Public Utilities Commission Scrutinizes Xcel Cost Overruns

The Minnesota Public Utilities Commission (MPUC) will hire a nuclear engineering consultant to investigate cost overruns associated with Xcel Energy’s Monticello Nuclear Generating Plant Life Cycle Management/Extended Power Uprate Project.

The project, at an estimated cost of $320 million, was authorized by the MPUC in 2009 and included necessary upgrades to increase the 600-MW plant to a capacity of 671 MW. By August 2013, the actual cost had more than doubled original estimates, increasing to at least $665 million.

Most of the cost increases were incorporated into Xcel’s base rates through rate cases in 2010 and 2012. In both cases, Xcel committed to a comprehensive prudence review of all costs associated with the project. Xcel has indicated that additional costs associated with concluding the project would be requested in its 2013 rate case and multi-year rate plan filing.

The investigation is expected to focus on three key questions:

  • Were modifications necessary because of Nuclear Regulatory Commission requirements, the Fukushima incident, or other related factors?
  • Were cost levels for the modifications reasonable?
  • How should costs be allocated between the Life Cycle Management and Extended Power Uprate parts of the project?

In a news release dated Oct. 18, Xcel cited evolving federal regulatory standards and schedules, higher installation costs, and a broader project scope than originally anticipated as reasons for cost increases above the original estimate.

“Completing the project took longer and cost more than we anticipated, but it was essential it be done right, and we believe we made reasonable decisions along the way,” said Tim O’Connor, senior vice president and chief nuclear officer. “Experience at other plants across the country with comparable projects demonstrates that our experience was not unique.”

Dave Sparby, president and CEO of Northern States Power Co.-Minnesota, an Xcel Energy company, said, “We appreciate this opportunity to provide substantial information to assist the commission’s review of this project. We look forward to working with stakeholders to assist their review.”

—Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)

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