Rule change for decommission funds

1 October 1998

The Nuclear Regulatory Commission has amended its rules governing how US nuclear power plant licences must prepare financially for plant decommissioning.

The new rules, which reflect NRC concerns about the possible early closure of nuclear plants as a result of the restructuring of the electric power sector, identify which licensees may use an external sinking fund.

“It can be a trust, escrow account, government fund, certificate of deposit, government securities or other payment acceptable to the NRC,” the agency said. The amended rule requires licensees to report to the NRC on the status of their decommissioning funds by 31 March 1999, then every two years, thereafter. However, if market conditions indicate the plant will close within five years before its licence expires, or if a nuclear plant has already shut down, the licensee must file a report annually.

A recent report by the US Energy Information Administration, the data-collecting arm of the US Department of Energy, concludes that restructuring of the US utility sector is likely to result in some early closings of nuclear power plants.

In a restructured industry, there would be no state or federal agencies monitoring nuclear plant decommissioning funds, as there is today, the NRC said.

The NRC rule change would also permit nuclear plant licensees to take credit on earnings for prepaid decommissioning trust funds and external sinking funds from the time that monies are set aside through the end of the decommissioning period. In the past, the NRC did not allow such credit because it worried that inflation and taxes would erode any investment return. However, that concern isn’t supported by historical performance of inflation-adjusted funds invested in US Treasury securities, the agency said.

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