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, 1999
                                    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.
                  $438,940,176 as of February 29, 2000

Indicate the number of shares outstanding of each of the registrant's classes
of Common Stock, as of the latest practicable date (adjusted to reflect the
two-for-one stock split effective March 15, 2000):
      23,849,974 Common Shares ($5 par value) as of February 29, 2000.

Documents Incorporated by Reference:
  1999 Annual Report to Shareholders-Portions incorporated by reference into
    Parts I and II
  Proxy Statement dated March 10, 2000-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.

    Historically, the Company's primary business has been the production,
transmission, distribution and sale of electric energy.  During the last
decade the Company, through its subsidiaries, has made significant investments
in other businesses which are referred to as Manufacturing Operations, Health
Services Operations and Other Business Operations. Manufacturing Operations
includes businesses involved in the production of polyvinyl chloride (PVC)
pipe, agricultural equipment, frame-straightening equipment and accessories
for the auto body shop industry, contract machining, and metal parts stamping
and fabrication.  Health Services Operations consists of certain businesses
which are 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. Other Business Operations include businesses
involved in such areas as electrical and telephone construction contracting,
transportation, telecommunications, entertainment, energy services, and
natural gas marketing. Substantially all of these businesses are owned by the
Company's wholly owned subsidiary Varistar Corporation (Varistar).

    The Company continues to investigate acquisitions of additional
non-electric businesses and expects continued growth in this area.  On
September 1, 1999 the Company acquired the flatbed trucking operations of E.
W. Wylie Corporation (Wylie).  Wylie is located in Fargo, North Dakota and
operates in 48 states and 6 Canadian provinces.  Effective 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.

    In August 1999, as part of an agreement with the Minnesota Pollution
Control Agency (MPCA), the Company donated the assets of the Quadrant Co.
municipal waste burning facility to the City of Perham, Minnesota.  On October
1, 1999 the Company completed the sale of certain assets of the radio stations
and video production company owned by KFGO, Inc. and the radio stations owned
by Western Minnesota Broadcasting Company. See "Other Business Operations" for
additional information regarding these subsidiaries.

    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 20 through 26 of the
Company's 1999 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 Operations, Manufacturing
Operations, Health Services Operations, and Other Business Operations.
Financial information about the Company's industry segments is incorporated by
reference to note 4 of "Notes to consolidated financial statements" on pages
36 and 37 of the Company's 1999 Annual Report to Shareholders, filed as an
Exhibit hereto.

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

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

General
-------

    The Company derived 50 percent of its consolidated operating revenues
from the electric segment in 1999; 53 percent in 1998; and 51 percent in 1997.
In 1999 the Company derived approximately 50.8 percent of its retail electric
revenues from Minnesota, 41.3 percent from North Dakota, and 7.9 percent 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, 30.8 percent of 1999 electric revenue was derived from
commercial customers, 28.2 percent from residential customers, 17.4 percent
from industrial customers, and 23.6 percent from other sources, including
municipalities, farms and power pools.

    No customer accounted for more than 10 percent of electric revenues in
1999.  Power pool sales to other utilities, which accounted for 26.3 percent
of total 1999 kwh sales, increased from 25.5 percent in 1998. Hot summer
weather in the Midwest and North Central regions of the United States,
combined with increased emphasis on power marketing efforts and increased
generation at the Company's plants contributed to the increase in power pool
revenues. Activity in short-term energy sales is subject to change based on a
number of factors and the Company is unable to predict the 2000 level of
activity.

    The aggregate population of the Company'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).  Since 1990 when the customer count was at a
low of 121,277, the Company has experienced an increase in customers. By year
end 1999 total customers had increased to 126,292. During 1999, the Company
experienced a net increase of 580 customers, with the majority of growth in
residential customers.

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

    The Company's 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.  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
industry. 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.

    In 1996, FERC issued two closely related final rules.  FERC Order No.
888 opened wholesale power sales to competition by requiring public utilities
who own, control, or operate transmission lines, to file nondiscriminatory
pro forma open access tariffs that offer others the same transmission service
they provide themselves.  FERC Order No. 889 requires utilities to post or
make available 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 their wholesale marketing and transmission
operation functions.

