Xcel Energy must reimburse customers for Sherco 3 outage costs

(KNSI) – The Minnesota Public Utilities Commission has ordered Xcel Energy to pay back the money it charged its customers following the failure of its Sherco coal-fired power plant in Becker in 2011.

An accident involving the giant generator inside Sherco 3 ripped the massive turbine blades from their mounts, sending huge shards of metal flying through the facility and starting a fire. No one was injured, but the generator was shut down for nearly two years while $239 million worth of repairs were made.

Most of it was paid for by insurance, but the utility had to find a way to replace the electricity at Sherco with its other power plants. The PUC made Xcel charge its customers fees for this.

Xcel sued turbine maker General Electric in 2013, saying corrosion and stress cracks in the blades were to blame and that the company had known about the defects for years but did nothing to fix them. The two sides settled in 2018 and Xcel returned the money to its customers, but the utility's insurance companies continued to battle GE in court.

Xcel was found to have been partially negligent in the operation and maintenance of Sherco 3 and was responsible for 48% of the costs of the accident. GE was found 52% negligent, the insurers of

The entire legal dispute was settled in 2020, but since then there has been a dispute over the cost of replacement power. The Minnesota Attorney General's Office and the Commerce Department said customers were entitled to a refund, but Xcel refused. The cost of power replacement between 2011 and 2013, plus interest, totaled $71.5 million.

In May, a judge ruled that because Xcel was found to be 48% liable, it should reimburse its ratepayers 48% of that total amount, a total of $34.3 million. The judge allowed a reduction in restitution and recommended that Xcel use some of its settlement money from GE.

Xcel was not happy with this decision, stating that it felt as if they had already paid for what had happened, and disputed findings that they had operated Sherco 3 carelessly, arguing that they had a long Have a track record of security success. The judge mentioned in the ruling that, contrary to the recommendations of its own engineers, Xcel postponed a full inspection of the generator's turbines in 2011, knowing full well that doing so could lead to “catastrophic risks.” Instead, the utility decided to spend money on discretionary, non-safety-related upgrades.

Now the PUC says Xcel must refund ratepayers $58 million, less credits already received. The actual refund amount has not yet been calculated.

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