SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                  FORM 10-Q


(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
 For the quarterly period ended  SEPTEMBER 30, 1997             
                                      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 
  incorporation or organization)                Identification No.) 

215 South Cascade Street, Box 496, Fergus Falls, Minnesota   56538-0496      
(Address of principal executive offices)                     (Zip Code)

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

                                                                             
(Former name, former address and former fiscal year, if changed since last
 report.)


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 the number of shares outstanding of each of the issuer's classes of 
Common Stock, as of the latest practicable date:

          October 31, 1997 - 11,695,903 Common Shares ($5 par value)



                           OTTER TAIL POWER COMPANY
                           ------------------------
                                    INDEX
                                    -----


Part I. Financial Information                                       Page No.

  Item 1. Financial Statements

    Consolidated Balance Sheets - September 30, 1997
    and December 31, 1996 (Unaudited)                                  2 & 3

    Consolidated Statements of Income - Three and Nine Months
    Ended September 30, 1997 and 1996 (Unaudited)                          4

    Consolidated Statements of Cash Flows - Nine Months
    Ended September 30, 1997 and 1996  (Unaudited)                         5

    Notes to Consolidated Financial Statements (Unaudited)          6, 7 & 8

  Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations                  8, 9, 10 & 11


Part II. Other Information

  Item 1. Legal Proceedings                                               12

  Item 6. Exhibits and Reports on Form 8-K                                12


Signatures                                                                12


<TABLE>
<CAPTION>
                             Part I.  Financial Information
                             ------------------------------
Item 1. Financial Statements
        --------------------
                                Otter Tail Power Company
                              Consolidated Balance Sheets
                                      (Unaudited)

                                        -Assets-

                                                            September 30,  December 31,
                                                                 1997          1996
                                                                ------        ------
                                                                            (Restated)
                                                               (Thousands of dollars)
<S>                                                            <C>           <C>
Plant:
  Electric plant in service                                    $752,657      $742,065
  Subsidiary companies                                          109,689        94,701
                                                               --------      --------
    Total                                                       862,346       836,766
  Less accumulated depreciation and amortization                350,138       327,855
                                                               --------      --------
                                                                512,208       508,911
  Construction work in progress                                  15,007        11,470
                                                               --------      --------
    Net plant                                                   527,215       520,381
                                                               --------      --------
Investments                                                      20,284        19,880
                                                               --------      --------
Intangibles -- net                                               21,356        21,954
                                                               --------      --------
Other assets                                                      6,096         6,553
                                                               --------      --------

Current assets:
  Cash and cash equivalents                                       6,010         2,094
  Temporary cash investments                                        --            --
  Accounts receivable:
    Trade - net                                                  37,751        32,603
    Other                                                         5,150         5,021
  Materials and supplies:
    Fuel                                                          3,205         3,220
    Inventory, materials and operating supplies                  24,879        24,247
  Deferred income taxes                                           4,887         4,550
  Accrued utility revenues                                        2,839         5,349
  Other                                                           5,437         4,524
                                                               --------      --------
    Total current assets                                         90,158        81,608
                                                               --------      --------
Deferred debits:
  Unamortized debt expense and reacquisition premiums             3,930         4,270
  Regulatory assets                                               5,732         5,866
  Other                                                           4,004         3,655
                                                               --------      --------
    Total deferred debits                                        13,666        13,791
                                                               --------      --------
      Total                                                    $678,775      $664,167
                                                               ========      ========

              See accompanying notes to consolidated financial statements

                                         - 2 -
</TABLE>

<TABLE>
<CAPTION>
                                Otter Tail Power Company
                              Consolidated Balance Sheets
                                      (Unaudited)

                                     -Liabilities-
                                                            September 30,  December 31,
                                                                 1997          1996
                                                                ------        ------
                                                                            (Restated)
                                                               (Thousands of dollars)
<S>                                                            <C>           <C>
Capitalization:
  Common shares, par value $5 per share - authorized
   25,000,000 shares; outstanding 1997 -- 11,692,307;
   and 1996 -- 11,372,298 shares                               $ 58,462      $ 56,861
  Premium on common shares                                       34,036        30,683
  Retained earnings                                             113,981       106,589
                                                               --------      --------
       Total                                                    206,479       194,133

