* Managing Editor, Boston College Environmental Affairs Law Review, 2000–01.
1 See generally P. Barker, Who Pays? An Analysis of the Allocation of the Costs of Canceled Nuclear Plants After Duquesne Light Co. v. Barasch, 50 Ohio L.J. 999 (1989) (describing how a nuclear utility covers its operating expenses). The costs of construction, maintenance and decommissioning are incorporated into a utility’s base rate and are amortized over a period of time. As long as the rate is reasonable and fair, a utility consumer must pay it. See Duquesne Light Co. v. Barasch, 488 U.S. 299, 310 (1988); Federal Power Co. v. Hope, 320 U.S. 591, 602 (1944) (holding that a rate must be “just and reasonable”); Smyth v. Ames, 169 U.S. 466, 546 (1898). Additional evidence indicates that courts will only interfere if the rate order does not compensate a utility. See Barker, supra at 1012.
2 Twenty-four states have deregulation laws on the books. Legislative Affairs (visited Nov. 19, 1999) <http://www.nado.org/legaffair/utility> [hereinafter www.nado.org].
3 H.R. 1828, 106th Cong. (1999). The Comprehensive Electricity Competition Act, H.R. 1828, was introduced to the House on May 17, 1999 and is currently in committees.
4 See generally Safe Energy Communication Council, The Great Ratepayer Robbery: How Electric Utilities Are Making Out Like Bandits (1998) (describing how utilities are taking advantage or ratepayers) [hereinafter The Great Ratepayer Robbery]. Ever since deregulation has been discussed as a real possibility, consumers have begun to question the legitimacy of the regulation requiring ratepayers to pay for certain costs.
5 See id.
6 See Energy Issues/News: Historical Background (visited Dec. 15, 1999) <http://www.eei. org/issues/history.htm> [hereinafter eei history]. In 1898, it was proposed to the National Electric Light Association that electric companies be regulated. See id. By 1916, 33 states had regulatory agencies. See id.
7 See Electric Power: Deregulation and the Public Interest 4 (John C. Moorhouse ed. 1986).
8 See Electric Power, supra note 7, at 4; Margaret Jess, Restructuring Energy Industries: Lessons from Natural Gas (visited Dec. 15, 1999) <ftp.eia.doe.gov/pub/oil_gas>.
9 See Jess, supra note 8.
10 See Electric Power, supra note 7, at 4.
11 Deregulation (visited Dec. 15, 1999) <http://www.energyland.net/deregulation/ intro.as> [hereinafter Deregulation].
12 See eei history, supra note 6.
13 See id. Companies used different equipment, voltages and frequencies. See id.
14 See Deregulation, supra note 11.
15 See Electric Power, supra note 7, at 43. Some people doubt whether the electric utilities were ever a natural monopoly. See id.
16 Adam D. Thierer, Electricity Deregulation: Separating Fact From Fiction in the Debate Over Stranded Cost Recovery (visited Dec. 15, 1999) <http://www.heritage.org/library/ categories/regulation>.
17 See Charles F. Phillips Jr., The Regulation of Public Utilities: Theory and Practice 109–10 (1988).
18 See id. at 110.
19 See id. at 111.
20 See id.
21 See id.
22 See Phillips, supra note 17, at 110.
23 See id. at 109–10.
24 See id. at 110.
25 See id.
26 See id.
27 See Thierer, supra note 16.
28 See Phillips, supra note 17, at 110.
29 See Steven Mark Cohn, Too Cheap to Meter: An Economic and Philosophical Analysis of the Nuclear Dream 17 (Roger S. Gottlieb ed. 1997).
30 See id. at 17.
31 See id.
32 See id.
33 See id. at 69.
34 See Cohn, supra note 29, at 17.
35 Id. at 17–18.
36 Id. at 18. In 1964, only 22% of those surveyed agreed with the statement, “You cannot trust government to do right most of the time.” Id.
