WASHINGTON — Replacing an under-construction plutonium disposal plant in South Carolina will be billions of dollars cheaper than finishing it, even after accounting for transportation and storage costs associated with a proposed alternative, the head of the National Nuclear Security Administration (NNSA) told lawmakers here Tuesday.
The Department of Energy wants to cancel the the Mixed Oxide Fuel Fabrication Facility (MFFF) and instead treat the plutonium via another means at the Savannah River Site and ship it for burial deep underground in New Mexico. Last week, Rep. Mike Simpson (R-Idaho), the House’s top energy appropriator, said he feared DOE had not properly accounted for the extra transportation expenses, among others, associated with this alternative “dilute and dispose” approach.
On Tuesday, NNSA Administrator Lisa Gordon-Hagerty said DOE would account for those costs, and that dilute and dispose will still “cost billions less” than the MFFF.
For the last three years, NNSA has requested congressional permission to stop building MFFF, which is supposed to turn 34 metric tons of surplus weapon-grade plutonium into commercial nuclear reactor fuel as part of an arms-control agreement with Russia.
For years, Congress resisted cancelling MFFF, which CB&I AREVA MOX Services is building under a contract awarded in 1999. Then, in the National Defense Authorization Act of 2018, lawmakers told NNSA it could cancel the plant after all — if the agency could prove that dilute-and-dipose would get rid of the 34 metric tons of plutonium for half the money it would cost to finish MFFF and process the plutonium there.
Congress’ directive makes it notionally possible to rough out the maximum amount of money NNSA could spend on dilute-and-dispose before it would become too expensive to use as an alternative to MFFF. However, the cost-cap you get from applying Congress’ formula depends on what you think it would cost to finish MFFF and process 34 metric tons of plutonium there.
On that point, NNSA and its contractor are billions of dollars apart in their thinking.
According to a figures published in a 2016 report commissioned by MFFF prime CB&I AREVA MOX SERVICES, the dilute-and-dispose cost-cap would be about $10 billion. That is based on an inflation-adjusted life-cycle MFFF cost estimate of about $25 billion, minus the $5 billion or so NNSA had already spent on the project by 2016. The estimate includes completing MFFF by 2025, then processing plutonium there for another 15 years.
However, the contractor-commissioned report assumed MFFF would get nearly twice the annual funding it actually received in the years following 2016: $500 million a year, rather than the $335 million Congress actually appropriated in 2017, and through the first six months of fiscal 2018 under a series temporary budget extensions.
That has been one of DOE’s major sticking points: that MFFF will take much longer to finish than the contractor believes because its budget will not rise as much as the contractor believes. According to estimates cited by the 2015 report DOE used as the justification for shutting down MFFF in the first place, the dilute-and-dispose cost cap would be more than $20 billion. That is based on a now three-year-old, inflation-adjusted MFFF life-cycle cost estimate of $47.5 billion. The estimate assumes the facility will get the $500 million a year.
However, if funding remained flat at $375 million a year — a benchmark DOE used in its 2015 cost estimate — the life-cycle cost of MFFF would be more like $110 billion, according to figures in the 2015 report. That would put the dilute-and-dispose cost cap north of $50 billion.
Customer and contractor likewise do not agree about how long it will take just to finish MFFF. CB&I AREVA MOX Services — which has sued DOE for allegedly mismanaging the MFFF prime contract — estimates it will take about $10 billion to finish the facility by 2029. That includes the $5 billion DOE has already spent on the plant. Energy Secretary Rick Perry said last week the MFFF would not be finished until 2048 and cost more than $17 billion, including sunk costs.
On Tuesday, Simpson remained wary about whether DOE would turn over the comprehensive cost estimate, but he also said he was willing to be convinced.
“If someone can show that something’s going to cost 50 percent less, I’m not going to jump and oppose it,” Simpson told Gordon-Hagerty.
Editor’s note, 05/13/2018, 9:45 a.m. Eastern. The story was corrected to read that MFFF had a $335 million budget in 2017, and that DOE’s 2015 MFFF cost estimate examined two funding scenarios: one in which MFFF received $375 million a year, and one in which MFFF received $500 million a year.
