To decommission or not to decommission ? That is the question!

29 October 1998

Increased competitiveness and deregulation of the US electric utility industry is imposing new performance expectations upon nuclear power plant owners. The availability of cheap natural gas and new combined cycle gas turbine technology with 60% thermal efficiencies, low capital cost, and quick construction cycles of two years have created new competition for nuclear generators.

Although annual industry performance indicators published by the Institute of Nuclear Power Operators (INPO) continue to show improvement, the rate appears to be leveling off. However, the improving trend may continue for the next few years as the top performers excel and the ‘economically challenged’ are removed from the US database by ceasing operations. Indeed, new issues confronting nuclear generators make it likely that, when plants experience long shutdowns or need significant new investment, companies will consider early decommissioning. This scenario is likely to emerge as the shakeout in the electric utility industry continues.

During the past ten years, eleven US commercial nuclear power plants have been shut down prior to the expiration of their Nuclear Regulatory Commission operating licenses. Most sites have proceeded with immediate decontamination and dismantlement (ie DECON). Others have opted to maintain the facility in a safe storage mode (ie SAFSTOR). The factors favouring permanently ceasing power operations and decommissioning a site require complex technical and economic evaluations. Nuclear plant owners contemplating such decisions often assemble teams of experts from engineering, operations and financial disciplines to evaluate all of the interrelated issues leading to a shutdown decision.

Duke Engineering & Services has significant experience in nuclear plant operations and engineering, plant life extension and shutdown evaluations, and decommissioning. The following discussion presents a decommissioner’s perspective of the factors which contribute to two of the most important decisions nuclear executives will ever need to make: 1) The decision to shut down a power plant, and 2) whether to dismantle the facility now or later. See Table 1 for an overview of the important factors.

Factors favouring plant shutdown

Permanent plant shutdowns during the past ten years have been influenced by a number of contributing factors. Typically, no one factor is considered dominant, and most shutdown decisions have resulted from many factors acting simultaneously. These factors are summarised below:

• Lower cost of competing power - The cost of power from alternative or competing sources of energy, especially in light of utility deregulation, presents the greatest threat to continued nuclear plant operation. This is beyond the direct control or influence of the nuclear decision-maker. Generally, the cost of power over the remaining life of the subject nuclear facility is compared with alternative power sources under varying operational and economic scenarios.

• High plant operating costs – Operating costs include major expense categories such as plant staff and contract labour, equipment and supplies, headquarters support, nuclear fuel, taxes, insurance, and regulatory fees. Older, smaller, single-unit plants which have a higher than average plant staff-to-megawatt ratio may have higher operating costs. Plant staffing strategies and staffing requirements are largely dictated by operations and maintenance requirements and license commitments, regardless of plant size. Likely candidates for early shutdown may be those plants with the highest cost of operation and maintenance.

• Declining capacity factor – A declining capacity factor is usually indicative of declining plant operational effectiveness, resulting in higher power costs. Capacity factor is usually more dependent on how well a plant is being operated and maintained than its age. Short term declines may be reversible with proactive management strategies and a motivated workforce. Plants with consistently declining capacity factors will continue to be uneconomical and thus be candidates for shutdown. (Note: A major factor in declining capacity factors are NRC-mandated outages which, over the last 10 years, have reduced the total US nuclear industry capacity factor by two percent. While this value is significant, the impact on a single plant is obviously greater.)

• Major capital expenditures – Expenditures for major capital additions or large component replacements can make a marginally economical plant uncompetitive. Major capital expenditures are most cost effective on larger plants with many years remaining in their life cycle or as part of a strategic license renewal initiative.

• Years remaining on operating license – Having fewer than ten years remaining on the current operating license is not, by itself, a significant contributing shutdown factor. When viewed in conjunction with other factors, such as major capital expenditure requirements and the availability of short term power contracts, this factor can become very important. Amortising major capital expenditures over a short time horizon, without the benefit of license extension, usually results in an uncompetitive power cost.

• Excess plant capacity in the region – Excess capacity encourages the use of the most cost effective power plants. In 1991, excess power capacity in New England was a contributing factor to the decision to permanently cease power operation at the 185 MWe Yankee Nuclear Power Station in Rowe, Massachusetts. Excess capacity is another external market factor which is beyond the control of the nuclear decision-maker.

• Restrictive regulatory environment – According to NRC Commissioner Nils Diaz, during the early 1980’s, “the NRC established regulatory requirements that demanded performance of the industry beyond what could be accommodated at that time.” The cost of compliance was very high and caused an incremental increases in plant O&M costs for many years. An increasingly restrictive regulatory environment is likely to have a material impact on the marginally economical plants and contribute to their closure.

