Data Shows Nuclear Plant Decommissioning Costs Falling

A research group that provides information to institutional investors said cost estimates to decommission U.S. nuclear plants fell in 2017 for the first time in a decade. The Callan Institute, headquartered in San Francisco, California, in its report said decommissioning cost estimates dropped by 2.5% last year, to $88.8 billion.

Callan’s data shows costs estimates have stabilized over the past few years, moving in a range between $88.1 billion and $91 billion.

As an example, the report looked at Duke Energy’s estimate to decommission its 860-MW Crystal River 3 nuclear plant in Florida. Duke Energy, in data submitted to the Nuclear Regulatory Commission in June, said its latest figure predicts total decommissioning costs at $895.9 million, in 2017 dollars. Duke Energy in 2013, when it decided to close the plant, estimated Crystal River’s total decommissioning costs at $1.18 billion. The utility with its most-recent estimate said costs have been “about 10% lower than anticipated.”

The Crystal River nuclear plant was an iconic image along Florida’s Gulf Coast, before Duke Energy shut it down in 2013. The plant had been offline since 2009. Courtesy: Duke Energy

A dozen nuclear reactors are scheduled to close over the next seven years, according to the U.S. Energy Information Administration. That’s in addition to the Oyster Creek Nuclear Generating Station, which closed in September. (Click here for a video retrospective of the plant.)

Callan’s report says several nuclear plant operators reduced their estimate for decommissioning in the past year, with some unchanged, while a few operators increased their cost estimates. Plants performing immediate decommissioning under the DECON procedure—in which any radioactive equipment and material is removed from a site and disposed at a commercial low-level waste facility, or decontaminated enough so the site can be released for unrestricted use shortly after ending operation—saw their estimates decrease, in particular at two in California: Southern California Edison’s San Onofre plant, and Pacific Gas and Electric’s Humboldt Bay plant.

Callan’s report said decommissioning operators are using technology advancements, along with economies of scale, to reduce the time required for decommissioning procedures, which is helping cut costs. Also, the increased need for decontamination and dismantling services has resulted in companies creating ventures specifically for decommissioning, with new business models in which groups specializing in closure efforts are taking over ownership of closed and retiring plants.

U.S. regulations require decommissioning costs to be met by a Nuclear Decommissioning Trust Fund (NDTF). Callan’s 2018 Nuclear Decommissioning Funding Study, based on 2017 data and covering 27 investor-owned and 26 public power utilities (excluding public power owners with small shares)with an ownership interest in more than 100 operating and non-operating U.S. reactors, shows more than $69 billion in the fund in 2017, a $5.5 billion (8.7%) increase from the prior year. Callan said the rise “can be attributed largely to capital market performance in 2017,” with both stock and bond funds moving higher. Callan said investor-owned funds account for about 89% of the NDTF, with public power funds accounting for the rest.

Callan’s data shows operators increased their fund balances while also reducing their fund contributions for a third straight year, with total annual operator contributions down $40 million (13.4%) in 2017 to $258 million. Said Callan: “In 2017, investor-owned contributions were half of their 2008 level while public power contributions were roughly a quarter of their 2008 level.”

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).