Circuit Court OKs Abandoned Plant Cost Recovery

Fortnightly Magazine - July 1 1996
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The U.S. Court of Appeals for the District of Columbia Circuit has upheld a Federal Energy Regulatory Commission (FERC) ruling that permits Yankee Atomic Electric Co. to recover all costs associated with an abandoned nuclear plant.

DC PSC RFP Technical Consultant for Formal Case (FC) No. 1156

In 1992, the utility decided to shut down its nuclear facility in Rowe, MA, after investigating safety concerns raised by the Nuclear Regulatory Commission. Having determined that closing the facility would cost less than restarting, Yankee then asked the FERC for full recovery of its unamortized investment in the plant, as well as construction-work-in-progress and decommissioning costs. The FERC overturned an "equitable sharing formula" adopted in an initial decision in the case, finding that denying full recovery of plant costs in such circumstances would give utilities "perverse incentives" to operate power plants until they recouped their investment, even though retiring the plant might be more cost-effective.

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