SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K

(Mark One) (X)  Annual Report pursuant to Section 13 or 15(d) of the 
                Securities Exchange Act of 1934 (fee required) 

                For the fiscal year ended  December 31, 1996
                                      OR
           ( )  Transition Report pursuant to Section 13 or 15(d) of the 
                Securities Exchange Act of 1934 (no fee required) 

                For the transition period from _______to_______

                         Commission File Number 0-368

                           OTTER TAIL POWER COMPANY 
            (Exact name of registrant as specified in its charter)

           MINNESOTA                                   41-0462685 
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

215 S. CASCADE ST., BOX 496, FERGUS FALLS, MN                       56538-0496 
  (Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code: (218)739-8200 

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class                  Name of each exchange on which registered 
       NONE                                            NONE 

Securities registered pursuant to Section 12(g) of the Act: 

                   COMMON SHARES, par value $5.00 per share
                        PREFERRED SHARE PURCHASE RIGHTS
                CUMULATIVE PREFERRED SHARES, without par value
                               (Title of class)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 
of Regulation S-K is not contained herein and will not be contained, to the 
best of the registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. (X) 

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. (Yes X  No    )

State the aggregate market value of the voting stock held by nonaffiliates of 
the registrant.
                     $365,961,842 as of February 28, 1997

Indicate the number of shares outstanding of each of the registrant's classes 
of Common Stock, as of the latest practicable date:
        11,417,647 Common Shares ($5 par value) as of February 28, 1997

Documents Incorporated by Reference:
  1996 Annual Report to Shareholders - Portions incorporated by reference into 
Parts I and II 
  Proxy Statement dated March 14, 1997 - Portions incorporated by reference
into Part III


                                    PART I

Item 1.  BUSINESS
         --------
      (a) General Development of Business
          -------------------------------
      Otter Tail Power Company (the "Company") is an operating public utility 
incorporated in 1907 under the laws of the State of Minnesota.  The Company's 
principal executive office is located at 215 South Cascade Street, Box 496, 
Fergus Falls, Minnesota 56538-0496; its telephone number is (218)739-8200. 

      The Company's primary business is the production, transmission, 
distribution and sale of electric energy.  The Company, through its 
subsidiaries, is also engaged in other businesses which are referred to as 
Health Services, Manufacturing and Other Business Operations.  Health Services 
Operations consists of certain businesses acquired beginning in 1993, that 
sell, service, lease and operate diagnostic medical imaging equipment and 
associated supplies and accessories.  Manufacturing Operations includes 
businesses acquired beginning in 1990 in such areas as metal parts stamping 
and fabrication, agricultural equipment, and plastic pipe extrusion.  Other 
Business Operations include businesses involved in such areas as electrical 
and telephone construction contracting, radio broadcasting, waste 
incinerating, and telephone/cable TV utility.

      The Company continues to investigate acquisitions of additional 
non-electric businesses and expects continued growth in this area.  In 
February 1996, the Company's subsidiary, Mid-States Development, Inc. 
("Mid-States"), acquired a Montana-based supplier of X-ray supplies and 
accessories. In April 1996, Mid-States acquired a mobile medical diagnostic 
services company located in Bemidji, Minnesota. In 1996, Mid-States also 
acquired four radio stations in the Fargo, North Dakota/Moorhead, Minnesota, 
market.  The Company's telecommunications subsidiary, North Central 
Utilities, Inc. ("NCU"), acquired two small cable TV systems in 1996 that 
serve the communities of Milbank, South Dakota, and Carlos, Minnesota.  The 
total acquisition price for all these businesses was $11,060,000.

      On January 2, 1997, NCU acquired The Peoples Telephone Co. of Bigfork 
("Peoples") to be accounted for under the pooling-of-interests method. 
Peoples, with 1,903 access lines serving five communities in Northern 
Minnesota, had 1996 revenues of $1.6 million.

      For a discussion of the Company's results of operations, see 
"Management's discussion and analysis of financial condition and results of 
operations," which is incorporated by reference to pages 25 through 32 of the 
Company's 1996 Annual Report to Shareholders, filed as an Exhibit hereto.

      (b) Financial Information About Industry Segments
          ---------------------------------------------
      The Company and its subsidiaries are engaged in businesses that have 
been classified into four segments:  Electric, Health Services, Manufacturing, 
and Other Business Operations.  Financial information about the Company's 
industry segments is incorporated by reference to note 2 of "Notes to 
consolidated financial statements" on page 41 of the Company's 1996 Annual 
Report to Shareholders, filed as an Exhibit hereto.

      (c) Narrative Description of Business
          ---------------------------------
                              ELECTRIC OPERATIONS
                              -------------------
General
-------
      The Company derived 55% of its consolidated operating revenues from the 
electric segment during 1996; 62% during 1995; and 69% during 1994. During 
1996 the Company derived approximately 53.0% of its electric revenues from 
Minnesota, 39.3% from North Dakota, and 7.7% from South Dakota. 

      The territory served by the Company is predominantly agricultural, 
including a part of the Red River Valley.  Although there are relatively few 
large customers, sales to commercial and industrial customers are significant. 
By customer category, 35.5% of 1996 electric revenue was derived from 
commercial customers, 33.5% from residential customers, 18.8% from industrial 
customers, and 12.2% from other sources, including municipalities, farms and 
power pools.

      No customer accounted for more than 10% of electric revenues in 1996.  
Power pool sales to other utilities, which accounted for 15.3% of total 1996 
kwh sales, decreased  from 25.3% in 1995. Activity in short-term energy sales 
is subject to change based on a number of factors and the Company is unable to 
predict the 1997 level of activity.  The Company's other sales of electricity 
for resale are insignificant.

      The aggregate population of the Company's retail service area is 
approximately 230,000.  In this service area of 423 communities and adjacent 
rural areas and farms, approximately 123,600 people lived in communities 
having a population of more than 1,000, according to the 1990 census.  The 
only communities served which have a population in excess of 10,000 are 
Jamestown, North Dakota (15,571); Fergus Falls, Minnesota (12,362); and 
Bemidji, Minnesota (11,245).  Since 1990 when the customer count was at a low 
of 121,277, the Company has experienced an increase in customers. By year end 
1996 total customers had increased to 124,782. During 1996, the Company 
experienced a net increase of 711 customers, with the majority of growth in 
residential and commercial customers.

Competition
-----------
      The Company's electric sales are subject to competition in some areas 
from municipally owned systems, rural cooperatives and, in certain respects, 
from on-site generators and cogenerators.  The Company's electricity also 
competes with other forms of energy.  The degree of competition may vary from 
time to time depending on relative costs and supplies of other forms of 
energy.  The Company may also face competition as the restructuring of the 
electric industry evolves.  Proposals that are being considered by various 
states and at the federal level, along with the National Energy Policy Act of 
1992 ("NEPA"), are expected to bring more competition into the electric 
business.  The NEPA reduces restrictions on operation and ownership of 
independent power producers ("IPPs"). It also allows IPPs and other wholesale 
suppliers and purchasers increased access to transmission lines.  The NEPA 
prohibits retail wheeling ordered by the Federal Energy Regulatory Commission, 
but it does not address the states' authority to order retail wheeling.

      In 1996 the Federal Energy Regulatory Commission ("FERC") issued two 
closely related final rules and a Notice of Proposed Rulemaking ("NOPR").  
Order No. 888 opened wholesale power sales to competition by requiring public 
utilities who own, control, or operate transmission lines, to file 
nondiscriminatory proforma open access tariffs that offer others the same 
transmission service they provide themselves.  Order 889 requires utilities to 
obtain information about their transmission system for their own wholesale 
power transactions, such as capacity availability, by the same means as their 
competitors would--via an Open Access Same-time Information System ("OASIS"), 
as well as separate the wholesale marketing and transmission operation 
functions. The NOPR proposes that each public utility will replace the Open 
Access rule proforma tariff with a capacity reservation tariff by December 31, 
1997.  As of year-end 1996, the company had taken the necessary steps to 
comply with these orders.

      The Company is taking a number of steps to position itself for success 
in a competitive marketplace.  It has initiated the process of functionally 
unbundling its generation, transmission, distribution and energy services 
operations by setting up distinct separate business units in each of these 
areas. The Company is developing the necessary accounting systems to capture 
costs and determine the profitability of each of these units and to identify 
areas for improvement and opportunities for increased profitability.  The 
Company is establishing an energy services business unit to promote the energy 
related products and services that have always been offered to its customers 
and to develop new products and services to be offered to current and 
potential customers in order to distinguish itself from the competition.
 
      As the electric industry evolves, the Company may also have 
opportunities to increase its market share.  The Company's generation capacity 
appears well positioned for competition due to unit heat rate improvements and 
reductions in fuel and freight costs.  A comparison of the Company's electric 
retail rates to the rates of other investor-owned utilities, cooperatives, and 
municipals in the states the Company serves indicates that the Company's rates 
are competitive.  In addition, the Company would attempt more flexible pricing 
strategies under an open, competitive environment. 

Capability and Demand
---------------------
      At December 31, 1996, the Company had base load net plant capability 
totaling 552,134 kw, consisting of 241,256 kw from the Big Stone Plant (the 
Company's 53.9% share), 156,203 kw from the Hoot Lake Plant, 149,450 kw from 
the Coyote Plant (the Company's 35% share), and under contract 5,225 kw from 
the Potlatch Co-generation Plant near Bemidji, Minnesota.  In addition to its 
base load capability, the Company has combustion turbine and small diesel 
units, used chiefly for peaking and standby purposes, with a total capability 
of 91,123 kw, and 4,353 kw of hydroelectric capability.  During 1996, the 
Company generated about 61% of its total kwh sales and purchased the balance.

