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

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Case 1:98-cv-00126-JFM Document 791-10 Filed 04/16/2004 Page 1 of 17

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IN THE U. S. COURT OF FEDERAL CLAIMS

- x
YANKEE ATOMIC ELECTRIC CO,,

\,\)~"t

MINE Y~E ~OOIC P~R

m., ,

CONNECTICUT YANKEE ATOMIC POWE
CO. ,

Plaintiffs:
vs.
UNITED STATES OF AMERICA

: No. 98-126C

98- 474C 98- 154C

Defendant.

Washington ,

D. C.

Tuesday, August 26,

2003

Deposition of:
DR. JOHN BARTLETT

called for examination by counsel for the

defendant, pursuant to notice and

agreement,

commencing at 9:30 a. m., at Department of Justice,

1100 L Street N. W.,

before Virlana Kardash, RPR,

CSR, a Notary Public in and for the District of

Columbia, when were present on behalf of the
~"- 7);'

respective parties:

1825 I Street , N. Washington , D.

20006

JABS REPORTING , INC www.jabsreporting. com

(202) 296- 6102 (888) 805- 5227

0124

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No.
Do you know,
accept one MTU sir, if

if DOE were to

let me clarify.

You know what I

mean when I say MTU?
metric tons uranium.

Yes.

My definition of that i

Is that yours as well?

Uh- huh.
I need yeses and noes from you, by the

way.

A friendly reminder.

Sorry.

Yes.

If DOE were to accept one MTU of spent

nuclear fuel in 1998 by January 31st, 1998, would i
have been in compliance with the contract?

I don't know whether it would be
considered in compliance or not.

Do you know why the standard con trac
doesn I t

t

give a date by which all the spent fuel mus

be accepted?

No.
You

also indicate in this sentence that

we I re talking about in your report that the contrac
doesn I t

speci fy a sequence in which spent fuel

should be accepted.

Do I have that right?

0125
1825 I Street , N. Washington , D.
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That 1 S right.
Can you explain that opinion?
Which opinion?

Your opinion that the contract does not
specify a sequence in which spent fuel should be
picked up.

Oh.

Well, it describes the OFF

approach,

as it is called.

Explain for us what you mean by the OFF

approach.
Oldest Fuel First is a protocol that it

describes as a basis for receipt of spent

fuel.

And is the OFF method not -- do you not
consider that a sequence by which spent fuel should
be accepted?
It is a sequence.

It is a sequence, yes.

Then what do you mean when you say that
the contract does not specify a sequence?

It specifies the OFF concept, which it
could interpreted as a sequence if it was followed

rigorously.
Can it be interpreted in another way?

0126
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JABS REPORTING , INC

156

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CERTIFICATE OF NOTARY PUBLIC

I, Michelle Bulkley,

the reporter before

whom the foregoing deposition was taken, do hereby
certify that the witness whose testimony appears in
the foregoing deposi tion was duly sworn by me; that
said depos

i tion is

true

record

of

the tes t imony
of

gi ven by said witness,
for, related
to, nor employed by any

that I am nei ther counsel

the parties

to the action in which this deposition was

taken;

and, further, that I am not a relative or employee
of

any at torney or counsel
of

employed by the parties

hereto, nor financially or otherwise interested in
the outcome

the ac

tion.

1Jid~
Notary Public in and for the
District of

Columbia

My Commission Expires;

April 14,

2007

;~l~

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. 8, 14

Case 1:98-cv-00126-JFM

Document 791-10

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, jb~\13 IkL
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Department of Energy
Washington, DC 20585 September 28 , 1995

$IJ~

Jyf?

Or. Andrew C. Kadak President and Chief Executive Officer Yankee Atomic Electric Company 580 Main Street Bolton, Massachusetts 01740- 1398
Dear Or. Kadak:

Thank you for your letter of September 7, 1995, expressing your thoughts on the viability of the exchange process for Delivery Commitment Schedules and restating your position on the Department. s obligation to afford priority waste acceptance to the spent fuel from Yankee Atomic Electric Company s Rowe

power station.

While your letter describes circumstances that you believe will impede the exchange of delivery commitment schedules, we continue to believe that once the Federal waste management system is operational, the~xchange provision will be exercised by Purchasers as OriginallY anticipated. Article V. E of the Contract for the Disposal of Spent Nuclear uel and/or Hiqh Level Radioactive Waste (Standard Contract) grants Purchasers the right to exchange. DOE concurrence, approved delivery commitment schedules. This provision was included in the Standard Contract in response to comments received during the Standard Contract rulemaking, in order to allow Purchasers greater flexibility in managing their inventories of spent fuel. We believe the exchange provision will allow industry to optimize the allocation of waste acceptance capacity to meet individual utility needs, without the overt

~th

involvement of the Department.

