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
                    For the fiscal year ended December 31, 2000
                                     OR
             ( )    Transition Report pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934

                    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 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     )

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)

State the aggregate market value of the voting stock held by
nonaffiliates of the registrant.
          $599,094,823 as of March 2, 2001

Indicate the number of shares outstanding of each of the
registrant's classes of Common Stock, as of the latest
practicable date:
      24,307,106 Common Shares ($5 par value) as of
      March 2, 2001.

Documents Incorporated by Reference:
   2000 Annual Report to Shareholders-Portions incorporated
      by reference into Parts I and II
   Proxy Statement dated March 2, 2001-Portions incorporated
      by reference into Part III

                              PART I

Item 1.     BUSINESS
            --------

     (a)   General Development of Business
           -------------------------------

     Otter Tail Power Company is a diversified corporation
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.

     Otter Tail Power Company and its subsidiaries (the Company)
have operations in 48 states and 6 Canadian provinces. The
businesses of the Company have been classified into 5 segments:
Electric Operations, Plastics Operations, Manufacturing
Operations, Health Services Operations and Other Business
Operations.

        - Electric Operations (the Utility) include the
          production, transmission, distribution, and sale of
          electric energy in Minnesota, North Dakota, and South
          Dakota. The electric utility operations have been the
          Company's primary business since incorporation. Since
          1990, the Company has diversified and made significant
          investments in the other segments.

        - Plastics Operations consist of businesses producing
          polyvinyl chloride (PVC) pipe in the Upper Midwest and
          Southwest regions of the United States.

        - Manufacturing Operations consist of businesses in the
          following manufacturing activities: production of wind
          towers, agricultural equipment, frame-straightening
          equipment and accessories for the auto body shop
          industry, custom plastic pallets, material and handling
          trays, and horticultural containers, contract
          machining, and metal parts stamping and fabrication.
          These businesses are located primarily in the Upper
          Midwest.

        - Health Services Operations consist of businesses in the
          sale, service, rental, refurbishing, and operation of
          medical imaging equipment and the sale of related
          supplies and accessories to various medical
          institutions located in 24 states.

        - Other Business Operations consist of businesses in
          electrical and telephone construction contracting,
          transportation, telecommunications, entertainment,
          energy services and natural gas marketing.  These
          businesses operate primarily in the Upper Midwest,
          except for the transportation company which operates in
          48 states and 6 Canadian provinces.

     Substantially all of the businesses except for Electric
Operations, energy services and the natural gas marketing
operation are owned by the Company's wholly-owned subsidiary
Varistar Corporation (Varistar), with its principal executive
offices in Fargo, North Dakota.

     The Company continues to investigate acquisitions of additional
non-electric businesses and expects continued growth in this
area. On January 1, 2000 the Company acquired the assets and
operations of Vinyltech Corporation (Vinyltech) located in
Phoenix, Arizona.  Vinyltech is a manufacturer of PVC pipe. On
June 1, 2000, the Company acquired the assets and operations of
Portable X-Ray & EKG, Inc. (PXE) located in Minneapolis,
Minnesota.  PXE is a provider of mobile x-ray, EKG, ultrasound,
and echocardiogram services primarily to patients in long term
care facilities in the Minneapolis/St. Paul market. On February
28, 2001 the Company acquired the stock of T.O. Plastics, Inc.,
which is a plastics thermoformer with three facilities in
Minnesota and one facility in South Carolina. T. O. Plastics,
Inc. custom manufactures returnable pallets, material and
handling trays and horticultural containers.

     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 22 through 28 of the Company's 2000 Annual Report to
Shareholders, filed as an Exhibit hereto.

     At the Annual Meeting of Shareholders to be held on April 9,
2001, shareholders will vote on a proposed amendment to the
Company's Articles of Incorporation, changing the corporate name
from "Otter Tail Power Company" to "Otter Tail Corporation."  The
name Otter Tail Power Company will continue to be used in
connection with the Utility.

     (b)   Financial Information About Industry Segments
           ---------------------------------------------

     The Company is engaged in businesses that have been
classified into five segments: Electric Operations, Plastics
Operations, Manufacturing Operations, Health Services Operations,
and Other Business Operations.  Financial information about the
Company's segments is incorporated by reference to note 4 of
"Notes to Consolidated Financial Statements" on pages 38 and 39
of the Company's 2000 Annual Report to Shareholders, filed as an
Exhibit hereto.

     (c)   Narrative Description of Business
           ---------------------------------

                        ELECTRIC OPERATIONS
                        -------------------

General
-------

     The Company derived 47 percent of its consolidated operating
revenues from Electric Operations in 2000; 50 percent in 1999;
and 53 percent in 1998. In 2000 Electric Operations derived
approximately 50.6 percent of its retail electric revenues from
Minnesota, 41.5 percent from North Dakota, and 7.9 percent from
South Dakota.

     The territory served by the Utility 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, 28.9
percent of 2000 electric revenue was derived from commercial
customers, 26.1 percent from residential customers, 16.1 percent
from industrial customers, and 28.9 percent from other sources,
including municipalities, farms and power pools.

     Power pool sales to other utilities increased from 33.5 percent
of  total kwh sales in 1999 to 38.3 percent of total 2000 kwh sales.
The Utility was well positioned to capitalize on sales into a robust
wholesale energy market in 2000 due to excellent plant availability
when on-peak power prices were high. The Utility has also placed
increased emphasis on power marketing efforts during the last three
years. Activity in short-term energy sales is subject to change based
on a number of factors and the Company is unable to predict the 2001
level of activity.

     The aggregate population of the Utility's retail electric
service area is approximately 230,000.  In this service area of
423 communities and adjacent rural areas and farms, approximately
123,600 people live 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).  As of December 31, 2000, the
Utility serves 126,750 customers.  This is an increase of 458
customers over 1999, with the majority of growth in residential
customers.

Competition
-----------

     Electric sales are subject to competition in some areas from
municipally owned systems, rural electric cooperatives and, in
certain respects, from on-site generators and cogenerators.
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 Utility 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 are expected to bring more
competition into the electric industry.

