1. Xcel Energy and Environmental Parties Least-Cost Resource Plan Settlement Agreement

2. Discussion  Background  Negotiations  Implementation  Lessons Learned  Background  Negotiations  Implementation  Lessons Learned

3. Xcel Energy in Colorado  1.34 million electric customers  1.25 million natural gas customers  Provides energy to 75% of state’s residents  1.34 million electric customers  1.25 million natural gas customers  Provides energy to 75% of state’s residents

4. The Least-Cost Plan Filing Filed with the CPUC April 30, 2004  Forecast of electric needs from 2004- 2013 and plan to meet them  Included:  Proposed all-source bidding process  A request to build a 750 MW coal-fired unit at Comanche Station near Pueblo Filed with the CPUC April 30, 2004  Forecast of electric needs from 2004- 2013 and plan to meet them  Included:  Proposed all-source bidding process  A request to build a 750 MW coal-fired unit at Comanche Station near Pueblo

5. The Forecast

6. Process  Resource forecast and plan filed 4/30/04  Rounds of testimony filed  In fall 2004, negotiations began with two main groups:  Environmental and community parties  Other intervenors (OCC, PUC staff, others)  Hearings held at CPUC Nov. 2004  Resource forecast and plan filed 4/30/04  Rounds of testimony filed  In fall 2004, negotiations began with two main groups:  Environmental and community parties  Other intervenors (OCC, PUC staff, others)  Hearings held at CPUC Nov. 2004

7. Why Negotiate?  Environmental groups’ view:  Reduce environmental impact of new coal unit  Greater environmental benefits faster  Achieve specific environmental benefits for Pueblo community  Expand renewable energy and energy conservation  Develop ongoing dialogue  Accountability  Environmental groups’ view:  Reduce environmental impact of new coal unit  Greater environmental benefits faster  Achieve specific environmental benefits for Pueblo community  Expand renewable energy and energy conservation  Develop ongoing dialogue  Accountability

8. Why Negotiate?  Xcel Energy’s view:  Cooperation and consensus from intervenors concerning critical energy resource  Reduce litigation risk concerning Comanche project  Opportunity to install additional emission controls on existing facility  Enhance community relations  Establish dialogue and pursue opportunities for mutual collaboration  Xcel Energy’s view:  Cooperation and consensus from intervenors concerning critical energy resource  Reduce litigation risk concerning Comanche project  Opportunity to install additional emission controls on existing facility  Enhance community relations  Establish dialogue and pursue opportunities for mutual collaboration

9. Negotiation Process  Negotiators  Major environmental and community parties; Xcel Energy  Long, difficult discussions with compromise from both sides  Key challenges:  Environmental negotiators – negotiating on behalf of many parties with different interests  Utility negotiators – balancing interests of many different parties; outside involvement in how we run our business; long- term implications and policy impacts  A common challenge: Internal buy-in  Negotiators  Major environmental and community parties; Xcel Energy  Long, difficult discussions with compromise from both sides  Key challenges:  Environmental negotiators – negotiating on behalf of many parties with different interests  Utility negotiators – balancing interests of many different parties; outside involvement in how we run our business; long- term implications and policy impacts  A common challenge: Internal buy-in

10. Settlement Agreement  Reached Dec. 2004; PUC approved 1/05  Concerned Environmental and Community Parties (CECP):  Sierra Club  Western Resource Advocates  Environmental Defense  Better Pueblo  Diocese of Pueblo  Southwestern Energy Efficiency Project  Colorado Renewable Energy Society  Environment Colorado  Smart Growth Advocates  Reached Dec. 2004; PUC approved 1/05  Concerned Environmental and Community Parties (CECP):  Sierra Club  Western Resource Advocates  Environmental Defense  Better Pueblo  Diocese of Pueblo  Southwestern Energy Efficiency Project  Colorado Renewable Energy Society  Environment Colorado  Smart Growth Advocates

11. Key Provisions  Comanche  Additional emission controls and tighter emission limits for Comanche Station  Mercury testing and cost-effective controls for all units; plant-wide mercury emission limit  Energy planning  Accept wind bids up to 15% penetration if in least-cost portfolio  Wind ancillary cost study  Greatly increased energy conservation programs and study  New resources evaluated with CO 2 proxy cost and renewable energy credit value  Innovative technologies  Community initiatives  Pueblo environmental donations and community involvement  Comanche  Additional emission controls and tighter emission limits for Comanche Station  Mercury testing and cost-effective controls for all units; plant-wide mercury emission limit  Energy planning  Accept wind bids up to 15% penetration if in least-cost portfolio  Wind ancillary cost study  Greatly increased energy conservation programs and study  New resources evaluated with CO 2 proxy cost and renewable energy credit value  Innovative technologies  Community initiatives  Pueblo environmental donations and community involvement

12. Key Provisions  Agreement by environmental signatories not to oppose Comanche Station permitting and approval processes Agreement on web site www.xcelenergy.com, under Energy and Rates, Colorado least-cost resource planwww.xcelenergy.com  Agreement by environmental signatories not to oppose Comanche Station permitting and approval processes Agreement on web site www.xcelenergy.com, under Energy and Rates, Colorado least-cost resource planwww.xcelenergy.com

13. Comanche Station Emission Controls Existing and New Unit 1Unit 2Unit 3 Nitrogen Oxide (NOx) Advanced Low-NOx Burner Advanced Low-NOx Burner & SCR Sulfur Dioxide (SO2) Lime Spray Dryer Lime Spray Dryer Lime Spray Dryer ParticulateBaghouse Mercury Sorbent Injection

15. Implementation  Quarterly meetings  Ongoing involvement  Wind study  Demand side management working group  Pueblo initiatives  Legislative agenda  Different groups have different interests  Quarterly meetings  Ongoing involvement  Wind study  Demand side management working group  Pueblo initiatives  Legislative agenda  Different groups have different interests

16. Ongoing Issues and Challenges  Lawsuit challenging air permits for Comanche project  Not filed by CECP  Impact on future negotiated settlements  Communication  Lawsuit challenging air permits for Comanche project  Not filed by CECP  Impact on future negotiated settlements  Communication

17. Lessons Learned  Collaboration is possible  Effort and personal commitment to get it done  Collaboration is possible  Effort and personal commitment to get it done