Chapter 2. Decommissioning Of Nuclear Facilities of California Public Utilities Code >> Division 4.1. >> Chapter 2.
This chapter shall be known and may be cited as the Nuclear
Facility Decommissioning Act of 1985.
The Legislature hereby finds and declares all of the
(a) The citizens of California should be protected from exposure
to radiation from nuclear facilities.
(b) It is in the best interests of all citizens of California that
the costs of electricity generated by nuclear facilities be fairly
distributed among present and future California electric customers so
that customers are charged only for costs that are reasonably and
(c) The costs of electricity generated by nuclear facilities,
including the costs of their decontamination and decommissioning,
should be reduced to the lowest level consistent with public health
(d) The ultimate costs of the decommissioning of nuclear
facilities are of significant magnitude, and introduce an element of
financial risk to both electric customers and investors unless
prudent provision is made for defraying those costs.
(e) In order to reduce both risk and ultimate costs for all of its
citizens, the State of California should establish a comprehensive
framework for timely payment of the costs of decommissioning, and
provide for allocation of risks and costs among the respective
(f) The principal considerations in establishing a state policy
respecting the economic aspects of decommissioning are as follows:
(1) Assuring that the funds required for decommissioning are
available at the time and in the amount required for protection of
(2) Minimizing the cost to electric customers of an acceptable
level of assurance.
(3) Structuring payments for decommissioning so that electric
customers and investors are treated equitably over time so that
customers are charged only for costs that are reasonably and
(g) Decommissioning nuclear facilities causes electric utility
employees to become unemployed through no fault of their own, and
these employees are entitled to reasonable job protection the costs
of which are properly includable in the costs of decommissioning.
It is the intent of the Legislature in enacting this chapter
to protect electric customers, both present and future, from the
risks of unreasonable costs associated with ownership and operation
of nuclear powerplants. To that end, the commission or board with
respect to each electric utility owning or operating a nuclear
powerplant, shall develop regulations and guidelines that promote
realism in estimating costs, provide periodic review procedures that
create maximum incentives for accurate cost estimations, and provide
for decommissioning cost controls.
Unless the context otherwise requires, the definitions in
this section govern the construction of this chapter.
(a) "Board" means the board of directors or other governing body
of a publicly owned public utility owning or operating a nuclear
(b) "Commission" means the Public Utilities Commission.
(c) "Electrical utility" includes both an electrical corporation
subject to the jurisdiction and control of the commission and a
publicly owned public utility subject to the jurisdiction and control
of its board, in either case owning or operating nuclear facilities
for the generation of electricity.
(d) "Decommissioning" means to remove nuclear facilities safely
from service and to reduce residual radioactivity to a level that
permits release of the property for unrestricted use and termination
of license, or as otherwise defined by the Nuclear Regulatory
Commission or its successor. Decommissioning includes other
activities and costs, if any, which may be included in Internal
Revenue Service regulations implementing Section 468A of the United
States Internal Revenue Code.
(e) "Nuclear facilities" means the site, building and contents,
and equipment associated with any activity licensed by the Nuclear
Regulatory Commission, or as may be otherwise defined by the Nuclear
Regulatory Commission or its successor.
(a) Each electrical corporation owning, in whole or in part,
or operating nuclear facilities, located in California or elsewhere,
shall establish an externally managed, segregated fund for the
purposes of this chapter. In addition, each electrical corporation
may establish other funds, as appropriate, for payment of
decommissioning costs of nuclear facilities.
(b) The externally managed, segregated fund established pursuant
to subdivision (a) shall be a fund which qualifies for a tax
deduction pursuant to Section 468A of the United States Internal
Revenue Code, and applicable regulations of the Internal Revenue
Service adopted pursuant thereto, if that tax treatment is determined
by the commission to be in the best long-term interests of the
customers of the electrical utility.
(c) The commission shall authorize an electrical corporation to
collect sufficient revenues in rates to make the maximum
contributions to the fund established pursuant to Section 468A of the
United States Internal Revenue Code and applicable regulations, that
are deductible for federal and state income tax purposes, and to
otherwise recover the revenue requirements associated with reasonable
and prudent decommissioning costs of the nuclear facilities for
purposes of making contributions into other funds established
pursuant to subdivision (a).
(d) Notwithstanding any other provision of this section, an
electrical utility, which is a publicly owned public utility subject
to the jurisdiction and control of its board, shall establish and may
manage a separate fund for purposes of this chapter. The board shall
provide that the amounts of all payments into this fund are
recoverable through the utility's electric rates.
(a) Each electrical utility owning, in whole or in part, or
operating a nuclear facility, located in California or elsewhere,
shall provide a decommissioning cost estimate to the commission or
the board for all nuclear facilities which shall include all of the
(1) An estimate of costs of decommissioning.
(2) A description of changes in regulation, technology, and
economics affecting the estimate of costs.
(3) A description of additions and deletions to nuclear
(4) Upon request of the commission or the board, other information
required by the Nuclear Regulatory Commission regarding
(b) The decommissioning costs estimate study shall be periodically
revised in accordance with procedures adopted by the commission or
the board pursuant to Section 8327.
The commission or the board shall review, in conjunction with
each proceeding of the electrical utility held for the purpose of
considering changes in electrical rates or charges, the
decommissioning costs estimate for the electrical utility in order to
ensure that the estimate takes account of the changes in the
technology and regulation of decommissioning, the operating
experience of each nuclear facility, and the changes in the general
economy. The review shall specifically include all cost estimates,
the basis for the cost estimates, and all assumptions about the
remaining useful life of the nuclear facilities.
The expenses associated with decommissioning of nuclear
facilities shall be paid from the funds established pursuant to
Section 8325. If the money in the funds is insufficient for payment
of all decommissioning costs, the commission or the board shall
determine whether the costs incurred in excess of the money in the
funds are reasonable in amount and prudently incurred. If the
commission or the board determines that the excess costs are
reasonable in amount and prudently incurred, the commission or the
board shall authorize these costs to be charged to the customers of
the electric utility.
The commission or the board shall, for purposes of
establishing rates or charges, review and approve the estimated
service life and estimated retirement date of all nuclear facilities.
Every electrical utility involved in decommissioning,
closure, or removal of nuclear facilities, shall provide assistance
in finding comparable alternative employment opportunities for its
employees who become unemployed as the result of decommissioning,
closure, or removal. The commission or the board shall authorize the
electrical utility to collect sufficient revenue through electric
rates and charges to recover the cost, if any, of compliance with