On Monday, the MN PUC addressed whether ‘tis nobler in the pocketbook to suffer the slings and arrows of the MISO market or to invest in new generating units against a sea of uncertainty.

As we noted in prior blogs, the MN PUC initiated the competitive process seeking bids to meet a claimed capacity need on Xcel Energy’s system from 150 MW by 2017 to up to 500 MW by 2019. Over the course of the proceeding, circumstances changed so drastically that it became entirely uncertain whether Xcel would have any capacity need during the relevant timeframe. Nonetheless, the MN PUC decided in March of this year that, notwithstanding the uncertainty, the record demonstrated a need for more than 300 MW by 2019. The MN PUC then found that if the parties can agree to terms that are consistent with the public interest, the Solar PPA provides an appropriate choice for meeting a portion of Xcel’s reliability and adequacy needs (and to fulfill the state’s energy policies) AND that all of the remaining thermal bids may also provide appropriate choices for the same. In other words the Commission directed Xcel to finalize agreements with all parties (or estimates for its own Black Dog project) and submit these finalized terms to the Commission for review.

After the MN PUC’s March decision, Xcel Energy filed yet another updated need assessment explaining that the company no longer expects to have a resource need until perhaps 2024. Xcel Energy also asked the MN PUC to delay action on all thermal projects as a result.

When the MN PUC began deliberations this week, it first took up the question about whether to revisit the need assessment and decided to stick with the original capacity need estimate set forth almost 2 years ago. The Commission then proceeded to oversee some modification of the Solar PPA terms but ultimately determined it was in the public interest and then went on to also find that the Calpine and Black Dog 6 terms were also consistent with the public interest. Thus at a time when even Xcel Energy is arguing it has no capacity shortfall for almost 10 years, the MN PUC authorized over 600 MW of capacity resources to move forward (71 MW solar project, 345 MW Calpine project, 209 MW Black Dog 6 project).

Furthermore, Xcel Energy’s Community Solar Gardens program opened on Friday, December 12. The MN PUC did not inquire as to the initial level of applications. Although verifiable numbers have not been publicly released, there could be a material amount of community solar gardens entering the system by 2015, which could put additional downward pressure on Xcel Energy’s capacity needs.