. With respect to the Department' s ability to grant priority acceptance of the letter of July 13, spent fuel from your Rowe power station, as I noted in mY 1995, to State Representative Herren. there are statutory limits on the amount of spent fuel that the Department can accept prior to the opening of a permanent reposi tory. Consequent ly . the Department does not have the abi 11 to grant priority acceptance to shutdown reactors without adversely affecting other utiJities. The Congress is Qebating the issue of centralized interim storag~ of spent nuclear l1:1e GuLcu;'ae of this debate may invo1ve , new policy direction for this program, and may include policy guidance on the pri ori ty acceptance of spent fuel from shutdown reactors.

Fuel.

Sincerely.

i&.
0128

Office of Civilia Ra ioactive Waste Management

Printed with IlOY ink an recycled paper

YDK- 006- 1064

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Case 1:98-cv-00126-JFM

Document 791-10

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Page 6 of 17

Ef?IS
&nsulting,

LLC

Expert Report of R. Larry Johnson

Yankee Atomic Electric Company
United States of America
Federal Claims

In the

S. Court

of

No. 98- 126C(Senior

Judge Merow)

Prepared By:

R. Larry Johnson , CPA
-"'f/

February 19, 2004

0129
U710 Plaza America Drive , Suite 300 . Reston , VA 20190-4745 Phone (703) 654- 1400 . Fax (703) 796- 1200

20H01 Bisclyne Blvd. , Suite 301 . Avemura , FL 33180- 1422
Phone 005) 705- 9960 . Fax (305) 705-9961

www. verisconsuiting. com

7500 Old Georgetown Rd" Suite 700 . Bethesda, MD 20814- 6133 Phone 001) 656- 0040 . Fax 001) 656- 0518

..............................,.....,......... ............................................ ................................... .". ~.""..""""""". .,..:...... ,............................ ... ..........:............. ~. ..... .......... ...,.. ... ........................................................' .....~..... ~.,..........................,........ ....... .......................... """'.'.." ..... ...... .... .................................. :... .... ..,..,.................................................................. "............ ~............. ...............,................................. " ............. ............................. ~...... .................. ;............. ......... "....,...................,.............. ;..............................,. ;......... : ...... .. .......... ....................,............................................ ...... ,......,........,................ :....... " ;.... .............,................. ................

Case 1:98-cv-00126-JFM

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TABLE OF CONTENTS

Introduction ..............,..........................

1-4
...... 5-

Summary Conclusions ..""".'.....'.'...."'..
Detailed Findings:
Scenario 1.................. .............."...,.........,..
Scenario , 2............... ..... .......... ..

~ ..... 9- 10,

Scenario 3 ...............................................................
Scenaiio 4.... o". - Scenario ' 5
~.o"". ..... .

11. 13-22 '
: 23

Alternative Acceptance Models for GTCC and Failed Fuel ......................................... 24-27 ~....... 28 Discounting ..............
Summary Calculations ...............................,.....,....
Exhibits .".. ............................
""""""".".""'.."'" 30-

Documents Considered. ..........,..........,................................,
Cuuiculum Vitae ofR Larry Johnson..,.......
Compensation ............................................................."..,...

........ 103

04- 11 0
,.... 111

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DETAILED FINDINGS
Scenario

It is assumed that in the ' non-breach w.orld , ~e DOE would have picked
which the DOE' s acceptance is based on the 1998 DOETSLCC.

Maine

yankee s s,peilt fuel in accordance With the 1995ACR rates as contrasted to the breach world in

Mr. Abbott has reported that Wldertheseassumptions , and 1:Urther assuming the wet
storage of the Spent fuel ,.

there would be no incremental costs of storage of spent . fuel in

the

breach world over that experience in the non-breach world, arid consequently, no damagesasa
res1.l1t of the DOE partial breach. '

Mr. Abbott has further reported that under these assumptions , and further assuming the

, dry storage of the spent fuel , there might be ' greater costs in the breach world th~ that
experienced in the non-breach
world. However;, in -recognition

of the results of Mr: Abbott'
occur in the \wet storage

analysis that no incremental costs (and, therefore no -damages)
decision to dry store and not as a result of the DOE partial breach.

assumption , as reported above, any such costs in the dry storage assumption are as a result of the

0131

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Case 1:98-cv-00126-JFM Document 791-10 Filed 04/16/2004 Page 9 of 17

