ML050890418

Decommissioning Funding Status Report Notification of Intent to Remove Parent Guarantee

ML050890418
Person / Time
Site:	Millstone, Surry, North Anna
Issue date:	03/29/2005
From:	Christian D Dominion Nuclear Connecticut, Dominion Resources Services, Virginia Electric & Power Co (VEPCO)
To:	Document Control Desk, NRC/FSME
References
05-121
Download: ML050890418 (18)

Text

1 Dominion March 29, 2005 United States Nuclear Regulatory Commission Serial No.05-121 Attention: Document Control Desk NL&OS/SWT RO Washington, D. C. 20555-0001 Docket Nos. 50-280, 281 50-338, 339 50-245, 336, 423 License Nos. DPR-32, 37 NPF-4, 7 DPR-21,65 NPF-49 VIRGINIA ELECTRIC AND POWER COMPANY DOMINION NUCLEAR CONNECTICUT, INC.

SURRY POWER STATION UNITS 1 AND 2 NORTH ANNA POWER STATION UNITS 1 AND 2 MILLSTONE POWER STATION UNITS 1.2 AND 3 DECOMMISSIONING FUNDING STATUS REPORT NOTIFICATION OF INTENT TO REMOVE PARENT GUARANTEE Pursuant to 10 CFR 50.75(f)(I), Virginia Electric and Power Company (Dominion) and Dominion Nuclear Connecticut, Inc., (DNC) are providing this report on the status of decommissioning funding for each of the seven nuclear power reactors as referenced above. In addition, Dominion is planning to modify its current method of providing financial assurance from the method previously reported to the NRC. Specifically, Dominion notified the NRC by letter dated March 31, 2003 (Serial No.03-178) and by letter dated June 25, 2003 (Serial No. 03-178A) that a parent company guarantee coupled with the sinking fund method would be the means of providing financial assurance for North Anna Units 1 and 2 and Surry Units 1 and 2. A parent company guarantee coupled with prepayment would be the means of providing financial assurance for Millstone Units 1 and 2. Millstone Unit 3 was, and continues to be, fully funded. As of this report and as noted in Attachments 1 and 2, a parent company guarantee is no longer required as a means of financial assurance for any of the Dominion and DNC units. Consequently, Dominion Resources plans to cancel the parent guarantee by separate correspondence.

To effect the cancellation of the parent guarantee in accordance with 10 CFR 30, Appendix A, Section Ill (A), Dominion Resources will provide by certified mail a formal notice of cancellation, which will become effective 120 days after receipt. Because the guarantee will remain in effect until expiration of the notice period, the financial test for the current guarantee is provided in Attachment 3. Dominion will continue to comply with Millstone Unit 1 License Condition 5 by providing an annual report in accordance

Serial No.05-121 Docket Nos. 50-280/281, 338/339, 245/336/423 Page 2 of 4 with 10 CFR 50.75(f)(l), adjusting cost estimates and funding levels over the storage period in accordance with 10 CFR 50.82(a)(8)(iv), and if required, reestablishing a parent guarantee in connection with such updates. provides the following information for the North Anna and Surry plants:

Table I - 2005 NRC Minimum Financial Assurance Amount Table II - Funds Held in External Trusts at December 31, 2004 Table Ill - 2005 NRC Minimum Financial Assurance Amount Minus Funds Held in External Trusts Table IV - Current Annual Funding Levels Table V - Annual Funding Levels Necessary to Meet 2005 NRC Minimum Financial Assurance Amounts provides the following information for the Millstone plants:

Table I - 2005 NRC Minimum Financial Assurance Amount Table II - Funds Held in External Trusts at December 31 , 2004 Table Ill - 2005 NRC Minimum Financial Assurance Amount Minus Funds Held in External Trusts Table IV - Current Annual Funding Levels TableV- Annual Funding Levels Necessary to Meet 2005 NRC Minimum Financial Assurance Amounts Table VI - Decommissioning Funding Worksheet for Millstone Unit 1 Since the March 31, 2003 submittal, there have been no material changes to trust agreements established for nuclear decommissioning of the Surry, North Anna, or Millstone units. However, in December 2003 the qualified and non-qualified decommissioning trusts for the Surry and North Anna units were amended to comply with the NRC's final rule on decommissioning trust provisions that became effective on December 24, 2003.

Please contact us if you have any questions or require additional information.

Very truly yours, David A. Christian Senior Vice President and Chief Nuclear Officer Virginia Electric and Power Company Dominion Nuclear Connecticut, Inc.

