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Minn. PUC gives nod to agreements linked to Xcel Energy's purchase of gas plant

The Minnesota Public Utilities Commission voted Jan. 16 to approve agreements tied to Xcel Energy Inc.'s revamped plan to acquire the Mankato Power Plant from Southern Power Co.

The commission rejected a previous proposal in September 2019 in which Xcel Energy subsidiary Northern States Power Co. - Minnesota would have acquired Mankato outright, finding that the utility had not shown the purchase to be in the public interest.

Xcel Energy then formed unregulated subsidiary MEC Holdings LLC to acquire both units of the gas-fired facility. The Federal Energy Regulatory Commission approved the acquisition in November 2019.

Meanwhile, Northern States Power filed a petition with the Minnesota commission in October 2019 seeking approval for agreements with MEC Holdings to purchase power from Mankato's two units. The power purchase agreements, or PPAs, continue Northern States Power's arrangements with Southern. The PPA for Mankato unit 1 runs through 2026, while the PPA for Mankato unit 2 runs through 2039.

In discussing the new proposal, commissioners said the deal has protections for ratepayers. The commission voted 4-0 to approve the request.

Northern States Power said in its petition that it would make sure MEC Holdings does not get an advantage through its relationship with the utility.

For instance, all plant personnel will be employed directly by MEC Holdings and not the utility. Further, should MEC Holdings want to continue selling power to Northern States Power once the PPAs expire, the company will only do so after putting the two units into a competitive bidding process with an independent evaluator. If subsequently picked through that process, Northern States Power then would negotiate a contract and seek approval from the commission.

"I do feel this is the appropriate approach, and I feel like there's appropriate protections in place," Commissioner Matthew Schuerger said.

According to commission documents, MEC Holdings intends to close the deal to purchase the plant by Jan. 20. (Minnesota PUC Docket AI-19-622)