      The Company has made arrangements to help meet its future base load 
requirements, and continues to investigate other means for meeting such 
requirements. The Company has an exchange agreement with another utility for 
the annual exchange of 75,000 kw of seasonal diversity capacity which runs 
through 2004.  In addition, for the 1996-1997 winter season, the Company has 
50,000 kw capacity available for purchase from other utilities. The Company 
also has agreements to purchase 60,000 kw of capacity for the summers of 1997-
1999 and 50,000 kw of year-round capacity for the May 1, 1997 through April 30, 
2005 period.  The Company also has a direct control load management system 
which provides some flexibility to the Company to effect reductions of peak 
load.

      The Company is a member of the Mid-Continent Area Power Pool ("MAPP").  
On November 1, 1996, the MAPP Agreement expired and was replaced by the MAPP 
Restated Agreement which resulted in a new organization.  A Regional 
Transmission Group ("RTG") and power and energy market functions were added.  
RTGs, as proposed by the FERC, coordinate planning of transmission grids on 
regional levels.  Through its Restated Agreement, MAPP opened its membership to 
organizations outside the Upper Midwest boundaries first established in 1972. 
The objective of MAPP is to coordinate planning and operation of generating and 
interconnecting transmission facilities to provide reliable and economic 
electric service to members' customers.  Customers served by MAPP members may, 
therefore, benefit from the regional high voltage interconnections which are 
capable of transferring large blocks of energy between systems.  Also, high 
voltage interconnections permit companies to engage in power transactions with 
each other.

      The Company traditionally experiences its peak system demand during the 
winter season.  For the calendar year 1996, the Company established a new 
system peak demand of 614,961 kw on February 1, 1996. The highest previous 
sixty-minute peak demand was 594,350 kw on December 11, 1995. Taking into 
account additional capacity available to it in February 1996 under power 
purchase contracts (including short-term arrangements), as well as its own 
generating capacity, the Company's capability of then meeting system demand, 
including reserve requirements computed in accordance with accepted industry 
practice, amounted to 723,875 kw.  In 1997 the Company expects moderate growth 
in peak demand as compared to 1996.  The Company's additional capacity 
available under power purchase contracts (as described above), combined with 
the Company's generating capability and load management control capabilities, 
is expected to meet 1997 system demand, including industry reserve 
requirements.

Fuel Supply
-----------
      Coal is the principal fuel burned by the Company at its Big Stone, 
Coyote, and Hoot Lake generating plants.  Hoot Lake has burned primarily 
western subbituminous coal since 1988, and Big Stone switched from North Dakota
lignite to western subbituminous coal in August of 1995. The following table 
shows for 1996 the sources of energy used to generate the Company's net output 
of electricity: 

                                                   Net Kilowatt     % of Total
                                                      Hours          Kilowatt
                                                    Generated          Hours
           Sources                                 (Thousands)       Generated
           -------                                 ------------     ----------
      Lignite Coal  . . . . . . . . . . . . .        1,630,601         61.9%
      Subbituminous Coal  . . . . . . . . . .          981,841         37.3
      Hydro . . . . . . . . . . . . . . . . .           21,890           .8
      Oil . . . . . . . . . . . . . . . . . .            1,073            -
                                                     ---------        -----
      Total . . . . . . . . . . . . . . . . .        2,635,405        100.0%
                                                     =========        =====

      The Company has a coal supply agreement with Westmoreland Resources, Inc. 
of Billings, Montana, for supply of subbituminous coal to Big Stone Plant from 
mid-1995 through 1999.  The coal comes from the Absaloka Mine near Hardin, 
Montana.  The Company replaced the Big Stone Plant's coal stockpile in 1995 
with subbituminous coal from Kennecott Energy's Spring Creek Mine.  The Company 
has purchase agreements for fixed quantities of subbituminous coal with 
Kennecott Energy as needed for Hoot Lake Plant.  The lignite coal contract with 
Knife River Coal Mining Company for the Coyote Plant expires in 2016, with a 
15-year renewal option subject to certain contingencies, and is expected to 
provide the plant's lignite coal requirements during the term of the contract. 
Knife River Coal Mining Company is an affiliate of Montana-Dakota Utilities 
Co., which is a co-owner of the Big Stone and Coyote Plants.

      In September 1996 three of the four co-owners of the Coyote generating 
plant filed a Demand and Notice of Arbitration complaint against Knife River 
Coal Mining Company and MDU Resources Group, Inc.  The three co-owners contend 
that the 14-year-old pricing mechanism outlined in the original coal supply 
contract has been abandoned by all parties over the past 7 years and no longer 
results in fair, equitable, and competitive prices for the lignite coal used to 
generate electricity at the plant.
      
      It is the Company's practice to maintain minimum 30-day inventories (at 
full output) of coal at Big Stone, a 20-day inventory at Coyote Plant, and a 
10-day inventory at Hoot Lake Plant.

      In November 1996, Big Stone Plant put new aluminum coal cars, leased by 
the three plant owners, into service transporting coal to the plant.  The steel 
coal cars owned by the plant's joint owners were sold in September 1996.  The 
Company has a coal transportation agreement with Burlington Northern Railroad 
for transportation services to the Big Stone Plant.  This contract began in 
1995 and runs through 1999. The new coal cars and new coal and freight 
agreements result in lower delivered coal prices at the Big Stone Plant being 
returned to the Company's retail customers through the Cost of Energy 
Adjustment clause.

      The Company has a subbituminous coal transportation agreement with 
Northern Coal Transportation Company, effective January 1993, covering coal 
moved from Kennecott Energy's Spring Creek mine to Hoot Lake Plant.  That 
agreement was renewed in January 1996 for an additional three years.

      Coyote Plant is a mine-mouth plant located in western North Dakota.  
There are no coal transportation costs, giving Coyote Plant the lowest 
delivered fuel costs on a per tonnage basis as compared to other Company units.

      North Dakota imposes a severance tax on lignite at a flat rate of $.75 
per ton, plus an additional $.02 per ton which is deposited in a lignite 
research fund. The lignite coal used by the Company at its plants is surface 
mined.  The North Dakota laws relating to surface mining and the Federal 
Surface Mining Control and Reclamation Act will continue to adversely affect 
the price of lignite to the Company.  Any changes in fuel costs result in 
adjustments to retail rates through the provisions in the Company's rate 
schedules.

      The average cost of coal consumed (including handling charges to the 
plant sites) per million BTU for each of the three years 1996, 1995, and 1994, 
was $.944, $.969, and $1.003, respectively.

      The Company is permitted by the State of South Dakota to burn some 
alternative fuels, including tire and refuse derived fuel, at its Big Stone 
Plant.  The quantity of alternative fuel burned during 1996, 3.0% of total fuel 
burned at Big Stone Plant, and expected to be burned in 1997, is insignificant 
when compared to the total annual coal consumption at Big Stone Plant.

General Regulation
------------------
      The Company is subject to electric rate regulation as follows: 

                                                            Year Ended 
                                                         December 31, 1996
                                                       ---------------------
                                                         % of 
                                                       Electric     % of kwh
  Rates                   Regulation                   Revenues       Sales  
  -----                   ----------                   --------     --------
MN retail sales         MN Public Utilities 
                        Commission                       48.6%        45.2%

ND retail sales         ND Public Service
                        Commission                       38.3         32.7

SD retail sales         SD Public Utilities
                        Commission                        7.6          6.5  

Transmission & sales    FERC
  for resale                                              5.5         15.6  
                                                        -----        -----
                                                        100.0%       100.0%
                                                        =====        =====

      The following table summarizes the electric rate proceedings with the 
Minnesota and the South Dakota Public Utilities Commissions, the North Dakota 
Public Service Commission, and the Federal Energy Regulatory Commission since 
January 1, 1992: 
                                                          Increase (Decrease)
                                                                Granted 
                                                          -------------------
Commission                     Date                         Amount        %
----------                     ----                       ----------   ------
                                                          (Thousands) 

Minnesota          Last Proceeding was July 1, 1987

North Dakota       (1)September 9, 1992                     ($1,000)   (1.5%)
                   (2)September 22, 1993                    ($  449)   (0.6%)

South Dakota       Last Proceeding was November 1, 1987

FERC               Last Proceeding was July 1, 1987

 (1)  A voluntary settlement agreement reached between the Company and the 
      North Dakota Commission pursuant to which the Company made a refund of 
      $1,000,000 to its North Dakota customers.  This settlement does not 
      require a permanent reduction in rates charged by the Company to 
      customers in North Dakota. 

 (2)  An agreement for incentive regulation reached between the Company and the 
      North Dakota Commission provided for sharing equally between ratepayers 
      and shareholders any amount earned in 1993 over or under a benchmark 
      overall rate of return.  A liability of $449,000 resulting from sharing 
      earnings above this benchmark for 1993 was returned to customers in 1994. 

      In 1994 the Company filed a petition with the Minnesota Public Utilities 
Commission for approval of an annual recovery mechanism for demand-side 
management related costs, under Minnesota's Conservation Improvement Programs. 
An intervenor, on behalf of the Large General Service Group, filed comments 
against the petition and requested the Commission to order a general rate case 
to review the Company's earnings levels.  In the interest of rate stability the 
Company reached an agreement, which was approved by the Commission, resulting 
in costs of approximately $2,200,000 each year for three years which must be 
absorbed in current rates starting in 1995.

      Under Minnesota law, the Minnesota Commission must allow implementation 
of an interim rate increase, subject to refund with interest, 60 days after the 
initial filing date of a rate increase request, except that the Commission is 
not required to allow implementation of the interim rate increase until four 
months after the effective date of a previous rate order.  The amount of the 
interim rate increase will be calculated using the proposed test year cost of 
capital, the rate of return on common equity most recently granted to the 
Company by the Commission, and rate base and expense items allowed by a 
currently effective Commission order.  In addition, if the Commission fails to 
make a final determination regarding any rate request within ten months after 
the initial request is filed, then the requested rate is deemed to be approved, 
except if (I) an extension of the procedural schedule (in case of a contested 
rate increase request) has been granted, in which case the schedule of rates 
will be deemed to have been approved by the Commission on the last day of the 
extended period of suspension of the rate increase, or (ii) a settlement has 
been submitted to and rejected by the Commission, and the Commission does not 
make a final determination concerning the schedule of rates, in which case the 
schedule of rates will be deemed to have been approved 60 days after the 
initial or, if applicable, the extended period of suspension of the rate 
increase. 

