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<SEC-DOCUMENT>0000898080-05-000115.txt : 20050224
<SEC-HEADER>0000898080-05-000115.hdr.sgml : 20050224
<ACCEPTANCE-DATETIME>20050224153054
ACCESSION NUMBER:		0000898080-05-000115
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20050217
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20050224
DATE AS OF CHANGE:		20050224

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MDU RESOURCES GROUP INC
		CENTRAL INDEX KEY:			0000067716
		STANDARD INDUSTRIAL CLASSIFICATION:	MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400]
		IRS NUMBER:				410423660
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-03480
		FILM NUMBER:		05637357

	BUSINESS ADDRESS:	
		STREET 1:		918 EAST DIVIDE AVENUE
		CITY:			BISMARCK
		STATE:			ND
		ZIP:			58506-5650
		BUSINESS PHONE:		7012227900

	MAIL ADDRESS:	
		STREET 1:		918 EAST DIVIDE AVENUE
		CITY:			BISMARCK
		STATE:			ND
		ZIP:			58506-5650

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MONTANA DAKOTA UTILITIES CO
		DATE OF NAME CHANGE:	19850429
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8k.txt
<DESCRIPTION>CURRENT REPORT ON FORM 8-K
<TEXT>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported): February 17, 2005

                            MDU Resources Group, Inc.

             (Exact name of registrant as specified in its charter)

          Delaware                       1-3480                  41-0423660
(State or other jurisdiction           (Commission            (I.R.S. Employer
      of incorporation)               File Number)          Identification No.)

                               Schuchart Building
                             918 East Divide Avenue
                                  P.O. Box 5650
                        Bismarck, North Dakota 58506-5650
                    (Address of principal executive offices)
                                   (Zip Code)



Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
    (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
    Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
    Exchange Act (17 CFR 240.13e-4(c))


<PAGE>

ITEM 1.01    ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Short-Term Incentive Compensation
- ---------------------------------

2004
- ----

On February 15, 2005, the Compensation Commmittee (the "Committee") of the Board
of Directors (the "Board") of MDU Resources Group, Inc. (the "Company") approved
the payment of annual awards under the existing executive incentive compensation
plans with respect to 2004. On February 17, 2005, the Board approved the
payments. Award payments made in 2004 pursuant to the existing executive
incentive compensation plans to those executive officers who will be named
executive officers in the proxy statement for the 2005 Annual Meeting of
Stockholders (the "NEOs") is contained in the Executive Incentive Compensation
Plan 2004 NEO Payment Chart which is attached hereto as Exhibit 10.2 and
incorporated herein by reference.

The terms of the executive incentive compensation plans provide for annual cash
incentive awards based upon achievement of annual performance measures with a
threshold, target and maximum level. A target incentive award is established
based upon the position level and actual base salary, or in the Committee's
discretion, the assigned salary grade market value. Actual payment may range
from zero to 200% of the target based upon achievement of corporate goals and
individual performance.

Participants who retire, die or become disabled during the year remain eligible
to receive an award. Subject to the Committee's discretion, participants who
terminate employment for other reasons are not eligible for an award. The
Committee has full discretion to determine the extent to which goals have been
achieved, the payment level, whether any final payment will be made and whether
to adjust awards.

The performance goals for 2004 under the MDU Resources Group, Inc. Executive
Incentive Compensation Plan (the "MDU EICP"), which applies to Mr. White and Mr.
Robinson, were (i) budgeted earnings per share achieved (weighted 75%) and (ii)
budgeted return on invested capital achieved (weighted 25%). Achievement of
budgeted levels of earnings per share and return on invested capital would
result in a potential award of 100% of the target amount. Achievement of less
than 85% would result in no payment, while achievement of 114% would result in a
payment of 200% of the target amount. The goals were met at near maximum level
($1.76 EPS, 9.4% ROIC) and resulted in a potential payment of 194.7% of the
target amount. The Committee then used its discretion and adjusted Mr.
Robinson's payment percentage as reflected in the chart.

Mr. Tipton, the retired Chief Executive Officer of Montana-Dakota Utilities Co.
and Great Plains Natural Gas Co., received his award pursuant to the
Montana-Dakota Utilities Co. Executive Incentive Compensation Plan, based upon
(i) business units actual earnings per allocated share as a percentage of
planned earnings per allocated share (weighted 75%) and (ii) business units
actual return on invested capital as a percentage of planned return on invested
capital (weighted 25%). The target amounts were: Montana-Dakota Utilities ($0.61
EPS, 6.42% ROIC), weighted 66% and Utility Services, Inc. ($1.97 EPS and 7.27%
ROIC), weighted 34%. Mr. Tipton's award was earned at 100.3% of target for the
Montana-Dakota Utilities Co. portion and 0% of target for the Utility Services,
Inc. portion and resulted in a potential payment of 67.3% of the target amount.
The Committee then used its discretion and adjusted Mr. Tipton's payment
percentage as reflected in the chart.

Mr. Castleberry received his award pursuant to the WBI Holdings, Inc. Executive
Incentive Compensation Plan, based upon (i) actual earnings per allocated share
as a percentage of planned earnings per allocated share (weighted 75%) and (ii)
actual return on invested capital as a percentage of planned


                                        2
<PAGE>


return on invested capital (weighted 25%) for WBI Holdings, Inc. ($2.37 EPS,
11.42% ROIC). Mr. Castleberry's award was earned at 114% of target on a weighted
basis and resulted in a potential payment of 200% of the target amount. No
adjustment was made by the Committee.

Mr. Hildestad received his award pursuant to the Knife River Corporation
Executive Incentive Compensation Plan, based upon (i) actual earnings per
allocated share as a percentage of planned earnings per allocated share
(weighted 75%) and (ii) actual return on invested capital as a percentage of
planned return on invested capital (weighted 25%) for Knife River Corporation.
The target amounts were $1.21 EPS and 6.95% ROIC. His award was earned at 92.6%
of target on a weighted basis and resulted in a potential payment of 69.1% of
the target amount. No adjustment was made by the Committee.

Mr. Gatzemeier received his award based upon (i) actual return on invested
capital (weighted 25%) and earnings per allocated share (weighted 37.5%), in
each case compared to planned return on invested capital and planned earnings
per allocated share for Centennial Power and Centennial Energy Resources
International of 5.55% and $1.64, and 21.36% and $5.94, respectively; and (ii)
corporate growth goals for acquisition of additional capacity in domestic
projects (weighted 25%) and a feasibility study for international development
projects (weighted 12.5%). Based on his performance with respect to these
targets, the award was earned at 100% of target and resulted in a potential
payment of 100% of the target amount. The Committee then used its discretion and
adjusted Mr. Gatzemeier's payment percentage as reflected in the chart.


