MUI Day at the

CapitolWednesday,

April 10Select the schedule that fits you best!

Register now!

See page 2 for details.

A POSITIVE, CREDIBLE AND INDEPENDENT VOICE FOR MINNESOTA UTILITY INVESTORS

The 2019 Legislature convened on Tuesday, January 8 with all 134 House members being officially sworn in. Of those members—over 35 of them are brand new to the Legislature.

While the learning curve has been steep with all these new faces, a record number of bills have been introduced in both the House and Senate. As of February 28 over 1920 bills have been introduced in the House and over 1930 in the Senate.

New Leadership in the House

With a new majority in the Minnesota House new Leadership was elected:

• Speaker of the House: Rep. Melissa Hortman (DFL, Brooklyn Park)

• Majority Leader: Rep. Ryan Winkler (DFL, Golden Valley)

• Minority Leader: Rep. Kurt Daudt (R, Crown)

The Minnesota Senate have a few new faces with some legislators moving to new positions. Leadership continues to remain the same for both parties:

• Majority Leader: Sen. Paul Gazelka (R, Nisswa)

• Minority Leader: Sen. Tom Bakk (DFL, Cook)

The Republicans have slightly increased their majority to 35–32 by winning two

Special Elections. Also new to the State Capitol is Governor Walz (DFL). He was officially sworn into office and was busy completing his Cabinet in January. Most of the Cabinet positions are filled—but we are still waiting for his appointment to the Minnesota Public Utilities Commission (PUC).

State Budget PassedThe overriding purpose of the 2019 Legislative Session is to pass a State Budget, funding all of the State Agencies and State programs for the next two years. The Legislature uses the economic forecast from Minnesota Management and Budget (MMB) to begin their budgeting process. MMB recently released the 2019 February Budget and Economic Forecast which showed Minnesota’s budget and economic outlook has weakened since November. The upcoming biennium is $1.052 billion, which is $492 million less than the November forecast. Slower projected economic growth and lower observed collections compared to prior estimates result in a reduced revenue forecast throughout the budget horizon.

Issues Moving Forward There have been numerous bills introduced that would impact Minnesota’s

2019 Legislative Session Moving in a Flurry

In yourInterestIn this issueDay at the Capitol Info 2

Day at the Capitol Preview Meeting Schedule 3

News Briefs 3, 7

MUI Supporting Membership Benefits 4

Did You Know 5–6

Summer Tour Schedule 6

Supporting Member Benefits 8

MARCH 2019

VOL. 29 NO. 1

Legislative Session cont. on page 7

In your INTERESTMARCH 20192

Wednesday, April 10, 2019 • 9:45 a.m. – 2:45 p.m.

Register online at www.mnutilityinvestors.org, or call 651-227-7902 or 1-888-850-5171.

REGISTRATION DEADLINE: is Friday, March 23rd.

Make a difference!

Choose your track! Select the afternoon schedule that suits you best.

SCHEDULE MORNING SCHEDULE

9:45 a.m. Registration Opens

10:30 a.m. Program Begins

11:00 a.m. Lunch

11:45 a.m. Shuttle to State Capitol Complex

EDUCATIONAL TRACK

Designed to ease members into one-on-one meetings with Legislators.

12:15–2:30 p.m. Educational Track Schedule

ADVOCACY TRACK

Traditional track for members who are comfortable meeting directly with Legislators.

12:15–2:30 p.m. Advocacy Track Schedule

Includes: 1/2 hour Optional Capitol Tour Seminar: In-depth Issue Discussion Seminar: Legislators want to hear from YOU!

Includes: Meet with your Legislators 1/2 hour Capitol Tour (if time allows) Meet with Legislative Leadership (tentative)

Chooseyour

track!

NEW location this year!

LOCATION Mendakota Country Club 2075 Mendakota Drive Mendota Heights, MN

REGISTRATION FEE FREE for Supporting Members! $20 per attendee for General Members General members must pay prior to the event with credit card or check.

TRANSPORTATION MOTOR COACH transportation to the event is available from the following locations:

JOIN US!

