Free Motion in Limine - District Court of Federal Claims - federal

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EXHIBIT A

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS BOSTON EDISON COMPANY VERSUS THE UNITED STATES ENTERGY NUCLEAR GENERATION, CO. PLAINTIFF NO. 99-447C DEFENDANT PLAINTIFF

______________________________________ ENTERGY NUCLEAR GENERATION, CO. VS. THE UNITED STATES PLAINTIFF NO. 03-2626C DEFENDANT

**************************************************** 11 12 13 **************************************************** 14 15 16 17 18 19 20 21 22 23 24 25 REPORTED BY: AMANDA M. WOOTTON, CSR, RPR DATE: MARCH 23, 2007 PLACE: ENTERGY HQ 1340 ESCHELON PARKWAY JACKSON, MISSISSIPPI TIME: 9:00 a.m. APPEARANCES NOTED HEREIN DEPOSITION OF DONALD R. DENTON

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APPEARANCES:

Patrick B. Bryan, Esquire U.S. Department of Justice 1100 L Street, N.W. Washington, DC 20530

Stephen Finn, Esquire U.S. Department of Justice 1100 L Street, N.W. Washington, DC 20530

Bradley D. Wine, Esquire Dickstein Shapiro, LLP 1825 Eye Street NW Washington, DC 20006-5403

Lisa M. Barbas, Esquire Dickstein Shapiro, LLP 1825 Eye Street NW Washington, DC 20006-5403

Samuel Morris, Esquire Wise, Carter, Child & Caraway Post Office Box 651 Jackson, Mississippi 39205-0651

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Appearances

TABLE OF CONTENTS

3 5 42 48 58 67 71 75 90 96 104 116 118 120 121 126 128 141 147 157 162 184 185

Examination by Mr. Wine Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Exhibit 7 Exhibit 8 Exhibit 9 Exhibit 10 Exhibit 11 Exhibit 12 Exhibit 13 Exhibit 14 Exhibit 15 Exhibit 16 Exhibit 17 Exhibit 18 Exhibit 19 Conclusion of Deposition Certificate of Deponent

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Correction Sheet

186

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 record. A Q Brad Wine.

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DONALD R. DENTON, after having first been duly sworn, was examined and testified under oath as follows, to-wit: E X A M I N A T I O N EXAMINATION BY MR. WINE: Q Please state your full name for the

Donald R. Denton. Mr. Denton, good morning. My name is This

We met just a couple of minutes ago.

is my colleague Lisa Barbas. A Q Yes. We're with the law firm of Dickstein

Shapiro and represent Boston Edison in this matter currently pending before the United States Court of Federal Claims against the United States government. And we're here to take your deposition today. you had your deposition taken before? A Q In the past probably. Yes. Have

Do you recall how many times you've given

depositions before? A Q Maybe a couple of times. Has it been in the context of spent

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nuclear fuel litigation? A Q A rate cases. Q Well, since you've gone through this Rates. Oh, rate-related issues? I was a rate manager. Used to testify in

exercise before, I'll be real brief in describing the ground rules the next few hours. a series of questions. I'm going to ask you

I'm going to hope that they'll

be concise and that you'll be able to comprehend what I'm looking for. If you don't, please ask me to

clarify so that I can make sure that we have a clear record that reflects your understanding of the facts relevant to this case. I need you to answer audibly

so that the court reporter can record your responses to my question. She cannot take down nods or head

shakes as responses to my questions so I'll need you to give an audible answer that she can record. At any time if you need to take a break, just ask me for one and we'll break for any reason at all. And I'm happy to accommodate you and that's true of anyone here in the room. Let's see if there are any

other quick ground rules that we need to go over briefly. Again, I think you'll find this to be a

familiar exercise based on your prior experiences.

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Is there any reason that you can't offer full and complete answers to the questions I'm offering? Any kind of medications that you're on or any medical condition that might affect your ability to answer questions? A Not to my knowledge. MR. MORRIS: Before we get started,

we want to reserve the right to read and sign. MR. WINE: Terrific. Absolutely. Absolutely.

Let's see if there is anything

else that I need to -MR. WINE: (Continuing.) Q A Q You're represented by counsel here today? Yes, I am. And can you identify your counsel so that

we have it for the record. A Sam. MR. MORRIS: A Morris. Morris.

MR. WINE: (Continuing.) Q A Q Mr. Morris with the Wise Carter firm? Yes. Terrific. Could you tell me how you

prepared for today's deposition, Mr. Denton? A I haven't really prepared for it.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 before? and --

Q A

No preparation at all? No. I spoke with Sam and said be here at

nine o'clock and... Q A And here you are? Yeah. And I asked him what the topic was

MR. MORRIS: we talked about. MR. WINE:

Don't talk about what

Yeah.

I'm not interested

in the substance of your conversations with Mr. Morris. Any conversations with anyone else? A No.

MR. WINE: (Continuing.) Q Did you get any phone calls or speak with

Charlie Minott at all about today's deposition? A Q Mr. Minott? A I don't recall, but it's been probably No. When was the last time you spoke with

four or five years. Q Okay. Have you ever testified at trial

A Q

Tax trial. Tax cases.

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A Q

I was tax manager, yes, sir. Got you. Review any documents for

purposes of today's deposition? A Q No. Let's see. Now, do you have any

understanding of the underlying litigation, what this lawsuit is about? A Q Not really. Okay. That's fine. We might keep it Let's

that way today depending on what we talk about. start by way of a little bit of background.

Could you

describe for me your educational background post high school and all of the degrees that you've received, Mr. Denton? A Degree in accounting from University of CPA's license in Arkansas and

Central Arkansas. Mississippi. Q

Where did you go to undergraduate school?

Is that the University of Central Arkansas? A University of Central Arkansas.

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Q

Okay.

And that's where you got your CPA

A Q you possess?

Yes. Okay. Any other degrees or licenses that

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A Q

No. Okay. Are you currently a Certified

Public Accountant, you're maintaining that certification?

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A Q

I'm in retirement, but, yes, I am. Okay. Are you a member of any

professional organizations? A The AICPA, the Arkansas Society of CPAs,

the Mississippi Society of CPAs. Q Mr. Denton? A Q No. Okay. Have you ever served as an expert Have you ever done any teaching,

witness in any matters? A Q A Yes. And can you describe that for me. Served as a expert witness in rate cases That's

in Missouri and rate filing with the FERC.

