Xcel Energy 2010 Annual Report Download - page 33

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Purchased Power — SPS has contracts to purchase power from other utilities and independent power producers. Long-term
purchase power contracts typically require a periodic payment to secure the capacity from and a charge for the associated energy
actually purchased. SPS also makes short-term purchases to comply with minimum availability requirements, and to obtain
energy at a lower cost.
SPS Resource Planning
Integrated Resource Planning (IRP) — SPS is soliciting public participation throughout 2011 in its New Mexico 2012 IRP filing
through public and webcast meetings. SPS anticipates filing the IRP with the NMPRC in July 2012.
Renewable Energy Portfolio Plan — SPS is required to develop and implement a renewable portfolio plan in which ten percent of
its energy to serve its New Mexico retail customers is produced by renewable resources in 2011, increasing to 15 percent in 2015.
SPS primarily fulfills its renewable portfolio requirements through the purchase of wind energy. In 2009, the NMPRC granted
SPS a variance to allow SPS to delay meeting its solar energy requirement until 2012 provided that SPS compensates for any
shortfall of the solar energy requirement for 2011 during 2012 through 2014. SPS executed and received NMPRC approval for a
total of 50 MW of PV solar energy PPAs. SPS requested a variance from the NMPRC to extend the time to implement its other
resource diversity requirements to January 2012.
Approved Resource Additions — SPS plans to add a new third gas turbine to its Jones Plant site in Lubbock, Texas. SPS received
CCN approvals from the PUCT and NMPRC for the turbine which will become operational in June 2011. This generating unit
will add 168 MW of capacity to the SPS service territory. SPS also executed a purchase power agreement with Calpine Energy
Services, LP for 200 MW from 2012 through 2018 that was approved by the NMPRC on Dec. 30, 2010.
Pending Resource Solicitations — SPS finalized a power purchase agreement for 161 MW of wind resources and requested
approval from the NMPRC in December 2010. SPS released a request for proposal in 2009 for approximately 43,000 MWh
annually of biomass generation or an equivalent amount of biogas of approximately 326,000 MMBtu annually to meet its other
resource diversity requirements in New Mexico. SPS is continuing its efforts to acquire viable biomass generation or a biogas
purchase to meet its renewable energy portfolio plan in New Mexico.
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
Average
Fuel Cost
Coal Natural Gas
SPS Generating Plants Cost Percent Cost Percent
2010 .............................................................
.
$ 1.84 71% $ 4.59 29% $ 2.64
2009 .............................................................
.
1.74 73 3.80 27 2.30
2008 .............................................................
.
1.86 71 8.41 29 3.78
See Items 1A and 7 for further discussion of fuel supply and costs.
Fuel Sources
Coal — SPS purchases all of its coal requirements for its two coal facilities, Harrington and Tolk electric generating stations,
from 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, 2010 and 2009, coal inventories at the Harrington site were
approximately 38 and 46 days supply, respectively. As of Dec. 31, 2010 and 2009, coal inventories at the Tolk site were
approximately 45 and 54 days supply, respectively. TUCO has coal agreements to supply 90 percent of SPS’ coal requirements in
2011, 57 percent of SPS’ coal requirements in 2012, and 44 percent of SPS’ coal requirements in 2013, which are sufficient
quantities to meet the primary needs of the Harrington and Tolk stations.