Xcel Energy to review nuclear power plant uprate project

Xcel Energy (NYSE: XEL) on March 30 asked Minnesota regulators to reaffirm that increasing generating capacity at the two-unit, 1,100 MW Prairie Island Nuclear Generating Plant is in customers’ best interest before the company continues with the project.

In May 2008, Xcel filed a Certificate of Need application to expand generating capacity at Prairie Island plant by 164 MW. The filing with the Minnesota Public Utilities Commission, as previewed in Xcel Energy’s Upper Midwest Resource Plan update filing in December, was prompted by changes that occurred since the commission in late 2009 issued a Certificate of Need after deciding that the project provided value to customers.

“Work completed so far has given us a better understanding of the project’s costs and benefits, as well as the uncertainty that remains” said Judy Poferl, president and CEO of Northern States Power Co.-Minnesota, an Xcel Energy company.

As the filing notes, the project’s benefit to customers is less because only 135 MW of added capacity can be achieved cost effectively, not 164 MW as originally proposed, and because implementation has been delayed due to changing federal review requirements. In October 2010, Xcel added 18 MW of the proposed 135 MW capacity increase, achieved by reducing uncertainty regarding measurement of feed water flow, leaving 117 MW to be captured.

Xcel also said long-term growth in customer needs now is projected to be about 40 percent less than forecast when the project was first proposed, and falling natural gas prices make the alternative to adding capacity at Prairie Island – natural gas-fueled generation – less expensive than it was previously.

The Minneapolis-based utility’s filing also said there are possible combinations of new conditions that could lead to the conclusion that the Prairie Island project no longer is cost effective.

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