BVY 08-022, Response to Request for Additional Information

Response to Request for Additional Information

ML081200753
Person / Time
Site:	Vermont Yankee
Issue date:	04/24/2008
From:	Ted Sullivan Entergy Nuclear Operations
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
BVY 08-022, FOIA/PA-2009-0026
Download: ML081200753 (27)

Text

Entergy Nuclear Operations, Inc.

Vermont Yankee P.O. Box 0250

ý--'Entergy 320 Governor Hunt Road Vernon, VT 05354 Tel 802 257 7711 April 24, 2008 BVY 08-022 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555

References:

(1) Letter, Entergy to USNRC, Report Pursuant to 10CFR50.54(bb),

BVY 07-007, dated March 21, 2007.

(2) Letter, USNRC to Entergy, Request for Additional Information to Support the Review of the Vermont Yankee Spent Fuel Management Plan Pursuant to 10CFR50.54(bb), NVY 08-030, dated March 12, 2008.

(3) Letter, Entergy to USNRC, Report Pursuant to 10CFR50.75(f)(3),

BVY 08-010, dated February 6, 2008.

(4) Letter, USNRC to Entergy, Request for Additional Information to Support the Review of the Vermont Yankee Nuclear Power Station Preliminary Cost Estimate Pursuant to 10CFR50.75(f)(3),

NVY 08-033, dated March 25, 2008.

Subject:

Vermont Yankee Nuclear Power Station License No. DPR-28 (Docket No. 50-271)

Response to Request for Additional Information

Dear Sir or Madam,

In References (2) and (4), NRC requested additional information pertaining to our Reference (1) and (3) submittals. Reference (1) concerns how Vermont Yankee (VY) intends to manage and provide funding for irradiated fuel until title to the irradiated fuel is transferred to the Department of Energy. Reference (3) provided a preliminary decommissioning plan and cost estimate.

Per discussion with NRC staff, the attachment to this letter provides VY's combined responses to the staff's questions contained in References (2) and (4).

There are no new regulatory commitments being made in this submittal.

Should you have any questions concerning this submittal, please contact Mr. David J.

Mannai at (802) 451-3304.

Sincerely, Site Vice President Vermont Yankee Nuclear Power Station Attachments (2) cc listing (next page)

BVY 08-022 Docket No. 50-271 Page 2 of 2 cc: Mr. Samuel J. Collins, Regional Administrator U.S. Nuclear Regulatory Commission, Region 1 475 Allendale Road King of Prussia, PA 19406-1415 Mr. James S. Kim, Project Manager U.S. Nuclear Regulatory Commission Mail Stop 0 8 C2A Washington, DC 20555 USNRC Resident Inspector Entergy Nuclear Vermont Yankee P.O. Box 157 320 Governor Hunt Road Vernon, Vermont 05354 Mr. David O'Brien, Commissioner VT Department of Public Service 112 State Street - Drawer 20 Montpelier, Vermont 05620

Docket No. 50-271 BVY 08-022 Attachment 1 Vermont Yankee Nuclear Power Station Response to Request for Additional Information Spent Fuel Management Plan - 10CFR50.54(bb)

BVY 08-022 / Attachment 1 / page 1 VERMONT YANKEE NUCLEAR POWER STATION SPENT FUEL MANAGEMENT PLAN - RAI Response DOCKET NO. 50-271 RAI No. 1:

Table 2 entitled, "Estimated Spent Fuel Management Costs" listed expenditures for the period from 2012 - 2017 at an estimated cost of $157 million in 2006 dollars. Describe in detail, the $157.0 million in expenditures for the period from 2012- 2017. Since Table 2 identified these costs as spent fuel management costs, how are these costs to be funded recognizing the decommissioning trust fund is required by NRC regulations, 10 CFR 50.75, for radiological decommissioning and not for spent fuel management costs or other non-radiological costs?

RESPONSE

The line items contributing to $157 million (actually $156.4) are identified in the following table.

The table is an excerpt from the detailed cost table D-1, Scenario 5 in the TLG Services report entitled "Decommissioning Cost Analysis for the Vermont Yankee Nuclear Power Station,"

issued in January 2007 (TLG Document No. El 1-1559-002). Additional detail for the line items identified as "Spent Fuel Capital and Transfer" can be found in Table 4 of the Program for Maintenance of Irradiated Fuel. The first six line items in Table 4 (equating to a total of approximately $90 million) are assumed to be spent over the years 2012 to'2017 on Independent Spent Fuel Storage Installation (ISFSI) construction and relocation of the spent fuel residing in the spent fuel storage pool at the time of shutdown to the ISFSI. The remaining $67 million is associated with site operating costs, fees and allocation of the site staff to spent fuel management in Period 2a.

At this time, based on expectations from historical earnings on the entirety of the decommissioning trust fund, Entergy VY plans to use funds from the decommissioning trust fund to cover spent fuel management costs. Based upon historical earnings (since Entergy VY acquired the fund on July 31, 2002), the decommissioning trust fund will have sufficient money to safely manage the spent fuel until the DOE is able to remove it from the site and remediate the site to levels whereby the operating license can be terminated and the site made available for alternative and unrestricted use (based upon Scenario 5 as outlined in the TLG study).