     As the electric industry moves towards deregulation, the
Utility expects the industry to become more competitive. The
Utility is taking a number of steps to position itself for
success in a competitive marketplace. The Utility has
functionally unbundled its energy supply, energy delivery, and
energy services operations.  Necessary accounting systems have
been developed to capture costs and determine the profitability
of each of these business units and to identify areas for
improvement and opportunities for increased profitability.
Separate business plans have been created for each business unit.
The energy services business unit was established to promote the
energy-related products and services traditionally offered to the
Utility's customers and to develop new products and services to
be offered to current and potential customers in order to
distinguish the Utility for competition. Furthermore, the Utility
is working with other utilities to develop reform proposals and
testimony for legislative committees studying competition in
Minnesota and North Dakota.

     The Company believes that the Utility is well positioned to
be successful in a more competitive environment.  The Utility's
generation capacity appears poised for competition due to unit
heat rate improvements. A comparison of the Utility's electric
retail rates to the rates of other investor-owned utilities,
cooperatives, and municipals in the states the Utility serves
indicates that the Utility's rates are competitive. In addition,
the Utility plans to attempt more flexible pricing strategies
under an open, competitive environment.

     For the status of deregulation see "Deregulation and Legislation".

Capability and Demand
---------------------

     At December 31, 2000, electric operations had base load net
plant capability totaling 564,843 kw, consisting of 253,168 kw
from the jointly-owned Big Stone Plant (constituting the Utility's
53.9 percent share of the plant's total capability), 156,475 kw
from the Hoot Lake Plant, 149,450 kw from the jointly-owned Coyote
Station (constituting the Utility's 35 percent share of the
station's total capability), and, under contract, 5,750 kw from a
co-generation plant near Bemidji, Minnesota.  In addition to its
base load capability, the Utility has combustion turbine and small
diesel units, used chiefly for peaking and standby purposes, with
a total capability of 91,852 kw, and hydroelectric capability of
4,296 kw.  During 2000, electric operations generated about 80
percent of its retail kwh sales and purchased the balance.

     The Utility has made arrangements to help meet its future
base load requirements, and continues to investigate other means
for meeting such requirements. The Utility plans to install a
peaking combustion turbine to be operational by June 1, 2003.  The
unit will generate between 40,000 and 50,000 kw. The Utility has
an agreement with another utility for the annual exchange of
75,000 kw of seasonal capacity which runs through October 2004.
The Utility has an agreement to purchase 50,000 kw of year-round
capacity which extends through April 30, 2005 and another
agreement to purchase 50,000 kw of year-round capacity from May 1,
2000 to April 30, 2010 from another utility. The Utility also has
seasonal capacity agreements to purchase 50,000 kw for the summers
of 2001 and 2002. The Utility has a direct control load management
system, which provides some flexibility to the Utility to effect
reductions of peak load. The Utility, in addition, offers rates to
customers which encourage off-peak usage.

     The Utility traditionally experiences its peak system demand
during the winter season.  For the calendar year 2000, the Utility
experienced a system peak demand of 650,252 kw on December 13,
2000. The previous highest sixty-minute peak demand ever was
635,529 kw on January 7, 1997. Taking into account additional
capacity available to it in December 2000 under power purchase
contracts (including short-term arrangements), as well as its own
generating capacity, the Utility's capability of then meeting
system demand, including reserve requirements computed in
accordance with accepted industry practice, amounted to 837,991
kw. The Utility's additional capacity available under power
purchase contracts (as described above), combined with generating
capability and load management control capabilities, is expected
to meet 2001 system demand, including industry reserve
requirements.

Fuel Supply
-----------

     Coal is the principal fuel burned at the Big Stone, Coyote,
and Hoot Lake generating plants.  Coyote, a mine-mouth facility,
burns North Dakota lignite coal. Hoot Lake and Big Stone plants
burn western subbituminous coal. The following table shows, for
2000, the sources of energy used to generate the Utility's net
output of electricity:

                                        Net Kilowatt      % of Total
                                           Hours           Kilowatt
                                         Generated          Hours
          Sources                       (Thousands)       Generated
          -------                       ------------      ----------

     Subbituminous Coal. . . . . . . .  2,604,129          72.1%
     Lignite Coal. . . . . . . . . . .    967,087          26.8
     Hydro . . . . . . . . . . . . . .     24,713            .7
     Oil . . . . . . . . . . . . . . .     14,372            .4
                                        ---------         ------
     Total . . . . . . . . . . . . . .  3,610,301         100.0%
                                        =========         ======

     The Utility has a primary coal supply agreement with
Kennecott Energy Company for the supply of Wyoming subbituminous
coal to Big Stone Plant for 2001.  Negotiations have begun to
secure a subbituminous coal supply contract for the Big Stone
plant for 2002.  Purchases are made for the supply of
subbituminous coal as needed for the Hoot Lake Plant. A lignite
coal contract with Knife River Coal Mining Company for the
Coyote Station expires in 2016, with a 15-year renewal option
subject to certain contingencies. Knife River Coal Mining
Company (Knife River) is an affiliate of Montana-Dakota
Utilities Co., which is a co-owner of the Big Stone Plant and
Coyote Station. In September 2000 it was announced that Knife
River would be sold to Westmoreland Coal Company.  The sale is
subject to several conditions prior to closing.  If the
conditions are met, it will close on or about April 30, 2001.

     During 2000, the Minnesota, North Dakota, and South Dakota
utility regulatory agencies approved the accounting treatment of
settlement proceeds related to the Knife River coal contract
arbitration. The approval allowed the Utility to record a $1.9
million reduction in fuel costs during 2000.  This reduction in
fuel costs was returned to electric retail customers through the
cost of energy adjustment clause.

     It is the Utility's practice to maintain minimum 30-day
inventory (at full output) of coal at the Big Stone Plant, a 20-
day inventory at the Coyote Station, and a 10-day inventory at the
Hoot Lake Plant.