  Cumulative preferred shares - authorized 1,500,000
   shares without par value; outstanding 1997
   and 1996, 388,311 shares
    Subject to mandatory redemption                              18,000        18,000
    Other                                                        20,831        20,831

  Cumulative preference shares - authorized 1,000,000
   shares without par value;  outstanding - none                    --            --

  Long-term debt                                                162,687       160,704
                                                               --------      --------
    Total capitalization                                        407,997       393,668
                                                               --------      --------

Current liabilities:
  Short-term debt                                                29,100        25,600
  Sinking fund requirements and current maturities               43,905        42,218
  Accounts payable                                               27,252        27,260
  Accrued salaries and wages                                      3,341         3,847
  Federal and state income taxes accrued                          1,768         2,031
  Other taxes accrued                                            10,172        12,048
  Interest accrued                                                2,053         3,622
  Other                                                           3,121         2,822
                                                               --------      --------
    Total current liabilities                                   120,712       119,448
                                                               --------      --------

Noncurrent liabilities                                           16,992        16,688
                                                               --------      --------

Deferred credits:
  Accumulated deferred income taxes                              98,250        98,498
  Accumulated deferred investment tax credit                     18,970        19,818
  Regulatory liabilities                                         12,712        13,283
  Other                                                           3,142         2,764
                                                               --------      --------
    Total deferred credits                                      133,074       134,363
                                                               --------      --------
      Total                                                    $678,775      $664,167
                                                               ========      ========

              See accompanying notes to consolidated financial statements

                                        - 3 -
</TABLE>

<TABLE>
<CAPTION>
                                         Otter Tail Power Company
                                    Consolidated Statements of Income
                                               (Unaudited)


                                                         Three months ended          Nine months ended
                                                            September 30                September 30
                                                         1997         1996           1997         1996
                                                        ------       ------         ------       ------
                                                                   (Restated)                  (Restated)
                                                       (Thousands of dollars)      (Thousands of dollars)
<S>                                                  <C>          <C>            <C>          <C>
Operating revenues:
  Electric                                             $ 47,418     $ 45,261       $151,244     $147,079
  Health services                                        17,868       16,527         48,277       43,598
  Manufacturing                                          22,088       17,407         57,273       51,133
  Other business operations                              14,484       15,722         30,449       34,833
                                                       --------     --------       --------     --------
    Total operating revenues                            101,858       94,917        287,243      276,643

Operating expenses:
  Production fuel                                         7,900        6,031         22,522       21,632
  Purchased power                                         4,543        6,513         17,584       19,010
  Other electric operation and maintenance expenses      18,115       16,774         53,323       49,254
  Cost of goods sold                                     35,232       31,501         87,613       84,589
  Other nonelectric expenses                             13,155       12,671         35,483       32,045
  Depreciation and amortization                           6,380        5,769         19,064       16,986
  Property taxes                                          2,780        2,864          8,363        8,863
                                                       --------     --------       --------     --------
    Total operating expenses                             88,105       82,150        243,952      232,379

Operating income:
  Electric                                                8,747        8,099         33,436       33,545
  Health services                                         1,095        1,490          2,592        3,156
  Manufacturing                                           2,857        1,893          6,420        6,048
  Other business operations                               1,054        1,285            843        1,515
                                                       --------     --------       --------     --------
    Total operating income                               13,753       12,767         43,291       44,264

Other income and deductions - net                         2,572          189          5,397        1,101
Interest charges                                          4,729        4,308         13,867       12,007
                                                       --------     --------       --------     --------
Income before income taxes                               11,596        8,648         34,821       33,358
Income taxes                                              3,811        1,946         10,953       10,261
                                                       --------     --------       --------     --------
Net income                                                7,785        6,702         23,868       23,097
Preferred dividend requirements                             590          590          1,769        1,769
                                                       --------     --------       --------     --------
Earnings available for common shares                   $  7,195     $  6,112       $ 22,099     $ 21,328
                                                       ========     ========       ========     ========
Earnings per average common share                         $0.62        $0.54          $1.90        $1.88
                                                       ========     ========       ========     ========

