Exelon, others could benefit from ruling on nuclear fee

Exelon (NYSE:EXC) could benefit significantly from the Nov. 19 ruling by the U.S. Court of Appeals for the District of Columbia Circuit that struck down the Department of Energy’s continued collection of a $1/MWh fee to handle spent fuel from the nation’s nuclear power plants.

The D.C. Circuit zeroed out DOE’s continued collection of the nuclear waste fee given that the Obama administration has dropped plans for storing spent fuel at Nevada’s Yucca Mountain, and has no other immediate alternative.

“Unless yesterday’s decision is overturned by the D.C. Circuit Court or by the Supreme Court, the DOE must submit a proposal to Congress setting the spent nuclear fuel fee at zero,” Bernstein Research Senior Analyst Hugh Wynne said in a Nov. 20 commentary for clients. Under law, Congress has 90 days to act on the DOE’s proposal. If it fails to do so, the $1/MWh fee would lapse.

The Energy Department is reviewing the court’s opinion, a DOE spokesperson told GenerationHub Nov. 20.

In 2012, Exelon’s nuclear generation totaled 168 million MWh, triggering $168m in spent nuclear fuel fees that were paid to DOE, Wynne said. “Because Exelon’s nuclear fleet is not subject to cost of service regulation, the potential elimination of this fee would have no effect on Exelon’s revenues but would reduce its operation and maintenance expense,” according to the analysis.

Other competitive generators that would benefit meaningfully, but to a lesser degree are Entergy (NYSE:ETR), Public Service Enterprise Group (NYSE:PEG) and FirstEnergy (NYSE:FE), according to the Bernstein analysis.

Among utilities subject to cost of service regulation, by contrast, any reduction in the DOE’s spent nuclear fuel fee would be offset by a commensurate reduction in the fuel component of their regulated rates, the firm said.

While their shareholders won’t see a direct benefit, the reduction in rates could be significant to ratepayers of utilities owned by Duke Energy (NYSE:DUK); Southern (NYSE:SO); and Dominion (NYSE:D), among others, the firm said.

“Alternatively, the Obama administration could abandon its opposition to the Yucca Mountain repository, again giving the Secretary of Energy a basis on which to evaluate the $1/MWh fee,” the Bernstein analyst said. “This also seems unlikely to us given the deep-seated opposition of Senate Majority Leader [Harry] Reid (D-NV).

The Nov. 19 ruling by the D.C. Circuit was praised by the Nuclear Energy Institute (NEI) as well as the National Association of Regulatory Utility Commissioners (NARUC).

“We agree with the court that unless and until the Energy Department’s repository program is restarted or another waste disposal program is developed, it is appropriate that the Nuclear Waste Fund fee be suspended,” said NEI General Counsel Ellen Ginsberg.

DOE has 45 days to request a re-hearing by the full D.C. Circuit Court of Appeals. If a re-hearing is not secured, DOE can appeal the decision to the United States Supreme Court.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.