Xcel Energy outlines progress on massive renewable energy program

wind farm april elp 2

Xcel Energy said it made progress in the third quarter of this year in a number of areas, including plans to add thousands of megawatts of new renewable energy.

Said Chairman, President and CEO Ben Fowke: “We are successfully executing our strategy by settling rate cases in Minnesota and Texas and achieving several milestones in our steel-for-fuel strategy with the approval of the Rush Creek wind farm in Colorado and our proposal to build and own 750 megawatts of new wind in the Upper Midwest. The abundance of wind in our service territory puts us in a unique position to continue to capitalize on this clean energy resource and drive significant carbon reductions at a tremendous value to our customers.”

In January 2015, its Northern States Power-Minnesota unit filed its 2016-2030 Integrated Resource Plan with the Minnesota Public Utilities Commission (MPUC). In October 2016, the MPUC verbally approved NSP-Minnesota’s plan, with modifications as follows:

·      The acquisition of at least 1,000 MW of wind by 2019, with additional acquisitions dependent on considerations such as price, bidder qualifications, rate impact, transmission availability and location;

·      The acquisition of 650 MW of solar before 2021 through the community solar gardens program or other acquisitions - and pursuit of additional, cost-effective solar resources if it is in the best interests of its customers;

·      Determination of the proper mix of purchased power and company-owned renewable resources shall be made during the resource acquisition process;

·      Retirement of the coal-fired Sherburne County (Sherco) Unit 2 in 2023 and Sherco Unit 1 in 2026, and a finding that more likely than not, there will be a need for about 750 MW of capacity coinciding with the retirement of Sherco Unit 1 in 2026;

·      Authorization for NSP-Minnesota to file a petition for a certificate of need to select the resource that best meets the system resource and local reliability needs associated with the retirement of Sherco Unit 1 in 2026;

·      Acquisition of no less than 400 MW of additional demand response by 2023; and

·      Submission of NSP-Minnesota’s next resource plan by February 2019.

The MPUC’s final written order on NSP-Minnesota’s resource plan is expected to be issued in late 2016.

Also, in September 2016, NSP-Minnesota issued a request for proposals (RFP) for 1,500 MW of wind generation to be in service by 2020. The RFP requests both Power Purchase Agreements and Build-Own-Transfer proposals. NSP-Minnesota intends to compare self-build options to the RFP bids to ensure that all resource additions are cost-competitive. In October 2016, NSP-Minnesota submitted a petition for approval to the MPUC of a 750 MW self-build wind farm portfolio. RFP bids were received in October 2016 and will be evaluated in conjunction with the self-build proposal.

An overview of the anticipated RFP schedule is as follows:

·      Project proposal selection and negotiation will occur from November 2016 to March 2017;

·      A NSP-Minnesota recommendation for proposed wind additions to the MPUC in the first quarter of 2017; and

·      MPUC approval is expected by July 2017.

In May 2016, Xcel's Public Service Co. of Colorado (PSCo) filed an application to build, own and operate a 600 MW wind generation facility at Rush Creek for a cost of about $1 billion, including transmission investment. In September 2016, the Colorado Public Utilities Commission (CPUC) approved a settlement between PSCo, the CPUC Staff, the Colorado Office of Consumer Counsel, the Colorado Energy Office and various other parties. This will allow PSCo to commence the project on a timely basis and capture the full production tax credit benefit for customers.

Key terms of the settlement are:

·      The Rush Creek project satisfies the reasonable cost standard and is in the public interest;

·      The project should be placed in service by Oct. 31, 2018;

·      The useful life of the project should be set at 25 years;

·      A hard cost-cap on the $1.096 billion investment (which includes the capital investment and allowance for funds used during construction);

·      A capital cost sharing mechanism for every $10 million below the cost-cap, with 82.5 percent retained by customers and 17.5 percent retained by PSCo on a net present value basis over the life of the project;

·      Amounts retained by PSCo under the capital cost sharing mechanism as well as overall facility revenue requirements may each be reduced for lower than projected long term generating output (i.e., higher degradation); and

·      The Pawnee-Daniels transmission line (estimated project cost of $178 million) should be accelerated and operations are expected to begin by October 2019. The line is needed to get Rush Creek's capacity onto the grid.

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