Xcel Energy 2007 Annual Report Download - page 124

In February 2008, the FERC issued an order accepting the proposed rates, suspending the effective date to July 6,
2008, and setting the rate filing for hearings and settlement procedures. The FERC granted a 50 basis point adder to
the rate of return on common equity that it will determine in this proceeding as a result of SPS’ participation in the
SPP regional transmission organization. The FERC has not yet acted on the companion SPP rate change filing. The
ultimate outcome of the rate filings is not known at this time.
15. Commitments and Contingent Liabilities
Commitments
Capital Commitments — The estimated cost as of Dec. 31, 2007 of capital requirements of Xcel Energy and its
subsidiaries and the capital expenditure programs is approximately $2.1 - $2.2 billion in 2008, $1.8 - $2.0 billion in
2009 and $1.9 - $2.1 billion in 2010. Xcel Energy’s capital forecast includes the following major projects:
CAPX 2020 — In June 2006, CapX 2020, an alliance of electric cooperatives, municipals and investor-owned utilities
in the upper Midwest, including Xcel Energy, announced that it had identified several groups of transmission projects
that proposed to be complete by 2020. Group 1 project investments are expected to total approximately $1.3 billion,
with major construction targeted to begin in 2009 or 2010 and ending three or four years later. Xcel Energy’s
investment is expected to be approximately $700 million. Approximately 75 percent of the capital expenditures and
return on investment for transmission projects are expected to be recovered under an NSP-Minnesota TCR tariff rider
mechanism authorized by Minnesota legislation, as well as similar TCR mechanisms passed in North Dakota and South
Dakota. Cost recovery by NSP-Wisconsin is expected to occur through the biennial PSCW rate case process.
Nuclear Capacity Increases and Life Extension — In August 2004, NSP-Minnesota announced plans to pursue 20-year
license renewals for the Monticello and Prairie Island nuclear plants, whose licenses will expire between 2010 and 2014.
License renewal for Monticello was approved by the NRC in November 2006 and the MPUC issued its approval in
October 2006 allowing additional spent fuel storage. Similar applications will be submitted for Prairie Island in 2008,
with final state and federal approvals expected in 2010.
NSP-Minnesota is pursuing capacity increases of all three units that will total approximately 230 MW, to be
implemented, if approved, between 2009 and 2015. The life extension and a capacity increase for Prairie Island Unit 2
is contingent on replacement of Unit 2’s original steam generators, currently planned for replacement during the
refueling outage in 2013. Total capital investment for these activities is estimated to be approximately $1 billion
between 2006 and 2015. NSP-Minnesota plans to seek approval for an alternative recovery mechanism from customers
of its nuclear costs. It is NSP-Minnesota’s plan to submit the certificate of need for Monticello in the first quarter of
2008 and the certificate of need for Prairie Island in the second quarter of 2008.
MERP Project — In December 2003, the MPUC approved NSP-Minnesota’s MERP proposal to convert two
coal-fueled electric generating plants to natural gas, and to install advanced pollution control equipment at a third
coal-fired plant. These improvements are expected to significantly reduce air emissions from these facilities, while
increasing the capacity at system peak by 300 MW. Major construction for the MERP project began in 2005 and these
projects are expected to come on line between 2007 and 2009. The cumulative investment is approximately $1 billion.
The MPUC has approved a more current recovery of the financing costs related to the MERP. The in-service plant
costs, including the financing costs during construction, are recovered from customers through a MERP rider, which
was effective Jan. 1, 2006.
Comanche 3 — Comanche 3, a 750 MW coal-fired plant being built in Colorado, is expected to cost approximately
$1.35 billion, with major construction initiated in 2006 and completed in the fall of 2009. The CPUC has approved
sharing one-third ownership of this plant with other parties. Consequently, PSCo’s investment in Comanche 3 will be
approximately $1 billion.
Sherco Project — NSP-Minnesota has proposed a $1.1 billion upgrade at the Sherco coal-fired power plant. The project
will increase capacity and reduce emissions. The MPUC is expected to rule on the project in 2008. If approved,
construction would start in late 2010 and be completed on the final unit in 2014.
Wind Generation — NSP-Minnesota plans to invest $213 million to acquire 100-MW of wind generation. The project
would be eligible for rider recovery in Minnesota. The project received approval by the MPUC in December 2007.
The capital expenditure programs of Xcel Energy are subject to continuing review and modification. Actual utility
construction expenditures may vary from the estimates due to changes in electric and natural gas projected load growth
regulatory decisions, the desired reserve margin and the availability of purchased power, as well as alternative plans for
meeting Xcel Energy’s long-term energy needs. In addition, Xcel Energy’s ongoing evaluation of compliance with future
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