Overview

Xcel Energy and Dairyland Power Cooperative are proposing to upgrade a
41-mile transmission line between an Xcel Energy substation in Chisago
County, Minnesota, and Dairyland Power's Apple River substation in Polk
County, Wisconsin. A transmission-line upgrade is needed to serve the
growing electricity demand northeast of the Minneapolis-St. Paul
metropolitan area in east-central Minnesota and in northwestern Wisconsin.

The proposed $50 million transmission line upgrade addresses transmission
system deficiencies in the area. It would solve numerous line-overload and
low-voltage conditions in the affected areas and would help ensure the
security and reliability of the region's electricity system for several
years. The demand for power continues to grow in the area, and we need to
act now to maintain reliability. This project is an integral part of the
transmission system upgrades required to maintain a secure and reliable
transmission system in Minnesota and Wisconsin, and to help avoid the kinds
of power disruptions that have occurred in California.

Project history

In 1996, Dairyland Power Cooperative and Northern States Power Co., which
now is Xcel Energy, proposed building a new 230-kilovolt (kV) line as the
optimal, long-term solution to the area's reliability needs. That project
became controversial and would not have been approved on the schedule
originally anticipated.

Since then, the project has been modified in an effort to find a way to
provide reliable electric service at the lowest cost possible and with as
little environmental impact as possible. An initial modification called for
a 161-kilovolt line along most of the length of the project. After a second
modification, Xcel Energy now is proposing a reduced voltage line for much
of the Minnesota portion of the project. This line would be built and
operated at 115 kilovolts from the Chisago County substation to Taylors
Falls, Minn., where 161-kilovolt service would then extend into Wisconsin.
This latest modification reduces capital costs by several million dollars
from the first modification while still adequately addressing regional
reliability needs. It also responds to local concerns by minimizing the
transmission line voltage and following existing transmission line
right-of-way as much as possible.

The need for this project has been certified by the Public Service
Commission of Wisconsin (PSCW).

Approval process

Xcel Energy is seeking approval for the project under the state permitting
process established by the 2001 Minnesota Legislature. The company will
apply for a Certificate of Need with the Minnesota Public Utilities
Commission and a Siting and Routing Permit with the Minnesota Environmental
Quality Board. Although we are pursuing permits at the state level, Xcel
Energy will continue to work with affected communities and is seeking input
from officials and landowners in Chisago County, including the Minnesota
cities of Lindstrom and Center City, through which the upgraded line may
follow an existing transmission-line corridor.

Xcel Energy and Dairyland Power also are seeking revisions to the existing
order from the PSCW and a permit from the U.S. Army Corps of Engineers. The
companies have filed for a scope change from the PSCW. A decision on the
proposal is expected by the end of 2001.