Xcel Energy 2015 Annual Report Download - page 26
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The peak demand for the NSP System typically occurs in the summer. The 2015 system peak demand for the NSP System occurred on
Aug. 14, 2015. The 2015 system peak demand was lower due to cooler summer weather. The 2016 forecast assumes normal peak day
weather.
Energy Sources and Related Transmission Initiatives
NSP-Minnesota expects to use existing power plants, power purchases, CIP options, new generation facilities and expansion of
existing power plants to meet its system capacity requirements.
Purchased Power — NSP-Minnesota has contracts to purchase power from other utilities and independent power producers.
Generally, long-term dispatchable purchased power contracts typically require a periodic payment to secure the capacity and a charge
for the delivered associated energy. Long-term energy-only purchased power contracts contain a charge for the purchased energy.
NSP-Minnesota also makes short-term purchases to meet system load and energy requirements, to replace generation from company-
owned units under maintenance or during outages, to meet operating reserve obligations, or to obtain energy at a lower cost.
Purchased Transmission Services — NSP-Minnesota and NSP-Wisconsin have contracts with MISO and other regional transmission
service providers to deliver power and energy to their customers.
Courtenay Wind Farm — In September 2015, NSP-Minnesota began construction of the Courtenay wind farm, a 200 MW NSP-
Minnesota owned project in North Dakota. In July and August 2015, the MPUC and NDPSC, respectively, approved the Courtenay
wind farm with recovery up to $300 million of capital costs. The project costs were included in the Minnesota RES rider and the
North Dakota RER.
NSP System Resource Plans — In January 2015, NSP-Minnesota filed its 2016-2030 Integrated Resource Plan (the Plan) with the
MPUC.
In October 2015, NSP-Minnesota proposed revisions to the Plan. The revised proposal addressed stakeholder recommendations as
well as the final Clean Power Plan (CPP) issued by the EPA. The revised Plan is based on four primary elements: (1) accelerate the
transition from coal energy to renewables, (2) preserve regional system reliability, (3) pursue energy efficiency gains and grid
modernization, and (4) ensure customer benefits. The provisions included in the Plan would allow for a 60 percent reduction in
carbon emissions from 2005 levels by 2030 and is expected to result in 63 percent of NSP System energy being carbon-free by 2030.
Specific terms of the proposal include:
• The addition of 800 MW of wind and 400 MW of utility scale solar to the pre-2020 time-frame;
• The addition of 1000 MW of wind and 1000 MW of utility scale solar between 2020-2030;
• The retirement of Sherco Unit 2 in 2023 and Sherco Unit 1 in 2026;
• The addition of a 230 MW natural gas combustion turbine in North Dakota by 2025;
• Replacement of Sherco coal generation with a 786 MW natural gas combined cycle unit at the Sherco site no later than 2026;
and
• Operation of the Monticello and PI nuclear plants through their current license periods in the early 2030’s.
NSP-Minnesota believes this will provide substantial opportunities for the ownership of renewable generation and replacement
thermal generation. In January 2016, NSP-Minnesota filed supplemental economic and technical information in support of its revised
Plan, demonstrating anticipated compliance with the CPP while maintaining reasonable costs for customers. Additionally, NSP-
Minnesota responded to MPUC inquiries regarding forecasted cost increases at PI (through end of licensed life) and committed to
provide additional information if the MPUC wishes to further explore alternatives to operating PI through its current licenses. While
the procedural schedule has not yet been finalized, the current expectation is that the MPUC will make a decision in the second half of
2016.
North Dakota Energy Resource Considerations — In February 2014, the NDPSC approved a settlement agreement between NSP-
Minnesota and NDPSC Advocacy Staff in resolution of the 2013 North Dakota electric rate case. Among other things, the settlement
agreement included a commitment to develop a generation cost allocation mechanism for serving North Dakota customers in a way
that reflects North Dakota energy policy. In September 2015, NSP-Minnesota and NDPSC Advocacy Staff satisfied this commitment
through joint filing of a Negotiated Agreement with key terms including:
• Acceleration of NSP-Minnesota’s commitment to locate thermal generation in North Dakota from 2036 to by the end of
2025;
• Exclusion of select wind and small solar PPAs from the NSP-Minnesota’s North Dakota Fuel Cost Rider;
• Continued recovery in North Dakota of six existing biomass PPAs, subject, in part, to refund if NSP-Minnesota fails to
achieve its generation commitment by the end of 2025;
• Extension of the current rate moratorium through 2017;