IRS approves another revised nuclear decommissioning fund schedule

Plain-English summary

A utility group requested a revised schedule of deductible contributions to a qualified nuclear decommissioning reserve fund after the operating license for a generating unit was extended. An updated decommissioning study and funding analysis were completed after the normal request deadline, and the taxpayer separately received an extension to submit the revised schedule. A public utility commission reduced the decommissioning costs included in rates and approved the assumptions used in the proposed funding formula. The IRS found that the taxpayer had a qualifying interest in the unit and that its proposed schedule used reasonable assumptions consistent with the commission's rate order. It approved the formula for specified years and a fixed redacted amount for later years. The taxpayer must seek another revision after specified regulatory events or at the next mandatory review date.

Ruling snapshot

• Question: Does the proposed revised schedule of ruling amounts for this nuclear decommissioning fund satisfy IRC § 468A and its regulations?
• Outcome: Approved
• Key authorities: IRC § 468A; Treas. Reg. §§ 1.468A-1 through 1.468A-3 and 1.468A-7

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202632002 Third Party Communication: None
Release Date: 8/7/2026 Date of Communication: Not Applicable
Person To Contact:
Index Number: 468A.04-02 ------------------------, ID No. -----------------
Telephone Number:
------------------ --------------------
------------------------------------------------- Refer Reply To:
------------------------ CC:ECE:B2
----------------------- PLR-102551-26

                                                               Date:
                                                               May 13, 2026

In Re: Revised Schedule of Ruling Amounts

Legend:

Taxpayer = --------------------------------------------------
Subsidiary = ------------------------------------------------
Company A = ---------------------------------------------------------------------------------

Company B = ------------------------------
Company C = --------------------------------------------------
Company D = ------------------------------------------------
Company E = -------------------------
Company F = ------------
Commission = ----------------------------------------------
Method = -------------------------------------------------
Order A = ---------------------------------------------------------------------------------

Order B = ---------------------------------------------------------------------------------

Docket A = ------------------------
Docket B = ------------------------
Fund = ---------------------------------------------------------------------------------

State A = -------------
State B = --------
Unit = -----------------------------------------------------------
Date 1 = ----------------------

                                                  2

PLR-102551-26
Date 2 = -------------------
Date 3 = ------------------
Date 4 = -----------------------
Date 5 = ---------------------------
Date 6 = ---------------------
Date 7 = --------------------
Date 8 = --------------
Date 9 = ----------------------
Date 10 = ------------------
Submission Date = --------------------------
Supplement Date = ----------------
a = --------------
b = ---
c = --------------
d = --------------
e = ---------
f = ---------
g = ---------
h = ------
i = --
j = -----------------
k = -------------------
l = ---
m = ---------------------
n = -------------------
Year 1 = -------
Year 2 = -------
Year 3 = -------
Year 4 = -------
Year 5 = -------
Year 6 = -------
Year 7 = -------
Year 8 = -------

Dear ------------:

  This letter responds to your request dated Submission Date, as supplemented by

an additional submission on Supplement Date, for a revised schedule of ruling amounts
under § 468A(d)(1) of the Internal Revenue Code and § 1.468A-3(f)(1) of the Income
Tax Regulations1 with respect to a nuclear decommissioning reserve fund that Taxpayer
has established for Unit. The Internal Revenue Service (Service) has previously
approved a request for a schedule of ruling amounts for Unit on Date 1.

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

or to the Procedure and Administration Regulations.

                                         3

PLR-102551-26
FACTUAL BACKGROUND

   Taxpayer represents the following facts:

    Taxpayer, a State A corporation, is the common parent of an affiliated group of

entities that files a consolidated federal income tax return. Taxpayer is the parent of
Subsidiary, a limited liability company organized under the laws of State A and
classified as a corporation for federal income tax purposes. Pursuant to an internal
reorganization to facilitate an acquisition transaction effective as of Date 2, Subsidiary
owns all of the interests in Company A, a limited liability company organized under the
laws of State A and engaged in the generation and sale of electric energy in State B.
Company A is disregarded entity for federal income tax purposes, employs the accrual
method of accounting and is included on the tax return of Taxpayer that is filed on a
calendar year basis.

