ML071000279

Decommissioning Funding Status Report

ML071000279
Person / Time
Site:	Cook
Issue date:	03/30/2007
From:	Jensen J Indiana Michigan Power Co
To:	Document Control Desk, NRC/NRR/ADRO
References
AEP:NRC:7075
Download: ML071000279 (13)

Text

Indiana Michigan Power INDIANA Cook Nuclear Plant MICHIGAN One Cook Place Bridgman, MI 49106 POWER AERcom A unit of American Electric Power March 30, 2007 AEP:NRC:7075 10 CFR 50.75(0(1)

Docket Nos.: 50-315 50-316 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Mail Stop O-PI-17 Washington, DC 20555-0001 Donald C. Cook Nuclear Plant Units 1 and 2 DECOMMISSIONING FUNDING STATUS REPORT In accordance with the requirements of 10 CFR 50.75(f)(1), Indiana Michigan Power Company, the licensee for Donald C. Cook Nuclear Plant (CNP), Units 1 and 2, hereby submits the attached report on the status of decommissioning funding. The recovery of decommissioning funds for the eventual decommissioning of CNP Units I and 2 is fully assured through cost of service regulation and the resulting contribution of funds into an external trust.

When projected to the current license expiration date for each unit, the Nuclear Decommissioning Trust balance is greater than the escalated Nuclear Regulatory Commission minimum cost of decommissioning, confirming compliance with the financial assurance requirements of 10 CFR 50.75.

This letter contains no new commitments. If you have any questions on the report or decommissioning funding, please contact Ms. Susan D. Simpson, Regulatory Affairs Manager, at (269) 466-2428.

SinceLely, Joseph N. Jensen Site Vice President JEN/rdw Attachment

-A001

U. S. Nuclear Regulatory Commission AEP:NRC:7075 Page 2 c: J. L. Caldwell - NRC Region III K. D. Curry - AEP Ft. Wayne, w/o attachment J. T. King, MPSC, w/o attachment MDEQ - WHMD/RMPWS, w/o attachment NRC Resident Inspector P. S. Tam - NRC Washington DC

ATTACHMENT TO AEP:NRC:7075 Indiana Michigan Power Company Donald C. Cook Nuclear Plant Units 1 and 2 2007 Nuclear Regulatory Commission Financial Assurance Requirements Report for Decommissioning Nuclear Power Reactors This report is being submitted in accordance with 10 CFR 50.75(f)(1). The report is comprised of the following schedules and the general comments set forth herein:

Schedule Title Page A Decommissioning Cost Estimates - Minimum Value Per 2 10 CFR 50.75(c)

B Summary of Decommissioning Trust Fund Balances December 31, 2006 6 C Projected Future Funds to Be Collected For Decommissioning 7 D Cost Escalation Rate for 10 CFR 50.75(c) Decommissioning Costs 9 E After Tax Rate of Return Assumed to be Earned on Amounts Collected 10 for Decommissioning F Nuclear Decommissioning Trust Fund Agreements Summary of 11 Significant Changes General Comments While the Minimum Value Decommissioning Cost Estimate under 10 CFR 50.75(c) reported on Schedule A is the information the Nuclear Regulatory Commission (NRC) has specified as appropriate for its purposes, Indiana Michigan Power Company (I&M) believes a broader and more comprehensive definition of, and provision for, nuclear decommissioning expenses is needed for its purposes.

For the past several years, I&M has periodically provided the Indiana and Michigan utility regulatory commissions site-specific studies containing a broader definition of nuclear decommissioning requirements. These studies include the 10 CFR 50.75(b) and (c) costs, 10 CFR 50.54(bb) costs, and "greenfield" costs, versus only the required 10 CFR 50.75 costs.

These costs have been commingled in the decommissioning trust funds. The site decommissioning studies have been presented in reports to the utility regulatory commissions.

The commissions have accepted these studies and have authorized recoveries for nuclear decommissioning based on their determinations, considering the reports presented, of appropriate recoveries for nuclear decommissioning using the more comprehensive definition. The currently estimated annual fund collections authorized for decommissioning are reported on Schedule C.

Attachment to AEP:NRC:7075 Page 2 Schedule A Indiana Michigan Power Company Nuclear Decommissioning Trust Fund Donald C. Cook Nuclear Plant Decommissioning Cost Estimates Minimum Value Per 10 CFR 50.75(c) 10 CFR 50.75(a) requires that each utility assure that there will be adequate funding for the decommissioning of the plant. 10 CFR 50.75(c) established a table of minimum values for the decommissioning funds, in January 1986 dollars, and it also set forth a method to adjust those values. Periodically, the NRC publishes NUREG-1307, "Report on Waste Burial Charges," and in that document, the data and more specific guidance is given regarding the method to be used to adjust the minimum amount to equivalent current amounts. The calculation in this report uses the burial cost escalation values and the method outlined in NRC NUREG-1307, Revision 12, to determine the minimum values.

