MONTICELLO — A Minneapolis-based energy company said customers should pay for the overrun costs of a $665 million project to rebuild a power plant in Monticello.

Xcel Energy requested a $248 million rate increase over two years. But the state Commerce Department thinks Xcel investors should absorb a large portion of the cost.

Company executives are defending their actions in an investigation conducted by utilities regulators. The company spent five years and more than twice the original estimate reinvigorating the 1970s-era plant.

Government-hired experts claim Xcel didn’t understand the complexity of the job, planned it poorly and inadequately supervised its contractors.

Dave Sparby, chief executive of Xcel’s Minnesota regional operations, said the project is safer, more reliable and still cost effective.

“We essentially rebuilt an almost-new power plant around the existing core and reactor,” Sparby said.

The project ended up being more expensive because major equipment, including pumps, turbine and electrical systems, had to be replaced, Xcel said.

“The nature of these projects is such that every other company that has undertaken a significant project basically trying to rebuild an operating nuclear power plant has faced complexities and ended up spending more than they predicted at the beginning,” said Laura McCarten, an Xcel regional vice president. “But in the end, the final cost provides great value for our customers and it was the right thing to do.”

Regulators will ultimately decide if the company’s investment was economical.

At a public hearing in October, Steve Mihalchick, an administrative law judge, will examine the state’s evidence, Xcel’s 750-page response and other submitted information. Based on Mihalchick’s report, the Public Utilities Commission will decide whether the company’s investors or customers will pay for the bulk of the project.