March-April 2015
Special Edition
75 YEARS 1940-2015
Minnkota’s first 75 years The beginnings
A Five Star Rural Electric Cooperative vehicle is parked in front of the cooperative’s headquarters in Whitman, N.D.
U.S. President Franklin D. Roosevelt signed the New Deal in 1935, which included the Rural Electrification Act to provide funding for electric cooperative projects.
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Minnkota Messenger • March-April 2015
Minnkota Power Cooperative, Inc., was officially formed on March 28, 1940, but its story begins a year earlier in the small community of Whitman, N.D. Clamoring for the centrally generated electricity that their friends in town had been enjoying for decades, farm families in the region organized rural electric cooperatives to provide the needed distribution system. But the wholesale cost of power from regional investor-owned utilities was proving to be very expensive. Frustrated by the situation, rural citizens in Whitman put their trust in Andrew L. Freeman to find a solution. Freeman, who was only 30 years old at the time and new on the job as manager of the fledgling Five Star Andrew L. Freeman Rural Electric Cooperative, faced a tall task. After much deliberation, it was determined that Freeman would travel to the Rural Electrification Administration (REA) headquarters in Washington, D.C., to secure a loan for a new power plant. Officials at the REA, which was formed as part of the New Deal in 1935, listened as Freeman told them about the problem. After huddling for a while, they returned to the room with the advice that Five Star fund and build the power plant by itself. Freeman answered that the project wouldn’t be possible without strong REA support and financial backing. After a short discussion, REA officials approved a $40,000 loan to finance the construction of a 40-kilowatt (kW) diesel plant in Whitman. Construction started Sept. 17, 1939, but was stopped almost immediately when it became
clear that the plant’s size wouldn’t meet the region’s growing appetite for electricity. That’s when other electric cooperatives became interested in joining with Five Star and developing a regional generating plant. As the plan began to take shape, Five Star, Walsh County Electric, Forks Electric and Traill County Electric merged to become Nodak Rural Electric Cooperative and named Freeman their new manager. Nodak then joined five Minnesota cooperatives – PKM Electric Cooperative (Warren), Wild Rice Electric Cooperative (Mahnomen), Red Lake Electric Cooperative (Red Lake Falls), Red River Valley Cooperative Power Association (Halstad) and ItascaMantrap Electric Cooperative (Park Rapids). The power requirements of the Nodak organization, combined with the needs of the other cooperatives across the Red River in northwestern Minnesota, made it obvious that the systems should develop an areawide power supply plan.
Forming Minnkota The cooperatives explained their plan to hundreds of farmers at a meeting at Grand Forks County Courthouse on March 28, 1940. Voting at the meeting supported both the formation of Minnkota and the construction of a power plant in Grand Forks. Once again, Freeman was selected as manager. Backed by an $860,000 REA loan, groundbreaking for the power plant was held on Oct. 18, 1940. Three 720-kW diesel generators and 165 miles of 34.5-kilovolt (kV) transmission line became operational on Sept. 10, 1941. Further progress was halted after the bombing of Pearl Harbor on Dec. 7, 1941. With the country then facing a much more important challenge, the REA ordered all
Minnkota’s first board of directors (Front) L.C. Odegard, Nodak Rural Electric Cooperative; S.E. Hunt, vice president, Red Lake Electric Cooperative; Victor M. Edman, president, PKM Electric Cooperative; F.C. Chandler, secretarytreasurer, Nodak; and P.J. Donnelly, Nodak. (Back) M.D. Butler, Nodak; Harry T. Branigan, Itasca-Mantrap Electric Cooperative; Einar Johnson, attorney; Andrew Freeman, manager; O.P. Refling, Wild Rice Electric Cooperative; and H.M. Trowbridge, Red River Valley Cooperative.
expansion stopped to concentrate on the war effort. When the war concluded, bringing power out to the farm became vitally important. Another five cooperatives quickly joined the Minnkota membership. They were Beltrami Electric Cooperative (Bemidji, Minn.), Cass County Electric Cooperative (Kindred, N.D.), Cavalier Rural Electric Cooperative (Langdon, N.D.), Clearwater-Polk Electric Cooperative (Bagley, Minn.) and Sheyenne Valley Electric Cooperative (Finley, N.D.). In 1948, ItascaMantrap left the Minnkota organization. The postwar years brought tremendous growth. Minnkota responded by placing three more generators into production at the Grand Forks diesel plant. Substation and transmission line construction was under way across the entire system.
