Jul 14 - McClatchy-Tribune Regional News - Mike Kaszuba Star Tribune, Minneapolis


As Xcel Energy pushes plans to extend the life of the Prairie Island nuclear plant, Red Wing officials say that Gov. Tim Pawlenty's state aid cuts have made them less confident in their longterm ability to protect it.

City officials, in an unusual step, have intervened in Xcel's proposal before the state public utilities commission -- a sign that Pawlenty's budget cuts may have unintended consequences.

In a newsletter to residents, Red Wing officials said they have "concerns regarding [the city's] diminishing ability to adequately address the unique obligations we have as a host city to a nuclear power plant."

Red Wing's capacity to provide emergency response staffing and training has been lessened, they said, by "significant" reductions in state aid -- including an estimated $898,590 next year -- along with state law changes that allowed Xcel to reduce its property tax payments.

The city's stance has drawn Red Wing into the political debate surrounding Pawlenty's use of the unallotment process to make state budget reductions, after the Republican governor resisted the DFL-controlled Legislature's push during the session for tax increases to help erase a $4.6 billion deficit.

Pawlenty has cited cities and counties in defending his actions, arguing that they often complain about state aid cuts even though some harbor large budget reserves and are unwilling to slash spending. Many have responded, as Red Wing has, that their budget reserves ebb and flow as the money is used to run the city.

Pawlenty spokeman Alex Carey said that tying state aid cuts to the city's ability to provide adequate public safety "seemingly blurs the issue, given [that] the power plant hires and pays for its own security."

He added: "I still don't see where public safety comes in, nor is it clear to us what those 'unique obligations' are [that] the city cites."

'The game is changing'

Red Wing is one of two Minnesota cities with a nuclear power plant. The Prairie Island plant, which opened in the early 1970s, has two 538-megawatt nuclear reactors.

Xcel Energy officials said the company has spent more than $20 million to show that the plant can "perform safely" should its life be extended by 20 years beyond 2014, and that the money it continues to pay Red Wing in property taxes and reimbursements exceeds the city's cost of providing emergency services.

"Our [proposal] will have little to no incremental impact on emergency services beyond what is currently provided," said Mary Sandok, an Xcel spokesperson.

Red Wing officials disagree.

"It's going to be extremely difficult to provide these public safety services that I think are critical and necessary," said Marshall Hallock, the city's finance director.

Although officials said that no one funding cut was responsible for the city's predicament, they said the combined effect of the state cuts and Xcel's reduced property tax payments had left the city with 15 percent less revenue since 2002.

Hallock said the drop in Xcel's annual city property tax payments, which stood at $5.9 million in 1995, would by itself leave the city with an estimated $2.3 million less next year.

By next year, he added, state aid payments to the city will have dropped by $1.07 million annually since 2006.

"The game is changing," said City Council Member Lisa Bayley. She joined her colleagues in signing an open letter to Red Wing's residents that, while generally supportive of the company's proposal, asked that Xcel provide "some type of additional assurance to protect the community's interests."

In making its case before the state public utilities commission, Xcel has asked that the generating capacity of each reactor be increased by 80 megawatts. More important, it is also seeking to have the number of spent nuclear fuel casks at an adjacent 5.5-acre storage facility increased to about 60 casks from a current total of 24. The city says that Xcel's proposed expansion would ultimately result in even more.

With the case scheduled to come before the commission this fall, Bob Cupit, the manager of the commission's permitting unit, said Red Wing's request that its budgetary issues be formally considered has raised eyebrows.

"This is a unique argument that's being made," he said.

A legitimate issue?

Red Wing officials, in pressing their case, said the city remains the first responder to an incident at the nuclear plant.

While Xcel Energy has its own Prairie Island fire brigade, the city is responsible for helping control incidents and responding to anything that extends beyond the plant's physical boundaries -- a role that could include evacuation, decontaminating emergency workers and sealing off roadways.

"[Xcel's] fire brigade is nothing more than a stop-gap measure," said Roger Hand, Red Wing's emergency management director.

Hand said city officials did not alert the governor's office regarding the issue because Pawlenty "went through the unallotment process and, really, he wasn't looking for any input from anybody at that point."

Although Red Wing officials are stressing that the city's ability to provide adequate public safety isn't now being jeopardized, they have drawn criticism even from DFLers.

Sen. Steve Murphy, DFL-Red Wing, a retired Xcel employee who once worked at the plant, said city officials had not proven that their ability to provide public safety for the Prairie Island plant might be jeopardized. He added that the city had adopted an anti-nuclear strategy that was troubling.

The public utilities commission "is not the body -- they don't have jurisdiction over [a city's] economic concerns," said Murphy, who added that his history with Xcel had not colored his views.

But Wadena Mayor Wayne Wolden, the president of the Coalition of Greater Minnesota Cities -- a group that has been critical of Pawlenty's state aid cuts to local governments -- said Red Wing was raising a legitimate issue.

"How can Minnesota ask a city to host a nuclear power plant and then cut the critical aid that helps protect that city in the event of a nuclear incident?" Wolden asked.

Xcel's Sandok said that, should its request to extend the plant's life be approved, its property tax payments to Red Wing will actually begin rising and will reach $9.2 million by 2017.

In addition, she said, Xcel continues to pay Red Wing an estimated $60,000 annually to recover funds spent on emergency preparedness. She said that the city also will get $750,000 this year from the state through a special utility valuation transition aid program to help offset Xcel's property tax reductions.

"Xcel Energy supports the changes in the law and [in state] rules" that led to the company's reduced property tax payments, Sandok said. "But we were not the primary proponent of either."

Mike Kaszuba --651-222-1673

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