POLITICS WON OVER PURPOSE AS AN EARLY VOTE on a nuclear waste bill in the U.S. Senate was itself laid to waste, apparently victim of a contested Senate seat in the state where spent fuel would be stored.

The June 2 vote would have limited debate on H.R. 1270. By getting a vote count, the leanings of senators on the bill would have been tested. And the way would have been paved for Senate Majority Leader Trent Lott (R-Miss.) to schedule a second, more formal vote on the measure.

But nine Democrats who supported a similar bill last April 15 in a 65-34 count - with one not voting - changed their vote, causing the cloture to go down 56-39. This time around, five senators didn't vote; 60 yeas are needed to invoke the cloture to end a filibuster.

Politics began intervening the day before the Senate tally when Rep. John Ensign (R-Nev.) released a statement saying that House Speaker Newt Gingrich (R-Ga.) didn't intend to call up the legislation this year. Rep. Gingrich, just minutes before the Senate ballot, released a statement saying it was unlikely the bill would make it past the president's veto to become law. Because of the crowded floor calendar and opposition of some members, he said he didn't expect to schedule floor action this year.

Although Rep. Ensign and Sen. Harry Reid (D-Nev.) have been united in their fight against interim storage of nuclear waste in their state, one defining factor intervened when it came to the Senate vote on temporary nuclear waste storage: Rep. Ensign is running for Sen. Reid's seat in this year's election. Apparently the outcome of the bill boiled down to that senate race - neither Nevadan wanted to anger constituents and both wanted to lay claim to being the one who aborted the vote. Rep. Ensign got there first with Rep. Gingrich's help, but Sen. Reid may have the last laugh come Election Day.

"It came down to election-year politics," said Derek Jumper, spokesman for the Senate Committee on Energy and Natural Resources. Jumper notes that had the nine Democrats voted as they did last year, there would have been 67 votes for the bill because two Republicans joined proponents. A 67-vote count could have overridden a presidential veto.

The preliminary vote on putting a temporary nuclear waste dump near Nevada's YuccaMountain, proposed site of the permanent repository, also comes just weeks after the Department of Energy offered utilities with nuclear power plants the chance to defer payments into the Nuclear Waste Fund - if they promised not to sue the DOE for not taking spent fuel.

The deferred payments, the DOE reasoned, would allow utilities to invest the money and use the excess to offset costs of on-site storage.

Observers say the timing of DOE's proposal was odd.

Working Toward Compromise

The DOE's May 18 offer came just days before Sen. Lott filed his motion to get the floor vote on the bill calling for temporary storage of more than 28,000 tons of radioactive waste stored at 73 nuclear plants in 34 states.

Nuclear waste program funding is about $635 million a year, according to Steve Unglesbee, Nuclear Energy Institute spokesman. Congress typically appropriates $190 million annually to use for the program, with the rest put on the books to make the deficit look smaller.

"I have not seen any indication from anyone, anywhere in the country, state or utility, that had any level of satisfaction with what was put on the table," said Mike McCarthy, administrator of the Nuclear Waste Strategy Coalition.

"Not all utilities will take this, I would imagine," said Lake H. Barrett, acting director of the DOE's office of civilian radioactive waste management. "I would be surprised if all utilities take this proposal... Some may."

The offer comes after two federal appeals court decisions. The first, decided Nov. 14, 1997 by the United States Court of Appeals (Northern States Power Co., et al., No. 97-1064, consolidated with Nos. 97-1065, 97-1370 and 97-1398) required the DOE to work out its disagreements over payment of damages to 49 companies under their Nuclear Waste Policy Act contracts. The second, decided May 5 by the same court under the same docket, took "no opinion on the legality of the DOE's using utility or ratepayer-supplied monies to pay costs or damages."

DOE, believing the suits posed no roadblocks to its plans, went ahead.

"It certainly looks like their timing was calculated," said one observer from the regulatory community who asked not to be named. "All they have to do is persuade two or three senators that this settlement offer is something to think about and you don't have to do the legislation. And if you have any doubts about the legislation, you don't have to vote for it."

Barrett insisted that the DOE's timing was coincidental.

"It has taken a long time to develop this and get all the internal coordination within the administration," the DOE official said. "We knew the court process was going forward and we were trying to, as I said, acting in good faith to get a proposal out since we didn't get any proposals in from the other side, other than legislation. It just took us a long time to get it out. It's a coincidence that this got out this week."

Relinquishing Rights

Barrett says under the DOE plan, utilities would only pay their portion of the program funding that would be used. The balance could be invested until it was paid back, at the Treasury Bill interest rate, currently about 5 percent. It would be paid back when the DOE received the waste for permanent, underground storage at Yucca Mountain.

Assuming a 10-percent return and assuming all utilities took the offer, the combined utility earnings would be $2.8 billion. Assuming a rate of return of 14 percent, $5 billion could be earned, he said. These scenarios also assume the waste is received by 2010.

But what compelling reason would utilities have to give up their rights to sue for damages?

"There's a very broad range of utilities and each utility situation is unique," Barrett said. "If 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.

Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.