July 19, 1998, The StateBarnwell revives plan to sell future space
By ANDREW MEADOWS
Staff Writer
Chem-Nuclear is reviving the idea of selling its customers, primarily electric utilities, future space in its Barnwell low-level radioactive waste facility.The revival comes as the company is struggling to meet its financial obligations to the state of South Carolina to operate the facility. Chem-Nuclear isn't saying much about the utility talks. However, officials believe the futures plan will yield at least the $67 million a year that the company currently pays the state in fees.
A similar futures plan, which was supposed to create a $1 billion education fund for the state, stalled earlier this year. Any new proposal will require legislative approval, a process that will reopen the often rancorous debate over whether the site should stay open.
"When we finish discussion with the generators it could require legislative approval," said David Ebenhack, Chem-Nuclear's vice president of community relations. "If it does, then clearly we would discuss it with the Legislature."
The utility negotiations follow a dramatic drop in the waste shipped to Barnwell since 1995, when the General Assembly levied a $235-a-cubic-foot fee on waste buried at the site. The fee, backed by Gov. David Beasley, allowed Barnwell to continue operating past Dec. 31, 1995, the date it was scheduled to close.
The fee prompted utilities, which produce about 75 percent of the waste shipped to Chem-Nuclear, to seek cheaper alternatives. Minimizing the production of waste and compacting waste have helped utilities, including SCE&G and Duke Energy, reduce the volume of low-level waste they produce by up to 90 percent over the past 10 years, according to the companies.
Some utilities also started shipping radioactive waste to a landfill in Clive, Utah. Others decided to store the waste on-site at their nuclear power reactors. The Nuclear Regulatory Commission allows a utility to store low-level waste on-site indefinitely. In 1995, Barnwell?s supporters contended the $235-a-cubic-foot fee would generate $140 million a year for the state, money to be spent on scholarships and school construction. Instead, the dropoff in the amount of waste shipped to Barnwell has resulted in reducing those fees to $67 million a year.
Said Chem-Nuclear's Ebenhack, "If there is an economic incentive people will come up with an alternative, and they certainly have."
"Only game in town." This current round of negotiations is the second time in the past year that Chem-Nuclear has had to ask utilities for financial aid. Earlier this year, utilities helped Chem-Nuclear make up an $8.5 million shortfall in the $23 million the company is required to pay the state to operate the facility.
The money that utilities ponied up was voluntary. But Chem-Nuclear now has imposed a mandatory "access fee" to cover the state payments.
At one point, Chem-Nuclear's parent company, Oak Brook, Ill.-based Waste Management, contemplated shuttering the Barnwell landfill. However, Chem-Nuclear says the Barnwell site remains profitable despite its inability to cover the tax payments to the state.
The drop in waste shipments to Barnwell has forced Waste Management officials to drop their profitability expectations for Barnwell. However, company officials won't disclose those expectations. And Chem-Nuclear, a subsidiary of stockholder-owned Waste Management, isn't required to disclose its finances.
Tom Dabrowski, head of Waste Management's nuclear division, said the tax shortfall was presented to utilities as another cost that had to be covered. The utilities understand Chem-Nuclear has to meet profitability levels, he added. "Fortunately, they understand this is a business," Dabrowski said.
But Carolina Power & Light, which operates the Robinson nuclear reactor in Hartsville, made a "business decision" not to help make up Chem-Nuclear"s tax shortfall, said Mike Hughes, a CP&L spokesman. Hughes refused to elaborate.
CP&L operates two nuclear facilities in North Carolina in addition to Robinson.
Now, as part of the futures program, Chem-Nuclear wants electric utilities to assess their waste needs for years to come and pay now for those needs.
"Are they happy about having to pay Barnwell extra? No. But on the other hand the industry needs Barnwell," said Steve Unglesbee, a spokesman for the Nuclear Energy Institute, the nuclear industry's trade group. "They are the only game in town."
Ebenhack echoed that thought when asked what leverage Chem-Nuclear has with electric companies. Said Ebenhack, "Where else are they going to put it?"
Although the Clive, Utah, site operated by Envirocare Inc., has taken an increased amount of Type A, low-level waste, Barnwell is the one of two nuclear landfills that accept more radioactive Type B and Type C waste.
The other landfill that takes B and C waste is in Richland, Wash. However, it accepts waste from only eight states in the Northwest.
Utilities always can store their waste on-site. Both Duke and SCE&G have contingency plans to store low-level waste on-site at their reactors.
But the companies say they would rather work out an economical alternative with Chem-Nuclear. "We prefer to have the Barnwell site open," said Gary Taylor, SCE&G's vice president of nuclear operations.
Past and future. Some nuclear watchers blame Gov. David Beasley and the General Assembly for making Barnwell the only alternative for low-level waste.
Marvin Resnikoff, a senior associate with Radioactive Waste Management Associates, said the decision by the Legislature and Beasley to keep Barnwell open killed a regional low-level waste disposal plan enacted by Congress in 1980. Under that law, eight regional compacts were charged with developing low-level landfills to take nuclear waste.
However, as long as Barnwell remains open, the regional compacts had no incentive to build landfills, Resnikoff said.
Before buying into Chem-Nuclear's futures plan, SCE&G's Taylor said, his company wants to be sure the landfill will be open for the next 20 to 30 years. That's when SCE&G will have to make a decision whether to keep its V.C. Summer nuclear reactor in Jenkinsville open.
SCE&G owns two-thirds of that reactor. The state of South Carolina, through state-owned Santee Cooper, owns the other third.
Dozens of utilities nationwide are facing the same quandary as SCE&G as the electric industry heads toward deregulation.
If SCE&G decides to close Summer, the utility will need somewhere to put its immense components, which will be dismantled.
Chem-Nuclear wants the utility to buy space now in Barnwell to bury those components. The 27-year-old Barnwell facility has 6 million cubic feet of space left for storage of waste. That's enough space for another 25 years of operation, the company estimates.
"If successful, Chem-Nuclear's futures plan should give the state at least the $67 million a year it's been averaging under the current fee structure," said company spokesman Ebenhack.
That, he said, would guarantee a "steady revenue stream" to South Carolina for education and give Chem-Nuclear's customers "stability."
1999 legislative battleground? Any new fee plan devised by Chem-Nuclear and accepted by the utilities will have to win legislative approval. Chem-Nuclear's foes already anticipate a request next year to restructure the fees the state assesses the company. The battle is sure to be vitriolic. Chem-Nuclear and SCE&G are two of the state's saaviest corporate lobbyists. And Barnwell's opponents are many and loud.
"Oh yeah, they'll come to the General Assembly next year," said state Rep. Bob Sheheen, D-Camden, a Barnwell opponent. "They always come back the year after an election."