November 1, 2011

The U.S. Spent Nuclear Fuel Policy, Part 2: Playing Hardball

By Dr. Robert Peltier, PE and James M. Hylko

Ongoing investigations into cancellation of the Yucca Mountain project have revealed an astonishing number of irregularities by agencies responsible for the project. Those investigations have exposed a broken system that failed to properly manage the project and that surrendered to political pressure. Worse still, the draft report of President Obama’s Blue Ribbon Commission on America’s Nuclear Future gave the industry little reason to hope that there would ever be a long-term nuclear waste fuel repository.

Eighteen months ago, we examined the history and status of the U.S. spent nuclear fuel policy. In that report we observed that the U.S. Department of Energy’s (DOE’s) legal deadlines required by the Nuclear Waste Policy Act (NWPA) and Amendments (NWPAA) for establishing a permanent repository for spent nuclear fuel (SNF) have come and gone. (See “The U.S. Spent Nuclear Fuel Policy: Road to Nowhere,” May 2010, in our online archives at http://www.powermag.com.) After cancelling the Yucca Mountain repository project, President Barack Obama appointed another commission to “conduct a comprehensive review and to make recommendations about policies for managing the back end of the nuclear fuel cycle and for a new plan” within two years.

A Review of Earlier Conclusions

We presented four important conclusions in our earlier report. They were that:

• The monetary damages to date, and the future federal liability costs for failing to construct a repository, are enormous and continue to grow each year.
• Nuclear utilities continue to pay a mil per kilowatt-hour produced for the Yucca Mountain facility that was cancelled.
• On-site storage will become the new normal because a Yucca Mountain replacement is politically impossible.
• The new Blue Ribbon Commission (BRC) will have no more success finding a new site than its predecessor commissions.

The NWPAA, signed by President H.W. Bush on December 22, 1987, codified the Yucca Mountain site as the nation’s permanent repository for SNF and other high-level nuclear wastes. That location decision was made when both houses of Congress overrode the Nevada governor’s veto, as allowed by law. In our opinion, this decision has so poisoned any future, necessarily public site selection process that no governor would dare vote for a repository site within his or her state—unless the benefits to the state were enormous. Nor will Congress ever again muster enough votes to override a governor’s veto, given the polarizing nature of the project.

We also observed that nuclear utilities had paid $31 billion into the Nuclear Waste Fund (NWF) from 1983 through the end of FY2009, less the $7.3 billion that was spent on developing Yucca Mountain, leaving a $23.6 billion (virtual) balance (updated from our previous article). That money went into the general fund and has been spent—it’s not in a “lock box.”

This financial data was taken from a report released by the Congressional Budget Office (CBO) titled “The Federal Government’s Responsibilities and Liabilities Under the Nuclear Waste Policy Act” that was released on July 27, 2010, a few months after our earlier report.

A strong case can also be made that the money collected to date will have to be refunded to the nuclear payors should the DOE abandon the search for a long-term storage facility. Today, about $2 billion is added to the NWF each year, so the fund balance today, on paper, is pushing $28 billion. From a strictly economic point of view, the formation of the BRC effectively delayed that day of reckoning until at least early in 2012, when the committee’s final report is due.

In the meantime, individual utilities are suing the federal government at a record pace for failing its legal duty to provide the storage facility on time. As of June 2010, electric utilities had filed 72 lawsuits “seeking compensation for costs they incurred because the federal government could not begin to accept nuclear waste for disposal in 1998,” according to the CBO report. As of that same date, 11 of the lawsuits had been settled for about $725 million, 10 lawsuits had been dismissed, and one payment of $35 million was made to Tennessee Valley Authority, another government entity. Of the 50 pending cases, 20 had been decided by June 2010 but had pending post-trial motions.

1. Reactor recharging. Tennessee Valley Authority (TVA) workers carry out refueling operations on the Browns Ferry Unit 2 reactor. Courtesy: TVA

The CBO observed that, “Because judicial claims for damages are made retrospectively, many more cases can be expected in the coming decades as utilities seek to recover their ongoing costs for storing nuclear waste long after they expected it to be removed and sent to a permanent disposal site.” The CBO also calculated the “taxpayers’ liabilities to electric utilities” will total about $13 billion if a permanent facility is opened by 2021, an unlikely scenario. The CBO also observed that “it is not clear how the Administration’s decision to terminate the Yucca Mountain repository will affect the federal government’s liabilities to electric utilities. If DOE is found at some point to have fully breached its contractual commitments, the federal government’s liabilities could increase considerably.”

Note that should Congress and the president decide to change the NWPA to permit a repository at a new location other than Yucca Mountain, and the federal government comes to terms with a particular state and its stakeholders over siting that repository (two big ifs), the federal government’s financial liability for past transgressions remains and will continue to grow, at least until a central repository enters service. In the words of the CBO, “Even if such legislation is enacted, federal liabilities will remain substantial, and payments from the Judgment Fund to compensate utilities for storing waste will continue for many years.”