Estimation OF NUCLEAR FACILITY
Decommissioning COSTS
Current staTus and prospects

It is now common practice to prepare decommissioning plans and associated cost estimates for nuclear
power plants and other nuclear facilities even before the start of construction. Typically these plans andestimates are updated regularly during plant operation, in the transition period after shut down, and duringdecommissioning. Specific requirements on contents of the plan are usually set out in regulation, which has
its basis in national legislation.
Transparent, underpinned cost estimates have a number of important functions. They provide: a rationale forthe chosen decommissioning strategy, a basis for assessing the cost-effectiveness of the decommissioning
activities, and a basis for ensuring the necessary funds are available when needed to cover the actual cost ofdecommissioning. Practices for estimating decommissioning costs vary across countries and projects. Efforts
are being made to improve cost comparability.

Status of cost estimation for decommissioning
Most countries have establishedrequirements for cost estimation
and reporting. For nuclear power
plants and other commercialfacilities, legal requirements
include the preparation of adecommissioning plan andassociated cost estimates, withperiodic updates - usually every
three to five years.

National regulations include both administrative and substantive requirements. Substantive requirements generally relate to explaining and justifying boundary conditions and assumptions used to calculate cost estimates.
Examples of boundary conditions include the year of the estimate, possible
site end states, characteristics of the facility or waste clearance limits, aswell as the expected decommissioning activities. The latter may include
facility characterisation, transitioning from operation to dismantling, wasteprocessing, legacy waste disposition, spent fuel disposition, storage, transportation and other materials management activities. Assumptions regarding contingency costs and the labour market are also to be reported. In
some countries, substantive requirements stipulate the use of present value
costs and means for handling escalation.

Periodic updates and reviews arecarried out in light of the factthat the timeframe for active
decommissioning comes several
years or even decades after theinitial estimate is made.

The nuclear safety regulator plays an important role in the review andapproval of decommissioning plans and, in some cases, decommissioning
cost estimates and funding plans. Some regulators require a cost-benefit
analysis or the equivalent for assessing alternative decommissioning technologies and techniques. Reviewing cost estimates regularly and comparing
them with the actual cost of decommissioning activities ensures the qualityof these estimates.

Most countries have adopted
an internally consistent formal
structure for estimating andreporting costs. There is variability
from country to country, however,in the methodology.

To structure their estimates, many countries have adopted a breakdown into
activity-dependent and period-dependent costs. These cost breakdowns canbe used to divide decommissioning financing into tranches; it is likely that
there is greater confidence in the more immediate tranches. Several countries
reflect the degree of confidence by specifying different contingency factors fordifferent tranches of the project.

Contingencies and uncertainties
In order to comprehend andaddress cost escalation two
concepts are important:“contingency” and “uncertainty”.

In preparing and managing cost estimates the concepts of “contingency”
and “uncertainty” are important.
“Contingency” addresses potential increases in the defined cost of anactivity item and is specific to that item. When increases occur these aremainly due to the novelty of some of the tasks. However, the overall contingency of completed projects is usually limited to between 10 and 30 %.
“Uncertainty” is the word used to refer to cost variations from causes outside
the control of the project, such as currency exchange rate fluctuations, unex- ➜Please consult our website: www.oecd-nea.org/rwm/wpdd

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WPDDWorking Partyon Decommissioningand Dismantlingpected inflation rates, regulatory changes, availability of new technologies ordisposal routes, etc. The effect of uncertainty on project costs can be muchgreater than that of contingency factors. Various approaches are used for
dealing with uncertainty, and each country may use a different combinationof tools, such as numerical simulations or scenario analysis.

Challenges in comparing the costs of decommissioning projects
The most significant cost elements
and their ranking as cost drivers
within a decommissioning project are:• Scope of work through to the endpoint ofthe site.
• Regulatory requirements, including detail ofreporting and clearance levels.
• Stakeholders’ demands.
• Characterisation of physical, radiological,
and hazardous materials inventory.
• Waste processing, storage and the availability of ultimate disposition facilities.
• Disposition of spent nuclear fuel and onsite storage prior to emplacement in a permanent repository.
• Clean structure disposition and disposal ofthe site for new developments.
• Contingency application and use in estimates.
• Availability of experienced personnel withknowledge of the plant.
• Assumed duration of the dismantling andclean-up activities.

The elements shown in the left column have been found to drive costs in theactual decommissioning of plants that have not undergone a major accident.
Most of these elements are outside the control of the project and are affectedby uncertainty. Cost figures should not be taken at face value unless these elements and their history are specified in comparative tables.
In general, only a range of values can be given for the costs of decommissioning projects; median or average cost values should not be given. Better
comparability is achieved by benchmarking the cost ranges of specific decommissioning activities rather than of entire projects.
It must be considered further that the cost of decommissioning projects willvary with the number of facilities or units on the same site and with the degreeof experience from previous decommissioning activities. These factors willaffect the efficiency of processes or alternative strategies.
Overall, these normal sources of variability make it challenging to compareentire project costs across projects and countries.

Progress in cost comparability
The NEA, the EC, and the IAEA
have developed an international
structure for estimating andreporting decommissioning costs
that will facilitate cost reporting,transparency and comparability.

Any decommissioning project can be broken down into a series of technicaland non-technical activities. The new (2012) International Structure for Decommissioning Costing (ISDC), developed from the previous ‘Yellow Book’ (1999),
is based on such activity items in an attempt to aid cost comparisons. The ISDC
general cost platform considers typical decommissioning activities and costcategories. The ISDC document provides guidance in establishing the basis of
the estimate (assumptions, boundary conditions, end points, costing methodology, etc.). It includes a detailed guide for preparing structured cost estimatesand contains an example to follow.

Additional international guidance isunder preparation.

Additional guidance based on an Earned Value Management System (EVMS)
is under preparation at the OECD/NEA. The EVMS is now being adopted inmany large government programmes and some commercial projects as aneffective tool for cost control.

The most important considerations in ensuring stable and more accurate decommissioning cost estimates include: avoidingchanges in project scope, fixing regulatory standards during the planning phase to avoid delays during active decommissioning,
and accurate characterisation of materials and soil. Comparability of entire project costs is difficult to achieve and cost
figures should not be taken at face value unless all boundary conditions and assumptions are made clear. It is advisable tobenchmark the costs of specific activities rather than of entire projects. An International Structure for Decommissioning
Costing (ISDC) is now available that allows better comparability of the costs of specific activities. Industry, governments andregulators are invited to make use of the ISDC and to participate in improving guidance, e.g., through the activities of theOECD/NEA Working Party on Decommissioning and Dismantling.

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Working Partyon Decommissioningand Dismantling

March 2012