ENOC-09-00034, Revised Decommissioning Funding Assurance Plan

Revised Decommissioning Funding Assurance Plan

ML093100289
Person / Time
Site:	Vermont Yankee
Issue date:	10/29/2009
From:	Mccann J Entergy Nuclear Operations, Entergy Nuclear Vermont Yankee, Entergy Operations
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
ENOC-09-00034, FOIA/PA-2010-0090
Download: ML093100289 (12)

Text

Entergy Operations, Inc.

Entergy Nuclear Operations, Inc.

440 Hamilton Avenue White Plains, New York 10601 Tel 914 272 3370 John F. McCann Vice President - Nuclear Safety, Emergency Planning and Licensing ENOC-09-00034 October 29, 2009 U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, DC 20555-0001

SUBJECT:

Revised Decommissioning Funding Assurance Plan Vermont Yankee Nuclear Power Station Docket No.: 50-271 License No.: DPR-28

References:

1. Entergy letter ENOC-09-00007; "Status of Decommissioning Funding for Plants Operated by Entergy Nuclear Operations, Inc. for the Year Ending December 31, 2008,- 10CFR50.75(f)(1)" dated March 30, 2009 (ML090920576).

2. NRC letter "ENVY, LLC's, Status of Decommissioning Funding Assurance for Vermont Yankee Nuclear Power Station (TAC No. ME0583)," dated June 18, 2009 (ML091550583).

3. Entergy letter ENOC 09-00024 "Decommissioning Funding Assurance Plan" dated August 13, 2009 (ML092260720).

4. NRC letter, "Request for Additional Information to Support the Review of the Vermont Yankee Nuclear Power Station Decommissioning Financial Assurance Plans (TAC No. ME0583)," dated September 29, 2009 (ML092680607)

Dear Sir or Madam:

Entergy Nuclear Operations, Inc. (Entergy) submitted the report of decommissioning funding status in Reference 1. NRC requested follow up telephone conference calls in Reference 2 regarding the decommissioning funding status for the subject plants. Entergy provided further information in Reference 3, and NRC requested additional information in Reference 4.

As discussed in further detail in Attachment 1, Entergy plans to adjust the decommissioning funding provided for Vermont Yankee Nuclear Power Station based upon the Entergy Nuclear Vermont Yankee, LLC trust fund balances as of September 30, 2009 by obtaining a Parent Guarantee from Entergy Corporation in the amount of $40 million and substantially in the A-o c

ENOC-09-00034 Page 2 of 3 Form of a Parent Guarantee as set forth in the Enclosure. The Parent Guarantee will be provided by December 31, 2009.

This letter contains one new commitment as documented in Attachment 2. If you have any questions, please contact Mr. Les England at 601-368-5766.

Sincerely, JFM / LAE Attachments

1. Entergy Nuclear Vermont Yankee, LLC Vermont Yankee Nuclear Power Station, Revised Plan for Decommissioning Funding Adjustment

2. Regulatory Commitments Enclosure Form of Parent Guarantee cc: next page

ENOC-09-00034 Page 3 of 3 cc:- Mr. Samuel J. Collins, Region 1 Administrator U.S. Nuclear Regulatory Commission 475 Allendale Road King of Prussia, PA 19406-1415 Mr. James S. Kim, Project Manager U.S' Nuclear Regulatory Commission Mail Stop 0 8 C2A Washington, DC 20555 USNRC Resident Inspector Entergy Nuclear Vermont Yankee 320 Governor Hunt Road Vernon, Vermont 05354 Mr. David O'Brien, Commissioner VT Department of Public Service 112 State Street - Drawer 20 Montpelier, Vermont 05620 Mr. L. Jager Smith, P.E.

