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Upgrade of Nuclear Plant $267M Over Budget

Tue, 07/16/2013 - 9:47am

MONTICELLO, Minn. (AP) — Xcel Energy is about to restart its oldest nuclear plant after a four-month shutdown for improvements that ran $267 million over budget.

The Star Tribune reported that Xcel's Monticello Nuclear Power Plant would restart this week after aging pumps and other equipment were replaced. The work was done to keep the 43-year-old reactor running for another two decades and to boost electric output by 12 percent.

The work ran 83 percent over the original estimate and could go higher, Minneapolis-based Xcel said. The company has cited schedule changes, vendor issues, evolving regulations and unexpected work.

Xcel is asking its 1.2 million electric customers in Minnesota to pay for the cost overruns. Nuclear-related expenses are part of what's driving the company's requested rate hike that an administrative judge has recommended cutting to 4.7 percent. The Minnesota Public Utilities commission will decide the eventual rate change.

"(It) is a large, complex project with many intricate components that required changes from original plans," Xcel's chief nuclear officer, Timothy O'Connor, told state regulators in recent written testimony.

Xcel proposed upgrading Monticello five years ago, when it needed to replace major components as part of the 20-year extension of its operating license to 2030. They decided to increase the size of some equipment to increase plant output, an increasingly common practice around the nation.

"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.

Some 3,000 construction workers have been at Monticello since early March, replacing large pumps and motors and other major equipment during a refueling shutdown, similar to earlier phases of the upgrade in 2009 and 2011.

Some engineering problems cropped up only after work began and needed to be addressed on the fly. The 2011 Fukushima Daiichi nuclear plant disaster in Japan also led to some delays and regulatory concerns.

The state Commerce Department, which analyzes utility rate hike requests on behalf of consumers, contends that Xcel hasn't offered enough justification for the cost overruns. Commerce officials declined to comment, citing the ongoing rate case.

Xcel customers already are paying higher interim electric rates this year, the fifth increase since 2005. Even if the cost overruns aren't added to rates this year, they could come back in 2014. Xcel plans another rate hike request for next year to recover its continued investments in the electrical system.

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Information from: Star Tribune, http://www.startribune.com

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