    Company A is the successor to a structurally-separated and unregulated

generation business formerly conducted by Company B. The transmission and
distribution businesses formerly conducted by Company B is currently conducted by an
entity unrelated to Taxpayer, Company C, and is regulated as to rates and conditions of
service by Commission.

     In Year 1, Company D, a limited liability company and a disregarded entity for

federal income tax purposes, transferred ownership of Unit and its decommissioning
liability to Company A. Consequently, Company A owns Fund subject to the
requirements of Section 468A to fund the decommissioning of Unit.

    Company C includes the costs to decommission Company A’s nuclear

generating units, including Unit, in its Commission rate proceedings. Company A and
Company C are parties to a decommissioning funds collection agent agreement
whereby Company C collects an amount intended to fund the cost of decommissioning
Unit that Company C must immediately remit to Company A upon receipt. Company A
then deposits the amounts received into Fund. The annual amount collected by
Company C to cover the cost of nuclear decommissioning is allocated between two
units, as approved by Commission.

   Taxpayer, as the parent of Company A, sought a revised schedule of ruling

amounts following the transfer of ownership of Unit. The Service issued a private letter
ruling approving the revised schedule of rulings amounts on Date 1.

    On Date 3, the Nuclear Regulatory Commission renewed and extended the

Facility Operating License for Unit to Date 4. Following the renewal, Company A
undertook a Year 2 decommissioning study. Company A also undertook a Year 2
funding analysis for Fund, which assumed that the decommissioning costs to be
included in the cost of service for ratemaking purposes for Unit as required by Order A
under Docket A dated Date 5 were collected and contributed to Fund for Unit through

                                        4

PLR-102551-26
Year 2. Order A also adjusted the allocation within Fund with Unit allocated h percent of
the Fund.

    Under Treas. Reg. Section 1.468A-3(f)(1)(iv), the renewal of the operating

license for Unit required Taxpayer to request a revised schedule of ruling amounts no
later than Date 6. On Date 7, Taxpayer contracted with Company E to produce a new
decommissioning study for Unit. By early Year 2, Taxpayer had not yet received the
updated decommissioning study for Unit. The completion of the updated
decommissioning study was critical to informing the completion of the updated funding
analysis, which used contributions determined in a prior schedule of rulings amounts for
taxable year through Year 2. Without completion of the updated decommissioning
study and updated funding analysis, taxpayer was unable to present the Commission
with updated decommissioning costs for Unit and Commission is not able to approve
the updated decommissioning cost for Unit based on Unit’s updated license to Date 4.
Taxpayer represents that these are intervening events beyond Taxpayer’s control that
prevent them from filing a timely revised schedule of rulings amount by Date 6 pursuant
to Treas. Reg. Section 1.468A-3(f)(1)(iv).

   Taxpayer received the completed Year 2 Decommissioning Study from Company

E on Date 8, after the Date 6 deadline. Based on Year 2 Decommissioning Study and
Year 2 Funding Analysis Company A requested and was granted by Commission in
Docket B a reduction to the amount of decommissioning costs includable in the cost of
service for ratemaking purposes for Unit under Order B dated Date 9.

  Consistent with Order B, Taxpayer, on behalf of Company, seeks a revised

schedule of rulings from Year 3 through Year 2 that will permit the contribution of the
same amounts to Fund as previously approved in Order A. Taxpayer proposes the
formula for the revised schedule of rulings amount (hereafter referred to as Formula) be:

   [(A x A1) + (B x B1) + (C x C1) + (D x D1) + (E x E1) + (F x F1) + (G x G1) + (H x

H1)] x J = RA

  Where:

    A = kWh for Residential Service
    A1 = a per kWh rate
    B = kWh for Secondary Service Less than or Equal to b kW
    B1 = c per kWh rate
    C = kWh for Primary Service less than or Equal to b kW
    C1 = c per kWh rate
    D = kWh for Lighting Service
    D1 =d per kWh rate
    E = Distribution System billing kW for Secondary Service Greater than b kW
    E1 = e per kW rate
    F = Distribution System billing kW for Primary Service Greater than b kW

(Distribution Line)

                                       5

PLR-102551-26
F1 = f per kW rate
G = Distribution System billing kW for Primary Service greater than b kW
(Substation)
G1 = g per kW rate
H = Distribution System billing kW for Transmission Service
H1 = f per kW rate
J = Allocation percentage to Unit (h%)

 Pursuant to Order B, Taxpayer requests to reduce the annual funding level of

decommissioning expense for years Year 4 through Year 5 to $i.

