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Minnesota mandates masses of megawatt -- Part of nuclear deal

In exchange for a guarantee that it can continue to operate two nuclear power plants unimpeded, Xcel Energy is being required by law to buy as much as 1400 MW more wind generation by 2015. The change in state law converts a renewable energy objective into a wind requirement. Previously, Xcel had agreed to buy 825 MW of wind by 2006, but it must now add another 300 MW of wind by 2010, one-third of which is to be developed in small increments of less than 2 MW -- a provision intended to encourage installations on the state's vast farmland. The new legislation also makes the state's renewables objective of 10% by 2015, which is voluntary for other utilities, mandatory for Xcel. That amounts to another 1100 MW for the utility.

Other state utilities must provide regulators with two year plans for how they will reach the goal. That, says Michael Noble of Minnesotans for an Energy-Efficient Economy, is a "heavy enough regulatory burden" to ensure substantially more wind energy than just that bought by Xcel and other active wind participants in Minnesota, such as Alliant Energy, Ottertail Electric Cooperative and Great River Energy.

Oversight

"There is every opportunity for Minnesota to rapidly expand its existing commitment to renewable energy, especially wind power," says Noble. "With a little oversight from the regulators, there's no reason why we shouldn't have 3000-4000 MW of wind power installed in the next 12 years."

The special treatment given Xcel grows out of compromise legislation passed in 1994 allowing it to store nuclear waste at its Prairie Island facility in return for buying 425 MW of wind energy by 2012 -- a huge requirement at the time. The Public Utility Commission later expanded that mandate to 825 MW, and this year it ordered Xcel to complete the entire mandate by 2006, the same time that it will complete transmission upgrades in southwest Minnesota designed to accommodate the big build up of wind generation.

Xcel is on track to make its mandate, says the utility's Jim Alders. It is buying 302 MW now and he says that will rise to 480 MW by end 2003. The utility is considering other proposals that will bring more wind generation online in the 2005-2009 timeframe.

The 1994 legislation limited the amount of nuclear waste the utility could store, which would have required Xcel to shut its nuclear plant down in 2007, five years before the licence expires. "That's what initiated our interest in bringing the issue to the legislature," says Alders. The new law gives the utility carte blanche on the amount of nuclear storage it needs to continue operations, even if it re-licences the facility. "On balance, this is a good deal for us and it may actually accelerate renewables development in the state," says Alders.

Nasty edge

While renewables advocates are declaring the legislation a victory, they also say the law has nasty edges: first, mixed waste garbage generation is now considered a renewable resource; second, although Xcel's annual payments into a renewable energy fund are doubled from $8.5 million to $16 million, the law now caps the amount the utility will pay each year (originally the payment was tied to the number of casks of nuclear waste the utility stored at its facilities); third, some of that pot of money will be channelled into coal gasification research, known euphemistically as "clean coal," and into the research and development of hydrogen from fossil fuels.

Not an RPS

Minnesota ranks fourth in installed wind generation in the US, with 336 MW, far behind California, which in January 2003 had 1772 MW, and Texas, with 1105 MW, both states with renewables portfolio standards (RPS). Iowa has 432 MW. The Texas RPS calls for 2000 MW by 2009 and the California RPS, passed into law last year, but still working its way through rulemaking by California regulators, is expected to gain the state 3700 MW of new renewable energy capacity by 2017.

Although the Minnesota legislation directs the PUC to set up an in-state renewable energy credit trading system, an important ingredient in the successful Texas RPS, and it directs one utility to meet RPS-style goals, Minnesota wind advocates are quick to say the legislation falls short of establishing an RPS across the entire state.

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