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State Department of Environmental Protection worried taxpayers may be at risk with TMI Unit 2 sale

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 5/13/20

Citing concerns over the cost of the cleanup and whether the new owner can afford it, the Pennsylvania Department of Environmental Protection is looking to intervene in the proposed transfer of the …

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State Department of Environmental Protection worried taxpayers may be at risk with TMI Unit 2 sale

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Citing concerns over the cost of the cleanup and whether the new owner can afford it, the Pennsylvania Department of Environmental Protection is looking to intervene in the proposed transfer of the license for the stricken Three Mile Island Unit 2 reactor to EnergySolutions of Salt Lake City.

The bottom line is that if the decommissioning of Unit 2 costs more than EnergySolutions can afford, taxpayers will be left with the bill, according to DEP.

Unit 2 was shut down after the March 1979 accident, considered the worst in the history of commercial nuclear power in the United States.

DEP in an April 15 brief to the Nuclear Regulatory Commission requests the NRC grant an extension of at least one month after DEP offices reopen following the COVID-19 pandemic, so DEP can request a hearing to review “whether adequate financial assurances exist to complete the proposed TMI-2 decommissioning project.”

DEP Secretary Patrick McDonnell in an April 6 letter to the NRC expressed his concerns about the proposed license transfer, calling TMI Unit 2 “the most radiologically contaminated facility in our nation outside of the Department of Energy’s weapons complex.”

GPU Nuclear Inc. — the current license holder for Unit 2 — and other holders of licenses for operating commercial nuclear power plants are required to have a trust fund to cover the cost of decommissioning.

The trust fund is made up of money paid into the fund over time by ratepayers.

GPU in 2018 estimated the trust fund balance for Unit 2 at $835 million. The minimum amount of the trust fund that must be transferred to TMI-2 Solutions is $800 million, indicating GPU Nuclear could withdraw up to $100 million from the trust fund before the deal is closed, according to the DEP brief.

Noting that the documents filed by the applicants with the NRC do not include “a description of expenses” regarding GPU Nuclear withdrawing money from the fund before closing, DEP in its brief says that “the applicants need to fully justify any withdrawal amount from the (trust fund) prior to the license transfer so that the NRC can determine if the funds are withdrawn for appropriate purposes as per the regulations.”

Business plan

EnergySolutions is among a number of companies that have emerged in recent years to decommission the growing number of commercial nuclear reactors in the United States that are being shut down because they are no longer considered economically viable.

The company’s business model is to complete decommissioning of a reactor faster, more efficiently and at less cost, without having to use all assets of the trust fund. The assets in the fund that do remain after a reactor has been decommissioned can become profit for these companies.

The cost to fully decommission Unit 2 was estimated at about $1.22 billion in 2015. However, EnergySolutions has told the NRC it can decommission the reactor by 2037 for about $1.06 billion.

Meeting request

GPU Nuclear and EnergySolutions in a joint letter to McDonnell dated April 13 requested an in-person meeting with the DEP secretary and his staff to discuss the questions and concerns DEP has raised regarding the proposed Unit 2 license transfer.

The letter states in part: “This license and ownership transfer, at the time of reductions in Exelon’s workforce on the island, will ensure a deeply experienced nuclear company to care for TMI-2. The proposed business deal described in the license transfer application to the U.S. NRC provides for strong financial assurances coupled with the proven technical abilities of EnergySolutions. As we work through the approval process with the U.S. NRC, we are more than willing to address additional concerns and questions by the DEP in a meeting forum of your choice.”

DEP in its brief notes that EnergySolutions projects the trust fund will grow through investments by $200 million over the 16 years it takes the company to decommission Unit 2.

However, EnergySolutions does not explain the basis for this assumed growth in the fund, DEP says.

“Without this explanation, the NRC will not be able to determine if enough funds are set aside to complete the decommissioning as outlined in the application,” according to the DEP.

Beyond the trust fund, EnergySolutions has pledged financial guarantees “up to” $100 million to pay for the decommissioning, but it is “unclear” what this means, DEP says.

“The application does not provide a defined amount of funds that will be provided by the parent guarantee,” DEP says. “As a separate concern, the global pandemic of COVID-19 has greatly affected financial markets, and the department questions how this impacts the assumptions made by” those seeking the license transfer.

“While the department welcomes a properly conducted and expedited cleanup and restoration of the TMI-2 site, the obvious risk of a funding shortfall and the attendant significant health, safety, environmental, financial and economic risks to the commonwealth and its citizens raise serious questions about the realization of that benefit,” DEP said in its brief.

“If the applicants’ financial assurances and agreements with third parties are insufficient or lacking to cover all of TMI-2 Solutions’ costs for dismantlement and waste disposal, the department is concerned that Pennsylvania citizens will become the payers of last resort.”

Who is responsible?

DEP also seeks answers regarding “where the ultimate responsibility and liability” for cleaning up Unit 2 will lie, should TMI-2 Solutions not have sufficient funds to finish decommissioning the reactor “and then ceases to exist.”

“Given the obvious uncertainties and complexities associated with cleaning up the remains of TMI-2’s damaged fuel debris, the reactor vessel, coolant system, associated piping and safety systems, containment and auxiliary buildings, the demonstration of adequate funding to complete the decommissioning of TMI-2 and restoration of the site, is a significant concern to the department and the citizens of Pennsylvania.”

EnergySolutions in October signed a contract with GPU Nuclear Inc. and other FirstEnergy Corp. subsidiaries to acquire Unit 2, pending NRC approving the license transfer from these entities to EnergySolutions.

EnergySolutions in documents provided to the NRC proposes completing the decommissioning of Unit 2 by 2037 — decades ahead of the current schedule.

EnergySolutions is requesting NRC approve the license transfer by July 31. The company through its subsidiary TMI-2 Solutions hopes to close on purchase of Unit 2 in the second half of 2020. If the NRC approves transferring the Unit 2 license to EnergySolutions, its subsidiary TMI-2 Solutions would acquire assets of the reactor’s decommissioning trust fund.

The NRC as part of a public comment period had granted parties until April 15 to request a hearing on the proposed transfer.

DEP in its brief noted that its central office housing the Bureau of Radiation has been closed since March 16 due to the pandemic. When it will reopen is uncertain.

Following the March 1979 accident, about 99 percent of the fuel and damaged core material was removed from Unit 2 and shipped to a U.S. Department of Energy facility in Idaho, where it remains.

DEP in its brief does not directly dispute the EnergySolutions’ cost estimate that the decommissioning  of Unit 2 can be done for $1.06 billion, instead of $1.22 billion.

However, the brief does refer to the “potentially unknown radiological conditions” in the reactor related to the 1979 accident.