2005
- ----

On November 9, 2004 and February 15, 2005, the Committee established 2005 annual
award opportunities for the NEOs. The Board approved the award opportunities at
its meetings on November 11, 2004 and February 17, 2005. Attached hereto as
Exhibit 10.3 and incorporated herein by reference is the 2005 NEO Annual Award
Opportunity Chart.

The terms of the executive incentive compensation plans, which apply to Mr.
Castleberry and Mr. Hildestad, provide for annual cash incentive awards based
upon achievement of annual performance measures with a threshold, target and
maximum level. A target incentive award is established based upon the position
level and actual base salary, or in the Committee's discretion, the assigned
salary grade market value. Actual payment may range from zero to 200% of the
target based upon achievement of corporate goals and individual performance.

Participants who retire, die or become disabled during the year remain eligible
to receive an award. Subject to the Committee's discretion, participants who
terminate employment for other reasons are not eligible for an award. The
Committee has full discretion to determine the extent to which goals have been
achieved, the payment level, whether any final payment will be made and whether
to adjust awards.

Mr. Castleberry's 2005 award is pursuant to the WBI Holdings, Inc. Executive
Incentive Compensation Plan, based upon (i) actual earnings per allocated share
(weighted 75%) and (ii) actual return on invested capital (weighted 25%),
expressed as a percentage of targeted earnings per allocated share and return on
invested capital, for WBI Holdings, Inc. Achievement of targeted levels of
earnings per allocated share and return on invested capital would result in a
potential award of 100% of the target amount. Achievement of less than 85% would
result in no payment, while achievement of 114% would result in a payment of
200% of the target amount. Actual payment will be equal to 95% of the potential
amount plus up to 5% based on achievement of company-wide safety related goals.


                                        3
<PAGE>

Mr. Hildestad's 2005 award is pursuant to the Knife River Corporation Executive
Incentive Compensation Plan, based upon (i) actual earnings per allocated share
as a percentage of planned earnings per allocated share (weighted 75%) and (ii)
return on invested capital as a percentage of planned return on invested capital
(weighted 25%). Achievement of budgeted levels of earnings per allocated share
and return on invested capital would result in a potential award of 100% of the
target amount. Achievement of less than 80% would result in no payment, while
achievement of 120% would result in a payment of 200% of the target amount.

Mr. Gatzemeier's 2005 award is based upon a combination of (i) actual return on
invested capital (weighted 25%) and (ii) actual earnings per allocated share
(weighted 75%) expressed as a percentage of budgeted earnings per allocated
share and return on invested capital, with respect to Centennial Energy
Resources LLC. Achievement of budgeted levels of earnings per allocated share
and return on invested capital would result in a potential award of 100% of the
target amount. Achievement of less than 90% would result in no payment, while
achievement of 110% would result in a payment of 200% of the target amount.

Mr. White's and Mr. Robinson's 2005 awards were made pursuant to the 1997
Executive Long-Term Incentive Plan. The performance goals for 2005 for Mr. White
and Mr. Robinson are (i) budgeted earnings per share achieved (weighted 75%) and
(ii) budgeted return on invested capital achieved (weighted 25%), with respect
to the Company. Achievement of budgeted levels of earnings per share and return
on invested capital would result in a potential award of 100% of the target
amount. Achievement of less than 85% would result in no payment, while
achievement of 114% would result in a payment of 200% of the target amount.

Named Executive Officer Base Compensation
- -----------------------------------------

On November 9, 2004, the Committee approved new base compensation, effective
January 1, 2005, for executive officers of MDU Resources Group, Inc. The Board
approved the new base compensation on November 11, 2004. Base compensation for
the NEOs is contained in the NEO 2005 Base Compensation Table, which is attached
hereto as Exhibit 10.1 and incorporated herein by reference.

Amendment of Plan
- -----------------
On February 17, 2005, the Board amended the 1997 Executive Long-Term Incentive
Plan to reduce the aggregate number of shares that may be issued under the plan
from 8,625,581 to 6,625,581.


                                       4
<PAGE>

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS

   (c) Exhibits.

     Exhibit Number Description of Exhibit

     10.1           MDU Resources Group, Inc. NEO 2005 Base Compensation Table

     10.2           MDU Resources Group, Inc. Executive Incentive Compensation
                    Plan 2004 NEO Payment Chart

     10.3           MDU Resources Group, Inc. 2005 NEO Annual Award Opportunity
                    Chart

     10.4           WBI Holdings, Inc. Executive Incentive Compensation Plan

     10.5           Knife River Corporation Executive Incentive Compensation
                    Plan


                                       5
<PAGE>

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Date:  February 24, 2005

                                         MDU Resources Group, Inc.

                                         By:   /s/  Vernon A. Raile
                                              -------------------------------
                                              Vernon A. Raile
                                              Senior Vice President
                                              and Chief Accounting Officer


                                       6
<PAGE>

                                  EXHIBIT INDEX

     Exhibit Number Description of Exhibit

     10.1           MDU Resources Group, Inc. NEO 2005 Base Compensation Table

     10.2           MDU Resources Group, Inc. Executive Incentive Compensation
                    Plan 2004 NEO Payment Chart

     10.3           MDU Resources Group, Inc. 2005 NEO Annual Award Opportunity
                    Chart

     10.4           WBI Holdings, Inc. Executive Incentive Compensation Plan

     10.5           Knife River Corporation Executive Incentive Compensation
                    Plan
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex10-1.txt
<DESCRIPTION>COMPENSATION TABLE
<TEXT>
                                                                    Exhibit 10.1

                            MDU Resources Group, Inc.
                        NEO 2005 Base Compensation Table

                                               Current Base         New Base
Name                  Title                  Compensation ($)   Compensation ($)
- ----                  -----                  ----------------   ----------------

Martin A. White       Chairman of the            650,000            700,000
                      Board, President and
                      Chief Executive
                      Officer

Warren L. Robinson    Executive Vice             350,000            370,000
                      President and Chief
                      Financial Officer

John K. Castleberry   President and Chief        350,000            370,000
                      Executive Officer,
                      WBI Holdings, Inc.

Terry D. Hildestad    President and Chief        350,000            370,000
                      Executive Officer,
                      Knife River
                      Corporation

Paul E. Gatzemeier    President and Chief        245,000            285,000
                      Executive Officer,
                      Centennial Energy
                      Resources LLC
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>ex10-2.txt
<DESCRIPTION>2004 NEO PAYMENT CHART
<TEXT>
                                                                    Exhibit 10.2

                            MDU Resources Group, Inc.
                      Executive Incentive Compensation Plan
                             2004 NEO Payment Chart

<TABLE>
<CAPTION>
Name                     Title                               Payment($)        % of Target
- ----                     -----                               ----------        -----------

<S>                      <C>                              <C>                    <C>
Martin A. White          Chairman of the Board,           $  1,265,550           194.7%
                         President and Chief Executive
                         Officer

Ronald D. Tipton         Retired Chief Executive               152,460            87.1
                         Officer of Montana-Dakota
                         Utilities Co. and Great Plains
                         Natural Gas Co.

