L-2009-256, Response to Requests for Additional Information
| ML093130065 | |
| Person / Time | |
|---|---|
| Site: | Duane Arnold  |
| Issue date: | 11/05/2009 |
| From: | Nazar M Florida Power & Light Co |
| To: | Document Control Desk, Office of Nuclear Reactor Regulation |
| References | |
| L-2009-256 | |
| Download: ML093130065 (8) | |
Text
Florida Power & Light Company, 700 Universe Boulevard, P.O. Box 14000, Juno Beach, FL 33408-0420 NOV 052009 FPL L-2009-256 10 CFR 50.4 10 CFR 50.75 U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, DC 20555 Re: NextEra Energy Duane Arnold, LLC Duane Arnold Energy Center Docket No. 50-331
Subject:
Response to Requests for Additional Information By letter dated October 6, 2009, the Nuclear Regulatory Commission Staff (NRC) issued Requests for Additional Information (RAIs) related to the decommissioning funding status for NextEra Energy's ownership interests in the Duane Arnold Energy Center (DAEC). NextEra Energy's responses to the Staff's RAIs are provided in the Enclosure to this letter.
Should you have questions regarding NextEra Energy's responses to the Staff's RAIs, please contact Mitchell Ross, Vice President and General Counsel - Nuclear at 561-691-7126, or Lisa Fuca, Nuclear Business Operations, at 561-691-7604.
Sincerely yours, Mano Nazar Senior Vice Presiden, Nuclear and Chief Nuclear Office, Enclosure A4w0(
an FPL Group company
US Nuclear Regulatory Commission L-2009-256 Enclosure Page 1 of 4 Enclosure - NRC Staff's Requests for Additional Information - Duane Arnold Energy Center The Nuclear Regulatory Commission (NRC) staff has reviewed your submittal, dated July 27, 2009, outlining FPL Energy Duane Arnold, LLC's (FPL Energy) proposedplan of action to cover deficiencies in providing decommissioning funding assurance discovered in its 70 percent ownership of Duane Arnold Energy Center (DAEC) Biennial Decommissioning Funding Report that was submitted on March 27, 2009. At that time, the NRC staff estimated a projected deficiency in decommissioning funding assurance of approximately $48 million in total. This reflects the review of all three owners of DAEC, for decommissioning funding assurance.
In the July 27, 2009, submittal, FPL Energy states that the decommissioning trust fund balance as of June 30, 2009, has grown to $167.5 million, an increase of $3.9 million from the December 31, 2008 balance indicated in the Biennial Decommissioning Funding Report that was submitted on or about March 31, 2009, by FPL Energy Duane Arnold, LLC.
FPL Energy has also proposed the use of a Parent Company Guarantee (PCG), based on a value derived by discounting the Minimum Decommissioning Funding Formula amount from the projected value at the time of permanent secession of operations, to a present value at the end of calendar year 2009. FPL Energy believes that the combination of the increased decommissioning trust fund balance as of June 30, 2009, along with the proposed discounted PCG, provides decommissioning funding assurance.
On July 27, 2009, FPL submitted a plan on behalf of the licensed owners, FPL Energy, 70 percent owner, and Central Iowa Power Cooperative (CIPCO), 20 percent owner, as part of the concurrent 2009 Biennial Decommissioning Review process, which describes how and when it intends to make adjustments to financial assurance mechanisms such that any shortfalls in decommissioning funding assurancefor DAEC are covered.
On page 2 of the decommissioning funding plan submitted, FPL Energy DA stated:
In order to address the funding difference for DAEC, FPL Energy will cause FPL Group Capital Inc. to amend the existing decommissioning funding parent (company) guaranty for $93 million to increase the value of that parent (company) guaranty to $132.5 million, [which is based on a] present value of NRC Minimum Calculationpursuantto 10 CFR 50.75.
10 CFR 50.75 (b)(1) states:
(b) Each power reactorapplicant for or holder of an operating license, and each applicant for a combined license under subpart C of 10 CFR part 52 for a production or utilization facility of the type and power level specified in paragraph (c) of this section shall submit a decommissioning report, as required by section 50.33(k).
(1) For an applicant for or holder of an operating license under part 50, the report must contain a certification that financial assurance for decommissioning will be (for a license applicant), or has been (for a license holder), provided in an amount which may be more, but not less, than the amount stated in the table in paragraph(c)(1) of this section adjusted using a rate at least equal to that stated in paragraph (c)(2) of this section.