Alexandria Baxter Bloomington Brooklyn Center Cloquet Duluth Eden Prairie Lakeville

Little Falls Mankato Moose Lake North Branch Rochester St. Cloud EAST St. Cloud WEST Vadnais Heights

Lunch is included Thank you bag for attendees Shuttle to and from Capitol Door prizes!

VOL. 29 NO. 1 3

Mark Your Calendar

MUI Day at the Capitol Preview Meetings are free for Supporting Members and their guests and $10 per person for General Members. This is your chance to learn about the legislative process, issues impacting your utility investment and ask questions about MUI Day at the Capitol.

Choose the meeting time and location that works best for you. If you are unable to participate in the MUI

Day at the Capitol, we still encourage members to attend one of these meetings. Registration is required. Please contact the MUI office at 651-227-7902 or 1-888-850-5171 or online at mnutilityinvestors.org for details and to register for the meeting. Meetings are subject to change or cancellation. G

Day at the Capitol Preview Meetings Schedule

DATE TIME LOCATION

Monday, March 11 11:30 am Duluth area

Tuesday, March 12 2:00 pm St. Paul area

Wednesday, March 13 11:30 am Bloomington area

Thursday, March 14 11:30 am NorthEast Metro area

Wednesday, March 20 11:30 am Mankato area

Thursday, March 21 2:00 pm Rochester area

DATE TIME LOCATION

Monday, March 25 11:30 am St. Cloud area

Tuesday, March 26 11:30 am NorthWest Metro area

Wednesday, March 27 11:30 am Baxter area

Thursday, March 28 11:30 am Fergus Falls area

Wednesday, April 10 MUI Day at the Capitol

*Note afternoon time

Electricity Intensity to DecreaseIn EIA’s recently released Annual Energy Outlook 2019 (AEO2019) Reference case, projected residential and commercial purchased electricity consumption grows more slowly than the number of households or total commercial floorspace. As a result, electricity intensity—the amount of electricity consumed per household or square foot of commercial floorspace—decreases by an average of 0.3% per year and 0.4% per year from 2018 through 2050 in the residential and commercial sectors, respectively.

Nationally, the total number of households grows an average of 0.7% per year from 2018 to 2050 in the Reference case. Total commercial floorspace grows 1.0% per year during the same period. Growth rates for both sectors are higher than the expected 0.5% per year increase in U.S. population.

Residential electricity sales increase 0.4% per year from 2018 to 2050 in the Reference case, while commercial sales increase by 0.5% per year. These projected rates are

much lower than what occurred from 1990 through 2018, when electricity sales grew at average annual rates of 1.7% in the residential sector and 1.8% in the commercial sector. Part of this slowing growth comes from improvements in technology and energy efficiency standards.

Federal efficiency standards—first adopted in the late 1980s and in effect in the early 1990s—require minimum performance levels for space heating, cooling, and water heating equipment as well as appliances and many other energy-consuming devices in buildings. As equipment is replaced, which can take 10 to 30 years for some equipment, overall efficiency is increased and total electricity demand is reduced from what it would have been had standards not been in place. AEO2019 includes current federal efficiency standards that are in effect or finalized with a future effective date, so projected new and replacement equipment is expected to meet these minimum performance requirements when installed.SOURCE: EIA, February 13, 2019 G

News Brief

In your INTERESTMARCH 20194

MUI Supporting Membership offers you...

To become a Supporting Member simply complete the application on the back of this newsletter and return with payment or join with a

credit card by calling MUI at 1-888-850-5171 or 651-227-7902.

• FREE Meeting Attendance to ALL of our meetings for your household (value is well above the cost of an annual membership!)

• Free Edward Jones Selected Utility Data Chart updated annually*• Opportunities to go on Exclusive MUI Member Energy Plant Tours**• Quarterly Print Newsletter delivered to your home• Print invitations for all MUI events and opportunities

Maybe it's time to give MUI Supporting Membership a closer look!

*You will receive a digital copy of this chart upon joining — why miss out?**For a chance to participate in the MUI Summer Energy Tours you will need to join by Friday April 19th!

