Xcel Energy still making big investments in nuclear power

As some U.S. utilities are abandoning old nuclear power plants, Xcel Energy says it's investing $1.8 billion to extend the life of its 40-year-old Minnesota reactors.

At the company's Prairie Island nuclear plant in Red Wing, Minn., 1,550 contract workers this fall will replace two massive steam generators — at $280 million, its single most costly improvement project. The plant was completed in 1974 at a cost of $350 million.

The Minneapolis-based utility's other reactor, in Monticello, Minn., also is getting a $600 million upgrade that aims to keep it running safely and boost its output by nearly 13 percent.

"What we are facing here is a lot of spending to extend life another 20 years," Laura McCarten, Xcel's regional vice president, said last Thursday as she invited community members to see the new seven-story-tall steam generators to be installed at Prairie Island Unit 2.

Xcel's investments come at a time when some utilities are retreating from nuclear power.

Just 10 days ago, Southern California Edison said it would permanently retire both reactors at its San Onofre Nuclear Generating Station between Los Angeles and San Diego. The decision came three years after spending $600 million to replace its steam generators. That project went badly. Leaks in the massive equipment triggered an emergency shutdown in January 2012. The plant never reopened.

Two other utilities this year have said they will shut down, or decommission, nuclear power plants, including one in Wisconsin. But Xcel executives say nuclear power remains a critical part of its power generation, which also relies on coal, wind, natural gas and other sources to serve its 1.2 million Minnesota electric customers.

At pressurized-water reactors like those at Prairie Island, steam generators are a key component, and a long-standing maintenance challenge.

The new, 330-ton steam generators for the Prairie Island plant were assembled in France, arrived by ship and barge, and this fall are to be hoisted through a hatch in the containment building with only inches of clearance.

Like the original steam generators, which will go to an unspecified out-of-state disposal site, the new units perform a crucial task — transferring heat from the reactor and creating steam that runs turbines to generate power.

The technology relies on thousands of tubes that separate radioactive reactor water from the steam entering the turbines. Over time, the tubes have been known to deteriorate, leaking radioactive water into the turbine steam, and forcing utilities to plug or repair failed tubes and filter out radioactive contaminants from the steam. Most of the 69 U.S. reactors with steam generators have already replaced them with models having corrosion-resistant steel tubes.

Xcel engineers say good maintenance at Prairie Island has allowed the original Unit 2 steam generators to run longer than any others in the U.S. industry. They are confident the replacement units, which are similar to those installed in Unit 1 in 2004, won't suffer from the problems that shuttered the San Onofre reactors.

"We paid a lot of attention to it," said Terry Pickens, Xcel's director of nuclear regulatory policy, who noted that the San Onofre equipment has a different design and manufacturer than Prairie Island's equipment. "We knew we better understand what is going on there."

Scott Marty, director of Xcel's steam generator replacement project, said he visited the San Onofre reactors to assess that problem, which has been attributed to unexpected vibration and deterioration of the tubes.

San Onofre is the only U.S. nuclear power plant to shut down because of problems related to a steam generator replacement, said Randy Stark, who manages the steam generator program at the utility-supported Electric Power Research Institute.

"The reason for doing these steam generator replacements is to improve safety," Stark said.

Just a few years ago, U.S. nuclear power appeared to be undergoing a rebirth.

It gained support as a carbon-free source of electricity and federal regulators embraced new plant designs. Two new reactors are still being built in Georgia by Southern Co. of Atlanta, and another two are underway by South Carolina Electric & Gas Co. in that state.

But along came the recession, the federal government's continued delay in developing a permanent waste storage site and the 2011 Fukushima Daiichi nuclear accident in Japan.

"The nuclear renaissance is done," said Mark Cooper, a senior fellow at the Vermont Law School Institute for Energy and the Environment who researches the economic risks of nuclear power. "Nukes are not easy — they are not easy to build and they are not easy to fix. … It is a very complex technology and every change can produce uncertainty."

Citing regulatory and other uncertainties, MidAmerican Energy Co., the Des Moines-based utility owned by Warren Buffett-led Berkshire Hathaway, said this month that it's dropping further study of building a small-scale nuclear reactor in Iowa.

Virginia-based utility Dominion last month shuttered its Kewaunee Power Station on Lake Michigan 35 miles southeast of Green Bay, saying it couldn't make money selling the power. In February, Duke Energy said it would decommission the Crystal River Nuclear Plant on the Gulf Coast of Florida, which has been shut down since 2009 after its concrete containment building cracked during a steam generator replacement project.

Even at Xcel, not all nuclear investment is considered worthwhile. The company last year canceled plans to spend $237 million to boost Prairie Island's output.

Mark Anderson, an analyst who tracks utilities for Thrivent Financial, said utilities have an alternative fuel that has dropped in price: natural gas. In the wake of the fracking boom, gas-fired power plants have gained favor with power companies. Xcel is proposing to build three natural gas-burning generators in Minnesota and North Dakota later this decade.

"Maybe we would still be talking about more nuclear power plants being built if natural gas prices continued on their [upward] trend of five to seven years ago, but that is not the case," Anderson said.

Xcel's McCarten said nuclear power still plays a critical part of the company's clean-energy strategy, which also relies heavily on wind power. Half the electricity Xcel produces for customers in Minnesota, South Dakota and North Dakota is carbon-free, and nuclear power plants play a big part, she added.

"There are very few utilities in the country that can make that sort of claim," McCarten said.

David Shaffer • 612-673-7090 • @ShafferStrib