Summary

The Department of Energy (DOE) is required to build a deep underground repository for the safe, permanent disposal of nuclear waste from government and the private sector. According to DOE estimates, the program could cost as much as $34 billion if two repositories are built. In a June 1990 report (GAO/RCED-90-65), GAO noted that DOE's methods for estimating program costs and revenues and for assessing fees did not adequately take into account uncertainties like inflation that are inherent in such a long-term program. GAO discusses DOE's periodic assessment of whether the fees charged to utilities running nuclear power plants are adequate to cover the costs of the civilian nuclear waste disposal program. GAO also discusses the need to disclose in the fund's financial statements the possibility that a portion of the one-time user fees due from utilities may be uncollectible because of the uncertain condition of some utilities.

GAO found that: (1) DOE does not agree that it should automatically adjust disposal fees on the basis of annual inflation rates, citing the need to consider all factors affecting the Nuclear Waste Fund's balance; (2) inflation accounts for about $4.5 billion of the total $12-billion increase in disposal costs between 1982 and 1988; (3) DOE estimates indicate that the Nuclear Waste Fund may already be underfunded by $2.4 billion to $4.1 billion; (4) DOE does not have adequate funding to both finance programs with present-day benefits and pay its share of projected waste disposal costs, but has not requested additional appropriations to pay its Fund debt; (5) if DOE waits until 2015, its projected date for beginning waste disposal, to pay its Fund debt, it could owe about $11.7 billion; (6) DOE fully implemented a recommendation to disclose its estimated $3.8-billion to $5.8-billion contingent liability for its share of program costs, but did not record its current actual liability of $700 million in its financial statements; (7) the Nuclear Waste Fund's financial statements record about $1.7 billion in receivables from utilities, but the statements do not disclose that some of these funds may not be collectible due to some utilities' financial conditions; and (8) DOE acted on recommendations to ensure the reliability and usefulness of annual cost estimates for the nuclear waste program, but did not implement a recommendation to ensure that its published estimates include all costs or explain their exclusion.