This allows NPPD, which is considering permanently shutting the 778 megawatt plant before its license expires in 2014, to focus on improving Cooper's operating performance and safety record, the partners said.

In April, the U.S. Nuclear Regulatory Commission downgraded Cooper to the lowest safety level a reactor can operate at without being shut down - a distinction held by only one other nuclear power plant in the country.

Cooper is the single biggest generating unit in Nebraska.

"What happened today is very positive and enhances Cooper's chances moving forward," Jack Alexander, senior vice president of supply and marketing for MidAmerican Energy, told Reuters.

"Now they can focus on improving performance," he added.

MidAmerican, which buys 50 percent of Cooper's output, said that because litigation disputes were settled and contracts were rewritten in more favorable terms, there is a possibility MidAmerican might renew its contract with NPPD after 2004.

"We had every intention of getting out of our contract...mainly because of costs associated with Cooper. But in light of what happened today, there is a very good likelihood of discussions for purchasing power from NPPD beyond 2004," Alexander said, adding that the price must be competitive and issues related to Cooper's management and operating performance must still be solved.

However, Lincoln Electric, whose contract for 12.5 percent of Cooper's output expires at the end of September 2003, said it remains set on not renewing its contract.

"We have made other power supply arrangements beyond 2003," Lincoln Electric Chief Executive Officer Terry Bundy told Reuters. "We wanted long-term certainty."

Although Cooper is not yet out of the woods, Bundy was pleased with the turn of events. "The events of today and settlements should be viewed positively for Cooper. They are things that needed to get out of the way," he said.

SETTLEMENTS

One cloud hanging over Cooper's fate has been litigation dating back to 1997, including the possibility NPPD may have to reimburse MidAmerican Energy and Lincoln Electric for past decommissioning payments.

The two had been paying those decommissioning costs since 1984, but stopped in December 2000 pending a court decision.

Under the agreement, the two companies will no longer pay a percentage of all Cooper's costs, including operating, maintenance and decommissioning costs.

Also, NPPD will retain the shares of both companies' decommissioning costs paid through December 2000, meaning NPPD will be able to pay off Cooper's debt and will not have to significantly raise its electric rates, Cady said.

"With this settlement, Cooper's debt will be paid off as of tomorrow," she said. The debt stands at $58 million.

MidAmerican's share of decommissioning costs and reserve funds stood at more than $200 million at the end of 2000 while Lincoln had contributed about $50 million.

NPPD began paying the two companies' share of decommissioning costs from June and will continue to do so.

The NPPD board also voted to begin negotiations on transferring the operations of Cooper to NMC of Hudson, Wisconsin, the sixth-largest nuclear operating company in the United States that operates eight nuclear reactors in four states in the upper Midwest.

If NMC and NPPD sign an operating agreement, NPPD would then apply to the NRC to transfer operating authority for Cooper to NMC. NPPD would remain the owner.