a

GAO

United States General Accounting Office

Report to the Honorable Edward J. 

Markey, House of Representatives

October 2003 NUCLEAR 

REGULATION

NRC Needs More 

Effective Analysis to 

Ensure Accumulation 

of Funds to 

Decommission 

Nuclear Power Plants

GAO-04-32
www.gao.gov/cgi-bin/getrpt?GAO-04-32.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Jim Wells, at 

(202) 512-6877 or WellsJ@gao.gov. 

Highlights of GAO-04-32, a report to the 

Honorable Edward J. Markey, House of 

Representatives 

October 2003

NUCLEAR REGULATION

NRC Needs More Effective Analysis to 

Ensure Accumulation of Funds to 

Decommission Nuclear Power Plants 

Although the collective status of the owners’ decommissioning fund 

accounts has improved considerably since GAO’s last report, some 

individual owners are not on track to accumulate sufficient funds for 

decommissioning. Based on our analysis and most likely economic 

assumptions, the combined value of the nuclear power plant owners’ 

decommissioning fund accounts in 2000—about $26.9 billion—was about 47 

percent greater than needed at that point to ensure that sufficient funds will 

be available to cover the approximately $33 billion in estimated 

decommissioning costs when the plants are permanently shutdown. This 

value contrasts with GAO’s prior finding that 1997 account balances were 

collectively 3 percent below what was needed. However, overall industry 

results can be misleading. Because funds are generally not transferable from 

funds that have more than sufficient reserves to those with insufficient 

reserves, each individual owner must ensure that enough funds are available 

for decommissioning its particular plants. We found that 33 owners with 

ownership interests in a total of 42 plants had accumulated fewer funds than 

needed through 2000 to be on track to pay for eventual decommissioning. In 

addition, 20 owners with ownership interests in a total of 31 plants recently 

contributed less to their trust funds than we estimate they needed to put 

them on track to meet their decommissioning obligations. 

NRC’s analysis of the owners’ 2001 biennial reports was not effective in 

identifying owners that might not be accumulating sufficient funds to cover 

their eventual decommissioning costs. In reviewing the 2001 reports, NRC 

reported that all owners appeared to be on track to have sufficient funds for 

decommissioning. In reaching this conclusion, NRC relied on the owners’ 

future plans for fully funding their decommissioning obligations. However, 

based on the owners’ recent actual contributions, and using a different 

method, GAO found that several owners could be at risk of not meeting their 

financial obligations for decommissioning when these plants stop operating. 

In addition, for plants with more than one owner, NRC did not separately 

assess the status of each co-owner’s trust funds against each co-owner’s 

contractual obligation to fund decommissioning. Instead, NRC assessed 

whether the combined value of the trust funds for the plant as a whole was 

reasonable. Such an assessment for determining whether owners are 

accumulating sufficient funds can produce misleading results because 

owners with more than sufficient funds can appear to balance out owners 

with less than sufficient funds even, though funds are generally not 

transferable among owners. Moreover, NRC has not established criteria for 

taking action if it determines that an owner is not accumulating sufficient 

funds. 

Following the shutdown of a 

nuclear power plant a significant 

radioactive waste hazard remains 

until the waste is removed and the 

plant site decommissioned. In 1999, 

GAO reported that the combined 

value of the owners’ 

decommissioning funds was 

insufficient to ensure enough funds 

would be available for 

decommissioning. GAO was asked 

to update its 1999 report and to 

evaluate the Nuclear Regulatory 

Commission’s (NRC) analysis of 

the owners’ funds and its process 

for acting on reports that show 

insufficient funds. 

NRC should (1) develop an 

effective method for determining 

whether owners are accumulating 

decommissioning funds at 

sufficient rates and (2) establish 

criteria for taking action when it is 

determined that an owner is not 

accumulating sufficient funds. 

NRC disagreed with these 

recommendations suggesting that 

its method is effective and that it is 

better to deal with unacceptable 

levels of financial assurance on a 

case-by–case basis. GAO continues 

to believe that limitations in NRC’s 

method reduce its effectiveness 

and without criteria, NRC might 

not be able to ensure owners are 

accumulating decommissioning 

funds at sufficient rates. 
Page i GAO-04-32 Decommissioning Nuclear Power Plants

Contents

Letter 1

Results in Brief 2

Background 4

Despite Industry-wide Improvement, Some Owners of Nuclear 

Power Plants Are Not Accumulating Sufficient Decommissioning 

Funds 6

NRC’s Analysis Did Not Effectively Determine Whether Each Owner 

Was Accumulating Sufficient Decommissioning Funds 11

Conclusions 15

Recommendations for Executive Action 16

Agency Comments and Our Evaluation 16

Appendixes

Appendix I: Scope and Methodology of Our Analysis of the 

Decommissioning Trust Funds 19

Appendix II: Detailed Results of Our Analysis of the Decommissioning 

Trust Funds 28

Appendix III: Comments from the Nuclear Regulatory Commission 42

GAO Comments 47

Appendix IV: GAO Contact and Staff Acknowledgments 52

GAO Contact 52

Acknowledgments 52

Tables Table 1: Status of Individual Owners’ Trust Fund Balances through 

2000, Compared with Benchmark Trust Fund Balances, 

under Most Likely Assumptions 9

Table 2: Status of Individual Owners’ Recent Trust Fund 

Contributions, Compared with Benchmark Trust Fund 

Contributions, under Most Likely Assumptions 10

Table 3: Status of Combined Trust Funds Compared with 

Benchmarks for Balances and Contributions (by 

Percentage above or below Benchmarks) 28

Table 4: Owners with More, or Less, Than Benchmark Trust Fund 

Balances and Contributions, under Most Likely 

Assumptions (by Percentage above or below 

Benchmarks) 29
Contents

Page ii GAO-04-32 Decommissioning Nuclear Power Plants

Table 5: Selected Owners with More, or Less, Than Benchmark 

Trust Fund Balances and Contributions, under Optimistic 

Assumptions (by Percentage above or below 

Benchmarks) 37

Table 6: Selected Owners with More, or Less, Than Benchmark 

Trust Fund Balances and Contributions, under Pessimistic 

Assumptions (by Percentage above or below

Benchmarks) 39

Abbreviations

FERC Federal Energy Regulatory Commission

GDP Gross Domestic Product

NRC Nuclear Regulatory Commission

SAFSTOR Safe Storage

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Page 1 GAO-04-32 Decommissioning Nuclear Power Plants

United States General Accounting Office

Washington, D.C. 20548

A

October 30, 2003 Letr

The Honorable Edward J. Markey

House of Representatives

Dear Mr. Markey:

Following the retirement of a nuclear power plant and removal of the 

plant’s spent or used fuel, a significant radioactive waste hazard remains 

until the waste is removed and disposed of, and the plant site 

decommissioned.1

 Decommissioning of existing plants is expected to cost 

nuclear power plant owners about $33 billion dollars.2 The Nuclear 

Regulatory Commission (NRC), which licenses nuclear power plants, 

requires plant owners to submit biennial reports on decommissioning 

funding that, among other things, provide financial assurance that enough 

funding will be available when the power plants are retired. 

In 1999, we reported that the combined value of the owners’ 

decommissioning trust fund accounts (as of the end of 1997) was 3 percent 

less than needed to ensure that enough funds would be available when the 

plants are retired.3

 In addition, we found that NRC had not established 

criteria for responding to unacceptable levels of financial assurance. In 

December 2001, we reported that transfers of plant licenses among 

companies stemming from economic deregulation and the restructuring of 

the electricity industry had, in many cases, increased assurances that new 

plant owners would have sufficient decommissioning funds when their 

plants are retired.4

 Nevertheless, in some instances, NRC’s evaluation of the 

adequacy of funding arrangements was not rigorous enough to ensure that 

decommissioning funds would be adequate. 

1

Retirement means the permanent cessation of a plant’s operation.

2

Costs in 2000 present value dollars and are for decommissioning the plant site only and 

exclude costs for cleaning up nonradiological hazards and storing spent fuel. 

3

U.S. General Accounting Office, Nuclear Regulation: Better Oversight Needed to Ensure 

Accumulation of Funds to Decommission Nuclear Power Plants, GAO/RCED-99-75

(Washington, D.C.: May 3, 1999). 

4

U.S. General Accounting Office, Nuclear Regulation: NRC’s Assurances of 

Decommissioning Funding during Utility Restructuring Could Be Improved, GAO-02-48

(Washington, D.C.: Dec. 3, 2001).
Page 2 GAO-04-32 Decommissioning Nuclear Power Plants

In this context, you asked us to update our earlier findings on the adequacy 

of owners’ decommissioning funds. Specifically, this report (1) assesses the 

extent to which nuclear plant owners are accumulating funds at sufficient 

rates to pay decommissioning costs when their plants’ licenses expire and 

(2) evaluates NRC’s analysis of the owners’ 2001 biennial reports and its 

process for acting on reports that show unacceptable levels of financial 

assurance. 

As part of our review, we collected data from the 2001 biennial reports on 

estimated decommissioning costs and actual decommissioning trust fund 

balances, generally as of December 31, 2000, for 122 nuclear power plants 

licensed by NRC. In addition, we surveyed the owners of the plants to 

determine how the trust fund balances were invested in 2000 and to 

identify the annual amounts that the owners had contributed to the trust 

funds in recent years. Eighty-two percent of the owners responded to our 

survey.5

 Using an approach similar to that used for our 1999 report,6 we 

analyzed both the combined efforts of all owners to accumulate funds to 

decommission all of the nuclear plants and each individual owner’s efforts 

to accumulate funds for decommissioning each of its plants. For our 

analysis, we estimated the most likely future values of key assumptions, 

such as decommissioning costs, earnings on the decommissioning funds’ 

assets, and the operating life of each plant. To address the inherent 

uncertainty associated with forecasting outcomes many years into the 

future, we also analyzed the effect of using pessimistic and optimistic 

values for these key assumptions. To evaluate NRC’s analysis of the 

biennial reports and its process for acting on reports that have not satisfied 

decommissioning funding assurance requirements, we reviewed NRC’s 

guidelines and policies for analyzing these reports and interviewed NRC’s 

officials about how they conducted their analysis. Appendix I provides 

more detail on the scope and methodology of our review.

Results in Brief Although the collective status of the owners’ decommissioning fund 

accounts has improved since our last report, some individual owners are 

not on track to accumulate sufficient funds for decommissioning. Using 

5

We administered the survey to 110 owners. Since then, the ownership of some plants has 

changed and as a result, the total number of owners has declined. Our analysis assesses 222 

trust funds held by 99 owners. 

6

GAO/RCED-99-75. 
Page 3 GAO-04-32 Decommissioning Nuclear Power Plants

our most likely economic assumptions, the combined value of the nuclear 

plant owners’ trust funds in 2000—about $26.9 billion—was about 47 

percent greater than needed at that point to ensure that sufficient funds 

will be available to cover the approximately $33 billion in estimated 

decommissioning costs when the plants are retired. This value contrasts 

with account balances that collectively were 3 percent below what was 

needed by the end of 1997. Overall industry results can be misleading, 

however. Because NRC does not allow owners to transfer funds from a 

trust fund with sufficient reserves to one without sufficient reserves, each 

individual owner must ensure that enough funds are available for 

decommissioning its particular plants. We found that 33 owners of all or 

parts of 42 different plants had accumulated less funds than we estimated 

they needed to have through 2000 to be on track to pay for eventual 

decommissioning. Under our most likely assumptions, these owners will 

have to increase the rates at which they accumulate funds to meet their 

future decommissioning obligations. Of the 33 owners, 26 provided 

contributions information for our survey. Of these 26 owners, only 8 

appeared to be making up their shortfalls with recent increases in 

contributions to their trust funds. 

NRC’s analysis of the owners’ 2001 biennial reports was not effective in 

identifying owners that might not be accumulating sufficient funds to cover 

their eventual decommissioning costs. In reviewing the 2001 reports, NRC 

reported that all owners appeared to be on track to have sufficient funds 

for decommissioning. In reaching this conclusion, NRC relied on the 

owners’ future plans for fully funding their decommissioning obligations. 

However, based on the actual contributions the owners recently made to 

their trust funds, we found that several owners could risk not meeting their 

financial obligations for decommissioning when these plants are retired. In 

addition, for the plants with more than one owner, NRC did not separately 

assess the status of each co-owner’s trust funds against the co-owner’s 

contractual obligation to fund decommissioning. Instead, NRC assessed 

whether the combined value of the trust funds for each plant as a whole 

was reasonable. Such an assessment for determining whether owners are 

accumulating sufficient funds can produce misleading results because 

owners with more than sufficient funds can appear to balance out owners 

with less than sufficient funds, even though funds are generally not 

transferable among owners. Furthermore, NRC has not established criteria 

for responding to any unacceptable levels of financial assurance. 

Accordingly, we are recommending that NRC develop and use an effective 

method for determining whether owners are accumulating funds at 
Page 4 GAO-04-32 Decommissioning Nuclear Power Plants

sufficient rates and establish criteria for responding to unacceptable levels 

of financial assurance. 

Background NRC’s primary mission is to protect the public health and safety, and the 

environment, from the effects of radiation from nuclear plants, materials, 

and waste facilities. Because decommissioning a nuclear power plant is a 

safety issue, NRC has authority to ensure that owners are financially 

qualified to decommission these plants. 

Of the 125 nuclear power plants that have been licensed to operate in the 

United States since 1959, 3 have been completely decommissioned. Of the 

remaining 122 plants, 104 currently have operating licenses (although 1 has 

not operated since 1985), 11 plants are in safe storage (SAFSTOR) awaiting 

active decommissioning,7

 and 7 plants are being decommissioned. At the 

time of our analysis, 43 plants were co-owned by different owners. 