Warren L. Robinson       Executive Vice President and          350,000             200
                         Chief Financial Officer

John K. Castleberry      President and Chief Executive         350,000             200
                         Officer, WBI Holdings, Inc.

Terry D. Hildestad       President and Chief Executive         120,925            69.1
                         Officer, Knife River
                         Corporation

Paul E. Gatzemeier       President and Chief Executive         257,250             175
                         Officer, Centennial Energy
                         Resources LLC
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>ex10-3.txt
<DESCRIPTION>2005 AWARD OPPORTUNITY CHART
<TEXT>
                                                                    Exhibit 10.3


                            MDU Resources Group, Inc.
                     2005 NEO Annual Award Opportunity Chart


<TABLE>
<CAPTION>
                                            1/1/2005
                                              Base
Name               Title                  Compensation     Threshold ($)   Target ($)   Maximum ($)
- ----               -----                  ------------     -------------   ----------   -----------

<S>                <C>                  <C>                   <C>           <C>         <C>
Martin A. White    Chairman of the      $   700,000  100%     70,000        700,000     1,400,000
                   Board, President
                   and Chief
                   Executive Officer

Warren L.          Executive Vice       $   370,000   50%     18,500        185,000       370,000
Robinson           President and
                   Chief Financial
                   Officer

John K.            President and        $   370,000   50%     46,250        185,000       370,000
Castleberry        Chief Executive
                   Officer, WBI
                   Holdings, Inc.

Terry D.           President and        $   370,000   50%     46,250        185,000       370,000
Hildestad          Chief Executive
                   Officer, Knife
                   River Corporation

Paul E.            President and        $   285,000   50%     14,250        142,500       285,000
Gatzemeier         Chief Executive
                   Officer,
                   Centennial Energy
                   Resources LLC
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>ex10-4.txt
<DESCRIPTION>WBI EICP
<TEXT>
                                                                    Exhibit 10.4

                               WBI Holdings, Inc.
                      Executive Incentive Compensation Plan


<PAGE>

                                                                    Exhibit 10.4

                                WBI HOLDINGS, INC

                      EXECUTIVE INCENTIVE COMPENSATION PLAN

          ------------------------------------------------------------

I. PURPOSE

     The purpose of the Executive Incentive Compensation Plan (the "Plan") is to
provide an incentive for key executives of WBI Holdings, Inc. and any
subsidiaries participating in the Plan (the "Company") to focus their efforts on
the achievement of challenging and demanding corporate objectives. The Plan is
designed to reward successful corporate performance as measured against
specified performance goals as well as exceptional individual performance. When
corporate performance reaches or exceeds the performance targets and individual
performance is exemplary, incentive compensation awards, in conjunction with
salaries, will provide a level of compensation which recognizes the skills and
efforts of the key executives.

II. BASIC PLAN CONCEPT

     The Plan provides an opportunity to earn annual incentive compensation
based on the achievement of specified annual performance objectives. A target
incentive award for each individual within the Plan is established based on the
position level and actual base salary, provided, however, that the Compensation
Committee of the Board of Directors (the "Committee") in its sole discretion,
may, instead of actual base salary, use the assigned salary grade market value
(midpoint) ("Salary"). The target incentive award represents the amount to be
paid, subject to the achievement of the performance objective targets
established each year. Larger incentive awards than target may be authorized
when performance exceeds targets; lesser or no amounts may be paid when
performance is below target.

     It is recognized that during a Plan Year major unforeseen changes in
economic and environmental conditions or other significant factors beyond the
control of management may substantially affect the ability of the Plan
Participants to achieve the specified performance goals. Therefore, in its
review of corporate performance the Committee, in consultation with the Chief
Executive Officer of MDU Resources Group, Inc., may modify the performance
targets.


                                     WBI-1
<PAGE>

However, it is contemplated that such target modifications will be necessary
only in years of unusually adverse or favorable external conditions.

III. ADMINISTRATION

     The Plan shall be administered by the Committee with the assistance of the
President of the Company. The Committee shall approve annually, prior to the
beginning of each Plan Year, the list of eligible Participants, and the target
incentive award level for each position within the Plan. The Plan's performance
targets for the year shall be approved by the Committee no later than its
regularly scheduled February meeting during that Plan Year. The Committee shall
have final discretion to determine actual award payment levels, method of
payment, and whether or not payments shall be made for any Plan Year.

     The Board of Directors of the Company may, at any time and from time to
time, alter, amend, supersede or terminate the Plan in whole or in part,
provided that no termination, amendment or modification of the Plan shall
adversely affect in any material way an award that has met all requirements for
payment without the written consent of the Participant holding such award,
unless such termination, modification or amendment is required by applicable
law.

IV. ELIGIBILITY

     Executives who are determined by the Committee to have a key role in both
the establishment and achievement of Company objectives shall be eligible to
participate in the Plan.

     Nothing in the Plan shall interfere with or limit in any way the right of
the Company to terminate any Participant's employment at any time, for any
reason or no reason in the Company's sole discretion, or confer upon any
Participant any right to continue in the employment of the Company. No executive
shall have the right to be selected to receive an award under the Plan, or,
having been so selected, to be selected to receive a future award.

V. PLAN PERFORMANCE MEASURES

     Performance measures shall be established that consider shareholder and
customer interests. These measures shall be evaluated annually based on
achievement of specified goals.


                                     WBI-2
<PAGE>

     The performance measure reflective of shareholder's interest will be the
percentage attainment of corporate goals, as determined each year by the
Committee. This measure may be applied at the corporate level for individuals,
such as the Chief Executive Officer, or at the business unit level for
individuals whose major or sole impact is on business unit results.

     Individual performance will be assessed based on the achievement of
annually established individual objectives.

     Threshold, target and maximum award levels will be established annually for
each performance measure and business unit. The Committee will retain the right
to make all interpretations as to the actual attainment of the desired results
and will determine whether any circumstances beyond the control of management
need to be considered.

VI. TARGET INCENTIVE AWARDS

     Target incentive awards will be expressed as a percentage of each
Participant's Salary. These percentages shall vary by position and reflect
larger reward opportunity for positions having greater effect on the
establishment and accomplishment of the Company's or business unit's objectives.
An exhibit showing the target awards as a percentage of Salary for eligible
positions will be attached to this Plan at the beginning of each Plan Year.

