- JUNE 15, 2006 EE 1276 OA1I No MPUC No. E-6472/M

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1 XCEL RESOURCE PLAN - PUC JUNE.D STAFF BRIEFING ORAL ARGUMENTS - DELIBERATIONS BEFORE THE MINNESOTA PUBLIC UTILITIES COMMISSION EXHIBIT - JUNE, 0 EE OAI No MPUC No. E-/M-0- days after the oral argument was something that had the staff going wild, because we were all offering different ideas, and they did a superb job in finishing by this morning really early with the last set of recommendations that they gleaned when they IS IB In the Hatter of Northern States Power Company d/b/a Xcel Energy. Application for Approval of its 0-) Resource Plan MPUC DOCKET HO. E- 00/RP- 0 Hinnesota Public Utilities Coanlssion 0 Metro Square Building Seventh Place East St. Paul. Minnesota June. 0 TAPES TRANSCRIBED Janet Shaddix Elling, RPR talked to each of the Commissioners. So, and all of what basically what's in this recommendation was how Commissioners related to staff that they wanted, or were interested in which issues and how to consolidate them. So because Commissioner Nickolai will probably have to leave before the discussion's over, what I'm going to do is I'm going to make a motion. And my motion will go through the whole all the issues, and then those issues which we agree on we'll set aside. Those issues which individual Commissioners have worked on that were different than what I or somebody else worked on, just because I made the motion means only to get it going, I'm completely open to suggestions and amendments, and we'll focus like a laser on each individual issue and get those resolved as we go through. So when we're done we'll have a complete motion, and if Commissioner Nickolai has one or two items he wants to -- that he wants to weigh in on before he leaves (Side A of Tape 0-.) that are more important to him we'll do those first CHAIR KOPPENDRAYER: Ms. Gonzalez. and then we'll go on. But when we're finished we'll MS. GONZALEZ: The deliberation item on have a complete motion by way of amendments. today's agenda, it's the item you had oral argument on on Tuesday, is on Xcel's resource plan. So having said that, my motion, if you have the new briefing paper -- Ms. Mackenzie has some introductory MS. MACKENZIE: Could I make one - remarks, and just so folks know, there are some decision options,.! th-ink most people have picked them up, there's some on the back table and some up here, that are revised, which probably need to be CHAIR KOPPENDRAYER: Yeah. Ms. Mackenzie. MS. MACKENZIE: I'm sorry, I don't mean to upset, this is perfect so far, but can I just further revised. But anyhow, there's some revised note one possible change? decision options, and Ms. Mackenzie has some CHAIR KOPPENDRAYER: Please. introductory remarks. MS. MACKENZIE: On page, under the REO MS. MACKENZIE: I just wanted to note for compliance filings, its option one and two, about the record that we did receive proposed decision alternatives from several of the parties, from the Department of Commerce, Xcel, Excelsior Energy, and two-thirds of the way down the page it says REO compliance filing, and the first option is to require the rerun of the Strategist model. Minnesota Center for Environmental Advocacy. Some My understanding is that if the company were received late in the day yesterday, they've all does file a new resource plan in 0, that it would been considered. I'd note that. be better part of the new resource plan and not to CHAIR KOPPENDRAYER: Questions of Ms. Mackenzie? Thank you. be filed in October. So just the second option there, the report on the REO update, but not -- you As I stated, because of time, and let me tell you just upfront, that the intensity with which wouldn't really need to have another rerun of the Strategist model before the next resource plan. I Commissioners were working on this in the last two just wanted to -- SHADDIX & ASSOCIATES ()- (00)-0 Page to.

2 XCEL RESOURCE PLAN - PUC - JUNE, 0 CHAIR KOPPENDRAYER: So one and two could be combined with that clarification? MS. MACKENZIE: Or just two. CHAIR KOPPENDRAYER: Or just do two. MS. MACKENZIE: Just two and leave one off. CHAIR KOPPENDRAYER: I see. Anything else? MS. MACKENZIE: No. CHAIR KOPPENDRAYER: So this -- I hope you have this, the parties that are looking at this with me, and then this is unusual in that I'm not bringing the parties up first, but I don't know what parties are going to want to come up here. So we'll just try this, you all have a copy and you can all hear me. Under A on page, wind expansion. Item number two. And I'm not even going to go into an explanation of why I picked one or two, if there's an objection then we'll explain our positions and we'll clarify it from the there. COMMISSIONER JOHNSON: There is an objection. CHAIR KOPPENDRAYER: Well, we'll get - yeah. And then under transmission to support wind discussion no discussion in the floor debate on the 00 megawatts of wind in the senate. That we can talk about later. Under renewable objectives, option one. And on page, two. Biomass REO, option one. Fixed allocation method and vintage approach, option one. That's recommending vintage approach. REO compliance filing, and we just talked about that, and we can clarify that if we have to for the final motion, but then that would be option two, with the clarification that Ms. Mackenzie just told us about. And plan for complying with 00 megawatts of wind requirement is option one and two on page. Northern Flood Agreement monitoring, option one. And then under I, is not acted on. Page, commission decision alternatives on distributed generation resources, is option one, A, B, C, D and then add E, update the Commission on the progress of the above items in the next resource plan, because there was no date there. I just added that, an update. Under K, cask fleet refurbishment report is not included. L is not included in the motion. And M, two, B. That's my motion, and we can go back and we have time, I think, to start with one, and then development, one, two, and three. And investments in R&D, wind storage technology is not included in the motion. Under B, demand-side management, option one. C, strategies for meeting higher demand-side management goals, it's option one and two. And just by way of quick explanation, in option two is included three, four, five, and six, to a large degree. And then on