Copyright 1999 Federal News Service, Inc.
Federal News Service
MARCH 24, 1999, WEDNESDAY
SECTION: IN THE NEWS
HEADLINE: PREPARED TESTIMONY OF
HONORABLE JOHN G. STRAND
CHAIRMAN, MICHIGAN PUBLIC SERVICE COMMISSION
BEHALF OF THE NATIONAL ASSOCIATION OF
REGULATORY UTILITY COMMISSIONERS
BEFORE THE SENATE ENERGY AND NATURAL RESOURCES COMMITTEE
SUBJECT - S. 608 "NUCLEAR WASTE POLICY ACT OF 1999"
Summary of Comments by THE HONORABLE JOHN
G. STRAND, COMMISSIONER Michigan Public Service Commission On behalf of NATIONAL
ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS 366 Dirksen Senate Office
Building Washington, D.C.
March 24, 1999
- NARUC commends the sponsors
of S. 608 and supports enactment of S. 608.
- Enormous amounts of money have
been collected from utility ratepayers to pay for the waste program, yet no
waste has been moved from civilian reactor sites. Nationally, utility ratepayers
pay approximately $600 million per year into the Nuclear Waste Fund; this fund
has accumulated more than $15 billion since 1983.
- Ratepayers have paid for
the original storage of nuclear waste on plant sites through rates, ratepayers
have paid for the Federal waste management and disposal program run by DOE
through the 1 mil per kilowatt hour fee. Now ratepayers are paying a third time
for expanded on-site storage as a result of DOE's failure to meet deadlines
prescribed in the Nuclear Waste Policy Act. If Secretary Richardson's proposal
to take title to nuclear waste at plant sites and not move the waste takes
effect, will ratepayers pay a fourth time, without ever seeing the waste moved?
- Congress must revise budget and appropriations processes that now result
in appropriations in which only 16 cents out of every dollar paid by ratepayers
into the Nuclear Waste Fund actually goes into the Federal Nuclear Waste
- Congress must pass legislation that will preserve and protect
ratepayers money for its intended purpose: safe, timely, central interim storage
and permanent disposal of spent fuel and high-level radioactive waste.
effective management and permanent disposal of nuclear wastes are essential to
minimize the life cycle costs of the existing nuclear plants that now generate
about 20 percent of electricity used in the U.S. The cost of waste disposal
could affect resource availability as we head into an era of competitive
- DOE is legally obligated to begin taking waste by a now expired
deadline, but the courts have been unwilling to require specific performance by
the DOE. The practical result at this time is a deadlock that can only be
corrected by Congressional action. DOE must be prohibited from using the Nuclear
Waste Fund or prospective fee collections for paying costs or damages as a
result of DOE's failure to comply with its obligations.
Chairman and Members of the Committee:
Good Morning. I am John Strand,
Chairman of the Michigan Public Service Commission and Chairman of the
Subcommittee on Nuclear Issues - Waste Disposal of the National Association of
Regulatory Utility commissioners, commonly known as NARUC. I am here today to
testify on behalf of NARUC. I am grateful for the opportunity to provide NARUC's
views on S. 608, the Nuclear Waste Policy Act of 1999.
The NARUC is a
quasi-governmental nonprofit organization founded in 1889. Within its membership
are the governmental bodies of the fifty States engaged in the economic and
safety regulation of carriers and utilities. The mission of the NARUC is to
serve the public interest by seeking to improve the quality and effectiveness of
public regulation in America. More specifically, the NARUC contains the State
officials charged with the duty of regulating the retail rates and services of
electric and gas utilities operating within their respective jurisdictions.
These officials have the obligation under State law to assure the establishment
and maintenance of such energy utility services as may be required by the public
convenience and necessity, and to ensure that such services are provided at
rates and conditions which are just, reasonable, and nondiscriminatory for all
With respect to the Federal Nuclear Waste program, no other
organization representing the public interest has been involved with a fair
resolution of this critical issue longer than the NARUC. In 1983, shortly after
the passage of the 1982 Act, the NARUC established policies and procedures on
the high-level nuclear waste program. Our years of experience and active
interest in the federal program lead us to conclude that we can no longer afford
delays - the need for Congress to fix this program is immediate.