37 Id.
38 See id.
39 See Cohn, supra note 29, at 18. Students for a Democratic Society declared, “Our monster cities, based historically on the need for mass labor, might now be humanized . . . by nuclear energy . . . .” Id.
40 See id. at 18.
41 See id.
42 See id. at 69. Some believed the demand for electricity was expected to increase by approximately seven percent annually for the foreseeable future. See Richard J. Pierce, Regulatory Treatment of Mistakes in Retrospect: Canceled Plants and Excess Capacity, 132 U. Pa. L. Rev. 497, 500 (1984). Others believed that electricity sales would continue to double every decade. See Richard Goldsmith, Utility Rates and Takings, 10 Energy L.J. 241, 241 (1989).
43 See Gregory B. Enholm & J. Robert Malko, Electric Utilities Moving into the 21st Century 15 (1994). This projected growth was never realized. In fact, sales for electricity fell from six to eight percent to two percent. See Cohn, supra note 29, at 15. Another result of the forecasted increase in electric sales was that the nation’s electric utilities began an ambitious program of expansion. See Goldsmith, supra note 42, at 241. In 1967, the Atomic Energy Commission (“AEC”) foresaw 1000 nuclear plants on line in the United States by the year 2000. See Cohn, supra note 29, at 127.
44 See infra notes 45–46 and accompanying text describing nuclear power as a panacea.
45 Leigh A. Riddick, Upside Down: Who Should Bear the Unanticipated Costs of Nuclear Decommissioning?, 132 No. 8 Fortnightly 31.
46 See Cohn, supra note 29, at 19. While there was opposition to nuclear power, “[t]hese countercurrents were submerged as nuclear promoters assembled a critical mass of social support for nuclear technology and subsequently constructed assessment centers in industry, the National Laboratories, and nuclear engineering departments that were dominated by technological aesthetics congenial with nuclear power expansion.” Id. at 20.
47 See id. at 63.
48 See id. at 63–83.
49 See id. at 63 (1990 dollars).
50 See id. While government aid influenced utilities to construct nuclear power plants, the decision to build a plant was up to the utility. See Pierce, supra note 42, at 508. Furthermore, the utilities had a strong economic incentive to construct nuclear power plants. See The Great Ratepayer Robbery, supra note 4, at 19. In some instances, utilities litigated to force regulatory agencies to allow them to build plants. Id.
51 See Cohn, supra note 29, at 75. This government cost reduction kept people from realizing the full cost of nuclear power. See id.
52 See id.
53 See Enholm & Malko, supra note 43, at 236.
54 See Thierer, supra note 16.
55 See Cohn, supra note 29, at 69.
56 See id. at 127.
57 See Enholm & Malko, supra note 43, at 13.
58 See id. at 13–15.
59 See Michael R. Lettrich, Popowsky v. Pennsylvania Public Utility Commission: The Supreme Court Holds That the Costs of Decommissioning TMI-2 may be Classified as “Operating Expenses” Properly Chargeable Consumers, 5 Widener J. Pub. L. 865, 865 (1996).
60 See Enholm & Malko, supra note 43, at 16.
61 See id. at 15. By the mid-1980s, forecasted growth had declined from six to eight percent to around two percent. See Pierce, supra note 42, at 503.
62 See Duquesne, 488 U.S. at 302–03; Pierce, supra note 42, at 502. Many utilities claim that the decision to build a nuclear plant was reasonable and prudent.
63 See Duquesne, 488 U.S. at 303. This is the argument made by most utilities.
64 See id. at 302–03.
65 See id. at 302.
66 See id. at 303.
67 See id.
68 See Cohn, supra note 29, at 143. Steven Mark Cohn, author of Too Cheap to Meter, disagrees with this superficial analysis of the decline of nuclear power. See id.