      Rate requests filed with the North Dakota Public Service Commission 
become effective 30 days after the date of filing unless suspended by the 
Commission. Within seven months after the date of suspension, the North Dakota 
Commission must act on the request, and during the period of consideration by 
the Commission a suspended rate can be implemented only with the approval of 
the Commission. 

      South Dakota law provides that a requested rate increase can be 
implemented 30 days after the date of filing, unless its effectiveness is 
suspended by the South Dakota Public Utilities Commission.  The Commission may 
suspend the effectiveness of the proposed rate change for a period not longer 
than 90 days beyond the time when the rate change would otherwise go into 
effect, unless the Commission finds that a longer time is required, in which 
case the Commission may extend the suspension for a period not to exceed a 
total of 12 months.  A public utility may not put a proposed rate change into 
effect until at least 45 days after the Commission has made a determination 
concerning any previously filed rate change.  In the event that a requested 
rate change is suspended by the Commission, such requested rate change can be 
implemented by the public utility six months after the date of filing (unless 
previously authorized by the Commission), subject to refund with interest.

      The Company's wholesale power sales and transmission rates are subject to 
the jurisdiction of the Federal Energy Regulatory Commission under the Federal 
Power Act of 1935.  Filed rates are effective after a one-day suspension 
period, subject to ultimate approval by the FERC.  Power pool sales are 
conducted continuously through the Mid-Continent Area Power Pool ("MAPP")  on 
the basis of generating costs, in accordance with schedules filed by MAPP with 
the FERC.

      In rate cases, a forward test year procedure enables cost increases to be 
recovered more promptly than use of an historic test year.  The Minnesota 
Public Utilities Commission has established by regulation a forward test year 
procedure. North Dakota law allows a forward test year.  The South Dakota 
Public Utilities Commission uses an historic test year with adjustments for 
known and measurable changes occurring within 24 months of the last month of 
the test year.

      The Company has obtained approval from the regulatory commissions in all 
three states which it serves for lower rates for residential demand control and 
controlled service, and in North Dakota and South Dakota for bulk interruptible 
rates.  Each of these special rates is designed to improve efficient use of 
Company facilities, while encouraging use of electricity instead of other fuels 
and giving customers more control over the size of their electric bill.

      All of the Company's electric rate schedules now in effect, except for 
wheeling, certain municipal and area lighting services and certain 
interruptible rates, provide for adjustments in rates based upon the cost of 
fuel delivered to the Company's generating plants, as well as for adjustments 
based upon the cost of the energy charge for electric power purchased by the 
Company.  Such adjustments are presently based upon a two-month moving average 
in Minnesota and under the FERC, a three-month moving average in South Dakota, 
and a four-month moving average in North Dakota and are applied to the next 
billing after becoming applicable. 

      Under the Minnesota Public Utilities Act, the Company is subject to the 
jurisdiction of the Minnesota Public Utilities Commission ("MPUC") with respect 
to rates, issuance of securities, depreciation rates, public utility services, 
construction of major utility facilities, establishment of exclusive assigned 
service areas, contracts and arrangements with subsidiaries and other 
affiliated interests, and other matters. The MPUC has the authority to assess 
the need for large energy facilities and to issue or deny certificates of need, 
after public hearings, within six months of an application to construct such a 
facility.

      The Minnesota Department of Public Service ("DPS") is responsible for 
investigating all matters subject to the jurisdiction of the DPS or the MPUC, 
and for the enforcement of MPUC orders.  Among other things, the DPS is 
authorized to collect and analyze data on energy and the consumption of energy, 
develop recommendations as to energy policies for the Governor and the 
Legislature of Minnesota and evaluate policies governing the establishment of 
rates and prices for energy as related to energy conservation.  The DPS acts as 
a state advocate in matters heard before the MPUC.  The DPS also has the power 
to prepare and adopt regulations to conserve and allocate energy in the event 
of energy shortages and on a long-term basis. 

      Under Minnesota law, every public utility that furnishes electric service 
must make annual investments and expenditures in energy conservation 
improvements, or make a contribution to the State's energy and conservation 
account, in an amount equal to at least 1.5% of its gross operating revenues 
from service provided in Minnesota. The DPS may require the Company to make 
investments and expenditures in energy conservation improvements whenever it 
finds that the improvement will result in energy savings at a total cost to the 
utility less than the cost to the utility to produce or purchase an equivalent 
amount of a new supply of energy.  Such DPS orders are appealable to the MPUC. 
Investments made pursuant to such orders generally are recoverable costs in 
rate cases, even though ownership of the improvement may belong to the property 
owner rather than the utility.  In 1995 the MPUC approved an automatic recovery 
mechanism which allows the Company to begin collecting from customers any 
conservation-related expenditures not included in base rates.

      The MPUC requires the submission of a 15-year advance integrated resource 
plan by jurisdictional utilities.  The most recent plan was submitted to the 
MPUC in 1996. The Company is presently awaiting a decision on that plan.  The 
Minnesota legislature has enacted a statute that favors conservation over the 
addition of new resources.  In addition, it has mandated the use of renewable 
resources where new supplies are needed, unless the utility proves that a 
renewable energy facility is not in the public interest.  It has effectively 
prohibited the building of new nuclear facilities.  The environmental 
externality law requires the MPUC, to the extent practicable, to quantify the 
environmental costs of each type of generation, and to use such monetized 
values in evaluating resource plans.  The MPUC must disallow any nonrenewable 
rate base additions (whether within or without the state) or any rate recovery 
therefrom, and shall not approve any nonrenewable energy facility in an 
integrated resource plan, unless the utility proves that a renewable energy 
facility is not in the public interest.  The state has prioritized the 
acceptability of new generation with wind and solar ranked first and coal and 
nuclear ranked fifth, the lowest ranking.  Whether these state policies are 
preempted by federal law has not been determined.

      Pursuant to the Minnesota Power Plant Siting Act, the Minnesota 
Environmental Quality Board ("EQB") has been granted the authority to regulate 
the siting in Minnesota of large electric power generating facilities in an 
orderly manner compatible with environmental preservation and the efficient use 
of resources.  To that end, the EQB is empowered, after study, evaluation, and 
hearings, to select or designate in Minnesota sites for new electric power 
generating plants (50,000 kw or more) and routes for transmission lines (200 kv 
or more) and to certify such sites and routes as to environmental 
compatibility.

      The Company is subject to the jurisdiction of the Public Service 
Commission of North Dakota with respect to rates, services, certain issuances 
of securities and other matters.  The North Dakota Energy Conversion and 
Transmission Facility Siting Act grants the North Dakota Commission the 
authority to approve sites in North Dakota for large electric generating 
facilities and high voltage transmission lines.  This Act is similar to the 
Minnesota Power Plant Siting Act described above and affects new electric power 
generating plants of 50,000 kw or more and new transmission lines of more than 
115 kv.  The Company is required to submit a ten-year plan to the North Dakota 
Commission annually.

      The South Dakota Public Utilities Act subjects the Company to the 
jurisdiction of the South Dakota Public Utilities Commission with respect to 
rates, public utility services, establishment of assigned service areas, and 
other matters.  The Company is currently exempt from the jurisdiction of the 
Commission with respect to the issuance of securities.  Under the South Dakota 
Energy Facility Permit Act, the South Dakota Commission has the authority to 
approve sites in South Dakota for large energy conversion facilities (100,000 
kw or more) and transmission lines of 115 kv or more. 

      The state utility commissions in Minnesota and North Dakota are currently 
investigating the impact of electric utility industry restructuring and the 
prospects for reregulation and retail competition in their respective 
jurisdictions. To date, the MPUC and the NDPSC have issued no new policies or 
rulemakings regarding this issue.  The South Dakota PUC has not taken any 
action with regards to industry restructuring or retail competition.

      The Company is also subject to regulation by the Federal Energy 
Regulatory Commission, successor to the Federal Power Commission, created 
pursuant to the Federal Power Act of 1935, as amended.  The FERC is an 
independent agency which has jurisdiction over rates for sales for resale, 
transmission and sale of electric energy in interstate commerce, 
interconnection of facilities, and accounting policies and practices.

      The Company is subject to various federal and state laws, including the 
Federal Public Utility Regulatory Policies Act and the Energy Policy Act of 
1992, which are intended to promote the conservation of energy and the 
development and use of alternative energy sources.

  	The Company is unable to predict the impact on its operations resulting 
from future regulatory activities by any of the above agencies, from any 
future legislation or from any future tax which may be imposed upon the source 
or use of energy.

Environmental Regulation
------------------------
      Impact of Environmental Laws:  The Company's existing generating plants 
are subject to stringent standards and regulations regarding, among other 
things, air, water and solid waste pollution, by agencies of the federal 
government and the respective states where the Company's plants are located.  
The Company estimates that it has expended in the five years ended December 
31, 1996, approximately $3,059,000 for environmental control facilities 
(excluding allowance for funds used during construction).  Included in the 
1997-2001 construction budget are approximately $3,079,000 for environmental 
improvements for existing and new facilities, including $504,000 for 1997.

      Air Quality:  Pursuant to the Federal Clean Air Act of 1970, the Clean 
Air Act Amendments of 1990 and other amendments thereto (collectively the 
"Act"), the United States Environmental Protection Agency ("EPA") has 
promulgated national primary and secondary standards for certain air 
pollutants.

      All primary fuel burned by the Company at its steam generating plants is 
North Dakota lignite or western subbituminous coal with sulfur content 
averaging less than one percent.  Electrostatic precipitators have been 
installed at the Company's principal units at the Hoot Lake Plant and at the 
Big Stone Plant.  A fabric filter to collect particulates from stack gases has 
been installed on a smaller unit at Hoot Lake Plant.  As a result, the 
Company's units at Big Stone and Hoot Lake currently meet all federal and 
state air quality and emission standards presently applicable. 