Average number of common shares outstanding          11,660,523   11,337,782     11,616,274   11,337,782

Dividends per common share                               $0.465        $0.45         $1.395        $1.35


                       See accompanying notes to consolidated financial statements


                                                  - 4 -
</TABLE>

<TABLE>
<CAPTION>
                                  Otter Tail Power Company
                           Consolidated Statements of Cash Flows
                                        (Unaudited)
                                                                       Nine months ended
                                                                         September 30,
                                                                      1997          1996
                                                                    --------      --------
                                                                                 (Restated)
                                                                    (Thousands of dollars)
Cash flows from operating activities:
<S>                                                                 <C>           <C>
Net income                                                          $ 23,867      $ 23,097
  Adjustments to reconcile net income to net cash
   Provided by operating activities:
    Depreciation and amortization                                     29,937        25,599
    Deferred investment tax credit - net                                (882)         (882)
    Deferred income taxes                                             (2,331)       (2,609)
    Change in deferred debits and other assets                           491         4,578
    Change in noncurrent liabilities and deferred credits                682           831
    Allowance for equity (other) funds used during construction           --          (225)
    (Gains)/Losses from investments and disposal of noncurrent assets (1,445)          496
   Cash provided by (used for) current assets & current liabilities:
    Change in receivables, materials and supplies                     (5,632)        3,905
    Change in other current assets                                     1,603          (970)
    Change in payables and other current liabilities                  (1,587)       (2,341)
    Change in interest and income taxes payable                       (1,831)       (1,797)
                                                                    --------      --------
      Net cash provided by operating activities                       42,872        49,682

Cash flows from investing activities:
  Gross capital expenditures                                         (33,849)      (50,662)
  Proceeds from disposal of noncurrent assets                          3,664         4,136
  Purchase of businesses, net of cash acquired                            --        (7,859)
  Change in temporary cash investments                                    --         2,161
  Purchases of marketable securities                                      (5)           --
  Proceeds from sales of marketable securities                           786            --
  Change in other investments                                           (578)       (8,741)
                                                                    --------      --------
    Net cash used in investing activities                            (29,982)      (60,965)

Cash flows from financing activities:
  Change in short-term debt - net                                      3,500        20,350
  Proceeds from issuance of common stock                               4,969            --
  Proceeds from issuance of long-term debt                            72,597        90,930
  Payments for retirement of long-term debt                          (71,801)      (81,957)
  Dividends paid                                                     (18,239)      (17,254)
                                                                    --------      --------
    Net cash (used in) provided by financing activities               (8,974)       12,069

Net change in cash and cash equivalents                                3,916           786

Cash and cash equivalents at beginning of year                         2,094         2,419
                                                                    --------      --------
Cash and cash equivalents at September 30                           $  6,010      $  3,205

Supplemental cash flow information
  Cash paid for interest and income taxes:
    Interest (net of amount capitalized)                            $ 15,096      $ 13,254
    Income taxes                                                    $ 14,439      $ 14,494

                See accompanying notes to consolidated financial statements

                                           - 5 -
</TABLE>

                           OTTER TAIL POWER COMPANY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

The Company, in its opinion, has included all adjustments (including normal 
recurring accruals) necessary for a fair presentation of the results of 
operations for the periods. The financial statements for 1997 are subject 
to adjustment at the end of the year when they will be audited by 
independent accountants.  The financial statements and notes thereto should 
be read in conjunction with the financial statements and notes for the 
years ended December 31, 1996, 1995, and 1994 included in the Company's 
1996 Annual Report to the Securities and Exchange Commission on Form 10-K. 
Because of seasonal and other factors, the earnings for the three-month and 
nine-month periods ended September 30, 1997, should not be taken as an 
indication of earnings for all or any part of the balance of the year.

