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Xcel Energy seeks approval for 150-MW wind contract to serve Minn. customer

Xcel Energy Inc. wants Minnesota regulators to approve a power purchase agreement for the output of a planned 151.2-MW wind farm in South Dakota.

The agreement will help an unnamed "large commercial and industrial customer" offset its energy use with renewable energy, Xcel Energy told the Minnesota Public Utilities Commission in a petition filed Dec. 13. The company said the power purchase agreement, or PPA, for wind energy generation from the Dakota Range Wind III & IV project would also help lower its overall fuel costs and save other customers money.

The unnamed customer will be in Becker, Minn., near Xcel Energy's coal-fired Sherburne County Plant (Sherco).

Xcel Energy said the customer wants to offset its operations' energy usage with renewable energy. The customer required procurement of incremental renewable energy resources for Xcel Energy's system to match energy usage for its to-be-constructed site and, ultimately, to meet the site's capacity needs once it reaches a certain threshold load size.

To meet its commitments under the terms of its agreement with the customer, Xcel Energy plans to acquire, through PPAs, up to 300 MW of wind generation to serve the company's system. The Dakota Range III PPA is for about 150 MW. Xcel Energy intends to file a petition in early 2019 for the rest.

Xcel Energy also said that in the coming weeks, it will file another petition with more detail about the customer and its proposal to serve that customer.

Xcel Energy wants approval of the PPA as a system energy resource since the price of energy under the agreement will lower its overall fuel costs and "result in significant benefits" for customers. The utility said it is proposing the PPA as a low-cost energy addition, not as a renewable addition needed to meet obligations under the Minnesota Renewable Energy Standard or other renewable goals. Xcel Energy intends to use the renewable energy credits to meet the customer's renewable energy objectives.

"We nevertheless believe the PPA is squarely within the public interest and represents an opportunity to lower customers' fuel costs while at the same time facilitating the addition of a large new customer to our system," the company said.

The Dakota Range III project was developed by Apex Clean Energy Inc. in Roberts County, S.D., and in November was sold to ENGIE SA subsidiary ENGIE IR Holdings LLC, according to Xcel Energy's application. The wind project is expected to be in service in 2020.