Government watchdog says funds for decommissioning nuclear facilities are being mismanaged

Trust funds set up to cover the cost of restoring the sites of nuclear facilities that are no longer operating, according to a new report, are losing money to the point their balances may not cover the cost of the plants' decommissioning.

The report by the Council to Modernize Government (CMG), a non-partisan nonprofit committed to reducing the power of the administrative state, explains that the Nuclear Regulatory Commission (NRC) requires nuclear power utilities to add decommissioning costs into the rates paid by utility’s customers, and these funds are held in trust until the facility is closed.

Companies that specialize in cleaning up decommissioned nuclear power facilities began purchasing some of these facilities from public utilities in 2008. The companies buying these facilities from public utilities, according to the report, are drawn to the sizable trust funds that are there to support the clean-up.

However, according to the report, some of these companies are allowing market forces to put the funds at risk, and the trusts are losing money to the point they don’t have balances legally required to cover the cost of decommissioning the facilities.

"They're managing those funds so poorly that they're losing large chunks of money. Any investments that could lose that much, in our mind, are speculative investments,” Curtis Schube, executive director of CMG, told Just The News.

Some of these companies, according to the report, appear to be prioritizing the potential profit opportunities that come from managing the large trusts, rather than assuring the site clean up is accomplished. “It does not appear the NRC has taken any measure, through enforcement, to compel these companies to true-up their balances with the dramatic losses their investments have experienced,” the report states.

As of October 31, 2022, there were 90 nuclear facilities undergoing decommissioning, which includes 25 that were nuclear reactors. Among them is the infamous Three Mile Island Unit 2, which experienced a partial meltdown in 1979. The radioactive waste and contaminated materials at the site have been removed, and it is now licensed as a decommissioning nuclear facility.

Three Mile Island Unit 2, in its most recent filing, asked to delay a phase of decommissioning due to “market conditions.”

The CMG report documents the decommissioning trust fund balances and spending for 2021 to 2022 at 11 facilities that are owned by companies that are not utilities. Of those 11 facilities, all but two have depleted their trust fund by more than $10 million from the actual work done in the time period. Three of them reduced their funds by at least $50 million more than they spent on decommissioning work, four by at least $125 million, and one had a reduction in the value of the trust fund over over $250 million from the clean-up costs.

A spokesperson for the NRC told Just The News that the trust funds are handled not by the companies themselves, but rather by third-parties who are required to invest the funds conservatively.

The funds, the spokesperson said, are subject to market downturns, which was seen in 2008 to 2009, but when the market rebounds, so do the funds, as they did in 2010. The report, according to NRC, reflects an overall market downturn during the years 2021 and 2022.

“Note that broad equity and fixed income indices, the S&P 500 and the Bloomberg Aggregate Bond indices, declined 18.11% and 13%, respectively, in 2022. The reports for CY 2023, which were submitted in March, should reflect the market's rebound. The staff's evaluation of those reports will be available later this summer,” the spokesperson said.

If the NRC, he continued, determines that a licensee’s trust fund no longer demonstrates reasonable assurance that sufficient funds will be available to complete decommissioning activities, the licensee will be required to take measures to restore the assurances.

“Several U.S. commercial nuclear power reactors have been successfully decommissioned. All have had sufficient money in their trust funds to cover decommissioning expenses,” the spokesperson said.

Schube said that the report shows a growing risk, and it’s important that these don’t become legacy facilities that sit around for decades, being unattended and potentially creating a danger to the public. He said it would also be unfair for ratepayers or taxpayers to have to cover the cost of completing the decommissioning of these sites after past ratepayers already paid for it.

“Prudent management of these trust funds to ensure responsible and expedient decommissioning of retired plants is a reasonable expectation. It is unclear whether the NRC is doing anything to ensure that this expectation is met,” Schube said.

To that end, he said, it’s important for the NRC to take more action to oversee the decommissioning process.

"We would like to see greater transparency around how companies are investing the trust fund money, a stronger insistence by the NRC to demand financial assurances when their trusts do not cover the future cost of decommissioning, and a denial of requests to extend decommissioning timeframes, which sometimes last more than a decade, that result from financial mismanagement,” Schube said.