69 Id. at 143.
70 See id.
71 See id. at 22–23.
72 See id. at 17, 54.
73 See Cohn, supra note 29, at 143; see also supra notes 59-64 and accompanying text.
74 See Cohn at 22. “Coal reserves in the U.S. are ample for centuries.” Id.
75 See id.
76 Id.
77 See id.
78 See supra notes 74–77 and accompanying text.
79 See Cohn, supra note 29, at 24.
80 See id. at 25.
81 See id. at 23.
82 See id. at 17.
83 Id. at 23–24.
84 See Cohn, supra note 29, at 53.
85 See id.
86 Id.
87 See id.
88 Plant construction, maintenance, and decommissioning are a few examples of expenses.
89 See Barker, supra note 1, at 999–1000. Technically, “amortization is the process in which capital outlay is recovered in installments by converting the depreciation in value of a capital asset into a current expense, with the entire amount being recouped by the end of the amortization period.” Id. at 1001.
90 See id. at 1001.
91 See id. at 1000.
92 See Duquesne, 488 U.S. at 613–14. In this case there was a question as to whether certain operating expenses have been prudently incurred. See id.
93 See Barker, supra note 1, at 1001.
94 See id.
95 See id.
96 See id.
97 See id. at 1003.
98 See Barker, supra note 1, at 1001.
99 Id. The used and useful rule is a “bedrock principle of public utility rate regulation. It requires that costs associated with electric power plants be paid by the ratepayers who benefit from the plant.” See Lettrich, supra note 59, at 868. Whether a cost is used or useful has been the topic of much litigation but is outside the scope of this article.
100 See The Decommissioning Crunch (visited Nov. 11, 1999) <http://www.bwgi.com/ energyarticle.html> [hereinafter The Decommissioning Crunch].
101 See 10 C.F.R. § 50.2 (2000); see also Staff Responses to Frequently Asked Questions on Decommissioning Nuclear Power Reactors (visited Nov. 12, 1999) <http://www.nrc.gov/NRC/ NUREGS/SR1628/part06.html> [hereinafter Staff Responses].
102 See Staff Responses, supra note 101.
103 See The Decommissioning Crunch, supra note 100.
104 See id.
105 See Decommisioning (visited Nov. 11, 1999) <http://www.greenpeace.org/_commons /no.nukes/decommi.html> [hereinafter Decommissioning]. Decommissioning costs are highly speculative because the detail and sophistication employed in developing an estimate varies greatly and a lack of standardization makes comparison difficult.
106 See id.
107 Bruce Biewald & David White, Stranded Nuclear Waste: Implications of Electric Industry Deregulation for Nuclear Plant Retirements and Funding Decommissioning and Spent Fuel (visited Nov. 19, 1999) <http://www.citact.org/nucrep.html>. Many plants close prematurely due to their bad financial state, resulting from poor management decisions. See The Great Ratepayer Robbery, supra note 4, at 1.
108 See Gary M. Becker, Surviving Nuclear Decommissioning, 136 No. 13 Pub. Util. Fort. 22, 22 (1998); U.S. NRC Information Digest, app. B at 103–04 [hereinafter NRC Information Digest].
109 See NRC Information Digest, supra note 108, app. B at 103–04. Many plants close down before the expiration of their license because of poor management. See id.
110 See Biewald & White, supra note 107.
111 See 10 C.F.R. pt. 30 (1975); 10 C.F.R. pt. 50 (1963).
112 See Biewald & White, supra note 107.
113 See Regulatory Analysis on Decommissioning Financial Assurance Implementation Requirement for Nuclear Power Reactors, 10 C.F.R. § 3.2.2.
114 See Biewald & White, supra note 107.
115 The used and useful rule is a “bedrock principle of public utility rate regulation. It requires that costs associated with electric power plants be paid by the ratepayers who benefit from the plant.” See Lettrich, supra note 59, at 868.