NRC regulations limit commercial nuclear power plant licenses to an initial 

40 years of operation but also permit such licenses to be renewed for 

additional 20 years if NRC determines that the plant can be operated safely 

over the extended period. NRC has approved license renewals for 16 plants 

(as of August 20, 2003). 

In 1988, NRC began requiring owners to (1) certify that sufficient financial 

resources would be available when needed to decommission their nuclear 

power plants and (2) require them to make specific financial provisions for 

decommissioning.8

 In 1998, NRC revised its rules to require plant owners to 

report to the NRC by March 31, 1999, and at least once every 2 years 

thereafter on the status of decommissioning funding for each plant or 

proportional share of a plant they own.9

 Under NRC requirements, the 

7

SAFSTOR involves placing the stabilized and defueled facility in storage for a time followed 

by final decontamination and dismantlement, and license termination. 

8

NRC licenses include all co-owners as co-licensees; in general, one owner is authorized to 

operate the facility while the others are authorized only to have an ownership interest. Coowners generally divide costs and output from their power plants by using a contractually 

defined pro rata share standard.

9

U.S. Nuclear Regulatory Commission, Financial Assurance Requirements (Sept. 22, 1998), 

63 Fed. Reg. 50465.
Page 5 GAO-04-32 Decommissioning Nuclear Power Plants

owners can choose from one or more methods, including the following, to 

provide decommissioning financial assurance: 

• prepayment of cash or liquid assets into an account segregated from the 

owner’s assets and outside the owner’s administrative control;

• establishment of an external sinking fund maintained through periodic 

deposit of funds into an account segregated from the owner’s assets and 

outside the owner’s administrative control;

• use of a surety method (i.e., surety bond, letter of credit, or line of credit 

payable to a decommissioning trust account), insurance, or other 

method that guarantees that decommissioning costs will be paid; and

• for federal licensees, a statement of intent that decommissioning funds 

will be supplied when necessary.

In September 1998, NRC amended its regulations to restrict the use of the 

external sinking fund method in deregulated electricity markets. Prior to 

this time, essentially all nuclear plant owners chose this method for 

accumulating decommissioning funds. However, under the amended 

regulations, owners may rely on periodic deposits only to the extent that 

those deposits are guaranteed through regulated rates charged to 

consumers. 

In conjunction with its amended regulations, NRC issued internal guidance, 

describing the process for reviewing the adequacy of a prospective owner’s 

financial qualifications to safely operate and maintain its plant(s) and the 

owner’s proposed method(s) for ensuring the availability of funds to 

eventually decommission the plant(s).10 The guidance outlines a method 

for evaluating the owner’s financial plans for fully funding 

decommissioning costs. In addition, the guidance states that, except under 

certain conditions, the NRC reviewer should, when plants have multiple 

owners, separately evaluate each co-owner’s funding schedule for meeting 

its share of the plant’s decommissioning costs.11

10U.S. Nuclear Regulatory Commission, Standard Review Plan on Power Reactor Licensee 

Financial Qualifications and Decommissioning Funding Assurance, NUREG 1577, Rev. 

1, March 1999. 

11Under NRC’s guidance, co-owners trust funds can be collectively evaluated when the lead 

licensee agrees to coordinate funding documentation and reporting for all the co-owners.
Page 6 GAO-04-32 Decommissioning Nuclear Power Plants

Despite Industry-wide 

Improvement, Some 

Owners of Nuclear 

Power Plants Are Not 

Accumulating 

Sufficient 

Decommissioning 

Funds

Using our most likely economic assumptions, the combined value of the 

nuclear power plant owners’ decommissioning trust funds was about 47 

percent higher at the end of 2000 than necessary to ensure accumulation of 

sufficient funds by the time the plants’ licenses expire. This situation 

contrasts favorably with the findings in our 1999 report, which indicated 

that the industry was about 3 percent below where it needed to be at the 

end of 1997 to ensure that enough funds would be available. However, 

because owners are not allowed to transfer funds from a trust fund with 

sufficient reserves to one without sufficient reserves, overall industry 

sufficiency can be misleading. When we individually analyzed the owners’ 

trust funds, we found that 33 owners for several different plants had not 

accumulated funds at a rate that would be sufficient for eventual 

decommissioning. 

Collectively the Nuclear 

Power Industry Is on Pace 

to Accumulate More Than 

Sufficient Funds for 

Decommissioning

Through 2000, the owners of 122 operating and retired nuclear power 

plants collectively had accumulated about 47 percent more funds than 

would have been sufficient for eventually decommissioning, using our most 

likely economic assumptions. Specifically, the owners had accumulated 

about $26.9 billion—about $8.6 billion more than we estimate they needed 

at that point to ensure sufficient funds. This situation contrasts with the 

findings in our 1999 report, which indicated that the industry had 

accumulated about 3 percent less than the amount we estimated it should 

have accumulated by the end of 1997. 

Using alternative economic assumptions changes these results. For 

example, under higher decommissioning costs and other more pessimistic 

assumptions, the analysis shows that the combined value of the owners’ 

accounts would be only about 0.2 percent above the amount we estimate 

the industry should have collected by the end of 2000. (See app. II for our 

results using more optimistic assumptions.) 
Page 7 GAO-04-32 Decommissioning Nuclear Power Plants

The collective improvement in the status of the owners’ trust funds (under 

most likely assumptions) since our last report is due to three main factors. 

First, all or parts of the estimated decommissioning costs were prepaid for 

15 plants when they were sold to new owners. For example, the seller 

prepaid $396 million when the Pilgrim 1 nuclear plant was sold in 1998 for 

the plant’s scheduled decommissioning in 2012. Second, for 16 other 

plants, NRC approved 20-year license renewals, which will provide 

additional time for the owners to make contributions and for the earnings 

to accumulate on the decommissioning fund balances. Third, owners 

earned a higher rate of return on their trust fund accounts than we 

projected in our 1999 report. For example, the average return on the trust 

funds of owners who responded to our survey was about 8.5 percent12

(after-tax nominal return) per year, from 1998 through 2000, instead of the 

approximately 6.25 percent per year we had assumed. The higher return 

was a result of the stronger than expected performance of financial 

markets in the late 1990s.13 Since that time, however, the economy has 

slowed and financial markets—equities in particular—have generally 

performed poorly. 

Several Owners Are Not 

Accumulating Sufficient 

Funds for Decommissioning 

Their Plants 

In contrast to the encouraging industry-wide results, when we analyzed the 

owners’ trust fund accounts individually, we found that several owners 

were not accumulating funds at rates that would be sufficient to pay for 

decommissioning if continued until their plants are retired. Each owner has 

a trust fund for each plant that it owns in whole or in part. For example, the 

Exelon Generation Company owns all or part of 20 different plants. For this 

analysis, we assessed the status of 222 trust funds for 122 plants owned in 

whole or part by 99 owners. As shown in table 1, using our most likely 

assumptions, 33 owners of all or parts of 42 different plants (50 trust funds) 

had accumulated less funds than needed through 2000 to be on track to pay 

for eventual decommissioning (see app. II for details).14 Thirteen of these 

12Based on 72 owners who provided after-tax rates of return for 1998, 1999, and 2000. These 

owners’ trust funds accounted for about 71 percent of the total trust funds in 2000. 

13For 2000 (the only year for which we have data on fund allocations), on average, owners 

allocated their funds rather evenly between equities and fixed income assets (see app. I for 

details). Investment plans such as pension funds that invested more heavily in equities may 

have earned a greater overall return during this period. 

14Some owners whom we estimate are below the benchmark have a parent company 

guarantee or other method to support financial assurance obligations. However, we did not 

evaluate the adequacy of these provisions. See app. II, table 4. 
Page 8 GAO-04-32 Decommissioning Nuclear Power Plants

plants were shut down before sufficient funds had been accumulated for 

decommissioning. Although the remaining 78 owners of all or parts of 93 

plants (172 trust funds) had accumulated more funds than we estimate they 

needed to have at the end of 2000, funds are generally not transferable from 

owners who have more than sufficient reserves to other owners who have 

insufficient reserves. Under our most likely assumptions, the owners whom 

we estimate to be behind will have to increase the rates at which they 

accumulate funds to meet their eventual decommissioning financial 

obligations. 

For our analysis, we compared the trust fund balance that individual 

owners had accumulated for each plant by the end of 2000 with a 

“benchmark” amount of funds that we estimate they should have 

accumulated by that date. In setting the benchmark, we assumed that the 

owners would contribute increasing (but constant present-value) amounts 

annually to cover eventual decommissioning costs.15 For example, at the 

end of 2000, an owner’s decommissioning fund for a plant that had 

operated one-half of a 40-year license period (begun in 1980) should 

contain one-half of the present value of the estimated cost to 

decommission the owner’s share of that plant in 2020. Although this 

benchmark is not the only way an owner could accrue enough funds to pay 

future decommissioning costs, it provides both a common standard for 

comparisons among owners and, from an equity perspective among 

ratepayers in different years, a financially reasonable growing currentdollar funding stream over time. Appendix I describes our methodology in 

more detail.

15Our analysis simulates that the owners will increase their yearly future funding at the 

assumed after-tax rate of return on the investments of the funds, and that once in the fund, 

these yearly contributions will grow at this same rate. See appendix I for a discussion of our 

methodology.
Page 9 GAO-04-32 Decommissioning Nuclear Power Plants

Table 1: Status of Individual Owners’ Trust Fund Balances through 2000, Compared 

with Benchmark Trust Fund Balances, under Most Likely Assumptionsa

Source: GAO analysis.

a

Most likely assumptions include 20-year license renewals that have been approved by NRC for 16 

plants as of August 20, 2003.

b

Not applicable. 

The status of each owner’s fund balance at the end of 2000 is not, by itself, 

the only indicator of whether an owner will have enough funds for 

decommissioning. Whether the owner will accumulate the necessary funds 

also depends on the rate at which the owner contributes funds over the 

remaining operating life of the plant; by increasing their contribution rates, 

owners whose trust fund balances were below the benchmark level could 

still accumulate the needed funds. Consequently, for the owners who 

provided contributions information to us, we also analyzed whether their 

recent contribution rates would put them on track to meet their 

decommissioning obligations. For this second analysis, we compared the 

average of the amounts contributed in 1999 and 2000 (cost-adjusted to 

2000) with a benchmark amount equivalent to the average yearly present 

value of the amounts the owners would have to accumulate each year over 

the remaining life of their share of the plants to have enough 

decommissioning funds. 

As table 2 shows, 28 owners with ownership shares in 44 different plants 

(50 trust funds) contributed less than the amounts we estimate they will 

need to meet their decommissioning obligations, under our most likely 

assumptions. 

Status Trust funds Owners 

Plants currently 

operating 

Plants shut 

down

Above benchmark 

balance 172 78 88 5

Below benchmark 

balance 50 33 29 13

Total 222 b b b
Page 10 GAO-04-32 Decommissioning Nuclear Power Plants

Table 2: Status of Individual Owners’ Recent Trust Fund Contributions, Compared 

with Benchmark Trust Fund Contributions, under Most Likely Assumptionsa

Source: GAO analysis.

a

Most likely assumptions include 20-year license renewals that have been approved by NRC for 16 

plants as of August 20, 2003. 

b

Contributions not available for 50 other trust funds.

c

Not applicable.

We compared the owners in table 1 with those in table 2 to see whether 

owners who are behind in balances were making up their shortfalls with 

recent increases in contributions. Of the 33 owners who we estimate had 

less than the benchmark balances through 2000, 26 owners of all or parts of 

38 plants provided contributions information. Of these owners, only 8 

owners of all or parts of 9 plants appeared to be making up their shortfalls 

with recent increases in contributions. By contrast, 20 owners with 

ownership interests in 31 plants recently contributed less to their trust 

funds than we estimate they needed to put them on track to meet their 

decommissioning obligations.16

These results would change under alternative economic assumptions. For 

example, if economic conditions improve to those assumed in our 

optimistic scenario, of the 20 owners who were below the benchmark 

under most likely assumptions on both balances and contributions, 12 

owners would still be below the benchmark in both categories, even under 

optimistic assumptions. 

However, if economic conditions worsen to those in our pessimistic 

scenario, 34 owners who were above the benchmark under most likely 

assumptions on either balances or contributions would be below either of 

Status

Trust 

funds Owners

Plants currently 

operating

Plants shut 

down

Above benchmark 

contributions 122 58 76 5

Below benchmark 

contributions 50 28 34 10

Total 172b c c c

16Some of these owners were also making up their shortfalls on other plants.
Page 11 GAO-04-32 Decommissioning Nuclear Power Plants

these benchmarks under pessimistic assumptions. (See app. II for detailed 

results.) 

