Feds pay damages in Yankee Atomic Power lawsuit

Wednesday, February 6, 2013

The Portland Press Herald reports that the federal government has partially paid damages awarded under a lawsuit filed by the owners of three former nuclear power plants for about $160 million in damages.  While final regulatory approvals remain pending, the companies plan to use the award to benefit ratepayers.

The nuclear plants -- Maine Yankee, Connecticut Yankee, and Yankee Rowe -- closed in the 1990s.  Federal law requires the federal government to develop a plan for long-term storage and disposal of radioactive waste.  While waste removal was supposed to start in 1998, the federal government has yet to designate a permanent waste repository or to remove the spent fuel.  As a result, the radioactive waste is stored in concrete casks at the sites of the former plants, at the plant owners' expense.  For Maine Yankee, those storage and maintenance costs range from $7 million to $11 million annually, with similar expenses for the other two plants.

The plant owners filed a lawsuit against the federal government in 1998, seeking damages for the cost of maintaining the spent fuel onsite.  After a series of awards and appeals,  a 2012 U.S. Court of Appeals decision upheld the award of $39,667,243 to Connecticut Yankee and $81,690,866 to Maine Yankee, and increased Yankee Atomic's damages award from $21,246,912.55 to $38,268,654.55.

These amount have reportedly now been paid, and the power companies are proposing how they will use the proceeds to benefit ratepayers.  Meanwhile, because the U.S. Court of Claims ruled that utility companies cannot receive damage awards for storage costs that have not yet been incurred, the Yankee Companies have filed a second round of damages claims for approximately $247 million, and anticipate filing a third round of damage claims before the end of 2013.

From 1972 until permanent shutdown in 1997, Maine Yankee operated a 900 megawatt pressurized water reactor in Wiscasset, Maine.  During its operations, Maine Yankee was the largest generating station in Maine.  The plant closed after its owners received a report by the Nuclear Regulatory Commission staff identifying safety problems that were deemed too costly to fix.  Even after closure, the unexpected costs of storing the spent fuel onsite only worsened the plants' economics.  The lawsuit judgment is designed to compensate the plant owners for these costs, although the litigation itself carries a price tag for both the companies and the U.S. taxpayer.

What role will nuclear power play in our energy mix in the coming years?  For now, no federal waste repository is planned.  Safety is paramount, particularly following the 2011 Fukushima disaster in Japan.  Nuclear power plants can produce cost-effective baseload electricity, but face the risk of surprise costs such as those faced by Maine Yankee.  Can a holistic legal and business solution enable the safe operation of nuclear power plants?

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