• Single asset utilities – Nuclear utilities with only one nuclear plant asset have only one revenue producing asset to support the overheads required by regulatory pressures. Consequently, the future of the company is dependent on the economic performance of its sole operating facility. Most of the single asset nuclear utilities own facilities that began commercial operation in the 1960s and 1970’s. Those facilities are likely to be the smaller plants with higher O&M costs, and most vulnerable to major component expenditures. Owners may decide that continued economic performance of the facility will be an increasingly difficult and risky challenge that is not worth undertaking.

• Strategic direction of corporation – With a movement towards a deregulated utility industry, electric utility owners are re-evaluating their strategic plans and business models. As is occurring in the non-nuclear sector, utilities are selling off generating assets and focusing their businesses in the transmission and distribution market. Owners wishing to divest themselves of nuclear generating facilities may opt to permanently shut them down.

• Deregulation and emerging market conditions – Deregulation is likely to add risk and uncertainty that will accelerate shutdown. New technology such as more efficient gas turbines coupled with increasingly predictable natural gas and oil prices (ie raw material prices within narrow price ranges) may accelerate this trend. Many changes in regulatory treatment of nuclear assets result in a subtle bias in favour of premature shutdown, including recovery of stranded assets and decommissioning costs, with future generation at market prices.

• Local political climate – Although not considered a major factor, local communities who oppose ongoing power operations at a nuclear site may rally, together with other anti-nuclear groups, in support of a potential plant shutdown initiative. An adversarial political climate often manifests itself as unfavourable regulatory treatment.

• Regional economic conditions – Stagnating economic conditions may result in reduced electric load demand. In recessionary times, the visibility of a marginally economical plant tends to be enhanced, thus weighing heavily on any evaluation to permanently shut the plant down.

• Disallowance of costs (rate cases) – Recovery of costs through rate case proceedings are no longer certain. Even though the average performance of nuclear power plants has significantly improved, poor performers are in an even worse position to recover costs associated with NRC violations, extended NRC-mandated shutdowns, and other outages which were the norm 10 years ago, but which are becoming more abnormal given the industry’s improved performance.

Factors favouring immediate dismantlement

Once a decision has been made to permanently cease power operations at a nuclear power plant, owners need to decide if the facility will be decontaminated and dismantled immediately or at some future time after a storage period. Factors which favour an immediate dismantlement of the facility include the following:

• Decommissioning funds are available – Financial resources required to decommission a nuclear power facility are normally collected during the life of power operations through the power cost charged to customers. When a plant is prematurely shutdown, the funds collected to date may be insufficient to pay for immediate plant dismantlement. Consequently, the owner may have no choice but to mothball the facility for many years until the decommissioning funds are adequate to proceed with dismantlement. Adequate financial resources to proceed with decommissioning are a mandatory requirement.

• Costs are predictable (near term) – Generally speaking, current economic conditions are stable, cost inflation is low, and future costs are predictable. This economic environment would support an immediate dismantlement strategy due to the visibility of near term cost trends. Once decommissioning is initiated, an owner could feel reasonably certain that rapid inflation, which could increase the decommissioning costs beyond available financial resources, is unlikely during the 5-7 year period typically needed to complete decommissioning.

• Availability of low level waste disposal site(s) – Decommissioning of a nuclear power facility requires the availability of a licensed low level radioactive waste disposal site. There are few disposal facilities currently operating in the US today, and their continued long term operation is uncertain. This encourages an immediate dismantlement strategy and the disposal of decommissioning wastes as soon as practicable. Also the projected cost of new “engineered” waste disposal facilities are substantially higher than currently operating facilities, favouring the disposal of radioactive waste materials sooner, rather than later.

• DECON costs less than SAFSTOR – Most decommissioning studies (for single-unit sites) which compare immediate dismantlement (ie DECON) to long term storage (ie SAFSTOR) have concluded that immediate dismantlement is less expensive. Generally speaking, SAFSTOR is more expensive than DECON due to the annual commitment of resources required to maintain the nuclear facility and its spent fuel in regulatory compliance during the storage period. However, there may be extenuating circumstances on multi-unit sites wherein the long term safe storage costs can be shared between facilities, resulting in a lower SAFSTOR cost estimate.

• Experienced plant personnel available – Personnel who have significant operating experience with a specific nuclear facility can be a valuable asset during its decommissioning. Knowledgeable plant engineers and operators possess great insight and understanding of plant design and operations which can enhance the safe and timely decommissioning of plant systems, components and structures. Decisions to postpone dismantlement may result in the permanent loss of this valuable resource. (Note: There is an emerging view among decommissioning professionals that, as the industry gains more decommissioning experience, the importance of retaining a number of knowledgeable plant operating personnel at an idle plant will be reduced.)

• Future regulatory uncertainty – Current regulations are known and expectations reasonably well defined. As time goes on, there is some likelihood, based on history, that decommissioning regulatory requirements may become increasingly restrictive and contribute to longer schedule durations and higher costs.

