Legalectric

Updates on rulemaking ongoing at the PUC (not that they put anything in the PUC docket, but don’t worry, I’ll post there too):

June 26 Meting Synopsis

July 8 Draft

Is this too wonkish, or does anyone else see the irony in having to struggle so to get opportunity for public input in these Certificate of Need rules?

If you have comments on the draft rules, and BE SPECIFIC, label with rule citation (i.e., Minn. R. 7849.0100, and show how you’d change the rule, with the narrative explanation and the exact words you suggest, and send to kate.kahlert@state.mn.us and post to docket 12-1246 at the PUC site if you can, (www.puc.state.mn.us and click on “eFiling” and sign up to post if you’re not already registered).

History and background, with links to the comments thus far:

How to work up excitement about the Certificate of Need rulemaking???  On its own, it’s dry, detailed, wonkish stuff, thrilling only to those of us who live and breathe need decisions and utility infrastructure siting and routing… but may there’s some pizazz in the machinations surrounding input, like lack of public representation on the Advisory Committee such that even my tremendous bulk doesn’t even it out.  Does Xcel deserve THREE representatives? ITC two?  “Participating Utilities” two, “Wind Coalition” one and none for Goodhue Wind Truth?  Here’s the list:

Advisory Committee Contact List

Plus they’re not posting the drafts on the rulemaking site, so the public has no idea what’s being proposed:

7849 June 5 DRAFT New

And minutes from the first meeting:

Synopsis – May 29 meeting

To get to the docket, go to www.puc.state.mn.us and then “search eDockets” and search for 12-1246.

We’ll be talking about the Certificate of Need criteria next, and here’s what’s proposed:

7849.0120 CRITERIA CERTIFICATE OF NEED REQUIREMENTS.

   A certificate of need must be granted to the applicant on determining that:

  Subpart 1. Need Demonstration. An applicant for a certificate of need must demonstrate that the demand for electricity cannot be met more cost effectively through energy conservation and load-management measures.

Subpart 2. Renewable Resource Preferred. An applicant proposing an LEGF that uses a nonrenewable energy source must demonstrate that it has considered the use of renewable energy sources, as required under Minnesota Statutes section 216B.243, subd. 3a.

Subpart 3. Assessment of Need Criteria. In evaluating a certificate of need application, the

commission shall consider the criteria contained in Minnesota Statutes, section 216B.243, subd. 3, as well as the following:

     A.  whether the probable result of denial would be an adverse effect upon the future adequacy, reliability, or efficiency of energy supply to the applicant, to the applicant’s customers, or to the people of Minnesota and neighboring states, considering: the region;

                (1)  the accuracy of the applicant’s forecast of demand for the type of energy that would be supplied by the proposed facility;

                  (2) the effects of the applicant’s existing or expected conservation programs and state and federal conservation programs;

      (3)  the effects of promotional practices of the applicant that may have given rise to the

increase in the energy demand, particularly promotional practices which have occurred since 1974;

      (4) B. the ability of current facilities and planned facilities not requiring certificates of need to meet the future demand; and

      (5)  the effect of the proposed facility, or a suitable modification thereof, in making efficient use of resources;

             B C.  whether a more reasonable and prudent alternative to the proposed facility has not been demonstrated by a preponderance of the evidence on the record, considering:;

                (1)  D. the appropriateness of the size, the type, and the timing of the proposed facility compared to those of reasonable alternatives;

      (2) E. the cost of the proposed facility and the cost of energy to be supplied by the proposed facility compared to the costs of reasonable alternatives and the cost of energy that would be supplied by reasonable alternatives;

              (3) F. the effects of the proposed facility upon the natural and socioeconomic environments compared to the effects of reasonable alternatives; and

                (4) G.  the expected reliability of the proposed facility compared to the expected reliability of reasonable alternatives;

             C.   by a preponderance of the evidence on the record, the proposed facility, or a suitable modification of the facility, will provide benefits to society in a manner compatible with protecting the natural and socioeconomic environments, including human health, considering:

                (1) the relationship of the proposed facility, or a suitable modification thereof, to overall state energy needs;

      (2) H. the effects of the proposed facility, or a suitable modification thereof, upon the natural and socioeconomic environments compared to the effects of not building the facility;

                (3) I.  the effects of the proposed facility, or a suitable modification thereof, in inducing future development; and

                (4) J. the socially beneficial uses of the output of the proposed facility, or a suitable modification thereof, including its uses to protect or enhance environmental quality; and.

             D.   the record does not demonstrate that the design, construction, or operation of the proposed facility, or a suitable modification of the facility, will fail to comply with relevant policies, rules, and regulations of other state and federal agencies and local governments.

Today the public hearings continue for the Hollydale transmission project.

1:30 p.m. at the Medina Ballroom on Hwy. 55

It’s a 115 kV line proposed for Plymouth and Medina through people’s yards — not a good idea.  DUH!

For the full docket, go to the PUC’s Search Docket Page and search for 12-113.

Here’s how they present it in Figure 2 of the Certificate of Need application:

But here’s what it really looks like:

I’m representing a family that lives west of the “Focused Study Area” who just moved to Medina and were surprised by this project — no notice that it was proposed — and are challenging need for the project, and if need is demonstrated, supporting the A-2 distribution system alternative, an upgrade of the 13.8 kV system to 34.5 kV, distributed generation at the load along the area highways, and a combination that would address any demonstrated need:

Petition for Intervention — March 4, 2013

The parties had a phone conference Monday about Xcel Energy’s request to delay the evidentiary hearings (we aren’t formal parties at this point and weren’t invited, but thanks to “plays well with others” Xcel for the heads up about it):

Xcel Energy request for continuance (SF 716 attached)

And the response from Western Plymouth Neighborhood Alliance:

Western Plymouth Neighborhood Alliance

It’s odd delaying a project hearing for a bill that’s speculative, who knows if it might pass or not.  But it’s delayed, the evidentiary hearing, that is, until May or June sometime, after the legislative session is over, and details remain to be worked out.  I’d guess Xcel Energy has other reasons not to go forward with the evidentiary hearing on need for this line…

Yes, once more with feeling… this transmission?  It’s NOT needed!

