A POSITIVE, CREDIBLE AND INDEPENDENT VOICE FOR MINNESOTA UTILITY INVESTORS

In yourInterest

VOL. 27 NO. 4

Uncertainty Overshadows the 2018 Legislative Session

April 12, 2018It promises to be another great Day at the Capitol. MUI members will head to St. Paul to talk to legislators about energy issues that impact them as consumers and investors.

See page 2 for more details.

Day at the Capitol

Mark your calendar!

We are in unchartered territory. Recently the MN Supreme Court

ruled that Governor Dayton’s line-item veto power is “expressly conferred” by the State Constitution—so he did have the authority to line-item veto the Legislature’s 2018/2019 funding. This has created uncertainty for the 2018 Legislative Session.

After the Supreme Court decision, the Legislative Coordinating Commission (LCC) met and passed a resolution to use carry forward funds for the Legislature. These funds should cover the House and Senate costs (rent, staffing, etc.) until the beginning of the 2018 Legislative Session.

When the Legislature reconvenes on February 20th, the Legislative Leadership has indicated they will draft and pass a bill that would fund the Legislature at the same level that was vetoed by the Governor in May. The big question…what happens if the Governor vetoes that funding bill? Will the Legislature override the Governor’s veto—it takes two-thirds vote of the members in each house.

Who knows what is going to happen? Cliff Hangers Abound.

Moving ForwardAt MUI we are still moving forward with our April 12, 2018 Day at the Capitol event and are preparing for debate on some potential issues.

We are developing a different format for our Day at the Capitol by offering two Tracks for

MUI members to follow. The Educational Track would foster understanding for First Timers and those hesitant to meet with legislators. The Advocacy Track is for members that have participated in the past and those who want to meet with legislators and legislative leadership. MUI members can choose which path they would like to participate.

Potential IssuesPersonal Property Tax: Minnesota’s utilities are the only industry that pays a tax on their personal property (equipment, pipes, lines, etc.) in addition to the taxes they pay on their real property. HF 1985/SF 2193, introduced by the Chairs of the Tax Committees, Rep. Greg Davids and Sen. Roger Chamberlain, doesn’t eliminate the personal property tax, BUT it would provide more transparency and certainty of how the taxes are determined which is important to the utility industry.

Competition/Customer Choice: These buzz words are being bantered around in legislative circles without providing a complete picture. The discussion is really about Reregulation that would favor a certain group of energy developers. They don’t identify how/if these outside developers will address low income customers, residential customers or how they will help pay for any of the infrastructure. These energy developers want to cherry-pick the big businesses, to the significant detriment of Minnesota’s utilities.

In this issueDay at the Capitol 2

CapX2020 Update 3

Local Member Meetings 4

Preview Meeting Schedule 5

News Briefs 5, 9–11

MUI Annual Meeting Album 6–8

Membership Accolades 11

Supporting Membership Application 12

DECEMBER 2017

2018 Legislative Session cont. on page 10

In your INTEREST2

Meeting notices will be sent in February 2018

DECEMBER 2017

SCHEDULE9:45 am Registration

10:30 am Program

11:00 am Lunch

11:45 am Bused to State Capitol Complex

12:15–2:30 pm MUI Member Educational Track (to ease members into one-on-one meetings) • 1/2 hour Optional Capitol Tour • Seminar: In-depth Issue Discussion • Seminar: Legislators want to hear from YOU!

12:15–2:30 pm MUI Member Advocacy Track (traditional schedule) • Meet with Legislators • 1/2 hour Optional Capitol Tour • Meet with Legislative Leadership

2:45 pm Head home

LOCATIONHotel Metro/DoubleTree St. Paul East 2201 Burns Avenue, St. Paul (Same location as last year)

Thursday, April 12, 2018

Meet with your Legislators at the State Office Building and the Senate Office Building

Tour the newly renovated State Capitol Building

CONVENIENT TRANSPORTATION! Shuttle to and from the State Office Building, Senate Office Building and State Capitol.

New this year!Choose the schedule track that's right for you!

VOL. 27 NO. 4 3

CapX2020 Update

CapX2020 Transmission Lines CompleteLargest Development of New Transmission in the Area in over 40 YearsIt’s quite the accomplishment, and one that has changed the energy landscape of the Upper Midwest - all of the CapX2020 transmission lines are up and running in Minnesota, North Dakota, South Dakota and Wisconsin. The accomplishment has entailed 13 years, a $2 billion investment, 800 miles of transmission, and 11 utility partners all working together.

