Vt. Fears Covering Nuclear Cost

  • This Friday, March 11, 2016 photo shows the Vermont Yankee Nuclear Power Plant along the Connecticut River in Vernon, Vt. (Kristopher Radder/The Brattleboro Reformer via AP) MANDATORY CREDIT Kristopher Radder—AP

Published: 3/24/2016 11:40:08 PM
Modified: 3/24/2016 11:40:43 PM

Vernon — The federal government’s “woefully inadequate” financial regulations could leave states like Vermont with big bills and massive cleanups long after a nuclear plant closes, state officials argue in newly released documents.

Vermont — with backing from Massachusetts, Connecticut and New York — is lobbying for the federal Nuclear Regulatory Commission to tighten its financial rules and broaden its cost projections for decommissioning nuclear plants.

The states contend such changes are especially important for plants like Vermont Yankee that owners are putting into a period of dormancy, dubbed SAFSTOR, that can last up to 60 years. The risks of unexpected problems and skyrocketing costs, officials say, are much greater at SAFSTOR plants.

“Decommissioning cost estimates truly are ‘estimates.’ They are by no means guarantees,” state officials wrote. “If a significant and unexpected decommissioning cost increase occurs at any merchant generator facility, it is unclear where the extra money will come from. That is a risk that the states should not have to face.”

The NRC is embarking on a yearslong process for revamping its decommissioning rules. That’s welcome news for Vermont, where officials have complained that states and host communities don’t have enough say in such matters.

Based on their experiences since Vermont Yankee ceased producing power in December 2014, state officials are pushing for a variety of changes. The state’s congressional delegation also has chimed in with similar concerns.

March 18 was the deadline for initial public comments on NRC rule-making. A federal website shows that more than 100 comments were submitted; governmental entities and interest groups weighed in, along with the nuclear industry and licensees like Vermont Yankee owner Entergy.

The push for a more “meaningful role” for states and localities is not a new theme in the decommissioning debate. But in written comments sent March 18 to the NRC, Vermont officials — along with the three other states’ attorneys general — placed new emphasis on the economic risks of nuclear cleanup.

“The financing of decommissioning — and of spent fuel management and site restoration — is a matter of critical importance to the host states,” officials wrote.

Such concerns extend beyond the allowable uses of a nuclear plant’s decommissioning trust fund, which has been a flashpoint at Vermont Yankee.

Now, Vermont officials are questioning all of the federal government’s basic assumptions about the costs of decommissioning and how those assumptions might come back to haunt state governments.

“The very real possibility of a licensee going bankrupt is an issue that the NRC has never fully addressed in a meaningful way,” state officials wrote. “The current regulations regarding financial assurance (for decommissioning) are woefully inadequate and, notably, fall far short of the scope and depth of financial assurances that the nuclear industry itself seeks when selling or buying a closed nuclear power plant.”

“This is an issue that could greatly impact host states if they are left with a radiologically contaminated (or otherwise unusable) site within their borders, due to a licensee’s failure to fully fund decommissioning or site restoration,” state officials added. “The NRC cannot allow that to happen.”

The states raise several specific financial concerns, including:

The SAFSTOR method, state officials argue, has little radiological basis. Instead, the extended cleanup schedule “has become a financial mechanism that licensees use to claim sufficient or even excess funds for decommissioning, when they in fact do not have sufficient funds,” officials wrote.

That’s because the NRC allows nuclear operators to assume an annual 2 percent rate of return on decommissioning trust funds in the decades after a plant is mothballed. One problem with that assumption, the states contend, is that “market volatility increases the chances of a shortfall” when decommissioning finally starts.

Another problem, the states say, is that dormancy actually raises the price of plant cleanup by introducing “tens to hundreds of millions of dollars in costs that are not incurred if a plant goes into immediate decommissioning.”

That includes the expense of getting a plant ready for SAFSTOR along with decades of security and maintenance required at a dormant plant. “Such an allocation of resources is wasteful and is not a good use of ratepayer or licensee funds,” state officials wrote.

Additional contamination issues can crop up at a shut-down plant, officials said. As one example, state officials cited the recent groundwater intrusion problem at Vermont Yankee, which has forced Entergy to find storage and disposal methods for large amounts of contaminated liquid.

For that reason and others, the states say the 60-year decommissioning schedule allowed under SAFSTOR should be reduced to 10 years.

“We don’t want to see plants simply being mothballed for decades,” Vermont Attorney General William Sorrell said. “Nor do we want to have a plant owner without the money to cover an environmentally protective cleanup.”

The states also argue that delays in decommissioning can raise cleanup costs at a rate that far exceeds the expected 2 percent growth in a plant’s trust fund. Citing research by NRC staff, officials say that, since 1986, decommissioning costs have grown at a rate between 4.7 percent and 9 percent annually.

At Vermont Yankee, decommissioning is expected to cost $1.24 billion. Entergy in 2015 spent about $58 million from the plant’s trust fund, which stood at $588.5 million at the end of January.

The NRC conducts regular reviews of Vermont Yankee’s trust fund and has found no concerns thus far. In fact, federal officials have decided there will be enough money not only for radiological cleanup but also for long-term management of spent nuclear fuel at the Vernon site.

But the four states say that, in order to address their financial concerns, federal regulators must raise the financial bar for plants like Yankee. Officials even suggest that plant owners should be required to provide financial assurance at 200 percent of a site’s estimated decommissioning costs.

That would be “reasonable in light of historical instances such as Connecticut Yankee, where costs were actually around double what was anticipated,” state officials wrote. “The cost increase at Connecticut Yankee cannot be viewed as an isolated instance. Decommissioning a nuclear plant is a major industrial activity with many unknowns.”

NRC spokesman Neil Sheehan offered some defense of the agency’s regulations, noting officials’ financial scrutiny of merchant plants like Vermont Yankee. He said the expected 2 percent annual growth in trust funds is a “conservatively set rate,” and he said the length of SAFSTOR is considered when the NRC evaluates those funds.

At the same time, he acknowledged the agency has much to consider when revising its decommissioning rules. “The NRC staff will have to dig into the details of the many comments submitted,” Sheehan said.

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