Commitments, Guarantees and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Estimated Minimum Annual Payments for Certain Long-Term Commitments [Table Text Block]

The following table details the estimated minimum payments for certain long-term commitments:



As of December 31, 2019
Millions	2020		2021		2022		2023		2024		Thereafter
Capital Purchase Obligations		$292.7	—		—		—		—		—
Easements (a)		$5.0		$5.3		$5.4		$5.5		$5.5		$170.4
PPAs (b)		$113.0		$122.5		$145.5		$145.6		$138.5		$1,386.7
Other Purchase Obligations (c)		$22.8		$9.6	—		—		—			$0.1


(a)	Easement obligations represent the minimum payments for our land easement agreements at our wind energy facilities.


(b)	Does not include the agreement with Manitoba Hydro expiring in 2022, as this contract is for surplus energy only; Oliver Wind I and Oliver Wind II, as Minnesota Power only pays for energy as it is delivered; and the agreement with Nobles 2 commencing in 2020 as it is subject to construction of a wind energy facility. (See Power Purchase Agreements.)

(c)

Consists of long-term service agreements for wind energy facilities and minimum purchase commitments under coal and rail contracts.

Minnesota Power has also entered into the following PSAs for the sale of capacity and energy as of December 31, 2019:



Counterparty	Quantity	Product	Commencement	Expiration	Pricing
PSAs
Basin
PSA 1	100 MW	Capacity / Energy	May 2010	April 2020	(a)
PSA 2	(b)	Capacity	June 2022	May 2025	Fixed
PSA 3	100 MW	Capacity	June 2025	May 2028	Fixed
Minnkota Power	(c)	Capacity / Energy	June 2014	December 2026	(c)
Oconto Electric Cooperative	25 MW	Capacity / Energy	January 2019	May 2026	Fixed
Silver Bay Power	(d)	Energy	January 2017	December 2031	(e)


(a)	The capacity charge is based on a fixed monthly schedule with a minimum annual escalation provision. The energy charge is based on a fixed monthly schedule and provides for annual escalation based on the cost of fuel. The agreement also allows Minnesota Power to recover a pro rata share of increased costs related to emissions that occur during the last five years of the contract.


(b)	The agreement provides for 75 MW of capacity from June 1, 2022, through May 31, 2023, and increases to 125 MW of capacity from June 1, 2023, through May 31, 2025.

(c)

Minnesota Power is selling a portion of its entitlement from Square Butte to Minnkota Power, resulting in Minnkota Power’s net entitlement increasing and Minnesota Power’s net entitlement decreasing until Minnesota Power’s share is eliminated at the end of 2025. Of Minnesota Power’s 50 percent output entitlement, it sold to Minnkota Power approximately 28 percent in 2019 (28 percent in 2018 and in 2017). (See Square Butte PPA.)

(d)

Silver Bay Power supplies approximately 90 MW of load to Northshore Mining, an affiliate of Silver Bay Power, which has been served predominately through self-generation by Silver Bay Power. Minnesota Power supplied Silver Bay Power with at least 50 MW of energy and Silver Bay Power had the option to purchase additional energy from Minnesota Power as it transitioned away from self-generation. In the third quarter of 2019, Silver Bay Power ceased self-generation and Minnesota Power began supplying the full energy requirements for Silver Bay Power.

(e)

The energy pricing was fixed through 2019 with pricing in later years escalating at a fixed rate annually and adjusted for changes in a natural gas index.

Minnesota Power has also entered into the following PPAs for the purchase of capacity and energy as of December 31, 2019:



Counterparty	Quantity	Product	Commencement	Expiration	Pricing
PPAs
Calpine Corporation	25 MW	Capacity	June 2019	May 2026	Fixed
Great River Energy
PPA 1	50 MW	Capacity / Energy	June 2016	May 2020	(a)
PPA 2	50 MW	Capacity	June 2016	May 2020	Fixed
PPA 3	50 MW	Capacity	June 2017	May 2020	Fixed
Manitoba Hydro
PPA 1	(b)	Energy	May 2011	April 2022	Forward Market Prices
PPA 2	50 MW	Capacity / Energy	June 2015	May 2020	(c)
PPA 3	50 MW	Capacity	June 2017	May 2020	Fixed
PPA 4 (d)	250 MW	Capacity / Energy	June 2020	May 2035	(e)
PPA 5 (d)	133 MW	Energy	(f)	(f)	Forward Market Prices
Minnkota Power	50 MW	Capacity / Energy	June 2016	May 2020	(g)
Nobles 2 (h)	(h)	Capacity / Energy	(h)	(h)	Fixed
Oliver Wind I	(i)	Energy	December 2006	December 2040	Fixed
Oliver Wind II	(i)	Energy	December 2007	December 2040	Fixed


(a)	The capacity price is fixed and the energy price is based on a formula that includes an annual fixed price component adjusted for changes in a natural gas index, as well as market prices.


(b)	The energy purchased consists primarily of surplus hydro energy on Manitoba Hydro's system and is delivered on a non-firm basis. Minnesota Power will purchase at least one million MWh of energy over the contract term.


(c)	The capacity and energy prices are adjusted annually by the change in a governmental inflationary index.


(d)	Agreements are subject to the construction of the GNTL and MMTP. (See Great Northern Transmission Line.)


(e)	The capacity price is adjusted annually until 2020 by the change in a governmental inflationary index. The energy price is based on a formula that includes an annual fixed component adjusted for the change in a governmental inflationary index and a natural gas index, as well as market prices.


(f)	The contract term will be the 20-year period beginning on the in-service date for the GNTL. (See Great Northern Transmission Line.)


(g)	The agreement includes a fixed capacity charge and energy prices that escalate at a fixed rate annually over the term.


(h)	The PPA provides for the purchase of all output from a 250 MW wind energy facility to be constructed in southwest Minnesota for 20 years beginning upon commercial operation of the wind energy facility which is currently expected in fourth quarter of 2020. (See Note 4. Regulatory Matters and Note 5. Equity Investments.)


(i)	The PPAs provide for the purchase of all output from the 50 MW Oliver Wind I and 48 MW Oliver Wind II wind energy facilities.