COST CALCULATIONS FOR THE SWEDISH RADIOACTIVE WASTE MANAGEMENT SYSTEM
Maria Wikström
Swedish Nuclear Fuel and Waste Management Co., SKB
Box 5864, S-102 40 Stockholm, Sweden
ABSTRACT
The companies that own nuclear power plants in Sweden are responsible for adopting such measures as are needed in order to manage and dispose of spent nuclear fuel and radioactive waste from Swedish nuclear power plants and to dismantle the plants. According to the law, the Financing Act, the reactor owners shall pay a fee on nuclear energy production in order to fulfil this responsibility. The fee is based on a probable cost for waste management for 25 years of operation of all NPPs. Besides paying a fee the reactor owners must also give guarantees as security for remaining costs. Cost increases such as consequences of major changes, disruptions etc. are covered via these guarantees.
The calculations are based on the plan for management and disposal of the radioactive waste products that has been prepared by SKB. In order to include the influence of uncertainties and variations a new calculation method has been applied. The uncertainties have been dealt with by means of a statistical weighing-together of their influence on the costs. This method differs from the method used in earlier years when the uncertainties were dealt with as a percentage surcharge on the calculated costs. The result of the calculation is presented as a distribution function indicating the probability associated with a given total cost, i.e. the probability that the calculated cost will prove true.
The future costs from 1998 onwards amount to SEK 44.9 billion. The future costs are calculated in January 1997 price level.The fee has been the same, in average SEK 0.019/kWh, for twelve years, between 1985 and 1996. For 1997 the average fee is SEK 0.011/kWh. The reduction of the fee is due to that the fee can be based on a confident cost calculation and due to an increased rate of return on the funded fees.
INTRODUCTION
The Swedish nuclear power utilities are responsible for adopting necessary measures to ensure the safe management and disposal of spent nuclear fuel and radioactive waste from the Swedish 12 NPPs. In order to fulfil this responsibility, the nuclear power utilities have jointly formed SKB, the Swedish Nuclear Fuel and Waste Management Co.
On behalf of its owners SKB is responsible for handling, transport and storage of the nuclear waste outside of the nuclear power production facilities. SKB is also in charge of the comprehensive research programme in the waste field which the utilities are responsible for according to the law.
In the early 1980's, the Swedish parliament decided to implement a special financing system for future expenses for the safe management of spent nuclear fuel and for the decommissioning and dismantling of the nuclear reactors. The basic regulations are provided in the Act on the Financing of Future Expenses for Spent Nuclear Fuel etc., henceforth referred to as the Financing Act.
The main implications of the parliamentary resolution were that the nuclear power utilities should pay a special fee and that funds would be accumulated for future needs. The fee is based on a certain amount per kWh of electricity generated by the nuclear power plants.
Every year, on behalf of the nuclear power utilities, SKB prepares a calculation of the costs for all the measures that are required to manage and dispose of spent nuclear fuel and radioactive waste from the Swedish nuclear power plants (ref. 1). The cost calculations are based on the plan for management and disposal of the radioactive waste products that has been prepared by SKB. The cost calculation is submitted to the Swedish Nuclear Power Inspectorate (SKI), which recommends to the Government both the fee and the amounts for which the reactor owners have to give guarantees.
THE SWEDISH WASTE MANAGEMENT SYSTEM
SKB has developed a complete system for the management of the radioactive waste. The system consists at present of the following:
Plans also exist for:
The cost calculations also include costs for research, development and demonstration, as well as for decommissioning the reactor plants etc. The calculations are based on the proposed strategy for activities which is presented in SKB RD&D Programme 95 (ref. 2). In this plan SKB proposes that disposal of spent fuel should be carried out in stages, beginning with an initial stage when 400 canisters, or 800 tonnes of fuel, will be deposited. This will be followed by an evaluation and renewed licensing before a decision is taken to expand the facility to full scale. The opportunity to change route or even to retrieve the canisters that has been deposited will be available.
AMENDMENTS IN THE FINANCING ACT
Amendments have been made in the Financing Act which were applicable as of January 1, 1996. The most important amendment is that the reactor owners, besides paying a fee on nuclear energy production, also must give a guarantee as security for remaining costs. In this way the fee can be based on a probable cost for waste management. This cost includes uncertainties and variations that are normal for these types of projects. Cost increases such as consequences of major changes, disruptions etc. are instead be covered via the given guarantees.
