Manitoba Hydro signs agreement for sale of 500 MW to Xcel Energy

August 19, 2002 — Manitoba Hydro has signed a 10-year agreement with Minnesota-based Xcel Energy, subject to regulatory approval in both jurisdictions, for export of 500 megawatts of electricity from Manitoba to Minnesota starting in 2005.

This sale agreement will result in an energy flow to Xcel Energy of 2.1 million megawatt-hours (2.1 billion kilowatt-hours) of electrical energy every year.

The deal is anticipated to produce $1.7 billion in revenue over the life of the contract. The contract doesn’t involve the building of dams or power lines, and it will be subject to approval from regulators before it can go forward.

“Export revenues have provided Manitoba Hydro with the stability to allow it to maintain some of the lowest rates in North America,” said Premier Gary Doer.

“Minnesota and Manitoba have been trading in electricity for over 30 years and this latest contract is an affirmation of the benefits of such trade for both parties,” said Manitoba Hydro President and CEO Bob Brennan. “This mutually beneficial sale between Manitoba and Minnesota will result in lower rates for utility customers in each area.”

The current agreement started with a request for proposals by Northern States Power Co. (NSP) in 1999 for supplies of electricity to meet its future needs. (NSP successfully merged with Denver-based New Century Energies to form Xcel Energy in August 2000.) Out of this competition, Manitoba Hydro was selected as one of the suppliers to meet part of this requirement.

Manitoba Hydro was approved as a successful bidder by the Minnesota Public Utilities Commission (MPUC) in November 2000. Xcel Energy will now be seeking final approval on the sale contract terms and conditions from the MPUC while Manitoba Hydro will be making an application to the National Energy Board for approval of the export sale.

Manitoba Hydro has several existing contracts with Xcel Energy, including a 500 megawatt contract that began in 1993 and expires in 2005. Although the terms and conditions are different, the new deal effectively replaces the expiring contract. This new contract will not require any new generating facilities in Manitoba nor will it require changes in Manitoba’s system operations.

Electricity exports have made up a growing portion of Manitoba Hydro revenues in the last decade, rising to $588 million in 2001-02 from $143 million in 1992-93, mainly due to higher export market rates.

During the decades since Manitoba Hydro has been exporting electricity it is estimated that such exports have reduced the production of greenhouse gases by 157 million tonnes by reducing the need for thermal generation in the region. Furthermore, the exports have had a positive impact on regional air quality by reducing other emissions from thermal generation. About 10 per cent of the electricity used in Minnesota comes from imports from Manitoba. The new agreement ensures that this environmental benefit will continue over the contract period.

Source: Manitoba Hydro

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