On January 2, 1997, the Company's telecommunications subsidiary, North 
Central Utilities, Inc., acquired all of the outstanding common stock of 
The Peoples Telephone Co. of Bigfork (Peoples) in exchange for 163,758 
newly issued shares of the Company's common stock and $209,000 in cash in a 
pooling of interests transaction.  The acquisition has no significant pro 
forma effect on the Company's balance sheet, operating revenues, net 
income, or earnings per share for 1996.  Therefore, the 1996 financial 
statements included in this report have not been restated to reflect the 
effect of the pooling.  The following table shows the effect of the pooling 
on the equity section of the Company's balance sheet on January 2, 1997:

                           Common            Premium
                           Shares           on Common  Retained    Total
                        Outstanding    Par    Shares   Earnings   Equity
                        -----------  -------  -------  --------  --------
                                            (dollars in thousands)
Otter Tail Power Company 11,372,298  $56,861  $30,683  $106,589  $194,133
Peoples                                   21              2,121     2,142
Shares Issued               163,758      819                          819
Adjustments for:
  Par value of new shares                (21)    (798)               (819)
  Cash paid for Peoples shares                   (209)               (209)
                         ----------  -------  -------  --------  --------  
Combined                 11,536,056  $57,680  $29,676  $108,710  $196,066
                         ==========  =======  =======  ========  ========
 
The net amount of cash used of ($209,000) and cash acquired of $36,000 in 
the pooling is included in the Company's Statement of Cash Flows for the 
nine months ended September 30, 1997, under "Proceeds from issuance of 
common stock."

On June 30, 1997, the Company's subsidiary, Mid-States Development, Inc., 
acquired all of the outstanding common stock of Chassis Liner Corporation 
(Chassis Liner) in exchange for 157,646 newly issued shares of the 
Company's common stock.  Chassis Liner is a manufacturer of auto and truck 
frame straightening equipment with facilities in Alexandria and Lucan, 
Minnesota.  The acquisition has been accounted for as a pooling of 
interests.  Because the acquisition has a significant pro forma effect on 
1996 results, the Company's prior period consolidated financial statements 
presented herein have been restated to include Chassis Liner.

The impact of Chassis Liner on the Company's consolidated statements of 
income and cash flows for the periods ending September 30, 1996, is 
presented in the table below:

                                                                Otter Tail
                                          Otter Tail               Power
                                             Power     Chassis    Company
(in thousands)                              Company     Liner    Combined  
--------------------------------------------------------------------------
For the three months ended September 30, 1996:
  Revenue                                   $ 92,866   $ 2,051   $ 94,917
  Operating Income                          $ 12,273   $   494   $ 12,767
  Net income                                $  6,207   $   495   $  6,702
 
For the nine months ended September 30, 1996:
  Revenue                                   $270,844   $ 5,799   $276,643
  Operating Income                          $ 43,397   $   867   $ 44,264
  Net income                                $ 22,219   $   878   $ 23,097
 
For the nine months ended September 30, 1996:
  Net cash provided by operating activities $ 49,034   $   648   $ 49,682
  Net cash used in investing activities      (60,916)      (49)   (60,965)
  Net cash provided by (used in)
    financing activities                      12,492      (423)    12,069
                                            --------   -------   --------
  Net change in cash and cash equivalents        610       176        786
  Cash and cash equivalents 
    at beginning of 1996                       1,867       552      2,419  
                                            --------   -------   --------
  Cash and cash equivalents 
    at September 30, 1996                   $  2,477   $   728   $  3,205


Prior to the acquisition, Chassis Liner was an S Corporation and, 
consequently, was not subject to federal or state income taxes.  The pro 
forma income tax provision for Chassis Liner that would have been reported 
by the Company as an additional provision to its historical tax expense had 
Chassis Liner not been an S Corporation prior to the acquisition is 
$198,000 and $351,000 for the three and nine month periods ended September 
30, 1996, respectively, and  $366,000 for the nine month period ended 
September 30, 1997, based on a tax rate of 40%.

Additional common stock issuances in the first nine months of 1997 include 
123,060 shares issued under the Company's Automatic Dividend Reinvestment 
and Share Purchase Plan (the Plan), 30,561 shares issued to the Company's 
leveraged employee stock ownership plan and 2,630 shares issued as a bonus 
to a consultant.  Of the 123,060 shares issued in 1997 under the Plan, 
4,707 shares were issued in conjunction with a program initiated in July of 
1997 whereby customers of the electric utility can purchase shares of the 
Company's common stock by remitting additional funds with their monthly 
electric service bill payments. 

