Free Response to Motion - District Court of Federal Claims - federal

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Case 1:98-cv-00126-JFM

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

YANKEE ATOMIC ELECTRIC
COMP ANY;~ .

Plaintiff
No. 98- 126C

(Senior Judge Merow)

UNITED STATES OF AMERICA
Defendant.

CHARLES W, PENNINGTON EXPERT WITNESS REPORT
This report addresses matters relevant to the contract entered into by Yankee Atomic

Electric Company ("Yankee Atomic ) with the government for the acceptance of spent nuclear
fuel and high- level radioactive waste (together " spent fuel" ). This contract is
one of

approximately 50 such contracts with essentially the same terms between the government and

commercial nuclear utilities. The form of each such contract is sometimes referred to as a
Standard Contract. I am aware that the Court has held that the government breached
Yankee

Atomic s contract by not beginning to accept spent fuel from Yankee Atomic by January 31
1998.

Frank Graves has submitted an expert report in this matter addressing the pace and

schedule on which the government would accept spent fuel from Yankee Atomic and other
contracting utilities after January 31 , 1998 pursuant to the parties ' contracts. In his report, Mr,

Graves relies on various data to develop factors used in his economic analysis to demonstrate

how the fuel removal program would have operated. This data includes: costs for the dry storage
of spent fuel; information on dry storage cask capacity, handling, and transportation; the

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operations and maintenance costs associated with the wet storage of spent fuel; and historical and
projected fuel discharge data for U. S. nuclear utilities, I was asked to review the above-noted
data. This report presents my opinions concerning that data, together with the other information

called for in Fed. R. Civ. P. 26(a)(2)(B).

Opinions to be Expressed and the Bases Therefor I offer the following points as the opinions to which I expect to testify at the trial of this

matter. I present my reasoning for reaching my conclusions along with the conclusions
themselves. In general , my opinions are based on my over 30 years of experience in nuclear

engineering and economics in the nuclear power industry, and my review of relevant documents.

The cost numbers supplied to Mr. Graves were provided by NAC International ("NAC"), where I

currently serve as Group Senior Vice President , Engineering and Dtsign Services. I have worked for NAC since 1996 in various positions , all of which were related to spent fuel

management. NAC has performed extensive spent fuel transportation and management work for
the U. S. Department of Energy (" DOE") for mor~ than 20 years,

My principal opinion is that the data concerning the costs of dry and wet storage for spent
fuel , dry storage cask capacity, handling, and transportation , and fuel discharges , that was

supplied to Mr. Graves is accurate and reliable for purposes of the economic models that Mr.
Graves has constructed.

Spent fuel dry storage cost data

NAC supplied Mr. Graves with data on the costs of various aspects of a dry storage

system for spent fuel. The cost data supplied is as follows:
Dry Storage Fixed Costs include licensing, engineering, construction of the ISFSI

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engineering and technical support of the cask/canister system, and equipment and
materials of the cask/canister system. Together these fixed costs total $6.4

million and represent the fixed costs associated with implementing a dry storage system.
Variable (per canister) initial costs associated with dry storage include varying the , project size of the storage pad , fabrication oversight , quality assurance oversight management , and variable equipment and materials. Together, these variable costs total $167 000 per canister. In addition, the physical cask/canister system is $720, 000. Together, these costs represent the variable costs on a per canister basis associated with implementing a dry storage system.
Costs associated with a crane upgrade, if needed, are $3. 5 million for an upgrade ofless than 30 ton handling capacity, and $4.5 million for a greater than 30 ton upgrade, In addition , an average of $1 million per site for structural modifications to buildings to accommodate a larger crane is necessary, if a crane upgrade is needed. Together, these fixed costs represent the fixed costs associated with upgrading a crane when implementing a dry storage system.

Dry Storage Decommissioning Cost is $240 000 per canister. the decommissioning expense associated with an ISFSI.

This cost represents

Dry Storage Operating & Maintenance Cost (per year) is $3 500, 000. This cost is largely associated with monitoring, surveillance and support, and represents the expenses on an annual basis associated with the operation and maintenance ofan ISFSI.
NAC has developed a substantial body of knowledge concerning dry storage systems
including, in particular , the following areas:

the design, licensing, and construction of independent spent fuel storage installations (ISFSI) at reactor sites for the storage of spent fuel using dry storage cask/canister systems;

the design, engineering, and fabrication of dry storage cask/canister systems;

the movement of spent fuel from a spent fuel pool to an ISFSI; and
the annual Operations and Maintenance costs for an ISFSI.

