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

Case 1:98-cv-00126-JFM

Document 791-11

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THE WITNESS:

It would shift the

order a little bit amongst the others because

Yankee Atomic in

particular, whb buys some

the early rights, would no longer buy them
for that peribd.
6.

They would ~ai t

a while to

buy.

They would probably sell rights for

that period and buy more in 2001.

connecticut and Maine would
all of

sell

their rights in the early

years.

other parties could get out a little bit
sooner if

those three were unable to get out

as soon as they

could.

BY MS. POWELL:
, Q.

Changing the hypothetical

slightly,

and now the assumption would be that all of
the plants, not just the -- all of the

participants, not just the three Yankee
plants, would need a ten- year

cooling period.

Hdw would that affect the results of your
analys

is?
MR. S KALABAN :
Obj ection.

Vague.

Foundation.
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THE WITNESS:

I haven't done
so I can

that analysis

formally, obviously,

only talk about the qualitative

effects.

But

generally that would make any shutdown

facility wait longer to become a Must-Move

facility,

five years

longer.

So it would push back their

demand for acceptance

slots.

They would

still have the OFF acceptance slots that they

would have otherwise partially used for their

. own purposes.

So they would release those

sooner.

So basically full pools would gain
more priority in the economic

priority

re-orde~ing than they now

have.

So a lot more full pools would

be served than since most -- I think there
only -- since no one builds an ISFSI,

probably wouldn 't change the full- pool

Must- Move situation.

It probably won't

change the rate at which any full pools get

out.

I would have to analyze that more

carefully, but it would delay the shutdown
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pools and might not accelerate the

full

pools.
BY MS. POWELL:
What would happen to the price of

slots ~n this hypothetical with the cooling
time for all utilities being ten years, not

five?
MR . S KALABAN :

Obj ection.

Vague.
THE WITNESS:

It'

s pretty hard

to be precise about this, again having not

run that analysis, but I would guess

the

price would fall in the early years and
in the later

rise

years.

I t depends

on whether there was

still Must- Move slack later on when the

deferred shutdown pool~ started to become
eligible for Must- Move.

. BY MS. POWELL:
And staying with the same

hypothetical of ten years cooling time for

all the utilities, what would happen to the
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uti lit i e

s'

a t - re

a c

to r

s to rag

e

cost s

MR. SKALABAN:
THE WITNESS:
BY MS.
POWELL:

Obj ection.
For all utilities?

Yes.
MR. S KALABAN :
Obj ection.

Vague.
THE WITNESS:

Some would change
s too broad to

and some wouldn't.

I guess it'
POWELL:

-- I don't know what you
BY MS.

re getting at.
time

If all utilities had a cooling
of

ten years, not five, wouldn't it be

logical that their at-reactor storage costs

would increase because they had to hold onto
the fuel longer?

MR. S KALABAN :

Obj ection.

Vague.

Foundation.
THE WITNESS:

Anyone who was in

shutdown mode would continue to bear

unavoidable O&M costs for five years longer
than they would have

with a five- year
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cooling period. So have been higher.
BY MS.

their but- for costs would

POWELL:

And if the utilities had to hold

onto their fuel for five more years,
more years than what your model

five

assumes,

would their damages

then fall?
Obj ection.

MR. S KALABAN :

Vague.
THE WITNESS:

Yes.

The approach

we' re taking of damages compares the damages

incurred in the breach to the avoidable

in the -- it is based on the avoidable

costs costs
the

in the but- for world relativs to the breach

world.

If the avoidable costs go up in

no~- breach world, the difference goes down.
BY MS. POWELL:

So in this hypothetical of a

ten- year

cooling

time,

the damages would

fall

because both the s~ap prices would fall at least in the early years and the at-reactor
storage costs would

increase?
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MR. S KALABAN :

Obj ection.

Vague.

Form.

Can you read that back?

(Reporter read record as requested.
THE WITNESS:

I don't know what

the net effect of the swap prices would

be,

because some of the utilities do buy
the current

swaps in

analysis,

and they might be able

to buy them for a lower price in the

hypothetical analysis. later , conceivably at a

They would buy . them
lower price.

So that wou~d actually raise
damages, because the but- for world would be

cheaper.

On the other

hand, they would have

had to bear five years of wet O&M in the

meantime, so I suspect the net effect would'
be that the damages would be
BY MS.
POWELL:

lower.