     The Utility has two coal transportation agreements with The
Burlington Northern and Santa Fe Railway Company. The first
agreement is for transportation services to the Big Stone Plant
which runs through 2001.  The second agreement is for Hoot Lake
Plant which expires in mid-2004. No coal transportation agreement
is needed for the Coyote Station due to its location next to a
coal mine.

     The average cost of coal consumed (including handling charges
to the plant sites) per million BTU for each of the three years
2000, 1999, and 1998, was $.994, $.956, and $.960, respectively.

     The Utility is permitted by the State of South Dakota to burn
some alternative fuels, including tire and refuse derived fuel, at
the Big Stone Plant.  The quantity of alternative fuel burned at
the Big Stone Plant is insignificant when compared to the total
annual coal consumption at the Big Stone Plant.

General Regulation
-------------------

     The Utility is subject to regulation of rates and other
matters in each of the three states in which it operates and by
the federal government for certain interstate operations.  A
breakdown of electric rate regulation by each jurisdiction is as
follows:

                                                       Year Ended
                                                    December 31, 2000
                                                   -------------------
                                                   % of
                                                   Electric    % of kwh
 Rates                  Regulation                 Revenues      Sales
 -----                  ----------                 ---------   --------
MN retail sales         MN Public Utilities
                        Commission                   37.5%       32.2%

ND retail sales         ND Public Service
                        Commission                   30.8        24.8

SD retail sales         SD Public Utilities
                        Commission                    5.9         4.7

Transmission & sales    Federal Energy Regulatory
  for resale            Commission                   25.8        38.3
                                                    -----       -----
                                                    100.0%      100.0%
                                                    =====       =====

     The Utility has approved tariffs in all three states which it serves
for lower rates for residential demand control and controlled service,
in Minnesota and North Dakota for real-time pricing, and in North Dakota
and South Dakota for bulk interruptible rates.  Each of these special
rates is designed to improve efficient use of the Utility facilities,
while encouraging use of  cost-effective electricity instead of other
fuels and giving customers more control over the size of their electric
bill.  In addition, in all three states, the Utility has approved tariffs
which allow qualifying customers to release and sell energy back to the
Utility when wholesale energy prices make such transactions desirable.

     The majority of the Utility's electric retail rate schedules
now in effect provide for adjustments in rates based on the cost
of fuel delivered to the Utility's generating plants, as well as
for adjustments based on the cost of electric energy purchased by
the Company.  Such adjustments are presently based on a two-month
moving average in Minnesota and under 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.

     The following summarizes the material regulations of each
jurisdiction applicable to the Utility's electric operations, as
well as the specific electric rate proceedings during the last
three years with the Minnesota Public Utilities Commission
(MPUC), the North Dakota Public Service Commission (NDPSC), the
South Dakota Public Utilities Commission (SDPUC), and the Federal
Energy Regulatory Commission (FERC):

     Minnesota:   Under the Minnesota Public Utilities Act,
the Utility is subject to the jurisdiction of the 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 Utility has not had a significant
rate proceeding before the MPUC since July 1987.

     The Department of Commerce (DOC), formerly Department of
Public Service, is responsible for investigating all matters
subject to the jurisdiction of the DOC or the MPUC, and for the
enforcement of MPUC orders.  Among other things, the DOC 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 DOC acts
as a state advocate in matters heard before the MPUC.  The DOC
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 percent of its gross operating revenues from service
provided in Minnesota. The DOC may require the utility 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 DOC 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. Since 1995,
the Utility has recovered demand-side management related costs not
included in base rates, under Minnesota's Conservation Improvement
Programs, through the use of an annual recovery mechanism approved
by the MPUC.  In 2000, the MPUC approved a 0.75 percent surcharge
on all Minnesota customers' bills starting on July 1, 2000, for
the recovery of conservation-related costs over and above those
being recovered in current rates.  The previous 12-month period
surcharge was 1.5 percent.  The current surcharge rate will be in
place until June 30, 2001 when it will be revised for subsequent
years' program results.

     The MPUC requires the submission of a 15-year advance
integrated resource plan by utilities serving at least 10,000
customers, either directly or indirectly, and having at least 100
megawatts of load.  The MPUC's findings and orders with respect to
these submissions are binding for jurisdictional utilities.
Typically, the filings are submitted every two years. The
Utility's most recent plan was submitted to the MPUC in 1999, and
was approved, without modifications, early in 2000. The MPUC also
granted the Utility a one-year waiver in submitting its next
integrated resource plan, which will be completed in 2002.

     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
outside of the state) or any rate recovery therefrom, and may 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.

     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.

     North Dakota:   The Utility is subject to the jurisdiction of
the NDPSC with respect to rates, services, certain issuances of
securities and other matters. The NDPSC periodically performs
audits of gas and electric utilities over which it has rate
setting jurisdiction to determine the reasonableness of overall
rate levels.  In the past, these audits have occasionally resulted
in settlement agreements adjusting rate levels. The North Dakota
Energy Conversion and Transmission Facility Siting Act grants the
NDPSC 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 Utility is required to submit a ten-year plan to
the NDPSC annually.

     On December 29, 2000 the NDPSC approved a performance-based
ratemaking plan for North Dakota operations, effective for 2001
through 2005 unless suspended or terminated by the NDPSC or the
Utility.   The plan includes seven performance measures, the
results of which determine the Utility's allowed return on
equity. Earnings outside the allowed return on equity range are
shared equally between shareholders and customers.

     On October 6, 1999, the NDPSC approved a settlement
agreement following an audit of the Utility's electric
operations in North Dakota.  The effect of this settlement
decreased 1999 earnings by approximately $441,000 after taxes or
$0.02 per share.  As part of the settlement the Utility was
required to refund to North Dakota customers during 2000 any
1999 regulated electric operations earnings from North Dakota
over a 12.5 percent return on equity. The amount of this refund
was insignificant.

