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Nuclear Solutions

The U.S. government has failed to meet its commitment to do a difficult job right.

BY JAMES M. WILLIAMS

In the Nuclear Waste Policy Act, passed by Congress in 1982 after extensive debate, the nation made a commitment to permanently dispose of the highly radioactive and long-lived wastes generated in the production of commercial nuclear power. The job was to be done by the federal government to ensure it would be handled safely, equitably, and at the expense of the commercial nuclear power industry and its ratepayers.

Seventeen years and $7 billion later, with the program still in the "design and evaluation" phase, it is fair to question our national commitment to pay for a program to dispose of spent nuclear fuel. We know today that tradeoffs are necessary, since no program for managing spent fuel will be completely safe or entirely equitable. The questions are how tradeoff issues will be addressed, and whether the parties can be relied upon to be resilient in providing an assurance of safety and consideration of equity.

SPENT NUCLEAR FUEL

The wastes involved are spent fuel from commercial nuclear reactors—assemblies of up to 15 rods filled with nuclear fuel pellets, which have been used to power the nation’s 121 commercial reactors. Through 1998, about 135,000 such assemblies weighing 38,000 metric tons have been discharged from nuclear plants. Another 160,000 assemblies weighing 45,000 metric tons will be discharged as the nation’s nuclear reactors operate through their license terms.1

Since their discharge, most assemblies have been stored in spent fuel pools at reactor sites, some for as long as 35 years. Some assemblies have been canistered and removed from pools to be stored "dry" in heavy metal casks or concrete bunkers, also at reactor sites. This storage, wet or dry, is at the expense of nuclear utilities and their ratepayers and is part of a utility’s obligation under its license for commercial operations.

But, under the 1982 Act, the federal government was to begin accepting commercial spent fuel in January 1998, thus beginning a process to relieve utilities of their on-site storage burden, free pool capacity to support ongoing reactor operations, and allow the decommissioning of reactor sites as reactors reach their license terms.

Spent fuel is highly radioactive. Even 10 years after its discharge from nuclear reactors, it is 200 times more radioactive per unit volume than the high-level wastes from U.S. nuclear weapons production, about 20,000 times more radioactive than the transuranic wastes being disposed of at the U.S. Department of Energy’s $19 billion repository near Carlsbad, New Mexico, and over 100,000 times more radioactive than the low-level wastes disposed of at commercial sites in the United States.2 Commercial spent fuel discharges through 1994—about one-third of the projected total—contained almost 60 times the radioactivity released in 900 underground detonations at the Nevada Test Site and more than 100,000 times the radioactivity released at Hiroshima in 1945.3

The nation has many nuclear waste management problems—spent fuel from defense reactors, high-level transuranic wastes from weapons production, low-level wastes at defense and commercial sites, uranium mill tailings, wastes generated in the decommissioning of nuclear reactors. Among all of these, commercial spent fuel represents a tiny fraction in terms of volume, but perhaps 90 percent in terms of radioactive content. This percentage, which reflects the status at the end of 1994, is likely to increase over time.4

DELICATE FABRIC

Morris Udall, the Arizona congressman who was a key participant in the negotiations leading to the 1982 act, called it a "delicate fabric of agreements" on issues of responsibility, safety, equity, and costs:5

n The Atomic Energy Act of 1954, which paved the way for the development of commercial nuclear power in the United States, left the federal government responsible for the long-term management of its wastes. The 1982 Act gave this responsibility to a newly-created agency of the Department of Energy—the Office of Civilian Radioactive Waste Management—and directed DOE to develop two permanent geologic repositories, the first located west of the Mississippi River, the second east.

n For the first repository, three sites would be scientifically characterized for their suitability to isolate highly radioactive wastes from the environment for 10,000 years, and the best of those would be selected. The idea was that the site itself would provide natural barriers to the release of radionuclides to air or groundwater; the waste packages and other engineered barriers would provide additional assurance of long-term isolation.

