Nuclear Power: Nuclear Regulatory Commission Relies on Information From its Reactor Oversight Process to Ensure Safety

What GAO Found

Companies that own and operate nuclear power plants in the United States are generally considered by credit rating agencies to have an adequate or strong ability to meet their financial obligations with overall stable credit outlooks. Market and other factors affect the financial condition of nuclear power plants. These factors include the type of market in which a plant operates, electricity prices, and the availability of federal and state tax credits. For example, companies operating in rate-regulated markets, where companies sell electricity at a rate established or approved by a state public service or public utility commission, face less financial risk associated with fluctuating electricity prices. By contrast, companies operating in competitive markets, where the price of electricity is determined by supply and demand, must absorb the costs of any such fluctuations.

In addition, the availability of federal and state tax credits can also affect the financial condition of nuclear power plants. For example, state and federal tax credits available to nuclear power plants can help offset costs by providing funding to repair or replace at-risk reactors or by providing additional revenue. Tax credits can also provide some financial certainty to nuclear power plant companies.

The Nuclear Regulatory Commission (NRC) is responsible for regulating commercial nuclear power reactors, among other things. To oversee safety, NRC primarily relies on its Reactor Oversight Process-NRC's program to inspect, measure, and assess the safety and security performance of operating commercial nuclear power plants, and to respond to any decline in their performance. NRC's Reactor Oversight Process focuses on monitoring and inspections of plant activities that have the greatest effect on safety and overall risk. If a plant's performance indicators or inspection findings raise concerns, NRC conducts supplemental inspections that are more targeted and in-depth. Information from performance indicator reports and inspections informs an assessment of a plant's overall safety posture.

NRC uses nuclear power plant financial information for licensing and other purposes. Specifically, NRC conducts a financial qualification review of nuclear power plants at initial licensing and license transfer to determine whether the applicant has adequate funds to cover the cost of construction and operations. NRC generally does not use financial information to inform its ongoing oversight processes once a license has been issued. According to NRC officials, NRC can review such information if deemed necessary. For example, officials said that NRC staff monitor industry information, and if they find information about the financial condition of a plant that could raise questions about safety, they may request additional information from that plant and conduct a more in-depth review.

Why GAO Did This Study

The United States has the largest fleet of nuclear power reactors in the world, and nuclear power has accounted for about 20 percent of annual U.S. electricity generation since the late 1980s. In recent years, nuclear energy has provided nearly half of our nation's carbon-free electricity, making it the largest domestic source of carbon-free energy. Currently, the United States has 94 operating commercial nuclear reactors at 54 nuclear power plants in 28 states. The average age of nuclear reactors in the United States is about 42 years old.

The federal government, through the NRC, regulates commercial nuclear power reactors by certifying designs, issuing licenses and license renewals, and conducting inspections, among other things. NRC's mission involves protecting public health and safety through efficient and reliable licensing, oversight, and regulation. In recent years, the U.S. nuclear power industry has faced economic and financial challenges, particularly for reactors located in competitive power markets where natural gas and renewable power generators influence wholesale electricity prices.

A House report accompanying the Energy and Water Development appropriations bills for fiscal year 2024 includes a provision for GAO to provide a report on NRC oversight of nuclear power plant safety and mechanisms for ensuring adequate protection of public health and safety. Specifically, the House report raised questions about the potential effect of financial pressure on the safety of U.S. nuclear power plants. This report describes the factors that affect the financial condition of nuclear power plants, and the information NRC uses to inform licensing and oversight of plant safety.

To conduct this work, GAO reviewed industry reports on financial challenges facing the industry, plant safety and operations, and credit outlooks for the nuclear power industry. GAO also reviewed relevant laws, regulations, and agency guidance to understand NRC's overall safety processes, and interviewed NRC officials and 12 stakeholders, including academics, industry groups, nuclear power plant companies, and credit rating agencies.

For more information, contact Frank Rusco at [email protected].