Minnesota regulators: Xcel must refund customers for Prairie Island outage caused by severed cables

Minnesota regulators have ordered Xcel Energy to issue a multimillion-dollar customer refund as a result of its workers accidentally severing underground cables, which shut down the Prairie Island nuclear power plant for months.

Xcel wanted its customers to pick up the tab for buying substitute power as the facility was fixed, arguing that the company was following standard practices during a maintenance project despite acknowledging it drilled in an area without first using ground radar that would have shown the cables.

The Minnesota Public Utilities Commission (PUC) disagreed and instead placed the cost on Xcel shareholders.

"There was imprudent oversight that caused the outages," said Commissioner Valerie Means. "The ratepayers should not have to pay for that. It's simple."

Commissioner Hwikwon Ham compared it to the time he used the "call before you dig" hotline before planting in his yard. "They marked everywhere, all around the house," he said. "I don't see why Xcel wasn't able to think the way those guys are doing it."

The PUC did not determine the exact refund amount. The five-member board instead asked an administrative law judge to calculate the cost of the outage and replacement power.

The decision is nevertheless a loss for Xcel, which has stressed the company's track record of safe operation at Prairie Island. That includes two 700-day runs of uninterrupted operations in recent years through heat waves and extreme cold, the company said.

"Our plant has been an industry leader in terms of performance for five years or so looking back," said Ryan Long, Xcel's president in Minnesota. "We think that above average performance is really relevant to considering the overall prudence of our operations at the plant."

In October, Xcel was replacing a power cable between the substation and the plant when workers cut through a different bundle of cables. That interrupted power to some equipment and caused one of two reactors at the Red Wing facility to shut down.

Xcel initially described the incident as an equipment issue. The company in March told federal nuclear regulators about the failure to use ground radar and admitted its excavation planning and oversight was inadequate.

On Thursday, Xcel shed some new light on the event.

Attorney Ian Dobson said the company did survey an initial path it had planned to bore. In the field, workers realized they needed to reroute.

A project engineer wrongly believed Xcel would be drilling deep enough to avoid problems.

Dobson also downplayed Xcel's own report to the Nuclear Regulatory Commission acknowledging weak oversight, saying it was a short summary, highly self-critical by design and focused on improving its future actions. That's different than how the state justifies under what circumstances customers deserve a refund.

The Minnesota Department of Commerce estimated the price for replacement power in 2023 at roughly $33.8 million, but the agency said the company saved about $10.3 million by not running the plant, lowering the overall costs.

Xcel hasn't calculated replacement power costs from 2024 yet, so the full cost of the event will be higher. The company plans to ask for customers to bear $9 million to $12 million for cable repair as part of its next electric rate case because Xcel found the infrastructure needed to be replaced soon anyway.

Prairie Island is a pillar of Xcel's strategy for a carbon-free electric grid by 2040 and provides enough power for more than 1 million households.

Unit 1 at Prairie Island shut down Oct. 19, which caused a longer-than-expected outage at Unit 2, which had powered down two weeks earlier for scheduled refueling and maintenance.

Unit 1 was back online Jan. 30 after a 103-day absence. Unit 2 could have returned in early February from the cable problem, but separate issues kept it offline until March 19.