n The U.S. Environmental Protection Agency would set standards for long-term isolation, and the U.S. Nuclear Regulatory Commission would certify that facility construction and operations met those standards.

n A centralized interim storage facility, if required, would not be in the same state as the permanent disposal facility and—to assure that it would not become permanent—would not be developed until the permanent facility was under construction.

n A fee would be collected on commercial nuclear power generated prior to and subsequent to the legislation, with the expectation that it would support full recovery of the costs of disposal of commercial nuclear wastes.

n The total systems costs of the program would be assessed annually and used to assess the adequacy of the fee to recover the projected costs. If at any point, the fee was judged inadequate, DOE would be responsible to propose changes needed to ensure full cost recovery.

 RETREAT

n In 1999, 17 years after passage of the Nuclear Waste Policy Act, the responsibility for disposal of commercial spent fuel remains with DOE. But the January 1998 deadline for beginning acceptance of spent fuel has been missed. In fact, the program for waste acceptance is several years from submittal of an application for a license to construct and operate the first geologic repository. And, the program has witnessed a disorderly retreat from Morris Udall’s delicate fabric of agreements on issues of safety, equity and costs:

n Only one geologic repository—Yucca Mountain in the Nevada desert—will be developed to accommodate the nation’s entire projected inventory of commercial and highly radioactive defense waste.

n Since the repository was not available in 1998, despite the deadline established in 1982, a centralized interim storage facility may be required to relieve reactor sites of spent fuel. Under contractual obligations in return for payment of fees, such spent fuel becomes the responsibility of the federal government.

n Despite six-years of effort, a special nuclear waste negotiator was unable to identify a community or state willing to accept an interim storage site; the interim storage facility would therefore also be located in the Nevada desert, on seismically active public land withdrawn from multiple use.

n To avoid moving all wastes on public highways, special heavy-haul and rail spur operations may be required to enable rail casks to be delivered at the destination end of the cross-country trip.

n For an unprecedented prospective campaign that would move the nation’s entire inventory of spent nuclear fuel an average distance of 2,300 miles, DOE has committed only to meet current regulations. It has avoided committing to assure safety through "best practices" to maximize rail shipment, use dedicated trains and equipment (not mixed rail freight), use standardized shipment casks, or provide escorts for quicker and more expert response to transportation incidents or accidents.

n DOE must still receive a license from the Nuclear Regulatory Commission, its former sister agency in the Atomic Energy Commission of the 1950s and 1960s, but whether the standard for long-term isolation will be set by the Environmental Protection Agency, as specified in the 1982 Act, or by the NRC itself is the subject of fierce bureaucratic contention.

n DOE may preempt state and local regulations that may complicate or delay its mission. DOE must evaluate impacts, but it need not consider alternative methods or sites for permanent disposal.

n During the past year, nuclear utilities have taken several legal actions against DOE, seeking to enforce the federal government’s contractual obligation to accept spent nuclear fuel as well as trying to collect monetary damages for DOE’s failure to begin acceptance in January 1998.

TODAY'S STATUS

So, what is the status today of the 1982 commitment that the federal government would do the difficult and uncertain job of disposing of highly radioactive commercial wastes safely, equitably, and at the expense of those who chose and benefitted from commercial nuclear power?

n The federal government and DOE retain responsibility, but DOE failed to begin acceptance in January 1998, and its ability to license a permanent repository at Yucca Mountain—its only option since 1987—is uncertain.

n A consortium of nuclear utilities have attempted to site a centralized interim storage facility—most recently on an impoverished Indian reservation in western Utah—but, beyond the payment of fees under their contracts with DOE, nuclear utilities have made little constructive contribution to the problem of permanent disposal.

n Changes in the program adopted by Congress in 1987, as well as those in currently proposed legislation, have undermined the 1982 commitment to regional equity in the siting of unwanted, even dreaded, storage facilities.

n Midstream changes in the standard for long-term insolation at the repository, combined with DOE’s reluctance to commit to best transportation practice, cast doubt on the federal government’s commitment to an assurance of safety in the management of highly radioactive materials.

n The revenue base for the program—fees on sales of nuclear-generated power—will rapidly dwindle over the next two decades, perhaps leaving the general taxpayer with the obligation to pay for an increasingly costly program, which, once firmly focused on a single rural community in a politically weak western state, will lack broad-based political support.

