Limitation on the use of borrowing authority Adding to DOE difficulties in assuring an adequate source of program revenues is an Office of Management and Budget restriction which in effect prevents DOE from using the NWF's borrowing authority to finance short-term revenue shortfalls. Section 302(e)(5) of NWPA provides DOE authority to borrow funds from the Treasury, as may be agreed to by DOE and Treasury, "If at any time the moneys available in the Waste Fund are insufficient to enable the Secretary to discharge his responsibilities Our review of the legislative history of this provision found there was some congressional expectation that DOE would need to use this borrowing authority in the early years of the program. An August 20, 1982, congressional committee report expressed this expectation in the following way: "It is anticipated that receipts of the Waste Fund will During the administration's review of DOE's fiscal year 1985 budget request for NWF, OMB limited DOE's budget authority for NWF expenditures to NWF's projected annual revenue receipts. Thus, as long as this limitation is in effect, DOE is precluded from using NWF's borrowing authority to cover program costs when expenditures in any given fiscal year are projected to exceed revenues. According to DOE's budget request, the administration's objective is to keep NWF self-supporting. OMB's restriction limits the options available to DOE to finance program costs. Based on a fee of 1 mill per kilowatthour, DOE had estimated a revenue shortfall of $78.8 million in fiscal year 1987. Given OMB's restriction on borrowing, DOE noted in its fiscal year 1985 budget request that to cover this revenue shortfall it may be necessary to increase the waste disposal fee charged the nation's nuclear utilities to 1.047 mills for fiscal years 1985 and 1986 and to 1.094 mills in fiscal year 1987. In March 1984, however, DOE announced that such increases may not be necessary because some utilities had indicated an intent to deposit in NWF in June 1985 one-time fees for the disposal of existing spent nuclear fuel. (See discussion on p. 46.) Accordingly, if these one-time fees become available in June 1985, DOE believes that the OMB restriction will not have an adverse impact 10 House Committee on Energy and Commerce report on the Nuclear Waste Policy Act of 1982 (H.R. 6598), H. R. Rep. No. 785, Part I, 97th Cong., 2nd Sess. 38 (1982). on NWF activities and the need for short-term increases in the 1-mill fee can be avoided. DOE SHOULD FULLY EVALUATE WAYS TO MORE PROMPTLY COLLECT Although NWF may avoid revenue shortfalls in the short term, we believe DOE needs to reexamine the payment terms that should be established for all generators and owners to ensure equitable treatment and sound financial management practice in recovering the government's program costs. Accordingly, we believe that DOE, in exercising its discretionary authority to establish NWF fee collection procedures, should fully evaluate ways to more promptly collect fees from all generators and owners of highly radioactive materials in the United States. Under Section 111 of NWPA, the Congress established the policy that the government's cost of carrying out activities for the disposal of highly radioactive material should be paid by its generators or owners. The act's implementing provisions call for these costs to begin accruing April 7, 1983, even though DOE is not required by the act to begin taking title to the highly radioactive material until the first geologic repository begins operation. NWF was created expressly for the purpose of serving as the vehicle for deposit of such payments. The act set the initial fee to be paid by utilities generating nuclear electricity after April 7, 1983, and provided DOE general guidance for setting fees to be paid by owners of previously generated commercial spent fuel and owners of reprocessed high-level radioactive waste (i.e., DOE defense programs and New York State). Moreover, the act gave DOE the flexibility to determine when and how the fees should be collected to ensure full recovery of the government's costs. Because of the time value of money, we and the Department of Treasury generally urge all federal agencies as a matter of sound financial management practice to make every effort to collect 11 payments owed the government in a timely manner. We believe that DOE, as custodian of NWF, should apply this financial management principle in exercising its discretionary authority to establish NWF fee collection procedures. Based on our analysis of present NWF fee collection procedures or plans (see pp. 41 to 53), we found that DOE may be able to accelerate the depositing of millions of dollars into NWF. 11Our guidance is contained in Title 2 (Section 15) of the General Accounting Office's Policy and Procedures Manual for Guidance of Federal Agencies (Accounting Principles and Standards). Treasury's guidance is contained in the Treasury Fiscal Requirements Manual (Section 8020). From a program management standpoint, such an acceleration in NWF deposits would give DOE more opportunities to balance the potentially competing NWF management