Xcel Energy 2007 Annual Report Download - page 137

other U.S. nuclear plants. NSP-Minnesota has funded its portion of the DOE’s permanent disposal program since
1981. The fuel disposal fees are based on a charge of 0.1 cent per kilowatt-hour sold to customers from nuclear
generation. Fuel expense includes the DOE fuel disposal assessments of approximately $13 million in 2007, $13 million
in 2006 and $12 million in 2005. In total, NSP-Minnesota had paid approximately $373 million to the DOE through
Dec. 31, 2007. However, it is not determinable whether the amount and method of the DOE’s assessments to all
utilities will be sufficient to fully fund the DOE’s permanent storage or disposal facility.
The Nuclear Waste Policy Act of 1982 required the DOE to begin accepting spent nuclear fuel no later than Jan. 31,
1998. In 1996, the DOE notified commercial spent-fuel owners of an anticipated delay in accepting spent nuclear fuel
by the required date and conceded that a permanent storage or disposal facility will not be available until at least 2010.
NSP-Minnesota and other utilities have commenced lawsuits against the DOE to recover damages caused by the DOE’s
failure to meet its statutory and contractual obligations.
NSP-Minnesota has its own temporary on-site storage facilities for spent fuel at its Monticello and Prairie Island nuclear
plants, which consist of storage pools at both sites and a dry cask facility at Prairie Island. With the dry cask storage
facility licensed by the NRC, approved in 1994 and again in 2003, management believes it has adequate storage
capacity to continue operation of its Prairie Island nuclear plant until at least the end of its current license terms in
2013 and 2014. The Monticello nuclear plant has storage capacity in the storage pool to continue operations until
2010. In 2005, NSP-Minnesota filed a certificate of need to allow interim storage of spent fuel at the Monticello
nuclear plant to support license renewal and operation for an additional 20 years. In October 2006, the MPUC issued
its approval allowing additional interim spent fuel storage. Minnesota Statutes provide that the MPUC decision become
effective June 1, 2007, which allowed the legislature the opportunity to review the MPUC action if desired. On Nov. 8,
2006, the NRC renewed the operating license of the Monticello nuclear plant for an additional 20 years. All of the
alternatives for spent fuel storage are being investigated until a DOE facility is available, including pursuing the
establishment of a private facility for interim storage of spent nuclear fuel as part of a consortium of electric utilities.
Nuclear fuel expense includes payments to the DOE for the decommissioning and decontamination of the DOE’s
uranium-enrichment facilities. In 1993, NSP-Minnesota recorded the DOE’s initial assessment of $46 million, which
was payable in annual installments for 15 years until 2007. NSP-Minnesota amortized each installment to expense on a
monthly basis. The final annual assessment was received and paid in 2006. The amortization of this annual assessment
was completed in September 2007. NSP-Minnesota has obtained rate recovery of these DOE assessments through the
cost-of-energy adjustment clause as the assessments were amortized.
Regulatory Plant Decommissioning Recovery — Decommissioning of NSP-Minnesota’s nuclear facilities, as last approved
by the MPUC, is planned for the period from cessation of operations through 2050, assuming the prompt
dismantlement method. NSP-Minnesota is currently recording the regulatory costs for decommissioning over the
MPUC-approved cost-recovery period and including the accruals in a regulatory liability account. The total
decommissioning cost obligation is recorded as an ARO in accordance with SFAS No. 143.
Monticello began operation in 1971 with an original license to operate until 2010. Prairie Island units 1 and 2 began
operation in 1973 and 1974, respectively, and are currently licensed to operate until 2013 and 2014, respectively. In
2003, the Minnesota legislature changed a law that had limited expansion of on-site storage. On Sept. 28, 2006, the
MPUC approved Xcel Energy’s request for a certificate of need to authorize construction and operation of a dry spent
fuel storage facility at Monticello to become effective June 1, 2007. On Nov. 8, 2006, the NRC renewed the operating
license of the Monticello nuclear plant for an additional 20 years to 2030. In June 2007, NSP-Minnesota filed for
depreciation life extension of the Monticello nuclear plant based on previous NRC and MPUC process approvals. The
Monticello 20-year depreciation life extension until September 2030 was granted by the MPUC on Sept. 21, 2007.
Construction of the Monticello Independent Spent Fuel Storage facility, as allowed by the certificate of need approved
in 2006, commenced on June 4, 2007. Installation of the horizontal storage modules began in October of 2007 with a
fuel loading campaign anticipated to begin in the Spring of 2008. Plant assessments and other work for the Prairie
Island applications started in 2006. The Prairie Island operating license extension for an additional 20 years of
operation is anticipated to be filed by the end of the first quarter of 2008 with the NRC.
The total obligation for decommissioning currently is expected to be funded 100 percent by external funds, as approved
by the MPUC when decommissioning commences. The MPUC last approved NSP-Minnesota’s nuclear
decommissioning study request in March 2006, using 2005 cost data with the next update due in October 2008. The
MPUC approval decreasing 2006 decommissioning funding for Minnesota retail customers resulted from an extension
of remaining life for the Monticello unit by 10 years (from 2010 to 2020). Contributions to the external fund started
in 1990 and are expected to continue until plant decommissioning begins. The assets held in trusts, primarily consisted
of investments in fixed income securities, such as tax-exempt municipal bonds and U.S. government securities that
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