ML040980027

Decommissioning Funding Status Report and Update to Parent Company Guaranty

ML040980027
Person / Time
Site:	Millstone, Surry, North Anna
Issue date:	03/29/2004
From:	Christian D Dominion Nuclear Connecticut
To:	Document Control Desk, NRC/FSME
References
04-163
Download: ML040980027 (10)

Text

Dominion Nuclear Connecticut, Inc.

Millstone Power Station X Dominion D

Rope Ferry Road Waterford. CT 06385 March 29, 2004 United States Nuclear Regulatory Commission Serial No.04-163 Attention: Document Control Desk NL&OS/SWT R1 Washington, D. C. 20555-0001 Docket No. 50-245 License No. DPR-21 DOMINION NUCLEAR CONNECTICUT MILLSTONE POWER STATION UNIT 1 DECOMMISSIONING FUNDING STATUS REPORT AND UPDATE TO PARENT COMPANY GUARANTY Pursuant to 10 CFR 50.75(f)(1), Dominion Nuclear Connecticut, Inc., (DNC) is providing the report on the status of decommissioning funding for Millstone Unit 1 as Attachment 1.

In addition, the annual update of the Millstone Unit 1 parent company guaranty has been performed as required by Condition 2.C(5) of its license.

In a letter dated March 31, 2003, DNC and Virginia Electric and Power Company (Dominion) provided the biennial update status on decommissioning funding for the Surry, North Anna and Millstone Power Stations. Subsequently, in a letter dated June 25, 2003, a parent company guaranty was provided to the Nuclear Regulatory Commission in the amount of 110 million dollars. This parent company guaranty covered DNC Millstone Units 1 and 2 as well as Dominion Surry Units 1 and 2 and North Anna Units 1 and 2. contains the updated financial test in support of the parent company guaranty. As demonstrated by the financial test, the current parent company guaranty for Millstone Units 1 and 2, Surry Units 1 and 2 and North Anna Units 1 and 2 remains an acceptable method for providing financial assurance in concert with the other means of financial assurance noted in our previous letter dated March 31, 2003. Since the March 31, 2003 submittal there have been no material changes to trust agreements established for nuclear decommissioning of Millstone Unit 1.

If you have any questions or require additional information, please contact Ms. Sheri Tew at (804) 741-2368.

Very truly yours, David A. Christian Senior Vice President and Chief Nuclear Officer Attachments (2)

Serial Number 04-163 Millstone Unit 1 Decommissioning Financial Assurance Page 2 of 2 Commitments made in this letter: None.

cc: U. S. Nuclear Regulatory Commission Region I 475 Allendale Road King of Prussia, PA 19406-1415 Mr. R. J. Prince NRC Inspector U. S. Nuclear Regulatory Commission Region I 475 Allendale Road King of Prussia, PA 19406-1415 Mr. S. M. Schneider NRC Senior Resident Inspector Millstone Power Station Mr. D. G. Holland NRC Project Manager U. S. Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Mail Stop 7E1 Rockville, MD 20852-2738 Mr. V. Nerses NRC Senior Project Manager U. S. Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Mail Stop 8C2 Rockville, MD 20852-2738 Mr. William Meinert Nuclear Engineer Mass. Municipal Wholesale Electric Co.

Moody Street, P. 0. Box 426 Ludlow, MA 01056 S. Page Central Vermont Public Service Corp.

77 Grove Street Rutland, VT 05701

Serial No.04-163 Millstone Unit 1 Decommissioning Financial Assurance Attachment 1 DOMINION NUCLEAR CONNECTICUT, INC. (DNC)

MILLSTONE POWER STATION UNIT 1 2004 DECOMMISSIONING FUNDING STATUS REPORT

Serial No.04-163 Millstone Unit 1 Decommissioning Financial Assurance Attachment 1 Page 1 of 2 2004 Decommissioning Funding Status Report Updated Decommissioning Funding Worksheet for Millstone Unit 1 II504A480,827 Estimated Decommissioning Cost Estimate at Time of License Transfer (Exhibit L to License Transfer Application) (1999 dollars)

$12,859,695 Cost savings associated with adjusted SAFESTOR estimates, based on tighter work-scope and manpower costs (1999 dollars) *

$7,589,890 Cost savings associated with specific vendor bids for spent fuel pool projects (1999 dollars)*

• As of 12/31/03 actual costs are lower than previous estimates which are conservative. The next decommissioning study will true up the remaining cost estimates.

