Concentric Energy Advisors
The Concentric Connection • March, 2019
Concentric Energy Advisors
Is there a Silver Lining in Nuclear Decommissioning?

By: Julie Lieberman, Senior Project Manager

Who would have thought that the decommissioning of nuclear power plants, a long, complex and costly process, prone to schedule extensions, cost overruns and the occasional headline-grabbing event, would become an attractive business for decommissioning contractors?

Nuclear decommissioning has long been at the high-end of the risk spectrum for deactivating and dismantling electric generation facilities. It is distinct from the typical electric plant retirement in that it requires the safe disposition of nuclear waste and contaminated equipment and facilities to restore the plant site to safe levels of residual radioactivity. The process can be fraught with ‘known’ and ‘unknown’ risks as workers operate in contaminated areas and discover issues that cannot be fully known until a plant is ‘opened up.’  Unexpected issues or accidents during decommissioning can result in extensive and costly delays, which can cost millions of dollars, threatening the trust funds that were set aside for decommissioning, as well as the balance sheets of third-party purchasers. Even the best decommissioning estimates are subject to changes in the availability of waste disposal options, outcomes of DOE litigation, changes in environmental regulation, and many other variables that could significantly impact the timing and economics of the job. Nonetheless, decommissioning contracting companies are courting the acquisition and subsequent decommissioning of shuttered U.S. nuclear plants, betting that they can decommission more efficiently and less expensively than existing plant owners, and perhaps more importantly, for less money than what is available through nuclear decommissioning trust funds.

In a first of its kind transaction, the recently approved sale of Vermont Yankee Nuclear Power Station (Vermont Yankee) to NorthStar, a national provider of large-scale demolition services, included substantial financial assurances and monitoring and oversight processes to help assuage concerns over unexpected costs and risks. Despite the potential risks and the requisite monitoring and assurances, there are plenty of benefits to go around to make this a win–win situation for the nuclear asset owner, the decommissioning contractor, the regulator and the local community.

The nuclear asset owner stands to benefit from the “third-party purchase” or “Transaction Model” by its ability to de-risk its operations by transferring its decommissioning obligations to a third-party purchaser. This allows the plant owner to shed significant contract and execution risk and removes exposure to regulatory or legislative changes that could impact future decommissioning processes and/or requirements. Nuclear plants are typically owned by a utility that understands very well how to build and run a nuclear power plant but has very little expertise on how to dismantle and decommission one, relying heavily on contractors to carry out this work.

Nuclear decommissioning contractors put their own skin in the game, leveraging their expertise to take control of the entire decommissioning project. The contractor/purchaser is able to promote efficiencies through its operations and stands to reap the financial rewards for a job on budget and on schedule without event.

The regulator and local community benefit from the Transaction Model because it expedites the decommissioning and site restoration timeline. In the case of Vermont Yankee, the plant could have been held in SAFSTOR[1] until 2068 with decommissioning completed as late as 2073 and site restoration in 2075. More recent plans estimated that decommissioning and site restoration would have been complete by 2060, absent the sale to NorthStar.

Without third-party decommissioning sales, it is likely that most nuclear plant owners would opt for some period of SAFSTOR. The NorthStar purchase fast-tracked Vermont Yankee’s decommissioning and site restoration timeline to 2030 at the latest, and perhaps as early as 2026 (except for the transfer of stored fuel to a U.S. government permanent storage repository.) The prospect of having all decommissioning and site restoration (except for permanent fuel transfer) complete in the next 7 to 11 years, as is the case with NorthStar, is a significant benefit to regulators and the impacted community.

What is concerning about the Transaction Model is that the nuclear- decommissioning contractor’s financial resources typically do not compare favorably to the nuclear fleet owner or the regulated-utility, the latter two of which typically have substantial asset holdings. Furthermore, decommissioning contractors are not usually entrenched in and interactive with the community and local regulators in the way that a utility plant owner would be, and arguably may be less dependent on their ‘good name’ in the sector to sustain their operations. Regulators may be concerned over their comparative ability to hold the third-party purchaser fully accountable for a decommissioning project that has gone awry. In the case of the Vermont Yankee transaction, these types of concerns were addressed by additional financial assurances by both the seller and purchaser.

We anticipate the trend toward third-party decommissioning transactions to accelerate as the nuclear industry continues to face a precipitous decline due to a combination of low gas prices, rising capital and operating costs, declining or flat electric demand, an inability to solve the waste issue, and renewable energy subsidies, among other factors. The nuclear industry has absolutely entered an age of decommissioning and is moving to the Transaction Model.

Vermont Yankee was the first approved decommissioning sale transaction, and the process will be watched carefully by regulators, utilities, nuclear plant owners, investors, and decommissioning contractors. Already three additional sale transactions (Palisades Nuclear Generating Station, Pilgrim Nuclear Power Station, and Oyster Creek Nuclear Generating Station) are pending regulatory approvals, and the potential sale of the Indian Point facility is in the works. Given the massive size and scope of nuclear decommissioning projects, sometimes ranging over a billion dollars, there are significant potential rewards for decommissioning contractors that are able to promptly and safely decommission nuclear power plants without event; and there are significant incentives to plant owners, regulators, and members of the local community to embrace the Transaction Model. Arguably, there is no entity more capable of doing the decommissioning work than the decommissioning contractor. But the stakes are high, and the regulatory approval process can be daunting.

