Matthew Wald on the peculiar economics of nuclear waste

Matthew Wald has a piece in yesterday’s Times about the rules governing the growing piles of waste from nuclear power plants, which the federal government is obliged to store – indefinitely, for all practical purposes. [photopress:NRC_yucca_drawing.jpg,thumb,pp_image]

What’s most disturbing isn’t actually new

– Wald’s explanation of the long-standing setup is troubling enough:

  • The federal government has obliged itself to “dispose” of nuclear waste for a fee of one-tenth of a cent per kilowatt-hour
  • Because it hasn’t taken the waste away on time – nuclear utilities have sued the federal government for their costs in storing the waste until it’s picked up
  • it was supposed to have started picking up the waste in 1998
  • this is costing about $500 million per year; because these payments are the result of lawsuits – they’re paid out of a “judgment fund,”

According to Wald,

Initially, the Energy Department tried to pay the damages out of the Nuclear Waste Fund, the money collected from the nuclear utilities, plus interest, which comes to about $30 billion. But other utilities sued, saying that if the government did that, there might not be enough money left for the intended purpose, building a repository. So the government now pays the damages out of general revenues.

The damages are large relative to the annual budget of the Energy Department, which is about $25 billion. But the money comes out of the Treasury, not the Energy Department. Under a law passed in the Carter administration, such payments are recognized as obligations of the federal government and no further action by Congress is required to make them.

The money comes out of a federal account called the Judgment Fund, which is used to pay settlements and court-ordered payments. For the last five years, the fund has made payments in the range of $700 million to $1 billion, with the average payment being $80,000 to $150,000. In contrast, payments to utilities have been in the tens of millions.

Matthew Wald, “As Nuclear Waste Languishes, Expense to U.S. Rises,” The New York Times

, 17 February 2008.

Perhaps a useful goal here would be, at a minimum, to attribute these costs to the cost per kilowatt hour of nuclear power. Strong evidence that, before we see nuclear power as central to our energy problems, we hedge our bets with safer options.

Lawrence Livermore lab explanation of the Yucca Mountain project here.