$484,031 ,242 Prior revised decommissioning cost estimate (1999 dollars)

$577.216,259 Prior revised decommissioning cost estimate (2003 dollars)

Unit 1 Qualified Fund Balance as of 12/31/03 $281 219,969 Unit 1 Non-Qualified Fund Balance as of 12/31/03 $0 Unit 1 Guaranty Amount $0 Total Fund Balances as of 12/31/2003 $281 219,969 Millstone Unit 1 Decommissioning Expenditures

$571,603,507 Estimated Remaining Decommissioning Costs (12/31/2003 $)

$2,398,889 Annual monitoring cost during SAFSTOR (12/31/2003 $)

$1,428,861 Annual Decommissioning Activities (2004 - 2008) (12/31/2003 $)f Additional scope anticipated but not yet submitted for approval.

4.50% Inflation Rate 6.50% After Tax Earnings - Long Term 0.75% After Tax Earnings - Money Market

Serial No.04-163 Millstone Unit 1 Decommissioning Financial Assurance Attachment 1 Page 2 of 2 Beginning of Year Unit 1 End of Year Year Balance *6 Earninas 4.Expenditures .4 Balance 2004 $281 219969 _15,778.973 $26.046,309 _270,952,633

$270,952,633 517,.476.071 $4,180,000 _5284,248,705 2006 _284248.705 S18,334.203 $4368p099 S298,214,808 2007 S298.214,808 S19.235.611 $4.564.664

- - - - - I S312,885,755 2008 _312,885755 S20,188_435 $4,588,896 S328,485294 2009 $328,485,294 521 250,015 $3,123,978 S346,611330 2010 5346,611,330 $_22,423,638 53264,558 __5365,770,411 2011 5365,770,411 523,664,204 $3,411,463 $386,023,152 2012 5386,023,152 524,975,326 $3,574,746 5407.423,732 5407.423.732 S26 361,467 _53,725,403 54300.059_796 2014 S430.059,796 =S27,827,363 53.893,046 _54_53.994,113 2015 $453,994,113 S29,377,400

$ $4,068233 S479,303,280_

2016 S479,303,280 531,016,167 $4,262,951 $506,056,496 2017 S506,056,496 5S32,749,287 $4,442,612 5534,363,171 2018 S534,363,171 534,582,724 $4,642,530 5564,303,366 2019 $564,303,366 536,522,047 $4,851,444 5595.973.969 2020 5595,973.969 S38.573,089 _$5,083,648 $629,463,410 2021 _ S629,463,410 s40.742,940 $55297,898 664,908,453 2022 5664.908 ,453 S43,039,120 $5,536A303 $702,411269 2023 S702.411.269 545.468,706 $55,785,437 5742.094.538 2024 5742,094,538 548,039,119 _6062,345 5784,071,312 2025 5784,071,312 550,759,305 $6,317,841 5828,512,776 2026 5828,512.776 553,638,761 $6,602,144 $875,549,392 2027 875,54,392 556,686,485_ $6,899,241 _ 925,336,637 5925,336,637 559,911.924 _ 7_229,459 $978,019,101 2029 $978,019,101 563,326,382 _7,534,143 51,033,811,340 2030 $1.033,811,340 566,941,859 $7,873,180 51,092,880,019 2031 $1,092,880,019 5S70,769,808 $8,227,473 51,155,422.354 2032 $1155.422,354 574,822,262 $8'621,265 51,221 .623351 2033 $1221.623,351 579,113,518 $8,984,606 _51 .291 752 263 2034 $1,291 752,263 $83,658,757 _9 388,913 s1,366,022,107 2035 $1,366,022,107 $9,811,415 51,444,683,259 2036 $1.444,683,259 $93,570,279 $10,281,018 51,527.972,519 2037 51,527,972,519 S98.969,999 510,714,310 $1,616228208 2038 S1 $16,228,208 $104,690.949 $11,196,454 51.709,722,702 2039 51,709,722,702 -

