Tuesday, May 6, 2008

Decommissioning fund is no panacea

I sent this to the TJ in early May. So far, no action.

I was intrigued by Professor Lowe’s letter on safe uranium mining (28 April), especially his comments on decommissioning funding for uranium mines.

Quite by coincidence, I have been preparing for a talk on energy alternatives and was reading a paper entitled, “U.S. nuclear plant decommissioning funding adequacy …” This paper was written by D. Williams (an economics researcher in the U.S. Government Accountability Office) and was published in Energy Economics in 2007.

To quote his findings, “the initial decommissioning cost estimates have been cited by many industry observers as being far too low [and] [t]he tax-paying public, future ratepayers, and/or stockholders may be assessed for funding shortfalls.”

Furthermore “a small - but not inconsequential - number of the 222 funds show balances (and/or contributions) that are below, and some far below, their benchmark levels …” and “the risk is not inconsequential that [economic] conditions could be well below average, leading to large numbers of underfunded trust funds.”

The paper uses data up to 2004. We certainly know that economic conditions have been “below average” since then.

Granted, this is U.S. research, and it deals with the reactor, as opposed to the mining end of the nuclear power cycle, but the conclusion is clear that the simple existence of decommissioning funding is insufficient to safeguard the public from ultimately paying for cleanup.

My guess is that the nuclear industry is fairly similar both across nations and within the nuclear power cycle from mining to power generation and ultimately disposal. Until similar thorough research is conducted upon the health and management of decommissioning funding for the Canadian uranium mining industry, then our best bet is to err on the side of caution.