Entergy VY has formally filed its request to continue operating for 20 years past its scheduled 2012 license expiration date with both the NRC and the State of Vermont. A final NRC decision on whether to extend Vermont Yankee's license could come later this year. Extended operations of the reactor will defer the need to access the decommissioning fund, allowing more time for the fund to grow, With a larger decommissioning fund, there will be additional and financially viable decommissioning options (even at lower rates of earnings). However, contributing to the fund prior to the decision on license extension creates the possibility for over funding. Entergy VY will revisit the financial adequacy of the decommissioning trust once the license end date has been confirmed, in accordance with the flexibility in fund accumulation rates described in

BVY 08-022 / Attachment 1 / page 2 Regulatory Position 2.2.8 in Regulatory Guide 1.159, Rev. 1. Entergy VY plans to review the adequacy of the funding in light of the then-existing license termination date once the license renewal request is resolved. If at that time, funding is not deemed adequate, Entergy VY will take steps in accordance with 10CFR50.75(e)(1) to address any inadequacy.

It should be noted that the projected expenditures for spent fuel management identified in the decommissioning cost analysis do not consider the outcome of the litigation (including compensation for damages) with the Department of Energy (DOE) with regard to the delays incurred by Entergy VY in the timely removal of the spent fuel from the site. Entergy VY views the extended spent fuel management costs to be damages that should be paid by the government because of the Department of Energy's breach of the spent fuel disposal contract.

BVY 08-022 / Attachment 1 / page 3 Extract from Table D-1 Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, SAFSTOR Alternative, 2017 DOE Start Date (thousands of 2006 dollars)

Spent Fuel Activity Management Index Activity Description Costs PERIOD la - Shutdown through Transition Period start date: March, 2012 Period end date: March, 2013 Period duration: 11.99 months Period la Collateral Costs Ia.3.1 Spent Fuel Capital and Transfer 11,269 Period laPeriod-Dependent Costs la.4.8 Emergency Planning Fees 3,929, la.4.10 Spent Fuel Pool O&M 1,158 Ia.4.11 ISFSI Operating Costs 122 PERIOD lb - SAFSTOR Limited DECON. Activities Period start date: March, 2013 Period end date: June, 2013 Period duration: 3.02 months Period lb Collateral Costs Ib.3.4 Spent Fuel Capital and Transfer 2,383 Period lb Period-Dependent Costs 1b.4.9 Emergency Planning Fees 30 I b.4. I1 Spent Fuel Pool O&M 292 1b.4.12 ISFSI Operating Costs 31 PERIOD 1c - Preparations for SAFSTOR Dormancy Period start date: June, 2013 Period end date: September, 2013 Period duration: 3.06. months Period ic Additional Costs Ic.2.2 Spent Fuel Pool Isolation 9,200

BVY 08-022 / Attachment 1 / page 4 Extract from Table D-1 (continued)

Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, SAFSTOR Alternative, 2017 DOE Start Date (thousands of 2006 dollars)

Spent Fuel Activity Management Index Activity Description Costs Period Ic Collateral Costs 1c.3.3 Spent Fuel Capital and Transfer 2,409 Period 1c Period-Dependent Costs Ic.4.8 Emergency Planning Fees 30 Ic.4.10 Spent Fuel Pool O&M 295 1c.4.1 1 ISFSI Operating Costs 31 PERIOD 2a - SAFSTOR Dormancy with Wet Spent Fuel Storage Period start date: September, 2013 Period end date: September, 2017 Period duration: 47.9 months Period 2a Collateral Costs 2a.3.1 Spent Fuel Capital and Transfer 71,539 Period 2a Period-Dependent Costs 2a.4.1 Insurance 2,982 2a.4.5 Plant energy budget 680 2a.4.7 Emergency Planning Fees 470 2a.4.8 Corporate A&G 7,336 2a.4.9 Spent Fuel Pool O&M 4,627 2a.4.10 ISFSI Operating Costs 487 2a.4.11 Security Staff Cost 15,119 2a.4.12 Utility Staff Cost 20,248 PERIOD 2b - SAFSTOR Dormancy with Dry Spent Fuel Storage Period start date: September, 2017 Period end date: December, 2017 Period duration: 3.68 months Period 2b Collateral Costs 2b.3.1 Spent Fuel Capital and Transfer 80

BVY 08-022 / Attachment 1 / page 5 Extract from Table D-1 (continued)

Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, SAFSTOR Alternative, 2017 DOE Start Date (thousands of 2006 dollars)

Spent Fuel Activity Management Index Activity Description Costs Period 2b Period-Dependent Costs 2b.4.1 Insurance 209 2b.4.5 'Plant energy budget 26 2b.4.7 Emergency Planning Fees 36 2b.4.8 Corporate A&G 56 2b.4.9 ISFSI Operating Costs 37 2b.4.10 Security Staff Cost 465 2b.4. 11 Utility Staff Cost 869 TOTAL 156,444

BVY 08-022 / Attachment 1 / page 6 RAI No. 2:

While the submittal identified the expenses associated with spent fuel storage, it did not include in the plan a mechanism for funding for the spent fuel costs. Section 5.2 entitled, "Financial Assurance" listed the balance in the decommissioning trust fund as of December 31, 2006, as $416.5 million.

For planning purposes, NRC regulations allow a licensee to take a 2% real rate of return credit on investments unless a higher rate is authorized by a regulated licensee's public utility commission. Vermont Yankee (VY) is not rate regulated, so the staff applied a 2%

real rate of return on the trust fund balance ($416.5 million) based on the regulation and deducted the expenses identified in Table 3, "Estimated Combined License Termination and Spent Fuel Management Costs." The results were that sufficient funds were not available to decommission VY. If the Table 2, "Estimated Spent Fuel Management Costs"'

were not included in the staff's analysis, sufficient funds are projected to be available to decommission VY based on the formula amount.

VY makes the statement that even taking out spent fuel expenses, sufficient funds would be available for decommissioning VY based on an after tax rate of return of 5.59% with an inflation rate of 3% or a rate of return of 6.62% with an inflation rate of 4%. In addition to assuming a real rate of return of greater than 2%, does this analysis take into account the $157.0 million spent from 2012 - 2017, and the annual costs of approximately $6.2 million for the period 2018-2043. What are the bases for the greater than 2 % real rate of return, assumed by VY, not withstanding the limit of a 2 % real rate set by the applicable regulation?