   The estimated year in which substantial decommissioning costs first will be

incurred is Year 5. The estimated year in which decommissioning of Unit is expected to
be substantially complete is Year 6. The total estimated cost of decommissioning the
Taxpayer's share of Unit in current dollars is $j (Year 7 dollars). The total estimated
cost of decommissioning Taxpayer’s costs of Unit in in future dollars is $k. The
estimated cost of decommissioning Unit expressed in future dollars for each taxable
year is found in Funding Analysis and is determined by adjusted baseline estimates in
Year 6 dollars adjusted for the required contingency ceiling and escalated using
Company F forecast information. A l year moving average was used for future years
beyond the current forecast horizon of Company F’s database.

  Taxpayer represents that the assumptions, estimates and other factors used in

determining the proposed revised schedule of ruling amounts are as follows:

   The funding period is from Year 8 to Year 4. The assumed after-tax return to be

earned by the assets was included in Taxpayer’s Year 2 Funding Analysis. The fair
market value of the assets in the Fund as of the first day of the first taxable year to
which the schedule of ruling amounts will apply is estimated at $m. The expected
earnings of the assets of Fund over the beginning on the first day of Year 2 to which the
revised schedule of ruling amounts would apply, through the last day of Year 5, the
funding period, is $n. The amount of decommissioning costs allocable to Fund pursuant
to § 1.468A-3(d) is $i (Year 7 dollars). The total estimated future cost of
decommissioning Unit is $k (Year 5 dollars). Taxpayer's share of the total estimated
future decommissioning costs pursuant to § 1.468A-3(d)(3) is $k (Year 7 dollars)
determined by Taxpayer’s Year 2 Funding Analysis.

  Taxpayer requested and received an extension of time under §§ 301.9100-1 and

301.9100-3 to allow Taxpayer to file a revised schedule of ruling amounts for Unit’s
nuclear decommissioning trust qualified fund on Date 10.

                            RULING REQUESTED

  Pursuant to § 468A(d)(1), Taxpayer requests the Service to issue a revised

schedule of ruling amounts for decommissioning costs for Unit conforming to the
proposed revised schedule of ruling amounts submitted by Taxpayer.

                                          6

PLR-102551-26
LAW AND ANALYSIS

   Sections 468A(a) and 1.468A-1(a) provide that a taxpayer that elects the

application of § 468A shall be allowed as a deduction for any taxable year the amount of
any payments made by the taxpayer to a nuclear decommissioning fund during such
taxable year. Section 1.468A-1(b)(1) provides that an eligible taxpayer is a taxpayer
that possesses a qualifying interest in a nuclear power plant. Under § 1.468A-1(b)(2),
the definition of the term “qualifying interest” includes a direct ownership interest.

   Sections 468A(b) and 1.468A-2(b)(1) provide that the amount of payments made

(or deemed made) by a taxpayer to a nuclear decommissioning fund during any taxable
year shall not exceed the ruling amount applicable to such fund for such taxable year.

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

payment to a nuclear decommissioning fund on the last day of a taxable year if such
payment is made on account of such taxable year and is made within 2 ½ months after
the close of such taxable year. This section applies to payments made pursuant to
either a schedule or ruling amounts or a schedule of deduction amounts.