MONEY MATTERS

Not the least of the problems of the program is that its long-term financing has been considered in perfunctory technical fashion, without serious policy-level consideration of important program alternatives or the tradeoffs of safety, equity, and costs. The Nuclear Waste Policy Act requires an annual assessment of the total system cost of the high-level nuclear waste program and, based in part on projected costs, an annual assessment of the adequacy of the fee—which is one mil per every kilowatt-hour of energy generated—to fully recover the costs attributed to commercial spent fuel. DOE has actually published such estimates in 1986, 1989, 1990, and 1995. The 1995 estimate is about $35 billion (FY96 dollars), or about $334,000 per metric ton of commercial spent nuclear fuel.6 Of the total, about $28.6 billion, or 82 percent, covers projected future costs.

The assessment of fee adequacy reflects several factors: the continued operation of the nation’s 110 commercial nuclear reactors; the amount of time the reactors are in operation, which could be affected by plant aging or market factors; the level of inflation, which erodes the purchasing power of the one-mil per kilowatt-hour fee; and real interest rates, which affect returns on investment of the fund balance. Another major factor, however, is the cost of the waste management program itself. Increased expenditures reduce the fund balance, the investment of which is expected to provide the revenues that are relied upon to sustain the implementation of the program in the decades after nuclear plants have shut down.

In DOE’s predicted operation of the Nuclear Waste Fund, the total expected expenditures attributable to commercial spent fuel are larger than expected fee revenues by about $7.7 billion (FY96 dollars), or 38 percent.7 But because the expected expenditures mostly fall in the latter years of the program, returns on investment of the fund balance are expected to support the program in the years in which fees on sales of nuclear power are no longer generated.

DOE’s 1995 assessment of fee adequacy, like its predecessors, concluded that the expected revenue from the fee, plus the income from investment of the fund balance, is adequate to meet the estimated cost to dispose of commercial spent fuel.8 This conclusion assumes that all nuclear plants continue operating through their 40-year license terms, reactor performance is not affected by aging, and program costs will be $35 billion.

DOE does not reveal the cost formulas and factors in its estimates of total system costs, however. Nor does it assess the costs of additional program elements that may be required by proposed legislation and recent court decisions—for example, a centralized interim storage facility at the Nevada Test Site adjacent to Yucca Mountain, an intermodal transfer and heavy-haul program to enable early shipment of canistered spent fuel in rail casks, and nuclear waste fund contributions to the cost of extended interim storage at reactor sites. Nor does it consider the costs of major uncertainties or contingencies in the implementation of the program—such as the discovery of defective canisters among the transportation casks, accidents in cross-country transport, failures of robotic equipment used to emplace and possibly retrieve waste packages in 100 miles of tunnels in heavily faulted volcanic rock, or delays in the currently anticipated schedule.

INDEPENDENT ASSESSMENT

In 1997, the state of Nevada commissioned an independent assessment of the total system cost of the nation’s high-level nuclear waste program.9 The independent cost assessment specifically addressed the current and projected inventory requiring permanent disposal; the strategy for managing the waste inventory; the types of costs required by the waste management strategy; and the schedules for storage, pickup, and emplacement, which determine the cost streams over time. The assessment identifies but does not estimate the potential costs of major uncertainties and contingencies in the implementation of the program.