page, option D, decision alternatives, forecast modeling is option one, A, and A recognizes, and we'll explain that later, that the turbine size may alter - be different than the need. A, B, C, D, E, F, and then is added G. And G is the second sentence in two, just below D, require the company to meet with the Department to continue discussing improvements to its forecast and report back to the Commission no later than December, 0. That's G, it's taken out of number two. And then the Commission decision alternatives on C0 planning and risk analysis, option one. And under F, sulfur dioxide strategies, option one. Renewable energy objectives, option one. Wind capacity requirement, option two. And under option two, just a quick comment that I asked our legal counsel about, she found no senate when it gets close to the time you want to leave, if we haven't gotten to those items, we'll jump ahead if we have to. COMMISSIONER NICKOLAI: Great, thank you. COMMISSIONER REHA: Mr. Chair. CHAIR KOPPENDRAYER: Commissioner Reha. COMMISSIONER REHA: Essentially I agree with most of your motion. But there are two areas that I disagree with, and one is on the wind expansion proposal. You had selected option two and I like option one for a number of reasons. I think, first of all, without the,0 megawatts ofwind, Xcel would not meet the REO over the period of this resource plan of 0 to. Also, I think that the earlier wind integration study had indicated that we could reliably integrate a significant portion of this wind in the time period that we're concerned about, and I think that there really is no risk in the near term that the company could meet the planned amount of wind. And we're not - this plan is not ordering the company to, you know, have a certain annual requirement, but to me it seems that the SHADDIX & ASSOCIATES ()- (00)-0 Page to

3 studies indicated that,0 would support, and has not disagreed, that the,0 megawatts of wind is cost efficient. And so I would - I would support item number one for those reasons. The first integration study looked at, I believe it was a percent through of wind, and I think that it's - because it is cost-effective, as I say, I think that number one should be adopted. I nobody really discussed the investments in R&D and wind storage technology. I don't think we need to direct Xcel to review the various wind storage technologies, my assumption is they're doing that, but I would be in favor of just indicating to Xcel that investments in research and development to maximize potential for wind energy storage is an important development of wind in Minnesota and just make that statement in the order. COMMISSIONER JOHNSON: Commissioner, what about having them maybe even talk to us about that? COMMISSIONER REHA: Sure, report back. COMMISSIONER JOHNSON: That would be good. COMMISSIONER REHA: Sure, that would be good. COMMISSIONER JOHNSON: Could you add that? COMMISSIONER REHA: Sure, I'd be happy to add that. It's my assumption that that indication should bring back information to COMMISSIONER JOHNSON: (Inaudible). COMMISSIONER REHA: Okay. CHAIR KOPPENDRAYER: Should we -- is our initial plan okay if we stick to one at a time? COMMISSIONER REHA: Sure. CHAIR KOPPENDRAYER: We're on one. COMMISSIONER REHA: That's fine. CHAIR KOPPENDRAYER: Let's finish that one. COMMISSIONER JOHNSON: I was wondering, Mr. Chair, if we should let Commissioner Nickolai. talk a little bit and get his major ones taken care of, and then we can - because I think there is quite a bit, but, I mean, that's helpful. COMMISSIONER REHA: I've only got a couple more if I just put them out on the table and then maybe Commissioner Nickolai could do that and then maybe we could just discuss them all. CHAIR KOPPENDRAYER: Okay. Let's do it. XCEL RESOURCE PLAN - PUC - JUNE, 0 COMMISSIONER REHA: And it won't take more than - CHAIR KOPPENDRAYER: We'll -- I think that's good. Then we'll have - if the Commissioners have questions of specific parties or if parties have specific - I don't want to - we did indicate to them on Tuesday that they would have a chance to summarize. So what I thought in doing this, at least you could focus your summary on the issues that are of importance to the Commissioners that there seems to be especially disagreement. So we'll try to work that all in. So, please, Commissioner Reha. COMMISSIONER REHA: Okay. Moving along, I I support the Chair's selection of option one under D. I'm not going to mention all the ones if I don't mention it that means I'm supportive of your option. With respect to the Commission decision alternatives on C0 planning and risk analysis, I'm fine with number one, and I support number two, which I think was Commissioner Johnson's addition on mitigation strategies, and I would also support item number three. And then COMMISSIONER JOHNSON: Aren't we supposed to think about and speak about it now? CHAIR KOPPENDRAYER: Sure. You wanted clarification, Commissioner Johnson? COMMISSIONER JOHNSON: No, I just (inaudible). COMMISSIONER REHA: I would not be in favor, in other words, of rejecting the Xcel plan, but I think that we should require them to provide in the next resource plan an update and expansion of CO contingency planning and so forth. CHAIR KOPPENDRAYER: As long as we're there let me just ask for a clarification on two also. The clarification I would want on two is why would we require Xcel to report the potential mitigation strategies of IGCC when IGCC is not Xcel's proposal? Why - COMMISSIONER REHA: I think this was Commissioner Johnson's proposal, so I'll defer to Commissioner Johnson. COMMISSIONER JOHNSON: Thank you, Commissioner Reha. I think this is important for us to know as a Commission, and the other parties probably, I mean, I would think they'd like to know. But personalty I would like to know. If we're going to do this IGCC, why not do a clean plant, and how SHADDIX ASSOCIATES ()- (00)-0 Page to