      The Coyote Plant is substantially the same design as the Big Stone 
Plant, except for site-related items and the inclusion of sulfur dioxide 
removal equipment. The removal equipment--referred to as a dry scrubber--
consists of a spray dryer, followed by a fabric filter, and is designed to 
desulphurize hot gases from the stack without producing sludge, an unwanted 
by-product of the conventional wet scrubber system. The Coyote Plant is 
currently operating within all presently applicable federal and state air 
quality and emission standards.

      The Clean Air Act Amendments of 1990, in addressing acid deposition, 
will impose new requirements on power plants in an effort to reduce national 
emissions of sulfur dioxide ("SO2") and nitrogen oxide ("NOx").

      The national SO2 emission reduction goals are to be achieved through a 
new market-based system under which power plants are to be allocated 
"emissions allowances" that will require plants to either reduce their 
emissions or acquire allowances from others to achieve compliance.  The SO2 
emission reduction requirements will be imposed in two phases, the first phase 
in 1995 and the second phase in 2000.

      The phase one requirements do not apply to any of the Company's plants. 
The phase two standards apply to the Company's plants in the year 2000.  The 
Company believes that its current use of low sulfur coal at the Hoot Lake 
Plant and the dry scrubbers installed at the Coyote Plant will enable the 
facilities to comply with anticipated phase two limitations with regards to 
SO2.  The Company has a new subbituminous coal contract for Big Stone Plant 
which runs through December 1999.  The subbituminous coal replaced lignite, 
which had been used since inception of plant operation in 1975 as the primary 
fuel.  The Company intends that the Big Stone Plant will maintain current 
levels of operation and meet phase two requirements by burning low sulfur 
subbituminous coal.  The cost of subbituminous coal in 2000 and beyond may be 
higher than the current market price but would likely not adversely affect the 
Company's power plant operations.

      The national NOx emission reduction goals are to be achieved by imposing 
mandatory emissions standards on individual sources.  The NOx emissions 
regulations that were issued by the EPA in 1995 apply to phase one boilers of 
the same design as those used at the Company's Hoot Lake Plant units 2 and 3. 
The Act allowed EPA to either retain the standard as it currently applies to 
phase one boilers or adopt more stringent standards for such phase two boilers 
by January 1, 1997.  More stringent standards were adopted on December 19, 
1996.  The Company had the option to either comply with the phase one 
standards beginning on January 1, 1997, under EPA's early opt-in provision, or 
comply with any revised standard for phase two units.  The Company elected the 
early opt-in provision for Hoot Lake Plant unit 2.  The unit is governed by 
the phase one standard until January 1, 2008. The Company has not elected the 
early opt-in provision for Hoot Lake Plant unit 3.  The Company currently 
anticipates that the cost of complying with the limitations applicable to Hoot 
Lake Plant unit 3 will not be material. 

      On December 19, 1996, the EPA also adopted NOx emissions regulations 
that would be applicable to cyclone-fired boilers such as those used at Big 
Stone and Coyote.  The regulations require that the emission standard be met 
by cyclone boilers beginning on January 1, 2000. The Utility Air Regulatory 
Group ("UARG") has filed a Petition for Review in the Court of Appeals for the 
District of Columbia.  As a member of UARG, the Company is participating in 
the Petition.  The Company is currently evaluating the Big Stone and Coyote 
NOx emissions with respect to the December 19, 1996 rules.  Existing emissions 
monitoring data indicates that Coyote meets the emission requirements.  At Big 
Stone, emissions are currently above the required level.  During 1997, the 
Company will be conducting tests at Big Stone to determine if emissions can be 
reduced through modifications to existing equipment.  Future modifications may 
be required at an undetermined cost, since compliance costs will depend on the 
regulations that are ultimately adopted and the cost of available 
technologies. 

      The Clean Air Act Amendments of 1990 contain a list of toxic air 
pollutants to be regulated.  The list includes certain substances believed to 
be emitted by the Company's plants.  The Act calls for EPA studies of the 
effects of emissions of the listed pollutants by electric utility steam 
generating plants.  Because promulgation of rules by the EPA has not been 
completed, it is not possible to assess at this time whether, or to what 
extent, this legislation will ultimately impact the Company.

      Water Quality: The Federal Water Pollution Control Act Amendments of 
1972, and amendments thereto, provide for, among other things, the imposition 
of effluent limitations to regulate discharges of pollutants, including 
thermal discharges, into the waters of the United States, and the EPA has 
established effluent guidelines for the steam electric power generating 
industry.  Discharges must also comply with state water quality standards.

      The Company has all federal and state water permits presently necessary 
for the operation of its Big Stone Plant.  A water discharge permit for the 
Hoot Lake Plant was renewed in 1992 for a five-year term.  A permit for the 
Coyote Plant was renewed in 1993 also for a five-year term.  The Company owns 
five small dams on the Otter Tail River which are subject to FERC licensing 
requirements.  A license for all five dams was issued on December 5, 1991. 
Total nameplate rating of the five dams is 3,450 kw (net unit capability of 
3,493 kw at December 31, 1996). 

      Solid Waste:  Permits for disposal of ash and other solid wastes have 
been issued for the Company's Big Stone and Coyote Plants.  A renewal permit 
is pending for the Company's Hoot Lake Plant and the Company anticipates that 
it will obtain this renewal in due course.  The EPA has promulgated various 
solid and hazardous waste regulations and guidelines pursuant to, among other 
laws, the Resource Conservation and Recovery Act of 1976, the Solid Waste 
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste Amendments 
of 1984, which provide for, among other things, the comprehensive control of 
various solid and hazardous wastes from their generation to final disposal.  
The states of Minnesota, North Dakota and South Dakota have also adopted rules 
and regulations pertaining to solid and hazardous waste.  The total impact on 
the Company of the various solid and hazardous waste statutes and regulations 
enacted by the Federal Government or the states of Minnesota, North Dakota and 
South Dakota is not certain at this time.  To date the Company has incurred no 
significant costs as a result of these laws.

      In 1980 the United States enacted the Comprehensive Environmental 
Response, Compensation and Liability Act, commonly known as the Federal 
Superfund law, and in 1986 reauthorized and amended the 1980 Act.  In 1983 
Minnesota adopted the Minnesota Environmental Response and Liability Act, 
commonly known as the Minnesota Superfund law.  In 1988 South Dakota enacted 
the Regulated Substance Discharges Act, commonly called the South Dakota 
Superfund law.  In 1989 North Dakota enacted the Environmental Emergency Cost 
Recovery Act.  Among other requirements the federal and state acts establish 
environmental response funds to pay for remedial actions associated with the 
release or threatened release of certain regulated substances into the 
environment.  These federal and state Superfund laws also establish liability 
for cleanup costs and damage to the environment resulting from such release or 
threatened release of regulated substances.  The Minnesota Superfund law also 
creates liability for personal injury and economic loss under certain 
circumstances.  The Company is unable to determine the total impact of the 
Superfund laws on its operations at this time but has not incurred any 
significant costs to date related to these laws.

      The Federal Toxic Substances Control Act of 1976 regulates, among other 
things, polychlorinated byphenyls ("PCBs").  The EPA has enacted regulations 
concerning the use, storage and disposal of PCBs.  The Company completed a 
program for removal of all PCB-filled transformers and capacitors by the end 
of 1987 and received Certificates of Disposal in 1989.  The Company completed 
removal of PCB-contaminated mineral oil dielectric fluid from all substation 
transformers in 1991 and continues to remove such oil from voltage regulators 
as well as other electrical equipment. 

      Health Effects of Electric and Magnetic Fields ("EMF"): In 1996 the 
National Research Council of the National Academy of Sciences, after 
evaluating more than 500 studies on the effects of EMF, found insufficient 
evidence to consider electric and magnetic fields a threat to human health.  
Although research conducted to date has found no conclusive evidence that 
electric and magnetic fields affect health, a few studies have suggested a 
possible connection with cancer.  The utility industry continues to fund 
studies.  The ultimate impact, if any, of this issue on the Company and the 
utility industry is impossible to predict. 

Capital Expenditures
--------------------
      The Company is continually expanding, replacing and improving its 
electric utility facilities.  During 1996 the Company invested approximately 
$36,221,000 (including allowance for funds used during construction) for 
additions to its electric utility properties.  During the five years ended 
December 31, 1996, the Company had gross electric property additions, 
including construction work in progress, of approximately $135,666,000 and 
gross retirements of approximately $36,859,000.

      The Company estimates that during the five years 1997 through 2001 it 
will invest for electric utility construction approximately $127,000,000 
(including allowance for funds used during construction).  The Company 
continuously reviews options for increasing its generating capacity, but at 
this time has no firm plans for additional base load generating plant 
construction. The majority of electric utility expenditures for the five-year 
period 1997 through 2001 will be for work related to the Company's 
transmission and distribution system.

Franchises
----------
      At December 31, 1996, the Company had franchises in all of the 371 
incorporated municipalities which it serves.  All franchises are nonexclusive 
and generally were obtained for 20-year terms, with varying expiration dates. 
No franchises are required to serve unincorporated communities in any of the 
three states which the Company serves.


                          HEALTH SERVICES OPERATIONS
                          --------------------------
General
-------
      Health Services Operations consists of businesses acquired beginning in 
1993 involved in the sale, service, rental, refurbishing and operation of 
medical imaging equipment and the sale of related supplies and accessories to 
various medical institutions primarily in the Midwest United States.  Two 
mobile diagnostic medical services companies were acquired in 1996.. The 
Company derived 17% of its consolidated operating revenues from this segment 
in 1996, 16% in 1995, and 16% in 1994.