     South Dakota: The South Dakota Public Utilities Act subjects
the Utility to the jurisdiction of the SDPUC with respect to
rates, public utility services, establishment of assigned service
areas, and other matters.  The Utility is currently exempt from
the jurisdiction of the SDPUC with respect to the issuance of
securities.  Under the South Dakota Energy Facility Permit Act,
the SDPUC 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. There have been no significant
rate proceedings in South Dakota since November 1987.

     FERC:   Wholesale power sales and transmission rates are
subject to the jurisdiction of the FERC under the Federal Power
Act of 1935, as amended (FPA). 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. Filed rates are effective after a one-day suspension
period, subject to ultimate approval by the FERC.  The Utility is
a member of the Mid-Continent Area Power Pool (MAPP), which
operates in parts of eight states in the Upper Midwest and in
three provinces in Canada. Power pool sales are conducted
continuously through MAPP in accordance with schedules filed by
MAPP with the FERC.

     In December 1999 the FERC issued Order No. 2000.  This order
required public utilities that own, operate or control interstate
transmission to file a proposal for a regional transmission
organization (RTO) or a description of any effort made to participate
in an RTO, the reasons for not participating and any plans for further
work toward participation.  In compliance with Order No. 2000, the
Utility filed its intent to join the Midwest Independent System
Operator (MISO) RTO.  Late in 2000 three Illinois utilities filed
their intentions to leave the MISO for the for-profit Alliance RTO.
Because of their action, there was a month-long FERC settlement
process in February 2001 that resulted in two regional transmission
organizations (MISO and Alliance) with a single transmission service
rate.  The FERC settlement agreement allows the three Illinois
companies to join Alliance as long as certain financial and operating
conditions are met.  As a result of the FERC settlement agreement for
the MISO and Alliance RTO operations, MISO will likely continue to
develop as a regional transmission organization.  The Utility, in
compliance with Order No. 2000, filed the necessary membership
application with the MISO on February 28, 2001.

     Other:   The Utility 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 Utility 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 that may be imposed upon the source or use of energy.

Deregulation and Legislation
----------------------------

     The United States Congress ended its 2000 legislative
session without taking action on proposed electric industry
restructuring legislation. The Utility expects that during 2001
Congress will continue to debate proposed legislation to promote
customer choice and a more competitive electric market but will
take a cautious approach in light of the issues facing the
California utility industry.

     Because of the problems being encountered in California as
a result of that state's deregulation design, many states are
proceeding cautiously with deregulation of their electricity
markets including the states in which the Utility operates.

     The MPUC issued its Wholesale Competition Report in 1996 and
its Retail Competition Report in 1997 and continues to work on
specific topics in the areas of potential stranded costs,
unbundled rates and affiliated transactions.  The Minnesota
legislature did not take any significant legislative action on
electric utility restructuring in 2000. However, the legislature
is concerned about energy supply shortfalls projected for the
MAPP region within the next five years and is considering steps
to ensure adequate supplies.  The Minnesota DOC has introduced
legislation to address projected shortages in the state. The
focus of the DOC proposal is a greater reliance on conservation,
renewable energy and reliability planning.  The proposal will
not address the issues of retail access and customer choice.

     Key energy industry committees of the Minnesota legislature
are introducing bills to ensure Minnesota's long-term electric
reliability.  These bills also include a greater emphasis on
conservation, renewable energy, distributed generation and
reliability planning.

     In 1997, the North Dakota legislature created an interim
study committee with a six-year life to investigate the impact
of electric utility industry restructuring on North Dakota.  To
date, the committee has made no recommendations for legislative
changes. The North Dakota legislature plans to deal first with
tax issues surrounding restructuring pertaining to both
investor-owned electric utilities and electric cooperatives.
The South Dakota legislature and SDPUC continue to monitor the
status of the industry restructuring and retail competition.
The Utility cannot predict the timing or impact of regulatory
actions regarding restructuring.

Environmental Regulation
------------------------

     Impact of Environmental Laws:   The Utility's existing
generating plants are subject to stringent federal and state
standards and regulations regarding, among other things, air,
water and solid waste pollution.  The Utility estimates it has
expended in the five years ended December 31, 2000,
approximately $2.4 million for environmental control facilities.
Included in the 2001-2005 construction budget are approximately
$10.2 million for environmental equipment for existing and new
facilities, including $1.8 million for 2001.

     Air Quality:   Pursuant to the Federal Clean Air Act of 1970
as amended  (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 Utility's steam generating
plants is North Dakota lignite or western subbituminous coal.
Electrostatic precipitators have been installed at the 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 units at the Big Stone Plant and the Hoot Lake Plant
currently meet all presently applicable federal and state air
quality and emission standards.

     The Coyote Station 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 desulfurize hot
gases from the stack without producing sludge, an unwanted by-
product of a conventional wet scrubber system. The Coyote
Station is currently operating within all presently applicable
federal and state air quality and emission standards.

     The Act, in addressing acid deposition, imposed
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 achieved
through a new market-based system under which power plants are
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
were imposed in two phases. Phase one was imposed in 1995 and
phase two was imposed in 2000.

     The phase one requirements did not apply to any of the
Utility's plants. The phase two requirements apply to the
Utility's plants. The Utility believes that its current use of
low sulfur coal at the Hoot Lake Plant and the dry scrubbers
installed at the Coyote Station will enable the facilities to
comply with anticipated phase two limitations on SO2 emissions.
The subbituminous coal burned at the Big Stone Plant replaced
lignite, which had been used since inception of plant operation
in 1975 as the primary fuel. The Utility intends that the Big
Stone Plant will maintain current levels of operation and meet
phase two requirements by burning low sulfur subbituminous coal.
The phase two SO2 emission limitations were met at all of the
Utility's plants in 2000.