To have access to these convenient resources and opportunities your household can join MUI as a Supporting Member for just $20 annually or $50 for 3 years.

VOL. 29 NO. 1 5

Did You Know cont. on page 6

Interesting Tidbits

Did You Know?

Recent Utility Company

News

Duluth's Allete Selling Water Subsidiary to Japanese CompanyAllete Inc. is selling one of its subsidiaries to a Japanese company for $270 million. Tokyo-based Kurita Water Industries Ltd. is set to buy U.S. Water Services, pending regulatory approval, in a move that could boost spending on Allete’s renewable energy projects.

“Kurita is a well-respected global enterprise, and this agreement is a win-win for Allete and U.S. Water Services,” Allete Chief Financial Officer Bob Adams said in a news release. “Proceeds from the sale will be primarily reinvested in growth initiatives at both our (utilities) and Allete Clean Energy.”

Allete, also the parent company of Minnesota Power and Superior Water, Light & Power, paid $168 million for an 87 percent stake in U.S. Water Services in 2015.

CenterPoint Energy and Vectren Complete MergerCenterPoint Energy, Inc. (NYSE: CNP) and Vectren Corporation (NYSE: VVC) recently announced the successful completion of their merger. The combined company, which is named CenterPoint Energy and headquartered in Houston, has regulated electric and natural gas utility businesses in eight states that serve more than 7 million metered customers and a competitive energy businesses’ footprint in nearly 40 states. With the merger, CenterPoint Energy has assets totaling approximately $29 billion, an enterprise value of $27 billion and approximately 14,000 employees.

CenterPoint Energy’s businesses include: Electric utility business – CenterPoint Energy maintains the wires, poles and electric infrastructure serving 2.4 million metered customers in the greater Houston area and 145,000 customers in Indiana. The company also owns and operates nearly 1,300 megawatts of power generation capacity in Indiana. CenterPoint Energy’s Texas electric utility business is headquartered in Houston and its Indiana electric utility business is

headquartered in Evansville, Iniana. Natural gas utility business – CenterPoint Energy sells and delivers natural gas to 4.5 million homes and businesses in eight states: Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas, including Houston and Minneapolis. The company’s natural gas utility business is headquartered in Evansville.

Competitive energy businesses–CenterPoint Energy’s competitive energy businesses include: natural gas marketing and energy-related services; energy efficiency, sustainability and infrastructure modernization solutions; and construction and repair services for pipeline systems, primarily natural gas. The company’s competitive energy businesses are led from Houston.

MDU Resources Subsidiary to Construct Bakken Natural Gas Transportation ProjectMDU Resources Group, Inc. (NYSE: MDU) announced that subsidiary WBI Energy, Inc. plans to construct approximately 67 miles of new pipeline, compression and ancillary facilities to transport natural gas from core Bakken production areas in western North Dakota to an interconnection point with Northern Border Pipeline. This North Bakken Expansion Project, as designed, would provide 200 million cubic feet per day of natural gas transportation capacity.

Dependent on regulatory and environmental permitting and finalization of transportation agreements with customers, construction on the project is expected to begin in early 2021 and be completed late that year.

“We are excited to grow our pipeline system to meet the natural gas transportation needs in the Bakken region,” said Trevor J. Hastings, president and CEO of WBI Energy. “We are working with our customers to meet these needs as the industry focuses on reducing natural gas flaring while growing production volumes.”

The estimated cost to build the designed 20-inch diameter pipeline and two associated compressor facilities is $220

ALE

CNP

MDU

In your INTERESTMARCH 20196

million. The project is expected to start near Tioga, North Dakota, and extend to a new connection with Northern Border Pipeline in McKenzie County, North Dakota.

WEC Energy Group Posts Strong 2018 ResultsWEC Energy Group (NYSE: WEC) recorded net income based on generally accepted accounting principles (GAAP) of $1.06 billion, or $3.34 per share, for 2018. This compares to earnings of $1.20 billion, or $3.79 per share, for 2017. The 2017 results include earnings from recurring operations of $3.14 per share and the net impact of one-time, non-cash adjustments totaling 65 cents per share. These one-time adjustments reflect the application of the 2017 tax law to the company's non-utility assets and to the assets of the parent company. 2018 earnings of $3.34 per share compared to 2017 adjusted earnings of $3.14 per share.