116 If a ratepayer is required to pay after a plant is canceled, then they are not paying for services received. Some argue that it is fair to require ratepayers to continue to pay after a utility shuts down because they are essentially still paying for a service—the safe closure of the plant. This argument misses the mark. Ratepayers have already been paying for the service of decommissioning through their prior rates. It is no fault of the ratepayer that a utility makes the decision to shutdown prematurely and causes it to lose its security. If the utility makes the unilateral decision to prematurely shutdown, its investors should bear the burden of that decision. Furthermore, it can be argued that ratepayers have already paid their share of the utility’s costs. For those nuclear plants that cost several billion dollars to construct, it is not accurate to say that consumers bearing the brunt of those construction costs are “benefiting” as a result of receiving the excessively high priced electricity from the facility. See Biewald & White, supra note 107; Pierce, supra note 42, at 504–06. After all, nuclear power, which was once believed to be less expensive than conventional power, is typically more expensive. See Riddick, supra note 45, at 1.
117 See “Stop the Bailout” Coalition Statement/Participants, Stop the Bailout!: Don’t Charge Consumers for Utilities’ Past Mistakes (visited Dec. 15, 1999) <http://www.local.org/ stopbail.htm> [hereinafter Stop the Bailout!].
118 Pierce, supra note 42, at 508.
119 See id. at 510.
120 See id. at 498.
121 See Barker, supra note 1, at 999. Additionally, each abandoned project costs $50 million.
122 See id. The author believes that utilities should be allowed to recover all costs of canceled plants. However, ratepayer organizations contest this view. See generally Stop the Bailout!, supra note 117.
123 See Pierce, supra note 42, at 511.
124 See id. at 511–12.
125 See id. at 512.
126 See id. A plant that was canceled before it went on line cannot be seen as used and useful since it never produced a service.
127 See Pierce, supra note 42, at 511–12.
128 See id. at 512. The belief that the decision to build new plants was reasonable supports the notion that ratepayers should compensate the utilities for their investment decisions. This notion, analyzed in Section V of this article, has been challenged by Steven Mark Cohn. See supra notes 71-89.
129 See Barker, supra note 1, at 1002. Courts have found the decision to build a nuclear plant was reasonable and prudent based on the popular misconception that electric sales were going to increase. See Duquesne, 488 U.S. at 303–04. However, even at that time, this popular belief may not have been reasonable. See supra notes 62-68.
130 See Thierer, supra note 16. Stranded costs actually include the costs of decommissioning canceled plants, and any other expenditures or investments of the utility that will not be recoverable when the plant lowers its rates in a competitive market.
131 See id.
132 See www.nado.org, supra note 2.
133 See Thierer, supra note 16.
134 See id.
135 See generally Energy Issues/News, Recovering Transition Costs: Key to Advancing Electricity Competition (visited Dec. 15, 1999) <http://www.eei.org/issues/comp_reg/power6.htm> [hereinafter eei recovery].
136 See id.
137 See id.
138 See id.
139 See id.
140 See eei recovery, supra note 135. This assertion is contested. Some sources claim that the other industries did not recover transition costs. See Stop the Bailout!, supra note 117.
141 See eei recovery, supra note 135.
142 See id. Existing utilities argue that they will be at a disadvantage because of their former status as regulated utilities. See id. Conversely, new firms contend that they will be disadvantaged because “the cost of capital (or the cost of raising or borrowing money for firms) would likely be artificially lower for firms enjoying generous stranded cost recovery, which would mean new rivals would have a more difficult time raising the money needed to compete with the incumbent utilities.” See Thierer, supra note 16. Thus, regardless of the view, a difference in financial status between new and previously regulated utilities will exist.
143 See Thierer, supra note 16.
144 See eei recovery, supra note 135.
145 Id.
146 See supra notes 16-28; see infra notes 149-153 and accompanying text.
147 See eei recovery, supra note 135.
148 See Thierer, supra note 16. A recent poll conducted by Research/Strategy/ Management Inc. for the Sustainable Energy Coalition shows that seventy percent of the respondents believe that utilities should be responsible for their own inefficient past investments. See id.
