Appendix A
Financial Statements
OCRWM Annual Report to Congress, FY 1996

UNITED STATES DEPARTMENT OF ENERGY
OFFICE OF CIVILIAN RADIOACTIVE
WASTE MANAGEMENT
NUCLEAR WASTE FUND

Financial Statements

September 30, 1996 and 1995

Overview

Reporting Entity

The Nuclear Waste Policy Act of 1982 (Public Law 97-425) established the Office of Civilian Radioactive Waste Management (OCRWM) within the U.S. Department of Energy. OCRWM's mission is to develop and manage a federal system for the permanent disposal of spent nuclear fuel from civilian reactors and high-level radioactive waste resulting from atomic energy defense activities in a manner that assures public and worker safety, protects the environment, merits public confidence and is economically viable.

The Nuclear Waste Policy Amendments Act of 1987 (Title V, Public Law 100-203) directed the Secretary of Energy to characterize only the Yucca Mountain site in Nevada to determine if it is suitable for a repository for spent nuclear fuel and high-level radioactive waste.

As of September 30, 1996, the Office of Civilian Radioactive Waste Management employed 2,130 people. This included approximately 210 OCRWM federal staff, 20 federal full-time equivalents (FTEs) at other DOE Headquarters offices, 10 federal FTEs at DOE operations offices, 140 U.S. Geological Survey employees, and 1,754 contractor employees, including employees of national laboratories.

The Office of Civilian Radioactive Waste Management is composed of one management center and two business centers organized to carry out two major projects.

The Yucca Mountain Site Characterization Project, located in Las Vegas, Nevada, oversees the scientific and technical investigation of Yucca Mountain, including:

• Addressing, by 1998, the major unresolved technical questions regarding the site so that an informed assessment can be made of the viability of licensing and constructing a geologic repository at Yucca Mountain;
• Constructing and operating the exploratory studies facility;
• Addressing those repository and waste package design elements that are critical to determining the feasibility and performance of the repository and the engineered barrier system;
• Preparing a Final Environmental Impact Statement to accompany the Secretarial site recommendation, should the site be found suitable, and license application; and
• Submitting a license application for repository construction to the Nuclear Regulatory Commission, should the President recommend and the Congress approve the Yucca Mountain site.
   

 Waste Acceptance, Storage and Transportation Project, located in Washington, D.C., is primarily responsible for:

• Conducting activities necessary for the Department to take title to and physical possession of spent nuclear fuel and high-level radioactive waste from the owners and generators of these wastes;
• Developing a market-driven waste acceptance and transportation approach that relies on the private sector for implementation; and
• Performing non-site specific design and engineering safety analyses for an interim storage facility.
   

 The Program's management center, located in Washington, D.C., provides program integration and management support to the Director, OCRWM, and to the two business centers. The management center, comprised of the Office of Program Management and Administration and the Office of Quality Assurance, is responsible for program planning and management, technical and regulatory integration, quality assurance, institutional activities, resources and information management, and international waste management activities.

Fiscal Year 1996 Technical Performance

During Fiscal Year 1996, despite a significantly reduced appropriation, OCRWM continued to make notable progress by building on the momentum generated in Fiscal Year 1995 and implementing the management efficiencies described in the Civilian Radioactive Waste Management Program Plan. OCRWM achieved the following five performance measures established for Fiscal Year 1996: issue revised Program Plan, excavate Yucca Mountain to the first Ghost Dance Fault alcove, complete Phase I (design) of the multipurpose canister system, submit to NRC a Topical Safety Analysis Report on the design of a spent nuclear fuel dry transfer system, and develop and issue a Proposed Notice of Policy and Procedures pursuant to Section 180 (c) of the NWPA. With regard to the final performance measure--complete excavation of the tunnel's thermal testing alcove--excavation of the tunnel's thermal test alcove for heater test number one was completed and the test was initiated.

Fiscal Year 1997 Technical Performance Measures

• Complete excavation of Exploratory Studies Facility main five-mile loop and scientific instrumentation alcoves to support studies for a viability assessment of the Yucca Mountain site in September 1998 and subsequent site suitability determination and licensing.
• Submit Topical Safety Analysis Report to the Nuclear Regulatory Commission for a non- site specific Phase I (containerized spent fuel) interim storage facility to maintain a readiness capability should an interim storage site be designated.
   
•  Issue final rule to amend the Department's siting guidelines (10 CFR Part 960) to support a more efficient process for evaluating the suitability of the Yucca Mountain site, as outlined in the revised draft Program Plan.
• Issue Notice of Final Policy and Procedures pursuant to Section 180 (c) of the NWPA, which provides for technical and financial assistance to States and Indian Tribes for training public safety officials through whose jurisdictions spent nuclear fuel and high-level waste would be transported, in preparation for an orderly transportation activity.
• Carry on collaboration with the nuclear utilities and other stakeholders to resolve issues and to develop the management and logistical capability in the private sector to aliress the Department's 1998 waste acceptance obligation.

