To gain backing for the deal, NSP has agreed to three stipulations from environmental and consumer groups that could directly help wind. First, NSP has agreed to expand transmission capacity at Buffalo Ridge, beyond the small upgrades it has recently done, to make way for more wind turbines, says Bill Grant of the Izaak Walton League in Minnesota. Second, it has agreed to join the Mid-West Independent System Operator (ISO), which could increase its interest in improving the transmission system. Third, NSP is agreeing to remove barriers, in the form of least-cost stipulations, to future wind development.
NSP is not the only owner of transmission lines in southwest Minnesota and that has complicated getting them upgraded, Grant says. Much of the transmission is owned by other utilities and the giant federal power marketing organisation, the Western Area Power Authority. By joining the Mid-West ISO, NSP can work towards seeing its transmission needs fulfilled.
According to utility watchdogs, the federal deregulation of the electric industry has for some years stalled investments in transmission systems, leaving areas like southwest Minnesota constrained. Large investments have been seen as too risky. In December, however, the Federal Energy Regulatory Commission required utilities to form regional transmission organisations by December 2001. Due to the NSP/NCE merger, the Mid-West ISO could be out ahead of that date.
Least cost test
The third stipulation refers to a state mandate calling for NSP to develop 400 MW of wind power by 2012 -- a ruling that NSP is currently trying to prove uneconomical (Windpower Monthly, November 1999). The utility is using a request for 1200 MW of new generating capacity to see whether wind could be the least cost option among bids from all energy sources. If it is not, NSP will argue that the mandate is unfair.
Two wind developers have made the final short list, including Enron Wind Development Corp of California and Northern Alternative Energy Inc of Minnesota. The final cut was expected to be made last month. "If wind is not selected, we'll work to identify and remove the impediments to wind," Grant says. The problem with wind in all-source bidding boils down to wind's intermittency on a grid as a power source, he adds.
All parties have agreed to the list of stipulations, Grant says, meaning it is very likely the Minnesota Public Utility Commission will approve the merger this month. The target for full approval, which includes all states served by both utilities, is July 1, according to NSP. The merger will form the country's eighth largest utility, Xcel Energy, with about 4.5 million electric and gas customers in 12 states, along with interests in the UK, Central Europe, Australia and South America. Based on 1998 figures, revenues of the new company will top $6.4 billion, with profits of $618 million.