Minnkota’s headquarters and diesel generating plant in the early 1940s. March-April 2015 • Minnkota Messenger
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Five diesel generating units were removed from Navy ships and added at Minnkota’s plant in the late 1940s.
The Harwood diesel plant (top) and the Grand Forks steam plant were built in the late 1940s and early 1950s to meet the growing demand for power.
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A diesel plant at Harwood, N.D., came online in 1947 just a few months before the start of construction on a new lignite-fired steam plant in Grand Forks. Even with construction continuing at a brisk pace, the risk of severe power shortages was still present as peak demand neared 17,000 kW. To alleviate the problem, another five diesel generators were purchased and removed from Navy ships. The diesel generators were producing electricity in Grand Forks in spring 1949. The first two units of the steam plant, totaling 10,000 kW, went online in late 1950, and construction began on an 11,500-kW addition. The plant was named for REA official Franklin P. Wood.
Minnkota Messenger • March-April 2015
Completion of the Garrison Dam in 1955 allowed the U.S. Bureau of Reclamation to provide another power source to the region. Located along the Missouri River in central North Dakota, the dam has five generating units with a total rated capacity of 583 megawatts (MW). Communities, cooperatives and other power suppliers quickly contracted for allotments of power through the Western Area Power Administration (WAPA). Also in 1955, Minnkota was contacted by Border Counties Power Cooperative in Warroad, Minn., regarding options for purchasing wholesale power. The resulting talks led to decisions by Border Counties’ members – Roseau Electric Cooperative (Roseau, Minn.) and North Star Electric Cooperative (Baudette, Minn.) – to join Minnkota.
Leading in lignite Minnkota’s successful lignite-fired Grand Forks steam plant spurred interest in expanded use of the plentiful North Dakota resource. Freeman was one of lignite’s biggest promoters and a pioneer of mine-mouth generation. Rather than transport coal by rail to a power plant, Freeman promoted the concept of locating the plant next to the fuel source and transmitting the energy through high-voltage transmission lines. A 1959 collaborative study of mine-mouth generation in central North Dakota supported the idea. Participating in the study were Minnkota, Otter Tail Power, Northern States Power, Dakotas Electric Cooperative of Bismarck and Central Power Association of Minot. Based on that report, Minnkota, Dakotas Electric Cooperative and Central Power Association formed Lignite Electric Power Cooperative for the purpose of acquiring rights to lignite deposits and building a mine-mouth plant.
At the same time, Basin Electric Power Cooperative was formed and began pursuing the construction of a mine-mouth plant. The REA believed this created an opportunity for a merger and the formation of an organization similar to the Tennessee Valley Authority. Freeman opposed creating a larger organization, thinking it would lose its efficiency. As a result, Lignite Electric Power Cooperative continued its plans and a highly competitive situation emerged between Basin Electric and Minnkota. Eventually, a new Kennedy Administration appointee from South Dakota made the decision in 1960 for the REA to provide finances for the Basin Electric construction plan, but not the Minnkota-led Lignite Electric group. As a result, Basin’s Leland Olds Unit 1 became the first mine-mouth, lignite-fired plant in North Dakota. Soon after the Leland Olds plant went online in 1966, Central Power and Dakotas Electric left Lignite Electric to join the Basin organization. Undaunted, Minnkota kept driving for REA financing of a plant near Center, N.D. Eventually the effort paid off when the REA approved a $55.7 million loan in 1966. As might be suspected by the name given the plant, Sen. Milton R. Young of North Dakota Andrew Freeman and Victor Edman accept a $55.7 million REA loan for a power plant had a large part near Center, N.D. in pushing its approval. The project also included a 230-kV transmission line from Center to Fargo. When the Young Station came online in November 1970, it incorporated many innovations, including a cyclone boiler, allowing it to overcome the challenges of using lignite,
The Center to Fargo 230-kV line (left) was built to deliver power from Young 1 and the Center to Duluth direct current line (right) was built to deliver power from Young 2.