    As the electric industry moves towards deregulation, the Company expects
the industry to become more competitive. The Company is taking a number of
steps to position itself for success in a competitive marketplace.  The
Company 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 Company has established an energy services business unit to promote
the energy-related products and services traditionally offered to the
Company's customers and to develop new products and services to be offered to
current and potential customers in order to distinguish the Company for
competition.  The Company offered a voluntary early retirement program in 1998
that reduced the electric utility staff by 55 employees. Furthermore, with the
goal of alleviating state tax inequities in the electric industry, the Company
is working with other utilities to develop tax reform proposals and testimony
for legislative committees studying competition in Minnesota and
North Dakota.

    As the electric industry evolves and becomes more competitive, the
Company believes it is well positioned to be successful.  The Company's
generation capacity appears poised 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
plans to attempt more flexible pricing strategies under an open, competitive
environment.

    For the status of other regulatory initiatives relating to competition,
see "General Regulation".

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

    At December 31, 1999, the Company had base load net plant capability
totaling 566,593 kw, consisting of 254,731 kw from the jointly-owned Big Stone
Plant (constituting the Company's 53.9 percent share of the plant's total
capability), 156,825 kw from the Hoot Lake Plant, 149,450 kw from the jointly-
owned Coyote Station (constituting the Company's 35 percent share of the
station's total capability), and, under contract, 5,587 kw from a 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 91,175
kw, and hydroelectric capability of 3,991 kw.  During 1999, the Company
generated about 66 percent 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 agreement with another utility for the annual
exchange of 75,000 kw of seasonal capacity which runs through October 2004.
The Company 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. The Company also
has seasonal capacity agreements for the summers of 2000, 2001 and 2002. The
Company has a direct control load management system, which provides some
flexibility to the Company to effect reductions of peak load. The Company, in
addition, offers rates to customers which encourage off-peak usage.

    The Company is a member of the Mid-Continent Area Power Pool (MAPP). The
objective of MAPP is to coordinate the planning and operation of generation
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 operating agreement for MAPP was restated in 1996 to open
membership to organizations outside the original Upper Midwest boundaries, to
establish a Regional Transmission Group and to add energy market functions.

    In December 1999 the Federal Energy Regulatory Commission issued Order
No. 2000.  This order requires public utilities that own, operate or control
interstate transmission to file by October 15, 2000 a proposal for a regional
transmission organization (RTO) or a description of any efforts made to
participate in an RTO, the reasons for not participating, and any plans for
further work towards participation.  The Company, along with several other
companies and MAPP, are working with the Midwest Independent System Operator
(MISO) to become a part of MISO and to be compliant with Order No. 2000.

    The Company traditionally experiences its peak system demand during the
winter season.  For the calendar year 1999, the Company experienced a system
peak demand of 628,259 kw on January 13, 1999. The Company's highest sixty-
minute peak demand ever was 635,529 kw on January 7, 1997. Taking into account
additional capacity available to it in January 1999 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 787,593 kw. The Company expects moderate load growth in peak demand
in 2000 as compared to 1999. 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 2000 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.  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 1999, 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
      -------                             -----------       ---------

Subbituminous Coal. . . . . . . . . . .    2,485,191          70.1%
Lignite Coal. . . . . . . . . . . . . .    1,027,045          29.0
Hydro . . . . . . . . . . . . . . . . .       25,035            .7
Oil . . . . . . . . . . . . . . . . . .        8,777            .2
                                           ---------         -----
Total . . . . . . . . . . . . . . . . .    3,546,048         100.0%
                                           =========         =====

    The Company has a primary coal supply agreement with Kennecott Energy
Company for the supply of subbituminous coal to Big Stone Plant for 2000 and
2001.  The coal comes from the Cordero Rojo Complex in Campbell County,
Wyoming.  The Company is in final negotiations 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 is an affiliate of Montana-Dakota Utilities Co., which is a
co-owner of the Big Stone Plant and Coyote Station.

