A federal appeals court ruled yesterday that the Department of Energy is still on the hook for a substantial portion of a settlement that a lower court had ordered the government to pay a utility after the company upgraded a $60 million nuclear waste storage facility.
But the U.S. Circuit Court of Appeals for the Federal Circuit said Energy Northwest did not make the case that the federal government's failure to take waste from its 1,150 megawatt Columbia Generating Station required the company to make modifications to the plant.
The 26-year-old nuclear reactor and dry storage facility are located 10 miles north of Richland, Wash.
Energy Northwest sued the Department of Energy in 2004 for money it spent on moving spent fuel from its wet pool to a newly built dry storage facility. The U.S. Court of Federal Claims then granted Energy Northwest more than $55 million in damages last year.
But the appeals court yesterday upheld the bulk of the lower court's settlement order, but said the federal government is not required to pay the utility $1 million for plant modifications and $6 million in interest charges the utility made in connection with the project.
However, the appeals court ruled Energy Northwest was rightfully granted $2.9 million in "overhead costs" associated with the storage facility.
“We are very pleased that the courts have ruled that DOE is responsible for the lion share of expenses incurred to store our used nuclear fuel on site,” said Energy Northwest CEO Mark Reddemann. “This is superb news for Northwest ratepayers.”
The Columbia Generating Station grabbed headlines yesterday after workers there cut into a pipe containing hydrogen, causing a small flame and prompting an evacuation. The Nuclear Regulatory Commission is now reviewing what the company initially deemed an "unusual event" and said workers cut into a pipe that cools the generator. Company officials later lifted the "unusual event" designation and said the incident posed no risk to the normal level of plant safety.
Energy Northwest signed a contract with DOE in 1983 to take spent nuclear fuel from the facility and store it in a permanent repository, which has not yet been built. The agreements followed in the wake of Congress directing the agency to prepare a permanent dump for spent nuclear fuel in 1982.
The contracts stipulated that the federal government was required to dispose of spent nuclear fuel generated by the reactor by 1998 and Energy Northwest was bound to prepare the waste for storage and contribute money to the Nuclear Waste Fund.
But as time passed it became increasingly clear that DOE was falling through on its obligation to take the waste. The Obama administration made that official last year by pulling support for the Yucca Mountain project in Nevada, prompting DOE to withdraw its application for the project and forcing utilities to store waste on-site (E&ENews PM, March 18).
Nuclear plants must store spent fuel in pools for at least five years and thereafter can leave the rods in water indefinitely, but the pools can fill up depending on their arrangement and must be moved to dry storage, according to NRC.
Energy Northwest determined by the early 1990s that the pool would reach capacity after 2003 if the government did not take the waste and decided in 1999 to build an "independent spent fuel storage installation" to store the fuel indefinitely in dry casks. The facility was approved to store spent nuclear fuel in 2002.
Energy Northwest then had to make modifications to get the spent fuel safety out of the wet pool and into dry storage casks, including the installation of a seismic device, moving large parts of the reactor and making changes to piping and pathways.
The federal claims court granted Energy Northwest $56.9 million in damages in 2004, including $1 million for site modifications, $2.9 million in overhead costs and $6 million for interest charges the company paid.
The federal government appealed the Court of Federal Claims' decision, saying that upgrading the storage facility was a responsibility Energy Northwest had taken on when signing the contract, which spelled out that nuclear plants are responsible for "all preparation, packaging, required inspections, and loading activities" necessary to prepare the spent fuel for storage.
DOE challenged all but $47 million of the utility's awards.
The appeals court said Energy Northwest failed to "prove that its site modifications were actually caused by the government's breach," namely the government's failure to take the waste. The appeals court also dismissed the utility's argument that it would be required to change the facility again if DOE "eventually performs" and begins accepting spent nuclear fuel.
"The trial court should have required Energy Northwest to prove that the Columbia site modifications would not have been necessary but for the government's breach," the appeals court said.