NCPA - National Center for Policy Analysis

Taxpayers on the Hook for Increasing Cost of Nuclear Waste

August 10, 2011

Imagine a football field packed 20 feet high with highly radioactive nuclear waste.  That's about the volume of the 65,000 metric tons of spent nuclear fuel stranded at dozens of nuclear sites across the United States.  It isn't just a potential public health hazard, but a growing burden on the federal government's groaning finances, says the Wall Street Journal.

  • A decades-old promise to dispose of the waste has become another unfunded liability, starting with a $25 billion ratepayer fund gone astray and $16 billion or more in estimated legal judgments to compensate utilities for their storage expenses.
  • The costs of the ultimate disposal project also are sure to rise, with no plan in sight to replace the now-canceled plan to entomb the waste at Nevada's Yucca Mountain.

When the federal government took responsibility for nuclear-waste disposal three decades ago, taxpayers weren't supposed to be on the hook.  Under a "polluter pays" doctrine, the 1982 law required nuclear utilities to shoulder the cost through an annual fee paid to the federal government.  The fee was to be deposited in a newly created Nuclear Waste Fund that the U.S. Department of Energy could tap to fund the storage project.

  • Counting past expenditures and interest earned, the fund's balance is about $25 billion.
  • But since the Balanced Budget and Emergency Deficit Control Act of 1985, Congress and successive administrations have changed the plan so that the fees paid by utilities essentially are treated like taxes and go into the government's general coffers.

Because the government failed to start taking spent fuel as promised beginning in 1998, utilities are suing it to cover their additional storage costs.  Federal officials have estimated it will cost $16.2 billion to pay legal judgments owed to utilities by 2020 -- assuming the United States is able to start taking waste from utilities starting then -- and $500 million a year after that.

Beyond disposal costs, taxpayers are also potentially liable for damages suffered by the public from a nuclear accident, including those stemming from the spent fuel stored at commercial power plant sites.  Under a 1950s law, plant operators currently must carry $375 million of liability insurance for each reactor, after which an industry insurance plan would take over, covering damages up to $12 billion.  Any personal injury or property damages in excess of that would be borne by the federal government, says the Journal.

Source: Mark Maremont, "Nuclear Waste Piles Up -- in Budget Deficit," Wall Street Journal, August 9, 2011.

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