RESPONSE

The analysis took into account the $157.0 million spent from 2012 - 2017, and the annual costs of approximately $6.2 million for the period 2018-2043. As shown in the following table, the schedule of expenditures from Table 3 (which included both license termination and spent fuel management costs) was used as a basis to determine the rate of return required to fund Scenario 5 as delineated in the "Decommissioning Cost Analysis for the Vermont Yankee Nuclear Power Station," issued in January 2007 by TLG Services, Inc.

Entergy VY's bases for employing a real rate of return greater than 2% are that (1) resolution is expected in the very near future of Entergy's request for a renewed operating license for VY, which will allow an additional 20 years of growth of the trust funds, and (2) the historical performance of the trust funds has exceeded the 2% figure. See also Entergy VY's response to RAI #1 above.

At the time the calculation was performed, Entergy VY's historic average annual rate of earnings on the decommissioning trust fund (since Entergy VY acquired the fund on July 31, 2002) exceeded 5.59%. Actual annualized composite rate of return for the Vermont Yankee decommissioning fund, from July 31, 2002 to December 31, 2007, after tax, was 6.05%. As such, the scenario is deemed to be financially viable.

BVY 08-022 / Attachment 1 / page 7 Entergy VY believes that it is reasonable to consider historic fund performance for this filing in the limited situation where the constraint on remaining license life is the absence of a final decision in the pending license renewal application request, where the final Safety Evaluation Report (SER) has.been approved and the Advisory Committee on Reactor Safeguards (ACRS) has recommended license renewal. If these bases are not considered sufficient, some decommissioning activities could be deferred, and credit can be taken for funds in the amount of the current parent company commitment that has been made of up to $60 million for spent fuel management. If needed, this money could be deposited into the decommissioning trust or a provisional trust as late as year 2026 to cover decommissioning and spent fuel storage costs. As discussed further in the response to RAI No. 2 on Vermont Yankee's Preliminary Decommissioning Cost Estimate (Attachment 2 / page 2), adequate funding would be available with a 2 percent real rate of return on earnings on the trust fund.

Entergy VY believes it should be given a reasonable amount of time to resolve any shortfall in the funding calculated using the existing license expiration date in accordance with Regulatory Position 2.2.8 in NRC Regulatory Guide 1.159 Rev. 1. Entergy VY believes a reasonable amount of time in this instance would encompass the time required for the decision on the license renewal request. If deemed necessary, Entergy VY would expressly request a finding that its use of the rate of return in its filing meets the NRC's requirements, pursuant to 10 CFR 50.75(e)(1)(vi), under the specific circumstances presented here with a decision on a license renewal to be rendered in the near future.

BVY 08-022 / Attachment 1 / page 8 Funding Requirements to Equal Expected Expenditures Scenario 5: 2012 SAFSTOR [License Termination & Spent Fuel Expenditures]

Basis Year 2006 Fund Balance $416.54 (millions)

Annual Escalation 3.00%

Annual Earnings 5.59% ________

Escalated Table 3 Present Value of Year Fund Balance Table 3 Costs Costs Escalated Costs 2006 416.54 ______

2007 439.82 ________

2008 464.41 ______

2009 490.37 _______

2010 517.78 _______

2011 546.73 2012 523.59 44.97 53.70 38.74 2013 474.94 63.36 77.92 53.25 2014 . 461.62 31.47 39.87 25.80 2015 446.36 31.47 41.06 25.17 2016 428.90 31.56 42.41 24.62 2017 420.14 23.65 32.74 18.00 2018 434.26 6.57 9.37 4.88 2019 449.44 6.19 9.09 4.48 2020 464.84 6.43 9.73 4.54 2021 480.71 6.49 10.11 4.47 2022 497.17 6.49 10.41 4.36 2023 514.35 6.42 10.61 4.21 2024 532.28 6.36 10.83 4.07 2025 550.91 6.34 11.12 3.96 2026 570.26 6.34 11.45 3.86 2027 590.34 6.34 11 .79 3.76 2028 611.16 6.36 12.19 3.68 2029 632.97 6.26 12.35 3.54 2030 655.46 6.34 12.89 3.49 2031 678.83 6.34 13.27 3.41 2032 703.40 6.20 13.37 3.25 2033 728.82 6.26 13.91 3.20 2034 755.24 6.26 14.32 3.12 2035 782.32 6.42 15.13 3.12 2036 810.81 6.28 15.24 2.98 2037 840.29 6.34 15.85 2.94 2038 870.93 6.34 16.33 2.86 2039 902.80 6.34 16.82 12.79 2040 935.89 6.36 17.37 12.73

BVY 08-022 / Attachment 1 / page 9 Funding Requirements to Equal Expected Expenditures (continued)

Scenario 5: 2012 SAFSTOR [License Termination & Spent Fuel Expenditures]

Basis Year 2006 _________

Fund Balance $416.54 (millions) _________

Annual Escalation 3.00% _________

Annual Earnings 5.59% _________

Escalated Table 3 Present Value of Year Fund Balance Table 3 Costs Costs Escalated Costs 2041 970.60 6.26 17.61 2.62 2042 1,005.38 6.72 19.48 2.75 2043 962.50 33.19 99.08 13.24 2044 696.80 103.91 319.50 40.44 2045 476.53 81.85 259.22 31.07 2046 309.04 59.51 194.12 22.04 2047 126.37 59.51 199.95 21.50 2048 1.41 38.15 132.03 13.44 2049 0.03 0.41 1.46 0.14 2050 (0.71) 0.2 0.73 0.07

___________ _________762.26 1,824.44 416.60

Docket No. 50-271 BVY 08-022 Attachment 2 Vermont Yankee Nuclear Power Station Response to Request for Additional Information Preliminary Decommissioning Cost Estimate - 10CFR50.75(f)

BVY 08-022 / Attachment 2 / page 1 VERMONT YANKEE NUCLEAR POWER STATION PRELIMINARY DECOMMISSIONING COST ESTIMATE - RAI Response DOCKET NO. 50-271

Background:

If necessary, as required by 10 CFR 50.75(f)(5), the preliminary cost estimate shall also include plans for adjusting levels of funds to demonstrate a reasonable level of assurance that funds will be available to.cover the cost of decommissioning.

