IRS approved a utility's revised schedule for nuclear decommissioning fund contributions

Plain-English summary

A regulated electric utility asked the IRS to conduct the mandatory review of its revised schedule of annual contributions to a qualified nuclear decommissioning fund. The utility owned a redacted percentage of a nuclear plant, and two public utility commissions had set decommissioning costs for ratemaking purposes using separate independent studies. Under IRC § 468A, deductible contributions cannot exceed the IRS-approved ruling amount for each year. The IRS concluded that the utility was an eligible taxpayer with a qualifying ownership interest and that its proposed schedule used reasonable assumptions consistent with the statute and regulations. It approved the redacted annual ruling amount for the specified range of years. The utility must request another revision if a triggering event occurs and, even without such an event, by the deadline for the tenth taxable year after the year it received this schedule. The IRS did not decide whether the underlying independent cost studies conformed to industry standards.

Ruling snapshot

• Question: Did the utility's proposed revised schedule of annual nuclear decommissioning fund contributions satisfy section 468A?
• Outcome: Approved
• Key authorities: IRC § 468A; Treas. Reg. §§ 1.468A-1, 1.468A-2, 1.468A-3, 1.468A-7

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202550008
Release Date: 12/12/2025
Index Number: 468A.04-02

--------------------- Person To Contact:
------------------------ ------------------ ID No. -----------------
----------------------------------------- Telephone Number:
------------------------------ --------------------
----------------------------- Refer Reply To:
CC:ECE:B02
PLR-108948-23
Date:
September 09, 2025

Re: Revised Schedule of Ruling Amounts
-----------------------------------------------------------------

LEGEND:

Taxpayer = -------------------------------------
-----------------------------------------------------
Parent = -------------------------------------------
-----------------------------------
State 1 = ----------------
State 2 = --------
Plant = ------------------------------------------------------------------------
------------------------------------------------------------------------------------------
--------------------
Location = ----------------------------------
Date 1 = ------------------
Date 2 = ------------------
P = ------
Method = -----------
Independent Study 1 = -----------------------------------------------------------------------

Independent Study 2 = -----------------------------------------------------------------------

Commission 1 = ----------------------------------------------------------
Commission 2 = ----------------------------------------------
Order 1 = -------------------------------------------------------
PLR-108948-23 2

Order 2 = -----------------------------------------------------------------------

Amount = -------------
Year A = -------
Year B = -------
Year C = -------
Year D = -------
Year E = -------
A = -----------------
B = -----------------
C = ------
D = ------
Fund = -------------------------------------------------------

Dear ---------:

    This letter responds to your request, dated April 14, 2023, supplemented on Date

2, for a mandatory review of a revised schedule of ruling amounts under § 468A(d) of
the Internal Revenue Code and § 1.468A-3(f)(1)(i) of the Income Tax Regulations.1 The
Internal Revenue Service (Service) previously granted revised schedules of ruling
amounts, most recently on Date 1. Supplemental information was submitted pursuant
to § 1.468A-3(e)(2).

   Taxpayer represents that, at the time this ruling request was submitted, the facts

and information relating to its request for a review of a revised schedule of ruling
amounts were as follows:

                                                 FACTS

     Taxpayer is a public utility operating company principally engaged in the

generation, transmission, and distribution of electric energy in State 1 and State 2.
Taxpayer is also a subsidiary of Parent and a member of Parent’s consolidated group,
filing its consolidated federal income tax return on a calendar year basis using an
accrual method of accounting.

   Taxpayer owns a joint and undivided interest in Plant of P percent, which is

situated at Location. The proposed method of decommissioning Plant is Method. With
respect to the decommissioning costs related to Plant which are included in Taxpayer’s
cost of service for ratemaking purposes, Taxpayer is subject to regulation by
Commission 1 and Commission 2.

1 Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax

Regulations (26 CFR part 1).
PLR-108948-23 3

    In Order 1, Commission 1 established the amount of decommissioning costs for

Plant to be included in Taxpayer’s cost of service for ratemaking purposes within its
jurisdiction. The amount was determined using assumptions derived from Independent
Study 1.

