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North Dakota seeks direction from Xcel Energy on potential split of utilities

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North Dakota seeks direction from Xcel Energy on potential split of utilities

North Dakota regulators want some more clarity on whether Xcel Energy Inc. is still interested in potentially separating its Minnesota and North Dakota operations.

The company, known legally as Northern States Power Co. - Minnesota, in January 2017 said it was considering gradually separating some parts of its integrated operations in the neighboring states to better meet energy resource needs in both jurisdictions. Xcel Energy later outlined a strategy to legally separate its Minnesota and North Dakota operations and create a new operating company to serve North Dakota electricity customers.

Members of the North Dakota Public Service Commission on March 29 said they are unsure if the company still wants to pursue that track and agreed to issue a notice of intent to close proceedings in which the idea had been floated. The company and other interested parties have until May 8 to respond.

Commissioner Brian Kroshus said the point of the notice is to get a better idea of whether Xcel Energy wants to continue to pursue legal separation, move toward "pseudo separation" or keep the status quo.

"This is really about defining a sense of direction and knowing that if we are going to spend time and resources pursuing something that it's, in fact, an avenue that they're still interested in going down," Kroshus told reporters after the commission's meeting.

If Xcel Energy does not file anything by May 8, he said the company would effectively agree to leave things the way they are, knowing it can still pursue reorganization in the future under a different case.

Xcel Energy serves about 93,000 electric customers in North Dakota through an integrated "NSP System" comprising the transmission and generation assets of NSP-Minnesota and Northern States Power Co. - WI.

The NSP System serves a combined 1.6 million electric customers in Michigan, Minnesota, North Dakota, South Dakota and Wisconsin.

The separation issue is tied to tension from different legal, regulatory and policy priorities between Minnesota and North Dakota.

For instance, in Minnesota, Xcel Energy is required by state law to get 31.5% of its electricity supply from renewable energy resources by 2020. North Dakota set a legislatively approved "objective" of utilities getting 10% of retail electricity sales from renewable resources by 2015.

To comply with the Minnesota requirement, Xcel Energy closed some coal-fired power plants and purchased additional supply from gas-fired and renewable resources.

Under a rate settlement approved by the North Dakota commission in March 2016, Xcel Energy agreed to file a new regulatory framework for selecting future resources to meet the energy and capacity needs of its customers. That settlement resulted in filings and discussions on potential reorganization.

Commission Chairman Randy Christmann said that at this point, Xcel Energy has gotten a lot of feedback from North Dakota regulators and likely from the Minnesota Public Utilities Commission as well.

"This is their chance to either scrap it ... or refine it and bring us something that is a little more refined based on what they've heard on both sides," he said.

Xcel Energy said it will review the commission's comments and decision and provide any additional information that may be requested. "We will continue to work with all of our stakeholders to provide a framework for providing safe, reliable, and affordable power to our customers in a manner that respects the policies and preferences of each state," the company said in a statement. (North Dakota PSC Case Nos. PU-12-813, et al)