Xcel Energy 2011 Annual Report Download - page 24

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14
Hydroelectric — The NSP System acquires its hydroelectric energy from both owned generation and purchased power
agreements. The NSP System owns 20 hydroelectric plants throughout Wisconsin and Minnesota which provide 253 MW of
capacity. For most of 2011, there were eight purchased power agreements in place which provided approximately 24 MW of
hydroelectric capacity. In December 2011, an additional nine MW of purchased hydroelectric capacity was brought onto the
system. Additionally, the NSP System purchases significant generation from Manitoba Hydro which is sourced primarily from its
fleet of hydroelectric facilities. Hydroelectric energy comprised 7.5 percent and 7.4 percent of the total owned and purchased
energy on the NSP System for 2011 and 2010, respectively.
Wholesale Commodity Marketing Operations
NSP-Minnesota conducts various wholesale marketing operations, including the purchase and sale of electric capacity, energy and
energy-related products. See Item 7 for further discussion.
NSP-Wisconsin
Public Utility Regulation
Summary of Regulatory Agencies and Areas of Jurisdiction — Retail rates, services and other aspects of NSP-Wisconsin’s
operations are regulated by the PSCW and the MPSC, within their respective states. In addition, each of the state commissions
certifies the need for new generating plants and electric transmission lines before the facilities may be sited and built. NSP-
Wisconsin is subject to the jurisdiction of the FERC with respect to its wholesale electric operations, hydroelectric generation
licensing, accounting practices, wholesale sales for resale, the transmission of electricity in interstate commerce, compliance with
NERC electric reliability standards, asset transactions and mergers, and natural gas transactions in interstate commerce. NSP-
Wisconsin has requested continued authorization from the FERC to make wholesale electric sales at market-based prices. See
Summary of Recent Federal Regulatory Developments - Market-Based Rate Rules for further discussion. NSP-Wisconsin is a
transmission owning member of the MISO RTO.
The PSCW has a biennial base rate filing requirement. By June of each odd numbered year, NSP-Wisconsin must submit a rate
filing for the test year beginning the following January.
Fuel and Purchased Energy Cost Recovery Mechanisms — NSP-Wisconsin does not have an automatic electric fuel adjustment
clause for Wisconsin retail customers. Instead, under Wisconsin rules, utilities must submit a forward-looking annual fuel cost
plan to the PSCW for approval. Once the PSCW approves the fuel cost plan, utilities must defer the amount of any fuel cost over-
collection or under-collection in excess of a two percent annual tolerance band, for future rate recovery or refund. Approval of a
fuel cost plan and any rate adjustment for refund or recovery of deferred costs is determined by the PSCW after an opportunity for
a hearing. Rate recovery of deferred fuel cost is subject to an earnings test based on the utility’s most recently authorized ROE.
These rules went into effect in January 2011.
NSP-Wisconsin’s wholesale electric rate schedules include a fuel clause adjustment to provide for adjustments to billings and
revenues for changes in the cost of fuel and purchased energy.
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, reconciliation is submitted whereby over-collections are refunded
and any under-collections are collected from the customers over the subsequent 12-month period.
Wisconsin Energy Efficiency and Conservation Goals — In June 2011, the Wisconsin biennial budget bill was signed into law,
which rolled back the projected increases for state energy efficiency and conservation funding effective in 2012. Based on this
action, NSP-Wisconsin expects to be allocated approximately $8.2 million of the statewide program costs in 2012, increasing to
approximately $9.1 million by 2014. Historically, NSP-Wisconsin has recovered these costs in rate charges to Wisconsin retail
customers and expects to recover the program costs in rates going forward.
Capacity and Demand
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See NSP-Minnesota Capacity and Demand.
Energy Sources and Related Transmission Initiatives
NSP-Wisconsin operates an integrated system with NSP-Minnesota. See NSP-Minnesota Energy Sources and Related
Transmission Initiatives.