Xcel Energy 2015 Annual Report Download - page 152
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Fargo, N.D. MGP Site — In May 2015, in connection with a city water main replacement and street improvement project in Fargo,
N.D., underground pipes, tars and impacted soils, which may be related to a former MGP site operated by NSP-Minnesota or a prior
company, were discovered. After initial reports and discussions with the City of Fargo and the North Dakota Department of Health,
NSP-Minnesota removed the impacted soils and other materials from the project area. NSP-Minnesota is undertaking further
investigation of the location of the historic MGP site and nearby properties. At this time, NSP-Minnesota’s investigation of the site is
preliminary as information is still being gathered. In October 2015, NSP-Minnesota initiated insurance recovery litigation in North
Dakota. The U.S. District Court for the District of North Dakota will likely establish a scheduling order for the case in the first quarter
of 2016.
As of Dec. 31, 2015, NSP-Minnesota had recorded a liability of $2.7 million related to further investigation and additional planned
activities. Uncertainties include the nature and cost of the additional remediation efforts that may be necessary, the ability to recover
costs from insurance carriers and the potential for contributions from entities that may be identified as PRPs. Therefore, the total cost
of remediation, NSP-Minnesota’s potential liability and amounts allocable to the North Dakota and Minnesota jurisdictions related to
the site cannot currently be reasonably estimated. In July 2015, NSP-Minnesota filed a request with the NDPSC for approval to
initially defer the portion of investigation and response costs allocable to the North Dakota jurisdiction. In December 2015, the
NDPSC approved NSP-Minnesota’s request.
Other MGP Sites — Xcel Energy is currently involved in investigating and/or remediating several other MGP sites where regulated
materials may have been deposited. Xcel Energy has identified seven sites across all of its service territories where former MGP
activities have or may have resulted in site contamination and are under current investigation and/or remediation. At some or all of
these MGP sites, there are other parties that may have responsibility for some portion of any remediation. Xcel Energy anticipates that
the majority of the remediation at these sites will continue through at least 2016. Xcel Energy had accrued $2.1 million for all of these
sites at Dec. 31, 2015 and 2014, respectively. There may be insurance recovery and/or recovery from other PRPs that will offset any
costs incurred. Xcel Energy anticipates that any amounts spent will be fully recovered from customers.
Environmental Requirements
Water and Waste
Asbestos Removal — Some of Xcel Energy’s facilities contain asbestos. Most asbestos will remain undisturbed until the facilities that
contain it are demolished or removed. Xcel Energy has recorded an estimate for final removal of the asbestos as an ARO. It may be
necessary to remove some asbestos to perform maintenance or make improvements to other equipment. The cost of removing
asbestos as part of other work is not expected to be material and is recorded as incurred as operating expenses for maintenance
projects, capital expenditures for construction projects or removal costs for demolition projects.
Federal Clean Water Act (CWA) Effluent Limitations Guidelines (ELG) — In September 2015, the EPA issued a final ELG rule for
power plants that use coal, natural gas, oil or nuclear materials as fuel and discharge treated effluent to surface waters as well as
utility-owned landfills that receive coal combustion residuals. Xcel Energy estimates that the cost to comply with the new ELG rule
for Colorado will range from $9 million to $21 million, and could change as Xcel Energy continues to assess alternate compliance
technologies. Xcel Energy is in the process of evaluating whether the costs of compliance at NSP-Minnesota and NSP-Wisconsin
could have a material impact on the results of operations, financial position or cash flows. The anticipated costs of compliance with
the final rule at SPS are not expected to have a material impact on the results of operations, financial position or cash flows. Xcel
Energy believes that compliance costs would be recoverable through regulatory mechanisms.
Federal CWA Section 316(b) — Section 316(b) of the federal CWA requires the EPA to regulate cooling water intake structures to
assure that these structures reflect the best technology available for minimizing adverse environmental impacts to aquatic species. The
EPA published the final 316(b) rule in August 2014. The rule prescribes technology for protecting fish that get stuck on plant intake
screens (known as impingement) and describes a process for site-specific determinations by each state for sites that must protect the
small aquatic organisms that pass through the intake screens into the plant cooling systems (known as entrainment). For Xcel Energy,
these requirements will primarily impact plants within the NSP-Minnesota service territory. The timing of compliance with the
requirements will vary from plant-to-plant since the new rule does not have a final compliance deadline. Xcel Energy estimates the
likely cost for complying with impingement requirements may be incurred between 2016 and 2027 and is approximately $49 million
with the majority needed for NSP-Minnesota. Xcel Energy believes at least six NSP-Minnesota plants and two NSP-Wisconsin plants
could be required by state regulators to make improvements to reduce entrainment. The exact cost of the entrainment improvements is
uncertain, but could be up to $194 million depending on the outcome of certain entrainment studies and cost-benefit analyses. Xcel
Energy anticipates these costs will be fully recoverable in rates.