“On virtually every meaningful measure, 2018 was an exceptional year for WEC Energy Group,” said Gale Klappa, executive chairman. “We delivered solid earnings and dividend growth and reached milestones in network reliability, customer satisfaction and community support,” he added. “The company continues to perform at a high level.”

For the fourth quarter of 2018, WEC Energy Group recorded net income based on GAAP of $205.0 million,

or 65 cents per share. This compares to earnings of $432.6 million, or $1.36 per share, for the fourth quarter of the previous year, which included 65 cents per share of one-time, non-cash adjustments.

During the fourth quarter, We Energies, WEC Energy Group’s largest utility, was recognized as the most reliable utility in the Midwest for the eighth year in a row by PA Consulting, an independent firm that analyzes data on electric outages, restoration times and service quality.

Otter Tail Corporation Increases Quarterly Dividend

Otter Tail Corporation (NASDAQ: OTTR) announced today the Board of Directors increased the company’s quarterly common stock dividend to $0.35 per share. The increase brings the annual indicated dividend rate to $1.40 per share, a $.06 increase over the 2018 rate. The dividend is payable on March 9, 2019 to shareholders of record on February 15, 2019. This 4.5 percent increase demonstrates our strong commitment to our shareholders and shows the confidence the board of directors has in our ability to deliver sustainable earnings and cash flows. We expect future dividend increases to be in line with earnings growth while maintaining a targeted payout ratio in the range of 60 to 70 percent.

This represents the 80th year (321st consecutive quarter) dividends have been paid on common stock. G

Did You Know cont. from page 5

One of the many benefits of being an MUI Supporting member is the opportunity to see first-hand the variety of ways Minnesotans get their power and the chance to talk to the employees that make it all happen.

MUI is in the process of organizing these Summer Tours. Information about these tours, and possibly more, will be sent to MUI Supporting Members in April.

MUI Summer Tours (available to MUI Supporting Members only)

DATE TOUR

June Xcel Energy Prairie Island Plant Tour (near Red Wing, MN)

June Midwest Independent System Operator (MISO) Control Center

June Minnesota Power Camp Ripley Solar Farm Tour (near Little Falls, MN)

August Xcel Energy Monticello Nuclear Plant

Reservations will be taken on Monday, April 29th at 9:30 AM (central time)

WEC

OTTR

VOL. 29 NO. 1 7

XEL

News Briefs

Google Looking at Becker to Build a $600 Million Data CenterGoogle is looking at building a giant Minnesota data center in Becker that would cost at least $600 million and be powered by two dedicated wind farms.

The data center, essentially a big building full of servers, was disclosed Thursday in a regulatory filing by Minneapolis-based Xcel Energy, which would play a big role in the project. The Google server farm would create about 50 full-time tech jobs and about 2,000 construction jobs over 18 to 24 months.

The Google facility would be one of the largest private construction projects in recent state history. It would be located on roughly 300 acres owned by Xcel near two of the company’s coal generators that are expected to close in the mid-2020s.

Data centers consume a lot of electricity, and Google would become one of Xcel’s five largest electricity customers in Minnesota if the project goes through, said Aakash Chandarana, Xcel’s regional vice president for rates and regulatory affairs, in an interview.SOURCE: Star Tribune, January 10, 2019 Mike Hughlett and Evan Ramstad

Solar Jobs are up in Minnesota, but Down NationallyMinnesota posted an eight percent increase in solar industry jobs last year, bucking a national solar employment decline of 3.2 percent, said an annual report released Tuesday by The Solar Foundation. The state tallied 4,602 solar jobs last year, up from 4,256 in 2017 and 1,995 in 2015. Minnesota ranked 15th in the nation in 2018 in total solar jobs, according to The Solar Foundation, a non-profit research group.