      Subsidiaries comprising Health Services Operations include the 
      following: 

      Diagnostic Medical Systems, Inc. ("DMS"), located in Fargo, ND, sells, 
      services and refurbishes diagnostic medical imaging equipment 
      manufactured primarily by Philips Medical Systems ("Philips"), including 
      fluoroscopic, radiographic and mammography equipment, along with 
      ultrasound, computerized tomography ("CT") scanners, magnetic resonance 
      imaging ("MRI") scanners, cardiac cath labs, and radiation therapy 
      equipment for the treatment of cancer.  DMS subsidiaries are DMS 
      Leasing, Inc. and Radiographic Supply, Inc. In 1994 DMS entered into a 
      five-year dealer agreement with Philips, which can be terminated by 
      Philips upon eighteen months' notice and certain other circumstances.  
      DMS is also a supplier for Kodak, DuPont, and Fuji in the medical film 
      and accessory business.  DMS markets mainly to hospitals, clinics and 
      mobile service companies in North Dakota, South Dakota, Minnesota, 
      Montana and Wyoming. Almost 80% of the hospitals served by DMS have 50 
      or fewer beds. DMS also offers, through its subsidiaries, mobile CT and 
      MRI service in the Upper Midwest and Central United States. 

      DMS Imaging, Inc., a subsidiary of DMS located in Fargo, ND and Bemidji 
      MN, provides mobile diagnostic medical services, including use of 
      diagnostic nuclear medicine, diagnostic ultrasound, diagnostic 
      mammography, computerized axial tomography, and magnetic resonance 
      imaging, and is a distributor of x-ray supplies and accessories to 
      health care facilities throughout the Midwest and Pacific Northwest.  
      Northern Medical Imaging, Inc., acquired in April 1996 and Imaging Plus, 
      Inc. were combined in 1996 to form DMS Imaging, Inc.

      Combined, the Health Service subsidiaries cover the three basics of the 
medical imaging industry:  (1) operating technologists who do the imaging of 
patients of hospitals and clinics; (2) the equipment function that sells, 
owns, rents, refurbishes and maintains the imaging machines; and (3) central 
office specialists who provide scheduling, billing and administrative support. 

Competition
-----------
      The market for selling, servicing and operating diagnostic imaging 
services and imaging systems is highly competitive.  In addition to direct 
competition from other contract providers, the Company competes with free-
standing imaging centers and health care providers that have their own 
diagnostic imaging systems and with equipment manufacturers that sell imaging 
equipment to health care providers for full-time installation.  Some of the 
Company's direct competitors which provide contract MRI services have access 
to greater financial resources than the Company.  In addition, some of the 
Company's customers are capable of providing the same services to their 
patients directly, subject only to their decision to acquire a high-cost 
diagnostic imaging system, assume the financial risk, and employ the necessary 
technologies.  The Company competes against other contract providers on the 
basis of quality of services, quality and magnetic field strength of imaging 
systems, price, availability and reliability.

Capital Expenditures
--------------------
      During 1996 capital expenditures of approximately $16,000,000 were  made 
in Health Services.  These capital expenditures were primarily for diagnostic 
imaging equipment purchased to service mobile imaging routes.  Total capital 
expenditures during the five-year period 1997-2001 are estimated to be 
$18,000,000.


                           MANUFACTURING OPERATIONS
                           ------------------------
General
-------
      Manufacturing Operations consists of businesses involved in the 
production of agricultural equipment, plastic pipe extrusion, and metal parts 
stamping and fabrication.  Initial acquisitions of businesses in this segment 
were made in 1990. No additional companies were acquired in 1996.  The Company 
derived 16% of its consolidated operating revenues from this segment in 1996, 
12% in 1995, and 5% in 1994.

      The following is a brief description of each of these businesses:

      Precision Machine of North Dakota, Inc., located in West Fargo, ND, uses 
      computer numerically controlled lathes and milling machines to produce 
      parts for manufacturers.

      Dakota Machine, Inc., located in West Fargo, ND, is primarily engaged in 
      metal fabrication of large equipment that handles or processes sugar 
      beets. Dakota Engineering, Inc., a subsidiary of Dakota Machine, Inc., 
      was formed in 1995 and is engaged in design engineering and construction 
      management, primarily in the sugar industry.

      Glendale Machining, Inc., located in Pelican Rapids, MN, uses computer 
      numerically controlled lathes and milling machines to produce parts for 
      manufacturers.

      BTD Manufacturing, Inc. ("BTD"), located in Detroit Lakes, MN, is a 
      metal stamping and tool and die manufacturer.  BTD stamps, machines, and 
      assembles metal parts according to manufacturers' specifications.

      Northern Pipe Products, Inc., located in Fargo, ND, manufactures poly-
      vinyl-chloride (PVC) pipe for municipal, rural water, irrigation and 
      other uses in a sixteen-state area.

      Each of the subsidiaries described above under Health Services and 
Manufacturing Operations are owned by Mid-States Development, Inc., which is a 
wholly owned subsidiary of Minnesota Dakota Generating Company ("MDG").  MDG 
is a wholly owned subsidiary of the Company.

Competition
-----------
      The markets in which the Company's manufacturing entities compete are 
characterized by intense competition.  The various markets the companies 
compete in have many established manufacturers with broader product lines, 
greater distribution capabilities, greater capital resources and larger 
marketing, research and development staffs and facilities than the Company.

The Company believes the principal competitive factors in its manufacturing 
segment are product performance, quality, price, ease of use, technical 
innovation, cost effectiveness, customer service and breadth of product line. 
The Company intends to continue to compete on the basis of its high 
performance products, innovative technologies, cost effective manufacturing 
techniques, close customer relations and support and its strategy to increase 
offerings of products.

Capital Expenditures
--------------------
      During 1996 capital expenditures of approximately $4,600,000 were made 
in Manufacturing.  Total capital expenditures for Manufacturing during the 
five-year period 1997-2001 are estimated to be approximately $12,000,000. 

                           OTHER BUSINESS OPERATIONS
                           -------------------------
General
-------
      The Company's Other Business Operations consists of businesses that are 
diversified in such areas as electrical and telephone construction 
contracting, radio broadcasting, waste incinerating, and telephone/cable TV 
utility.  In 1996 Mid-States Development, Inc. acquired four radio stations in 
the Fargo, North Dakota/Moorhead, Minnesota market area.  The Company's 
telecommunications subsidiary, North Central Utilities, Inc. ("NCU"), acquired 
two small cable TV systems.  On January 2, 1997, NCU acquired The Peoples 
Telephone Co. of Bigfork in a pooling-of-interests transaction.  The Company 
derived 12% of its consolidated operating revenues from these diversified 
businesses during 1996, 10% in 1995, and 10% during 1994. 

      The following is a brief description of each of these businesses:
 
      Moorhead Electric, Inc., located in Moorhead, MN, provides commercial 
      and industrial wiring of large buildings, constructs and maintains 
      telecommunications and power distribution systems, and installs computer 
      network cable.

      Aerial Contractors, Inc., located in West Fargo, ND, constructs and 
      maintains overhead and underground electric, telecommunications, and 
      cable television lines.

      KFGO, Inc., located in Fargo, ND, operates an AM and FM commercial radio 
      station.

      MSB, Inc., located in Fargo, ND, operates one AM and three FM commercial 
      radio stations along with a video production facility.

      Western Minnesota Broadcasting Company, located in Morris, MN, operates 
      an AM and FM commercial radio station.

      Quadrant Co. ("Quadrant") operates a municipal waste burning facility 
      located in Perham, MN.  Quadrant continues to provide primary service to 
      one of its two steam customers under an agreement which can be 
      terminated by either party upon one year's prior written notice, and is 
      currently providing backup service to its other steam customer under an 
      agreement that commenced on June 1, 1996 and terminates on May 31, 1998, 
      subject to earlier termination by either party upon 90 days' written 
      notice.  Quadrant also continues to burn municipal solid waste for three 
      Minnesota counties under a contract extension which  expires April 1, 
      1997.  Two Minnesota counties, representing about 40% of Quadrant's 
      processing capacity, did not renew or extend their contracts for waste 
      incineration which expired in September 1996.  Quadrant is in the 
      process of negotiating new waste incineration agreements with the 
      remaining counties and is pursuing additional incineration contracts.

      The Company has invested approximately $3.2 million in plant and 
      equipment in Quadrant. Quadrant represented approximately $2.5 million 
      in sales for 1996 and an insignificant impact on consolidated operating 
      income for the Company. The outcome of current incineration contract 
      negotiations could result in an impairment issue under SFAS 121.  The 
      Company is working to obtain prospects for new incineration contracts.  
      The price ranges being considered for the contracts result in a wide 
      variance in estimates of future cash flows, making it difficult to 
      accurately calculate an impairment value at this time. See 
      "Environmental Regulation" below.

      Midwest Information Systems, Inc.("MIS"), headquartered in Parkers 
      Prairie, MN, owns two operating telephone companies serving over 4,000 
      customers and a cable television company serving approximately 600 
      customers.  MIS is also involved in long-distance transport, fiber-optic 
      transmission facilities, and the sale of direct broadcast satellite 
      television programming and equipment.

      With the exception of Quadrant, which was founded by the Company in 
1985, each of these businesses was acquired by the Company since 1989. 
Quadrant is a wholly owned subsidiary of MDG, which in turn is a wholly owned 
subsidiary of the Company. MIS is a wholly owned subsidiary of North Central 
Utilities, Inc., a subsidiary of MDG formed for the purpose of acquiring 
utility companies.  Each of the other subsidiaries described above are owned 
by Mid-States Development, Inc., which is also a wholly owned subsidiary of 
MDG.

General Regulation
------------------
      The Company's operating telephone subsidiaries are subject to the 
regulatory authority of the MPUC regarding rates and charges for telephone 
services, as well as other matters.  The operating telephone subsidiaries must 
keep on file with the Minnesota DPS schedules of such rates and charges, and 
any requests for changes in such rates and charges must be filed for approval 
by the MPUC.  The telephone industry is also subject generally to rules and 
regulations of the Federal Communications Commission ("FCC").  The Company's 
operating cable television subsidiary is regulated by federal and local 
authorities.  The Company's radio broadcasting subsidiaries are regulated by 
the FCC.

