ML022490126
| ML022490126 | |
| Person / Time | |
|---|---|
| Site: | Watts Bar, Grand Gulf, Pilgrim, Arkansas Nuclear, River Bend |
| Issue date: | 08/29/2002 |
| From: | Hochstetter S State of AR, Public Service Commission |
| To: | Collins S Office of Nuclear Reactor Regulation |
| References | |
| Download: ML022490126 (12) | |
Text
Sandra L. Hochstetter Chairman (501) 682-1455 Betty C. Dickey Commissioner (501) 682-1451 Lavenski R. Smith Commissioner (501) 682-1453 ARKANSAS PUBLIC SERVICE COMMISSION UTILITIES DIVISION 1000 Center P.O. Box 400 Little Rock, Arkansas 72203-0400 http:l/www.AccessArkansas.orglpsc August 29, 2002 Mr. Samuel J. Collins Director, Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Mail Stop O-5E7 One White Flint North 11555 Rockville Pike Rockville, MD 20852-2738 j-'- zq,!I so
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Dear Mr. Collins:
This letter is in response to John McGaha's letter of July 25,2002 concerning Entergy's questions about compliance withNRC regulations on decommissioning funding. Mr. McGaha's letter stated the NRC should schedule a meeting to discuss these questions. Bill Reckley has contacted our staffto coordinate the meeting. Three or four representatives from our staff will attend the meeting tentatively scheduled for September 24, 2002.
As you know, this is not the first time this issue has been addressed. Mr. McGaha wrote to Chairman Meserve concerning this very issue on March 26,2001. The Arkansas Public Service Commission's position was clarified in a letter from me to Chairman Meserve on August 2,2001. Given Chairman Meserve's letter of May 11, 2001 it was our understanding that this issue as it pertains to Arkansas Nuclear One had been addressed in a satisfactory manner. We were therefore surprised to learn that Entergy had continued to press this issue with the NRC. It is our hope that the September 24 meeting will resolve any remaining issues or questions.
The Arkansas Public Service Commission appreciates the opportunity to participate in the resolution of this matter.
Sincerely, Sandra Hochstetter Chairman Attachments (referenced correspondence)
-3 ADoi
Mr. Samuel J. Collins August 29, 2002 Page -2 cc:
Mr. John McGaha, President, Entergy Operations, Inc.
Mr. James M. Field, Chairman, Louisiana PSC Mr. W. W. Merschoff, NRC Administrator, Region IV Mr. W. D. Reckley, NRC Project Manager, (ANO-1)
Mr. T. W. Alexion, NRC Project Manager, (ANO-2)
A EnterW oprtin, n RO. Box 31995 EJadkw, MS 39288-1995 Td 601368 5690 carx~a@a~wergy corn John R. Mcraha March 26, 2001 The Honorable Richard A. Meserve Chairman U.S. Nuclear Regulatory Commission Washington, D.C. 20555
SUBJECT:
Decommissioning Funding Cessation CNRO-2001-00013
Dear Chairman Meserve:
This letter is designed to advise you of recent developments concerning funding of the external sinking funds for decommissioning of several nuclear plants operated by Entergy Operations, Inc. on behalf of the plants' owners; and to seek the NRC's guidance concerning these developments. Prior to January 2001, each of Entergy Operations' plants' decommissioning liabilities was being covered by an external sinking fund, as permitted under NRC regulations found at 10 C.F.R. §50.75(e)(1)(ii). Recent and ongoing actions by the Arkansas and Louisiana Public Service Commissions are changing the vehicle for collecting the necessary funding. This topic was discussed with members of your staff on March 12 in a public meeting held at NRC headquarters in Rockville. Maryland. Our intention to send this letter was discussed during that meeting.
In 2000 the Arkansas Public Service Commission (APSC) held hearings on the appropriate level of decommissioning funding for Arkansas Nuclear One, Units 1 and 2 (ANO 1 and ANO
- 2) (APSC Docket No.87-166.TF), which are operated by Entergy Operations, Inc. and owned by Entergy Arkansas, Inc. (EAI). At the hearings, the APSC staff testified that ANO 1 had filed with the NRC for an operating license renewal under 10 C.F.R. Part 54, and that renewal approval is likely for that unit. The staff reasoned that because it is likely that EAI would ultimately receive a license renewal for ANO 1 and ANO 2, it is also likely that EAI would operate ANO I and ANO 2 Into an extended license term. Under current assumptions regarding trust fund earnings and the escalation of decommissioning costs, the APSC staff argued that the ANO decommissioning trusts would be overfunded if ANO 1 and ANO 2 operate for several years past their original 40-year licensed life and if decommissioning funding were not ceased immediately.
