Niagara Mohawk Power Corp. already has charged its ratepayers more than $23 million over the past two years to pay for shutting down its two nuclear power plants when the time comes.
The upstate New York utility carries the decommissioning funds on its books, but already has spent much of the money on other things, something state regulators allow.Utility officials insist it's better for ratepayers if the money is invested in the nuclear plants now, and decommissioning funds are raised later through some other means. Nuclear utilities in other states follow the same practice.
But public interest groups say this method is misleading. And they say utilities are underestimating future decommissioning costs.
The problem of shutting down nuclear plants is something utilities won't face until the turn of the century. But the issue of how to pay to retire them already has become a high-stakes struggle, since some 66 commercial nuclear reactors are due for permanent shutdown by 2010.
Since no large nuclear power plants have ever been dismantled, there are no guidelines for estimating decommissioning costs. Utilities even admit they're just groping in the dark.
Only one commercial reactor has actually begun decommissioning, Duquesne Light Co.'s 72,000-kilowatt Shippingport Atomic Power Station at Shippingport, Pa. Utility officials peg the cost of dismantling the plant at $100 million.
But most of the nuclear plants operating today generate more than a million kilowatts, so it's impossible for utilities to use Shippingport as a guideline, experts say.
The Nuclear Regulatory Commission, which oversees operation of the nation's nuclear plants, will issue rules on the subject later this year, said Karl Abraham, an NRC spokesman. The rules will require utilities to come up with their own plan for estimating decommissioning costs or use the
commission's estimate of $100 million, Mr. Abraham said.
That figure is based on 1984 estimates supplied by Battelle Northwest Laboratory of Richland, Wash., a research and development laboratory. Company officials say the figure covers only the cost of removing the most radioactive elements within a plant's nuclear reactor, not dismantling an entire plant.
Most states, including New York, allow utilities to collect decommissioning funds from ratepayers now and keep the money in internal
Only 11 states require nuclear utilities to keep the funds in an external account with an outside manager.
Two utilities in the state, which have collected millions in decommissionin g funds, already have used much of the money to build additional plants or improve existing ones. They say using the money this way gives ratepayers a better return on their money than interest from an external account could.
"Saving money in a bank account at a 10 percent interest rate would mean you would have to go out and borrow more money at a higher interest rate when it comes time to decommission," said William Romano, spokesman for Niagara Mohawk. "It's better to let the money work for you now."
But critics say the practice is too risky.
"The main problem is that a utility simply may spend the money and if they've been bad managers there's nothing left when it comes time to decommission," said Kenneth Bossong, an official of Critical Mass, a Washington-based public interest group.
"There's just too great a risk of utility bankruptcy or that decommissioning costs will be much higher than anticipated."
Mr. Bossong also said the $100 million decommissioning figure is grossly underestimated. "We think decommissioning costs will be equal to the actual construction cost of the plant," he said.
It cost Niagara Mohawk $260 million to build its Nine Mile One plant, and the company estimates it will spend $6.3 billion to complete its Nine Mile Two plant curently under construction.
But the utility estimates it will cost only $212 million to decommission Nine Mile One and $264 million to decommission Nine Mile Two.