    In September 1996, three of the four co-owners of the Coyote Station
filed a Demand and Notice of Arbitration complaint against Knife River Coal
Mining Company and MDU Resources Group, Inc.  The three co-owners contended
that the 15-year-old pricing mechanism outlined in the original coal supply
contract had been abandoned by all parties over the past 8 years and no longer
resulted in fair, equitable, and competitive prices for the lignite coal used
to generate electricity at the plant.  During 1999 settlement of the
arbitration resulted in (1) a reduction of fuel prices for Coyote Station,
beginning March 26, 1999, (2) modification of the price adjustment provision
of the contract for the future, and (3) a requirement that Knife River refund
excess amounts paid for coal delivered from September 13, 1996 through March
26, 1999.  The Company received a refund of $2.7 million, representing its
share as a co-owner of Coyote Station.  This refund and accumulated interest
has been recorded as a liability pending the outcome of regulatory filings in
each state to determine procedures for refunds to electric retail customers.
The regulatory filings include a request to recover arbitration costs incurred
by the Company. Responses to the Company's regulatory filings are expected by
mid-2000.

    It is the Company'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 Company 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 1999, 1998, and 1997,
was $.956, $.960, and $.957, respectively.

    The Company 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.

Rate Regulation
---------------

    The Company is subject to electric rate regulation as follows:

                                                       Year Ended
                                                   December 31, 1999
                                                   -----------------
                                                    % of
                                                   Electric   % of kwh
 Rates                  Regulation                 Revenues     Sales
 -----                  ----------                 --------   --------
MN retail sales         MN Public Utilities
                        Commission                  40.5%      38.1%

ND retail sales         ND Public Service
                        Commission                  33.0       30.0

SD retail sales         SD Public Utilities
                        Commission                   6.3        5.6

Transmission & sales    FERC
  for resale                                        20.2       26.3
                                                   -----      -----
                                                   100.0%     100.0%
                                                   =====      =====

    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, 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 Company
facilities, while encouraging use of cost-effective 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 electric power energy purchased by the Company.  Such
adjustments are presently based upon a two-month moving average in Minnesota
and under FERC regulation, 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 electric rate proceedings since January 1,
1995 and describes the procedures for rate requests with the Minnesota Public
Utilities Commission (MPUC), the South Dakota Public Utilities Commission
(SDPUC), the North Dakota Public Service Commission (NDPSC) and FERC:

    Minnesota: On July 21, 1999, the MPUC approved the Company's 1998
financial incentive filing, which included the recovery of associated lost
margins and financial incentives of $1,829,000 from implementing conservation
programs and performance in meeting energy savings goals. The MPUC indicated
its intention to review the ongoing role of financial incentives for utility
investments in conservation. Due to the uncertain future of financial
incentives, no accrual was made for the 1999 financial incentives. On January
27, 2000, the MPUC approved a new Shared-Savings DSM Financial Incentive Plan
for 1999 and 2000, which awards utilities a small share of the total benefits
from investments in conservation.

    Since 1995, the Company has recovered demand-side management related
costs, under Minnesota's Conservation Improvement Programs, through the use of
an annual recovery mechanism approved by the MPUC.  In 1999, the MPUC approved
a 1.5 percent surcharge on all Minnesota customers' bills starting on July 1,
1999, for the recovery of conservation-related costs over and above those
being recovered in current rates.  The previous 12-month period surcharge was
2.75 percent.  The current surcharge rate will be in place until June 30,
2000 when it will be revised for subsequent years' program results.

    The Company has not had a significant rate proceeding before the MPUC
since July 1987. Under Minnesota law, the MPUC must allow implementation of an
interim rate increase, subject to refund with interest, sixty days after the
initial filing date of a rate increase request, except that the MPUC 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 MPUC, and rate base and expense items allowed by a currently
effective MPUC order.  In addition, if the MPUC 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
(1) 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 MPUC on the last day of the extended
period of suspension of the rate increase, or (2) a settlement has been
submitted to and rejected by the MPUC, and the MPUC 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 sixty days after the initial or,
if applicable, the extended period of suspension of the rate increase.