Scenario

Yankee Atomic could have Stored the Spent Fuel in the Viet Pool for the duration of the
period prior

to DOE acceptance. Dr. Wise s calculatioftS of damages are founded upon the

~sertioIi that the partial, breach by DOE required thatYankee Atomic construct an ISFSI. Dr.
Wise s 2003 Report reflects the following:

But for the failure of DOE to accept an~ remove Yankee Atomic s spent fuel in
" accordance with the contract, Yarucee Atomic would not have incurred costs related to the design and construction of the ISFSl'

,6

Dr. Wise then measured damages as the differente betwee~ w~at Yankee.Atomic asserted it ,
would cost to construct and operate its ISFSI as well as to fe-rack and operate its Wet Pool-prior

to transfer of the spent fuel from the Wet Pool to the ISFSI, as contrasted with what it is asserted it would have cost Yankee Atomic to operate theW et Pool , prior to a non-breach fuel-out date of
January 1999.

However, Mr. Abbott has opined that Yankee Atomic could have simply continued to
store the spent fuel in its Wet Pool from the non-breach fuel out schedule through the date the

DOE removes the spent fuel. Mr. Abbott' s conclusions in that regard are detailed in his 2004
report.
Accordingly, under this scenarIO , the damages

that Yankee Atomic incurred

as a

consequence of the DOE partial breach are limited to the duration of additional years for which

the spent fuel would have continued to be stored in the Wet Pool at the annual operating cost of
the Wet Pool.

6 Page 4 of Dr. Wise Expert Report dated March 28 , 2003

0132

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SUMMARY CALCULATI9NS '
I have prepared the foll~wing table to summarize the damage scenarios I have describe4

in this report in both constant dollars and 2003 present value dollars. I have prepared" this table

by, applying the same ~sk~adj~ed discount rates and' inflation assumptions as Dr. Wise; with
, the exception that I have applied theserates' on a pre~tax basis.
Mid-2002
Scenario
.'Scenario 1 .
Constant Dollars

Present Value in 2003 Dollars

" Wet Storage , Dry Storage
, Scenario 2
, With Non-Acceptance

-zero";

-zero- '

, -zero-

-zero$ 56, 243

, $74 160 242
of GTCC
-zerozero- '

with Non-Acceptance ofGTCCand Failed Fuel

938 -zero-zero- ,

Scenario 3
with Noll-Acceptance of GTCC with Non-AcceptanceofGTCC and Failed ,Fuel
'i.

942 154 ' 161 908 161 908

333 368 256 631 360 780
89, 565 195 831 107 120 293

Scenario 4
with Non-Acceptance of GTCC with Non- Acceptance of GTCC and Failed Fuel
Scenario 5

220; 955 43,204 088 37,443 543
693 669 533 427 227 118)

with Non-Acceptance of GTCC with Non-Acceptance ofGTCC and Failed Fuel

813 528 569 590 948, 668

These calculations have been made using only the risk~adjusted

discount rat~. It

is my

opinion that the risk,.adjustedrate is appropriate to the measurement of damages; this opinion is
shared by Dr.

Wise , as reflected in the following testimony:

These cash flows are, not , 100
flows.

theoretical finance perspective , you should apply a risk adjusted rate to these cash

32

percent devoid of market risk. So; from

a strictly

In the event that it is determined that the risk- free rate should be applied to detennme the present
value measurements of damages , Exhibit' 39 presents the alternative measurement of damages on
that basis.
32 Wise

Deposition, 8/26/02 p, 212

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UNITED STATES COURT OF FEDERAL CLAIMS

YANKEE ATOMIC ELECTRIC COMPANY,

t~tP'V
: 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 AMgRICA, De f endan t .
MAINE YANKEE ATOMIC POWER
1 0
COMPANY

Senior

: Judge Merow)

, 11

vs.

Plaintiff,
Defendant.

: No. 98-474 C

(Senior

UNITED STATES OF AMERICA,

: Judge Merow)

VOLUME I
'l/3;' ',i,,

, 14

PAGES 1 - 235

Deposition of Frank C. Graves

Washington, D. C.
Monday, November 12, 2001

20

Reported by:
J;, "

Deborah Larson Hommer , RPR

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disapprove a swap because of the location of

the fuel, the spent fuel?
MR.

SHAPIRO:

Obj ection.
I don
I t

Vague.

THE WITNESS:

know what

constitutes a sufficient criterion for them
to wi

thhold.