Financial Performance Measures

OCRWM's primary financial goal is to ensure full cost recovery, as required by the NWPA. The critical financial performance measure is whether appropriate actions are taken to support this goal.

Full cost recovery is based on the balance between program cost and income. The Program's cost was estimated in the "Analysis of the Total System Life-Cycle Cost of the Civilian Radioactive Waste Management Program" report, dated September 1995. A Nuclear Waste Fund Fee Adequacy Report was completed in October 1996, which indicated that projected fee income will be sufficient, but not excessive, to cover the Program's costs over the life of the Program.

Program funding comes from the Nuclear Waste Fund (NWF) and the Defense Nuclear Waste Disposal appropriation. The NWF consists of fees paid by the owners and generators of spent nuclear fuel, in accordance with provisions of their contracts with the Department of Energy (DOE) for disposal services. Nuclear Waste Fund assets in excess of those appropriated to pay program costs are invested in U.S. Treasury securities. The Defense Nuclear Waste Disposal appropriation was established by the Congress to fund the cost of disposal of high-level radioactive waste resulting from atomic energy defense activities. As of September 30, 1996, cumulative accrued revenue from fees included the Defense Nuclear Waste Disposal appropriation and totaled approximately $10.1 billion, and cumulative interest earnings and other accrued revenue totaled approximately $4.515 billion. Cumulative expenses from appropriations for the Program, the Nuclear Regulatory Commission, the Office of the Nuclear Waste Negotiator and the Nuclear Waste Technical Review Board, totaled approximately $5.096 billion.

Other measures of OCRWM's financial performance include whether late payments by contract holders result in lost interest and whether excess funds are invested promptly and prudently. One late payment of $2,387,777 resulted in no lost interest. Three underpayments totaling $74,482 resulted in lost interest to the Fund amounting to $3,407. Action by the Contracting Officer on the one late payment and three underpayments is in process. A review of daily investment activities indicated a single occurrence of failure to invest $223,000 in a timely manner, which resulted in lost interest in the amount of $403.
As of September 30, 1996, the U.S. Treasury securities held by the Nuclear Waste Fund had a market value of $5.9 billion. The net income from investments for fiscal year 1996 was $409 million, including $376 million in interest earnings and $33 million in net gains on sale of securities. Over the last year, based on market value, OCRWM's Nuclear Waste Fund investments returned 5.15 percent compared to 3.97 percent for the average intermediate-term Treasury mutual fund.

Summary Findings

Despite the unanticipated 43 percent reduction in the Program's Fiscal Year 1996 appropriation, compared to the Fiscal Year 1995funding level, OCRWM maintained significant progress during Fiscal Year 1996toward key long-term goals. A draft revision of the 1994 Program Plan was issued in May 1996, to allow OCRWM to manage the reduced funding and to regain a strategy that is consistent with the intent of the Program's enabling legislation, the Administration's policy for the Program, and the realities of the budget. The draft revised plan draws upon the knowledge gained through scientific investigations and engineering design activities to update the technical and regulatory elements of OCRWM's site characterization program at Yucca Mountain, NV. It defines three near-term objectives designed to maintain momentum toward a national decision on the geologic disposal option:

• Update the regulatory framework in Fiscal Year 1997 for evaluating the suitability of Yucca Mountain;
• Complete a viability assessment of the Yucca Mountain site in Fiscal Year 1998; and
• If the site is subsequently determined to be suitable, recommend it to the President as the repository site in 2001, and submit a license application to the Nuclear Regulatory Commission (NRC) in 2002.

All major milestones for 1996which were identified in the draft revised Program Plan have been completed. With adequate funding and an updated regulatory process for the evaluation of site suitability and repository licensing, OCRWM is confident that, if the site is suitable, the target for submittal of a license application to the Nuclear Regulatory Commission can be achieved.

Limitations of the Financial Statements

The accompanying financial statements were prepared to report the financial position, results of operations and cash flows of the Nuclear Waste Fund and the Defense Nuclear Waste Disposal appropriation, pursuant to requirements of the NWPA, as amended. While the statements have been prepared from the books and records of the NWF and the Defense Nuclear Waste Disposal appropriation, in accordance with the formats prescribed by the Office of Management and Budget, the statements are different from the financial reports used to monitor and control budgetary resources, which are prepared from the same books and records.

The statements should be read with the realization that they relate to the Nuclear Waste Fund and the Defense Nuclear Waste Disposal appropriation; that unfunded liabilities reported in the financial statements cannot be liquidated without the enactment of an appropriation; and that the payment of all liabilities, other than those resulting from contractual obligations, can be abrogated by the U.S. Department of Energy.