Leadership and the Three “Ls”

Cyndi Lesher
Global Warming Colloquium - Business Perspective
June 21, 2006
Hamline University, Saint Paul, Minnesota

Leadership and the Three “Ls.”

Global Climate change affects everyone, and will affect how we all do business in the future. In fact, you could say Global climate change will equal business climate change.

Business needs to be part of the solution – it’s what our customers want. It’s what our regulators want. It’s the right thing to do.

Utility companies like Xcel Energy are very close to this issue. We have to do more than just change — we have to be leaders, educating and assisting other members of the business community on what they can do to conserve energy and lessen their impact on climate.

It really boils down to one word: Leadership. For Xcel Energy it means we will advance voluntary programs that go beyond current standards of environmental performance. It means we will pursue environmental excellence and innovation in our corporate strategy and daily operations.

To be a leader, business needs to adopt what I call the three “L’s:” Listening…Learning… and Linking. Those three little “L’s” add up to Leadership.

First — Listening. Xcel Energy doesn’t have all the answers, nor does any business. When it comes to global climate change, you have to keep an open mind and keep listening — to your customers, your regulators, your environmental groups, and yes, your investors.

When our friends in the environmental community approached us about six years ago during the time of our merger, and asked what we could do to go beyond regulations in cutting air emissions, we listened. Today we have hundreds of construction workers on-site at our King, High Bridge and Riverside Power plants. Those old boilers are being retrofitted or replaced with state of the art power units that will cut emissions by more than 90 percent, compared with today’s levels. This voluntary Metro Emission Reduction Project will even cut emissions of Carbon Dioxide, the main suspect in global warming, by 21 percent. At the same time, we’ll increase the capacity of the plants enough to power 300-thousand new homes in our growing metro area. MERP, as we call it, is similar to a program this company launched in Denver in the 1990s, but on a much larger scale. We are getting it done because our company listened to the communities it serves and then volunteered to do more than what’s required.

The second “L” is Learning.

They say you live and learn…when it comes to global climate change, we hope everyone will live better because of what we’ve learned. I’m proud of the fact that my boss, Xcel Energy Chairman and CEO Dick Kelly, has acknowledged publicly that he believes climate change is taking place. It is now our company’s position that we will take steps to deal with it. In 2004, we were one of a handful of utility companies to announce a carbon management strategy — a way of helping our climate by reducing our emissions of carbon per megawatt-hour generated. We pledged to reduce that carbon intensity by 7 percent, resulting in a total reduction in carbon dioxide emissions of 12 million tons by 2009.

Another way we’ve learned to help the climate is through conservation. When I was growing up, the price of electricity was based on how much you used. The more electricity you used, the lower the rate — so the incentive was to use more, or at least not worry about how much you were using. Today we’ve learned how to do just the opposite — to offer incentives to customers who conserve electricity — through programs like demand side management, home and business energy audits, Saver’s Switch for your air conditioner, rebates for energy efficient equipment, and even promotions for compact fluorescent bulbs.

As a result, Minnesota is now a national leader in conservation. We have saved enough energy over the past 15 years to equal the output of our biggest coal burning plant in Sherburne County.

Here’s a case in point: the folks designing the new Downtown Minneapolis Central Library took advantage of our Energy Design Assistance program to make energy saving part of the design of the building. We used computer modeling to make a list of suggestions to save energy. The results have been outstanding. Because of our assistance, that gorgeous new building will use 43 percent less energy than it would have if it had just met the existing Minnesota energy code. The new library will save an estimated two and a half gigawatt-hours of electricity each year. That’s enough electricity to power three-hundred average homes. Savings to the library in dollars will be 176-thousand dollars each year — enough money to buy a lot of books. Plus, the library earned energy rebates of a quarter-million dollars by implementing our suggestions.

Imagine that — a big utility company like Xcel Energy teaching a “center of learning” like the library how to reduce its impact on the environment. The lesson is clear: helping the environment can also help your wallet. It’s a lesson that all businesses and homeowners can learn.

Here’s another lesson: this year marks the 20th anniversary of our first wind farm. In 1986, Northern States Power Company built three puny wind turbines near the tiny town of Holland, Minnesota, on the Buffalo Ridge. It was the first wind farm in the state, and those three machines, called “Bonus” turbines, spent more time being repaired than actually generating power. But we learned much from the experience. Today wind-generated electricity is the fastest growing source of power in the United States. And with what we’ve learned, Xcel Energy is now the nation’s number one purchaser of wind power, according to the American Wind Energy Association. This is big stuff, and it’s historic. Here’s a direct quote from the March 15th news release from AWEA: “For the first time in the recent history of the U.S. wind energy industry, Southern California Edison has been overtaken as the largest purchaser of wind energy.” We should all be proud that our hometown energy team is now number one.