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

to a nuclear decommissioning fund unless the taxpayer requests and receives from the
Secretary a schedule of ruling amounts. Section 468A(d)(2) provides that the term
“ruling amount” means, with respect to any taxable year, the amount which the
Secretary determines to be necessary to — (A) fund the total nuclear decommissioning
cost of a nuclear power plant over the estimated useful life of such plant, and (B)
prevent any excessive funding of such costs, or the funding of such costs at a rate more
rapid than level funding, taking into account such discount rates as the Secretary deems
appropriate. Section 468A(d)(3) provides that the Secretary shall at least once during
the useful life of the nuclear power plant (or more frequently, upon the request of the
taxpayer), review, and revise, if necessary, the schedule of ruling amounts determined
under § 468A(d)(1).

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

a nuclear decommissioning fund is a ruling specifying the annual payments (ruling
amounts) that, over the taxable years remaining in the funding period as of the date the
schedule first applies, will result in a projected balance of such 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 such fund.

   Section 1.468A-3(a)(2) provides that each schedule of ruling amounts must be

consistent with the principles and provisions of § 1.468A-3 and must be based on
reasonable assumptions concerning — (i) The after-tax rate of return to be earned by
the assets of the nuclear decommissioning fund; (ii) The total estimated cost of
decommissioning the nuclear power plant; and (iii) The frequency of contributions to
such 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

                                         7

PLR-102551-26
schedule of ruling amounts shall be provided by the Service unless the taxpayer's
proposed schedule is consistent with the principles and provisions of § 1.468A-3 and is
based on reasonable assumptions.

    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 and provisions of § 1.468A-3 and is based on reasonable assumptions. If a
public utility commission established or approved the currently applicable rates for the
furnishing or sale by the taxpayer of electricity from the nuclear power 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.

   Section 1.468A-3(a)(5) provides that the Service will approve, at the request of

the taxpayer, a formula or method for determining a schedule of ruling amounts (rather
than providing a schedule specifying a dollar amount for each taxable year) if the
formula or method is consistence with the principles and provision s of this section and
is based on reasonable assumptions. Section 1.468A-3(f)(1)(ii) further provides a
special rule relating to the mandatory review of ruling amounts that are determined
pursuant to a formula or method.

   Section 1.468A-3(b)(1) provides that, in general, the ruling amount specified in a

schedule of ruling amounts for any taxable year in the funding period shall not be less
than the ruling amount specified in such schedule for any earlier taxable year.

   Section § 1.468A-3(c)(1) provides that the funding period for a nuclear

decommissioning fund is the period that — (i) begins on the first day of the first taxable
year for which a deductible payment is made (or deemed made) to such fund; and (ii)
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 such fund relates.

   Under § 1.468A-3(c)(2)(i)(A), except as provided in § 1.468A-3(c)(2)(ii), the last

day of the estimated useful life of a nuclear power plant that has been included in the
rate base for ratemaking purposes in any ratemaking proceeding that established rates
for a period before January 1, 2006, is the date used in the first such ratemaking
proceeding as the estimated date on which such plant will no longer be included in the
taxpayer's rate base for ratemaking purposes.

   Under § 1.468A-3(c)(2)(i)(B), except as provided in § 1.468A-3(c)(2)(ii), the last

day of the estimated useful life of a nuclear power plant that is not described in
§ 1.468A-3(c)(2)(i)(A) is the last day of the estimated useful life of such plant
determined as of the date it is placed in service. Under § 1.468A-3(c)(2)(i)(C), except
as provided in § 1.468A-3(c)(2)(ii), a taxpayer with an interest in a plant that is not
described in § 1.468A-3(c)(2)(i)(A) may use any reasonable method for determining the
last day of such estimated useful life.

                                          8

PLR-102551-26
Under § 1.468A-3(c)(2)(ii), if it can be established that the estimated useful life of
a nuclear power plant will end on a date other than the date determined under
§ 1.468A-3(c)(2)(i), the taxpayer may use such other date as the last day of the
estimated useful life but is not required to do so. If the last day of the estimated useful
life was determined under § 1.468A-3(c)(2)(i)(A) and the most recent ratemaking
proceeding used an alternative date as the estimated date on which a nuclear power
plant will no longer be included in the rate base, the most recent ratemaking proceeding
will generally be treated as establishing such alternative date as the last day of the
estimated useful life.

