Most California Nukes Pass GAO Decommissioning Fund Analysis

While the General Accounting Office (GAO) questioned the ability of 33 nuclear power plant owners across the nation to pay for expensive decommissioning after shutdown, all investor-owned utility plants in California have enough funds to complete the burial process, according to a report released this week. The congressional investigator found, however, that the Sacramento Municipal Utility District?-owner of the closed Rancho Seco plant?has less than the necessary funds in its account. ?We have the money,? countered Dennis Gardiner, SMUD decommissioning manager. ?The model the General Accounting Office used is not the model industry uses? and is ?ultraconservative.? Rancho Seco had been gathering $18.5 million a year for the decommissioning fund up until 2000?the base year for the GAO study. Now, ratepayers are paying $27 million a year into the fund, according to Gardiner. The price may change next year, however. While Rancho Seco is partially decommissioned, it still has the thorny problem of disposing of the 500-ton radioactive reactor vessel from its shuttered facility. Bids for that disposal are to come in soon, and the cost could change ratepayer contributions. The Palo Verde plant in Arizona, which is owned partly by California utilities, is also on the GAO?s radar. California owners, including the Los Angeles Department of Water & Power, Southern California Edison, and Southern California Public Power, have fully funded decommissioning accounts. But one other owner, El Paso Electric, weighs down its share of the total funds with less than 25 percent of the GAO?s benchmark funds for Unit 1. Public Service Company New Mexico has less than 100 percent of the benchmark for Unit 3. California, unlike the rest of the nation, has a decommissioning trust fund for investor-owned utilities, which is out of the hands of the nuclear plant owners. The California Public Utilities Commission has historically required that a nonutility trustee board manage the funds and that there be an excess reserve to cover the unknowns of the decommissioning process. However, the CPUC recently reduced the amount of that hedging for future costs at the request of consumer advocates to reduce rates. It is now less than what environmentalists think is optimal. Also unlike other states, if a California investor-owned utility?s nuclear plant were sold, the new owner would not control the decommissioning funds. In other states, this transfer has been used to attract buyers because they can inherit a pot of securities, much like pension funds. For the rest of the nation, the Nuclear Regulatory Commission (NRC) is the guarantor of decommissioning funds. Its fund requirements are lower than California?s, and it allows utilities to invest the funds without a blind trust in the middle. For the most part, the GAO worries that nuclear plants co-owned by one partner with funds and another that is financially unstable will undermine final decommissioning. The NRC responded that it would not impose decommissioning costs on co-owners, even if an owner were broke. Regulators, however, did say they might change the policy if it involves a public health issue.

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Most California Nukes Pass GAO Decommissioning Fund Analysis

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