149 See id.
150 Id.
151 See id.
152 Thierer, supra note 16. “Because regulatory commissions across the United States gradually came to the unstated conclusion that it was more important to protect the health of the companies they regulated than the interests of customers, an entitlement mentality was born and nurtured among the utilities . . . many utilities have come to believe they have a right to be compensated for all their inefficient or unprofitable investments.” Id.
153 See id. “Because so many commissions have allowed utilities to amortize their expenses by raising prices on their captive customer base at will, many utilities have come to believe they have a right to be compensated for all their inefficient or unprofitable investments.” Id.
154 See id.
155 Id. This test was approved by Dr. Jake Haulk, Research Director for Allegheny Institute for Public Policy. See id.
156 See id.
157 See Thierer, supra note 16.
158 See id.
159 See id. The new utilities will be more fiscally sound because they will not be relying on the false security created by regulation. See supra notes 47-55 and accompanying text.
160 See Thierer, supra note 16.
161 See eei recovery, supra note 136.
162 See Electric Power Deregulation (visited Dec. 15, 1999) <http://www.pitneysoft.com/ products/SWdereg.html> [hereinafter pitneysoft].
163 See id.
164 See Comprehensive Electricity Competition Plan (visited Dec. 15, 1999) <http:// www.home.doe.gov/policy/ceca.htm> [hereinafter Plan].
165 See Electricity Deregulation, a Current Event (visited Nov. 19, 1999) <http://www. About.com> [hereinafter Current Event].
166 See Plan, supra note 164.
167 See id.
168 See Current Event, supra note 165.
169 See Powering a Generation: Understanding Deregulation #1: Restructuring or Deregulation? (visited Nov. 21, 1999) <http://www.si.edu/nmah/csr/powering/dereg 1.html> [hereinafter Powering a Generation].
170 See Powering a Generation, supra note 169. QFs are independent power producers under PUPRA. See Thierer, supra note 16.
171 See Current Event, supra note 165.
172 See id.
173 See www.nado.org, supra note 2.
174 See Powering a Generation, supra note 169.
175 See id.
176 See id.
177 See id.
178 42 U.S.C. § 13201; 16 U.S.C. § 797; 25 U.S.C. § 3505.
179 See www.nado.org, supra note 2.
180 See id.
181 See id.
182 That is the end result of requiring utilities to open their transmission lines to other producers.
183 See www.nado.org, supra note 2.
184 See id. at 6.
185 See Plan, supra note 164.
186 See id.
187 See H.R. 1828, 106th Cong. (1999).
188 See Plan, supra note 164.
189 Id.
190 See id.
191 See id.
192 Id.
193 See Jess, supra note 8. “FERC has ruled that electric utilities should recover 100% of their legitimate and verifiable stranded wholesale costs.” Id.
194 See Plan, supra note 165.
195 See id.
196 See generally Status of State Electric Industry Restructuring Activity as of Dec. 1, 1999 (visited Dec. 15, 1999) <http://www.eia.doe.gov/cneaf/electricty/chg__str/regmap> [hereinafter Status of State].
197 See generally Plan, supra note 165.
198 See www.nado.org, supra note 2.
199 See Status of State, supra note 197.
200 See id.
201 See id. Alabama, Texas and Massachusetts allow for 100% of stranded cost recovery. See id.
202 See id. Alabama is an example of this. See id. The Michigan proposal allows for full recovery of stranded costs using exit fees through 2007. See id.
203 See Thierer, supra note 16. Securitization is the process by which a utility is allowed to sell bonds to cover stranded costs. Connecticut requires securitization. See Status of State, supra note 196.
204 See Status of State, supra note 196. Maine is an example. See id.
205 See id. Montana and Ohio are examples of this. See id. Rhode Island permits a customer transition charge of 2.8 cents per kilowatt-hour. See id.
206 See id. Illinois uses such a formula. See id.
207 These cases are characterized as traditional since these cases establish rate regulation jurisprudence. There is a distinction between these cases and Eastern Enterprises, which is not a rate regulation case.
