FERGUS FALLS, Minn. - Otter Tail (NASDAQ:OTTR) Power Company, a subsidiary of Otter Tail Corporation (NASDAQ:OTTR), has received approval from the Minnesota Public Utilities Commission (MPUC) to modify its energy sourcing strategy for Minnesota customers. This decision, announced yesterday, is part of the company's resource plan for 2022-2036 and includes transitioning the Coyote Station to emergency-only use for Minnesota customers starting June 1, 2026, through 2031.
The MPUC has allowed Otter Tail Power to retain the reliability benefits of Coyote Station, which will continue to operate for North Dakota and South Dakota customers beyond 2031. Additionally, the company is set to develop project plans for replacement energy, including 200 to 300 MW of solar resources, 150 to 200 MW of wind resources, and 20 to 75 MW of battery storage. These new resources aim to be operational by the end of 2029, contributing to Minnesota's Carbon Free standard.
The commission also recognized the proposal to add on-site liquefied natural gas storage at the Astoria Station natural gas facility as reasonable and prudent. This step is part of the regulatory process to enhance system reliability and provide price protection for Minnesota customers.
Otter Tail Power Company President Tim Rogelstad expressed appreciation for the support from various labor unions and the MPUC's commitment to customer needs. Otter Tail Power serves customers across three states and is awaiting a decision on the on-site fuel project at Astoria Station from the North Dakota Public Service Commission. There are no pending decisions in South Dakota as the state does not have a project preapproval process.
This strategic shift is part of Otter Tail Power’s broader efforts to align with environmental standards and improve energy reliability for its customers. The information in this article is based on a press release statement from Otter Tail Corporation.
InvestingPro Insights
As Otter Tail Power Company, a subsidiary of Otter Tail Corporation (NASDAQ:OTTR), navigates through strategic changes in its energy sourcing, investors and stakeholders may find the following InvestingPro Insights particularly informative. With a current market capitalization of $3.81 billion, the company is making significant moves that could impact its financial performance and growth trajectory.
From an investment standpoint, Otter Tail Corporation has demonstrated a commitment to returning value to shareholders. This is evidenced by the fact that the company has raised its dividend for 10 consecutive years, and has maintained dividend payments for an impressive 54 consecutive years. Such consistency suggests a stable financial position and a reliable income stream for investors, aligning with the company’s strategy to provide long-term value.
Moreover, Otter Tail Corporation is trading at an earnings multiple of 12.29, which is considered low relative to the market. This could indicate that the company's stock is potentially undervalued, presenting an attractive entry point for investors. Additionally, the P/E ratio, adjusted for the last twelve months as of Q1 2024, stands at 12.46, reinforcing the notion of a reasonable valuation in the current market.
As Otter Tail Power continues to invest in renewable energy sources, such as solar and wind resources, analysts have revised their earnings upwards for the upcoming period. This optimism may reflect the company's strategic initiatives to meet environmental standards and improve energy reliability, which could translate into future profitability.
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Investors may also note that the company's liquid assets exceed its short-term obligations, and it operates with a moderate level of debt, which could provide a cushion against market volatility. With a total of 12 additional InvestingPro Tips available, stakeholders can gain a comprehensive understanding of Otter Tail Corporation's financial position and make informed decisions.
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