Funds to shut nuclear plants falling short

VERNON, Vt. -- The companies that own almost half the nation's nuclear reactors are not setting aside enough money to dismantle them, and many may sit idle for decades and pose safety and security risks as a result, an Associated Press investigation has found.

The shortfalls are caused not by fluctuating appetites for nuclear power but by the stock market and other investments, which have suffered huge losses over the past year and damaged the plants' savings, and by the soaring costs of decommissioning.

At 19 nuclear plants, owners have won approval to idle reactors for as long as 60 years, presumably enough time to allow investments to recover and eventually pay for dismantling the plants and removing radioactive material.

But mothballing reactors or shutting them down inadequately could pose dangerous health, environmental or security problems. In the worst cases, generally considered unlikely, risks include radioactive waste leaking from idled plants into groundwater, airborne releases or a terrorist attack.

During the past two years, estimates of dismantling costs have soared by more than $4.6 billion because rising energy and labor costs, while the investment funds that are supposed to pay for shutting plants down have lost $4.4 billion in the battered stock market.

The power companies have been hammered by the same declining market returns as colleges, companies and private investors. Industry critics say reactor owners weren't saving enough even before the financial collapse and that federal regulators have not held the industry to a high enough standard.

Federal regulators are expected to release letters later this week that will describe shortfalls at 30 of the nation's 104 nuclear plants and ask operators for details about how they plan to resolve the problem.

The amount of money set aside for dismantling the plants has decreased at nearly four of every five reactors, according to an AP analysis of financial records provided every other year to the Nuclear Regulatory Commission. The government could force plant operators to set aside more money.

Plant owners say they have several ways to close the gap. In addition to idling the plants, the government can simply extend licenses to operate them. And investments could recover in the years to come. Industry officials say a 6 percent annual rate of return is a reasonable long-term goal.

Most nuclear plants will be operating for several more decades and will be able to recoup their fund losses, said Steve Kerekes, a spokesman for the Nuclear Energy Institute, a trade group.

Nuclear power critics say those plans are not enough.

"No one at the NRC wants to acknowledge what is absolutely obvious to us, that the funds are inadequate and that the industry has bare assets," said Aroold Gundersen, a former nuclear industry executive and decommissioning expert.

Those critics say the industry is making assumptions about their investments that do not account for another market collapse, political obstacles to getting the licenses renewed and unforeseen safety problems that could make nuclear power less palatable.

Last week, British officials reported on a 2007 leak in a cooling tank at the decommissioned Sizewell-A nuclear plant. If the leak had not been promptly discovered, officials said, nuclear fuel rods could have caught fire and sent airborne radioactive waste along the English coast, harming plant operators or the public.

The average cost of dismantling a nuclear reactor is now estimated now at $450 million. The average plant owner has about $300 million saved up for the job. Typically, the money is raised through a small surcharge on electric rates.

NRC records show utilities are trying to close the gaps:

--Owners at 19 plants have won approval to mothball reactors for as long as 60 years. A method called Safestor has been approved for reactors including the three Palo Verde units in the Arizona desert and the Three Mile Island 1 reactor near Harrisburg, Pa.

Under this method, radioactive fuel is removed from the reactor and the spent fuel storage pool and is stored in dry casks on plant property. Plant systems are drained of water, and the remaining radioactivity in the plant is lef º7 ²²±°5°»°27:¹1¹08¸22 80·9 º7 store nuclear waste at a secure facility in Yucca Mountain, Nev. Instead, radioactive fuel rods are now stored in large concrete and steel canisters on plant grounds that are guarded around the clock and tested often for leaks.

The Vermont Yankee plant, in southeastern Vermont along the banks of the Connecticut River, was hailed as the future of power production for New England when it opened in 1972. Its license is set to expire in 2012, and its decommissioning fund has less than half the money expected to be needed.

As recently as December 2007, the fund held $416 million. Now it stands at about $384 million -- a rebound from where it stood a few months ago but not even close to the estimated $932 million it will eventually cost to dismantle the plant.

Entergy Corp. is seeking a 20-year license extension for Vermont Yankee, and is hoping to have enough money in the fund to decommission the plant in the 2030s. Jay Thayer, the plant's vice president for operations, said that if the decommissioning fund continues to perform poorly, the company could ask for permission to idle the plant for as long as 60 years under the Safestor program. That would put off the dismantling until 2092.

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On the Net:

Nuclear Regulatory Commission: http://www.nrs.gov

Vermont Yankee: http://www.safecleanreliable.com/

Greenpeace: http://www.greenpeace.org

Nuclear Energy Institute: http://www.nei.org/

Luminant Corp.: http://www.luminant.com