objectives which we noted in the previous sections, namely, --assuring that NWF has sufficient revenues available to enable DOE to discharge its responsibilities under the act (a statutory requirement), --maintaining fee stability over the long life of the program by avoiding increases in the ongoing waste disposal fee (a DOE policy objective), and --keeping NWF self-supporting by avoiding the use of In addition, such an acceleration in NWF deposits would allow DOE to accelerate retiring NWF's debt to the government. NWPA allows DOE to request the Treasury to invest balances in NWF which are in excess of current needs and use the interest revenues to offset future program costs. According to DOE and Treasury officials, before DOE can invest it must retire NWF's outstanding debt or have cash balances in NWF greater than such debt. In estabishing NWF, DOE transferred into it a total of $258.5 million in unexpended DOE fiscal year 1983 appropriations. (See app. IV.) NWPA requires that these funds, with interest, be repaid to the government. During fiscal year 1983, the interest expense on this debt was about $3 million. DOE's budget projects this interest expense to be about $7 million in fiscal year 1987. By eliminating this financing cost and helping to keep NWF self-supporting, accelerated deposits could in the long run be less costly to the ultimate payers--primarily consumers of nuclear electricity and U.S. taxpayers. Ways to accelerate payments To determine if and how DOE could more promptly collect payments to NWF, we reviewed DOE's fee collection procedures or plans for the four general categories of generators or owners of highly radioactive materials. The categories are --utilities generating nuclear electricity after April 7, --commercial owners of previously discharged spent fuel; --DOE-owned defense high-level waste; and --New York State-maintained high-level waste. 12we did not evaluate the appropriateness of the DOE and OMB policy objectives. Since NWPA's enactment, DOE has collected payments from just the nation's nuclear-electric utilities. Overall, we found that there are actions DOE may be able to take to accelerate payments from all categories, as summarized in the table on page 43 and discussed in the following sections. Each action, however, has implementing obstacles or concerns that DOE would need to fully address. For example, actions we identified for the first two categories related to the disposal of commercial spent nuclear fuel would require DOE to amend its disposal services contracts, and actions for the last two related to the disposal of reprocessed high-level waste would require DOE to develop a firm basis for establishing the amount of fees to collect. Utilities generating nuclear electricity after April 7, 1983 Current fee collection procedures Section 302(a) (2) of NWPA requires DOE to collect ongoing fees from utilities generating nuclear electricity on or after April 7, 1983, based on a set fee of 1 mill per kilowatt-hour. DOE's standard contract requires the utilities to make automatic payments for the actual amount of nuclear electricity each utility generates on a quarterly basis. All payments must be made by wire 13 transfer within 30 days after the utilities' assigned quarter. DOE expects to collect, on average, about $80 million per quarter in such fees. DOE's standard contract does not contain any rationale for the quarterly payment terms, and involved DOE officials were not able to provide us a documented rationale for its selection. According to the Acting Director of the responsible DOE division, it was his understanding that the quarterly payment terms were selected because DOE (1) had limited time to establish collection procedures, (2) did not have an automated system developed, (3) did not know specifically what would be involved in collecting the fees, and (4) wanted to minimize the administrative burden on a limited staff. Accelerating payment One way for DOE to accelerate ongoing fee payments would be to use monthly billing procedures. Under present billing procedures, fees for electricity generated in a given quarter need not be paid to DOE until 30 days after the end of the quarter. If, 13Under DOE's contract, generators of electricity were permitted to select a payment quarter after paying fees for April to June 1983 and a one-time adjustment fee for electricity generated from July 1, 1983, to the start of the assigned payment quarter. *Based on GAO computations using a 10-percent interest rate to reflect the time value of money. Assumes over the 40-quarter period, the average fee outstanding will be $1.15 billion ($2.3 billion divided by 2) times 1.8 percent (difference between average yields of utility bonds which was 13.3 percent and the yield of Treasury notes which was 11.5 percent on November 30, 1983). C$2.3 billion times 2 percent (difference between the prime interest rate which was 11 percent as of November 30, 1983, and the yields on Treasury bills on that same date which was about 9 percent). d$2.3 billion times 13.3 percent, the average yield of utility bonds on November 30, 1983. e$5.5 million times 10 percent. |