Environmental Regulation
------------------------
      In recent years, facilities such as Quadrant that burn municipal solid 
waste have been subjected to increasing state and federal environmental 
regulation.  The Minnesota Pollution Control Agency promulgated rules relating 
to ash in 1993 and air emissions in 1994.  In late 1996, the U.S. Court of 
Appeals for the District of Columbia Circuit vacated air emission regulations 
recently adopted by the EPA.  EPA has petitioned for a rehearing of the case.  
Quadrant continues to operate under an expired air emission permit with the 
permission of the Minnesota Pollution Control Agency and submitted its 
application for a new air emission permit in April of 1995.  Historically the 
terms of Quadrant's contacts with customers have enabled Quadrant to pass on 
to its customers much of the cost of environmental compliance.  The increasing 
cost of environmental compliance may adversely affect Quadrant's ability to 
successfully negotiate the renewal of the contracts discussed above.

Competition
-----------
      Each of the businesses in Other Business Operations is subject to 
competition, as well as the effects of general economic conditions, in their 
respective industries. 

Capital Expenditures
--------------------
During 1996 capital expenditures of approximately $5,000,000 were made in 
Other Business Operations.  Capital expenditures during the five-year period 
1997-2001 are estimated to be approximately $12,000,000 for Other Business 
Operations.

                                   FINANCING
                                   ---------
      The Company estimates that funds internally generated, combined with 
funds on hand will be sufficient to meet all sinking fund payments for First 
Mortgage Bonds in the next five years and to provide for the majority of its 
estimated 1997-2001 consolidated capital project expenditures. Additional 
short-term or long-term financing will be required in the period 1997-2001 in 
connection with a portion of the Company's estimated capital project 
expenditures, maturity of First Mortgage Bonds ($18,800,000 in 1997) and a 
Long-Term Lease Obligation ($2,200,000 in 1998), in the event the Company 
decides to refund or retire early any of its presently outstanding debt or 
Cumulative Preferred Shares, or for other corporate purposes.

      The foregoing estimates of capital expenditures and funds internally 
generated may be subject to substantial changes due to unforeseen factors, 
such as changed economic conditions, competitive conditions, technological 
changes, new environmental and other governmental regulations, tax law 
changes, and rate regulation. 

      As of December 31, 1996, the Company had unutilized net fundable 
property available for the issuance of more than $36,000,000 principal amount 
of additional First Mortgage Bonds and also was entitled to issue in excess of 
$102,000,000 principal amount of additional Bonds on the basis of Bonds 
theretofore retired. 

      The Company's operating subsidiaries have been responsible for obtaining 
their own financing after the Company's initial equity investment and have 
developed financing arrangements with various banks.  Historically, the 
Company has not made or guaranteed loans to its subsidiaries, loaned any 
subsidiary money or cosigned on any of their borrowing. 

      The Company has access to short-term borrowing resources. As of December 
31, 1996, the Company and subsidiaries had unused credit lines totaling 
$21,700,000.  The Company had $25,600,000 in short-term borrowings as of 
December 31, 1996.  The subsidiary companies had $7,000,000 of credit lines in 
use at December 31, 1996, a portion classified as current maturities and a 
portion classified as long-term debt depending on the terms and nature of use.

                                   EMPLOYEES
                                   ---------
      The Company and its subsidiaries had approximately 1,629 full-time 
employees at December 31, 1996.  A total of 505 employees are represented by 
local unions of the International Brotherhood of Electrical Workers, of which 
430 are employees of the Electrical Operations segment and are covered by a 
three-year labor contract that was renewed in 1996 and expires November 1, 
1999.  The Company has never experienced any strike, work stoppage, or strike 
vote, and regards its present relations with employees as very good. 

Forward Looking Information - Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995
----------------------------------------------------------
      In connection with the "safe harbor" provisions of the Private Securities 
Litigation Reform Act of 1995 (the "Act"), the Company has filed cautionary 
statements identifying important factors that could cause the Company's actual 
results to differ materially from those discussed in forward-looking 
statements made by or on behalf of the Company.  When used in this Form 10-K 
and in future filings by the Company with the Securities and Exchange 
Commission, in the Company's press releases and in oral statements, words such 
as "may", "will", "expect", "anticipate", "continue", "estimate", "project", 
"believes" or similar expressions are intended to identify forward-looking 
statements within the meaning of the Act.  Factors that might cause such 
differences include, but are not limited to, the factors discussed under 
"Factors affecting future earnings" on pages 30 through 32 of the Company's 
1996 Annual Report to Shareholders, filed as an exhibit hereto.  These factors 
are in addition to any other cautionary statements, written or oral, which may 
be made or referred to in connection with any such forward-looking statement 
or contained in any subsequent filings by the Company with the Securities and 
Exchange Commission.

Item 2.  PROPERTIES
         ----------
     The Coyote Station, which commenced operation in 1981, is a 414,000 kw 
(nameplate rating) mine-mouth plant located in the lignite coal fields near 
Beulah, North Dakota and is jointly owned by the Company, Northern Municipal 
Power Agency, Montana-Dakota Utilities Co. and Northwestern Public Service 
Company.  The Company has a 35% interest in the plant and was the project 
manager in charge of construction.  Montana-Dakota Utilities Co., in whose 
service territory the plant is located, is the operating manager of the plant.

     The Company, jointly with Northwestern Public Service Company and 
Montana-Dakota Utilities Co., owns the 414,000 kw (nameplate rating) Big Stone 
Plant in northeastern South Dakota which commenced operation in 1975.  The 
Company, for the benefit of all three utilities, was in charge of construction 
and is now in charge of operations. The Company owns 53.9% of the plant.

      Located near Fergus Falls, Minnesota, the Hoot Lake Plant is comprised 
of three separate generating units with a combined rating of 127,000 kw.  The 
oldest Hoot Lake Plant generating unit was constructed in 1948 (7,500 kw 
nameplate rating) and a subsequent unit was added in 1959 (53,500 kw nameplate 
rating).  A third unit was added in 1964 (66,000 kw nameplate rating) and 
later modified during 1988 to provide cycling capability, allowing this unit 
to be more efficiently brought on-line from a standby mode.

      At December 31, 1996, the Company's transmission facilities, which are 
interconnected with lines of other public utilities, consisted of 48 miles of 
345 kv lines;  363 miles of 230 kv lines; 573 miles of 115 kv lines; and 4,272 
miles of lower voltage lines, principally 41.6 kv.  The Company owns the 
uprated portion of the 48 miles of the 345 kv line, with Minnkota Power 
Cooperative retaining title to the original 230 kv construction.

      All of the Company's electric utility properties, with minor exceptions, 
are subject to the lien of the Company's Indenture of Mortgage dated July 1, 
1936, as amended and supplemented, securing its First Mortgage Bonds. 

Item 3.  LEGAL PROCEEDINGS
         -----------------
      Not Applicable.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 
         ---------------------------------------------------
      No matters were submitted to a vote of security holders during the three 
months ended December 31, 1996.

Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT (AS OF MARCH 1, 1997) 
         ----------------------------------------------------------
      Set forth below is a summary of the principal occupations and business 
experience during the past five years of executive officers of the Company: 

                       DATES ELECTED
NAME AND AGE             TO OFFICE    PRESENT POSITION AND BUSINESS EXPERIENCE 
------------           -------------  ----------------------------------------
John C. MacFarlane (57)     4/8/91    Present: Chairman, President and Chief 
                                               Executive Officer

Andrew E. Anderson (57)     4/8/96    Present: Vice President, Finance and 
                                               Treasurer
                            4/10/95   Vice President, Finance 
                            Prior to
                            4/10/95   Controller

Marlowe E. Johnson (52)     4/12/93   Present: Vice President, Customer 
                                               Service, North Dakota
                            Prior to
                            4/12/93   Division Manager, Jamestown

Douglas L. Kjellerup (55)   4/12/93   Present: Vice President, Marketing and 
                                               Development
                            Prior to
                            4/12/93   Vice President, Planning and Development

LeRoy S. Larson (51)        4/12/93   Present: Vice President, Customer 
                                               Service, Minnesota and
                                               South Dakota
                            4/13/92   Vice President, Division Operations,
                                      Minnesota and South Dakota
                            Prior to
                            4/13/92   Division Manager, Morris

Richard W. Muehlhausen (58) 4/8/96    Present: Senior Vice President, 
                                               Corporate Services
                            Prior to 
                            4/8/96    Vice President, Corporate Services 

Jay D. Myster (58)          4/8/96    Present: Senior Vice President, 
                                               Governmental and Legal, 
                                               and Corporate Secretary
                            Prior to 
                            4/8/96    Vice President, Governmental and Legal,
                                      and Corporate Secretary

Rodney C.H. Scheel (47)    4/10/95    Present: Vice President, Electrical 
                           Prior to
                           4/10/95    Director, Information Services

Ward L. Uggerud (47)       4/10/89    Present: Vice President, Operations 

Jeffrey J. Legge(40)       4/10/95    Present: Controller 
                           Prior to
                           4/10/95    Manager, Tax Department

      The term of office of each of the officers is one year, and there are no 
arrangements or understanding between individual officers or any other persons 
pursuant to which he was selected as an officer.

      No family relationships exist between any officers of the Company. 


                                    PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON 
         EQUITY AND RELATED STOCKHOLDER MATTERS 
         --------------------------------------
      The information required by this Item is incorporated by reference to  
the first sentence under "Stock listing" on Page 52, to "Selected consolidated 
financial data" on Page 24 and to "Quarterly information" on Page 49, of the 
Company's 1996 Annual Report to Shareholders, filed as an Exhibit hereto.