“CapX2020 is a great example of collaboration. Investor-owned electric utilities, electric cooperatives, and municipally-owned electric utilities all worked together in an unprecedented way through transmission expansion to ensure we can continue to provide safe, reliable, and affordable energy to our customers,” said Tim Rogelstad, President of Otter Tail Power Company. “In this respect, we’re a model for the rest of the country in transmission development. We’ve accomplished much more together than we ever could do alone.”

“The CapX2020 lines have strengthened the backbone of the grid,” said Teresa Mogensen, Xcel Energy’s Senior Vice President Transmission. We have addressed local reliability issues from Fargo to Rochester to La Crosse, Wisconsin so those communities can continue to grow and prosper.”

Pictures say a thousand words... check out MUI’s webpage to see our "Year in Review"

mnutilityinvestors.org

In your INTERESTDECEMBER 20174

Over 500 MUI members had the chance to hear from a variety of speakers at their Local Member meeting held throughout Minnesota this fall.

From Northern Minnesota (Bemidji, Iron Range, Duluth) to Western Minnesota (Fergus Falls, Alexandria, Mankato) to Central Minnesota (St. Cloud, Baxter, Little Falls) to Southern Minnesota (Rochester, Albert Lea) to the five locations in the Metro Area; over 500 MUI members had the opportunity to hear from a variety of energy speakers.

The topics included an update on nuclear energy, issues facing the electric industry, the process to relicense many of Otter Tail Power’s hydro facilities; Otter Tail Power’s initiatives working with the City of Bemidji; learned about SMMPA; as well as a briefing from Edward Jones.

Please see Page 5 for a complete schedule of our upcoming Day at the Capitol Preview meetings in March. These meetings are complimentary for all MUI members. G

Fall Local Member Meetings

Local Member Meetings Continue to Be a Vital Part of MUI's Success

Little Falls meeting Pam Gorman Prochascka, Xcel Energy, spoke to a full room in Mankato.

St. Cloud meeting

Baxter members listen intently. Leon Kremeier, Otter Tail Power Company, spoke at the Bemidji meeting.

Duluth members

Bill Swanson from Otter Tail Power Company spoke in Fergus Falls.

Chris Schoenherr speaking at the Rochester Local Member meeting.

Iron Range meeting

VOL. 27 NO. 4 5

Search for Minnesota Utility Investors and "LIKE" us. Check our page regularly for up-to-date information and event pictures.

MUI Is on Facebook

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Minnesota One of the Most Energy Efficient StatesMinnesota ranked high in a report of the Most and Least Energy-Efficient States. The study says Minnesota is the fourth most energy-efficient state out of 48 states, Alaska and Hawaii weren't included. Only New York, Vermont and Utah rank higher.

To come up with the rankings, experts compared home energy efficiency and auto energy efficiency. Minnesota came in third for home energy efficiency, which was calculated by measuring the total residential energy per capita and annual daily temperatures. Wisconsin came in at 8th on the list and Iowa was 28th. The least energy-efficient state measured was South Carolina.

SOURCE: KNSI News Radio

News Briefs

Mark Your Calendar

MUI Day at the Capitol Preview Meetings are open to all General and Supporting Members. This is your chance to learn about the legislative process, issues impacting your utility investment and ask questions about MUI Day at the Capitol.

If you are unable to attend the Meeting in your area, you are welcome to attend an alternative MUI Local Member Meeting. Reservations are required. Please contact the MUI office for details and to register for the meeting. G

MUI Day at the Capitol Preview Meetings Schedule

DATE TIME LOCATION

Thu, March 8 11:30 am Rochester

Mon, March 12 11:30 am St. Paul

Tue, March 13 11:30 am NorthEast Metro

Tue, March 13 5:30 pm Woodbury

Wed, March 14 11:30 am Bloomington

Thu, March 15 11:30 am St. Cloud

Mon, March 19 11:30 am Fergus Falls

DATE TIME LOCATION

Mon, March 19 5:30 pm Alexandria

Wed, March 21 11:30 am Mankato

Wed, March 21 5:30 pm Albert Lea

Tue, March 27 11:30 am Duluth

Wed, March 28 11:30 am Baxter

Thu, March 29 11:30 am West Metro

Thu, April 12 MUI Day at the Capitol

MUI Booth James Schneider, the big winner of the Omaha Steaks gift card.

