Xcel settles with nuclear contractor over Prairie Island upgrade

Xcel Energy Inc. agreed to pay $36 million to a nuclear contracting firm that said it got stiffed by the Minneapolis-based utility on a power plant project.

The settlement with Babcock & Wilcox Nuclear Energy of Charlotte, N.C., ended litigation over the 2013-2014 replacement of steam generators at the Prairie Island nuclear power plant in Red Wing, Minn., a project that cost more than $280 million.

The companies disclosed the settlement in separate regulatory filings. They said the settlement also covered pending litigation with the project's main contractor, Montreal-based SNC Lavalin Nuclear, which was a defendant in the case.

The $36 million is nearly $10 million less than Babcock & Wilcox says it was owed, according to an Xcel filing with Minnesota Public Utilities Commission.

Xcel earlier had claimed it not only didn't owe the money, but was due $3 million from SNC Lavalin for delays. Other terms of the settlement were not disclosed.

The companies declined to comment beyond the regulatory filings. The lawsuit was filed in Goodhue County District Court last November.

The settlement, with its $10 million savings on the upgrade costs, is one of several recent developments that could affect Xcel rates.

Xcel also has asked the PUC to reconsider its decision denying the utility permission to charge customers for the cost of borrowing funds to upgrade its Monticello nuclear power plant. The upgrade ended up 80 percent over budget. Because of the unexpected costs, the PUC allowed Xcel to charge customers for the cost overruns, but not to earn a profit or cover its debt service on them.

Xcel argued that debt service is a legitimate cost that customers should pay because all of the extra work was needed. If the commission agrees, it would allow Xcel to reduce its $125 million Monticello-related write-off by about $20 million, a utility spokesman said in an e-mail. But it could raise rates slightly, though the exact amount is not clear.

In the Prairie Island upgrade, Xcel replaced two steam generators that convert heated, pressurized reactor water into steam to generate power. At Monticello, the upgrades completed last year boosted the power output and extended the life of the plant at a final cost of $748 million.

David Shaffer • 612-673-7090 Twitter: @ShafferStrib