208 See generally Duquesne Light Co. v. Barasch, 488 U.S. 299 (1988) (holding rate regulation is constitutional if the total effect of the rate order cannot be said to be unreasonable); Federal Power Co. v. Hope, 320 U.S. 591 (1944) (holding rate regulation is constitutional if the total effect of the rate order cannot be said to be unreasonable); Smyth v. Ames, 169 U.S. 466 (1898) (holding rate regulation is constitutional if the utility receives a fair return on the value of that which it employs for public convenience).
209 169 U.S. 466 (1898); see Goldsmith, supra note 42, at 243.
210 Smyth, 169 U.S. at 523.
211 See id.
212 Id. at 546.
213 See id. at 545.
214 Id. The Court’s acknowledgement of the ratepayers’ interest is routinely repeated throughout the traditional cases. While the quoted material appears to create a basis for ratepayers to construct an argument, the ratepayers’ interest has always been ignored. See Drobak, From Turnpike to Nuclear Power: The Constitutional Limits on Utility Rate Regulation, 65 B.U. L. Rev. 65, 67 (1985). While Supreme Court cases have established in dicta protection of the public interest, the prevailing analysis has focused on only the part of the doctrine that protects investors. See id.
215 320 U.S. 591.
216 Id. at 602.
217 See id.
218 Id.
219 See id. at 603.
220 Hope, 320 U.S. at 602.
221 Id. at 602; see Goldsmith, supra note 42, at 249. Although a balance between investors and consumers was required, most jurisprudence focused only on the part of the doctrine that protects investors. See Drobak, supra note 214, at 67.
222 See Barker, supra note 1, at 1006.
223 See id. at 1006–07.
224 See id.
225 See Drobak, supra note 214, at 116.
226 Dayton Power & Light Co. v. Public Util. Comm’n, 447 N.E.2d 733, 740 (1989).
227 488 U.S. 299 (1989).
228 488 U.S. at 310.
229 66 Pa. Cons. Stat. § 1315 (Supp. 1988).
230 488 U.S. at 305.
231 See Barker, supra note 1, at 1011. Fair and reasonable for whom? The jurisprudence assumes that the question of reasonableness is phrased to protect the utility.
232 524 U.S. 498.
233 See id. at 522–23.
234 See id. at 504.
235 See id.
236 See id. at 504–15.
237 See Eastern Enterprises, 524 U.S. at 504.
238 See id. at 510.
239 See id.
240 See id. at 514–16.
241 See id. at 516.
242 See Eastern Enterprises, 524 U.S. at 516.
243 See id.
244 See id.
245 See id.
246 See id.
247 See Eastern Enterprises, 524 U.S. at 516.
248 See id. at 517.
249 See id.
250 See id.
251 See id.
252 See Eastern Enterprises, 524 U.S. at 517.
253 See id. at 538.
254 See id. at 549.
255 See id. at 522–23.
256 See id.
257 Eastern Enterprises, 524 U.S. at 522–23 (quoting Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979)).
258 See Hope, 320 U.S. at 602 (stating, “if the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry is at an end”). The constitutional question relating to rate regulation focused primarily on the reasonableness of the rate as it affected the utility. While superficial attention was given to the interests of the ratepayer in the form of a “balancing test,” the consumer’s interest would be swiftly ignored if the result was a confiscatory rate. See Duquesne, 488 U.S. at 307–08. Therefore, the courts started with the assumption that a rate must be paid, the only real question was how much.
259 Duquesne, 488 U.S. at 307–08.
260 See Eastern Enterprises, 524 U.S. at 522–23.
261 See generally Eastern Enterprises, 524 U.S. 498 (1998) (Eastern Enterprises discusses the impact of economic regulation that effects a taking).
262 See Smyth, 169 U.S. at 522.
263 See Eastern Enterprises, 524 U.S. at 522–23. Justice O’Connor’s takings analysis, however, did not comprise a majority of the Court. Justice Kennedy, who concurred in the result but not in the reasoning, analyzed the issue under substantive due process. See id. Under Kennedy’s analysis, the Coal Act was unconstitutional because it was retroactive in nature. See id. at 548.
