NSP System

NSP Supply Plans: Generation and Transmission Betsy Engelking Betsy Engelking Director, Resource Planning Director, Resource Planning Xcel Energy Xcel Energy

Key Strategies in Developing Plan Meet renewables requirements in all statesMeet renewables requirements in all states Upgrade and maintain existing units as possibleUpgrade and maintain existing units as possible Maintain a diverse portfolio of reasonably priced resourcesMaintain a diverse portfolio of reasonably priced resources Position company to meet future environmental mandates such as carbon regulationPosition company to meet future environmental mandates such as carbon regulation

2008 Resource Plan Action Plan Meet all jurisdictional renewable requirements Meet all jurisdictional renewable requirements — Focus on increasing owned wind Increase DSM goal to 1.3% energy savings phased over 3 years Increase DSM goal to 1.3% energy savings phased over 3 years Extend Manitoba Hydro contract Extend Manitoba Hydro contract Implement Nuclear and Sherco upgrades Implement Nuclear and Sherco upgrades Repower Blackdog as a combined cycle – 600 MW between 2015 and 2017 Repower Blackdog as a combined cycle – 600 MW between 2015 and 2017 Develop contingency plans Develop contingency plans

Effects of Economic Downturn in Generation Planning Expected continued sales decline Expected continued sales decline Changing reserve margins Changing reserve margins Reduced need for renewable energy Reduced need for renewable energy Cancel 2011 peaking resource Cancel 2011 peaking resource Defer Black Dog conversion from 2013 to 2015 or later Defer Black Dog conversion from 2013 to 2015 or later Delay environmental and capacity upgrades at Sherco 1 and 2 Delay environmental and capacity upgrades at Sherco 1 and 2

Updated Load and Resources Chart (800) (961) (1,243) (1,320) (1,396) (1,415) (1,422) (1,618) (1,637) (1,909) (1,992) Assumes: Manitoba Hydro expires per current contracts, Black Dog 3&4 retired in 2015, PI life is extended, Monti uprates in 2011, Sherco 3 15 MW increase in 2011 Does not include: PI uprates (164 MW), Sherco 1&2 uprates (69 MW), Black Dog repowering (650 MW), MH extension ( MW)

Renewables Requirements Requirements in all 5 jurisdictions Requirements in all 5 jurisdictions — MN: 30% by 2020 — WI: 12% by 2015 — ND, SD, MI: 10% by 2015 We plan compliance on a system-wide basis at the lowest possible cost We plan compliance on a system-wide basis at the lowest possible cost Accurate cost allocation to ensure each jurisdiction pays its cost for renewables Accurate cost allocation to ensure each jurisdiction pays its cost for renewables

Current Status: Renewable Energy 350 MW of owned wind MW of owned wind — 200 MW Nobles (Minnesota) — 150 MW Merricourt (North Dakota) Additional local and distributed wind Additional local and distributed wind — CBED in Minnesota — Discussion of Feed-in Tariffs Bayfront Conversion Bayfront Conversion — 20 MW biomass gasifier (Wisconsin) — Uses existing steam generator and turbine

Mitigating Carbon Risk Current plan, including renewables and nuclear upgrades, reduces carbon 22% below 2005 levels by 2020 Current plan, including renewables and nuclear upgrades, reduces carbon 22% below 2005 levels by 2020 After 2020, expanded needs will cause carbon to increase absent development of low and no- carbon alternatives After 2020, expanded needs will cause carbon to increase absent development of low and no- carbon alternatives Xcel develops plans to meet state voluntary reduction goals, but believes a national solution is the best way to address carbon Xcel develops plans to meet state voluntary reduction goals, but believes a national solution is the best way to address carbon

Environmental upgrades at Sherco Unit 3 mercury reduction and capacity upgrades (15-20 MW) complete in 2012 Unit 3 mercury reduction and capacity upgrades (15-20 MW) complete in 2012 Delay in CAIR and CAMR rulings allow us to delay upgrades at Units 1 and 2 Delay in CAIR and CAMR rulings allow us to delay upgrades at Units 1 and 2 Lower cost options for compliance may be commercial soon Lower cost options for compliance may be commercial soon Earliest projects will begin is 2014 Earliest projects will begin is 2014

Other Supply Issues Grand Meadow Wind Farm on line in December 2008 Grand Meadow Wind Farm on line in December 2008 Last phase of MERP repowering project, new Riverside CC, will be online June 2009 Last phase of MERP repowering project, new Riverside CC, will be online June 2009 Need for flexible, modular plans that allow us to advance or delay resources as the economy dictates Need for flexible, modular plans that allow us to advance or delay resources as the economy dictates

CAPX Transmission Created by Minnesota Utilities to examine the infrastructure needed to ensure system reliability Created by Minnesota Utilities to examine the infrastructure needed to ensure system reliability Projects also support Wisconsin and the Dakotas Projects also support Wisconsin and the Dakotas Phase 1 projects recently approved by Minnesota PUC Phase 1 projects recently approved by Minnesota PUC

Phase I CAPX projects A 240-mile, 345-kilovolt line between Brookings County, S.D., and Hampton, Minn., plus a related 345-kilovolt line between Marshall and Granite Falls, Minn. A 250-mile, 345-kilovolt line between Fargo, N.D., and Alexandria, St. Cloud and Monticello, Minn. A 150-mile, 345-kilovolt line between Hampton, Rochester, Minn., and La Crosse, Wis.

Next Steps Obtain approval in other jurisdictions Obtain approval in other jurisdictions Select routes for projects Select routes for projects Next set of projects currently being study Next set of projects currently being study — Will address transmission needs to address increased renewables goals after 2016 Continue to monitor need and cost of transmission expansion Continue to monitor need and cost of transmission expansion

Keeping Costs Low for Customers Develop flexible plans that allow us to address changing economy Develop flexible plans that allow us to address changing economy Use bidding and other strategies to obtain resources at lowest possible costs Use bidding and other strategies to obtain resources at lowest possible costs Work actively with legislators and regulators to shape policies that reduce cost Work actively with legislators and regulators to shape policies that reduce cost Utilize existing resources and existing sites to expand generation fleet Utilize existing resources and existing sites to expand generation fleet Maximize use of transmission Maximize use of transmission

Conclusions Xcel Energy’s resource needs are changing rapidly Xcel Energy’s resource needs are changing rapidly Flexible planning is the key Flexible planning is the key — Keep options open — Plan for modular system additions Current goals include nuclear plant life extension, Black Dog repowering and Manitoba Hydro extension Current goals include nuclear plant life extension, Black Dog repowering and Manitoba Hydro extension We are working to meet all of our needs and requirements at the lowest cost to customers We are working to meet all of our needs and requirements at the lowest cost to customers