LIC-10-0093, Submittal of Decommissioning External Trust Fund Audit
| ML102790166 | |
| Person / Time | |
|---|---|
| Site: | Fort Calhoun  |
| Issue date: | 09/29/2010 |
| From: | Baughn S Omaha Public Power District |
| To: | Document Control Desk, Office of Nuclear Reactor Regulation |
| References | |
| LIC-10-0093 | |
| Download: ML102790166 (14) | |
Text
Omaha Public Power Dist 444 South 16 th Street Mall Omaha, NE 68102-2247 September 29, 2010 LIC-10-0093 U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, DC 20555-0001
References:
- 1. Docket No. 50-285
- 2. Letter from OPPD (C. P. Moriarty) to NRC (R. S. Wood) dated June 29, 1990
SUBJECT:
Omaha Public Power District (OPPD) Fort Calhoun Station Decommissioning External Trust Fund Audit Enclosed please find a copy of the subject audit dated September 17, 2010. The audit is of the statements of net assets available for decommissioning costs of OPPD's Fort Calhoun Station Decommissioning External Trust Fund as of June 30, 2010 and 2009, and the related statements of changes in net assets available for decommissioning costs for the years then ended. The Decommissioning Funding Plan Trust Agreement enclosed with Reference 2 requires that the NRC be notified of the audit results.
If you have any questions or require additional information, please contact Mr. John Thurber at (402) 636-3056.
Sincerely, S. E. Baughn Manager - Nuclear Licensing SEB/mle c: E. E. Collins, NRC Regional Administrator, Region IV (w/o enclosure)
L. E. Wilkins, NRC Project Manager (w/o enclosure)
J. C. Kirkland, NRC Senior Resident Inspector (w/o enclosure)
Enclosure Aood Employment with Equal Opportunity
LIC-10-0093 Enclosure Omaha Public Power District Fort Calhoun Station Decommissioning External Trust Fund Annual Audit
I Omaha Public Power District Fort Calhoun Station Decommissioning External Trust Fund Financial Statements as of and for the Years Ended June 30, 2010 and 2009, and Independent Auditors' Report
OMAHA PUBLIC POWER DISTRICT FORT CALHOUN STATION DECOMMISSIONING EXTERNAL TRUST FUND TABLE OF CONTENTS Page INDEPENDENT AUDITORS' REPORT 1-2 MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009 3-4 FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JUNE 30, 2010 AND 2009 Statements of Net Assets Available for Decommissioning Costs 5 Statements of Changes in Net Assets Available for Decommissioning Costs 6 Notes to Financial Statements 7-8 CERTIFICATION OF PAYMENTS FROM THE FUND PURSUANT TO SECTIONS 5 AND 6 OF THE FORT CALHOUN STATION DECOMMISSIONING FUNDING PLAN FOR THE YEARS ENDED JUNE 30, 2010 AND 2009 9
Deloitteo D e lo tteoDeloitte &Touche LLP First National Tower 1601 Dodge Street, Ste. 3100 Omaha, NE 68102-9706 USA Tel: +1 402 346 7788 Fax: +1 402 342 1820 www.deloitte.com INDEPENDENT AUDITORS' REPORT Board of Directors Omaha Public Power District Omaha, Nebraska We have audited the accompanying statements of net assets available for decommissioning costs of the Omaha Public Power District Fort Calhoun Station Decommissioning External Trust Fund (the "Fund")
as of June 30, 2010 and 2009, and the related statements of changes in net assets available for decommissioning costs for the years then ended. These financial statements are the responsibility of the Omaha Public Power District's management Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the net assets available for decommissioning costs of the Omaha Public Power District Fort Calhoun Station Decommissioning External Trust Fund as of June 30, 2010 and 2009, and the changes in net assets available for decommissioning costs for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis On pages 3-4 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board.
This supplementary information is the responsibility of Omaha Public Power District's management We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit such information and we do not express an opinion on it.
Member of Deloitte Touche Tohmatsu
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The certification of paymehts from the Fund pursuant to Sections 5 and 6 of the Fort Calhoun Station Decommissioning Funding Plan on page 9 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. This additional information is the responsibility of the Omaha Public Power District's management. Such information has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
Setme7 2 LL01 September 17, 2010
OMAHA PUBLIC POWER DISTRICT FORT CALHOUN STATION DECOMMISSIONING EXTERNAL TRUST FUND MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009 Overview The Fort Calhoun Station (the "Station") is a pressurized water reactor nuclear plant. The Station is owned by the Omaha Public Power District ("OPPD") and was placed in commercial operation in September 1973.
