Xcel Energy and Environmental Parties

Least-Cost Resource Plan Settlement Agreement

Xcel Energy and Environmental Parties

Least-Cost Resource Plan Settlement Agreement

DiscussionDiscussion

Background

Negotiations

Implementation

Lessons Learned

Background

Negotiations

Implementation

Lessons Learned

Xcel Energy in ColoradoXcel Energy in Colorado

1.34 million electric customers

1.25 million natural gas customers

Provides energy to 75% of state’s residents

1.34 million electric customers

1.25 million natural gas customers

Provides energy to 75% of state’s residents

The Least-Cost Plan FilingThe Least-Cost Plan Filing

Filed with the CPUC April 30, 2004

Forecast of electric needs from 2004-2013 and plan to meet them

Included: Proposed all-source bidding process A request to build a 750 MW coal-fired unit at

Comanche Station near Pueblo

Filed with the CPUC April 30, 2004

Forecast of electric needs from 2004-2013 and plan to meet them

Included: Proposed all-source bidding process A request to build a 750 MW coal-fired unit at

Comanche Station near Pueblo

The Forecast

ProcessProcess

Resource forecast and plan filed 4/30/04

Rounds of testimony filed

In fall 2004, negotiations began with two main groups: Environmental and community parties Other intervenors (OCC, PUC staff, others)

Hearings held at CPUC Nov. 2004

Resource forecast and plan filed 4/30/04

Rounds of testimony filed

In fall 2004, negotiations began with two main groups: Environmental and community parties Other intervenors (OCC, PUC staff, others)

Hearings held at CPUC Nov. 2004

Why Negotiate?Why Negotiate?

Environmental groups’ view: Reduce environmental impact of new coal unit Greater environmental benefits faster Achieve specific environmental benefits for

Pueblo community Expand renewable energy and energy

conservation Develop ongoing dialogue Accountability

Environmental groups’ view: Reduce environmental impact of new coal unit Greater environmental benefits faster Achieve specific environmental benefits for

Pueblo community Expand renewable energy and energy

conservation Develop ongoing dialogue Accountability

Why Negotiate?Why Negotiate?

Xcel Energy’s view: Cooperation and consensus from intervenors

concerning critical energy resource Reduce litigation risk concerning Comanche project Opportunity to install additional emission controls

on existing facility Enhance community relations Establish dialogue and pursue opportunities for

mutual collaboration

Xcel Energy’s view: Cooperation and consensus from intervenors

concerning critical energy resource Reduce litigation risk concerning Comanche project Opportunity to install additional emission controls

on existing facility Enhance community relations Establish dialogue and pursue opportunities for

mutual collaboration

Negotiation ProcessNegotiation Process

Negotiators Major environmental and community parties; Xcel Energy

Long, difficult discussions with compromise from both sides

Key challenges: Environmental negotiators – negotiating on behalf of many

parties with different interests Utility negotiators – balancing interests of many different

parties; outside involvement in how we run our business; long-term implications and policy impacts

A common challenge: Internal buy-in

Negotiators Major environmental and community parties; Xcel Energy

Long, difficult discussions with compromise from both sides

Key challenges: Environmental negotiators – negotiating on behalf of many

parties with different interests Utility negotiators – balancing interests of many different

parties; outside involvement in how we run our business; long-term implications and policy impacts

A common challenge: Internal buy-in

Settlement AgreementSettlement Agreement

Reached Dec. 2004; PUC approved 1/05

Concerned Environmental and Community Parties (CECP): Sierra Club Western Resource Advocates Environmental Defense Better Pueblo Diocese of Pueblo Southwestern Energy Efficiency Project Colorado Renewable Energy Society Environment Colorado Smart Growth Advocates

Reached Dec. 2004; PUC approved 1/05

Concerned Environmental and Community Parties (CECP): Sierra Club Western Resource Advocates Environmental Defense Better Pueblo Diocese of Pueblo Southwestern Energy Efficiency Project Colorado Renewable Energy Society Environment Colorado Smart Growth Advocates

Key ProvisionsKey Provisions Comanche

Additional emission controls and tighter emission limits for Comanche Station

Mercury testing and cost-effective controls for all units; plant-wide mercury emission limit

Energy planning Accept wind bids up to 15% penetration if in least-cost portfolio Wind ancillary cost study Greatly increased energy conservation programs and study New resources evaluated with CO2 proxy cost and renewable energy

credit value Innovative technologies

Community initiatives Pueblo environmental donations and community involvement

Comanche Additional emission controls and tighter emission limits for

Comanche Station Mercury testing and cost-effective controls for all units; plant-wide

mercury emission limit

Energy planning Accept wind bids up to 15% penetration if in least-cost portfolio Wind ancillary cost study Greatly increased energy conservation programs and study New resources evaluated with CO2 proxy cost and renewable energy

credit value Innovative technologies

Community initiatives Pueblo environmental donations and community involvement

Key ProvisionsKey Provisions

Agreement by environmental signatories not to oppose Comanche Station permitting and approval processes

Agreement on web site www.xcelenergy.com, under Energy and Rates, Colorado least-cost resource plan

Agreement by environmental signatories not to oppose Comanche Station permitting and approval processes

Agreement on web site www.xcelenergy.com, under Energy and Rates, Colorado least-cost resource plan

Comanche Station Emission ControlsComanche Station Emission Controls

Existing and New

Unit 1 Unit 2 Unit 3

Nitrogen Oxide (NOx)

Advanced Low-NOx

Burner

Advanced Low-NOx

Burner

Advanced Low-NOx

Burner & SCR

Sulfur Dioxide (SO2)

Lime Spray

Dryer

Lime Spray

Dryer

Lime Spray

Dryer

Particulate Baghouse Baghouse Baghouse

MercurySorbent Injection

Sorbent Injection

Sorbent Injection

ImplementationImplementation

Quarterly meetings

Ongoing involvement Wind study Demand side management working group Pueblo initiatives Legislative agenda Different groups have different interests

Quarterly meetings

Ongoing involvement Wind study Demand side management working group Pueblo initiatives Legislative agenda Different groups have different interests

Ongoing Issues and ChallengesOngoing Issues and Challenges

Lawsuit challenging air permits for Comanche project Not filed by CECP Impact on future negotiated settlements

Communication

Lawsuit challenging air permits for Comanche project Not filed by CECP Impact on future negotiated settlements

Communication

Lessons LearnedLessons Learned

Collaboration is possible

Effort and personal commitment to get it done

Collaboration is possible

Effort and personal commitment to get it done