Minnkota board approves 2021 budget

Average wholesale rates are projected to remain stable as Minnkota’s rate structure change is implemented.


Ben Fladhammer


December 16, 2020

The Minnkota board of directors voted to approve the 2021 capital and operating budgets during meetings this fall. In addition to the budgets, the board implemented rate structure changes that aim to better reflect the true cost of providing safe and reliable electric service to the membership.

The structure change, which will take effect in April, is revenue-neutral to Minnkota, meaning average wholesale rates are projected to remain stable throughout 2021.

“The board, staff and membership have worked together over the last two years to study our cost of service and how those costs are recovered in our rates,” said Mac McLennan, Minnkota president and CEO. “As the industry continues to change at a rapid pace, we are now better positioned with a rate structure that sends more accurate pricing signals to our member cooperatives.”

With the significant uncertainty surrounding the COVID-19 pandemic, Minnkota has budgeted for decreased energy sales to the member cooperatives and continued low prices for surplus energy in the wholesale market. Solid financial performance in recent years has helped the cooperative find stability in unstable times.

“So far, we have successfully navigated the economic issues related to COVID-19,” McLennan explained. “But we may experience rate pressures if we don’t see the demand for energy within the membership and in the market return to pre-pandemic levels.”

Minnkota’s revenue requirement in 2021 is budgeted at $389.1 million, which is $20.6 million lower than in the 2020 budget. Expenses are anticipated to be $393.3 million, which is down $9.1 million from the previous year’s budget. Minnkota anticipates using $15.9 million in deferred revenue funds to meet its targeted margin levels.

The 2021 capital budget totals $39.1 million in projects, tools and equipment. About 62% of the budget will be invested in the power delivery system. Minnkota plans to rebuild decades-old distribution substations and transmission line, install technologies to reduce blink outages and add enhanced communication technologies at various sites throughout the system.

On the power production side, a seven-week outage is scheduled on Unit 1 of the Milton R. Young Station in fall 2021. Major projects will be completed during the outage to ensure the plant can continue operating safely and effectively.

“In these unprecedented times, we know our members are depending on us to provide reliable and cost-effective energy 24 hours a day,” McLennan said. “We strive to find strategic ways to manage our costs, while still making prudent, long-term investments in our generation and transmission assets.”

Main Image: The sun sets over Berg substation in south Grand Forks. (Minnkota/Michael Hoeft)


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