Xcel Energy Chairman and CEO Dick Kelly's Remarks to Western Resource Advocates

November 10, 2006

Thank you for inviting me to speak to this distinguished group, although I must admit that after-dinner speeches can be pretty tough.  I believe the best ones have a good beginning and a good ending...that aren't very far apart.  I tried to keep that in mind when I prepared my remarks for tonight.  

Receiving your kind invitation to speak at your annual gathering clearly illustrates the turning point we've reached in the relationship between Xcel Energy and the environmental community. 

When the request to speak here reached my desk, my quick response was, "I'd be happy to."  In years past, it might have been, "What do they want?"  "What might happen to me?" Or,  " Will the exit be clearly marked?"

When you work in the utility industry as long as I have, and you've been through a few tough annual meetings, you can develop a thick skin  - and some might say a hard head to match. 

But I think our body armor is peeling off - and I credit this group with helping to make that happen.

I love Colorado.  I was born and raised here.  And I'm proud to lead Colorado's largest energy provider as its CEO. I started my career at this company almost 40 years ago as a meter reader. I've seen a lot happen in the industry over that time - with restructurings, mergers and acquisitions, deregulation, growing environmental concern and - more recently - the promise of new technology that can help us produce energy with less environmental impact. 

A new direction can come slowly for a utility. It's a lot like a big ship.  It may seem hard to turn.  It was built to last - not for speed. But when the wheel does start to move, that ship can leave a big and lasting wake in its path.  And that's the legacy I want to leave for Xcel Energy concerning environmental leadership.

For years, our company felt we were doing our best job when no one thought much about us.  If the electricity came on when our customers flipped a switch, they seemed happy.  If their bill was reasonable, they didn't complain too much.

That may have been the case 10 or 20 years ago, but it's not true today.  Our customers still want reliable energy.  But they also care how that energy is made and the environmental impact it creates. They still care about their electricity bill - and about the planet they'll leave their children.  

Coloradoans let the nation know how they felt about energy when they voted to implement the country's first ballot initiative to establish a renewable portfolio standard - called Amendment 37.  Xcel Energy had long supported renewable energy and had been aggressively adding wind to our system. But we were concerned about the cost impacts this initiative might create for some customers. 

I would like to very publicly thank Western Resource Advocates, Environment Colorado, our state's legislators, other organizations and individuals who worked with us to modify the amendment language to address our concerns about cost - and who have helped us since that time implement what I think is a very successful renewable portfolio standard in this state.

Amendment 37 may have gotten our two groups talking - but it's common goals, mutual respect, growing trust and some courage that have kept us working to build Colorado's clean energy future - together

Our challenge is both great and immediate.  Our company is seeing customer energy use increase 2 to 3 percent a year in Colorado, with more customers entering our service area and use-per-customer growing as well. Our greatest challenge is to meet these growing energy needs in a way that reduces environmental impact - not increases it.  And that includes both regulated emissions and emissions of carbon dioxide from fossil fuels.

To address this, our company has been increasing our use of renewable energy in Colorado - and in the seven other states we serve.  We'll triple wind capacity on our Colorado system by the end of next year - when we expect more than 1,100 megawatts of wind to be in service.  We'll meet Amendment 37 requirements eight years early.  Across our company, we expect to have 2,500 megawatts of wind capacity on line by the end of 2007. 

Xcel Energy is the largest wind energy provider to retail customers in the United States today - and with our aggressive plans to add more wind to our system, I don't see any other company taking that top spot.

We also recently announced the state's first and the nation's largest central station photovoltaic solar project.  It will be built near Alamosa to serve our customers.  The facility will come on line by the end of 2007.  And we're encouraged by the interest our customers have shown in solar rebates that enable them to install solar systems on their homes and businesses.  

We also want to build a facility that uses advanced coal technology called integrated gasification combined cycle - or IGCC - in Colorado.  IGCC holds the potential for reduced emissions, as well as the ability to capture carbon dioxide in a cost-effective manner for sequestration or other uses. The facility we'd like to build here would help prove this technology at our higher altitude and with the type of coal we have in our region.

Energy efficiency and conservation must play a central role in meeting our customers' growing energy needs.  It's critical to provide programs, tools and information to help our customers make wise energy choices to reduce environmental impact and help manage their energy costs. 

And we've launched a team - that includes Xcel Energy employees, outside technology leaders and members of the environmental community -  to help us explore how smart grid technology and energy efficiency can help transform our business. 

I've outlined several things our company is doing to try to reduce the environmental impact of the energy we make and sell.  Now let me tell you what our company stands for in terms of climate change policy.

As you may have read in the paper recently, I believe global climate change is real.

I understand that concentrations of carbon dioxide are increasing in the atmosphere.  I recognize that climate scientists have measured warmer temperatures in recent history and believe the two are related.  I believe it is part of our role as an energy provider to help address this issue.  And I believe the time to act is now.

So what does this mean for all of us?  Do we stop using gasoline in our cars - stop using natural gas to heat our homes - stop using any fossil fuel to make electricity?  Our society can't make such a profound transition so fast.  But there are a lot of things we can do to move in the right direction - right now.

Xcel Energy has implemented a voluntary carbon management strategy to reduce both the intensity and emissions of carbon dioxide from our entire energy portfolio, and we're on track to meet our reduction goals.  We also think it's time for our country to take a comprehensive national approach to the climate change issue to achieve real environmental improvement and help protect customers from adverse financial impacts.

Our customers - our communities - expect us to act on this issue. Every one of us as energy users plays a role too. 

Our company and our industry do not benefit by waiting for others to draft climate policy without our input. Further delays will make future policy decisions harder, more expensive and less effective.

We've been talking with policymakers, members of the environmental community and others about a national proposal to address climate change.  We want to exchange thoughts and ideas in a dialogue that we hope will result in an approach that is politically, economically and environmentally viable. 

We support a well-designed, mandatory federal policy to address climate change. A federal policy should be based on the technology needed to make real, cost-effective progress on the climate change issue.

We believe a federal policy should advance technologies with the potential to reduce greenhouse gas emissions from electricity generation. A federal policy should mandate increasing use of clean energy resources.  We need aggressive but achievable goals for deployment of clean energy in this country.

In our view, clean energy means - first and foremost - renewable energy. Clean energy also means energy efficiency, and new, coal-fueled facilities with carbon capture and sequestration. And, we think it also means the next generation of nuclear plants.  We need to vastly improve the economics of clean generation technologies and promote energy security through the use of domestic resources.

We need to protect all customers from adverse financial impacts, and enable utilities to recover their cost of compliance.  A broad-based, national approach that allows flexible compliance methods and options for meeting the goals can move us down the right path.

Addressing climate change is vitally important for our industry, our nation and our planet.  Electric utilities can play a key role.  When I look ahead to the future of my industry, I see electric production that will be highly efficient, harness diverse resources, and be nearly emission-free. I believe this future is possible. But we need to support both smart policy and new technology today to make it happen tomorrow. 

On behalf of Xcel Energy, I commit to you that we will continue to work together to help solve our state's and our nation's environmental problems.  I commit to you that our doors will be open to talk about issues, concerns and new ideas.  And I commit to you we will keep our word and be a company that deserves your continued trust. 

It has taken courage for members of the environmental community to work with a utility company like ours.  You've taken a stand based on the belief that working with us can achieve greater good and more environmental progress than another path.  I thank you for this.  Our company will prove to you - with our words and our deeds - that you are absolutely right.