The Next Nuclear Bailout: Cleaning Up Pennsylvania’s Nuclear Power Plants

By Eric Epstein 

  Three Mile Island Alert, Inc. (TMIA) has been actively involved with issues pertaining to nuclear decommissioning since the March 1979 accident at Three Mile Island (TMI) Unit-2.  Specifically, We've asked: Who should pay the cost of nuclear decommissioning and radioactive waste management? 

Three Mile Island Alert does not dispute the nuclear industry’s contention, as evidenced in the Annual Reports of Pennsylvania nuclear utilities, that radiological decommissioning and radioactive waste isolation expenses are subject to change and likely to increase. 

However, the fact of this matter is that the management, together with the shareholders of nuclear utilities, aggressively pursued the licensing, construction and operation of nuclear generating stations, fully cognizant that no commercial nuclear reactor had been decommissioned and that a solution to nuclear waste disposal did not exist.

Furthermore, the industry has not actively sought a solution to the permanent storage and isolation of low-level and high-level radioactive waste. The industry has thus willfully pursued a financial investment in nuclear energy which was knowingly fraught with huge uncertainties. Therefore, it is grossly unfair and inequitable to request that rate payers provide a financial safety net  for the utilities’ risky nuclear investment strategy. TMIA argues that rate payer equity and corporate accountability necessitates that a substantial portion of the shortfall relating to the actual nuclear decommissioning and nuclear waste disposal costs, should be borne by the entities that are traditionally held responsible for imprudent and unreasonable management decisions -- the electric industry shareholder.

  The table below documents the gross miscalculations in decommissioning projections from 1985 through 1995.

 Generating Station(s)         1985 Study/1995 Study                                  $ Increase 

Limerick 1 & 2         $272 million/$986 million                                    $714million

Peach Bottom 2 & 3         $273 million/$947 million                      $674million 

Three Mile Island 1 (1)      $60 million(2)/$368 million or $431 million(3) $308-$371 million

    Exelon is in the same quandary as other generators, yet this is their response to environmentalists: “... At this time, the Company cannot predict future changes in decommissioning technology, decommissioning costs or nuclear regulatory requirements. Accordingly, the Company cannot anticipate future decommissioning cost requirements or the associated rate recovery levels.

 (“Q. & A. 157”, PP&L’s Response to Interrogatories of the Environmentalists, Set 3, Dated: May 19, 1997).   

     ComEd, the other half of Exelon, has documented that net nuclear decommissioning costs have risen from $3.89 billion in 1990 to $5. 43 billion in 1999. (PECO Energy’s Response to EE-I-4.) However, comparative analyses of early ComEd estimates are unavailable: “A search of ComEd’s records reveals that ComEd does not have records of the initial estimates of the indicated decommissioning costs.”  (PECO’s Response to EE-Informal-I-4.) 

  At the Susquehanna Steam Electric Station, projected costs for decommissioning have increased by 553 percent since 1981. In 1981, PP&L engineer Alvin Weinstein predicted that PP&L’s share to decommission SESS would fall between $135 and $191 million. By 1985, the cost estimate had climbed to $285 million, and by 1991 the cost in 1988 dollars for the “radioactive portion” of decommissioning was $350 million. The company then contracted out for a site-specific study which projected that the cost of immediate decommissioning [DECON] would be $725 million in 1993 dollars. The 1994 cost estimate remained steady at $724 million, but the market value of securities held and accrued in income in the trust funds declined, and thus the estimate reflected another increase in decommissioning costs. (PP&L Base Rate Case, Page, 1016, Lines 7-27 and  Page 1017, Lines 1-24.)

  Pennsylvania's underfunded decommissioning funds (located in Nevada for tax purposes) will be reporting serious losses in their SEC’s filings.  To get a sense of the magnitude of the losses, one only has to travel to New England.

The account was already underfunded according to Entergy, and the difference between what was actually needed to clean the plant up and the amount in the decommissioning was at least $400 million short.

