COMPTROLLER GENERAL'S DEPARTMENT OF ENERGY'S INITIAL DIGEST The Nuclear Waste Policy Act of 1982, enacted GAO reviewed DOE's initial efforts to imple- 1Such materials include the spent nuclear fuel Tear Sheet i GAO/RCED-85-27 earlier collection of millions of dollars in user fees, GAO makes specific recommendations to the Secretary of Energy to reexamine program financing arrangements. SITING WASTE REPOSITORIES The act established a step-by-step process for the siting of two geologic repositories. Key statutory milestones/deadlines are shown The Secretary of Energy, in February 1983, notified the following six states that, for the first repository, DOE had identified locations within their states for further evaluation: Louisiana (1), Mississippi (2), Nevada (1), Texas (2), Utah (2), and Washington (1). The identification of these areas was based on years of investigating three different types of geologic rock formations (basalt, salt, and tuff). (See pp. 12 to 15.) As part of its efforts to identify sites for a second repository, DOE also notified an additional 17 states that it is gathering and screening data on another type of geologic formation (crystalline rock) within those states. DOE plans to identify potentially acceptable sites for the second repository in the spring of 1986. (See p. 15.) Completion of siting guidelines The act required DOE to issue, with the concurrence of the Nuclear Regulatory Commission (NRC), general siting guidelines by July 7, 1983. NRC's concurrence in July 1984 substantially completed the process of developing the siting guidelines and fulfilled a critical program milestone since it allowed DOE to continue with the siting process. DOE will use the guidelines to evaluate the suitability of candidate sites throughout each remaining screening step in the act's siting process. The guidelines, among other things, specify factors that qualify or disqualify any site from development as a repository. DOE completed the final rulemaking action for incorporating the siting guidelines into the Code of Federal Regulations in December 1984. DOE believes that the importance of full consultation with states, the need for public comment, and the time needed to obtain NRC concurrence on the guidelines have warranted the more than 1-year delay in its development. (See pp. 16 to 20.) Siting deadlines for the first repository are not expected to be met DOE does not expect to meet the 1985 and 1987 statutory deadline dates for key decisions in the siting of the first repository. --Because of "unanticipated complexities" encountered in preparing required environmental evaluations of the potentially acceptable repository sites, DOE will not be in a position to recommend 3 sites to the President for detailed on-site tests until at least mid-1985. (See pp. 20 to 21.) In December 1984, DOE made a preliminary determination to recommend sites in Nevada, Texas, and Washington State. (See p. 10.) --Because of delays in initiating detailed tests and more recent estimates of the time needed for this testing, DOE estimates that the President would not be in a position to recommend the first repository site until after June 1990. (See pp. 21 to 22.) FINANCING THE PROGRAM In July 1984, DOE estimated total program costs over the next 50 years at $20.9 billion to $23.3 billion (in 1983 dollars). Under the act, the "generator or owner" of highly radioactive materials must pay these program costs. To separately account for program receipts and expenditures, the act provided for the establishment of a special trust fund, called the Nuclear Waste Fund. (See pp. 28, 38, and 72.) Fee payment procedures and disposal contracts set In April 1983, DOE established payment procedures for collecting two types of fees from commercial generators and owners of spent nuclear fuel. An ongoing fee from utilities was set by the act at an initial rate of 1/10 of a cent per kilowatt-hour of nuclear electricity generated. Under its payment procedures for this fee, DOE expects to collect, on average, about $80 million every 3 months. (See p. 42.) DOE also established procedures for collecting a one-time fee from owners of spent nuclear fuel discharged from commercial power reactors in prior years. DOE estimates that these com mercial owners owe the Nuclear Waste Fund $2.3 billion in one-time fees. DOE has given them until June 30, 1985, to select one of three deferred payment options. (See p. 45.) By June 30, 1983--the deadline imposed by the act for current generators and owners--DOE had entered into an initial 70 contracts with nuclear utilities and other commercial owners of spent fuel. The contracts set forth the specific terms and conditions, as well as the procedures for the collection and payment of fees, under which DOE shall begin to make disposal services available for commercial spent fuel by January 31, 1998--the first repository's scheduled start-up date. In GAO's view, the contracts represent a major step toward placing the financing responsibility for the disposal program on the generators or owners of highly radioactive materials and providing the program an assured source of revenue. (See pp. 29 to 31.) Increases in the ongoing fee reported likely to be needed The ongoing fees paid by nuclear utilities are expected to be the major long-term source of program revenue. Reports issued by DOE and the Congressional Budget Office in the summer of 1984 indicate that increases in the ongoing fee will be needed to account for the effects of inflation, and possibly real cost growth, at some point in the long life of the disposal program. For example, DOE reported that the Nuclear Waste Fund is extremely sensitive to the effects of compound annual inflation. The report noted that the Fund could accumulate deficits through the year 2040 ranging between $9 billion and $16 billion at a 5-percent sustained annual inflation rate. Given the present substantial uncertainty about program cost and revenue projections, DOE has indicated that it will delay any proposal to increase the rate of the ongoing fee until the late 1980's. At that time, DOE expects to have more reliable data on nuclear growth projections and program costs. (See pp. 37 and 38.) Payment terms need reexamination GAO believes that, from a sound financial management and equity standpoint, DOE should fully evaluate ways to more promptly collect Nuclear Waste Fund fees from all anticipated repository users. While DOE has established payment procedures to collect fees from commercial generators and owners of spent nuclear fuel, DOE has not yet established fees for the reprocessed high-level wastes (1) produced by DOE defense programs and (2) maintained by New York State. Based on an analysis of DOE's fee collection procedures and/or plans, GAO found that DOE may be able to accelerate millions of dollars in payments from anticipated users of its waste disposal services. --For utilities generating nuclear electricity, DOE could seek to accelerate payments of ongoing fees by instituting monthly, rather than quarterly, payment periods. (See pp. 42 to 45.) --For commercial owners of previously discharged spent fuel, DOE could seek to subject deferred payments of one-time fees to commercial, rather than Treasury, interest rates. (See pp. 45 to 49.) --For defense high-level waste it owns, DOE could seek appropriations to begin payments |