Xcel clarifies certain parts of potential Geronimo solar contract

The Northern States Power unit of Xcel Energy (NYSE: XEL) clarified with the Minnesota Public Utilities Commission on Dec. 12 that it will need approval for any contract for 100 MW of solar power with Geronimo Energy LLC from that commission and the one in North Dakota.

Xcel provided revised language to the Minnesota commission related to the regulatory condition precedent for the draft power purchase agreement (PPA) between the company and Geronimo affiliate Aurora Solar LLC. The commission selected Geronimo’s 100 MW Aurora project in this docket, in part because it will help further the Xcel’s compliance obligations with Minnesota energy policies. That project is actually a series of small solar installations to be located at Xcel substations around Minnesota.

In compliance with the commission’s May order in this docket, the company filed an execution-ready PPA on Sept. 23. Among other things, the PPA contained provisions, which allow either the company or Geronimo to terminate the PPA should the company not obtain recovery of its costs from its Minnesota and/or North Dakota customers. During oral arguments on Dec. 8, questions and concerns were raised about the meaning of recovering 100% of the PPA costs. Specifically, there was discussion about whether the 100% included those costs traditionally allocated to the company’s South Dakota, Wisconsin and Michigan customers.

Xcel and Geronimo then met on this issue and came up with the clarifying language. Xcel noted that under the law, it needs project prudence approval in Minnesota and North Dakota, but not the other three states.

“With respect to costs allocated to our South Dakota, Wisconsin, and Michigan customers, there are no pre-approval mechanisms in these jurisdictions. These jurisdictions review the reasonableness and prudence of our PPA costs on an after the fact basis. Consequently, there may not be a review of this PPA in those jurisdictions for some time. The Company did not believe it was necessary to subject the Aurora project to the regulatory risk of cost recovery in those states given the likely timing of any determination of recoverability.”

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.