Bill passed in Senate committee would alter process to OK Xcel's nuclear energy costs

A controversial bill that would alter Minnesota's approval process for costly investments needed at Xcel Energy's nuclear plants was passed Tuesday by a Senate committee.

Xcel said the new process is needed to give it more certainty in recovering at least $1.4 billion in costs expected over the next 17 years. It would provide "stability and certainty for the final stages of our nuclear facilities under their current federal licenses," said the bill's author, Sen. Andrew Mathews, R-Milaca.

Opponents, which include the Minnesota Department of Commerce and the Minnesota Chamber of Commerce, argue the bill would shift financial risks from the company to ratepayers, as well as weaken the decisionmaking power of the Minnesota Public Utilities Commission (PUC).

"It adds too much risk, too much of a gray area," Cam Winton, the chamber's director of energy and labor/management policy, testified before the Senate Energy and Utilities Finance and Policy Committee.

The committee voted 7-2 in favor of the bill, referring it to the Senate floor. A similar bill is pending in the House.

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.

Xcel needs to invest at least $1 billion to keep Prairie Island going into the 2020s and through the expiration of its federal licenses in 2033 and 2034. The company estimates that the Monticello plant will require $420 million in investments from 2021 through 2030, when its license runs out.

Under the legislation, Xcel would submit its nuclear plant improvement tab in a special proceeding before regulators, outside of the current procedure for not only nuclear plants, but for coal and natural gas-fired generators, too.

The legislation would allow Xcel to get approval up front for future nuclear expenses, Bill Grant, deputy commissioner of energy and telecommunications for the Commerce Department, told the committee. Currently, the PUC would determine whether Xcel's costs are prudent after they are made.

"The proposed bill would give Xcel too much of a blank check," Grant said.

Gov. Mark Dayton said he would oppose "any legislation that undermines the authority" of the PUC.

"These end runs to the Legislature to try to give special interests what they want violates the whole purpose of the Public Utilities Commission," Dayton said.

Sen. David Osmek, R-Mound and the Senate energy and Utilities Committee chairman, disagreed with that idea, noting the bill would allow the PUC to reject, modify or approve Xcel's cost recovery proposals.

"I don't see where the commission would be wiped out or defanged," he said.

Committee member Sen. John Marty, DFL-Roseville, said Xcel brought the bill to the Legislature because it "didn't like the results they got from the commission" in past nuclear cost recovery cases. "You are really tying the hands of the commission."

Marty was one of the two committee members who voted against the measure.

The initial Senate bill was met with much opposition from utility consumer advocates, renewable energy advocates, the Chamber of Commerce and Xcel Energy's large power customers.

So, it was amended before Tuesday's hearing, effectively allowing the PUC more input.

The bill originally did not allow the PUC to modify Xcel's nuclear cost recovery requests, giving it only an up-or-down vote. The amended bill allows the PUC to modify Xcel's requests.

The bill was amended again during Tuesday's hearing to address concerns about a new "rider" — i.e., a separate line item — that would have been added to customers' bills for nuclear improvement costs. The amendment, brought forward by Osmek, axed the rider in favor of nuclear cost recovery through a rate case, the traditional path.

Opponents, including the Chamber of Commerce, said after the hearing that rate case recovery was better than a rider, but they remained opposed to the legislation.

Star Tribune staff writer Patrick Coolican contributed to this report.

Mike Hughlett • 612-673-7003