CNRO-2009-00010, Transmittal of Decommissioning Funding Assurance Plans

Transmittal of Decommissioning Funding Assurance Plans

ML092260590
Person / Time
Site:	River Bend, Waterford
Issue date:	08/13/2009
From:	Mccann J Entergy Nuclear Operations, Entergy Operations
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
CNRO-2009-00010, FOIA/PA-2010-0090
Download: ML092260590 (8)

Text

Entergy Operations, Inc.

Entergy Nuclear Operations, Inc.

• 440 Hamilton Avenue White Plains, New York 10601 John F. McCann Director Nuclear Safety &Licensing CNRO-2009-00010 August 13, 2009 U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, DC 20555-0001

SUBJECT:

Decommissioning Funding Assurance Plans River Bend Station Unit 1 Waterford 3 Steam Electric Station Docket No. 50-458 Docket No. 50-382 License No. NPF-47 License No. NPF-38

References:

1. Entergy letter CNRO-2009-00005; "Status of Decommissioning Funding for Plants Operated by Entergy Operations, Inc for the Year Ending December 31, 2008," dated March 30, 2009 (ML090920218).

2. NRC letter dated June 18, 2009 regarding Status of Decommissioning Funding Assurance for River Bend Station (ML091540293).

3. NRC letter dated June 18, 2009 regarding Status of Decommissioning Funding Assurance for Waterford 3 Steam Electric Station (ML091550692)

4. Entergy letter CNRO-2009-0008 "Status of Decommissioning Funding Assurance" dated July 6, 2009 (ML091960057).

Dear Sir or Madam:

Entergy Operations, Inc (Entergy) submitted the biennial report of decommissioning funding status for the subject plants in Reference 1. NRC requested follow up telephone conference calls in References 2 and 3 regarding the decommissioning funding status for the subject plants. The conference call was held on June 29, 2009. Entergy letter dated July 6, 2009, Reference 4, confirmed the agreed upon date of August 13, 2009 for Entergy to submit the plans for addressing the current funding status to the NRC.

Enclosed are the plans for addressing the current funding status for River Bend Station and Waterford 3 Steam Electric Station. The plans are based on NRC funding requirement calculation documents confirmed in a conference call held July 22, 2009. Entergy will initiate the plans by appropriate filings with the rate regulating jurisdictions no later December 31, 2009.

Ao/

CNRO-2000-00010 Page 2 of 2 This letter contains one new commitment as documented in Attachment 3. If you have any questions, please contact Mr. Brian Ford at 601-368-5516.

Sincerely, JFM/BSF/LAE Attachments:

1. Entergy Gulf States Louisiana, L.L.C. River Bend Station Unit 1 (70%

Regulated Share) Plan for Decommissioning Funding Adjustment

2. Entergy Louisiana, L.L.C. Waterford 3 Steam Electric Station Plan for Decommissioning Funding Adjustment

3. Regulatory Commitments cc: (All Below with Attachments)

Mr. T. A. Burke (ECH)

Ms. W. F. Curry (ECH)

Mr. J. S. Forbes (ECH)

Mr. J. A. Kowalewski (W3)

Mr. J. F. McCann (WPO)

Mr. T. G. Mitchell (ECH)

Mr. M. Perito (RBS)

Mr. L. Jager Smith (Wise, Carter)

Dr. E. E. Collins, Regional Administrator, Region IV Mr. C. F. Lyons, Project Manager, GGNS, RBS Mr. N. Kalyanam, Project Manager, W-3 NRC Resident Inspector's Office, River Bend Station NRC Resident Inspector's Office, Waterford 3

CNRO-2009-00010 Attachment 1 ENTERGY GULF STATES LOUISIANA. L.L.C.

RIVER BEND STATION UNIT 1 (70% REGULATED SHARE)

PLAN FOR DECOMMISSIONING FUNDING ADJUSTMENT

Background

On March 30, 2009, Entergy Gulf States Louisiana, L.L.C. (EGSL) submitted its biennial filing for River Bend Station's 70% regulated share (River Bend), pursuant to 10 CFR 50.75(f) (Accession No. ML090920218). On June 18, 2009, the Nuclear Regulatory Commission (NRC) staff sent EGSL a letter advising EGSL of a telephone conference to discuss the NRC staff's calculations regarding River Bend's decommissioning funding assurance (Accession No. ML091540293). The telephone conference was held on June 29, 2009. On-July 22, 2009, another call was held with the NRC staff that resulted in some of the funding requirement figures being changed, and those changes are reflected in this communication. Also in the staff's letter of June 18, 2009, the staff indicated that if EGSL is determined to have a projected decommissioning funding shortfall, it will need to submit a plan to describe how and when the licensee intends to make adjustments to financial assurance mechanisms. This communication includes the licensee's plan to address any shortfall.

