<< Previous

Why Nuclear Plants Have 40-Year License Terms
U.S. nuclear power plants are licensed to operate for 40 years. This term was specified by Congress in the Atomic Energy Act of 1954. The law was fashioned after the Communications Act of 1934, in which radio stations were licensed to operate for several years and allowed to renew their licenses as long as the stations continued to meet their charters. The Atomic Energy Act allowed for nuclear power plants to renew their licenses.

Congress selected a 40-year term for nuclear power plant licenses because this period was a typical amortization period for an electric power plant. The 40-year license term was not based on safety, technical or environmental factors.

Each nuclear power plant is licensed based on a given set of requirements, depending primarily on the type of plant. This set of requirements is called the plant’s “licensing basis.”

A plant’s licensing basis is an evolving set of requirements and commitments. Over time, as technology advances and operating experience provides new information, a plant’s licensing basis may be changed—for example, when the NRC issues new requirements and the plant makes modifications. These new and additional requirements become part of the plant’s licensing basis.

This constant oversight by the NRC ensures a plant will operate safely throughout its life.

Economics Drive License Renewal Decision
In deciding whether to pursue license renewal, a company will consider the economic situation of its plant—including where it is located, its capital cost and the competition in that area.

At the end of a nuclear plant’s 40-year license, initial capital costs for the plant will have been fully recovered and the decommissioning costs will have been fully funded. Any incremental cost incurred over the original license period could be amortized over a longer period of time because of license renewal, further reducing the cost of electricity. For many nuclear power plants, license renewal represents the most inexpensive option for future electricity generation.

As part of the planning process, each company must make some assumptions about future electricity demand and other supply options, including purchased power and transmission considerations.

Next Page: "NRC’s License Renewal Requirements" >>

Pages 1 2 3