a low-Btu, high-moisture and low-sulfur coal. To provide cooling water for the facility, Nelson Lake was created in 1968 by a dam built across Square Butte Creek. The earth-filled dam, 45 feet high and 1,500 feet long, created a 415-acre surface impoundment. In 1972, Square Butte Electric Cooperative was formed by the same 11 cooperatives associated with Minnkota and a leveraged lease arranged to build a second generating plant at the Young Station. Construction of Young 2 was completed in May 1977. The Square Butte project included a 465-mile direct current (DC) transmission line and associated converter stations at Center and Duluth, Minn. Square Butte
The Young 1 generating unit was brought online in November 1970, and still serves as a vital resource for Minnkota today.
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sells the power generated from Young 2 to Minnkota and Minnesota Power of Duluth. Minnkota operates the 250-MW Young 1 and the 455-MW Young 2, both of which have ranked among the lowest-cost generators in the nation during their histories. An abundant, economical coal supply from BNI Coal, LTD., has been a major contributor to the Young Station’s success.
Managing peak loads
Ripple receivers are installed in homes and businesses that participate in the load management program.
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Among the concerns of Minnkota and the member cooperatives in the early 1970s was the shortage of petroleum products – gasoline, diesel fuel and heating oil – and the potential for sharp increases in the cost of electric power to the consumer. The rising prices and insecure supply of fuel oil and propane created a strong incentive for consumers in the Minnkota service area and elsewhere to switch to electric heat. Minnkota’s studies showed a new power plant would soon have to be constructed if the rising needs were to be accommodated. Since the cost of new power plants had risen steeply – at least four-fold within the decade – Minnkota knew developing new generating capacity would greatly increase the cost of electricity furnished by the cooperative to its member systems. The Minnkota board and management searched diligently for a low-cost alternative to building a new power plant, and the best answer they came up with was load management. Started in 1977, the load management program is voluntary for consumers who allow Minnkota to interrupt, by remote control, electric heaters and other loads in exchange for a discounted retail electric rate. This capability enables Minnkota to more effectively manage its existing power resources.
Minnkota Messenger • March-April 2015
The implementation phase of the program began in 1976 with the board of directors establishing an incentive wholesale rate designed to encourage the controlling of demand. A contract was awarded to the Landis & Gyr electronics manufacturer to furnish a ripple control system. The ripple control system was installed in 1977. It includes computers that can produce tens of thousands of electronic signals and equipment located at substations that inject these signals into the power transmission and distribution lines. Receivers plugged into household current at consumer homes and businesses can read the signals, and when the appropriate message is sent, the receiver interrupts the electric power flowing to a water heater, electric heating system or other controlled loads. The program remains popular today with about 50,000 consumers participating. Loads most commonly involved in the program are dual fuel heating systems, water heaters, storage heaters and commercial loads with backup generators. When necessary, nearly 90 MW in the summer and 350 MW in the winter can be interrupted.
Minnkota employee Vern Rostberg documents the arrival of Minnkota’s ripple receivers, which are used as part of the load management program.
In addition to using load management, Minnkota also has a long history of participating in wholesale electricity markets to manage its power supply resources. Buy and selling surplus power on the market dates back to 1963 when a group of Upper Midwest electric providers joined together to form the Midwest Area Power Planners (MAPP), which would later become known as the Mid-Continent Area Power Pool. MAPP was created to coordinate planning, construction and operation of new power facilities on a regional basis. It was to save its members money through the elimination of duplicate facilities, economic planning of generation and the creation of a market for surplus power. This arrangement worked well until the Federal Energy Regulatory Commission (FERC) in 1999 began requiring utilities that own, operate or control facilities for the transmission of electric energy participate in a regional transmission organization (RTO). In 2005, Minnkota signed an agreement with the Midwest Independent System Operator (MISO), later known as Midcontinent ISO, that allows the cooperative to participate in the regional wholesale market. Minnkota is currently a MISO participant. Its generation and load is modeled, scheduled, dispatched and settled financially in the MISO market.
