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S.F. No. 521 - Electric Energy Biomass Mandate Amendment
 
Author: Senator David J. Tomassoni
 
Prepared By:
 
Date: February 26, 2013



 

OVERVIEW

In 1994 legislation was enacted authorizing the dry cask storage of spent radioactive fuel rods at the Prairie Island Nuclear Generating Plant operated by XCEL Energy.  This authorization was necessary for the continued operation of the generating plant since storage capacity in the plant’s storage pool was reaching capacity.  As part of the 1994 legislation, XCEL was required to satisfy wind and biomass generation mandates.  The biomass mandate was originally for 125 megawatts.  For a variety of reasons the biomass mandate was difficult to satisfy.  For this reason the law has been amended 14 times to accommodate various proposals to satisfy the mandate.  The legislative amendments were often drafted with a specific project in mind and were often quite detailed.  Senate File No 521 addresses one of the projects that XCEL is utilizing to satisfy the biomass mandate.  This particular project is a wood burning generation facility jointly owned by Hibbing and Virginia municipal utilities (referred to in statute as the “project owners”).  There is an existing power purchase agreement between XCEL and the project owners.

Section 1, paragraph (e) requires that within 45 days of March 31, 2013, upon request of the project owner, an amendment must be made to the existing power purchase agreement between XCEL and the project owners.  The amendment is for the price paid by XCEL for energy from the project after January 1, 2014.  The price cap for purchased energy is raised from the existing $104 to $109.20 per megawatt hour.

New paragraph (f) requires, upon request of the project owners that XCEL agree to a fuel clause adjustment amendment to the power purchase agreement.  The Public Utilities Commission is required to approve the amendment.

New paragraph (g) prohibits XCEL from recovering from the project owner any costs that were not reasonably incurred by XCEL, notwithstanding if the power purchase agreement authorizes the cost recovery.  Requires XCEL to pay the full purchase price for all energy delivered under the power purchase agreement provided that in any year the project owner does not deliver more than 110 percent of the scheduled delivery nor on average over five years no more than 105 percent of the scheduled delivery.

JCF/syl

 
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