2024 rates projected to be stable for seventh straight year
Minnkota remains in a strong financial position despite inflation and supply chain challenges.
For the seventh straight year, the Minnkota Power Cooperative Board of Directors has approved a budget with no change to the wholesale electric rates. Stability in Minnkota’s rate structure comes at a time when cost pressures are increasing across the cooperative’s operations.
“In times of inflation and supply chain challenges, we strive to be both resilient and adaptable in our operations,” said Mac McLennan, Minnkota president and CEO. “We’re dedicated to working with our members to navigate these cost pressures and find ways to keep rates as stable as possible while still making the necessary investments in our infrastructure to assure reliability and performance.”
In 2024, Minnkota’s capital budget includes $62.1 million in projects, tools and equipment. Additionally, another $17.4 million in projects that are reimbursable to Minnkota will be completed during the year, including infrastructure relocation and changes associated with the Fargo-Moorhead Flood Diversion Project.
The capital budget is highlighted by Minnkota’s ongoing commitment to addressing aging infrastructure and improving service to the members. The cooperative will rebuild or uprate three substations and complete two major sections or transmission line reconstruction. Upgrades to demand response infrastructure and the addition of distribution automation technology to improve power delivery system visibility at 16 substations will continue.
From a power production standpoint, Unit 1 at the Milton R. Young Station will undergo a 42-day scheduled maintenance outage to complete projects and conduct thorough inspections in an effort to keep the unit operating reliably and efficiently. Major outages are scheduled on both Young Station units every three years.
“This is a larger capital budget than we’ve historically pursued,” McLennan said. “There are major projects scheduled at our power plants and across our entire power delivery system. These investments are critical to ensuring we are positioned to provide long-term reliable power to our membership. The added project work in 2024 will require a significant level of focus, hard work and determination from our staff.”
The economy in Minnkota’s service area remains strong with consistent growth coming from the major population centers and the agricultural industry. The budget anticipates the sale of 4.2 billion kilowatt-hours (kWh) to the Class A members in 2024, resulting in a 1.2% increase in member revenue compared to the previous year’s budget.
Minnkota’s financial position is also supported by previous years of strong operational performance. The cooperative has a deferred revenue plan in place to manage shortfalls and unanticipated expenses, as well as a Resource Transition Fund to address extraordinary market events and future power supply needs.
Minnkota is rated as an investment-grade utility in 2023. The cooperative currently has an A- rating and stable outlook from Standard and Poor’s. Fitch Rating Services rates Minnkota at BBB+ with a stable outlook.
“We’re fortunate to be in a solid financial position as we continue to navigate significant industry change, while also managing through this period of inflation and supply chain constraints,” McLennan said. “If the current economic conditions continue, we recognize that an adjustment to rates may be needed to ensure Minnkota can continue to deliver reliable and sustainable electricity to the membership.”