Tank waste vitrification project

Waste tanks
About 54 million gallons of high-level radioactive and chemical waste are stored in 177 underground tanks the size of buildings, buried in Hanford’s central area, about 12 miles from the river. Over the years 70 of the tanks have leaked about one million gallons of waste into the soil. Eventually, all of the tanks will leak. The leaked tank waste has reached the groundwater, which eventually flows into the Columbia River. Estimated time for the tank waste to reach the river is anywhere from 7 to 20 years to a couple generations. How badly it damages the river depends on how much gets there and when.

Presently the U.S. Department of Energy does not have a plan for intercepting the waste before the waste reaches the river. DOE has been pumping liquid waste out of the leaking single shell tanks into the newer, not yet leaking, double shell tanks.

The long-term plan is to "vitrify" the waste by combining it with molten glass to produce glass logs which will be stored in a dry underground vault in Hanford’s central area. The contract to design the first vitrification plant was signed with British Nuclear Fuels Ltd. (BNFL) in July, 1998. A vitrification plant is supposed to be designed within two years.

Tank waste milestones coming
Lynn Porter – June 20, 1999
The Dept. of Energy has reached an "agreement in principle" with Washington state on new tank waste project milestones (cleanup deadlines) for the Tri-Party Agreement. The TPA is a legal contract between DOE, EPA and Washington on cleaning up Hanford. Public hearings on the new milestones will be held in Oregon and Washington.

The milestones should be finalized by July 31, Office of River Protection manager Dick French told a group of Oregon activists recently. Taken directly from DOE’s contract with BNFL (British Nuclear Fuels Ltd.), there will be three milestones for the next seven years – during which BNFL will design and build a tank waste vitrification plant. Tank waste will be mixed into glass logs to immobilize it and keep it out of the environment. Construction on the plant begins in 2002, with vitrification starting in 2007.

Tank waste vitrification contract
Lynn Porter – June 27, 1999
DOE will eventually sign a contract with British Nuclear Fuels Ltd. to vitrify (turn into glass logs) Hanford’s radioactive tank wastes. The proposed contract is somewhat controversial. Old Hanford contracts were "cost-plus" – the contractor got paid whether they got anything done or not. Under the currently proposed "privatization" contract, BNFL would only get paid when it actually starts producing glass logs in 2008.

Between now and then the government has to set aside enough money to pay for the logs, or to repay investors in the vitrification plant if the government should default on the project. With BNFL borrowing billions of dollars from investors for several years, substantial amounts of interest are involved, increasing the total cost. There are doubts as to whether Congress will appropriate enough money for the set aside fund.

We asked Todd Martin, a consultant and expert on Hanford’s tanks, to tell us how the contract could be made more workable. His response is below.

Changing the vitrification contract
Todd Martin – June 21, 1999
The problem that Gerry Pollet has pointed out time and again is that the rates of borrowing private money are much greater than the rate at which the government can borrow money. Also, the way the contract is set up, it requires BNFL to carry huge amounts of capital at that higher rate for a very long time since BNFL doesn't get paid until they produce glass. So, the example here is that BNFL is currently doing a $300+ million design that they won't get paid for until at least 2008 -- that adds up to a lot of interest over the years.

So what DOE should do is, (1) reduce the interest rate being paid; (2) reduce the time that the government has to pay interest on the contractor's money; and (3) still maintain incentive for the contractor to complete the job.

The way to do this would be a mix of public and private financing somewhere between what DOE wants to do and what Gerry advocates. I'm not sure where the right line is. I'll leave that to the experts.

Second, DOE should make progress payments while still requiring a certain amount of contractor equity to ensure performance. In other words, when design is done, BNFL should be paid the agreed upon fixed price for design. Minus maybe 20% that would be held until glass was produced to maintain incentive. Then, when construction was satisfactorily completed, BNFL would be paid, again minus the 20%. And so on. In this way, the government isn't paying 10-15 year's worth of privately financed interest on several billion dollars. This would dramatically reduce costs without losing the important incentives.

The bottom line on the tank waste contract
Gerald Pollet, Heart of America NW -- October 8, 1998
Testimony before the U.S. House of Representatives Committe on Commerce subcommittee on Oversight and Investigations
The issue is whether USDOE should proceed with a contract using "private" financing, costing an additional estimated $3.27 billion in financing, interest and profit related to the mode of financing. Or, should USDOE replace the contract’s financing method with a "pay as you go" fixed price, incentivized contract. Use of the latter mode of financing would provide for construction and operation of the same facilities for $3 billion less, probably on a schedule two years faster, with significantly less financial risk for the U.S. taxpayer (as well as greatly reduced safety and environmental risk).

For several years, Members of this and other committees have expressed great doubt about USDOE’s claims that "privatization" of the construction and operation of Hanford’s High-Level Nuclear Waste vitrification plants could be done at lower cost to the taxpayer and the USDOE Clean-Up budget. Section 3132 of the Defense Authorization Act for 1998 required submission to Congress of a detailed comparison of the costs of privatization funding versus government financing. USDOE has directly refused to produce such a comparison.
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Statement on why DOE believes that the proposed vitrification contract with BNFL Inc. should be kept as is
DOE Office of River Protection -- July 8, 1999
DOE believes that the contract with BNFL Inc. represents the best available value for the taxpayer and offers the best chance for success. The contract builds on BNFL’s Inc.’s robust technical approach and includes future options for expanding facility capacity to complete most of the tank waste cleanup.

DOE also believes that this contract will result in the most cost-effective waste treatment. DOE has always acknowledged that there will be a substantial cost associated with private financing of the BNFL facilities. However, the contract includes features that drive BNFL Inc. to perform in an efficient and cost-effective manner. It provides strong incentives to control and reduce cost and schedule. These incentives, which would not be present in a government-financed contract, are expected to result in a lower cost for waste treatment than would be the case under government financing.

Finally, DOE will continue to work with BNFL to optimize the technical and financing approach and will also maintain a level of competitive pressure on BNFL Inc. as DOE continues to explore alternative approaches.