ML070390056

Report on Decommissioning Funding Status

ML070390056
Person / Time
Site:	Rancho Seco
Issue date:	02/01/2007
From:	Redeker S Sacramento Municipal Utility District (SMUD)
To:	John Hickman Document Control Desk, Office of Nuclear Material Safety and Safeguards
References
MPC&D 07-006
Download: ML070390056 (4)

Text

SMUD SACRAMENTO MUNICIPAL UTILITY DISTRICT El P. 0. Box 15830, Sacramento CA 95852-1830, (916) 452-3211 AN ELECTRIC SYSTEM SERVING THE HEART OF CALIFORNIA MPC&D 07-006 February 1, 2007 U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, DC 20555 Docket No. 50-312 Rancho Seco Nuclear Generating Station License No. DPR-54 RANCHO SECO REPORT ON DECOMMISSIONING FUNDING STATUS Attention: John Hickman As required by 10 CFR 50.75(f)(1), we are submitting this report on the status of decommissioning funding for Rancho Seco.

Background

Rancho Seco began commercial power operation in April 1975, and shutdown permanently in June 1989. In 1991, SMUD submitted the proposed Decommissioning Plan for Rancho Seco, along with a Revised Financial Assurance Plan. The NRC approved the Decommissioning Plan in March 1995. Due to revisions to 10 CFR 50.82, SMUD submitted the Post Shutdown Decommissioning Activities Report for Rancho Seco in March 1997. Rancho Seco has been undergoing plant dismantlement since February 1997.

The current plan is to fully fund the decommissioning trust fund by 2008. However, based upon the lack of a radioactive waste disposal facility acceptable to the District, SMUD plant to store some Class B and C radioactive waste in our Interim Onsite Storage Building beyond 2008, awaiting disposal at a later date.

Decommissioning Financial Assurance Method and Trust Fund Status SMUD had maintained an internal decommissioning fund since the early 1980s. In 1991, SMUD transferred $90 million from the internal fund into an "External Sinking Decommissioning Trust Fund" currently maintained by Wells Fargo Bank. Table 1 shows the amount of the trust fund annual contribution and disbursals for the years 1991 through 2006. The total disbursals between 1994 and 2006 are $397.2 million. At the end of 2006 the trust fund contained $82.8 million.

RANCHO SECO NUCLEAR GENERATING STATION 0 14440 Twin Cities Road, Herald, CA 95638-9799; (209) 333-2935

J. Hickman MPC&D 07-006 I. Hickman MPC&D 07-006 TABLE 1 YEAR ANNUAL ANNUAL DISBURSAL CONTRIBUTION 1991 $90 Million' $0 1992 $12 Million $0 1993 $12 Million $0 1994 $12 Million $35,327,974 1995 $15 Million $24,375,399 1996 $15.5 Million $17,950,000 1997 $16.5 Million $18,400,000 1998 $17.5 Million $21,920,000 1999 $18.5 Million $34,693,319 2000 $18.5 Million $45,847,250 2001 $24.5 Million $36,213,871 2002 $27 Million $40,869,137 2003 $27 Million $23,886,458 2004 $27 Million $31,360,571 2005 $27 Million $34,446,586 2006 $27 Million $31,901,184 Cost Estimate TLG Services, Inc. performed the initial cost estimate in 1991, and then performed biennial updates in 1993, 1995, and 1997. When SMUD began plant dismantlement in 1997, we also began performing annual updates to the decommissioning cost estimate.

SMUD staff performed the 1998 update. TLG performed the 1999 and 2000 annual updates. SMUD staff began performing the annual update beginning with the 2001 cost estimate update through the 2005 cost estimate update with TLG providing quality reviews. The 2006 cost estimate is the first to be finalized without outside agency review. With approximately 2 years left for the project, major dismantlement projects are near completion and remaining project scope quantified, staff has determined that outside review would not provide additional confidence in the cost basis. The total decommissioning costs are now estimated to be $538.1 million. The portion of this total that is not NRC-defined decommissioning activities (e.g., non-radiological dismantlement, spent fuel storage, etc.) is $132.1 million, most of which is related to dry fuel storage at our Independent Spent Fuel Storage Installation (ISFSI).

Table 2 shows the history of estimated decommissioning costs for license termination.

The estimated costs include spent fuel storage through 2008, but do not include site restoration costs.

'Initial contribution

J. Hickmnan MPC&D 07-006 J. Hickman MPC&D 07-006 TABLE2 YEAR OF COST STUDY ESTIMATED DECOMMISSIONING COST 1991 $281 Million 1993 $365 Million 1995 $441 Million 1997 $452 Million 1998 $459 Million (1997 dollars) 1999 $458 Million 2000 $495 Million 2001 $504 Million 2002 $519 Million 2003 $524.3 Million 2004 $529.7 Million 2005 $534.1 Million 2006 $538.1 Million Accumulation of Funds SMUD plans to accumulate funds in the external trust fund, at the rate of $27 million per year, through 2008. Based on the current decommissioning cost estimate and funding rate, collecting funds through 2008 will provide sufficient funds to complete decommissioning Rancho Seco and terminate the 10 CFR Part 50 license.

As stated above, SMUD expects to store some Class B and C radioactive waste in our Interim Onsite Storage Building beyond 2008. Long term storage and disposal costs of the Class B and C radioactive waste are included in the decommissioning costs.

Funding to store the spent nuclear fuel at the ISFSI beyond 2008 is not included in the decommissioning fund. SMUD will fund site restoration separately, after the completion of dismantlement activities.

Certification of Financial Assurance Certification is hereby made that financial assurance is being provided through an external sinking fund in the amount of $140.9 million to complete decommissioning at Rancho Seco and terminate the 10 CFR Part 50 license.

Adjustments to Cost Estimate and Trust Fund With active decommissioning in progress, we now perform annual updates to the cost estimate. Historically, TLG performed the cost estimate updates as requested by SMUD.

However, after several years of decommissioning experience, and with relatively long-

J. Hickman MPC&D 07-006 term contracts in place, SMUD staff began performing the annual cost estimate update in 2001. The current cost update increase is due to inflation.

Administration of the Decommissioning Fund The trust fund holdings were reviewed at the end of 2006, and the trust fund contained

$82.8 million. As indicated in Table 1, the annual contribution amount is reviewed and adjusted as appropriate, to meet the needs of the total estimated decommissioning cost.

SMUD will continue to monitor the adequacy of the annual contribution to assure that adequate funds will be available to complete decommissioning and terminate the 10 CFR Part 50 license.

Assumptions Regarding Rates of Trust Fund Escalation and Earnings SMUD has made the following assumptions regarding trust fund escalation and earnings.

Based on historical portfolio performance, SMUD has estimated the rate of return at 5.0%. The decommissioning cost escalation rate is currently estimated at 2.5%. This rate is within an established range and congruent with rates used for other business plans at SMUD. Therefore, SMUD's estimated real rate of return is 2.5%.

Contractual Obligations There are no contractual obligations associated with SMUD's financial assurance plan or the operation of the decommissioning trust fund.

Modifications to Financial Assurance Method In 1991, SMUD submitted its Financial Assurance Plan to the NRC describing the use of an external sinking fund. There have been no significant modifications to SMUD's external sinking fund since our initial submittal.

Material Changes to the Trust Fund Agreement In July 2003, the trust fund moved from Bankers Trust, N.Y. to Wells Fargo Bank, N.A.

If you or members of your staff have questions requiring additional information or clarification, please contact Bob Jones at (916) 732-4843.

Sincerely, Manager, Plant Closure and Decommissioning Cc: B.S. Mallett, NRC, Region IV, Arlington