264 Id. at 522–23 (quoting United States v. Security Indus. Bank, 459 U.S. 70, 78 (1982)).
265 Id. (citations omitted).
266 See id.
267 See Eastern Enterprises, 524 U.S. at 522–23.
268 See id.
269 See id.
270 Id. (quoting Kaiser Aetna, 444 U.S. at 175).
271 See id. at 529.
272 Eastern Enterprises, 524 U.S. at 528–29.
273 Id at 530.
274 See The Decommissioning Crunch, supra note 100.
275 See Stop the Bailout!, supra note 117.
276 See Public Citizen, Study Shows Electricity Deregulation Could Cause Unfunded Nuclear Waste Liabilities That May Exceed $50 Billion (visited Dec. 15, 1999) <http://www.citizen. org/press/pr-elec3.htm> [hereinafter Public Citizen].
277 See Biewald and White, supra note 107. New nuclear plants did not lower costs as originally promised. Instead, the plants raised costs by 50 percent in some cases. See Pierce, supra note 42, at 505.
278 See Stop the Bailout!, supra note 117; Thierer, supra note 16.
279 See Eastern Enterprises, 524 U.S. at 532–33.
280 See id.
281 See id. at 535–36.
282 The utilities’ investment-backed expectations likewise support the conclusion that ratepayers should not have to pay transitional costs. Put simply, there is no reasonable basis on which utilities can rely to expect to recover stranded costs after deregulation. The regulatory bargain and compact, while a myth, will not even be arguably applicable after deregulation because deregulation will end the utility’s monopoly. This means that without captive ratepayers, no utility should expect to recover all costs. Another reason for supporting the theory that utilities have no investment backed expectations is that after Hope, the possibility of the public interest outweighing the investor interest was real. See Hope, 320 U.S. at 603. Therefore, anyone investing in utilities after Hope either knew or should have known of the risk that profits would be withheld someday to further the pubic interest. See Drobak, supra note 214, at 106. Furthermore, requiring consumers to continue to pay an old source when it is receiving no benefit is patently unfair. Some may argue that the whole community benefits from the safe and responsible decommissioning of the plant, and thus, the old ratepayers are receiving a benefit from their rates. However, I argue that since the whole community is benefiting, the whole community, and not just old ratepayers, should pay for the cost of decommissioning.
283 See Pierce, supra note 42, at 505.
284 See Eastern Enterprises, 524 U.S. at 537.
285 Id. (emphasis added).
286 See supra notes 155-186 and accompanying text. See generally Status of State, supra note 196; Plan, supra note 164.
287 See Plan, supra note 164. If and when the Comprehensive Electricity Competition Act is passed in its original form, it will allow for stranded cost recovery. See id.
288 See supra notes 192-200 and accompanying text.
289 See Eastern Enterprises, 524 U.S. at 523–24. Justice O’Connor’s opinion speaks of the inquiry into the fairness of the government action in question. The inquiry into fairness “require[s] that economic injuries caused by public action must be compensated by the government, rather than remain disproportionately concentrated on a few persons.” Id.
290 This is unfair because a former consumer should not have to pay for future costs from which the consumer may not be benefiting if they change utilities. Moreover, it is discriminatory. “[T]he decision to charge present ratepayers for [future costs] unjustly discriminates against present ratepayers by charging them for the cost associated with electricity provided to past consumers.” Lettrich, supra note 59, at 877.
291 See supra notes 33-55.
292 See supra notes 47-55 and accompanying text. Without the subsidies, favorable regulation, and money for research and development—which cut the cost of nuclear generating costs by fifty percent—some utilities would not have been able to afford to build nuclear plants. See Cohn, supra note 29, at 75.
293 See Pierce, supra note 42, at 508.
294 The term “corporate welfare” is used by the “Stop the Bailout” Coalition to describe the stranded cost bailout. See Stop the Bailout!, supra note 117.
