Xcel Energy 2006 Annual Report Download - page 22

12
In 2006, NSP-Minnesota and other parties filed testimony in phase I of this proceeding. The parties filed briefs in January 2007. The
ALJ is expected to make a recommendation to the MPUC on phase I later in the first quarter of 2007 and make a recommendation on
phase II in August 2007.
NSP-Minnesota’s position in the proceeding is that the proposal (i) is inconsistent with our resource need, (ii) is not likely to be least-
cost and is not in the public interest, (iii) shifts substantial risks to NSP-Minnesota and our ratepayers, (iv) presents a power purchase
agreement that is inconsistent with industry standards in its allocation of risks and costs, (v) the proposal fails to satisfy the elements
of the statutes under which it is proposed, and (vi) the proposal could result in significant adverse financial consequences. NSP-
Minnesota intends to request that all costs associated with the proposed power purchase agreement, if approved, will be recoverable in
customer rates.
NSP System Resource Plan — On Nov. 1, 2004, NSP-Minnesota filed its proposed resource plan for the period 2005 through 2019.
The proposed plan identified needed resources and proposed processes for acquiring resources to meet those needs. On July 28, 2006,
the MPUC issued an order that, among other things:
• Approved NSP-Minnesota’s proposal to proceed with a request for proposal for 136 MW of peaking resources with an
intended in service date of 2011;
• Identified a base load resource need of 375 MW beginning in 2015 and required NSP-Minnesota to file a certificate of need
application for a proposed base load resource to begin the acquisition process by Nov. 1, 2006;
• Approved acquisition of 1,680 MW of wind generation resource over the planning period;
• Accepted the proposed increases in demand-side management and energy-savings goals; and
• Accepted the submittal of Xcel’s plan for uprating the Monticello and Prairie Island nuclear plants along with a comprehensive
environmental and upgrade plan for the Sherco plant.
On Oct. 18, 2006, the MPUC issued an order after reconsideration clarifying the Nov. 1, 2006, filing requirements and extending the
filing requirement for the nuclear upgrades until Sept. 1, 2007, to accommodate scheduling and legislative review of the MPUC’s
decision in the Monticello certificate of need proceeding.
NSP-Minnesota expects to file its next resource plan with the MPUC on July 1, 2007.
NSP-Minnesota Base Load Acquisition Proceeding — On Nov. 1, 2006, NSP-Minnesota filed a proposal with the MPUC for a
purchase of 375 MW of capacity and energy from Manitoba Hydro for the period 2015-2025 and the purchase of 380 MW of wind
energy to fulfill the base load need identified in the 2004 resource plan. The proposal included a signed term sheet with Manitoba
Hydro and a process to acquire the wind energy through competitive bidding. Alternative suppliers were entitled to submit competing
proposals to the MPUC by Dec. 18, 2006. An alternate supplier proposed a 375 MW share of a mine mouth lignite circulating
fluidized bed plant located in North Dakota and 380 MW of wind energy generation, with an option for Xcel Energy ownership in
both components. The MPUC found both NSP-Minnesota’s proposal and the alternate proposal to be substantially complete and
referred the matter to a contested case proceeding.
NSP-Minnesota Transmission Certificates of Need — In December 2001, NSP-Minnesota proposed construction of various
transmission system upgrades to provide transmission outlet capacity for up to 825 MW of renewable energy generation (wind and
biomass) being constructed in southwest and western Minnesota. In March 2003, the MPUC granted four certificates of need to NSP-
Minnesota, thereby approving construction, subject to certain conditions. The initial projected cost of the transmission upgrades was
approximately $160 million. The MPUC granted a routing permit for the first major transmission facilities in the development
program in 2004. The remaining route permit proceedings were completed in 2005. In 2003, the
MPUC also approved an RCR automatic adjustment mechanism that allows NSP-Minnesota to recover the revenue requirements
associated with certain transmission investments for delivery of renewable energy resources.
In late 2006, NSP-Minnesota filed two applications for certificates of need with the MPUC for four additional transmission lines in
southwestern Minnesota and Chisago County. NSP-Minnesota along with ten other transmission providers, have announced plans to
file certificate of need applications by mid 2007 for three transmission lines serving Minnesota and parts of surrounding states.
See Note 13 in the Consolidated Financial Statements for further discussion.
Purchased Transmission Services — NSP-Minnesota and NSP-Wisconsin have contractual arrangements with MISO to deliver
power and energy to the NSP System for native load customers.
Nuclear Power Operations and Waste Disposal — NSP-Minnesota owns two nuclear generating plants: the Monticello plant and the
Prairie Island plant. See additional discussion regarding the nuclear generating plants at Note 15 to the Consolidated Financial
Statements.