Xcel Energy 2015 Annual Report Download - page 41
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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 Natural Gas Weighted
Average Owned
Fuel Cost
SPS Generating Plants Cost Percent Cost Percent
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.12 73% $ 3.11 27% $ 2.39
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07 71 4.76 29 2.85
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14 71 3.97 29 2.68
See Items 1A and 7 for further discussion of fuel supply and costs.
Fuel Sources
Coal — SPS purchases all of the coal requirements for its two coal facilities, Harrington and Tolk electric generating stations, from
TUCO. TUCO arranges for the purchase, receiving, transporting, unloading, handling, crushing, weighing and delivery of coal to
meet SPS’ requirements. TUCO is responsible for negotiating and administering contracts with coal suppliers, transporters and
handlers. The coal supply contract with TUCO expires in December 2016 and 2017 for Harrington and Tolk, respectively. SPS
normally maintains approximately 43 days of coal inventory. As of Dec. 31, 2015 and 2014, coal inventories at SPS were
approximately 76 and 17 days supply, respectively. At Dec. 31, 2015, milder weather, purchase commitments and resolution of railcar
congestion resulted in coal inventories being above optimal levels. TUCO has coal agreements to supply 87 percent of SPS’ estimated
coal requirements in 2016, and a declining percentage of the requirements in subsequent years. SPS’ 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.
Natural gas — SPS uses both firm and interruptible natural gas supply and standby oil in combustion turbines and certain boilers.
Natural gas for SPS’ power plants is procured under contracts to provide an adequate supply of fuel; which typically is purchased with
terms of one year or less. The transportation and storage contracts expire in various years from 2016 to 2033. All of the natural gas
supply contracts have variable pricing that is tied to various natural gas indices.
Most transportation contract pricing is based on FERC and Railroad Commission of Texas approved transportation tariff rates.
Certain natural gas supply and transportation agreements include obligations for the purchase and/or delivery of specified volumes of
natural gas or to make payments in lieu of delivery. SPS’ commitments related to gas supply contracts were approximately $10
million and $3 million and commitments related to gas transportation and storage contracts were approximately $192 million and $222
million at Dec. 31, 2015 and 2014, respectively.
SPS has limited on-site fuel oil storage facilities and primarily relies on the spot market for incremental supplies.
Renewable Energy Sources
SPS’ renewable energy portfolio includes wind and solar power from both owned generating facilities and PPAs. As of Dec. 31, 2015,
SPS is in compliance with mandated RPS, which require generation from renewable resources of approximately four percent and 15
percent of Texas and New Mexico electric retail sales, respectively.
• Renewable energy comprised 19.0 percent and 14.7 percent of SPS’ total energy for 2015 and 2014, respectively;
• Wind energy comprised 18.5 percent and 14.0 percent of the total energy for 2015 and 2014, respectively; and
• Solar power comprised approximately 0.5 percent and 0.4 percent of the total energy for 2015 and 2014, respectively.
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 customers utilizing Windsource decreased to approximately 880 in
2015 from 900 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 144 PV systems with approximately 8.0 MW of
aggregate capacity and over 129 PV systems with approximately 7.7 MW of aggregate capacity have been installed in New Mexico
under this program as of Dec. 31, 2015 and 2014, respectively.