(Emphasis added.)
US Nuclear Regulatory Commission L-2009-256 Enclosure Page 2 of 4 Question 1 On Enclosure 4 of the July 27, 2009, submittal, CIPCO stated that a Real Rate of Return of four percent is assumed. Please provide the necessary evidence that allows CIPCO to use an assumed Real Rate of Return of four percent by the appropriateregulatory authority.
Central Iowa Power Cooperative's Response to RAI 1:
CIPCO is a public corporation incorporated under Chapter 499 Iowa Code (2009). CIPCO has the authority and is required to fix, establish, and collect adequate rates and other charges for electrical energy or services sold or furnished by it. CIPCO is accordingly authorized to establish its own rates and other charges through which it can recover its cost of service.
CIPCO is governed by a 13 member Board of Directors that are elected by the CIPCO members. The Board of Directors is the rate making authority for CIPCO. CIPCO rates are not regulated by any state or federal authority. In a Board Resolution dated October 27, 2009, the CIPCO Board of Directors resolved that the rates and other charges for electrical energy services and the decommissioning fund be established assuming a real rate of return on the decommissioning fund of four percent.
Question 2 Please provide a status of the remaining 10 percent owner of DAEC.
Corn Belt Power Cooperative's Response to RAI 2:
Corn. Belt Power Cooperative is a public corporation incorporated under Chapter 499 Iowa Code (2009). The Cooperative has the authority and is required to fix, establish, and collect adequate rates and other charges for electrical energy or services sold or furnished by it. Corn Belt is governed by an 11 member Board of Directors who are elected by its members. The Corn Belt Board of Directors is accordingly authorized to establish its own rates and other charges through which it can recover its cost of service and is the rate making authority for the Cooperative. The Cooperative's rates are not regulated by any state or federal authority.
In a Board Resolution dated October 30, 2009, the Corn Belt Board of Directors resolved that the rates and other charges for electrical energy services and the decommissioning fund be established assuming a real rate of return on the decommissioning fund of three percent.
An updated accounting of Corn Belt's trust balance and planned future contributions is provided in the response to RAI 3.
Question 3 NRC recognizes that. if approximately $132.5 million were deposited in cash into the prepaid account, the, increased balance would provide adequate financial assurance, as of June 30, 2009. The reason is that actual funds in a prepaid account can generate earnings.
However, FPL's plan to provide .a PCG in the amount of $132.5 million does not meet the requirements of section 50.75(e)(1)(i). The PCG is a promise by the parent company to pay the decommissioning obligations of. the licensee in the event the licensee fails to pay for decommissioning costs. By its nature, the PCG has no funds from which earnings can be
US Nuclear Regulatory Commission L-2009-256 Enclosure Page 3 of 4 decommissioning costs. By its nature, the PCG has no funds from which earnings can be generated. Your plan would generate earnings only on. the actual balance in the account. The sum of the $165.7 million trust fund balance plus earnings on the balance plus a $132.5 million PCG would not cover the minimum NRC requirement of section 50.75(c), as of July 31, 2009.
In view of the above, provide a revised plan to cover the projected shortfall using a method that conforms to one of the methods provided in section 50.75.
NextEra's Response to RAI 3:
NextEra does not concede that the NRC's position regarding the use of the present value of the NRC formula minimum amount is correct. However, NextEra presents the following revised plan for demonstrating funding assurance that does not involve a present value calculation and instead relies upon its preliminary site-specific estimate of the cost to decommission the Duane Arnold Energy Center (DAEC) using the SAFSTOR method, which complies with 10 CFR 50.75.
NextEra has not made a final determination of the actual decommissioning approach for DAEC, but the SAFSTOR option has been selected for the purpose of demonstrating the adequacy of DAEC's decommissioning funding. NextEra may choose a different decommissioning option in the future, recognizing that the chosen option must meet NRC requirements for decommissioning funding. Specifically, renewal of the DAEC operating license may lead NextEra to change its planned decommissioning methods for funding assurance purposes.
NextEra filed a license renewal application for DAEC on September 30, 2008.
