Managing Public Opposition CapX2020 Strategy Summer 2010

2. Future of Transmission �To accelerate the creation of a clean energy economy, we will double our capacity to generate alternative sources of energy�we�ll begin to build a new electricity grid�that will convey this new energy from coast to coast.� President Obama in his first radio address

3. Load growth has out pacedtransmission investment This chart shows the increase in electric demand from the early 1980s through 2020. The last time a major upgrade in transmission occurred was in the 1970s and 1980s, and the increase in electric use reflects the differences in how people lived and worked then compared to now. In the 80s, very few people had more than one TV, not everyone had air conditioners in their homes and no one had computers. Now, almost every home has multiple TVs, at least one if not multiple computers, and most people have air conditioners. Factories are much more automated now than they were 20 to 30 years ago, as are farms. As an example, 20 to 30 years ago, few farms had 3-phase corn dryers. We�ve heard from multiple utilities and electric cooperatives that it�s difficult for them to even provide 3-phase power to farms because of the increased use of it. Project Summary by Decade: 1970s saw a major investment in the regional transmission infrastructure with. Most projects interconnected generating stations located far outside the metropolitan areas to these load centers. A major reliability project, the twin cities 345 kV loop was also built during this period. Most of these projects were built to serve projected demand for the next 30 years. 1980s saw a continuation of these generation connection projects, but at a much lower rate 1990s saw little investment in new line miles with limited uprates of selected facilities The current decade has seen renewed invest in the region primarily driven by the Duluth to Westin WI project and the Lakefield Junction, MN to Split Rock SD project which has laid the ground work for enhanced wind energy deliveries from SW MN to the Twin Cities load centerThis chart shows the increase in electric demand from the early 1980s through 2020. The last time a major upgrade in transmission occurred was in the 1970s and 1980s, and the increase in electric use reflects the differences in how people lived and worked then compared to now. In the 80s, very few people had more than one TV, not everyone had air conditioners in their homes and no one had computers. Now, almost every home has multiple TVs, at least one if not multiple computers, and most people have air conditioners. Factories are much more automated now than they were 20 to 30 years ago, as are farms. As an example, 20 to 30 years ago, few farms had 3-phase corn dryers. We�ve heard from multiple utilities and electric cooperatives that it�s difficult for them to even provide 3-phase power to farms because of the increased use of it. Project Summary by Decade: 1970s saw a major investment in the regional transmission infrastructure with. Most projects interconnected generating stations located far outside the metropolitan areas to these load centers. A major reliability project, the twin cities 345 kV loop was also built during this period. Most of these projects were built to serve projected demand for the next 30 years. 1980s saw a continuation of these generation connection projects, but at a much lower rate 1990s saw little investment in new line miles with limited uprates of selected facilities The current decade has seen renewed invest in the region primarily driven by the Duluth to Westin WI project and the Lakefield Junction, MN to Split Rock SD project which has laid the ground work for enhanced wind energy deliveries from SW MN to the Twin Cities load center

4. State renewable requirements grew 2004 � MN renewable energy goal � 10% 2007 � MN renewable energy standard (RES) � 25% (30% Xcel) North Dakota RES � 10 percent by 2015 South Dakota RES � 10 percent by 2015 Wisconsin RES � 10 percent by 2015

5. Who are the CapX2020 utilities? Cooperatives, municipals, investor-owned utilities Serving nearly 5.5 million customers for decades 42,000+ miles of transmission lines National leaders in using renewable energy 4,300 megawatts of wind on systems Xcel Energy-Nation�s No. 1 wind power provider (four years running) Great River Energy-No. 1 wind power provider among rural electric cooperatives (2008) Otter Tail Power-13% of generating power is from renewable energy sources Xcel Energy-Nation�s No. 1 wind power provider (four years running) Great River Energy-No. 1 wind power provider among rural electric cooperatives (2008) Otter Tail Power-13% of generating power is from renewable energy sources

