Federal Appeals Court orders further review of utilities’ nuclear storage costs

Update courtesy of Utility Regulatory News #4012: Finding that a more precise quantification of spent nuclear fuel (SNF) storage costs was needed, the U.S. Court of Appeals for the Federal Circuit has returned to the U.S. Court of Federal Claims a case in which several electric utilities had been awarded damages for the U.S. Department of Energy’s (DOE) failure to erect a national repository for spent nuclear fuel (SNF).

At issue were those provisions of the Nuclear Waste Policy Act of 1983 that created a contractual relationship between DOE and electric utilities that operate nuclear plants, under which the utilities were obligated to pay fees into a Nuclear Waste Fund and DOE in turn was required to arrange for storage of the utilities’ SNF and other high-level radioactive waste. By the beginning of 1998, however, DOE was still not accepting the SNF, leading the utilities to incur the expense of constructing their own SNF containment facilities. A number of utilities, including Southern Nuclear Operating Co., Alabama Power Co., and Georgia Power Co., thereafter filed suit, seeking damages to compensate them for the funds expended on their own SNF storage projects. The Court of Federal Claims ruled in the utilities’ favor. Although sustaining the Claims Court’s basic conclusion, the Federal Circuit held that the calculation of the damages awarded must be revisited.

The appeals court agreed that the utilities had been harmed by DOE’s delay, but it was not satisfied that the damage award properly reflected only those expenses directly attributable to DOE’s delay. That is, the court said, some of those costs would have been incurred by the utilities anyway, so it was necessary to determine which of those storage costs would not have been incurred but for DOE’s breach of contract. For the full story, subscribe to URN.

Posted: March 24th, 2011 under Nuclear Spent Fuel, nuclear renaissance, regulation.
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As relief workers fan out across Japan’s eastern coast to find victims of this weekend’s devastating earthquake and tsunami, Tokyo Electric Power Co. (TEPCO) engineers are scrambling to prevent a runaway meltdown at three nuclear reactors, and trying to restore proper cooling to several others.

It’s a nightmare scenario by any definition. Countless families have been affected by this once-in-a-millennium disaster — and the nightmare isn’t over. In particular, Daiichi plant workers now are risking their lives, in what can only be described as an heroic effort to contain the nuclear crisis. Their sacrifice for Japan and the world shouldn’t be underestimated.

In the context of this barely comprehensible human tragedy, questions about how the meltdown will affect America’s nuclear future seem inappropriate. They’re also premature; the Daiichi situation is rapidly evolving as workers struggle to cool reactor cores, and assess possible damage to containment structures. In any case, we won’t know the full extent of the nuclear disaster for some time — perhaps weeks or even months.

However, when Japan gets past the immediate emergency and begins to rebuild, then it will be time to decide whether Daiichi is this generation’s Three Mile Island — i.e., whether it will end the industry’s plans for a nuclear renaissance. Greenpeace and other anti-nuclear groups already are saying Daiichi “proves” nuclear power is unacceptably dangerous and should be stopped. And politicians in some countries are calling for a halt to projects that were in the works. Whether this impulse gains strength in the coming months, or fades with the memory of the current nightmare, will determine how Daiichi affects the industry’s long-term future.

Alternatively, Daiichi could bring a constructive conversation about nuclear design and siting. It could serve as an object lesson for engineers who are planning or operating reactors in geologically active areas — or within range of a 14-meter tsunami. It could give the industry a chance to explain how the new designs are inherently safer than Daiichi’s 40 year-old boiling water reactors.

In short, when the time comes to consider what Daiichi means for the power industry, we might decide to learn the lessons it can teach, and use those lessons to build a safer nuclear future.

Until that time, however, we can only watch, and offer support to the resilient and resourceful people of Japan.

Posted: March 14th, 2011 under Current News, Uncategorized, nuclear renaissance.
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SCE awarded damages for project’s failure

Weekly Update courtesy of Utility Regulatory News #3980: In a suit brought before the U.S. Court of Federal Claims, Southern California Edison Co. (SCE) has prevailed on charges that the federal government failed to uphold its end of a standard contract that had been reached with utility operators of nuclear facilities, such as SCE, under which the utilities had been guaranteed a permanent, government-created repository for spent nuclear waste no later than January 31, 1998.