Serial No.05-121 Docket Nos. 50-280/281, 338/339,245/336/423 Page 3 of 4 Attach ments: - North Anna and Surry Decommissioning Financial Assurance - Millstone Units 1, 2 and 3 Decommissioning Financial Assurance - Financial Test Contained in 10 CFR Part 30 Appendix A Commitments made in this letter: None cc: U. S. Nuclear Regulatory Commission Region II Sam Nunn Atlanta Federal Center 61 Forsyth Street, S.W., Suite 23T85 Atlanta, GA 30303 U. S. Nuclear Regulatory Commission Region I 475 Allendale Road King of Prussia, PA 19406-141 Mr. N. P. Garrett NRC Senior Resident Inspector Surry Power Station Mr. J. T. Reece NRC Senior Resident Inspector North Anna Power Station Mr. R. Prince NRC Inspector Region I 475 Allendale Road King of Prussia, PA 19406-141 5 Mr. S. M. Schneider NRC Senior Resident Inspector Millstone Power Station Mr. A. 6.Wang Project Manager - Millstone Unit 1 U. S. Nuclear Regulatory Commission One White Flint North Mail Stop 7 E l 11555 Rockville Pike Rockville, MD 20852-2738

Serial No.05-121 Docket Nos. 50-280/281, 338/339,245/336/423 Page 4 of 4 Mr. V. Nerses NRC Senior Project Manager - Millstone Unit 2 U. S. Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Mail Stop 8C2 Rockville, MD 20852-2738 Mr. G. F. Wunder Project Manager - Millstone Unit 3 U. S. Nuclear Regulatory Commission One White Flint North Mail Stop 8 B I A 11555 Rockville Pike Rockville, MD 20852-2738 Mr. S. R. Monarque NRC Senior Project Manager U. S. Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Mail Stop 8H12 Rockville, MD 20852-2738 Mr. J. E. Reasor, Jr.

Old Dominion Electric Cooperative Innsbrook Corporate Center 4201 Dominion Blvd.

Suite 300 Glen Allen, VA 23060 Mr. Joseph Roy Massachusetts Municipal Wholesale Electric Co.

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

77 Grove Street Rutland, VT 05701

Attachment 1 Serial No.05-121 VIRGINIA ELECTRIC AND POWER COMPANY (DOMINION)

SURRY POWER STATION UNITS 1 AND 2 NORTH ANNA POWER STATION UNITS 1 AND 2 DECOMMISSIONING FINANCIAL ASSURANCE 2005 Nuclear Decommissioning Financial Assurance

Serial No.05-121 Attachment 1 VIRGINIA ELECTRIC AND POWER COMPANY 2005 Nuclear Decommissioning Financial Assurance 2005 NRC Minimum Financial Assurance Amount (Millions of Dollars)

Virginia State Corporation Commission (VSCC) $ 267.0 $ 267.0 $ 251.O $ 251.O $ 1,036.1 Company Contribution North Carolina Utilities Commission $ 16.0 $ 16.0 $ 15.0 $ 15.0 $ 62.0 Federal Energy Regulatory Commission $ 23.7 $ 23.7 $ 10.1 $ 10.1 $ 67.6 Virginia Retail (not under VSCC Jurisdiction) $ 49.9 $ 49.9 $ 47.1 $ 47.1 $ 194.0

$ (13.4) $ (13.4) $ (7.1) $ (7.1) $ (40.8)

Funds Held in External Trusts at December 31,2004 (see note 2)

(Millions of Dollars)

(see note 1) (see rote 1)

North Anna North Anna irginia State Corporation Commission (VSCC) $ 199.9 $ 191.6 $ 169.8 $ 158.0 $ 719.3 ompany Contribution rth Carolina Utilities Commission era1 Energy Regulatory Commission irginia Retail (not under VSCC Jurisdiction) $

Page 1 of 3

Serial No.05-121 Attachment 1 VIRGINIA ELECTRIC AND POWER COMPANY 2005 Nuclear Decommissioning Financial Assurance 2005 NRC Minimum Financial Assurance Amount (Minus Funds Held in External Trusts)

(Millions of Dollars)

Virginia State Corporation commission (VSCC) $ 67.1 $ 75.4 $ 81.2 $ 93.0 $ 316.8 External Company Contribution (0.4) External North Carolina Utilities Commission 13.6 External Federal Energy Regulatory Commission 41.4 External Virginia Retail (not under VSCC Jurisdiction) $ 97.3 External L - - - - u u ~ U U ~

Current Annual Funding Levels (sw note 4)

(Millions of Dollars)

Virginia State Corporation Commission (VSCC) n/a Company Contribution North Carolina Utilities Commission Federal Energy Regulatory Commission Virginia Retail (not under VSCC Jurisdiction)

Page 2 of 3

Serial No.05-121 Attachment 1 VIRGINIA ELECTRIC AND POWER COMPANY 2005 Nuclear Decommissioning Financial Assurance (Millions 01 Dollars - except percentages and years)

