It has been several months since I last reported on the efforts of Nancy Thorner, the Illinois resident who has been working diligently for several years to encourage Exelon to reconsider its 1998 decision to shut down the 22 year old (at the time) Zion nuclear power station. You can find links to previous articles about this situation below, but the basic story is as follows:
In the mid 1990s, Commonwealth Edison, the monopoly electric utility that built and operated many of the nuclear plants that are now owned and operated by Exelon as a merchant plant operator, was having difficulty managing and maintaining its nuclear plants. They were achieving low capacity factors, appearing on Nuclear Regulatory Commission watch lists, and suffering from power struggles between labor unions and management.
Zion, like many of the other Commonwealth Edison units, had issues that culminated in a group of operators resisting management orders and taking off their shirts in the control room. There were some other complicating circumstances, but the bottom line was that the company shut down both units of the plant and decided to keep them shut down. The decision allowed the company to fire or reassign the recalcitrant union members and to establish a more powerful position over the behavior of employees. At the time, replacement power was cheap since natural gas was selling for less than $2.00 per million BTU and since the midwest was shedding much of its manufacturing base, reducing the overall electricity demand.
Nancy became interested in the situation several years ago after hearing a talk given by David Hollein, a key member of the Westinghouse technical support team for Zion. David had already been campaigning for years to tell people that there was nothing technically wrong with the facility; it could be profitably operated with the same kind of management and operational attention that Oliver Kingsley brought to the rest of the Commonwealth Edison fleet soon after Zion was initially shut down.
Nancy’s efforts have been aimed at trying to convince Exelon that times have changed and that a 2,200 MWe emission-free nuclear power station that is already complete would be worth fixing up, even if it costs a couple of billion dollars to get the license restored. (TVA has already restored a long shutdown Browns Ferry to operation, has invested billions into completing the suspended Watts Bar II project and is now considering an effort to complete at least one of the units at the long suspended Bellefonte project site.)
Recently, Nancy has decided to take a new tack. She is a plaintiff in a lawsuit against ZionSolutions, the company that currently holds the possession only license for Zion. What Nancy and her attorney, Daniel Sponseller, have found is that there is currently no government agency (local, state or federal) that is watching the financial aspects of the decommissioning process or monitoring the decommissioning fund that was filled by charging electricity company ratepayers for the “stranded costs” that Exelon assumed when it took ownership of the nuclear plants that the ratepayers had purchased for Commonwealth Edison under the old monopoly utility construct.
After investigating the situation carefully, Nancy and the other plaintiffs to the suit developed significant concerns that the decommissioning fund will be completely drained, with no money left to return to ratepayers, even if the actual cost of the decommissioning is hundreds of millions less than initially estimated. She is concerned that the companies involved will simply inflate their bills, attribute unrelated expenses, and assert outsized profit margins that will combine to make the vanishing act seem legitimate.
On July 14, 2011, Dan Sponseller filed a lawsuit against ZionSolutions, the limited liability company set up by EnergySolutions to handle the Zion decommissioning project.
For several weeks after the lawsuit was filed, there was a complete silence in the news media. Perhaps that was partially caused by the fact that Exelon was not named in the suit; it no longer officially owns the Zion nuclear station. Instead, the corporation named in the suit was ZionSolutions, a limited liability company that did not exist before the project and will not exist after the project is completed.
There was no reporting from outlets that might be interested in the precedence that would be set regarding the proper handling and oversight of decommissioning funds for the rest of the nuclear power plant fleet. Even I dropped the ball and neglected to provide a timely update on the situation.
However, a couple of enterprising reporters have become intrigued by the implications of the story. The first one who broke the story was Jay Hancock of the Baltimore Sun. He became interested because Exelon recently made a bid to purchase Constellation Energy, the largest corporation with headquarters in Baltimore. Jay’s story appeared in the Sun’s August 6, 2011 edition with the headline of Customers protest fund switch by Constellation suitor Exelon.