     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 Hoot Lake Plant units 2 and 3. The Act allowed
the EPA to retain the standard as it currently applies to phase
one boilers or adopt more stringent standards for phase two
boilers by January 1, 1997.  The EPA adopted more stringent
standards on December 19, 1996. The Utility had the option of
complying with the phase one standards beginning on January 1,
1997, under EPA's early opt-in provision, or complying with any
revised standard for phase two boilers.  The Utility 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
Utility did not elect the early opt-in provision for Hoot Lake
Plant unit 3.  Installation of low-NOx equipment was completed
on Hoot Lake Plant unit 3 to meet the NOx emission requirements.
The NOx emission standards as applicable to Hoot Lake Plant
Units 2 and 3 were met in 2000.

     On December 19, 1996, the EPA also adopted NOx emissions
regulations that would be applicable to cyclone-fired boilers
such as those used at the Big Stone Plant and Coyote Station.
The regulations require that the emission standard be met by
cyclone boilers beginning on January 1, 2000.  The Utility
evaluated the Big Stone Plant and Coyote Station NOx emissions
with respect to the December 19, 1996 rules.  Existing emissions
monitoring data indicated that the Coyote Station met the
emissions requirements. During 1997, the Utility conducted tests
at the Big Stone Plant to determine if emissions could be
reduced through modifications to existing equipment. The results
of the tests were positive and modifications were completed.  As
a result of the modifications, the emission limitations for 2000
were met at both the Coyote Station and Big Stone Plant.

     The Act calls for EPA studies of the effects of emissions
of listed pollutants by electric steam generating plants.  The
EPA has completed the studies and sent reports to Congress. The
Act required that the EPA make a finding as to whether
regulation of emissions of hazardous air pollutants from fossil
fuel-fired electric utility generating units is appropriate and
necessary.  On December 14, 2000, the EPA announced that it
affirmatively decided to regulate mercury emissions from
electric generating units.  The EPA expects to propose
regulations by December 2003 and issue final rules by December
2004.  Because promulgation of rules by the EPA has not been
completed, it is not possible to assess whether, or to what
extent, this regulation will impact the Utility.

     In 1998, EPA announced its New Source Review Enforcement
Initiative targeting coal-fired utilities, petroleum refineries,
pulp and paper mills and other industries for alleged violations
of EPA's New Source Review rules.  These rules require owners or
operators that construct new major sources or make major
modifications to existing sources to obtain permits and install
air pollution control equipment at affected facilities. The EPA
is attempting to determine if emission sources violated certain
provisions of the Act by making major modifications to their
facilities without installing state-of-the-art pollution
controls. On January 2, 2001, the Utility received a request
from the EPA, pursuant to Section 114(a) of the Act, to provide
certain information relative to past operation and capital
construction projects at the Big Stone Plant. The Utility is in
the process of responding to that request and cannot, at this
time, determine what, if any, actions will be taken by the EPA.

     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 Utility has all federal and state water permits
presently necessary for the operation of the Big Stone Plant.
Water discharge permits for the Hoot Lake Plant and Coyote
Station were renewed in 1997 and 1998, respectively, each for a
five-year term.  The Utility 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.

     Solid Waste:   Permits for disposal of ash and other solid
wastes have been issued for the Big Stone Plant and Coyote
Station.  A renewal permit is pending for the Hoot Lake Plant,
and the Utility anticipates that it will obtain this renewal in
due course.  The Utility estimates that the current ash disposal
site at the Hoot Lake Plant will be filled to capacity within
approximately three years.  The Utility is evaluating its
options, including increased marketing of the ash for
construction purposes and building a new ash disposal site
adjacent to the current site within the same permitted area.
Although an estimate of the engineering costs required to
construct a new facility has not been completed, the Utility
believes that the investment required will not have a
significant impact on future plant operating costs.

     At the request of the Minnesota Pollution Control Agency
(MPCA) the Utility has an ongoing investigation at its former,
closed Hoot Lake Plant ash disposal sites. The Utility is proceeding
with additional site investigations with the findings subject to
further review by the MPCA.

     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 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 Utility 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 Utility 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, which was reauthorized and
amended in 1986.  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 known as 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 Utility 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 Utility completed a program for the removal of
PCB-filled transformers and capacitors.  The Utility is also
completing an additional program for the removal of PCB-
contaminated mineral oil dielectric fluid from substation
transformers and voltage regulators that were identified in
2000. The Utility continues to remove such oil from other
electrical equipment.

     Health Effects of Electric and Magnetic Fields (EMF): A
number of studies have examined the possibility of adverse
health effects from EMF without conclusive results.  Although
research conducted to date has found no conclusive evidence that
EMF 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 Utility is continually expanding, replacing and
improving its electric facilities.  During 2000, approximately
$23.6 million was invested for additions to its electric utility
properties.  During the five years ended December 31, 2000,
gross electric property additions, including construction work
in progress, were approximately $124.4 million and gross
retirements were approximately $51.7 million.

     The Utility estimates that during the five years 2001
through 2005 it will invest approximately $148 million for
electric construction.  The Utility continuously reviews options
for increasing its generating capacity. While at this time the
Utility has no firm plans for additional base load generating
plant construction, the Utility plans to install a peaking
combustion turbine to be operational by June 1, 2003. The
majority of electric utility expenditures for the five-year
period 2001 through 2005 will be for work related to the
Utility's production plants and distribution system.

Franchises
----------

     At December 31, 2000, the Utility had franchises in all but
one of the 371 incorporated municipalities that 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 that the Utility serves.



                         PLASTICS OPERATIONS
                         -------------------

General
-------

     Plastics Operations consist of businesses producing
polyvinyl chloride (PVC) pipe. The Company derived 15 percent of
its consolidated operating revenues from this segment in 2000, 7
percent in 1999, and 6 percent in 1998.

     The following is a brief description of these businesses:

     Northern Pipe Products, Inc., located in Fargo, ND,
     manufactures and sells PVC pipe for municipal, rural water,
     irrigation and other uses in a fifteen-state area.

     Vinyltech Corporation, located in Phoenix, AZ, manufactures
     and sells PVC pipe for municipal, rural water, irrigation
     and other uses in an eight-state area of the Southwest region
     of the United States.