    North Dakota: On October 6, 1999, the NDPSC approved a settlement
agreement following an audit of the Company'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 Company is required to refund to North Dakota customers any
1999 regulated electric operations earnings from North Dakota over a 12.5
percent return on equity. While the final decision on any potential refund
relating to 1999 lies with the NDPSC, the Company expects that any refund
will not be significant.  In addition, as part of the settlement agreement,
the Company filed a proposal for a performance-based ratemaking plan in 2000.

    Rate requests filed with the NDPSC become effective thirty days after the
date of filing unless suspended by the NDPSC. Within seven months after the
date of suspension, the NDPSC must act on the request, and during the period
of consideration by the NDPSC a suspended rate can be implemented only with
the approval of the NDPSC. The NDPSC periodically performs audits of gas and
electric utilities over which it has rate setting jurisdiction to determine
reasonability of overall rate levels.  In the past, these audits have
occasionally resulted in settlement agreements adjusting rate levels.

    South Dakota: There have been no significant rate proceedings in South
Dakota since November 1987. Under South Dakota law a requested rate increase
can be implemented thirty days after the date of filing, unless its
effectiveness is suspended by the SDPUC.  The SDPUC may suspend the
effectiveness of the proposed rate change for a period not longer than ninety
days beyond the time when the rate change would otherwise go into effect,
unless the SDPUC finds that a longer time is required, in which case the SDPUC
may extend the suspension for a period not to exceed a total of twelve months.
A public utility may not put a proposed rate change into effect until at least
forty-five days after the SDPUC has made a determination concerning any
previously filed rate change.  In the event that a requested rate change is
suspended by the SDPUC, such requested rate change may be implemented by the
public utility six months after the date of filing (unless previously
authorized by the SDPUC), subject to refund with interest.

    FERC: The Company's wholesale power sales and transmission rates are
subject to the jurisdiction of the FERC under the Federal Power Act of 1935,
as amended (FPA).  Filed rates are effective after a one-day suspension
period, subject to ultimate approval by the FERC.  Power pool sales are
conducted continuously through MAPP in accordance with schedules filed by
MAPP with the FERC.

    On March 25, 1997, FERC issued an order approving a settlement
agreement in the Company's Open Access Transmission Tariff filing of July 9,
1996.  This settlement sets the rates the Company can charge under its Open
Access Transmission Tariff. On May 29, 1997, FERC issued an order approving a
request for the waiver of the standards of conduct under Order 889.

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

    Minnesota: Under the Minnesota Public Utilities Act, the Company 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 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 conserva-
tion.  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 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 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.  In 1995, the MPUC
approved an automatic recovery mechanism which allows the Company to collect
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 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 Company's
most recent plan was submitted to the MPUC in 1999, and was approved, without
modifications, early in 2000. The MPUC ordered the Company to complete a study
on the feasibility of offering its customers a green pricing program.  Under
green pricing, customers may voluntarily choose to pay more per kilowatt-hour
for energy generated by renewable resources.  The green pricing study is to
be filed with the MPUC no later than July 1, 2001.   The MPUC also granted the
Company 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 Company is subject to the jurisdiction of the NDPSC with
respect to rates, services, certain issuances of securities and other matters.
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 Company is required to submit a ten-year plan
to the NDPSC annually.

    South Dakota: The South Dakota Public Utilities Act subjects the Company
to the jurisdiction of the SDPUC 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 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.

    FERC: The Company is also subject to regulation by the FERC, successor to
the Federal Power Commission, created pursuant to the 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.

    General: The United States Congress ended its 1999 legislative session
without taking action on proposed electric industry restructuring legislation.
The Company expects that during 2000 Congress will continue to debate
proposed legislation which, if enacted, would promote customer choice and a
more competitive electric market.