Baltimore residents and political leaders are nervous about what might happen if the proposed sale of Constellation completed. The company and its predecessor, Baltimore Gas and Electric (BG&E), have been the source of important support for community activities and cultural organizations for decades. Jay’s article included some strong questioning of the situation, with quotes like the following:
Who’s protecting consumers’ interest in the trust fund now?
Not us, says the Illinois Commerce Commission.
“I don’t think we have any jurisdiction at all,” said ICC spokeswoman Beth Bosch. “All those plants were spun off to an Exelon affiliate” after deregulation, she added, which put them beyond the ICC’s reach. “And I don’t know that we’re even monitoring that case.”
Not us, says the Nuclear Regulatory Commission.
“From our standpoint, the fund is there to clean up the site and that is what is being done,” said NRC spokesman Scott Burnell. “When you start slicing up the pie and figuring out where the money goes, that starts to go outside our jurisdiction.”
Not us, says BNY Mellon, which became trustee for the decommissioning fund when EnergySolutions took over. The trust agreement says BNY has “no duty to inquire into the correctness or accuracy” of EnergySolutions’ requests for money from the fund.
Electricity deregulation in the late 1990s and early 2000s allowed valuable assets in many states to slip from the control of utility commissions into private hands.
As part of her campaign to save Zion, Nancy has developed good relations with local press outlets, so after Jay’s story appeared in the Baltimore Sun, she was able to get a lengthy commentary published in the Champion News titled ZionSolutions scrutinized for its handling of a trust fund to decommission the Zion Dual Nuclear Plant.
Jay Hancock’s investigation at the Baltimore Sun found that there is simply no one protecting the ratepayers’ statutory residual interests in the trust funds — all of which they paid over several years — which is one of the main reasons the lawsuit was brought.
The Baltimore Sun is a sister publication of the Chicago Tribune, yet it took the investigative skills of Baltimore Sun business reporter, Jay Hancock, to realize the story value of the lawsuit filed on July 14th questioning how the decommissioning fund is being handed by Zion Solutions.
Its mother paper, the Tribune, has never taken Chicago’s Exelon Corporation to task for its initial closing of the Zion Dual Nuclear Plant in 1998 and now the questionable handling of the decommissioning fund by ZionSolutions.
Other Chicago area newspapers have likewise been derelict in finding any fault or irregularities over the way The Zion Station was closed in 1998 and kept closed, for reasons never fully accounted for by Exelon Corporation, until Exelon handed the Dual Zion Nuclear Plant and its trust fund over to ZionSolution for decommissioning in September of 2011.
Though this will probably never be admitted by the big city newspaper, that column in Champion News seems to have had the effect of a wake up call for the Chicago Tribune. On Wednesday, August 10, 2011, the Tribune’s Julie Wernau picked up the story with her report titled Lawsuit filed over Zion plant decommissioning. Here is a quote from her article that describes the precedent-setting nature of the lawsuit:
The suit, filed in the U.S. District Court for the Northern District of Illinois by a group of local citizens, asks that a court-appointed third party manage the trust fund, which Commonwealth Edison customers paid into from 1998 to 2006.
“No qualified person or entity has been appointed to act as a trustee with respect to the trust funds to fully protect the rights of ComEd’s customers … or to review the withdrawals,” the suit asserts.
The case could be significant because determining how decommissioning costs are handled could set a precedent for other Illinois nuclear reactors that ultimately are mothballed. Each plant has a similar decommissioning fund that in total amounts to $4 billion—money paid by Illinois consumers.
In previous articles, I have described how Exelon determined that keeping the power that Zion could be suppling out of the “competitive” market was more valuable to the company than the revenue that the company would receive by selling the power. That slightly illogical construct works because limiting the available supply of electricity drives up the price at which the other 17 units in the Exelon fleet can sell their power. I have only recently begun to understand the scale of the money that is in play inside of the decommissioning funds and the lack of oversight regarding how those funds are expended in a “deregulated” market. Knowing a little about how invoices and payment systems work, it is easy to see the opportunity for some significant diversion of funds into the pockets of key individuals.
It will be interesting to see how the courts respond.