Have decommissioning contractors found the silver lining in the storm clouds surrounding nuclear power’s future? Only time will tell if taking on the risks of buying plants to profitably decommission them will prove to be a good bet. Conversely, time will also tell whether third-party purchasers have assumed more risk than they can effectively manage, and whether the full battery of agreed-upon financial assurances will be required and will have been proven sufficient to mitigate those risks.

How We Can Help

In our role in the Vermont Yankee transaction, Concentric Energy Advisors prepared an assessment of the financial aspects of the proposed transfer of Vermont Yankee to NorthStar, including a thorough review of the financial assurances proposed by NorthStar if the transfer were approved, and the financial capabilities of NorthStar to complete the decommissioning, site restoration, and spent nuclear fuel management in the context of the potential financial risks posed by the project. Concentric also assisted the Vermont Public Utility Commission in quantifying the range of potential risks of the transaction and in developing processes to monitor and identify risks at the earliest juncture in the decommissioning and site restoration processes.

Are you an asset owner considering a transaction? We provide business strategy guidance and due diligence and assist in obtaining regulatory approvals for energy transactions.

Are you a regulator charged with balancing potential decommissioning risks and rewards and recommending a path forward? We provide monitoring of decommissioning operations, screening/pre-qualifying of potential transaction counterparties, and transaction due diligence.

Are you a decommissioning service provider? We will assist in finding potential transaction partners, and conduct a review of your business profile to provide an independent assessment of your ability to purchase and obtain regulatory approval in a nuclear decommissioning transaction.

Contact to learn more about our services.

[1] SAFSTOR allows for growth in the nuclear decommissioning trust funds and also allows more time for radiological decay of the site, substantially lessening the amount of high-level radioactive waste in the decommissioning process.

Webinar on April 9th
Upcoming Webinar: Environmental, Social, and Governance (ESG) Factors for Utilities

On April 9th, Jim Coyne and the Concentric team are hosting a webinar on Environmental, Social, and Governance Factors (ESG) for Utilities. We will discuss why ESG practices are becoming an essential utility issue, including a discussion of the analytics between ESG ratings and stock performance.

Email Katherine Judd at to receive an invitation or for more information.

Concentric Energy Advisors
Recent Promotions
We Are Pleased to Announce the Following Staff Promotions
  • Toby Bishop to Senior Vice President
  • Joe Weiss to Assistant Vice President
  • Bickey Rimal to Senior Project Manager
  • Chris Wall to Senior Project Manager
  • Briana Adams to Project Manager
  • Meredith Stone to Project Manager
  • Amanda Nori to Senior Consultant
  • Jacob Hurwitz to Consultant
  • Tom O’Neill to Consultant
  • Shane Wang to Consultant
  • Jessalyn Pryciak to Senior Analyst

Please join us in congratulating the group on their successes.

The Foster Report Featured Story of the Week
Fast Track for Colorado Legislation Has Industry Alarmed, Fearing Impact

Oil and natural gas producers in Colorado dodged a bullet when voters rejected a ballot initiative that would have hindered operations, but they’re facing a freight train in legislation moving swiftly through the General Assembly that the industry says would amount to a moratorium on new production and hamstring the state’s economy.

In less than one week, the bill (S.B. 19-181) has been introduced and moved through two Senate committees on party-line votes, with Democrats supporting it and Republicans opposing it. After the Senate Transportation & Energy Committee voted in the early morning hours March 6 in a 4-3 vote, the Finance Committee did the same March 7, sending the legislation to the Appropriations Committee for consideration on March 8.

The Colorado Petroleum Council, a division of the American Petroleum Institute, said the fiscal note on the bill fails to account for significant losses in severance tax and ad valorem tax revenue that support state and local economies. An objective analysis on oil and gas impact in the state shows that a 50% reduction in new production would result in a lower GDP by $4.4 billion and 36,000 fewer jobs in the first five years, the group said.

Others have told lawmakers that if the measure passes as written, producers will leave Colorado. In an appeal to Democrat leaders in the state, Ken Salazar penned an op-ed that appeared in the Denver Post deeming the measure “too extreme,” giving unfettered control to local governments and affecting funding for schools, roads and the state’s economy.


Read More at The Foster Report ›
Concentric Energy Advisors
Life at Concentric
Concentric After Dark

Last month our Marlborough headquarters hosted an employee paint and sip event which provided a relaxing, creative outlet at the end of the week. Concentric provided all the tools needed to create a masterpiece with acrylic paint on a canvas, plus snacks, beverages, and music. The group started with a free-form background which allowed them to get comfortable with the medium, then moved onto a subject relative to our industry, rows of birds perching on power lines in the foreground. Each person approached the subject matter differently, and all those perspectives are evident in the final pieces, which are now hanging up around the office.

The event was hosted by Gwen Walsh, Concentric’s Business Development Coordinator.

Learn More About a Career at Concentric ›
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