It is located on the west bank of the Missouri River approximately 20 miles north of the City of Omaha in the vicinity of Fort Calhoun, Nebraska. The Nuclear Regulatory Commission ("NRC") issued a renewed operating license for the Fort Calhoun Station in November 2003 that enables the plant to continue operating until 2033.
In February 1983, OPPD's Board of Directors authorized a plan for the decommissioning of the Station at the end of its operating license. The plan called for the allocation of the cost of decommissioning during the Station's life to the customers receiving the benefits. Accordingly, OPPD began funding for the Station in July 1983.
In 1990, pursuant to NRC regulations, OPPD established an external trust fund based upon the NRC's minimum funding requirements. To ensure that additional funds are available to pay decommissioning costs, a supplemental trust fund was established in 1992. The funds in the 1992 Fund are in excess of the NRC's minimum funding requirements and are not included in these audited financial statements. The net assets available for decommissioning costs in the 1992 Fund were $74.1 million and $67.6 million at June 30, 2010 and 2009, respectively.
The unaudited Management's Discussion and Analysis should be read in conjunction with the financial statements and related notes. This document contains forward-looking statements based on OPPD's current plans.
Financial Position and Results of Operations The following were the Net Assets of the Omaha Public Power District Fort Calhoun Station Decommissioning External Trust Fund (the "Fund") at June 30 (dollar amounts in thousands):
2010 2009 Net assets available for decommissioning costs $243,183 $221,485 The following were the revenues of the Fund for the years ended June 30 (dollar amounts in thousands).
2010 2009 Investment income $ 8,536 $10,894 Increase (decrease) in fair value of investments 13,162 (5,101 Total revenues $21,698 $ 5,793 2010 Compared to 2009 Total revenues were $21.7 million for the twelve-month period ended June 30, 2010, with $8.5 million from investment income and $13.2 million from an overall net increase in the fair value of investments due to favorable market conditions. Total revenues were $5.8 million for the twelve-month period ended June 30, 2009, with $10.9 million from investment income offset by $5.1 million from an overall net decrease in the fair value of investments due to unfavorable market conditions.
Funding Policy OPPD annually reviews the funding requirements and cost projections for decommissioning activities. Cost projections are based on NRC formulas and indices and an independent engineering firm's estimates.
Earnings rate projections are based on forecasts for three to five year government bonds. Inflation rate projections are based on forecasts for the consumer price index. All investment income earned is reinvested in the decommissioning fund.
The present value of the minimum decommissioning amount ("MDA") required by the NRC was estimated at
$343.5 million as of June 30, 2010. Given current escalation indices and projected earnings rates, the balance of OPPD's Fort Calhoun Station Decommissioning External Trust Fund and the present value of future earnings in this Fund are estimated to exceed the MDA, partly due to the Station's 20-year license extension.
Accordingly, no funding was required for the fiscal years presented. The amount deemed in excess of the MDA will remain in the Fund to cover possible changes in escalation indices and projected earnings rates.
Summary of the Financial Statements The financial statements, related notes, and Management's Discussion and Analysis provide information about the Fort Calhoun Station Decommissioning External Trust Fund's financial position and activities. The Statements of Net Assets Available for Decommissioning Costs present the Fund's net assets as of June 30, 2010 and 2009. The Statements of Changes in Net Assets Available for Decommissioning Costs present the Fund's revenues and expenditures for the years ended June 30, 2010 and 2009. The Notes to Financial Statements provide additional detailed information.
The basic financial statements, notes, and Management's Discussion and Analysis are designed to provide a general overview of the Fund's finances. Questions concerning any of the information provided in this report should be directed to Investor Relations, 402-636-3286.
OMAHA PUBLIC POWER DISTRICT FORT CALHOUN STATION DECOMMISSIONING EXTERNAL TRUST FUND STATEMENTS OF NET ASSETS AVAILABLE FOR DECOMMISSIONING COSTS AS OF JUNE 30, 2010 AND 2009 (Dollar amounts in thousands) 2010 2009 ASSETS Investments, at fair value (Note 2) $,242,638 $220,586 Accrued interest receivable 545 899 NET ASSETS AVAILABLE FOR DECOMMISSIONING COSTS $243,183 $221,485 The accompanying notes are an integral part of the financial statements.
OMAHA PUBLIC POWER DISTRICT FORT CALHOUN STATION DECOMMISSIONING EXTERNAL TRUST FUND STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR DECOMMISSIONING COSTS FOR THE YEARS ENDED JUNE 30, 2010 AND 2009 (Dollar amounts in thousands) 2010 2009 REVENUES:
Investment income $ 8,536 $ 10,894 Increase (decrease) in fair value of investments 13,162 (5,101) 21,698 5,793 EXPENDITURES (Note 3)
EXCESS OF REVENUES OVER EXPENDITURES 21,698 5,793 NET ASSETS AVAILABLE FOR DECOMMISSIONING COSTS:
.Beginning of period 221,485 215,692 End of period $243,183 $221,485 The accompanying notes are an integral part of the financial statements.