295 Even if one argues that nuclear power plants are a societal concern because their safe decommissioning is important to the welfare of all, the solution needs to include everyone, and not just those individuals who may or may not have received a service from the utility but are within the utility’s region.
296 Unquestionably, nuclear power plants are dangerous. There have been at least three major nuclear plant problems: (1) at Three-Mile Island; (2) at Chernobyl; and (3) in Japan.
297 See Eastern Enterprises, 524 U.S. at 538.
298 See id. at 546–49.
299 See id. The Due Process Clause forbids retroactive legislation. See id.
300 See supra notes 284-285 and accompanying text.
301 See supra notes 162-165 and accompanying text.
302 See id.
303 See id.
304 See generally The Great Ratepayer Robbery, supra note 4 and accompanying text.
305 See Stop the Bailout!, supra note 117.
306 See Duquesne, 488 U.S. at 302–03; Pierce, supra note 42, at 502, 511; Barker, supra note 1, at 1005.
307 See Duquesne, 488 U.S. at 302. The CAPCO project involved four utilities that planned to construct seven large nuclear generating plants. See id.
308 See id.
309 See id. at 303.
310 See id.
311 See supra notes 35, 72 (discussing the focus on positive research only).
312 See Zygmunt J.B. Plater, Environmental Law and Policy: Nature, Law, and Society 895–97 (2d ed. 1998) (citing United States v. Park, 421 U.S. 658 (1975)). In environmental tort cases, the defendant may not claim as a valid defense that he or she deliberately remained ignorant of disposal methods of hazardous waste. See Park, 421 U.S. at 671–72. Park, the president of Acme Markets, Inc., was charged with violating the Federal Food, Drug & Cosmetic Act, 21 U.S.C.A. § 332. See id. Park’s defense was that he had delegated the job of monitoring sanitary conditions to others. According to the court that, “the defendant had, by reason of his position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct, the violation complained of, and that he failed to do so.” Plater, supra at 895-97.
313 See supra notes 49-55 and accompanying text (discussing federal funding for nuclear research).
314 Professor Drobak’s article suggests the current interpretation of rate regulation cases is not the only interpretation. See also Duquesne, 488 U.S. at 301–02; Federal Power Co. v. Hope, 320 U.S. 591, 602 (1944); Smyth v. Ames, 169 U.S. 466, 546 (1898). Their holdings only require that investors receive a reasonable return, not a full return. See id.
315 The characterization of a public utility as private property that is devoted to public use is misleading: the utility is not “devoted” to the public but rather is “devoted” to the idea of making a profit.
316 The decisions were those of the utilities and the regulatory commission. See Pierce, supra note 42, at 508.
317 Smyth, 169 U.S. at 545.
318 See Hope, 320 U.S. at 603. “Regulation does not ensure that a business shall produce net revenues.” Id.
319 The Great Ratepayer Robbery, supra note 4.
320 See supra notes 53-55 and accompanying text.
321 See Stop the Bailout!, supra note 117.
322 See Thierer, supra note 16.
323 See Drobak, supra note 214, at 123.
324 Id.
325 See Lettrich, supra note 59, at 876–77.
326 See Cohn, supra note 29.
327 See Pierce, supra note 42, at 505.
328 See Lettrich, supra note 107, at 876–77.
329 See id.
330 See Biewald & White, supra note 107.
331 See Stop the Bailout!, supra note 117. In fact, some believe stranded cost recovery will stifle competition, not improve it. Id.
332See generally eei recovery, supra note 135. Stranded cost recovery is needed to keep utilities competitive in competitive market. Id. As a response to this claim, the FERC has ruled that electric utilities should recover 100% of legitimate and verifiable stranded costs. See Jess, supra note 8.
333 Many nuclear power plants are fiscally unsound. See The Great Ratepayer Robbery, supra note 4.
334 Thierer, supra note 16.
335 See id.