Xcel Energy Inc. said Monday that its refurbished Monticello nuclear reactor is again running at full power, just as state regulators begin considering how much the utility will be able to raise consumers' rates to cover the higher-than-expected cost of updating the plant.

The Public Utilities Commission, which has the final say on a potential rate increase, will take up the matter in a hearing on Tuesday and has scheduled deliberations on Thursday, a time frame that could produce a decision as soon as this week.

The utility said the reactor reached full power on Saturday and is generating enough electricity to power nearly 450,000 homes.

Monticello's return to full service follows Xcel's disclosure in July that the cost of the five-year upgrade to the reactor had doubled. Originally budgeted at $320 million, the cost of the project reached $655 million.

The expense is one of the reasons Xcel asked regulators to approve a rate increase for its 1.2 million electric customers in Minnesota. The utility last November asked for a 10.7 percent rate increase but has twice pared it back and now seeks a 7.8 percent hike, which would add about $209 million in annual revenue.

Last month, an administrative judge recommended that Xcel get a 4.7 percent increase. Industry analysts have said the commission may split the difference between the judge's recommendation and the utility's request.

Star Tribune, Star Tribune
Xcel said Monday the Monticello nuclear plant is back operating at full capacity after a refurbishment. File photo of the deep pool that holds spent fuel rods at the reactor.

Xcel spokesman Tom Hoen said Monday the firm wouldn't comment publicly on the cost overruns at ­Monticello while the rate case is pending before the PUC.

However, in filings made to the commission, Xcel has defended the cost for upgrading the plant, citing numerous issues including schedule changes, vendor matters, evolving regulations and unexpected work.

"[It] is a large, complex project with many intricate components that required changes from original plans," Xcel's chief nuclear officer, Timothy O'Connor, said in written testimony submitted to the regulators.

The reactor was shut down for four months so that workers could complete the replacement of aging pumps and other equipment, a move intended to extend the life of the 43-year-old reactor through 2030 as well as boost its power output.

However, Xcel is still waiting for permission from the Nuclear Regulatory Commission to operate the reactor at a higher power level. Xcel is seeking to boost the reactor's authorized output of 600 megawatts by 71 megawatts.

Steve Alexander • 612-673-4553