Xcel Energy / Public Service Colorado WECC Market Interface Committee Meeting 10/30/08 Stephen Beuning, Director Market

1. Xcel Energy /Public Service ColoradoWECC Market Interface Committee Meeting10/30/08Stephen Beuning, Director Market Operations

2. Discussion outline • Xcel Energy Utility Overview • Wind Integration Discussion • Operating Impacts • Tuning Tasks • WECC Evolution to Support Renewable Resources • Questions

3. Xcel Energy Utility Overview Four Operating Companies In Three Regional Markets

4. Northern States Power Company- Minnesota Northern States Power Company- Wisconsin 5th Largest Combination Electric and Gas Utility (based on customers) Traditional Regulation Public Service Company of Colorado Southwestern Public Service Xcel Energy Utility Overview Xcel Energy is the #1 Wind Energy Provider in the US.

5. Wind Integration Discussion:Operating impacts

6. Background: Operating Impacts of Wind Generation • General experience (% annual by energy): • At 0-5% penetration: amounts are within existing utility methods to manage variable conditions without significant impact • At 5-9% penetration: we see increased ramping requirements and some increased old-style unit shutdowns during minimum load conditions • At 9-20% penetration: we anticipate larger ramping impacts and “bottoming-out” of old-style generators during minimum load conditions • At >20%: More research needed on potential new tools such as storage, plug-in hybrids, smart grid etc…

7. Traditional view of generator fleet resources

8. “New View” of Generation Additions Traditional Pyramid Alternative Pyramid High carbon generation Peaking Intermediate Baseload Low carbon generation Graphic created by Doug Larson, Western Interstate Energy Board, presented to WECC June 2008 Used with permission of author.

9. Wind “Saturation” effect • Next slide is a simplified system forecast for a high wind scenario • Saturation point depends on system size • “Old fleet” unit minimum constraints become binding! • What to do about this becomes point of today’s discussion

10. System Example: 2885 MW 4781 MW The “Bermuda Triangle” of wind integration!

11. Wind Integration Discussion: Tuning Tasks

12. Wind Integration Tuning Tasks • Key areas for tuning utility operations to manage increasing wind generation: • Improve wind forecasting capability • Improve regional markets – regional dispatch • Increase transmission line delivery capacity • Expand customer load management • Increase “old” generation fleet flexibility • Develop new storage methods for fuel and excess electric production • Modernize existing mandatory reliability standards

13. WECC Regional Evolution to Support Renewable Resources

14. WECC Regional Changes:Can we move obstacles? • Eliminate transaction-based contribution to transmission revenue recovery – several options: • Regional Tariff: • License Plate, Postage Stamp or other? • Alternative: get incremental transmission recovery through a regional dispatch-based hurdle rate? • Establish a regional loss-repayment procedure • Stand-alone COPS maintenance funding (continued on next slide)

15. WECC Regional Changes:Can we move obstacles? • Rationalize non-firm and firm curtailment priority • Use West-Wide System Model topology and distribution factor data ported to a market clearing interface • Deploy a reliability-based regional redispatch and real-time balancing market

16. Conclusions • Our experience indicates that regional market dispatch is very helpful in integrating renewable resources into a balanced energy dispatch • Regional dispatch defers the “saturation point” at which integration starts to become a problem • Although transmission lines are difficult to site and build, major investments will be needed to adapt to high wind penetration levels • Additional methods are also needed for best wind integration results • Customer load flexibility • Increased flexibility from traditional generators • Energy storage tools

17. End

18. Bonus Material

19. Forecasting Improvements • Forecasting error increases the occurrence of unplanned unit commit • Existing forecasts in general have shortcomings and need to incorporate additional attributes: • Need site-specific forecasts at hub height • Need to include impact of wind turbine site geography • Need to incorporate specific turbine site availability into aggregated curves that relate wind forecast to farm output

20. Example: Hourly ramp change System Example Upshot: -Increased ramping and load-following burden -More flexible reserves needed

21. Natural Gas Storage • Gas storage can help mitigate pipeline balancing concerns caused by additional gas dispatch volatility from wind integration • Wind integration studies should also include pipeline penalty cost estimates • Size the storage for largest deviations • Able to handle large, consecutive hourly deviations

22. Energy Storage may be the key… Wind Electricity “Black Box” Storage Electric Grid • Pumped Storage (hydro) • Compressed Air • Battery • Wind to Hydrogen

23. Balancing Standard Revision • “Reliability-based Control”: a standard being developed and tested by the North American Electric Reliability Council • Current practices account for energy imbalance but require a rapid return to zero imbalance • New proposal permits helpful imbalance while ensuring reliable operating parameters within the interconnection – creates a balancing diversity benefit • Xcel Energy supports this proposed standard

24. Added green power sources High-speed, networked connections Plug-in hybrid electric cars Customer interaction with utility Real-time and green pricing Signals Smart thermostats, appliances and in-home control devices Smart House Smart Grid Initiative