Members had a chance to spin the Wheel of Energy. Members test their knowledge at Minnesota Trivia.

In your INTERESTDECEMBER 20176

MUI Annual Meeting

MUI’s 27th Annual Meeting Drew Nearly 550 Participants

Members from across Minnesota arrive at the MUI annual meeting. Members begin their Annual Meeting experience.

Thank you MUI Members, Participants and Speakers for Another Successful MUI Annual Meeting

VOL. 27 NO. 4 7

Andy Smith, Edward JonesAnnette Henkel, MUI President

Kari Nelson, Alliant EnergyEmily O'Connell, American Gas Association Jean Krause, CenterPoint Energy

Amy Fredregill, Xcel Energy

Pam Gorman Prochaska, Xcel EnergyPat Keyes, WEC Energy GroupTodd Wynn, Edison Electric Institute

Enbridge Representatives Minnesota Safety Council ALLETE

Members ask questions of WEC Energy Group Members speaking with Loren Hanson, Otter Tail Corporation

In your INTEREST8

MUI Annual Meeting

DECEMBER 2017

A successful day ends at lunch with MUI friends.

Edward Jones Representatives talking to members.Darin Norman, Xcel Energy

MDU Resources Group Polymet Mining

Congrats to Our Door Prize Winners!Omaha Steaks $150 Gift Card James Schneider, SartellALLETE bag and umbrella Kevin Sweeney, Minneapolis5 Shares of Alliant Energy Keith Roettgering, MahtomediOtter Tail Corp. Duffel Bag Karen Ruff, ShoreviewXcel Energy Gift Box Patricia Shelland, W St. PaulMUI Basket Gary Reinecke, Blaine2 Spots on an MUI Summer Tour Kaye Derr, SartellEnbridge Tervis Mugs Joe Gorg, Pequot Lakes Peggy Dronen, Alexandria Diane Williams, Minneapolis

VOL. 27 NO. 4 9

Thank You to MUI Volunteers!Your Help Made the Annual Meeting a Success

BUS LEADERS• Wayne Anderson, Duluth• Ramona James and Jeannette Marka, Mankato• Shirley Syverson, Alexandria• Carol Cloud, Brainerd• Neomie and Dick Morris, Fergus Falls• Caroline Neale, Albert Lea• Linda and Phil Ferguson, Rochester• Cheryl and Charles Stanek, Little Falls• Lois and Douglas Hed, Eden Prairie• John Adams, Eden Prairie• Dianna Butler, Bloomington

MEETING VOLUNTEERS• Brent Brunn and Kristine Connett• Ron and Yvonne Burt• Roger and Marilyn Harma• Elwood and Dee Lofthus• Roger and Carolyn Lovik• Carl and Lee Lehmann• Paul and Ardy Randall• Gary and Kathy Reinecke• Al and Joan Sanford Thank

you!

Xcel's Solar Garden Program Passes Milestone: 40 Projects Online Xcel Energy announced that 40 community solar gardens are up and running, passing the 100-megawatt threshold for electricity production.

The Community Solar Garden program was created by the legislature and launched in 2014. It’s aimed at bringing solar energy to residents and businesses who don’t want the expense and complications of building their own solar arrays.

The program got off to a slow start, delayed by a flood of applications and disputes between Xcel and solar developers. Xcel had once projected that 200 megawatts of solar garden power would be online by the end of 2016. Instead, only around 50 megawatts were running. (A megawatt is one million watts).

But an increasing number of community solar gardens have been switched on this year. Xcel says 139 megawatts of power are online. Projects generating up to 200 more megawatts could be completed by 2017’s end.

Nearly 180 community solar garden projects are in the design and construction phase, the company says, and they will continue rolling out in 2018. The state’s solar garden program, which is exclusive to Xcel’s Minnesota territory, is the largest of its kind in the country.

“This is a significant moment for the solar industry,” Chris Clark, Xcel’s president for Minnesota, said in a press statement. “We are well on our way to delivering a third of our energy from renewables by 2030, and solar plays a role in achieving that ambitious goal.”

Wind power by far provides the bulk of Xcel’s renewable energy, but solar is growing. Aside from the solar garden program, the Minneapolis-based company is getting power in Minnesota from three large solar projects, two of which each deliver 100 megawatts, while a third puts out 62 megawatts.