NRC’s Analysis Did Not 

Effectively Determine 

Whether Each Owner 

Was Accumulating 

Sufficient 

Decommissioning 

Funds

NRC’s analysis of the 2001 biennial decommissioning status reports was 

not effective in identifying owners that might not be accumulating funds at 

sufficient rates to pay for decommissioning costs when their plants are 

permanently shut down. Although the NRC reported in 2001 that all owners 

appeared to be on track to have sufficient funds for decommissioning,17 our 

analysis indicated that several owners might not be able to meet financial 

obligations for decommissioning. NRC’s analysis was not effective for two 

reasons. First, NRC overly relied on the owners’ future funding plans, or on 

rate-setting authority decisions, in concluding that the owners were on 

track to fully fund decommissioning. However, as discussed earlier, based 

on actual contributions the owners had recently made to their trust funds, 

several owners are at risk of not accumulating enough funds to pay for 

decommissioning. Second, for the plants with more than one owner, NRC 

did not separately assess the status of each co-owner’s trust funds relative 

to the co-owner’s contractual obligation to fund a certain portion of 

decommissioning. Instead, NRC combined funds on a plant-wide basis and 

assessed whether the combined trust funds would be sufficient for 

decommissioning. Such an assessment method can produce misleading 

results because the owners with more than sufficient trust funds can 

appear to balance out those with insufficient trust funds. Furthermore, if 

NRC had identified an owner with unacceptable levels of financial 

assurance, it would not have had an explicit basis for acting to remedy 

potential funding deficiencies because it has not established criteria for 

responding to unacceptable levels of financial assurances. 

NRC officials said that their oversight of the owners’ decommissioning 

funds is an evolving process and that they intend to learn from their review 

of prior biennial reports and make changes to improve their evaluation of 

the 2003 biennial reports. However, they also said that any specific changes 

they are considering are predecisional, and final decisions have not yet 

been made.

17Summary of Decommissioning Trust Funding Status Reports For Power Reactors, 

SECY-01-0197, Nuclear Regulatory Commission, November 5, 2001. 
Page 12 GAO-04-32 Decommissioning Nuclear Power Plants

NRC’s Review Relied on 

Owners’ Future Plans for 

Making Contributions 

According to NRC officials, in reviewing the 2001 biennial reports, they 

used a “straight-line” method to establish a screening criterion for 

assessing whether owners were accumulating decommissioning funds at 

sufficient rates. Specifically, NRC compared the amount of funds 

accumulated through 2000 (expressed as a percentage of the total 

estimated cost as of 2000 to decommission the plant) to the expended plant 

life (expressed as a percentage of the total number of years the plant will 

operate). Under this method, the owner of a plant that has operated for 

one-half of its operating life would be expected to have accumulated at 

least one-half of the plant’s estimated decommissioning costs (that is, it 

would be collecting at or above the straight-line rate). NRC found that the 

owners of 64 out of 104 plants currently licensed to operate were collecting 

at the above a straight-line rate, and that the owners of the remaining 40 

plants were collecting at the less than a straight-line rate.18 

On a plant-wide basis, NRC then reviewed the owners’ “amortization” 

schedules for making future payments to fully fund decommissioning. The 

schedules, required as part of the biennial reports, consist of the remaining 

funds that the owners expect to collect each year over the remaining 

operating life of the plants. In estimating the funds to be collected, the 

owners may factor in the earnings expected from their trust fund 

investments. To account for such earnings, NRC regulations allow an 

owner to increase its trust fund balance by up to 2 percent per year (net of 

estimated cost escalation), or higher, if approved by its regulatory ratesetting authority, such as a state public utility commission. Because these 

owners’ amortization schedules identified sufficient future funds to enable 

them to reach the target funding levels, NRC concluded that all licensees 

appear to be on track to fund decommissioning when their plants are 

retired. 

However, relying on amortization schedules is problematic, in part because 

the actual amounts the owners contribute to their funds in the future could 

differ (that is, worsen) from their planned amounts if economic conditions 

or other factors change. NRC officials said that owners are not required by 

regulation to report their recent actual contributions to the trust funds, and 

NRC does not directly monitor whether the owners’ actual contributions 

match their planned contributions. Consequently, NRC relies on the 

owners’ amortization schedules as reported in the biennial reports. 

18One plant—Browns Ferry 1—has a license but is currently not operating.
Page 13 GAO-04-32 Decommissioning Nuclear Power Plants

Such reliance is also problematic because in developing their amortization 

schedules, the owners could use widely varying rates of return to project 

the earnings on their trust fund investments. For example, each of the three 

co-owners of the Duane Arnold Energy Center nuclear plant assumed a 

different rate, ranging from 2 to 7 percent (net of estimated cost 

escalation). Other factors being equal, the owners using the higher rates 

would need to collect fewer funds than the owner using the lower rate of 

return. While the return that each owner actually earns on its investments 

may be higher or lower than these rates, by relying on the owners’ 

amortization schedules, NRC effectively used a different set of 

assumptions to evaluate the reasonableness of the trust funds accumulated 

by each owner. Consequently, NRC did not use a consistent “benchmark” in 

assessing the owners’ trust funds. By contrast, we used historical trends 

and economic forecasts to develop assumptions about rates of earnings 

and other economic variables, applied the same assumptions in evaluating 

the adequacy of each owner’s trust fund, and based expected future 

contributions on actual amounts contributed in recent years. 

NRC’s Analysis Focused on 

the Adequacy of Trust 

Funds on a Plant-by-Plant 

Basis 

NRC’s internal guidance for evaluating the biennial reports states that for 

plants having more than one owner, except in certain circumstances, each 

owner’s amortization schedule should be separately assessed for its share 

of the plant’s decommissioning costs.19 For those plants that have coowners, NRC used the total amount of funds accumulated for the plant as a 

whole in its analysis. However, as we demonstrated with our industry-wide 

analysis, such an assessment for determining whether owners are 

accumulating sufficient funds can produce misleading results because 

owners with more than sufficient funds can appear to balance out owners 

with less than sufficient funds, even though funds are generally not 

transferable among owners.

19Requirement is waived if lead owner has agreed to coordinate funding documentation and 

reporting for all co-owners. In such cases, the guidance does not require a separate 

evaluation of each co-owner’s amortization schedule.
Page 14 GAO-04-32 Decommissioning Nuclear Power Plants

In explaining their approach, NRC officials said that the section of the 

guidance that calls for a separate evaluation of each owner’s amortization 

schedule for its share of the plant is not compulsory. In addition, they said 

that they consider each owner’s schedule to determine the total funds for 

the plant as a whole, but they believe that the same level of effort is not 

required for each individual trust fund balance unless there is a manifest 

reason to do so. They also stated that NRC’s regulations do not prohibit 

each co-owner from being held responsible for decommissioning costs, 

even if these costs are more than the co-owner’s individual ownership 

share. However, assessing the adequacy of decommissioning costs on a 

plant-wide basis is not consistent with the industry view, held by most plant 

owners, that each co-owner’s responsibility should be limited to its pro rata 

share of decommissioning expenses and that NRC should not look to one 

owner to “bail out” another owner by imposing joint and several liability on 

all co-owners.20 NRC has implicitly accepted this view and has 

incorporated it into policy to continue it. In a policy statement on 

deregulation,21 NRC stated that it will not impose decommissioning costs 

on co-owners in a manner inconsistent with their agreed-upon shares,22

except in highly unusual circumstances when required by public health and 

safety considerations and that it would not seek more than the pro rata 

shares from co-owners with de minimis ownership. Nevertheless, unless 

NRC separately evaluates each co-owner’s trust fund, NRC might 

eventually need to look to require some owners to pay more than their 

share. 

NRC Has Not Established 

Criteria for Responding to 

Unacceptable Levels of 

Financial Assurance

While the NRC has conducted two reviews of the owners’ biennial reports 

to date, it has not established specific criteria for responding to any 

unacceptable levels of financial assurances that it finds in its reviews of the 

owners’ biennial reports. As we noted in our 1999 report, without such 

criteria, NRC will not have a logical, coherent, and predictable plan of 

action if and when it encounters owners whose plants have inadequate 

financial assurance. NRC officials said that their oversight of the owners’ 

20Joint and several liability refers to the legal doctrine, which would allow holding all or any 

one of the co-owners financially responsible for the default of any co-owner.

21Final Policy Statement on the Restructuring and Economic Deregulation of the Electric 

Utility Industry, 62 Fed. Reg. 44071 (Aug. 19, 1997). 

22Co-owners generally divide costs from their facilities using a contractually defined pro rata 

share.
Page 15 GAO-04-32 Decommissioning Nuclear Power Plants

decommissioning funds is an evolving process, and they are learning from 

their prior reviews. However, they also said that any specific changes they 

are considering are predecisional and final decisions have not yet been 

made. 

The absence of any specific criteria for acting on owners’ decommissioning 

financial reports contrasts with the agency’s practices for overseeing safety 

activities at nuclear power plants. According to NRC, its safety assessment 

process allows it to integrate information relevant to licensee safety 

performance, make objective conclusions regarding the information, take 

actions based on these conclusions in a predictable manner, and effectively 

communicate these actions to the licensees and to the public. Its oversight 

approach uses criteria for identifying and responding to levels of concern 

for nuclear plant performance. In determining its regulatory response, NRC 

uses an “Action Matrix” that provides for a range of actions commensurate 

with the significance of inspection findings and performance indicators. If 

the findings indicate that a plant is operating in a way that has little or no 

impact on safety, then NRC implements only its baseline inspection 

program. However, if the findings indicate that a plant is operating in a way 

that implies a greater degree of safety significance, NRC performs 

additional inspections and initiates other actions commensurate with the 

significance of the safety issues. A similar approach in the area of financial 

assurance for decommissioning would appear to offer the same benefits of 

objectivity and predictability that NRC has established in its safety 

oversight. 

Conclusions Ensuring that nuclear power plant owners will have sufficient funds to 

clean up the radioactive waste hazard left behind when these plants are 

retired is essential for public health and safety. As our analysis identified, 

some owners may be at risk of not accumulating sufficient trust funds to 

pay for their share of decommissioning. NRC’s analysis was not effective in 

identifying such owners because it relied too heavily on the owners’ future 

funding plans without confirming that the plans were consistent with 

recent contributions. Moreover, it aggregated the owners’ trust funds plantwide instead of assessing whether each individual owner was on track to 

accumulate sufficient funds to pay for its share of decommissioning costs. 

In addition, NRC has not explained to the owners and the public what it 

intends to do if and when it determines an owner is not accumulating 

sufficient trust funds. Without a more effective method for evaluating 

owners’ decommissioning trust funds, and without criteria for responding 
Page 16 GAO-04-32 Decommissioning Nuclear Power Plants

to any unacceptable levels of financial assurance, NRC will not be able to 

effectively ensure that sufficient funds will be available when needed. 

Recommendations for 

Executive Action

To ensure that owners are accumulating sufficient funds to decommission 

their nuclear power plants, we recommend that the Chairman, NRC, 

develop an effective method for determining whether owners are 

accumulating funds at sufficient rates to pay for decommissioning. For 

plants having more than one owner, this method should include separately 

evaluating whether each owner is accumulating funds at sufficient rates to 

pay for its share of decommissioning. We further recommend that the 

Chairman, NRC, establish criteria for taking action when NRC determines 

that an owner or co-owner is not accumulating decommissioning funds at a 

sufficient rate to pay for its share of the cost of decommissioning.

Agency Comments and 

Our Evaluation

We provided a draft of this report to NRC for its review and comment. 

NRC’s written comments, which are reproduced in appendix III, expressed 

three main concerns regarding our report. First, NRC disagreed with our 

observation that its analyses of funding levels of the co-owners of a nuclear 

plant are inconsistent with its internal guidance. We revised the report to 

remove any inferences that NRC was not complying with its own guidance. 

While clarifying this point, we remained convinced that NRC needs to do 

more to develop an effective method for assessing the adequacy of nuclear 

power plant owner’s trust funds for decommissioning. NRC’s current 

practice is to combine the trust funds for all co-owners of a nuclear plant, 

then assess whether the combined value of the trust funds is sufficient. 

However, as our analysis indicates, NRC’s practice of combining the trust 

funds of several owners for its assessment can produce misleading results 

because co-owners with more than sufficient funds can appear to balance 

out those with less than sufficient funds. As a practical matter, owners 

have a contractual agreement to pay their share of decommissioning costs, 

and owners generally cannot transfer funds from a trust fund with 

sufficient reserves to one without sufficient reserves. While NRC 

recognizes that private contractual arrangements among co-owners exist, 

the agency stated that it reserves the right, in highly unusual situations 

where adequate protection of public health and safety would be 

compromised if such action were not taken, to consider imposing joint and 

several liability on co-owners for decommissioning funding when one or 

more co-owners have defaulted. Nonetheless, we believe that NRC should 

take a proactive approach, rather than simply wait until one or more co-
Page 17 GAO-04-32 Decommissioning Nuclear Power Plants

owners default on their decommissioning payment expenses, to ensure 

that sufficient funds will be available for decommissioning and that the 

adequate protection of public health and safety is not compromised. Such 

an approach, we believe, would involve developing an effective method 

that, among other things, separately evaluates the adequacy of each coowner’s trust fund. 

Second, NRC disagreed with our view that some owners are not on track to 

accumulate sufficient funds for decommissioning. NRC’s position is that it 

has a method for assessing the reasonableness of the owners’ trust funds 

and that our method has not been reviewed and accepted by NRC. While 

we recognize that NRC has neither reviewed nor accepted our method, our 

report identifies several limitations in NRC’s method that raise doubts 

about whether the agency’s method can effectively identify owners who 

might be at risk of not having sufficient funds for decommissioning. A 

particularly problematic aspect of this method is NRC’s reliance on the 

owners’ future funding plans to make up any shortfalls without verifying 

whether those plans are consistent with the owners’ recent contributions. 

We found some owners’ actual contributions in 2001 were much less than 

what they stated in their 2001 biennial reports to NRC that they planned to 

contribute. For example, one owner contributed about $1.5 million (or 39 

percent) less than the amount they told NRC that they planned to 

contribute. In addition, based on our analysis using actual contributions 

the owners had recently made to their trust funds, we found that 28 owners 

with ownership shares in 44 different plants contributed less than the 

amounts we estimate they will need to make over the remaining operating 

life of their plants to meet their decommissioning obligations. Therefore, 

we continue to believe that some owners are not on track to accumulate 

sufficient funds to pay for decommissioning. 

