Xcel Energy 2011 Annual Report Download - page 27

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In December 2010, the CPUC approved the following:
• Shutdown Cherokee Units 2 and 1 in 2011 and 2012, respectively, and Cherokee Unit 3 (365 MW in total) by the end of
2015, after a new natural gas combined-cycle unit is built at Cherokee Station (569 MW);
• Fuel-switch Cherokee Unit 4 (352 MW) to natural gas by 2017;
• Shutdown Arapahoe Unit 3 (45 MW) and fuel-switch Unit 4 (111 MW) in 2014 to natural gas;
• Shutdown Valmont Unit 5 (186 MW) in 2017;
• Install SCR for controlling NOx and a scrubber for controlling SO2 on Pawnee Generating Station in 2014;
• Install SCRs on Hayden Unit 1 in 2015 and Hayden Unit 2 in 2016; and
• Convert Cherokee Unit 2 and Arapahoe Unit 3 to synchronous condensers to support the transmission system.
PSCo has received CPCNs for the conversion of Cherokee Unit 2 to a synchronous condenser, for the decommissioning of
Cherokee Unit 1 and Unit 2, and for the Pawnee emissions controls. In addition, PSCo has filed for CPCNs for the new natural
gas combined-cycle at Cherokee station and the Hayden emissions controls.
San Luis Valley-Calumet-Comanche Transmission Project — In May 2009, PSCo and Tri-State Generation and Transmission
Association filed a joint application with the CPUC for a 230 KV and 345 KV line and substation construction project. The line
was intended to assist in bringing solar power in the San Luis Valley to customers. The line was originally expected to be placed
in-service in 2013; however, due to delays in the siting and permitting of the line, the in-service date was delayed.
In October 2011, in conjunction with the filing of the electric resource plan, PSCo determined that due to lower projected load
growth, lower gas prices and the higher cost of solar thermal generation, it was unlikely to need the transmission line in the
foreseeable future. A CPUC decision on the resource plan is expected in late 2012.
SmartGridCity™ CPCN — As part of the PSCo 2010 electric rate case, the CPUC included recovery of the revenue requirements
associated with $45 million of capital and $4 million of annual O&M costs incurred by PSCo to develop and operate
SmartGridCity™, subject to refund, and ordered PSCo to file for a CPCN for that project.
In February 2011, the CPUC approved the CPCN and allowed recovery of approximately $28 million of the capital cost and 100
percent of the O&M costs and ordered PSCo to file for a rate reduction in April 2011 to reflect the lower level of capital in rate
base. On July 1, 2011, PSCo implemented an annual rate reduction of $2.8 million. In December 2011, PSCo filed an application
addressing the additional information requested. A decision is expected in the third quarter of 2012.
Boulder, Colo. Franchise Agreement — In November 2011, two ballot measures were passed by the citizens of Boulder. The
first measure increased the occupation tax to raise an additional $1.9 million annually (and extended the tax until the earlier to
occur of (1) Dec. 31, 2017, (2) when Boulder decides not to create a municipal utility, or (3) when Boulder commences delivery
of municipal electric utility services) for the purpose of funding the exploration costs of forming a municipal utility and acquiring
the PSCo electric distribution system in Boulder. The second measure authorized the formation and operation of a municipal light
and power utility and the issuance of enterprise revenue bonds, subject to certain restrictions, including, but not limited to, the
level of initial rates and debt service coverage. Boulder has retained legal counsel specializing in condemnation and plans to
retain legal counsel specializing in FERC matters. The City Council has not yet decided whether it will proceed with the
formation of a municipal electric utility or with commencing a condemnation proceeding. Should Boulder proceed with these
actions and be successful, PSCo would seek to obtain full compensation for the property and business taken by Boulder and for
all damages resulting to PSCo and its system. PSCo would also seek appropriate compensation for stranded costs with the FERC.
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.
Coal Natural Gas
PSCo Generating Plants Cost Percent Cost Percent
Weighted
Average
Fuel Cost
2011
..............................
$ 1.77 76% $ 4.98
24
% $ 2.54
2010
..............................
1.58 85 5.05
15
2.11
2009
..............................
1.52 82 3.99
18
1.97
See Items 1A and 7 for further discussion of fuel supply and costs.