SMUD wins $34.6 million nuclear waste suit, but won't see the money soon

Published: Saturday, Feb. 2, 2013 - 12:00 am | Page 6B

A federal court has awarded more than $34.7 million to the Sacramento Municipal Utility District in connection with the federal government's failure to provide a permanent storage site for nuclear waste from the utility's long-dormant Rancho Seco plant.

Trouble is, SMUD sought more than twice that total, is not likely to see a penny of that money anytime soon and faces the unsavory possibility of continuously suing the federal government to obtain compensation for storing waste at the Rancho Seco facility east of Galt.

The developments are the latest in a politically saturated flap dating back to 1987, when Congress singled out Yucca Mountain in Nevada as a repository for nuclear waste generated by numerous utilities.

In a 59-page decision issued Thursday, U.S. Court of Federal Claims Judge Susan Braden concluded that SMUD was owed $34,659,185 over what amounted to a partial breach of contract from 1992 through 2009.

SMUD and other utilities maintain that the federal government has long avoided its legal obligation to find a permanent storage site for nuclear waste.

All the while, the Yucca Mountain site has been awash in politics. Shortly after President Barack Obama took office, his administration voiced concerns that Yucca Mountain could become a possible target for terrorists.

On Friday, Arlen Orchard, general counsel for SMUD, said the Yucca Mountain possibility "appears to be dead at this point."

In the meantime, however, utilities have been stuck with the task of storing nuclear waste as safely and cheaply as possible.

Today, SMUD says nuclear waste storage at Rancho Seco costs about $6 million a year.

SMUD had sought around $80 million, but the court reasoned that the utility actually saved money, in part, with its current method of storing waste at Rancho Seco, which was closed as a power-generating facility following a public referendum in 1989.

SMUD moved nuclear waste from wet ponds to dry storage containers – a less-expensive option – in 2004.

Orchard said he was mystified by the court's logic, calling it "crazy math." He said SMUD's storage costs wouldn't have figured in had the government simply lived up to its original waste-storage contract.

"The good news," Orchard said, was the Washington, D.C.-based court acknowledging that the federal government had an obligation to provide a waste storage site and that utility customers were entitled to compensation.

"The bad news," Orchard continued, " … is that until this is finally resolved, the government has no obligation to pay (the $34.7 million), and SMUD won't see any money until that time comes."

Orchard added that SMUD and other utilities face the prospect of "periodically suing the federal government" in the future as more nuclear waste storage costs are compiled.

Orchard said that scenario could be negated with a settlement, but he said that prospect is open-ended at this point.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Mark Glover



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