Firm sees Xcel as ‘windy with a chance of natural gas’

Xcel Energy (NYSE:XEL) is dealing with a lot of state regulatory issues as it seeks to add roughly 2,000 MW of wind to achieve renewable portfolio standards (RPS) in several states where it operates, UBS Investment Research analyst Julien Dumoulin-Smith said recently.

In an Aug. 16 analysis, Dumoulin-Smith said there could be better days to come for Xcel Energy, as UBS launched its coverage with a “neutral” rating.

The generation forecast is “wind with a chance of natural gas,” Dumoulin-Smith said in the review.

The most recent news on the wind front came this month when an Xcel subsidiary said it was seeking Minnesota approval for its fourth Midwest wind project. The utility has entered into contracts with RES Americas to develop the 150-MW Border Winds Project, which will be located in northeastern Rolette County, N.D. Once complete, RES Americas will transfer ownership of the plant to Xcel Energy.

Following a relatively weak Minnesota rate case decision, UBS expects “the regulatory morass to continue,” with Xcel expected to file for a large rate increase on Nov. 1 to reflect its over-budget Monticello nuclear uprate, according to the analysis.

As for Xcel Energy’s wind power expansion, it is being coupled with about 900 MW of new natural gas generation being proposed in Colorado and Minnesota.

Xcel Energy is looking retire almost 600 MW of fossil capacity between 2011 and 2017 at the Cherokee, Valmont and Arapahoe stations, the firm said in the analysis. New natural gas generation is being added at the Arapahoe and Cherokee stations between 2013 and 2017.

Meanwhile new emissions control equipment is being added at certain coal stations between 2014 and 2016, UBS noted. Pawnee 1 is planning to install a selective catalytic reduction (SCR) and scrubber system in 2014. Hayden 1 and 2 are planning SCR installation in 2015 and 2016.

Xcel Energy is the parent holding company of four regulated utilities: Northern States Power of Minnesota (NSPM), Public Service of Colorado (PSCo), Southwestern Public Service (SPS), and Northern States Power of Wisconsin (NSPW). Xcel Energy, through its regulated subsidiaries, provides energy services to 3.4 million electric customers and 1.9 million natural gas customers. Its service territory spans eight states and the company primarily operates in the West and Midwest region.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.