    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 1999, and no
significant action is expected during 2000. However, the DOC plans to draft
comprehensive retail access legislation that could be introduced in early
2001. Company personnel have been actively involved in working with the
DOC-sponsored work groups and a legislative task force. The Minnesota State
Chamber of Commerce introduced legislation in 2000 relating to the separation
of costs for generation, transmission and distribution on electric service
statements.  In 1997, the North Dakota legislature created a subcommittee to
investigate the impact of electric utility industry restructuring on North
Dakota.  The North Dakota legislature plans to deal first with tax issues
surrounding restructuring.  Currently, South Dakota is not undertaking any
legislative activity regarding electric utility restructuring.

    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 that 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 federal and state standards and regulations
regarding, among other things, air, water and solid waste pollution.  The
Company estimates that it has expended in the five years ended December 31,
1999, approximately $2,565,000 for environmental control facilities.  Included
in the 2000-2004 construction budget are approximately $5,065,000 for
environmental equipment for existing and new facilities, including $276,000
for 2000.

    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 Company at its 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 Company's plants.
The phase two requirements will apply to the Company's plants. The Company
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
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 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
Company 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 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 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.

    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 Company
has evaluated the Big Stone Plant and Coyote Station NOx emissions with
respect to the December 19, 1996 rules.  Existing emissions monitoring data
indicate that the Coyote Station meets the emissions requirements. During
1997, the Company conducted tests at the Big Stone Plant to determine if
emissions can be reduced through modifications to existing equipment. The
results of the tests were positive and modifications have been completed.
As a result of the modifications, the Company believes the NOx emissions
regulations have been met.

    The Act contains a list of regulated toxic air pollutants, which
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.  The EPA has completed
the studies and sent reports to Congress. 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 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 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 3,441 kw at
December 31, 1999).

    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 Company anticipates that it will
obtain this renewal in due course.  The Company estimates that the current
ash disposal site at the Hoot Lake Plant will be filled to capacity within two
to three years.  The Company 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 Company believes that the investment required will not
have a significant impact on future plant operating costs.

    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 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, 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 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 the removal of PCB-filled transformers and capacitors by the end
of 1987 and received Certificates of Disposal in 1989.  The Company completed
a removal program of PCB-contaminated mineral oil dielectric fluid from
substation transformers and voltage regulators and continues to remove such
oil from 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 1999, the Company invested approximately
$21,486,000 for additions to its electric utility properties.  During the
five years ended December 31, 1999, the Company had gross electric property
additions, including construction work in progress, of approximately
$129,530,000 and gross retirements of approximately $49,534,000.

    The Company estimates that during the five years 2000 through 2004 it
will invest approximately $125 million for electric utility 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 2000 through 2004 will be for work related to the
Company's transmission and distribution system.

Franchises
----------

    At December 31, 1999, the Company had franchises in all 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 Company serves.


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

General
-------

    Manufacturing Operations consists of businesses involved in the
following manufacturing activities: production of PVC pipe, agricultural
equipment, frame-straightening equipment and accessories for the auto body
shop industry, contract machining, and metal parts stamping and fabrication.
In January 2000, the Company through Varistar acquired the assets and
operations of Vinyltech Corporation. The Company derived 20 percent of its
consolidated operating revenues from this segment in 1999, 20 percent in
1998, and 21 percent in 1997.

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

    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.

    Dakota Machine, Inc., located in West Fargo, ND, manufactures sugar beet
    pilers, continuous-pan sugar refiners, diffusion towers, and nearly all
    other types of equipment used by sugar beet refineries.

    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.

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

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

    Mid-States Testing Company, located in Moorhead, MN, sells and tests
    rubber protective equipment for the electrical utility industry and
    other electrical workers.

    Vinyltech Corporation, located in Phoenix, AZ, manufactures and sells
    PVC pipe in Arizona, California, Nevada, and other southwestern states.

    Each of the subsidiaries described above are owned by Varistar.