According to the NRC staff's calculations, the staff has concluded that the NRC minimum amount for the 2009 report period for the 70% regulated share of River Bend is

$378,716,370. The staff likewise concluded that the available escalated funding to meet that obligation is $214,527,204, based on the December 31, 2008 River Bend 70% share decommissioning trust fund balances. The difference in these figures is $164,189,166.

Costs for the operation of the 70% share of River Bend are primarily recovered through rates established at the Louisiana Public Service Commission (LPSC) (approximately 55%

of the 70% share), the Public Utility Commission of Texas (PUCT) (approximately 45% of the 70% share)1 , and the Federal Energy Regulatory Commission (FERC) (a minimal fraction). Both the LPSC and the PUCT have made assumptions, for decommissioning

,collection purposes, that River Bend will operate through a renewed license term. 2 River Bend's current license expires on August 29, 2025. While EGSL plans to seek a renewed license from the NRC for River Bend, such renewed license has not yet been issued. The assumption by the LPSC and the PUCT of a renewed license term for decommissioning collections has resulted in the current cessation of continuing collections from ratepayers for River Bend decommissioning in both the Louisiana and Texas jurisdictions.

The LPSC order that resulted in cessation of decommissioning collections adopted a settlement agreement, which settlement agreement includes a provision for reinstaiing decommissioning collections in the event the NRC finds decommissioning funding for River Bend inadequate. Specifically, the settlement agreement adopted by the' order states as follows at paragraph 8:

8. Although by this settlement EGS is agreeing to reduce the depreciation rate and the decommissioning accrual for River Bend based upon the 1 Entergy Texas, Inc. has a purchased power obligation from River Bend, regulated by the PUCT,

• that includes a responsibility for the indicated share of the decommissioning obligation for the plant.

2 The FERC has not made such an assumption, and the FERC-jurisdictional share of River Bend decommissioning is collected based on the current licensed life of the plant.

1

CNRO-2009-00010 assumption that the operating license for the plant and the useful life will be extended, EGS will be permitted to recover over the useful life of the plant the reasonable depreciation and decommissioning expenses relating to the River Bend generating station. In the event that the Nuclear Regulatory

'Commission ("NRC") formally notifies EGS or the River Bend licensee that the decommissioning funding for River Bend is or would become inadequate, the Company would be permitted recognition in rates of decommissioning expense at a level sufficient to address reasonably the NRC's concern as expressed in the notification. Nothing in this settlement shall be construed to require the Company to represent or report to the NRC that its level of decommissioning funding is sufficient or to preclude EGS or the River Bend licensee from requesting from the Commission an increase in decommissioning funding at a later date.3 Similarly, in Texas, the PUCT ordered a "20-year life extension adjustment to EGSI's calculation of nuclear depreciation and decommissioning costs effective January 1, 2009.

Subsequent to the filing of the case that resulted in the aforementioned order, the former Entergy Gulf States, Inc. implemented a merger by division that resulted in the current owner of River Bend, EGSL, and a new Texas-jurisdictional entity, Entergy Texas, Inc. (ETI).

ETI receives the former Texas-jurisdictional share of River Bend output through a power purchase agreement with EGSL, and ETI retains the obligation for the former Texas-jurisdictional share of River Bend's decommissioning obligation.

