Xcel Energy 2008 Annual Report Download - page 29

added to the system for an eight year Resource Acquisition Period (RAP) through 2015. The CPUC issued its order in
September 2008, which approved the following:
• Increase in wind portfolio of 850 MW by 2015. PSCo would then have a total of approximately 1,900 MW of
wind power resources;
• Approximately 200 MW from a central solar thermal facility with storage, with possible option of acquiring up
to 600 MW of solar thermal resources with storage as technology develops;
• Increase customer efficiency and conservation programs with plans to meet the CPUC goals of annual energy
sales reductions to approximately 3,669 GWh, that would yield a demand savings in the range of 886 MW to
994 MW by 2020;
• Retirement of two older coal-burning plants (two units at Arapahoe and two units at Cameo), replacing the
capacity with company owned resources, provided the costs are reasonable; and
• Reduce PSCo’s CO2 emissions by 10 percent below 2005 levels and for PSCo to propose additional reductions
to achieve a 20 percent reduction by 2020 in its next plan.
In April 2008, the CPUC approved a certificate of public convenience and necessity application to build a new,
company owned 260 MW combustion turbine project at the existing Fort St. Vrain generating station. Fort St. Vrain is
scheduled to come on line in the second quarter of 2009. The Fort St. Vrain project will leave PSCo 123 MW short of
the necessary peaking power and 16 percent short of reserve margin necessary to meet the 2009 summer peak load.
PSCo will meet the differential for the summer 2009 peak by purchasing short-term capacity.
Construction continues on Comanche 3, a 750 MW pulverized coal-fired unit at the existing Comanche Station
located near Pueblo, Colo. and installation of additional emission control equipment on the two existing Comanche
Station units. Completion is planned for the fall of 2009. As part of an electric rate case, PSCo is allowed to include
construction work in progress associated with the Comanche 3 project in rate base without an offset for AFDC,
depending upon PSCo’s senior unsecured debt rating.
PSCo has an agreement with Intermountain Rural Electric Association (IREA) and Holy Cross which transfers a
portion of capacity ownership in the Comanche 3 unit to IREA and Holy Cross. IREA will take ownership of 190
MW and Holy Cross will take ownership of 60 MW upon commercial operation.
RES — The 2007 Colorado legislature adopted an increased RES that requires PSCo to generate or cause to be
generated electricity from renewable resources equaling:
• At least 10 percent of its retail sales by 2010;
• 15 percent of retail sales by 2015;
• 20 percent of retail sales by 2020; and
• 4 percent must be generated from solar renewable resources with half the solar resources being located at
customers facilities.
The new law limits the net incremental retail rate impact from these renewable resource acquisitions as compared to
non-renewable resources to 2 percent. The new legislation encourages the CPUC to consider earlier and timely cost
recovery for utility investment in renewable resources, including the use of a forward rider mechanism.
PSCo Regulatory Policy Initiative — In March 2008 open meetings, the CPUC voted to open an investigatory docket
that will review the current regulatory structure to determine if current utility incentives are aligned with state public
policy objectives and to determine if the existing structure is internally consistent in achieving these objectives. In June
2008, a transmission investigatory docket, was opened to gather information on transmission planning in Colorado and
transmission planning coordination with other states and utilities. In September 2008, the CPUC opened a customer
incentives docket whose scope covers how regulatory structure and incentives influence customer decisions.
Several parties, including PSCo filed comments in the utility incentive docket in September 2008. The comments
covered a wide array of issues, including the best method to deliver DSM services to customers and the implications to
utilities of owned generation or generation acquired through power purchase agreements. The comments also raised
questions regarding whether or not revisions should be made to the current regulatory structure to reduce regulatory
lag.
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