VII. INCENTIVE FUND DETERMINATION

     The target incentive fund is the sum of the individual target incentive
awards for all eligible Participants. Once the incentive targets have been
determined by the Committee, a target incentive fund shall be established and
accrued ratably by the Company. The incentive fund and accruals may be adjusted
during the year.

     At the close of each Plan Year, the Company will prepare an analysis
showing the Company's or business unit's performance in relation to each of the
performance measures employed. This will be provided to the Committee for review
and comparison to threshold, target and maximum performance levels. In addition,
any recommendations of the President will be presented at this time. The
Committee will then determine the amount of the target incentive fund earned.


                                     WBI-3
<PAGE>

VIII. INDIVIDUAL AWARD DETERMINATION

     Each individual Participant's award will be based first upon the level of
performance achieved by the Company and secondly based upon the individual's
performance. The criteria applicable for assessing individual performance will
be established at the beginning of each Plan Year. The assessment by the
Committee, after consultation with the President, of achievement relative to the
established criteria, as determined by a percentage from 0 percent to 200
percent, will be applied to the Participant's target incentive award which has
been first adjusted for Company or business unit performance.

IX. PAYMENT OF AWARDS

     Except as provided below or as otherwise determined by the Committee, in
order to receive an award under the Plan, the Participant must remain in the
employment of the Company or business unit for the entire Plan Year. If a
Participant terminates employment with MDU Resources Group, Inc. pursuant to
Section 5.01 of the Company's Bylaws which provides for mandatory retirement for
certain officers on their 65th birthday (or terminates employment with a
subsidiary of the Company pursuant to a similar subsidiary Bylaw provision) and
if the Participant's 65th birthday occurs during the Plan Year, determination of
whether the performance measures have been met will be made at the end of the
Plan Year, and to the extent met, payment of the award will be made to the
Participant, prorated. Proration of awards shall be based upon the number of
full months elapsed from and including January to and including the month in
which the Participant's 65th birthday occurs.

     An individual Participant who transfers between the Company and business
units may receive a prorated award at the discretion of the Committee. Payments
made under this Plan will not be considered part of compensation for pension
purposes. Payments when made will be in cash. Incentive awards may be deferred
if the appropriate elections have been executed prior to the end of the Plan
Year. Deferred amounts will accrue interest at a rate determined annually by the
Committee.

     In the event of a "Change in Control" (as defined by the Committee in its
Rules and Regulations) then any award deferred by each Participant shall become
immediately payable to the Participant in cash, together with accrued interest
thereon to the date of payment. In the


                                     WBI-4
<PAGE>

event the Participant files suit to collect the Participant's deferred award
then all of the court costs, other expenses of litigation, and attorneys' fees
shall be paid by the Company in the event the Participant prevails upon any of
the Participant's claims for payment of a deferred award.

- -------------------------

Plan adopted October 15, 1985
Plan amended November 4, 1986
Plan amended July 9, 1996, effective January 1, 1996
Plan amended November 8, 1996, effective January 1, 1997
Plan amended August 5, 1999, effective January 1, 1999
Plan amended November 8, 2001, effective January 1, 2001
Plan amended by Written Consent February 25, 2002, effective January 1, 2002
Plan amended by Written Consent November 17, 2003, effective January 1, 2003
Plan amended by Written Consent August 24, 2004, effective January 1, 2004, per
  Written Consent dated December 29, 2004


                                     WBI-5
<PAGE>

                               WBI HOLDINGS, INC.

                      EXECUTIVE INCENTIVE COMPENSATION PLAN

                              RULES AND REGULATIONS


     The Board of Directors of WBI Holdings, Inc. (formerly known as Williston
Basin Interstate Pipeline Company) (the "Company") hereby amends the Rules and
Regulations for the administration of the Executive Incentive Compensation Plan
(the "Plan") and the Plan first adopted at a Board of Directors meeting of the
Company on October 15, 1985.

I. DEFINITIONS

     The following definitions shall be used for purposes of these Rules and
Regulations and for the purpose of administering the Plan:

     1.   The "Company" shall refer to WBI Holdings, Inc. and any subsidiaries
          participating in the Plan. No member of the Committee shall
          participate in a decision as to the member's own eligibility for, or
          award of, an incentive award payment.

     2.   "Participants" for any Plan Year shall be those executives who have
          been approved by the Compensation Committee as eligible for
          participation in the Plan for such Plan Year.

     3.   "Payment Date" shall be the date set by the Compensation Committee for
          payment of awards, other than those awards deferred pursuant to
          Section IX of the Plan and Section VII of these Rules and Regulations.

     4.   The "Plan" shall refer to the Executive Incentive Compensation Plan.

     5.   The "Plan Year" shall be the calendar year.

     6.   "Change in Control" shall mean the earliest of the following to occur:
          (a) the sale or other disposition of all or substantially all of the
          assets of the Company, other than to a subsidiary of MDU Resources
          Group, Inc. or to a subsidiary of the Company; or (b) the sale or
          other disposition of voting stock of the Company, other than to a
          subsidiary of MDU Resources Group, Inc. or to a subsidiary of the
          Company, such that, immediately following such sale or other
          disposition, MDU Resources Group, Inc. and/or its subsidiaries would
          own less than 50 percent of the outstanding voting stock of the
          Company; or (c) the sale or other disposition of voting stock of the
          Company, other than to a subsidiary of MDU Resources Group, Inc. or to
          a subsidiary of the Company, such that, immediately following such
          sale or other disposition, MDU Resources Group, Inc, and/or its
          subsidiaries


                                     WBI-6
<PAGE>

          would no longer possess the ability to elect a majority of the Board
          of Directors of the Company; or (d) any other event which shall be
          deemed by a majority of the Compensation Committee of the Board of
          Directors of the Company to constitute a "Change in Control" of the
          Company; and provided, further, that the Compensation Committee of the
          Board of Directors of the Company shall have the right to deem any
          event to constitute a "Change in Control" of any particular subsidiary
          of the Company, even if no Change in Control shall have occurred with
          regard to the Company.

     7.   The "Prime Rate" shall be the base rate on corporate loans posted by
          at least 75 percent of the nation's 30 largest banks as reported daily
          in The Wall Street Journal.

     8.   "Retirement" means the later of the day the Participant attains age 55
          or the day the Participant ceases to be an employee of the Company or
          any of its subsidiary corporations.

II.  ADMINISTRATION

     1.   The Chairman of the Board (the "Chairman") shall not participate in
          the Plan. No member of the Committee shall participate in a decision
          as to the member's own eligibility for, or award of, an incentive
          award payment.

     2.   The Compensation Committee shall have the full power to construe and
          interpret the Plan and to establish and to amend these Rules and
          Regulations for its administration.

     3.   Prior to the beginning of each Plan Year, the Compensation Committee
          shall approve a list of eligible officers and notify those so approved
          that they are eligible to participate in the Plan for such Plan Year.