Plan to Adjust Financial Assurance Mechanisms As a (primarily) rate regulated entity,5 EGSL expects the retail costs of the River Bend 70%

share to be included in the rates to be paid by its retail customers. As mentioned above, when the LPSC ordered reduction in the decommissioning funding for River Bend, it included an express provision in the order allowing for reinstatement of decommissioning collections should the NRC find the funding inadequate. EGSL believes the NRC has now made that finding. Accordingly, for the Louisiana-jurisdictional share of River Bend, EGSL plans to seek relief from the LPSC under the aforementioned order provision in paragraph 8, specifically seeking reinstatement of collections for the decommissioning of the Louisiana-jurisdictional share of the River Bend 70% share. Using the rates of decommissioning cost escalation (2.5%) and decommissioning fund growth (5.7%) previously approved by the LPSC, and the existing Louisiana-jurisdictional share of the River Bend decommissioning trust funds (approximately $41.5 million as of December 31, 2008), the licensee calculates that an annual decommissioning collection amount of approximately $7.1 million would be required to meet the Louisiana ratepayers' share of the aforementioned decommissioning fund shortfall. It is the licensee's plan to request an amount of additional annual funding from the LPSC that will eliminate the funding shortfall in a filing with the LPSC by the end of calendar year 2009.

3 Settlement Term Sheet dated December 17, 2002, adopted in LPSC Consolidated Order No. U-22491, U-23358, U-24182, U-24993, U-25687, dated December 18, 2002.

5 Order in PUCT Docket No. 34800, dated March 16, 2009, at Finding of Fact 34.

The 30% share of River Bend formerly owned by Cajun Electric Power Cooperative is held by EGSL as a non-rate-regulated asset. Its decommissioning funding is addressed by a prefunded trust received by EGSL following the bankruptcy of Cajun Electric Power Cooperative.

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CNRO-2009-00010 Likewise, as a rate-regulated entity, ETI, as the responsible entity for the Texas utility's share of River Bend decommissioning, expects its costs to be covered by its regulated ratepayers. ETI currently has plans to make a rate filing by the end of December 2009.

Accordingly, ETI plans on seeking from the PUCT reinstatement of collections for the decommissioning of the Texas utility's share of the River Bend 70% share. Using the rates of decommissioning cost escalation (4.8%) and decommissioning fund growth (6.6%)

previously approved by the PUCT, and the existing Texas utility's share of the River Bend decommissioning trust funds (approximately $90.8 million as of December 31, 2008), the licensee calculates that an annual decommissioning collection amount of approximately

$1.7 million would be required to meet the Texas ratepayers' share of the aforementioned decommissioning fund shortfall. It is ETI's plan to request an amount of additional annual funding from the PUCT that will eliminate the funding shortfall in the aforementioned scheduled rate filing.

The licensee cannot predict whether the LPSC and PUCT will use the rate assumptions mentioned above, such that the final annual collection figures allowed by those regulators will match the amounts that are planned to be collected through rates. Further, the licensee may find that changed conditions will require the presentation of different rates to the regulators, such that the annual collections figures would be different than indicated above.

However, it is the licensee's and ETI's plan to make requests to the rate regulators seeking to include in retail rates the revenue requirement that is necessary to collect the shortfall quantified by the NRC.

3

CNRO-2009-00010 ENTERGY LOUISIANA, LLC WATERFORD 3 STEAM ELECTRIC STATION PLAN FOR DECOMMISSIONING FUNDING ADJUSTMENT

Background

On March 30, 2009, Entergy Louisiana, LLC (ELL) submitted its biennial filing for Waterford 3 Steam Electric Station (Waterford 3), pursuant to 10 CFR 50.75(f) (Accession No. ML090920218). On June 18, 2009, the Nuclear Regulatory Commission (NRC) staff sent EGSL a letter advising EGSL of a telephone conference to discuss the NRC staff's calculations regarding Waterford 3's decommissioning funding assurance (Accession No. ML091550692). The telephone conference was held on June 29, 2009. On July 22, 2009, another call was held with the NRC staff that resulted in some of the funding requirement figures being changed, and those changes are reflected in this communication. Also in the staff's letter of June 18, 2009, the staff indicated that if ELL is determined to have a projected decommissioning funding shortfall, it will need to submit a plan to describe how and when the licensee intends to make adjustments to financial assurance mechanisms.

This communication includes the licensee's plan to address any shortfall.

