Bills in the state Legislature would provide $25 million in taxpayer money to Minnesota Power for a roughly $700 million power line renovation project.

The Duluth-based utility also is asking North Dakota for $25 million, aiming to use the money from the states to snare an additional $50 million in federal funding.

Minnesota Power wants to upgrade two terminals for a 465-mile power line from Hermantown to central North Dakota. The refurbishment would increase the 46-year-old power line's capacity by about 60%.

"It is a critical piece of infrastructure, and it is time now to modernize it," Julie Pierce, Minnesota Power's vice president of strategy and planning, told a Senate committee Wednesday. "We are going to need more transmission to reduce congestion, manage new renewables and maintain reliability [on the grid]."

Minnesota Power notified utility regulators of the project in November, though publicly disclosed its preliminary cost estimate just this week. The Minnesota Public Utilities Commission also must approve it.

Sen. Grant Hauschild, DFL-Hermantown, and Rep. Dave Lislegard, DFL-Aurora, introduced bills that would appropriate $25 million from the state's general fund for the project. Both the Senate and House energy committees on Wednesday laid over the bills for inclusion in broader spending legislation.

The North Dakota House has already approved $25 million for the project.

Minnesota Power is applying to the U.S. Department of Energy for the matching $50 million contribution, which would be covered by the 2021 Infrastructure Investment and Jobs Act. The law set aside billions of dollars to shore up the aging U.S. power grid.

Pierce said the project would allow Minnesota Power to transport more wind electricity to Minnesota from North Dakota, helping it meet Minnesota's new clean power goals.

"It is a very critical piece of our renewable energy plan," she said.

A law signed in January by DFL Gov. Tim Walz directs Minnesota utilities to produce 100% carbon-free power by 2040.

Even without the 2040 goals, Minnesota Power would need to refurbish the terminals at each end of the power line, Pierce said. "We have to make a decision now on whether to retire or replace this infrastructure."

The terminals convert electricity from direct current to alternating current. Minnesota power's line from Hermantown to Center, N.D., is one of a handful of HVDC (high-voltage direct-current) lines in the country.

HVDC lines transmit electricity more efficiently than alternating current (AC) lines. But direct current must be converted so it can flow on the grid's mostly AC system.

The power line's western terminus is a large coal-fired power plant. The line was built to send "coal by wire" to Minnesota, said Al Rudeck, safety and external affairs officer for Minnesota Power's Duluth-based parent company Allete.

A coal mine adjacent to the power plant is owned by another Allete subsidiary, and Minnesota Power is entitled to 50% of the coal plant's electricity production.

But Minnesota Power's contractual commitment to the plant expires at the end of 2025. And the utility has been selling most of its electricity allotment back to the plant's other owners in recent years.

In 2022, about 9% of Minnesota Power's electricity came from the North Dakota coal plant, according to a filing with the U.S. Securities and Exchange Commission.

The power line is now primarily used to transport power from Allete-owned wind farms in North Dakota, Rudeck said. "We are bringing wind by wire essentially today."

Even after 2025, some coal power — by the nature of the electric grid — would still flow on Minnesota Power's line, particularly when wind production is low. The new line also would allow power to flow both ways — not just from North Dakota to Minnesota.

Minnesota Power said that with federal and state funding, the company can renovate its HVDC converter stations so that its 465-mile line could eventually carry three to six times more electricity, not just 60 % more.

To get to those higher levels, though, the company would need to string a new, higher-capacity line along the current route, a project that regulators would need to approve separately.