Xcel Energy 2008 Annual Report Download - page 27

NSP-Wisconsin’s retail electric rate schedules for Michigan customers include power supply cost recovery factors, which
are based on 12-month projections. After each 12-month period, a reconciliation is submitted whereby over-collections
are refunded and any under-collections are collected from the customers over the subsequent 12-month period.
Wisconsin Renewable Portfolio Standard (RPS) — The Wisconsin legislature passed a RPS that requires 10 percent of
electric sales statewide be supplied by renewable energy sources by the year 2015. However, under the RPS, each
individual utility must increase its renewable percentage by 6 percent over its baseline level. For NSP-Wisconsin the
RPS is 12.85 percent because its baseline percentage was 6.85 percent. NSP-Wisconsin anticipates it will meet the RPS
requirements with its pro-rata share of existing and planned renewable generation on the NSP System. Costs associated
with complying with the standard are recoverable through general rate cases and the fuel cost recovery mechanism
described above.
Capacity and Demand
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See discussion of the system capacity and demand
under NSP-Minnesota Capacity and Demand discussed previously.
Energy Sources and Related Initiatives
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See a discussion of the system energy sources under
NSP-Minnesota Energy Sources and Related Initiatives discussed previously.
Fuel Supply and Costs
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See a discussion of the system energy sources under
NSP-Minnesota Fuel Supply and Costs discussed previously.
PSCo
Public Utility Regulation
Summary of Regulatory Agencies and Areas of Jurisdiction — PSCo is regulated by the CPUC with respect to its
facilities, rates, accounts, services and issuance of securities. PSCo is regulated by the FERC with respect to its wholesale
electric operations, accounting practices, hydroelectric licensing, wholesale sales for resale and the transmission of
electricity in interstate commerce. PSCo has received authorization from the FERC to make wholesale electricity sales at
market-based prices, however, PSCo withdrew its market-based rate authority with respect to sales in its own and
affiliated operating company control areas.
Fuel, Purchased Energy and Conservation Cost Recovery Mechanisms — PSCo has several retail adjustment clauses that
recover fuel, purchased energy and other resource costs:
•ECA — The ECA recovers fuel and purchase power costs. It also includes an incentive adjustment to encourage
efficient operation of base load coal plants and encourage cost reductions through purchases of economical
short-term energy. The total incentive can not exceed $11.25 million in any year. The ECA mechanism is revised
quarterly. The ECA will expire at the earlier of rates taking effect after Comanche 3 is placed in service or
Dec. 31, 2010.
•PCCA — The PCCA allows for recovery of purchased capacity payments for most power purchase agreements.
The PCCA will expire at the earlier of rates taking effect after Comanche 3 is placed in service or Dec. 31,
2010.
•SCA — The SCA allows PSCo to recover the difference between its actual cost of fuel and the amount of these
costs recovered under its base steam service rates. The SCA rate is revised annually on Jan. 1, as well as on an
interim basis to coincide with changes in fuel costs.
•AQIR — Effective January 2003, the AQIR recovers, over a 15-year period, the incremental cost (including fuel
and purchased energy) incurred by PSCo as a result of a voluntary plan, to reduce emissions and improve air
quality in the Denver metro area.
•DSMCA — The DSMCA clause permits PSCo to recover DSM and interruptible service option credit (ISOC)
costs and performance initiatives based on achieving various energy savings goals on an annual basis beginning
Jan. 1, 2009.
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