In 1997, Quadrant Co. (Quadrant) began processing solid waste for three 
Minnesota counties under the terms of a new waste incineration agreement.  
Since operating under the new agreement, Quadrant has experienced a 
reduction in revenue of approximately fifty percent, as compared to 1996.  
However, Quadrant's cash flows from operations for the first nine months of 
1997 were positive.  The Company intends to continue operating the Quadrant 
plant as long as positive cash flows can be maintained.

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-Q 
and in future filings by the Company with the Securities and Exchange 
Commission, in the Company's press releases and in oral statements, words 
such as "may", "will", "expect", "anticipate", "continue", "estimate", 
"project", "believes" or similar expressions are intended to identify 
forward-looking statements within the meaning of the Act.  Factors that 
might cause such differences include, but are not limited to, the factors 
discussed under "Factors affecting future earnings" on pages 30-32 of the 
Company's 1996 Annual Report to Shareholders, which is incorporated by 
reference in the Company's Form 10-K for the fiscal year ended December 31, 
1996.  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.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS
         ---------------------------------------------

Material Changes in Financial Position
--------------------------------------
Cash provided by operating activities of $42,872,000 as shown on the 
Consolidated Statement of Cash Flows for the nine months ended September 
30, 1997, combined with funds on hand of $2,094,000 at December 31, 1996,  
allowed the Company to pay dividends and finance the majority of its 
capital expenditures in the first nine months of 1997.  Additional cash 
provided by the issuance of $3,500,000 in short-term debt and $4,969,000 in 
common stock provided the funds used to finance the remainder of the 
capital expenditures in the first nine months of 1997.  The Company's 
initiative to reduce capital expenditures has resulted in a $16.8 million 
reduction in this category over the first nine months of 1997, as compared 
to the same period in 1996.  At September 30, 1997, the Company had 
$22,421,000 available in unused lines of credit which could be used to 
supplement cash needs.  The Company estimates that funds internally 
generated, combined with funds on hand, will be sufficient to meet all 
sinking fund payments for First Mortgage Bonds in the next five years and 
to provide for its estimated 1997-2001 consolidated capital project 
expenditures.

Additional short-term or long-term financing will be required in the period 
1997-2001 in connection with  the maturity of First Mortgage Bonds and a 
long-term lease obligation ($21,000,000), 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. 

In the second quarter of 1997, Standard and Poor's reaffirmed its AA- 
rating of the Company's senior debt, however, it revised its ratings 
outlook on the Company from stable to negative sighting growth in the level 
of nonutility earnings relative to overall Company earnings as a reason for 
the revision.  Also in the second quarter of 1997, Moody's Investors 
Service reaffirmed its Aa3 rating of the Company's First Mortgage Bonds and 
Duff and Phelps reaffirmed its AA rating, while Fitch Investors Service 
downgraded its rating from AA to AA-.  

Subsequent to September 30, 1997, the Company's subsidiary, Mid-States 
Development, Inc. (Mid-States), borrowed $22,500,000 under a term note for 
10 years with a fixed interest rate of 7.8%.  The proceeds will be loaned 
to various subsidiaries of Mid-States to be used to repay certain variable 
and fixed-rate debt.  Mid-States also secured a new line of credit of 
$17,500,000, which it intends to use to finance its subsidiaries' working 
capital needs; interest on the borrowings will be based on LIBOR plus 1.75% 
(7.6% at October 15, 1997). The note and credit line borrowings are secured
by a pledge of the common stock of the companies owned by Mid-States.  
Subsequent to September 30, 1997, Mid-States' medical imaging services 
subsidiary entered into a sale/leaseback transaction whereby $17,000,000 of
diagnostic medical equipment was sold and leased back under two operating 
leases.  The leases have terms of three and four years with annual lease
payments of approximately $700,000 and $3,760,000, respectively.  This
transaction will result in a reduction in fixed assets and debt and transfer
technology risk in this equipment to the lessor.  

