Bloomberg News

Wednesday, August 11, 2004

Exelon Corp., the biggest U.S. operator of nuclear power plants, said it will be paid as much as $300 million through 2010 by the federal government after settling a dispute over storage of spent nuclear fuel.

The case could have implications for similar claims by the Wisconsin utilities that own the state's two nuclear plants.

The state's largest utility, Wisconsin Energy Corp., estimates it has damages totaling at least $70 million relating to storage of nuclear waste at the Point Beach plant, which is located near Two Rivers. Wisconsin electric customers statewide paid nearly $300 million over two decades into a nuclear waste fund.

The settlement stems from a 1982 federal law that required nuclear power generators to pay into a fund for the repository, which the government was supposed to open by 1998. Other U.S. utility companies may follow Exelon in getting reimbursements for costs of storing nuclear fuel.

"All of the nuclear utilities will likely follow through on this because they're in the same situation," said Barry Abramson, a money manager at Gabelli Asset Management in Rye, N.Y. "The principle is the same in that the government promised it would collect the fuel. They clearly reneged on the agreement, even though they kept collecting the fees."

Most of the money is expected to be returned to utility customers, Abramson said.

Representatives of both Wisconsin Energy and WPS Resources Corp. in Green Bay said they couldn't determine Tuesday how their cases before the government would be affected by the Exelon settlement. WPS is the majority owner of the Kewaunee plant in the Town of Carlton.

"It's really too early," Wisconsin Energy spokeswoman Beth Martin said.

Wisconsin Energy's complaint was filed in 2000, while WPS filed a claim for damages earlier this year, said Dave Molzahn, director of nuclear oversight at WPS.

Exelon, parent of Chicago-based ComEd, will get $80 million immediately to reimburse costs of storing fuel from its reactors since 1998, said Craig Nesbit, a spokesman for the utility. Payments will continue until the U.S. Energy Department opens a national repository, planned by 2010, meeting its contractual obligation to receive the fuel, Exelon said.

Exelon's storage costs would total $300 million by 2010 and $600 million by 2015, the company said. The U.S. government has been stalled in a plan to build a waste repository at Yucca Mountain in the Nevada desert.

About $22 billion has been paid into the U.S. Nuclear Waste Fund since 1983, said Steve Kerekes, a spokesman for the Nuclear Energy Institute, a Washington-based group. Utility owners pass on the costs to customers.

"Under the law, the government was supposed to be taking our fuel in 1998," said Carl Crawford, a spokesman for New Orleans-based Entergy, the second-biggest U.S. nuclear power producer. "But they haven't taken any fuel nor given us any of our money back, and that's our customers' money."

Thomas Content of the Journal Sentinel staff contributed to this report.