Public Policy Detail
VBSR Testimony –House Commerce
H.373- Full Funding of the Decommissioning Cost of a Nuclear Plant
Thursday April 17, 2008
Andrea Cohen, Public Policy Coordinator, VBSR
VBSR is a non-profit statewide business association with over 560 members. These members employ approximately 10-12% of the state’s workforce and contribute approximately 4 billion dollars annually to the state’s economy. We are pleased you are examining this issue. The adequacy of (and access to) the decommissioning fund can have enormous implications and thoughtful scrutiny is essential.
VBSR has longstanding policy that emphasizes the need for economic development to be sustainable--meeting today’s needs while protecting human and natural resources that will be needed in the future. We also advocate for a “user pays” approach to resource use, and for internalizing into the present any externalities from business action (e.g. cost of waste management and pollution). We believe this approach ensures a strong and sustainable economic climate. Regarding H. 373, there are a few points we ask you to consider:
1. It is in the interest of Vermont businesses (and other Vermont taxpayers) to ensure that the decommissioning fund is adequate and accessible when needed.
We re-iterate the concern expressed by the bill sponsors- to ensure that Vermont is “not left holding the bag”. It is critical that adequate funds are available for decommissioning in the long term, and in the event of an earlier unanticipated closure. We should ensure all the necessary funds are available, while the facility is operating and receiving revenue.
Other state regulatory programs (e.g. waste management) take a more cautious approach to financial responsibility, and require evidence of full closure funds before a permit is issued.
Note: Vermont Solid Waste Management Rules- 6-304 Application for Certification- applicant “must show evidence of compliance with the financial responsibility and capability requirements of Subchapter 9 of these rules, or a plan for achieving compliance with requirements prior to the issuance of a draft certification”.
We urge you to draw from successes and failures of the past when you make your decision regarding this bill. For example, before the state had the aforementioned rules in place, some local private landfills closed without adequate funds for closure and the state or town incurred costs to ensure proper closure and maintenance of the facility. A model of success includes a large landfill that went into bankruptcy and because a capitalized financial instrument was in place the state did not have to line up with all the other creditors, or incur years of litigation, to get the necessary funds for closure. It is worth mentioning that in this regulatory program, the types of acceptable financial instruments are low risk and secure- bonds, letters of credit, etc.
The funds need to be adequate and you should err on the side of caution. You want a sure and clear path to the de-commissioning funds when needed. You do not want to have to wait or incur the costs and uncertainty of litigation. It is good public policy to make sure that in the worse case scenario the funds are there and accessible, and not linked to success or failure of a company, corporate restructuring, support agreements not dedicated to the facility etc.
2. The owner (and ultimately the rate payers) should pay for expected costs of de-commissioning.
Again, VBSR believes that users should pay. Currently this means some Vermont businesses and residents, and some out of state users will pay. These entities should contribute to decommissioning and it is most sure to get these contributions while the facility is still operating. In the best-case scenario, if additional funds are not needed, those users/payers should get the full return on that investment. In the worst-case scenario, the general Vermont taxpayer would not have to bear the burden. It is our position that if the legislature has a policy position regarding the decommissioning fund, the sooner your interests are known the better. This assists regulators and regulated entities in planning for the future.
In closing, we don’t believe the decommissioning fund of a nuclear facility should be “less sure” and reliable than a local waste management facility. We urge you to make sure all is secure and sound with the ENVY decommissioning fund and to take any needed action to minimize risk to Vermont taxpayers.
