Major Nuclear Power Plant

Brief

Since 1982, an energy regulatory body has charged utilities throughout the United States a fee for every kilowatt-hour of electricity sold by nuclear power plants. In return for the fee, the energy regulatory body was required to begin removing the highly radioactive used nuclear fuel from these plants no later than January 31, 1998. The energy regulatory body had yet to perform this, causing a delay in performance for the client utility. The utility incurred significant costs to store substantially greater quantities of discharged spent fuel on-site at one of its nuclear power plants than it would have had the energy regulatory body performed as contractually required.

In 2000, following unsuccessful attempts at settlement, the utility filed a complaint with the U.S. Court of Federal Claims to recover the costs that would not have otherwise been incurred if the energy regulatory body had performed its contractual obligations. After an extended proceeding that culminated in a lengthy trial in 2007, the utility successfully settled its claim against the energy regulatory body for approximately US$45.5 million in 2011.

What we did

HKA experts were retained by outside counsel for the client utility to provide detailed analyses of various spent nuclear fuel cases and litigation fees incurred. We memorialized the results of the analyses in pre-filed rebuttal testimony with the state’s Public Service Commission (PSC), which regulates the state’s public utilities. Our rebuttal testimony detailed various aspects of the utility’s spent nuclear fuel suit and compared it to other spent nuclear fuel cases, noting various unique issues and aspects of the utility’s spent nuclear fuel case regarding damages and causation.

HKA’s rebuttal testimony also opined that a head-to-head comparison between any two spent nuclear fuel cases is difficult at best, especially given the significant differences between other spent nuclear fuel cases and the current case. After detailing specific issues and facts related to the utility’s spent nuclear fuel matter, HKA opined that the legal fees incurred in this case were reasonable and in line with, or less than, those incurred by other utilities in other cases. Our experts also testified live at a PSC hearing on the matter, with cross-examination by interveners and PSC staff.

Outcomes

The state’s PSC decided not to reduce the amount of legal fees recovered by the client utility. The PSC found that it was “difficult to determine the reasonableness of legal expenses in one case by comparing them to legal expenses from another case.” This finding validated or adopted the conclusions and opinions provided in the HKA pre-filed and live testimony. Through our experts’ knowledge of the nuclear industry, and specifically of spent nuclear fuel matters, we were able to assist the utility in fully recovering its legal expenses from the spent nuclear fuel suit.

The utility has and will continue to refund its customers the settlement amount from the energy regulatory body. After an intervener group compared the settlement the utility received from the energy regulatory body with the legal costs expended against the settlement amount and legal fees of another utility, it proposed a reduction in the legal fees the utility could recover from the rate base.