A POSITIVE, CREDIBLE AND INDEPENDENT VOICE FOR MINNESOTA UTILITY INVESTORS

In yourInterest

VOL. 30 NO. 4

March 24, 2021We still plan to hold this important event—virtually! See page 2 for more details.

MUI Day at the Capitol

DECEMBER 2020

Looking Forward to the 2021 Minnesota Legislature As of this writing, former Vice-President Joe Biden has been declared our next President; but President Trump has filed lawsuits in several states challenging the accuracy of their ballot counting. Closer to home, the outcomes of the election are much clearer. Minnesota continues to be the only state with divided government.

MN House of Representatives will remain under DFL control For either party to attain control of the Minnesota House, the prevailing party must win at least 68 seats. Heading into the election, House Democrats held 75 seats and the Republicans held 59 seats. Following the election, five House seats appear to have flipped from DFL to Republican.

There may be three races subject to an automatic recount because the margins are so close. Should the numbers in those races hold, Democrats head into the 2021 Legislative Session with a 70-64 majority over the Republicans.

MN Senate will remain under Republican control.For either party to attain control of the Minnesota Senate, the prevailing party must attain at least 34 seats. Heading into the election, Senate Republicans held 35 seats. Following the election, three Senate seats flipped from Republican to DFL while two Senate seats flipped from DFL to Republican (34–33).

92nd Minnesota Legislative SessionThe 2021 Legislative Session begins Tuesday, January 5th. This is a Budget year. The Legislature, working with the Governor, must compile a two-year budget for the State while facing an anticipated deficit of over $2 billion. Minnesota’s Management and Budget office will release the next official forecast in early December 2020 so the Legislature will have a clearer picture on the fiscal impact of COVID-19 on the State.

The $2.359 billion budget reserve remains available to mitigate the budgetary impact of the crisis. Given the uncertainty about the path of pandemic, the economic outlook will remain volatile for some time

There will be many new faces at the State Capitol with new Committees and new Committee Chairs. In addition to the uncertainty of how/can Committees meet in-person will make for some challenging times in St. Paul.

No matter the circumstances, whether virtually or in-person, MUI will continue to be involved at the Capitol—as can MUI members. As the Legislative Session gets going, we will be developing the format for our March 24th Day at the Capitol. Stay tuned! G

In this issueDay at the Capitol 2

Meeting Reviews 3

Upcoming MUI BINGO Zoom Meeting 3

Hydrogen information 4

News Briefs 5–7

Membership Accolades 7

Membership Form 8

In your INTEREST2

Watch your mail in January 2021 for more details about this new grassroots virtual activity!

DECEMBER 2020

This will likely be a Virtual/Zoom event with a number of opportunities to discuss legislative issues and hear from legislative leadership.

Mark your calendars!

Wednesday, March 24, 2021

No weather delays!

Welcome Snowbirds!

MUI has moved!3460 Washington

Drive #210Eagan, MN 55122

Our new address as of Nov. 1, 2020

VOL. 30 NO. 4 3

We continued Fall member meetings Zooming. Over 400 members attended by computer or phone the eight energy-related meetings we held in September and October.

Topics of these meetings included the status Xcel Energy’s Integrated Resource plan (IRP); an update on CapX2050 potential investments; a Mid-Continent Independent System Operator (MISO) update on state/regional transmission issues; as well as company/shareholder updates from ALLETE; MDU Resources Group; Otter Tail Corp. and Xcel Energy.

For some fun, MUI did organize an MUI Bingo meeting in September – over 95 members registered for the event. G

While it was very different than how we had hoped to celebrate our 30th Anniversary, over 150 members registered for the MUI’s October 12th Annual Meeting. Members still had the opportunity to “see” other members from around Minnesota and get updated about the utility markets.

Our one and only featured speaker was Mike Doyle, Senior Equity Analyst with Edward Jones. He is responsible for coverage of stocks in the utility sector.

