The Federal Energy Regulatory Commission (FERC) has granted Xcel Energy Services' request for incentive transmission rates as part of its plan for six transmission upgrades to meet state renewable portfolio standards and serve increased power demand in the upper Midwest.
Xcel, on behalf of Northern States Power Co. of Minnesota and Northern States Power Co. of Wisconsin (NSP Cos.), filed proposed modifications to NSP's transmission rate formula under the Midwest Independent Transmission System Operator open-access transmission and energy markets tariff.
The proposed modifications permit two types of incentive rate treatments for the upgrades: recovery of return on 100% of prudently incurred construction work in progress and recovery of prudently incurred costs of transmission facilities that are canceled or abandoned for reasons beyond the NSP Cos.' control.
The transmission upgrades will help serve renewable energy resources, particularly wind energy. Xcel is looking to build transmission to accommodate between 300 MW and 700 MW of wind power.
FERC conditionally accepted the companies' proposal to modify their transmission rate formula to use projected test year cost inputs, with a true-up mechanism to reflect actual costs.
‘Our analysis indicates that the NSP Cos.' proposal to switch to forward-looking estimated transmission costs with a true-up mechanism is just and reasonable,’ according to FERC.
To provide customers with sufficient time to review revenue requirement information, FERC directed the companies to provide estimated information to customers by Sept. 1 each year, instead of their proposed date of Oct. 1.