Nuclear Decommissioning Costs. Estimated site-specific nuclear decommissioning costs, including the cost of decommissioning plant components not subject to radioactive contamination, total approximately $1.3 billion stated in 1994 dollars based on decommissioning studies completed in 1994. This amount includes the Corporation’s 12.5 percent ownership in Catawba. The other joint owners of Catawba are responsible for decommissioning costs related to their ownership interests in the station. Both the NCUC and the PSCSC have granted the Corporation recovery of estimated decommissioning costs through retail rates over the expected remaining service periods of the Corporation’s nuclear plants. Such estimates presume each unit will be decommissioned as soon as possible following the end of its license life. Although subject to extension, the current operating licenses for the Corporation’s nuclear units expire as follows: Oconee 1 and 2 – 2013, Oconee 3 – 2014; McGuire 1 – 2021, McGuire 2 – 2023; and Catawba 1 – 2024, Catawba 2 – 2026.

During 1997 and 1996, the Corporation expensed approximately $56.5 million which was contributed to the external funds for decommissioning costs and accrued an additional $3.0 million and $1.6 million to the internal reserve in 1997 and 1996, respectively. Nuclear units are depreciated at an annual rate of 4.7 percent, of which 1.61 percent is for decommissioning. The balance of the external funds as of December 31, 1997 and 1996, was $471.1 million and $362.6 million respectively. The balance of the internal reserve as of December 31, 1997 and 1996, was $210.8 million and $207.8 million, respectively, and is reflected in Accumulated Depreciation and Amortization in the Consolidated Balance Sheets. Management’s opinion is that the decommissioning costs being recovered through rates, when coupled with assumed after-tax fund earnings of 5.5 to 5.9 percent, are currently sufficient to provide for the cost of decommissioning.

A provision in the Energy Policy Act of 1992 established a fund for the decontamination and decommissioning of the uranium enrichment plants of the Department of Energy (DOE). Licensees are subject to an annual assessment for 15 years based on their pro rata share of past enrichment services. The annual assessment is recorded as Fuel Used in Electric Generation in the Consolidated Statements of Income. The Corporation paid $9.7 million during 1997 and has paid $54.7 million cumulatively related to its ownership interests in nuclear plants. The Corporation has reflected the remaining liability and regulatory asset of $87.1 million and $94.7 million in the Consolidated Balance Sheets at December 31, 1997 and 1996, respectively, and were classified as Deferred Credits and Other Liabilities and Regulatory Assets and Deferred Debits, respectively.