Rate increase further blunted by SNF settlement proceeds

Update courtesy of Utility Regulatory News #4057: In authorizing a combined electric and natural gas utility to increase its rates by less than half of what had been requested, the Wisconsin Public Service Commission has ruled that in light of the state’s ongoing economic woes, it would be inappropriate to require the utility’s ratepayers to pay up front for environmental compliance costs that will not actually be incurred until sometime in the future, if ever. The utility, Northern States Power-Wisconsin (NSPW), had sought more than $29 million in electric rate relief and $8 million in natural gas rate relief, the basis for which was attributed in part to a need to prefund two projects, one for improving certain facilities to assure compliance with the new Cross-State Air Pollution Rule (CSAPR) and the other for cleaning up a former manufactured gas plant site. Noting that the CSAPR is under appeal and that questions remained about insurance indemnification as to the gas plant site remediation work, the commission found that it would be better to adhere to its long-standing policy of deferring environmental costs as they are incurred, for future amortization. The commission explained that such an approach has worked well for almost 20 years, has allowed for closer tracking of costs, and has provided for proper ratepayer/shareholder cost allocations. In approving additional gas revenues of $2.9 million and electric revenues of $12 million, the commission observed that NSPW will soon be receiving its share of an award stemming from a breach-of-contract suit brought against the U.S. Department of Energy (DOE), in which DOE was faulted for failing to receive and store spent nuclear fuel (SNF). According to the commission, the Wisconsin portion of the SNF litigation proceeds will total almost $13 million, thus muting the overall effect of the rate increases granted NSPW. For the full story, subscribe to URN.

Posted: February 13th, 2012 under Nuclear Spent Fuel, ratemaking, regulation.
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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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