Callan's Annual Nuclear Decommissioning Funding Study Shows $15 Billion Drop in Fund Balances

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Dec 05, 2023, 07:30 ET

The study offers key insights to make peer comparisons more accurate and relevant

SAN FRANCISCO, Dec. 5, 2023 /PRNewswire/ -- Callan, a leading institutional investment consulting firm, announced the results of its 2023 Nuclear Decommissioning Funding Study, outlining insights into the status of nuclear decommissioning funding in the U.S. Callan found that nuclear decommissioning trust (NDT) fund balances totaled $81 billion in 2022, down more than $15 billion (15%) from 2021 largely due to stock and bond market performance.

The study covers 26 investor-owned and 26 public power utilities with an ownership interest in the 92 operating nuclear reactors and 16 of the non-operating nuclear reactors in the U.S. NDTs are created to pay for the costs of decommissioning a closed nuclear power plant.

"In our analysis, we saw a steep decline in assets as the S&P 500 and Bloomberg Aggregate Indices were down 18% and 13%, respectively, in 2022," said Julia Moriarty, study author and co-manager of Callan's Capital Markets Research group. "With costs remaining fairly stable, the result was a 15% point decline in the funded status from 97.4% in 2021 to 82.5% in 2022."

Other Key Findings

In 2022, costs totaled over $98 billion, which is largely unchanged from 2021.
Total contributions from utilities into their NDTs rose to $371 million in 2022, an $82 million (28%) increase from $290 million in 2021.
In 2022, investor-owned contributions were just 29% their 2010 level, while public power contributions were 4.3x their 2010 level (though roughly two-thirds when excluding a significant contribution from one utility).
Investor-owned assets ($71.6 billion) fell back behind costs ($83.5 billion) after a brief reversal in 2021. Public power assets lagged behind costs by $5.3 billion in 2022. The total deficit rose to $17.2 billion in 2022 due largely to poor capital market performance.
The widening of the gap between assets and liabilities in 2022 resulted in a decrease in the funding level from 97% in 2021 to 82% in 2022.
All 21 investor-owned utility NDTs are invested in equity and fixed income securities with a median allocation of 60% equity and 38% fixed income. Four of the utilities reported allocations to real estate, private equity, or hedge funds. Two-thirds of the owners reported a cash equivalent allocation of approximately 1.5%.

Find the summary blog post and full survey here.

About Callan
Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises clients with more than $3 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has six offices throughout the U.S. Learn more at callan.com.

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SOURCE Callan LLC