According to the NRC staff's calculations, the staff has concluded that the NRC minimum amount for the 2009 report period for Waterford 3 is $400,196,973. The staff likewise concluded that the available escalated funding to meet that obligation is $359,175,976, based on the December 31, 2008 Waterford 3 decommissioning trust fund balances. The difference in these figures is $41,020,997. \

Costs for the operation of Waterford 3 are recovered through rates established at the Louisiana Public Service Commission (LPSC). The LPSC has made the assumption, for decommissioning collection purposes, that Waterford 3 will operate through a renewed license term. Waterford 3's current license expires on December 18, 2024. While ELL plans to seek a renewed license from the NRC for Waterford 3, such renewed license has not yet been issued. The assumption by the LPSC of a renewed license term for decommissioning collections has resulted in a decrease in the amount of continuing collections from ratepayers for Waterford 3 decommissioning in Louisiana relative to the amount collected before that assumption was made.

The LPSC order that resulted in cessation of decommissioning collections adopted a settlement agreement, which settlement agreement includes a provision for reinstating decommissioning collections in the event the NRC finds decommissioning funding for Waterford 3 inadequate. Specifically, the settlement agreement adopted by the order states as follows at paragraph 4:

4. Although by this settlement ELI is agreeing to reduce the depreciation rate and the decommissioning accrual for Waterford 3 based upon the assumption that the operating license for the plant (and, therefore, the useful life of the plant) will be extended, ELI will be permitted to recover over the useful life of the plant all of the reasonable depreciation and decommissioning expenses relating to the Waterford 3 generating station. In the event that the Nuclear Regulatory Commission ("NRC") formally notifies ELI or the Waterford 3 licensee that the decommissioning funding for Waterford 3 is or would become inadequate, the Company will be permitted recognition in rates of decommissioning expense at a level sufficient to 1

CNRO-2009-00010 address reasonably the NRC's concern as expressed in the notification.

Nothing in this settlement shall be construed to require the Company to represent or report to the NRC that its level of decommissioning funding is sufficient or to preclude ELI or the Waterford 3 licensee from requesting from the Commission an increase in decommissioning funding at a later date.1 Plan to Adjust Financial Assurance Mechanisms As a rate regulated entity, ELL expects the costs of Waterford 3, to be included in its rates paid by its retail customers. As mentioned above, when the LPSC ordered reduction in the decommissioning funding for Waterford 3, it included an express provision in the order allowing for reinstatement of decommissioning collections should the NRC find the funding inadequate. ELL believes the NRC has now made that finding. Accordingly, ELL plans to seek relief from the LPSC under the aforementioned order provision in paragraph 4, specifically seeking reinstatement of collections for the decommissioning of Waterford 3.

Using the rates of decommissioning cost escalation (4.08%) and decommissioning fund growth (6.08%) previously approved by the LPSC, the existing Waterford. 3 decommissioning trust funds as of December 31, 2008 ($180.9 million), and the currently existing schedule of future decommissioning collections for Waterford 3, the licensee calculates that an additional annual decommissioning collection amount of approximately

$1.5 million would be required to meet the aforementioned decommissioning fund shortfall.

It is the licensee's plan to request an amount of additional annual funding from the LPSC that will eliminate the funding shortfall in a filing with the LPSC by the end of calendar year 2009.

The licensee cannot predict whether the LPSC will use the rate assumptions mentioned above, such that the final annual collection figures allowed by those regulators will match the amounts that are planned to be collected. Further, the licensee may find that changed conditions will require the presentation of different rates to the LPSC, such that the annual collections figures would be different than indicated above. However, it is the licensee's plan to make a request to the LPSC seeking to include in retail rates the revenue requirement that is necessary to collect the shortfall quantified by the NRC.

1 Settlement Term Sheet dated March 28, 2005, adopted in LPSC Order No. U-20925 RRF 2004, dated May 25, 2005. The aforementioned order refers to Entergy Louisiana, Inc., or ELI, which was the name of the Waterford 3 licensee before it completed a restructuring into a limited liability corporation, ELL, at the end of 2005.

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CNRO-2009-00010 Regulatory Commitments This table identifies actions discussed in this letter for which Entergy commits to perform.

Any other actions discussed in this submittal are described for the NRC's information and are not commitments.

TYPE (Check one) SCHEDULED COMMITMENT COMPLETION ONE-TIME CONTINUING DATE ACTION COMPLIANCE (If Required)

1. Entergy will initiate the plans x December 31, by appropriate filings with 2009.

the rate regulating jurisdictions no later December 31, 2009.

K C--

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