FORM 10-K
33
MDU RESOURCES G ROUP, INC.
In September 2005, Montana-Dakota entered into a contract for seasonal capacity from a neighboring utility, starting at 85 MW in 2007,
increasing to 105 MW in 2011, with an option for capacity in 2012. In April 2007, Montana-Dakota entered into an additional contract for
seasonal capacity of 10 MW in May through October of each year continuing through 2010. Energy also will be purchased as needed from
the Midwest ISO market. In 2007, Montana-Dakota purchased approximately 13 percent of its kWh needs for its interconnected system
through the Midwest ISO market.
The following table sets forth details applicable to the Company's electric generating stations:
2007 Net
Nameplate
Summer
Generation
Rating
Capability
(kWh in
Generating Station
Type
(kW)
(kW)
thousands)
North Dakota:
Coyote*
Steam
103,647
106,750
750,670
Heskett
Steam
86,000
103,260
618,431
Williston
Combustion Turbine
7,800
9,600
(5)**
South Dakota:
Big Stone*
Steam
94,111
105,950
554,967
Montana:
Lewis & Clark
Steam
44,000
52,300
314,672
Glendive
Combustion Turbine
77,347
78,900
12,477
Miles City
Combustion Turbine
23,150
22,300
2,623
Diamond Willow
Wind
19,500
4,300***
16
455,555
483,360
2,253,851
* Reflects Montana-Dakota's ownership interest.
** Station use, to meet MAPP's accreditation requirements, exceeded generation.
***Pending accreditation.
Virtually all of the current fuel requirements of the Coyote, Heskett and Lewis & Clark stations are met with coal supplied by
subsidiaries of Westmoreland. Contracts with Westmoreland for the Coyote, Heskett and Lewis & Clark stations expire in May 2016,
April 2011 and December 2012, respectively. The Coyote coal supply agreement provides for the purchase of coal necessary to supply
the coal requirements of the Coyote Station or 30,000 tons per week, whichever may be the greater quantity at contracted pricing. The
maximum quantity of coal during the term of the agreement, and any extension, is 75 million tons. The Heskett and Lewis & Clark coal
supply agreements provide for the purchase of coal necessary to supply the coal requirements of these stations at contracted pricing.
Montana-Dakota estimates the Heskett and Lewis & Clark coal requirement to be in the range of 500,000 to 600,000 tons, and 250,000
to 350,000 tons per contract year, respectively.
A coal supply agreement, entered into in August 2007 with Kennecott, meets the majority of the Big Stone Station's fuel requirements for
the years 2008 to 2010 at contracted pricing. The Kennecott agreement provides for the purchase of 2.1 million, 1.8 million and 1.0 million
tons of coal in 2008, 2009 and 2010, respectively.
During the years ended December 31, 2005, through December 31, 2007, the average cost of coal purchased, including freight at
Montana-Dakota's electric generating stations (including the Big Stone and Coyote stations) was as follows:
Years Ended December 31,
2007
2006
2005
Average cost of coal per MMBtu
$ 1.29
$ 1.26
$ 1.14
Average cost of coal per ton
$18.71
$18.48
$17.01
The maximum electric peak demand experienced to date attributable to sales to retail customers on the interconnected system was
525,643 kW in July 2007. Montana-Dakota's latest forecast for its interconnected system indicates that its annual peak will continue to
occur during the summer and the peak demand growth rate through 2013 will approximate less than 1 percent annually.
Montana-Dakota expects that it has adequate capacity available through existing baseload generating stations, wind-powered generation,
turbine peaking stations and firm contracts to meet the peak demand requirements of its customers through 2012. Future capacity that is
needed to replace contracts and meet system growth requirements is expected to be met by constructing new generation resources or
acquiring additional capacity through power contracts. For additional information regarding potential power generation projects, see Item 7
-- MD&A -- Prospective Information -- Electric.
Montana-Dakota has major interconnections with its neighboring utilities and considers these interconnections adequate for coordinated
planning, emergency assistance, exchange of capacity and energy and power supply reliability.
