T H E NEWS IN F 0 C U S

Nuclear Decommissioning j

Too Expensive to Run, Too Expensive to Shut

ere’s new evidence that de- T” commissioning nuclear power plants is going to be vastly more expensive than believed only a few years ago, more complicated, and perhaps more difficult to fi- nance. The evidence comes from a tentative decision by the Penn- sylvania Public Utility Commis- sion on Three Mile Island Unit 2 decommissioning costs and from two recent cases at the Federal Energy Regulatory Commission.

In early January, Pennsylvania regulators appeared to back a po- sition advocated by the state con- sumer advocate that ratepayers should not have to pay for decom- missioning the TMT reactor, which melted down in 1979. The PUC put out a news release stating that “a majority of the commissioners expressed support for the position advanced by the consumer advo- cate, that ratepayers should not be held accountable for the costs of decommissioning the accident- crippled TMII Unit 2 nuclear reac- tor. The news release reflected opinions expressed during a PUC discussion of the Metropolitan Edison and Pennsylvania Electric proposal to recover some $60 mil- lion in costs to decommission the remains of the dead reactor. More than $1 billion has been spent since the accident in decontami- nating the reactor, much of it tax- payer dollars.

Parent GPU estimates the total cost of the decommissioning will run to about $152 million. Met- Ed owns 50% of the plant, Penelec 25% and Jersey Central Power & Light 25%. The New Jer- sey Board of Regulatory Commis- sioners has authorized JCPSLL to recover TMI-2 decommissioning costs in rates.

The PaPUC news release was based on an informal polling of the commissioners. When the statement was issued, Penelec and Met-Ed began lobbying im-

mediately to try to turn the deci- sion around. In the meantime, Moody’s Investors Service an- nounced it would put credit rat- ings for both Met-Ed and Penelec in jeopardy Moody’s said about $1.2 billion in securities could be affected.

On January 21, the Pennsylva- nia Commission chair David Rolka issued a statement interpret- ing the commission’s rate deci- sion, which appeared to leave the TMI owners responsible for some $122.5 million in decommission-

ing costs which they had sought to collect from ratepayers.

Meanwhile, federal energy regu- lators were also getting into the act. On January 12, FERC issued an order in a case involving Bos- ton Edison’s Pilgrim nuclear unit. Boston Edison asked for a 2.4% in- crease in the decommissioning portion of its wholesale rates to ac- commodate an increase in the esti- mated cost of dismantling the plant from $109 million to $328 million. A group of 12 municipal customers challenged the esti- mate, saying it should be more like $163 million, not $328 million. The munis argued that Boston Edison’s decommissioning study was flawed. FERC found that the decommissioning charges were not “shown to be just and reason- able” and opened an investigation.

I n another case, on December 22,1992 FERC partially re-

jected a proposal by Connecticut Yankee Atomic Power Co. to in- crease its rates by 10.7% and in- clude an automatic five-year rate change, both to recover increased costs of decommissioning its nu- clear unit at Haddam Neck, which began generating power in 1968. In its filing, Connecticut Yankee said its estimate of the cost of decommissioning the plant have risen from $130 million to over $309 million (in 1992 dollars).

Other nuclear operators have had similar experience: Yankee Atomic last year doubled its esti- mate of the cost to decommission the closed Yankee Rowe plant in Massachusetts to $247 million.

T H E NEWS IN F 0 c u s

Utilities based their early esti- mates to decommission plants on the costs of dismantling the pio- neer Shippingport plant near Pittsburgh in the mid-1980s. That work cost $91 million and led the Nuclear Regulatory Commission in 1988 to set minimum amounts that utilities must accumulate to finance decommissioning. The NRC requires owners of pressur- ized water reactors rated at over 1,200 MW to set aside $105 mil- lion (in 1986 dollars) for decom- missioning. For smaller PWRs, the amount is $75 million. For boiling water reactors, the figures are $135 million for the 1,200 MW units and $104 million for the smaller BWRs. Those amounts now appear seriously inadequate and the NRC is reviewing them.

I n its FERC filing, Connecticut Yankee said it wanted the im-

mediate 10.7% hike, plus the abil- ity to automatically modify its rate at five-year intervals, without advanced approval from FERC. Because Connecticut Yankee sells its power at wholesale to its ten owners at wholesale, FERC has ju- risdiction over the rates. The com- mission rejected the automatic, five-year rate adjustment.

“The commission has held that whenever an electric utility seeks to change its decommissioning charges,” said FERC’s order, “it must file a change in rates pursu- ant to section 205 of the [Federal Power Act] and part 35 of the commission’s regulations.”

The commission set the 10.7% proposed rate hike for hearing, and also said it would institute an

investigation of Connecticut Yan- kee’s 12% rate of return on equity, as proposed by the Rhode Island attorney general, ‘because our in- dependent preliminary analysis suggests that this fixed component of connecticut Yankee’s formula rate may indeed be excessive. . . .”

Rate hikes for other decommis- sioning funds will require either FERC review or state review, or, in the case of municipally-owned units, perhaps no review.

Already in line for early decom- missioning are six units that have

been shut down prematurely: Yan- kee Rowe, Sacramento Municipal Utility District’s Ranch0 Seco plant, Public Service of Colo- rado’s Fort St. Vrain, the Long Is- land Power Authority’s Shore- ham plant, Southern California Edison’s San Onofre Unit 1 and, most recently Portland General Electric’s Trojan plant, closed in November with a steam gener- ator tube leak and put on the scrap heap when the utility de- cided it was too expensive to fix the steam generators.

-Kennedy l? Maize

Moving Power from Canada

Is the Price Right for NU/NEES Transmission corridor Pmposal?

I s more open transmission access coming to New England, as a re-

sult of the Northeast Utilities ac- quisition of Public Service Co. of New Hampshire merger? Or will access be frustrated because its cost is too high and its terms too restrictive? These will be the cen- tral questions facing the Federal Energy Regulatory Commission as it reviews NUs compliance fil- ings in the merger case, as well as a related proposal, made jointly with New England Electric Sys- tem, for service through the New Hampshire corridor. The corridor proposal is vital to many New England utilities as the route for importing additional power from Canada.

NU’s PSNH unit has offered other utilities, independent power developers and Canadian inter- ests up to 28 years of access across its transmission lines. From 340 to 440 MW of transmission capac- ity in the “New Hampshire corri- dor” was offered in 1990 during hearings on the PSNH acquisition by NU; there were no takers on the first offer.

This “second tier” offering was expanded to other potential users. The offer, made in conjunction with NEES, includes the offer of 200 MW of transfer capacity across NEES’ transmission system.

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