OMAHA PUBLIC POWER DISTRICT FORT CALHOUN STATION DECOMMISSIONING EXTERNAL TRUST FUND NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES Organization of Fund - The Omaha Public Power District Fort Calhoun Station Decommissioning External Trust Fund (the "Fund" or the "1990 Fund") was established in accordance with Nuclear Regulatory Commission ("NRC") regulations, for the purpose of discharging the Omaha Public Power District's ("OPPD") obligation to decommission, as defined by the NRC, its Fort Calhoun Station. For 1990 and subsequent years, OPPD's Board of Directors approved the collection of nuclear decommissioning costs based upon the NRC's external minimum funding requirements. The NRC's requirements are based on a generic estimate of the cost to decommission radioactive portions of a nuclear unit based on the size and type of reactor.
Beginning in 1993, OPPD commenced funding on the basis of new decommissioning estimates which resulted from a 1992 independent engineering study and which exceed NRC external minimum funding requirements. The resultant Fort Calhoun Station Decommissioning Supplemental External Trust Fund (the "1992 Fund") was established to retain funds in excess of the NRC's minimum funding requirements (not included herein). In 2003, the NRC granted a 20-year extension of the Fort Calhoun Station's operating license which will allow the Station to operate until 2033. The accompanying financial statements are only for the 1990 Fund.
The present value of the total decommissioning cost estimate for the Fort Calhoun Station as of June 30, 2010 and 2009 was approximately $673.7 million and $669.6 million, respectively, of which the NRC minimum decommissioning amountwas approximately $343.5 million-and $338.9 million, respectively.
OPPD will periodically review and adjust, if necessary, the funding level for changes in the estimated costs of decommissioning the station.
Fair Value of Financial Instruments - The Fund reports investments at fair value in accordance with Governmental Accounting Standards Board Statement No. 31, Accounting and FinancialReportingfor CertainInvestments andfor ExternalInvestment Pools.
Investment Income - Investment income is recorded, as earned, on an accrual basis.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Risks and Uncertainties - The Fund utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for decommissioning costs.
- 2. INVESTMENTS Investments - The Fund's investments are held by the Fund's trustee, the First National Bank of Omaha, in the Fund's name in accordance with the trust agreement. Fair values were determined based on quotes received from the trustee's market valuation service. The weighted average maturity was based on the fair value of individual investments and investment type. As of June 30, 2010 and 2009, the Fund's investments were as follows (dollar amounts in thousands):
2010 2009 Weighted Weighted Average Average Fair Maturity Fair Maturity Investmeht Type Value (Years) Value (Years)
Money market funds $ 36 $ 2 U.S. government securities 134,312 1.8 125,946 2.3 Corporate bonds 3,170 0.2 9,408 1.8 Mutual funds 105,120 85,230 Total $242,638 $220,586 Portfolio Weighted Average Maturity 1.0 1.4 Interest Rate Risk - The Fund's investment in relatively short-term securities reduces interest rate risk, as evidenced by its portfolio weighted average maturity of 1.0 and 1.4 years at June 30, 2010 and 2009, respectively.
Credit Risk - The Fund's investment policy is to comply with the Nebraska state statutes for governmental entities, which limit investments to investment grade fixed income obligations. The majority of the investments held by the Fund at June 30, 2010 and 2009 were rated AAA by Standard &
Poor's Ratings Services and AAA by Moody's Investors Service.
Custodial Credit Risk - The Fund's bank deposits were entirely insured or collateralized with securities held by the Fund or by its trustee in the Fund's name at June 30, 2010 and 2009. The Fund delivers all of its investment securities under contractual trust agreements.
- 3. EXPENDITURES ON BEHALF OF THE FUND Trustee fees of $30,000 were paid on behalf of the Fund by the Omaha Public Power District for each of the years ended June 30, 2010 and 2009.
OMAHA PUBLIC POWER DISTRICT FORT CALHOUN STATION DECOMMISSIONING EXTERNAL TRUST FUND CERTIFICATION OF PAYMENTS FROM THE FUND PURSUANT TO SECTIONS 5 AND 6 OF THE FORT CALHOUN STATION DECOMMISSIONING FUNDING PLAN FOR THE YEARS ENDED JUNE 30, 2010 AND 2009 No such payments were made during the years ended June 30, 2010 and 2009.