Stock dip cuts TVA cleanup funding

Stock dip cuts TVA cleanup funding
■ Authority officials hope to cure shortfall by requesting to extend the life of nuclear reactors.

BY DAVE FLESSNER
BUSINESS EDITOR

Three years of stock market losses and rising environmental costs may leave the Tennessee Valley Authority without enough money set aside to pay to shut down and clean up its three nuclear power plants, according to TVA officials.
In a report released Tuesday, TVA estimates it is $385 million short of the amount needed to clean up the nuclear plants as they are shut down over the next three decades.
The Nuclear Regulatory Commission requires utilities maintain nuclear decommissioning funds for cleaning up and removing toxic wastes from reactors after they are permanently shut down.
"We are seeing the effects of an unprecedented three-year decline in the stock market at the same time decommissioning costs are rising about 9 percent a year," TVA Chief Financial Officer David Smith said.
"But this report is only a snapshot taken at probably one of the worst times for the equity market. It also doesn't consider the great likelihood that the market will bounce back and that we will extend the life of our nuclear assets."
TVA officials believe they will cure the shortfall in the nuclear decommissioning fund with a request to extend the life of its reactors another 20 years.
Anti-nuclear activists oppose the nuclear license

extensions and questioned whether TVA is doing enough to protect communities around the nuclear plants.
"These nuclear plants are located on the banks of the river that supplies the drinking water to millions of people," said Stephen Smith, executive director of the Southern Alliance for Clean Energy. "TVA needs to have the resources available to clean these plants up if and when they have to be shut down.
"To my mind, it's only a hope and prayer to think these plants can safely go another 20 years."
TVA has filed a request to extend the license at its oldest reactor, Unit 1 at the Browns Ferry plant in Alabama, until 2033. TVA plans similar applications for its other reactors at Browns Ferry, Sequoyah and Watts Bar, TVA spokesman Gil Francis said.
The NRC has approved similar license extensions by other utilities. The extra life of the plant should give TVA enough time to earn more investment income to cover any decommissioning costs, according to Mark J. Burzynski, manager of nuclear licensing for TVA.
"Moderate market recovery, along with the achievement of planned license renewal for Browns Ferry within the near term, will restore overall funding adequacy," Mr. Burzynski said in a letter to the NRC.
TVA set aside $400 million in 1996 to provide what agency officials then estimated would be enough money for decommissioning all of its licensed nuclear plants. The fund grew with the stock market in the 1990s to reach nearly $800 million. But at the end of 2002, TVA estimates the trust fund was worth only $540 million. As of March 31, Mr. Smith said the fund had dropped to about $518 million.
In its report to the NRC, TVA estimates it will cost more than $2.3 billion to decommission and clean up all of its nuclear sites. To generate that amount, TVA estimates it should now have $904 million in its decommissioning fund, or 42 percent more than what now is available.
Mr. Burzynski said TVA is considering several methods to provide additional funding assurance to the NRC prior to the regulators' decision on any license extension at Browns Ferry in two years.
TVA may not be alone among operators of America's 103 commercial nuclear reactors in its deficiency of its nuclear decommissioning fund, according to an NRC official.
"We are still compiling and reviewing these reports as we will be for several months," said Michael Dusaniwskyj, an NRC economist responsible for analyzing the adequacy of the decommissioning funds. "But with what has happened in the stock market, we may see some shortfalls in these reports."
The NRC began requiring utilities in 1999 to disclose how they will pay for decommissioning licensed plants. In previous reports, TVA and other utilities maintained adequate reserves, Mr. Dusaniwskyj said.