Minnesota commission clears way for Xcel power supply RFP

After months of debate and intervenor comments, the Minnesota Public Utilities Commission on March 5 approved the latest integrated resource plan of Northern States Power, clearing the way for this Xcel Energy (NYSE: XEL) subsidiary to issue a request for proposals for new power supply.

In August 2010, Northern States Power filed a resource plan covering the period 2011-2025. Since that time Xcel has occasionally revised its plans. Within that process, Xcel did things like abandon a plan to switch its coal-fired Black Dog power plant over to natural gas.

Intervenors in the case included the Minnesota Department of Commerce (the Department), Calpine Corp. (NYSE: CPN), various large industrial power customers, and several environmental groups, including the Sierra Club.

Based on its analysis, Xcel’s revised five-year action plan includes the following elements:

  • Retiring the coal-fired Black Dog Units 1 and 2, but canceling plans to acquire replacement power.
  • Canceling the further expansion of the generating capacity of the Prairie Island Nuclear Power Plant.
  • Continuing the operation of the Key City generator in Mankato (43 MW) and Granite City generator near St. Cloud (54 MW) until 2016, and bringing the French Island Unit 3 generator (57 MW) back into service.
  • Continuing to analyze whether to update or replace the coal-fired Sherburne County (Sherco) Units 1 and 2.
  • Soliciting proposals for an additional 200 MW of wind-powered electricity.
  • Continuing programs involving solar energy, including Solar Rewards – a program subsidizing customer purchases and installation of photovoltaic solar cells – albeit with lower subsidies for enrollees.

Based on its forecasts, Xcel argues that it will need an additional 154 MW by 2017, 319 MW by 2018, and 443 MW by 2019 to meet anticipated customer demand. Xcel asked the commission to affirm this level of need, and this degree of specificity, arguing that the information would be useful to entities that might provide resources as part of Xcel’s competitive bidding process.

To attract the broadest range of projects for its consideration, Xcel asked the commission to grant a wide degree of latitude to potential bidders in Xcel’s competitive resource acquisition process. In particular, Xcel proposed soliciting bids that: meet all or any portion of the need; rely on any fuel type; rely on new or existing generators; and rely on intermediate or peaking generators, or both.

Xcel opposed proposals to reduce the amount of its forecasted need based on the assumption that Xcel can increase the amount of savings it can achieve through demand-side management. While Xcel’s own study concluded that it could save 300 MW through the use of demand-side management, Xcel argued that the study was insufficiently rigorous to provide a basis for altering its demand forecasts.

PUC says plan meets standards, RFP should be open to various fuels

The commission found in the March 5 order that Xcel has fulfilled the requirements of Minnesota statutes governing resource planning. The commission noted that it is approving Xcel’s plan for planning purposes only. This approval does not relieve Xcel from the need to comply with any regulatory review required for any specific resource it might pursue in implementing this plan.

“The current resource planning docket will have a direct bearing on Xcel’s competitive bidding process,” the commission wrote. “In particular, the current docket supports the finding that Xcel will need an additional 150 MW in 2017, increasing up to 500 MW by 2019. Moreover, a broad range of resources could contribute to meeting this need, justifying solicitation of a broad range of proposals. In particular, Xcel should invite proposals for meeting all of the forecasted need, or any part of it. Xcel should invite proposals for adding peaking resource, intermediate resources, or a combination of the two. Xcel should invite proposals that rely on building new generators, as well as proposals that rely on existing generators.”

While the Department recommended that the commission direct Xcel to seek gas-fueled sources of generation in particular, the commission said it is not persuaded of the need to prohibit consideration of other alternatives. Rather, it is willing to rely on the bid evaluation process to identify the best alternatives, regardless of type.

The idea that Xcel will need an additional 500 MW by 2019 is well-supported in the record, the commission added. Indeed, Xcel had previously argued that it would need up to 600 MW of additional capacity – and Xcel generated this estimate before it cancelled plans to add 118 MW of new capacity to its Prairie Island nuclear plant.

“For purposes of Xcel’s competitive bidding docket, the Commission finds it appropriate to solicit proposals for an additional 150 MW in 2017, increasing up to 500 MW by 2019,” the order said. “This statement does not preclude Xcel from acquiring more than 150 MW of new resources by 2017. Those choices will be made in the context of the resource acquisition docket, based on the proposals and the evidence adduced in that docket.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.