NRC’s Decommissioning Cost Formula Is Faulty, GAO Report Says

A new study from the Government Accountability Office (GAO) says the Nuclear Regulatory Commission (NRC) should reevaluate the formula with which it calculates nuclear reactor decommissioning costs. In an analysis of 12 of the nation’s 104 reactors, decommissioning costs calculated for five reactors were 76% less than what would be required, Congress’ investigative arm says.

The new study was conducted at the request of Rep. Edward Markey (D-Mass.) and chair of the House Subcommittee on Energy and Environment, who asked the GAO to assess how effectively the NRC requires reactor licensees to reduce radioactive contamination after reactors are permanently shut down. That process, decommissioning, costs hundreds of millions of dollars per reactor, and the NRC requires licensees to provide assurance that they will have enough funds to decommission, in part, by accumulating funds through trust fund investments that are greater than the NRC’s decommissioning funding formula.

Over time, the NRC has strengthened oversight of licensees’ decommissioning funds, creating guidance and other documents related to criteria for reviewing licensees’ two-year reports and by using its enforcement process when deficiencies are identified, as well as conducting reviews at licensee offices to verify that fund balances licensees reported in their two-year reports match their year-end bank statements in response to a 2006 NRC Office of the Inspector General (OIG) recommendation.

But several weaknesses remain, the report says, foremost among them that the NRC’s formula “may not reliably estimate adequate decommissioning costs.” According to the NRC, the formula was intended to estimate the “bulk” of the decommissioning funds needed, but the term “bulk” is undefined, making it unclear how the NRC can determine if the formula is performing as intended.

An analysis of 12 reactors showed that for five reactors, the NRC formula captured 57% to 76% of the costs reflected in each reactor’s site-specific estimate, and the other seven captured 84% to 103%.

“Even though the formula estimates captured more than 50 percent of the licensee’s site- specific cost estimates for each of the 12 reactors, the wide range of differences between formula and site-specific cost estimates raises a question about whether or not the formula can reasonably be said to have captured the bulk of decommissioning costs,” the GAO says.

In addition, for eight of the 12 reactors, the licensees calculated their site-specific cost estimates less than seven years before the license was originally due to expire, and their estimates were as much as $362 million more than the formula estimates at that time.” Overall, 9 of the 12 reactors have had their licenses renewed, which gives these licensees more time to accumulate the decommissioning funds they will likely need,” it adds. “However, without changes to the NRC formula, it is possible that the NRC formula estimates could be significantly less than the licensees’ site-specific cost estimates several years from their new shutdown date.”

The GAO also finds that the NRC has not reviewed licensees’ compliance with the investment standards the agency has set for decommissioning trust funds. These standards specify, among other things, that fund investments may not be made in any reactor licensee or in a mutual fund in which 50% or more of the fund is invested in the nuclear power industry. “As a result, NRC cannot confirm that licensees are avoiding conditions described in the standards that may impair fund growth. Without awareness of the nature of licensees’ investments, NRC cannot determine whether it needs to take action to enforce the standards.”

Sources: POWERnews, GAO