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Financial Assurance for Decommissioning

Reactor Licensees

he total cost of decommissioning a reactor facility depends on many factors, including the timing and sequence of the various stages of the program, type of reactor or facility, location of the facility, radioactive waste burial costs, and plans for spent fuel storage. The NRC estimates costs for decommissioning a nuclear power plant range from $280-$612 million.

NRC requires nuclear power plant licensees to report to the agency the status of their decommissioning funds at least once every 2 years, annually within 5 years of the planned shutdown, and annually once the plant ceases operation.

Licensees may demonstrate financial assurance for decommissioning by one or more of the following:

Prepayment: a deposit by the licensee at the start of operation in a separate account such as a trust fund.

Surety, insurance, or parent company guarantee method: assurance that the cost of decommissioning will be paid by another party should the licensee default.

External sinking fund: a separate account outside the licensee's control to accumulate decommissioning funds over time, if the reactor licensee recovers the cost of decommissioning through ratemaking regulation or non-bypassable charges.

Related reactor decommissioning funding documents:

  • Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance (NUREG-1577)
  • Standard Review Plan for Evaluating Nuclear Power Reactor License Termination Plans See in NUREG-1700 the following sections related to funding:
    • Chapter 7
    • Chapter 13, Section 13.1.1, "Management and Technical Support Organization"
    • Chapter 13, Section 13.1.2-13.1.3, "Operating Organization"
  • Report on Waste Burial Charges (NUREG-1307)

Materials Licensees

Generally speaking, licensed facilities that are not reactors are called "materials" licensees. They encompass a broad array of facilities, from medical applications to nuclear fuel fabricators. The cost to decommission these facilities similarly ranges broadly, from a few thousand up to the hundred million dollar range. For licensees whose decommissioning costs are less than $113,000, the NRC does not require setting aside funds for decommissioning. The primary factor affecting the cost of decommissioning is the amount of radioactive material the licensee is authorized to possess under its license. Other important factors include the physical form of the material (whether it is sealed or not) and the extent of contamination at the facility.

The majority of licensees have possession limits low enough that they may provide financial assurance according to a schedule. Licensees that are authorized to possess relatively large amounts of radioactive material must perform a site-specific cost estimate based on conditions at the facility to arrive at the necessary amount of financial assurance, and they must submit a decommissioning funding plan (DFP) to describe how they will fund the decommissioning costs. The DFP must be updated every 3 years.

Uranium mills are not required to provide a DFP. Uranium mills must, however, provide an estimate of the costs of decontamination, decommissioning, and reclamation for their facilities and provide anuual updates to their financial sureties.

Licensees must provide financial assurance for decommissioning costs before they begin operations that could result in contamination that needs to be cleaned up. The methods available for materials licensees are similar to those used for reactor licensees:

Prepayment: a deposit by the licensee at the start of operation in a separate account, such as an escrow or trust fund.

Surety, insurance, or parent company guarantee: a guarantee of payment of decommissioning costs by a third party, which can be used in the event that the licensee defaults on its obligation to decommission the site.

External sinking fund combined with a surety method: Where an external sinking fund is used by a materials licensee, it must be combined with another financial instrument to assure that the full cost of decommissioning is available at the start of operations. As the value of the external fund increases, the value of the other instrument may be decreased.

Statement of intent: available for government licensees only, this method documents the government licensee’s intent to fund decommissioning through legislative appropriation.

Related Materials Licensee Decommissioning Funding Documents:

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Page Last Reviewed/Updated Monday, December 09, 2013