Manitoba Hydro has signed preliminary deals to sell more electricity to Minnesota, a move that could bolster plans for new hydro dams and transmission lines.

Under a deal announced Tuesday, Minnesota Power would buy surplus hydroelectric power from Manitoba Hydro starting this year, depending on availability. A second 15-year deal would see the U.S. utility buy 250 megawatts of electricity, or about enough power for 80,000 homes, beginning around 2020.

The long-term sale would require the building of hydroelectric facilities in northern Manitoba and major new transmission facilities between Canada and the U.S., the two companies said.

Minnesota Power currently buys 50 megawatts from Manitoba Hydro under a deal that will expire in 2015. Manitoba Hydro's biggest customer in the state is Xcel, which has a 10-year contract for 375 megawatts of power.

Minnesota Power and Manitoba Hydro have one year to complete talks and sign definitive agreements.

"We are pleased to co-operate with our neighbour and long-term utility partner to secure this clean, carbon-free energy resource for our customers," said Don Shippar, chairman, president and CEO of Allete Inc., the parent company of Minnesota Power, in a release issued Tuesday.
 
Manitoba Hydro has been considering building the $3.5 billion Keeyask hydro plant or the $5 billion Conawapa plant, which would generate 1,250 megawatts, on rivers in northern Manitoba. If built, the plants would expand the company's output for provincial consumption and for export to other parts of Canada and the United States.

"Manitoba Hydro is proceeding with plans for the development of new large hydroelectric projects in northern Manitoba," said Bob Brennan, Manitoba Hydro president and CEO.

"Another benefit to both parties is the additional transmission capacity between the two utilities. These projects and the associated power sales will be good for the environment, good for the northern First Nation communities and good for ratepayers both in Minnesota and Manitoba."

Winnipeg-based Manitoba Hydro, a provincial Crown corporation, is the province's major energy utility, serving 516,800 electric customers throughout Manitoba.

Minnesota Power supplies retail electric service to 141,000 customers in the northern U.S. state.