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Through my employment at NAC I have gained a substantial body of experience in these areas as

well. As head of the engineering and design services group, I supervise the design, licensing, and implementation ofNAC' s spent fuel storage and transport casks , as well as the costing and

pricing ofthose products and related services. In my current and prior positions , both at NAC
and elsewhere , I have acquired a substantial body of knowledge in the pricing of spent fuel dry

storage systems and the various components of such systems. I have prepared and reviewed bids

submitted by NAC for the provision of dry storage systems for spent fuel. I have also reviewed
commercial bids and contracts drafted by other companies and submitted to NAC for the

provision of such services, Over 15 years , I have also consulted with utilities and organizations
such as EPRI on the design, licensing, and installation of such services , and on the costing of
these services.

The numbers NAC supplied to Mr. Graves for the category of Dry Storage Fixed Costs
have several bases. In part , these numbers are derived from bids for the provision of dry storage

services that were either developed and submitted by NAC , or submitted to NAC by other

contractors and reviewed by NAC, An additional source of information is the Owl Creek Energy
Project , a private interim storage facility being developed in Wyoming for which NAC is the

project manager. It is NAC' s responsibility to develop pricing information for this project, and
some of the information developed is reflected in the cost numbers supplied to Mr. Graves.

The Dry Storage Cost numbers are also formed by the experience of Virginia Power

which is currently operating two ISFSIs -- one of which is the longest operating domestic ISFSI

and one of which is the newest domestic ISFSI in operation, Cost information from these ISFSls
was used as an additional basis for the numbers supplied to Mr. Graves.

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The numbers for Crane Upgrade Costs , Dry Storage Canister Cost, Dry Variable

Construction Costs , and Dry Storage Decommissioning Costs are all developed from NAC'

extensive experience in dry storage systems for spent fuel. In large part these numbers are
derived from bids submitted by and/or to NAC for the various aspects of a dry storage system.

The Dry Storage Operating and Maintenance Cost number is based upon cost information
supplied by several utilities for their ISFSIs.

I personally reviewed all of the dry storage cost information discussed above. Based
upon my experience in and knowledge of the subject of dry storage of spent fuel , particularly the

pricing of spent fuel dry storage systems, it is my opinion that these cost numbers are reliable
estimates of the indicated expenses associated with a dry storage system.

Dry storage cask capacity, handling, and transportation data NAC supplied Mr. Graves with data on the capacity of casks used for the transportation
and dry storage of spent fuel , as well as data on aspects of the handling and transportation of

such casks. The data concerns the following aspects of dry storage:
capacities for transportation and storage casks for boiling water reactors and pressurized water reactors; and
spent fuel pool crane design capacities and loaded transfer cask weights for spent fuel pools currently in service.

The data on cask capacities is derived from transportation and storage cask designs

created by NAC. These cask designs have been approved for use by the NRC. The data on the
capacity of canister based systems is based on the NAC-UMS design, which is currently in the

NRC review process. The VMS should receive storage approval from the NRC this year and
transport approval from the NRC in the second quarter of 2001. A similar system, the NAC-

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MPC system , has been previously approved by the NRC for storage and transportation of spent
fuel.

The data on caSk removal is derived from NAC's experience in conducting shipping

campaigns for spent fuel. NAC has made over 3200 shipments of spent fuel and has developed a
sizable body of knowledge concerning the time necessary to complete the various operations
associated with a spent fuel shipping campaign.

The information on crane design capacities and transfer cask weights is derived from
Facility Interface Capability Assessment (FICA) studies performed by NAC for the Department
of Energy (" DOE").
The

purpose of these studies was to evaluate the cask handling capabilities

of the nuclear utilities that entered into Standard Contracts with the government. All of the
studies were submitted to DOE at their completion.

I personally reviewed all of the information discussed above. Based upon my experience
in and knowledge of the subject of dry storage of spent fuel , particularly in the areas of

cask/canister systems and the movement of spent fuel from a spent fuel pool to an ISFSI , it is my
opinion that the information provided to Mr. Graves is accurate and reliable.

Operations and maintenance costs associated with the wet storage of

spent fuel

NAC supplied Mr. Graves with data indicating that a conservative estimate of the average annual cost of operating and maintaining a spent fuel pool at a shutdown nuclear plant is

approximately $8 million. NAC is in the business of collecting data on the management of spent

fuel by nuclear utilities, In the course of this business , NAC has collected information on the

costs of wet storage for spent fuel. The $8 million cost number supplied to Mr, Graves is derived
from cost information collected by NAC from shutdown nuclear plants that are currently

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operating spent fuel pools,

I personally reviewed all ofthe

information from which the wet

storage operations and

maintenance costs discussed above were derived, Based upon my experience in and knowledge
of spent fuel management and storage , it is my opinion that the information provided to Mr.
Graves is accurate and reliable.