The independent analysis estimates the cost of the nation’s high-level nuclear waste program at $54 billion, which is 54 percent above the most recent DOE estimate of $35 billion, or about $528,000 per metric ton of commercial spent nuclear fuel.10 Of the $54 billion, all but 11 percent are projected future costs. The projected future costs ($48 billion) exceed DOE’s estimate by $19 billion, or by about 67 percent. Of the $19 billion difference between the independent analysis and the DOE analysis, nearly $15 billion is for components that were not included in DOE’s 1995 estimates: a centralized interim storage facility, a system for enabling early shipment of canistered fuel to the centralized facility, and support for extended interim storage at reactor sites.

The implications for long-term finances are dramatic. The shortfall of fee revenues versus cumulative expenditure occurs earlier (in 2010, versus 2024 in DOE’s expected case) and is much greater ($24 billion versus $8 billion).

SHOTFALLS

Given the current U.S. legal and political environment, how might such a shortfall be met? First, by returns on investment of the fund balance. Then, to the extent that such returns are insufficient, by changes in the one-mil fee on sales of nuclear power. Then, if fee adjustments are not possible, by general tax revenues. Finally, if Congress refuses to use general tax revenues, by cutting costs or cutting corners in the program itself—actions that could reduce safety and impose inequities on communities and future generations who would be saddled with the responsibilities of managing or paying for nuclear wastes without having had the benefit of the use of nuclear-generated power.

These options raise the question of our national commitment to pay for the safe and equitable disposal of highly radioactive wastes generated in the production of nuclear power, as well as the implications if this commitment is in doubt. The evidence from the program’s first 17 years is that the national commitment is declining, even as the cost of the program may be increasing because of changes in legislation, court decisions, and a formidable array of other uncertainties. Congressional appropriations to the program have steadily declined, from about 0.07 percent of domestic spending in the mid-1980s to half that in the late 1990s.11 Fee revenues paid by nuclear utilities have also declined as a percentage of nuclear electricity sales—from over 2.0 percent in the late 1970s to 1.4 percent in the late 1990s.12

Congress, DOE, and the nuclear power industry—the institutions that authorize, implement, and fund the program—appear inclined to delay or avoid consideration of the need for additional revenues, either from the users and generators of nuclear power or from the U.S. taxpayer. A similar observation applies to the state utility commissions who represent ratepayers in states that have relied, at least in part, on nuclear power and that now face the costs of plant decommissioning as well as costs that may be "stranded" in the shift from regulated electric utility monopolies to more competitive power generation.13

WHOSE RISK? WHO PAYS?

The question is not whether tradeoffs among safety, equity, and costs must be addressed, but rather when and how these tradeoffs should be addressed. Desirably, such issues should be considered early and forthrightly through informed, public debate. The options available now may in the future be unavailable, or they may be more painful and contentious. Following is a list of suggestions as to how tradeoff issues should be addressed:

n Establish a panel of highly credible independent reviewers—who combine knowledge of the U.S. high-level nuclear waste program and federal finance practice with expertise in cost and revenue analysis, safety and equity dimensions, and program management implications—to oversee the total systems cost and fee adequacy assessment process.

n Conduct an annual assessment of total system cost and fee adequacy.

n Consider program alternatives in the annual assessment in addition to those consistent with current legislation.

n Consider monetary costs to others—for instance, nuclear utilities could be required to provide extended onsite storage.

n More fully consider the costs of uncertainty in the nuclear waste program.

n Consider the implications of potential early shutdown of commercial nuclear plants.

n Examine the tradeoffs of safety, equity, and costs among alternative program directions.

n Synthesize the above for technical and policy level review.

n Present a detailed review and discussion of the results in open forum at technical and policy levels. The discussion should address the relevance of the alternatives, the quality of the analysis, the cost differences and the tradeoffs of safety and equity, the national commitment to pay, and the implications for DOE program management.

n Report the findings to DOE, the Office of Management and Budget, and Congress.