A new system was also introduced for the administration of the accumulated funds. The aim was that the fund should be administered so as to achieve a better return. The system of depositing the funds at the Riksbank (Swedish central bank) was abolished and the funds were transferred to a special fund, the Nuclear Waste Fund. The assets are now to be invested at the National Dept Office. The Fund is governed by a Board of Governors, appointed by the Government. As much of the assets are invested in state bonds with guaranteed real rate of return, the uncertainties associated with this important factor has diminished. Today about 80% of the assets are given a real rate of return of more than 4% for the next 15-20 years.
CALCULATION METHOD
As a basis for determining the fee and the need for guarantees, three types of amounts are to be reported:
The fee-determining amount is used to determine the fee which is paid per kWh from nuclear production. The fee-determining amount includes all costs for managing and disposing of the spent nuclear fuel from 25 years of operation of the reactors, for decommissioning the reactors and carrying out the necessary research and development. If a reactor has been operated more than 25 years, the costs should include fuel etc. that has been used up to and including the year for which the fee is to be paid.
The basic amount and contingency allowance are to be used to determine the need for guarantees to cover the loss of fees in the event of shutdown of the reactors before 25 years of operation, or in the event of cost increases as a result of future unforeseen events.
Fee-Determining Amount
The fee-determining amount has been based on a base scenario which describes the measures, facilities etc. that are needed to manage and dispose of the spent nuclear fuel and dismantle the nuclear power plants. This scenario is based on 25 years of operation of the reactors. For reactors operating more than 25 years the scenario includes operation through the year for which the fee is to be paid. It takes into account normal uncertainties, variations and disruptions in a project.
In order to include the influence of variations and uncertainties in the cost calculations a new calculation method has been applied. The uncertainties have been dealt with by means of a statistical weighing-together of their influence on the costs. This method differs from the method used in earlier years when the uncertainties were dealt with as a percentage surcharge on the calculated costs.
The used method is based on a calculation principle termed "Progressive convergence calculation" (ref. 3), which has been developed specially as a tool for handling uncertainties of projects. The method employs established statistical principles.
The calculation method is schematically illustrated in figure 1. The calculation is started by a conventional cost calculation based on a scenario called the reference. This calculation gives a certain cost for each cost item. Uncertainties and variations in the reference are then defined. The variations are described below. The base scenario, used for establishing the fee, includes the reference as well as the variations.
Fig. 1. Schematic Description of the Calculation Method
Each cost item and variation is regarded as a variable which can assume different values with varying degree of probability. A suitable distribution function is chosen for each item and variation.
The total cost is then obtained by adding up all the cost items according to the rules that apply to addition of stochastic variables. The outcome is obtained as the result of a large number of calculation cycles, where each cycle arrives at a calculated total cost for a certain combination of costs for each item and each variation.
The result is presented as a distribution function indicating the probability associated with a given total cost, i.e. the probability that the calculated cost will prove true. A probability of 50%, for example, means that there is an equal likelihood that the real cost will be larger as that it will be smaller. The probability level chosen for the presentation of the results is dependent on the purpose of the calculation. The 50% level is used for the fee-determining amount, which is supposed to reflect the probable cost outcome. For determining contingencies a higher probability is chosen.
The method also provides indications of where the major uncertainties are. They can then be broken down and studied in greater detail, after which the calculation is repeated, leading to reduced uncertainty, The progressive convergence towards an increasingly accurate result has given the method its name.
Since several of the variations included in the calculations greatly influence the timetable, the final result is dependent upon the real interest rate that is used. The calculations are therefore carried out in the form of a number of present-value calculations with differing assumptions regarding the real interest rate used for discounting (i.e. the discount rate).
Basic Amount
The basic amount is used to determine the need for guarantee to cover loss of fees in the event of premature shut-down of the reactors. It is defined as the total costs for managing and disposing the waste quantities which arise from reactor operation through the present year and for dismantling the nuclear power plants. The basic amount has been calculated based on the base scenario, i.e. the amount on which the fee is based.
Four calculations have been performed, one for each reactor station, assuming a premature shut-down of all units at each station. This means that the quantity of waste that has to be managed and disposed of is less and the shutdown/dismantling is made earlier than in the base scenario.
