Xcel Energy will be able to raise electricity rates by less than half what the utility requested and will face additional scrutiny for cost overruns on its project to upgrade the Monticello nuclear plant, state regulators ruled Thursday.
The Minnesota Public Utilities Commission will hire an expert in nuclear issues to study the Monticello upgrade, which cost $655 million -- more than twice what the company had told state officials it would cost. The plant went back online last month with the ability to produce 12 percent more power than before.
Commissioners said it's possible the cost overruns are perfectly justified, but they said more information was needed to determine if Xcel's ratepayers should have to bear any of the extra costs.
Xcel has said the Monticello project was complex and required some changes officials had not anticipated.
Xcel had originally sought a more than 10 percent rate hike last November, but the utility had revised the rate downward several times. On Tuesday, Xcel told the Public Utilities Commission that it mostly agreed with the 4.7 percent rate hike an administrative law judge recommended last month. Although neither the PUC nor Xcel could say what rate resulted from a series of decisions the commission approved Thursday, it was expected to be even lower than what the judge recommended.
Northern States Power-Minnesota President and CEO Dave Sparby said in a written statement that the company is still reviewing the decisions and did not know what the full impact will be for its customers.
"We continue to believe our request was reasonable and necessary to continue providing high-quality service to our customers," he said. "The costs we sought in this case are important to support investments in our system."
Xcel customers have been paying for a larger interim rate increase since January and will get refunds plus interest on future bills. But Xcel is expected to seek another larger rate hike this fall.