These departures from past practice would greatly increase the prominence of systems cost and fee adequacy assessment in the management of the U.S. high-level waste program. The benefit could be a clearer definition of the nation’s commitment to pay for the safe, equitable disposal of the highly radioactive and long-lived wastes generated in the production of nuclear power, and a more steadfast national acceptance of a very long-term, uncertain, inherently inequitable, and costly program. Put another way, it could provide an opportunity for leadership in addressing the core issues in a very important but difficult and contentious national program.n

James M. Williams is president of Planning Information Corporation, a consulting group engaged in nuclear waste issues, operating out of Denver, Colorado.

1. Discharges through 1995 are based on DOE records. Projected discharges are by Planning Information Corporation, based in part on DOE projections of spent fuel storage requirements for which 1993 was the base year. See DOE/RW-0431-Rev. 1 (June 1995).

2. S. Sinnock, V.T. Lin, and J.P. Brannen, "Preliminary Bounds on the Expected Postclosure Performance of the Yucca Mountain Repository Site, Southern Nevada," Journal of Geophysical Research 92 (1987), pp. 7820-7842; DOE’s Integrated Data Base Report—1994: US Spent Nuclear Fuel and Radioactive Waste Inventories, Projections and Characteristics (Oak Ridge National Laboratory, 1995) (Revision 11, Table 0.3).

3. DOE’s Integrated Data Base Report—1994; A.E. Hechanova and V. Hodge, "Source Term Screening of Underground Nuclear Detonations at the Nevada Test Site" (Nevada Risk Assessment/Management Program, September 1998) Table 2-1, A-1, and A-2; DOE, "U.S. Nuclear Tests: July 1945 through September 1992", Revision 14, December 14.

4. DOE, Integrated Data Base Report—1994 (Revision 11, Table 0.3).

5. Luther J. Carter, Nuclear Imperatives and Public Trust (Washington, DC: Resources for the Future, 1989), p. 223.

6. DOE’s 1995 estimate allocates 80.22 percent of total system costs to commercial spent fuel, the inventory of which is projected at 83,954 metric tons.

7. These estimates assume an average long-term inflation rate of 3.5 percent, compared with 4.2 percent in DOE’s fee adequacy assessment. The reduced inflation rate increases the value of projected fee revenues by about 8.0 percent in constant dollar terms.

8. Nuclear Waste Fund Fee Adequacy: An Assessment (Washington, DC: US Department of Energy, October, 1996).

9. The potential costs of many program sub-components have been assessed and discussed. We believe ours is the first comprehensive independent assessment of total system costs. In 1990, the U.S. General Accounting Office conducted an assessment focusing primarily on the user fee rather than program costs. Nuclear Waste: Changes Needed in DOE User-Fee Assessments to Avoid Funding Shortfall, GAO/RCED-90-65, June 1990.

10. The independent assessment allocates 80.68 percent of total system costs to commercial spent fuel, the inventory of which is projected at 82,345 metric tons.

11. See Statistical Abstract of the U.S., Table 518 (Federal Budget Outlays) and Table 520 (Federal Outlays by Detailed Function).

12. Figures for cumulative one-time fees and one-mil per kilowatt-hour fees are from the DOE/OCRWM financial statement for FY 1996. It is assumed that one-time fees were incurred in the year of discharge but were paid in 1983. Estimates for the value of sales of nuclear power are based on statistics from the USDOE Energy Information Agency. The nuclear portion of total electricity generated in each year since 1957 is applied to total annual electricity sales. The sales value is based on the overall price of electricity in each year, adjusted to FY 1996 dollars.

13. Electric utility monopolies over the years have made capital investments under the assumption that they had a long-term customer base that would pay for the investments over time. In a new, competitive market, some of these investments may no longer be cost-effective, and if they have not already been paid for, companies owning them will be stuck with future payments without a good way to recoup their losses. Such costs are considered "stranded."

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