Partnering with municipals In the mid-1970s, several cities in northwestern Minnesota and eastern North Dakota were collectively negotiating with Minnkota for additional power. Due to load growth along with a freeze of WAPA hydropower allotments, many municipals were concerned with meeting their customers’ long-term power needs. In 1976, 12 of those cities came together to form the Northern Municipal Power Agency (NMPA), a Minnesota political subdivision, with a goal to obtain a longterm, reliable and economical power supply. Contracts were developed that provided for wheeling of WAPA power by Minnkota, and the sale of supplemental power to the municipals by Minnkota distribution cooperatives. Because the municipals are not beneficiaries of the REA, Minnkota could not provide long-term power supply or transmission services from its REA-financed facilities. At the same time, Minnkota had purchased a 30 percent ownership share in the Coyote Station, a 427-MW lignite coal plant under construction. With interest rates exceeding 12 percent, Minnkota and its members were expecting a rate shock in the early 1980s. The solution was to create a Joint System that would allow NMPA to purchase Minnkota’s share of the Coyote Station and
The 427-MW Coyote Station, located near Beulah, N.D., was brought online in 1981. NMPA, which operates with Minnkota as part of the Joint System, owns 30 percent of the plant.
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Back-to-back disasters hit Minnkota in April 1997. The most severe ice storm in Minnkota history damaged the power delivery system and the Red River flood inundated much of Grand Forks, including the cooperative’s headquarters.
efforts, Freeman retired Dec. 31, 1982, after serving as manager for 42 years. Longtime Minnkota executive Lyle Lund took over as manager Jan. 1, 1983, and served in that role until retiring July 1, 1990. David Loer became president & CEO in 1990.
Mother Nature strikes
Lyle Lund
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leverage its ability to access lower-cost, taxexempt financing. NMPA also purchased a load-ratio share of Minnkota’s transmission system and will continue to provide capital for all future transmission additions and improvements. The Joint System was officially formed April 23, 1981. This arrangement combines the costs of all assets between Minnkota and NMPA and sets rates that are substantially similar for the member cooperatives and participating municipals. It also allows Minnkota to purchase the surplus power from the Coyote Station not used by the municipals. Creation of the Joint System was the last maDavid Loer jor accomplishment for Minnkota under the leadership of Freeman. Known for inventing the head-bolt engine heater and for other economic development
Minnkota Messenger • March-April 2015
Mother Nature dealt a double dose of disaster to Minnkota and its employees in April 1997. The most severe ice storm in memory swept through the Red River Valley, snapping power poles like matchsticks and wiping out a sizable chunk of Minnkota’s transmission system. In efforts that went beyond the call of duty, Minnkota employees worked long and hard throughout the next week to restore service to 70 of 193 substations and 50,000 customers. The storm also destroyed 540 poles on Minnkota’s 69-kV system and 101 aluminum structures on its 345-kV line running from Center to Fargo. With the $7.2 million disaster barely contained, another soon followed. Just two weeks later, the raging waters of the Red River of the North inundated the Greater Grand Forks area, forcing 50,000 people to flee their homes – including nearly 120 of Minnkota’s 162 Grand Forks-based employees. Muddy waters swept through Minnkota’s headquarters, including the warehouse, diesel plant, main office building and the base-
ment of Service Center 3, causing $3.8 million in damages. Once again, Minnkota employees rose to the challenge, facilitating a swift and certain recovery.
Entering wind As Minnkota entered the 21st century, it began looking at alternative forms of energy production. In response to customer interest in wind-generated electricity, Minnkota and NMPA developed the Infinity Wind Energy program for the associated cooperatives and municipals. On Jan. 25, 2002, Minnkota commissioned the first commercial-scale, utility-owned wind turbine in the state of North Dakota. The 900-kW turbine is located near Valley City along Interstate 94. An identical turbine was installed later that year near Petersburg, N.D., along U.S. Highway 2. More than 2,000 An Infinity wind turbine retail customers sublocated near Petersburg, N.D. scribed to purchase the entire output of a 900-kW turbine located on a ridge six miles east of Valley City, N.D. In addition to other customers, electricity generated from the Petersburg turbine is being sold to the Grand Forks Air Force Base through the base’s retail power supplier, Nodak Electric Cooperative. The completion of these two turbines marked only the beginning of Minnkota’s venture into wind energy. In 2007, the state of Minnesota issued a mandate that requires utilities to provide 25 percent of their total electrical generation from renewable
sources by 2025. In the same year, the state of North Dakota passed a renewable energy objective that sets a goal of 10 percent by 2015. Minnkota acted swiftly to secure quality wind sites and economical access to available transmission lines. The cooperative began working with wind developer NextEra Energy Resources and Otter Tail Power Company on a new wind farm near Langdon, N.D. The Langdon Wind Energy Center, a 199.5-MW wind farm, came online in January 2008. Minnkota is purchasing energy from its 139.5-MW allocation through longterm purchase power contracts with NextEra. The site has 133 turbines that each has the capacity to produce 1.5 MW. Later that year, Minnkota again contracted with NextEra for 217.5 MW of additional wind capacity from the Ashtabula Wind Energy Center, located near Valley City, N.D. The 244-turbine site produces a total of 366 MW, with Otter Tail and NextEra having the rights to the output not purchased by Minnkota. Today, Minnkota has 359 MW of wind energy capacity in its system. As an early adopter of wind energy, Minnkota was recognized in 2010 by the U.S. Department of
The Langdon Wind Energy Center provides a significant portion of Minnkota’s 359 MW of wind energy capacity.
