MDU will request a rate increase .... wind energy is costing too much.
North Dakota requires a certain percentage of renewable energy be provided by wind.
According to the link above, MDU analysts show that with that requirement removed, MDU made about $3 million in profits. I have no idea what is meant by that since the article did not elaborate, and the article did not say what that figure was in comparison to. MDU posted an operating income of $19 million in 3Q10 compared to an operating income of $15 million in 3Q09.
It is my understanding that regulated utilities are guaranteed a "reasonable" rate of return (I don't know the formula) on their regulated activities and guaranteed recuperation of costs incurred for projects mandated by law.
Investors were disappointed in MDU's 3Q10 earnings report. MDU earned 32 cents/share in the most recent quarter compared to 50 cents/share in 3Q09.
According to MDU's most recent 10-Q, MDU's average cost of fuel and purchased power per kWH is 2 cents. I do not know what the electricity costs coming from the two MDU wind farms, but just to remind folks what wind energy costs, here are the projections for the Cape Wind project off the coast of Massachusetts: Wind Cape energy: 21 cents/KWH and will increase at 3.5% annually.
Off-shore wind energy is significantly more expensive than on-shore wind energy, and although it is difficult to get accurate figures, two facts: a) general consensus is that wind energy is at least 50% more expensive than coal for generating electricity; and, b) wind energy costs about 10 to 12 cents per kWH.
It should be noted that wind energy is the least of MDU's challenges right now. MDU is a diversified conglomerate and the general downturn of the economy has hurt its materials and construction division and lower natural gas prices continue to be a significant problem.
3Q10 earnings conference call.
Billings Gazette link with same story.
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