Basin Electric’s 10-year financial forecast for 2024-2033 was approved by directors at the August meeting.
Darla Jensen, Basin Electric manager of financial reporting and planning, said the forecast contains a number of key assumptions. “This forecast includes total capital expenditures of $5.1 billion to build new generation and transmission to serve member load growth. The estimated capital expenditures are primarily for transmission line and substation equipment upgrades and enhancements to existing facilities.” Jensen said. “Capital spend results in increased financing costs with estimated debt issuances exceeding $3.5 billion. Increasing costs associated with new generation build-out, maintenance expense and volatility in West-side surplus sales contribute to the need for projected rate increases after the first two years of the forecast.”
Cost of electric service expenses will range from $2.2 billion to $2.7 billion per year. “The increase in cost of service can be attributed primarily to member growth,” Jensen said. “The member growth is being met through new generation build which includes wind, solar, and gas generation.”
On a consolidated basis, the forecast includes spending of $5.6 billion for capital expenditures over the 10-year period. “Basin Electric accounts for 90% of this spend, with more than two-thirds of that going toward new generation and transmission facilities. The balance, $1.5 billion, will be used at existing facilities” Jensen said. “The remainder of the capital expenditures would be spent at Dakota Coal and Dakota Gas.”
Margin sensitivity analysis indicates a consolidated margin of $150 million is required to maintain certain targeted financial metrics. “We set that target so we can maintain financial ratios that support ‘A’ credit ratings. The estimated impact on rates is rate increases starting in 2026. A consolidated margin necessitates member rate increases staring in 2026,” Jensen said.
Dakota Gasification Company
A 10-year financial forecast was also approved by Dakota Gas directors.
With the revenue and expenses assumed in the financial forecast, Jensen said Dakota Gas expects net income for the duration of the forecast. In addition to the continued coal gasification operations, the 45Q project, which includes three compressors, is estimated to go into service in the first quarter of 2024 to capture and sequester carbon dioxide.
Total expenses average $590 million annually through 2033. Jensen said the primary drivers of operating expenses in the forecast are coal, utilities, labor benefits, and natural gas purchases.
Total capital expenditures for 2024-2033 are projected to total $213 million. The forecast includes an infrastructure improvement plan to achieve better plant performance. Jensen said total capital expenditures related to the infrastructure improvement plan are about $84 million.
Dakota Coal Company
The 10-year financial forecast for Dakota Coal was approved by its directors.
Over the 10-year period, projected lignite coal deliveries from the Freedom Mine average approximately 14 million tons annually.
According to Jensen, the forecast predicts that average coal prices will range from $18.66 to $26.81 per ton.
Consolidated net income after tax is estimated at approximately $4 million. Capital expenditures are estimated to be $388 million for Dakota Coal’s coal, lime, and limestone operations for the 10-year period.
