Xcel questions value of Prairie Island update project

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RED WING - Since early 2008, Xcel Energy has intended to expand the generating capacity of the Prairie Island nuclear plant, but now the company is asking Minnesota regulators whether the project is really in customers’ best interest.

The Minnesota Public Utilities Commission issued a certificate of need in 2009 after deciding the project would provide customers a great deal of value — to the tune of $433 million. In the past two years, however, changes have put that value in question.

“The project still is expected to benefit customers; however, the magnitude of the benefit is substantially lower than originally anticipated,” explained Judy Poferl, president and CEO of Northern States Power Company-Minnesota, an Xcel Energy company.

Originally, Prairie Island plant’s capacity was going to increase by 164 megawatts. That “update” has since been reduced to 135 megawatts after Xcel determined the initial capacity was not cost effective.

Xcel filed a request with the PUC on Friday asking commissioners to reaffirm the importance of the project.

“We’re making this filing to prompt a good dialogue and facilitate a thorough understanding of the issues that could affect customer benefits so the commission and other stakeholders can weigh them before significant additional costs are incurred,” Poferl said in a statement.

Capacity expansion is licensed by the Nuclear Regulatory Commission and, in 2010, requirements for capacity expansion license amendment requests began steadily increasing. As a result, the projected implementation of the project was delayed.

Also contributing to the delay was Japan’s Fukushima Daiichi nuclear plant incident, which is still drawing a lot of the NRC’s attention year later. With fewer NRC resources available to consider projects like the capacity expansion, the length of time needed to review Prairie Island’s license amendment request will likely increase.

Eighteen of the 135 megawatts proposed for the expansion were put into service in 2010, but the remainder — which were expected to be in service in 2014 and 2015 — now appear more likely to be implemented in 2016 and 2017 at the earliest.

Decreasing the project size from 164 to 135 megawatts allowed for a decrease in project costs as well, going from a projected $322 million to $310 million. Customer benefits, however, have dropped much more significantly as a result. In the beginning, benefits were estimated at about $433 million, but most recently are sitting at about $50 million.

Xcel’s filing with the PUC also points out that long-term growth in customer electricity needs is likely 40 percent lower than originally forecasted and falling natural gas prices make adding gas-fueled power plants a cheaper alternative to increasing nuclear capacity.

“We look forward to working with all interested stakeholders on this issue, and in reaching a decision that is in the best interests of our customers,” Poferl said.

Regardless of whether the capacity expansion project moves forward, Xcel spokeswoman Mary Sandok said the utility will address some life-cycle management issues — like the replacement of the steam generator on Unit 2 — in order to ensure safe and reliable operation at Prairie Island through 2033 and 2034. That’s when its two licenses expire.

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