Finally, NRC disagreed with our view that it should establish criteria for 

responding to owners with unacceptable levels of financial assurance. NRC 

stated that its practice is to review the owners’ plans on a case-by-case 

basis, engage in discussions with state regulators, and issue orders as 

necessary and appropriate. Since NRC has never identified an owner with 

unacceptable levels of financial assurance, it has never implemented this 

practice. We believe that NRC should take a more proactive approach to 

providing owners and the public with a more complete understanding of 

NRC’s expectations of how it will hold owners who are not accumulating 

sufficient funds accountable. As stated in our draft report, this lack of 

criteria is in contrast to NRC’s practices in overseeing safety issues at 

nuclear plants, where the NRC uses an “Action Matrix” that provides for a 
Page 18 GAO-04-32 Decommissioning Nuclear Power Plants

range of actions commensurate with the significance of safety inspection 

findings and performance indicators. In the area of financial assurance, a 

similar approach could involve monitoring the trust fund deposits of those 

owners who NRC determines are accumulating insufficient funds to verify 

that the deposits are consistent with the owners’ funding plans.

We conducted our review from June 2001 to September 2003 in accordance 

with generally accepted government auditing standards. Unless you 

publicly announce the contents of this report earlier, we plan no further 

distribution until 30 days from the report date. At that time, we will send 

copies of this report to the appropriate congressional committees; the 

Chairman, NRC; Director, Office of Management and Budget; and other 

interested parties. We will also make copies available to others upon 

request. In addition, this report will be available at no charge on the GAO 

Web site at http://www.gao.gov. If you or your staff have any questions, 

please call me at (202) 512-6877. Key contributors to this report are listed in 

appendix IV.

Sincerely yours,

Jim Wells

Director, Natural Resources 

and Environment
Page 19 GAO-04-32 Decommissioning Nuclear Power Plants

Appendix I

Scope and Methodology of Our Analysis of the Apendxies

Decommissioning Trust Funds ApendxiI

This appendix describes the scope and methodology of our review for our 

first objective: the extent to which nuclear power plant owners are 

accumulating funds at sufficient rates to pay decommissioning costs when 

their plants’ licenses expire. 

In addressing this objective, we analyzed the status of the 

decommissioning trust funds from two perspectives. First, we analyzed 

whether the industry as a whole is accumulating funds at rates that would 

be sufficient for decommissioning. For this analysis, we combined the trust 

funds of the owners of 122 nuclear plants. We then compared our results 

with those of our 1999 report to see whether the industry’s status had 

changed. 

Second, because owners generally cannot transfer funds from a trust fund 

with sufficient reserves to one without sufficient reserves, we also 

analyzed the status of each owner’s trust fund for each plant in which the 

owner had an ownership share. For this analysis, we analyzed the status of 

222 individual trust funds, representing 99 owners of all or parts of 122 

plants. 

For both the combined industry-wide trust funds and the individual 

owners’ trust funds, we conducted two separate analyses (hereafter 

described in terms of our analysis of the individual owners’ trust funds). 

This method is the same as that used in our earlier report on the adequacy 

of decommissioning funding.1

 First, we looked backward from a base 

year—2000—and assessed whether, when taking into account key 

economic factors such as decommissioning cost-escalation rates and aftertax rates of return on the funds (the discount rate), each owner’s 

decommissioning fund balance for its ownership share of each of its plants 

was consistent with the expended portion of the licensed operating life of 

that plant. In other words, we assessed whether the monies the owner had 

contributed to its fund as of the end of 2000, together with the past earnings 

on these monies, equaled a benchmark or expected balance the owner 

should have accumulated by that time. 

1

GAO/RCED-99-75.
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 20 GAO-04-32 Decommissioning Nuclear Power Plants

To determine the benchmark balance for 2000 for each plant (owner’s 

share), we multiplied the present value of the plant’s estimated future 

decommissioning costs (owner’s share) by the fraction of the plant’s 

operating life used up by 2000. For example, a plant that began operating in 

1980 would have used up one-half of its 40-year operating life by the end of 

2000. Therefore, by the end of 2000, the owner for this plant should be 

expected to have accumulated in its trust fund one-half of the present value 

(in constant 2000 dollars) of the estimated decommissioning costs. Over 

the life of a plant, our benchmark measure presumes that an owner would 

contribute an annual amount that increases (but constant in present-value 

terms) at the trust fund’s after-tax rate of return. The sum of these annual 

amounts plus the income earned on the investment of the funds would 

equal the total estimated (present value of) the decommissioning costs 

when the plant’s operating license expires.2

 

Although recent deregulation and restructuring of the electricity industry 

have led some owners to prepay decommissioning costs, many owners 

continue to fund the trust funds by collecting fees from electricity users. 

Thus, under our benchmark measure, by paying decommissioning “fees” 

that are deposited into the trust funds, electricity users pay for the present 

value of each year’s accrued decommissioning costs. As a result, the 

benchmark embodies the principle of economic efficiency in that the price 

of a product (i.e., electricity) should, if possible, equal all of its costs—

current and accrued. In addition, by assuming that current and future users 

pay the same decommissioning fees, in constant present-value terms, our 

benchmark ensures that decommissioning costs are accrued transparently 

over time.

In addition to the looking-backward analysis, we conducted a second 

analysis, a “looking forward” from a base year—end of 2000—and assessed 

2

We assume that decommissioning will most likely occur within 5 years of a plant being 

retired. For simplicity, our model therefore decommissions a plant “instantaneously” at 2.5 

years after the 40-year lifespan. Thus, the present value of decommissioning costs after the 

first year of operation is computed by discounting the estimated future costs by 41.5 years 

(39+2.5). Under our benchmark, the first contribution to the fund at the end of the first year 

should equal 1/40th of the present value of the costs, discounted over 41.5 years. At the end 

of the second year of the plant’s operation, the trust fund (including earnings) would equal 

2/40th of the present value of the future costs, discounted back by 40.5 years. Finally, at the 

end of the 40th and final year of operation, the fund would contain 40/40th of the present 

value of the future costs, discounted back by 2.5 years. At “instantaneous” 

decommissioning, 2.5 years hence, the trust fund balance would equal the entire currentdollar decommissioning costs. 
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 21 GAO-04-32 Decommissioning Nuclear Power Plants

whether each owner’s recent contributions to its decommissioning funds 

for respective shares of each of its nuclear power plants were at a level 

consistent with the remaining portions of the licensed operating lives of 

each plant. In other words, we assessed whether the owner recently added 

monies to its decommissioning trust fund for each plant at the benchmark 

contribution necessary to have enough funds to decommission the plant 

when its operating license expires. For example, an owner who is behind in 

terms of trust fund balance through the end of 2000 could have recently 

contributed to its fund at much higher rates than it had in the past to make 

up for its shortfall over the remaining operating life of the plant.

To determine an owner’s benchmark annual contribution, for each of its 

plants, we computed the annual-average present value of the required 

future contributions that are summed over the remaining life of the plant. 

The total present value contribution must equal the present value of the 

total future decommissioning costs minus the value of the current trust 

fund balance. We then compared this annual amount with the average 

contribution to the trust fund that the owner made in 1999 and 2000 (cost 

adjusted to 2000). We assume that an owner will annually increase its most 

recent contribution (2-year average, cost adjusted to 2000) over the 

remaining life of its plant by the assumed after-tax rate of return on its 

decommissioning fund. Owners whose recent average contributions 

exceeded the benchmark amount would be adding funds at a rate that 

would be more than sufficient, while owners whose recent average 

contributions were below the benchmark rate would be adding funds at an 

insufficient rate to pay for future decommissioning costs (under our 

specific economic assumptions). 

For our assessment of the status of the industry as a whole (and for both 

the looking-backward and looking-forward analyses), we developed three 

different scenarios: baseline (i.e., most likely), pessimistic, and optimistic. 

For the baseline analysis, we used our most likely economic assumptions. 

For the pessimistic and optimistic scenarios, we used different values for 

several key assumptions, as described later in this appendix.

For our assessment of the status of each individual owner’s trust funds, we 

looked at the status of each owner’s trust funds under baseline (most 

likely) assumptions (for both the looking-backward and looking-forward 

analyses). In addition, for owners who were below the benchmark on both 

balances and contributions under the baseline assumptions, we reviewed 

the 2003 and 2001 biennial reports to ascertain whether the owner has 

and/or had an additional method (e.g., parent company guarantee) to 
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 22 GAO-04-32 Decommissioning Nuclear Power Plants

support financial assurance obligations. We indicate in our detailed results 

when an owner reported having an additional method (see app. II, table 4). 

However, we did not evaluate the adequacy of these methods.

In addition, for selected owners depending upon our baseline results, we 

analyzed how these results might change under alternative conditions—

optimistic or pessimistic assumptions. For example, for owners who were 

below the benchmark on both balances and contributions under the 

baseline (see app. II, table 5), we assessed the status of their trust funds 

under optimistic conditions to determine which of these owner’s funds 

would still remain below benchmark on both our looking-backward and 

looking-forward measures. In addition, for owners who were from zero to 

100 percent above the benchmark, under baseline assumptions for either 

balances or contributions, we assessed the status of their funds under 

pessimistic assumptions to determine whether their funds would fall below 

benchmarks for both balances and contributions (see app. II, table 6).3

Key Data Used in Analysis To conduct our analysis we used a spreadsheet simulation model that uses 

a base year of 2000. In addition, for the key data in our analysis, we used 

the owner’s 2001 biennial reports and responses from a mail survey that we 

administered to nuclear power plant owners. 

More specifically, the key data used in the model are the following:

(1) Owner’s name, percentage of each plant in which the owner has a share, 

year the plant was licensed to operate (or commenced operation, if earlier), 

and year the plant’s license will expire. We obtained these data using the 

owners’ 2001 biennial reports to Nuclear Regulatory Commission (NRC) 

and other NRC publications.

(2) A decommissioning cost estimate for each plant (that is, a current 

dollar amount for the year that the estimate was made). When available, we 

used a site-specific estimate of NRC-related costs (that is, radiation-related 

costs). If a site-specific estimate was not available, we used cost estimates 

derived from NRC’s generic formula for these NRC-related costs. We 

obtained these data using the owners’ 2001 biennial reports to NRC.

3

Table 6 includes some trust funds for which we did not have contributions data but whose 

balance adequacy percentage for the baseline fell below zero under the pessimistic 

assumptions.
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 23 GAO-04-32 Decommissioning Nuclear Power Plants

(3) Decommissioning fund balances as of December 31, 2000 for each 

owner and its plant share. When indicated, we used that portion of the fund 

balance that the owner designated for NRC-type costs (that is, excluding 

the costs relating to nonradiation or spent-fuel activities). Otherwise we 

used the entire fund balance. We obtained these data from the owners’ 

responses to our survey or from their 2001 biennial reports. 

(4) Decommissioning fund contributions for 1999 and 2000 for each owner 

and its plant share. We assumed these contributions were for NRC-related 

costs only. We obtained these data from the responses to our survey, and 

for owners who did not respond to our survey, we do not report on the 

adequacy of their contributions. 

In some cases, the ownership shares of plants have changed hands since 

our survey and the 2001 biennial reports. In these cases, to make our 

analysis as current as possible, we assess the adequacy of the funds that 

were accumulated by the previous owner but report the results under the 

name of the new owner of the trust fund (see app. II, table 4). Nonetheless, 

the new owner might accumulate trust funds at a different rate than the 

former owner. 

Key Assumptions Used in 

the Analysis

The analysis of the industry-wide trust funds and the individual owners’ 

trust funds depends on the following six key assumptions. The values for 

these six assumptions vary based upon the scenario: baseline (most likely), 

pessimistic, or optimistic. For each scenario, we used the same assumption 

values for each owner and each plant in order to apply an “even-handed” 

standard. 

(1) Future after-tax rate of return on decommissioning fund assets 

(discount rate): An after-tax rate of return was used to discount future trust 

fund contributions and plant decommissioning costs. In our survey, we 

asked owners for information on the financial assets contained in their 

respective decommissioning funds. We grouped these assets into five basic 

financial categories and calculated estimated, industry-wide, average 

weights for each type, these asset weights themselves reflecting the 

weights of the varying fund sizes. These categories, and calculated 

weighted-averages were: equities (e.g., common stocks), 47.1 percent; U.S. 

securities (e.g., federal government bonds), 26.7 percent; corporate bonds, 

9.8 percent; municipal bonds, 10.4 percent; and cash and short-term 

instruments, 6.0 percent. Therefore, on average, these decommissioning 

funds contained roughly a 50-50 split between equities and bonds. We used 
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 24 GAO-04-32 Decommissioning Nuclear Power Plants

these results for all of the decommissioning funds, for all three scenarios, 

but recognize three qualifications: (1) the variation in these asset weights 

among individual funds for 2000 was quite large, (2) our asset composition 

data represent only a time “snapshot” of such allocation—for year 2000 

only, and (3) these same (baseline) asset weights are also assumed for our 

other two scenarios, because appropriate data were lacking to do 

otherwise.

Using a long-term forecast from Global Insight (an economic forecasting 

company),4

 we developed a forecast for each asset category under a 

baseline, pessimistic, and optimistic forecast scenario. For the baseline 

scenario, we used Global Insight’s trend forecast; for the pessimistic 

scenario, we used their pessimistic forecast (representing slower real gross 

domestic product (GDP) growth); and for the optimistic scenario, we used 

their optimistic forecast (representing faster real GDP growth).

