PUC: Xcel’s imprudence led to Prairie Island outage; customers to receive refunds 

Earlier this year, Xcel filed a report to “true-up” the difference between the company’s budgeted and actual expenses for 2023 fuel and purchased power costs. The report disclosed over twenty million dollars in costs Xcel incurred purchasing replacement power during an unplanned outage at Xcel’s Prairie Island nuclear facility late in 2023. These costs were passed on to Xcel’s customers. The report provided minimal details about the reasons for the unplanned outage. Since the report was filed, additional information came to light showing the Prairie Island outage was caused by workers erroneously drilling through underground cables at the facility after Xcel failed to inform them of the cables’ location. (CUB previously posted on this issue here.) On September 19th, the Minnesota Public Utilities Commission (PUC) determined that Xcel was at fault for this accident and must refund related costs to its ratepayers.  

What was in dispute?  

The Department of Commerce (Department), Office of the Attorney General (OAG), and CUB responded to Xcel’s true-up filing and argued that Xcel, not its ratepayers, should be responsible for the significant replacement power costs incurred as a result of the Prairie Island outage. (The costs of the repair itself will be considered in a separate proceeding anticipated next year.) In response, Xcel argued that ratepayers should pay for the costs of its error because, overall, Xcel operates Prairie Island successfully and some mistakes are an inevitable part of doing business. Xcel also recommended that the PUC refer this matter to the Office of Administrative Hearings (OAH) for a contested case proceeding before a judge. Specifically, Xcel requested the opportunity to submit additional evidence in a contested case (1) showing that its actions were “prudent” (reasonable) and, therefore, no ratepayer refund was warranted; and (2) that if a ratepayer refund is warranted, it should be less than the refund amount recommended by the Department, the OAG, and CUB.  

At the hearing, it became quickly apparent that the Commissioners did not agree that Xcel acted prudently when failing to provide workers with correct maps showing the location of the buried cables. Rather, the Commissioners agreed that the drilling incident was a result of Xcel’s imprudence and, therefore, Xcel should be responsible for the replacement power costs. However, the PUC also determined that additional record development would be helpful in calculating the precise amount to be refunded to ratepayers. For this reason, the PUC referred a narrow question to the OAH for contested case proceedings: how should the PUC calculate an appropriate refund owed to ratepayers as a result of Xcel’s imprudence preceding the Prairie Island drilling incident.  

CUB’s Reaction 

First, CUB is grateful to staff at the Minnesota Department of Commerce who flagged this issue for closer scrutiny. A Department analyst tasked with reviewing Xcel’s true-up report noticed an odd detail in a single cell of a spreadsheet attached to Xcel’s filing and thought to ask Xcel for additional information. But for the analyst asking these questions, Xcel ratepayers would likely have paid for Xcel’s mistake without ever knowing of Xcel’s role in causing the outage. 

We are also pleased with the PUC’s decision. The PUC sent a strong message that Minnesota utilities will be held accountable for costs that could and should be avoided through prudent business operations and decisions. We are somewhat disappointed that the PUC referred the refund calculation question to the OAH, as we believed the PUC already had enough information to decide on a refund amount at the hearing. However, we understand and respect the PUC’s decision—and, due to the significant dollar amount in dispute (the refund amount may be $16 million or more), we are not surprised by it.  
 

What happens next 

In the coming weeks, the PUC will issue an order formally referring the refund calculation question to the OAH. Parties to the contested case will then have the opportunity to request information from Xcel and file expert testimony analyzing the facts and costs in order to make recommendations. CUB looks forward to playing a role in that process.   

Keep an eye on our website for additional updates.