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basically it. Q Okay. Now, I will tell you generally the

underlying litigation in which you're offering testimony is with respect to spent nuclear fuel litigation that is ongoing. If I use that term or

discuss "spent nuclear fuel litigation," do you have an understanding of what that is?

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A Q

Generally. Okay. Have you testified or given any

testimony on behalf of Entergy or any other entity in any spent nuclear fuel litigation? A Q No. Okay. All right. Let's start with the

work that you're doing now and then work our way back. Describe -- can you give me your title for your present employment? A Q business. A Q A Q Retired. You're retired. So you're out of the

How long have you been retired? About a year. Okay. Right. Okay. You retired in spring of 2006? July 1st, 2006. Very good. And where do you

reside now that you're retired? A Q Madison, Mississippi. Okay. Are you doing any kind of

consulting work in your retirement or anything like that? A Q No. Okay. Prior to your retirement,

immediately before your retirement, what was your -describe for me your employment.

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A

I was the director of business services

at Entergy Nuclear unregulated. Q A Q entailed. A I was basically the acting chief How long had you held that position? Since 1999. Okay. And describe for me what all that

financial officer but I was in -- had responsibility for all of the books and records of the unregulated nuclear company. Q do you know? A I wasn't exactly replaced but Theo Okay. Who replaced you when you retired;

Bunting is the chief financial officer that consolidated the regulated and unregulated into one position. Q Okay. And in this CFO role, what types

of issues particular to nuclear plants were you responsible for? portfolio. A Preparing the financial statements and Describe for me a bit your

reviewing them, management reporting, preparing data for the 10Ks and Qs and SEC filings. Maintaining the

accounting standards in FASB, implementing the new accounting standards for the unregulated nuclear

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portion of the company, separate company within Entergy. Q Okay. Before I forget and I apologize

that I'm taking things out of order, are you being compensated for your time here today? A Not to my knowledge. MR. WINE: Mr. Morris. MR. MORRIS: A Don't give him ideas. You should talk to

Came in on my off Friday.

MR. WINE: (Continuing.) Q Okay. Now, you started this -- you began

your position as director of business services in '99, you said? A Q Yes. Okay. Did you have any responsibility

for filings with the Nuclear Regulatory Commission with respect specifically to decommissioning trust funds? A Q No. Okay. Do you know during your time as

the director of business services who was responsible for that aspect of the nuclear portfolio? A Q Yes. Who was that?

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A northeast. Q A filings. Q

The director of licensing in the I don't know the individual's name. Okay. But the licensing group filed the NRC

Okay.

Did you have any role in reviewing

those before they went in? MR. BRYAN: MR. WINE: question. A comment was. MR. MORRIS: He made an objection as I'm sorry. I didn't understand what the Objection. Vague.

You can answer my

to the technical nature of the question but you can answer. A Okay. Would you repeat the question,

MR. WINE:

Can you read it back.

(Whereupon, the question was read back by the court reporter.) MR. BRYAN: A Objection. Vague.

Yes, I normally reviewed them.

MR. WINE: (Continuing.) Q And what was the purpose of you reviewing

those filings?

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A

I would have to provide them the

information off the financial statements as to the amount of assets in the decommissioning fund. Q So you were privy to amounts in the funds

at any given time? A Q I recorded them on a monthly basis. Okay. Prior to 1999 when you were Pretend

serving as -- now I want you to walk me back. like we're reviewing your resume. prior to '99? A

What were you doing

Director of support at Arkansas Nuclear

One, one of our nuclear plants. Q A And what did that entail? I had the business function at the plant,

the materials, security, all of the support functions at a nuclear plant. Q Okay. And what -- when did you begin in

that position? A Q I believe it was 1992. So from '92 to '99 for that seven-year And then prior to that position, what was

your job? A I was controller, director of accounting And then that

for SERI, the Grand Gulf nuclear plant.

job turned into director of accounting for all of the

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nuclear plants. Q And describe for me your role first -- or

describe for me what you were responsible for as director of controlling for Grand Gulf and director of accounting for all nuclear. A Closing the books, payroll, all of the

disbursements, all of the accounting functions. Q position? A Q 1986. Okay. So '86 to '92 there. What were you Okay. And Okay. And when did you begin in that

then let's go prior to '86.

responsible -- what was your job? A I was the tax manager for Arkansas Power

and Light Company, a subsidiary of Entergy, taxes and rates. Q Is this the capacity where you gave

testimony or were -A Q A Q Yes. -- involved in rate cases? Yes, prepared and filed testimony. Got you. And what was the time frame for

your tenure as tax manager? A Q About 1979 to '86. Okay. Any employment predating that tax

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manager role? A I was the manager of internal auditing

from '78 to '79 for Arkansas Power and Light Company. Q A Anything else before that? I worked in public accounting for two

years from '75 to '78, two to three years. Q CPA? A Q Yes. All right. Terrific. Now, were you Is this immediately after getting your

serving as the director of licensing at the time of Entergy's acquisition of the Pilgram plant in Plymouth, Massachusetts? A Q here. No. I was never a director of licensing. I wrote that note down

I apologize.

The director of business services, I apologize. A Q No. What was your role at the time of the

acquisition of the Pilgram plant? A Nuclear One. Q Okay. So when you became the director of I was the director of support at Arkansas

business services in 1999, the Pilgram plant had already been integrated into Entergy's nuclear portfolio; is that correct?

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A Q

Yes. Okay. When -- in the context of your

role as director of business services, did you have any interactions, particularly in the late '90s, '99

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and into 2000, 2001, with a gentleman by the name of Charlie Minott? A Q Charlie? A Q A Charlie worked at our Pilgram plant. Uh-huh. And he was -- and I dealt with him on I knew Charlie, yes. Okay. And how did you come to know

several projects. Q Did you obtain information from

Mr. Minott for purposes of the financial work that you were doing in your capacity? MR. BRYAN: A No. Objection. Vague.

MR. WINE: (Continuing.) Q Mr. Minott. A He was usually a project manager on a Okay. Describe for me your dealings with

construction project or something we were working on, and I dealt with him in the capacity of him being the project manager and his budgets and costs.