     4.   Prior to the beginning of each Plan Year, the Committee shall approve
          an Annual Operating Plan. The Annual Operating Plan shall include the
          Plan's performance measures, a list of individuals to be included in
          the Plan and the target incentive award levels for each salary grade
          covered by the Plan for the following Plan Year. The Plan's
          performance targets for the year shall be approved by the Committee no
          later than its regularly scheduled February meeting during the Plan
          Year. The Annual Operating Plan, insofar as it is relevant to each
          individual Participant, shall be made available by the President to
          each Participant in the Plan at the beginning of each Plan Year.

     5.   The Compensation Committee shall have final discretion to determine
          actual award payment levels and whether or not payments shall be made
          for any Plan Year. However, unless the Plan's performance objectives
          are met for the Plan Year, no award shall be made for that Plan Year.
          Performance targets modified pursuant to Section II of the Plan will
          be deemed performance targets for purposes of determining whether or
          not the targets have been met.


                                     WBI-7
<PAGE>

III. PLAN PERFORMANCE MEASURES

     1.   The Committee shall establish the percentage attainment of corporate
          performance measure and the percentage attainment of individual goals
          measure. The Committee may establish more or fewer performance
          measures as it deems necessary.

     2.   The corporate performance measure may be set by reference to earnings,
          return on invested capital or any other measure or combination of
          measures deemed appropriate by the Committee. It may be established
          for the Company or for the individual business unit.

     3.   Individual performance will be assessed based on the achievement of
          annually established individual objectives.

     4.   Plan performance measures may be applied at the corporate level for
          individuals such as the Chief Executive Officer whose major or sole
          impact is Company-wide, or at the business unit level for individuals
          whose major or sole impact is on the business unit results. The Annual
          Operating Plan shall contain a list of individuals to whom the Plan
          performance measures will be applied at the corporate level and a list
          of those individuals for whom the Plan performance measures will be
          applied at the business unit level. The relevant business unit for
          each individual will be identified.

     5.   The Committee shall set threshold, target and maximum award levels for
          the performance measures, for each business unit, and for the Company.
          Those levels shall be included in the Annual Operating Plan.

     6.   The Committee will retain the authority to determine whether or not
          the actual attainment of these measures has been made.

IV. TARGET INCENTIVE AWARDS

     1.   Target incentive awards will be a percentage of each Participant's
          Salary, as defined in the Plan.

     2.   Target incentive awards shall be set by the Committee annually and
          will be included in the Annual Operating Plan.

V. INCENTIVE FUND DETERMINATION

     1.   The target incentive fund is the sum of the individual target
          incentive awards for all eligible Participants.

     2.   Once individual incentive targets have been determined, a target
          incentive fund shall be established and accrued ratably by the
          Company. The incentive fund and accruals may be adjusted during the
          year.


                                     WBI-8
<PAGE>

     3.   As soon as practicable following the close of each Plan Year, the
          President will provide the Committee with an analysis showing the
          Company's performance in relation to the performance measures. The
          Committee will review the analysis and determine, in the Committee's
          sole discretion, the amount of the actual incentive fund.

     4.   In determining the actual incentive fund, the Committee may consider
          any recommendations of the President.

VI. INDIVIDUAL AWARD DETERMINATION

     1.   The Compensation Committee shall have the sole discretion to determine
          each individual Participant's award. The Committee's decision will be
          based first upon the level of performance achieved by the Company and
          second upon the individual's performance.

     2.   The Committee, after consultation with the President, shall set the
          award as a percentage from 0 percent to 200 percent of the
          Participant's target incentive award, adjusted for Company
          performance.

VII. PAYMENT OF AWARDS

     1.   On the date the Compensation Committee determines the awards to be
          made to individual Participants, it shall also establish the Payment
          Date.

     2.   Except as provided below or as the Committee otherwise determines, in
          order to receive an award under the Plan, a Participant must remain in
          the employment of MDU Resources Group, Inc., its Utility Division or a
          Subsidiary Company for the entire Plan Year.

     3.   If a Participant terminates employment with the Company pursuant to
          Section 5.01 of the Company's Bylaws which provides for mandatory
          retirement for certain officers on their 65th birthday (or terminates
          employment with a subsidiary of the Company pursuant to a similar
          subsidiary Bylaw provision) and if the Participant's 65th birthday
          occurs during the Plan Year, determination of whether the performance
          measures have been met will be made at the end of the Plan Year, and
          to the extent met, payment of the award will be made to the
          Participant, prorated. Proration of awards shall be based upon the
          number of full months elapsed from and including January to and
          including the month in which the Participant's 65th birthday occurs.

     4.   Payment of the award shall be made in cash. Payments shall be made on
          the Payment Date unless the Participant has deferred, in whole or in
          part, the receipt of the award by making an election on the deferral
          form attached hereto, prior to the end of the Plan Year immediately
          preceding the Payment Date.

     5.   In the event a Participant has elected to defer receipt of all or a
          portion of the award, the Company shall set up an account in the
          Participant's name. The


                                     WBI-9
<PAGE>

          amount of the Participant's award to the extent deferred will be
          credited to the Participant's account on the Payment Date.

     6.   The balance credited to an account of a Participant who has elected to
          defer receipt of an award will be an unsecured, unfunded obligation of
          the Company.

     7.   Interest shall accrue on the balance credited to a Participant's
          account. The rate of interest shall be the Prime Rate plus 1
          percentage point as reported on the last Friday in January of each
          year. Interest on the balance in an account shall accrue at the rate
          so determined from the Payment Date immediately following the
          determination to the Payment Date of the following year.

     8.   Interest shall be credited to the account on the day preceding Payment
          Date and shall be calculated on the balance in the Participant's
          account as of that date.

     9.   A Participant may elect to defer any percentage, not to exceed l00, of
          an annual award.

     10.  A Participant electing to defer any part of an award must elect one of
          the following dates for payment:

          (1)  Payment Date next following termination of employment with the
               Company or an affiliated company; or

          (2)  Payment Date of the fifth year following the year in which the
               award may be made.

     11.  A Participant may elect to receive the deferred amounts accumulated in
          the Participant's account in monthly installments, not to exceed 120.
          In the event the Participant elects to receive the amounts in the
          Participant's account in more than one installment, interest shall
          continue to accrue on the balance remaining in their account at the
          applicable rate determined by the Committee.

     12.  In the event of the death of a Participant in whose name a deferred
          account has been set up, the Company shall, within six months
          thereafter, pay to the Participant's estate or the designated
          beneficiary the entire amount in the deferred account.

