Energywire: Green Groups Push FirstEnergy on Decommissioning Funding

June 7, 2018
Green Groups Push FirstEnergy on Decommissioning Funding
By Jeffrey Tomich

A coalition of environmental groups is urging regulators to take enforcement action against FirstEnergy Corp. and bankrupt FirstEnergy Solutions on the grounds that the companies have inadequate funding set aside to meet nuclear decommissioning requirements for reactors in Ohio and Pennsylvania.

The Chicago-based Environmental Law & Policy Center and other advocacy groups filed a citizen’s petition with the Nuclear Regulatory Commission and are hoping to soon get a chance to advance their case before the NRC’s Petition Review Board.

Margrethe Kearney, an attorney for the Chicago-based ELPC, said the groups had concerns about the adequacy of decommissioning funding for the FirstEnergy Solutions (FES) plants even before the company announced plans to deactivate its Davis-Besse, Perry and Beaver Valley plants by 2021.

Plans to accelerate the shutdown of the reactors only exacerbates those concerns because it means there’s less time for funds in decommissioning trusts to grow, she said.

Kearney said the groups want the NRC to require FES to provide updated financial information and be required to fund any decommissioning shortfall.

“The NRC can absolutely require them [FES] to put more money into those decommissioning trusts,” she said. “At a minimum we need to make sure we’re protecting taxpayers from getting stuck with this burden.”

The environmental groups, which also include Ohio Citizen Action, the Ohio Environmental Council and the Environmental Defense Fund, are awaiting the next step in the process — an appearance before the Petition Review Board.

But that won’t happen unless and until the parties get an order from the federal judge overseeing FirstEnergy Solutions bankruptcy clarifying that an automatic stay implemented as part of the bankruptcy case doesn’t apply to the NRC proceeding.

FES filed for Chapter 11 bankruptcy protection on March 31 (EnergyWire, April 2).

ELPC and the other advocacy groups filed a motion with the court last month seeking to lift the stay. The U.S. government this week filed a response to the motion asking the court to clarify that the stay shouldn’t apply to the NRC’s regulatory proceeding.

The advocates’ motion is currently scheduled to be the subject of a court hearing next week.

FirstEnergy Solutions, meanwhile, cited an April 4 memo from the NRC stating that decommissioning funding for the Davis-Besse, Perry and Beaver Valley plants “continues to be sufficiently funded under NRC regulations.”

The memo said the NRC Office of Nuclear Reactor Regulation will continue to monitor reactor decommissioning funding for each site in the wake of the FES bankruptcy.

It further states that NRC’s Office of the General Counsel notified the Department of Justice on April 2 that the NRC has an interest in the bankruptcy proceeding, “including protection and preservation of the decommissioning trust funds.”

The environmental groups, however, dispute the NRC’s analysis in light of plans to deactivate the three plants by 2021.

“That changes all of the calculations,” Kearney said.

Under NRC regulations, FES parent FirstEnergy Corp. would be required to backstop any shortfall in decommissioning funding.

But FirstEnergy has been trying to distance itself from the bankrupt subsidiary.

As of Dec. 31, FirstEnergy listed $2.7 billion invested in trusts for decommissioning and environmental remediation for the FES nuclear plants (including $1.9 billion held by FES). But the decommissioning costs were omitted from asset retirement obligations listed in the company’s most recent quarterly filing with the U.S. Securities and Exchange Commission.

In April, FirstEnergy announced agreement with two key groups of creditors representing a majority of the outstanding debt obligations of FirstEnergy Solutions that would shield the Ohio-based utility holding company from any future claims related to the FES bankruptcy, including any potential costs associated with decommissioning of the nuclear plants in Ohio and Pennsylvania that are scheduled to shut down by 2021.

A FirstEnergy spokesman didn’t respond to emailed questions.

The petition by environmental groups said figures provided to the NRC by FES in March 2017 show decommissioning trusts for the Beaver Valley 1 and 2, Perry and Davis-Besse reactors are collectively $350 million short of what’s needed to cover estimated decommissioning costs.

While the NRC considers funding adequate on the expectation the balances will grow over time, the groups say actual decommissioning costs are likely to be greater than the company estimates, according to a report by a 2017 study by the Callan Institute.

The study, based on information on Dec. 31, 2016, estimates the decommissioning funding shortfall for FirstEnergy is closer to $2.75 billion. The estimate includes “pro forma” costs for the four reactors to be deactivated by FES during the next three years as well as the idled Three Mile Island Unit 2 in Pennsylvania, owned by FirstEnergy subsidiary GPU Inc.

If the NRC agrees with the environmental groups’ petition and requires FES to increase funding in the nuclear decommissioning trusts, the agency shouldn’t have to fight off other creditors in the bankruptcy proceeding to do so, Kearney said.

“The NRC has the police and regulatory authority to require FES to put that money away without having to go to the bankruptcy court,” she said. “I don’t think any of that money should be up for grabs.”

READ MORE

BACK TO BLOG

ELPC’s Founding Vision is Becoming Today’s Sustainability Reality

Support ELPC’s Next 25 Years of Successful Advocacy

Donate Now