For the baseline scenario, we calculated a forecast (current-dollar) growth 

rate of 6.26 percent for equities, 6.83 percent for U.S. securities, 7.83 

percent for corporate bonds, 6.27 percent for municipal bonds, and 5.02 

percent for cash and short-term instruments.5

 Multiplying these forecast 

rates with their respective asset weights in the owners’ portfolios yielded a 

baseline “portfolio average” forecast pretax annual-average rate of return 

of 6.49 percent. Similarly, we calculated pretax rates of return for the 

pessimistic and optimistic forecasts of 7.27 percent and 6.45 percent, 

respectively. The rate under the pessimistic forecast is higher than the rate 

under the baseline or optimistic forecasts because of higher inflation in the 

Global Insight pessimistic forecast and because of the owners’ relatively 

high average allocation of trust fund investments in bonds. (In Global 

Insight’s pessimistic forecast, the nominal-rate return on bonds is greater 

than on equities.) 

4

Forecast as of January 30, 2003. 

5

To forecast the growth in equities, we used Global Insight’s forecast for the S&P 500. We 

assumed that dividends would be reinvested. For example, for our baseline scenario, we 

combined the compound annual-average growth rate for the S&P 500 Index with its 

corresponding annual-average dividend yield rate to obtain a total growth rate. For U.S. 

securities, we used the forecast for 30-year federal government bonds. For corporate bonds 

and municipal bonds, we used the forecast for Aaa-rated corporate and municipal bonds, 

respectively. For cash, we used the forecast for 6-month U.S. Treasury Bills. 
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 25 GAO-04-32 Decommissioning Nuclear Power Plants

To convert the “portfolio average” forecast pretax rate of return to an aftertax rate of return, we used the pre- and post-tax rates of return data that 

owners provided in our survey. Based on these data we determined that the 

pretax rate should be reduced by 0.87 percentage points to derive a 

baseline after-tax rate of return of 5.62 (6.49 – 0.87) percent.6 Similarly, we 

calculated an after-tax rate of return of 6.40 (7.27 – 0.87) percent for the 

pessimistic scenario and an after-tax rate of return of 5.58 (6.45 – 0.87) 

percent for the optimistic scenario. 

(2) Future decommissioning cost escalation rate: For our baseline 

scenario, we assumed that decommissioning costs would increase annually 

at a nominal rate of 4.60 percent.7

 Combining the after-tax rate of return 

and the cost escalation rate gave us an implied real (cost-adjusted) after-tax 

rate of return of 1.02 (5.62 - 4.60) percent for the baseline scenario. 

To calculate real after-tax rates of return for the pessimistic and optimistic 

scenarios, we first adjusted the nominal after-tax rates of return using 

Global Insight’s inflation forecasts. Its annual-average inflation forecast 

was about 2.47 percent for trend, or baseline, 3.04 percent for pessimistic, 

and 2.15 percent for optimistic. Using these forecasts, the real forecast 

rates of return are 3.15 (5.62 - 2.47) percent for baseline, 3.36 (6.40 – 3.04) 

percent for pessimistic, and 3.43 (5.58 – 2.15) percent for optimistic. We 

then used proportionality ratios to obtain real cost adjusted after-tax rates 

of return of 1.09 percent for the pessimistic scenario and 1.11 percent for 

the optimistic scenario.8 From these real after-tax rates of return, we

6

Using rate of return data provided by 84 owners, we calculated a weighted-average 

difference between their pretax and after-tax rates of return for each fund and year over 

1997-2001, weighted by the relative size of their funds. We then calculated the simple mean 

of the weighted average differences for each year to obtain an overall weighted average 

difference of about 0.87 of a percentage point. 

7

The 4.60 percent cost-escalation rate is fund-weighted average based on the owners’ 

assumptions about future nominal-dollar cost-escalation, as reported in their 2001 biennial 

reports.

8

To calculate a cost-adjusted real rate-of-return for the pessimistic and optimistic scenarios, 

we formed proportionality ratios. For pessimistic, 3.36% / 3.15% = x% / 1.02%; therefore, x = 

1.09%. For optimistic, 3.43% / 3.15% = y% /1.02%; therefore, y = 1.11%. 
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 26 GAO-04-32 Decommissioning Nuclear Power Plants

computed implied cost-escalation rates of 5.31 percent and 4.47 percent for 

the pessimistic and optimistic scenarios, respectively. 9

 

Note that the real (cost-adjusted) after-tax rates of return are quite similar 

in value among our scenarios; therefore, any differing effect on model 

results caused by the combination of the fund rate of return and 

decommissioning cost-escalation assumptions will be fairly minimal. 

Nonetheless, all other things being equal, for these two assumptions only, 

the balance and contribution adequacy results for the pessimistic scenario 

will be slightly above those of the baseline scenario, and only slightly below 

those of the optimistic scenario. 

(3) Alternative initial decommissioning cost estimates: In our baseline 

scenario, for the “initial” decommissioning (NRC-related) costs, we used 

the site-specific estimates when available. Otherwise, we used the cost 

estimates derived from NRC’s generic formula. For the pessimistic and 

optimistic scenarios, we used professional judgment to adjust the estimate 

used in the baseline. For example, to reflect a general concern among 

industry observers that future decommissioning costs could be much 

higher than expected, we increased the initial cost estimate by 40 percent 

for the pessimistic scenario, and reduced the initial decommissioning cost 

estimate by only 5 percent for the optimistic scenario.

(4) Alternative start of decommissioning--years after shutdown: For the 

baseline scenario, we assumed that decommissioning would occur within 

the immediate 5 years after license termination; for simplification, we 

assumed “instantaneous” decommissioning at 2.5 years after shutdown.10 

For the pessimistic assumption, decommissioning is assumed to occur 

within the first 4 years—at 2 years after shutdown. For the optimistic 

assumption, we assumed a 5-year delayed start of decommissioning— 

within 5-10 years after license termination—at 7.5 years after shutdown. 

Under certain circumstances (e.g., co-located plants), NRC may permit a 

decommissioning delay. As long as the assumed after-tax rate of return 

exceeds the assumed cost-escalation rate (i.e., a positive, real, cost9

For pessimistic, 6.40% - x% = 1.09%; therefore, x = 5.31%. For optimistic, 5.58% - y% = 1.11%; 

therefore, y = 4.47%.

10To test this simplifying assumption in the looking-backward analysis, we assessed the 

impact of assuming that one-fifth of decommissioning occurred over each of the 5 years. 

The result was virtually identical to that obtained when we assumed that all 

decommissioning occurred at 2.5 years after shutdown. 
Appendix I

Scope and Methodology of Our Analysis of 

the Decommissioning Trust Funds 

Page 27 GAO-04-32 Decommissioning Nuclear Power Plants

adjusted rate of return), a delay in decommissioning will improve the 

outlook for an owner’s trust fund in both the looking-backward (trust fund 

balance) and looking-forward (trust fund contributions) analysis, all else 

the same. 

(5) Alternative operating license expiration year: The year of plant 

operating-license expiration is assumed to vary among our three scenarios 

to reflect that NRC has approved license renewals for some plants, and it 

may approve 20-year license renewals for other plants in the future. For the 

baseline and pessimistic scenarios, we include the renewals that have been 

approved for 16 plants, as of August 20, 2003.11 In addition, because NRC 

has received renewal applications from owners of 14 plants, and it 

anticipates applications from owners of another 8 plants by the end of 2003 

(as of August 20, 2003), we assume in the optimistic scenario that license 

renewals will be approved for an additional 22 plants.12 In general, these 

plant license renewals suggest that the electricity market today is robust 

and owners expect higher electricity prices in the future.13 

(6) Alternative market values for decommissioning funds: For the baseline 

and optimistic scenarios, we use the actual market value of the trust fund 

balances as of the end of 2000. In contrast, for the pessimistic scenario, we 

reduced the actual market value of the funds by 5 percent for 2000 to 

simulate the effect of a slowing economy on investment returns from 2000 

through 2002. The simulated decline is modest, and over the period, the 

overall increase in bond prices would have offset to some degree the 

overall decline in the value of common stocks.

11The 16 plants are: Arkansas Nuclear Unit 1; Calvert Cliffs Units 1 and 2; Hatch Units 1 and 

2; North Anna Units 1 and 2; Oconee Units 1, 2, and 3; Peach Bottom Units 2 and 3; Surry 

Units 1 and 2; and Turkey Point Units 3 and 4.

12The 14 plants are: Catawba Units 1 and 2; Dresden Units 2 and 3; Fort Calhoun; Ginna; 

McGuire Units 1 and 2; Quad Cities Units 1 and 2; Robinson 2; St. Lucie Units 1 and 2; and 

Summer. The other 8 plants are: Arkansas Nuclear Unit 2; Browns Ferry Units 1, 2, and 3; 

Cook, D.C. Units 1 and 2; and Farley Units 1 and 2. 

13This expectation is in contrast to conditions reported in our 1999 report, when the market 

for electricity appeared much weaker. In that report, we assumed in the baseline scenario 

that 6 plants would be prematurely retired during 1998 to 2002. 
Page 28 GAO-04-32 Decommissioning Nuclear Power Plants

Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds ApendxiI

This appendix presents the detailed results of our analysis of the 

decommissioning trust funds. Specifically, table 3 shows industry-wide, 

weighted-average results under three scenarios—baseline (most likely) 

assumptions, pessimistic assumptions, and optimistic assumptions. Table 4 

presents the results for individual owners under baseline, or most likely 

assumptions. Table 5 shows the results of our analysis under optimistic 

assumptions for individual owners whose trust funds were below the 

benchmarks for both balances and recent contributions under the baseline 

scenario. Table 6 presents the results under pessimistic assumptions for 

individual owners whose trust funds were zero to 100 percent above the 

benchmark balances and/or contributions under the baseline scenario. See 

appendix I for a description of our methodology.

Table 3: Status of Combined Trust Funds Compared with Benchmarks for Balances 

and Contributions (by Percentage above or below Benchmarks)

Source: GAO analysis.

Note: Percentages are weighted averages, measured relative to the benchmark balances or 

benchmark contributions.

a

The baseline and pessimistic scenarios include the 20-year license renewals already granted for 16 

plants, as of August 20, 2003.

b

The optimistic scenario includes 20-year license renewals for 38 plants, including renewals: (1) 

already granted for 16 plants, (2) for another 14 plants whose owners have applied for but not yet 

received renewals, and (3) for another 8 plants whose owners are expected to apply by December 

2003 (all as of August 20, 2003).

c

Adequacy of recent contributions is based on responses to our survey. The percentages are more, or 

less, than the benchmark contribution, meaning the owner has contributed more, or less, on average 

for 1999 and 2000 (cost adjusted to 2000) than the annual average of the present value of the amounts 

required in each subsequent year until the plant’s license expires.

Scenario

Analysis 

category

Number of 

owners

Number of 

plants

Baselinea

(percent)

Pessimistica

(percent)

Optimisticb

(percent)

Balances 

through 2000 99 122 46.9 0.2 82.5

Recent 

Contributionsc 75 109 106.5 -18.0 224.4
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 29 GAO-04-32 Decommissioning Nuclear Power Plants

Table 4: Owners with More, or Less, Than Benchmark Trust Fund Balances and Contributions, under Most Likely Assumptions 

(by Percentage above or below Benchmarks) 

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa

Arkansas 

Nuclear 1b

Entergy Arkansas, Inc. 100 + + + + + + + +

Arkansas 

Nuclear 2c

Entergy Arkansas, Inc. 100 + _ 

Beaver Valley 1 Ohio Edison Co. 35 + + 

Beaver Valley 1 Pennsylvania Power Co. 65 _ _ _ _ 

Beaver Valley 2 Cleveland Electric Illuminating Co. 24.47 + + + 

Beaver Valley 2 Ohio Edison Co. 41.88 + + _ 

Beaver Valley 2 Pennsylvania Power Co. 13.74 + + + + _ _ _

Beaver Valley 2 Toledo Edison Co. 19.91 + + + +

Big Rock Pointd Consumers Energy Co. 100 + + + + +e

Braidwood 1 Exelon Generation Co., LLC 100 + + + _ _ _ 

Braidwood 2 Exelon Generation Co., LLC 100 + + + + + + + +

Browns Ferry 1c Tennessee Valley Authority 100 _ _ _ _ _ 

Browns Ferry 2c Tennessee Valley Authority 100 _ _ _ _ _ 

Browns Ferry 3c Tennessee Valley Authority 100 _ _ _ _ _ 

Brunswick 1 North Carolina Eastern Municipal 18.33 _ + 

Brunswick 1f Progress Energy Carolinas, Inc. 81.67 _ _ _ 

Brunswick 2 North Carolina Eastern Municipal 18.33 _ + 

Brunswick 2 f Progress Energy Carolinas, Inc. 81.67 _ _ + 

Byron 1 Exelon Generation Co., LLC 100 + + + _ _ _ 

Byron 2 Exelon Generation Co., LLC 100 + + + + + +

Callaway AmerenUE 100 + _ _

Calvert Cliffs 1b Constellation Energy Group 100 + g

Calvert Cliffs 2b Constellation Energy Group 100 + g

Catawba 1h Duke Power Co. 12.50 + + + +

Catawba 1h North Carolina Electric 

Membership 

28.1 + _ _ _ 

Catawba 1h North Carolina Municipal Power 37.50 + + +

Catawba 1h Piedmont Municipal Power Agency 12.50 + + + 

Catawba 1h Saluda River Electric Cooperative 9.38 + + + + _ _ _ 

Catawba 2h Duke Power Co. 12.5 + + + + + +
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 30 GAO-04-32 Decommissioning Nuclear Power Plants

Catawba 2h North Carolina Electric 

Membership 

28.1 + _ _ _ 

Catawba 2h North Carolina Municipal Power 37.5 + + + + 

Catawba 2h Piedmont Municipal Power Agency 12.5 + + + + + 

Catawba 2h Saluda River Electric Cooperative 9.38 + + + + _ _ _ 

Clinton AmerGen Energy Co., Inc. 100 + + + + + + + 

Columbia Generating 

Station

Energy Northwest 100 _ _ _

Comanche Peak 1 Texas Utility Electric Co. 100 + + + + + + + +

Comanche Peak 2 Texas Utility Electric Co. 100 + + + + + + + +

Cook, D.C. 1c Indiana Michigan Power Co. 100 + + + + + + +e

Cook, D.C. 2c Indiana Michigan Power Co. 100 + + + + + + +

Cooper Nebraska Public Power District 100 + + + + +

Crystal River 3 City of Alachua Electric Dept. 0.08 + g

Crystal River 3 City of Bushnell Utility Dept. 0.04 + + g

Crystal River 3 City of Gainesville Regional 

Utilities

1.41 + + + + +

Crystal River 3 City of Kissimmee Utilities 0.68 + g

Crystal River 3 City of Leesburg Municipal Electric 0.82 + g

Crystal River 3 City of Ocala Utilities Division 1.33 + g

Crystal River 3 New Smyrna Beach Utilities 

Comm.

