Xcel Energy 2011 Annual Report Download - page 34

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FERC Tie Line Investigation — In October 2007, the FERC Office of Enforcement commenced a non-public investigation of the
transmission service arrangements across the Lamar Tie Line, a transmission facility that connects PSCo and SPS. In July 2008,
the FERC issued a preliminary report alleging Xcel Energy violated certain FERC policies, rules and approved tariffs that could
result in material penalties under the FERC penalty guidelines. The report did not constitute a finding by the FERC. Xcel Energy
disagreed with the preliminary report and demonstrated compliance with applicable standards. In November 2011, Xcel Energy
and SPP filed proposed tariff revisions clarifying the transmission arrangements across the Lamar Tie Line prospectively.
In January 2012, the FERC approved a stipulation and consent agreement in which Xcel Energy did not admit any violations but
agreed to pay a $2 million civil penalty. The FERC contemporaneously issued an order approving changes to the Xcel Energy
OATT to allow continued network service arrangements under the tariff.
NERC Compliance Audits and Self-Reports — In 2010 and 2011, the NSP System, PSCo and SPS filed self-reports with the
MRO, the WECC and the SPP, respectively, regarding potential violations of certain NERC CIPS. Based on the issues identified
with CIPS compliance, the utility subsidiaries submitted a mitigation plan that provides for a comprehensive review of the utility
subsidiaries’ CIPS compliance programs. Following this comprehensive review, additional self-reports of potential violations
were filed.
In 2011, the NSP System was subject to a comprehensive triennial audit by the MRO regarding compliance with various NERC
mandatory reliability standards, including CIPS. The MRO found potential violations of seven standards; five are related to CIPS.
The written MRO audit reports have been issued and referred to MRO’s enforcement function for further action. None of the
potential violations are expected to result in a material penalty.
In May 2011, PSCo was subject to a comprehensive triennial audit by the WECC regarding compliance with various NERC
mandatory reliability standards. In December 2011, PSCo and WECC agreed to a settlement in principle of five violations of four
NERC reliability standards, including the two violations self-reported prior to the May 2011 audit. The violations were all self-
identified and self-reported to WECC. PSCo agreed to pay an immaterial penalty to resolve all five reliability standard violations.
Following execution of the settlement agreement, the agreement must be approved by NERC’s Board of Trustees and filed with
FERC for further approval.
In July 2011, SPS filed a self-report with the SPP regarding a potential violation of a NERC reliability standard. Mitigation
actions associated with this self-report are complete, and the violation is not expected to result in a material penalty.
NERC Compliance Investigations — In September 2007, portions of the NSP System and transmission systems west and north
of the NSP System briefly islanded from the rest of the Eastern Interconnection as a result of a series of transmission line outages.
In addition, service to approximately 790 MW of load was temporarily interrupted, primarily in Saskatchewan, Canada. In late
2010, NERC transferred responsibility for completing the compliance investigation to the MRO. The final outcome of the
compliance investigation, and whether and to what extent penalties for alleged violations may be assessed, is unknown at this
time.
In February 2010, the NERC notified NSP-Minnesota that it was commencing a non-public investigation of NSP-Minnesota
maintenance practices associated with insulating oil levels in bulk electric system substations, as the result of an anonymous
complaint received by the NERC. In February 2011, NERC transferred responsibility for completing the compliance investigation
to the MRO. The MRO reviewed the status of insulating oil levels during the triennial compliance audit in the first quarter 2011.
In July 2011, the NERC issued a preliminary findings report with three potential violations of NERC reliability standards, which
NSP-Minnesota responded to in September 2011. The final outcome of the compliance investigation and whether and to what
extent penalties for alleged violations may be assessed is unknown at this time.
NERC Advisory Regarding Impact of Transmission Field Conditions on Facility Ratings — In 2010, the NERC issued an
advisory requiring utilities to perform an assessment of field versus assumed “as built” transmission infrastructure conditions and
allowed for affected entities to complete their initial assessment and corrective actions by 2013 and 2014, respectively. The
advisory compliance cost for the utility subsidiaries is estimated at $25 million to $30 million. Xcel Energy will seek recovery
through applicable rate-making mechanisms.