{"id":110,"date":"2021-10-05T16:58:56","date_gmt":"2021-10-05T16:58:56","guid":{"rendered":"https:\/\/annualreport.nwmo.ca\/2023\/?page_id=110"},"modified":"2024-03-25T19:37:34","modified_gmt":"2024-03-25T23:37:34","slug":"ensuring-funding-is-in-place","status":"publish","type":"page","link":"https:\/\/annualreport.nwmo.ca\/2023\/ensuring-funding-is-in-place\/","title":{"rendered":"Ensuring funding is in place"},"content":{"rendered":"

[et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” background_enable_image=”off” background_position=”top_center” overflow-x=”hidden” custom_margin=”||||false|false” custom_padding=”80px||0px||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_class=”page-title” _builder_version=”4.24.2″ _module_preset=”default” header_font=”|300|||||||” header_font_size=”48px” header_line_height=”1.2em” header_2_font_size=”48px” header_2_line_height=”1.2em” custom_margin=”||0px||false|false” global_colors_info=”{}”]<\/p>\n

Ensuring funding is in place \t
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A key aspect of our commitment to accountability is ensuring that the funding necessary to pay for the long-term management of Canada\u2019s used nuclear fuel will be available when needed. The roles and responsibilities of financial surety are summarized in the diagram below.<\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row use_custom_gutter=”on” gutter_width=”2″ module_class=”row-content” _builder_version=”4.19.0″ _module_preset=”default” background_enable_color=”off” custom_padding=”0px||||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”https:\/\/annualreport.nwmo.ca\/2023\/wp-content\/uploads\/2023\/03\/FinancialSuretyRolesAndResponsibilities_EN.jpg” alt=”Financial surety roles and responsibilities ” title_text=”Financial surety roles and responsibilities ” force_fullwidth=”on” module_class=”share-element” _builder_version=”4.24.2″ _module_preset=”default” hover_enabled=”0″ border_radii=”off|64px|||” global_colors_info=”{}” sticky_enabled=”0″][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Total cost estimate” module_id=”section-4″ module_class=”toggle-section” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_class=”toggle-btn” _builder_version=”4.24.2″ _module_preset=”default” header_2_font=”|300|||||||” header_3_font=”||||||||” custom_padding=”||0px|||” global_colors_info=”{}”]<\/p>\n

Total cost estimate<\/h2>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Total cost estimate content” module_class=”section-4 toggle-section toggle-content ” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.24.2″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n

One of the NWMO\u2019s important responsibilities is determining the lifecycle cost of the project so we can ensure the funds will be available when needed. Updated every five years based on the latest information, the lifecycle cost estimate<\/a> explains what we anticipate the project will cost from beginning to end and why. It helps ensure accountability and transparency as we implement Canada\u2019s plan for the safe, long-term management of used nuclear fuel.<\/p>\n

The NWMO completed a full update of the cost estimate for the Adaptive Phased Management project in 2021, with the next update planned for 2026.<\/p>\n

The estimate includes costs to develop, construct, operate, monitor and decommission a long-term facility, including the deep geological repository and Centre of Expertise, and to transport the used nuclear fuel to the repository. As this is a 175-year estimate, many assumptions have been taken for planning purposes to ensure sufficient funds are available, and where possible, have been and will continue to be revised and made more specific as the plan advances.<\/p>\n

Many factors impact the eventual cost of the project. They include the type and volume of used nuclear fuel to be managed, the facility\u2019s location, the surrounding infrastructure, rock type and characteristics, the design of the repository, and the length of time allocated to monitoring the site following fuel placement.<\/p>\n

The total amount of used nuclear fuel in Canada, which is currently about 3.3 million fuel bundles, could be impacted by factors such as the longevity and productivity of nuclear reactors, and decisions on refurbishments or new nuclear reactors. Every year, we update fuel bundle volume estimates and trust fund balances that impact the project\u2019s cost estimates and funding requirements, based on fuel bundle estimates provided by the nuclear energy producers. We then determine the trust fund contribution requirements for the following year to ensure sufficient resources for future use.<\/p>\n

Our 2021 cost estimate was based on an expected volume of 5.5 million fuel bundles, the anticipated volume at the end of the planned operation of Canada\u2019s existing nuclear reactors.<\/p>\n

Based on this expected volume, the cost for construction of the facility is approximately $4.5 billion (in 2020 dollars). The total lifecycle cost of the project \u2014 from the beginning of the site selection process in 2010 to regulatory approval, construction, operation, long-term monitoring and closure \u2014 is approximately $26 billion (in 2020 dollars). This amount covers many decades of lifecycle activity.<\/p>\n

It is important to determine the amount that is required, in today\u2019s dollars, in order to have the necessary funds in place when needed in the future. The funds in place today will grow to cover the full cost of the project over the long term, based on continued additional payments from the funders of the project and through expected investment income that will also grow over time. The funding required to manage approximately 5.5 million fuel bundles from 2024 onwards is $11 billion (using Jan. 1, 2024, present value).<\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Pre- and post-construction costs” module_id=”section-5″ module_class=”toggle-section” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_class=”toggle-btn” _builder_version=”4.24.2″ _module_preset=”default” header_2_font=”|300|||||||” header_3_font=”||||||||” global_colors_info=”{}”]<\/p>\n