ENOC-09-00034 ENTERGY NUCLEAR VERMONT YANKEE. LLC VERMONT YANKEE NUCLEAR POWER STATION REVISED PLAN FOR DECOMMISSIONING FUNDING ADJUSTMENT On March 30, 2009, Entergy Nuclear Operations, Inc. submitted a decommissioning funding status report for the Vermont Yankee Nuclear Power Station (Vermont Yankee), pursuant to 10 CFR 50.75(f) on behalf of Entergy Nuclear Vermont Yankee, LLC (ENVY) (Accession No. ML090920576). On June 18, 2009, the Nuclear Regulatory Commission (NRC) staff sent ENVY a letter advising ENVY of a telephone conference to discuss the NRC staff's calculations regarding Vermont Yankee's decommissioning funding assurance (Accession No. ML091550583). The telephone conference was held on June 29, 2009. Also in the staff's letter, the staff indicated that if ENVY is determined to have a projected decommissioning funding shortfall, it needed to submit a plan to describe how and when the licensee intends to make adjustments to financial assurance mechanisms. An initial plan for decommissioning funding adjustment was provided by letter dated August 13, 2009.

(Accession No. ML092260720).

The decommissioning trust funds for Vermont Yankee have increased in value since December 31, 2008, as of September 30, 2009. The September 30, 2009 decommissioning trust fund balance for Vermont Yankee was $419,854,151, compared to the December 31, 2008 balance of $372,010,000. Table 1 below replicates the calculation sheet provided to ENVY by the NRC, and uses the September 30, 2009 Vermont Yankee decommissioning trust fund balance in lieu of the December 31, 2008 balance, and has escalated the funds during the balance of the first year reported below for only 3 months, as compared to the full year. The analysis in Table 1 indicates that there is now a $39,656,315 nominal deficit in the decommissioning funding assurance being provided.

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ENOC-09-00034 Attachment 1 TABLE 1 Plant name: Vermont Yankee Power Station Month Day Year Year of Biennial: 9 30 2009 Termination of Operation: 3 21 2012 IMWth 1986$ ECI Base L ILxI Px I Fx BWR 1.988 1I 0.13 8E.0 11.805 10.220 1B19

[11.1981 1912 1 $121,208,000 109.5 2.16 0.65 2.37 1.649 NRC Mimimum: $513,385,033 I Amount of NRC Minimum/Site Licensee:  % Owned: Specific: Amount in Trust Fund:

Entergy 100.00% $513,385,033 $419,854,151 Step 1:

Earnings Credit:

Real Rate of Years Lefts Total Real Trust Fund Balance: Return per in License Rate of Total Earnings:

$419,854,151 2% 2.48 1.05024 $440,947,436 ITotal Earnings = Trust Fund balance x (1+RRR)AYears left in license Step 2:

Accumulation:

Valu of per ear Real Rate of Value of Annuity per year Return per Years of Annuity: Total Annuity:

$0 2% 0 $0 Step 3:

Decom Period:

I Real Rate of Decomr Total Real Total Earnings for Total Earnings: Return per Period: Rate of Decom:

$440,947,436 2% 7 0.14869 $32,781,282 Total Earnings for Decom = (112) x Total Earnings x [(l+RRR)ADeco m period - 1]

Total of Steps 1 - 3:

$473,728,718ITotal = Total Earnings + Total Earnings for Decom

-$39,656,315 Parent Guarantee Amount 2

ENOC-09-00034 ENVY plans to obtain a Parent Guarantee from Entergy Corporation in the amount of

$40 million and substantially in the Form of a Parent Guarantee set forth in the Enclosure by December 31, 2009, to provide the additional funding necessary to demonstrate adequate funding assurance for decommissioning of Vermont Yankee. Based on the September 30, 2009 Vermont Yankee decommissioning trust fund balances, combined with the proposed additional financial assurance, the decommissioning funding for Vermont Yankee provides reasonable assurance that adequate funds will be available for decommissioning of the plant, consistent with the use of a combination of methods as described in the'NRC regulations at 10 CFR 50.75(e)(1)(vi).