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Q

Were you responsible for overseeing the

filing of Entergy's 10K in March of 2000? MR. BRYAN: A No. Objection. Vague.

MR. WINE: (Continuing.) Q A Q Do you understand my question? Yes. Okay. When did you begin in your -- when

did -- which 10Ks were you responsible for overseeing? A Q A Q I didn't file the 10Ks. Okay. I provided data and reviewed the 10Ks. I see. And so for the March of 2000 10K

filing, were you involved in that process? A I'm not sure. At some point in time, I

became involved with them, yes. Q Okay. We may look at some documents

during the course of today in an effort to refresh your recollection or see what you may know about some of the -- either SEC filings or other related filings and whether or not your job touched those at any given time. Do you have any familiarity with the Nuclear Waste Policy Act? A Not really.

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Q

Do you have any understanding of what

that act does or provides for? MR. BRYAN: Objection. Vague.

Calls for a legal conclusion. A No.

MR. WINE: (Continuing.) Q No understanding. Okay. Do you have an

understanding of what the standard contract is? MR. BRYAN: A No. Same objections.

MR. WINE: (Continuing.) Q A Q Okay. No. Okay. So if I were to ask you if you had Never heard that term before?

an understanding of what DOE's responsibilities were pursuant to the standard contract, you wouldn't know? MR. BRYAN: A No. Same objections.

MR. WINE: (Continuing.) Q Okay. Outside of your area of expertise.

Did you have any involvement in recording or -strike that. Did any of your work for Entergy ever involve payments to the Department of Energy for fees pursuant to -- for fees associated with the pickup and storage

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of spent nuclear fuel? A No.

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Q A Q A

That never crossed your desk at all? No. Okay. I assume it was -- it was probably

included in our financial records, but I didn't have any direct responsibility for it, no. Q Okay. What responsibility -- insofar as

there was any kind of plant-specific responsibilities that you had, can you describe for me what -- what involvement in your roles you had with the Pilgram plant in Plymouth, Massachusetts, how you might interact with the folks at Pilgram in your day-to-day work. A I really didn't have any direct

responsibility with the plants. Q A Uh-huh. I -- I reviewed the financial statements

and normally on a quarterly basis, I would review the financial statements with the plant VP. Q Okay. How did you become familiar with

the decommissioning trust fund for the Pilgram plant? MR. BRYAN: facts not in evidence. Objection. Assumes

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MR. WINE: (Continuing.) Q Well, let's start then. Let's go back.

Is there a -- during your tenure at Entergy, were you aware that there was a decommissioning trust fund for the Pilgram plant? A Q with that? A every month. Q Okay. When did you first begin recording I recorded the earnings on the assets Yes. Okay. And how did you become familiar

earnings on the assets of the Pilgram plant? A Q Probably in late '99, 2000 time frame. Okay. Right after the acquisition of

Pilgram from Boston Edison? A We created the unregulated nuclear

company, and I came in as the business services manager. Q Any of your work in recording the

earnings on the decommissioning trust involve designations for what are called 50-75 purposes or NRC minimum purposes? A me. Q Okay. And you didn't care what those No. It was all one lump-sum number to

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funds were for -- designated for within that trust fund, correct? A Q No. Okay. It was one number. All right. Is it fair to say that

you weren't involved in any way, shape or form in the acquisition of the Pilgram plant by Entergy from Boston Edison? A Q A Q A Q I was not. Not on the deal team? No. Not on any kind of due diligence team? No. You weren't privy to any of the meetings

that took place regarding Entergy's decision whether to buy the Pilgram plant or not? A Q No. Okay. That was purchased already. Did your review of the financial

statements for plants include a review of liabilities or projected future costs for plants? A Q Pilgrim? A Q Yes. And what liabilities did you look at, to Yes. And did you do that specifically for

the best of your recollection, with respect to the

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Pilgrim plant? A Q All the liabilities. Did you look at any liabilities

associated with spent nuclear storage? A Q Not specifically. Okay. If I use a term ISFSI or spent

on-site interim storage facility, do you understand what that is? A Q Yes. And did any of the expenses or

liabilities of the Pilgrim plant involve on-site interim storage costs? MR. BRYAN: MR. MORRIS: MR. WINE: (Continuing.) Q A You can answer the question. Would you repeat that question. (Whereupon, the question was read back by the court reporter.) A We recorded the liability for the The decommissioning, the asset Objection. Vague.

Join in the objection.

decommissioning.

retirement obligation was recorded on the plant. MR. WINE: (Continuing.) Q Do you know how Entergy went about

setting the number for decommissioning of the Pilgrim

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plant, how they got that number? MR. BRYAN: A In general, yes. Objection. Vague.

MR. WINE: (Continuing.) Q A Q How was that? Decommissioning studies. Okay. And do you know which

decommissioning studies were utilized for purposes of setting that number? MR. MORRIS: You're talking about at

the time of the purchase. MR. WINE: (Continuing.) Q A was. Q A Q Have you heard of the NES study before? I'm not sure. Okay. If I were to tell you that the NES Yeah. In the late '90s, early 2000.

I have no idea what the original study

study is a study performed by Boston Edison before the sale of the Pilgrim plant, does that have any impact on your recollection of whether or not that was a study utilized for setting the decommissioning number used by Entergy? A I knew that they had an outside study. I

do not know who did it.

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Q

Who authored it.

Okay.

Did you actually

review any of those studies? A Q No. Okay. You relied on other folks to

review the studies and give you a number? A Q this process? A Right. They would have been the one We contracted that function with TLG. Okay. Oh, okay. So TLG was involved in

reviewing those studies. Q Okay. Did you at any time record any

unfunded liabilities associated with decommissioning in the '99 to 2000 frame? MR. BRYAN: Objection. Vague.

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MR. WINE: (Continuing.) Q A Q For the Pilgrim plant? I'm not sure I understand the question. Okay. If I use the term "unfunded

liabilities," are you familiar with that term in general? MR. BRYAN: A Yes. Objection. vague.

MR. WINE: (Continuing.) Q And what would be your understanding of

the concept of an unfunded liability?