Historical and projected fuel discharge data
NAC supplied Mr, Graves with data on historical and projected discharges of nuclear fuel

from the reactors of u.S. nuclear utilities, This data is a product ofNAC' s research and analysis
of nuclear fuel cycles and markets , areas in which NAC has provided extensive consulting
services for over 30 years, I previously led the nuclear fuel consulting group at NAC, the group

that provides these particular consultation services. I personally reviewed all ofthe fuel
discharge information supplied to Mr. Graves. Based upon my experience in and knowledge of
the research and analysis of fuel cycles and markets , it is my opinion that the information

provided is accurate and reliable.
II.

Data or Information Considered in Forming Opinions

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Case 1:98-cv-00126-JFM

Data and other information I considered in forming my opinions is listed in Exhibit 1 to
this report.

ill.

Qualifications

My qualifications to offer the opinions contained in this report , including a list (compiled
to the best of my recollection) of the publications I have authored within the preceding ten years are set out herein and in Exhibit 2 to this report.

Compensation
NAC is being paid $250 per hour for my time working on this matter.

Other Expert Testimony
I have not testified as an expert at trial or by deposition in any other cases within the
preceding four years.

Respectfully submitted

Dated: August 22 , 2000

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DATA AND OTHER INFORMA nON CONSIDERED IN FORMING OPINIONS

Information collected by NAC International ("NAC") concerning various financial and spent fuel. This information includes: bids of technical aspects of dry and wet storage spent fuel management services; bids and other of submitted by NAC for the provision cost i..m9rmation received from contractors and subcontractors to NAC for spent fuel management services; and spent fuel management cost information received from domestic nuclear utilities.

Historical and projected inventories of commercial spent fuel in the United States. Data
provided by NAC.

Current inventory of spent fuel stored in domestic Independent Spent Fuel Storage
Installations, Data provided by NAC,

Facility Interface Capability Assessment ("FICA") Study, NAC International. The Impact of Dry Spent Fuel Storage on Decommissioning, Rc. Boswer, M, Taylor, Jr"
and K, R. Miller.

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Charles W. Pennington-Group Senior Vice President Engineering & Design Services
Rerevant Experience Mr. Penni~on leads NAC' s
engineering and design services group, s spent which handles the design, licensing and implementation of NAC' fuel storage and transport casks. He also is the Director of NAC' Spent Fuel Academy, an educational seminar on spent fuel storage and Mr. Pennington I s expertise transport offered to the nuclear industry. includes development and commercialization of wet and dry nuclear material storage and transport technology, as well as other engineered products and services involving nuclear steam supply systems and lowlevel waste processing. His spent fuel and overall nuclear waste experience includes close involvement in the commercialization of 10

major technology systems.

I S team of 30 consultants and Mr. Pennington previously led NAC analysts, which specializes in all fuel cycle areas, including uranium mining and production; uranium and conversion markets; enrichment market and technology; fuel fabrication; reprocessing, recycling and spent fuel management; decontamination and decommissioning; and data

base services.
Before joining NAC in 1996, Mr. Pennington was vice president, International, where technology and business development, for Holtec he directed the development of nuclear and hazardous material storage and transport technology and was involved in other engineered systems systems, steam and services, such as BWR HWC shielding analyses and generator assessments, heat exchange systems, storage system installation technology, and field services for installation of nuclear materials storage systems,
Before joining Holtec, Mr. Pennington served as vice president for Transnuclear Inc., the New York- based U, S, subsidiary of Transnucleaire S . A., where his activities included:
The design development

commercialization, casks. and marketing efforts for the ~N-BRP and TN-REG dual purpose casks, TN- 24, TN- 40 and TN- 32 advanced metal spent fuel storage
fabrication assessment

cask, TNMACSTOR concrete module storage system, TN- RAM transport FSV spent fuel transport cask, and transuranic waste transport

systems;
Studies for EPRI on dry spent fuel transfer and storage technologies and economics; Expert witness services for Northern States Power Company at successful state hearings on spent nuclear fuel dry storage at Prairie Island.

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'II

Mr. Pennington was involved in system design and licensing for 10 years at Combustion Engineering, Inc. after serving for five years as an officer in the U. S. Navy nuclear submarine service, where he was qualified in the operation of nuclear propulsion systems and as a nuclear weapons officer.
Mr. Pennington' s expertise includes development and commercialization of wet and dry nuclear material storage and transport technology, as well as other engineered products and services involving nuclear steam supply systems and low- level waste processing. His spent fuel and overall nuclear waste experience includes responsibility for the commercialization of 10 major storage and transport systems involving

Earlier ,

both domestic and foreign technologies.