     Together these companies have the capacity to produce 170
million pounds of PVC pipe annually.

Competition
-----------

     The plastic pipe industry is highly fragmented and
competitive, due to the large number of producers, small number
of raw material suppliers, and the commodity nature of the
industry. Because of shipping costs, competition is usually
regional, instead of national, in scope. Northern Pipe and
Vinyltech compete not only against other plastic pipe
manufacturers, but also ductile iron, steel, concrete and clay
pipe producers. Pricing pressure will continue to effect
operating margins in the future.

     Northern Pipe and Vinyltech intend to continue to compete
on the basis of their high quality products, cost effective
production techniques, and close customer relations and support.

Manufacturing and Resin Supply
------------------------------

     Extrusion is a common manufacturing process used in the
production of PVC.  During the production process, the PVC
compound is placed in an extrusion machine, where it is heated
into a plastic state and pulled through a sizing apparatus to
produce the pipe.  The newly extruded pipe is moved through a
water cooling trough, marked to identify the type of pipe and
cut to length.  Warehouse and outdoor storage facilities are
used to store the finished product.  Inventory is shipped from
storage to customers primarily by common carrier.

     The PVC resins are acquired in bulk and shipped to point of
use by rail car.  Both Northern Pipe and Vinyltech have good
relationships with their key raw material vendors.

     Due to the commodity nature of PVC resin and PVC pipe and
the dynamic supply and demand factors worldwide, historically
the markets for both PVC resin and PVC pipe have been very
cyclical with significant fluctuations in prices and gross
margins.  Over the last ten years, there has been consolidation
in PVC resin producers and the capacity of the PVC resin
producers has increased by over 75 percent.  Published PVC resin
prices fluctuated from a high of $.42 per pound to a low of
$.345 per pound during 2000.

Capital Expenditures
--------------------

     During 2000, capital expenditures of approximately $3.4
million were made in Plastics Operations.  Total capital
expenditures during the five-year period 2001-2005 are estimated
to be approximately $15 million.

                    MANUFACTURING OPERATIONS
                    ------------------------

General
-------

     Manufacturing Operations consist of businesses in the
following manufacturing activities: production of wind towers,
agricultural equipment, frame-straightening equipment and
accessories for the auto body shop industry, custom plastic
pallets, material and handling trays, and horticultural
containers; contract machining; and metal parts stamping and
fabrication. In February 2001, the Company acquired the stock of
T. O. Plastics, Inc. The Company derived 12 percent of its
consolidated operating revenues from this segment in 2000, 13
percent in 1999, and 14 percent in 1998.

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

     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 primarily for the recreation
     vehicle industry and industrial manufacturers.

     Chassis Liner Corporation, located in Alexandria and Lucan,
     MN, manufactures and markets vehicle frame-straightening
     equipment and accessories used by the auto body shop
     industry.

     Dakota Machine, Inc., located in West Fargo, ND,
     manufactures towers for the wind energy industry and
     equipment for the sugar beet refining industry.

     Precision Machine, Inc., located in West Fargo, ND and
     Pelican Rapids, MN, provides machining, foundry, and metal
     work for farm implement and industrial equipment industries
     and produces parts to customers' specifications from
     prototype to final production.

     T. O. Plastics, Inc., located in Minneapolis and
     Clearwater, MN and Hampton, SC, is a plastics thermoformer
     engaged in manufacturing custom returnable pallets and
     handling trays and over 100 different flats, packs, pots,
     trays and specialty containers used in the horticulture
     industry.

Competition
-----------

     The various markets in which the Manufacturing Operations
entities compete are characterized by intense competition.
These markets 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's manufacturing entities.

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

     Some of the products sold by the companies in the
Manufacturing Operations segment are purchased by companies in
the recreational vehicle, wind generation, and auto body shop
market.   A downturn in these markets could have an adverse
impact on the financial results of the Company's manufacturing
segment.

Capital Expenditures
--------------------

     During 2000, capital expenditures of approximately $7.9
million were made in Manufacturing Operations.  Total capital
expenditures for Manufacturing Operations during the five-year
period 2001-2005 are estimated to be approximately $19 million.


                    HEALTH SERVICES OPERATIONS
                    --------------------------

General
-------

     Health Services Operations consist of the DMS Health Group,
which is engaged in the sale, service, rental, refurbishing, and
operation of medical imaging equipment and the sale of related
supplies and accessories to various medical institutions. The
Company derived 12 percent of its consolidated operating
revenues from this segment in 2000, 15 percent in 1999 and 16
percent in 1998.

     The companies comprising the DMS Health Group include:

     DMS Health Technologies, Inc., located in Fargo, ND, and
     formally named Diagnostic Medical Systems, Inc., sells,
     services, and refurbishes diagnostic medical imaging
     equipment and related supplies and accessories. DMS sells
     radiology equipment manufactured by several entities,
     including Philips Medical Systems (Philips), a large multi-
     national company based in the Netherlands. Philips
     manufactures fluoroscopic, radiographic and mammography
     equipment, along with ultrasound, computerized tomography
     (CT) scanners, magnetic resonance imaging (MRI) scanners
     and cardiac cath labs.  DMS is also a supplier of medical
     film and related accessories. DMS markets mainly to
     hospitals, clinics and mobile service companies in North
     Dakota, South Dakota, Minnesota, Montana and Wyoming.

     DMS Imaging, Inc., a subsidiary of DMS Health Technologies,
     Inc. located in Bemidji, MN, operates mobile and in-house
     diagnostic medical imaging equipment, including CT, MRI,
     Positron-Emission Tomography, nuclear medicine services and
     other similar radiology services to hospitals, clinics,
     long-term care facilities and other medical providers
     located in 24 states.

     Combined, the DMS Health Group covers the three basics of
the medical imaging industry:  (1) ownership and operation of
the imaging equipment for health care providers; (2) sale, lease
and/or maintenance of medical imaging equipment and related
supplies; and (3) scheduling, billing and administrative support
of medical imaging services.