I assume it would have to be a

material inconvenience to the program
creating costs greater than the savings
would have been achieved by the private

that

parties for their preferred

they'

re making total system

order, otherwise costs go up for

the sake of minimizing their portion of the

costs.

I don't think that be would be a

legitimate execution of the
BY MS.
POWELL:

program.

You don't know the criterion under
which DOE would approve or disapprove

exchanges?
MR.

SHAPIRO:

Obj ection.

Vague.

THE WITNESS:

I don't know 0

any formal description of the decision
criteria that DOE would

apply.

I do know
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that Daniel Dreyfus wrote that letter to

Dr. Kadak explaining that he expected it to be a bias toward approval of utility swaps,

not a bias against them.
meaning they won
1 t

So I interpret

that

be unreasonably

disallowed.
BY MS.
POWELL:

And, again, Ilm not sure the recor4

is clear on your response when I asked you

about whether access to railways or ports or
highways, whether that would have any impact
on DOE' s decision to approve or disapprove an

exchange.

Again, you gave me a long

answer,

but I guess I I m

or " no.

Would

looking for the simpler " yes" acces s, again, to highways,
would that impact DOE I

ports, railways,
exchange?
MR.

decision whether to approve or disapprove an

SHAPIRO:

Obj ection.

Vague.

THE WITNESS:

It'

s hard for me

to make a distinction between fuel location
and access to

highways,

et cetera.

So I
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CERTIFICATE OF NOTARY PUBLIC

I, Deborah' Larson Hommer, RPR,

the officer
witness
tha t

before whom the foregoing deposition was

taken, do hereby certify that the

whose testimony appears in the foregoing
deposi tion was duly sworn by me;

the

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

deposition is a true

gi ven by said

wi tness

said record of the testimony that I am nei ther
tha t

counsel for

related to, nor employed by any

of the parties to the action in which deposition was

this

taken; and,

further, ~hat I am

not a relati~e or employee of any attorney counsel employed by the parties hereto, nor financially or otherwise interested in
outcome of the

the

action.
Notary Public in and for the District of Columbia

My Commission Expires:
ug us t 3 1,
2 0 0 3

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UNITED STATES COURT OF FEDER
k~~

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\8) (lJ)

YANKEE ATOMIC ELECTRIC COMPANY,

.X
: No. 98- 126 C

vs.

Plaintiff

UNITED STATES OF AMERICA,

Defendant.

Senior

: Judge Merow)

CONNECTICUT YANKEE ATOMIC POWER:
COMPANY,

vs

Plaintiff,
: No. 98-:-

UNITED STATES OF AMERICA,
, Defendant.

Senior

154 C

: Judge Merow)

MAINE YANKEE ATOMIC POWER
COMPANY,

vs.

Plaintiff,
Defendant.
VOLUME

: No.

98.;..474 C

, (Senior

UNITED STATES OF AMERICA,

: Judge Merow)

PAGES 236 - 444

Deposition of Frank C. Graves

Washington, D. C .
Tuesday, November 13, 2D
01

Reported by:

Deborah Larson Hommer, RPR
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Connecticut Yankee and Maine Yankee

and they

get out around 2001 and 2002.
So if they had to wai t ten

years I they would get out 2006 and 2007.
I guess Yankee Atomic gets out in 1980 to
1 9 9 9 'I

And

and that 1 s a

couple of years beyond

their two- year cooling

period,

they would

have probably gotten out about 2001 with a

ten- year cooling period.
shut down in 1991.

And I believe they

How would specifically the results
of your '

analysis
MR.

change in this hypothetical?
S KALABAN :

Obj ection.

Vague.

Asked and

answered.
The resul t

THE WITNESS:

produce is the out- dates for those

that I units,

which are all before 2002, on or before 2002

under the five- year cooling assumption.
Under the ten- year
BY MS.

cooling assumption

only

Yankee Atomic would get out before 2002.
POWELL:

Would the change in the cooling
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period from five to ten years in this current
hypothetical, would that also affect the

other utilities

the other participants
equenca model?

and,

there fore, your economic
MR.
S KALABAN :

Obj ection.

Vague.
THE WITNESS:

Your predicate was

that Yankee Atomic had this problem.

fact,

I actually extended it to Maine and

connecticut in my

answer.

So perhaps I

overanswered.
BY MS. POWELL: '

No.

Actually my hypo was each of

the Yankee plants,

so -ones, then

But if they' re the only

it wouldn 't affect the other'

s willingness to

get out.
So they I

re

it would have no

impact whatsoever, the cooling period,

for

the Yankees
MR.

SKALABAN:

Obj ect ion.

Vague.
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