0.56 + + + + + + + e

Crystal River 3 Orlando Utilities Comm. 1.60 + + + g

Crystal River 3 Progress Energy Florida 91.8 + + + + + + + e

Crystal River 3 Seminole Electric Cooperative, Inc. 1.7 + + + + + 

Davis-Besse Cleveland Electric Illuminating Co. 51.38 + + + + + 

Davis-Besse Toledo Edison Co. 48.62 + + + + +

Diablo Canyon 1 Pacific Gas & Electric Co. 100 + + + + + + + +e

Diablo Canyon 2 Pacific Gas & Electric Co. 100 + + + + + + + +e

Dresden 1d Exelon Generation Co., LLC 100 _ _ _ _ _ _ 

Dresden 2h Exelon Generation Co., LLC 100 + + + + +

Dresden 3h Exelon Generation Co., LLC 100 + + + + +

Duane Arnold Central Iowa Power Cooperative 20 _ _ _ _ _ _ 

Duane Arnold Corn Belt Power Cooperative 10 _ _ _ _ 

Duane Arnold IPL 70 _ _ _ _ 

Farley 1c Alabama Power Co. 100 + + + + + 

(Continued From Previous Page)

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 31 GAO-04-32 Decommissioning Nuclear Power Plants

Farley 2c Alabama Power Co. 100 + + + + + +

Fermi 1d Detroit Edison Co. 100 _ _ _ _ 

Fermi 2 Detroit Edison Co. 100 + + + + + + +

FitzPatrick Entergy Nuclear Operations, Inc. 100 + + + + + + +e

Fort Calhounh Omaha Public Power District 100 + + + + +

Ginnah Rochester Gas & Electric Corp. 100 _ g

Grand Gulf 1 South Mississippi Electric Power 10 _ _ _ _ _ 

Grand Gulf 1 System Energy Resources, Inc. 90 + + + + + 

Haddam Neckd Connecticut Yankee Atomic Power 

Co.

100 + + + + + e

Harris 1 North Carolina Eastern Municipal 16.17 + _ 

Harris 1 Progress Energy Carolinas, Inc. 83.83 + + 

Hatch 1b City of Dalton (Georgia) 2.2 + + + + e, g 

Hatch 1b Georgia Power Co. 50.1 + + + + + + +

Hatch 1b Municipal Electric Authority of 

Georgia

17.7 + + + + + + +

Hatch 1b Oglethorpe Power Co. 30 + + + + + + + 

Hatch 2b City of Dalton (Georgia) 2.2 + + + + e, g

Hatch 2b Georgia Power Co. 50.1 + + + + + + + +

Hatch 2b Municipal Electric Authority of 

Georgia

17.7 + + + + + + + +

Hatch 2b Oglethorpe Power Co. 30 + + + + + 

Hope Creek 1 PSEG Nuclear, LLC 100 + + + + i g

Humboldt Bay 3d Pacific Gas & Electric Co. 100 + + + + +e

Indian Point 1d, f Entergy Nuclear Operations, Inc. 100 _ _ _ i _ _ _i

Indian Point 2 Entergy Nuclear Operations, Inc. 100 + + + + + 

Indian Point 3 Entergy Nuclear Operations, Inc. 100 + + + + + + +e

Kewaunee Wisconsin Power & Light 41 + + + + + + + +e

Kewaunee Wisconsin Public Service 

Corporation

59 + + + +i + + + +e, i

LaCrossed, f Dairyland Power Cooperative 100 _ _ _ _ 

LaSalle County 1 Exelon Generation Co., LLC 100 + + + _ 

LaSalle County 2 Exelon Generation Co., LLC 100 + + + + + + 

Limerick 1j Exelon Generation Co., LLC 100 _ _ _ _ 

Limerick 2j Exelon Generation Co., LLC 100 _ _ 

Maine Yankeed Maine Yankee Atomic Power Co. 100 _ _ _ _

(Continued From Previous Page)

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 32 GAO-04-32 Decommissioning Nuclear Power Plants

McGuire 1h Duke Power Co. 100 + + + +

McGuire 2h Duke Power Co. 100 + + + + +

Millstone 1d, f, j Dominion 

Nuclear Connecticut

100 _ g

Millstone 2 Dominion 

Nuclear Connecticut

100 + + g

Millstone 3 Central Vermont Public Service 

Corp. 

1.73 + + + + g

Millstone 3 Dominion 

Nuclear Connecticut

93.47 + + + + e, g 

Millstone 3 Massachusetts Municipal 

Wholesale Electric Co.

4.80 + + + + g

Monticello Xcel Energy 100 _ + + 

Nine Mile Point 1f Constellation Energy Group 100 _i g

Nine Mile Point 2 Constellation Energy Group 82 + + + i g

Nine Mile Point 2 Long Island Power Authority 18 + + + + + + +

North Anna 1b, k Old Dominion Cooperative 10.4 + + + + e, g

North Anna 1b, k Virginia Electric & Power Co. 89.6 + + + + + + + +

North Anna 2b, k Old Dominion Cooperative 10.4 + + + + e, g

North Anna 2b, k Virginia Electric & Power Co. 89.6 + + + + + + + + 

Oconee 1b Duke Power Co. 100 + + + + + +

Oconee 2b Duke Power Co. 100 + + + + + +

Oconee 3b Duke Power Co. 100 + + + + + + +

Oyster Creek AmerGen Energy Co., Inc. 100 + + + + + + +e

Palisades Consumers Energy Co. 100 + + + + + + + +e

Palo Verde 1 Arizona Public Service Co. 29.1 + + + + + + +

Palo Verde 1 El Paso Electric Co. 15.8 _ + 

Palo Verde 1 Los Angeles Dept. of Water & 

Power

5.7 + + + + + + + +e

Palo Verde 1 Public Service Company of New 

Mexico

10.2 + + + + + +

Palo Verde 1 Salt River Project Agricultural 

Improvement & Power District 

17.49 + + + g

Palo Verde 1 Southern California Edison Co. 15.8 + + + + e, g

Palo Verde 1 Southern California Public Power 5.91 + + + + + + + +e

Palo Verde 2 Arizona Public Service Co. 29.1 + + + + + + +

Palo Verde 2 El Paso Electric Co. 15.8 _ _ 

(Continued From Previous Page)

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 33 GAO-04-32 Decommissioning Nuclear Power Plants

Palo Verde 2 Los Angeles Dept. of Water & 

Power

5.70 + + + + + + + +e

Palo Verde 2 Public Service Company of New 

Mexico

10.2 + + + + +

Palo Verde 2 Salt River Project Agricultural 

Improvement & Power District

17.49 + + + g

Palo Verde 2 Southern California Edison Co. 15.8 + + + + e, g

Palo Verde 2 Southern California Public Power 5.91 + + + + + + + +e

Palo Verde 3 Arizona Public Service Co. 29.1 + + + + + + 

Palo Verde 3 El Paso Electric Co. 15.80 _ + 

Palo Verde 3 Los Angeles Dept. of Water & 

Power

5.7 + + + + + + + +e

Palo Verde 3 Public Service Company of New 

Mexico

10.2 + + _ _ _

Palo Verde 3 Salt River Project Agricultural 

Improvement & Power District

17.49 + + + g

Palo Verde 3 Southern California Edison Co. 15.8 + + + + e, g

Palo Verde 3 Southern California Public Power 5.91 + + + + + + + +e

Peach Bottom 1d, j Exelon Generation Co., LLC 100 _ _ _ _ _ _ 

Peach Bottom 2b, j Exelon Generation Co., LLC 50 + +i + + +

Peach Bottom 2b PSEG Nuclear, LLC 50 + + + i g

Peach Bottom 3b, j Exelon Generation Co., LLC 50 + + + i + + + +

Peach Bottom 3b PSEG Nuclear, LLC 50 + + + + i g

Perry 1 Cleveland Electric Illuminating Co. 44.85 + + + + + + +

Perry 1 Ohio Edison Co. 30 + + + + + 

Perry 1 Pennsylvania Power Co. 5.24 + + + +

Perry 1 Toledo Edison Co. 19.91 + + + + + + 

Pilgrim 1 Entergy Nuclear Operations, Inc. 100 + + _ _ _ 

Point Beach 1 Wisconsin Electric Power Co. 100 + + + + + + +e

Point Beach 2 Wisconsin Electric Power Co. 100 + + + + + + +e

Prairie Island 1 Xcel Energy 100 + + + + + 

Prairie Island 2 Xcel Energy 100 + + + + + 

Quad Cities 1h Exelon Generation Co., LLC 75 + + + 

Quad Cities 1h MidAmerican Energy Holdings Co. 25 + + + + + +

Quad Cities 2h Exelon Generation Co., LLC 75 + + + + + 

Quad Cities 2h MidAmerican Energy Holdings Co. 25 _ + 

(Continued From Previous Page)

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 34 GAO-04-32 Decommissioning Nuclear Power Plants

Rancho Secod Sacramento Municipal Utility 

District

100 _ _ _ _ _

River Bend 1 Entergy Gulf States, Inc. 100 + + + + + + + + 

Robinson 2f, h Progress Energy Carolinas, Inc. 100 _ _ _ _ 

Salem 1 Exelon Generation Co., LLC 42.59 _ _ _ 

Salem 1 PSEG Nuclear, LLC 57.41 + + + i e, g

Salem 2 Exelon Generation Co., LLC 42.59 _ _ 

Salem 2 PSEG Nuclear, LLC 57.41 + + + i g

San Onofre 1d San Diego Gas & Electric Co. 20 + + + + e, g

San Onofre 1d Southern California Edison Co. 80 + + + e, g

San Onofre 2 Anaheim Public Utilities Dept. 3.16 + + + + e, g

San Onofre 2 Riverside Utilities Dept. 1.79 + + + + e, g

San Onofre 2 San Diego Gas & Electric Co. 20 + + + + e, g

San Onofre 2 Southern California Edison Co. 75.05 + + + + e, g

San Onofre 3 Anaheim Public Utilities Dept. 3.16 + + + + e, g

San Onofre 3 Riverside Utilities Dept. 1.79 + + + + e, g

San Onofre 3 San Diego Gas & Electric Co. 20 + + + + e, g

San Onofre 3 Southern California Edison Co. 75.05 + + + + e, g

Saxtond GPU Nuclear 100 + + + + e, g

Seabrook 1 FPL Energy 88.2 + + + i + + + +i

Seabrook 1 Hudson Light & Power Dept. 0.08 + + + + + + 

Seabrook 1 Massachusetts Municipal 

Wholesale Electric Co.