Pursuant to 10 CFR 50.75(e)(1)(i), "A licensee that has prepaid funds based on a site specific estimate under § 50.75(b)(1) of this section may take credit for projected earnings on the prepaid decommissioning trust funds, using up to a 2 percent annual real rate of return from the time of future funds' collection through the projected decommissioning period, provided that the site-specific estimate is based on a period' of safe storage that is specifically described in the estimate." Thus, a site-specific cost estimate may be used for demonstrating decommissioning funding assurance, provided that "the NRC-required cost estimate for decommissioning costs as defined in 10 CFR 50.2 is equal to or greater than the amount stated in the formulas in 10 CFR 50.75(c)(1) and (2)." (Regulatory Guide 1.159, section 1.1.1; Draft Regulatory Guide-1229, section 1.1.1.)
On February 19, 2009, NextEra submitted a site-specific decommissioning cost estimate to the NRC as part of its preliminary decommissioning cost estimate and spent fuel management plan filing required by 10 CFR 50.75(f)(3) and 10 CFR 50.54(bb) (Accession Nos. ML090550968 and ML090570189). Scenario 2 of the DAEC site-specific estimate considers the costs to decommission the facility assuming (1) no renewal of the facility operating license, and (2) the use of a SAFSTOR period. NextEra's revised plan for demonstrating decommissioning funding assurance is based upon this scenario - a period of safe storage until 2068, at which time decommissioning activities will commence.
Appendix E to the DAEC site-specific estimate (pages 164-65 of 190) provides the annual license termination costs for this scenario in 2008 dollars. Section 1.4.3 of Regulatory Guide 1.159 (and Draft Regulatory Guide-1229) states that site specific cost estimates should be adjusted at least once a year to reflect the impact of inflation. Section 1.4.1 states that licensees may use standard, measures of price indexing, such as the annual Consumer Price Index (CPI) published by the Bureau of Labor Statistics to adjust site-specific cost estimates.
The CPI Detailed Report for September 2009 shows negative growth in the CPI over the previous 12-month period. For this analysis, NextEra did not adjust the cost estimate downward
US Nuclear Regulatory Commission L-2009-256 Enclosure Page 4 of 4 to reflect the deflation experienced over the past year. Instead, the cost estimate provided below conservatively retains the use of 2008 dollars.
The decommissioning trust funds for DAEC have increased since December 31, 2008. As of September 30, 2009, the total decommissioning trust fund balance including the shares of all three joint owners is approximately $232,709,000, compared to the December 31, 2008 balance of $203,073,403. Table 1 utilizes the September 30, 2009 DAEC decommissioning trust fund balance in lieu of the December 31, 2008 balance. In Table 1, the decommissioning trust fund ending balance is escalated each year by the 2% real rate of return allowed pursuant to 10 CFR 50.75(e)(1)(i) for NextEra's share, and by the 3% and 4% real rate of return authorized by Corn Belt's and CIPCO's rate-setting authorities, respectively, as allowed under 10 CFR 50.75(e)(i) and discussed in the answers to RAIs 1 and 2 above. After the annual escalation, the estimated annual costs are subtracted from the annual total decommissioning fund balance and the planned contributions of CIPCO and Corn Belt are added. Table 1 includes only license termination costs and does not include spent fuel management or non-radiological greenfield costs.
As can be seen from the information provided in Table 1, the required funding for a SAFSTOR decommissioning, approximately $579 million, is greater than the current (September 30, 2009)
NRC formula amount per 10 CFR 50.75(b) and (c) of $507,291,842, and therefore, the site-specific analysis complies with the NRC's position outlined in Regulatory Guide 1.159 section 1.1.1 that a site-specific cost estimate may only be used if it is equal to or greater than the NRC formula amount.
This SAFSTOR analysis demonstrates that when the September 30, 2009 decommissioning trust fund balance is escalated at the allowable rates and compared against the annual figures for the SAFSTOR period studied in the DAEC preliminary decommissioning cost estimate, a significant surplus would remain at the end of the decommissioning project. Accordingly, NextEra concludes that no further action is required at this time to demonstrate adequate funding assurance for decommissioning DAEC.
As reflected in the March 27, 2009 Biennial Funding Status Report and the July 27, 2009 Decommissioning Funding Status Report and Financial Assurance Plan, NextEra currently has a $93 million parent guaranty providing partial decommissioning funding assurance. Using the SAFSTOR approach, NextEra's parent guaranty would no longer be required. Through this filing, NextEra is seeking NRC approval of its SAFSTOR decommissioning funding assurance mechanism and will maintain its parent guaranty in place pending NRC approval. Following NRC approval, and in accordance with its terms, NextEra's parent guaranty will remain in place until 120 days after NextEra or FPL Group Capital, Inc. provides notice to the NRC of its cancellation.