4 XCEL RESOURCE PLAN - PUC - JUNE, 0 much more does it cost to capture this? And possibly I like the idea of shipping it up to Canada and getting paid for it. I'd like to know the cost comparisons of a clean plant versus a regular IGCC plant. And I'd like to know the price difference if it were in different locations, if it's at Sherco or out in North Dakota or up in the Iron Range. I mean, there's got to be some benefits here of using this plant and locating it in the right place as well. So - CHAIR KOPPENDRAYER: I agree with you 0 percent. COMMISSIONER JOHNSON: Well, then, let's do it. CHAIR KOPPENDRAYER: I want Mesaba to tell me that. COMMISSIONER JOHNSON: Oh, I don't care who does it. Xcel's - is Xcel. 0 COMMISSIONER REHA: Well, this is CHAIR KOPPENDRAYER: Resource plan, this COMMISSIONER JOHNSON: Then have Xcel investigate it too, and when Mesaba's turn comes we'll have them do it as well and see if we can get some agreement. I mean, let's get the information going, and the sooner the better, as far as I'm concerned, that we know some of this stuff, rather than sitting here in the dark. Okay? That doesn't cost us anything and it sure as hell shouldn't cost the company much to figure this out. They should know that anyway. COMMISSIONER REHA: Well, I think - CHAIR KOPPENDRAYER: I'm sorry. see it in their filing. This is not something new. CHAIR KOPPENDRAYER: Commissioner Nickolai. COMMISSIONER NICKOLAI: Well, Mr. Chair, I think I agree that there's some value to getting a report back, as Commissioner Reha has pointed out, you know, that the goal of this is to look at possible ways of, you know, figure out what the need's going to be and then figure out possible ways of meeting that need. And getting some more information on this kind of an alternative for the future would be useful, I think, so that I think that I could go along with two here as well. COMMISSIONER JOHNSON: Thank you. What about number seven, as long as we're on this? I have it circled on mine. CHAIR KOPPENDRAYER: Oh, I didn't discuss number seven? COMMISSIONER NICKOLAI: Mr. Chair, as long as we're on number seven, I mean, I think there's some value to putting in some language like that. I mean, that's the general legal principle, but the idea of putting Xcel on notice that -- that they need to be thinking about the implications of possible CO limitations and making sure that their reactions are prudent is just a good reminder, I think. COMMISSIONER JOHNSON: That's what I think. CHAIR KOPPENDRAYER: Well, the reason I didn't include it was, if you were talking to me and it was my company and my money, I'd say, okay, what do you want me to spend when I don't know what regulations I'm spending for? And how are you going COMMISSIONER REHA: Commissioner Johnson, to hold me accountable for not spending enough of if I might, Mr. Chair, I think that clearly this is something that I don't know what the bar is going to a resource plan and we're not selecting the be set at? technology for any of this. So all the technology, COMMISSIONER NICKOLAI: Well, Mr. Chair, from what I understand, is kind of on the table to if I could - meet the resource plan needs. And so, you know, to (End of Side A of Tape 0-.) me finding out more information about the technology (Side B of Tape 0-.) is probably a positive thing. And that's what COMMISSIONER NICKOLAI: - I agree that resource plans are for, is to kind of look forward the purpose of this is to say you can't stick your and try to provide information to the Commission so head in the sand, you can't do what, you know, you that when we do have proposals in front of us we can't do, for example, what General Motors has been have all the information that we need. So I don't doing for a long time and sticking their head in the see it as being burdensome. sand and saying the price of gasoline is not going COMMISSIONER JOHNSON: And, you know, up so we're just going to keep focusing on, you Mr. Chair, I brought this up to Mesaba a long time know, big Buicks or big SUVs. ago. I did talk about this. So I would expect to CHAIR KOPPENDRAYER: I like ' SHADDIX & ASSOCIATES ()- (00)-0 Page to

5 XCEL RESOURCE PLAN - PUC - JUNE, 0 Cadillacs. But, Commissioner Nickolai, you have to construction would allow us to interpret it, but reread number one. We're requiring them to do -- right now I guess I would feel more secure having that's what you're saying. I hate to would be some legal analysis from our attorneys on it before opposed to saying we're going to charge you A, B, C, I'd vote one way or the other. and we're going to charge this to so and so when we CHAIR KOPPENDRAYER: So, Commissioner don't know - we don't know what the bar is. That Reha, if you back up to page under wind expansion, seems like - just - you recommended one? COMMISSIONER NICKOLAI: Well, Mr. Chair, COMMISSIONER REHA: Right. you make a good point there. I mean, what it does CHAIR KOPPENDRAYER: That would go along is we make it clear in number one, which I'm pleased with number three under wind capacity requirement, to see that you included in your motion, that we do and your desire for further analysis, you would be expect to see the CO analysis - silent on the 00? CHAIR KOPPENDRAYER: That was a huge COMMISSIONER REHA: Correct. concession on my part. COMMISSIONER JOHNSON: So would that be a COMMISSIONER REHA: It was. four then? COMMISSIONER NICKOLAI: So, you know, I CHAIR KOPPENDRAYER: No, it could be can live without seven, let's put it that way. number three. COMMISSIONER REHA: Yeah. I'm not - I COMMISSIONER REHA: It could be number don't have strong views on number seven. I tend to three. agree with you, Mr. Chair, that this is the COMMISSIONER JOHNSON: Okay. jurisdiction and authority that this Commission has, CHAIR KOPPENDRAYER: If - and to repeat it, I think just saying it in this COMMISSIONER REHA: And make no specific meeting is sufficient notice to the company that determination on whether Xcel can count the 00 we'll scrutinize their work on the C0. So I don't megawatts of wind under the REO. think we need to say it in the order or have a CHAIR KOPPENDRAYER: Any other comments decision option, necessarily. So I don't have a on that? strong view on that. COMMISSIONER NICKOLAI: Mr. Chair, I COMMISSIONER JOHNSON: (Inaudible) but mean, I do agree that the language in the law is A we're all giving in. (Inaudible). somewhat ambiguous, I mean, you know, but the part CHAIR KOPPENDRAYER: That's a first. that I keep tripping over is electric an electric COMMISSIONER REHA: I'm just about done. utility that owns a nuclear generation facility, as There's one other area. I guess I would prefer to part of its good faith effort under this see number two on sulfur dioxide, but I'm, you know, subdivision, and subdivision two, which is the REO I think that, you know, we can