Progress Energy 2007 Annual Report Download - page 124

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
122
D. Other Commitments and Contingencies
SPENT NUCLEAR FUEL MATTERS
Pursuant to the Nuclear Waste Policy Act of 1982, the
Utilities entered into contracts with the DOE under which
the DOE agreed to begin taking spent nuclear fuel by no
later than January 31, 1998. All similarly situated utilities
were required to sign the same standard contract.
The DOE failed to begin taking spent nuclear fuel by
January 31, 1998. In January 2004, the Utilities filed a
complaint in the United States Court of Federal Claims
against the DOE, claiming that the DOE breached the
Standard Contract for Disposal of Spent Nuclear Fuel
by failing to accept spent nuclear fuel from our various
facilities on or before January 31, 1998. Our damages
due to the DOE’s breach will be significant, but have yet
to be determined. Approximately 60 cases involving the
government’s actions in connection with spent nuclear fuel
are currently pending in the Court of Federal Claims.
The DOE and the Utilities agreed to, and the trial court
entered, a stay of proceedings, in order to allow for
possible efficiencies due to the resolution of legal and
factual issues in previously filed cases in which similar
claims are being pursued by other plaintiffs. These issues
may include, among others, so-called “rate issues,” or the
minimum mandatory schedule for the acceptance of spent
nuclear fuel and high-level radioactive waste by which
the government was contractually obligated to accept
contract holders’ spent nuclear fuel and/or high-level
waste, and issues regarding recovery of damages under
a partial breach of contract theory that will be alleged to
occur in the future. These issues have been presented in
the trials or appeals during 2006 and 2007. Resolution of
these issues in other cases could facilitate agreements by
the parties in the Utilities’ lawsuit, or at a minimum, inform
the court of decisions reached by other courts if they
remain contested and require resolution in this case. In
July 2005, the parties jointly requested a continuance of
the stay through December 15, 2005, which the trial court
granted. Subsequently, the trial court continued the stay
until March 17, 2006. The trial court lifted the stay on
March 22, 2006, and discovery commenced. The trial
court issued a scheduling order on March 23, 2006, and
the case went to trial beginning November 5, 2007. Closing
arguments are anticipated in the second quarter of 2008
with a ruling expected later in 2008. The Utilities cannot
predict the outcome of this matter. In the event that the
Utilities recover damages in this matter, such recovery
is not expected to have a material impact on the Utilities’
results of operations given the anticipated regulatory and
accounting treatment.
In July 2002, Congress passed an override resolution to
Nevada’s veto of the DOE’s proposal to locate a permanent
underground nuclear waste storage facility at Yucca
Mountain, Nev. In January 2003, the state of Nevada; Clark
County, Nev.; and the city of Las Vegas petitioned the U.S.
Court of Appeals for the District of Columbia Circuit for
review of the Congressional override resolution. These
same parties also challenged the EPA’s radiation standards
for Yucca Mountain. On July 9, 2004, the Court rejected the
challenge to the constitutionality of the resolution approving
Yucca Mountain, but ruled that the EPA was wrong to set a
10,000-year compliance period in the radiation protection
standard. In August 2005, the EPA issued new proposed
standards. The proposed standards include a 1,000,000-year
compliance period in the radiation protection standard.
Comments were due November 21, 2005, and are being
reviewed by the EPA. The DOE originally planned to submit
a license application to the NRC to construct the Yucca
Mountain facility by the end of 2004. However, in November
2004, the DOE announced it would not submit the license
application until mid-2005 or later. The DOE did not submit
the license application in 2005 and subsequently reported
that the license application would be submitted by June
2008 if full funding was obtained for the project. The DOE
requested $545 million for fiscal year 2007 and received
$445 million. The DOE requested $495 million for fiscal year
2008. However, Congress passed an appropriations bill
which allocates $390 million in fiscal year 2008 for DOE’s
Yucca Mountain repository program. As a result of the fiscal
year budget reductions, the schedule for submitting the
license application is being re-evaluated by the DOE. The
impact to the Yucca Mountain repository program cannot
be predicted at this time.
On October 19, 2007, the DOE certified the regulatory
compliance of the document database that will be used by
all parties involved in the federal licensing process for the
Yucca Mountain facility. The NRC did not uphold the DOE’s
prior certification in 2004 in response to challenges from the
state of Nevada. The state again is expected to challenge
the DOE’s certification process. The DOE has stated that if
legislative changes requested by the Bush administration
are enacted, the repository may be able to accept spent
nuclear fuel starting in 2017, but 2020 is more probable due
to anticipated litigation by the state of Nevada. The Utilities
cannot predict the outcome of this matter.
With certain modifications and additional approvals by the
NRC, including the installation of on-site dry cask storage
facilities at Robinson, Brunswick and CR3, the Utilities’
spent nuclear fuel storage facilities will be sufficient to
provide storage space for spent fuel generated on their
respective systems through the expiration of the operating