Friday, July 13, 2012

Kansas Gas & Electric Co. v. U.S.

Jul 12: In the U.S. Court of Appeals, Federal Circuit, Case Nos. 2011-5044, 2011-5045. Appealed from the United States Court of Federal Claims. In this partially mixed opinion, Kansas Gas and Electric Company (KG&E), Kansas City Power & Light Company (KCPL), and Kansas Electric Power Cooperative, Inc. (KEPCO) (collectively the Kansas Companies) suffered damages due to the Government's partial breach of the Standard Contract for Disposal of Spent Nuclear Fuel And/Or High-Level Radioactive Waste (Standard Contract). In June 2010, the United States Court of Federal Claims conducted a nine-day trial and awarded the Kansas Companies $10,632,454.83.
    The majority indicated, "In determining the amount of damages, the trial court correctly did not award damages for cost of capital and for the costs associated with researching alternative storage options for spent nuclear fuel (SNF) and high level radioactive waste (HLW). The trial court also appropriately reduced the Kansas Companies' damages by the value of the benefit they received as a result of their mitigation activities. However, the trial court erred by not accepting the Kansas Companies' reasonable method for calculating overhead costs. Therefore, this court affirms-in-part and reverses-in-part the trial court's damages award."
    The majority court ruled, "The Kansas Companies' method for calculating over-head costs was reasonable and complied with FERC accounting standards. As such, this court reverses the trial court's refusal to accept these calculations. This court affirms the remainder of the trial court's decision. As such, there is no need to address the issues raised in the Government's cross-appeal."
    In a partial dissent, one Justice indicated, "The majority concludes that when the Kansas Companies used Federal Energy Regulatory Commission (FERC)-compliant accounting practices to allocate overhead to their mitigation efforts, they were dispositively entitled to recover the full amount of that overhead as damages. I respectfully disagree. When, as here, a trial court is presented with evidence that regulatory accounting practices were used to calculate the amount of overhead attributable to mitigation projects, that amount is presumptively a correct measure of damages for over-head. And our precedent firmly establishes that a trial court is not free to disregard it simply because it questions the precision of the accepted accounting practice."
    Access the complete opinion (click here). [#Haz/Nuclear, #CAFed]
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