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Nuclear Power Operations and Waste Disposal
Nuclear Waste Disposal Litigation — In 1998, NSP-Minnesota filed a complaint in the U.S. Court of Federal Claims against the
United States requesting breach of contract damages for the DOE’s failure to begin accepting spent nuclear fuel by Jan. 31, 1998,
as required by the contract between the United States and NSP-Minnesota. NSP-Minnesota sought contract damages in this
lawsuit through Dec. 31, 2004. In September 2007, the court awarded NSP-Minnesota $116.5 million in damages. In August
2007, NSP-Minnesota filed a second complaint; this lawsuit claimed damages for the period Jan. 1, 2005 through Dec. 31, 2008.
In July 2011, the United States and NSP-Minnesota executed a settlement agreement resolving both lawsuits, providing an initial
$100 million payment from the United States to NSP-Minnesota, and providing a method by which NSP-Minnesota can recover
its spent fuel storage costs through 2013, estimated to be an additional $100 million. The settlement does not address costs for
used fuel storage after 2013; such costs could be the subject of future litigation. NSP-Minnesota received the initial $100 million
payment in August 2011, the second installment of $18.6 million in March 2012, and the third installment of $20.7 million in
October 2012. Amounts were subsequently credited to customers, except for approved reductions such as legal costs, customer
credit amounts still in process at Dec. 31, 2012, and amounts set aside to be credited through another regulatory mechanism.
In NSP-Wisconsin’s 2012 Electric and Gas Rate Case, the PSCW authorized NSP-Wisconsin to utilize the proceeds from the
second and third installments to be included as a reduction of the 2013 electric rate increase. In December 2012, the MPUC
approved NSP-Minnesota’s triennial nuclear decommissioning filing which required NSP-Minnesota to place the Minnesota retail
portion of the DOE settlement payments for the third installment of $15.3 million and the anticipated fourth installment in 2013
into the nuclear decommissioning fund when received. The SDPUC required NSP-Minnesota to credit the settlement funds to
customers rather than apply the credits to the revenue requirement in the pending 2012 rate case. South Dakota customers will
receive credits for the third installment, beginning in February 2013. NSP-Minnesota proposed to contribute the second, third and
fourth installments to the nuclear decommissioning fund to offset the increase in the decommissioning accrual that was included
in the 2012 North Dakota electric rate case. That filing is pending NDPSC action.
Other Contingencies
See Note 12 for further discussion.
14. Nuclear Obligations
Fuel Disposal — NSP-Minnesota is responsible for temporarily storing used or spent nuclear fuel from its nuclear plants. The
DOE is responsible for permanently storing spent fuel from NSP-Minnesota’s nuclear plants as well as from 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 KWh sold to customers from nuclear generation. Fuel expense includes the DOE fuel disposal
assessments of approximately $12 million in 2012, $11 million in 2011 and $13 million in 2010. In total, NSP-Minnesota had
paid approximately $434.2 million to the DOE through Dec. 31, 2012. See Note 13 — Nuclear Waste Disposal Litigation for
further discussion.
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 and dry cask facilities at both sites. The amount of spent fuel storage capacity currently authorized
by the NRC and the MPUC will allow NSP-Minnesota to continue operation of its Prairie Island nuclear plant until the end of its
renewed licenses terms in 2033 for Unit 1 and 2034 for Unit 2 and its Monticello nuclear plant until the end of its renewed
operating license in 2030. Other 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.
Regulatory Plant Decommissioning Recovery — Decommissioning of NSP-Minnesota’s nuclear facilities is planned for the
period from cessation of operations through at least 2091, 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.
Monticello received its initial operating license in 1970 and began commercial operation in 1971. With its renewed operating
license and CON for spent fuel capacity to support 20 years of extended operation, Monticello can operate until 2030. The
Monticello 20-year depreciation life extension until September 2030 was granted by the MPUC in 2007. The Monticello dry-cask
storage facility currently stores 10 of the 30 canisters authorized by the MPUC.