Amounts (from Table 1) 343.4 $ 343.4 $ 316.1 $ 316.1 $ 1,318.9 Projected Annual Escalation Factors 4.15% 4.15% 4.18% 4.18%

Year Thai Operating License Expires 2032 2033 2038 2040 2005 NRC Minimum Financial Assurance Amounts (in Future dollars) 1,029.1 $ 1,071.7 $ 1,221.7 $ 1,326.0 $ 4.648.6 Expected After-Tax and Fees Annual Earnings Rate 6.24% 6.24% 6.38% 6.38%

Annual Funding Levels Necessary to Meet 2005 NRC Minimum Financial Assurance Amounts The North Anna Power Station is jointly owned by Virginia Electric and Power Company (88.4%) and Old Dominion Electric Cooperative (11 6%). However, Virginia Electric and Power Company is responsible for (89.26%) of the Decommissioning obligation. The amounts stated in the above tables relect only that portion of the Decommissioning obligation attributable to Virginia Electric and Power Company.

Excludes amounts designated for the future Decommissioning of the ISFSls.

Represents annual funding levels to the License Renewal Date - end of Unit life. Negative amounts indicate full funding Parent Company Guarantees were in place for Surry Units 1&2 and lor North Anna Units 1&2 lor the Decommissioning obligation allocated to our FERC Jurisdictional customers. The trusts for these units are estimated to be fully funded and the Parent Company Guarantees are no longer needed Page 3 of 3

Attachment 2 Serial No.05-121 DOMINION NUCLEAR CONNECTICUT, INC. (DNC)

MILLSTONE POWER STATION UNITS 1.2 AND 3 DECOMMISSIONING FINANCIAL ASSURANCE 2005 Nuclear Decommissioning Financial Assurance

Serial No.05-121 Attachment 2 DOMINION NUCLEAR CONNECTICUT 2005 Nuclear Decommissioning Financial Assurance 2005 NRC Minimum Financial Assurance Amount (Millions of Dollars)

(See Note 3) (See Note 1 )

MPS MPS MPS Dominion Nuclear Connecticut Central Vermont PSC (Millions of Dollars)

(See Note 3) (See Note 1 )

MPS MPS MPS Dominion Nuclear Connecticut Central Vermont PSC Page 1 of 5

Serial No.05-121 Attachment 2 DOMINION NUCLEAR CONNECTICUT 2005 Nuclear Decommissioning Financial Assurance 2005 NRC Minimum Financial Assurance Amount Minus Funds Held in External Trusts (Millions of Dollars)

(See Note 3) (See Note 1) Method For MPS MPS MPS Providing Unit 1 Unit 2 Unit 3 Total Financial Ownership #50-245 #50-336 #50-423 u2 al u3 Assurance Dominion Nuclear Connecticut nla $40.8 $49.6 $90.4 Central Vermont PSC nla nla $1.9 $1.9 (Millions of Dollars)

(See Note 3) (See Notes 1 8 4)

MPS MPS MPS Dominion Nuclear Connecticut Central Vermont PSC Page 2 of 5

Serial No.05-121 Attachment 2 DOMINION NUCLEAR CONNECTICUT 2005 Nuclear Decommissioning Financial Assurance Annual Funding Levels Necessary to Meet 2005 NRC Minimum Financial Assurance Amounts (Millions of Dollars except percentage and years)

(See Note 3) (See Note 1)

MPS MPS MPS Unit 1 Unit 2 Unit 3 Total u3 Ownership #50-245 #50-336 #50-423 U2 81U3 Ownership Yo 2005 NRC Minimum Financial Assurance Amounts (From Table I)

Dominion Nuclear Connecticut nla $354.9 $351.8 $706.6 93.47%

Central Vermont PSC nla nla $6.5 $6.5 1.73%

Massachusetts Municipal WEC nla nla $18.1 $18.1 4.80%

Projected Annual Escalation Factors nla 4.24% 4.24%

Year That Operating Retired License Expires 1998 2015 2025 2005 NRC Minimum Financial Assurance Amounts (Stated in Future Dollars) nla $550.9 $897.6 $1,448.5 Expected After-Tax and Fees Annual Earnings Rate nla 6.24% 6.24%

Annual Funding Levels Necessary to Meet 2005 NRC Minimum Financial Assurance nla ($1.6) ($4.4)

(negative amounts indicate full funding-See Note 2)

(1)Millstone Unit 3 is jointly owned by Dominion Nuclear Connecticut (93.4707%), Central Vermont PSC (1.7303%)and Massachusetts Municipal WEC (4.79Wh).

(2) A Parent Company Guarantee was in place for Unit 1 in the amount of $15,428,109 and Unit 2 in the amount of $13,563,281.