11.6 + + + + + 

Seabrook 1 Taunton Municipal Lighting Plant 0.1 + + + + + + 

Sequoyah 1 Tennessee Valley Authority 100 _ _ _ _ 

Sequoyah 2 Tennessee Valley Authority 100 _ _ _ _ 

South Texas Project 1 AEP (Texas Central Co.) 25.20 + + + + i + + + + i

South Texas Project 1 City of Austin—Austin 

Energy

16 + + + + + + + +

South Texas Project 1 City Public Service Board of San 

Antonio

28 + + + + + + +

South Texas Project 1 Texas Genco 30.80 + + + + i + + + +i

South Texas Project 2 AEP (Texas Central Co.) 25.20 + + + + i + + + + i

South Texas Project 2 City of Austin—Austin Energy 16 + + + + + + + +

South Texas Project 2 City Public Service Board of San 

Antonio

28 + + + + + + + +

(Continued From Previous Page)

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 35 GAO-04-32 Decommissioning Nuclear Power Plants

South Texas Project 2 Texas Genco 30.80 + + + + i + + + +e, i 

St Lucie 1h Florida Power & Light Co. 100 + + + + + + + +e

St Lucie 2h Florida Municipal Power Agency 8.7 + + + g

St Lucie 2h Florida Power & Light Co. 85.2 + + + + + + + +e

St Lucie 2h Orlando Utilities Comm. 6.05 + + + + e, g

Summerh South Carolina Electric & Gas Co. 66.67 _ _ _ _ _

Summerh South Carolina Public Service 

Authority

33.33 + + + + +

Surry 1b Virginia Electric & Power Co. 100 + + + + + + +

Surry 2b Virginia Electric & Power Co. 100 + + + + + + +

Susquehanna 1 Allegheny Electric Cooperative 10 _ _ _ 

Susquehanna 1 PPL Susquehanna, LLC 90 + + 

Susquehanna 2 Allegheny Electric Cooperative 10 _ _ _

Susquehanna 2 PPL Susquehanna, LLC 90 + + + + +

Three Mile Island 1 AmerGen Energy Co., Inc. 100 + + + + + + +e 

Three Mile Island

2d

Jersey Central Power & Light 25 _ i g

Three Mile Island

2d

Metropolitan Edison Co. 50 _ i g

Three Mile Island

2d

Pennsylvania Electric Co. 25 _ i g

Trojand, f, j Eugene Water & Electric Board 30 _ _ _ g

Trojand, f, j Pacific Power & Light Co. 2.50 _ + + + +

Trojand, f, j Portland General Electric Co. 67.50 _ _ _ _ _ _

Turkey Point 3b Florida Power & Light Co. 100 + + + + + + + +e

Turkey Point 4b Florida Power & Light Co. 100 + + + + + + + +e

Vermont Yankee Entergy Nuclear Operations, Inc. 100 + i + + +i

Vogtle 1 City of Dalton (Georgia) 1.60 + + + + e, g

Vogtle 1 Georgia Power Co. 45.70 + + + + + + + +

Vogtle 1 Municipal Electric Authority of 

Georgia

22.70 + + + + + + + +

Vogtle 1 Oglethorpe Power Co. 30 + _ _ _

Vogtle 2 City of Dalton (Georgia) 1.60 + + + + e, g

Vogtle 2 Georgia Power Co. 45.70 + + + + + + + +

Vogtle 2 Municipal Electric Authority of 

Georgia

22.70 + + + + + + + +

(Continued From Previous Page)

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 36 GAO-04-32 Decommissioning Nuclear Power Plants

Legend

+ means that fund balance/recent contributions were 0 to 25 percent more than benchmark.

++ means that fund balance/recent contributions were 26 to 50 percent more than benchmark.

+++ means that fund balance/recent contributions were 51 to 100 percent more than benchmark.

++++ means that fund balance/recent contributions were 101 percent or more than benchmark.

_ means that fund balance/recent contributions were 0.1 to 25 percent less than benchmark.

_ _ means that fund balance/recent contributions were 26 to 50 percent less than benchmark.

_ _ _ means that fund balance/recent contributions were 51 to 100 percent less than benchmark.

Source: GAO analysis.

a

Adequacy of recent contributions is based on responses to our survey. The percentages are more, or 

less, than the benchmark, meaning the owner has contributed more, or less, on average for 1999 and 

2000 (cost adjusted to 2000) than the annual average of the present value amounts required in each 

subsequent year until its plant is retired. 

b

Plant’s operating license extended for 20 years.

c

Plants whose owners are expected to apply for 20-year license renewals by December 2003.

d

Plant has permanently shut down.

e

Trust fund balance exceeds present value of estimated decommissioning costs.

f

Owner has, as of March 31, 2003, an additional method to support financial assurance obligations 

(e.g., parent company guarantee, statement of intent).

g

Contributions data are not available. 

h

Plants whose owners have applied for 20-year license renewals, as of August 20, 2003.

i

Includes balances and/or contributions from a previous owner’s biennial report and/or responses to 

our survey.

j

Owner had, as of March 31, 2001, an additional method to support financial assurance obligations 

(e.g., parent company guarantee, statement of intent).

k

Liability is for decommissioning share and not ownership share.

Vogtle 2 Oglethorpe Power Co. 30 _ _ _ _ 

Waterford 3 Entergy Louisiana, Inc. 100 _ +

Watts Bar 1 Tennessee Valley Authority 100 + + + + _ _ _ 

Wolf Creek 1 Kansas City Power & Light Co. 47 + _ 

Wolf Creek 1 Kansas Electric Power 

Cooperative

6 _ _ _ _ _ 

Wolf Creek 1 Kansas Gas & Electric Co. 47 + + 

Yankee Rowed Yankee Atomic Electric Co. 100 _ + + + +

Zion 1d Exelon Generation Co., LLC 100 _ _ _ _ _ 

Zion 2d Exelon Generation Co., LLC 100 _ _ _ _ _ _ 

(Continued From Previous Page)

Baseline (most likely) scenario

Plant name Owner

Ownership 

share of plant 

(percent)

Adequacy of trust 

fund balances as of

end of 2000

Adequacy of recent 

trust fund 

contributionsa
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 37 GAO-04-32 Decommissioning Nuclear Power Plants

Table 5: Selected Owners with More, or Less, Than Benchmark Trust Fund Balances and Contributions, under Optimistic 

Assumptions (by Percentage above or below Benchmarks)

Optimistic scenariob

Plant name Ownera

Ownership

share of plant 

(percent)

Adequacy of trust 

fund balances as of 

end of 2000

Adequacy of recent 

trust fund 

contributionsc

Beaver Valley 1 Pennsylvania Power Co. 65 + _ _ _ 

Browns Ferry 1d Tennessee Valley Authority 100 + + _ _ _ 

Browns Ferry 2d Tennessee Valley Authority 100 + + _ _ _

Browns Ferry 3d Tennessee Valley Authority 100 + + _ _ _ 

Brunswick 1 Progress Energy Carolinas, 

Inc.

81.67 _ +

Columbia Generating 

Station

Energy Northwest 100 _ _ _

Dresden 1e Exelon Generation Co., LLC 100 _ _ _ _ _ _ g

Duane Arnold Central Iowa Power 

Cooperative

20 _ _ _ _ _ _ 

Duane Arnold Corn Belt Power Cooperative 10 _ _ _ _ 

Duane Arnold IPL 70 _ _ 

Fermi 1e Detroit Edison Co. 100 + + + + +f

Grand Gulf 1 South Mississippi Electric 

Power

10 _ _ _ _ 

Indian Point 1e Entergy Nuclear Operations, 

Inc.

100 _ _ _g _ _ _g

LaCrossee Dairyland Power Cooperative 100 + + + + + f

Limerick 1 Exelon Generation Co., LLC 100 _ _ _ 

Limerick 2 Exelon Generation Co., LLC 100 _ + 

Maine Yankeee Maine Yankee

Atomic Power Co.

100 _ _

Palo Verde 2 El Paso Electric Co. 15.80 + +

Peach Bottom 1e Exelon Generation Co., LLC 100 _ _ _ _ _ _ 

Rancho Secoe Sacramento Municipal Utility 

District

100 _ _ _ _ _

Robinson 2d Progress Energy Carolinas, 

Inc.

100 + + + + +

Salem 1 Exelon Generation Co., LLC 42.59 _ _ 

Salem 2 Exelon Generation Co., LLC 42.59 + + 

Sequoyah 1 Tennessee Valley Authority 100 _ _ _ _

Sequoyah 2 Tennessee Valley Authority 100 + _ _ _

Summerd South Carolina Electric & Gas 

Co.

66.67 + + + + 
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 38 GAO-04-32 Decommissioning Nuclear Power Plants

Legend

+ means that fund balance/recent contributions were 0 to 25 percent more than benchmark.

++ means that fund balance/recent contributions were 26 to 50 percent more than benchmark.

+++ means that fund balance/recent contributions were 51 to 100 percent more than benchmark.

++++ means that fund balance/recent contributions were 101 percent or more than benchmark.

_ means that fund balance/recent contributions were 0.1 to 25 percent less than benchmark.

_ _ means that fund balance/recent contributions were 26 to 50 percent less than benchmark.

_ _ _ means that fund balance/recent contributions were 51 to 100 percent less than benchmark.

Source: GAO analysis.

a

Owners’ funds were selected to be screened under optimistic assumptions based on our baseline 

results; namely, that the status of their trust funds was below baseline benchmarks on both balances 

and contributions. 

b

See appendix I for description of optimistic assumptions.

c

Adequacy of recent contributions is based on responses to our survey. The percentages are more, or 

less, than the benchmark, meaning the owner has contributed more, or less, on average for 1999 and 

2000 (cost adjusted to 2000) than the annual average of the present value amounts required in each 

subsequent year until its plant is retired. 

d

Plant whose owners have applied for 20-year license renewals or are expected to apply by December 

2003, as of August 20, 2003.

e

Plant has permanently shut down.

f

Trust fund balance exceeds present value of estimated decommissioning cost.

g

Includes balances and/or contributions from a previous owner’s biennial report and/or responses to 

our survey.

Susquehanna 1 Allegheny Electric Cooperative 10 _ _ +

Susquehanna 2 Allegheny Electric Cooperative 10 _ _ +

Trojane Portland General Electric Co. 67.50 _ _ _ _

Vogtle 2 Oglethorpe Power Co. 30 + _ _ _ 

Wolf Creek 1 Kansas Electric

Power Cooperative

6 _ _ _ _

Zion 1e Exelon Generation Co., LLC 100 _ _ _ _ _

Zion 2e Exelon Generation Co., LLC 100 _ _ _ _ _

(Continued From Previous Page)

Optimistic scenariob

Plant name Ownera

Ownership

share of plant 

(percent)

Adequacy of trust 

fund balances as of 

end of 2000

Adequacy of recent 

trust fund 

contributionsc
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 39 GAO-04-32 Decommissioning Nuclear Power Plants

Table 6: Selected Owners with More, or Less, Than Benchmark Trust Fund Balances and Contributions, under Pessimistic 

Assumptions (by Percentage above or below Benchmarks) 

Pessimistic assumptions scenariob

Plant name Ownera

Ownership

share of plant 

(percent)

Adequacy of trust fund 

balances as of end of 

2000

Adequacy of recent 

trust fund 

contributionsc

Arkansas Nuclear 2d Entergy Arkansas, Inc. 100 _ _ _ _

Beaver Valley 1 Ohio Edison Co. 35 _ _ _ _ _

Beaver Valley 2 Cleveland Electric Illuminating 

Co.

24.47 _ _ _

Beaver Valley 2 Ohio Edison Co. 41.88 _ _ _

Beaver Valley 2 Toledo Edison Co. 19.91 _ _

Big Rock Pointe Consumers Energy Co. 100 _ _ _ _ _

Brunswick 1 North Carolina Eastern 

Municipal

18.33 _ _ _ _ 

Brunswick 2 North Carolina Eastern 

Municipal

18.33 _ _ _ _

Brunswick 2 Progress Energy Carolinas, 

Inc.

81.67 _ _ _ _ 

Callaway AmerenUE 100 _ _ _ _ _ 

Calvert Cliffs 1f Constellation Energy Group 100 _ g

Calvert Cliffs 2f Constellation Energy Group 100 _ g

Catawba 1d Duke Power Co. 12.50 _ _

Catawba 1d North Carolina Electric 

Membership

28.1 _ _ _ _ _ 

Catawba 1d Piedmont Municipal Power 

Agency

12.5 _ _

Catawba 2d North Carolina Electric 

Membership

28.1 _ _ _ _ 

Crystal River 3 City of Alachua Electric Dept. 0.08 _ g

Crystal River 3 City of Bushnell Utility Dept. 0.04 _ g 

Crystal River 3 City of Kissimmee Utilities 0.68 _ _ g

Crystal River 3 City of Leesburg Municipal 

Electric

0.82 _ _ g

Crystal River 3 City of Ocala Utilities Division 1.33 _ _ g

Crystal River 3 Seminole Electric 

Cooperative, Inc.

1.70 _ _ _

Dresden 2d Exelon Generation Co., LLC 100 _ _

Dresden 3d Exelon Generation Co., LLC 100 _ _ 

Farley 1d Alabama Power Co. 100 _ _
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 40 GAO-04-32 Decommissioning Nuclear Power Plants

Legend

+ means that fund balance/recent contributions were 0 to 25 percent more than benchmark.

++ means that fund balance/recent contributions were 26 to 50 percent more than benchmark.

+++ means that fund balance/recent contributions were 51 to 100 percent more than benchmark.

++++ means that fund balance/recent contributions were 101 percent or more than benchmark.

_ means that fund balance/recent contributions were 0.1 to 25 percent less than benchmark.

_ _ means that fund balance/recent contributions were 26 to 50 percent less than benchmark.

Haddam Necke Connecticut Yankee Atomic 

Power Co.

100 _ _ _ _

Harris 1 North Carolina Eastern 

Municipal

16.17 _ _ _

Harris 1 Progress Energy Carolinas, 

Inc.

83.83 _ _ _

Humboldt Bay 3e Pacific Gas & Electric Co. 100 _ _ _ _ _

Indian Point 2 Entergy Nuclear Operations, 

Inc.

100 _ _ 

Millstone 2 Dominion Nuclear Connecticut 100 _ g

Monticello Xcel Energy 100 _ _ _ _

Palo Verde 1 El Paso Electric Co. 15.8 _ _ _ _ 

Palo Verde 3 El Paso Electric Co. 15.8 _ _ _ _ 

Palo Verde 3 Public Service Co. of New 

Mexico

10.20 _ _ _ _

Peach Bottom 2f Exelon Generation Co., LLC 50 _h _

Pilgrim 1 Entergy Nuclear Operations, 

Inc.