TABLE 1 Duane Arnold Energy Center Decommissioning Funding Plan Scenario 2: 2014 Shutdown, SAFSTOR Alternative (Thousands of Dollars)
Basis Year 2008 Fund Balance as of 9/30/09: (Thousands of Dollars)
Next Era 184,620 70% ownership CIPCO 31,985 20% ownership Corn Belt 16,104 10% ownership Total Trust Fund Balance 232,709 Annual Escalation 0%
Annual Earnings - Next Era 2%
Annual Earnings - CIPCO 4%
Annual Earnings - Corn Belt 3%
A B C D E F G H CIPCO Corn Belt Next Era Decommissioning Decommissioning Decommissioning Trust Fund Trust Fund Balance Trust Fund Balance escalated escalated at 3% Total CIPCO Corn Belt Total Cost Balance escalated at 4% minus 20% minus 10% of Decommisioning Decommissioning Decommissioning Escalated at at 2% minus 70% of expenses + expenses + Trust Fund minus Trust Fund Trust Fund Year 50.75 Cost 0% of expenses Contributions Contributions expenses Contirbutions Contirbutions 2009 184,620 32,485 16,604 233,709 500 500 2010 188,312 34,784 17,602 240,699 1,000 500 2011 - - 192,079 37,176 18,880 248,135 1,000 750 2012 7,908 7,908 190,385 38,081 19,656 248,122 1,000 1,000 2013 9,100 9,100 187,822 38,784 20,585 247,192 1,000 1,250 2014 42,672 42,672 161,708 32,801 18,436 212,946 1,000 1,500 2015 1,789 1,789 163,690 33,756 18,810 216,256 2016 1,789 1,789 165,712 34,748 19,195 219,655 2017 1,789 1,789 167,774 35,780 19,592 223,146 2018 1,789 1,789 169,877 36,854 20,001 226,732 2019 13,308 13,308 163,959 35,666 19,270 218,895 2020 3,794 3,794 164,582 36,334 19,469 220,385 2021 3,794 3,794 165,218 37,029 19,674 221,920 2022 3,794 3,794 165,867 37,751 19,885 223,502 2023 3,794 3,794 166,528 38,502 20,102 225,132 2024 3,794 3,794 167,203 39,283 20,325 226,812 2025 2,036 2,036 169,122 40,448 20,732 230,301 2026 1,448 1,448 171,491 41,776 21,209 234,475 2027 1,448 1,448 173,907 43,157 21,700 238,764 2028 1,448 1,448 176,371 44,594 22,206 243,172 2029 1,448 1,448 178,885 46,088 22,728 247,701 2030 1,448 1,448 181,449 47,642 23,265 252,356 2031 1,448 1,448 184,065 49,258 23,818 257,141 2032 1,448 1,448 186,732 50,939 24,388 262,059 2033 1,448 1,448 189,453 52,687 24,975 267,115 2034 1,448 1,448 192,229 54,505 25,579 272,313 2035 1,448 1,448 195,060 56,395 26,202 277,657
TABLE 1 Duane Arnold Energy Center Decommissioning Funding Plan Scenario 2: 2014 Shutdown, SAFSTOR Alternative (Thousands of Dollars)
Basis Year 2008 Fund Balance as of 9/30/09: (Thousands of Dollars)
Next Era 184,620 70% ownership CIPCO 31,985 20% ownership Corn Belt 16,104 10% ownership Total Trust Fund Balance 232,709 Annual Escalation 0%
Annual Earnings - Next Era 2%
Annual Earnings - CIPCO 4%
Annual Earnings - Corn Belt 3%
A B C D E F G H I CIPCO Corn Belt Next Era Decommissioning Decommissioning Decommissioning Trust Fund Trust Fund Balance Trust Fund Balance escalated escalated at 3% Total CIPCO Corn Belt Total Cost Balance escalated at 4% minus 20% minus 10% of Decommisioning Decommissioning Decommissioning Escalated a at 2% minus 70% of expenses + expenses + Trust Fund minus Trust Fund Trust Fund Year 50.75 Cost 0% of expenses Contributions Contributions expenses Contirbutions Contirbutions 2036 1,448 1,448 197,947 58,362 26,843 283,152 2037 1,448 1,448 200,893 60,406 27,503 