Maine Yankee Atomic Power Co. v. Maine Public Utilities Com'n

• Decision Date: 25 October 1990
• Citation: 581 A.2d 799
• Parties: MAINE YANKEE ATOMIC POWER COMPANY v. MAINE PUBLIC UTILITIES COMMISSION.
• Court: Maine Supreme Court

Page 799

581 A.2d 799

119 P.U.R.4th 574

MAINE YANKEE ATOMIC POWER COMPANY v. MAINE PUBLIC UTILITIES COMMISSION.

Supreme Judicial Court of Maine.

Argued Sept. 18, 1990.

Decided Oct. 25, 1990.

Michael T. Healy (orally), Charles Harvey, Christopher J. Devlin, Verrill & Dana, Portland, for appellants.

Anthony W. Buxton, Preti, Flaherty, Beliveau & Pachios, Augusta, for Indus. Energy Consumer Group.

Peter B. Kelsey, Laurence W. Brown, Washington, D.C., for amici curiae Edison Elec. Institute.

Frances E. Francis, Margaret A. McGoldrick, Barbara S. Esbin, Washington, D.C., for amici curiae Consumer-Owned Purchasers.

James A. Buckley (orally), Maine Public Utilities Com'n, Augusta, for appellee.

Before ROBERTS, WATHEN, GLASSMAN, CLIFFORD, COLLINS, and BRODY, JJ.

WATHEN, Justice.

Maine Yankee Atomic Power Company ("Maine Yankee") appeals the February 22, 1990 order of the Maine Public Utilities Commission ("MPUC") purporting to establish Maine Yankee's cost of decommissioning and to fix the amounts which Maine Yankee must pay annually to its decommissioning trust fund, pursuant to Maine's Nuclear Decommissioning Financing Act ("NDFA"), 35-A M.R.S.A. §§ 4351-4359 (1988).

At the heart of this appeal lies a jurisdictional issue. Maine Yankee maintains that a federal agency, the Nuclear Regulatory Commission ("NRC"), has exclusive jurisdiction over nuclear decommissioning which it exercises in conjunction with the ratemaking agency, the Federal Energy Regulatory Commission ("FERC"). The MPUC, however, asserts that it has concurrent jurisdiction to review and approve any proposed decommissioning financing plan, pursuant to the NDFA. We determine that federal law preempts the NDFA.

Maine Yankee, a licensed nuclear electric generating facility in Wiscasset, is owned by a group of investor-owned electric utilities ("the sponsors") located in Maine, Massachusetts, New Hampshire, Connecticut, and Vermont. Maine Yankee sells to these sponsors, at wholesale, its entire output of electricity on a basis proportional to each sponsor's ownership of the company.

Pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, as amended, the NRC is statutorily mandated "to protect the radiological health and safety of the public." General Requirements for Decommissioning Nuclear Facilities, 53 Fed.Reg. 24018, 24037 (1988). In keeping with this mandate, the NRC promulgated a rule requiring

reasonable assurance that at the time of the termination of operations [of nuclear facilities] adequate funds are available so that decommissioning can be carried out in a safe and timely manner and that lack of funds does not result in delays that may cause potential health and safety problems.

Id. On July 27, 1988, the NRC's general requirements for decommissioning nuclear facilities became effective. Id. at 24018-19.

Although the NRC is not authorized to regulate rates or to interfere with the decisions of state or federal agencies respecting the economics of nuclear power, the NRC is responsible for promulgating "rules prescribing allowable funding methods for meeting decommissioning costs." Id. at 24037 (citing Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Comm., 461 U.S. 190, 212-13, 217-19, 103 S.Ct. 1713, 1726-27, 1729-30, 75 L.Ed.2d 752 (1983)). In setting forth technical and financial criteria for decommissioning licensed nuclear facilities, the NRC took care to clarify the roles of the state public utility commissions and the Federal Energy Regulatory Commission. To FERC the NRC ascribes

the responsibility for setting rates for the transmission and sale (wholesale) of electricity by investor-owned utilities in interstate commerce and authorizes the conditions, rates, and charges for interconnections among electric utilities.... State public utility commissions have the responsibility for setting rates for retail sales of electricity to homeowners and companies doing business in their states.

53 Fed.Reg. at 24037-38 (emphasis added). As a company engaged in the "transmission and sale (wholesale) of electricity by investor-owned utilities in interstate commerce," Maine Yankee is subject only to the jurisdiction of FERC for the regulation of its utility service and rates. The rates fixed by FERC provide for the costs of operating the plant as well as a return through depreciation of Maine Yankee's investment in the plant. Thus, Maine Yankee asserts that FERC has jurisdiction over its decommissioning plan since "decommissioning expenses have historically been and continue to be treated by FERC as depreciation and booked as negative salvage."

