Xcel Energy 2015 Annual Report Download - page 31
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Fuel Supply and Costs
The following table shows the delivered cost per MMBtu of each significant category of fuel consumed for owned electric generation,
the percentage of total fuel requirements represented by each category of fuel and the total weighted average cost of all fuels.
Coal (a) Nuclear Natural Gas Weighted
Average
Owned Fuel
Cost
NSP System Generating Plants Cost Percent Cost Percent Cost Percent
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.15 47% $ 0.83 40% $ 3.89 13% $ 1.85
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23 52 0.89 42 6.27 6 1.94
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.20 49 0.95 40 5.08 11 2.03
(a) Includes refuse-derived fuel and wood.
The cost of natural gas in 2015 decreased due to lower wholesale commodity prices.
See Items 1A and 7 for further discussion of fuel supply and costs.
Fuel Sources
Coal — The NSP System normally maintains approximately 41 days of coal inventory. Coal supply inventories at Dec. 31, 2015 and
2014 were approximately 67 and 27 days usage, respectively. At Dec. 31, 2015, milder weather, purchase commitments and
resolution of railcar congestion resulted in coal inventories being above optimal levels. NSP-Minnesota’s generation stations use low-
sulfur western coal purchased primarily under contracts with suppliers operating in Wyoming and Montana. During 2015 and 2014,
coal requirements for the NSP System’s major coal-fired generating plants were approximately 8.3 million tons and 9.3 million tons,
respectively. Coal requirements for 2015 were lower due to the retirement of Black Dog Units 3 and 4 and relatively low natural gas
prices. The estimated coal requirements for 2016 are approximately 7.9 million tons.
NSP-Minnesota and NSP-Wisconsin have contracted for coal supplies to provide 90 percent of their estimated coal requirements in
2016, and a declining percentage of the requirements in subsequent years. The NSP System’s general coal purchasing objective is to
contract for approximately 90 percent of requirements for the first year, 60 percent of requirements in year two, and 30 percent of
requirements in year three. Remaining requirements will be filled through the procurement process or over-the-counter transactions.
NSP-Minnesota and NSP-Wisconsin have a number of coal transportation contracts that provide for delivery of 100 percent of their
coal requirements in 2016 and 2017. Coal delivery may be subject to interruptions or reductions due to operation of the mines,
transportation problems, weather and availability of equipment.
Nuclear — NSP-Minnesota secures contracts for uranium concentrates, uranium conversion, uranium enrichment and fuel fabrication
to operate its’ nuclear plants. The contract strategy involves a portfolio of spot purchases and medium and long-term contracts for
uranium concentrates, conversion services and enrichment services with multiple producers and with a focus on diversification to
minimize potential impacts caused by supply interruptions due to geographical and world political issues.
• Current nuclear fuel supply contracts cover 100 percent of uranium concentrates requirements through 2018 and approximately
59 percent of the requirements for 2019 through 2030;
• Current contracts for conversion services cover 100 percent of the requirements through 2021 and approximately 54 percent of
the requirements for 2022 through 2030; and
• Current enrichment service contracts cover 100 percent of the requirements through 2026 and approximately 34 percent of the
requirements for 2027 through 2030.
Fabrication services for Monticello and PI are 100 percent committed through 2030 and 2019, respectively.
NSP-Minnesota expects sufficient uranium concentrates, conversion services and enrichment services to be available for the total fuel
requirements of its nuclear generating plants. Some exposure to market price volatility will remain due to index-based pricing
structures contained in certain supply contracts.