• Decommissioning technologies available now – Decommissioning involves the use of currently available decontamination and dismantlement processes, technologies, and equipment. Even underwater segmentation of highly activated reactor core components has been safely accomplished using robotic plasma-arc torches. Consequently, deferring dismantlement to a later date due to insufficient access to suitable technologies is usually not warranted.

• Site available for reuse – Immediate dismantlement and site restoration of a nuclear power facility permits reutilisation of the site for uses which may offer significant economic benefit to the company and the surrounding communities.

• Minimises impacts on local communities – Immediate transition into dismantlement minimises (or delays) the economic impact and employee dislocation commonly associated with any plant shutdown. Under a DECON strategy, experienced plant personnel and other regional workers are more likely to find decommissioning employment opportunities to the overall benefit of the local economy.

• Positive public perception – There is anecdotal evidence that the public supports the dismantlement of nuclear power plants sooner, rather than later. The general fear is that the facility will sit there for a long time, may be abandoned, or become a “radioactive waste dump”.

• Eliminates corporate liability sooner – A shut down nuclear plant is presented in a company’s financial reports as a liability until the facility is removed, the site restored, and the NRC license terminated. Until this is accomplished, the rating and attractiveness of the company to the financial community for investment may be diminished.

• Permits earlier termination of the NRC license – Termination of the NRC license is a prerequisite to releasing the site for other uses and is considered the final major milestone to be accomplished during the life cycle of every nuclear power facility.

Factors favouring deferred dismantlement

Some of the factors which enhance the desirability of deferring dismantlement of a nuclear power plant include the following:

• Insufficient decommissioning funds – As previously noted, if adequate decommissioning funds are not immediately available, dismantlement of the facility must be delayed until such time that they are. The time delay would be dependent on the amount of funds collected to date, the total cost estimate to complete the decommissioning process, and the rate at which the fund will grow over time.

• Lower radwaste volumes – Deferred dismantlement results in somewhat lower radioactive waste volumes as a result of the radioactive decay process. Since Cobalt-60 is usually the predominant nuclide (from a dose perspective; with a half-life of 5.3 years), the total volumetric inventory of radioactive material which needs to be disposed of as radwaste will be reduced. However, the quantities of other longer-lived nuclides which are normally present with Cobalt 60 (such as Iron-55 and Nickel-63) virtually guarantee that the majority of the materials to be removed from the facility will qualify as radioactive waste. The actual reduction in radioactive waste volumes over time will be based on the initial activity levels at the time the nuclear facility ceased operation.

• Lower personnel radiation exposure – Commensurate with the discussion on radioactive waste volumes, radiation levels will decline over time, and the total radiation exposure to decommissioning workers will also be reduced.

• Resolution of spent fuel issue – With the exception of the Fort St Vrain nuclear plant, the US Department of Energy has not yet initiated the transfer of spent fuel from nuclear plant sites to a government repository. Consequently, there may not be any incentive for an owner to proceed with plant dismantlement if the spent fuel pool and supporting systems and structures must remain operational. The SAFSTOR period may provide owners with a good reason to take a “wait and see” posture (in spite of higher annual O&M costs) until the spent fuel issue is resolved once and for all.

• Avoids industry learning curve – The decommissioning of commercial nuclear power plants is a relatively young industry. Indeed, less than 10% of the US commercial fleet has been decommissioned. The industry and the companies who participate in it will likely develop along a “learning curve” where human resources, engineering processes, and regulatory requirements become more efficient, based on earlier experiences. Deferred dismantlement avoids the pain which often accompanies the learning process.

• Benefits from future technology development – As the industry gains more experience, new, more effective decontamination and dismantlement technologies and processes will be implemented resulting in higher worker productivity, reduced schedule durations, and lower costs.

• Allows time for detailed planning – The successful decommissioning of a nuclear power plant requires a comprehensive and detailed planning effort which integrates all of the required licensing, engineering and dismantlement activities. The unplanned, premature closure of a plant may not allow for such a comprehensive planning effort. If dismantlement is deferred, there is more time to prepare an optimised decommissioning plan and schedule.

• Multiple unit sites – Plants which have been shut down permanently, but are located on the same site as other operating nuclear units may benefit from deferred dismantlement. The long term operations, maintenance and security requirements might be met with shared resources from the operating units, with a commensurate lower cost commitment than would otherwise be required if it were a single unit site. There may also be critical ‘shared’ systems and components which make single-unit decommissioning impossible or difficult.


During the next few years, many utilities will decide whether continued operation of their nuclear power facilities is economically justified. The decision to permanently shut down a plant is only the first major decision which must be made. The selection of a strategy for decommissioning the site is an equally daunting task which requires the consideration of many factors. The degree to which these factors apply is unique to each plant and must be examined in detail in order to ensure that a prudent decommissioning decision is made.

Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.