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Education
Duke Uni vers i
A. Mathematics

North Carolina State University
S., Nuclear Engineering with Economics Minor
University of Connecticut A., Marketing and Finance

Selected Papers and Publications

Volume 22. June 1974. Tritium Release from Niobium, NUCLEAR TECHNOLOGY, . A Study of Extra Large Storage Casks, 1986, Final Report of Work for DOE Contract DE-ACO1-84RWOOO38, published 1987. Waste Type The Independent Development of a Multi-Modal, MultiSociety, Transport System for Transuranic Wastes. American Nuclear
SPECTRUM

' 88 Proceedings. September 1988.

Survey of Dry Spent Fuel Storage Cask Systems within the United Cogema, States. Final Report of Study Performed under Contract to S . A., Paris, France, February 1989. Conceptual Design for an On- Site Spent Fuel Transfer System, April 1991. Final Report of Research proj ect 2813 - 2 5, Electric Power Research Institute, EPRI Report NP- 7459, September 1991.
Scoping Evaluation of Alternative Spent Fuel Transfer Concepts. Addendum Report for Research Project 2813- 25, Electric Power Research Institute, July 1991, Design Im~lications of Using Spent Fuel Transfer Systems at the MRS ect 2813 - 2 5, and Shutdown Reactors. Addendum Report for Research proj Electric Power Research Institute. December 1991. 10th Development of On- Site Spent Fuel Transfer System Designs. The International Conference on the Packaging and Transportation of Radioactive Materials, September 1992. The Development of Transnuclear s TN- 40 Advanced Storage Cask. Institute of Nuclear Materials Management, Proceedings of the Spent Fuel Management Seminar IX. January 1992, The Economic Case for Modular Increases in Fuel Pool Storage Capacity. Report of Study Prepared for Comparative Assessments of Three Utilities. April 1993. The Development of the Holtec International Storage, Transport and

Repository (HI- STAR)
System. Institute of Nuclear Materials Management, Proceedings of the Spent Fuel Management Seminar XII- January 1995,

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The Shutdown Reactor: Optimizing Spent Fuel Storage Costs. Institute of Nuclear Materials Management, Proceedings of the Spent Fuel Management Seminar XII. Janua~y 1995. NUCLEAR ENGINEERING HI -STAR: Hol tec International' s MPC System, INTERNATIONAL. July 1995. 4.nthe Management of Spent Fuel in the United States, Report

prepared for a major utility. November 1996. Dry Storage of Spent Fuel at U. S. Reactors and Its Relative Contribution to the Low-Level Radiation Exposure of the General Public. Fuel- Trac . Topical Report. December 1996. Purpose Framework for Progress: Realizing the Benefits of Multi' 97. April 1997. Systems. Nuclear Energy Institute, FUEL CYCLE

Trends,,

NAC Multi- Purpose Technology Concept & Status, Technology for the Millennium. The Institute of Nuclear Material Management Spent Fuel Management Seminar XVI. January 13, 1999. Selecting Lesson Dry Spent Nuclear Fuel Management Lessons Learned: Learners in Dry Spent Fuel Management or Experience as a Good Teacher and a Bet ter Partner, ANS Professional Development Workshop, June 9, 1999. Fuel: ANS President' s Special Session on Dry Cask Storage: "Spent Stick It Where You Don ' t Get Stuck With Where Should You Stick It. ANS Annual Meeting. June 1999, Century, A NAC Multi- Purpose Systems Status: Technology for the Next State of the Technology Presentation. The Institute of Nuclear 13, Material Management Spent Fuel Management Seminar XVII. January

It?"

2000.
Meeting the Challenges of Dry Spent Fuel Management. American Power

April 11,

Conference.
2000.

Fewer, Better, Faster - Trends In The Fuel Market: Spent Fuel Storage and Disposal - Where Are We Going? World Nuclear Fuel Market 27th Annual Meeting. June 13, 2000. U. S. NAC Summary of the Spent Fuel Management Situation in the International Spent Fuel Academy. September 1997, 1998, 1999. Spent Fuel Storage Expansion: Evaluation Factors for Decision 1997, 1998, Making. NAC International Spent Fuel Academy. September

1999.
Economic Analysis of Spent Fuel Storage and Life Cycle Costs, NAC International Spent Fuel Academy, September 1997, 1998, 1999.

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