RAI No. 1:

Entergy's submittal (BVY 08-010) for Vermont Yankee (VY) entitled, "Report Pursuant to 10CFR 50.75(f)(3)" dated February 6, 2008, included a cost estimate for various decommissioning options. Table 3.1, Table 3.3, Table 3.5, and Table 3.7 identified the cost and annual expenditures for each of the selected alternatives. Entergy needs to provide an assessment of the trust fund amount as of December 31,2007, to determine if sufficient funds would be available to fund the designated scenario.

RESPONSE

The costs reported in Entergy VY's submittal (BVY 08-010) for Vermont Yankee (VY) entitled, "Report Pursuant to 10 CFR 50.75(f)(3)" dated February 6, 2008, were presented in 2006 dollars.

For comparison with a December 2007 trust fund amount, the costs need to be escalated to 2007 dollars. Table 3, "Estimated Combined License Termination and Spent Fuel Management Costs" in Vermont Yankee's Spent Fuel Management Plan presented the costs for Scenario 5, the preferred scenario, in 2006 dollars. Those costs have been escalated to 2007 dollars in Table IA.

The 2007 cost reported in Table IA is $783.66 million. Based upon a December 2007'trust fund balance of $439.567 million, a rate of return of 5.58% would be required to fund this scenario (license termination and spent fuel management costs). The analysis is provided in Table lB.

Based upon hist6rical earnings (since Entergy VY acquired the fund on July 31, 2002), the decommissioning trust fund will have sufficient money to safely manage the spent fuel until the Department of Energy (DOE) is able to remove it from the site and remediate the site to levels whereby the operating license can be terminated and the site made available for alternative and unrestricted use. Entergy VY's historic average annual rate of earnings on the decommissioning trust fund since acquisition has exceeded 5.58%. The actual annualized composite rate of return for the Vermont Yankee decommissioning fund, from July 31, 2002 to December 31, 2007, after tax, was 6.05%. Using these assumptions, the scenario is financially viable.

Entergy VY believes that it is reasonable to consider historic fund performance for this filing in the limited situation where the constraint on remaining license life is the absence of a final decision in the pending license renewal application request, where the SER has been completed and the ACRS has recommended license renewal. If these bases are not considered sufficient,

BVY 08-022 / Attachment 2 / page 2 Entergy VY believes it should be given a reasonable amount of time to resolve any shortfall in the funding calculated using the existing license expiration date in accordance with Regulatory Position 2.2.8 in NRC Regulatory Guide 1.159 Rev. 1. Entergy VY believes a reasonable amount of time in this instance would encompass the time required for the decision on the license renewal request. If deemed necessary, Entergy VY would expressly request a finding that its use of the rate of return in its filing meets the NRC's requirements, pursuant to 10 CFR 50.75(e)(1)(vi), under the specific circumstances presented here with a decision on a license renewal to be rendered in the near future.

See also the response to RAI No. 2 below.

RAI No. 2:

While the submittal identified the expenses associated with decommissioning scenarios, it did not include the plan, required by 50.75(f)(5), to adjust funding levels to demonstrate a reasonable level of financial assurance, if necessary.

NRC regulations allow a licensee to take a 2% real rate of return earnings credit on trust balances unless a higher rate is authorized by a regulated licensee's public utility commission. VY is not rate regulated, so the staff applied a 2% real rate of return on the trust fund balance ($416.5 million as of December 31, 2006) based on the regulation and deducted the expenses identified in submittal. The staff's result for the scenario analyzed was that sufficient funds were not available to decommission VY. The review was based on one of the scenarios that used a current license expiration date of 2012. How does the licensee intend to adjust funding levels, if required?

RESPONSE

Based upon historical earnings (since Entergy VY acquired the fund on July 31, 2002), the decommissioning trust fund will have sufficient money to safely manage the spent fuel until-the DOE is able to remove it from the site and remediate the site to levels whereby the operating license can be terminated and the site made available for alternative and unrestricted use (based upon Scenario 5 as outlined in the TLG study and at least a 2.58% real rate of return on investment).

Entergy VY's bases for employing a real rate of return greater than 2% are that (1) resolution is expected in the very near future of Entergy's request for a renewed operating license for VY, which will allow an additional 20 years of growth of the trust funds, and (2) the historical performance of the trust funds has exceeded the 2% figure.

Entergy VY's historic average annual rate of earnings on the decommissioning trust fund (since Entergy VY acquired the fund on July 31, 2002) has exceeded 5.58%. Actual annualized composite rate of return for the Vermont Yankee decommissioning fund, from July 31, 2002 to December 31, 2007, after tax, was 6.05%.

BVY 08-022 / Attachment 2 / page 3 Entergy VY believes that it is reasonable to consider historic fund performance for this filing in the limited situation where the constraint on remaining license life is the absence of a final decision in the pending license renewal application request, where the SER has been completed and the ACRS has recommended license renewal.

