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Taxes and Nuclear Waste: An Unfortunate Pairing

By Samuel Brinton

Friday, November 6, 2015

Taxes: nobody likes paying them.

Nuclear waste: nobody likes having it around.

As it turns out, these two things are connected by more than a lack of popularity. The fact of the matter is that every U.S. taxpayer is also paying for the federal government’s failure to find a way to dispose of nuclear waste, to the tune of $100 each.

But the government specifically set up a “pay to play” system to fund its nuclear waste management program, where utilities operating nuclear power plants pay for waste disposal. So how is this the case? The math is actually pretty straightforward.

Under the Nuclear Waste Policy Act of 1982, utilities that operate nuclear power plants were ordered to pay into a special fund to clean up nuclear waste, called the Nuclear Waste Fund, at the rate of one-tenth of a cent per kilowatt-hour of electricity. Those fees were passed on to consumers by the nuclear utilities. So for more than 30 years, the nearly 20 percent of Americans who receive electricity from nuclear power have been paying a bit extra in their utility bills to deal with nuclear waste. According to the Department of Energy, the fund had accumulated a balance of $39.8 billion1 as of September 2014.

While the federal government continues to be paralyzed on implementing a permanent plan to deal with nuclear waste, the circle of people who pay to deal with nuclear waste has expanded beyond those using it as a power source to include all taxpayers. The Department of Energy was supposed to start accepting nuclear waste from utilities by 1998. When it failed to do that, nuclear utilities began suing the federal government to recoup the costs of storing this material at reactor sites. The utilities won. And they’re likely to keep winning until the government begins to meet its waste management commitments. As a result of successful litigation against the government and given current uncertainty about the direction of its repository program, the Department of Energy recently zeroed out its fees from nuclear utilities. While the Nuclear Waste Fund is no longer collecting fees, the balance will continue to grow due to interest.

When the government loses these lawsuits, utilities receive compensation from the Treasury Department’s Judgment Fund, which is supported by federal income tax dollars. Every day that passes without progress toward a solution to the nuclear waste issue adds to the Department of Energy’s liability. As of September 30, 2014, the most recent date with figures available, the government’s total remaining liability had grown to an estimated $22.6 billion. Using the Census Bureau’s estimate of eligible taxpayers over age 18—about 245 million Americans—the current tab for the federal government’s inaction on nuclear waste has already reached nearly $100 per American adult.

The Bipartisan Policy Center has toured the country to hear people’s views on the nuclear waste issue. One message that comes through loud and clear is that continued stalemate and mounting taxpayer liability is unacceptable. Until the federal government starts taking steps to get the nuclear waste program moving again, payments out of the taxpayer-funded Judgment Fund will continue and the money in the Nuclear Waste Fund, earmarked for implementing a permanent solution, will sit idle. That truth should be a strong incentive for action.

nuclear taxes

Data: Market Value

  • As of September 30, 2014, the U.S. Treasury securities held by the department related to the NWF had a market value of $39.8 billion compared to $36.6 billion at the end of fiscal year FY2013.
  • As of September 30, 2013, the U.S. Treasury securities held by the department related to the NWF had a market value of $36.6 billion compared to $38.7 billion at the end of fiscal year FY2012.
  • As of September 30, 2012, the U.S. Treasury securities held by the department related to the NWF had a market value of $38.7 billion compared to $35.1 billion at the end of FY2011.
  • As of September 30, 2011, the U.S. Treasury securities held by the department related to the NWF had a market value of $35.143 billion compared to $30.457 billion at the end of fiscal year FY2010.
  • As of September 30, 2010, the U.S. Treasury securities held by OCRWM had a market value of $30.457 billion compared to $26.439 billion at the end of fiscal year (FY) 2009.
  • As of September 30, 2009, the U.S. Treasury securities held by OCRWM had a market value of $26.389 billion compared to $24.087 billion at the end of fiscal year (FY) 2008.

Data: Liability

The industry is reported to estimate that damages for all utilities with which the department has contracts ultimately will be at least $50 billion. The department believes that the industry’s estimate is highly inflated and that the disposition of the 66 cases that have either been settled or subject to a judgment in the trial court suggests that the government’s ultimate liability is likely to be significantly less than that estimate. Accordingly, based on these settlement estimates, the total liability estimate is $27.1 billion.

  • After deducting the amount paid as of September 30, 2014, under these settlements and as a result of final judgments, a total of $4.5 billion, the remaining liability is estimated to be approximately $22.6 billion.
  • FY 2013 Liability After deducting the amount paid as of September 30, 2013, under these settlements and as a result of final judgments, a total of $3.7 billion, the remaining liability is estimated to be approximately $21.4 billion.
  • FY 2012 Liability After deducting the amount paid as of September 30, 2012, under these settlements and as a result of final judgments, a total of $2.6 billion, the remaining liability is estimated to be approximately $19.7 billion.
  • FY 2011 Liability After deducting the amount paid as of September 30, 2011, under these settlements and as a result of final judgments, a total of $1.6 billion, the remaining liability is estimated to be approximately $19.1 billion.
  • FY 2010 Liability After deducting the amount paid as of September 30, 2010, under these settlements and as a result of final judgments, a total of $841 million, the remaining liability is estimated to be approximately $15.4 billion.
  • FY 2009 Liability to date, approximately $567 million in claims have been paid under these settlements with contract holders continuing to submit annual claims for additional costs.

1 Department of Energy’s Nuclear Waste Fund’s Fiscal Year 2014 Financial Statement Audit

KEYWORDS: DEPARTMENT OF ENERGY