   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 to which the fund relates.

  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 filed after the deemed payment deadline date (as defined in
§ 1.468A- 2(c)(1)) for such taxable year. Under § 1.468A-2(c)(1), the deemed payment
deadline date is the fifteenth day of the third calendar month after the close of any
taxable year.

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

request for a schedule of ruling amounts.

   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), and may, in its
discretion, waive the requirements of §§ 1.468A-3(e)(1) and (2) under appropriate
circumstances.

    Section 1.468A-3(f)(1)(i) provides that any taxpayer that has obtained a schedule

of ruling amounts pursuant to § 1.468A-3(e) must file a request for a revised schedule of
ruling amounts on or before the deemed payment deadline date for the tenth taxable
year that begins after the taxable year in which the most recent schedule of ruling
amounts was received. If the taxpayer calculated its most recent schedule of ruling
amounts on any basis other than an order issued by a public utility commission, the
taxpayer must file a request for a revised schedule of ruling amounts on or before the
deemed payment deadline date for the fifth taxable year that begins after the taxable
year in which the most recent schedule of ruling amounts was received.

   Section 1.468A-3(f)(1)(ii)(B) provides that any taxpayer that has determined its

ruling amount for any taxable year under a formula prescribed by § 1.468A-6 must file a
request for a revised schedule of ruling amounts on or before the deemed payment
deadline for its first taxable year that begins after the disposition.

                                         9

PLR-102551-26

    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 on the facts represented by Taxpayer, we reach the following conclusions:

   1. Taxpayer has a qualifying interest in Unit and is, therefore, an eligible
      taxpayer under § 1.468A-1(b)(1).

   2. Taxpayer, as an eligible taxpayer under § 1.468A-1(b)(1), has calculated its
      decommissioning costs under § 1.468A-3(d)(1).

   3. Commission B’s Rate Order determines the amount of decommissioning
      costs to be included in Taxpayer’s cost of service for ratemaking purposes.
      The proposed schedule of ruling amounts is consistent with Commission B’s
      Rate Order. 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.

   4. Pursuant to § 1.468A-3(a)(5), we approve the Formula for determining the
      schedule of ruling amounts (rather than a schedule specifying a dollar amount
      for each taxable year) that is consistent with the principles and provisions of
      § 468A and the regulations thereunder that is based on reasonable
      assumptions.

   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).

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

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

                   APPROVED SCHEDULE OF RULING AMOUNTS

                Year                                    Ruling Amount
       Year 3 through Year 2                    To be determined from Formula
       Year 4 through Year 5                                  $i


   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,
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, pursuant to § 1468A-3(f)(1)(ii), Taxpayer must file a
request for a revised schedule of ruling amounts on or before the deemed payment

                                         10

PLR-102551-26
deadline of the fifth taxable year following the close of the tax year in which this
schedule of ruling amounts is received.

    If an event described in § 1.468A-6(a) occurs during a taxable year to which this

schedule of ruling amounts relates, Taxpayer is limited to making payments to the Fund
prior to the date of such event, regardless of the amount approved in this schedule of
ruling amounts.

   Except as specifically set forth above, we neither express nor imply any opinion

concerning the Federal income tax consequences of any aspect of any transaction or
item discussed or referenced in this letter. Specifically, no determination is made
whether the Year 2 decommissioning study conforms to industry standards and
practices.

  The rulings contained in this letter are based upon information and

representations submitted by Taxpayer and accompanied by a penalties of perjury
statement executed by an appropriate party. While this office has not verified any of the
material submitted in support of the request for rulings, it is subject to verification on
examination.

   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 the Taxpayer's federal income tax return for each tax
year in which the Taxpayer claims a deduction for payments made to the Fund.

                                   Sincerely,



                                   Maggie Stehn
                                   Senior Counsel, Branch 2
                                   Office of Associate Chief Counsel
                                   (Energy, Credits, & Excise Tax)

                                                   11

PLR-102551-26
cc: --------------------
----------------------------
-------------------------------------
--------------------------------
-------------------------

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

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