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A

A liability where there was no cash

provided or no asset provided. Q Book to cover that future liability or

A Q

I would suppose so, yes. Okay. And at any time in the late '99

through the early 2000 time period, did anyone address to you potential unfunded liabilities, particularly associated with decommissioning of the Pilgrim plant? MR. BRYAN: A Yes. Objection. Vague.

MR. WINE: (Continuing.) Q A And what was that? It was my understanding that the amount

of funds that we received from BECO were not sufficient to decommission the plant. Q A How did you come to that understanding? We compared the liability with the And the liability was larger than the assets. Q When did this issue first arise? MR. BRYAN: MR. WINE: (Continuing.) Q A the job. Do you understand my question? I would say initially when I came into Objection. Vague.

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Q A Q A Q A

Okay. Yes.

In the '99, 2000 time frame?

And who raised this issue with you? I guess I raised the issue. How did you become aware of it? When I reviewed the liability accounts

and the trusts and found that the trust was not sufficient to cover the liability. to senior management. that. Q Who within senior management did you I did report that

They said they were aware of

report that to? A I suppose it would have been John Wilder,

the CFO of Entergy. Q Was Mr. Wilder the person who said he was

aware of that situation? A He said in general the team was aware of

that when they purchased the plant. Q Okay. Did Mr. Wilder explain how Entergy

intended to address that? A I believe he said that on acquiring the And the exit strategy

plant, there was exit strategy.

says that we would run the plant for some period of time until the funds could grow to be sufficient to begin the initial decommissioning of the plant.

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Q A

How long would that be? The exit strategy said at least five

Q

And what rate of growth was assumed in

order to get to that point? A Q I'm not sure. Okay. Did you -- did you report that --

the unfunded liability that you just mentioned to me in any of the 10K filings or any of the inputs of the 10K filings that you provided on behalf of Entergy? MR. BRYAN: A No. Objection. Vague.

MR. WINE: (Continuing.) Q A Why not? It was in there. The liability was in

there and the asset was in there. Q Okay. Explain -- what asset was in

A Q

The decommissioning trust fund. Okay. The decommissioning trust fund was

an asset of the company's and the potential costs associated with decommissioning or projected for decommissioning were a liability. And if I understand

your testimony correctly, the liability associated or projected for decommissioning was greater than the

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amount of the asset, correct? A Q That was my understanding, yes. Okay. And was that explained or provided

in Entergy's 10K filings? A Q A Q Not to my knowledge. Would that be required? Not to my knowledge. Do you -- was it your view that that was

a material unfunded liability or an immaterial unfunded liability? MR. BRYAN: MR. MORRIS: A Objection. Vague.

Join in the objection.

I wouldn't know whether it was considered

material or not. MR. WINE: (Continuing.) Q the other? A Q No. Okay. And is it your position or was it You wouldn't characterize it one way or

your understanding from your conversation with Mr. Wilder that it would not be considered or that there would be no unfunded liabilities after five years of growth in the decommissioning trust fund? A Q No. Okay. That was not my understanding. Well, what was your understanding

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of Mr. Wilder's explanation to you? A That it would be at least five years but

it could be longer. Q A Q A Q Okay. Could it be less than five years?

Didn't think so. Okay. Minimum of five years. Did the period of time depend on

performance of the holdings of the trust? A Q I'm sure, yes. Okay. Were -- and again, your -- your

concern or understanding was solely with respect to the aggregate amount of the trust fund, not with respect to meeting any kind of regulatory requirements imposed by the NRC or other oversight agencies, correct? A Q I didn't have that responsibility, no. Okay. Now, I will tell you that at the

time of Pilgrim's acquisition in 1999, the then forecasted end of license life was 2012. have that understanding? A Q Yes. Okay. Was it the view of Entergy that if Did you ever

Pilgrim had operated until the end of its license life, that there wouldn't be unfunded liabilities

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associated with the decommissioning of the Pilgrim plant? MR. BRYAN: Objection to the extent

it calls for speculation. MR. MORRIS: A Join in the objection.

I don't recall anything about that.

MR. WINE: (Continuing.) Q Did y'all ever look at that issue? MR. BRYAN: A Same objection.

We would look at different scenarios but

I can't recall whether it was funded fully at 2012 or not. MR. WINE: (Continuing.) Q What kind of scenarios did you look at? What

We already talked about a five-year scenario. other scenarios did you look at? A

The accounting standards board issued a

FASB -- I think it's FASB 143 that required that you look at alternatives and under the FASB 143, we did look at different alternatives. we started that. I can't tell you when But we normally We would look at

Maybe 2001, '2, '3.

would look at a -- an extended life.

a probability that would say shut it down in 2012 and decommission it and we would look at one and say what if the plant broke and we immediately had to

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decommission it. Q Okay. So these were alternatives that

you-all addressed from an accounting perspective to address this gap between projected decommissioning liabilities and the amount in the decommissioning trust fund, correct? A obligation. Q A Okay. What was in the -- what was in the asset Well, to determine the asset retirement

account was really irrelevant to this calculation. Q A I see. We just wanted to know what did you think

the liability was based on probability analysis. Q Okay. And then these alternatives were

ways to mitigate the potential impact of any unfunded liability on the company, correct? A Q A Q I don't think so. Or is that a mischaracterization? It's a mischaracterization. Okay. Explain to me again what the

purpose of examining these accounting alternatives was. A To determine your most probable outcome

for what the liability would be --

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Q A

I see. -- rather than just saying one scenario.

We used three scenarios. Q Okay. So again, and you may have already But

provided this in your testimony and I apologize.

let's walk through the three alternatives that Entergy utilized for purposes of the Pilgrim plant in this time frame. The first we talked about was an early

exit strategy, correct? A Q A Yes. Approximately five years? I'm saying -- the five years was not one

of the strategies, no. Q A the plant. Q A Q Okay. That was, I think, at the acquisition of I think that was the strategy. That they consider? Right. Okay. What were the three then that they

considered subsequent to the acquisition of the plant? A It would be license renewal or shut down

at the end of the original license or immediate decommissioning. Q A Okay. Now, that's my recollection of what they

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were. Q Do you know if the company considered any

of these three alternatives in formulating its bid to acquire the Pilgrim plant? A Q No. No. Did not.

