Minnkota Board approves 2025 budget and rates

This fall, the Minnkota Board of Directors approved the cooperative’s capital and operating budgets for 2025. The budgets include a rate increase for Class A member cooperatives – the first adjustment to rates since 2017.

“Persistent supply chain challenges, inflationary pressures and electric market conditions are all having impacts,” said Mac McLennan, Minnkota president and CEO. “The cost increases for materials and equipment have been significant, forcing us to adapt our strategies and prioritize projects carefully to ensure we continue delivering reliable service to our members while maintaining financial stability.”

As a not-for-profit cooperative, Minnkota collects enough revenue to cover its costs as well as a small margin to operate the business. At the same time, it makes investments to ensure safe, reliable and sustainable electricity is available for its members well into the future.

In 2025, Minnkota has budgeted operating revenues of $479.2 million and expenses of $474.8 million. The cooperative anticipates using its Revenue Deferral Fund to meet its target margin level of $14.2 million. The 2025 average rate change of approximately 8.3% will be implemented on April 1.

Minnkota’s capital budget includes $101.7 million in projects, tools and equipment. Of that total, approximately $23.3 million is reimbursable to the cooperative through other entities.

The 2025 budgets are highlighted by Minnkota’s ongoing commitment to addressing aging infrastructure and improving service to the members. Approximately two-thirds of the capital budget is focused on power delivery system improvements or additions. The cooperative plans to start and/or complete work on five distribution substation rebuild projects and complete reconstruction of three major sections of 69-kilovolt transmission line. Upgrades to demand response infrastructure and the addition of distribution automation technology to improve power delivery system visibility at 14 substations will continue.

From a power supply standpoint, Unit 2 at the Milton R. Young Station will undergo a 44-day scheduled maintenance outage to complete projects and conduct thorough inspections in an effort to keep the coal-based unit operating reliably and efficiently. Major outages are scheduled on both Young Station units every three years.

“We have major projects planned, including important upgrades at our power plants and across our entire power delivery system,” McLennan said. “While these investments come at a time of rising costs, they are essential to maintaining and strengthening the reliability of the power we provide to our members. The scope of these projects will demand an extraordinary level of focus, dedication and hard work from our employees, ensuring that we are well-prepared to meet the evolving needs of our membership now and for years to come.”

Minnkota’s financial position is supported by previous years of strong operational performance. The cooperative has a Revenue Deferral Fund in place to manage shortfalls and rising 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 2024. 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 faced with a significant amount of industry change that may require major investments in the not-too-distant future,” McLennan said. “Maintaining financial stability is crucial as we navigate future power supply opportunities, while continuing to address aging infrastructure needs spread throughout our power delivery system. We remain grateful for the support and guidance from our membership as we continue forward in the energy transition.”