Minnesota approves nearly $1 billion project to bring North Dakota wind power to state

State utility regulators Thursday approved Minnesota Power’s nearly $1 billion plan to rebuild a major power line that crosses the northern part of the state and carries wind energy from North Dakota to Hermantown.

The project drew support from organized labor, environmental advocates and state lawmakers, and is key to the Duluth-based utility’s efforts to shift from fossil fuels. But the project has opponents as well. The cost will fall largely on Minnesota Power’s customers, and the biggest users, including taconite mines and paper mills, said the utility’s plan to expand the capacity of the line is unnecessary and too expensive.

The Public Utilities Commission (PUC) sided with Minnesota Power’s request to modernize the 47-year-old line along its existing route, including the replacement of two terminals on either end.

“They have had a long, beautiful life,” said Julie Pierce, vice president of strategy and planning for Minnesota Power, about those terminals. “They’re still operating today, but it’s time.”

Pierce said refurbishing an existing line avoids the cost of building a new one and it also won’t require clearing forests or damaging wetlands along a new route.

“Generally, there’s a huge need for transmission capacity expansion and just the ability to move more power throughout the region,” said Allen Gleckner, executive lead of policy and programs for the St. Paul nonprofit Fresh Energy. The organization advocates for a fast transition to an economy without greenhouse gas emissions. “That’s a key component of the energy transition and getting to a carbon-free electric system.”

Minnesota Power’s 465-mile Square Butte line primarily transmits electricity generated by wind farms in North Dakota to northeastern Minnesota, where wind is less plentiful. With its importance in bringing wind energy to Minnesota, the line is a major part of the company’s shift away from coal to nearly 60% renewable power today and a planned 80% carbon-free system by 2030.

The upgrades will expand capacity by 60% and set the stage for future upgrades to carry roughly three to six times more electricity.

The project will also reduce costly failures. If Minnesota Power did not modernize its line, outages would cost at least $493 million, not counting inflation and the price of buying replacement power, an administrative law judge found. The judge’s ruling did not include a time frame for those losses. The judge also concluded that Minnesota Power could miss the state’s goal for a carbon-free electric grid by 2040 without this project.

The utility said upgrading its existing system was also preferable to building a new line.

“It’s tough to site new stuff,” Pierce said. “Being able to take something that’s currently here, leverage the fact that it’s at the end of its life and it needs renewal to make it into something that’s very future-proof is the exciting part.”

The project cost increased from a 2022 estimate of $700 million to between $800 million and $940 million now. Minnesota Power said that was in part because of a worldwide surge in manufacturing demand for these kinds of high-voltage systems. The newer estimate doesn’t account for inflation over the last two years, either.

A coalition of the utility’s large customers — such as Cleveland-Cliffs, Blandin Paper, Enbridge Energy and U.S. Steel — argued that regional transmission projects that share costs more broadly are already underway, so Minnesota Power’s own plan to expand the line’s capacity after modernizing it wasn’t necessary.

In March, the Midcontinent Independent System Operator (MISO), the organization that maintains the power grid, floated a $23 billion plan for more than a dozen new transmission lines across the Upper Midwest. That’s on top of its 2022 commitment that includes three new power lines worth more than $2 billion in Minnesota.

Minnesota Power has lined up a $50 million grant from the federal government for the project and state lawmakers approved $15 million.

PUC Commissioner Hwikwon Ham said the project’s cost should be viewed in the context of the benefits it brings, including low-cost energy like wind. He said that as Minnesota Power reduces its reliance on coal, expanding transmission lines is essential for bringing new renewable-power sources online.

“History shows this kind of option, when we see clear need in the future, saves a lot of money for the ratepayers,” he said.

The Minnesota Power line is one of only a few high-voltage direct-current transmission lines in the country. They are meant to transport power over long distances more efficiently, losing less electricity on the way.

There is also a large coal-fired power plant at the western terminus of the line, and the Square Butte line mainly delivered that fossil fuel power before Minnesota Power bought the line in 2010. The utility has an agreement to buy electricity from that coal plant, but the amount has ramped down over time and the deal expires in 2025.