If these bases are not considered sufficient, some decommissioning activities could be deferred, and credit can be taken for funds in the amount of the current parent company commitment that has been made of up to $60 million for spent fuel management. If needed, this money could be deposited into the decommissioning trust or a provisional trust as late as year 2026 to cover decommissioning and spent fuel storage costs. As discussed further below, Table 2B demonstrates that adequate funding would be available with a 2 percent real rate of return on earnings on the trust fund.

In response to RAI No. 1 on Vermont Yankee's Preliminary Decommissioning Cost Estimate, the 2006 dollar estimate for Scenario 5 was escalated to 2007 dollars (for comparison with the December 2007 trust fund balance of $439.567). The results are shown in Table IA.

Scenario 5 was basedupon the premise that decommissioning would commence once the spent fuel is removed from the site in 2042. However, current NRC regulations permit decommissioning to be deferred up to 60 years (with the plant's operating license terminated as late as 2072). For illustrative purposes, a 60-year SAFSTOR scenario is shown in Table 2A.

This scenario was created by inserting additional years of storage within the Scenario 5 cost model (adjusted for the absence of spent fuel after year 2042). The progression of the cost increases in the original Scenario 5 cost for spent fuel and license termination is delineated as follows:

License Termination and Year's Spent Fuel Management Cost Dollars Reference Table 3, "Estimated Combined License Termination and Spent Fuel Management Costs." Vermont Yankee's Spent Fuel

$762.28 million 2006 Management Plan Table 3 costs escalated to 2007 dollars in response to RAI No. 1 on Vermont Yankee's

$783.66 million 2007 Preliminary Decommissioning Cost Estimate Storage period extended and decommissioning deferred to maximum extent (additional storage

$875.16 million 2007 costs included)

As shown in Table 2B, the 60-year SAFSTOR scenario is financially viable using a 3% rate of inflation and 5% rate of earnings (for a 2% real rate of return) with the additional $60 million added to the trust fund as late as the year 2026. Should the rate of inflation be less or earnings on the fund exceed 5% (as they have historically done), less (or no) money would need to be added to the fund or it could be added later.

BVY 08-022 / Attachment 2 / page 4 Entergy VY believes it should be given a reasonable amount of time to resolve any shortfall in the funding calculated using the existing license expiration date in accordance with Regulatory Position 2.2:8 in NRC Regulatory Guide 1.159 Rev. 1. Entergy VY believes a reasonable amount of time in this instance would encompass the time required for the decision on the license renewal request. If deemed necessary, Entergy VY would expressly request a finding that its use of the rate of return in its filing meets the NRC's requirements, pursuant to 10 CFR 50.75(e)(1)(vi), under the specific circumstances presented here with a decision on a license renewal to be rendered in the near future.

Entergy VY has formally filed its request to continue operating for 20 years past its scheduled 2012 license expiration date with both with the NRC and the State of Vermont. A final NRC decision on whether to extend Vermont Yankee's license could come later this year. Extended operations of the reactor will defer the need to access the decommissioning fund, allowing more time for the fund to grow. With a larger decommissioning fund, there will be additional and financially viable decommissioning options (even at lower rates of earnings). However, contributing to the fund prior to the decision on license extension creates the possibility for over funding. Entergy VY will revisit the financial adequacy of the decommissioning trust once the license end date has been confirmed, in accordance with the flexibility in fund accumulation rates described in Regulatory Position 2.2.8 in Regulatory Guide 1.159, Rev. 1. Entergy VY plans to review the adequacy of the funding in light of the then-existing license termination date once the license renewal request is resolved. If at that time, funding is not deemed adequate, Entergy VY will take steps in accordance with 10CFR50.75(e)(1) to address any inadequacy.

It should be noted that the projected expenditures for spent fuel management identified in the decommissioning cost analysis do not consider the outcome of the litigation (including compensation for damages) with the DOE with regards to the delays incurred by Entergy VY in the timely removal of the spent fuel from the site. Entergy VY views the extended spent fuel management costs to be damages that should be paid by the government because of the DOE's breach of the spent fuel disposal contract.

RAI No. 3:

The submittal identified the estimated costs associated with the selected decommissioning scenarios in 2006 dollars. Recent media reports concerning construction costs indicates a significant increase in material and labor costs over general inflation. In light of such reports, what escalation factor will be used by Entergy to escalate the decommissioning costs to 2008 dollars? For the staff to complete their evaluation, the decommissioning cost, in 2008 dollars, is necessary for staff to determine if sufficient funds are available for the designated scenarios.

BVY 08-022 / Attachment 2 / page 5

RESPONSE

In escalating decommissioning estimates, TLG Services follows the guidance provided by the NRC in 10 CFR 50.75(c)(2). However, while the NRC divides its reference costs for decommissioning into three categories of labor, energy, and burial, TLG uses five, subdividing the NRC's labor category into "labor" and "equipment and materials" cost components and adding an "other" category for miscellaneous fees, taxes and other unique or one-time expenditures.

TLG has prepared Asset Retirement Obligation liability assessments for several major nuclear plant owners [in accordance with the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards, No. 143 (FAS 143)]. In the development of the determinations, escalated cash flows are produced. The schedule of expenditures, presented in 2007 dollars, in response to RAI No. 1 was developed using the same methods that TLG uses in escalating decommissioning costs for FAS 143 determinations.

TLG develops future cash flows by escalating four of the cost categories (labor, equipment and materials, energy and other) with indices provided by Global Insight [Global Insight is a privately held company formed from the two leading economic and financial information companies, DRI (Data Resources, Inc.) and WEFA (Wharton Econometric Forecasting Associates)]. "Burial" costs are typically escalated based upon the provisions in the long-term agreements a licensee has entered into with a disposal service provider (e.g., EnergySolutions).