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 companies within Health Services Operations compete 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 direct
competitors, which provide contract MRI services, have access to
greater financial resources than the health services companies.
In addition, some of the Health Services Operations' 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 and technology
risk, and employ the necessary technologies.  The companies
within this segment compete 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 2000 capital expenditures of approximately $2.9
million were made in Health Services Operations. Total capital
expenditures during the five-year period 2001-2005 are estimated
to be $2 million. Operating leases are also
used to finance the acquisition of medical equipment used by
Health Services Operations. Operating lease payments during the
five-year period 2001-2005 are estimated to be $32 million.


                     OTHER BUSINESS OPERATIONS
                     -------------------------

General
-------

     Other Business Operations consists of businesses engaged
in electrical and telephone construction contracting,
transportation, telecommunications, entertainment, energy
services, and natural gas marketing. The Company derived 14
percent of its consolidated operating revenues from these
businesses in 2000, 15 percent in 1999, and 11 percent in 1998.

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

     Moorhead Electric, Inc., located in Moorhead, MN, installs
     data cable for commercial and industrial computer networks,
     underground fiber-optic and copper cable for the
     telecommunications industry, and electrical wiring in
     residential, commercial, and industrial settings.

     Aerial Contractors, Inc., located in West Fargo, ND, builds
     and repairs overhead and underground electric distribution
     and transmission lines and substations, and installs
     underground fiber-optic, copper and coaxial cable for the
     telecommunications industry.

     Midwest Information Systems, Inc., headquartered in Parkers
     Prairie, MN, owns telephone and cable television businesses
     that together operate approximately 7,000 access lines.

     E. W. Wylie Corporation (Wylie), located in Fargo, ND, is a
     contract and common carrier operating a fleet of tractors
     and trailers in 48 states and 6 Canadian provinces.

     Otter Tail Energy Services Company, headquartered in Fergus
     Falls, MN was established in 1997 to pursue opportunities
     in the natural gas and electricity markets.  It offers
     technical services, engineering services, performance-based
     service contracting and financial services related to these
     products. Otter Tail Energy Services Company owns one
     subsidiary, Otter Tail Energy Management Company, which is
     a marketer of natural gas to commercial and institutional
     customers in Iowa, South Dakota, North Dakota and
     Minnesota.

General Regulation
------------------

     The telephone subsidiaries are subject to the regulatory
authority of the MPUC regarding rates and charges for telephone
services, as well as other matters.  The telephone subsidiaries
must keep on file with the MPUC 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 promulgated
by the FCC.  The cable television subsidiary is regulated by
federal and local authorities.

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. The
trucking industry, in which Wylie competes, is highly
competitive.  Wylie competes primarily with other short- to
medium-haul, flatbed truckload carriers, internal shipping
conducted by existing and potential customers and, to a lesser
extent, railroads.  Competition for the freight transported by
Wylie is based primarily on service and efficiency and to a
lesser degree, on freight rates.  There are other trucking
companies that have greater financial resources, operate more
equipment or carry a larger volume of freight than Wylie and
these companies compete with Wylie for qualified drivers.

Capital Expenditures
--------------------

     During 2000, capital expenditures of approximately $6.7
million were made in Other Business Operations.  Capital
expenditures during the five-year period 2001-2005 are estimated
to be approximately $19 million for Other Business Operations.


                           FINANCING
                           ---------

     The Company estimates that funds internally generated net
of forecasted dividend payments, combined with funds on hand,
will be sufficient to meet sinking fund payments on First
Mortgage Bonds and preferred stock redemption requirements in
the next five years and to provide for its estimated 2001-2005
consolidated capital expenditures. Additional short-term or
long-term financing will be required in the period 2001 through
2005 for the maturity of long-term debt, in the event the
Company decides to refund or retire early any of its presently
outstanding debt or Cumulative Preferred Shares, to complete
acquisitions, 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,
interest rates, demand for energy, availability of energy within
the power pool, cost of capacity charges relative to cost of new
generation, competitive conditions, technological changes,
acquisitions or divestitures of subsidiary companies, new
environmental and other governmental regulations, tax law
changes, and utility regulation.

     The Company has access to short-term borrowing resources.
As of December 31, 2000, the Company had unused credit lines
totaling $38.0 million.


                          EMPLOYEES
                          ---------

     The Company had approximately 2,221 full-time employees at
December 31, 2000.  A total of 465 employees are represented by
local unions of the International Brotherhood of Electrical
Workers, of which 387 are employees of the Electric Operations
segment and are covered by a three-year labor contract expiring
November 1, 2002.  The Company has not experienced any strike,
work stoppage, or strike vote, and considers 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, governmental and regulatory action, the
competitive environment, economic factors, weather conditions, and
other factors discussed under "Factors affecting future earnings" on
pages 26 through 28 of the Company's 2000 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 Utility, Northern Municipal Power Agency, Montana-
Dakota Utilities Co. and Northwestern Public Service Company.
The Utility owns 35 percent of the plant and on July 1, 1998,
became the operating agent of the Coyote Station.

     The Utility, 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 Utility is the operating
agent of Big Stone Plant and owns 53.9 percent of the plant.

     Located near Fergus Falls, Minnesota, the Hoot Lake Plant
is comprised of three separate generating units with a combined
nameplate 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, 2000, the Utility'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; 720 miles of 115 kv lines; and 4,151 miles of
lower voltage lines, principally 41.6 kv.  The Utility 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.

     In addition to the properties mentioned above, the Company
owns and has investments in offices and service buildings.
Through Varistar, the Company owns facilities and equipment used
to manufacture PVC pipe and perform metal stamping, fabricating,
and contract machining; construction equipment and tools;
medical imaging equipment; a fleet of flatbed trucks and
trailers; and the infrastructure to maintain approximately 7,000
access lines in its telecommunication companies.

     Management of the Company believes the facilities and
equipment described above are adequate for the Company's present
businesses.

     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.  All of the
common shares of the companies owned by Varistar are pledged to
secure indebtedness of Varistar.