Here’s an article from the St. Cloud Times, good to know they’re following up on the CapX 2020 transmission project and keeping an eye on Xcel Energy.  This demonstrates what we’ve been saying for how long now?  CapX 2020 is NOT needed:

Record hot summer didn’t mean record electricity useage, Xcel Energy reports

In one of the hottest summers on record, Minnesotans should have used a near-record amount of electricity.

But it wasn’t even close.

In fact, electricity use actually fell in the scorching summer of 2012.

According to Xcel Energy figures, projected 2012 sales will be more than 1 percent below those of 2011. Average use per customer will drop by the same percentage.

Why? Strong conservation efforts and a weak economy, according to Laura McCarten, Xcel Energy regional vice president.

Xcel’s million-plus customers are trimming their power consumption — installing fluorescent bulbs, adjusting thermostats, insulating homes and switching to more efficient appliances.

Others — mostly businesses — are cutting back involuntarily. A sour economy has forced businesses to cut back, and some, such as the Ford plant in St. Paul, have closed permanently.

The overall impact of conservation and a slow economy can be seen in Xcel’s power plants. In the past five years, those plants have had to produce 6 percent less power per customer.

The company has a target, specified in Minnesota’s 2007 Energy Act, of cutting anticipated consumption by 1.5 percent every year.

The 1.5 percent is measured according to what energy consumption would have been without conservation programs. The company hit the 1.5 percent reduction target in 2011 and is on track to do it again this year, said Lee Gabler, Xcel’s director of demand side management and renewable operations.

Read the rest of this entry »

Xcel Energy’s 2Q report came out almost two weeks ago (where DOES the time go?!?!), and one part stuck out:

I think the strongest sales that we are seeing are at SPS, based upon the energy related businesses they had down there. We are also seeing on the C&I sides, some pretty good pick up in Wisconsin.  Again, that’s energy-related, but in this case, it’s more sand mining, which has really become quite the business in that part of Wisconsin.

This came from their transcript, on Seeking Alpha, linked above.  So who is looking at the impacts of frac sand mining on energy use, sales and peak demand?

The earnings call and other info is available on Xcel’s Investor site at www.xcelenergy.com.  CLICK HERE FOR THEIR INVESTOR RELATIONS PAGE (may need to agree to their “Safe Harbor Statement” to get here) Xcel’s demand isn’t anything to write home about, this from their 8/2/2012 Xcel Energy Second Quarter 2012 Earnings Report:

And from the SEC:

Xcel’s 10-Q filed with SEC

And in this filing, an amazing tidbit that I’d not noticed before — Firm Transmission Rights are regarded as COMMODITY DERIVATIVES:

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Commodity derivatives — The methods used to measure the fair value of commodity derivative forwards and options utilize forward prices and volatilities, as well as pricing adjustments for specific delivery locations, and are generally assigned a Level 2.  When contractual settlements extend to periods beyond those readily observable on active exchanges or quoted by brokers, the significance of the use of less observable forecasts of long-term forward prices and volatilities on a valuation is evaluated, and may result in Level 3 classification.

Electric commodity derivatives held by NSP-Minnesota include financial transmission rights (FTRs) purchased from Midwest Independent Transmission System Operator, Inc. (MISO).  FTRs purchased from MISO are financial instruments that entitle the holder to one year of monthly revenues or charges based on transmission congestion across a given transmission path.  The value of an FTR is derived from, and designed to offset, the cost of that energy congestion, which is caused by overall transmission load and other transmission constraints.  Congestion is also influenced by the operating schedules of power plants and the consumption of electricity pertinent to a given transmission path.  Unplanned plant outages, scheduled plant maintenance, changes in the relative costs of fuels used in generation, weather and overall changes in demand for electricity can each impact the operating schedules of the power plants on the transmission grid and the value of an FTR.  NSP-Minnesota’s valuation process for FTRs utilizes complex iterative modeling to predict the impacts of forecasted changes in these drivers of transmission system congestion on the historical pricing of FTR purchases.

If forecasted costs of electric transmission congestion increase or decrease for a given FTR path, the value of that particular FTR instrument will likewise increase or decrease.  Given the limited observability of management’s forecasts for several of the inputs to this complex valuation model – including expected plant operating schedules and retail and wholesale demand, fair value measurements for FTRs have been assigned a Level 3.  Monthly FTR settlements are included in the fuel clause adjustment, and therefore changes in the fair value of the yet to be settled portions of FTRs are deferred as a regulatory asset or liability.  Given this regulatory treatment and the limited magnitude of NSP-Minnesota’s FTRs relative to its electric utility operations, the numerous unobservable quantitative inputs to the complex model used for valuation of FTRs are insignificant to the consolidated financial statements of Xcel Energy.

“Financial Transmission Rights” which “entitle the holder to one year of monthly revenues or charges based on transmission congestion across a given transmission path.” SAY WHAT?!?!?!

Now please, correct me if I’m wrong, but wasn’t “derivatives” in a tanking market what got Xcel’s NRG into bankruptcy?