High court to rule on power plant costs

April 23, 1991|By Lyle Denniston | Lyle Denniston,Washington Bureau of The Sun Reporter Kim Clark of The Sun's Business staff contributed to this article.

WASHINGTON -- The Supreme Court, returning to the controversy over cost overruns in building nuclear power plants, agreed yesterday to rule again on the right of electric utilities to pass on those costs to their rate-paying customers.

Three years after the court had upheld that right, the justices were confronted with a lower court decision putting new restrictions on it.

The justices, in a brief order, said they would review a federal appeals court ruling that could force utilities to absorb part of the overruns if they went ahead with plant construction after becoming fully aware of the sharply rising costs.

The Maryland Public Service Commission is now conducting a similar review of Baltimore Gas and Electric Co.'s outlay of about $400 million for power to substitute for that generated by the Calvert Cliffs nuclear power plant while it was under repair. But BG&E officials said yesterday that the Supreme Court's action would not affect their case.

Now, as in 1988 when the court last ruled on the issue, the case involves who is to pay for millions of dollars in added costs in building the Grand Gulf nuclear generating station at Port Gibson, Miss. The plant was built by System Energy Resources Inc., a subsidiary set up by a power-pooling combine of utilities now known as Energy Corp.

Three years ago, the court ruled in a Grand Gulf case that states and cities must allow utilities to pass on to their customers the federally approved costs that result when utilities get together on plans to build a joint nuclear station.

But the 5th U.S. Circuit Court of Appeals in New Orleans, in a decision last August, said that the Supreme Court's 1988 decision only controlled the situation as of the time the utilities enter into the nuclear plant project and divide up the costs they expect.

Once construction has actually gotten under way, the circuit court said, state or city utility commissions are free to decide whether the utilities were "prudent" in failing to minimize their rising costs by going ahead with the project once they became aware that heavy cost overruns were going to occur.

A ruling on the case (New Orleans Public Service vs. City Council, No. 90-1156) is expected next year.

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