Generating CONSENSUS
Xcel reaches agreement on proposed wind farms
Xcel Energy’s plans to build two massive wind farms in New Mexico and West Texas took a huge leap forward Monday thanks to a new settlement agreement with parties in the case.
The company filed the agreement, or stipulation, at the New Mexico Public Regulation Commission, where various intervening parties had previously objected to key parts of Xcel’s project, which calls for building a 522-megawatt facility in eastern New Mexico and a 478-MW farm in Texas. That, combined with the purchase of 230 MW of wind energy from a nearby facility owned by NextEra Energy, would provide enough electricity to power about 440,000 average homes annually.
The company, which expects to invest about $1.6 billion, had said the project would benefit about 385,000 customers by saving them roughly $2.8 billion in electric costs over 30 years. The savings would come from offsetting higher fuel costs from natural gas and other sources.
But some parties in the case, particularly PRC utility staff, said the projected savings weren’t guaranteed, and they demanded protections for ratepayers.
In the new settlement, Xcel subsidiary Southwest Public Service Co., made some key compromises. That includes: agreement to cap cost recovery for the project at $1,675 per kilowatt, a guarantee the wind farms will produce a minimum annual output of 48 percent of capacity and assurances that customers will be credited 100 percent of the federal production tax credits for wind generation it will receive once the farms come online.
“No parties are opposed now,” said David Hudson, Xcel president for New Mexico and Texas. “PRC staff and other parties also filed testimony today in support of the agreement.”
The parties compromised with Xcel on a sticking point for the company. Until now, PRC staff had opposed mechanisms for the utility to earn back any investment during the two
or more years it would take for it to get new rates approved by the PRC to recover its investment in the project. That meant costs during the interim period during a new rate case would never be recaptured.
In the new agreement, SPS will now be allowed to recover that investment, either through interim rates that will take effect within 30 days after SPS files a new rate case, or through a surcharge on bills after new rates are approved, Hudson said.
Parties in the case say the agreement is fair.
“I’m committed to ensuring energy affordability and security, protecting our natural environment, and growing New Mexico’s fragile economy, and that’s why I’m supporting the stipulation filed today with the PRC,” Attorney General Hecter Balderas said in a prepared statement.
The project is still not guaranteed. That’s because SPS must finalize an agreement with parties in Texas, and because federal tax reform could disrupt wind production tax credits, undermining the project’s economics, Hudson said.