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, 2000.

Item 4A.    EXECUTIVE OFFICERS OF THE REGISTRANT (AS OF MARCH 1, 2001)
            ----------------------------------------------------------

     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 (61)   4/8/91      Present: Chairman, President and Chief
                                               Executive Officer

John D. Erickson (42)     4/10/00     Present: Executive Vice President,
                                               Chief Financial Officer and
                                               Treasurer

                          10/26/98    Vice President, Finance and
                                      Chief Financial Officer

                          Prior to
                          10/26/98    Director, Market Strategies &
                                      Regulation

Marlowe E. Johnson (56)   4/10/00     Present: Vice President, Delivery
                                               Customer Service--North
                                               Dakota
                          Prior to
                          4/10/00     Vice President, Customer
                                      Service, North Dakota

Douglas L. Kjellerup (59) 4/10/00     Present: Vice President,
                                               Chief Operating Officer
                                               Energy Delivery

                          2/1/99      Chief Operating Officer,
                                      Energy Delivery; Vice President,
                                      Marketing and Development

                          Prior to
                          2/1/99      Vice President, Marketing and
                                      Development

George A. Koeck (48)      4/10/00     Present: Corporate Secretary
                                               and General Counsel

                          8/2/99      General Counsel

                          Prior to
                          8/2/99      Partner, Dorsey & Whitney, LLP

Lauris N. Molbert (43)    4/10/00     Present: Vice President, Chief
                                               Operating Officer, Varistar;
                                               President and Chief
                                               Operating Officer,
                                               Varistar Corporation
                          Prior to
                          4/10/00     President and Chief Operating Officer,
                                      Varistar Corporation

Rodney C.H. Scheel (51)   4/10/00     Present: Vice President, Delivery Systems

                          Prior to
                          4/10/00     Vice President, Electrical

Ward L. Uggerud (52)      4/10/00     Present: Vice President,
                                               Chief Operating Officer
                                               Energy Supply

                          2/1/99      Chief Operating Officer,
                                      Energy Supply; Vice President,
                                      Operations

                          Prior to
                          2/1/99      Vice President, Operations


     The term of office of each of the officers is one year.
Any officer elected may be removed by the vote of the Board of
Directors at any time during the term.


                            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 "Otter Tail Power Company
stock listing" on Page 52, to "Selected consolidated financial
data" on Page 21 and to "Quarterly information" on Page 45 of
the Company's 2000 Annual Report to Shareholders, filed as an
Exhibit hereto.

Item 6.     SELECTED FINANCIAL DATA
            -----------------------

     The information required by this Item is incorporated by
reference to "Selected consolidated financial data" on Page 21
of the Company's 2000 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 22 through 28 of
the Company's 2000 Annual Report to Shareholders, filed as an
Exhibit hereto.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            ----------------------------------------------------------
     The Company does not have material market risk exposure
related to foreign currency exchange rate risk, commodity price
risk or interest rate risk.


Item 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
            -------------------------------------------

     The information required by this Item is incorporated by
reference to "Quarterly information" on Page 45 and the
Company's audited financial statements on Pages 29 through 45 of
the Company's 2000 Annual Report to Shareholders excluding
"Report of Management" on Page 29, 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 regarding Directors
is incorporated by reference to the information under "Nominees
for Election as Directors" in the Company's definitive Proxy
Statement dated March 2, 2001.  The information regarding
executive officers is set forth in Item 4A hereto. The
information regarding Section 16 reporting is incorporated by
reference to the information under "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's definitive
Proxy Statement dated March 2, 2001.

Item 11.     EXECUTIVE COMPENSATION
             ----------------------

     The information required by this Item is incorporated by
reference to the information under "Summary Compensation Table,"
"Option/SAR Grants in Last Fiscal Year," "Aggregated Option/SAR
Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR
Values," "Pension and Supplemental Retirement Plans," "Severance
and Employment Agreements," and "Directors' Compensation" in the
Company's definitive Proxy Statement dated March 2, 2001.

Item 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT
             ----------

     The information required by this Item is incorporated by
reference to the information under "Outstanding Voting Shares"
and "Security Ownership of Management" in the Company's
definitive Proxy Statement dated March 2, 2001.

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 23 hereof.

           (3)  See Exhibit Index on Pages 24 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:

                  None


                               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  /s/John D.Erickson
                                           ----------------------
                                           John D. Erickson
                                           Executive Vice President,
                                           Chief Financial Officer
                                           and Treasurer
                                   Dated:  March 27, 2001

     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                                  )
                                                )
John D. Erickson                                )
  Executive Vice President,                     )
  Chief Financial Officer and Treasurer         )
  (principal financial and accounting officer)  )
                                                ) By /s/John D. Erickson
Thomas M. Brown, Director                       )    --------------------------
                                                )       John D. Erickson
Dayle Dietz, Director                           )   Pro Se and Attorney-in-Fact
                                                )      Dated March 27, 2001
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, 2000

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,
2000:

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

    Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . 29

    Consolidated Balance Sheets, December 31, 2000 and 1999. . . . . .30 & 31

    Consolidated Statements of Income for the Three Years
    Ended December 31, 2000  . . . . . . . . . . . . . . . . . . . . . . . 32

    Consolidated Statements of Changes in Common Shareholders' Equity for the
    Three Years Ended December 31, 2000. . . . . . . . . . . . . . . . . . 33

    Consolidated Statements of Cash Flows for the Three Years
    Ended December 31, 2000  . . . . . . . . . . . . . . . . . . . . . . . 34

    Consolidated Statements of Capitalization, December 31, 2000
    and 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

    Notes to Consolidated Financial Statements . . . . . . . . . . . . .36-45

Selected Consolidated Financial Data for the Five Years
    Ended December 31, 2000  . . . . . . . . . . . . . . . . . . . . . . . 21

Quarterly Data for the Two Years Ended
    December 31, 2000  . . . . . . . . . . . . . . . . . . . . . . . . . . 45


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.