TVA's nuclear closing fund short $363 million

TVA's nuclear closing

fund short $363 million

By Duncan Mansfield
Associated Press Writer

KNOXVILLE — The Tennessee Valley Authority's trust fund to pay for the eventual closure and cleanup of its three nuclear plants is $363 million short.

The nation's largest public utility blamed a falling stock market and rising environmental costs for the shortage.

TVA invested its entire $518 million decommissioning fund in equities, but the proceeds have failed to keep pace with a 9 percent annual rise in cleanup projections.

"I think many other utilities will be short as well," TVA Chief Financial Officer David Smith said Wednesday.

Explanations may not satisfy the Nuclear Regulatory Commission, which is taking a biannual review of decommissioning funds for all 103 reactors in the United States.

NRC economist Michael Dusaniwskyj said utilities with lagging funds will be pressed to answer: "How are you going to get the money?"

Some "don't want to bite the bullet," he said, although the NRC requires utilities only to stash away enough money to make old reactor sites radiation free, not necessarily clean them well enough for other uses.

"You could just write a check and put some more cash in," Smith said. "But that would be our last choice."

TVA worries about tying up too much money in an account that can be used for only one purpose, and has refused to pass along decommissioning fund contributions to electricity ratepayers to ease the bottom line.

A self-financing federal corporation, TVA created its decommissioning fund in 1996 with a one-time infusion of $400 million.

The fund, invested in the stock market, was expected it to grow fast enough to meet requirements without having to add another dime.

"I don't think anybody gets any credit with 'I told you so,' " said Stephen Smith, director of the Knoxville-based Southern Alliance for Clean Energy, "but we were critical of them putting so much of it in the stock market seven years ago and now they are wondering why they have a shortfall."

The TVA fund grew to nearly $800 million three years ago before the market slide. It is worth about $540 million on Dec. 31 and down to $518 million on March 31.

TVA says it will need nearly $2.4 billion to decommission its three reactors at Browns Ferry in Alabama; two reactors at Sequoyah and one reactor at Watts Bar, both Tennessee plants.

License expires

The NRC license on Browns Ferry, TVA's oldest nuclear plant, will run out in about a decade. The license for the Unit 1 reactor expires in 2013; Unit 2, 2014; and Unit 3, 2016.

The Sequoyah reactors are good until 2020-2021, and Watts Bar is licensed to 2035.

TVA plans to seek license extensions for all of them, beginning with Browns Ferry later this year. NRC approval could add 20 years to their operation.

TVA's Smith said that could give TVA two more decades to fill the decommissioning fund. Dusaniwskyj agrees it would be like converting a 15-year home mortgage to a 30-year mortgage.

But Stephen Smith believes TVA "should have the full amount of money in hand" before the plants reach what was once considered their operating lifetimes.

"The costs are continuing to go up and they need to have more not less money in the fund," he said.