EAI argued that the acquisition of a license renewal provides no indication that a decision will be made to operate a plant past its initial licensed life. Furthermore, even if license renewal and the decision to operate past forty years were synonymous, neither ANO 1 nor
Decommissioning Funding Cessation March 26. 2001 CNRO-2001-00013 Page 2 of 3 ANO 2 have a renewed NRC license at this time. EAI also voiced its concerns that cessation of decommissioning collections would not be consistent with NRC regulations and guidance conceming payments into an external sinking fund for decommissioning of a nuclear plant.
As a result of those hearings, on October 3. 2000, the APSC issued its Order 32, ordering, in relevant part, that collections from ratepayers for decommissioning funds for ANO I and ANO 2 should be ceased as of January 1, 2001. In accordance with that order, decommissioning collections for ANO and payments into ANO's decommissioning trusts have been halted.
Based in part on the actions taken by the APSC, in December 2000, consultants for the Louisiana Public Service Commission (LPSC) staff recommended that the LPSC cease decommissioning collections for Entergy Gulf States, Inc.'s (EGSI) River Bend Station (River Bend) in LPSC Docket No. U-24993.,EGSI has filed testimony opposing this action, and has presented arguments similar In substance to those presented to the APSC. This case Is currently scheduled to go to hearings some time in the early part of this year. If the LPSC rules that River Bend's decommissioning trust funding should be ceased, Entergy expects the LPSC staff consultants to make the same recommendation with respect to Entergy Louisiana, Inc.'s (ELI) Waterford 3 Nuclear Station (Waterford 3). Pursuant to 10 C.F.R. § 54.17(c), neither River Bend nor Waterford 3 is even eligible to apply to the NRC for a license renewal at this time.
NRC regulations do not appear to sanction the cessation of decommissioning collections for ANO 1, ANO 2, River Bend or Waterford 3 based upon an assumed life extension. 10 C.F.R. § 50.75(e)(1)(ii) provides that payments to an external sinking fund should be made in an amount such that "funds would be sufficient to pay decommissioning costs at the time termination of operation is expected." NRC Regulatory Guide 1.159 states. more explicitly, that deposits to the sinking fund should be calculated based on "the remaining years of the license.0 Reg. Guide 1.159 at section 2.2.5.
Entergy Operations, Inc. requests guidance from the NRC on whether elimination of collections for decommissioning trust funding based on an assumed life extension (where there is no license renewal) is consistent with NRC requirements for decommissioning funding assurance. We believe that if the NRC does not express its position on this matter in a timely manner, other public service commissions may construe the NRC's silence as acquiescence to elimination of decommissioning funding. Entergy Operations would appreciate the earliest possible response from the NRC. If thle NRC's position is that4 elimination of collections under these circumstances is Inappropriatewe wouldtk-te--16, presguftfS position to one or more of thepublic service commissions that regulate Entergy i peiiations-plants' decommisslonig u pi oO rang i tIiiFirinfin'a actions. i
Decommissioning Funding Cessation March 26, 2001 CNRO-2001-00013 Page 3 of 3 If we can provide you with any additional information, please contact me at 601-368-5690.
Thank you, for your attention to this Important matter.
Sin erelly, JRM/LJSIbaa cc:
Mr. C. G. Anderson (N-GSB)
Mr. G. J. Taylor (M-ECH-65)
Mr. J. L. Blount (M-ECH-62).
Mr. E.W. Merschoff Mr. W. A. Eaton(G-ESC-VPNO)
Mr. N. S. Reynolds Mr. R. K. Edington (R-GSB-40)
Mr. L. Jager Smith (Wise, Carter)
Mr. J. T. Herron (W-GSB-300)
Mr. D.E. Levanway (Wise, Carter)
Mr. S.M. Henry Brown (LoENT-WDC)
Mr. W. D. Reckley, Project Manager (ANO-1)
Mr. T. W. Alexion., Project Manager, (ANO-2)
Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Mail Stops 5H16; 4D6A Washington, DC 20555 Mr. R. E. Moody, Project Manager (RBS)
Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Mail Stop 0-701 Washington, DC 20555 Mr. N. Kalyanam, Project Manager (W-3)
Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Mail Stop O-7D1 Washington, DC 20555 Mr. S. P. Sekerak, Project Manager (GGNS)
Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Mail Stop 13H3 Washington, DC 20555
UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 205554001 May 11, Z001 CHAIRMAN J
.ci OO Mr. John McGaha, President Entergy Operations, Inc.
P.O. Box 31995 Jackson, Mississippi 39286-1 995
Dear Mr. McGaha:
Thank you for your letter of March 26, 2001, informing us of a recent decision by the Arkansas Public Service Commission (APSC) regarding the amount of decommissioning funds that APSC has allowed to be collected for Arkansas Nuclear One, Units 1 and 2 (ANO 1 and ANO 2, respectively), in rates charged to electricity consumers.