As acknowledged in Reference 4, ENVY determined based upon July 31, 2009 trust fund balances, an additional cash deposit of $51,356,612 into a trust fund would result in total available funding equal to the NRC minimum amount. Based upon the September 30, 2009, balances, an additional cash deposit of $35,146,420 into a trust fund would result in total available funding equal to the NRC minimum amount.

ENVY expects that the operating license for Vermont Yankee will be renewed by the NRC in late 2009 or early 2010. If the Vermont Yankee license is renewed, ENVY expects that any shortfall in decommissioning funding will be diminished or eliminated. In that event, ENVY expects that it will be appropriate to reevaluate the amount for the Parent Guarantee, if one is still needed.

By letter dated July 30, 2007, as supplemented on October 31, 2007, ENVY requested NRC consent to the transfer of the Vermont Yankee license to a new company, Enexus Energy Corporation (Enexus). The NRC approved the license transfer in an order dated July 28, 2008, and this Order was extended by NRC Order dated July 24, 2009. The terms of the Form of Parent Guarantee provide that the Entergy Parent Guarantee will be terminated three calendar days after the license transfer to Enexus occurs. Thus, within two calendar days after control of ENVY is transferred to Enexus, if needed, ENVY will obtain additional, financial assurance in the form of a letter of credit in-an amount equal to the Entergy Parent Guarantee at the time of transfer, or through deposit into a trust fund with terms acceptable to the NRC in the amount representing the cash value that, with earnings, would result in total available funding equal to the NRC minimum amount calculated in the same manner as

$51,356,612 and $35,145,420 were calculated based upon the July 31, 2009 and September 30, 2009 trust fund balances, respectively.

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ENOC-09-00034 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. To address the x December 31, decommissioning trust fund 2009.

deficit reflected in Table 1, ENVY will obtain a Parent Guarantee in the amount of

$40 million by December 31, 2009. If needed, ENVY will obtain additional financial assurance in the form of a letter of credit or cash deposit to a trust, within two calendar days after control of ENVY is transferred to Enexus.

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ENOC-09-00034 Enclosure Enclosure Form of Parent Guarantee 1

ENOC-09-00034 Enclosure FORM OF GUARANTEE Guarantee made this [DATE] by Entergy Corporation, a corporation formed pursuant to the laws of the State of Delaware, herein referred to as "guarantor," to its subsidiary, Entergy Nuclear Vermont Yankee, LLC, obligee (or licensee).

Recitals

1. The guarantor has full authority and capacity to enter into this guarantee under its bylaws, articles of incorporation, and the laws of the State of Delaware, its State of incorporation. Guarantor has approval from its Board of Directors to enter into this guarantee.,

2. This guarantee is being issued so that the obligee will be in compliance with regulations issued by the Nuclear Regulatory Commission (NRC), an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. The NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 50, which require that a holder of, or an applicant for, a license issued pursuant to 10 CFR Part 50 provide assurance that funds will be available when needed for required decommissioning activities.

3. This guarantee is issued to provide financial assurance for radiological decommissioning activities for the Vermont Yankee Nuclear Power Station, as required by 10 CFR Part 50. The radiological decommissioning guarantee amount of this guarantee is $40 million for the Vermont Yankee Nuclear Power Station.

4. The guarantor meets or exceeds the following financial test criteria in the NRC's Financial Test IIof 10 CFR Part 30 Appendix A, A.2, and agrees to notify obligee and the NRC of any changes in its ability to meet the criteria in compliance with the notification requirements as specified in 10 CFR Part 50.

The guarantor meets the following financial test:

(a)(i) A current rating of its most recent bond issuance of AAA, AA, A, or BBB as issued by Standard and Poors, or Aaa, Aa, A, or Baa as rated by Moodys; and (ii) Tangible net worth is at least $10 million and at least six times the guarantee amount; and (iii) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the current guarantee amount.

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ENOC-09-00034 Enclosure

5. Through its wholly-owned subsidiaries, the guarantor has majority control of the voting stock for the following licensee covered by this guarantee: Entergy Nuclear Vermont Yankee, LLC, Vermont Yankee Nuclear Power Station, P.O.