6. Group 1 projects resulted from Vision PlanUtilities, regulators, stakeholders aligned Twin Cities Load is major factor influencing transmission system design Local service needs in Alexandria, St. Cloud, Rochester, LaCrosse/Winona, Bemidji/Red River Valley area This cost estimate is for projects as originally proposed � single circuit 345 kV (1.4-1.7 billion). Est cost of dbl circuit capable: $1.6 � 1.9 billion In addition, $70 - $100 M of investments to underlying transmission system necessary to achieve benefits of the Group 1 projects Expansive regulatory proceedings Routes were developed via sequential, collaborative process, Started with very broad study corridors, now into 2nd round of engagement, narrowing options down to very specific routes WI, ND, SD, Federal reviews underway Land acquisition, construction: 2010 through 2015 Twin Cities Load is major factor influencing transmission system design Local service needs in Alexandria, St. Cloud, Rochester, LaCrosse/Winona, Bemidji/Red River Valley area This cost estimate is for projects as originally proposed � single circuit 345 kV (1.4-1.7 billion). Est cost of dbl circuit capable: $1.6 � 1.9 billion In addition, $70 - $100 M of investments to underlying transmission system necessary to achieve benefits of the Group 1 projects Expansive regulatory proceedings Routes were developed via sequential, collaborative process, Started with very broad study corridors, now into 2nd round of engagement, narrowing options down to very specific routes WI, ND, SD, Federal reviews underway Land acquisition, construction: 2010 through 2015

7. Route Development Significant outreach to: Media Local governments State and federal agencies Affected landowners

8. Media 2006�Visited all newspapers in project areas Explain project need, regulatory process, how to participate

9. Local government Briefings to county and township governments Included in all mailings Pledged to meet anytime, anywhere

10. State and federal agencies Input from all important DNR, US Fish and Wildlife Service, Office of Energy Security, others Identify areas important in each county/geographic area

11. Landowners Most important stakeholders They will live with infrastructure for decades Find ways to meaningfully involve them Don�t just pay lip service to involvement

12. Open Houses Project education Need Regulatory process Route development

13. Landowners Project education Sell the project need CapX2020 conducted statewide opinion research Identified likely support for renewable energy projects Also explained growing electric use Fact sheets, displays, direct mail Answer every question No matter how strange Strange questions: Why can�t you put wind turbines on top of towers? Can we have a cell phone tower installed on the ones on our property to improve our cell service? Typical questions: What about stray voltage? Will towers interfere with my GPS, radio or internet service? How much will I be paid for an easement? Strange questions: Why can�t you put wind turbines on top of towers? Can we have a cell phone tower installed on the ones on our property to improve our cell service? Typical questions: What about stray voltage? Will towers interfere with my GPS, radio or internet service? How much will I be paid for an easement?

14. Landowners Route development Route development team at open houses Maps with land-use information Ask for their help Document changes from meeting to meeting

15. Work groups Small groups Invited local governments and active landowners Demonstrated commitment to legislators, local governments and policy makers

16. Route development Notice corridors Asked for comments and feedback Urged to route along existing corridors Roads, transmission lines, rail, etc Route options Asked for feedback; asked if we missed anything Near-final routes Asked for more feedback

17. Notice Corridor

18. Routes in Review

19. Results? Opposition limited to affected landowners Strong support from local governments Were closely involved in route development We went to them Open houses, board meetings, work group invitations, Farmfest, statewide meetings Continued updates through Right-of-Way, design/engineering and construction

20. Recommendations Explain the need Demonstrate transparency Use landowner/local government knowledge

21. Overview of MinnesotaRoute Review, Approval Process MN PUC route process Governed by MN Statutes Chapter 216E, Rules Chapter 7849 Stakeholder input to process is critical Public (landowners, local communities) State (MN DOT, Department of Agriculture, Department of Natural Resources) Federal ( U.S. Army Corps of Engineers, U.S. Fish and Wildlife Service, Forest Service) State or public can add route options for consideration Brookings County-Hampton project example: 47 route segments added MN PUC determines route

22. Committed to Public Participation 2007 communication and public outreach 100+ meetings with local governments, civic groups, media Mailings to 73,000 landowners, 500 local officials 2008 130 public meetings/LGU presentations 275,000 direct mail pieces; 225 newspaper ads 2009 90+ public meetings/LGU presentations 260,000 direct mail pieces; 140 newspaper ads

23. Group 1 projects regulatory phase 345-kV projects April 2009: MN PUC unanimously approved Certificate of Need Minnesota Route Permits filed 2010: regulatory permits to be filed in North and South Dakota and Wisconsin 230-kV project July 2009: MN PUC unanimously approved Certificate of Need permit June 2010: Route Permit decision expected Federal agency reviews ongoing