Bailout may be required for nuclear plant closings

October 12, 1990|By Peter Honey | Peter Honey,Washington Bureau of The Sun

WASHINGTON -- Electric utility companies are underestimating the costs of closing and dismantling nuclear power plants, which could present taxpayers with another multibillion-dollar headache in years to come, the consumer group Public Citizen said yesterday.

The group, founded by Ralph Nader, said a yearlong study of the electric industry showed that utilities expect to spend almost $26 billion on closing, cleaning up and dismantling all of the nation's 124 nuclear reactors -- a process called "decommissioning" -- as the reactors reach the end of their operational capability over the next 10 to 40 years.

But factors such as the unavailability of radioactive-waste storage sites and the rapid escalation of decommissioning cost estimates since 1980 suggest that the eventual bill would amount to between $50 billion and $100 billion, the group said.

"We could find ourselves in a situation of having another massive bailout," said Joan Claybrook, president of Public Citizen. "Tomorrow's electric users are going to pay."

Ken Bossong, a director of the group, said decommissioning "is an enormous, hidden cost of nuclear power. . . . For some reactors, the cost of decommissioning the plants will rival their initial construction costs."

Industry spokesmen immediately rejected the charge, saying that adequate funds for decommissioning are being developed under the scrutiny of state and federal utility regulators as well as the Nuclear Regulatory Commission.

Public Citizen charged that although the nation's reactors had already been operating for, on average, more than one-third of their projected lives, utilities had collected only $3.2 billion for shutdown activities by the end of 1989.

The Edison Electric Institute, an industry lobby group, dismissed Public Citizen's figure. Spokeswoman Gloria Quinn said that 6 percent of the decommissioning costs had already been collected. Utilities collect money for nuclear decommissioning by including the costs in regular consumer bills.

"And those funds are earning interest, usually over 30 or 40 years," she said. "It's not money that is standing still."

Daniel Borson, author of the Public Citizen report, said utilities often underestimate what it will cost to dispose of highly radioactive spent fuel and radioactive wastes as well as to decontaminate plants.

Mike Foley, director of financial analysis at the National Association of Regulatory Utility Commissioners, questioned the accuracy of Public Citizen's report.

"I don't know how you can make a case for whether you are or aren't collecting enough," he said. "Nobody knows how much it will cost because no major nuclear plant has ever been decommissioned."

But he said there could be cause to question the costs of decommissioning since in the past the industry had often underestimated the cost of constructing nuclear plants.

The shortage of storage sites for used nuclear fuel rods also remained a serious problem, Mr. Foley said. "These things are piling up all over the country."

The Baltimore Gas and Electric Co., which operates the only two nuclear reactors in Maryland, both at the Calvert Cliffs plant, was one of 10 utilities that Public Citizen said were holding most of the decommissioning funds within company assets. This was a "potentially unstable" way of storing the money, the group said, because it made the funds subject to the success of each utility company. It called on all utilities to keep the money for decommissioning in stable, external funds.

Since July, the Nuclear Regulatory Commission has required that utilities keep all decommissioning funds in external trusts. The NRC order does not force immediate and full compliance but allows utilities to transfer internally held funds to the trust over the entire life of the nuclear plant.

In BG&E's case, this could take at least 26 years longer, since the Calvert Cliffs reactors are due for closure in 2014 and 2016. And these dates could be extended under an NRC order if the reactors are considered to be safe beyond that time.

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