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Why Buy A Shutdown Nuclear Plant? The Answer Might Surprise You

Today, the Nuclear Regulatory Commission (NRC) held a public meeting to consider the latest development in what has become a growing trend in the nuclear power industry – accelerating decommissioning by transferring licenses to third parties after a plant shuts down. The topic of today’s NRC meeting was to provide an overview of Entergy’s plan to sell and transfer the NRC licenses for the Vermont Yankee Nuclear Power Station – which permanently ceased operations at the end of 2014 – to NorthStar Group Services, Inc., a company that specializes in nuclear decommissioning and environmental remediation. This meeting began the process by which the companies seek NRC approval of the transaction.

Vermont Yankee Nuclear Power Station
Why would anyone want to buy a nuclear plant? Because they can decommission it faster, with more certainty in schedule and costs,that’s why. In the nuclear decommissioning business, time is literally money. NRC regulations allow up to 60 years for completion of decommissioning, and waiting is a prudent and safe practice that often becomes necessary when plants shut down early. Plant owners are required to set aside money in a nuclear decommissioning trust fund while the plant is operating and to assure the NRC that this fund will be sufficient to decommission the plant. For early shutdowns like Vermont Yankee, additional time may be needed for the decommissioning trust fund to grow through the accumulation of investment interest before the more significant work can begin. What decommissioning companies are saying, though, is that their experience enables them to provide more certainty to efficiently and safely dismantle the plants without having to wait.

It is not surprising that much has been learned about nuclear plant decommissioning. The process has already been completed at 11 U.S. power reactors and dozens of additional facilities around the world, where radioactive systems and structures have been decontaminated and dismantled, with any remaining low-level radioactive waste shipped off to disposal sites. High-level radioactive waste, in the form of used nuclear fuel, is transferred to robust concrete and steel dry cask storage systems that are typically located at the site until a permanent disposal facility is developed by the U.S. Department of Energy.

Existing Vermont Yankee ISFSI pad and the cleared site for the second ISFSI
Recently, this experience was put to the test at the Zion Nuclear Power Station in Illinois. Shut down in 1998, Zion was in a holding pattern until 2010, when Exelon transferred the license to a subsidiary of decommissioning company Energy Solutions (now known as Zion Solutions). The project is now on track for completion well ahead of its 2020 deadline – more than a dozen years earlier than originally planned. A similar approach is now also being applied to the decommissioning of a reactor in LaCrosse, Wisconsin which ceased operations in 1987.

Although every plant is different, the Vermont Yankee, Zion and LaCrosse transactions have much in common when it comes to creating win-win business propositions. And the real winners in these transactions are the people who live around the plant. Under the agreement discussed today, Vermont Yankee decommissioning and site restoration will be scheduled for completion decades earlier, with cost certainty and additional financial assurances. This arrangement also will begin generating economic activity at the site during the active decommissioning phase many years sooner than originally planned, with benefits for the local and regional economy. 

While improved business models are making a huge difference, there are two additional obstacles that, if overcome, would further improve the process: 1) regulatory uncertainties that exist during the transition from operations to decommissioning (Vermont Yankee is past that phase) and, 2) the shipment of used fuel off the site to a federal facility (as required by law) so all land associated with the plant can be released. On the first issue, in November 2015, the NRC proposed a rulemaking that has the potential to make the transition more efficient. And regarding for the used fuel, just last week former Texas Governor Rick Perry, who has been nominated to be Secretary of Energy, promised in his confirmation hearing that, "The time of kicking the can down the road — those days are over.”   

The above is a guest post from Rod McCullum, senior director of fuel and decommissioning at NEI.

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