      In the April 1, 1996, acquisition of Northern Medical Imaging, Inc. 
("NMI"), a Company subsidiary exchanged 107,633 shares of the Company's common 
stock acquired on the open market and $1,000,000 for all of the outstanding 
voting common shares of NMI.  The issuance of shares of common stock did not 
involve a public offering and therefore was exempt from registration pursuant 
to Section 4(2) of the Securities Act of 1933, as amended.

Item 6.  SELECTED FINANCIAL DATA
         -----------------------
      The information required by this Item is incorporated by reference to 
"Selected consolidated financial data" on Page 24 of the Company's 1996 Annual 
Report to Shareholders, filed as an Exhibit hereto.

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS
         ---------------------------------------------
      The information required by this Item is incorporated by reference to 
"Management's discussion and analysis of financial condition and results of 
operations" on Pages 25 through 32 of the Company's 1996 Annual Report to 
Shareholders, filed as an Exhibit hereto.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         -------------------------------------------
      The information required by this Item is incorporated by reference to 
"Quarterly information" on Page 49 and the Company's audited financial 
statements on Pages 33 through 49 of the Company's 1996 Annual Report to 
Shareholders excluding "Report of Management" on Page 33, filed as an Exhibit 
hereto.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE
         ---------------------------------------------
      None.


                                   PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 
         --------------------------------------------------
      The information required by this Item is incorporated by reference from 
the information under "Nominees for Election as Directors" in the Company's 
definitive Proxy Statement dated March 14, 1997.  The information regarding 
executive officers is set forth in Item 4A hereto.

Item 11. EXECUTIVE COMPENSATION
         ----------------------
      The information required by this Item is incorporated by reference from 
the information under "Summary Compensation Table," "Pension and Supplemental 
Retirement Plans," "Severance Agreements," and "Directors' Compensation" in 
the Company's definitive Proxy Statement dated March 14, 1997.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
         --------------------------------------------------------------
      The information required by this Item is incorporated by reference from 
the information under "Outstanding Voting Shares" and "Security Ownership of 
Management" in the Company's definitive Proxy Statement dated March 14, 1997.


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------
      None.

	
                                    PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 
         ---------------------------------------------------------------
      (a) List of documents filed:

          (1) and (2) See Table of Contents on Page 22 hereof. 

          (3) See Exhibit Index on Pages 23 through 29 hereof. 

              Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of 
              certain instruments defining the rights of holders of 
              certain long-term debt of the Company are not filed, and in 
              lieu thereof, the Company agrees to furnish copies thereof 
              to the Securities and Exchange Commission upon request.

      (b) Reports on Form 8-K:

          No reports on Form 8-K have been filed during the quarter ended 
          December 31, 1996.



                                  SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be signed 
on its behalf by the undersigned thereunto duly authorized.

                                           OTTER TAIL POWER COMPANY


                                           By  A. E. Anderson
                                             -------------------------------
                                                     A. E. Anderson
                                                     Vice President, Finance
                                                     and Treasurer

                                           Dated:  March 28, 1997

      Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated:

Signature and Title
-------------------
John C. MacFarlane                         )
  Chairman, President and                  )
  Chief Executive Officer                  )
  (principal executive officer)            )
  and Director                             )
                                           )
A. E. Anderson                             )
  Vice President, Finance and Treasurer    )
  (principal financial officer)            )
                                           )
Jeffrey J. Legge                           )
  Controller                               )    By	A. E. Anderson
  (principal accounting officer)           )      ---------------------------
                                           )             A. E. Anderson
                                           )      Pro Se and Attorney-in-Fact 
                                           )         Dated March 28, 1997
Thomas M. Brown, Director                  )
                                           )
Dayle Dietz, Director                      )
                                           )
Dennis R. Emmen, Director                  )
                                           )
Maynard D. Helgaas, Director               )
                                           )
Arvid R. Liebe, Director                   )
                                           )
Kenneth L. Nelson, Director                )
                                           )
Nathan I. Partain, Director                )
                                           )
Robert N. Spolum, Director                 )


                           OTTER TAIL POWER COMPANY

                               TABLE OF CONTENTS
                               -----------------
   FINANCIAL STATEMENTS, SUPPLEMENTARY FINANCIAL DATA, SUPPLEMENTAL FINANCIAL 
       SCHEDULES INCLUDED IN ANNUAL REPORT (FORM 10-K) FOR THE YEAR ENDED
                               DECEMBER 31, 1996

The following items are included in this annual report by reference to the 
registrant's Annual Report to Shareholders for the year ended December 31, 
1996: 

                                                                  Page in
                                                                  Annual
                                                                 Report to 
                                                               Shareholders 
                                                               ------------
Financial Statements:

Independent Auditors' Report ........................................ 33

Consolidated Balance Sheets, December 31, 1996 and 1995 ........ 34 & 35

Consolidated Statements of Income for the Three Years 
Ended December 31, 1996 ............................................. 36

Consolidated Statements of Retained Earnings for the
Three Years Ended December 31, 1996 ................................. 36

Consolidated Statements of Cash Flows for the Three Years 
Ended December 31, 1996 ............................................. 37

Consolidated Statements of Capitalization, 
December 31, 1996 and 1995 .......................................... 38

Notes to Consolidated Financial Statements ....................... 39-49

Selected Consolidated Financial Data for the Five Years
Ended December 31, 1996 ............................................. 24

Quarterly Data for the Two Years Ended
December 31, 1996 ................................................... 49


Schedules are omitted because of the absence of the conditions under which 
they are required or because the information required is included in the 
financial statements or the notes thereto. 


                                 Exhibit Index
                                      to
                                 Annual Report
                                 on Form 10-K
                       For Year Ended December 31, 1996

             Previously Filed
         -------------------------
                             As
                           Exhibit
         File No.            No.
         --------          -------

3-A                                 --Restated Articles of 
                                    Incorporation, as amended 
                                    (including resolutions
                                    creating outstanding series
                                    of Cumulative Preferred Shares).

3-C      33-46071          4-B      --Bylaws as amended through 
                                    April 11, 1988.

4-D-1    2-14209           2-B-1    --Twenty-First Supplemental 
                                    Indenture from the Company to
                                    First Trust Company of Saint
                                    Paul and Russel M. Collins, as
                                    Trustees, dated as of 
                                    July 1, 1958.

4-D-2    2-14209           2-B-2    --Twenty-Second Supplemental
                                    Indenture dated as of
                                    July 15, 1958.

4-D-3    33-32499          4-D-6    --Thirty-First Supplemental 
                                    Indenture dated as of 
                                    February 1, 1973.

4-D-4    33-32499          4-D-7    --Thirty-Second Supplemental 
                                    Indenture dated as of
                                    January 18, 1974.

4-D-5    2-66914           2-L-13   --Thirty-Ninth Supplemental 
                                    Indenture dated as of
                                    October 15, 1979.

4-D-6    33-46070          4-D-11   --Forty-Second Supplemental 
                                    Indenture dated as of
                                    December 1, 1990.

4-D-7    33-46070          4-D-12   --Forty-Third Supplemental 
                                    Indenture dated as of
                                    February 1, 1991.

4-D-8    33-46070          4-D-13   --Forty-Fourth Supplemental 
                                    Indenture dated as of
                                    September 1, 1991

4-D-9    8-K dated         4-D-15   --Forty-Fifth Supplemental 
         7/24/92                    Indenture dated as of
                                    July 1, 1992

4-D-10   8-A dated         1        --Rights Agreement, dated as of
         1/28/97                    January 28, 1997, between the
                                    Company and Norwest Bank Minnesota,
                                    National Association

10-A     2-39794           4-C      --Integrated Transmission
                                    Agreement dated August 25,
                                    1967, between Cooperative
                                    Power Association and the
                                    Company.

10-A-1   10-K for year     10-A-1   --Amendment No. 1, dated as 
         ended 12/31/92             of September 6, 1979, to 
                                    Integrated Transmission
                                    Agreement, dated as of
                                    August 25, 1967, between
                                    Cooperative Power Association 
                                    and the Company.

10-A-2   10-K for year     10-A-2   --Amendment No. 2, dated as of
         ended 12/31/92             November 19, 1986, to Integrated 
                                    Transmission Agreement between 
                                    Cooperative Power Association 
                                    and the Company.

10-C-1   2-55813           5-E      --Contract dated July 1, 1958,
                                    between Central Power Electric 
                                    Corporation, Inc., and the Company.

10-C-2   2-55813           5-E-1    --Supplement Seven dated
                                    November 21, 1973.
                                    (Supplements Nos. One through 
                                    Six have been superseded 
                                    and are no longer in effect.)

10-C-3   2-55813           5-E-2    --Amendment No. 1 dated
                                    December 19, 1973, to
                                    Supplement Seven.

10-C-4   10-K for year     10-C-4   --Amendment No. 2 dated 
         ended 12/31/91             June 17, 1986, to Supplement 
                                    Seven.

10-C-5   10-K for year     10-C-5   --Amendment No. 3 dated 
         ended 12/31/92             June 18, 1992, to Supplement 
                                    Seven.
 
10-C-6   10-K for year     10-C-6   --Amendment No. 4 dated 
         ended 12/31/93             January 18, 1994, to Supplement 
                                    Seven.

10-D     2-55813           5-F      --Contract dated April 12, 1973, 
                                    between the Bureau of Reclamation 
                                    and the Company.

10-E-1   2-55813           5-G      --Contract dated January 8, 1973, 
                                    between East River Electric Power 
                                    Cooperative and the Company.

10-E-2   2-62815           5-E-1    --Supplement One dated
                                    February 20, 1978.

10-E-3   10-K for year     10-E-3   --Supplement Two dated 
         ended 12/31/89             June 10, 1983.

10-E-4   10-K for year     10-E-4   --Supplement Three dated 
         ended 12/31/90             June 6, 1985.

10-E-5   10-K for year     10-E-5   --Supplement No. Four, dated 
         ended 12/31/92             as of September 10, 1986. 