Pursuant to the Nuclear Waste Policy Act of 1982, the U.S. Dept. of Energy (DOE) and utilities operating nuclear plants were required to enter so-called standard contracts, which provided that the government would develop a suitable facility for accepting and storing both spent nuclear fuel and associated high level waste. Utilities were required to execute such contracts as a condition of relicensing their nuclear units, and they also were required to pay into a Nuclear Waste Fund. Although Yucca Mountain in Nevada has long been identified by the government as the optimal location for the repository, significant opposition to the site caused the project to lag. In early 2010, after all funding for the Yucca Mountain project was cut from the federal budget, DOE formally withdrew its application with the Nuclear Regulatory Commission for a license to operate the facility. Such action prompted the court to state that “the Yucca Mountain proposal is dead.” With no alternative to Yucca Mountain on the horizon, the court said it was evident that the government was unable to perform its part of the bargain under the standard contracts.

In looking at SCE’s case in particular, the court found that in the 12 years that have passed since the repository was supposed to have been available, SCE had continued to make its requisite quarterly payments into the Nuclear Waste Fund and also had incurred significant expense in constructing and securing its own on-site storage facilities. In addition, the utility had had to make arrangements for some off-site storage as well. According to the court’s calculations, taking all such costs into consideration, SCE was entitled to damages of more than $142 million. Subscribe to URN for the full story.

Posted: August 13th, 2010 under energy policy, nuclear renaissance.
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Business-as-Usual Will Stifle Nuclear, Coal Development

In a letter dated July 21, Duke Energy CEO James Rogers urged Senate Majority Leader Harry Reid (D-Nev.) to “include a carbon title in your base energy bill that allows this country to move forward.” Rogers argued that a business-as-usual approach to carbon regulation would stifle development of new nuclear and coal-fired power plants and make America dangerously dependent on volatile natural gas markets.

Rogers also referred Sen. Reid to a McKinsey analysis that showed U.S. GDP would grow more under a “utility first” carbon regulation scenario than it would without any carbon regulation, and that carbon allowances and efficiency improvements would actually reduce electricity bills on average by 7 percent.

Rogers’ letter arrives just as Senate Democrats were convening to debate whether to include a carbon title in an energy bill sponsored by the majority leader. The San Francisco Chronicle’s website quoted Senate sources predicting that a scaled-down bill would proceed in late July and would not include carbon regulation, but some legislators—including Sen. Joe Lieberman (I-Ct.)—are hoping to retain the carbon title in Reid’s bill.-Michael T. Burr

Posted: July 22nd, 2010 under Current News, carbon regulation, climate change, coal, efficiency, energy policy, green energy, natural gas, nuclear renaissance, renewables.
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S.C. Supreme Court denies appeal of PSC decision

Weekly Update Courtesy of Utility Regulatory News #3969: Finding that the state legislature had designated the South Carolina Public Service Commission (PSC) as the proper agency to administer and enforce the state’s Base Load Review Act (BLRA), and discovering nothing arbitrary or capricious in the commission’s interpretation of that law with respect to an electric utility’s application for authority to construct a new nuclear generating unit, the South Carolina Supreme Court has affirmed the PSC’s conclusion that the nuclear power project could go forward.

The commission’s decision allowing South Carolina Electric & Gas Co. to proceed with a nuclear joint venture with the state-run South Carolina Public Service Authority had been challenged by an environmental group, Friends of the Earth, who alleged that because the proposed nuclear plan represented the first time the PSC had invoked the terms of the BLRA, its decision thereunder should be subject to “heightened scrutiny” by the court. The group also argued that the particular nuclear technology being proposed was beyond the utility’s means and that the utility had failed to fully analyze alternatives, such as enhanced demand-side management programs and power purchased from renewable resources.

After reviewing the record as a whole, however, the court said that there was ample evidence that the utility had adequately considered other alternatives to the nuclear option and also had looked at competing technologies. Accordingly, the court ruled that the appellant had made no showing that the commission’s BLRA analysis had been mistaken or an abuse of discretion. Given the PSC’s expertise in such matters, and the legislature’s clear signal that the commission was to be the lead agency in effectuating the act, the court declared the commission’s decision approving the nuclear project to be “presumptively correct,” and it declined to substitute its judgment for that of the commission’s. For the full story, Subscribe to URN.

Posted: June 9th, 2010 under Uncategorized, green energy, nuclear renaissance, regulation.
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