    In Order 2, Commission 2 established the amount of decommissioning costs for

Plant to be included in Taxpayer’s cost of service for ratemaking purposes within its
jurisdiction. The amount was determined using assumptions derived from Independent
Study 2.

   The estimated cost of $A (Year A dollars) was used as a base cost for

decommissioning P percent of Plant. The estimated cost of decommissioning Plant in
future dollars is $B (Year D dollars). It is estimated that substantial decommissioning
costs will first be incurred in Year D and that decommissioning will be substantially
complete in Year E. The methodology used to convert the Year A dollars to Year D
dollars was to escalate the estimated costs at an inflation rate of C percent to the year
of estimated expenditure. The assumed after-tax rate of return for amounts to be paid
under the proposed revised schedule of ruling amounts was D percent.

                             LAW AND ANALYSIS

   Section 468A(a), as amended by the Energy Tax Incentives Act of 2005 (the

Act), Pub. L. 109-58, 119 Stat. 594, allows an electing taxpayer to deduct payments
made to a nuclear decommissioning reserve fund.

   Section 468A(b) limits the amount that may be paid into the nuclear

decommissioning fund in any year to the ruling amount applicable to that year. Prior to
the changes made by the Act, the deduction was limited to the lesser of the amount
included in the utility’s cost of service for ratemaking purposes or the ruling amount.
Generally, as a result, only regulated utilities could take advantage of § 468A. The Act
amendment of § 468A eliminated the cost-of-service limitation. Accordingly,
decommissioning costs of an unregulated nuclear power plant may now be funded by
deductible contributions to a qualified nuclear decommissioning fund.

   Section 468A(d)(1) provides that no deduction shall be allowed for any payment

to the nuclear decommissioning fund unless the taxpayer requests and receives from
the Secretary a schedule of ruling amounts. The "ruling amount" for any tax year is
defined under § 468A(d)(2) as the amount which the Secretary determines to be
necessary to fund the total nuclear decommissioning cost of that nuclear power plant
over the estimated useful life of the plant. This term is further defined to include the
amount necessary to prevent excessive funding of nuclear decommissioning costs or
funding of these costs at a rate more rapid than level funding, taking into account such
discount rates as the Secretary deems appropriate.

 Section 468A(h) provides that a taxpayer shall be deemed to have made a

payment to the nuclear decommissioning fund on the last day of a taxable year if the
PLR-108948-23 4

payment is made on account of such taxable year and is made within 2½ months after
the close of the tax year. This section applies to payments made pursuant to either a
schedule of ruling amounts or a schedule of deduction amounts.

  Section 1.468A-1(a) provides that an eligible taxpayer may elect to deduct

nuclear decommissioning costs under § 468A. An "eligible taxpayer," as defined under
§ 1.468A-1(b)(1), is a taxpayer that has a "qualifying interest" in any portion of a nuclear
power plant. A qualifying interest is, among other things, a direct ownership interest.

   Section 1.468A-2(b)(1) provides that the maximum amount of cash payments

made (or deemed made) to a nuclear decommissioning fund during any tax year shall
not exceed the ruling amount applicable to the nuclear decommissioning fund for such
taxable year. The limitation on the amount of cash payments for purposes of § 1.468A-
2(b)(1) does not apply to any “special transfer” permitted under § 1.468A-8.

    Section 1.468A-3(a)(1) provides that, in general, a schedule of ruling amounts for

a nuclear decommissioning fund is a ruling specifying annual payments that, over the
tax years remaining in the "funding period" as of the date the schedule first applies, will
result in a projected balance of the nuclear decommissioning fund as of the last day of
the funding period equal to (and in no event more than) the "amount of
decommissioning costs allocable to the fund."

    Section 1.468A-3(a)(2) provides that, to the extent consistent with the principles

and provisions of this section, each schedule of ruling amounts shall be based on
reasonable assumptions concerning the after-tax rate of return to be earned by the
amounts collected for decommissioning, the total estimated cost of decommissioning
the nuclear plant, and the frequency of contributions to a nuclear decommissioning fund
for a taxable year. Under § 1.468A-3(a)(3), the Service shall provide a schedule of
ruling amounts identical to the schedule proposed by the taxpayer, but no such
schedule shall be provided by the Service unless the taxpayer's proposed schedule is
consistent with the principles and provisions of that section.

