DULUTH MN - June 2, 2008 - The City of Duluth has reached agreement with Minnesota Power to sell the boilers and plant infrastructure it owns in Steam Plant #2 in West Duluth for $2.5 million, Mayor Don Ness announced Wednesday.  Steam Plant #2 provides steam to NewPage’s Duluth paper mill and recycle mill as well as Minnesota Power’s Hibbard Energy Center.

 The City owns a portion of the plant equipment, with Minnesota Power owning the balance of equipment and surrounding buildings and the property where the assets reside.  The sale proceeds will help restore the city’s undesignated fund balance and will provide immediate cash infusion into the general fund.  “After several months of discussions and negotiations with Minnesota Power, I am very pleased to announce this sale,” Mayor Ness said.  “The city-owned equipment is used as part of a steam co-operative that provided no revenue to the city.  The sale of our equipment not only brings an important infusion of cash but more importantly puts this operation into private hands.”

 “Under private ownership, we will see significant investment into this equipment and a resulting benefit to both Minnesota Power and NewPage,” the mayor added.

 For its part, Minnesota Power plans to invest $13 million into the facility over the next three years, which will also generate an estimated $65,000 per year in new property tax revenue to the city.

 “This acquisition would allow us to meet our state mandate of providing 25 percent of our energy from renewable resources by 2025,” said Minnesota Power COO Al Hodnik.  “We would be able to sustain the 33 jobs presently on site and upgrade two others as an added benefit of this purchase.  We are very happy to partner with the City of Duluth and NewPage to move this important project forward.”

 In addition to receiving the sale proceeds, the City is released from liability associated with the site, involvement in oversight and management of the assets, and exits from a non-core business area.  “The phrase ‘win-win’ is bandied about quite a bit nowadays but we really do have such a situation here,” Mayor Ness said.  “The City of Duluth streamlines its operations, realizes financial benefit, and a trusted hometown corporation is able to expand its operation.  This is a great day for Duluth.”