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Financial News

Fortnightly Magazine - May 15 1997

for accepting spent nuclear fuel by Jan. 1, 1998. The Nuclear Waste Fund (NWF), a separate fund of the U.S. Treasury, was established by Congress to cover nuclear waste disposal costs. NWPA set the fee at 1 mill per kilowatt-hour.

Like clockwork, the money went into the NWA. And, like Social Security, money not committed to these activities went into government securities. The nuclear fund is starting to look like Social Security in many other ways.

By the end of 1996, close to $13 billion had been collected, while more than $6 billion was spent to develop a repository at Yucca Mountain, Nevada. The fund still counts another $2 billion as a receivable. Yet, development of the repository stalled for reasons ranging from the geological (salt dome stability) to the theological (certain Native Americans consider the site sacred). With each delay, the January 1998 deadline slips further and further away. Meanwhile, the spent fuel pools filled up.

DOE finally admitted in 1993 it would miss the deadline. But DOE also broke new legal ground by claiming no legal duty to take the spent fuel in 1998 if the repository was not ready. Of course, DOE said utilities were still responsible for paying the one-mill levy. To make matters worse, those NWF government securities slipped over into government assets for deficit reduction purposes (em a novel accounting approach, not to mention innovative tax policy.

The government might duck responsibilities and divert money, but utilities have businesses to run. Facing expropriation on such a grand scale (em and approximately 36,000 metric tons of spent nuclear fuel (em Northern States Power Co. and Consolidated Edison Co. initiated a legal campaign to hold DOE's feet to the fire. Eventually joined by almost half the nuclear industry, the utilities achieved a remarkable victory in 1996 in Indiana-Michigan Power Co. v. Dept. of Energy, 88 F.3d 1272 (D.C.Cir.), handed down on May 30 of last year.

Fortunately for the stockholders, the court ruled a contract is a contract: Utilities were paying fees so DOE had a duty to accept the fuel. Which brings us to the present.

Since the DOE trucks will not roll this January, there will be damages. DOE has said it will not start accepting fuel until 2010 to 2015, which means the damages will continue for a long time. The longer the utilities are denied relief, the longer DOE receives its money and the longer the utilities receive nothing in return. So, we're talking Big Damages.

This past January, 36 nuclear utilities went back to the U.S. Court of Appeals asking for relief from having to continue paying into the Nuclear Waste Fund. The utilities also asked the court to enjoin DOE from taking action for suspending further payment. And, perhaps most important, the utilities asked the court to order DOE to develop a plan to begin taking custody of spent fuel.

Presently, utilities are not seeking recission damages (em the $13 billion. They simply want to see DOE perform as promised. As for the $6 billion, which, for all practical purposes, has been