    Section 1.468A-3(a)(4) provides that the taxpayer bears the burden of

demonstrating that the proposed schedule of ruling amounts is consistent with the
principles of the regulations and that it is based on reasonable assumptions. That
section also provides additional guidance regarding how the Service will determine
whether a proposed schedule of ruling amounts is based on reasonable assumptions.
For example, if a public utility commission established or approved the currently
applicable rates for the furnishing or sale by the taxpayer of electricity from the plant,
the taxpayer can generally satisfy this burden of proof by demonstrating that the
schedule of ruling amounts is calculated using the assumptions used by the public utility
commission in its most recent order. In addition, a taxpayer that owns an interest in a
deregulated nuclear plant may submit assumptions used by a public utility commission
that formerly had regulatory jurisdiction over the plant as support for the assumptions
used in calculating the taxpayer’s proposed schedule of ruling amounts, with the
understanding that the assumptions used by the public utility commission may be given
PLR-108948-23 5

less weight if they are out of date or were developed in a proceeding for a different
taxpayer. The use of other industry standards, such as the assumptions underlying the
taxpayer's most recent financial assurance filing with the Nuclear Regulatory
Commission, are described by the regulations as an alternative means of demonstrating
that the taxpayer has calculated its proposed schedule of ruling amounts on a
reasonable basis. Section 1.468A-3(a)(4) further provides that consistency with
financial accounting statements is not sufficient, in the absence of other supporting
evidence, to meet the taxpayer’s burden of proof.

   Section 1.468A-3(b)(1) provides that, in general, the ruling amount for any tax

year in the funding period shall not be less than the ruling amount for any earlier tax
year. Under § 1.468A-3(c)(1), the funding period begins on the first day of the first tax
year for which a deductible payment is made to the nuclear decommissioning fund and
ends on the last day of the taxable year that includes the last day of the estimated
useful life of the nuclear power plant to which the fund relates.

     Section 1.468A-3(c)(2) provides rules for determining the estimated useful life of

a nuclear plant for purposes of § 468A. In general, under § 1.468A-3(c)(2)(i)(A), if the
plant was included in rate base for ratemaking purposes for a period prior to January 1,
2006, the date used in the first such ratemaking proceeding as the estimated date on
which the nuclear plant will no longer be included in the taxpayer’s rate base is the end
of the estimated useful life of the nuclear plant. Section 1.468A-3(c)(2)(i)(B) provides
that, if the nuclear plant is not described in § 1.468A-3(c)(2)(i)(A), the last day of the
estimated useful life of the nuclear plant is determined as of the date the plant is placed
in service. Under § 1.468A-3(c)(2)(i)(C), any reasonable method may be used in
determining the estimated useful life of a nuclear power plant that is not described in §
1.468A-3(c)(2)(i)(A).

   Section 1.468A-3(d)(1) provides that the amount of decommissioning costs

allocable to a nuclear decommissioning fund is the taxpayer's share of the total
estimated cost of decommissioning the nuclear power plant. Section 1.468A-3(d)(3)
provides that a taxpayer's share of the total estimated cost of decommissioning a
nuclear power plant equals the total estimated cost of decommissioning such plant
multiplied by the taxpayer's qualifying interest in the plant.

   Section 1.468A-3(e) provides the rules regarding the manner of requesting a

schedule of ruling amounts. Section 1.468A-3(e)(1)(v) provides that the Service will not
provide or revise a ruling amount applicable to a taxable year in response to a request
for a schedule of ruling amounts that is filed after the deemed payment date (as defined
in § 1.468A-2(c)(1)) for such taxable year.

   Section 1.468A-3(e)(2) enumerates the information required to be contained in a

request for a schedule of ruling amounts filed by a taxpayer to receive a ruling amount
for any taxable year.
PLR-108948-23 6

   Section 1.468A-3(e)(3) provides that the Service may prescribe administrative

procedures that supplement the provisions of §§ 1.468A-3(e)(1) and (2). In addition,
that section provides that the Service may, in its discretion, waive the requirements of
§§ 1.468A-3(e)(1) and (2) under appropriate circumstances.

