Xcel Energy defends plant cost overruns in recent state filing

Upgrades to Monticello Nuclear Generating Plant were expensive and took longer than anticipated, Xcel Energy admitted in a recent filing with state regulators.
An Oct. 18 summary submitted to the Minnesota Public Utilities Commission last week reported an initial cost estimate of $320 million to replace the plant’s electrical distribution system, transformers, reactor feed pumps and motors, feedwater heaters and condensate pumps, motors and other equipment.
That figure ballooned to $655 million this summer when a life-cycle management and extended power uprate project to increase plant capacity was completed. According to Xcel, the overall project required replacing hundreds of pieces of equipment within the plant’s small footprint and the efforts of thousands of workers during three different implementation outages.
“While our costs were substantially higher than initially anticipated, this was primarily due to necessary changes in scope and design to meet our goals, regulatory requirements and actual installation costs, which turned out to be much higher than we predicted and delays added costs in our federal licensing effort,” Xcel stated in the 24-page report released Friday.
Installation of the modifications was more difficult and expensive than the utility foresaw in its original planning for the first major construction program to occur at the Monticello nuclear plant since its opening.
Monticello  commenced operations in 1970 under an original 40-year license granted by the Nuclear Regulatory Commission (NRC).  Because Minnesota legislation from the early-1990s effectively precluded Xcel from renewing its operating license, the company did not expect plant operations beyond 2010.
According to the report released last week, Xcel deferred major capital projects and upgrades and focused only on those repairs necessary for the plant to operate safely through retirement in 2010. However, in 2003, a new Minnesota law made it possible for Xcel Energy to seek a 20-year operating license extension, and in 2006, Xcel Energy obtained state and federal permits needed to continue operations at the Monticello Nuclear Generating Plant until 2030.
“It turned out that this 40-year-old plant had more systems that needed replacement than we anticipated when we began the process of obtaining authorization to renew its license in 2005,” Xcel officials stated. Therefore, as part of the present uprating initiative, Xcel ended up replacing more systems than planned.
Xcel also stated: “Had we decided not to undertake all of the projects we did as part of this initiative, we would have had to shut Monticello down prematurely.”
When Xcel decided to replace the plant’s entire condensate demineralizer system, the company found replacing the vessels required work in vaults that were extremely confined and radioactive, the report stated.
The original 1960s-vintage vessels had been installed first and the walls of the vaults poured around them.
A significant number of additional workers had to rotate in and out of the space and our workers had to wear protective gear and comply with restrictive rules concerning exposure to radiation.
In the end, Xcel estimates that installation of the condensate demineralizer system added $34 million to the cost of the project.
In addition, the original scope of work called for rerating six feedwater heaters and replacing or modifying other related plant equipment. However, during the design phase, Xcel determined the six feedwater heaters all required replacement and extensive replacement of drain and dump piping. In total, the added scope related to the feedwater heater system was a “very challenging” job that ultimately resulted in an incremental $64 million of costs, the report stated.
Xcel stated in the filing its initial estimate for reactor feed pumps and motors, a major modification, was based on General Electric’s recommendation to add a smaller capacity supplemental reactor feed pump and motor.
However, the company determined that a third pump design was not workable due to size limitations and operating procedures. According to the report, Xcel elected to replace the existing pumps and motors with larger capacity equipment to support uprated power conditions The increased scope for this modification led to incremental engineering and design, material and other costs estimated at nearly $31 million.
Xcel said it incurred about $45 million in additional installation costs as a result of the issues encountered.
Finally, upgrading the plant’s non-safety-related equipment to a new 13.8 kilovolt electrical distribution system and adding more than 14 miles of 5-inch cable throughout the plant added about $73 million in installation costs, the Oct. 18 report stated.
Productivity was slowed due to the specialized and time-consuming procedures to ensure worker safety in radiological and electrically sensitive areas of the plant, and the NRC’s five-year review of Xcel’s application took much longer and costs doubled what the company had originally expected, the report also stated.
Xcel said the NRC’s review drove costs up by about $30 million. “The upgrades at Monticello were important to the long-term viability of this generating resource,” the report concluded. The equipment is functioning properly and we have had very few issues since the unit returned to full power after the outage.”

Contact Tim Hennagir at [email protected]