The company did not consider any of these

three or you don't know? MR. BRYAN: Objection to the extent

it calls for speculation. MR. WINE: (Continuing.) Q A And let me be clear because I -That requirement didn't come about until

after we acquired the plant. Q A Q The FASB requirement didn't? Right. I guess I'm asking you a slightly And let me first address I don't want you to

different question.

Mr. Bryan's objection here. speculate.

If you don't know something, I want you to

tell me because I want to be able to probe your recollection and your understanding of certain facts. My question was a little different. Do you know if

the company, in formulating its bid to acquire the Pilgrim plant, modeled either immediate -- an immediate decommissioning or a 2012 shutdown in

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formulating its decision whether or not to buy the Pilgrim plant? A Q A Q Are you privy to that?

No, I'm not. You're not privy to that? No. Okay. All right. Let's see. Now, what

other -- did you have any other conversations with Mr. Wilder or anyone else regarding Entergy's assumptions or analyses performed at the time of the Pilgrim acquisition? A Q I'm not sure I understand your question. Okay. Well, we talked a little bit about

13 14 15 16 17 18 19 20 21 22 23 24 25

a conversation or conversations that you had with John Wilder regarding potential unfunded liabilities, correct? A Q Uh-huh. (Affirmative response.)

And Mr. Wilder's explanation of what the

company assumed at the time of acquisition to address that unfunded liability, correct? A Q Yes. Any other conversations with either

Mr. Wilder or anyone else regarding the company's analysis of the financial aspects of the Pilgrim plant at the time of acquisition? A Not to my recollection.

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Q

Okay.

Have you ever had any

conversations with Ms. Connie Wells regarding financial aspects of the Pilgrim plant? A Q A Q A Not to my knowledge. How about Carolyn Shanks? Not to my knowledge. Dan Keiter? Maybe Dan. Dan usually was on the

acquisition teams. Q Okay. And what would be -- so Mr. Keiter

being involved in the acquisition of assets would be one of the bases for you to interact with him, correct? MR. BRYAN: Objection to the extent

it mischaracterizes his testimony. A Not on the Pilgrim acquisition but on

subsequent acquisitions. MR. WINE: (Continuing.) Q On other ones. I see. Did you have any

conversations with Mr. Keiter that you recall with respect to the Pilgrim acquisition? A Q I can't recall any. Do you recall having any conversations

with Charlie Minott regarding reporting of the decommissioning trust fund to the Nuclear Regulatory

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Commission? A Charlie. I probably had conversations with He helped prepare those filings for the

Pilgrim plant. Q Okay. Could you characterize those

conversations or describe for me those conversations that you had with Mr. Minott to the best of your recollection? A Q I don't remember the details of it, no. Okay. Okay. Do you remember providing

any information in the early 2000 to I'd say 2002 time frame to the general accounting office regarding Entergy's reporting of decommissioning trust fund amounts? A Q A Q I don't record, and I don't -You don't recall that? -- recall that. It could have been.

Do you recall in general with respect --

without respect to time frames such communications with the general accounting office? A Q No. Okay. Subsequent to acquisition, do you

know if Entergy ever performed any kind of evaluation analysis of the Pilgrim plant? MR. MORRIS: Objection. Vague.

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A

I'm not sure what your question is.

MR. WINE: (Continuing.) Q A Q Okay. Of the Pilgrim plant. Well, we talked about you recording it

and monitoring the performance of the decommissioning trust fund for Pilgrim, correct? A Q Yes. And you did that for all of the nuclear

plants or was it against the non-regulated nuclear plants within the Entergy portfolio, correct? A Q Yes. Besides monitoring that asset, did you

evaluate or monitor any of the other assets associated with the Pilgrim plant on a regular or periodic basis? A We prepared financial statements that

included all of the assets and reviewed them on a monthly basis. Q Okay. Is it fair to say you had nothing

to do with examining financing or purchase options for the Pilgrim plant on behalf of Entergy? A Q I had nothing to do with that. Okay. Just want to weed things out of

here so I know which documents to show you, Mr. Denton, so if you will just indulge me momentarily.

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Fair to say you were not -- fair to say you were not involved in the negotiation of the terms of the purchase and sale agreement between Entergy and Boston Edison Company? A Q Was not involved. Okay. Do you know who was on behalf of

Entergy in that process? A I would have thought Dan Keiter and maybe

Carolyn Shanks, but those are the only two names I would recall. Q Were you involved in the acquisition of

any other nuclear facilities on Entergy's behalf post 1999? A Q A Q A Q Yes. Okay. I would say yes. Could you tell --

All of them. All of them? (Witness nods head affirmatively.) Which ones specifically do you recall

being involved with? A Q A Q acquisitions? The Indian Point units. Uh-huh. Fitzpatrick and Vermont Yankee funds. And what was your role in those

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A

To set up the accounting for those as

we -- payroll accounting, set up financial statements for them. Q A Okay. Those were all set up as individual

companies and we prepared the books and records for each one of those companies. Q A Okay. So my role was to initialize the

accounting and then prepare the accounting on a monthly basis. Q Okay. If I use the term "NRC minimum"

with respect to a decommissioning trust fund, do you have an understanding of what that concept means? A Q concept? A NRC requires decommissioning of the Yes. What is your understanding of that

19 20 21 22 23 24 25

radiological portions of the plant. Q Okay. Do you know if that -- the NRC

minimum includes or excludes funding amounts required for spent nuclear storage demolition of non-radiological structures in Green Fielding? A doesn't. I'm not specifically sure that it does or

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Q

Okay.

With respect to Indian Point,

Fitzpatrick and Vermont Yankee, did you have anything to do with Entergy's analysis or potential analysis of financing of those purchases? A Q No. Nothing to do with analysis of the means

of funding those acquisitions? A Q No. Do you have any knowledge irrespective of

your involvement of whether or not those plants were purchased utilizing third-party financing? A financing. Q A Q It was all self financed? Yes. Okay. All right. I am going to show you To my knowledge, there was no third-party

some documents. things.

I want to see a -- a couple of

I want to see your recollection of facts I also want to see

associated with these documents.

if you, during the course of your employment, reviewed these documents yourself in any way, shape or form. So we are going to get some documents in front of you and ask you some specific questions about them. (DOCUMENT MARKED AS DEPOSITION EXHIBIT NO. 1 AND ATTACHED.)

