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Environment, Energy and Transportation Program

Nuclear Power Plant Decommissioning--Issues for State Legislatures to Consider

By Cheryl Runyon

September 1998

The United States is entering a new era in energy competition. Possible competition with fossil fuel generating plants has caused some nuclear plant managers to consider whether it is financially feasible to continue operating their facilities, whether they should sell them to a company that only operates nuclear plants or whether they should close the plants prematurely.

Some nuclear plants will be able to continue operating in a competitive market. For example, GPU (operating in Pennsylvania and New Jersey) will sell its Three Mile Island plant to Amergen Energy Co. (BNFL and Peco) while it prematurely closes its Oyster Creek plant. GPU has decided to restrict its business to the distribution side of the energy market. Other companies (Maine Yankee, Connecticut Yankee, Portland Gas and Electric) decided to close their nuclear plants early because it was not financially feasible to retrofit piping and other equipment.

When a plant closes prematurely, however, the special account to pay for cleanup, decontamination, dismantling and disposal of the reactor vessel may have insufficient deposits or interest to pay all the costs. The nuclear power plant being closed was supposed to operate for 40 years; during that time the compounding of the deposits and interest was to build to a level sufficient to meet estimated decommissioning costs.

When a nuclear plant closes early, the management has a few options to choose from to meet the deficit. It can ask its shareholders to make up the difference; it can ask the legislatures, public utility commissions and the Federal Energy Regulatory Commission to charge ratepayers an additional fee for the stranded investment (the generation-related investments made by an electric utility during the period of regulation that are deemed uneconomic in a competitive market); or states may have to assume or ensure financial responsibility for monetary shortfalls.

Because very few nuclear plants have been fully decommissioned, the Nuclear Regulatory Commission (NRC) and state public utility commissions only have estimates of what the actual cost of decommissioning will be. Utility managers must decide whether they should decommission a plant immediately or place the plant in storage and delay the completion of decommissioning for another 20, 30 or 40 years.

When a plant is decommissioned, the utility must clean up the site for an unrestricted use (a green field) or a restricted use (such as another generating and transmission station with different energy sources). NCSL research indicates that while single unit sites often are decommissioned early, multiple unit sites often place their fiscally marginal unit in a storage mode and continue to operate the more efficient reactors for the life of the license. There are advantages and disadvantages to both systems:

Another issue that has yet to be resolved at the federal level is "How clean is clean?" NRC rules require that the site be cleaned up to a level of 25 millirem (m/rem) per year; the Environmental Protection Agency is attempting to develop a different rule and level of 15m/rem per year. The two agencies seem unable to resolve their differences; Congress may have to decide whose rule takes precedence.

One of the issues that still needs to be addressed—and that may guide the decision about radioactive levels—is what the future use of the site will be. If the power plant will be used for another energy source and only workers would be exposed, a higher radioactivity standard (with monitoring of the work force) may be applied. If the decommissioned site will be used for recreation (many sites are near water) or housing, the site may have to be cleaned up to background levels (naturally occurring levels of radiation) in the surrounding area.

Another issue is "When will the spent fuel be removed from the site and where will it go?" Building on-site dry cask storage for spent fuel is not considered a decommissioning cost; ratepayers or stockholders will be asked to pay an additional fee for casks. Some utilities plan to dismantle the entire plant and keep a spent fuel pool island. In either case, the site cannot be released for an unrestricted use until the fuel is removed.

The issue of low-level radioactive waste disposal and the volumes of waste that will require disposal also will affect the states and the compacts responsible for developing disposal facilities. A new low-level waste disposal facility has not opened since the Barnwell, S.C., site. The Texas, Maine, Vermont compact has been approved by Congress and the president; the Texas Low-Level Waste Authority had hoped to have its license by 1999 and to open its facility in 2000. The recent denial of the license for the Texas site by the Texas Natural Resources Conservation Commission for seismic and socioeconomic reasons has delayed the program and its siting efforts.

The Barnwell and Richland, Wash., sites can accept all classes (A, B and C) of low-level waste. (Classes of waste are defined by the level of radioactivity and the level of shielding necessary to protect the public and the environment.) The Clive, Utah, facility accepts class A waste (the majority of low-level waste is class A). Disposal of low-level waste at Barnwell is more expensive because of its state education fund surcharge, but the site is open to generators in 49 states (all but North Carolina). The Richland facility is available to member states of the Northwest and Rocky Mountain Low-Level Waste Compacts (Alaska, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming).

State legislators need to play an active role in (1) considering how utility restructuring will affect the continued operation of nuclear power plants, (2) developing policy regarding the financing of prematurely closing plants, and (3) what future use can be made of nuclear power plant sites for other energy generation purposes, recreational activities or manufacturing plants and office parks.