$110,751,716 $11.700.294 51,808,774,!124

$1,808,774,124 $117,171,858 $12,260,306 51.913,685,676 2041 S1,913,685,676 $123,974,316 $12,777,014 52,024,882,978 2042

$2,024,882,978 $131,183,454 $13,351,980 52,142.714,453 2043 $2,142,714,453 5138,822,973 52,267,584,607 2044 $2,267,584,607 $146,917,829 $14 ,620,643 52,399,881,793 2045 $2,399.881_793 $155,497,120 $515236,827 52,540,142,086 2046 $2,540,142,086 5_164,.591,755 $15,922,484 $2,688,811,357 2047 $2,688,811,357 S174,231.971 516,638,996 52,846,404,332 2048 $2,846,404,332 $181,292,183 $114,587,638 52,913,108,877 2049 52.913,108,877 _$177,106 ,419 $376,789,488 $2,713,425,807 2050 52,713,425,807 _$150,276,399 $802,962,415 s2,060739,791 2051 $2,.060,739,791 5102,495,393 $967,775,173 51,195,460,011 2052 $1,195,460,011 $56,459,626 $653,700,760 $598218,878 2053 $32,036,540 5210,6 8,051 S419,557,367 2054 S20,473,090 5209,173,515 _5230,856,941 2055 5230,856,941 $11321 280 $113,366,817 5t128,811,404 2056 5128.811,404 _ 54,168,443 $129.363,024 _ $3,616,824 2057 53,616,824_

Trust Fund Fun Excess Trs 1111213 $1)$

Ex es (W3112003 $128,469 2,

Serial No.04-163 Millstone Unit 1 Decommissioning Financial Assurance Attachment 2 DOMINION NUCLEAR CONNECTICUT, INC. (DNC)

MILLSTONE POWER STATION UNIT 1 FINANCIAL TEST CONTAINED IN 10 CFR PART 30 APPENDIX A, INCLUDING INDEPENDENT ACCOUNTANTS' REPORT

Serial No.04-163 Millstone Unit 1 Decommissioning Financial Assurance Attachment 2 page 1 of 2 FINANCIAL TEST CONTAINED IN 10 CFR PART 30 APPENDIX A Dominion Resources, Inc. (DRI), located at 120 Tredegar Street, Richmond, Virginia 23219, as parent company of Virginia Electric and Power Company (Dominion) and Dominion Nuclear Connecticut, Inc. (DNC) satisfies the financial test contained in Appendix A to 10 CFR Part 30 for use of a parent guaranty in the total amount of $110 million.'

DRI guarantees, through the parent company guaranty, $110 million for the purpose of decommissioning the nuclear facilities owned by Dominion Resources, Inc. (DRI):

Facility Name Location License No.

Surry Unit 1 Surry, VA DPR-32 Surry Unit 2 Surry, VA DPR-37 North Anna Unit 12 Louisa, VA NPF-4 North Anna Unit 22 Louisa, VA NPF-7 Millstone Unit I Waterford, CT DPR-21 Millstone Unit 2 Waterford, CT DPR-65 Millstone Unit 3 Waterford, CT NPF-49 DRI is required to file a Form 10K with the U.S. Securities and Exchange Commission.

The DRI 2003 10K was separately transmitted to the NRC on March 29, 2004 (Serial Number 04-168). The figures for line items B and C as shown below were derived from DRI's independently audited, year-end financial statements and footnotes for the 12-month period ended December 31, 2003, and underlying accounting records.

A. DRI's current implied bond ratings are BBB+ and Baal for Standard and Poor's and Moody's, respectively.

The NRC Minimum and the subsequent 2% allowable real rate of return calculations have been revised to reflect License Renewal (NRC approval - March 2003) for the Surry and North Anna units. The result of including License Renewal is that a Parent Company Guaranty is no longer required for Surry Unit I and Unit 2 and North Anna Unit 1 and Unit 2 as these units are now fully funded. Additionally, Millstone Unit 2, without License Renewal, no longer requires a Parent Company Guaranty as this unit is now fully funded. Millstone Unit 3, without License Renewal, has been and remains fully funded and therefore does not require a Parent Company Guaranty. Millstone Unit 1,which has been approved for the 'SAFESTOR" method of decommissioning, is now fully funded and no longer requires a Parent Company Guaranty.

DRI will leave the existing $110 Million Parent Company Guaranty in place for this 2004 filing for the purpose of covering any variations to either the decommissioning escalation rate or decommissioning trust fund growth rate between now and the next filing.

2 The North Anna Nuclear Power Station isjointly owned by Virginia Electric and Power Company (88.4%)

and Old Dominion Electric Cooperative (11.6%). However, Virginia Electric and Power Company is contractually responsible for 89.26% of the decommissioning obligation and Dominion Resources, Inc. is providing a guaranty for that portion only.

