Xcel Energy 2008 Annual Report Download - page 22

revised forecast. As discussed below, it also withdrew its request for upgrades at Sherco Units 1 and 2. The MPUC is
expected to act on the plan in the first half of 2009.
Additional Base Load Capacity Projects for Sherco, Monticello and Prairie Island — The MPUC order in the 2004
NSP-Minnesota resource plan indicated that additional capacity from the Sherco, Monticello, and Prairie Island plants
would be cost-effective and should be pursued. The disclosure regarding the Monticello and Prairie Island plans is
included below under ‘‘Nuclear Power Operations and Waste Disposal.’’
In December 2007, NSP-Minnesota filed a plan for major pollution control and efficiency improvements at Sherco
Units 1 and 2 with the MPUC. The plan proposed conversion of the pollution control systems at the plant from wet
scrubber precipitator technology to dry spray absorber/baghouse equipment as well as efficiency improvements that
would increase the production capacity of the plant by 70 MW. The total cost of the proposed plan was estimated at
$1 billion. In November 2008, NSP-Minnesota filed a request with the MPUC to withdraw the plan to reevaluate
alternatives, due to significant changes in the national economy, lower forecast of energy consumption, and new
information concerning an emerging technology that may be more cost effective. The MPUC granted the withdrawal
request on Dec. 9, 2008.
Wind Generation — In December 2008, the first NSP-Minnesota owned wind generation plant, the 100 MW Grand
Meadow wind farm, went into service. The project was developed through a build-own-transfer arrangement with a
large wind energy developer (enXco) at a cost of approximately $210 million. NSP-Minnesota plans to invest
approximately $900 million over three years for a 201 MW project in southwestern Minnesota, called the Nobles Wind
Project, and a 150 MW project in southeastern North Dakota, called the Merricourt Wind Project. These projects are
expected to be operational by the end of 2010 and 2011, respectively. On Dec. 3, 2008, NSP-Minnesota filed petitions
with the MPUC and the NDPSC seeking the required regulatory approvals for the two wind powered generating
facilities. See additional discussion of wind generation, in Item 7 — Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
NSP-Minnesota Transmission Certificates of Need — In August 2007, NSP-Minnesota and Great River Energy (on
behalf of eight other regional transmission providers) filed a certificate of need application, for three 345 KV
transmission lines, as part of the CapX 2020 project. The project to build the three lines includes construction of
approximately 600 miles of new facilities at a cost of approximately $1.7 billion, with construction to be completed in
phases. The cost of the project to NSP-Minnesota and NSP-Wisconsin is estimated to be approximately $900 million.
These cost estimates will be revised after the regulatory process is completed. Evidentiary hearings were completed in
September 2008. The OES recommended an increase in capacity for the Fargo, N. D. project. An environmental
coalition supported the projects subject to conditions for wind purchases or commitments for the transmission capacity,
while two other intervenors opposed the proposal. The applicants filed rebuttal testimony recommending the
modification of all three projects to be constructed as double circuit compatible with the first circuit strung during
initial construction and the second circuit strung as needed. NSP-Minnesota expects the ALJ to issue a report and
recommendation in the first quarter of 2009. The MPUC is expected to make a final decision in 2009 after receipt of
the ALJ report.
As part of CapX 2020, Otter Tail Power Company, Minnesota Power and Minnkota Power Cooperative (on behalf of
themselves and NSP-Minnesota and Great River Energy) filed a certificate of need application in March 2008 for a 230
KV transmission line between Bemidji and Grand Rapids, Minn. A route application for this project was filed in June
2008. The need application is uncontested; route hearings are expected to be conducted in late 2009, and an MPUC
decision is anticipated by the second quarter of 2010. The Bemidji-Grand Rapids line is expected to entail construction
of approximately 68 miles of new facilities at a cost of $100 million, with construction to be completed by end of
2011. The estimated cost to NSP-Minnesota is approximately $26 million.
In the second quarter of 2009, NSP-Minnesota plans to file a certificate of need application with the MPUC for two
161 KV transmission lines in the Rochester, Minn. area to support ongoing development of wind powered generation
in southeastern Minnesota. The proposal consists of an approximately 15 mile long, 161 KV transmission line north of
Rochester, and an approximately 30 mile long, 161 KV transmission line southeast of Rochester. The project’s estimated
cost is $30 million. An MPUC decision is anticipated late in 2009.
FCA Investigation — In 2003, the MPUC opened an investigation to consider the continuing usefulness of the FCAs
for electric utilities in Minnesota. There was no further activity until the MPUC issued a notice for comments on
April 5, 2007, as to whether to continue the statewide investigation.
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