exv10w4



 





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



Exhibit 10.4




CONFIRMATION LETTER




	 	 	 	 	 	 	 
	 	 	 	 	Kennecott #: 711
	 
	 	 	 	 	 	 
	Buyer:

	 	Otter Tail Power Company, a division

          of Otter Tail Corporation

NorthWestern Corporation,

           d/b/a NorthWestern Energy

Montana-Dakota Utilities Co., a division

           of MDU Resources, Inc.

c/o Otter Tail Power Company

As Agent for Big Stone Plant

P. O. Box 496

215 South Cascade Street

Fergus Falls, MN 56538-0496

	 	Seller:
	 	Kennecott Coal Sales Company

Caller Box 3009 (82717-3009)

505 South Gillette Avenue

Gillette, WY 82716

	 
	 	 	 	 	 	 
	Attn:

	 	Stacie Hebert
	 	Attn:
	 	Bruce Miller
	Phone:

	 	218-739-8635
	 	Phone:
	 	307-685-6114
	Fax:

	 	218-739-8629
	 	Fax:
	 	307-687-6009







This Confirmation Letter (“Confirmation”) shall confirm the transaction
arranged October 31, 2003, between Otter Tail Power Company, a division of
Otter Tail Corporation (“Otter Tail”) and Kennecott Coal Sales Company
(“Kennecott”) pursuant to the Master Coal Purchase and Sale Agreement effective
June 1, 2004. The terms and conditions of this transaction are as follows:



Kennecott to sell and deliver and Otter Tail to purchase and receive.



	 	 	 
	Transaction Type:

	 	Physical Coal
	 
	 	 
	Product:

	 	Sub-Bituminous coal; (*) Btu/Lb. and (*) Lbs. SO2/mmBtu
	 
	 	 
	Base Price:

	 	(*) per ton of coal
	 
	 	 
	Shipment Period:

	 	January 1, 2005 through December 31, 2007







Quantity:




	 	 	 	 	 
	 	 	Tons
	Delivery Year
	 	(to the nearest unit train)

	2005
	 	 	(*	)
	2006
	 	 	(*	)
	2007
	 	 	(*	)







	 	 	 
	Delivery Point:

	 	FOB Railcar, Cordero Rojo Complex – Campbell County, Wyoming
	 
	 	 
	Topsize:

	 	2” x 0” ASTM







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	Quality:	 	 	 	Coal Quality Specifications
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	Section 9.03 – Standard Btu and

Sulfur for price adjustments as

set forth below:

	 	Sections 6.02 & 6.04

Rejection Limits/

Non-Conforming Shipment

	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	
 
	 	
 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Btu/Lb
	 	(*)
	 	(*)
	 	 	Lbs. SO2/mmBtu	(*)	 	(*)







	 	 	 
	Btu Adjustment:

	 	To reflect the actual heat content of the coal delivered, each month the Base Price of coal will be adjusted for any
variation from (*) Btu/Lb., using the following formula:







	 	 	 
	Btu Adjustment Per Ton = P x

	 	(AR – BB)
	

	 	
 
	

	 	BB







	 	 	 	 	 
	Where:
	 	 	 	 
	

	 	P =
	 	The Base Price of coal per ton delivered during the month;
	

	 	AR =
	 	The monthly weighted average “As-Received” Btu’s per
pound of the respective coal[s] delivered to Otter Tail;
and,
	

	 	BB =
	 	The Base Btu’s per pound of the respective coal[s]
delivered to Otter Tail during the month; the BB value = (*)







	 	 	 
	 

	 	All shipment Btu’s and weighted average Btu’s shall be in
zero decimals. All prices for Btu adjustments shall be
calculated using floating-point decimals, with the result
being rounded to three decimal places as shown in the
following example:







Sample info: P = (*)/ton, BB = (*), AR =(*)




	 	 	 
	Example: Btu adjustment per ton

	 	= (*)
	

	 	= (*)
	

	 	= (*)
	

	 	= (*)







	 	 	 
	Sulfur Adjustment:

	 	To reflect the actual sulfur content of Coal delivered, each month the Base Price of Coal will be adjusted
in accordance with the following formulas.
	 
	 	 
	

	 	For purposes of this adjustment, it shall be assumed that 100% of the sulfur in the Coal will be converted
to sulfur dioxide (“SO2”). The pounds SO2 per mmBtu shall be calculated in accordance with the following
formula based on Seller’s lab analysis of the percent sulfur in the Coal and the calorific value of the
Coal:







	 	 	 
	Lbs. SO2/mmBtu =

	 	Monthly Weighted Average Sulfur % in Coal X 20,000
	

	 	
 
	

	 	Monthly Weighted Average Btu/Lb.







	 
	All shipment sulfur percent and weighted average sulfur
percent shall be stated in two decimals. SO2 for the period
billed shall be calculated using floating-point decimals,
with the result being rounded to two decimal places as shown
in the following example:

	Sample info: Monthly Weighted Average Sulfur % in Coal = (*),

Monthly Weighted Average Btu/Lb. = (*)

	Example: Lbs. SO2/mmBtu = ((*) X 20,000) / (*) = (*) = (*)








2









 






Sulfur adjustment in $/ton of Coal =




	 	 	 
	 

	 	(Base Lb. SO2/mmBtu – Actual Lb. SO2/mmBtu) X Actual Btu/Lb. X $ADI
	

	 	
 
	

	 	1,000,000
	 
	 	 
	

	 	ADI = The “SO2 Monthly Average Price”
published by Air Daily for the month preceding
delivery.
	 
	 	 
	

	 	Base Lb. SO2/mmBtu = (*)
	 
	 	 
	

	 	All shipment SO2 and weighted average SO2 shall be stated in
two decimals. All prices for sulfur adjustments are to be
calculated using floating-point decimals, with the result
being rounded to three decimal places as shown in the
following example:
	 
	 	 
	

	 	Sample info: Actual Btu = (*), Base SO2 = (*), Actual SO2 = (*),
	

	 	SO2 Allowance (ADI) = (*)







	 	 	 
	Example: Sulfur Adjustment in $/ton of Coal

	 	= ((*) – (*)) X (*) X $(*)) / 1,000,000
	

	 	= $(*)
	

	 	= $(*)







IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR, AND EACH OF
THE PARTIES WAIVES THE RIGHT TO SEEK INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE
DAMAGES UNDER THIS AGREEMENT.



Please confirm that the terms and conditions stated herein accurately reflect
your understanding of our agreement by signing and returning to Leslie Thorn at
Seller’s address.



	 	 	 	 	 	 	 
	By:

	 	   /s/ Ward Uggerud
	 	Date:
	 	June 22, 2004
	

	 	
 	 	 	 	 
	

	 	Otter Tail Power Company, a division	 	 	 	 
	

	 	          of Otter Tail Corporation	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	      /s/ Andrea Stomberg
	 	Date:
	 	June 29, 2004
	

	 	
 	 	 	 	 
	

	 	Montana-Dakota Utilities Co., a division	 	 	 	 
	

	 	          of MDU Resources, Inc.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	   /s/ Michael J. Hanson
	 	Date:
	 	July 14, 2004
	

	 	
 	 	 	 	 
	

	 	NorthWestern Corporation,	 	 	 	 
	

	 	          doing business as NorthWestern	 	 	 	 
	

	 	          Energy	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	   /s/ Kelly A. Cosgrove
	 	Date:
	 	June 1, 2004
	

	 	
 	 	 	 	 
	

	 	Kennecott Coal Sales Company	 	 	 	 







(*) Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.




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