The trusts for Unit 1 and Unit 2 are now estimated to be fully funded and the Parent Company Guarantees are no longer needed for these units. Negative amounts indicate full funding.

(3) MPS Unit 1 Decommissioningcost estimate is based on an updated sitespecific estimate referenced in Table VI (4) Massachusetts Municipal WEC contributed $475,144until mid-year 2002 at which time further contributions were suspended. No further contributions are anticipated to be required.

(5) Excludes amounts designated for the future Decommissioning of the ISFSI.

Page 3 of 5

Serial No.05-121 Attachment 2 DOMINION NUCLEAR CONNECTICUT 2005 Nuclear Decommissioning Financial Assurance Page 4 of 5

Serial No.05-121 Attachment 2 DOMINION NUCLEAR CONNECTICUT 2005 Nuclear Decommissioning Financial Assurance I1

.....A.

3;:;:;:;

.:.x.:.

Table VI: (cont'd)

Decommissioning Funding Worksheet for Millstone Unit 1 bl

m:

Page 5 of 5

Attachment 3 Serial No.05-121 DOMINION AND DNC SURRY POWER STATION UNITS 1 AND 2 NORTH ANNA POWER STATION UNITS 1 AND 2 MILLSTONE POWER STATION UNITS 1 . 2 AND 3 DECOMMISSIONING FINANCIAL ASSURANCE Financial Test Contained in 10 CFR Part 30 Appendix A

Attachment 3 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 guarantee in the total amount of $1 10 million.

DRI guarantees, through a parent company guarantee, $1 10 million for the purpose of decommissioning the nuclear facilities owned by Dominion Resources, Inc. (DRI):

Facilitv Name Location License No.

Surry Unit 1 Surry, VA DPR-32 Surry Unit 2 Surry, VA DPR-37 North Anna Unit 1 Louisa, VA NPF-4 North Anna Unit 2 Louisa, VA NPF-7 Millstone Unit 1 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 figures for line items B and C as shown below were derived from DRls independently audited, year-end financial statements and footnotes for the 12-month period ended December 31,2004, and underlying accounting records.

1 The North Anna Nuclear Power Station is jointly owned by Virginia Electric and Power Company (88.4%) and Old Dominion Electric Cooperative (1 1.6%). 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.

Attachment 3 page 2 of 2 A. DRls current implied bond ratings are BBB+ and Baal for Standard and Poors and Moodys, respectively.

B. Computation of tangible net worth (millions of dollars):

Net Worth $1 1,426 LESS: Intangible Assets 413 GoodwiII 4,298 Tangible Net Worth 6,715 LESS: Net Book Value of Nuclear Plants 3,317 Tangible Net Worth less book value of plants 3.398 C. Total Assets - $45,446 Less: Foreian - $ 1,476 Total US Assets = $43,970 FINANCIAL TESTS YES NO

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

2. Is line B at least 6 times the guarantee amount of $1 10 million? IXIO

3. a. Are at least 90 percent of the firms assets located in the U.S.? IXIO or

b. Is line C at least 6 times the guarantee amount of $1 10 million? IXIO

4. a. Are bond ratings BBB or above as issued by Standard and Poors? IXI 0 or

b. Are bond ratings Baa or above as issued by Moodys? !XI0 I hereby certify that the content of this financial test is true and correct to the best of my knowledge.

Senior Vice Dominion Resources,

Deloitte Deloitte & Touche LLP Suite 500 707 East Main Street Richmond, VA 23219 USA Tel: +1 804 697 1500 Fax: +1 804 697 1825 INDEPENDENT ACCOUNTANTS REPORT www.deloitte.com 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 Companys compliance with the parent company guarantee financial test as of December 3 1,2004, included in the accompanying letter dated March 29, 2005, from David A. Christian of Virginia Electric and Power Company and Dominion Nuclear Connecticut, Inc.,

and with respect to Attachment 3, from G. Scott Hetzer of Dominion Resources, Inc. Management is responsible for the Companys compliance with those requirements. This agreed-upon procedures engagement was conducted 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:

We have recomputed from, or reconciled to, the audited financial statements of the Company as of and for the year ended December 3 1,2004, on which we have issued our reports dated February 28,2005, (which report on the consolidated financial statements expressed an unqualified opinion and included an explanatory paragraph as to changes in accounting principles in 2003 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) the Companys (a) Tangible Net Worth less book value of plants and (b) Total US Assets included in Attachment 3, Dominion and DNC; Surry Power Station Units 1 and 2 and North Anna Power Station Units 1 and 2; Millstone Power Station Units 1, 2 and 3; Decommissioning Financial Assurance in the letter referred to above and noted such amounts were in agreement.

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 29,2005. 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, the management of the Company 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 29,2005 Member of Deloitte Touche Tohrnatsu