100 _ _ _ _ 

Prairie Island 1 Xcel Energy 100 _ _

Quad Cities 1d Exelon Generation Co., LLC 75 _ _ _ _

Quad Cities 2d Exelon Generation Co., LLC 75 _ _ _

Quad Cities 2d MidAmerica Energy Holdings 25 _ _ _ _

Susquehanna 1 PPL Susquehanna, LLC 90 _ _ _ _ 

Vermont Yankee Entergy Nuclear Operations, 

Inc.

100 _ _h _ _h

Vogtle 1 Oglethorpe Power Co. 30 _ _ _ _ _ 

Waterford 3 Entergy Louisiana, Inc. 100 _ _ _ _

Wolf Creek 1 Kansas City Power & Light Co. 47 _ _ _ _ 

Wolf Creek 1 Kansas Gas & Electric Co. 47 _ _ _

Yankee Rowee Yankee Atomic Electric Co. 100 _ _ _ _ _

(Continued From Previous Page)

Pessimistic assumptions scenariob

Plant name Ownera

Ownership

share of plant 

(percent)

Adequacy of trust fund 

balances as of end of 

2000

Adequacy of recent 

trust fund 

contributionsc
Appendix II

Detailed Results of Our Analysis of the 

Decommissioning Trust Funds 

Page 41 GAO-04-32 Decommissioning Nuclear Power Plants

_ _ _ means that fund balance/recent contributions were 51 to 100 percent less than benchmark.

Source: GAO analysis.

a

Owners’ funds were selected to be screened under pessimistic assumptions based on our baseline 

results; namely, that the status of their trust funds was 0 to 100 percent above baseline benchmark on 

balances and/or contributions. 

b

See app. I for description of pessimistic assumptions.

c

Adequacy of recent contributions is based on responses to our survey. The percentages are more, or 

less, than the benchmark, meaning the owner has contributed more, or less, on average for 1999 and 

2000 (cost adjusted to 2000) than the annual average of the present value amounts required in each 

subsequent year until its plant is retired. 

d

Plant whose owners have applied for 20-year license renewals or are expected to apply by December 

2003, as of August 20, 2003.

e

Plant has permanently shut down. 

f

Plant’s operating license extended for 20 years.

g

Contributions data are not available. 

h

Includes balances and/or contributions from a previous owner’s biennial report and/or responses to 

our survey.
Page 42 GAO-04-32 Decommissioning Nuclear Power Plants

Appendix III

Comments from the Nuclear Regulatory 

Commission ApendxiI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.

See comment 2.

See comment 3.

See comment 4.
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 43 GAO-04-32 Decommissioning Nuclear Power Plants

See comment 5.

See comment 6.
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 44 GAO-04-32 Decommissioning Nuclear Power Plants

See comment 7.

See comment 8.

See comment 9.

Now on p. 3.
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 45 GAO-04-32 Decommissioning Nuclear Power Plants

Now on p. 3.

See comment 10.

Now on p. 7.

See comment 11.

See comment 12.
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 46 GAO-04-32 Decommissioning Nuclear Power Plants

See comment 13.

Now on p. 14.
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 47 GAO-04-32 Decommissioning Nuclear Power Plants

The following are GAO’s comments on NRC’s letter dated October 3, 2003.

GAO Comments 1. Rather than concluding that NRC does not have a method, we stated 

that the agency’s analysis was not effective in identifying owners who 

might be at risk of accumulating insufficient funds to pay for 

decommissioning. For example, NRC relied on the owners’ future 

funding plans to make up any shortfalls without verifying whether the 

plans are consistent with the owners’ recent contributions. See also our 

response in the Agency Comments and Our Evaluation section on page 

16. 

2. We agree that NRC should be primarily concerned with ensuring that 

owners of nuclear power plants will have sufficient funds for 

decommissioning. However, we believe that NRC should take a 

proactive, rather than reactive, approach to providing owners and the 

public with a more complete understanding of NRC’s expectations as to 

how they will hold owners who are not accumulating sufficient funds 

accountable. As discussed in the report, the lack of any specific criteria 

for acting on owners’ decommissioning financial reports contrasts with 

NRC’s practices in overseeing safety issues at nuclear plants, where the 

agency uses an “Action Matrix” that provides for a range of actions 

commensurate with the significance of safety inspection findings and 

performance indicators. Without similar criteria in its oversight of 

decommissioning funding assurance, NRC will not have a logical, 

coherent, consistent, and predictable plan of action if and when it 

encounters owners whose plants have inadequate financial assurance. 

See also our response in the Agency Comments and Our Evaluation 

section on page 16.

3. See our responses to comments 5, 6, and 9 in this appendix. 

4. See our responses to comment 9.

5. We agree that current NRC regulations do not establish intermediate 

benchmarking levels, but rather establish the minimum balance that 

must be obtained when plants are retired. We also agree that the state 

regulatory authorities and Federal Energy Regulatory Commission play 

a role. However, we believe that NRC should take a more proactive 

approach in developing an effective method for ensuring that sufficient 

funds will be available for decommissioning. For example, a common 

expected rate of return could be used to project the earnings of each 
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 48 GAO-04-32 Decommissioning Nuclear Power Plants

owner’s trust fund. NRC’s current method allows the owners to use up 

to 2 percent (real) or another rate if approved by its state regulator. As 

we stated in our report, one state regulator approved owners of the 

same plant to use widely varying rates of return to project earnings on 

their trust fund investments. Other factors being equal, the owner using 

the higher rate would need to collect fewer funds than the owner using 

a lower rate of return. While the actual rate the owners will earn on 

their funds could be higher or lower, NRC accepted the state regulatorapproved rates without assessing whether they were consistent with 

market expectations. 

In another example, in its 2001 biennial report, one owner using NRC’s 

2 percent rate of return estimated that the amount of funds needed for 

decommissioning under NRC’s regulations would be insufficient at five 

of its nuclear power plants. Therefore, the owner provided additional 

assurance in the form of a parent guarantee. However, the owner 

sought and subsequently received approval from its state regulator to 

use a higher real rate of return. After receiving the approval, the owner 

withdrew its parent guarantee since under the higher rate, the 

projected trust funds were sufficient to cover estimated 

decommissioning costs. We believe that by being more proactive, and 

not simply deferring to others, the NRC can develop a more effective 

and consistent method and better achieve its primary concern of 

ensuring that owners are accumulating funds at sufficient rates.

6. We found no evidence during our review that NRC has ever determined 

that an owner is not accumulating sufficient funds. Therefore, without 

any experience that its “practice” has been applied, we believe that 

without clear criteria, NRC will not have a logical, coherent, consistent, 

and predictable plan of action if and when it encounters owners whose 

plants have inadequate financial assurance. Accordingly, we are 

recommending that NRC establish criteria for responding to 

unacceptable levels of financial assurance. 

7. We agree that our method is different from that used by NRC. Our draft 

discussed and reviewed NRC’s analysis. Based on our review, we 

concluded that NRC’s analysis was not effective in identifying owners 

who might be at risk of accumulating insufficient funds to pay for 

eventual decommissioning. For example, NRC relied on the owners’ 

future funding plans, or on rate-setting authority decisions, in 

concluding that the owners were on track to fully fund 

decommissioning. However, we found some owners’ actual 
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 49 GAO-04-32 Decommissioning Nuclear Power Plants

contributions in 2001 were much less than what they stated in their 

2001 biennial reports to NRC that they planned to contribute. For 

example, one owner contributed about $1.5 million (or 39 percent) less 

than the amount it told NRC that it planned to contribute. Moreover, 

using actual contributions the owners had recently made to their trust 

funds, we identified several owners that are at risk of accumulating 

insufficient funds to pay for eventual decommissioning.

8. We do not believe any changes are needed.

9. We agree, and the our draft report stated, that NRC does not separately 

assess the status of each co-owner’s decommissioning funding against 

the co-owner’s private contractual obligation to fund decommissioning. 

The NRC guidance states: “Some licensees are part owners of power 

reactors. In such cases, the [NRC] reviewer should evaluate separately 

each licensee’s [co-owner’s] amortization schedule [i.e., 

decommissioning funding] for its share of the facility, unless the lead 

licensee has agreed to coordinate funding documentation and reporting 

for all co-owners.” Nonetheless, we revised the report to remove any 

inferences that NRC’s practice is inconsistent with its internal 

guidance. Notwithstanding NRC’s characterization of its practice, we 

believe that both the guidance and NRC’s actions do not go far enough. 

For example, the guidance allows for an exception when the lead 

licensee agrees to coordinate documentation and reporting. More 

importantly, the critical issue is that NRC should do more to develop an 

effective method for assessing the adequacy of nuclear power plant 

owner’s trust funds for decommissioning. Under NRC’s current method, 

it combines the trust funds for all co-owners of a nuclear plant and then 

assesses the adequacy of decommissioning funds on a plant-wide basis. 

However, as our analysis indicates, combining the trust funds of several 

owners can produce misleading results because those co-owners with 

more than sufficient funds can appear to balance out those with less 

than sufficient funds. In addition, as a practical matter, owners have 

contractual agreements to pay for their share of decommissioning, and 

the trust funds are generally not transferable among owners. Unless 

NRC separately evaluates the adequacy of each co-owners’ 

decommissioning trust fund, the agency’s existing process would 

appear to require some co-owners to pay more than their fair share of 

decommissioning costs. We believe this would be inconsistent with 

NRC’s stated policy of generally not looking to one co-owner to bail out 

another.
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 50 GAO-04-32 Decommissioning Nuclear Power Plants

10. Rather than state that NRC has not developed and used a method, we 

found that the agency’s method was not effective in identifying owners 

who might be at risk of accumulating insufficient funds to pay for 

decommissioning. For example, we identified several limitations in 

NRC’s method, including the agency’s practice of combining the trust 

funds for all the co-owners of a nuclear plant and then assessing 

whether the combined value of the trust funds is sufficient. We believe 

that this practice can produce misleading results because those coowners with more than sufficient funds can appear to balance out those 

with less than sufficient funds. 

In addition, we agree that NRC has not established criteria for taking 

action when it finds cases of unacceptable levels of financial assurance. 

According to NRC officials we spoke to, NRC has never identified an 

owner with unacceptable levels of financial assurance. Moreover, the 

general activities that NRC stated above are not included in its internal 

guidance for reviewing the owners’ biennial reports. We believe that 

NRC should take a more proactive approach to providing owners and 

the public with a more complete understanding of NRC’s expectations 

as to how they will hold owners who are not accumulating sufficient 

funds accountable. We believe having established criteria for taking 

action when it is determined that unacceptable levels of financial 

assurance exist will better prepare NRC to make this determination. 

Furthermore, having such criteria would not only increase public 

confidence that NRC has a plan to take action to ensure sufficient funds 

will be available for decommissioning but also would make its 

determination of inadequacy more transparent to owners.

11. As indicated in our draft report, we reviewed NRC’s analysis of the 

owners’ 2001 biennial reports. Our review clearly points out that the 

agency’s method has limitations that reduce its effectiveness. For 

example, NRC relied on the owners’ future funding plans to make up 

any shortfalls without verifying whether those plans are consistent with 

the owners’ recent contributions. We found that some owners’ actual 

contributions in 2001 were much less than what they stated in their 

2001 biennial reports to NRC that they planned to contribute. For 

example, one owner contributed about $1.5 million (or 39 percent) less 

than the amount they told NRC that they planned to contribute. In 

addition, based on our analysis using the actual contributions the 

owners recently made to their trust funds, we found that 28 owners 

with ownership shares in 44 plants contributed less than the amounts 

we estimate they will need to contribute over the remaining life of their 
Appendix III

Comments from the Nuclear Regulatory 

Commission

Page 51 GAO-04-32 Decommissioning Nuclear Power Plants

plants to meet their decommissioning obligations. Accordingly, we 

believe that our recommendation to NRC to develop an effective 

method is clearly warranted to ensure that all owners are accumulating 

funds at sufficient rates. See also our response to comment 12.

12. As stated in our draft, our conclusions are based on a method that uses 

a benchmark to assess the adequacy of each nuclear plant owner’s 

decommissioning trust fund. In addition, our draft stated that this 

benchmark is not the only way an owner could accrue enough funds to 

pay future decommissioning costs. Still, we believe that our benchmark 

is useful for assessing the status of the owners’ decommissioning trust 

funds because it (1) provides a common standard for comparisons 

among owners, (2) embodies the principle of economic efficiency in 

that the price of a product (i.e., electricity) should, if possible, equal all 

of its costs—current and accrued, and (3) provides for transparency in 

that it assumes that current and future users pay the same 

decommissioning fees, in constant present-value terms.

13. As we stated in our draft, NRC stated that it will not impose 

decommissioning costs on co-owners in a manner inconsistent with 

their agreed-upon shares, except in highly unusual circumstances when 

required by public health and safety considerations and that it would 

not seek more than the pro rata shares from co-owners with

de minimis ownership. Nevertheless, unless NRC separately evaluates 

the adequacy of each co-owners’ decommissioning trust fund, the 

agency’s existing process would appear to require some co-owners to 

pay more than their fair share of decommissioning costs. We believe 

this would be inconsistent with NRC’s stated policy of generally not 

looking to one co-owner to bail out another one.
Page 52 GAO-04-32 Decommissioning Nuclear Power Plants

Appendix IV

GAO Contact and Staff Acknowledgments ApendxiIV

GAO Contact Tim Guinane (202) 512-4939

Acknowledgments In addition, Ronald La Due Lake, Carolyn McGowan, Cynthia Norris, 

Michael Sagalow, Barbara Timmerman, Daniel G. Williams, and Dwayne 

Weigel made key contributions to this report. 

(360094)
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