take a look at that directive, shall deploy an additional 00, and than going forward as well. goes on. But the one additional area that I But, you know, but when I think about the disagree with, and that has to do with the wind ramifications of it, it seems that if we go down the capacity requirement and the 00 megawatts. I road that Commissioner Reha is talking about with guess, I've read that statute several times, and the amount of wind, that we don't actually have to every time I read it I'm and then read the make a specific finding, so that going on number comments of the parties, I remain unsure of what the three helps preserve options, while not a legal language means, it's confusing to me. I think we position, and doesn't really cause any adverse legal need some legal analysis from our attorneys on it. consequences, as far as I can tell. So, if I'm I know our attorney did attempt to listen asked to vote today I'd vote for two, 'cause I - I to the tapes, and not all of the tapes were think that the legislature probably meant to include available. And so, I guess, before I would decide it. But it looks to me like there's no harm if we whether the 00 megawatts is in or out I'd like to go with three, so. see some legal analysis from our attorneys on the CHAIR KOPPENDRAYER: Well, let me - let interpretation of the statute. me just explain my logic on page for page If it's ambiguous, I think statutory under wind expansion, option two, and then on this SHADDIX & ASSOCIATES ()- (00)-0 Page to

6 one here. Was because for some twisted reason I watched closely the legislative process this year, and I seen what's happening with wind and renewables in the legislature. And we almost got a mandate that would have been, to my way of thinking, extremely difficult and expensive, and so I put all of my emphasis on the wind issues, on ordering wind, and I said it on Tuesday, I believe, the wind study, the wind study, the wind study, folks, we're going to take a new look at all wind under the wind study. But as Commissioner Reha pointed out, the wind study doesn't change the statute that says by two thousand, what is it, six? COMMISSIONER REHA:. XCEL RESOURCE PLAN - PUC - JUNE, 0 CHAIR KOPPENDRAYER: Yeah, but the,0. COMMISSIONER REHA: Oh, um-hum. CHAIR KOPPENDRAYER: Is already in statute and it's already been to some degree agreed that it's possible. So at least that amount we're going to get there, regardless, I guess, of what the wind study says. The reason I didn't - that I went with the not - with saying the 00 megawatts is included in the REO is because I'm assuming that if the wind study says something we're not expecting, and that is that this wind just don't work, and we're not expecting that, but that it limits wind, then we haven't put ourselves in a box and said, hey, you know, this is really limited and expensive, but you got to do it anyway because we already said you have to do it. So being silent on it, I'm okay with that. And I guess, you know, having explained myself out of the box, I can go along with one also, because one under wind expansion, because that's going to be done anyway. Were you finished, Commissioner Reha? COMMISSIONER REHA: Yeah, which - under plan for complying with 00 megawatt wind requirement, Mr. Chair, on page, what option did you select, one and two? CHAIR KOPPENDRAYER: One and two. COMMISSIONER REHA: I'm fine. Then with respect to any of the others, I'm good. 0, COMMISSIONER NICKOLAI: Well, Mr. Chair, if I could jump in. First of all, I apologize to everyone for the fact that I will have to leave for a while. A long time ago I was asked to be a speaker over at the communication section of the bar, and I'm the luncheon speaker, but I will get back as soon as I can. But I hope that -- there will still be a quorum of the Commission, so I hope that you'll proceed without me, and then I'll come back as soon as I can and join you if you're still going on. COMMISSIONER JOHNSON: Do you have anything to say about these? COMMISSIONER NICKOLAI: I do. I do. Mr. Chair, I really appreciate the points that you've made here, I disagree with a few of them, but I'm surprised, actually, I think that we are going to be closer together on some of these than I thought. I agree with Commissioner Reha that we should go for the one on the wind expansion plan, I think that that - that sets a target so that Xcel knows that we do think that's the proper commitment to make. But, you know, recognize the fact that we know the wind integration study is coming in early '0, we're going to know more at that time, there's going to be a new resource plan coming down the pike, and we'll see what happens with that. And, let's see, I -- SHADDIX & ASSOCIATES ()- (00)-0 CHAIR KOPPENDRAYER: Before you turn the page, on two, I think Commissioner Reha made the comment, and Commissioner Johnson, at the bottom of the page under investments for R&D and wind storage. COMMISSIONER REHA: Um-hum. CHAIR KOPPENDRAYER: That first sentence, you wanted to include that. I'm fine with that if we include that in everybody's resource plan. Xcel isn't the only company that's doing wind and Xcel isn't the only company that's - that has to meet an REO, and isn't the only company that would benefit or would have to go through the expense of that kind of R&D. So if everybody is looking at it and everybody is - I'm fine with that. COMMISSIONER REHA: And I think - I think most utilities, in my understanding, my participation at EPRI and a number of other organizations, I think that this is an important issue, and a lot of utilities that have wind are looking at. COMMISSIONER NICKOLAI: Well, Mr. Chair, if we were to include that sentence here, and then also have staff help us make sure it got included as we looked at all the rest of them, I think that would be a good idea. I personally have very little knowledge on this, other than what I read in this docket, and to the extent that it can be explored I Page to