The increases in electric plant in service and construction work in 
progress are due to new construction and capital expenditures at the 
electric utility, mainly in the production, transmission and general plant 
areas including the Company's share of capital expenditures at the Coyote 
Plant for boiler retubing, and approximately $2.3 million for the 
replacement of facilities damaged in the April 1997 storm.  The 
acquisition of Peoples provided $7.1 million of the increase in subsidiary 
companies plant.  Capital additions of $3.8 million in the manufacturing 
segment, along with additions of approximately $4.1 million at the other  
subsidiaries accounted for the remaining increase in subsidiary companies 
plant.

The increase in trade receivables reflects a $6.6 million increase in 
receivables in the manufacturing segment coinciding with an increase in the 
level of sales in this segment.  The increase in trade receivables in the 
manufacturing segment was partially offset by a $1.3 million seasonal 
decline in trade receivables at the electric utility.  The decrease in 
accrued utility revenues is reflective of a normal seasonal decline in the 
use of electricity in the Company's service area in the latter part of 
September compared to December.  The increase in other current assets is 
due to an increase in prepaid expenses in the health services and 
manufacturing segments.

The combined increase in common shares, par value and premium on common 
shares of $4,954,000 is mainly due to the issuance of the 156,251 shares of 
common stock under the Company's stock plans as described in the notes to 
consolidated financial statements.  The increase in long-term debt is due 
to the acquisition of Peoples.  The increase in short-term debt is related 
to the timing of bond interest payments and estimated income tax payments 
totaling $8.5 million in August and September of 1997.  Accrued salaries 
and wages decreased as a result of the payment of 1996 accrued employee 
incentives. The decrease in other taxes accrued is partly due to the timing 
of property tax payments in Minnesota, North Dakota and South Dakota, 85% 
of which are due within the first nine months of the year following 
accrual.  Part of the decrease in other taxes accrued is due to an 
adjustment to Minnesota property taxes accrued related to a reduction in 
statutory class rates for commercial and industrial property and reduced 
valuations of utility property.  The decrease in interest accrued is due to 
the timing of bond interest payments, the majority of which are due in the 
first and third quarters of the calendar year.


Material Changes in Results of Operations
-----------------------------------------
The 4.8% increase in electric operating revenue for the quarter ended 
September 30, 1997, as compared to the same period in 1996, is due to 
increases of 3.6% in retail revenue and 54.7% in other electric revenue. 
The 2.8% increase in electric operating revenue for the nine months ended 
September 30, 1997, as compared to the nine months ended September 30, 
1996, is due to increases of 3.2% in retail revenue and 45.2% in other 
electric revenue offset by a 21% decrease in revenue from power pool sales. 
The increases in retail revenue for the three and nine month periods ended 
September 30, 1997, as compared to the same periods in 1996, are mainly due 
to increases in kwh sales to industrial customers and increases in cost-of-
energy revenue related to recovery of the costs of power purchased for sale 
to retail customers in the first six months of 1997.  The increases in 
other electric revenue reflect the recognition of Minnesota Conservation 
Improvement Program (CIP) lost margins recovery approved by the Minnesota 
Public Utilities Commission (MNPUC) in the second quarter of 1997.  
Increases in transmission service charge revenue and electric property 
rental income also contributed to the increases in other electric revenue. 
The decrease in revenue from power pool sales for the nine month period 
ended September 30, 1997, as compared to the same period in 1996, is the 
result of the Company having less energy to market as a result of delayed 
coal shipments caused by the blizzards of 1997 and to the shutdown of the 
Coyote Plant for its first scheduled major overhaul in three years that 
lasted from March 27, 1997, until June 6, 1997.

The net reduction in production fuel and purchased power expenses for the 
nine months ended September 30, 1997, as compared to the nine months ended 
September 30, 1996, is commensurate with the reduction in power pool sales 
for the comparable periods.  The primary contributors to the increases in 
other electric operation and maintenance expenses for the three and nine 
month periods ended September 30, 1997, as compared to the three and nine 
month periods ended September 30, 1996, are the overhaul of the Coyote 
Plant in the second quarter of 1997, and increased expenditures for outside 
and contracted services.