Contingency Allowance
The contingency allowance, which is supposed to allow for the risk of unforeseen cost increases, has been calculated using the same statistical method as the fee-determining amount. Costs for less probable but not unreasonable events that give rise to cost changes are supposed to be included in the calculation of the contingency allowance. Large variations in for example, concept, siting, timetable, cost data, as well as disruptions of various kinds, are thereby also taken into account. The result is obtained in the form of a statistical distribution of the total costs indicating the probability associated with a given cost, i.e. the probability that the real costs will be lower than the calculated cost. To determine the contingency allowance a probability of 80-90% will be used.
VARIATIONS IN THE BASE SCENARIO
The method for handling uncertainties in the calculation is based on a systematic identification and evaluation of events which can significantly affect the cost outcome. The events in turn give rise to technical, economics or administrative variation in the reference concept. These variations are quantified with a range from the "lowest" to the "highest" outcome, related to a given probability.
Certain variations can be said to be normal within the construction and civil engineering sector. These are included in the base scenario and do not change the overall concept or timetable strategy. All variations within the base scenario are included in the calculation of the fee-determining amount.
Other variations which influence the overall concept or timetable strategy, or are otherwise deemed to be less likely, are included only in the amount used for determining the contingency allowance.
Examples of variations included in the calculation of the fee determining amount is:
COST RESULTS
Fee-Determining Amount
The fee-determining amount has been calculated for the case where all reactors are operated for 25 years or at least through 1997. The calculations have been carried out with a statistical weighing-together described above. The results of the calculations are obtained in the form of a distribution function which gives the probability associated with the total cost, i.e. the probability that the real costs will be lower than the calculated cost, see figure 2. For the fee-determining amount, which is supposed to be the probable cost, the value is used which has an equal likelihood of being too great as of being too small.
The total future costs through 1998 amount to SEK 44.9 billion. The future costs are calculated in January 1997 prices.
Fig. 2. Distribution Function for Determining the Contingency Allowance (Undiscounted). The Contingency Allowance is also Shown in the Figure.
Since several variations affect the timetable for the waste system, the present values of the costs have also been calculated with different assumptions concerning the discount rate. To show the importance of the discount rate, the total future costs under the Financing Act as a function of the real interest rate are shown in Figure 3.
Fig. 3. Total Future Costs Under the Financing Act as a Function of the Real Discount Rate. Operation of all Reactors for 25 Years or at Least Through 1997. January 1996 Prices.
Determination of Basic Amount
As a basis for determining what guarantees is needed to cover the loss of fees in the event of a premature shutdown, a basic amount has been calculated separately for each power company for the case that all reactors on a site are shut down on 31 Dec. 1997. This scenario will give a total future cost of SEK 42.7 billion, which is about SEK 2 billion less than the fee-determining amount.
Determination of Contingency Allowance
The contingency allowance should be used as a basis to determine the need for guarantees as security for additional costs resulting from unforeseen events. The same calculation method has been employed for calculating the amount used in determining the contingency allowance as for the fee-determining amount. However, the variations that have been applied are considerably more far-reaching and concern the deep repository concept, siting, timetable, cost data and different types of disruptions.
Examples of variations that are included in the calculation of the contigency allowance are:
In determining the need for guarantees, it is desirable to choose a cost level that has a high probability associated with it. The probability to be used for the contingency allowance is not yet decided. A probability of 80% or 90% is discussed. The contingency allowance is also highly dependent on the chosen discount rate.
FEE
The fee is dependent of:
The fee is calculated based on a probable future cost. This cost is calculated with the calculating method described above. The future electrical production of the nuclear power plants is based on 25 years of operation or at least through 1997.
The real rate used for calculating the fee is recommended by the Board of the Nuclear Waste Fund. The real rate for calculating the fee for 1997 was 4% up to the year 2019 and 2.5 % thereafter.
The fee has been the same, in average SEK 0.019 /kWh, for twelve years, between 1985 and 1996. For 1997 the average fee is SEK 0.011/kWh. The reduction of the fee is due to that the fee can be based on a confident cost calculation and due to better rate of interest.
THE NUCLEAR WASTE FUND
According to the Financing Act, the assets of the Fund are to be deposited in accounts at the National Dept Office. The new investments means that the interest rates can be fixed for longer periods at the same time it is possible to re-invest the funds at market terms.
The value of the Fund was SEK 22 billion September 1997.
Figure 4 shows the growth and accumulated withdrawals of the Nuclear Waste Fund since 1981.
Fig. 4. The Nuclear Waste Fund. Growth and Accumulated Withdrawals Since 1981
REFERENCES