Spent Nuclear Fuel Verdicts and Settlements

United States

HKA key to Nuclear Power Companies’ efforts to recover US$1.8 billion from U.S. Government in pivotal spent nuclear fuel verdicts and settlements

Brief

In 1982, the Nuclear Waste Policy Act (NWPA) was enacted to regulate the disposal of nuclear waste. Under the Act, the Nuclear Waste Fund was established to finance the research, construction and maintenance of nuclear waste repositories, as well as the safe transport of the waste from the nuclear plants to a permanent storage facility. Nuclear power companies were required to pick up the tab – together paying nearly US$800 million into the fund annually – with the understanding that disposal would commence in 1998. It did not – in part due to the political turmoil that ultimately erupted over the proposed disposal site: Yucca Mountain, Nevada.

Having acted under the assumption that DOE would honor its contractual agreement, power companies were now left to properly handle waste that would require them to incur tens to hundreds of millions of dollars to build their own spent nuclear fuel storage facilities at each of their reactor sites, and obtain the requisite approval of local and state government officials to store that waste.

Most US nuclear plants began operations in the 1970s and early 1980s. The earliest of these plants were generally built to accommodate the storage of spent fuel for just a few years until such time that the Government took the fuel for “reprocessing”. Following President Carter’s effective ban on reprocessing due to proliferation concerns, the NWPA-mandated contracts would require each nuclear utility to find a means to store its spent fuel on its nuclear plant site until DOE began to accept spent fuel in 1998.

While the NWPA and related DOE contracts with nuclear utilities explicitly identified 1998 as the date when DOE would begin accepting spent fuel from nuclear plants, the rate of acceptance and the specifics with which such acceptance would occur were not as clearly specified.

What we did

Retained by outside counsel for many of the nuclear utilities, HKA performed extensive fact-finding. This was done by conducting interviews of company executives, plant managers, operators and other technical specialists, and reviewing operational and accounting records, often dating back to the early 1980s.

Based on this investigation, the HKA team performed in-depth analyses to quantify the incremental amount of spent fuel that would be stored onsite at each nuclear plant and the resulting cost impacts. For each case, HKA prepared expert damages reports. The supporting evidence typically amounted to thousands of pages of documents and analyses.

HKA experts then delivered clear and concise expert testimony to explain to the court the basis of the plaintiffs’ damages.

Outcomes

HKA expert witnesses were able to demonstrate to the courts the substantial economic damages the power companies had borne to date and will continue to bear because of DOE’s failure to perform on its contractual obligations.

The damage awards in HKA matters have totalled more than 90% of the claim amounts.

Of the resolved cases, the awards encompassed the overwhelming majority of the elements of damages that HKA had determined. Several of these plaintiffs have pursued subsequent rounds of litigation to recover their ongoing costs.

– In July 2007, Southern Company was awarded approximately US$77 million in damages by the US Court of Federal Claims for its three power plants located in Georgia and Alabama.

– In September 2007, Northern States Power Company was awarded approximately US$116 million in a ruling by the US Court of Federal Claims for its Prairie Island and Monticello nuclear plants for costs incurred through 2004. In July 2011, Northern States Power Company settled its claim with the Department of Justice for approximately US$100 million for costs incurred through 2008.

– In October 2007, Entergy was awarded approximately US$49 million in damages by the US Court of Federal Claims for its Arkansas nuclear power plant.

– In December 2009, Wisconsin Electric was awarded approximately US$50 million in damages by the US Court of Federal Claims for the Point Beach nuclear plant. In February 2011, Wisconsin Electric settled the claim with the Department of Justice for US$46 million.

– In February 2010, Energy Northwest was awarded approximately US$57 million in damages by the US Court of Federal Claims for its Columbia nuclear plant. In July 2011, Energy Northwest settled the claim with the Department of Justice for US$49 million.

– In March 2010, Entergy was awarded approximately US$10 million in damages by the US Court of Federal Claims for its Grand Gulf nuclear power plant in Mississippi.

– In May 2010, Entergy was awarded approximately US$4 million in damages by the US Court of Federal Claims for its Pilgrim nuclear plant.

– In May 2010, Entergy was awarded approximately US$106 million in damages by the US Court of Federal Claims for its Indian Point nuclear plant.

HKA’s (previously The Kenrich Group) work was cited numerous times in court decisions in making the case against the US government.

In addition to the work done on litigations, HKA also assisted several utilities in settlements with the Department of Justice. HKA continues to assist many of these utilities on annual settlement submissions provided to the DOE. These annual submissions cover the utilities’ ongoing costs for addressing spent nuclear fuel until the time DOE performs.

– In January 2006, South Carolina Electric & Gas was awarded US$6 million in a settlement agreement with the Department of Justice.

– In June 2006, Omaha Public Power District was awarded US$15 million in a settlement agreement with the Department of Justice.

– In March 2007, Duke Energy was awarded US$56 million for its nuclear plants in a settlement agreement with the Department of Justice.

– In mid-2009, Florida Power & Light was awarded a confidential amount in a settlement agreement with the Department of Justice.

– In September 2009, Public Service Electric & Gas was awarded US$47 million in a settlement agreement with the Department of Justice.

– In March 2011, PPL was awarded US$55 million in a settlement agreement with the Department of Justice.

– In May 2011, Nebraska Public Power District was awarded US$61 million in a settlement agreement with the Department of Justice

By industry estimates, the total damages to be paid by DOE could be in the tens of billions of dollars.

For HKA clients still awaiting resolution, the precedent set by the utility companies’ wins offers significant hope that at least the utilities and their ratepayers will not ultimately have to pay twice to address the issue of spent nuclear fuel.

Project Details
  • Client
    Various
  • Value
    US$900 million
  • Services
    Expert
  • Sectors
    Power & Utilities