The breakdown of cost of goods sold and other nonelectric expenses by 
business segments other than electric are as follows:

                                    Three months ended September 30
                            Cost of goods sold   Other nonelectric expenses
                            ------------------   --------------------------
                              1997      1996           1997      1996
                             ------    ------         ------    ------
                                          (in thousands)
Health services             $10,418   $ 8,428        $ 6,177   $ 6,462
Manufacturing                15,963    12,720          3,169     2,636
Other business operations     8,851    10,353          3,809     3,573
                            -------   -------        -------   -------
  Total                     $35,232   $31,501        $13,155   $12,671
                            =======   =======        =======   =======

                                    Nine months ended September 30
                            Cost of goods sold   Other nonelectric expenses
                            ------------------   --------------------------
                              1997      1996           1997      1996
                             ------    ------         ------    ------
                                          (in thousands)
Health services             $27,157   $24,158        $18,086   $15,861
Manufacturing                42,784    37,426          7,672     7,246
Other business operations    17,672    23,005          9,725     8,938
                            -------   -------        -------   -------
          Total             $87,613   $84,589        $35,483   $32,045
                            =======   =======        =======   =======

Reclassifications of $2,233,000 and $4,102,000 in health services cost of 
goods sold to health services other nonelectric expenses were made for the 
three and nine month periods ended September 30, 1996, respectively, 
related to the medical imaging services companies acquired in 1996 in order 
to report these costs and expenses in a manner consistent with previously 
acquired medical imaging services companies.

The increase in health services operating revenue of 8.1% for the three 
months ended September 30, 1997, as compared to the same period in 1996, is 
due to increased sales of medical imaging services. The increases in cost 
of goods sold in the health services segment for the three and nine month 
periods ended September 30, 1997, as compared to the same periods in 1996, 
are due to valuation adjustments related to refurbished and trade-in 
equipment and increased costs associated with long-term customer service 
contracts.  The 10.7% increase in health services operating revenue and the 
increase in other nonelectric expenses for the nine month period ended 
September 30, 1997, as compared to the same period a year ago, is due to 
the acquisitions of Radiographic Supply in February 1996, and Northern 
Medical Imaging in April 1996.  

The increases in manufacturing operating revenue of 26.9% and 12.0% for the 
three and nine month periods ended September 30, 1997, as compared to the 
three and nine month periods ended September 30, 1996, reflect increased 
sales at five of the Company's six manufacturing subsidiaries.  One of the 
manufacturing subsidiaries showed an increase in third quarter operating 
revenues but a decrease in year-to-date operating revenues in 1997, as 
compared to 1996, due to the delayed shipment of finished goods to a major 
customer of this subsidiary in order to accommodate that customer's 
delivery and production schedule.  This manufacturing company maintained 
its production schedule in order to optimize the use of its plant capacity.

Manufacturing cost of goods sold increased in the three and nine month 
periods ended September 30, 1997, as compared to the same periods in 1996, 
in conjunction with the increased sales over the same comparable periods 
and also as a result of increased prices for resins used in the manufacture 
of PVC pipe. The increases in manufacturing revenues more than offset the 
increases in manufacturing cost of goods sold and other nonelectric 
expenses resulting in increases in manufacturing operating income for both 
the three and nine month periods ended September 30, 1997, as compared to 
the same periods in 1996. 

The decreases in other business operations revenue for the quarter and nine 
months ended September 30, 1997, as compared to the quarter and nine months 
ended September 30, 1996, are due to a decline in revenue and reductions in 
material cost pass through billings at the Company's construction 
subsidiaries, offset slightly by increases in media and telecommunications 
revenue due to the acquisition of several radio stations in 1996, and the 
acquisition of Peoples in January of 1997.  The decreases in construction 
activity and material cost pass through billings are the main factors 
contributing to the decreases in cost of goods sold from other business 
operations for the comparable periods. Other nonelectric expenses for other 
business operations increased for the three and nine month periods ended 
September 30, 1997, as compared to the same periods a year ago, as a result 
of the radio stations and Peoples acquisitions.

The increases in depreciation and amortization expense for the three and 
nine month periods ended September 30, 1997, as compared to the same 
periods in 1996, are related to electric utility property additions 
including upgrades made to Big Stone Plant in 1996, accelerated 
depreciation at Quadrant , and the acquisition of Peoples in 1997.