The following table identifies the Global Insight forecast data sets used for the four cost categories (exclusive of Burial). Consistent with the NRC's guidance, TLG escalates the labor component of its decommissioning cost estimates using an Employment Cost Index (ECI) and the energy cost component with a Producer Price Index (PPI).

Use of the Consumer Price Index (CPI) for general services, site operating costs and one-time expenditures is consistent with the intent of the index (the measure of the average change in prices over time of goods and services).

Cost Category Global Insight Forecast Database Labor ECI Total Compensation (JECIWSSP)

Equipment/Materials Producer Price Index, Machinery & Equipment (WPI11)

Producer Price Index, Fuels and Related Products and Energy Power (WPIP05)

Other Consumer Price Index, Services (CUSASNS)

Index identified in the EnergySolutions Life-of-Plant Burial and Recycling Disposal Agreement

BVY 08-022 / Attachment 2 / page 6 The resulting escalation indices for inflating the various cost categories to 2007 (based upon actual performance) and 2008 (projections) are provided below.

LABOR MTL/EQ ENERGY BURIAL OTHER TOTAL COSTS COSTS COSTS COSTS COSTS COSTS 2006 Costs 431,513 115,832 8,038 87,147 119,755 762,285 2006 Indices 102.0500 126.1667 166.6917 198.7000 2.3887 2007 Indices 105.2500 127.3250 177.9222 203.4990 2.4711 Multiplier 1.0314 1.0092 1.0674 1.0242 1.0345 2007 Costs 445,044 116,895 8,580 89,252 123,887) 783,657 2008 Indices 108.6072 127.6010 185.0188 "211.6930 2.5595 Multiplier 1.0643 1.0114 1.1099 1.0654 1.0715 2008 Costs 459,239 117,148 8,922 92,846 128,318 806,473 Based upon the information from Global Insight, costs have increased approximately 5.8% over the two year period, or less than 3% annually.

RAI No. 4:

Since the VY's projected end of operation is less than 5 years based on its license expiration date, the licensee is required by 10 CFR 50.75(f)(2) to submit annually their decommissioning funding report rather than biennially. Provide the amount in the trust fund as of December 31, 2007, as well as the revised formula amount because the staff will need to factor this information into the staff's analysis.

RESPONSE

The information was provided to the NRC in a letter from John F. McCann, Director, Nuclear Safety and Licensing, Entergy Nuclear Operations, Letter No. ENOC-08-00018, dated March 26, 2008.

BVY 08-022 / Attachment 2 / page 7 Table 1A Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, SAFSTOR Alternative, 2017 DOE Start Date (thousands of 2007 dollars)

Equip. & Yearly Year Labor Materials Energy Burial Other Totals 2012 .30,785 7,444 734 41 7,261 46,265 2013 33,446 13,507 689 1,385 16,083 65,110 2014 13,786 13,798 182 34 4,379 32,178 2015 13,786' 13,798 182 34 4,379 32,178 2016 13,824 13,835 182 34 4,391 32,266 2017 10,924 9,624 154 33 3,457 24,192 2018 4,647 598 91 32 .1,401 6,769 2019- 4,540 318 91 32 1,401 6,382 2020 4,617 487 91 32 1,405 6,632 2021 4,626 542 91 32 1,401 6,692 2022 4,626 542 91 32 1,401 6,692, 2023 4,604 486 91 32 1,401 6,614 2024 4,595 431 91 32 1,405 6,554 2025 4,583 430 91 32 1,401 6,537 2026 4,583 430 .91 32 1,401 6,537 2027 4,583 430 91 32 1,401 6,537 2028 4,595 431 91 32 1,405 6,554 2029 4,562 374 91 32 1,401 6,459 2030 4,583 430 91 32 1,401 6,537 2031 4,583 430 91 32 1,401 6,537 2032 4,553 319 91 32 1,405 6,399 2033 4,562 374 91 32 1,401 6,459 2034 4,562 374 91 32 .1,401 6,459 2035 4,604 486 91 32 1,401 6,614 2036 4,574 375 91 32 1,405 6,477 2037 4,583 430 91 32 1,401 6,537 2038 4,583 430 91 32 1,401 6,537 2039 4,583 430 91 32 1,401 6,537 2040 4,595 431 91 32 1,405 6,554 2041 4,562 374 91 32 1,401 6,459 2042 4,736 656 93 32 1,405 6,923 2043 29,272 1,112 908 62 2,894 34,248 2044 49,606 14,244 888 30,041 11,928 106,707 2045 41,197 8,668 728 24,461 9,053 84,107 2046 36,416 3,931 681 14,431 5,771 61,231 2047 36,416 3,931 681 14,431 5,771 61,231 2048 20,484 1,717 297 3,468 13,371 39,336

BVY'08-022 / Attachment 2 / page 8 Table IA (continued)

Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, SAFSTOR Alternative, 2017 DOE Start Date (thousands of 2007 dollars)

Equip.ý & Yearly Year Labor Materials Energy Burial Other Totals 2049 190 .173 0 0 59 422 2050 90 83 0 0 28 201 445,044 116,895 8,580 89,252 123,887 783,657

BVY 08-022 / Attachment 2 / page 9 Table 1B Vermont Yankee 'Nuclear Power Station Scenario 5: 2012 Shutdown, SAFSTOR Alternative, 2017 DOE Start Date (millions of dollars)

Basis Year 2007 Fund Balance $439.567 (millions)

Annual Escalation 3%

Annual Earnings 5.58%

2007 Escalated Present Value Decommissioning Decommissioning of Escalated Year Fund Balance Costs Costs Costs 2007 $439.567 -