SOURCE: Star Tribune, Mike Hughlett, October 4, 2017

News Briefs

Older Wind Turbines Eyeing Surgery to Extend Lifespans Even for wind farms, middle age is a time for nips, tucks and sometimes replacement surgery. At least 600 megawatts of U.S. wind farms have already undergone significant upgrades, primarily in California, and NextEra Energy Inc., the largest producer of North American wind power, said Thursday it expects to invest as much as $3 billion to upgrade or replace aging turbines at operating power plants through 2020.

It’s part of an expected wave of refurbishments, which the wind industry calls “repowerings,” that may affect as much as 30 percent of the country’s wind farms in the next three years, according to Bloomberg New Energy Finance. Almost 10 gigawatts of turbines — about 12 percent of the country’s installed capacity — were 10 years to 20 years old at the end of last year, the age when owners start to think about replacing them.

The idea that wind farms only have 20-year useful lives “is ridiculous,” Mark Goodwin, president of the Charlottesville, Virginia-based developer Apex Clean Energy Inc., said during a panel discussion Thursday at the AWEA Wind Energy Finance & Investment conference in New York.

Warren Buffett’s MidAmerican Energy Co. said last month that it would upgrade hundreds of older turbines at power plants in Iowa.

Another 14 gigawatts of operating wind farms will reach their 10th birthday by the end of next year, said Alex Morgan, a New York-based analyst at BNEF. That’s when they reach the “sweet spot for retrofits,” she said Thursday.

The reasons aren’t limited to age and health. Newer turbines produce more electricity than older models, so owners can downsize their power plants without reducing electricity output. And these jobs are sometimes easier than building new wind farms because power lines and permits are usually already in place.

U.S. subsidies may be a key motivation. The federal production tax credit is being phased out over the next several years, and wind farms that already receive the subsidy can qualify again if repowered after 10 years.Repowering projects that began last year can capture the full credit if work is completed by 2020.

“That’s why everyone is rushing to do it,” Morgan said.

SOURCE: Bloomberg New Energy Finance, Brian Eckhouse, October 26, 2017

In your INTERESTDECEMBER 201710

Thanks to All Who Completed Our Recent Member Survey at Our Fall Meetings Some of the results:96% Voted in the Last General Election94% Retired/Semi-Retired

We are reviewing all of the feedback and will take it into consideration for 2018.

Thank you!

News Briefs

Energy Storage Mandate: The electric industry is rapidly evolving and there is more and more discussion and enthusiasm about energy storage. Minnesota’s utility companies are developing and testing various types of “storage” initiatives that could work on their individual systems. They are also closely monitoring what other utilities are doing in other parts of the United States. What is the purpose of forcing Minnesota utilities to purchase more, untested storage before it is ready or needed?

With all that AND the campaign season for the Governor’s race and the MN House—2018 promises to be an interesting year! Stay Tuned! G

2018 Legislative Session cont. from cover

Otter Tail Power Company Wants to Construct Electricity Plant Otter Tail Power Company wants permission from South Dakota regulators to construct an electricity production plant in Deuel County. The 250-megawatt facility known as Astoria Station would be in Scandinavia Township on the north side of SD Hwy 28. The site is 1.5 miles northwest of Astoria and four miles east of Toronto. Natural gas from the Northern Border pipeline that runs through the company’s recently acquired property would be used to generate the electricity.Otter Tail estimated construction to cost about $165 million. The company expects the plant to be in service by May 2021.

The Public Utilities Commission set Nov. 27 for a public input meeting at 5:30 p.m. MST in Toronto at Deubrook Elementary School gymnasium at 695 Palisades Ave.

One megawatt can supply up to 1,000 residences at times of average demand. Natural gas provides flexibility to respond to hourly and daily changes in demand. The commission received Otter Tail’s application Oct. 5. The company described Astoria Station as a “least-cost” approach.