7 think it's worth exploring, so. COMMISSIONER JOHNSON: So we have agreement so far on page, right? COMMISSIONER NICKOLAI: Well, I think- COMMISSIONER JOHNSON: Well, it's three to one, yeah. Okay. COMMISSIONER REHA: I heard the Chair say he was - he was moving along with the rest of us here. COMMISSIONER JOHNSON: Yeah, that's good. COMMISSIONER NICKOLAI: And, Mr. Chair, if you go over to page, I was fine with the Chair's recommendations on three. And then on page, just a couple of points I want to make. I thought that this idea of approving a request for RFP for the need of megawatts of gas peaking, making clear with one, not the many requests for gas peaking plants, but as I was thinking about this I thought that that made a lot of sense because it creates, in effect, a hedge against the - if in fact the result is closer to the company's forecast than to the Department's forecast, so I thought that that was a very good idea. CHAIR KOPPENDRAYER: Let me go on to explain a little bit. Approving the company's request for an RFP doesn't mean that we're going to approve the RFP or we're going to approve anything from here on. It only says, all right, we see, we heard the explanation, there's a potential need, get started. And along the way continue to prove to us that there's a need. And that's why also included is approve the megawatts of baseload need for intended service in, and also included is that they require them to - to file their certificate of need by November. Because if I'm going to look at this RFP for this - for this peaking plant, I want to look at it in light of the whole picture. So let's get going on the whole picture, let's have everybody at the table under the certificate of need, and it gives us an opportunity to have several bites at the apple. COMMISSIONER JOHNSON: And that's why I was not going to vote for number one, I wanted number two, but this I'm sure won't come to fruition, but let them plan on it, start working on it, and it'll (inaudible). CHAIR KOPPENDRAYER: Because also there's a chart that shows there's another hundred and some megawatts of peaking, and then there's a chart that XCEL RESOURCE PLAN - PUC - JUNE, 0 shows there's 0 -- you have the same chart. No, that ain't the one. 0 and some megawatts of combined-cycle gas, so COMMISSIONER NICKOLAI: Is this the chart? CHAIR KOPPENDRAYER: Yes. COMMISSIONER NICKOLAI: This is preferred plan, expansion plan that includes upgrades, median gas scenario. COMMISSIONER REHA: Um-hum. CHAIR KOPPENDRAYER: And so what I want to look at is this peaking plant, the baseload, and then in light of is this necessary, the next two gas plants, are they necessary. COMMISSIONER NICKOLAI: Well, and Mr. Chair, I agree with you, and I also appreciate the fact your motion included D and E, because those were items that I asked Mr. Eknes and Ms. Mackenzie to put in as possible items as we were talking yesterday. 'Cause I think that we need to send a message that it looks like, according to what Xcel's filed, that there's pretty reasonably there's possibly a reasonable way, a reasonably cost way of expanding baseload capacity, and that there's no reason why they shouldn't get moving on that. And then also the one on demand response, I appreciate being included in here, because Xcel's resource plan keeps on telling us here that they're really worried about the peak, in fact they're asking for many megawatts of peaking of peaking plants, but one of the one of the ways that, as I've gone to various meetings at MISO and with OMS, there's a lot of interest in trying to figure out how to develop good demand response giving customers the control over their load at certain price levels. Because we have a real different system than we did a few years ago. There are now real-time prices, and Xcel's participating in that market on a five-minute basis. And some of that information can be used by customers to help them decide when it's appropriate to control a load and that will help control the peak. And so that's why I thought it was important to get that in there and so we can get Xcel thinking about, a little more push on that idea, but how we do that, and then how that all fits within the MISO market. CHAIR KOPPENDRAYER: And, Commissioner Nickolai, I included that when I read it this morning in the new. Because well, it just it didn't give me too much heartburn, but I did it SHADDIX & ASSOCIATES ()- (00)-0 Page to

8 fully cognizant of the fact that the large users are the ones that respond. And the large users are looking at their own bottom line and they're responding accordingly. XCEL RESOURCE PLAN - PUC - JUNE, 0 When we looked at that in light of - and I don't know if you were on the Commission yet, in light of net metering and the Seattle, Washington model, what was that called, Puget Sound model. COMMISSIONER REHA: Right. CHAIR KOPPENDRAYER: You know, we just found that the savings weren't there to incent customers to be looking on a daily basis or on an hourly basis, not even on a daily basis, they were going to save like maybe 0 cents, you know, if they watched it on a daily basis, and that's why the Puget Sound model didn't turn out as well as what some of us thought it did. So it doesn't hurt to - it doesn't hurt to say what are you doing and have you look at it. COMMISSIONER REHA: And I think also, just to add to that, I think under EPACT, the Commission is required to take a fresh look at (inaudible) response, and so the more information that we have on that, the better we can assess and analyze what, if anything, we want to do with respect to demand response. So I think the more data gathered, the better. CHAIR KOPPENDRAYER: And I -- there are - and another reason, another thing that came to my mind when I was going over this one was, and I've brought it up before, there are things happening out there - Xcel is doing some things that others aren't, but there are some things happening out there that Xcel is not doing. Out in rural Minnesota some of the co-ops have some really innovative ideas. You know, I and my daughter each have three meters on our house and we save a lot of money on electricity by having different rates for off-peak use. And those are things that have to be examined all the time. COMMISSIONER NICKOLAI: Well, and Mr. Chair, yeah, so I appreciate you including those. I do think it's worth pushing on. Then on page, on the sulfur dioxide strategies, I agree with the Chair just to take no action at this time. I'm not I'm not persuaded that it seems that there's a need to take some action immediately, so I think there might be some value in letting this issue sit for a while. CHAIR KOPPENDRAYER: And some of my 0 thinking on that was that, you know, I'm really cognizant of this one more than, I have