Otter Tail Corp. is raising its capital expenditure projections for the 2019-to-2023 period to support planned investments in wind facilities, as well as other technology and transmission projects.
The company increased its planned capex from $1.07 billion to $1.1 billion during the five-year period. In 2019, Otter Tail's capex is expected at $233 million, which includes $79 million for the Merricourt wind project and $46 million for the Astoria Station natural gas plant.
Otter Tail's capex projection is $376 million in 2020; $131 million in 2021; $220 million in 2022; and $145 million in 2023.
"With this revision, our compounded annual growth rate in rate base is now projected to be 8.6% over the 2018-through-2023 time frame," said CFO Kevin Moug during the company's Aug. 6 earnings conference call. "These investments will continue to positively impact the corporation's earnings and returns on capital."
Moug added that the company has an option to purchase the 62.4-MW Ashtabula III wind farm from NextEra Energy Inc. and NextEra Energy Partners.
"That is now included in our 2022 time frame of capex; that's been moved forward from 2023," he said. Output of the Ashtabula III facility is currently contracted to Otter Tail under a 25-year power purchase agreement.
In July, Otter Tail, through its Otter Tail Power Co. utility, closed the acquisition of the 150-MW Merricourt wind project in McIntosh and Dickey counties, in North Dakota, from EDF Renewable Development Inc. Construction of the $270 million facility will start in August, with a target completion date in October 2020.
In May, Otter Tail also started work on the Astoria Station natural gas-fired combustion turbine generation project in South Dakota's Scandinavia Township. The project remains on schedule and on budget, according to an Aug. 6 filing.
With Merricourt and Astoria as catalysts, Otter Tail Power now expects that by 2022, its customers will receive 30% of their energy from renewable resources, and its carbon emissions will be at least 30% below 2005 levels, while keeping rates about 30% below the national average.