March 16, 2018 /
S&P Global Market Intelligence

By Stephanie Tsao

Republicans members of the Minnesota House introduced a bill that would allow Xcel Energy Inc. subsidiary Northern States Power Co. – Minnesota to use a carbon reduction rider to help recover the operating costs of the state’s two nuclear power plants.

House File No. 3708, introduced March 12 by sponsors Reps. Marion O’Neill, Barb Haley, Jim Newberger, Jason Rarick, Cal Bahr and Joyce Peppin, would allow nuclear power plants to be considered a qualified “carbon reduction facility.” The bill would let qualified facilities seek cost recovery outside of a general rate case. The petitions can be for “total expected costs,” including capital investment and operation and maintenance costs.

The measure is before the House Standing Committee on Job Growth and Energy Affordability Policy and Finance but has yet to come up for a vote. Newberger, who serves as vice chair of the committee, and O’Neill could not be reached for comment.

Xcel owns the 646-MW Monticello plant, about 45 miles northwest of Minneapolis, Minn., and the 1,092-MW Prairie Island in southeastern Minnesota. Monticello’s operating license expires in 2030, while those for the two units at Prairie Island expire in 2033 and 2034.

Citizens Utility Board of Minnesota Executive Director Annie Levenson-Falk, who advocates on behalf of consumers, said the bill would give Xcel Energy a “blank check for investments in its nuclear plant” and allow utilities to determine how much they can charge customers for nuclear power plant costs, thus diminishing the role of the state public utilities commission, according to a March 13 joint statement. Joining Levenson-Falk were AARP Minnesota State Director Will Phillips and the nonprofits Energy CENTS Coalition and Minnesota Citizens Federal Northeast, which both advocate on behalf of low- to moderate-income customers.

In a March 14 interview, Levenson-Falk said the bill lacks consumer protections such as a cap on costs and allows utilities to keep coming back the state commission seeking even more cost recovery.

Chris Clark, president of Xcel Energy-Minnesota, told the Star Tribune that the rider reflects a new method for recovering costs and is not an increase in costs. The rider “will show customers they are getting a good deal from the investments we are making,” Clark said in an article published March 14.

In 2016, Xcel requested an 18-month study on whether operating its Prairie Island nuclear plant was more cost-effective than other alternatives, such as closing the plant in 2025 and switching to alternative power sources. Both Monticello and Prairie Island sell into the central power grid operated by the Midcontinent ISO, which has faced declining capacity prices in recent years.