288,803 2038 1,448 1,448 .203,897 62,533 28,184 294,614 2039 1,448 1,448 206,961 64,745 28,884 300,591 2040 1,448 1,448 210,087 67,045 29,606 306,738 2041 1,448 .1,448 213,275 69,437 30,349 313,062 2042 1,448 1,448 216,527 71,925 31,115 319,567 2043 1,448 1,448 219,844 74,513 31,904 326,260 2044 1,448 1,448 223,227 77,203 32,716 333,147 2045 1,448 1,448 226,678 80,002 33,553 340,233 2046 1,448 1,448 230,198 82,912 34,415 347,525 2047 1,448 1,448 233,788 85,939 35,302 355,030 2048 1,448 -1,448 237,451 89,087 36,216 362,754 2049 1,448 1,448 241,186 92,361 37,158 370,705 2050 1,448 1,448 244,996 95,766 38,128 378,890 2051 1,448 1,448 248,882 99,307 39,127 387,317 2052 1,448 1,448 252,847 102,990 40,156 395,993 2053 1,448 1,448 256,890 106,820 41,216 404,926 2054 2,184 2,184 260,499 110,656 42,234 413,389 2055 2,303 2,303 264,097 114,621 43,271 421,989 2056 2,303 2,303 267,767 118,746 44,339 430,851 2057 2,303 2,303 271,510 123,035 45,439 439,983 2058 2,303 2,303 275,328 127,496 46,571 449,395 2059 2,303 2,303 279ý222 132,135 47,738 459,096 2060 2,303 2,303 283,195 136,960 48,940 469,095 2061 2,303 2,303 287,247 141,978 50,178 479,402 2062 2,303 2,303 291,379 147,196 51,453 490,028
TABLE 1 Duane Arnold Energy Center Decommissioning Funding Plan Scenario 2: 2014 Shutdown, SAFSTOR Alternative (Thousands of Dollars)
Basis Year 2008 Fund Balance as of 9/30/09: (Thousands of Dollars)
Next Era 184,620 70% ownership CIPCO 31,985 20% ownership Corn Belt 16,104 10% ownership Total Trust Fund Balance 232,709 Annual Escalation 0%
Annual Earnings - Next Era 2%
Annual Earnings - CIPCO 4%
Annual Earnings - Corn Belt 3%
A B C D E F G H I CIPCO Corn Belt Next Era Decommissioning Decommissioning Decommissioning Trust Fund Trust Fund Balance Trust Fund Balance escalated escalated at 3% Total CIPCO Corn Belt Total Cost Balance escalated at 4% minus 20% minus 10% of Decommisioning Decommissioning Decommissioning Escalated a at 2% minus 70% of expenses + expenses + Trust Fund minus Trust Fund Trust Fund Year 50.75 Cost 0% of expenses Contributions Contributions expenses Contirbutions Contirbutions 2063 2,303 2,303 295,595 152,623 52,766 500,984 2064 2,303 2,303 299,895 158,268 54,119 512,281 2065 2,303 2,303 304,280 164,138 55,512 523,930 2066 9,354 9,354 303,818 168,832 56,242 528,893 2067 14,366 14,366 299,838 172,712 56,493 529,044 2068 63,862 63,862 261,132 166,849 51,802 479,782 2069 79,225 79,225 210,897 157,678 45,433 414,008 2070 96,091 96,091 147;851 144,766 37,187 329,805 2071 80,953 80,953 94,141 134,366 30,207 258,715 2072 47,681 47,681 62,647 130,205 26,345 219,198 2073 18,654 18,654 50,842 131,682 25,270 207,795 Total 579,397 579,397 Calculations:
Column D = (Column D (Previous year's fund balance)* (1+.02)) - (Column C* 0.70) (70% of current year's decommissioning expenditures)
Column E = (Column E (Previous year's fund balance)* (1+.04)) - (Column C* 0.20) (20% of current year's decommissioning expenditures) + Column H (current year's contributions)
Column F = (Column F (Previous year's fund balance)* (1+.03)) - (Column C* 0.10) (10% of current year's decommissioning expenditures) + Column I (current year's contributions)
Column G = Column D + Column E + Column F