     13.  In the event of a "Change in Control" then any award deferred by each
          Participant shall become immediately payable to the Participant. In
          the event the Participant files suit to collect a deferred award then
          all of the Participant's court costs, other expenses of litigation,
          and attorneys' fees shall be paid by the company in the event the
          Participant prevails upon any of the claims for payment.

____________________________________________________
Rules and Regulations adopted October 15, 1985

Rules and Regulations amended September 3, 1987


                                     WBI-10
<PAGE>

Rules and Regulations amended July 31, 1989

Rules and Regulations amended July 9, 1996, effective January 1, 1996

Rules and Regulations adopted November 8, 1996, effective January 1, 1997

Rules and Regulations amended January 30, 1997, effective January 1, 1997

Rules and Regulations amended August 5, 1999, effective January 1, 1999

Rules and Regulations amended November 8, 2001, effective January 1, 2001

Rules and Regulations amended by Written Consent February 25, 2002, effective
January 1, 2002

Rules and Regulations amended by Written Consent November 17, 2003, effective
January 1, 2003

Rules and Regulations amended by Written Consent August 24, 2004, effective
January 1, 2004, per Written Consent dated December 29, 2004


                                     WBI-11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>ex10-5.txt
<DESCRIPTION>KNIFE RIVER EICP
<TEXT>
                                                                    Exhibit 10.5

                             Knife River Corporation
                      Executive Incentive Compensation Plan


<PAGE>

                                                                    Exhibit 10.5

                             KNIFE RIVER CORPORATION

                      EXECUTIVE INCENTIVE COMPENSATION PLAN


     RESOLVED, that there is hereby established the Executive Incentive
Compensation Plan ("the Plan") which shall be effective as of this date.

I. PURPOSE

     The purpose of the Plan is to provide an incentive for key executives of
Knife River Corporation and any subsidiaries participating in the Plan (the
"Company") to focus their efforts on the achievement of challenging and
demanding corporate objectives. The Plan is designed to reward successful
corporate performance calculated from January 1 to December 31, of each Plan
Year, as measured against specified performance goals as well as exceptional
individual performance. When corporate or subsidiary performance reaches or
exceeds the performance targets and individual performance is exemplary,
incentive compensation awards, in conjunction with salaries, will provide a
level of compensation which recognizes the skills and efforts of the key
executives.

II. BASIC PLAN CONCEPT

     The Plan provides an opportunity to earn annual incentive compensation
based on the achievement of specified annual performance objectives. A target
incentive award for each individual within the Plan is established based on the
position level and actual base salary, provided, however, that the Compensation
Committee of the Board of Directors (the "Committee") in its sole discretion,
may, instead of actual base salary, use the assigned salary grade market value
(midpoint) ("Salary"). The target incentive award represents the amount to be
paid, subject to the achievement of the performance objective targets
established each year. Larger incentive awards than target may be authorized
when performance exceeds targets; lesser or no amounts may be paid when
performance is below target.

     It is recognized that during a Plan Year major unforeseen changes in
economic and environmental conditions or other significant factors beyond the
control of management may


                                      KR-1
<PAGE>

substantially affect the ability of the Plan Participants to achieve the
specified performance goals. Therefore, in its review of corporate performance
the Committee, in consultation with the Chief Executive Officer of MDU Resources
Group, Inc., may modify the performance targets. However, it is contemplated
that such target modifications will be necessary only in years of unusually
adverse or favorable external conditions.

III. ADMINISTRATION

     The Plan shall be administered by the Committee with the assistance of the
President of the Company. The Committee shall approve annually, prior to the
beginning of each Plan Year, the list of eligible Participants, and the target
incentive award level for each position within the Plan. The Plan's performance
targets for the year shall be approved by the Committee no later than its
regularly scheduled February meeting during that Plan Year. The Committee shall
have final discretion to determine actual award payment levels, method of
payment, and whether or not payments shall be made for any Plan Year.

     The Board of Directors of the Company may, at any time and from time to
time, alter, amend, supersede or terminate the Plan in whole or in part,
provided that no termination, amendment or modification of the Plan shall
adversely affect in any material way an award that has met all requirements for
payment without the written consent of the Participant holding such award,
unless such termination, modification or amendment is required by applicable
law.

IV. ELIGIBILITY

     Key executives who are determined by the Committee to have a key role in
both the establishment and achievement of Company objectives shall be eligible
to participate in the Plan.

     Nothing in the Plan shall interfere with or limit in any way the right of
the Company to terminate any Participant's employment at any time, for any
reason or no reason in the Company's sole discretion, or confer upon any
Participant any right to continue in the employment of the Company. No executive
shall have the right to be selected to receive an award under the Plan, or,
having been so selected, to be selected to receive a future award.


                                      KR-2
<PAGE>

V. PLAN PERFORMANCE MEASURES

     Performance measures shall be established that consider shareholder and
customer interests. These measures shall be evaluated annually based on
achievement of specified goals.

     The performance measure reflective of shareholder's interest will be the
percentage attainment of corporate goals, as determined each year by the
Committee. This measure may be applied at the corporate level for individuals,
such as the Chief Executive Officer, or at the business unit level for
individuals whose major or sole impact is on business unit results.

     Individual performance will be assessed based on the achievement of
annually established individual objectives.

     Threshold, target and maximum award levels will be established annually for
each performance measure and business unit. The Committee will retain the right
to make all interpretations as to the actual attainment of the desired results
and will determine whether any circumstances beyond the control of management
need to be considered.

VI. TARGET INCENTIVE AWARDS

     Target incentive awards will be expressed as a percentage of each
Participant's Salary. These percentages shall vary by position and reflect
larger reward opportunity for positions having greater effect on the
establishment and accomplishment of the Company's or business unit's objectives.
An exhibit showing the target awards as a percentage of Salary for eligible
positions will be attached to this Plan at the beginning of each Plan Year.

VII. INCENTIVE FUND DETERMINATION

     The target incentive fund is the sum of the individual target incentive
awards for all eligible Participants. Once the incentive targets have been
determined by the Committee, a target incentive fund shall be established and
accrued ratably by the Company. The incentive fund and accruals may be adjusted
during the year.

     At the close of each Plan Year, the Company will prepare an analysis
showing the Company's or business unit's performance in relation to each of the
performance measures employed. This will be provided to the Committee for review
and comparison to threshold,


                                      KR-3
<PAGE>

target and maximum performance levels. In addition, any recommendations of the
President will be presented at this time. The Committee will then determine the
amount of the target incentive fund earned.

VIII. INDIVIDUAL AWARD DETERMINATION

     Each individual Participant's award will be based first upon the level of
performance achieved by the Company and secondly based upon the individual's
performance. The criteria applicable for assessing individual performance will
be established at the beginning of each Plan Year. The assessment by the
Committee, after consultation with the President, of achievement relative to the
established criteria, as determined by a percentage from 0 percent to 200
percent, will be applied to the Participant's target incentive award which has
been first adjusted for Company or business unit performance.