A local newspaper reports, "The trust fund that will pay for the eventual shutdown and cleanup of Vermont Yankee nuclear plant lost another $33 million last month, bringing the once flush $440 million fund down to $364 million. A little more than a year ago, on Sept. 20, 2007, the fund amounted to $440 million; it dropped to $427 million by March 31, $397 million by Sept. 30 and a $33 million drop in one month to $364 million. Overall, the fund has dropped about 18 percent in the past year.” (4)

 High-Level Radioactive Waste Management

  Isolation of high-level radioactive waste (HLW), which is primarily composed of spent nuclear fuel, cannot be separated from nuclear decommissioning.  Nuclear generating stations cannot be immediately decontaminated and decommissioned with the presence of spent fuel on site or inside the reactor vessel. Even if spent fuel storage capacity is increased, the additional cost will have a significant impact on decommissioning.

On Aug. 5,  2008, the DOE acknowledged that the cost to build, operate and decommission Yucca Mountain increased 67 percent since 2001 and the new cost is $96.2 billion – in 2007 dollars. In two separate Federal Register Notices, the NRC revised the opening date of Yucca Mountain to 2025, as a placeholder, and unilaterally changed the amount of time spent fuel could be safely stored on site from 30 to at least 60 years.  

Low Level Radioactive Waste Isolation 

All of Pennsylvania’s  nuclear generating stations currently serve as a temporary repository for low-level radioactive waste (LLRW).  The term is “low-level” is not analogous to low-risk.  PPL’s attitude toward waste disposal mirrors that of the industry and government. “Storage at the plant is an interim measure until a permanent, monitored above-ground [actually, the facility is specified to be above grade ] disposal site is ready in Pennsylvania. " 

  Low level radioactive waste projections need to be adjusted upward to factor in license extensions, and to account for recent legal developments. For example,  the federal government and nuclear industry have instituted a strategy of  manipulating waste classifications and definitions as a means of “disposing” of nuclear waste.  

Conclusion

  No prudent financial officer operating outside of the nuclear industry in the real world of Sarbanes-Oxley would accept funding formulas and rate recovery strategies that rely on so many fluid caveats and assumptions. David Hayward, president of Hayward Consulting stated, “...Nuclear plant owners have historically underestimated the cost of decommissioning nuclear power  plants. Third, the issue of disposing nuclear waste has not been fully settled.” (Public Utilities Fortnightly, “Plant Valuation: Book Value and Beyond”, September 1, 1999, p. 58).

  Nuclear power remains a heavily subsidized industry. The Bush administration and Republican leaders have strayed from their free enterprise mantra to facilitate development a new generation of reactors. “Congress could pass a measure that would guarantee about $15 billion in loans to nuclear power plant developers, all to offset the high, upfront capital costs that are preventing them from taking risks. It coincides with another bill to reauthorize the Price-Anderson Act that has limited nuclear power operators' liabilities risks since 1957 to $9.3 billion," suggested Ken Silverstein in "Nuclear Power Has Yucca Mountain to Climb." (5)

End notes

1 GPU reported that the cost to decommission TMI-2 more than doubled in 48 months. By 1997, the decommissioning estimate had risen 110% in four years to $433 million, 1997, GPU Annual Report.

2 TMI-1 total, projected decommissioning expense based on ENTOMB, 1986, GPU Annual Report, p. 39. 

3 TLG’s estimate as referenced in the 1998, GPU Annual Report, p. 59. (Source: PECO Energy’s Response to EE-I-4)

4 Yankee fund posts another loss, Article published Nov 19, 2008

By Susan Smallheer Herald Staff.

5 “Nuclear Power Has Yucca Mountain to Climb”,  Ken Silverstein , Director, Energy Industry Analysis,  Wednesday, October 22, 2003.

Mr. Epstein is the Chairman of Three Mile Island Alert , Inc., a safe-energy  organization based in Harrisburg, Pennsylvania and founded in 1977. TMIA that monitors Peach Bottom and Three Mile Island nuclear generating stations.