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

    The various markets in which the Company's manufacturing 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 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 segment
are purchased by companies in the recreational vehicle market, sugar beet
industry, auto body shop industry and PVC pipe market.  The growth in these
markets has provided strong growth for the Company's manufacturing segment.
A downturn in these markets could have an adverse impact on the financial
results of the Company's manufacturing segment. In addition, Northern Pipe
Products and Vinyltech's gross margin percentages are related to PVC resin
prices.  Due to the commodity nature of PVC resin and the dynamic supply and
demand factors worldwide, it is difficult to predict gross margin percentages
or assume that historical trends will continue.

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

    During 1999, capital expenditures of approximately $6.9 million were
made in Manufacturing Operations.  Total capital expenditures for
Manufacturing Operations during the five-year period 2000-2004 are estimated
to be approximately $26 million.


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

General
-------

    Health Services Operations consists of businesses 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.
The Company derived 15 percent of its consolidated operating revenues from
this segment in 1999, 16 percent in 1998 and 17 percent in 1997.

    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 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 manufacturers 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 located in Bemidji MN, operates
    mobile and in-house diagnostic medical imaging equipment, including CT,
    MRI, nuclear medicine services and other similar radiology services to
    hospitals, clinics and other medical providers located in 23 states.

    Combined, the Health Services subsidiaries cover 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.

    Each of the subsidiaries described above are owned by Varistar.

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 the health
services segment 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 their 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 companies'
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 1999 capital expenditures of approximately $1 million were made
in Health Services. Total capital expenditures during the five-year period
2000-2004 are estimated to be $42 million.


                      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, transportation, telecommunications, entertainment, energy
services, and natural gas marketing. During August 1999, the assets of the
Quadrant municipal waste burning facility were donated to the City of Perham,
Minnesota.  On September 1, 1999, the Company acquired through Varistar, the
flatbed trucking operations of E. W. Wylie Corporation. The Company completed
the sale of certain assets of the radio stations and video production company
owned by KFGO, Inc. and the radio stations owned by Western Minnesota
Broadcasting Company during October, 1999.  The Company derived 15 percent of
its consolidated operating revenues from these diversified businesses in 1999,
11 percent in 1998, and 11 percent in 1997.

    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,
    operates telephone and cable television businesses that together operate
    approximately 7,000 access lines.

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

    Otter Tail Energy Services Company (OTESCO), 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. OTESCO has one subsidiary, Otter Tail Energy
    Management Company (OTEMCO), which was formed as a result of the
    acquisition of PAM Natural Gas, Inc.  OTEMCO is a marketer of natural
    gas to commercial and institutional customers in Iowa, South Dakota,
    North Dakota and Minnesota.

    With the exception of OTESCO, Varistar owns each of the subsidiaries
described above. OTESCO is a wholly owned subsidiary of Minnesota-Dakota
Generating Company, which in turn is a wholly owned subsidiary of the Company.

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 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 Company's operating 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.

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

    During 1999, capital expenditures of approximately $4.7 million were
made in Other Business Operations.  Capital expenditures during the five-year
period 2000-2004 are estimated to be approximately $17 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 2000-2004
consolidated capital expenditures. Additional short-term or long-term
financing will be required in the period 2000 through 2004 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, 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 rate
regulation.

    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.  The Company has not
typically made or guaranteed loans to its subsidiaries, or cosigned on any
subsidiary's borrowing.

    The Company has access to short-term borrowing resources. As of December
31, 1999, the Company and its subsidiaries had unused credit lines totaling
$32.7 million.



                               EMPLOYEES
                               ---------

    The Company and its subsidiaries had approximately 1,973 full-time
employees at December 31, 1999.  A total of 496 employees are represented by
local unions of the International Brotherhood of Electrical Workers, of which
389 are employees of the Electric Operations segment and are covered by a
three-year labor contract that was renewed in 1999 and expires November 1,
2002.  The Company has never 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 24
and 25 of the Company's 1999 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 percent interest in the plant and was the
project manager in charge of construction.  On July 1, 1998, the Company
became the operating agent of the Coyote Station.