Box 0250, 320 Governor Hunt Road, Vernon, VT 05354, NRC License No.

DPR-28.

6. Decommissioning activities as used below refers to the activities required by 10 CFR Part 50 for decommissioning of the facility identified above.

7. For value received from obligee and pursuant to the authority conferred upon the guarantor by the unanimous resolution of its directors, a certified copy of which is attached, the guarantor guarantees that if the licensee fails to perform the required decommissioning activities, as required by License No.

DPR-28, due to the lack of funds, the guarantor shall:

(a) provide all funds necessary, up to the amount of this guarantee, to carry out the required activities, or (b) set up a trust fund in favor of the obligee in the amount of this guarantee for these activities.

8. The guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report and reconciling schedule to the NRC annually within 90 days of the close of the parent guarantor's fiscal year.

9. The guarantor and the licensee agree that if-the guarantor fails to meet the financial test criteria at any time after this guarantee is established, the guarantor and the licensee shall send, within 90 days of the end of the fiscal year in which the guarantor fails to meet the financial test criteria, by certified mail, notice to the NRC. If the licensee fails to provide alternative financial assurance as specified in 10 CFR Part 50, as applicable, and obtain written approval of such assurance from the NRC within 180 days of the'end of such fiscal year, the guarantor shall provide such alternative financial assurance in the name of licensee or make full payment under the guarantee to a standby trust established by licensee.

10. Independent of any notification under paragraph 8 above, if the NRC determines for any reason that the guarantor no longer meets the financial test criteria or that it is disallowed from continuing as a guarantor for the facility under License No. DPR-28, the guarantor agrees that within 90 days of being notified by the NRC of such determination, an alternative financial assurance mechanism as specified in 10 CFR Part 50 as applicable, shall be established by the guarantor in the name of licensee unless licensee has done so.

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ENOC-09-00034 Enclosure

11. The guarantor as well as its successors and assigns shall remain bound jointly and severally under this guarantee notwithstanding any or all of the following: amendment or modification of license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50.

12. The guarantor agrees that it will be liable for all litigation costs incurred by the licensee or the NRC in any successful effort to enforce this agreement against the guarantor.

13. The guarantor agrees to remain bound under this guarantee for as long as licensee must comply with the applicable financial assurance requirements of 10 CFR Part 50, for the previously listed facility, except as provided in Paragraph 14 below and except that the guarantor may cancel this agreement by sending notice by certified mail to the NRC and to the licensee, such cancellation to become effective no earlier than 120 days after receipt of such notice by both the NRC and licensee as evidenced by the return receipts. If the licensee fails to provide alternative financial assurance as specified in 10 CFR Part 50, as applicable, and obtain written approval of such assurance within 120 days after the sending of the above notice by the guarantor, the guarantor shall provide such alternative financial assurance.

14. This guarantee shall terminate three calendar days after the completion of any-transaction involving a transfer of control of Entergy Nuclear Vermont Yankee, LLC and NRC License No. DPR-28, under circumstances where:

(i) guarantor no longer directly or indirectly owns a majority voting interest in Entergy Nuclear Vermont Yankee, LLC; and (ii) the transaction and direct or indirect license transfer are completed pursuant to the prior written consent of the NRC including the imposition of any conditions upon the transferee regarding decommissioning funding assurance as deemed appropriate by the NRC.

15. The guarantor expressly waives notice of acceptance of this guarantee by the NRC or by licensee. The guarantor also expressly waives notice of amendments or modification of the decommissioning requirements and of amendments or modifications of the license.

16. If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to the NRC during each calendar year in which this guarantee is in effect.

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ENOC-09-00034 Enclosure I hereby certify that this guarantee is true and correct to the best of my knowledge.

Effective date:

Entergy Corporation Authorized signature for guarantor Name of person signing Title of person signing Signature of witness or notary:

Entergy Nuclear Vermont Yankee, LLC Authorized signature for licensee Name of person signing Title of person signing Signature of witness or notary:

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