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Funding Requirements
NRC funding requirements are specifically related to that portion of a nuclear plant that has been contaminated by radioactive material. The NRC does not require companies to include funds for dismantling buildings and facilities (such as office buildings and switchyards) that do not pose a radiation hazard to workers or the public.

Decommissioning costs include three components: labor, energy, and the transportation and disposal of waste materials. The most reliable estimate of decommissioning costs comes from an engineering study of a specific plant. The NRC requires that companies establish a decommissioning fund for each reactor. The company must review annually and report to the NRC every other year on the amount of money required for decommissioning and the adequacy of the fund being used to accumulate it. The size of the fund is adjusted periodically to account for changes in the cost of labor, energy and low-level waste disposal, and to take into account technological advancements.

Every company that operates a nuclear power plant is required to amass the funds needed for decommissioning. Three types of decommissioning funds are acceptable to the NRC:

• An external sinking fund that builds up money for decommissioning gradually over the plant’s operating lifetime. Revenues earmarked for decommissioning are collected from customers through rates and invested in a trust fund that is professionally managed.
• A prepayment account in which the company deposits money before the plant begins operation. The account may be a trust, escrow account, government fund, certificate of deposit or government securities. It is kept separate from a company’s other assets and is outside its control.
• A surety bond, letter of credit or insurance, which guarantees that decommissioning costs will be paid if the company defaults on its obligation.

Companies typically have set up sinking funds to accumulate money to decommission nuclear plants. In the early years of a nuclear unit’s operating life, decommissioning funds build up slowly, then accelerate more quickly as the compounded earnings on the trust fund’s investments increase.