Cost and reliability drive Otter Tail Power Company’s 15-year resource plan

Rhea-AI Summary

Otter Tail Power Company has submitted an updated Integrated Resource Plan (IRP) for 2022-2036 to regulatory commissions in Minnesota, North Dakota, and South Dakota. This update reflects significant changes since its initial filing in September 2021, emphasizing an increase in renewable energy resources. Key actions include adding liquified natural gas storage by 2026, developing 200 MW of solar generation by 2028, and initiating plans for 200 MW of wind power by 2029. The company may withdraw from Coyote Station ownership if a large capital investment is necessary. The Minnesota Public Utilities Commission will review the updated plan this fall.

Positive

• Plans to add 200 MW of solar generation by 2028.
• Initiating steps for 200 MW of wind generation by 2029.
• Updated plan includes more renewable resources.
• Retention of Coyote Station could provide additional capacity.

Negative

• Potential withdrawal from Coyote Station if major capital investments are required.

FERGUS FALLS, Minn.--(BUSINESS WIRE)-- Otter Tail Power Company has submitted an updated 2022- 2036 Application for Integrated Resource Plan (IRP) with regulatory commissions in each of the three states it serves: Minnesota, North Dakota, and South Dakota.

In September 2021 the company submitted its initial IRP filing. “Since that time, mounting changes have presented a markedly different planning landscape than the one our initial filing addressed,” said Otter Tail Power Vice President of Energy Supply Brad Tollerson. “Based on those factors, we’ve updated the preferred plan set forth in our initial filing.”

Updated preferred plan

The updated preferred plan provides specific actions the company intends to complete in the next five years, which include:

• Adding on-site liquified natural gas (LNG) fuel storage at Astoria Station in 2026.
• Adding approximately 200 megawatts (MW) of solar generation in the 2027-2028 timeframe.
• Taking the initial steps necessary to add approximately 200 MW of wind generation in the 2029 timeframe.
• Withdrawing from its 35% ownership interest in Coyote Station if the company is required to make a large, non-routine capital investment in the plant.

The company also intends to repower four of its existing wind farms as part of its IRP baseline model.

How initial and updated plans compare

“Our updated preferred plan adds more renewable generation resources to our portfolio than our prior plan,” said Tollerson. “With respect to Coyote Station, our analysis still supports withdrawal from our ownership interest if we are required to make a large, non-routine capital investment to operate the plant or comply with regulatory mandates. That was the case in our initial preferred plan and remains the case with today’s update. Where our Coyote Station analysis differs from our initial filing is that the mix of uncertainties and risks our customers face in the current planning environment supports retention of Coyote Station in our generation portfolio if we’re not required to make a major capital investment in the plant.”

Otter Tail Power President Tim Rogelstad adds, “As a winter peaking utility, we are particularly concerned about the Midcontinent Independent System Operator’s (MISO’s) new minimum capacity planning requirements, open questions concerning MISO accreditation methodologies, and projected capacity deficits within MISO. We believe it’s in the public interest to retain Coyote Station’s existing dispatchable capacity in our generation portfolio pending greater visibility into any non-routine capital investments that may be required to continue operating the plant.” This position will be subject to evaluation in the company’s next IRP filings.

Meeting customers’ needs; complying with laws and regulations

“Our updated preferred plan ensures we have the resources necessary to continue providing reliable, low-cost electricity to meet our customers’ needs,” said Rogelstad. “The plan preserves flexibility to respond to risks in a changing planning environment; complies with the requirements of applicable statutes and 5 rules, including the Minnesota Clean Energy Law; utilizes Inflation Reduction Act incentives to lower renewable energy generation costs; and accounts for differing energy policies in each of the three states we serve while preserving the customer benefits of system-wide planning and networked assets for a small utility.”

Next steps

The Minnesota Public Utilities Commission (MPUC) procedural schedule allows intervenors four months to analyze the company’s updated plan and provide feedback to the MPUC. The company then has two months to respond to intervenors’ comments. Otter Tail Power anticipates an MPUC hearing toward the end of 2023. The North Dakota Public Service Commission (ND PSC) has hired a consultant to review the modeling and determine whether the company’s preferred plan is reasonable. Otter Tail Power anticipates receiving ND PSC comments on the consultant’s report by this fall. The South Dakota Public Utilities Commission (SD PUC) doesn’t have formal IRP requirements or proceedings, but the company has filed its IRP with the SD PUC because it is a vital stakeholder.

“As we’ve done since starting our resource planning process, we’ll continue to monitor the changing landscape,” said Rogelstad.

This news release is on our website at otpco.com/newsroom.

Otter Tail Power Company, a subsidiary of Otter Tail Corporation (Nasdaq Global Select Market: OTTR), is headquartered in Fergus Falls, Minnesota. With a balanced commitment to environmental, economic, and community stewardship, the company provides electricity and energy services to approximately 133,000 customers in Minnesota, North Dakota, and South Dakota. To learn more about Otter Tail Power Company visit otpco.com. To learn more about Otter Tail Corporation visit ottertail.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230331005348/en/

Stephanie Hoff

shoff@otpco.com

218-739-8535

Source: Otter Tail Power Company

FAQ

What is Otter Tail Power Company's updated Integrated Resource Plan (IRP)?

The updated IRP for 2022-2036 focuses on increasing renewable energy resources and outlines specific actions for the next five years.

When was the initial IRP filed by Otter Tail Power Company?

The initial IRP was submitted in September 2021.

What renewable energy projects are included in the updated IRP?

The updated IRP includes plans for adding 200 MW of solar generation by 2028 and 200 MW of wind generation by 2029.

What is the status of Coyote Station in the updated plan?

Otter Tail Power may withdraw from Coyote Station ownership if a large, non-routine capital investment is required.

When will the Minnesota Public Utilities Commission review the updated IRP?

The MPUC will review the updated plan and allow intervenors four months for analysis, with a hearing anticipated toward the end of 2023.