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Following major environmental upgrades, the Young Station is positioned to meet all current state and federal emissions standards.
Energy as the Wind Energy Cooperative of the Year.
Power plant upgrades As wind energy integrated into Minnkota’s energy mix, the cooperative also made prudent investments in its existing baseload generation. The most significant improvements to Young 1 and Young 2 since their construction were completed from 2006 to 2011. Several major outages were scheduled over this six-year period to install new systems and make other upgrades to lower sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions levels. The $425 million project was initiated through a settlement agreement between Minnkota, the Environmental Protection Agency (EPA) and the state of North Dakota. Both generating units are equipped with scrubbers designed to remove 95 percent of SO2 emissions and a multi-phase process – Over-Fire Air with Selective Non-Catalytic Reduction – to reduce 55 to 60 percent of nitrogen oxides emissions. The upgrade also included a complete overhaul of the plant’s electrical support systems and related infrastructure. With the project completed, Minnkota began to take proactive steps to meet upcoming requirements for mercury reduction.
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Minnkota Messenger • March-April 2015
The cooperative partnered with Clean Coal Solutions, a power plant technology and research firm, to test a liquid halogen-based technology at the plant. In one of the first experiments of its kind on cyclone-fired boilers fueled with lignite coal, Clean Coal Solutions demonstrated that its CyClean™ additives provide significant opportunities to reduce mercury emissions. The successful results prompted an agreement that allows Clean Coal Solutions to operate at the Young Station and continue to apply its proprietary products to further reduce emissions. In 2015, Minnkota completed the installation of systems to supplement the CyClean™ additives. The addition of liquid halogen and powdered-activated carbon injection systems position the plant to reduce 60 percent of mercury emissions and meet the EPA requirements.
Future power supply Minnkota began examining options for future power supply needs in the mid-2000s. Load forecast projections indicated Minnkota would need to acquire additional baseload resources to serve the steadily growing demand for electricity. The cooperative partnered with other regional utilities to examine the possibility of constructing a new, jointly owned 500-MW coal-based power plant at
the Young Station site. The Young 3 project went through an exploratory phase, but was ultimately shelved primarily due to the uncertainty of future emissions requirements and escalating construction costs. Building a new plant was off the table, but there were options to meet Minnkota’s future needs through existing facilities. In late 2009, Minnkota and Minnesota Power completed an agreement in which Minnkota received an increasing allocation of the Young 2 output. From 2013 to 2026, Minnesota Power’s 50 percent allocation of Young 2 will transfer to Minnkota. By 2026 and thereafter, Minnkota will purchase 100 percent of the Young 2 output. The agreement provides Minnkota with 227.5 MW of additional capacity and related energy, which will serve as its long-term power supply. In return, Minnesota Power received from Square Butte Electric Cooperative the Center to Duluth direct current (DC) transmission line to transport wind energy from its Bison Project near Center, N.D. With Minnesota Power using the DC line, Minnkota needed another high-voltage line to transmit energy from Young 2. The solution was to construct a 345-kV transmission line from Center to Grand Forks, a line needed to improve reliability and voltage stability issues in the northern Red River Valley. Minnkota began building the 250-mile, $354 million Center to Grand Forks transmission line in May 2012. Following 117 weeks of almost continuous construction, the line became operational Aug. 7, 2014.