2008 $464.095 -

2009 $489.992 -

2010 $517.334 -

2011 $546.201 -

2012 $523.045 $46.265 $53.634 $40.882 2013 $474.486 $65.110 $77.745 $56.128 2014 $461.387 $32.178 $39.575 $27.061 2015 $446.370 $32.178 $40.762 $26.400 2016 $429.177 $32.266 $42.100 $25.825 2017 $420.613 $24.192 $32.512 *$18.890 2018 $434.713 $6.769 $9.370 $5.156 2019 $449.871 $6.382 $9.099 $4.743 2020 $465.235 $6.632 $9.739 $4.808 2021 $481.073 $6.692 $10.122 $4.733 2022 $497.491 $6.692 $10.426 $4.617 2023 $514.637 $6.614 $10.614 $4.452 2024 $532.521 $6.554 $10.833 $4.304 2025 $551.107 $6.537 $11.129 $4.188 2026 $570.396 $6.537 $11.463 $4.086 2027 $590.417 $6.537 $11.807 $3.986 2028 $611.170 $6.554 $12.192 $3.898 2029 $632.897 $6.459 $12.376 $3.748 2030 $655.312 $6.537 $12.901 $3.700 2031 $678.590 $6.537 $13.288 $3.610 2032 $703.057 $6.399 $13.398. $3.447 2033 $728.359 $6.459 $13.929 $3.395 2034 $754.654 $6.459 $14.347 $3.312 2035 $781.632 $6.614 $15.132 $3.308 2036 $809.984 $6.477 $15.263 $3.161 2037 $839.314 $6.537 $15.867 $3.112 2038 $869.805 $6.537 $16.343 $3.036 2039 $901.507 $6.537 $16.833 $2.962

BVY 08-022 / Attachment 2 / page 10 Table lB (continued)

Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, SAFSTOR Alternative, 2017 DOE Start Date (millions of dollars)

Basis Year 2007 Fund Balance $439.567 (millions)

Annual Escalation 3%

Annual Earnings 5.58%

2007 Escalated Present Value Decommissioning Decommissioning of Escalated Year Fund Balance Costs Costs Costs 2040 $934.428 $6.554 $17.383. $2.897 2041 $968.924 $6.459 $ 17.645 $2.785 2042 $1,003.510 $6.923 $19.480 $2.912 2043 $960.246 $34.248 $99.260 $14.055 2044 $695.283 $106.707 $318.545 $42.722 2045 $475.469 $84.107 $258.611 $32.851 2046 $308.080 $61.231 $193.920 $23.331 2047 $125.533 $61.231 $199.738 $22.761 2048 $0.373 $39.336 $132,165 $14.265 2049 -$1.066 $0.422 $1.460 $0.149 2050 -$1.841 $0.201 $0.716 .$0.069

$783.657 $1,821.722 $439.745

BVY 08-022 / Attachment 2 / page 11 Table 2A Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, Extended SAFSTOR Alternative, 2017 DOE Start Date (thousands of 2007 dollars)

Equip. & Yearly Year Labor Materials Energy Burial Other Totals 2012 30,785 7,444 734 41 7,261 46,265 2013 33,446 13,507 689 1,385 16,083 65,110 2014 13,786 13,798 182 34 4,379 32,178 2015 13,786 13,798 182 34 4,379 32,178 2016 13,824 13,835 182 34 4,391 32,266 2017 10,924 9,624 154 33 3,457 24,192 2018 4,647 598 91 32 1,401 6,769 2019 4,540 318 91 32 1,401 6,382 2020 4,617 487 91 32 1,405 6,632 2021 4,626 542 91 32 1,401 6,692 2022 4,626 542 91 32 1,401 6,692 2023 464486 91 32 1,401 6,614 2024 4,595 431 91 32 1,405 6,554 2025 4,583 430 91 32 1,401 6,537 2026 4,583 430 91 32 1,401 6,537 2027 4,583 430 91 32 .1,401 6,537 2028 4,595 431 91t 32 1,405 6,554 2029 4,562 374 91 32 1,401 6,459 2030 4,583 430 91 32 1,401 6,537 2031 4,583 430 91 32 1,401 6,537 2032 4,553 319 91 32 1,405 6,399 2033 4,562 374 91 32 1,401 6,459 2034 4,562 .374 91 32 1,401 6,459 2035 4,604 486 91 32 1,401 6,614 2036 4,574 375 .91 32 1,405 6,477 2037 4,583 430 91 32 1,401 6,537 2038 4,583 430 91 32 1,401 6,537 2039 4,583 430 91 32 1,401 6,537 2040 4,595 431 91 32 1,405 6,554 2041 4,562 374 91 32 1,401 6,459 2042 4,736 656 93 32 .1,405 6,923 2043 2,469 278 91 45 929 3,812 2044 2,469 278 91 45 929 3,812 2045 2,469 278 91 45. 929 3,812 2046 2,469 278 91 45 929 3,812 2047 2,469 278 91 45' 929 3,812 2048 2,469 278 91 45 929 3,812 2049 2,469 278 91 45 929 3,812 2050 2,469 278 91 45 929 3,812

