Xcel Energy 2009 Annual Report Download - page 33

Pending Resource Solicitations — SPS released four RFP’s during 2008, targeting capacity and energy resources as
follows:
• up to 200 MW under terms of 3 to 8 years with deliveries beginning either June 2010 or June 2011;
• up to 250 MW of wind resources located in Texas portion of the SPS balancing authority;
• up to 600 MW of dispatchable resources with terms of up to 20 years and deliveries beginning either June 2012
or June 2013; and
• a non-wind RFP for renewable energy in New Mexico consisting of solar and biomass technologies.
SPS awarded a winning bid to Sun Edison for 50 MW of photovoltaic solar to be installed at five sites (10 MW each)
in New Mexico and signed contracts in 2009, and a request for approval was filed in January 2010.
Purchased Transmission Services — SPS has contractual arrangements with SPP and regional transmission service
providers to deliver power and energy to its native load customers, which are retail and wholesale load obligations with
terms of more than one year.
Fuel Supply and Costs
The following table shows the delivered cost per MMBtu of each significant category of fuel consumed for electric
generation, the percentage of total fuel requirements represented by each category of fuel and the total weighted average
cost of all fuels.
Weighted
Coal Natural Gas Average Fuel
SPS Generating Plants Cost Percent Cost Percent Cost
2009 ...................................... $1.74 73% $3.80 27% $2.30
2008 ...................................... 1.86 71 8.41 29 3.78
2007 ...................................... 1.64 67 6.45 33 3.22
See additional discussion of fuel supply and costs under Item 7 — Factors Affecting Results of Continuing Operations
in Management’s Discussion and Analysis and under Item 1A — Risks Associated with Our Business.
Fuel Sources
Coal — SPS purchases all of its coal requirements for its two coal facilities, Harrington and Tolk electric generating
stations, from TUCO, Inc. (TUCO). TUCO arranges for the purchase, receiving, transporting, unloading, handling,
crushing, weighing, and delivery of coal to meet SPS’ requirements. TUCO is responsible for negotiating and
administering contracts with coal suppliers, transporters, and handlers. For the Harrington station, the coal supply
contract with TUCO expires in 2016. For the Tolk station, the coal supply contract with TUCO expires in 2017. As
of Dec. 31, 2009, coal inventories at the Harrington and Tolk sites were approximately 46 and 54 days supply,
respectively. TUCO has coal agreements to supply 89 percent of SPS’ coal requirements in 2010, 37 percent of SPS’
coal requirements in 2011, and 35 percent of SPS’ coal requirements in 2012, which are sufficient quantities to meet
the primary needs of the Harrington and Tolk stations.
Natural gas — SPS uses both firm and interruptible natural gas and standby oil in combustion turbines and certain
boilers. Natural gas for SPS’ power plants is procured under contracts to provide an adequate supply of fuel. The
supply contracts expire in 2010. The transportation and storage contracts expire in various years from 2010 to 2033.
Certain natural gas supply and transportation agreements include obligations for the purchase and/or delivery of
specified volumes of natural gas or to make payments in lieu of delivery. At Dec. 31, 2009, SPS’ commitments related
to supply contracts were approximately $47 million and transportation and storage contracts were approximately
$253 million.
Wholesale Commodity Marketing Operations
SPS conducts various wholesale marketing operations, including the purchase and sale of electric capacity, energy and
energy related products. SPS uses physical and financial instruments to minimize commodity price and credit risk and
hedge supplies and purchases. See additional discussion under Item 7A — Quantitative and Qualitative Disclosures
About Market Risk.
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