Serial No.04-163 Millstone Unit 1 Decommissioning Financial Assurance Attachment 2 page 2 of 2 B. Computation of tangible net worth (millions of dollars):

Net Worth $10,538 LESS: Intangible Assets 365 Goodwill 4,300 Tangible Net Worth 5,873 LESS: Net Book Value of Nuclear Plants 3.258 Tangible Net Worth less book value of plants 2.615 C. Total Assets = $44,186 Less: Foreicqn = $ 1,550 Total US Assets = $42.636 FINANCIAL TESTS YES NO

1. Is line B at least $10 Million? 0 0

2. Is line B at least 6 times the guaranty amount of $110 million? 0 El

3. a. Are at least 90 percent of the firm's assets located in the U.S.? 0 0 or

b. Is line C at least 6 times the guaranty amount of $110 million? 0E 0

4. a. Are bond ratings BBB or above as issued by Standard and Poor's? 0 0 E

or

b. Are bond ratings Baa or above as issued by Moody's? 0 0 I hereby certify that the content of this financial test is true and correct to the best of my knowledge.

G. Scott ~,Presiden~/

etie~r Senior Vice d Treasurer Dominion Resources, nc.

Deloitte & Touche LLP 707 East Main Street Suite 500 Eighth & Main Building Richmond, Virginia 23219 Tel: (804) 697-1500 Fax: (804) 697-1825 www.deloitte.com Dloit Deloitte

&Touche INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Board of Directors of Dominion Resources, Inc.

Richmond, Virginia We have performed the procedures included in 10 CFR 30, Appendix A, which were agreed to by the United States Nuclear Regulatory Commission and Dominion Resources, Inc. (the Company), solely to assist the specified parties in evaluating the Company's compliance with the parent company guarantee financial test option as of December 31, 2003, included in the accompanying letter dated March 29, 2004 from David A.

Christian of Virginia Electric and Power Company and Dominion Nuclear Connecticut, Inc., and with respect to Attachment 2, from G. Scott Hetzer of Dominion Resources, Inc. Management is responsible for the Company's compliance with those requirements. This agreed-upon procedures engagement was performed in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

The procedures that we performed and related findings are as follows:

1. We compared the amounts included in Attachment 2. Dominion Nuclear Connecticut, Inc. (DNC),

Virginia Electric and Power Company (Dominion). Surry Power Station Unit 1. Surry Power Station Unit 2, North Anna Power Station Unit 1. North Anna Power Station Unit 2. Millstone Power Station Unit 1, Millstone Power Station Unit 2, Millstone Power Station Unit 3, Decommissioning Financial Assurance. Financial Test Contained in 10 CFR Part 30 Appendix A. Section B. Net Worth, Intangible Assets and Goodwill, and Section C. Total Assets, in the letter referred to above with the corresponding amounts in the audited financial statements of Dominion Resources, Inc. as of and for the year ended December 31, 2003, on which we have issued our report dated February 26, 2004, which report expressed an unqualified opinion and included an explanatory paragraph as to changes in accounting principles for: asset retirement obligations, contracts involved in energy trading, derivative contracts not held for trading purposes, derivative contracts with a price adjustment feature, the consolidation of variable interest entities, and guarantees in 2003; goodwill and intangible assets in 2002; and derivative contracts and hedging activities in 2001, and noted that such amounts were in agreement.

2. We recomputed from, or reconciled to, the audited financial statements referred to in procedure 1, the information included in Attachment 2. Dominion Nuclear Connecticut, Inc. (DNC), Virginia Electric and Power Company (Dominion). Surrv Power Station Unit 1. Surry Power Station Unit 2, North Anna Power Station Unit 1, North Anna Power Station Unit 2. Millstone Power Station Unit 1.

Millstone Power Station Unit 2, Millstone Power Station Unit 3. Decommissioning Financial Assurance. Financial Test Contained in 10 CFR Part 30 Appendix A Section B. Net Book Value of Nuclear Plants and Section C. Foreign assets, in the letter referred to above and noted no differences.

Deloitte Touche Tohmatsu

We were not engaged to, and did not, perform an examination, the objective of which would be the expression of an opinion on the accompanying letter dated March 29, 2004. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the information and use of the Board of Directors and management of Dominion Resources, Inc. and the United States Nuclear Regulatory Commission, and is not intended to be and should not be used by anyone other than these specified parties.

March 29, 2004