	Background

The federal government has enriched uranium for use by commercial  nuclear power plants and for defense-related purposes for more than 40  years at three plants, located near Oak Ridge, Tennessee; Paducah,  Kentucky; and Portsmouth, Ohio (see fig. In 1992, the Congress passed the Energy Policy Act, which established the  Uranium Enrichment Decontamination and Decommissioning Fund to pay  for the costs of decontaminating and decommissioning the nation’s three  uranium enrichment plants. At Projected Costs and Revenues, the Fund Will Be Insufficient to Complete Cleanup at the Three Plants

Under a variety of models using DOE’s projected costs and revenues, the  Fund will be insufficient to cover all of its authorized activities. Using  DOE’s projections that 2044 would be the most likely date for completion  of cleanup at the plants, we estimated that cleanup costs would exceed  Fund revenues by $3.8 billion to $6.2 billion (in 2007 dollars). Because  DOE had not determined when decontamination and decommissioning  work would begin at the Paducah and Portsmouth plants, and because  federal contributions to the Fund have been less than the authorized  amount, we developed several alternative models to assess the effects of  different assumptions on the Fund’s sufficiency. Thus, deferred time frames were determined by DOE, assuming that all  work would be completed at the Portsmouth plant first and then initiated  at the Paducah plant. Although our analysis was able to capture several uncertainties potentially  affecting the Fund—including interest rates, inflation rates, cost and  revenue variances, and the timing of decontamination and  decommissioning—additional uncertainties exist that we could not  capture. Uncertainty Over the Extent of the Fund’s Insufficiency Remains Because DOE Has Yet to Issue Plans for the Paducah and Portsmouth Plants

Uncertainty over the extent of the Fund’s insufficiency remains because  DOE has not issued plans that identify the most probable time frames and  costs for the decontamination and decommissioning of the Paducah and  Portsmouth plants. According to DOE officials, it is now in the process of  finalizing a report that contains new schedule and cost information for  both plants and addresses the sufficiency of the Fund. Until DOE resolves uncertainties surrounding the  plants’ cleanup, including when cleanup activities are expected to both  begin and end, it is not possible to more precisely determine the total  funding needed to cover the authorized cleanup activities. However, until this  detailed information is made available, we cannot assess how DOE’s  updated time frames and cost estimates may affect the Fund’s sufficiency. As a result, we believe that DOE should finalize plans for the Paducah and  Portsmouth plants so that it can better determine the extent to which  Fund extensions may be needed.
Why GAO Did This Study

Cleaning up the nation's three uranium enrichment plants will cost billions of dollars and could span decades. These plants--located near Oak Ridge, Tenn.; Paducah, Ky.; and Portsmouth, Ohio--are contaminated with radioactive and hazardous materials. In 1992, the Energy Policy Act created the Uranium Enrichment Decontamination and Decommissioning Fund (Fund) to pay for plant cleanup. Fund revenues come from an assessment on domestic utilities and federal government appropriations. In 2004, GAO reported on the Fund's sufficiency to cover authorized activities. GAO recommended that Congress consider reauthorizing the Fund for 3 more years, to 2010, and require the Department of Energy (DOE) to reassess the Fund's sufficiency before it expired to determine if further extensions were needed. Because decisions not yet made by DOE could affect the cost of cleanup and the Fund's sufficiency, GAO also recommended that DOE develop decontamination and decommissioning plans for the Paducah and Portsmouth plants that would identify the most probable time frames and costs for completing the cleanup work. This testimony is based on GAO's 2004 report. It summarizes the extent to which the Fund may be sufficient to cover authorized activities and the status of DOE's progress in developing decontamination and decommissioning plans for the Paducah and Portsmouth plants.

What GAO Found

GAO's analysis showed that the Fund will be insufficient to cover all authorized activities. Using DOE's estimates for the cleanup costs at the three plants and current and likely revenue projections, GAO developed a number of simulation models that factored in annual cost and revenue projections and uncertainties surrounding inflation rates, costs, revenues, and the timing of the final cleanup work at the Paducah and Portsmouth plants. Specifically, GAO's baseline model demonstrated that by 2044, the most likely date for completing all cleanup activities at the plants, cleanup costs will have exceeded revenues by $3.8 billion to $6.2 billion (in 2007 dollars). Importantly, GAO found that the Fund would be insufficient irrespective of which estimates were used or what time frames were assumed. DOE has not yet issued plans for the decontamination and decommissioning of the Paducah and Portsmouth plants as GAO recommended. According to DOE officials, the department is developing a report to Congress that will contain updated information for both plants. DOE did not make that information available to GAO, however, and hence GAO was unable to assess how any new schedule or cost estimates may affect the Fund's sufficiency. Until DOE issues plans that provide the most probable time frames and costs for completing decontamination and decommissioning at the Paducah and Portsmouth plants, it is not possible to more precisely determine the total funding needed to cover the authorized cleanup activities.