Estimated Decommissioning Cost - 10 CFR 50.75(c)

Unit 1 Unit 2 Total

$367,778,97 75 $370,958,620 $ 738,737,595

Attachment to AEP:NRC:7075 Page 3 Schedule A Decommissioning Cost Estimate Calculation The first step of the decommissioning cost estimate calculation is to determine the 1986 base cost.

Donald C. Cook Nuclear Plant (CNP) Units I and 2 are rated at 3304 megawatt-thermal (MW,) and 3468 MWt, respectively. From 10 CFR 50(c)(1)(i), the cost is then based on the MWt output of each unit. For reactor power greater than 3400 MWt, the cost is $105 million. For reactor power from 1200 to 3400 MWt, the cost is calculated using this formula:

Cost = $(75 + 0.0088P) million.

Given P is the power level. So, for Unit I at 3304 MWt the cost is:

Cost = $(75 + 0.0088 x 3304) million

= $104.1 million.

For Unit 2, since the power level is greater than 3400 MWt, the cost is $105 million which is taken directly from the NRC's model.

So, the total 1986 base decommissioning cost for CNP is $104.1 + $105 million or $209.1 million.

The next portion of the analysis is to adjust the 1986 cost to the current year cost.

Using the formula:

Estimated Cost (Year X) = [1986 $ Cost] [A Lx + B E, + C B,]

Where A, B, and C are the fractions of the total 1986 $ costs that are attributable to labor (0.65), energy (0A13), and burial (0.22), respectively, and sum to 1.0. The factors L*, Ex, and B, are defined by:

Lx = labor cost escalation, January of 1986 to January of Year X E, = energy cost escalation, January of 1986 to January of Year X B, = burial cost escalation, January of 1986 to January of Year X, i.e., burial cost in January of Year X / burial cost in January of 1986.

The labor escalation factor is determined by U. S. Bureau of Labor Statistics (BLS) data using the "Employment Cost Index" and the NUREG-1307, Table 3.2, data for the Midwest region.

No 2007 data has been published, so fourth quarter 2006 data is used for 2007.

Attachment to AEP:NRC:7075 Page 4 Schedule A The energy cost escalation is determined by BLS data by using "Producer Price Indexes." The energy term in the adjustment equation is made up of two components; industrial electric power (P),

and light fuel oil (F). E, is determined from the following equation for Pressurized Water Reactors:

E = 0.58P + 0.42F.

The values of P and F are taken from the BLS as described in NUREG-1307. The data from January were used, and is shown in Table 1. Also shown are the results of the calculations to determine E. The energy data for 2007 is BLS preliminary data.

Table 1 Cost Index Values Year Labor Data (L) Electric Power (P) Light Fuel Oil (F) Energy Data (E) 2007 102.8 170.8 180.3 174.79 2006 102.8 167.0 191.8 177.42 2005 100.0 148.9 138.5 144.53 2004 143.1 106.8 127.85 1986 114.2 82.0 100.68 The next step is to convert the cost index values into the adjustment factors, L, and E,.

The Labor adjustment factor is determined by multiplying the current year's cost index value by the applicable base labor adjustment factor, then dividing by the 2005 reference cost. Per NUREG-1307, Revision 12, Table 3.2, the Midwest Labor Adjustment Factor is 2.13824.

(L 2006 = 102.8*2.08/100.0)

The energy adjustment factor is determined by dividing each year's electric power (P) and light fuel oil (F) cost by the respective 1986 reference cost, then applying the allocation of .58Px + .42Fx (2007 Px = 170.8/114.2), (2007 Fx = 180.3/82), (2007 Ex = .58 (170.8/114.2) + .42 (180.3/82 =

1.790948)

The values for B, are taken directly from NUREG-1307, Revision 12, Table 2.1, using the data for South Carolina using waste vendors for disposition as a non-Atlantic Compact State. For years where no data is provided, the value of the most recent year is used with no escalation. The results are shown in Table 2.

The final step is to calculate the Estimated Cost for Year X using the equation given above and the Lx, E,, and Bx values. The estimated cost is given in Table 2.

Attachment to AEP:NRC:7075 Page 5 Schedule A Table 2 Escalation Factors Estimated Decommissioning Cost Year L, E, B, Unit I Unit 2 Total 2007 2.13824 1.790948 8.683 $367,778,975 $370,958,620 $738,737,595 2006 2.13824 1.83055 8.683 $368,314,909 $371,499,188 $739,814,096

Attachment to AEP:NRC:7075 Page 6 Schedule B Indiana Michigan Power Company Nuclear Decommissioning Trust Fund Donald C. Cook Nuclear Plant Summary of Decommissioning Trust Fund Balances December 31, 2006 Total Unit 1 Unit 2 Book Value 776,669,183 396,453,566 380,215,617 Unrealized Appreciation 195,205,400 104,215,324 90,990,076 Market Value 971,874,583 500,668,890 471,205,693 Accrued Interest 0 0 0 Accrued Contributions 2,872,007 1,501,642 1,370,365 Subtotal 974,746,590 502,170,532 472,576,058 Less: Taxes on 39,077,642 20,862,258 18,215,384 Unrealized Appreciation Total 935,668,948 481,308,274 454,360,674

