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$835 million in contractor hands after utility regulators approve sale of Kewaunee nuke plant

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Kewaunee nuclear plant

Wisconsin regulators have approved the transfer of the Kewaunee Nuclear Power Plant to a demolition contractor that will have discretion over $835 million in ratepayer funds set aside for decommissioning.

Wisconsin regulators have approved the sale of a shuttered nuclear plant, leaving hundreds of millions of ratepayer dollars in the hands of a private contractor.

The Public Service Commission voted unanimously Wednesday to allow Dominion Energy to sell the Kewaunee Nuclear Power Plant to Utah-based EnergySolutions for an undisclosed sum. EnergySolutions will also get about $835 million set aside to cover the cost of decommissioning the 49-year-old plant.

The commission rejected arguments from consumer advocates who said the deal lacked provisions that could return some $285 million to customers of Alliant Energy and Wisconsin Public Service Corporation.

Any unused funds in the decommissioning trust are to be returned to ratepayers, but the deal doesn’t cap expenses, giving EnergySolutions discretion over how the money is spent.

“We don’t have that ability to do that,” said Commissioner Ellen Nowak. “The allegation somehow that we’re leaving a certain amount of dollars on the table … is totally unfounded.”

Ellen Nowak


At issue was the commission’s 2005 order authorizing Alliant and WPS to sell the plant to Dominion for $220 million. The order included a condition that any excess decommissioning funds be returned to ratepayers and gave the utilities the “right of first refusal” to match any future offer to buy the plant.

After the sale was announced last year, a competitor, NorthStar Group Services, pledged to do the job for $550 million, returning the balance to ratepayers, and offered either Alliant or WPS $25 million for the rights of first refusal.

The utilities declined, contending that the rights were not transferable and that reacquiring the plant would subject ratepayers to undue risk.

The Citizens Utility Board argued that by rejecting NorthStar’s offer the utilities “turned a blind eye” to the hundreds of millions of dollars that could be returned to those ratepayers.

Commissioners contended the 2005 order limited their authority and that the utilities’ only alternative was to buy back the plant and hope NorthStar made good on its offer.

“There is no guarantee,” Nowak said. “They want us to play flip or flop and allow a utility to buy back a nuclear plant and hope the deal goes through.”

Commissioner Tyler Huebner noted $193 million was returned to ratepayers when the plant was sold to Dominion.

“The benefit to the state was ensuring it was properly decommissioned,” he said.

Rebecca Valcq


Chair Rebecca Valcq said a cost cap could create incentives to cut corners.

“Cheaper doesn’t always mean safer,” Valcq said. “We have to make sure it’s done prudently and safely.”

The Nuclear Regulatory Commission — not the PSC — is responsible for ensuring the site is fully decontaminated.

EnergySolutions and Dominion estimate decommissioning the plant, which closed in 2013, will cost nearly $724 million. NorthStar argued that EnergySolutions, which contracts work to its own subsidiaries, has no incentive to spend the funds prudently.

Valcq said Internal Revenue Service rules against self-dealing and NRC oversight would ensure funds are spent prudently.

But while the NRC oversees site cleanup and verifies that license holders have enough money to cover the costs — generally $300 million to $400 million per plant — the agency does not review line-item expenses.

Citizens Utility Board executive director Tom Content called the vote “a big missed opportunity” for utility customers.

“The decision hands the keys to EnergySolutions to undertake the decommissioning project but establishes absolutely no incentives for the company to limit its spending on the project,” he said. “Wisconsin had a clear alternative here to assure savings.”

NorthStar CEO Scott State said his company participated in the proceedings with no expectation of getting the contract but to “do right” by ratepayers and “uphold the integrity of the industry.”

“This transaction will undoubtedly close but could have been easily done in a way that was far more advantageous to the citizens of Wisconsin,” State said. “We are surprised that the PSC unfortunately chose not to exercise its jurisdiction to secure the financial protections for Wisconsin ratepayers that have been provided to ratepayers in other states with similar decommissioning projects.”

Completed in 1973, Kewaunee is one of three nuclear power plants in Wisconsin.

This year EnergySolutions is expected to finish a six-year project to decommission the first, a 50-megawatt plant operated by Dairyland Power Cooperative, at a cost of more than $83 million.

The owners of Point Beach, the last operating plant, are seeking license extensions to keep that plant running through 2050.


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