Xcel Energy (NYSE:XEL) utility Northern States Power (NSP) has agreed to plan a natural gas power plant in eastern North Dakota that will have a generating capacity of at least 200 MW as part of a larger agreement between Xcel Energy and the North Dakota Public Service Commission.
The PSC announced March 9 that it had reached a “comprehensive settlement agreement” with the utility to address “several persistent challenges” between Xcel and the North Dakota PSC.
The agreement resolves all outstanding issues on divvying up costs for new resources developed in the Xcel system. The deal stems from a 2014 settlement that outlined ways to allocate costs associated with energy mandates in neighboring Minnesota.
The agreement includes the following:
• A commitment by Xcel to build or have located in eastern North Dakota a natural gas-fired electric generation facility with a capacity of at least 200 MW. The turbine will be treated as an Xcel system resource and will be allocated to all states and customers served by the Xcel system.
• North Dakota customers will NOT have to pay for 15 Community Based-Energy Development and two small solar purchase power agreements being implemented because of Minnesota-driven alternative energy projects.
• The proportional share of the cost of six key biomass purchase power agreements and two wind projects (Odell and Pleasant Valley) will continue to be recovered in North Dakota. The biomass resources will provide approximately 145 MW of baseload-type capacity to the entire Xcel system and the two wind projects will provide low-cost energy to the Xcel system, thereby reducing overall system costs.
• A rate freeze for base electric rates until at least 2018.
• Development of a mechanism for dealing with divergent state energy policies.
“This settlement agreement delivers three big wins for North Dakota Xcel customers,” said Commission Chairman Julie Fedorchak.
“It prohibits a general rate increase for two more years, secures a commitment to gas-powered generation to strengthen reliability in the Valley by 2025 , and it eliminates from our rates a number of costly experimental energy projects driven by Minnesota policymakers,” Fedorchak said.
PSC also addressed nuclear waste refunds, generation rate riders
The PSC has also approved a request from NSP (Xcel Energy) to refund to customers over $700,000 awarded as part of a settlement with the U.S. Department of Energy (DOE). Under the Nuclear Waste Policy Act, utilities were required to enter into contracts with the DOE for the disposal of spent nuclear fuel. In exchange, the DOE committed to transport and dispose of the waste nuclear fuel beginning no later than Jan. 31, 1998.
DOE was presumed to have opened a national waste storage facility at Yucca Mountain, Nevada, or somewhere else by then.
In 1998, NSP filed the first of two lawsuits against the DOE seeking to recover damages associated with the storage of spent nuclear fuel at the company’s two nuclear generating stations. The most recent settlement that results in the refunds approved today is for a three-year period ending in 2016. Two additional payments are expected.
The refunds will be distributed to Xcel customers as a one-time credit on their bill based on usage over the past year. The average residential customer will receive approximately $3. Approximately 30% of the electricity used by Xcel customers in North Dakota comes from nuclear energy.
The PSC approved a change to MDU Resources s (NYSE:MDU) Generation and Resource Recovery Rider. The changes proposed were to adjust the revenue collected for the Heskett III project and the addition of the Reciprocating Internal Combustion Engines co-located with the Lewis and Clark Generating Station.
The agreement approved today allows MDU to recover approximately $9.7m, not to exceed a 10.5% annual return. The average residential customer can expect an increase of approximately $1.94 per month.
The Generation Resource Recovery Rider will be implemented on an interim basis pending the outcome of an electric rate case that will be filed with the PSC later in 2016. It is expected that the rider will be eliminated after the costs are included in base rates after the conclusion of the rate case.