IX. PAYMENT OF AWARDS

     Except as provided below or as otherwise determined by the Committee, in
order to receive an award under the Plan, the Participant must remain in the
employment of the Company or business unit for the entire Plan Year. If a
Participant terminates employment with MDU Resources Group, Inc. pursuant to
Section 5.01 of the Company's Bylaws which provides for mandatory retirement for
certain officers on their 65th birthday (or terminates employment with a
subsidiary of the Company pursuant to a similar subsidiary Bylaw provision) and
if the Participant's 65th birthday occurs during the Plan Year, determination of
whether the performance measures have been met will be made at the end of the
Plan Year, and to the extent met, payment of the award will be made to the
Participant, prorated. Proration of awards shall be based upon the number of
full months elapsed from and including January to and including the month in
which the Participant's 65th birthday occurs.

     An individual Participant who transfers between the Company and business
units may receive a prorated award at the discretion of the Committee. Payments
made under this Plan will not be considered part of compensation for pension
purposes. Payments when made will be in cash. Incentive awards may be deferred
if the appropriate elections have been executed prior to the end of the Plan
Year. Deferred amounts will accrue interest at a rate determined annually by the
Committee.


                                      KR-4
<PAGE>

     In the event of a "Change in Control" (as defined by the Committee in its
Rules and Regulations) then any award deferred by each Participant shall become
immediately payable to the Participant in cash, together with accrued interest
thereon to the date of payment. In the event the Participant files suit to
collect the Participant's deferred award then all of the court costs, other
expenses of litigation, and attorneys' fees shall be paid by the Company in the
event the Participant prevails upon any of the Participant's claims for payment
of a deferred award.

_______________________________________________
Plan adopted November 22, 1983

Plan amended July 26, 1991

Plan amended November 8, 1996, effective January 1, 1997

Plan amended August 6, 1999, effective January 1, 1999

Plan amended February 10, 2000, effective January 1, 2000

Plan amended November 7, 2001, effective January 1, 2001

Plan amended by written consent February 25, 2002, effective January 1, 2002

Plan amended by written consent November 17, 2003, effective January 1, 2003

Plan amended by written consent August 24, 2004, effective January 1, 2004,
per Written Consent dated December 29, 2004


                                      KR-5
<PAGE>


                             KNIFE RIVER CORPORATION
                      EXECUTIVE INCENTIVE COMPENSATION PLAN
                              RULES AND REGULATIONS

               --------------------------------------------------

     The Compensation Committee of the Board of Directors of Knife River
Corporation (formerly known as Knife River Coal Mining Company) (the "Company")
hereby amends the following Rules and Regulations for the administration of the
Executive Incentive Compensation Plan (the "Plan"), first adopted at a meeting
of the Board of Directors of the Company held on November 22, 1983.

I. DEFINITIONS

     The following definitions shall be used for purposes of these Rules and
Regulations and for purposes of administering the Plan:

     1.   The "Committee" shall be the Compensation Committee of the Board of
          Directors of the Company.

     2.   The "Company" shall refer to Knife River Corporation and any
          subsidiaries participating in the Plan.

     3.   "Participants" for any Plan Year shall be those key executives who
          have been approved by the Committee as eligible for participation in
          the Plan for such Plan Year.

     4.   "Payment Date" shall be the date set by the Committee for payment of
          awards, other than those awards deferred pursuant to Section VII of
          these Rules and Regulations.

     5.   The "Plan" shall refer to the Executive Incentive Compensation Plan.

     6.   The "Plan Year" shall be January 1 through December 31.

     7.   "Change in Control" shall mean the earliest of the following to occur:
          (a) the sale or other disposition of all or substantially all of the
          assets of the Company, other than to a subsidiary of MDU Resources
          Group, Inc. or to a subsidiary of the Company; or (b) the sale or
          other disposition of voting stock of the Company, other than to a
          subsidiary of MDU Resources Group, Inc. or to a subsidiary of the
          Company, such that, immediately following such sale or other
          disposition, MDU Resources Group, Inc. and/or its subsidiaries would
          own less than 50 percent of the outstanding voting stock of the
          Company; or (c) the sale or other disposition of voting stock of the
          Company, other than to a subsidiary of MDU Resources


                                      KR-6
<PAGE>

          Group, Inc. or to a subsidiary of the Company, such that, immediately
          following such sale or other disposition, MDU Resources Group, Inc,
          and/or its subsidiaries would no longer possess the ability to elect a
          majority of the Board of Directors of the Company; or (d) any other
          event which shall be deemed by a majority of the Compensation
          Committee of the Board of Directors of the Company to constitute a
          "Change in Control" of the Company; and provided, further, that the
          Compensation Committee of the Board of Directors of the Company shall
          have the right to deem any event to constitute a "Change in Control"
          of any particular subsidiary of the Company, even if no Change in
          Control shall have occurred with regard to the Company.

     8.   The "Prime Rate" shall be the base rate on corporate loans posted by
          at least 75 percent of the nation's 30 largest banks as reported daily
          in The Wall Street Journal.

     9.   "Retirement" means the later of the day the Participant attains age 55
          or the day the Participant ceases to be an employee of the Company or
          any of its subsidiary corporations.

II. ADMINISTRATION

     1.   The Committee shall have the full power to construe and interpret the
          Plan and to establish and to amend these Rules and Regulations for its
          administration.

     2.   No member of the Committee shall participate in a decision as to their
          own eligibility for, or award of, an incentive award payment.

     3.   Prior to the beginning of each Plan Year, the Committee shall approve
          a list of eligible key executives and notify those so approved that
          they are eligible to participate in the Plan for such Plan Year.

     4.   Prior to the beginning of each Plan Year, the Committee shall approve
          an Annual Operating Plan. The Annual Operating Plan shall include the
          Plan's performance measures and target incentive award levels for each
          salary grade covered by the Plan for the following Plan Year. The
          Committee shall set threshold, target and maximum award levels for
          performance. These levels shall be included in the Annual Operating
          Plan. The Plan's performance targets for the year shall be approved by
          the Committee no later than its regularly scheduled February meeting
          during the Plan Year. The Annual Operating Plan, insofar as it is
          relevant to each individual Participant, shall be made available by
          the Committee to each Participant in the Plan at the beginning of each
          Plan Year.

     5.   The Committee shall have final discretion to determine actual award
          payment levels and whether or not payments shall be made for any Plan
          Year. However, unless the Plan's performance objectives are met for
          the Plan Year, no award shall be made for that Plan Year. Performance
          targets modified pursuant to Section II of the Plan will be deemed
          performance targets for purposes of determining whether or not these
          targets have been met.


