The federal government does not have to make ratepayers whole for costs that two Southern Co. subsidies passed on to pay for a pair of dry storage facilities for spent fuel, a federal judge ruled this week.
The decision was part of what could largely be characterized as a routine ruling in the U.S. Court of Federal Claims in a lawsuit brought against the government in 2014 by Georgia Power Co. and Alabama Power Co. to recover the costs of storing spent nuclear fuel that the government never picked up for disposal, breaching a contract.
The Southern Co. subsidiaries sought nearly $180 million in damages and the government did not put up a fight over most of that. Of a controversial tranche that kept the parties in court for nearly a decade, about $3.5 million concerned the spent fuel storage facilities, according to a 71-page opinion published Wednesday.
To ensure its investors turned a profit, Georgia Power and Alabama Power raised the cost of electricity charged customers to account for the cost of the spent fuel facilities. In their lawsuit against the government, the companies demanded that the feds fork over the roughly $3.5 million to make ratepayers whole.
But when the government said that Southern Co.’s rates and ratepayers were not the United States’ problem, Judge Patricia Campbell-Smith agreed.
“The court understands plaintiffs’ concern that its customers not bear the burden of that return, but as for-profit companies, plaintiffs are, in fact, in the position to avoid that outcome,” Campbell-Smith wrote in her opinion. “The court finds that plaintiffs’ shareholders have received a financial benefit in the form of a return on their equity investments in plaintiffs’ dry storage infrastructure. Whether the benefit is characterized as a profit for shareholders or a cost to customers is a matter of, at most, plaintiffs’ internal accounting, and at least, semantics.”
Power plants often sue the government for breaches of what is known as the standard contract that the Department of Energy entered with many power plant owners. Under the contract, DOE is supposed to collect spent nuclear fuel and deliver it to a permanent waste repository. No such repository exists in the U.S. and the government is not close to building one, despite congressional authorization to do so at Yucca Mountain in Nye County, Nev.
Georgia Power operates the Alvin W. Vogtle Electric Generating Plant in Burke County, Ga., and the Edwin I. Hatch Nuclear Power Plant near Baxley, Ga. Alabama Power operates the Joseph M. Farley Nuclear Plant in Houston County, Ala., near the Georgia line.
The Southern Nuclear subsidiaries have sued DOE for standard contract breaches multiple times and collected each time, as other utilities have.