Electricity Consumers' Interest in the Nation's Nuclear Waste Program
DOE's Civilian Radioactive Waste Management program has been a source of deep
concern and enormous frustration to our nation's utility ratepayers and
regulators for many years. Our primary concerns are financial. First, we are
concerned over the enormous amounts of money that have been collected from
utility ratepayers to pay for the waste program despite the fact that no waste
has yet been moved from civilian reactor sites. Nationally, utility ratepayers
pay approximately $600 million per year into the Nuclear Waste Fund, only a
small portion of which, approximately sixteen cents on the dollar, is actually
appropriated for the program ThisFund, which is supported solely by the Nation's
electricity consumers, has accumulated more than $15 billion since 1983. State
regulators have a compelling interest in the cost-effectiveness and success of
the program because of our fiduciary responsibilities to the utility ratepayers.
We have recently heard from the DOE that there won't be enough money
available to fund both a centralized interim storage facility and complete the
work necessary to open a permanent repository as scheduled in 2010. DOE made
these statements in testimony given on February 10, 1999 before the House
Subcommittee on Energy and Power. As you can imagine, we have a number of
concerns about these statements.
While we absolutely agree that sacrificing
the development and opening of the permanent repository in order to get an
interim facility built and operating is an unacceptable outcome, we don't agree
with the characterization that there isn't enough money to do both. The DOE
qualified their February testimony by stating that their analysis is based on
historical appropriations patterns. Therein lies perhaps the biggest part of the
problem. When only sixteen cents of every dollar going into the Nuclear Waste
Fund is being applied toward its intended purpose, its not hard to conclude that
there isn't enough money to do both interim storage and the permanent disposal
program. The DOE statement also ignores the fact that the unspent balance of the
Nuclear Waste Fund currently exceeds $8 billion.
In other words, the
problem isn't that there is not enough money or time to build and operate both
an interim storage system and the permanent repository, the problem is that the
money the Nation's electricity consumers have paid into the Nuclear Waste Fund
is not going toward the job as specified in the Nuclear Waste Policy Act, as
amended. This is a problem that only the Congress can fix and we appeal to you
to pass legislation that will preserve ratepayer's money for its intended
purpose: safe, timely, central interim storage and permanent disposal of spent
fuel and high-level radioactive waste from commercial nuclear power plants.
Yet another concern relates to consumer costs. The effective management and
permanent disposal of nuclear waste are essential to minimizing the life cycle
costs of the existing nuclear plants that generate about 20 percent of the
electricity used in the United States. Cost increases for expanding on-site
storage, reactor decommissioning and centralized disposal of nuclear wastes
increases the costs of nuclear energy overall, which in turn, can have a
significant adverse affect on energy costs to consumers. This problem is
becoming particularly acute as the nation heads into an era of competitive
markets in the electric utility industry. Moreover, nuclear generation provides
significant air emission benefits that will be jeopardized if the
unresolvedwaste problem renders these plants uneconomic.
Since 1984, the
NARUC has passed twenty five policy resolutions on the nuclear waste program,
including eleven that specifically encourage legislative revisions to the
program. Back in 1992, NARUC passed a policy resolution (copy attached) that
asked Congress to ensure that utility ratepayer funds are used for their
intended purpose by enacting legislation that removes the nuclear waste
program's budget from the Federal Budget. That request was reiterated nine times
in subsequent resolutions. I have also attached, for your review, the most
recent NARUC resolution addressing the nuclear waste program adopted February
24, 1999. Today, the budget for the nuclear waste program continues to languish
in the appropriations process with ratepayer payments into the Nuclear Waste
Fund held hostage. Perhaps worse yet, we are still without the fundamental
policy framework necessary to ensure that the Federal Government accepts and
disposes of nuclear wastes in a timely and efficient manner. The NARUC commends
the sponsors of S. 608 for undertaking this critical task of developing a
workable legislative solution, and we welcome the efforts of this Committee to
address the concerns of millions of U. S. ratepayers who financially support
DOE Secretary Richardson's Take Title Proposal
time, the NARUC has not taken a formal position on the recent proposal by
Secretary Richardson to have the DOE take legal title to the utilities spent
fuel at reactor sites until a repository is opened. The NARUC would like to
reserve judgement on the proposal until we hear some more specifics on this
approach from the DOE. However, what we know about the proposal raises a number
of serious concerns.
First, there are some very important details that the
DOE has not yet addressed, such as how it would be funded and at what cost; how
much of the cost of implementing this proposal is in addition to the exorbitant
costs that the program has already incurred; when it would be implemented and
how long will it take to implement? We do not yet understand how the electricity
consumers will benefit from the proposal. In fact, it appears that the chief
beneficiary would be DOE. If the devil is in the details, then we need to hear
Second, we can't tell if the DOE has even considered such State and
local issues as the effects on property taxes and environmental permitting.
Also, we don't see how nuclear plants with limited spent fuel storage capacity
will benefit by this proposal. The continued operation ofthese plants will be
jeopardized by DOE's failure to remove the waste.