But with most, if not all, MUI meetings, we closed with a rousing game of MUI BINGO. G

Meeting Reviews

MUI Zooming in the Fall

MUI Annual Meeting Recap

Allan Gerlach, MiltonaBarbara Harrison, BurnsvilleDavid Pederson, MoorheadJeffe Legge, Fergus FallsJerry Nelson, RosevilleJoan Groth, St. CloudJudith Moe, St. Paul

Kathy Nordos, AlexandriaLaurie Arndt, DuluthLinda Ferguson, RochesterMarty Friede, BloomingtonPaul Hendrickson, FrazeeSteve Norgaard, Rochester

Congratulations to the BINGO winners at the September Meeting!

Congratulations to the BINGO winners from the Annual Meeting!Alfrieda Dornbush, BeckerArlene Zimmerman, Park RapidsCarl Lehmann, Inver Grove HeightsDianna Butler, MinneapolisKen Kiefer, RochesterMichael Pliml, Inver Grove HeightsPat O’Keefe, AnnandaleShirley Syverson, Alexandria

We appreciate all of our member making an effort to participate and support MUI’s meetings.

ALL MUI Fall Member meetings, including the MUI Annual Meeting, can be found in a video library on our website at www.mnutilityinvestors.org under the Event Calendar tab.

YOU CAN VIEW ALL FALL MEETINGS

MUI BINGO ZOOM MeetingFriday, December 18, 2020 at 10:00 AM

TO REGISTER: Call 651-227-7902 or register online at the MUI website: www.mnutilityinvestors.org

You MUST register by December 13th to get a Bingo card.

Join us!

In your INTEREST4 DECEMBER 2020

Hydrogen

Green hydrogen fuel could facilitate decarbonization across a wide swath of industries, but experts say the utility sector will be the first to transition

At the beginning of the last decade, renewable energy remained an industry-polarizing topic. Legacy energy companies held that fossil fuels would maintain their grip on the industry for generations to come, largely relegating emerging technologies such as solar to the realm of startups.

In 2020, these legacy companies, such as GE and Siemens view hydrogen as a second chance, according to participants in an American Council on Renewable Energy (ACORE) webinar.

"I'm doing three to five calls a week with all flavor of industrial companies, gas companies, utilities, chemical companies and investors," Skip Grow, a managing director at Morgan Stanley, told ACORE last Tuesday. "For a lot of those companies, especially those that feel they missed the renewable opportunity, they seem to take the view that they're not going to miss hydrogen if and when it emerges."

Grow said interest from investors is likely to spur a "massive spending wave" brought on by a growing belief that 100% carbon-free power and transportation is now inevitable.

Panelists from ACORE's Tuesday discussion generally agreed that hydrogen's potential flexibility and its ability to build on existing infrastructure to scale rapidly have implications for a host of industries. Industry leaders believe the power sector will play a critical role in helping hydrogen achieve scale, eventually making it more accessible to other industries.

In fact, the transformation has already begun, according to Sean Ebnet, vice president of business development for Ørsted, an offshore wind company with headquarters in Denmark. Ebnet told ACORE members that many European nations have established goals to replace natural with 20% green hydrogen, and that Germany is aiming for as much as 60% replacement. Blending hydrogen with natural gas, he said, makes the transition to 100% renewable energy more cost effective because it allows industries to take advantage of existing infrastructure. G

Hydrogen is having a moment, and power generation is leading the way

Regulation, flexibility benefits will drive hydrogen growthU.S. utilities have also begun to jump on the hydrogen bandwagon. In early October, San Diego Gas & Electric announced that it plans to bring two long-duration green hydrogen storage projects online by 2022, although the details of the operation are not yet public. A few days later, Ohio's Long Ridge Energy Terminal announced plans to convert a 485 MW combined-cycle gas power plant, which is currently under construction, to run, eventually, on 100% green hydrogen, which is produced using zero-emisson electricity.