Mr. Graves, do you know wha t type

and by "type" I mean model and manufacture of

casks or canisters Maine Yankee is going

use at ISFSI?
MR.
S KALABAN :

Obj ection.
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CERTIFICATE OF NOTARY PUBLIC

Deborah Larson Hommer, RPR, the officer
before whom the foregoing depositiDn was
taken, do hereby certify that the witness

whose testimony appears in the foregoing

deposition was duly sworn by me; tha t

the

testimony of said witness was taken by me in
stenotype and thereafter reduced to
typewriting under my direction;

that ' said

deposi tion is a true record of the testimony

given by said witness; that I am neither counsel. for, related to, nor employed by
of the parties to the action in which
deposition was

any

this

taken; and, further,

that I am

not a relative or employee of any attorney or

counsel employed by the parties hereto, nor

financially or otherwise interested in outcome of the

the

action.
Notary Public in and

for

My Commission Expires:
August 31 , 2003

the D

i s t r i c t

0 f Co 1 u mb i

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UNITED STATES COURT OF FEDERAL CLAIMS

YANKEE ATOMIC ELECTRIC COMPANY,

t(Q)rP1f
: No. 98-126 C

vs.

Plaintiff,

UNITED STATES OF AMERICA,

Defendant.

(Senior

: Judge Merow)

CONNECTICUT YANKEE ATOMIC POWER:
COMPANY,

vs.

Plaintiff,
: No. 98- 154 C

UNITED STATES OF AMERICA,

Defendant.

(Senior

: Judge Merow)

MAINE YANKEE ATOMIC POWER
COMPANY,

vs.

Plaintiff,

: No. 98-474 C

(Senior

UNITED STATES OF AMERICA, De f endan t .

: Judge Merow)

VOLUME I I I
~:ftM;.

PAGES 445 - 605

Deposition of Frank C. Graves
Washington, D.

Wednesday, November 14 , 2001

Reported by:

Deborah Larson Hommer ' RPR
445

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On page

14 of your report, the

second full paragraph, the last sentence in
there says, "A market that performs in

this
of

manner could be implemented by a last bid
auction procedure or .

could be the result

active, visible bilateral trading.

What do

you mean by " active, visible bilateral

trading"
That could be trading that
facilitated by '

something

like a web- based

bulletin board to let parties interested in
trading post bids and asks for

swaps.

could include information about past
It could actually perform an auction

trades.

itself.

So some sort of informational mediation of

what I S happening in the market is all that
required to get a pretty efficient
MS. POWELL:

solution.

Could you read back

. his answer?
(Reporter read record as requested.
BY MS.
POWELL:

Are you saying that an auction could
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Case 1:98-cv-00126-JFM Document 791-11 Filed 04/16/2004 Page 10 of 17

occur wi thin a bi la teral
MR.

trade?

m sorry?
Vague.

SHAPIRO:

Obj ection.
No.

THE WITNESS:

What I'

~aying is that

sort

of

an exchange mechanism

could be created whereby sellers and buyers
would submit willingness-to- buy and

willingness-to-sell bids,
software could be run
imitates an

and a piece

which,

in effect,

auction, and rank-orders their
them.

willingness -- their relative willingness to

pay to create marriages between

And then afterwards it noti f ies
them of

who married whom.

And people who

participate in that mechani sm could agree to
all pay the price of

the last couple that got

married or they could agree to some other
pricing mechanism.

But they would end up

with bilateral rights exchanges, but they
would enjoy centralized information and
competi tion for the rights.
That sort of

thing happens

for

instance,

in electric transmission rights or
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-Case 1:98-cv-00126-JFM Document 791-11 Filed 04/16/2004 Page 11 of 17

did for a while before there was
early days of

in the

open access.
BY MS. POWELL:

It'

s no t an

uncommon mechanism.

Does your model assume that every
bilateral trade occurs at what you define

the market-clearing price?
MR.

SHAPIRO:

Obj ection.

Vague.

THE WITNESS:

I have quantified

swap prices to my clients as though they
acquired their rights at the marke~-clearing

rice.

And because they weren

1 t

always the

marginal bidder,
often qui te

although they were actually

close,

I ve assumed that

that

would be a feature avail~ble to other bidders

as well.
For purposes of

setting the
out

dates at which my clients would get
managing their
20

pools,

it wouldn' t matter

whether they paid their own bid or paid

the

market- clearing price.
So in terms of

dates

the
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CERTIFICATE OF NOTARY PUBLIC

I , Deborah Larson Hommer, RPR,

the of f icer

before whom the foregoing deposition was

taken,

do hereby certify that the witness

whose testimony appears in the foregoing

depos i tion was duly sworn by me; that the
testimony of said witness was taken by me in
stenotype and thereafter reduced to

typewriting under my

direction;

that said

deposition is a true record of the testimony

gi ven by said wi tness;

that I am neither

counsel for

related to, nor employed by any

of the parties to the action in which

this

deposition was

taken; and, further

that I am

not a relative or employee of any attorney or

counsel employed by the parties hereto,
financially or otherwise interested in

nor

the

outcome of the

action.
Notary Public in and for the District of Columbia

August 31,
JABS REPORTING INC.

