

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