State legislative requirements that expect utilities to decarbonize faster than other industrial sectors will drive early adoption of hydrogen in power generation, according to Michael Ducker, vice president of renewable fuels for Mitsubishi Power. Ducker believes the power industry

will lead the way with respect to hydrogen adoption. Ducker said the industry, like Long Ridge, has significant financial incentive to implement hydrogen as well.

"We've got corporates and investors who are now saying, I'm no longer investing in fossil fuels, period. It doesn't matter who is in office," Ducker said.

Flexibility, according to Ebnet, is another key reason why the power sector may move toward hydrogen. At low concentrations, hydrogen can be blended into existing natural gas infrastructure with minimal consequences. Over time, as the availability of hydrogen fuel increases, governments can build out new infrastructure when the switch makes sense. SOURCE: Adeline Kon/Utility Dive; November 2, 2020; Emma Penrod

Minnesota Power aims to test heavy-duty electric mine trucks They may not go from zero to 60 in less than three seconds like a Tesla, but enormous electric trucks are generating excitement on northern Minnesota's Iron Range.

Utility Minnesota Power has proposed a pilot project to state regulators in which it would help the region's iron and taconite mines acquire heavy-duty electric vehicles to help shrink their carbon footprint.

Frank Frederickson, vice president of customer experience, said the utility has been collaborating with mine customers on the idea. The trucks are manufactured by Caterpillar and Japanese firm Komatsu, along with a handful of other companies. They operate either using a mix of electric and diesel-based energy or use a trolley system. The trolley approach allows the trucks to rely more on electricity but requires the installation of more infrastructure at the mine.

Several mines around the world have electric trucks operating but few are located in the United States.

Yet Minnesota Power sees tremendous upside in mine transportation electrification. Large industrial customers consume more than three-quarters of the utility's electricity, likely the highest proportion of any power company in the country. By moving mines away from diesel and toward electric power, they grow demand in a region that has long faced a challenging resource-driven economy.

Minnesota Power brought up the proposal in a filing before the commission that offered a series of projects to help jumpstart the economy, including other transportation electrification projects. The region has seen some progress on transportation electrification, with the Duluth Transit Authority being the first bus system in the state to operate electric buses. The utility's industrial customers have climate goals and electric mine trucks could help meet them, Frederickson said.

Minnesota Power plans to evaluate the truck mine market and their mining customers before investing in equipment from one of the vehicle manufacturers, Frederickson said. The pilot will study a plan for retrofitting existing mine trucks with electric equipment, a strategy allowing more vehicles to transition to electricity.Source: August 22, 2020; Frank Jossi; Energy News Network

Otter Tail Power Company a leader in developing EV charging options in rural United StatesBefore you hit the road, you might think about where you’ll stop to eat, sleep, or fill gas. As electric vehicles (EVs) become more affordable and chargers more accessible, some people are planning trips around charging locations.

With the evolution of electric transportation, Otter Tail Power Company customers have become increasingly interested in access to EV chargers with reasonable rates. Recognizing the demand for electric transportation resources, the company developed a proposal for an EV charging infrastructure pilot program. The Minnesota Public Utilities Commission approved the proposal, allowing Otter Tail Power Company to build 11 direct current (DC) fast charging sites and 10 Level 2 charging sites in its Minnesota service area.

“This proposal is a cost-effective way to get more EV chargers across Minnesota,” said Commissioner Matt Schuerger in a recent news release from the Minnesota Public Utilities Commission. “Otter Tail Power deserves a lot of credit for being one of the first rural electric utilities in the country to create a proposal and one that garnered such widespread stakeholder support.”

The company is still finalizing charger locations and expects to complete the project in the next two to three years. “This is an exciting plan for current and future EV owners,” said Otter Tail Power Company Market Planning Manager Jason Grenier. “When the project is complete, 97 percent of our Minnesota customers will be within 30 miles of a charging station—and 100 percent will be within 60 miles.”

