$700 million Zion plant trust fund must be accounted for
To the Editor:
A lawsuit was filed in the U.S. District Court for the Northern District of Illinois on Thursday, July 14, on behalf of four plaintiffs, including myself, against Zion Solutions LLC and Bank of New York Mellon.
Between approximately 1998 and 2006, plaintiffs and other customers of ComEd collectively were required by law to pay hundreds of millions of dollars into a trust fund relating to the future nuclear decommissioning of the Zion Nuclear Power Plant in Zion, Ill. The balance in the trust fund is currently in excess of $700 million.
The trust fund is to be used to pay for the necessary and reasonable costs for the nuclear decommissioning of the Zion Plant over an estimated time period of 10 years.
It was established that ComEd's customers were entitled to receive in the form of rebates or credits the balance of any unused trust funds monies.
As to the history of the Zion plant, it was build by ComEd, at ratepayer's expense. The dual nuclear plant was originally licensed in 1974 and was expected to operate until at least 2012. After that time ComEd had the right to apply for extensions of the operating licenses for several decades beyond 2012.
In 1998, ComEd suspended all operations at the Zion plant. ComEd stated at the time that operations were being suspended for "economic" and "market" reasons.
It was in 2001 that ComEd transferred ownership of the Zion plant, together with the rest of ComEd's large operating nuclear generation fleet, to Exelon Corporation, at which time Exelon Corporation assumed the obligation for the future nuclear decommissioning of the Zion plant when its useful life came to an end.
From 2001 to Sept. 1, 2010, Exelon Corporation did not attempt to resume operations of the Zion plant, seek to apply for a license extension beyond 2012, or try to sell or seek a third party who might operate the plant or hold it for future restarting.
During this time period the price of electricity for Exelon Corporation's other nuclear generation units increased significantly.
It was on Sept. 1, 2010, that Exelon Corporation transferred ownership of the Zion plant to ZionSolutions, giving ZionSolutions the responsibility for permanently dismantling and decommissioning the Zion plant. ZionSolutions likewise assumed most of the liabilities for decommissioning the Zion plant.
In tandem with the September 2010 ownership transfer, ZionSolutions also was to assume direct control of the trust funds. ZionSolution appointed defendant BNYMellon to act as trustee of the trust funds and to take custody of the The Zion Station decommissioning trust funds.
A question exist as to whether ZionSolutions has the legal authority to appoint a trustee for the trust funds.
BNY Mellon is currently acting as trustee of the trust funds, as directed in a written agreement with ZionSolutions, and under the terms defined by ZionSolutions.
Under the terms of the agreement, BNY Mellon is required to make such payments to ZionSolutions without the authority to inquire as to the accuracy of any assertions made by ZionSolutions as to amounts claimed to be due, or whether the funds withdrawn are for necessary and reasonable nuclear decommissioning costs as legally required to be paid from the trust funds.
Since the date of transfer on Sept. 1, 2010 of the Dual Zion Nuclear Facility to ZionSolutions by Exelon Corporation, over $10 million has been withdrawn from the trust funds by ZionSolutions for claimed costs and profits associated with the dismantling of the Zion plant. ZionSolutions has further indicated that it intends to withdraw hundreds of million of dollars more from the trust fund, possibly withdrawing the entirety over the next several years.
Herein lies the problem. No qualified person or entity has been appointed to act as a trustee with respect to the trust funds to fully protect the rights of ComEd's customers as beneficiaries of the trust funds as required by law, or to review the withdrawals from the trust funds to determine whether they meet all the requirements for payment established by Illinois law and other applicable law.
It has been determined that some of payments from the trust funds made or to be made to ZionSolutions do not qualify as necessary and reasonable Zion plant decommissioning costs, nor do they comply with the law under which the trust funds were established.
Future disputed payments include, but are not limited to, a self-directed profit claim by ZionSolution of 15% to 20% and tens of millions of dollars in charges for deferred operating or other non-nuclear-decommissioning costs.
Even so, it has not been demonstrated that ZionSolutions has the legal right to make all of the withdrawals it has made or all it intends to make in the future from the trust funds.
The lawsuit filed on July 14, 2011 against ZionSolutions and the Bank of New York
Mellon is composed of the following four counts:
1) Enjoin and recover payments to ZionSolutions.
2) Appoint trustee to fully protect all the interests of all beneficiaries under the trust.
3) Require payments (or credits) from trust funds for ComEd's customers under 220 ILCS 5/8-508.1.
4) Action for accounting by BNY Mellon.
As one of four plaintiffs, the ZionSolutions/Bank of New York Mellon lawsuit has been filed as a class action lawsuit on our own behalf, and pursuant to Rule 23 of the Federal Rules of Civil Procedure, for the benefit of all ComEd customers who are entitled to benefit from the provisions of 220 ILCS 5/8-508.1 requiring that the balance of the trust funds be paid or credited to ComEd customers.
This class consists of at least tens of thousands of individuals. As such it would be a substantial hardship for most individual members of the class if forced to prosecute individual actions.
A trial by jury is demanded on all counts.