Resources & Stats

Nuclear Industry Opposes New Tax for the Decontamination and Decommissioning Fund

July 2012
Background

• In the 1940s and 1950s, the federal government built three uranium enrichment plants for its nuclear weapons and national defense programs. The first of the three plants in Oak Ridge, Tenn., was built in 1945 as part of the Manhattan Project. The second (in Paducah, Ky.) began operations in 1952, followed by the Portsmouth, Ohio, plant in 1954.
• These plants operated for approximately 25 years as part of the national defense effort – until 1969 when the Atomic Energy Commission determined that some portion of their production capacity could be dedicated to production of commercial nuclear fuel.
• When the enrichment plants began producing enriched uranium for commercial uses in 1969, the plants were already fully contaminated from almost 25 years of operation as part of the U.S. nuclear weapons program.
• The government privatized the uranium enrichment enterprise in 1992. The Department of Energy retained ownership of the three enrichment plants, however, and the obligation to decommission them.

Utility Customers Pay Once for Decontamination and Decommissioning

• Enriched uranium was sold to commercial customers in the U.S. and around the world. Approximately 25 percent of these sales were to foreign utilities. The Department of Energy and its predecessor agencies received payments for these enrichment services.
• U.S. government pricing for enrichment services to commercial customers was based on full cost recovery. These costs included plant decontamination and decommissioning (D&D,) so D&D costs were factored into the price utility customers paid to the U.S. government.
• Although DOE included D&D in its price for enrichment services charged to utility customers, it did not accrue the money in a special fund. Instead it used these funds for other purposes.

Utility Customers Pay a Second Time for Decontamination and Decommissioning

• The Energy Policy Act (EPAct) of 1992 created the Uranium Enrichment Decontamination and Decommissioning Fund (D&D Fund), to finance clean-up at the three government-owned gaseous diffusion plants. The legislation also privatized the uranium enrichment enterprise.
• Beginning in fiscal year 1993, electric utilities were assessed up to $150 million per year (adjusted for inflation) for 15 years to help finance cleanup of the facilities. The fee was based on each company’s historic purchases of federal uranium enrichment services.
• The Energy Policy Act of 1992 specifically provided for termination of the assessment against electric utilities after the earlier of: (1) 15 years after October 24, 1992, or (2) the collection of $2.25 billion, adjusted for inflation.

Nuclear Energy Industry Position: Electricity Consumers Should Not Pay a Third Time

• Although the industry supports environmental cleanup of these sites, the government should not impose costs for this program on electricity consumers for a third time, when the government itself has yet to meet its financial obligations under the 1992 statute. The fund has a balance of approximately $4.7 billion and an annual outlay of $500 million to $600 million.
• The electric utility industry believes no further assessment from utility customers for the D&D fund is appropriate or necessary, and opposes the Obama Administration’s proposal to tax electricity consumers for this program.
• Utilities have already paid twice for D&D activities at these sites. The original cost charged to utilities for enriching uranium included a portion to cover D&D costs. The electric companies also met their obligation to the D&D Fund, as specified by the law, with a total contribution of $2.6 billion.
• Despite this, electric utilities are being asked to pay a third time for the same D&D program. This is unacceptable and represents a new “hidden” tax on consumers of electricity, at a time when many Americans are struggling in a down economy.