Future of Minnkota With the retirement of David Loer in December 2010, Minnkota hired Robert
“Mac” McLennan as the cooperative’s fourth president & CEO. Prior to joining Minnkota, McLennan was employed by Tri-State Generation & Transmission Association, an electric generation and transmission cooperative based in Colorado, as senior vice president of external affairs & member relations. During McLennan’s tenure, Minnkota finished securing all-requirements wholesale power contracts with all 11 member distribuMac McLennan tion cooperatives through 2055. Minnkota also has extended its coal supply contracts with BNI Coal through 2037. In 2015 – Minnkota’s th 75 year – the cooperative plans to break ground on a new office and operations center in Grand Forks. The facility will allow Minnkota to locate Grand Forks employees in a single building, operate more efficiently, streamline processes and incorporate advanced security safeguards. Additionally, it will provide adequate work and storage space for Minnkota’s transmission, substation and electrical crews. The headquarters will look a lot different than the old Five Star building in Whitman. Times are changing. What won’t change is Minnkota’s mission to provide safe, reliable and cost-effective electricity to the member- The Center to Grand Forks 345-kV line was completed in 2014 and represents Minnkota’s most significant investment in transmisship. sion assets ever.
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Minnkota Today Minnkota-NMPA Joint System Resources
(kilowatts)
Milton R. Young Station – Coal Young 1 250,000 Young 2 (78%) 355,000 Coyote Station – Coal (30%) 128,100 Wind Infinity 1,800 Langdon Wind Energy Center 139,500 Ashtabula Wind Energy Center 217,500 Garrison Dam – Hydro 108,871 Other 35,516 Total power supply resources
Langdon Wind Energy Center
Garrison Dam
Langdon, N.D.
Missouri River
Coyote Station
Infinity
Beulah, N.D.
Petersburg, N.D. Langdon
Langdon Wind Energy Center
Coyote Station
Infinity
Garrison Dam Ashtabula Wind Energy Center
Milton R. Young Station
Valley City
Infinity
1,236,287 Ashtabula Wind Energy Center
Customers
Valley City, N.D.
Cooperatives Municipals Total
128,135 14,968 143,103 Infinity
Revenues (millions)
Valley City, N.D.
Minnkota Cooperatives NMPA Municipals
$360 378 55 44
Employees (full time)
Minnkota Young Station – 174 Headquarters – 201 Cooperatives Municipals Total
Milton R. Young Station Center, N.D.
Miles of transmission line
375
Miles of distribution line
401 53 829
Substations
Cooperatives Municipals
3,340 33,453 280
Transmission Distribution
Minnkota Power Cooperative
Associated Systems
40 202
Minnkota Power Cooperative 1822 Mill Road • P.O. Box 13200 Grand Forks, N.D. 58208-3200 701.795.4000 www.minnkota.com
Distribution Cooperatives
Municipal Utilities
Beltrami Electric Cooperative Bemidji, Minn.
Bagley Public Utilities Bagley, Minn. Baudette Municipal Utilities Baudette, Minn. Fosston Municipal Utilities Fosston, Minn. Grafton Municipal Utilities Grafton, N.D. Halstad Municipal Utilities Halstad, Minn. Hawley Public Utilities Hawley, Minn. Park River Municipal Utilities Park River, N.D. Roseau Municipal Utilities Roseau, Minn. City of Stephen Utilities Stephen, Minn. Thief River Falls Municipal Utilities Thief River Falls, Minn. City of Warren Water & Light Warren, Minn. Warroad Municipal Utilities Warroad, Minn.
Cass County Electric Cooperative Fargo, N.D. Cavalier Rural Electric Cooperative Langdon, N.D. Clearwater-Polk Electric Cooperative Bagley, Minn. Nodak Electric Cooperative Grand Forks, N.D. North Star Electric Cooperative Baudette, Minn. PKM Electric Cooperative Warren, Minn. Red Lake Electric Cooperative Red Lake Falls, Minn. Red River Valley Cooperative Power Association Halstad, Minn. Roseau Electric Cooperative Roseau, Minn. Wild Rice Electric Cooperative Mahnomen, Minn.