    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
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, 1999, 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; 684 miles of 115 kv lines; and 4,179
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.

    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 polyvinyl chloride pipe and
perform metal stamping, fabricating, and contract machining; construction
to equipment and tools, medical imaging equipment, a fleet of flatbed trucks,
and the infrastructure to maintain approximately 7,000 access lines in its
telecommunication companies.

    Management of the Company believes that 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, 1999.

Item 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT (AS OF MARCH 1, 2000)
          ----------------------------------------------------------

    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 (60)   4/8/91      Present: Chairman, President and Chief
                                               Executive Officer

John D. Erickson (41)     10/26/98    Present: Vice President, Finance and
                                               Chief Financial Officer
                          Prior to
                          10/26/98    Director, Market Strategies &
                                      Regulation

Marlowe E. Johnson (55)   4/12/93     Present: Vice President, Customer
                                               Service, North Dakota

Douglas L. Kjellerup (58) 2/1/99      Present: Chief Operating Officer,
                                               Energy Delivery; Vice President,
                                               Marketing and Development
                          Prior to
                          2/1/99      Vice President, Marketing and
                                      Development

LeRoy S. Larson (54)      4/12/93     Present: Vice President, Customer
                                               Service, Minnesota and South
                                               Dakota

Jay D. Myster (61)        10/1/98     Present: Corporate Secretary
                          Prior to
                          10/1/98     Senior Vice President,
                                      Governmental and Legal,
                                      and Corporate Secretary

Rodney C.H. Scheel (50)   4/10/95     Present: Vice President, Electrical
                          Prior to
                          4/10/95     Director, Information Services

Ward L. Uggerud (50)      2/1/99      Present: Chief Operating Officer,
                                               Energy Supply; Vice President,
                                               Operations
                          Prior to
                          2/1/99      Vice President, Operations

Jeffrey J. Legge (43)     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.  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 50,
to "Selected consolidated financial data" on Page 19 and to "Quarterly
information" on Page 43 of the Company's 1999 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 19 of the Company's 1999
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 20 through 26 of the Company's 1999 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 43 and the Company's audited financial
statements on Pages 27 through 43 of the Company's 1999 Annual Report to
Shareholders excluding "Report of Management" on Page 27, 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 10, 2000.
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 10, 2000.

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 Agreements," and "Directors' Compensation" in the Company's
definitive Proxy Statement dated March 10, 2000.

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 10, 2000.

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 28 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
                                                      Vice President, Finance
                                                      and Chief Financial
                                                      Officer


                                         Dated:  March 28, 2000

    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                          )
  Vice President, Finance and             )
  Chief Financial Officer                 )
  (principal financial officer)           )
                                          )
Jeffrey J. Legge                          )   By /s/ John D. Erickson
 Controller                               )      -------------------------
 (principal accounting officer)           )        John D. Erickson
                                          )  Pro Se and Attorney-in-Fact
                                          )     Dated March 28, 2000
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, 1999

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,
1999:

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

    Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . 27

    Consolidated Balance Sheets, December 31, 1999 and 1998. . . . . .28 & 29

    Consolidated Statements of Income for the Three Years
    Ended December 31, 1999  . . . . . . . . . . . . . . . . . . . . . . . 30

    Consolidated Statements of Changes in Common Shareholders' Equity for the
    Three Years Ended December 31, 1999. . . . . . . . . . . . . . . . . . 31

    Consolidated Statements of Cash Flows for the Three Years
    Ended December 31, 1999  . . . . . . . . . . . . . . . . . . . . . . . 32

    Consolidated Statements of Capitalization, December 31, 1999
    and 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

    Notes to Consolidated Financial Statements . . . . . . . . . . . . .34-43

Selected Consolidated Financial Data for the Five Years
    Ended December 31, 1999  . . . . . . . . . . . . . . . . . . . . . . . 19

Quarterly Data for the Two Years Ended
    December 31, 1999  . . . . . . . . . . . . . . . . . . . . . . . . . . 43



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.