to admit, C0, because I sit underneath the plume from the Sherco plants, and the Sherco updates are going to address some of this. So I thought, all right, we're going to be addressing some ofthis, we don't have to go any further right now. COMMISSIONER NICKOLAI: Bear with me for a minute, Mr. Chair, 'cause I'm wondering if I missed something. Let's see. Oh. COMMISSIONER REHA: If I just might ask a question of Commissioner Nickolai on respect to the C0 planning and risk analysis. You know, I just want to say that I think that most people are in consensus that carbon management is coming. And we address this so much at our national meetings and at our regional meetings. And it would seem to me that over the course of this resource plan, which goes from 0 to, I believe, to not have Xcel starting to work with stakeholders that are interested in this to develop some type of a framework on how to look at C0 risk, I think is very blind-sighted. COMMISSIONER NICKOLAI: Well, Mr. Chair, Commissioner Reha, actually I realize, that was what I had just skipped over. COMMISSIONER REHA: Okay. COMMISSIONER NICKOLAI: And I wanted to say that on - I agree with you on one, two, and three. COMMISSIONER REHA: Okay. COMMISSIONER NICKOLAI: In fact I have one in addition I would like to see to one. The sentence reads. Including consideration of framework proposed by MCEA in this case to be applied in Xcel's next resource plan and certificate of need filings, I would like to see that read, Xcel's next resource plan, certificate of need filings, and other resource acquisitions. little broader. need filings as well. COMMISSIONER REHA: Okay. COMMISSIONER NICKOLAI: So make it a COMMISSIONER REHA: And certificate of COMMISSIONER NICKOLAI: And that's to one. Yes, but also other resource acquisitions, make it a little broader, because not everything is going to require a certificate of need, perhaps. COMMISSIONER REHA: So I guess I was confused then when you said you agreed with the SHADDIX & ASSOCIATES ()- (00)-0 Page to

9 XCEL RESOURCE PLAN - PUC - JUNE, 0 Chair on C0? resources. COMMISSIONER NICKOLAI: No, I'm sorry, I COMMISSIONER NICKOLAI: Other resource meant 0, on. I had skipped page. acquisitions. COMMISSIONER REHA: Oh, I'm sorry. COMMISSIONER JOHNSON: Yeah. What does COMMISSIONER NICKOLAI: No, no, I that mean to take, for instance, Manitoba Hydro? misspoke. COMMISSIONER NICKOLAI: It means that CHAIR KOPPENDRAYER: I was talking about whenever there's a resource acquisition there's S0 too. B going to need to be an analysis with respect to CO COMMISSIONER REHA: Oh, okay. I'm sorry. risk analysis using that framework. COMMISSIONER NICKOLAI: But I did skip CHAIR KOPPENDRAYER: So it could be over -- interpreted, if they can contract for more power COMMISSIONER REHA: Nevermind. from Manitoba Hydro which is less C0 emissions, COMMISSIONER NICKOLAI: But so I agree ~ that's a good thing. CHAIR KOPPENDRAYER: You thought you COMMISSIONER NICKOLAI: Right. Um-hum. really had me coming your way. And again, if you look at this, it's gaining it's COMMISSIONER NICKOLAI: So on page I providing information, it's not -- as far as the agree with Commissioner Reha on one, two, and three, discussion of a hedge value. but I would like to see that, just that addition, to COMMISSIONER JOHNSON: That's fine. one. And then S0, I do agree with the Chair on Thank you. that. COMMISSIONER NICKOLAI: It's not COMMISSIONER REHA: Okay. mandating a particular outcome, it's just trying to COMMISSIONER NICKOLAI: And I'm trying to make sure that the decision is as informed as think if there's and then, as we talked about the possible. wind capacity requirement on page, if I have to COMMISSIONER JOHNSON: Okay. And then vote, I would vote two, I would vote with the Chair, the rest of it you're all in agreement with, right? but number three seems to me a good way of COMMISSIONER NICKOLAI: I'm in agreement preserving options so that I certainly would think with the Chair's motion, yes. that would be a good way to go. CHAIR KOPPENDRAYER: And you still have Let's see. On the some time, so why don't we hear some comments from CHAIR KOPPENDRAYER: Well, let's just the parties on the recommendations. stop there a second. I guess you said it would be COMMISSIONER REHA: We haven't heard from an okay option, I conceded that in light of one and Commissioner Johnson. being silent on the issue, are you okay with that, CHAIR KOPPENDRAYER: We're really close. Commissioner Johnson? Then we don't have to vote on COMMISSIONER JOHNSON: On what? it. Option three on G? And remember, we're going COMMISSIONER REHA: Are you in agreement to let the parties comment on this and we're keeping then all along? an open mind here. It might not seem that way, but COMMISSIONER JOHNSON: I followed all we are. along with everything, and the only one I really COMMISSIONER NICKOLAI: And then, have trouble with is not going with the Department Mr. Chair, as we go through these, let's see, it on the forecasting, but -- seemed to me on the - let's see, I'm with you on COMMISSIONER REHA: But you're okay? number two - let's see. don't - COMMISSIONER JOHNSON: Yeah. COMMISSIONER JOHNSON: Oh, COMMISSIONER REHA: Okay. Commissioner CHAIR KOPPENDRAYER: The parties that COMMISSIONER NICKOLAI: I'm with you I have heard the discussion and wish to comment, think on all the rest of this through page. please come on up. COMMISSIONER JOHNSON: Back to page, And why don't we introduce ourselves for when you're talking about adding the record, and we'll start with Ms. Friese. COMMISSIONER NICKOLAI: Page. Ms. Friese, I owe you an apology. I noticed that COMMISSIONER JOHNSON: - other when you were speaking the other day, Tuesday, that SHADDIX & ASSOCIATES ()- (00)-0 Page to

