[Congressional Record Volume 145, Number 81 (Wednesday, June 9, 1999)]
[Extensions of Remarks]
[Pages E1178-E1179]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


INTRODUCTION OF THE ``NUCLEAR DECOMMISSIONING FUNDS CLARIFICATION ACT''

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                           HON. JERRY WELLER

                              of illinois

                    in the house of representatives

                         Tuesday, June 8, 1999

  Mr. WELLER. Mr. Speaker, I am pleased to join with my colleague, Ben 
Cardin, to introduce ``The Nuclear Decommissioning Funds Clarification 
Act.'' The need for this legislation results from the emergence of a 
competitive electricity market out of a regulated environment. Because 
of this structural change, the tax treatment of nuclear decommissioning 
funds is not clear under current law.
  Understanding that decommissioning a nuclear power plant represents a 
uniquely large and signficant financial undertaking for a utility, in 
1984 Congress enacted ``Code section 468A'' which was designed to have 
public service commissions authorize that certain costs could be 
charged by an electric utility company to its customers to dedicate to 
a nuclear decommissioning fund (Fund).
  In 1986, the Code was further amended to allow an electric utility 
company with a direct ownership interest in a nuclear power plant to 
elect to deduct contributions made to a nuclear decommissioning fund, 
subject to certain limitations. The Fund must be a segregated trust 
used exclusively for the payment of decommissioning (shutting down) 
costs of nuclear power plants. Decommissioning the nation's 110 nuclear 
power plants represents a large financial commitment--so large that 
nuclear plant owners accumulate the necessary funding over the plant's 
40-year operating life.
  As a result of Federal and state laws enacted since 1992, 21 states 
have approved plans to introduce competition, and all states are 
considering deregulation. Fifty-four nuclear power plants are located 
in 15 of the states that have undergone restructuring, more than half 
the nation's 103 operating plants. Under current law, deductible 
contributions made to a nuclear decommissioning fund (Fund) are based 
on limitations reflected in cost-of-service ratemaking. In a 
competitive market, companies will no longer operate in a regulated, 
cost-of-service environment and will not be able to deduct 
contributions to decommissioning funds. Therefore, it is appropriate to 
clarify the deductibility of nuclear decommissioning costs under 
market-based rates and to codify the definition of ``nuclear 
decommissioning costs'' that limit contributions to a Fund.
  In addition, restructuring has brought regulatory and market forces 
to bear upon continued ownership of nuclear power plants. As more 
companies move away from the nuclear generation--either by chioce or 
state mandate--companies such as illinois Power in my home state are 
planning transfers and sales of nuclear power plants. These new 
business activities have triggered unforeseen tax consequences that, if 
not corrected, could force the early shutdown of nuclear units that 
cannot be sold. Hence, a number of nuclear power plants may be forced 
to shut down before their licenses expire, resulting in the loss of 
jobs and a reduction of energy supply.
  Decommissioning nuclear power plants is an important health and 
safety issue. it is essential that monies are available to safely 
decommission the plant when it is retired. It is

[[Page E1179]]

also necessary, in many cases because of restructuring laws passed by 
states, to clarify the tax treatment for nuclear power plants that 
transfer ownership. I urge my colleagues to join with me in supporting 
this important bill.

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