Utilities and Climate Change Regulation Frank Prager Xcel
- Slides: 16
Utilities and Climate Change Regulation Frank Prager Xcel Energy Inc. Vice President, Environmental Policy June 19, 2008
Xcel Energy Overview Northern States Power Company Minnesota 44% Public Service Company of Colorado 39% Southwestern Public Service 12% Northern States Power Company Wisconsin 5% Gas Customers Electric Customers 1. 8 M 3. 3 M 5 th Largest Combination Electric and Gas Utility (based on customers)
Xcel Energy’s Environmental Leadership l #1 retail wind energy provider l Windsource – Largest green pricing program in US l Industry-leading voluntary emission reductions l Innovative clean technology development l Comprehensive CSR reporting
Challenge of Climate Change l Climate change policy will require: — Significant emission reductions — Huge capital investments — Long-term technological transformation l Utilities will bear the lion’s share of the initial reductions
Federal Climate Policy l Climate legislation dead this session — Lieberman Warner failed on cloture June 6 l Some form of regulation appears inevitable l Policy design has huge impact on cost — Targets and timing — Availability of offsets — Safety valve/cost containment — Auction vs. allocation
Meeting the Challenge l l Emission reductions require mix of diverse resources Existing coal fleet must be addressed Natural gas is a “bridge fuel” Nuclear, coal with carbon capture will be critical future baseload technologies
EPRI: Value of Clean Technologies* 3500 U. S. Electric Sector CO 2 Emissions (million metric tons) * Achieving all targets is very aggressive, but potentially feasible 3000 2500 EIA Base Case 2007 2000 Technology Efficiency Renewables Nuclear Generation Advanced Coal Generation Carbon Capture & Sequestration Plug-in Hybrid Vehicles Distributed Generation 1500 1000 500 0 1995 2000 2005 2010 2015 2020 2025 2030
Xcel Energy’s Response: 2007 Colorado Resource Plan l Goal: meet customer energy needs cost effectively while reducing emissions l November 15 proposed plan: — Renewable energy (including wind and solar) — Energy efficiency and conservation — New gas fired generation — Coal plant retirement l Projected 10% reduction by 2017 l 2009 filing: evaluate 20% by 2020 scenarios Ponnequin l Smart Grid City
Xcel Energy’s Response: 2007 Minnesota Resource Plan l “Compliance” based plan — Renewable energy (to meet 30% standard) — Energy efficiency and conservation — Emission reduction program — Sherco and Nuclear upgrades l Result: 22% reduction in CO 2 by 2020 Sherco
Strategies to Reduce Carbon Dioxide Today l Natural gas l Renewable energy l Customer energy efficiency l l l Tomorrow New nuclear Advanced renewable energy with storage Smart Grid PHEVs and DG Clean coal
Coal l Coal must remain part of energy mix — Low customer costs — Environmental challenge l Comanche 3 — 750 MW supercritical plant in Pueblo, CO — Comprehensive environmental settlement § NOx/SO 2 emission reductions from existing units — Under construction § Avoided commodity price increases (Price today nearly doubled) § Labor challenges — On-line by 2010 l Future: clean coal
Clean Coal l Coal with carbon dioxide capture and sequestration — Pulverized coal — IGCC l Maintains coal as viable resource option l Political interest and support on state/federal level l Significant cost challenges — 10 -30% energy penalty — Trend toward cancelation of projects in 2007 l Xcel Energy experience: IGCC and geologic sequestration is viable — Obstacles: Cost, resource need and liability
IGCC Process (Simplified) Waste Heat Boiler Coal Gasifier Turbine CO 2 Sequestration Enhanced Oil Recovery
Climate Policy, the Economy and Jobs l Climate change regulation is not free — Technology is key l Climate regulation has implications for energy security — Increased reliance on natural gas for electricity generation — Coal must remain in energy mix l Utility industry must be transformed l Increased costs could destroy demand l Good policy design is critical to control costs
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