Wednesday, February 22, 2006

I am rather excited about the new changes at Xcel Energy. Hopefully this new pro-wind CEO of theirs follows through with his amazing announcement.


Dick Kelly, who replaced Wayne Brunetti as CEO of Xcel Energy on July 1, told a receptive luncheon crowd at the South Dakota Wind Energy Conference on September 12 (see related story) that "we're a big supporter of wind. We think it is an important part of the United States energy policy. We just need to keep working on [renewable energy supplies]. And at Xcel Energy we will do that."

Kelly, who began working for Xcel predecessors 38 years ago as a meter reader, reviewed the purchase of electricity from wind power across the Xcel service territory that spans 10 states and serves four million customers. Xcel currently buys power from about 900 MW of wind power, and expects that to increase to 2,500 MW by 2012. In order to achieve that level of wind supply in the Xcel system, he said, more transmission lines will need to be built. "Where the wind blows - that's not where people live." Xcel Energy has launched a $160 million project to help solve that problem by adding high- and medium-voltage power lines to increase the transmission capacity from the Buffalo Ridge in southwestern Minnesota to the Twin Cities of Minneapolis and St. Paul, Minn. Those lines are expected to be in service by 2007.

Kelly also called for changes in the regulation of utilities that would further facilitate wind power development. He suggested that financial ratings agencies are beginning to place obligations to buy wind power from independent power producers on the company's balance sheet, even though the company doesn't own the projects. He called for regulators to help the company address that issue.

Kelly also said that "the utility should have the same opportunity to benefit from wind development that independent developers have." However, independent power producers start receiving a return on their investment as soon as they begin producing power, while utilities must wait until the next rate case is heard by regulators before they can begin to recover their investment. With new rules for cost recovery, Kelly said, utilities can become directly involved in the investment in wind farms.

Finally, he called for coherent, cohesive policies. He cited the varying renewable energy standards that have been adopted in various states, as well as the inconsistency in federal energy policies. However, he said, given a consistent policy, regardless of what it is, "if you give us a challenge and say that you want [to meet a particular renewables goal], we'll deliver that. But the rules have to be consistent and apply fairly to everyone; then we can play the game." Kelly went on, "I don't know what the number is, whether it's 5% or 10% or 20%. In time it needs to grow, there's no doubt about it, because the science is pretty sound that we do need to do something. So, we need the rules to be clarified so we can play, then we'll play and we'll deliver what you need. We are very sensitive to what the customers need, and we're very sensitive to the environment ourselves. You don't have to drag Xcel kicking and screaming onto the side [of using renewables]. It's the right thing to do, and we will do the right thing. Whatever the community wants, whatever the customer is looking for, we promise that we'll deliver that to you, which is very exciting!"

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