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MR. WINE: (Continuing.) Q Mr. Denton, I'm handing you a document

that has been marked Denton Exhibit No. 1 for purposes of your deposition today. I ask you to review that

document, and while you're reviewing it, I'm going to describe it for the record. The document has been

produced in this litigation has been Bates stamped ENGC/BECO DOE 1st RFP-3-770 through 777. It is a

cover letter from J. F. Alexander, director of nuclear assessment, on Entergy letterhead, dated March 20th, 2000, to the US Nuclear Regulatory Commission with a report on the NRC decommissioning fund assurance report for Entergy associated with the Pilgrim nuclear power station. I ask you to review that document,

Mr. Denton, and tell me if you've ever seen this document before. A Q I can't remember seeing the document, no. Okay. Do you know Mr. -- or were you

familiar with Mr. Alexander during your tenure at Entergy? A Yes, I think he was the licensing

director at Pilgrim. Q Okay. And did your office and

Mr. Alexander's office interact in any way? A Not normally.

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Q

Okay.

To the extent that Mr. Alexander

was required to report funding information to the Nuclear Regulatory Commission, would he get that information from you or would he maintain that information in his own office? A I would say they would -- some of the

information would come from me. Q Okay. Now, on this letter, it identifies

Mr. Minott as a point of contact and I think you and I already talked about Mr. Minott and your interactions with him. It also identifies at the bottom, a

Mr. Allen Wang and a Mr. Robert Wood, both with the US Nuclear Regulatory Commission. either of those gentlemen? A Q No. Never had any dealings with them to the Are you familiar with

best of your recollection? A Q Not to my recollection. Okay. I'd like you to turn to the

attachment, if you would, and specifically to the page marked Bates 772 in the lower right-hand corner. A Q (Witness complies.) Do you have any familiarity with this

form of document and the numbers or the data that is being transmitted here by Entergy to the Nuclear

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Regulatory Commission? A Q Not specifically. Okay. In general, I do.

What is your general understanding

of this form and the data contained herein? A That this would be the form that the The NRC minimum.

company reported to the NRC. Q A Q A plant. Q Okay. Okay. Yes.

Do you know a Mr. Cliff Gatlin?

Who is Mr. Gatlin? He was the business manager at Pilgrim

And did you have any conversations

with Mr. Gatlin regarding reports like this to the Nuclear Regulatory Commission? A He most likely would have been the

individual to request data. Q Okay. Now, for purposes of facilitating

our conversation about this document, I'll make a couple of -- just kind of stipulations or statements about my understanding of what's contained and if you feel that I'm erroneously characterizing certain aspects of the document, feel free to correct me. it's my understanding based upon the testimony of prior witnesses that the number reflected on line 1, the $337 million figure reflects the NRC minimum, But

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basically a formulaic calculation for the Pilgrim plant at this point in time for this filing, right? MR. BRYAN: Objection. Foundation.

Assumes facts not in evidence. MR. MORRIS: A Join in the objection.

I really have no idea.

MR. WINE: (Continuing.) Q Okay. And that the $558 million figure

below that is an escalation of that first figure using a specific escalation rate out to a specific point in time, in this case to December 2016? MR. BRYAN: Objection. Foundation.

Assumes facts not in evidence. MR. MORRIS: MR. WINE: (Continuing.) Q Again, do you have any reason to disagree Join in the objection.

with my reading or my assessment of that number? A line 2. Q I would read that that's what it says on That's the escalated amount. Now, on line 3 in particular, this is It says the

where I want to begin our focus.

decommissioning trust fund amount accumulated at December 31, 1999, for scope defined in Item 1 above is $282,365,375. A Yes. Do you see that?

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Q

Do you have an understanding of what that

dollar figure represents? A In general, I'd say according to what's

written there, that's the trust asset. Q Okay. Now, there is a footnote here to

that figure and it specifically says that the NRC formulas and the calculated trust fund amounts herein exclude the cost of dismantling or demolishing non-radiological systems and structures as well as costs to manage and store spent fuel until transfer to DOE. In December of 1999, December 31, 1999, would

you have been serving in the role of director of business services? A Q Yes. And would you have a familiarity with the

amount in the Pilgrim decommissioning trust fund as of that date? A I don't recall what it was.

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Q

Okay.

Is it -- do you have a

recollection of whether or not the decommissioning trust fund for Pilgrim was -- in December of 1999 was $282 million as reflected on this form or some amount greater or less than that $282 million figure reflected herein? A Line 3 would indicate it's 282 million

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but I couldn't tell you whether that's correct or not. Q Okay. Very good. Well, we'll look at

some documents and see if in fact that may refresh your recollection. You can put that document away and

we'll continue to look at some additional documents related to decommissioning numbers here. MR. WINE: Hold on a second.

(DOCUMENT MARKED AS DEPOSITION EXHIBIT NO. 2 AND ATTACHED.) MR. WINE: (Continuing.) Q Mr. Denton, I'm handing you a document

that has been marked Denton Exhibit 2 for purposes of today's deposition. It is a document that is printed While you're

on both the front and the back side.

reviewing that document, I'm going to describe it for the record. It was produced by Entergy in this

litigation and contains the Bates label in the bottom right-hand corner ENGC/BECO DOE 1st RFP-3-257 through 258. It appears to be a string of e-mail

communications originating at the bottom of the page from Carolyn Thompson to you dated July 11th, 2000 and then a series of communications resulting finally in a communication to Ms. Thompson from Mr. Minott on July 12th, 2000, and then you're CC'ed along with some other folks in that final communication. Once you've

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had a chance to review this, Mr. Denton, I ask you if you're familiar with the document. A Q I'm not familiar with the document. Okay. Let's walk through it and discuss

it and see if that refreshes your recollection. Starting again at the bottom with the original e-mail from Carolyn Thompson to you dated July 11th, 2000. Ms. Thompson writes: Don, Jerry Yelverton gave Gene

an action item to provide him with the following by this Friday. Now, let's stop there for a second. Do

you know who Mr. Yelverton is? A Q Yes. And what was Mr. Yelverton's role at the

time that this e-mail was written to the best of your recollection? A Q He was the CEO of nuclear. Okay. And who -- do you know who the

Gene is referred herein? A Q I believe that was his secretary. Okay. Now, there are three bulleted The first is

items underneath that initial sentence.