                                      KR-7
<PAGE>

III. PLAN PERFORMANCE MEASURES

     1.   The Committee shall establish the percentage attainment of corporate
          performance measure and the percentage attainment of individual goals
          measure. The Committee may establish more or fewer performance
          measures as it deems necessary.

     2.   The corporate performance measure may be set by reference to earnings,
          return on invested capital or any other measure or combination of
          measures deemed appropriate by the Committee. It may be established
          for the Company or for the individual business unit.

     3.   Individual performance will be assessed based on the achievement of
          annually established individual objectives.

     4.   Plan performance measures may be applied at the corporate level for
          individuals such as the Chief Executive Officer whose major or sole
          impact is Company-wide, or at the business unit level for individuals
          whose major or sole impact is on the business unit results. The Annual
          Operating Plan shall contain a list of individuals to whom the Plan
          performance measures will be applied at the corporate level and a list
          of those individuals for whom the Plan performance measures will be
          applied at the business unit level. The relevant business unit for
          each individual will be identified.

     5.   The Committee shall set threshold, target and maximum award levels for
          the performance measures, for each business unit, and for the Company.
          Those levels shall be included in the Annual Operating Plan.

     6.   The Committee will retain the authority to determine whether or not
          the actual attainment of these measures has been made.

IV. TARGET INCENTIVE AWARDS

     1.   Target incentive awards will be a percentage of each Participant's
          Salary, as defined in the Plan.

     2.   Target incentive awards shall be set by the Committee annually and
          will be included in the Annual Operating Plan.

V. INCENTIVE FUND DETERMINATION

     1.   The target incentive fund is the sum of the individual target
          incentive awards for all eligible Participants.

     2.   Once individual incentive targets have been determined, a target
          incentive fund shall be established and accrued ratably by the
          Company. The incentive fund and accruals may be adjusted during the
          year.


                                      KR-8
<PAGE>

     3.   As soon as practicable following the close of each Plan Year, the
          President will provide the Committee with an analysis showing the
          Company's performance. The Committee will review the analysis and
          determine, in its sole discretion, the amount of the actual incentive
          fund.

     4.   In determining the actual incentive fund, the Committee may consider
          any recommendations of the President.

VI. INDIVIDUAL AWARD DETERMINATION

     1.   The Committee shall have the sole discretion to determine each
          individual Participant's award. The Committee's decision will be based
          first upon the level of performance achieved by the Company and second
          upon the individual's performance.

     2.   The Committee, after consultation with the President, shall set the
          award as a percentage from 0 to 200 percent of the Participant's
          target incentive award, adjusted for Company performance.

VII. PAYMENT OF AWARDS

     1.   On the date the Compensation Committee determines the awards to be
          made to individual Participants, it shall also establish the Payment
          Date.

     2.   Except as provided below or as the Committee otherwise determines, in
          order to receive an award under the Plan, a Participant must remain in
          the employment of MDU Resources Group, Inc., its Utility Division or a
          Subsidiary Company for the entire Plan Year.

     3.   If a Participant terminates employment with the Company pursuant to
          Section 5.01 of the Company's Bylaws which provides for mandatory
          retirement for certain officers on their 65th birthday (or terminates
          employment with a subsidiary of the Company pursuant to a similar
          subsidiary Bylaw provision) and if the Participant's 65th birthday
          occurs during the Plan Year, determination of whether the performance
          measures have been met will be made at the end of the Plan Year, and
          to the extent met, payment of the award will be made to the
          Participant, prorated. Proration of awards shall be based upon the
          number of full months elapsed from and including January to and
          including the month in which the Participant's 65th birthday occurs.

     4.   Payment of the awards shall be made in cash. Payments shall be made on
          the Payment Date unless the Participant has deferred, in whole or in
          part, the receipt of the award by making an election on the deferral
          form attached hereto, prior to the end of the Plan Year immediately
          preceding the Payment Date.

     5.   In the event a Participant has elected to defer receipt of all or a
          portion of the award, the Company shall set up an account in the
          Participant's name. The


                                      KR-9
<PAGE>

          amount of the Participant's award to the extent deferred will be
          credited to the Participant's account on the Payment Date.

     6.   The balance credited to an account of a Participant who has elected to
          defer receipt of an award will be an unsecured, unfunded obligation of
          the Company.

     7.   Interest shall accrue on the balance credited to a Participant's
          account. The rate of interest shall be the Prime Rate plus 1
          percentage point as reported on the last Friday in January of each
          year. Interest on the balance in an account shall accrue at the rate
          so determined from the Payment Date immediately following the
          determination to the Payment Date of the following year.

     8.   Interest shall be credited to the account on the day preceding Payment
          Date and shall be calculated on the balance in the Participant's
          account as of that date.

     9.   A Participant may elect to defer any percentage, not to exceed 100, of
          an annual award.

     10.  A Participant electing to defer any part of an award must elect one of
          the following dates for payment:

          (a)  Payment Date next following termination of employment with the
               Company or an affiliated company; or

          (b)  Payment Date of the fifth year following the year in which the
               award may be made.

     11.  A Participant may elect to receive the deferred amounts accumulated in
          the Participant's account in monthly installments, not to exceed 120.
          In the event the Participant elects to receive the amounts in the
          Participant's account in more than one installment, interest shall
          continue to accrue on the balance remaining in their account at the
          applicable rate or rates determined annually by the Committee.

     12.  In the event of the death of a Participant in whose name a deferred
          account has been set up, the Company shall, within six months
          thereafter, pay to the Participant's estate or the designated
          beneficiary the entire amount in the deferred account.

     13.  In the event of a "Change in Control" then any award deferred by each
          participant shall become immediately payable to the Participant. In
          the event the Participant files suit to collect a deferred award then
          all of the Participant's court costs, other expenses of litigation,
          and attorneys' fees shall be paid by the Company in the event the
          Participant prevails upon any of the claims for payment.

_____________________________________________________

Rules and Regulations adopted November 22, 1983


                                     KR-10
<PAGE>

Rules and Regulations amended for 1985 Plan Year -- the methodology set forth in
calculating Plan performance was adjusted

Rules and Regulations amended November 8, 1996, effective January 1, 1997

Rules and Regulations amended January 30, 1997, effective January 1, 1997

Rules and Regulations amended August 6, 1999, effective January 1, 1999

Rules and Regulations amended February 10, 2000, effective January 1, 2000

Rules and Regulations amended November 7, 2001, effective January 1, 2001

Rules and Regulations amended by Written Consent February 25, 2002, effective
January 1, 2002

Rules and Regulations amended by Written Consent November 17, 2003, effective
January 1, 2003

Rules and Regulations amended by Written Consent August 24, 2004, effective
January 1, 2004, per Written Consent December 29, 2004


                                     KR-11
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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