Otter Tail plans to replace capacity-purchase agreements that are expiring and also close its 1950s era coal-fired 150-megawatt Hoot Lake plant near the company’s headquarters of Fergus Falls, Minn. Astoria Station would tie into a new switching station that Otter Tail and Northern States Power want to build as part of a transmission network. Otter Tail also intends to add 150 megawatts of electricity from wind production near Merricourt, N.D., according to the application. SOURCE: Rapid City Journal, Bob Mercer, October 12, 2017

ALLETE Clean Energy Earns Yellow Ribbon Designation ALLETE Clean Energy, an ALLETE Inc. company, is proud to announce it has earned a Yellow Ribbon designation from the state of Minnesota. Overseen by the Minnesota Department of Military Affairs, the Beyond the Yellow Ribbon program supports service members, veterans and their families by connecting them with career counseling, professional development and employment resources. The Yellow Ribbon program is a sister program to Employer Support of the Guard and Reserve, a Department of Defense program established to promote cooperation between service members and their civilian employees.

To earn a Yellow Ribbon designation from the Department of Military Affairs, companies must build relationships with local military leaders, identify which employees have military connections and commit to hiring, supporting and retaining veterans. The designation recognizes companies that honor military-connected employees and their families, and streamline their access to resources.

"Becoming the first clean energy independent power producer and developer to be recognized as a Yellow Ribbon company illustrates ALLETE Clean Energy's commitment to our military-connected employees, their families and the communities in which we operate," said ALLETE Clean Energy President Al Rudeck. "Military employees exemplify hard work, dedication and a commitment to excellence that we all benefit from. I thank all of our employees for their dedication to fulfilling their dual role of military and civilian missions."

VOL. 27 NO. 4 11

Accolades

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

members who have renewed between August 22, 2017 – November 8, 2017. 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.

WANT TO BE INCLUDED? JOIN TODAY! An application and our most recent member offer is featured on the back page.

MINNESOTA: Al and Joyce Anderson, August and Ann Stoffel, Brenda and Dave Fussy, Darrell Iverson, Dave and Karen Ostlie, David and Lisa Olson, Ed and Larie Ann Schmidt, Garth and Marie Meschke, Jackie Schmidt, Jeanette Marka, Jim Chapple, John and Susan Thera, John Guderian, Julie Alsworth and Erika Johnson, Larry and JoAnne Olson, Mary and Dan Kelly, Mary Milton, Merlin and Alfrieda Dornbush, Nicolette Noltimier, Paula and Larry Kaiser, Ramona James, Richard Herwig, Sandra Chase, Shawn and Cathy Wendlandt, Steve Norgaard, William Jacobson and Nancy Thill.

Accolades to Recent MUI Dues-Paying Members

News Briefs

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

Email: mui@mnutilityinvestors.org www.mnutilityinvestors.org

President: Annette P. Henkel Office Manager: Lana Leonard Membership & Marketing Manager: Heidi Hickey

The Cass Gilbert Building 413 Wacouta Street, Suite 230 St. Paul, MN 55101

How to Join Complete this form and return with a check (make payable to MUI) or call us to pay with a credit card at 651-227-7902 or 1-888-850-5171.

NAME

SPOUSE’S NAME (IF APPLICABLE)

ADDRESS

CITY STATE ZIP

PHONE EMAIL

TO JOIN simply complete this form and return with payment. Or call MUI at 1-888-850-5171 or 651-227-7902.

Start Your 2018 with MORE!More Information—More Opportunities—Supporting Membership Matters—Join Today!

Our Supporting Members are Informed, Involved, and Engaged Investors.

2018 Opportunities for Supporting MembersJoin now to take advantage of the following:• FREE Report on Statistical Data on

Selected Energy Utilities (join now and the 2018 edition will be included in your March Newsletter!)

• Opportunity to go on Spring Energy Tours

• Free Entry to Summer & Fall Member Meetings (a $40 value per couple per meeting!)

Exclusive entry into Supporting Member drawings which include:• Spring Drawing for

Exclusive Tour reservations

• Entry into Annual Meeting Exclusive Drawings

Membership QualificationI have investments in the one or more of these Minnesota Investor-Owned Energy Utilities: (Check all that apply)

ALLETE

CenterPoint Energy

MDU Resources Group

Otter Tail Corporation

WEC Energy Group

Xcel Energy

Member DuesTwo people per household included per membership. (Select one)

Annual Membership ($20)

3-year Membership ($50)*

*3-year Membership GiftThose that select 3-year Membership earn a free gift. (Select one)

MUI Collapsible Tote

MUI Umbrella

Please Mail to: Minnesota Utility Investors413 Wacouta Street, Suite 230 St. Paul, MN 55101

Great 3-year membership gifts!

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