Xcel Energy and Environmental Parties Least-Cost Resource Plan Settlement Agreement

1. Xcel Energy and Environmental PartiesLeast-Cost Resource Plan Settlement Agreement

2. Discussion • Background • Negotiations • Implementation • Lessons Learned

3. Xcel Energy in Colorado • 1.34 million electric customers • 1.25 million natural gas customers • Provides energy to 75% of state’s residents

4. The Least-Cost Plan Filing Filed with the CPUC April 30, 2004 • Forecast of electric needs from 2004-2013 and plan to meet them • Included: • Proposed all-source bidding process • A request to build a 750 MW coal-fired unit at Comanche Station near Pueblo

5. The Forecast

6. Process • Resource forecast and plan filed 4/30/04 • Rounds of testimony filed • In fall 2004, negotiations began with two main groups: • Environmental and community parties • Other intervenors (OCC, PUC staff, others) • Hearings held at CPUC Nov. 2004

7. Why Negotiate? • Environmental groups’ view: • Reduce environmental impact of new coal unit • Greater environmental benefits faster • Achieve specific environmental benefits for Pueblo community • Expand renewable energy and energy conservation • Develop ongoing dialogue • Accountability

8. Why Negotiate? • Xcel Energy’s view: • Cooperation and consensus from intervenors concerning critical energy resource • Reduce litigation risk concerning Comanche project • Opportunity to install additional emission controls on existing facility • Enhance community relations • Establish dialogue and pursue opportunities for mutual collaboration

9. Negotiation Process • Negotiators • Major environmental and community parties; Xcel Energy • Long, difficult discussions with compromise from both sides • Key challenges: • Environmental negotiators – negotiating on behalf of many parties with different interests • Utility negotiators – balancing interests of many different parties; outside involvement in how we run our business; long-term implications and policy impacts • A common challenge: Internal buy-in

10. Settlement Agreement • Reached Dec. 2004; PUC approved 1/05 • Concerned Environmental and Community Parties (CECP): • Sierra Club • Western Resource Advocates • Environmental Defense • Better Pueblo • Diocese of Pueblo • Southwestern Energy Efficiency Project • Colorado Renewable Energy Society • Environment Colorado • Smart Growth Advocates

11. Key Provisions • Comanche • Additional emission controls and tighter emission limits for Comanche Station • Mercury testing and cost-effective controls for all units; plant-wide mercury emission limit • Energy planning • Accept wind bids up to 15% penetration if in least-cost portfolio • Wind ancillary cost study • Greatly increased energy conservation programs and study • New resources evaluated with CO2 proxy cost and renewable energy credit value • Innovative technologies • Community initiatives • Pueblo environmental donations and community involvement

12. Key Provisions • Agreement by environmental signatories not to oppose Comanche Station permitting and approval processes Agreement on web site www.xcelenergy.com, under Energy and Rates, Colorado least-cost resource plan

13. Comanche Station Emission Controls Existing and New

15. Implementation • Quarterly meetings • Ongoing involvement • Wind study • Demand side management working group • Pueblo initiatives • Legislative agenda • Different groups have different interests

16. Ongoing Issues and Challenges • Lawsuit challenging air permits for Comanche project • Not filed by CECP • Impact on future negotiated settlements • Communication

17. Lessons Learned • Collaboration is possible • Effort and personal commitment to get it done