Xcel Energy Wind and Biomass Generation Mandate

Summary

Minnesota law (Minn. Stat. § 216B.2423) requires Xcel Energy to build or contract for 225 megawatts (MW) of installed wind-energy capacity in the state by December 31, 1998, and to build or contract for an additional 200 MW of installed capacity by December 31, 2002. The same statute also directed the Minnesota Public Utilities Commission (PUC) to require Xcel Energy to construct and operate, purchase or contract to purchase an additional 400 MW of installed wind-energy capacity by December 31, 2002, subject to resource planning and least-cost planning requirements. The total wind-energy capacity required under Minn. Stat. § 216B.2423 is 825 MW.

A separate law (Minn. Stat. § 216B.2424, also originally enacted in 1994) requires Xcel Energy to build or contract for 110 MW of electricity generated from biomass resources. The original requirement was for 50 MW by December 31, 1998 and an additional 75 MW by December 31, 2002, a total of 125 MW. The mandate was subsequently reduced to 110 MW in 2003. Additional sections of the law allocate the biomass requirement in various ways, imposing limits on the amount which may come from a single project, specific project, or fuel source.

This portion of the mandate is being fulfilled by district energy in St. Paul, a poultry-waste project in Benson, and a third biomass project in Virginia/Hibbing. In May 2008, the mandate was amended to confine the definition of eligible farm-grown, closed-loop biomass to herbaceous crops, trees, agricultural waste, and aquatic plant matter that is used to generate electricity and to specifically exclude mixed municipal solid waste from eligibility. A further amendment (S.F. 550) relating to revisions of one project's power purchase agreement was enacted in May 2009, but it left Xcel's obligations essentially unchanged.

The wind and biomass energy purchased or contracted for under this law is eligible to be folded into the state renewable portfolio standard (RPS), the mandatory portion of which will take effect during 2010 for Xcel Energy. In September 2010 the Minnesota Public Utilities Commission (PUC) determined (see PUC Order Docket E-002/M-08-440) that Xcel owns renewable energy credits (RECs) associated with wind and biomass contracts entered into under this mandate in cases where REC ownership is not addressed in the contract and a separate settlement has not been negotiated.