10 I was interrupting you in the middle of sentences, and that's unfair on my part and I apologize. XCEL RESOURCE PLAN - PUC - JUNE, 0 MS. FRIESE: Well, no apology necessary, Chair Koppendrayer, I appreciated the give and take on that issue and it was an important one. Actually, I'd like to defer to my colleague, Beth Goodpaster, of MCEA, who has some comments, and may chime in myself a bit later. MS. GOODPASTER: Beth Goodpaster, appearing on behalf of Minnesota Center for Environmental Advocacy, Izaak Walton League, Fresh Energy, and Union of Concerned Scientists. CHAIR KOPPENDRAYER: consolidate all of that pretty soon. MR. CLARK: You're going to Chris Clark, on behalf of Northern States Power Company, doing business as Xcel Energy. MR. DAVIS: Chris Davis, on behalf of the Minnesota Department of Commerce. MS. EIDE-TOLLEFSON: Kristen Eide-Tollefson, finishing up this docket as CURE. MR. BRADLEY: Ken Bradley, on behalf of Fresh Energy and the Minnesota Human Rights Center. Mr. Clark. CHAIR KOPPENDRAYER: Thank you. MR. CLARK: Mr. Chair, Commissioners, thank you. I will try to make some quick comments on the sort of consensus motion that you've accumulated. Let me first say, though, that one of the things we were waiting for in this resource plan and looking forward to all through this plan has been feedback from this Commission. We heard much of that feedback on Tuesday, we heard another good bit of it this morning as you built the motion. I want to let you know that we as a company, including our executive officers, Paul Bonavia (phonetic), who is president of our utilities group is here with me, David Sparby is behind me, and the others that you've seen on more of a day-to-day basis are all here, have all heard you, and are all listening to what you have to say as a Commission. First with regard to the baseload plant, which we think is one of the biggest parts of this case and the biggest parts of this discussion. If this Commission wants us to come forward with a filing, staff mentioned that we sent over resource decision alternatives yesterday, we indicated in that alternative that we're willing to make such a filing by the end of the year. We note that you've moved the date up to November st and we're certainly willing to work toward that date as well. We sort of look at it as there are big decisions to make, there are big environmental issues to consider, and we want to make that filing as good as we can. We think if we have a little extra time, that's great, and if you want it on November st, that's great, we'll deliver what you want. Likewise with regard to the upgrades. We heard you, we have been continuing our work efforts on those upgrades, trying to figure out the transmission issues with them, trying to figure out what the best schedule is, looking at lead times of equipment, building project schedules. We are committed to bringing those forward to you and are willing to do so in a formal filing. With regard to the, I think, megawatts of peaking need, we appreciate you considering that as sort of a contingency or a hedge, I think as you've described it in making your motion. We think that's the appropriate way to do that. We think that means we'll go out for about a 0 megawatt RFP in the, time frame. We may ask that you consider reflecting that date in the decision alternatives, as we think the Flint Hills may actually push that need up a little earlier. That said, we clearly hear the point that you're concerned about gas coming on the system, you're concerned about adding a peaking plant unnecessary, and that as we update forecasts and consider information, the changes in information, consider the variables that continue to change, we take a close look at those before we come to you and ask that you approve a selection, and then again before we come to you and ask that we approve any Power Purchase Agreement that comes out of there. So, again ~ Mr. Chair? You looked like you had a question. CHAIR KOPPENDRAYER: Well, Mr. Clark, just on the point of Flint Hills. I was - and I'm sure the others were too, I was fully aware of you talking about Flint Hills. But I had nothing to say, Flint Hills is doing this when or Flint Hills is going to need how much, I just heard about Flint Hills. So you - you, Xcel, has to make a case about Flint Hills if that has to be moved up. MR. CLARK: And, Mr. Chair, SHADDIX & ASSOCIATES ()- (00)-0 Page to 0 0

11 Commissioners, I don't mean to narrow this issue just to Flint Hills, we also had quite a discussion with Commissioner Nickolai about MISO and the MISO Day market. And I think really the message, and I wanted to actually clarify that MISO Day discussion, and I can also do that with regard to the Flint Hills discussion as I do that. MISO has improved our ability to get energy from the marketplace. And in the time of the plan, MISO, in about the 0 time frame, we had to have firm transmission paths for energy we obtained in the MISO - for capacity we obtained in the MISO market. And we recognized in the 0, 0 time frame that there were constraints that were it was very difficult to lock up those firm transmission paths. And we became concerned about that and as a result we made the change to the 0 percent recommended the change to the 0 percent forecast and locked in the short term purchases. But in 0 we actually have had very good access to capacity in the MISO market, but what's going on is that MISO and MAPP continue to discuss, or MAPP on its own, in light of what MISO is doing, continues to look at its rules and focuses on the reliability. And those two organizations do not always see eye to eye. MAPP isn't always willing to defer to what MISO thinks how it should work in regard to capacity. If the world continues like it has in 0, that's one of the factors that will play into our analysis of whether we need that peaking plant, and we may not need it On the other hand, if sort of the MAPP more conservative view of you need a firm transmission path through this path that prevails and the rules get changed away from what they are in the 0 time frame, that contingency all of a sudden becomes much more real, or that hedge becomes much more likely to be needed. Likewise, with Flint Hills, as we update the models to take a look at it, we're seeing a little bit of movement in the time that we need that peaking energy. These things will all continue to move, and so if the Commission feels more comfortable based on the record that you have in front of you using the time frame and just leaving it alone, we can certainly work with that. I think there's plenty of leeway in the overall process for us to adjust and for us to alert you if we think we need to bring it in earlier. XCEL RESOURCE PLAN - PUC - JUNE, 0 CHAIR KOPPENDRAYER: And, again, the Commission, or myself, I don't want Xcel's customers' lights to go out any more than you do, and as we go towards these dates new information is always helpful. MR. CLARK: Thank you, Mr. Chair, Commissioners. I think