Federal failure to fulfill spent-fuel obligations creates expensive risks.
Stephen Maloney is a managing consultant in Towers Perrin’s risk and financial services practice. Email him at email@example.com
For more than 50 years, the federal government has failed to manage spent nuclear fuel (SNF) and high-level radioactive waste (HLW), imposing the burdens for this critical function on the private sector. Nuclear plant operators incurred upwards of several hundred million dollars per reactor in uncompensated expense and risk premiums, and potentially face decades of additional costs and risks coping with SNF and HLW.
When federal policies fail, they fail in a big way. The most obvious costs to utilities are in SNF custodial facilities and services that were supposed to be provided by the Department of Energy (DOE) in exchange for the fees paid by utility customers.
But, the more insidious costs are the decades of reimbursed interest and risk premiums, and their ripple effects lowering utility credit ratings and raising capital costs for years to come.
Companies that sold nuclear facilities in the past two decades suffered additional losses at the time of sale, because DOE’s breach put the buyers of those plants at significant risk. No nuclear waste repository was, or is, available. At the time, dry-cask storage technology and safety regulations were in the embryonic stage and success uncertain. Many decommissioning trusts were underfunded. These plants were distress sales.