Connecticut Yankee Nuclear Plant Awarded $39.7 Million

CHRISTIAN NOLAN

The Connecticut Law Tribune

2013-02-15 15:16:00.0

Back in 1996, the Connecticut Yankee nuclear power plant in Haddam Neck was shut down because it was too costly to keep operating. Dangerous radiation had leaked from the plant in 1978 and again in 1989, which contributed to the decision.

But even after the plant closed, the meter kept running.

Under a contract that was tied to the operation of the plant, the federal government was supposed to take possession of the spent nuclear fuel at the site starting in 1998, but never did. As a result, the company paid more than $10 million a year to keep the materials secure.

The federal Department of Energy had attempted to build a repository to permanently store the waste in Nevada's Yucca Mountain, but its efforts to remove and store the fuel rods and other waste didn't materialize. In a lawsuit that was filed in 1998, the plant owner accused the federal government of being in breach of its contract to remove the materials from the state. The suit was joined by two other nuclear plants in New England.

This month, the federal government agreed in a settlement to pay the owners of the closed Connecticut Yankee plant $39.7 million for the costs related to removing the radioactive materials, which had been paid by electric customers, but never done. The settlement agreement calls for the government to reimburse an additional $120 million to the Maine Yankee Atomic Power Co. and Yankee Atomic Electric Co. in Massachusetts. Because electric customers in the three states had been paying the federal government for the cost of storing the nuclear waste, plans are being filed with the Federal Energy Regulation Commission to establish a process to distribute the funds.

Owners of the three plants said the entire $160 million settlement will be returned to the rate payers, after adjustments are made for state and federal taxes. The money has already been transferred from the U.S. Treasury to the three companies.

In a statement from the owners of the three plants, which are part of a consortium of New England utility companies, the companies plan to find "the best way to use the proceeds from the damage awards to benefit the ratepayers."

The three plants, which were all decommissioned at around the same time, together sued the government for breach of contract. In August 2004 there was a seven week trial on damages in federal court. Various appeals dragged the process out until last May when the U.S. Court of Appeals upheld a decision by U.S. Court of Federal Claims Senior Judge James F. Merow.

In addition to the $39.7 million awarded to Connecticut Yankee, Maine Yankee was awarded $81.7 million and Yankee Atomic $38.3 million.

Some say the settlements are just the beginning. That is because the issue of disposing of the spent nuclear waste remains unsolved.

"We can expect more of the same until the government begins meeting its obligation to move used fuel off of plant sites," said Steve Kerekes, senior director of media relations with the Nuclear Energy Institute in Washington D.C. "The larger situation right now is the government doesn't have a waste management program in place."

Kerekes said President Barack Obama appointed a commission to look into how to proceed with a nuclear waste management program. Kerekes said the Energy Department estimates that damages for similar cases around the country could reach as high as $20 billion by 2020. He said damages nationally sit at about $2 billion currently.

Wayne Norton, who leads the three decommissioned plants, said the litigation damages represent damages through 2001 for Connecticut Yankee and Yankee Atomic and through 2002 for Maine Yankee.

"While recovering monetary damages from the federal government is positive for the ratepayers it does not result in spent nuclear fuel and Greater than Class C waste being removed from the three companies' sites," said Norton in a written statement. "However, we are pleased that in the Department of Energy's January 11 strategy report the administration supports an integrated nuclear waste management system that includes a pilot interim storage facility with an initial focus on accepting spent nuclear fuel from shut-down reactor sites. We are hopeful Congress and the Administration will move immediately to implement the report recommendations and we look forward to working with others to bring that about," added Norton.

The ongoing litigation between the three companies and the Department of Energy is being conducted in phases as an earlier court decision ruled that utility companies cannot receive damage awards for costs that have not yet been incurred. As a result, the three decommissioned companies have, and expect to continue to litigate with the Department of Energy every several years to request damages for costs incurred.

The three companies are currently seeking approximately $247 million in additional damages from the Department of Energy in a second round of cases that were filed with the U.S. Court of Federal Claims in 2007.

In these Phase II cases, Connecticut Yankee is seeking $135.3 million, Yankee Atomic $76.6 million, and Maine Yankee $35 million. These numbers reflect the damages that Connecticut Yankee and Yankee Atomic incurred from January 1, 2002 through December 31, 2008, and that Maine Yankee incurred from January 1, 2003 through December 31, 2008.

The current annual cost to store the spent nuclear fuel is approximately $7 to $11 million per site. However, Norton claims that annual cost could well increase as regulations evolve and potentially impose additional requirements on the companies.

It may come as a surprise to some that the decommissioned Connecticut Yankee plant is receiving any funding after it was shut down in late 1996 after 28 years of operation. At the time it was the nation's second oldest reactor.

In 1996, a company study found the plant was too costly to keep operating. The reactor was shut down for safety problems in July 1996 and summer inspections found that a backup safety system might not work properly in an emergency.

By August 1996, even while it was shut down, a serious nuclear accident could have happened, regulators said at the time, when the water level over the fuel core dropped by about three feet. Operators failed to notice the problem because gauges had been disconnected. •