Legislation introduced this week would alter Minnesota’s approval process for costly investments at Xcel Energy’s nuclear power plants, a move criticized by ratepayer and clean-energy advocates.
Under the proposed law, Xcel would submit its nuclear plant improvement tab — expected to be at least $1 billion at the Prairie Island plant — in a special proceeding before regulators, instead of through a traditional rate case. A new “rider,” a separate line item, would be added to customers’ bills to cover improvement costs at nuclear plants.
However, the rider would reflect a new method of recovering costs at Xcel’s nuclear plants, not an increase in costs, said Chris Clark, Xcel’s Minnesota president. The entire process “will show customers they are getting a good deal from the investments we are making.”
Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, said that “from a consumer’s perspective, it’s quite a bad proposal. This bill protects Xcel’s shareholders.”
The bill was introduced Monday in the Minnesota House by Rep. Marion O’Neill, R-Maple Lake, who did not return calls for comment.
Minneapolis-based Xcel, the state’s largest electric utility, operates one nuclear reactor in Monticello and two more at its Prairie Island facility near Red Wing. Nuclear power produces negligible carbon emissions, making Monticello and Prairie Island critical to Xcel’s clean power goals.
By 2030, the company wants 85 percent of its electricity to be generated from carbon-free sources. Nuclear power would make up about one-third of that amount, Clark said. Wind would comprise most of the rest, though solar would be included, too.
“The legislation is really an effort to advance the goal of carbon reduction at an affordable price,” Clark said.
Xcel would propose its total expected nuclear costs — including capital investments and operations and maintenance expenses — over a multiyear period. The Minnesota Public Utilities Commission (PUC) then would decide whether to approve the expenses determined by Xcel within 10 months, according to the bill.
“We wanted to give the commission an additional tool for cost certainty around nuclear,” Clark said.
Critics said the bill weakens the PUC’s power, not allowing it to modify Xcel’s requests.
“This bill sort of sidesteps the process in place and has the Legislature telling the PUC what to do,” said Michael Noble, director of Fresh Energy, a St. Paul research and advocacy group for renewable energy. “It undermines the rigor of the process.”
Fresh Energy is not anti-nuclear. Noble said it’s probably economically and environmentally beneficial to keep Xcel’s three nuclear reactors in Minnesota operating until their licenses expire between 2030 and 2034.
Xcel has already invested $800 million in various upgrades at Prairie Island since 2012, and expects another $500 million in expenditures there through 2020. Much of those costs — and their recovery from Xcel’s rate payers — have been approved in previous rate cases.
However, Xcel needs to invest about $1 billion more to keep Prairie Island going through the expiration of its licenses, Clark said. Xcel also estimates that its Monticello nuclear plant will require $420 million in investments from 2021 through 2030, when its license ends.
Cost overruns at Monticello were a significant problem a few years ago.
In 2015, the PUC allowed Xcel to collect $748 million it spent on a big upgrade at Monticello — including over $400 million in cost overruns — from ratepayers. However, the PUC did not allow Xcel to collect any profits on the cost overruns, as the company had sought.