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Chapter 16 - Historical Lessons for Nuclear Decommissioning Trust Fund Investment

One way we can attempt to judge the best investment strategy for nucleardecommissioning trust funds (NDTs) is to examine past after-tax returns of variousinvestment options. The authors of this chapter make such an evaluation. Theynote that no passively managed asset class allowed in qualified NDTs hasproduced real after-tax returns. They conclude that an active, rather than apassive, investment strategy is necessary, and they stress the advisability ofshortand intermediate -term fixed-income securities such as municipal bonds.However, when the authors applied the hypothetical 15 percent tax rate proposedin a new Congressional bill (HR 4653), several asset classes did provide realaftertax returns.

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Energy Specializations: Nuclear Power – Markets and Prices; Nuclear Power – Policy and Regulation

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Nuclear decommissioning, Trust funds, Investment strategy, Debt instruments

DOI: 10.5547/ISSN0195-6574-EJ-Vol12-NoSI-16

Published in Volume 12, Special Issue of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.