The decrease in property taxes for the nine month period ended September 
30, 1997, as compared to the same period in 1996, is due to reductions in 
Minnesota property taxes accrued as a result of legislative action 
affecting Minnesota commercial and industrial property class rates for 
1997, and lower assessed values on Minnesota utility property.

A gain on the sale of a Direct Broadcast Satellite franchise, in which the 
Company's telecommunications subsidiary, Midwest Information Systems, Inc., 
held a one-third ownership interest, accounted for $1.8 million of the 
increase in other income and deductions - net for the quarter and nine 
months ended September 30, 1997, as compared to the quarter and nine months 
ended September 30, 1996.  Realized gains on sales of investments of 
$141,000 and increases in miscellaneous nonoperating income of $442,000 
also contributed to the increases in other income and deductions - net for 
same comparable periods.  The remainder of the increase in other income and 
deductions - net for the nine months ended September 30, 1997, as compared 
to the nine months ended September 30, 1996, reflects the recognition of 
$610,000 in realized gains on the sale of marketable securities, the 
recognition of $880,000 in compensation for the abandonment of certain 
microwave frequencies licensed to the Company, and an increase in revenue 
recognition of $405,000 related to Minnesota CIP financial incentives.

The increases in interest charges for the three and nine month periods 
ended September 30, 1997, as compared to the three and nine month periods 
ended September 30, 1996, are directly related to the increased level of 
short-term debt at the parent company and an increase in the average level 
of long-term debt and current maturities at the subsidiary companies for 
the comparable periods.

Increases in income taxes for the three and nine month periods ended 
September 30, 1997, as compared to the three and nine month periods ended 
September 30, 1996, are mainly due to increases in income before income 
taxes for the same comparable periods.  However, income before income taxes 
for the third quarter of 1996 includes Chassis Liner's third quarter net 
income of $495,000 which was not subject to income tax.  Also, income taxes 
for the third quarter of 1996 reflects reductions related to deferred tax 
adjustments. 


                          PART II. OTHER INFORMATION
                          --------------------------

Item 1. Legal Proceedings
        -----------------
Patricia C. Reimel v. John C. MacFarlane, et al, and Otter Tail Power 
Company
---------------------------------------------------------------------
This suit was filed on July 1, 1997 in United States District Court 
for the District of Minnesota by Patricia C. Reimel, individually and 
derivatively as a shareholder of the Company.  The suit names as 
defendants the Company, each member of the Company's Board of 
Directors and certain executive officers of the Company.  The 
allegations made by the plaintiff relate to the Company's Shareholder 
Rights Plan, which was adopted by the Company's Board of Directors in 
January 1997.  Claims for relief include modification or elimination 
of the Company's Shareholder Rights Plan, as well as damages in an 
unspecified amount.  The Company believes the suit is procedurally
inappropriate and has requested that the Court dismiss the suit
because the plaintiff failed to make a demand on the Board of
Directors of the Company prior to seeking to resolve the alleged 
claims through litigation.


Item 6. Exhibits and Reports on Form 8-K.
        ---------------------------------
a) Exhibits:

   27   Financial Data Schedule

   27.1 Restated Financial Data Schedules

        The acquisition of Chassis Liner on June 30, 1997, was accounted 
        for under the pooling of interests method.  Accordingly, the 
        Company's 1996 interim and year end, and 1997 first quarter 
        consolidated financial statements previously filed with the 
        Securities and Exchange Commission on Forms 10-Q and 10-K for 
        the corresponding periods have been restated to include Chassis 
        Liner.  Exhibit 27.1 contains restated summary financial 
        information extracted from the restated consolidated financial 
        statements for the affected periods.

b) Reports on Form 8-K.

   No reports on Form 8-K were filed during the fiscal quarter ended 
   September 30, 1997.
 

                                  SIGNATURES
                                  ----------
Pursuant to the requirements 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:    Jeff Legge 
                              ---------------------
                                  Jeff Legge
                                  Controller
                (Chief Accounting Officer/Authorized Officer)

Dated: November 7, 1997
       ----------------