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CaPX 2020 <br />INTERIM REPORT <br />DECEMBER 2004 <br />Utility resource planners foresee continuing growth in the state's population, economy and <br />demand for electricity. Through 2020, Minnesota electric utilities predict an annual average <br />growth in our customers' demand for electricity of 2.49 percent,2 far above the national <br />forecast of 1.8 percent per year. ~ Meeting this increased demand is expected to require an <br />additiona16,300 megawatts of generating capacity. To provide context for this amount, the <br />largest generating station in Minnesota -the Sherburne County (Sherco) plant near Becker - <br />provides a total of approximately 2,300 megawatts of generating capacity. <br />In addition to the projected increased need for electric generating capacity, customers' <br />demand for power quality has increased. Sophisticated electrical equipment and new <br />business customers, such ashigh-speed data processing centers, require highly reliable <br />electricity service. To meet these requirements, transmission and distribution infrastructure <br />must be designed to meet increasingly higher power quality standards. <br />CapX 2020 provides further background and detail regarding customer requirements and <br />projected demands in Attachment A. <br />DUR CURRENT SYSTEM <br />Designed and built in the 1960s and `70s, the high voltage transmission facilities (230 <br />kilovolts and above) act as the supporting structure, or backbone, of the bulk electric system, <br />moving electricity from power plants to load centers. The system is designed to maintain <br />reliability even when faced with various contingencies that arise due to weather or other <br />factors that temporarily may remove a particular transmission facility from service. The <br />majority of these facilities were built in the 1970s, with the last of this class built in <br />connection with construction of Unit 3 at the Sherco power plant, which began operating in <br />1987. <br />Utility planners historically designed the regional transmission grid with sufficient capacity <br />and network capability to support the system and meet long-term growth requirements. The <br />grid has served Minnesota well; since 1987, only shorter, lower-voltage transmission lines <br />have been built, typically to meet local, load-serving needs. <br />Attachment B contains additional information regarding our current transmission system, <br />planning processes and regulatory structure. <br />A CHANCED MARKET <br />Thirty years ago, when the transmission backbone was designed and built, the region's <br />electric utilities jointly planned the addition of new generation and transmission facilities. In <br />1992, Congress deregulated the wholesale electric power supply industry, making generation <br />a competitive market while still regulating transmission facilities as the nation's electric <br />z Demand studies include information from the following utilities: Alliant Energy, Great River Energy, <br />Dairyland Power Cooperative, Minnesota Power, Missouri River Energy Services, Otter Tail Power Company, <br />Southern Minnesota Municipal Power Agency/Rochester Public Utilities and Xcel Energy. <br />s EIA, growth in electric sales for 2002-2025 (htt~://_w_ww_eia doc_gqv/oiaf/aeo/e_lectrici~_html) <br />4 <br />