Wind Energy Saves Gas and Cuts Consumer Electric Costs

Conifer, Colo. — A trailblazing new study released by the Interwest Energy Alliance
reports that consumers will save more than $251 million because of Xcel Energy’s
current fleet of wind plants over the coming two decades. The study further concludes
that consumers could have saved another $186 million had Xcel invested in more wind
during three recent bidding cycles for new electric generators.

By comparing existing wind projects and wind projects that were proposed (but not built)
to the cost of natural gas generation (which wind energy most often displaces), the authors
of this study, Jane Pater and Ron Binz, quantify savings that wind energy generation has
already provided Xcel Energy’s consumers. The authors then project what consumers would have
saved if additional amounts of wind energy generation that Xcel sought but did not buy had been
added to Xcel’s power generation portfolio during generation resource acquisition bids in 1999, 2004
and 2005. Pater is experienced in energy and environmental affairs, and Binz was Colorado
Consumer Counsel for eleven years.

The study’s findings —that more wind means more consumer savings— are also significant
because Xcel’s own research shows that it can cost-effectively and reliably accommodate
wind energy up to about 15% of its electric generation totals, about twice as much as it
currently has on its system or has recently agreed to purchase. Last year Xcel announced
it would enter into agreements to buy the output from 775 additional megawatts of new wind energy.
The Pater-Binz study reports that Xcel could add another 263 MW of wind next year to reach a
penetration level of 15%. “A 15% wind level would deliver even more cost savings to its consumers,
along with significant environmental and economic benefits to the whole state,” said Fred Hefley,
manager of Baca Green Energy in Walsh, Colorado.

Xcel’s failure to add the wind energy that could be benefiting its electric customers now has been
attributed to lack of transmission lines to bring the wind from Colorado’s windy Eastern Plains to
Front Range electric loads. Xcel’s plans for new transmission, just announced to transmission
planners and a legislative transmission study committee, do not address large amounts of new
wind energy. Since transmission takes five to seven years to build, while wind plants can be built
in a year or two, Xcel customers will have to wait for the transmission to be planned and built to get
new wind plants to provide relief from high natural gas and electric prices.

The Interwest Energy Alliance emphasized that in order for Colorado to harness
the tremendous potential for wind power —and reap its multifaceted benefits— much-needed
electric transmission infrastructure must be developed to bring wind-generated electricity to load
centers. “More transmission from Colorado’s eastern plains wind resources would help
struggling rural communities reap economic benefits from investment and jobs in wind plants,
while Front Range consumers would have access to cleaner, more secure and lower cost
electricity,” said Ron Lehr, attorney and former Colorado PUC Chairman who now represents
the wind industry. “It’s time to ‘connect the dots,’ get transmission planned and built,
and bring wind power benefits to the whole state.”

Significant findings from this study include:

The cost savings for wind generation that Xcel Energy has already acquired will produce
more than $251 million in fuel and emissions cost savings for PSCo [Xcel Energy]
ratepayers over the next 20 years.
Had Xcel acquired additional wind generation that it sought and was offered, at about
the prices for the wind it did buy, Colorado ratepayers would have saved a total of $438 million
over the lives of these contracts (15 to 20 years) —that is, an additional $186 million over the
savings that will be achieved by the wind farms now on the Xcel system.
Current levels of wind generation will prevent 19.2 million tons of carbon dioxide that would
otherwise result from burning fossil fuels; adding wind generation that could have been
purchased, as suggested in this study, would have further reduced carbon dioxide
emissions by 14.7 million tons.

To read the entire study, entitled “Wind on the Public Service Company of Colorado System:
Cost Comparison to Natural Gas,” visit the Interwest Energy Alliance’s
website at www.interwest.org.