BVY 08-022 / Attachment 2 / page 12 Table 2A Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, Extended SAFSTOR Alternative, 2017 DOE Start Date (thousands of 2007 dollars) 2051 2,469 278 91 45 929 3,812 2052 2,469 278 91 45 929 3,812 2053 2,469 278 91 45 929 3,812 2054 2,469 278 91 45 929 3,812 2055 2,469 278 91 45 929 3,812 2056 2,469 278 91 45 929 3,812 2057 2,469 278 91 45 929 3,812 2058 2,469 278 91 45 929 3,812 2059 2,469 278 91 45 929 3,812 2060 2,469 278 91 45 929 3,812 2061 2,469 278 91 45 929: 3,812 2062 2,469 278 91 45 929 3,812 2063 2,469 278 91 45 929 3,812 2064 2,469 278 91 45 929 3,812 2065 2,469 278 91 45 929 3,812 2066 2,469 278 91 45 929 3,812 2067 29,272 1,112 908 62 2,894 34,248 2068 49,606 14,244 888 30,041 11,928 106,707 2069 41,197 8,668 728 24,461 9,053 84,107 2070 36,416 3,931 681 14,431 5,771. 61,231 2071 36,416 3,931 681 14,431 5,771 61,231 2072 20,764 1,973 297 3,468 13,458 39,960

______ 504,312 123,564 10,761 90,338 146,181 875,156

BVY 08-022 / Attachment 2 / page 13 Table 2B Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, Extended SAFSTOR Alternative, 2017 DOE Start Date (millions of dollars)

Basis Year 2007 ________ ________

Fund Balance $439.567 (millions) __________________________

Annual Escalation 3%_________________

Annual Earnings 5%_________________

Expenditures from Decommissioning Trust Fund 2007 Escalated Present Value Decommissioning Decommissioning of Escalated Year Fund Balance Contributions Costs Costs Costs 2007 $439.567 _______

2008 $461.541 2009 $484.614 2010 $508.840 20,11 $534.277 _______

2012 $507.352 $46.265 $53.634 $42.026 2013 $454.970 $65.110 $77.745 $58.018 2014 $438.139 $32.178 $39.575 $28.127 2015 $419.280 $32.178 $40.762 $27.591 2016 $398.140 $32.266 $42.100 $27.140 2017 $385.531 $24.192 $32.512 $19.961 2018 $395.434 $6.769 $9.370 $5.479 2019 $406.103 $6.382 $9.099 $5.067 2020 $416.665 $6.632 $9.739 $5.165 2021 $4732$6.692 $10.122 $5.113 2022 $438.311 $6.692 $10.426 $5.016 2023 $449.608 $6.614 $10.614 $4.863 2024 $461.25 1 $6.554 $ 10.833 $4.727 2025 $473.180 $6.537 $11.129 $4.625 2026 $545.371 $60.000 $6.537 $11.463 -$19.211 2027 $560.827 $6.537 $11.807 $4.451 2028 $576.671 $6.554 $12.192 $4.377 2029 $593.123 $6.459 $12.376 $4.232 2030 $609.873 $6.537 $12.901 $4.201 2031 $627.073 $6.537 $13.288 $4.121 2032 $645.023 $6.399 $13.398 $3.957

• 2033 $663.339 $6.459 $13.929 $3.918 2034 $682.153 $6.459 $14.347 $3.844 2035 $701.122 $6.614 $15.132 $3.861 2036 $720.908 $6.477 $15.263 $3.709 2037 $741.080 $6.537 $15.867 $3.672 2038 $761.784 $6.537 $16.343 $3.602 2039 $783.033 _______$6.537 $16.833 1$3.534

BVY 08-022 / Attachment 2 / page 14 Table 2B Vermont Yankee Nuclear Power Station Scenario 5: 2012 Shutdown, Extended SAFSTOR Alternative, 2017 DOE Start Date (millions of dollars)

Basis Year 2007 Fund Balance $439.567 (millions)

Annual Escalation 3%

Annual Earnings 5%

Expenditures from Decommissioning Trust Fund 2007 Escalated Present Value Decommissioning Decommissioning of Escalated Year Fund Balance Contributions Costs Costs Costs 2040 $804.794 $6.554 $17.383 $3.475 2041 $827.381 $6.459 $17.645 $3.360 2042 $849.262 $6.923 $19.480 $3.533 2043 $880.669 $3.812 $11.048 $1.908 2044 $913.314 $3.812 $11.380 $1.872 2045 $947.250 $3.8.12 $11.721 $1.836 2046 $982*530 $3.812 $12.073 $1.801 2047 $1,019.212 $3.812 $12.435 $1.767 2048 $1,057.355 $3.812 $12.808 $1.733 2049 $1,097.021 $3.812 $13.192 $1.700 2050 $1,138.274 $3.812 $13.588 $1.668 2051 $1,181.181 $3.812 $13.996. $1.636 2052 $1,225.814 $3.812 $14.415 $1.605 2053 $1,272.245 $3.812 $14.848 $1.574 2054 $1,320.552 $3.812 $15.293 $1.544 2055 $1,370.815 $3.812 $15.752 $1.515 2056 $1,423.118 $3.812 $16.225 $1.486 2057 $1,477.549 $3.812 $16.71:1 $1.458 2058 $1,534.199 $3.812 $17.213 $1.430 2059 $1,593.165 $3.812 $17.729 $1.403 2060 $1,654.547 $3.812 $18.261 $1.376 2061 $1,718.450 $3.812 $1'8.809 $1.350 2062 $1,784.983 $3.812 $19.373 $1.324 2063 $1,854.261 $3.812 $19.954 $1.299 2064 $1,926.403 $3.812 $20.553* $1.274 2065 , $2,001.535 $3.812 $21.170 $1.250 2066 $2,079.788 $3.812 $21.805 $1.226 2067 $1,981.982 $34.248 $201.776 $10.808 2068 $1,433.526 $106.707 $647.536 $33.034 2069 $979.486 $84.107 .$525.703 $25.542 2070 $634.251 $61.231 $394.200 $18.241 2071 $259.932 $61.231 $406.026 $17.893 2072 $0.000 $39.960 $272.926 $11.455

$875.156 $3,445.826 $439.562