Attachment to AEP:NRC:7075 Page 7 Schedule C Indiana Michigan Power Company Nuclear Decommissioning Trust Fund Projected Future Funds to Be Collected For Decommissioning (a)

Unit 1 I Unit 2 1 Indiana Michigan FERC Indiana Michigan FERC l)econnmis-sioniTo Unit 1 Total Unit 2 Total sioning Total Jurisdiction Jurisdiction (b) Jurisdiction Jurisdiction Jurisdiction (b) Jurisdiction 2005 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2006 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2007 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2008 9,732,400 3,787,396 3,598,199 17,117,995 8.999,900 3,614,198 3,336,625 15,950,723 33,068,718 2009 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2010 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3.336,625 15,950,723 33,068,718 2011 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2012 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 9 3,336,625 15,950,723 33,068,718 2013 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,1 8 2014 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2015 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2016 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2017 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2018 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2019 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2020 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2021 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2022 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2023 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2024 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2025 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2026 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718

Attachment to AEP:NRC:7075 Page 8 Schedule C I ~ Unit 1 I Unit 2 1 Indiana Michigan FERC Indiana Michigan FERC Decommiis-sioniTo Unit 1 Total Unit 2 Total Ssioning Total Jurisdiction Jurisdiction (b) Jurisdiction Jurisdiction Jurisdiction (b) Jurisdiction 2027 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2028 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2029 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2030 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2031 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2032 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718 2033 9,732,400 3,787,396 3,598,199 17,117,995 8,999,900 3,614,198 3,336,625 15,950,723 33,068,718

• 2034 8,110.333 3,156,163 2,998,499 14,264,996 8,999,900 3,614,198 3,336,625 15,950,723 30,215,719 2035 8,999,900 3,614,198 3,336,625 15,950,723 15,950,723 2036 8,999,900 3,614,198 3,336,625 15,950,723 15,950,723 2037 8,999,900 3,614,198 3,336,625 15,950,723 15,950,723 Total 290,349,933 112,990,647 107,346,270 510,686,851 296,996,700 119,268,534 110,108,625 526,373,859 1,037,060,710 Notes:

(a) Based on regulatory commission orders in effect on December 31, 2006. Assumes each unit operates over its current licensed life and that authorized collections are not changed.

(b) Amount dependent on Kwh sales. Base amount is $3,086,600 per year for Unit I and $2,946,000 for Unit 2.

• License for Unit 1 expires in October 2034. License for Unit 2 expires in December 2037.

Attachment to AEP:NRC:7075 Page 9 Schedule D Indiana Michigan Power Company Nuclear Decommissioning Trust Fund Donald C. Cook Nuclear Plant Cost Escalation Rate for 10 CFR 50.75(c)

Decommissioning Costs Jurisdictional Projected Escalation Jurisdiction Allocation (a) (b, c, d) Weighted Escalation Indiana 71.3333% 6.50% 4.64%

Michigan 15.165 1% 6.50% 0.99%

FERC 13.5016% 6.00% 0.81%

Total 6.43%

Notes:

(a) Most recent jurisdictional demand allocation factors.

(b) Indiana Utility Regulatory Commission Order in Case No. 39314.

(c) Michigan Public Commission Order in Case No. U-10347.

(d) Federal Energy Regulatory Commission Order in Case ER90-269-000.

Attachment to AEP:NRC:7075 Page 10 Schedule E Indiana Michigan Power Company Nuclear Decommissioning Trust Fund Donald C. Cook Nuclear Plant After Tax Rate of Return Assumed to be Earned on Amounts Collected for Decommissioning Jurisdictional Projected Earnings Jurisdiction Allocation (a) (b, c, d) Weighted Earnings Indiana 71.3333% 7.00% 4.99%

Michigan 15.1651% 7.00% 1.06%

FERC 13.5016% 7.27% 0.98%

Total 7.04%

Notes:

(a) Most recent jurisdictional demand allocation factors.

(b) Indiana Utility Regulatory Commission Order in Case No. 39314.

(c) Michigan Public Commission Order in Case No. U-10347.

(d) Federal Energy Regulatory Commission Order in Case ER90-269-000.

Attachment to AEP:NRC:7075 Page 11 Schedule F Indiana Michigan Power Company Nuclear Decommissioning Trust Fund Donald C. Cook Nuclear Plant Nuclear Decommissioning Trust Fund Agreements Summary of Significant Changes A nuclear decommissioning trust fund agreement for the units at the Donald C. Cook Nuclear Plant (CNP) exists with the following trustee:

Mellon Bank Pittsburgh, Pennsylvania.

Since the report dated March 23, 2005, filed with the Nuclear Regulatory Commission on Funding for CNP, Units 1 and 2, there have been no substantive changes made in the trust agreement.