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a utility does not have damages they can sustain in court through a long process, this might be a better situation for their ratepayers and stockholders. There are others who it might not work for. They each have to look at it in their own financial and legal situation." He said the proposed settlement creates a strong incentive for the DOE to meet its obligation. "If we did not perform and we did not take the fuel, all of that money never comes to the federal government," he said. "It's still held by the utilities."
The deferred payments due in 2010 total $6.4 billion.
"The government wants to perform, it's the government's responsibility," Barrett said. "We know that and we're trying our best to perform, but this would be added incentive from a financial point of view."
Lobbying for Legislation
"There's just a glaring omission of no date for pick up," said Unglesbee. "And there's no indication of how DOE intends to meet its obligation."
Legislation would address the root problems, he said.
The unnamed industry observer noted that municipally owned utilities are only allowed to invest in Treasury securities. So they would not be able to invest at higher interest rates. They'd have to pay back what they'd earned, so nothing would be gained.
For other utilities, commissions would scrutinize money collected for obligations and impose very strict requirements on how it could be invested. "You're not going to be able to use the riskier investments that would generate a higher rate of return," the observer notes. "The utility has to engage with the state commission on something like this. If the state says no, then the utility wouldn't be able to do it anyway."
The fact that the DOE recognizes the money collected shouldn't be going to other purposes is one of the sole benefits of the proposal, McCarthy said. But for utilities to give up their right to sue for damages, that would be unexplainable to stockholders.
Furthermore, he estimates life cycle costs of nuclear waste at $40 billion to $80 billion, which would mean DOE's offer would be mere cents on the dollar.
McCarthy said as many as eight states have started legal and administrative processes to escrow money on their own, withholding even from the federal government.
Barrett said the DOE set June 15 as the loose, "fairly mellow," deadline for utilities to accept its offer. By June 2, 41 companies had joined to reject the DOE's proposal, claiming that its monetary remedies were inadequate. In a letter to Secretary of Energy Federico Peña, Joe F. Colvin, Nuclear Energy Institute CEO, reiterated the industry's position: "Extending storage of used fuel at nuclear energy plant sites throughout the United States instead of moving the used fuel to central storage is not an acceptable solution."
Joseph F. Schuler Jr. is senior associate editor at Public Utilities Fortnightly.
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