Xcel’s customers shouldn’t pay for Xcel’s failure to “call before you dig” at its Prairie Island nuclear facility
Earlier this year, Xcel filed a report that discusses adjustments in its electric rates to “true-up” the difference between Xcel’s budgeted and actual 2023 fuel costs. The report disclosed millions of dollars in costs Xcel incurred and passed on to ratepayers to purchase replacement power while Xcel’s Prairie Island nuclear facility was shut down last fall. Since the report was filed, additional information has come to light showing the Prairie Island outage was caused by Xcel workers inadvertently drilling through underground cables after not being informed of the cables’ location.
Fortunately, there were no radiological impacts from this incident, and the health and safety of the public and site personnel were not impacted. Still, this event is troubling for a number of reasons.
First and foremost, the Prairie Island outage could have been avoided. Xcel warns its customers that "the safest and only legal way to dig is to know what's below ground before your shovel or equipment moves any dirt" and that "even small projects like planting a shrub require you to make advance arrangements before digging." Xcel did not heed its own advice when performing excavations at a nuclear facility, where the consequences of a mistake can be severe. Also troubling is Xcel’s attempts to charge ratepayers for the significant replacement power costs incurred while its nuclear facility was not operating. Xcel, not its ratepayers, should be responsible for the financial consequences of Xcel’s mistake. This blog describes CUB’s efforts to hold Xcel accountable for covering those costs.
What happened?
On October 19, 2023, Xcel workers engaged in a horizontal directional drilling at Xcel’s Prairie Island nuclear facility to replace aging cables. While conducting this drilling, the workers inadvertently severed other buried direct current control cables. This caused a 103-day outage at the Prairie Island Unit 1 facility that lasted from October 19, 2023 to January 30, 2024. The incident also extended what had been a planned outage at Prairie Island Unit 2, which was already undergoing maintenance at the time of the incident but could not be started up again until after the damaged cables were repaired. In a “Licensee Event Report” filed with the U.S. Nuclear Regulatory Commission, Xcel noted the incident “was caused by weakness in the Excavation Permit approval process as well as inadequate oversight of the personnel performing the work.”
How is this event affecting Xcel’s customers?
During the outage caused by the drilling incident, Xcel needed to purchase replacement power to make up for energy not being generated by the Prairie Island facility. Purchasing power at market rates was expensive: the Minnesota Department of Commerce (“Department”) determined that Xcel incurred over $23 million in additional energy costs from October 19, 2023 to December 31, 2023 due to the outage.
Minnesota law typically allows regulated utilities to adjust charges for the cost of fuel through an automatic “true-up” process, called the fuel clause adjustment (“FCA”) mechanism. Xcel files monthly and annual reports showing how it adjusts rates under the FCA. In Xcel’s 2023 year-end report, Xcel reported it had passed replacement power costs through to its ratepayers—all while barely disclosing Xcel’s role in causing the outages that required the utility to purchase that replacement power. In a single cell included in a spreadsheet 192 pages into Xcel’s 270-page filing, Xcel simply noted, “During excavation for cable replacement, an underground horizontal boring machine damaged control cables resulting in the automatic opening of the Unit 1 Output Breakers.”
Thankfully, Department staff reviewing Xcel’s annual filing raised concerns about the unplanned outages Xcel reported and asked for additional information. The information Xcel provided in response revealed a fuller picture of Xcel’s role in the drilling incident. The Department and Minnesota Office of the Attorney General – Residential Utilities Division (“OAG”) filed comments on May 15, 2024, recommending the Commission disallow rate recovery of Xcel’s replacement power costs and require Xcel to refund those costs to its customers. On July 30, 2024, CUB also filed comments in this docket supporting the Department’s and OAG’s recommendations.
The Department, OAG, and CUB all agree: Xcel was irresponsible in not informing its workers of underground cables before engaging in a drilling project. Xcel, not its ratepayers, should be responsible for costs incurred as a result of that irresponsibility. CUB ultimately recommended that the Commission refund customers $21,682,742 (plus interest) that Xcel wrongfully collected from customers through the FCA mechanism in 2023.
What happens next?
As noted above, CUB just filed comments on this issue on July 30, 2024. (Xcel also filed additional comments on July 30.) Due to the dollar amount in dispute in this docket, it is possible the Commission will ask for additional comments before holding a hearing to decide whether Xcel should issue refunds to its customers. If so (and even if the Commission does not open an additional comment period), this may be a good docket for Xcel customers to make their voices heard. If you are frustrated by Xcel’s actions and do not think customers should pay for replacement power costs, you can file a public comment by following the directions here. Be sure to note the comments relate to docket 22-179. In the meantime, keep an eye on CUB’s blog for additional updates on this issue.