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GAO Report Finds Inadequacy, Inaccuracy in NRC Oversight of Funds to Decommission Nuclear Power Plants

Press Release

Date: May 7, 2012
Location: Washington, DC

Today, Congressman Edward J. Markey (D-Mass.), senior member of the Energy and Commerce Committee, released a new report by the Government Accountability Office (GAO) that found that the Nuclear Regulatory Commission (NRC) may not be accurately estimating the costs of decommissioning nuclear power plants nor adequately ensuring that owners are financially planning for the eventual permanent shutdown of America's nuclear power plants. The request was motivated by several other reports suggesting such inadequacies. For example, a 2009 review of licensee decommissioning funding status reports found that licensees for 27 out of 104 operating nuclear reactors had a combined shortfall of more than $2.4 billion in their decommissioning funds.

Because decommissioning a nuclear reactor costs hundreds of millions of dollars, the NRC is responsible for ensuring that licensees provide assurance that they will have adequate funds at the relevant time to decommission their reactors. The new GAO report, "Nuclear Regulation: NRC's Oversight of Nuclear Power Reactors' Decommissioning Funds Could Be Further Strengthened" was requested by Rep. Markey in March 2010 to ensure that nuclear power plant licensees provide reasonable assurance of adequate decommissioning funds and to identify any improvements or weaknesses in NRC's oversight in this area. Rep. Markey long has been concerned about the strength of NRC's oversight of decommissioning funding over the past two decades, prompting his request for previous oversight reports from GAO in 2001 and 2003.

"Decommissioning funds are the 401k's for America's nuclear power plants, and this new GAO report indicates the nation's plants are headed for a retirement meltdown," said Rep. Markey. "The NRC appears to be inaccurately estimating the costs of decommissioning the nation's nuclear power plants and inadequately ensuring that owners are financially planning for the eventual shutdown of these plants. It will be the public who'll pay the price if nuclear power plant owners come up short on the bill to safely close these plants."

The GAO examined the overall strength of NRC's oversight of decommissioning funding. Key findings of the report include:

· The NRC decommissioning funding formula may be outdated since it was last updated in 1988 and is based on two studies published in 1978 and 1980 that used technology cost and other information available at that time.
· NRC's evaluation of licensees' funding arrangements was not rigorous enough to ensure that decommissioning funds would be adequate,
· The NRC had not established criteria for taking action if it determines that a licensee is not accumulating adequate decommissioning funds and
· The NRC relies on licensees' reports of decommissioning fund balances without verifying these balances

The GAO report makes a series of recommendations to the Commission that includes defining what the agency means by the bulk of the funds that licensees will likely need to decommission their reactors; documenting procedures describing the steps that NRC staff should take in their reviews analyzing licensee documentation and verifying that the amounts licensees report to NRC in their decommissioning funding status reports match the balances on their year-end bank statements; continuing reviews of fund balances in a way that is most efficient and effective for the NRC; and considering review of a sample of licensees' investments to determine if licensees are complying with decommissioning investment standards and determine whether action should be taken to enforce these standards.

In light of the recommendations made in the new GAO report, Rep. Markey today sent a letter to the NRC asking for the Commission's responses to questions that include:

· What is the experience that leads the NRC to conclude the existing regulatory system is adequate?
· What are the NRC's plans to improve the ability to estimate decommissioning costs? What new inputs will be included in a revised decommissioning funding formula, and how will the revised formula be verified?
· How is the public to be assured that nuclear power plant decommissioning can be performed in a manner to protect human health and safety and the environment?
· How does the NRC specifically plan to implement each of these recommendations in the GAO report, and what is the timeline for implementation of each?
· Is the NRC considering discontinuing licensee site reviews to verify the accuracy of licensee fund balances in their decommissioning funding status reports as the GAO report indicates?
· What training programs or partnerships is the Commission considering to address lack the financial expertise of agency staff to evaluate compliance with investment restrictions?
· Will the Commission reconsider its October 2010 vote against the NRC staff's proposed change that would have directed nuclear power plant licensees to adjust decommissioning funds every year and within three months of the annual recalculation of the regulatory minimum needed?

"Adequate decommissioning funds are absolutely essential to reduce radioactive contamination after nuclear reactor permanently shuts down," wrote Rep. Markey in the letter to the NRC. "Every one of the 104 currently active nuclear reactors across the United States will need to be decommissioned eventually. Having enough money to perform the shutdowns is critical for protecting public and environmental health and safety."