Xcel Energy 2008 Annual Report Download - page 61

evaluate the impact of potential future GHG regulation on its future resource acquisition plans. Xcel Energy publishes a
Triple Bottom Line report annually, which is available on our website, www.xcelenergy.com. The Triple Bottom Line
report discloses Xcel Energy’s environmental, economic and social performance. Xcel Energy also provides detailed
information to environmental research organizations, such as Trucost, the Carbon Disclosure Project and The Climate
Registry.
Achieving Financial Objectives
Xcel Energy’s financial objectives of Building the Core also has three phases: obtaining legislative and regulatory support
for large investment initiatives, investing in the utility business and earning a fair return on utility system investments.
The first phase, as noted above, is obtaining legislative and regulatory support for large investment initiatives, prior to
making the investment. To avoid excessive risk, it is critical that Xcel Energy reduce regulatory uncertainty before
making large capital investments. Xcel Energy has accomplished this for both the MERP in Minnesota and the
Comanche 3 coal unit in Colorado. Transmission legislation has been passed in Minnesota, Colorado, Texas and several
other jurisdictions where Xcel Energy operates. In addition, various jurisdictions have adopted legislation allowing for
rider recovery of investments in renewable energy.
The second phase is investing in the utility business. In addition to Xcel Energy’s normal level of capital investment,
Xcel Energy expects to have significant investment opportunity, in part attributable to the environmental strategy
described above. Those opportunities include the following:
• Xcel Energy is making, as part of our MERP program, nearly $1 billion of improvements at three Twin Cities
coal-fired generating plants, A. S. King, High Bridge and Riverside, to significantly reduce air emissions from
those facilities while increasing the amount of electricity they can produce by approximately 300 MW. New
state-of-the-art emission control equipment was placed in service for the A.S. King plant in 2007 and the
existing High Bridge facility was replaced with a 575 MW natural gas combined-cycle unit that went into service
in May 2008. The final phase of the MERP, the new Riverside combined-cycle plant, is currently scheduled to
be placed in service by May 2009.
• Invest approximately $1.3 billion through 2010 for Comanche 3, a project to build a new 750 MW supercritical
coal unit in Colorado, scheduled to be completed in late 2009. The CPUC has approved sharing one-third
ownership of this plant with other parties. Consequently, PSCo’s investment in Comanche 3 will be
approximately $1 billion.
• Invest approximately $192 million for the planned addition of two gas fired units totaling 300 MW at the Fort
St. Vrain generating facility located in Colorado, scheduled to be completed in mid-2009.
• Invest over a $1 billion investment through 2015 to extend the lives and increase the output of our two nuclear
facilities, Monticello and Prairie Island.
• Spending approximately $206 million for a new 100 MW wind farm located near Grand Meadows, Minn. The
new plant was placed in service in December 2008.
• 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, expected to be operational by the end of 2010 and 2011, respectively.
• Investment by the CapX 2020 coalition of utilities of approximately $1.7 billion to expand the transmission
system in the upper Midwest with major construction targeted to begin in 2010 and ending three to five years
later, of which Xcel Energy’s share of the investment is expected to be approximately $900 million, depending on
the route and configuration approved by the MPUC.
As a result of these investments, as well as continued investments in the transmission and distribution system, Xcel
Energy expects that the rate base, or the amount on which Xcel Energy earns a return, will grow annually, on average,
approximately 7 percent from 2008 through 2012.
The third phase is earning a fair return on utility system investments. To this end, the regulatory strategy is to receive
regulatory approval for rate riders as well as general rate cases. A rate rider is a mechanism that allows recovery of
certain costs and returns on investments without the costs and delays of filing a rate case. These riders allow for timely
revenue recovery of the costs of large projects or other costs that vary over time. Xcel Energy’s regulatory strategy is
based on filing reasonable rate requests designed to provide recovery of legitimate expenses and a return on utility
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