My Commission

Expires:

2003
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IN THE U. S. COURT OF FEDERAL CLAIMS
10-.

0:;:-

; ;L ~C - C CERTtfflED MAINE YANKEE ATOMIC POWER CO. CONNECTICUT YANKEE ATOMIC POWER CO.,

~~~E -

COpy

vs.

Plaintiff,

98- 126C 98- 474C 98- 154C

UNITED STATES,

Defendant

Washington ,

D. C

Thursday, January 3, 2002

Deposition of:
FRANK C. GRAVES,
~l.
~i'

the witness, called for examination by counsel for

the defendant, pursuant to notice and

agreement,

commencing at 9:30 a. m., at 1100 L Street, N. W.,

Washington, D.

C., before Linda C. Marshall , RPR, a

Notary Public in and for the District of
18 .

Columbia,

when were present on behalf of the respective

parties:

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down .

That is,

if

you' ve had your fuel removed
so not permanently shut

and taken over by the - -

down, shut down by the power plant.
And how did you derive this $8, 000, OOO?
Where did you get the $8, 000, 000 from?

Well, we interacted extensively with
NAC experts on this to get a sense of

what is an

appropriate number to use for wet O&M

costs.

And

we may have related it to internal budgets as

well.
source.

There I S a footnote saying that that is the

I would be a little loathe to rely on

that as a fact because the
have been prepared early in the process

that footnote may

developing the spreadsheets and not ultimately
consistent with what our best sources for the
data were.
I believe the 8 million is more of

generic number than an attempt to represent the

costs for those three specific

facilities.

Is it the annual O&M costs to run a
spent fuel facility for one year?

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here, item 5, wet O&M cost refers to item 3 in my

input table.

And there, the footnote refers to

the expert report of James Malone.

I f the - - again, if thi s
overall result of your model?

number were to

change, the $8 million, would that impact the

Well, we have to be careful about terms

as to what we mean by overall generalize a little bit from

results. I f you your questions, it
you.

may help formulate other questions for

The big driver of the order in which
pools are accepted from " must-move" removal is
the volume of waste that is " must-move" at each

si te.

That can range from a very small number.

If, for

instance, it I S a full

pool and

it only needs to have one core picked up to stay
in operation.

So in that case, the pool might

only have 10 to 50 metric tons of waste that has
to be removed.

Conversely, if it' s a shut down pool,

it could have 500 to a thousand tons of

waste.

So, potentially, 10 to a hundred times as much

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waste as other kinds of " must-move"

facilities.

So, you recall plants are ranked in

terms of the ratio of their avoidable cost to
the ratio of that number to the amount of volume

that is " must-move"
So that it' s both the numerator and

denominator matter to the

ordering.

The dominator varies by -- as I just
mentioned by about two or more orders of

magni tude across the plants in the sample.
Unless the costs were to vary by a
couple orders of magnitude as well and the
uncertainties surrounding those it

could not

have very much effect on the

outcome.

So, for instance, if we changed this
number to, let' s say, $10 million of wet O&M cost

per year, it would have very, very little effect
on the results in terms of rank order of who gets
ou t

when.
It would have no effect on how soon

everybody gets out, because the program has the

capacity to remove all of the -- to get ahead of

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the " must-move"

requirements by

2002.

So that would still be

true.

And the

rank order of who got out first would probably be
unchanged by changing this number.

Unless you

thought you - -

that you were going to change it

from 8 million to say 80

million.

I f you

change

it by a factor of 10 or 15 to get more because

you think there'

s that much noise in it, then

costs start to matter a

lot.
We'

But in fact that' s implausible.
told by Mr. Pennington that

all likelihood
percent,
maybe

these costs vary by only a few

15 percent plus or minus these numbers across
almost all the pools in the United

States.

So if you' re within shouting distance

of $8 million, changing that inside of the

plausible range will have almost no effect on my

model.
Mathematically, if you were to change
it by a factor of ten, that would make a huge

difference, but that is

implausible.

So as the

rule, the dominator effects dominate the results

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