We’ve learned a lot in the past 20 years, and we hope to keep on learning and keep improving our environmental performance. And if anyone in the audience has a good idea of how to develop more renewable energy, I invite you to apply for a grant from the Xcel Energy Renewable Development Fund. People with ideas on producing renewable energy or researching some aspect of renewable energy are eligible for grants. Through this fund we’re all learning more about climate-friendly energy solutions.

The third “L” is Linking. This might be the most important step. Linking means partnering to get things done. Let’s go back to the MERP project — the largest voluntary emission reduction program in the nation. To get MERP done, we needed to partner with:

• Environmental groups — to get their support;
• Minnesota Legislators, who passed a law enabling the program to go forward with special financing;
• Regulators, who weighed the pros and cons for customers;
• Our business community, which agreed to real increases in energy bills to pay for a cleaner environment;
• And finally, our customers, who showed up by the hundreds at our public meetings on MERP.

We listened, we learned, we linked up with all our partners, and we will now all benefit from a one-billion dollar environmental program that has been called the biggest environmental improvement in Minnesota history.

The path to environmental success is paved with partnerships. And there are many kinds of partnerships. Recently we linked up with WCCO Channel 4 for their “Project Energy” reports, and earlier this year with Channel 11 for their ambitious reports on energy issues. The stories emphasized what businesses and individuals can do to reduce their impact on the climate by making smart energy choices. And one evening, we had a dozen Xcel Energy volunteers on the 10 PM News on Channel 4 taking calls from viewers who wanted to sign up for our saver’s switch and other conservation programs.

We have a voluntary wind energy program called Windsource that is now the nation’s number one customer-driven wind program. Part of the reason it’s number one is because of our partnerships with community groups and environmental groups who have done a great job of helping us to promote it. Windsource gives our customers the power to grow wind power even faster than what the government has mandated or what our company had planned. In Minnesota alone we’ve connected 16 new wind turbines that wouldn’t have been there without the Windsource program. Our partnerships with our customers are crucial to give them the information they need to make climate friendly choices, and to give them the power to impact how their electric company does its job.

Listening, Learning and Linking. They all add up to Leadership. Being the nation’s number one wind utility is just the start. It took us 20 years to build our wind portfolio. Now consider this: By the end of 2007 we’ll have twice as much wind power on our system as we do today. We’re going to purchase new wind power as fast as the wind farms can be put up. We’re investing 160-million dollars for new transmission lines to get the wind power from the Buffalo Ridge to our load centers.

But Leadership also means looking at ways to get more from the wind, and this is where it gets really cool: we’ve just linked up with the National Renewable Energy Laboratory in Colorado on a project that will study the use of a wind turbine to make Hydrogen. Everybody talks about the coming hydrogen economy. But the problem with Hydrogen is you either have to strip it out of natural gas, which creates greenhouse gasses in the process, or you use electricity from plants that burn fossil fuels, to electrolyze it out of water. Our vision is to use renewable energy, from the wind, to run an electrolyzer and make the perfect climate friendly fuel — Hydrogen. And we’re the only utility to link up with the National Renewable Energy Laboratory to see if that idea will work. But we’re not the only utility company interested in Hydrogen. Xcel Energy is leading the Hydrogen Utility Group, a partnership of nine utility companies sharing research on Hydrogen’s future role in the utility business.

Leadership also means looking at new ways to develop clean coal technologies. We believe that coal will continue to have a role in generating electricity well into the future, because it is a plentiful and cheap source of energy that helps to keep rates reasonable for customers. To reduce its impact on the climate, we’ve proposed building a power plant in Colorado that will gasify coal so it burns as clean as natural gas. And it will also offer the possibility of being able to capture carbon dioxide emissions. It’s still a very new idea at this point, but we’re willing to take a leadership role to see if there’s a way to use coal without adding to the global warming problem. If it works, you’ll see more of these plants going up.

In conclusion, Business needs to Listen the concerns of its customers and regulators, Learn how to lessen its local impact on the climate as much as possible through energy conservation or other measures, and Link with the partners and resources needed to put the brakes on climate change. We need to work together and talk to each other and share our successes and keep listening and learning. And then we have to raise that cooperation to a national and global scale. I believe the business community here and around the world can rally around this issue and become part of the solution. And I know that Xcel Energy will continue to be a leader going forward.

Thank you very much.