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FirstEnergy's Davis Besse nuclear plant at Oak Harbor, Ohio.

Advocates seek assurance on decommissioning funds for FirstEnergy nuclear plants

Environmental advocates have jumped another hurdle in their quest to make sure FirstEnergy and its subsidiaries provide enough funding for safe closure of their nuclear power plants.

On August 2, the Nuclear Regulatory Commission made an initial recommendation to accept the Environmental Law & Policy Center’s petition for review on whether the trust funds set up for that purpose will have enough money after the bankruptcy of FirstEnergy’s generation subsidiaries.

Beyond the bankruptcy court, FirstEnergy has been pushing for a bailout for nuclear and coal plants, and in June President Trump told Energy Secretary Rick Perry to take steps to stop the loss of such “fuel-secure” plants.

Earlier this year, the Federal Energy Regulatory Commission issued a unanimous decision that there was no emergency justifying protection from competition for coal and nuclear plants. Yet this month FERC Chief of Staff Anthony Pugliese announced that the agency is working to identify “critical” plants that could get the benefit of a bailout from the Trump administration.

For now, though, the FirstEnergy companies’ nuclear plants are slated to close by 2021. And the NRC and bankruptcy court will need to decide if there will be enough money to close and clean up the companies’ nuclear plants.

Saving up — or not

The ELPC says there will be a shortfall of billions of dollars unless the bankruptcy court preserves the companies’ ongoing liabilities and responsibilities for funding and performing the cleanup work and FirstEnergy remains on the hook as parent guarantor.

The NRC’s action this month “indicates that we’ve sufficiently impressed the petition review board with the seriousness of the case we’re making on the decommissioning trust fund shortfalls,” said Howard Learner, president and executive director at the ELPC. Without action now, he said, there’s a risk that the costs could be shifted to taxpayers and that the plants could become “radioactive Superfund sites…that will impair the environment and economic development in the communities.”  

In general, federal law calls for companies that own and operate nuclear power plants to build up trust funds for closure over time. The goal is to make sure enough money is available when it’s time to dismantle plant equipment, dispose or store remaining waste, and decontaminate the site.

Funding requirements depend on multiple factors, including estimated closure costs and how long companies will pay into the trust fund. Speeding up the plants’ closures cuts off the time when money goes into the account.

The Davis-Besse plant’s NRC operating license was to have run through 2037, and the Perry plant would have been eligible to seek renewal and extend its license through 2046. In late March, however, FirstEnergy announced that the plants would close by 2021. Three days later its generation subsidiaries filed for bankruptcy.

Once closed, the plants would no longer produce revenue that could go into the trust fund.

FirstEnergy’s position as a guarantor is like that of a parent whom a credit card might insist on as a co-signer for a younger teen’s credit card account, Learner said.

“There needs to be a company with serious assets to be able to extend money if necessary to operate, maintain and clean up the nuclear plants,” he said.

What’s ahead

FirstEnergy did not respond to a request for comments for this story about its responsibilities as the guarantor for its subsidiaries’ nuclear plants.

Responding on behalf of the subsidiaries, FirstEnergy Solutions spokesperson Tom Mulligan referred back to an April 4 NRC statement the week after the bankruptcy filing. “Decommissioning funding for each site continues to be adequately funded under NRC regulations,” he quoted.

However, the next sentence of the NRC memo noted that FirstEnergy had last reported the status of decommissioning funding back in March 2017, a year before the bankruptcy filing. The next trust fund report would otherwise be due in March 2019.

The next steps in the NRC proceeding will give ELPC a chance to introduce more evidence and legal arguments to support its case on the financial responsibility issues.

ELPC and other environmental groups will also need an ongoing green light from the bankruptcy court to move ahead on efforts to hold FirstEnergy and its subsidiaries responsible for cleanup at nuclear and coal plants despite the Chapter 11 proceedings. A limited stipulation let the NRC move ahead on ELPC’s petition this summer, but it’s unclear how and when remaining issues on the groups’ May 2018 motion in the bankruptcy court will be resolved.

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