Xcel investment blow to Skull Valley

14 December 2005

Midwestern utility group Xcel Energy has announced that it is to hold any further investment in spent fuel storage at Skull Valley in Utah.

The decision comes as a huge blow for the Private Fuel Storage (PFS) group, which has already seen Southern Company drop out of the project after suspending its investments back in 2002. Now only the Dairyland Power Cooperative, with less than 12%, will continue to fund the project, a move which some observers suggest effectively signals the end of the controversial development.

Xcel holds a 33% stake in PFS, which is developing the project, making it the single largest investor, and had originally expressed an interest in the project as it was facing a waste storage shortage for its Minnesota nuclear plants, where a state law prevented the creation of sufficient additional storage space. With the national waste repository at Yucca Mountain not ready in time, Xcel was forced to pursue alternatives.

However, in 2003, the state law was overturned and with the current administration expected to roll out legislation dealing with interim waste storage that could see action as early as next year, the key argument in favour of Skull Valley appears to be evaporating.

By maintaining a stake in the project, however, Xcel can monitor congressional developments while allowing the project to be resumed if a waste management solution should fail to appear.

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