Otter Tail Power Company also has partnered with leaders in the communities of Bemidji, Crookston, Fergus Falls, and Morris, Minnesota, and Wahpeton and Jamestown, North Dakota to install EV charging stations. Most recently, in downtown Fergus Falls, the company installed two 7-kilowatt (kW) Level 2 chargers and a 50-kW fast charger, the first charger of its kind along a 200-mile major corridor of Interstate Highway 94 between Monticello and Moorhead, Minnesota.

News Briefs cont. on page 6

News Briefs

VOL. 30 NO. 4 5

In your INTERESTDECEMBER 20206

From misconceptions about price to worries about driving long distances in winter weather, EV adoption has its challenges in Otter Tail Power Company’s rural and vast service area. Yet, the company expects the number of EV owners will continue to grow with needed infrastructure in place. “And electric transportation is affordable,” said Grenier. “Customers can charge their vehicles for less than half the cost of gas per mile at public chargers and can see even greater savings when charging at home.” The company’s public DC fast charging rates range from .5 cents per kilowatt-hour (kWh) during off-peak hours to 13 cents per kWh during peak hours.

“Whether you live in or are visiting our service area, these charging stations will make long stretches of highway more accessible for EV travel,” said Grenier. “And we’ll continue to evaluate opportunities for additional charging stations in North Dakota and South Dakota.”

As EVs continue to improve, it’s easier than ever to hit the road with a safe and reliable network for EV travel. Find more information about Otter Tail Power Company’s customer EV rates and rebates at otpco.com/DriveOn.

CenterPoint Energy seeks to minimize methane emissions in Minnesota through new vacuum pump procedureCenterPoint Energy is taking a unique approach to tackling methane emissions and other potential environmental and safety hazards for natural gas pipelines in Minnesota, with a procedure based on vacuum pump technology.

“A key benefit of vacuum purging is that it helps avoid methane emissions when commissioning a pipeline,” Brad Steber, CenterPoint Energy’s Manager of Technical Field Operations for Minnesota, said. “The process also limits nuisance impacts such as noise and odor, in addition to minimizing the safety risk of accidental ignition with a gas-air mixture.”

That solution purges air out of said pipelines before introducing natural gas, as opposed to the traditional method, which involved using the pressurized gas to force air out. The downside of the traditional method is that it also vents gas-laden air into the atmosphere. As methane

is the main component of natural gas, and a greenhouse gas, that means flooding the air with emissions.

The system was field-tested in September on 3,200 feet of six-inch polyethylene pipe installed near St. Michael, Minnesota. This followed pressure testing of the pipe with air to guarantee its strength and gas tightness. Hoses then attached two zero emission vacuum and compressor units to an outlet on the pipeline, through which they pumped air from it until a vacuum was achieved. Once the air was removed, an inlet valve was opened and natural gas injected.

It took hours to purge the pipe, but only minutes to fill it. As a result, CenterPoint Energy intends to evaluate other vacuum pump types and test how different pipe fittings can perform under the vacuums created.

SOURCE: Oct. 28, 2020, Chris Galford, Daily Energy Insider

Xcel gets $10.5M federal grant for pilot project on hydrogenXcel Energy will build a pilot hydrogen plant at one of its two Minnesota nuclear facilities, an effort to bolster the long-term of viability of atomic power and produce hydrogen without using fossil fuels. To fund the pilot, Xcel was recently awarded a $10.5 million grant from the U.S. Department of Energy (DOE). Xcel’s pilot plant is the second phase of a novel project announced a year ago, which is led by the DOE’s Idaho National Laboratories.

“It just makes sense for us to look at this,” said Tim O’Connor, Xcel’s chief generation officer. Xcel will put $2 million of its own money into the project.

If the pilot moves to commercialization, the company would be able to offset declining nuclear electricity revenue by producing hydrogen without emitting greenhouse gases. Now, hydrogen is primarily produced with natural gas. Hydrogen has many industrial markets, including oil refining and fertilizer production. It could also play a key role in future decarbonizing efforts, notably via hydrogen fuel cells for vehicles.

