Citing low costs, Xcel Energy plans 'significant increase' in wind purchases

11 July 2013 by Tom Gray Tom Gray

Texas-New Mexico customers to save $590 million in fuel costs over 20 years

Xcel Energy subsidiary Southwestern Public Service Co. is seeking approval in New Mexico to purchase almost 700 MW of additional wind energy through three purchase agreements, deals that the investor-owned utility said "will save Texas-New Mexico customers more than $590 million in fuel costs over 20 years."

The wind purchases, it said, will come from three facilities to be located in Oklahoma, Texas, and New Mexico:

• 199 megawatts from NextEra Energy Resources/Mammoth Plains Wind Energy Center located in Dewey and Blaine counties, Okla.
• 249 megawatts from NextEra Energy Resources/Palo Duro Wind Energy Center located in Hansford and Ochiltree counties, Texas.
• 250 megawatts from Infinity Wind Resources/Roosevelt Wind Ranch in Roosevelt County, N.M., between the towns of Dora and Elida.

The price per megawatt-hour of energy generated at these wind facilities will be less than the per-megawatt-hour price of most of the company’s natural gas-fueled generation, according to Southwestern President and CEO Riley Hill. Over the 20-year terms of these agreements, Xcel Energy expects to save $590.4 million in fuel costs, Mr. Hill said.

“We started shopping for more wind energy in March after seeing some very good prices on the market,” Mr. Hill said. “We are making these acquisitions purely on economics and the savings we can deliver to our customers.”

Mr. Hill said the favorable pricing is partly the result of the federal wind energy production tax credit (PTC) that Congress extended January 1 for one year, applicable to facilities on which construction is started before the end of 2013.

Xcel Energy currently has close to 1,500 MW of wind energy capacity connected to its Texas-New Mexico transmission and distribution network, which spans the Panhandle and South Plains regions of Texas, six eastern and southeastern counties in New Mexico, and portions of Oklahoma and Kansas. Xcel Energy purchases more than 600 of those megawatts through long-term contracts.

The three additional contracts will more than double the company’s contract wind resources, and will push the total Texas-New Mexico wind capacity beyond 2,200 MW.

The company solicited additional wind resources through a request for proposals process that opened in March. This process generated more than 75 proposals that included the winning bidders. The deals are for energy only, and do not include the purchase of renewable energy certificates (RECs).

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