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Chapter 17 - Investment Strategies for Externalized Nuclear Decommissioning Trusts

Abstract:
This chapter constitutes the third view of nuclear trust fund investment. It addresses several overall strategies of such investment by identifying the types of trusts, investment objectives, risk considerations, and the historical record. The author uses a fund adequacy analysis to examine expected cost growth, expected fund value, actual cost growth vs. expected cost growth, and actual fund value vs. expected fund value. He believes that while the long-term goal of such nuclear decommissioning trust (NDT) investment is quite definable, the practical ability to meet the goal is limited. Under the current requirements, he considers the realistic prognosis for a real return on investment to be low, if not zero, even with the close monitoring that will be needed.

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

JEL Codes:
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Nuclear trust fund investment, Nuclear decommissioning, Income taxes, Investor-owned utilities

DOI: 10.5547/ISSN0195-6574-EJ-Vol12-NoSI-17


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