On October 5, 1981, Maine Yankee made a rate increase filing with FERC, seeking "to reflect in its rates the estimated costs of decommissioning" its nuclear generating plant. Maine Yankee Atomic Power Co., 20 F.E.R.C. p 61,141 at p. 61,308 (1982). On October 29, 1981, the MPUC filed a notice of intervention with FERC and took the position that Maine Yankee should "supplement or modify its filing with a 'rate schedule' which provides for (1) the billing of decommissioning costs in accordance with the method approved by the M.P.U.C. ... and (2) the segregation of decommissioning funds in a separate account to be used solely for decommissioning purposes." On March 30, 1982, Maine Yankee filed a proposed settlement agreement which attempted to resolve the issues in the subsequent FERC proceeding. Id. Meanwhile, on April 15, 1982, the Maine Legislature enacted the Nuclear Decommissioning Financing Act, now codified at 35-A M.R.S.A. §§ 4351-4359 (1988). The NDFA creates a specific mechanism for establishing a decommissioning financing plan and requires any licensee operating a nuclear power plant in Maine to file a proposed plan with the MPUC for review and ultimate approval. Id. at § 4353(1-3).

On August 3, 1982, FERC issued its order approving the March 30, 1982 settlement agreement and expressing the view, with regard to the NDFA, that there should be "consistency with the states ... to the extent that it allows us to properly carry out our duties under the Federal Power Act." Maine Yankee Atomic Power Co., 20 F.E.R.C. at p. 61,310. The MPUC did not appeal this order. Since that time, Maine Yankee and the other parties to this litigation, including the MPUC, have participated in litigated FERC proceedings in 1985 and 1988. Maine Yankee Atomic Power Co., 31 F.E.R.C. p 61,068 (1985); Maine Yankee Atomic Power Co., 44 F.E.R.C. p 61,368 (1988). In each of these cases, the parties negotiated the appropriate cost estimate and funding level for decommissioning expenses and reached a binding settlement; no appeals were taken.

On September 13, 1982, Maine Yankee filed its proposed decommissioning financing plan with the MPUC; on November 12, 1982, the MPUC notified the company that its filing was incomplete; and on December 7, 1982, the MPUC granted Maine Yankee's request for additional time to supplement its filing. Since then, both parties continued to process the case, but no final plan was ever approved by the MPUC. On August 29, 1983, the MPUC approved a stipulation entered into by the parties as an interim decommissioning financing plan.

On January 15, 1988, Maine Yankee petitioned FERC to modify the period over which it would collect decommissioning costs to 10 years, increase its annual decommissioning charges accordingly, and decrease the level of return on common equity that the company could collect. Maine Yankee Atomic Power Co., 42 F.E.R.C. p 61,307 at p. 61,920 (1988). According to Maine Yankee, these changes "would have permitted the company to fix decommissioning expense based on Maine Yankee's most recent estimate of $178,097,900 and to fund for decommissioning expense at the level of $14,466,467 per year over the course of ten years." On February 8, 1988, the MPUC filed an intervention, making it a party to the proceeding. Id. In its March 15, 1988 order, FERC rejected Maine Yankee's proposed accelerated decommissioning schedule and required the company to "file revised rates, reflecting recovery of decommissioning costs over the nuclear unit's remaining life." Id. at p. 61,923.

On July 27, 1988, Maine Yankee submitted an uncontested settlement agreement which FERC approved on September 20, 1988, establishing a decommissioning cost basis of $167,000,000 and a fixed rate of return on common equity at 12.9%. Main Yankee Atomic Power Co., 44 F.E.R.C. p 61,368 at p. 62,224 (1988). In addition, the parties agreed to a "stay-out" provision prohibiting Maine Yankee from making "a filing to place into effect prior to February 16, 1991, any increase in the level of annual decommissioning charges above that stated in [the settlement agreement]."

On March 20, 1989, Maine Yankee moved that the MPUC approve an amendment to the August 29, 1982 interim decommissioning financing plan which reflected the provisions of the September 20, 1988 FERC order, converting it into an MPUC-approved decommissioning finance plan. On November 17, 1989, hearings began on the issue, and, on November 29, 1989, Maine Yankee, the Public Advocate, and the Industrial Energy Consumer Group ("IECG") ¹ filed a stipulation of the issues in the case. On February 22, 1990, the MPUC rejected the stipulation and Maine Yankee's decommissioning financing plan, finding that "$178,097,900 is the most reasonable estimated cost of decommissioning," and ordered that Maine Yankee increase, effective March 1, 1990, its annual contributions to the decommissioning trust fund by $719,961, for a total contribution of $9,793,904.

On March 23, 1990, the MPUC stated that additional funding amounts required under its February 22, 1990 order must be supplied from Maine Yankee's assets or the assets of the sponsors, and granted a request to stay the February 22, 1990 order pending Maine Yankee's appeal to this Court.

The supremacy clause of the United States...