Allete will partner with Houston-based Grid United to develop a novel $2.5 billion power line from central North Dakota to eastern Montana.
Duluth-based Allete, parent company of Minnesota Power, would operate and own at least 35% of the 385-mile line — an $875 million investment. The 600-kilovolt power line would connect three regions of the U.S. power grid.
The nation's overall power grid is decentralized. Connections between the eastern and western grids are particularly scarce, making it difficult to move abundant power from one area to a region where electricity is in short supply.
"This is going to have really broad-ranging benefits," said Julie Pierce, Minnesota Power's vice president of strategy and planning. The power line would be an Allete corporate project; Minnesota Power would not seek money from ratepayers to finance it.
The North Dakota-Montana power line would be one of largest transmission projects undertaken by Allete or its Minnesota Power subsidiary.
If built, the power line — dubbed the North Plains Connector — is projected to come online in 2029. While Allete is working with Grid United, the companies have not signed a full development agreement.
"We are just in the early stage of developing this project," Pierce said. "There is a long road ahead."
Indeed, a raft of a state and federal regulatory permits would be needed, as well as approval from MISO and SPP, organizations that operate regional power grids that cover many states, including Minnesota.
The North Plains Connector would run from two points in central North Dakota to Colstrip, Mont., site of a large coal power plant. North Dakota is a major exporter of electricity, from coal plants and wind farms.
The new power line would make it easier to transport electricity produced in states well beyond North Dakota and Montana. That could ease overall grid congestion and improve the flow to electricity to areas hit hard by bad weather.
Grid United and Allete say it would be the nation's first transmission connection between three regional U.S. electric energy markets — the Midcontinent Independent System Operator (MISO), the Western Interconnection and the Southwest Power Pool (SPP).
Grid United was formed a couple of years ago by Michael Skelly, a wind power developer who turned to transmission development as head of Clean Line Energy. Clean Line tried to develop a 700-mile power line from Oklahoma to Tennessee.
The company folded in 2017 after encountering numerous regulatory obstacles, but its transmission project has effectively been revived by another company under the name Grain Belt Express.
Grid United, which is backed by the energy-focused investment fund Centaurus Capital, is working on five power line projects, which range from 100 miles to 385 miles long, The North Plains Connector is the furthest along, Skelly said.
"We've had thousands of conversations" with landowners and government officials, he said.
Allete is the first utility company to participate in one of United Grid's projects. "It's a big deal for us," Skelly said. "It's an expression of confidence in the project."
Skelly said he expects that the North Plains Connector will partly be a "merchant" power line, carrying electricity to and from customers who pay for the service.
But electric utilities may also join the project to serve their own customers — and recoup their investments from ratepayers.
The North Plains Connector would be a high-voltage direct-current line. A high-voltage DC line loses less power over long distances than an alternating current (AC line), increasing the efficiency of electricity transportation.
The power line would have the capacity to transport 3,000 megawatts of electricity.