As defined by the foundation, solar employment includes developing, constructing and maintaining solar arrays, along with manufacturing, sales and distribution jobs connected to the solar industry. About two-thirds of solar jobs nationally are in installation and project development.The U.S. solar industry employed 242,343 people as of 2018, down by nearly 8,000 jobs from 2017 and the second consecutive year of decline after years of steady growth.

Solar companies delayed many large projects in late 2017, waiting for the outcome of a petition for new tariffs on solar panels, according to the Solar Foundation. The delays put a damper on growth, reducing employment demand.

Solar installer is expected to be the fastest-growing occupation in the United States from 2016 to 2026, followed closely by wind turbine technician, according to the U.S. Bureau of Labor Statistics. The former had a 2017 median annual pay of $39,490; the latter, $53,880.

While solar energy still makes up only about 1 percent of Minnesota’s power generation, it has grown from virtually nothing: 1 megawatt of production capacity in 2008 to a projected 882 megawatts by the end of 2018, according to the Minnesota Department of Commerce. (A megawatt is one million watts). The state’s community solar garden program has particularly bloomed over the past two years, comprising around 60 percent of solar power capacity in Minnesota.

The solar garden program, created by the state Legislature in 2013, is aimed at residents, businesses and governments that want solar energy without setting up their own panels. Independent developers build the solar arrays and Minneapolis-based Xcel Energy buys power and administers the program.SOURCE: Star Tribune, February 12, 2019, Mike Hughlett G

utilities but listed are several we anticipate to be included in the House Omnibus Energy & Climate Committee Bill:

• An increase in the Renewable Energy Standard to 80% by 2035 and 85% by 2035 for Xcel Energy (HF 700)

• Establish a 100% Carbon-free Standard by 2050 for all electric utilities except Xcel Energy must meet it by 2045. (HF 700)

• Incentives for solar energy on schools (HF 1133)

• Providing additional incentives for expanding the electric vehicle charging infrastructure

We hope you can join us on Wednesday, April 10 for our MUI Day at the Capitol. G

Legislative Session cont. from page 1

In your INTEREST

In Your Interest is a publication of Minnesota Utility Investors, and is published four times each year in March, June, September and December.

Phone: 651-227-7902 Toll Free: 1-888-850-5171

Email: mui@mnutilityinvestors.org www.mnutilityinvestors.org

President: Annette P. Henkel Office Manager: Lana Leonard Membership & Marketing Manager: Heidi Hickey

The Cass Gilbert Building 413 Wacouta Street, Suite 230 St. Paul, MN 55101

How to Join Complete this form and return with a check (make payable to MUI) or call us to pay with a credit card at 651-227-7902 or 1-888-850-5171.

NAME

SPOUSE’S NAME (IF APPLICABLE)

ADDRESS

CITY STATE ZIP

PHONE EMAIL

TO JOIN simply complete this form and return with payment. Or call MUI at 1-888-850-5171 or 651-227-7902.

Ready to take a CLOSER look at Supporting Membership?

Our Supporting Members are Informed, Involved, and Engaged Investors.

To receive mail delivery of this newsletter, join as a Supporting Member 1 year=$20, 3 years=$50

Benefits of Supporting Membership:• FREE Meeting Attendance

to ALL of our meetings for your household (valued well above the cost of an annual membership!)

• Free Edward Jones Selected Utility Data Chart updated annually

• Opportunities to go on Exclusive MUI Member Energy Plant Tours

• Quarterly Print Newsletter delivered to your home

• Print invitations for all MUI events and opportunities

Membership QualificationI have investments in the one or more of these Minnesota Investor-Owned Energy Utilities: (Check all that apply)

ALLETE

CenterPoint Energy

MDU Resources Group

Otter Tail Corporation

WEC Energy Group

Xcel Energy

Member DuesTwo people per household included per membership. (Select one)

Annual Membership ($20)

3-year Membership ($50)*

*3-year Membership GiftThose that select 3-year Membership earn a free gift. (Select one)

MUI Collapsible Tote

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Please Mail to: Minnesota Utility Investors413 Wacouta Street, Suite 230 St. Paul, MN 55101

Great 3-year membership gifts!

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