Monticello nuclear plant repairs surge

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: July 15, 2013 - 10:49 AM

The bill for upgrades to Monticello nuclear plant is expected to grow even more, which may affect utility’s rate hike request.

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The gray concrete walls of the Monticello nuclear power plant, 40 miles north of the Twin Cities.

Photo: Jim Gehrz, Star Tribune

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– A major upgrade to Minnesota’s oldest nuclear power plant is finally finished — and way over budget.

Xcel Energy expects to restart its Monticello Nuclear Power Plant this week after a four-month shutdown that allowed workers to replace aging pumps and other equipment to keep the 43-year-old reactor running another two decades and to boost electric output by 12 percent.

But the cost of the work surged $267 million, or 83 percent, over its 2008 budget of $320 million. The Minneapolis-based electric and gas utility says the final costs will be even higher, but hasn’t publicly disclosed the amount.

In the meantime, Xcel’s 1.2 million electric customers in Minnesota are being asked to pay for the cost overruns. This sort of nuclear-related expense is one of the major drivers behind Xcel’s requested rate hike that an administrative judge recently recommended slashing to 4.7 percent. The Minnesota Public Utilities Commission will decide, probably this fall, how much more ratepayers will pay.

Utility officials declined to answer questions about the cost overruns, saying it would be inappropriate to comment while state regulators are considering the rate hike request. In regulatory filings, Xcel has defended the cost increase for upgrading the Monticello plant, citing schedule changes, vendor issues, evolving regulations and unexpected work. Xcel promised additional explanations later.

“[It] is a large, complex project with many intricate components that required changes from original plans,” Xcel’s chief nuclear officer, Timothy O’Connor, said in recent written testimony submitted to state regulators.

Such cost overruns are further proof of the “very dicey” economics of nuclear power, said Mark Cooper, a senior research fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment.

“They cannot build these things or repair them or expand them without having severe cost overruns and that is part of the technology,” Cooper said in an interview.

Last year, Xcel dropped a planned power enhancement at its other Minnesota nuclear plant, Prairie Island in Red Wing, saying it no longer was an economical option.

– in 2008

When Xcel proposed upgrading the Monticello plant five years ago, the utility needed to replace major components as part of the 20-year extension of its operating license to 2030.

At the same time, Xcel officials also decided to upsize some of the new equipment so that Monticello’s output could be increased by 12 percent. The power boost represented about 41 percent of the overall $320 million budget and was approved by the state PUC at that price.

About a quarter of the nation’s 104 power reactors have undergone similar power enhancements, known as “uprates.”

“They are generally seen as a way to invest in increased capacity without having to go through the difficulty of siting new nuclear power plants — and in general they have been successful,” said Andrew Kleit, a professor of energy and environmental economics at Pennsylvania State University who has studied such projects.

Indeed, Xcel contends it has been worthwhile to boost Monticello’s output, even though the U.S. Nuclear Regulatory Commission has yet to authorize running the reactor at the higher output. Xcel expects NRC approval later this year.

Large workforce gone

In Monticello, 3,000 construction workers labored at the plant since early March, turning it into a major construction zone.

  • Monticello Nuclear Power Plant

    Located: Monticello, Minn., 45 northwest of the Twin Cities.

    Online: 1970.

    Type: GE boiling water reactor.

    Output: 600 megawatts, enough to serve 500,000 homes; now capable of 671 megawatts.

    Upgrade: Recently completed replacing and upsizing major components to extend plant’s life and boost output by 12 percent.

    License: Operating license expires in 2030 under a 20-year extension from the U.S. Nuclear Regulatory Commission; awaiting license to run at higher output.

    Overruns: Costs soared 83 percent during five-year upgrade to $587 million. Final price tag expected to be even higher.

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