Xcel Energy 2014 Annual Report Download - page 40

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Renewable Energy Sources
SPS’ renewable energy portfolio includes wind and solar power from both owned generating facilities and PPAs. As of Dec. 31, 2014,
SPS is in compliance with mandated RPS, which require generation from renewable resources of approximately four percent and 10
percent of Texas and New Mexico electric retail sales, respectively.
• Renewable energy comprised 14.7 percent and 12.7 percent of SPS’ energy for 2014 and 2013, respectively.
• Wind energy comprised 14.0 percent and 12.1 percent of SPS’ energy for 2014 and 2013, respectively.
• Solar power comprised approximately 0.4 percent of SPS’ energy for both 2014 and 2013.
SPS also offers customer-focused renewable energy initiatives. Windsource allows customers in New Mexico to purchase a portion or
all of their electricity from renewable sources. The number of Windsource participants remained consistent at approximately 900 in
2013 and 2014. Windsource sales were approximately 4,400 MWh in 2013 and 3,900 MWh in 2014.
Additionally, to encourage the growth of solar energy on the system in New Mexico, customers are offered incentives to install solar
panels on their homes and businesses under the Solar*Rewards program. Over 315 PV systems with approximately 20.8 MW of
aggregate capacity and over 115 PV systems with approximately 7.6 MW of aggregate capacity have been installed in New Mexico
under this program as of Dec. 31, 2014 and 2013, respectively.
Wind — SPS acquires its wind energy from independent power producers (IPP) and qualified facilities (QF) contracts with wind farm
owners, primarily located in the Texas Panhandle area of Texas and New Mexico. SPS currently has 37 of these agreements in place,
with facilities ranging in size from under two MW to 250 MW for a total capacity greater than 1,800 MW. SPS had approximately
1,500 MW and 1,000 MW of wind energy on its system at the end of 2014 and 2013, respectively. In addition to receiving purchased
wind energy under these agreements, SPS also typically receives wind RECs, which are used to meet state renewable resource
requirements. The average cost per MWh of wind energy under the IPP contracts and QF contracts was approximately $26 for both
2014 and 2013. The cost per MWh of wind energy varies by contract and may be influenced by a number of factors including
regulation, state-specific renewable resource requirements and the year of contract execution. Generally, contracts executed in 2014
continued to benefit from improvements in technology, excess capacity among manufacturers, and motivation to commence new
construction prior to the expiration of the Federal PTCs in 2014, with certain projects qualifying into future years.
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 sales and purchases.
See Item 7 for further discussion.
Summary of Recent Federal Regulatory Developments
The FERC has jurisdiction over rates for electric transmission service in interstate commerce and electricity sold at wholesale, hydro
facility licensing, natural gas transportation, asset transactions and mergers, accounting practices and certain other activities of Xcel
Energy Inc.’s utility subsidiaries and transmission-only subsidiaries, including enforcement of NERC mandatory electric reliability
standards. State and local agencies have jurisdiction over many of Xcel Energy Inc.’s utility subsidiaries’ activities, including
regulation of retail rates and environmental matters. In addition to the matters discussed below, see Note 12 to the accompanying
consolidated financial statements for a discussion of other regulatory matters.
FERC Order, New ROE Policy — In June 2014, the FERC adopted a new two-step ROE methodology for electric utilities. In
October 2014, the FERC upheld the determination of the long-term growth rate to be used in its new ROE methodology. Several
parties sought rehearing of the June 2014 order and therefore the new FERC policy may be subject to additional changes.