The Congressional D&D Deception that Robs Nuclear Consumers

Washington, D.C., April 28, 2014 – Here’s a classic case of how Congress can slyly pick the pockets of American consumers. The victims don’t even know that they are missing the money.

Although in the larger framework of the federal budget, the amount isn’t very impressive, since 1992 consumers of electricity from nuclear plants have paid about $2.6 billion to the Department of Energy to a fund allegedly dedicated to decontaminating and decommissioning formerly-DOE owned uranium enrichments plants. But consumers have already paid these costs in the prices the government charged for separative work units (SWUs) when it ran the store.

It looks like this nasty process that Congress uses to steal from consumers will continue.

The levy on electric customers to pay for enrichment cleanup is entirely aimed at the wrong targets. DOE’s now-closed or sold-off enrichment facilities were built with taxpayer dollars to support entirely military aims. It was all part of the secret World War II Manhattan Project to create nuclear bombs, eventually dropped on Japan but (thankfully) nowhere else ever again.

After the war, when the then-Atomic Energy Commission and the Eisenhower administration were trying to create a civilian nuclear power program, the AEC started selling SWUs to civilian utilities. For the period from 1969 to 1992 when the AEC and its successor, the DOE, ran the enrichment enterprise (most of the time as a world-wide monopoly), sales of civilian enrichment services included the future costs of shutting them down and cleaning them up.

In 1992, two things happened to change the enrichment landscape. First, DOE began the process of spinning off its enrichment program to the private sector, creating the U.S. Enrichment Corporation to run the program as a contractor and then, in 1993, selling the entire enrichment complex to USEC. Also in 1992, Congress passed the first major energy legislation in over a decade, the 1992 Energy Policy Act.

The 1992 law created the “Uranium Enrichment Decontamination and Decommission (D&D) Fund” to finance cleanup at the former DOE sites in Tennessee, Kentucky and Ohio. The legislation imposed fees totaling some $150 million per year, adjusted for inflation over the next 15 years, although civilian consumers of nuclear electricity had not contributed to the construction or operation of the government facilities.

Again two things happened when the fund was created. First, as with the nuclear waste trust fund that taxes consumers of nuclear power to finance the government’s feckless nuclear waste disposal program, the federal government treated the D&D funds as just another, fungible, source of dollars. There was no apparent attempt to see that the money actually went to the cleanup of the enrichment sites. Instead, the dollars flowed into the general coffers of the government. There simply is no such thing as a federal government trust fund, or, as the mind-numbing debate over social security reform in the George W. Bush administration called it, a “lock box.” These boxes have no locks that Congress cannot pick.

Second, once the federal government gets a new stream of revenue, it is almost impossible to close it down (again, take a look at the nuclear waste fund). The Obama administration’s current budget proposal would extend the D&D tax on nuclear consumers for another 10 years, raising another $2.4 billion or so.

Today, congressional appropriations committees are considering the administration budget and both the National Association of Regulatory Utility Commissioners and the Nuclear Energy Institute are opposing the extension of the D&D tax. In a letter to the appropriators April 18, NARUC said, “Consumers of electricity generated by nuclear energy met their obligation to the D&D Fund with a total contribution of $2.6 billion. Despite having met this obligation, NARUC was disappointed to see this tax resurrected” in the Obama budget.

What are the odds that Congress will kill the D&D tax? My guess is less than 10%.