You indicate that, based upon an assumption by the APSC that the license renewal application filed for AN0 1 pursuant to 10 CFR Part 54 is likely to be approved by the NRC, the APSC has determined that AN0 1 and AN0 2 will be operated into the renewed license term.
As a result, using its current assumptions regarding decommissioning trust fund earnings and decommissioning cost escalation, the APSC has apparently concluded that the AN0 decommissioning trusts would be overfunded if AN0 1 and ANO 2 operate for several years past their original 40-year licensed life and if decommissioning funds collections from ratepayers were not ceased immediately. You indicate that the APSC issued an order on October 3, 2000, that collections from ratepayers for decommissioning funds for AN0 1 and ANO 2 should end as of January 1, 2001. You also indicate that decommissioning collections were, in fact, stopped as of that date. You further state that based on the APSC action, the Louisiana Public Service Commission may take similar actions for the River Bend Station and Waterford 3 Nuclear Station. You request guidance from the NRC on whether the elimination of collections for decommissioning trust funding based on an assumed life extension (where there is no license renewal) is consistent with NRC requirements for decommissioning funding assurance.
The NRC expects that decommissioning funding assurance will be provided such that the necessary funds will be available by the end of the licensed operating life, based on the current license term. Section 50.75 (e)(1)(ii) of the Commission's regulations provides that payments to an external sinking fund are to be made such that "the total amount of funds would be sufficient to pay decommissioning costs at the time termination of operation is expected."
The NRC interprets this section of its regulations to require that the accumulation of decommissioning funds in an external sinking fund be based on the remaining term of the license. Thus, if the NRC issues an operating license for a nuclear power plant for a term of 40 years, the decommissioning funds collection and earnings period should be based on that 40 year license term. Decommissioning fund collection can be based on a renewed license (e.g.,
60 years) onl after the NRC has approved the license renewal. Issuance of a renewed license is subject to a favorable review by the NRC and cannot be taken for granted. According to our present schedule, we expect to reach a decision about whether to grant license renewal for AND 1 early this Summer. No application for renewal has been filed for AND 2.
If you have any further questions on this matter, please contact Robert Wood at (301) 415-1255.
Richard A. Meserve cc:
Chairman Sandra L. Hochstetter, APSC Chairman James M. Field, LPSC
Sandra L. Hochstetter ARKANSAS Chairman PUBLIC SERVICE COMMISSION 10's (501) 682-1455 1000 Center Betty C. Dickey P.O. Box 400 Commissioner Little Rock, Arkansas 72203-0400 (501) 682-1451 Fax (501) 682-5731 Lavenski R. Smith http:llwww.state.ar.uslpsc Commissioner (501) 682-1453
$I August 2, 2001 The Honorable Richard A. Meserve Chairman U.S. Nuclear Regulatory Commission Washington, D.C. 20555
Dear Chairman Meserve:
On March 26, 2001 Entergy Operations, Inc. President John McGaha wrote to you concerning the external sinking funds for decommissioning nuclear plants operated by Entergy. Two of the plants referred to are Arkansas Nuclear One (ANO) Unit 1 and Unit 2. The purpose of this letter is to clarify the Arkansas Public Service Commission's position regarding funding for the decommissioning of these units.
This Commission has not changed the vehicle for decommissioning funding.
In 1987 the Commission approved Rider M26 as the funding vehicle for nuclear decommissioning costs to ensure that funds would be available at the termination of operation of ANO Unit 1 and Unit 2.
Rider M26 is a unique rate mechanism designed specifically to recover the projected decommissioning costs for ANO Unit 1 and Unit 2. The Riderprovides for updated cost projections every five years and annual updates of the financial model inputs including inflation factor, fund balances and earnings projections in an annual review of the status of decommissioning funding.
Rider M26 rzmains an approved Entergy tariff and trust earnings continue to accumulate. The balance in the external trust funds totaled $360 million as-of December 2000. While collections are suspended for 2001, all other aspects of the tariff are effective. Annual filings continue as do the projected cost updates.
Our objective continues to be the assurance of funding at decommissioning. However, the risk of over-collection was an issue brought before the Commission. Testimony assessed the impact of not receiving license extensions and calculated the risk to ratepayers in terms of increased future annual revenue requirements. The risk of over-collection without timely refunds was clearly much greater than the increased future annual revenue requirements. A 20:year life extenr'ion wa-not necessary for the conclusion that revenue collection should be suspended. It was on the basis of this testimony that the Commission suspended collections under Rider M26 at this time with a specific provision for continued annual monitorrg. Our order in no way prevents collection ofdecommissioning funds should it be determined in the future that such funds are required to decommission ANO.