   Section 1.468A-3(f)(1) describes the circumstances in which a taxpayer must

request a revised schedule of ruling amounts. Section 1.468A-3(f)(1)(i) requires that a
taxpayer request a revised schedule of ruling amounts for the fund on or before the
deemed payment deadline date for the 10th taxable year that begins after the taxable
year in which the most recent schedule of ruling amounts was received.

   Section 1.468A-3(f)(2) provides that any taxpayer that has previously obtained a

schedule of ruling amounts may request a revised schedule of ruling amounts. Such a
request must be made in accordance with the rules of § 1.468A-3(e). The Service shall
not provide a revised schedule of ruling amounts applicable to a taxable year in
response to a request for a schedule of ruling amounts that is filed after the deemed
payment deadline date for such taxable year.

    We have examined the representations and information submitted by Taxpayer

in relation to the requirements set forth in § 468A and the regulations thereunder.
Based solely upon these representations of the facts, we reach the following
conclusions:

  1. Pursuant to § 1.468A-3(a)(4), Taxpayer has met its burden of demonstrating
     that the proposed schedule of ruling amounts is consistent with the principles
     of the Code and regulations and is based on reasonable assumptions.

  2. Taxpayer has a qualifying ownership interest in Plant and is, therefore, an
     eligible taxpayer under § 1.468A-1(b)(1) of the regulations.

  3. Taxpayer, as an owner of Plant, has calculated the total decommissioning
     costs under § 1.468A-3(d)(3) of the regulations.

  4. The proposed schedule of ruling amounts was derived by following the
     assumptions contained in Independent Study 1 and Independent Study 2,
     which studies Taxpayer has represented are of a standard type used in the
     industry. In addition, both independent studies were used by Commission 1
     and Commission 2, respectively, to calculate the amount of decommissioning
     costs to be included in Taxpayer’s cost of service for ratemaking purposes.
     Thus, Taxpayer has demonstrated, pursuant to § 1.468A-3(a)(4), that the
     proposed schedule of ruling amounts is based on reasonable assumptions
     and is consistent with the principles of § 468A and the regulations thereunder.

  5. The maximum amount of cash payments made (or deemed made) to the
     Fund during any tax year is restricted to the ruling amount applicable to the
     Fund, as set forth under § 1.468A-2(b)(1) of the regulations.

PLR-108948-23 7

  Based solely on the determinations above, we conclude that Taxpayer’s

proposed schedule of ruling amounts satisfies the requirements of § 468A of the Code.
We have approved the following revised schedule of ruling amounts.

               APPROVED SCHEDULE OF RULING AMOUNTS

              Years                                        Ruling Amount
         Year B – Year C                                      $Amount

   If any of the events described in § 1.468A-3(f)(1) occur in future years, Taxpayer

must request a review and revision of the schedule of ruling amounts. Generally, the
taxpayer is required to file such a request on or before the deemed payment deadline
date for the first taxable year in which the rates reflecting such action became effective.
When no such event occurs, the taxpayer must file a request for a revised schedule of
ruling amounts on or before the deemed payment deadline of the tenth taxable year
following the close of the tax year in which this schedule of ruling amounts is received.

   Except as specifically determined above, no opinion is expressed or implied

concerning the Federal income tax consequences of the transaction described above.
Specifically, no determination is made whether the independent decommissioning cost
studies conform to industry standards and practices.

   This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3)

of the Code provides it may not be used or cited as precedent. In accordance with the
power of attorney on file with this office, a copy of this letter is being sent to your
authorized representatives. Pursuant to § 1.468A-7(a), a copy of this letter must be
attached (with the required Election Statement) to Taxpayer's federal income tax return
for each tax year in which Taxpayer claims a deduction for payments made to the Fund.

                                              Sincerely,


                                              ________________________________
                                              MAGGIE M. STEHN
                                              Senior Counsel, Branch 2
                                              Office of the Associate Chief Counsel
                                              (Energy, Credits, and Excise Tax)

Enclosure
Copy for § 6110 purposes
PLR-108948-23 8

cc: --------------------------

     --------------------------
     -------------------------

     -----------------------
     ----------------------------------------
     -----------------------
     --------------------------------
     -------------------------

cc: -------------------------------------------------