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Commitments, Guarantees and Contingencies Commitments, Guarantees and Contingencies (Tables)
 12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Estimated Minimum Annual Payments for Certain Long-Term Commitments [Text Block]
The following table details the estimated minimum annual payments for certain long-term commitments:
As of December 31, 2016
 
 
 
 
 
 
Millions
2017

2018

2019

2020

2021

Thereafter

Coal, Rail and Shipping Contracts

$27.9


$27.0


$1.8

—

—

—

Leasing Agreements

$13.7


$12.0


$10.7


$7.5


$5.9


$18.3

PPAs (a)

$98.0


$102.9


$105.5


$113.4


$143.3


$1,803.9

(a)
Excludes the agreement with Manitoba Hydro expiring in 2022, as this contract is for surplus energy only, and the 133 MW agreement with Manitoba Hydro commencing in 2020, as our obligation under this contract is subject to construction of additional transmission capacity. Also excludes Oliver Wind I and Oliver Wind II, as Minnesota Power only pays for energy as it is delivered.
Minnesota Power has also entered into the following agreements for the purchase or sale of capacity and energy as of December 31, 2016:
Counterparty
Quantity
Product
Commencement
Expiration
Pricing
PPAs
 
 
 
 
 
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)
Oliver Wind I
(h)
Energy
December 2006
December 2031
Fixed
Oliver Wind II
(h)
Energy
December 2007
December 2032
Fixed
Shell Energy
50 MW
Energy
January 2017
December 2019
Fixed
TransAlta
(i)
Energy
January 2017
December 2019
Fixed
PSAs
 
 
 
 
 
Basin
 
 
 
 
 
PSA 1
100 MW
Capacity / Energy
May 2010
April 2020
(j)
PSA 2
100 MW
Capacity
June 2016
June 2018
Fixed
Minnkota Power
(k)
Capacity / Energy
June 2014
December 2026
(k)
Silver Bay Power
(l)
Energy
January 2017
December 2031
(m)
(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 additional transmission capacity between Manitoba and the U.S., along with construction of new hydroelectric generating capacity in Manitoba. (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 shall 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 PPAs provide for the purchase of all output from the 50 MW Oliver Wind I and 48 MW Oliver Wind II wind energy facilities.
(i)
The energy purchased under the 50 MW PPA is during off-peak hours and the 100 MW PPA is during on-peak hours.
(j)
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.
(k)
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 2016 (28 percent in 2015; 23 percent in 2014). (See Square Butte PPA.)
(l)
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. In the years 2016 through 2019, Minnesota Power will supply Silver Bay Power with at least 50 MW of energy and Silver Bay Power will have the option to purchase additional energy from Minnesota Power as it transitions away from self-generation. On December 31, 2019, Silver Bay Power will cease its self-generation and Minnesota Power will supply the energy requirements for Silver Bay Power.
(m)
The energy pricing is fixed through 2019 with pricing in later years escalating at a fixed rate annually and adjusted for changes in a natural gas index.