WISCASSET, Maine — The federal government has agreed to pay Maine Yankee Atomic Power Co. $81.7 million for failing to remove 550 metric tons of spent nuclear fuel that’s been sitting in Wiscasset since the nuclear plant stopped generating power in 1996, funds that will be returned to Maine ratepayers in the future.

The $81.7 million is meant to reimburse Maine Yankee for the costs incurred in storing the spent fuel between 1998 and 2002, according to Eric Howes, a spokesman for Maine Yankee.

Maine Yankee, which began generating power in 1972, was decommissioned in 2005 after an eight-year process. There are currently 550 metric tons of spent nuclear fuel contained within 60 stainless steel, airtight canisters, which, in turn, are buried under concrete, stored in Wiscasset.

It costs Maine Yankee roughly $9 million a year to store the nuclear fuel waste, Howes said.

The federal government is legally responsible for removing and storing spent nuclear fuel from the country’s nuclear power plants, Howes said. The government was to have begun removing Maine Yankee’s spent fuel by January 1998. When it failed to do so, Maine Yankee sued, as did its sister nuclear plants: Yankee Atomic Electric Co. in Massachusetts and Connecticut Yankee Atomic Power Co.

The federal government did not give in easily, however, and the court battle wore on for years. The current development is because the government decided not to appeal a U.S. Court of Appeals decision last May that confirmed the 2010 decision by the U.S. Court of Federal Claims, which included the award of $81.7 million to Maine Yankee.

The government also has agreed to award damages in the amount of $38.3 million and $39.7 million to Yankee Atomic and Connecticut Yankee, respectively, Howes said.

“We are very pleased that after 14 years of litigation, the three companies have recovered for our ratepayers nearly $160 million in costs resulting from the Department of Energy’s failure to remove spent nuclear fuel … from our three sites,” Wayne Norton, president of Yankee Atomic and Connecticut Yankee and chief nuclear officer of Maine Yankee, said in a statement. “These funds, and additional damages claims we hope to recover in the future, will all benefit our ratepayers.”

By “our ratepayers,” Norton is referring to essentially all Mainers because Maine Yankee is owned by a consortium of utilities in New England, with Central Maine Power owning a 38 percent stake, making it Maine Yankee’s largest shareholder, Howes said. While the plant was operating, that meant CMP was entitled to 38 percent of the power it generated, but it was also responsible for 38 percent of the costs, he said.

Bangor Hydro-Electric Co. owns 7 percent, while Maine Public Service Co. owns 5 percent, Howes said.

The decommissioning of Maine Yankee was expensive, as is the continued storage of the spent fuel, according to Tom Welch, chairman of the Maine Public Utilities Commission. Those costs have been, and still are, borne by Maine ratepayers, he said.

“Ever since decommissioning, there’s been a little piece of people’s electricity rates every year that go towards basically maintaining the storage because [the spent fuel] is still kept in Wiscasset,” Welch said.

The $81.7 million Maine Yankee received currently is sitting in a trust fund, Howes said. Maine Yankee is in the process of developing a proposal that will be submitted to the Federal Energy Regulatory Commission for how the funds should be used to lower rates for ratepayers. The Maine PUC and the Maine Office of Public Advocate will also be able to comment on the decision.

Welch said the money, in one form or another, will be returned to ratepayers.

“Basically what happened was ratepayers had money extracted from their pockets for fuel removal and storage. It didn’t get used for that purpose, so they should get that back,” Welch said.

Whether it’s returned in the form of a near-term rate reduction or in future reductions “is a more nuanced question,” Welch said.

Richard Davies, who as Maine’s public advocate represents the state’s ratepayers in these matters, said he and PUC staff would likely meet with Maine Yankee’s representatives next week to discuss how the money will flow back to ratepayers.

“We’ll work with them to get this resolved as quickly as possible,” Davies said.

This is just a first step to Maine Yankee recouping its costs, Howes said. While the $81.7 million only covers the years 1998 to 2002, Maine Yankee has a second case pending with the court for the years 2003 through 2008, in which it’s seeking an additional $35 million. The company plans to file another lawsuit later this year to recoup storage costs incurred from 2008 to the present, Howes said.

Companies like Maine Yankee are only allowed to recoup costs already incurred, not future costs, which is why lawsuits have to be filed every several years, Howes said.

While the recouped costs are welcome news for Maine Yankee, the government’s decision to pay damages still does not do anything to expedite the removal of the spent nuclear fuel in Wiscasset, Howes said.

The federal government had planned to store the country’s spent nuclear waste in Yucca Mountain, but the Obama administration terminated that project in 2009. Since then, a blue-ribbon commission and the U.S. Department of Energy have been working on a plan for the waste.

Welch called the federal government’s handling of the nuclear fuel waste issue “one of the most colossal, politically mismanaged efforts of the century.” Maine Yankee, he said, is “a piece of a very large national problem.”

“The longer-term problem here is there hasn’t been anything approaching a congressional consensus on how to deal with all this spent nuclear fuel,” Welch said. “It’s sort of disappointing because one of the issues it makes difficult is developing new nuclear plants, which in the view of some could be beneficial. It’s difficult to envision building new ones when you can’t figure out what to do with the waste of the old ones.”

However, a DOE report released in January does lay out a strategic plan to deal with the country’s spent nuclear waste, including a pilot interim storage facility focused on removing spent nuclear fuel from shutdown plants sites like Maine Yankee.

This is an encouraging sign, Howes said, yet given the significant bureaucratic hurdles it’s likely that the spent nuclear fuel will remain in Wiscasset “for many years to come.”

Whit Richardson

Whit Richardson is Business Editor at the Bangor Daily News. He blogs about Maine business, entrepreneurs and the economy.