Nuclear Regulation

The estimated cost to dismantle all of the commercial nuclear power plants in this country, dispose of the resulting radioactive waste, and clean up the plant sites is about $30 billion, of which about $14 billion is currently unfunded. The process, known as decommissioning, is necessary because, following the retirement of a nuclear power plant and the removal of the plant's spent fuel, a significant radiation hazard remains. Utilities licensed by the Nuclear Regulatory Commission (NRC) to own and operate nuclear power plants collect money from their electricity customers to pay for decommissioning. Although the estimated cost to decommission a nuclear power plant is on the order of $300 million to $400 million in today's dollars, NRC does not know if licensees are setting aside enough money for this future expense. GAO's analysis showed that, under likely assumptions, 36 of 76 licensees had not accumulated sufficient decommissioning funds through 1997. However, all but 15 of these 36 licensees appeared to be making up their funding shortfalls with recent increases in the rates that they are accumulating decommissioning funds. Regarding the movement toward deregulating the electricity industry, in November 1998 NRC began requiring its licensees to provide additional financial assurances if the Federal Energy Regulatory Commission and state utility commissions will no longer guarantee, through the regulation of electricity rates, the collection of sufficient funds for decommissioning.

GAO noted that: (1) although the estimated cost to decommission a nuclear power plant is on the order of $300 million to $400 million in today's dollars, NRC does not know if licensees are accumulating sufficient funds for this future expense; (2) GAO's analysis showed that, under likely assumptions, 36 of 76 licensees had not accumulated sufficient decommissioning funds through 1997; (3) however, all but 15 of these 36 licensees appeared to be making up their funding shortfalls with recent increases in the rates that they are accumulating decommissioning funds; (4) using more pessimistic and optimistic assumptions would increase or decrease the number of underfunded licensees, respectively; (5) although utility commissions have permitted licensees to continue charging their customers for the costs of decommissioning prematurely-retired plants, this financial safeguard could be affected by states' efforts to deregulate the electricity industry; (6) to address the movement toward deregulating the electricity industry, in November 1998 NRC began requiring its licensees to provide additional financial assurances if the Federal Energy Regulatory Commission or state utility commissions will no longer guarantee, through the regulation of electricity rates, the collection of sufficient funds for decommissioning; (7) however, one additional form of financial assurance--the early payment of decommissioning costs--may not be practicable or affordable; (8) also, NRC considered requiring licensees to accelerate decommissioning funding as a hedge against the premature retirement of plants but rejected the concept because of possible adverse effects on licensees' finances; (9) on the other hand, NRC's alternative methods to the collection of decommissioning funds earlier essentially rely on the continued financial health of the licensee or its parent company; (10) thus, the effectiveness of NRC's 1998 regulatory changes will likely depend on how vigorously NRC monitors the financial health of its licensees; (11) in this regard, licensees must now provide financial reports every 2 years to NRC so it can monitor financial assurances for decommissioning; and (12) however, NRC did not establish thresholds for clearly identifying acceptable levels of financial assurances or establish criteria for identifying and responding to unacceptable levels of assurances.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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