Xcel plans to do engineering and planning work on the pilot plant through next year, with construction expected to start in 2022. It is projected to come online in 2023. Xcel hasn’t decided yet whether the hydrogen pilot will be at its Monticello or Prairie Island nuclear plants, though the latter seems more likely.

News Briefs cont. on page 7

News Briefs cont. from page 5

VOL.30 NO. 4 7

Accolades

Thank you to our MUI Supporting Members for their continued support! Those listed below represent

members who have RENEWED their membership between August 15, 2020 – November 4, 2020. The list is organized by state and then alphabetized by FIRST name. Members that are italicized have renewed for three year – the rest for one year.

RENEWING SUPPORTING MEMBERSMINNESOTA: Jacqueline Sinkfield Fleming, Joe and Marilyn Schmit.

Accolades to Recent MUI Dues-Paying Members

Xcel’s pilot plant would use an electric current to separate water into its components of hydrogen and oxygen, a process known as electrolysis. Xcel will employ “high-temperature” electrolysis by using steam from its nuclear power production. By using steam to heat water, less electricity is needed than with low-temperature electrolysis — cutting the process’s costs and making it more energy efficient. The electricity will also be provided by the power plant.

“This is unlike what others in the U.S. are currently doing with electrolysis,” O’Connor said.

Nuclear power, though saddled with the vexing problem of long-term waste disposal, is the nation’s largest source of carbon-free power. About 20% of U.S. electricity comes from nuclear plants; about 23% in Minnesota. Xcel has said that nuclear power is critical in reaching the company’s goals of 80% carbon-free electricity by 2030 and 100% by 2050.

The U.S. nuclear industry — like coal power — is under stress, with several U.S. plants closing over the past decade as their economic advantages have eroded. Nuclear plants owned by regulated utilities like Xcel have fared better.

The rise of renewable energy and cheap gas-fired power has upended the electricity industry. “The pressure point in the energy mix has been higher renewables,” O’Connor said.

Solar and wind power get dispatched first in wholesale electricity markets because they have the cheapest fuel cost — zero. They are also by nature variable power sources. With more wind and solar on the grid, utilities are increasingly operating both fossil fuel and nuclear plants more flexibly.

Xcel over the past couple of years has shown it can ramp down nuclear power output by as a much as 25%. But nuclear plants were built to run 24 hours a day. So, ramping down power output also means reducing revenue, which is vital to cover a nuclear plant’s many fixed costs. By producing

hydrogen economically, a nuclear plant could create an additional revenue stream, and potentially a strong one.

The DOE launched the nuclear-hydrogen project in September 2019, with an initial allocation of about $11 million. Xcel got $1.3 million of that money for a study. The other utilities that have been participating in the project are Arizona Public Service and Akron-based Energy Harbor, formerly known as FirstEnergy Solutions.

SOURCE: Star Tribune; Mike Hughlett; October 15, 2020

Helping everyday heroes: Minnesota Energy Resources awards public safety grantsMinnesota Energy Resources is awarding nearly $12,000 in Rewarding Responders Grants to area first responders.

Seven Minnesota fire departments have been awarded up to $2,000 through the grant, given annually to help emergency response agencies purchase equipment or training to improve public safety. This year’s recipients include the Owatonna Fire Department. Firefighters requested funding to replace outdated thermal imaging cameras. The cameras help firefighters orient themselves in a fire and ensure they go home safely at the end of a call. Other recipients include the Blooming Prairie Fire Department, who also requested funding to purchase a new thermal imaging camera.

These grants are part of Minnesota Energy Resources’ commitment to safety in the communities the company serves. Including this year’s Rewarding Responders Grants, Minnesota Energy Resources has donated more than $67,000 over the past six years to help first responders improve public safety across Minnesota.

SOURCE: Owatonna People’s Press; Allison Miller; September 18, 2020

News Briefs cont. from page 6

In Your Interest is a publication of Minnesota Utility Investors, and is published four times each year in March, June, September and December.

Phone: 651-227-7902 Toll Free: 1-888-850-5171

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