if you're willing, it might and if this isn't how you want to do this, just let me know, there are a couple other issues that I want to comment on, but I think it might be quickest if I did that as I turn the pages and discuss what I sort of heard as your consensus motion. CHAIR KOPPENDRAYER: Please. MR. CLARK: And if I misheard it, I'm sure, please let me know. With regard to where the Commission was discussing a motion on the wind expansion plan, we're certainly comfortable with option one as you've discussed it here today. We think that if the order appropriately recognized, as your discussion did, that the wind integration study and penetration study is coming, and that the Commission may revisit later your decisions based on that, we think that's understood. We also think that as we do resource planning we will factor in many things that continue to change and bring all that information to you. And so as long as those later years aren't viewed as a mandate that can never be changed, which we don't think is how resource planning works, we're certainly fine with your option one. With regard to the transmission to support wind development, we were okay with the items lined out in your motion, Chair Koppendrayer, and I think as supported by the others. The one comment I would make is that perhaps under three, if that filing were to occur in the next biennial transmission plan, that might be as appropriate as the resource plan because there's a focus on transmission issues in that docket I think it's relatively the same time frame that it would come back in front of you. With regard to the statement on resource and development, we like the fact that you expanded that to include other utilities, but we think it's a good point to make. On page, I believe it was B, one, we think that is that's workable for us. C, one and two, likewise. On page on D, again, the message SHADDIX & ASSOCIATES ()- (00)-0 Page to

12 XCEL RESOURCE PLAN - PUC - JUNE, 0 from us is that we've heard you and we think that to add that we would have to consult with other items one, A through E, as outlined in what we understand to be the motion to be helpful. We appreciate the discussion actually of item E, it helps us as we look at bringing information back to you. COMMISSIONER REHA: There's also an item parties, including MCEA, and we're certainly willing to do that. And also to pick up the language that we would consider the 00 risk analysis in resource planning, CON filings, and other resource acquisitions, which I believe was sort ofthe consensus motion. F and G, so you're not mistaken, F - But where that would move us away in our MR. CLARK: I'm sorry, I misspoke. opinion from one is that it wouldn't lock us into COMMISSIONER REHA: That was mine, so I looking at just one particular protocol, the didn't want it to be left out. California approach, for instance. But it would MR. CLARK: I wasn't trying to do that, allow us to look at all the information and not lock actually. I was trying to I knew you'd added one ourselves into a this is an up or down on the and I just didn't look far enough. So items one, California protocol and what they did in that through G, I think was the discussion. docket. We'll create our own docket, and if you're CHAIR KOPPENDRAYER: And we -- and the interested in that, we're also willing to discussion that I just briefly - that I had with participate in a generic proceeding. But we're staff, I believe it was Mr. Eknes, about turbine certainly willing to do the work, we certainly don't size, that's why that line should read, approve the have our head in the sand and don't want to have our company's request to issue an RFP for a need of head in the sand on this issue. C0 is going to be megawatts, because the RFP may have - to meet that a defining issue for this industry over the next may have a turbine size of 0, and we recognize decades and we want to be a part of leading that that. effort. So we're that's how we would approach MR. CLARK: And we appreciate that, I handling -- approaching items two and three there. think that is very helpful from our viewpoint. CHAIR KOPPENDRAYER: Mr. Clark, just With regard to the decision option E on page, the C0 issues. Our preference was three, and let me just say this with regard to two. We are certainly willing to bring two forward, the discussion of how an IGCC may be able to help mitigate, and start to try to address the questions that Commissioner Johnson asked. But we also appreciated your reference to other parties who would have something to contribute to that, and so we would look at our initiating that discussion as doing that. Taking a good effort to bring that discussion to you and our thoughts about it, but then also asking other parties to contribute to that. Not take it as a report that Xcel filed that needs to be torn apart and criticized, but there are others who are working, Excelsior and Great Northern have both talked to me about their look at that technology, and I think there are lots of contributors that have opinions that would be valuable to this Commission on that. With regard to the Commission's discussion of one, our preference would be that you would incorporate what you're doing in one into three. First to avoid some duplication, and second to clarify, and I think you'd have to modify three looking through my notes, I didn't -- I didn't realize that that locked you into a protocol. COMMISSIONER REHA: It says - yeah. CHAIR KOPPENDRAYER: Consideration. COMMISSIONER REHA: Including. CHAIR KOPPENDRAYER: Including consideration of the framework, that's one framework you might look at. MR. CLARK: And, Mr. Chair - CHAIR KOPPENDRAYER: And everything else applicable, that's new and better. MR. CLARK: And, Mr. Chair, Commissioners, I think if the order makes it clear that we're to look at, you know, many frameworks, I think that's what we're after in spending time discussing this issue, is we don't want to be locked into what California did, we want to take the Minnesota approach to this issue. CHAIR KOPPENDRAYER: That's not my intention at all to make Minnesota look like California. Ain't going there. MR. CLARK: Mr. Chair, Commissioners, with regard to the remainder of the consensus, I don't know that we had any particular - particularly strong concerns with the remainder of SHADDIX & ASSOCIATES ()- (00)-0 Page to