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copies of decommissioning studies for all Entergy owned nuclear units. Second is

decommissioning trust agreements and the third is decommissioning funding status reports. And

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Ms. Thompson ends her request to you at the bottom. It says, Do you have a copy of these for Pilgrim? you provide these? If not, who should I contact? Can

Are these the kinds of documents that your office typically maintained in the 2000 time period? A Q No. Okay. Now, let's look up the page to the And it's

response to Ms. Thompson's initial e-mail.

sent from you but it appears that it's being written by someone else. A me -Q A Q Okay. -- in my group. So Ms. Iupe was in your -- in your group Can you explain that for me.

Linda Iupe was a senior accountant for

at this time, correct? A Q Yes. And was it an ordinary practice for

Ms. Iupe to respond to e-mails sent to you in your absence? A If I was out of the office, I would

22 23 24 25

normally have my secretary if something had a priority on it, to route it to one of the senior accountants. Q Okay. Do you recall being out of the

office for any reasons in the July 2000 time frame,

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any part of an extended absence from employment or anything? A I don't recall, no.

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q

Okay.

Now, Ms. Iupe responds to Carolyn, Don

Ms. Thompson in the following manner: Denton is out of the office. house this week.

Cliff is at the power

However, I think Charlie Minott at

Pilgrim should have this information since he just recently had to file some information with the NRC. believe Charlie filed the minimum required funding information to the NRC and we have trust fund statements information in our office. need them. Let's stop there for a minute. Do you have an understanding of what Ms. Iupe means when she refers to "minimum required funding information"? A (Indicating.) Q A Q The NRC minimum? Minimum file. Okay. And then she says, We have trust I think it would be this document. See me if you I

fund statement information in our office. Ever be the case that the information or the minimum required funding information would be

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different from the trust fund statement information? MR. BRYAN: Objection. Vague.

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

A

I can't say.

MR. WINE: (Continuing.) Q Okay. Are you familiar -- have you ever

seen a situation where a -- where Entergy reports out one number to the NRC for NRC minimum purposes but that the trust fund actually contains a greater amount of funding in it than the amount reported to the NRC? A Q A Q Not to my knowledge. You've never seen that? Not to my knowledge. Okay. Then further up it looks like

Ms. -- Ms. Thompson is still on the e-mail address as writing to Mr. Minott and CC's you. being CC'ed on this communication? A Q A It says I was but no, I do not recall. You don't recall this particular e-mail? No. Do you recall

20 21 22 23 24 25

Q

Is it fair to say that if your name

appears on one of these e-mails, that you likely received it in the ordinary course of business? A Q Sometimes I did and sometimes I didn't. Okay. Well, let me ask you, when you

received e-mail, particularly in the 2000 time frame,

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was it ever the case that an e-mail sent specifically to your e-mail address would go to someone else like a secretary -A Q A e-mails. Q Okay. And so you -- it's possible that Yes. -- or some other person? My secretary scanned and opened all of my

you received some of them but not others? A Q Yes. Okay. Would this be the kind of e-mail

that you would have expected her to provide you or to take care of on her own? MR. BRYAN: A Objection. Vague.

I would have expected her to assign this

to a senior accountant. MR. WINE: (Continuing.) Q A Q Okay. Yes. Okay. Now, let's go to the final e-mail Like Ms. Iupe?

in this string at the top of the page from Charlie Minott to Ms. Thompson. And again, you're CC'ed on

here, as is Ms. Iupe, a -- a Robert Bellamy and a William Riggs. Do you know all of those individuals?

We haven't talked about Mr. Bellamy or Mr. Riggs yet.

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A Mr. Riggs. Q

I know Mr. Bellamy.

I don't know

What was Mr. Bellamy's role to the best

of your recollection? A Q Vice president of the Pilgrim plant. Okay. And it's titled "Decommissioning

Study Pilgrim."

And Mr. Minott writes, Carolyn, Mike

Bellamy will give Don Denton -- and in parentheses, it says, He's here today -- the 1998 decommissioning study and the March 2000 letter to the NRC on decommissioning funding. Let me stop here for a second. When Mr. Minott

wrote he's here today, did that mean that you were at the Pilgrim plant? MR. MORRIS: A Objection.

Appears that's where I was out of the

office to is the Pilgrim plant. MR. WINE: (Continuing.) Q A Why were you visiting the Pilgrim plant? I went up about once a quarter to visit

with all of the VPs to go over their financial statements with them. Q Okay. And then it says, open

parentheses, this letter also has copies of the trust agreements, close parentheses, period. Do you recall

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anything specific about your trip to the Pilgrim plant in the July 2000 time period? A Q No. Anything out of the ordinary, standard --

or a standard type of meeting? A Q A Q I can't recall the meeting at all. No recollection of it at all? No. Do you normally keep notes of meetings

like that when you were to go up quarterly to a particular site? A Q No. Okay. Any recordation of your -- of the

meetings or the events that took place when you met at a plant with senior executives? A Q No. Okay. The e-mail continues, note the '98

study was done for Boston Edison and does not correlate with the total decommissioning costs I understand Entergy is using for Pilgrim, $572 million, period. Let's stop there. Do you recall this

$572 million to be the amount of the decommissioning cost or liability that we discussed earlier being utilized by Entergy for the Pilgrim plant?

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 else? A Q No. Okay. A

MR. BRYAN: I can't remember.

Objection.

Foundation.

MR. WINE: (Continuing.) Q Whether it was this number or something

It says, I suggest you contact She is in the process of finding I'll be here if you have

Mary Ball Markow.

the basis for this number. any other questions.

Do you know who Ms. Markow is? A Q A Yes, I do. Who is she? She was a part-time accountant that

worked, I think, probably with the acquisitions group. Q Okay. Do you know why any of these

individuals would be interested for finding the basis of the $572 million figure? MR. BRYAN: Objection to the extent

it calls for speculation. A No.

