Midwest Energy News, October 26, 2012
As energy market forces continue to shift, Minnesota’s largest utility now foresees meeting modestly growing electricity needs primarily with natural gas and hydropower imported from Canada.
Xcel Energy, which serves about 1.4 million customers in Minnesota, has filed major revisions to its latest long-range plan twice since 2010. The picture changed again this week when the utility said it no longer thinks proposed nuclear plant upgrades are beneficial.
“We have been working through a period of time with considerable change,” said Jim Alders, Xcel’s director of regulatory administration.
After a day of testimony Thursday aimed at finding consensus on how to proceed, the Minnesota Public Utilities Commission is set to vote next week on whether to approve the utility’s plan, which calls for adding more natural gas and hydro after 2017.
Environmentalists criticized the plan for not including enough renewables, and because it doesn’t commit to retiring the company’s aging Sherco coal plant, the largest single source of air pollution in Minnesota.
Xcel filed its initial 2011-2015 resource plan in August 2010. Regulated utilities in Minnesota are required to file the plans every few years so regulators can make sure they’re planning enough reliable, cost-effective power to meet long-term needs.
Slow economic growth and recovery projections prompted Xcel to lower its demand forecasts twice since then. The utility now doesn’t expect to need any new generation until after 2017. It estimates a need for about 550 new megawatts by 2020.
The utility proposes to meet that new demand mostly through natural gas. Xcel says it would add 400 to 600 megawatts of natural gas capacity between 2017 and 2019, as well as expand its contract with Manitoba Hydro in 2015 and 2021.
Environmental groups, meanwhile, took aim at the lack of solar and wind in the utility’s plan.
Xcel is the nation’s largest utility provider of wind power, but its long-range plan does not include any new wind capacity after 2012, when the federal wind production tax credit is set to expire unless Congress acts before the end of the year.
“Our plan is: re-evaluate in the early part of 2013 and decide what to do next during the remainder of 2013,” Alders said. “If it makes sense to pursue more wind, we will come back to you.”
Xcel’s plan includes adding 20 megawatts of solar over the next decade. John Farrell, a research associate with the Institute for Local Self-Reliance, pointed out the “remarkable difference” between that and Minnesota’s solar potential.
On efficiency, the utility says continuing to meet the state’s 1.5 percent annual efficiency mandate over the entire length of the plan will be difficult due to “energy efficiency market saturation,” and that 1.3 percent is more realistic.
Planning for coal retirement
Several people who testified, including polar explorer and climate activist Will Steger, urged Xcel and the utilities commission to begin the process for retiring the Sherco 1 and 2 units at Xcel’s central Minnesota coal plant.