Regulators fight third-time 'tax' on nuclear

23 April 2014

American nuclear power companies may have to pay to clean-up military enrichment sites - for the third time over. An independent association of regulators has joined industry to oppose the unwarranted 'tax'.

The US Department of Energy's (DoE's) predecessor, the Atomic Energy Commission, built three large uranium enrichment plants for military purposes in the 1940s and 1950s (at Oak Ridge, Paducah and Portsmouth) but later decided to sell some of their capacity to nuclear power station operators as well. Part of the deal was that the power companies would pay a certain amount extra on top of the costs of enrichment to cover the future costs of decommissioning and cleaning up the federally-owned plants. However, the DoE, which had the responsibility to manage this work, "did not set those or any other funds aside for this work," according to the National Association of Regulatory Utility Commissioners (NARUC).

The National Association of Regulatory Utility Commissioners (NARUC) is a national, non-profit organisation of the state commissions responsible for regulation of electric utilities.

In 1992 the DoE restructured its enrichment base by creating USEC and thereby commercialising the final years of the service at Paducah and Portsmouth, while continuing to own all three plants and to be responsible for their clean-up. It moved to impose a second charge on power companies and went on to collect a further $2.6 billion. But again, "an independent audit found that the federal government used a portion of the funds for other purposes," said the NARUC.

Third time unlucky

Now, with US budgetary matters for 2014 under debate in Senate committees, the NARUC has written to Dianne Feinstein, the chair of the Subcommittee on Energy and Water Development Committee on Appropriations. It requested that Feinstein oppose the DoE's request, made last year, to charge US nuclear power companies an additional $2.4 billion over ten years. NARUC pointed out that this money ultimately comes from utility customers who have paid twice already.

US nuclear trade group the Nuclear Energy Institute (NEI) said, "The nuclear energy industry supports environmental cleanup of these sites, but the government should not tax electricity consumers for a third time. The industry believes no further assessment from utility customers for the decontamination and decommissioning fund is appropriate or necessary." Around $500 million to $600 million is spent each year from the fund, which has a balance of about $4.7 billion.

In 2004 the General Accounting Office complained that by 2044, which it said was the most likely time for the clean-up to be finished, "costs will have exceeded revenues by $3.5 billion to $5.7 billion." The NEI said that the DoE "has still not developed a reliable estimate of the total cost."

Separate from the enrichment plant decommissioning fund, the DoE also maintains a fund for the permanent disposal of nuclear waste from military programs as well as used fuel from nuclear power plants. Power companies have since 1983 paid one tenth of a cent per kWh into this fund, which has accumulated to around $30 billion. The DoE was mandated to bring into operation a final disposal site for all this by 1998, but failed to do so. It cancelled the Yucca Mountain project and is now developing a new strategy. US power companies have won a ruling that they need not continue to pay the fee, but they have nevertheless incurred individual costs for longer-term used-fuel storage at power plant sites. Court awarded damages settlements for this have so far totalled nearly $2 billion, according to the NEI.

Researched and written
by World Nuclear News