MR. WINE: (Continuing.) Q A Q Don't know? No, I don't know. Okay. Do you recall the first time you

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met Mr. Bellamy? A Q A Q A Yes, I suppose I do. And when was that? It was in the mid '90s. Okay. And in what context?

I was the director of support at A and O

and he was the director of support at River Bend, a sister plant. Q Okay. Is it a fair assessment or

characterization to state that Mr. Bellamy was transferred up to Plymouth, Massachusetts, the Pilgrim plant after Entergy's acquisition of Pilgrim from Boston Edison? A transferred. Q I'm not sure of the time frame but he was He went up there as the VP of the plant. He was not a Boston Edison employee prior

to the acquisition? A Q No. Okay. He was an Entergy employee. Very good. I think we've

exhausted that document. that aside.

And let's go ahead and put

We'll take a look at another document. Do you

We've been going for about an hour. want to take a break here? A I'm fine if you do. MR. WINE:

Let's keep going for a

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little while longer and then we'll take a break just to give everyone some stretch time. (DOCUMENT MARKED AS DEPOSITION EXHIBIT NO. 3 AND ATTACHED.) MR. WINE: (Continuing.) Q Mr. Denton, I'm handing you a document

that has been marked Denton Exhibit 3 for purposes of your deposition today. I ask you to read it and while

you're reviewing the document, I'm going to describe it for the record. The document was produced by

Entergy in this matter and I'm going to read -- it has two Bates numbers on it. the right. I'm going to read the one on

It's Bates labeled ENGC/BECO OCT11 site It is an e-mail string to

visit dash one through two.

which -- on which you've been copied in at least one instance. The original e-mail from Charlie Minott

dated Friday February 16th, 2001, to John Gerety and you'll see that you're one of several people that was CC'ed on that e-mail string, at least that initial or original e-mail from Mr. Minott to Mr. Gerety and then there are a couple of responses to that e-mail subsequent to its original transmittal by Mr. Minott. MR. MORRIS: Just for the record, I

just wanted to identify this particular document was produced pursuant to the

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protective order and so it should be treated accordingly when attached to the transcript and any testimony that is solicited relating to this document, we would also like to designate under the protective order. MR. WINE: (Continuing.)

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q

Okay.

I'm going to ask you some specific

questions, Mr. Denton, focusing on the first e-mail. And I should warn you again, as you see, in the effort of saving trees, we've printed this document on front and back. So I'm going to focus my questions at least

initially on Mr. Minott's initial e-mail that appears at the bottom of page 1 and the opposite side of that page. First of all, let's begin with this. Do you

recall having received this e-mail communication from Mr. Minott? A Q No, I do not. I really don't.

Now, we had talked about the previous

e-mail communication that some e-mail fell into a category of communication that you would receive and respond to directly and others would be assigned out to senior accountants. Can you tell me which --

reviewing this today, which category this communication would fall under?

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A just go away. Q A Q A

If it didn't require any action, it might

Okay.

And no one would respond to it?

It's a possibility. Okay. It would not be assigned to a senior

accountant until there was action required on our part. Q Now, let's look at the people in the John Gerety is a name

e-mail header first of all.

that I don't know that we have mentioned prior to now in today's deposition. was or is? A Q No. Okay. We've talked about Robert Bellamy. Do you recall who Mr. Gerety

I don't recall if we've mentioned Clifford Gatlin before. A Q Have we discussed Mr. Gatlin? Yes. Okay. Your name appears there. William

Riggs we talked about before.

John Alexander, I think And Steven

we saw a letter from Mr. Alexander before. Brennion I believe is a new name. Mr. Brennion is? A Q No, I do not. Okay.

Do you recall who

Let's look at the substance of the

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e-mail.

And the subject line is Pilgrim Let's stop

decommissioning funding report to the NRC. there for a second.

Do you recall being in the group

of individuals that would receive and/or review decommissioning funding reports for Pilgrim before being sent to the Nuclear Regulatory Commission? A Q I would normally verify the assets. Okay. And the accuracy of the

information contained therein? A Q Yes. How do you go about confirming the

accuracy of the numbers contained in the report to the NRC? A I would normally check the number back to

what we had given to them. Q Okay. And in order to do that, would you

check to see whether the number in the draft report to go to the NRC matched the number that you were recording at that specific time for the decommissioning trust fund? MR. BRYAN: A Yes. Objection. Vague.

MR. WINE: (Continuing.) Q A Okay. Yes. The answer is yes?

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Q

Okay.

And again, I think I asked you

this question previously, but in the context for that review for accuracy, was it ever the case that Mr. Minott or anyone else associated with the Pilgrim plant would provide you with a number to be given to the NRC that was less than the amount that was then being recorded by your office for the entirety of the decommissioning trust? A Q e-mail here. Not to my knowledge. Okay. Now, let's read Mr. Minott's

It says, Attached is a draft of the

summary page for the funding report due to the NRC 3/31/01. It shows that we have a 5 percent projected

margin over the NRC minimum funding level of 641 million versus 612 million minimum and that last year's report showed a projected 16 percent margin. Okay. Let's stop there. Do you recall any

discussions in this time frame about changes in the margin, the decommissioning trust fund associated with the NRC minimum amount? A Q A Q No. You don't recall that at all? (Witness nods head negatively.) Mr. Minott then goes on to explain why

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that reduction occurred.

He says the reduction was

caused by -- the first bullet is only a 4 percent increase in the trust balance. 82 million to 294 million. eight or a two. math. Can you. 262 or would that be

I can't tell if that is an Should be able to do the I And in

Four percent growth would be a 62 or 94. Let me look.

think it is likely 282 million.

fact, in -- yeah, in Denton Exhibit 1 which was the December 31, 1999, filing, Entergy reported a $282 million trust fund amount for the NRC minimum. So I believe this is a $282 million figure. Do you

have any reason to disagree with that reading? MR. BRYAN: A on that line. MR. WINE: (Continuing.) Q Okay. Then the next bullet is a Objection. Foundation.

I would read that number as 282 million

10 percent increase in NRC's calculated minimum decommissioning costs and then he lists the major

20 21 22 23 24 25

drivers.

Do you have any recollection or were you

ever familiar with changes in the NRC minimum calculation? A No. MR. BRYAN: Counsel, just for the

record, you're reading from the e-mail dated

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