Presidential Commission Recommends Nuclear Waste Management and Funding Reforms

The Blue Ribbon Commission on America’s Nuclear Future released its final report detailing a new strategy for managing the nation’s nuclear waste.  The Commission’s key recommendations include removing nuclear waste management from the purview of the Department of Energy (DOE), creating a new federally chartered corporation to implement the waste management program and immediately overhauling how utilities fund the nation’s waste management activities.  The Commission submitted its report to Secretary of Energy Chu on January 26 and urged the Secretary to appoint a senior official at the agency to coordinate prompt implementation of the Commission’s recommendations.

President Obama formed the Commission following his decision to halt work on a geologic storage facility at Yucca Mountain, Nevada.  Despite more than two decades of work on developing that site, the United States still lacks a central repository for civilian nuclear waste, and nuclear waste remains at power plants around the country.  Since the early 1980s when Congress created the Nuclear Waste Fund (NWF), utilities have paid the federal government 0.1 cents per kilowatt-hour of nuclear electricity sold in order to fund nuclear waste management activities.  Much of that money collected from utilities, however, has been used by Congress to fund unrelated programs or to reduce the annual budget deficit.

Concluding that the DOE’s record in managing nuclear waste has “not inspired widespread confidence or trust,” the Commission recommended creating a new single-purpose organization to implement the nation’s nuclear waste management program.  The federally chartered corporation would site, license, build, and operate facilities for interim storage and permanent disposal.

The Commission highlighted that reforming the NWF is critical to the success of the new organization.  The report details “a web of budget rules” that have made the approximately $750 million in annual fee revenues and the $25 billion balance in the NWF “effectively inaccessible” for their intended purpose.  The Commission noted that pending legal action against the DOE aimed at suspending the collection of annual fees until a new waste management plan is in place underscores the “sense of outrage that the only aspect of the waste management program that has been implemented in full and on schedule is the part that involves collecting fees.”

The Commission recommended that utility fee payments into the NWF each year match actual spending on waste management activities.  Under this recommendation, the DOE would amend existing contracts with utilities to require utilities to retain the balance of annual fees in irrevocable trust accounts, which would be similar to qualified nuclear decommissioning funds.  According to the Commission, DOE and utilities could implement this proposal without new Congressional legislation.

In 1998, then-Secretary of Energy Frederico Pena proposed a similar scheme.  Under that proposal, utilities would have been allowed to invest the retained portion of fee payments at “market rates of return,” but pay the government in the future the balance of the fees at the Treasury rate.  The difference in interest would have been retained by the utilities to offset the costs of the federal government’s delay in taking nuclear waste.  Utilities opposed the Pena proposal because they would have been required to give up rights to file claims against the government for its failure to meet a statutory deadline to begin collecting nuclear waste.