Pre- and post-construction costs<\/h2>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”content Pre- and post-construction costs” module_class=”section-5 toggle-section toggle-content ” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.24.2″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n

The $11 billion funding requirement (using Jan. 1, 2024, present value) includes $3 billion to select a site for the repository, complete a detailed design, develop the Centre of Expertise, acquire the site, evaluate environmental impacts, and obtain the site preparation licence and the construction licence under the Nuclear Safety and Control Act<\/em> (NSCA<\/em>). These pre-construction nuclear facility costs are paid for by the waste owners based on the annual NWMO budget, as approved by the Board of Directors.<\/p>\n

The remaining $8 billion funding requirement is to construct the facility, transport existing and future fuel bundles to the repository, and operate, close and monitor the repository. The Nuclear Fuel Waste Act<\/em> (NFWA<\/em>) requires that costs after the Licence to Construct is granted must be funded through contributions to the NFWA<\/em> trust funds established by Ontario Power Generation (OPG), Hydro-Qu\u00e9bec (HQ), New Brunswick Power (NBP) and Atomic Energy of Canada Limited (AECL). As of December 2023, the total value of the NFWA<\/em> trust funds was approximately $5.3 billion.<\/p>\n

Waste owners continue to contribute annually as the used fuel inventory increases, to ensure that the full $11 billion funding requirement for existing and future inventory of used fuel bundles is fulfilled. The costs of interim storage at the reactor sites and retrieval of the used fuel from storage are not funded through the NWMO because they are the responsibility of the waste owners.<\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”Financial reporting requirements” module_id=”section-2″ module_class=”toggle-section” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_class=”toggle-btn” _builder_version=”4.24.2″ _module_preset=”default” header_2_font=”|300|||||||” global_colors_info=”{}”]<\/p>\n

Financial reporting requirements<\/h2>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ admin_label=”content Financial reporting requirements” module_class=”section-2 toggle-section toggle-content ” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||||false|false” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.24.2″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n

The NFWA <\/em>specifically addresses the future financial obligations expected for managing used nuclear fuel over the long term, as described in the box below. All the requirements defined in Subsection 16(2) of the NFWA<\/em> are addressed in this section Ensuring funding is in place<\/em>.<\/p>\n

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Requirements of the NFWA<\/em> (2002)<\/strong><\/h3>\n

The NWMO is required to provide a range of financial information in each of our annual reports following the government\u2019s decision, as defined in Subsection 16(2) of the NFWA<\/em>.<\/p>\n

16(2) Each annual report after the date of the decision of the Governor in Council under Section 15 must include:<\/p>\n

(a) the form and amount of any financial guarantees that have been provided during that fiscal year by the nuclear energy corporations and Atomic Energy of Canada Limited under the Nuclear Safety and Control Act<\/em> and relate to implementing the approach that the Governor in Council selects under Section 15 or approves under Subsection 20(5);<\/p>\n

(b) the updated estimated total cost of the management of nuclear fuel waste;<\/p>\n

(c) the budget forecast for the next fiscal year;<\/p>\n

(d) the proposed formula for the next fiscal year to calculate the amount required to finance the management of nuclear fuel waste and an explanation of the assumptions behind each term of the formula; and<\/p>\n

(e) the amount of the deposit required to be paid during the next fiscal year by each of the nuclear energy corporations and Atomic Energy of Canada Limited, and the rationale by which those respective amounts were arrived at<\/p>\n

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Based on the NFWA<\/em>\u2019s requirements, trust funds were established in 2002, and each waste owner has made annual contributions since. The total value of these funds, including investment income, was approximately $5.3 billion as of the end of 2023. Additionally, the companies have set aside other segregated funds and financial guarantees for nuclear waste management and decommissioning. The NFWA<\/em> built in explicit provisions to ensure the trust funds are maintained securely and used only for their intended purpose. The NWMO may have access to these funds only for the purpose of implementing the management approach selected by the government once a construction or operating licence has been issued under the NSCA<\/em>.<\/p>\n

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\n \n\n \n \n \n \n \n \n \n
\n Owner <\/th>\n \n Trust fund balance ($ million) <\/th>\n <\/tr>\n
\n <\/td>\n \n December 2023 <\/td>\n <\/tr>\n
\n OPG <\/td>\n \n 4,867 <\/td>\n <\/tr>\n
\n NBP <\/td>\n \n 207 <\/td>\n <\/tr>\n
\n HQ <\/td>\n \n 183 <\/td>\n <\/tr>\n
\n AECL <\/td>\n \n 76* <\/td>\n <\/tr>\n
\n Total <\/td>\n \n 5,333 <\/td>\n <\/tr>\n <\/table>\n<\/div>