And finally, at least on
the surface, the Secretary's proposal fails our simple three-part test. First,
it doesn't move the waste. Second, it doesn't preserve ratepayers' funding for
its intended purpose, and third, it doesn't protect the ratepayers from future
cost increases created by the delay in taking the waste or from the inefficient
use of the Nuclear Waste Fund.
Let me put it another way; utility ratepayers
have paid for the storage of nuclear waste at nuclear power plants through the
rates paid to cover the capital costs of planned on-site storage. Ratepayers
have also paid for the Federal nuclear waste management and disposal program run
by the DOE through the 1 rail per kilowatt hour fee they pay on the generation
of electricity from nuclear generation plants. These are the fees that go
directly into the Nuclear Waste Fund and have accumulated to the tune of $15
billion Ratepayers are now paying a third time - - for expanded on-site storage
as a result of DOE's failure to meet the deadlines prescribed in the Nuclear
Waste Policy Act. The DOE Secretary's proposal to take title to the waste at the
power plants, but not move it, seems to rely on the ratepayers paying a fourth
time! I ask you, when can the ratepayers of this country expect to get
performance for their money?
We are hopeful that there is more to the DOE's
proposal than is apparent. We hope to hear that this is just one component of a
larger plan to address the deficiencies of the program, and somehow, electricity
consumers, utilities, everyone, not just DOE will benefit from their actions.
The Department of Energy's Viability Assessment
The NARUC is encouraged
by the results of DOE's Viability Assessment of a Repository at Yucca
Mountain. The viability assessment, released in December 1998, presents
the results of DOE's study to date and it concludes "that Yucca
mountain remains a promising site for a geologic repository and that
work should proceed to support a decision in 2001 on whether to recommend the
site to the President for development as a repository." The DOE has been
studying a site at Yucca Mountain, Nevada, for more than 15
years to determine whether it is a suitable place to build a geologic repository
for the nation's high-level radioactive waste.
Our review of the assessment
leads us to conclude that the provisions in Section 204 of S.608, which
authorize and direct the Secretary of Energy to "design, construct, and operate
afacility for the interim storage of spent nuclear fuel and high-level
radioactive waste at the interim storage facility site" make sense. In our
"Resolution Regarding Guiding Principles for Legislative Changes to the Nuclear
Waste Policy Act," (attached hereto) NARUC called for the DOE to begin to take
possession and remove high-level radioactive waste and spent nuclear fuel to
meet its (now expired) January 31, 1998 deadline for complying with its legal
obligation as soon as possible. The resolution further urged the U.S. Congress
to designate the location of one above-ground, centralized, interim storage
facility for spent nuclear fuel and that such site not be limited by the
location or licensing of a permanent repository.
In sum, the viability
assessment leads us to believe it is time to get on with siting, designing, and
constructing an interim storage facility as soon as possible.
of Federal Court Decisions
The implications of the recent Federal court
decisions are quite clear: It is now up to Congress to fix to this program. In
the litigation swirling around this program, we have reached a judicial
deadlock. In terms of the costs of the program, failure to enact this
legislation could result in the Federal government paying huge damages to the
utilities, damages that could run well into billions of dollars.
the States and the utilities were compelled to file suit against the DOE by the
Department's final interpretation of the 1982 Act, in which the DOE concluded
that it had no obligation to accept nuclear wastes from civilian reactors,
absent a final repository Given the Department's record in its site
characterization efforts, this position by the DOE was entirely unacceptable. In
the first case that was decided by the U.S. Court of Appeals for the DC. Circuit
(lndiana Michigan Power Co., et al v Dept. of Energy, 88 F. 3d 1272 (D.C.Cir.
1996), the Court of Appeals concluded that the Nuclear Waste Policy Act of 1982
"creates an obligation in DOE, reciprocal to the utility's obligation to pay, to
start disposing of the SNF (Spent Nuclear Fuel) no later than January 31, 1998"
and that the statutory obligation to commence disposing of SNF no later than
January 31, 1998, is "without qualification or condition." The same Court, in
November 1997 in Northern States Power Co., et ai v Dept. of Energy, 128 F.3d
754 (D.C.Cir 1997) reaffirmed DOE's unconditional obligation to begin to dispose
of spent nuclear fuel by the statutory and contractual deadline, and found that
utility and State petitioners had a clear right to relief, that DOE had a clear
duty to act, and that petitioners should pursue "potentially adequate remedies"
under the Standard Contract to address DOE's avoidable delay.
