Xcel Energy 2013 Annual Report Download - page 161

143
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. In January 2014, the United States proposed, and NSP-
Minnesota accepted, an extension to the settlement agreement which will allow NSP-Minnesota to recover spent fuel storage costs
through 2016. The extension does not address costs for used fuel storage after 2016; 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, the third installment of $20.7 million in October 2012, and the fourth installment of $42.6 million in November 2013. Amounts
received from the installments were subsequently credited to customers, except for approved reductions such as legal costs, customer
credits still in process at Dec. 31, 2013, and amounts set aside to be credited through another regulatory mechanism.
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. In January 2014, the DOE sent its court mandated proposal to adjust
the current fee to zero. The Nuclear Waste Policy Act provides that a proposal by the Secretary of Energy to adjust the fee shall be
effective after a period of 90 days of continuous session unless either House of Congress adopts a resolution disapproving the
Secretary’s proposed adjustment.
Fuel expense includes the DOE fuel disposal assessments of approximately $10 million in 2013, $12 million in 2012 and $11 million
in 2011. In total, NSP-Minnesota had paid approximately $444.8 million to the DOE through Dec. 31, 2013. 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 costs for decommissioning over the MPUC-approved cost-recovery period.
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 15 of the 30 canisters authorized by the MPUC.
Prairie Island Units 1 and 2 received their initial operating license and began commercial operations in 1973 and 1974. With its
renewed operating license from the NRC, Prairie Island Units 1 and 2 can operate until 2033 and 2034, respectively. The MPUC
approved depreciation life for Prairie Island is consistent with the remaining life of the NRC approved operating license. The Prairie
Island dry-cask storage facility currently stores 35 of the 64 casks authorized by the MPUC.
NSP-Minnesota previously recorded annual decommissioning accruals based on periodic site-specific cost studies and a presumed
level of dedicated funding consistent with cost-recovery in utility customer rates. Cost studies quantify decommissioning costs in
current dollars. This study presumed that costs will escalate in the future at a rate of 3.63 percent per year during operations and
radiological portion of decommissioning and 2.63 percent during the independent spent fuel storage installation and site restoration
portion of decommissioning. The total estimated decommissioning costs that will ultimately be paid, net of income earned by the
external decommissioning trust fund, is currently being accrued using an annuity approach over the approved plant-recovery period.
This annuity approach uses an assumed rate of return on funding, which is an after-tax return between 4.57 percent and 5.53 percent,
depending on production unit and time frame for external funding. The net unrealized gain or loss on nuclear decommissioning
investments is deferred as a regulatory asset or liability.