August 2, 2001 Page 2 I hope this clarification is useful in explaining the specific facts in Arkarsa sserving as the basis for our ruling. If,you have any questions or need clariiication, please feel free to contact me.
Sincerely, Sandra Hochstetter Chairman
Entergy Operamons Inc
'!EntergW'~
John R. McGana CNRO-2002-00044 July 25. 2002 Mr. Samuel J. Collins Director, Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Mail Stop O-5E7 One White Flint North 11555 Rockville Pike Rockville, MD 20852-2738
SUBJECT:
Decommissioning Funding Questions
Dear Mr. Collins:
Pursuant to our recent communications, you have asked that I submit a succinct summary of Entergy's questions concerning compliance with NRC regulations on decommissioning funding.
My staff has recently provided your staff with some detailed questions.
Our primary policy-level questions may be summarized as follows:
- 1.
Our interpretation of 10 C.F.R. §50.75(e)(1)(ii), related regulatory guidance, and the letter from Chairman Meserve to Entergy Operations, Inc., dated May 11, 2001, is that the use of an external sinking fund is one of-several methods for providing reasonable assurance that adequate decommissioning funding will be available to pay decommissioning costs at the expected time of termination of operation of a nuclear plant. Funding of the external sinking fund is to be based on the licensed life of the plant. The effect of potential life extension in decommissioning funding calculations is not to be credited unless and until the licensee has actually received an approved license extension. Only then can reasonable assurance be based on a potential life beyond the initial licensed life, and only then can the funding of the sinking fund be altered based on an assumed life extension. As indicated in my letter to Chairman Meserve dated March 26, 2001, the Arkansas Public Service Commission has ordered a deviation from this requirement in the case of Arkansas Nuclear One, Unit 2, and the Louisiana Public Service Commission may soon follow suit in the case of River Bend. Our question is: What is the NRC's approach to a situation where a rate regulator has ordered a schedule for decommissioning collections for an external sinking fund that appears to conflict with applicable federal regulations?
- 2.
What assumptions and calculations are acceptable to the NRC to meet the reasonable assurance requirement that adequate decommissioning funding will be available at the end of plant life? If the 2% real rate of return on decommissioning funds prescribed by 10 C.F.R. §50.75(e)(1)(ii) is used, the results can obviously be
Decommissioning Funding Questions July 25, 2002 CNRO-2002-00044 Page 2 of 3 dramatically different than if other methods and assumptions are used. Likewise, if a rate regulator issues an order to curtail collection of funding needed to support the sinking fund approach, is it valid to assume that increased rates of return can be used to justify this decision? If the same rate regulator's decision is based on an assumption that the sinking fund funding, once curtailed, may be resumed later in the current licensed life, and such decision is counting on a license and life extension to provide reasonable assurance of adequate funding, is this decision consistent with NRC regulations where a license extension has not yet been approved?
In our telephone conversation of July 17, we agreed on the following course of action:
- 1.
Your staff will work with mine on communicating a common understanding of the above questions.
- 2.
The NRC will schedule a meeting to review/discuss the NRC Staff's position on these questions.
Appropriate stakeholders, including state public service commission staffs, would be notified of the meeting to ensure that all interested parties can participate in the discussions.
I look forward to attending the meeting described above and to resolving our concerns on how to comply with the NRC's regulations on decommissioning funding.
If we can provide you with any additional information, please contact Mr. Jager Smith at 601-368-5572. Thank you for your attention to this important matter.
Sincerely, JRM/LJS/bal cc:
See next page
Decommissioning Funding Questions July 25, 2002 CNRO-2002-00044 Page 3 of 3 cc:
Mr. C. G. Anderson (N-GSB)
Mr. J. L. Blount (M-ECH-62)
Mr. W. A. Eaton (G-ESC-VPNO)
Mr. P. D. Hinnenkamp (R-GSB-40)
Mr. N. S. Reynolds (W&S)
Mr. L. Jager Smith (Wise, Carter)
Mr. G. J. Taylor (M-ECH-65)
Mr. J. E. Venable (W-GSB-300)
Mr. G. A. Williams M-ECH-579)
Mr. James M. Field, Chairman, Louisiana PSC Ms. Sandra L. Hochstetter, Chairman, Arkansas PSC Mr. T. W. Alexion, NRC Project Manager, (ANO-2)
Mr. D. H. Jaffe, NRC Project Manager, (GGNS)
Mr. N. Kalyanam, NRC Project Manager, (W-3)
Mr. E.W. Merschoff, NRC Administrator, Region IV Mr. W. D. Reckley, NRC Project Manager, (ANO-1)
Mr. M. K. Webb, NRC Project Manager, (RBS)