April 2, 2001
Honorable Frank B. Tiffany
City of Sunfish Lake
369 Salem Church Road
Sunfish Lake, MN 55118
Dear Mayor Tiffany:
The following comments are provided as a result of further study of the MSB Energy Associates (MSB) review and as a follow-up to the March 22, 2001, meeting.
MSB questions the load forecast provided in Table 2-1. We respond as follows:
1. We reviewed the load levels used in previous planning studies completed by Xcel as well as data provided to MAPP for its studies. These numbers are provided in Table 2-1. Also, we asked Xcel to provide the latest available load data in August 2000, which Xcel did, and we summarized it in Table 2-1. Table 2-1 clearly identifies the source of the data. It was never our intended scope to provide an independent area load forecast, as this is quite difficult, expensive and time-consuming.
2. Xcel provided two possible future load additions. One is the possible industrial load increase of 25 MW at Lone Oak. The other is the significant increase at Bloomington. Both were noted in our report. We presented this data and comparisons for information to the Steering Committee. We believe that the Steering Committee would be more familiar with this type of economic growth than we are, as we do not live in the area and do not read the local newspapers.
3. In our opinion, the load data shows:
a. That the area is actually growing faster than what was anticipated by Xcel even one year ago, and
b. The commercial and industrial areas served by the transmission have potential for large load increases. The possibility of large load increases makes planning transmission even more difficult and risky.
4. In our opinion, based on two short visits, the area appears to be experiencing economic growth, appears to be a desirable location for future growth, and appears to have land and other resources needed to sustain future growth.
5. In our opinion, based on existing commercial and industrial loads already in the area and the reasonable assumption that additional load increases can be expected in the area, prudent planning would take into consideration the possibility of such load increases.
MSB questions, “it seems that there would be things that could be done which would more directly address the apparent problems. Rather than bring in a stringer source from the east (Red Rock), it appears to make more sense to use the strong sources in the western area (High Bridge and Black Dog) and strengthen the ties between those sources and the Bloomington and Airport areas. It does not appear that CAI seriously considered alternatives of this nature.” We respond as follows:
1. Our report addresses exactly such an alternative. This is presented as Plan C and is shown on Figure 2-4. The plan reinforces the transmission system from Wilson to Rogers Lake with a double-circuit 115 kV line and reinforces the system from High Bridge to Rogers Lake by rebuilding an existing 115 kV circuit. The weakness of this plan is shown in Table 2-7, when the Black Dog and High Bridge generation is reduced or off-line.
2. By tying into Red Rock, we are supporting the area from the 345 kV bulk power grid.
MSB questions the statement that load flow cases were studied without local generation resources to assess the adequacy of the delivery system. We respond as follows:
1. Our planning studies were based on the same criteria that Xcel used. The criteria were 100% load with the local generation running and 80% load with most of the local generation off. Our review of the Xcel planning documents indicated that these criteria have been used consistently, even prior to deregulation and competitive posturing.
2. In our opinion, these are reasonable criteria, which we have observed used by other utilities.
MSB states, “Essentially, CAI is saying that the transmission system is being designed so as to support competition and restructuring of the electric utilities.” We respond as follows:
1. We are providing to the Steering Committee only the planning criteria that were and are used by Xcel for planning the metropolitan transmission system - as a matter of fact.
2. In our opinion, we have not seen a change in planning philosophy at Xcel for competitive posturing. What we have observed at other utilities is a change in planning philosophy to build less, not more, transmission for competitive posturing. Why? Because a limited transmission system limits the choices the customer has with regard to generation resources. Also, we observe reluctance of transmission utilities to build new lines because of concern that the regulatory climate is so uncertain there is risk they will not be financially compensated for the investment in new transmission.
MSB states, “Traditionally, transmission was designed and built for the general public good of providing a network capable of providing reliable electric service to everyone. Transmission designed and built for the purpose of bolstering competition is not necessarily transmission for a public benefit. Instead, it bolsters a private good - the competitive positioning of the various players in the electric power industry. If transmission is being built as a private good rather than as a public good, we do not see why the public should be forced to accept the placement of those facilities on their property.” We respond as follows:
1. We understand that a bill has been introduced into the Minnesota House to provide customers with a choice of their generation supplier by January 1, 2003. This bill includes a three-year price control period, unbundling of charges for generation, transmission and distribution, and many other features. The deregulation of the utility industry currently produces more questions than answers. Any comments provided are based on opinions and speculation at this time. However, it is our understanding that the transmission system will continue to be a regulated industry. Competition is mostly with regard to generation. A robust transmission system provides a public benefit because it provides the customers with access to more generation choices.
2. A limited transmission system would limit customer choices. For example, if the only generation that the South St. Paul, Mendota Heights, and Sun Fish Lake customers have access to are High Bridge and Black Dog, then they may not enjoy more economical generation that is located elsewhere.
3. The final sentence above talks about placement of transmission lines on private property. Xcel’s proposed upgrade was to double-circuit the existing line, thereby keeping the upgrade on existing utility right-of-way. The alternative routes evaluated did require new right-of-way, and we noted this disadvantage in our evaluation of these routes.
MSB states, “The CAI Report does not provide a long-term look at the best way of meeting the transmission needs in the South East Metro area. Proper transmission planning would look at the projected needs over a period of time into the future …” We respond as follows:
1. The scope of our service to the Steering Committee was to review the need for the specific Red Rock - Wilson double-circuit line and to provide alternatives. We agree that proper transmission planning requires a broader context in terms of geographical area and for a long-range look into the future. We believe our study adequately addressed the more limited scope of our project. We will leave the review of the broader context planning issues to the regulatory agencies and reliability councils.
Yours truly, Yours truly,
John Guidinger David A Shafer, P.E.
Environmental Coordinator Electrical Systems Engineer