Xcel Energy 2011 Annual Report Download - page 21

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See Note 14 to the consolidated financial statements for further discussion regarding the nuclear generating plants.
NRC Regulation — The NRC regulates the nuclear operations of NSP-Minnesota. Decisions by the NRC can significantly
impact the operations of the nuclear plants. The event at the nuclear plant in Fukushima, Japan could impact the NRC’s
deliberations on NSP-Minnesota’s power uprates discussed below. This event could also result in additional regulation by the
NRC, which could require additional capital expenditures or operating expenses. The NRC has created an internal task force to
develop recommendations for NRC consideration on whether it should require immediate emergency preparedness and mitigating
enhancements at U.S. reactors and any changes to NRC regulations, inspection procedures and licensing processes.
In July 2011, the task force released its recommendations. The report confirmed the safety of U.S. nuclear energy facilities and
recommends actions to enhance U.S. nuclear plant readiness to safely manage severe events. In October 2011, the NRC Staff
identified the near-term regulatory actions to be taken and prioritized these recommendations into a three-tiered approach. In
December 2011, the NRC Commissioners approved the prioritization of the first tier and second tier recommendations. The NRC
Staff and the industry are working to establish guidance to implement the NRC’s direction regarding resolution of the Tier 1
recommendations and final action by the NRC on these recommendations is expected in the first half of 2012.
The industry is considering a wide range of strategies to address anticipated NRC regulation. Depending on the approach selected,
preliminary estimates range from $20 million to $250 million dollars of capital investment approximately over the next five to
eight years to address postulated safety upgrades to the Xcel Energy nuclear facilities. The low end of this range would apply if
the NRC accepts the industry’s ‘flex’ approach which provides diverse and portable sources of providing emergency power and
water. The high end estimate considers added cost of requiring permanently installed modifications with a higher degree of
engineering analysis to meet nuclear standards for flooding, seismic and other local environmental considerations. Xcel Energy
believes the costs of implementing these requirements would be recoverable through regulatory mechanisms, and it does not
expect a material impact on its results of operations.
To better coordinate response activities, the U.S. nuclear energy industry has created a steering committee made up of
representatives from major electric sector organizations, including Xcel Energy, to integrate and coordinate the industry’s
ongoing responses. In addition, the NRC has conducted technical inspections at Xcel Energy’s nuclear facilities to assess the
capability to respond to extraordinary consequences similar to those that occurred at Fukushima, Japan. These inspections
identified no significant findings or issues.
Nuclear Plant Power Uprates and Life Extension
Life Extensions — In 2006, the NRC renewed the Monticello operating license allowing the plant to operate until 2030. In June
2011, the NRC issued renewed operating licenses for Prairie Island Units 1 and 2, allowing Unit 1 to operate until 2033 and Unit
2 until 2034.
Monticello Nuclear Plant Extended Power Uprate — In 2008, NSP-Minnesota filed for both state and federal approvals of an
extended power uprate of approximately 71 MW for NSP-Minnesota’s Monticello nuclear plant. The MPUC approved the CON
for the extended power uprate in 2008. The filing was placed on hold by the NRC Staff to address concerns raised by the
Advisory Committee on Reactor Safeguards related to containment pressure associated with pump performance. NSP-Minnesota
has been working with the industry and regulatory agencies to address this issue and had expected to receive a regulatory decision
on the license application in 2012. In October 2011, the Advisory Committee recommended that all licensing actions that credit
the use of containment accident pressure be suspended until the causes and risks of Japan’s Fukushima incident are better
understood. NSP-Minnesota is evaluating the impact of this recommendation on the timing of the license decision which will
likely result in a delay of the approval. NSP-Minnesota has rescheduled the remaining equipment changes needed to complete the
Monticello power uprate project during the planned spring 2013 refueling outage.
Prairie Island Nuclear Extended Power Uprate — In 2008, NSP-Minnesota filed for an extended power uprate of approximately
164 MW for Prairie Island Units 1 and 2, which the MPUC approved in 2009. Analysis of recent extended power uprate
submittals to the NRC concluded that significant additional design work beyond current schedule and cost plan estimates are now
being required to submit a successful application. As a result, NSP-Minnesota is completing an economic and new project design
analysis to determine project impacts and anticipates submitting a Change in Circumstances filing with the MPUC in the first
quarter of 2012.
Total capital investment between 2012 and 2015 for the Monticello and Prairie Island power uprate and life cycle management
activities is estimated to be approximately $640 million.