Xcel undecided on challenge over Colorado transmission decision

By the OGJ Online Staff

HOUSTON, Aug. 14, 2001 – Xcel Energy Inc. hasn’t decided whether to appeal a regulatory decision requiring shareholders to pick up part of the tab to build a high voltage transmission line linking western and eastern interconnections, a spokesman said Tuesday.

The Colorado Public Utilities Commission granted Xcel Energy, Minneapolis, Minn., the authority to build a high voltage transmission line to connect the Front Range with alternate power supplies located to the east and south of Colorado in mid-July.

The PUC approved a proposal to build a 345 kv transmission line from Lamar, Col. to the Kansas border. The high voltage line will link the electric systems of the former Public Service Co. and Southwestern Public Service of Amarillo, which merged several years ago. The Kansas portion of the line is scheduled to become operational in September.

“Given the constraints of the Front Range transmission system, it is important for us to encourage investment in transmission capacity in and out of the state,” PUC Chairman Ray Gifford said.

The proposed transmission line will increase the interconnection capacity between the western and eastern interconnections by 210 Mw, or 20%. Attention has recently turned to the state of the nation’s aging electric grid and the need for added supply and tighter connections among various regions of the country.

Congress has conducted hearing on the adequacy of the grid and the Bush administration has called for creating a true national transmission system, while not specifically endorsing any project.

Shareholder costs
Last week the Bush administration and the National Governors Association formed a task force headed by Sec. of Energy Spencer Abraham and Michigan Gov. John Engler, a Republican, to examine electricity infrastructure issues, especially roadblocks to new facilities. Funding for new facilities is also coming to the forefront as a public policy question.

The Colorado PUC ruled once the line is in operation, Xcel will be allowed to recover from ratepayers the costs of the transmission line and 50% of a the costs of a $40 million converter necessary to link the two systems. The converter will be built near Lamar, but Xcel said it will also benefit Southwestern Public Service customers in Kansas and Texas.

The estimated cost of the Colorado portion of the project is expected to be about $65.7 million, of which Colorado ratepayers would pay about $45.7 million. The total cost of the project is an estimated $92 million.

Xcel spokesman Mark Stutz said the company believes the project will benefit all customers, and regulators traditionally have permitted full cost recovery under those circumstances. But Gifford said doesn’t make sense that Colorado ratepayers should have to pay the full cost of the converter.

A PUC administrative law judge recommended Xcel be allowed to build the line, but that shareholders, not ratepayers, bear the risk of the project. The PUC said it would require Xcel to file annual reports showing the actual amount of eastern and western power flowing over the facility, and quantifying the benefits to Colorado ratepayers.

The Commissioners said it would put Xcel on notice that costs of the transmission line might be disallowed in the future if the benefits don’t outweigh the costs. Stutz said the PUC hasn’t yet filed a written order, and the company won’t decide whether to appeal until the order is entered.

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