February 1998,both State and utility parties in Northern States filed motions
with the Court of Appeals to enforce the Court's decisions in Indiana Michigan
and Northern States, due to DOE's failure to undertake any action to comply with
its obligations. In an unpublished order issued in May 1998, the Court of
Appeals determined that despite its earlier holding that DOE has an
unconditional obligation under the Act tO begin acceptance on January 31, 1998,
the Act "does not itself require performance." Accordingly, the Court declined
"to requir(e) the DOE to perform under the contract." The Court did not,
however, overturn its earlier holding that in construing its obligation under
the contract to dispose of SNF, DOE could not claim that its failure to perform
is an unavoidable, non- compensable delay under the standard contract.
November of last year, the Supreme Court refused to hear two competing appeals
of the Court of Appeals. In State of Michigan v. Dept. of Energy (No. 98-225),
the Court refused to hear an appeal of the States that the Court of Appeals
should have provided additional remedies for DOE's failure to meet the statutory
deadline, including an order to begin waste acceptance. In United States v.
Northern States Power Co., (No. 98-384), the Court refused to hear DOE's appeal
of the Court of Appeals' ruling that its failure to comply was inexcusable. By
the Supreme Court's election, without comment, to not take up these cases, the
final Court of Appeals rulings stand.
The short summary of these court
decisions is this: DOE is legally obligated to begin taking waste by a now
expired deadline, but the Act itself doesn't yet require specific performance by
DOE. The practical result at this time is a deadlock that can only be corrected
by Congressional action.
In the recent Court of Federal Claims decision in
the Yankee Atomic case, the Court determined that the DOE is liable for monetary
damages for its breach of its waste disposal contracts. The only question that
remains is the determination of the amount of damages. At least eleven other
Court of Claims actions are still pending. If each of these cases results in
determinations that the DOE is liable, and the plaintiffs are able to prove
their estimates of damages, then the DOE could be liable for several billion
dollars. The NARUC's position on the payments of such damages on program funding
and whether any such payments should come out of the Nuclear Waste Fund is
outlined in the attached policy resolution: DOE must be prohibited from using
the Nuclear Waste Fund or prospective fee collections for paying costs or
damages incurred by utilities, ratepayers, and by State and local governments,
as a result of DOE's failure to comply with its obligations. Rather, any costs
or damages should be paid out of a Federal judgement fund.To put it bluntly, it
would be an outrage if DOE were able to pay for its damages out of the Nuclear
Waste Fund. In effect, it would be requiring the ratepayers to pay for DOE's
failures. Moreover, the statute suggests that the Nuclear Waste Fund cannot be
used for anything other storage and disposal activities and not the payment of
damages. See, 42 U.S.C. 10222(d)
Passing This Legislation is Necessary
It is absolutely critical that the Congress pass legislation to fix the
Federal nuclear waste program. The legislation is needed for two overriding
reasons: 1) to provide the DOE with clear policy direction to ensure that the
Federal Government accepts and disposes of nuclear wastes in a timely and
efficient manner, and 2) to stop the hemorrhaging of ratepayers' money in all
facets of the program.
We are not confident in the DOE's year 2010
projection for taking waste for disposal. That may be a gross understatement. If
the DOE were to announce today that they were pushing back the projected opening
of the repository to 2020, I'm afraid that we would be suspicious of that date
too. This program has been marked by delay after delay. In fact, the strategy of
the DOE seems to be one of finding ways to delay taking nuclear waste. Our
concerns are not unfounded. In the history of this program, the DOE has met only
one deadline, and that, not surprisingly, was the deadline for arranging the
contracts with the utilities that began the flow of money from the ratepayers
into the Nuclear Waste Fund. The ratepayers have upheld their end of the deal by
paying for all of the on-site storage of civilian nuclear waste and by paying
more than $15 billion into the Nuclear Waste Fund.
If finding ways to limit
the Federal Governments liability is an objective, we have the answer. Get the
waste moving to a Federal interim storage site. All of the liability for damages
that the Federal Government is currently exposed to comes from the DOE's non-
performance under the law and in the standard contracts. Delay strategies simply
make matters worse. Moving the waste is the only honest solution.
In conclusion, it is imperative that Congress enact S. 608 as expeditiously
as possible State regulators who labor to protect consumers from economic
exploitation stand ready to workwith the Congress, the Department of Energy and
all other affected stakeholders to refocus our waste disposal policies. The
Nation's electricity consumers deserve to see progress in a waste disposal
program in which they are already hugely invested. At this very late date, we
must not once again fail them. Thank you for your time and attention. I would be
pleased to answer any questions you might have.
LOAD-DATE: March 26, 1999