U.S. to pay Xcel $100M for nuclear waste storage

In the latest in a series of settlements with the nation's electric utilities, the government agreed to bear the cost of storing waste.

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Prairie Island nuclear power plant in Welch, Minnesota, on the banks of the Mississippi River.

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It took 13 years, but Xcel Energy finally got the federal government to reimburse ratepayers for costs related to the storage of spent fuel at its Prairie Island and Monticello nuclear powerplants.

Xcel announced Friday that the government will pay $100 million to settle a lawsuit it filed in 1998. The payment is reimbursement for 10 years of storage costs incurred by the utility and its customers, and amounts to about $20 for a typical residential ratepayer, said Scott Wilensky, Xcel's vice president for regulatory affairs and resource planning.

In addition, the Minneapolis-based utility settled another lawsuit over storage costs from 2009 through 2013. Those costs are uncertain, but the company estimates they will total about $100 million more. Federal reimbursement from that settlement will paid over several years, Wilensky said.

Xcel has 1,300 tons of radioactive waste at its reactors near Red Wing and Monticello, Minn. Nearly half of the spent fuel is in casks designed for decades of storage, and the rest is in water-filled pools inside the plants.

Judy Poferl, CEO of Xcel's regional division that is still known as Northern States Power Co., called the settlement a good outcome that "compensates our customers for costs already incurred because of the federal government's delays and provides a timely means for recovering future costs."

The settlement proceeds will be returned to Xcel customers in Minnesota, Wisconsin, the Dakotas and Michigan. The distribution plans must be worked out with public utilities commission in each state, but Wilensky said the payments would be prorated, based on power usage.

Dispute over 1982 law

The dispute arose because of a law Congress passed in 1982 that required the Department of Energy (DOE) to begin removing spent nuclear fuel and high-level radioactive waste created by utilities like Xcel. To pay for the program, the statute created the Nuclear Waste Fund, and the utilities began making quarterly payments into it in 1983.

The DOE signed contracts to remove the spent fuel by Jan. 31, 1998, but has failed to do so. That prompted 74 breach-of-contract lawsuits in the U.S. Court of Federal Claims, according to Michael Hertz, deputy assistant attorney general, who addressed the Blue Ribbon Commission on America's Nuclear Future in February.

A proposed permanent storage site for U.S. nuclear waste at Yucca Mountain in Nevada was dropped from consideration last year by the Obama administration. The blue ribbon commission has been studying what to do next.

The U.S. Justice Department had no comment Friday on the settlement.

Heather Westra, an environmental consultant to the Prairie Island Indian Community, which is next to Prairie Island, said she had no opinion on the settlement, but expressed disappointment that a permanent storage site has not been found.

"It's a shame that we're at this point," she said. "It means there is no progress on a permanent repository or national solution to waste disposal."

Xcel's Wilensky said he believes Yucca Mountain may eventually be reconsidered. Meantime, utility companies are working with the administration to come up with an interim storage solution.

"It's hard to say what happens after 2013, but if there is no federal response in the near term, I believe that we'll have some sort of either continuing litigation or a longer-term settlement that allows us to continue to be compensated for the federal government's delay in taking the waste," Wilensky said.

U.S. utilities were seeking at least $6.4 billion in storage repayments, and the government had spent about $167 million defending the lawsuits, Hertz told the commission in February. DOE has reached settlements involving 44 reactors in addition to the three operated by Xcel, Wilensky said.

In 2007, Xcel won a judgment of $116 million in its first lawsuit, but the government appealed. Meanwhile, decisions in three appellate courts led the company to believe it would be difficult to sustain that award, Wilensky said. The company's second lawsuit was to go to trial later this month.

Dan Browning • 612-673-4493 Neal St. Anthony •673-7144

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