10-E-6   10-K for year     10-E-6   --Supplement No. Five, dated 
         ended 12/31/92             as of January 7, 1993.

10-E-7   10-K for year     10-E-7   --Supplement No. Six, dated 
         ended 12/31/93             as of December 2, 1993.

10-F     10-K for year     10-F     --Agreement for Sharing 
         ended 12/31/89             Ownership of Generating
                                    Plant by and between the
                                    Company, Montana-Dakota
                                    Utilities Co., and 
                                    Northwestern Public Service
                                    Company (dated as of
                                    January 7, 1970).

10-F-1   10-K for year     10-F-1   --Letter of Intent for purchase 
         ended 12/31/89             of share of Big Stone Plant from 
                                    Northwestern Public Service Company
                                    (dated as of May 8, 1984).

10-F-2   10-K for year     10-F-2   --Supplemental Agreement No. 1 	
         ended 12/31/91             to Agreement for Sharing 
                                    Ownership of Big Stone Plant
                                    (dated as of July 1, 1983).

10-F-3   10-K for year     10-F-3   --Supplemental Agreement No. 2 	
         ended 12/31/91             to Agreement for Sharing
                                    ownership of Big Stone Plant
                                    (dated as of March 1, 1985).

10-F-4   10-K for year     10-F-4   --Supplemental Agreement No. 3 	
         ended 12/31/91             to Agreement for Sharing
                                    ownership of Big Stone Plant
                                    (dated as of March 31, 1986).

10-F-5   10-K for year     10-F-5   --Amendment I to Letter of 
         ended 12/31/92             Intent dated May 8, 1984, for 
                                    purchase of share of Big Stone 
                                    Plant.

10-G     10-Q for quarter  10-A     --Big Stone Plant Coal Agrmnt 
         ended 9/30/94              by and between the Company, 
                                    Montana-Dakota Utilities Co.,
                                    Northwestern Public Service
                                    Company, and Westmoreland
                                    Resources, Inc. (dated as of
                                    June 30, 1994).

10-G-1   10-Q for quarter  10-B     --Big Stone Coal Transp. 
         ended 9/30/94              Agreement by and between the 
                                    Company, Montana-Dakota
                                    Utilities, Northwestern Public
                                    Service Co., and Burlington
                                    Northern Railroad Company
                                    (dated as of July 18, 1994).

10-G-2   10-K for year     10-G-2   --Amendment No. 1, dated as of 
         ended 12/31/95             December 27, 1995, to Big
                                    Stone Coal Transportation
                                    Agreement (dated as of
                                    July 18, 1994).

10-G-3   10-Q for quarter  19-D     --Big Stone Plant Tire Derived 	
         ended 6/30/93              Fuel Agreement by and between 
                                    the Company and BFI Tire
                                    Recyclers of Minnesota (dated
                                    as of November 2, 1992).

10-G-4   10-Q for quarter  19-E     --Big Stone Plant Tire Derived 	
         ended 6/30/93              Fuel Agreement by and between 
                                    the Company and National Tire
                                    Services (dated as of 
                                    November 2, 1992).

10-H     2-61043           5-H      --Agreement for Sharing Owner- 
                                    ship of Coyote Station
                                    Generating Unit No. 1 by and
                                    between the Company, Minnkota
                                    Power Cooperative, Inc.,
                                    Montana-Dakota Utilities Co.,
                                    Northwestern Public Service
                                    Company, and Minnesota Power
                                    & Light Company (dated as of
                                    July 1, 1977).

10-H-1   10-K for year     10-H-1   --Supplemental Agreement No. 
         ended 12/31/89             One dated as of November 30, 1978, 
                                    to Agreement for Sharing
                                    Ownership of Coyote Generating
                                    Unit No. 1.

10-H-2   10-K for year     10-H-2   --Supplemental Agreement No. 
         ended 12/31/89             Two dated as of March 1, 1981,
                                    to Agreement for Sharing
                                    Ownership of Coyote Generating
                                    Unit No. 1 and Amendment No. 2
                                    dated March 1, 1981, to Coyote
                                    Plant Coal Agreement.

10-H-3   10-K for year     10-H-3   --Amendment dated as of 
         ended 12/31/89             July 29, 1983, to Agreement 
                                    for Sharing Ownership of
                                    Coyote Generating Unit No. 1.

10-H-4   10-K for year     10-H-4   --Agreement dated as of Sept. 5, 1985, 
         ended 12/31/92             containing Amendment No. 3 to Agreement 
                                    for Sharing Ownership of Coyote 
                                    Generating Unit No.1, dated as of 
                                    July 1, 1977, and Amendment No. 5 to
                                    Coyote Plant Coal Agreement,
                                    dated as of January 1, 1978.

10-I     2-63744           5-I      --Coyote Plant Coal Agreement 
                                    by and between the Company,
                                    Minnkota Power Cooperative,
                                    Inc., Montana-Dakota
                                    Utilities Co., Northwestern
                                    Public Service Company,
                                    Minnesota Power & Light
                                    Company, and Knife River
                                    Coal Mining Company (dated
                                    as of January 1, 1978).

10-I-1   10-K for year     10-I-1   --Addendum, dated as of 
         ended 12/31/92             March 10, 1980, to Coyote Plant 
                                    Coal Agreement.

10-I-2   10-K for year     10-I-2   --Amendment (No. 3), dated as 
         ended 12/31/92             of May 28, 1980, to Coyote 
                                    Plant Coal Agreement.

10-I-3   10-K for year     10-I-3   --Fourth Amendment, dated as 
         ended 12/31/92             of August 19, 1985, to
                                    Coyote Plant Coal Agreement.

10-I-4   10-Q for quarter  19-A     --Sixth Amendment, dated as of
         ended 6/30/93              February 17, 1993, to Coyote 
                                    Plant Coal Agreement.

10-K     10-K for year     10-K     --Diversity Exchange Agreement 	
         ended 12/31/91             by and between the Company
                                    and Northern States Power
                                    Company, (dated as of May 21, 1985) 
                                    and amendment thereto (dated as of 
                                    August 12, 1985).

10-K-1   10-Q for quarter  10       --Purchased Power and 
         ended 6/30/94              Interconnection Agreement 
                                    between the Company and
                                    Potlatch Corporation dated
                                    as of June 8, 1994.

10-K-2   10-K for year     10-K-4   --Capacity & Energy Agreement
         ended 12/31/94             by and between the Company
                                    and Minnkota Power Coop.
                                    Inc. dated as of May 27, 1994.

10-K-3   10-K for year     10-K-5   --Interchange Agreement by and
         ended 12/31/92             between the Company and
                                    Wisconsin Power and Light
                                    Company dated as of 
                                    February 21, 1992.

10-K-4   10-K for year     10-K-6   --Interchange Agreement by and
         ended 12/31/92             between the Company and
                                    Wisconsin Electric Power Co.
                                    dated as of June 26, 1992.

10-K-5   10-Q for quarter  19-B     --Interchange Agreement by and
         ended 6/30/93              between the Company and
                                    Wisconsin Public Service
                                    Corp dated as of January 20, 1993.

10-L     10-K for year     10-L     --Integrated Transmission 
         ended 12/31/91             Agreement by and between the
                                    Company, Missouri Basin
                                    Municipal Power Agency and
                                    Western Minnesota Municipal
                                    Power Agency (dated as of
                                    March 31, 1986).

10-L-1   10-K for Year     10-L-1   --Amendment No. 1, dated as 
         ended 12/31/88             of December 28, 1988, to
                                    Integrated Transmission
                                    Agreement (dated as of
                                    March 31, 1986).

10-M-1   10-K for year     10-M-1   --Hoot Lake Plant Coal 
         ended 12/31/89             Agreement dated as of
                                    October 1, 1980, by and
                                    between the Company and
                                    Knife River Coal Mining
                                    Company.

10-M-2   10-K for year     10-M-2   --First Amendment dated as of 
         ended 12/31/89             August 14, 1985, to Hoot 
                                    Lake Plant Coal Agreement.

10-M-3   10-K for year     10-M-10  --Hoot Lake Coal Transp.
         ended 12/31/92             Agreement dated January 15, 1993 
                                    by and between the Company
                                    and Northern Coal Transportation Co.

10-M-4   10-Q for quarter   19-C    --First Amendment dated as of 
         ended 6/30/93              January 20, 1993 to Hoot Lake 
                                    Coal Transportation Agreement
                                    dated January 15, 1993.

10-M-5                              --Second Amendment dated as of 
                                    May 21, 1996 to Hoot Lake 
                                    Coal Transportation Agreement
                                    dated January 15, 1993.*

10-N-1   10-K for year     10-N     --Deferred Compensation Plan 
         ended 12/31/91             for Directors, dated
                                    April 9, 1984.**

10-N-2   10-K for year     10-N-2   --Executive Survivor and
         ended 12/31/94             Supplemental Retirement Plan,
                                    as amended.**

10-N-3   10-K for year     10-P     --Form of Severance Agrmnt.**
         ended 12/31/92

10-N-4   10-K for year     10-N-5   --Nonqualified Profit Sharing 
         ended 12/31/93             Plan.**

10-N-5   10-K for year     10-N-6   --Nonqualified Retirement 
         ended 12/31/93             Savings Plan.**

10-O     10-K for year     10-O     --Dealer Agreement by and 
         ended 12/31/93             between DMS and Philips
                                    Medical Systems North
                                    America Company dated
                                    January 18, 1994.

13-A                                --Portions of 1996 Annual
                                    Report to Shareholders
                                    incorporated by reference
                                    in this Form 10-K.

21-A                                --Subsidiaries of Registrant

23                                  --Consent of Deloitte & Touche LLP

24-A                                --Powers of Attorney.

27                                  --Financial Data Schedule.

------------
*Confidential information has been omitted from such Exhibit and filed 
separately with the Commission pursuant to a confidential treatment request 
under Rule 24b-2.

** Management contract or compensatory plan or arrangement required to be 
filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.