ML092640486
| ML092640486 | |
| Person / Time | |
|---|---|
| Site: | Point Beach, Duane Arnold  |
| Issue date: | 09/21/2009 |
| From: | Justin Poole Plant Licensing Branch III |
| To: | Jim Costedio, Flentje F NextEra Energy Duane Arnold, Point Beach |
| Poole Justin/DORL/LPL3-1/ 301-415-2048 | |
| References | |
| Download: ML092640486 (4) | |
Text
From:
Poole, Justin Sent:
Monday, September 21, 2009 1:50 PM To:
COSTEDIO, JAMES; 'Flentje, Fritzie' Cc:
Feintuch, Karl
Subject:
Decommissioning Funding Review RAIs for Point Beach and Duane Arnold
- Jim, By letter dated July 27, 2009, FPL Company provided information that was requested during a teleconference on June 30, 2009 regarding the decommissioning funding status.
The Financial, Policy, and Rulemaking Branch has reviewed the information provided and determined that in order to complete its evaluation, additional information is required. We would like to discuss the questions, in draft form below, with you in a conference call this week.
Please get the appropriate people from FPL and Duane Arnold involved.
This e-mail aims solely to prepare you and others for the proposed conference call. It does not convey a formal NRC staff position, and it does not formally request for additional information.
Justin C. Poole Project Manager NRR/DORL/LPL3-1 U.S. Nuclear Regulatory Commission (301)415-2048 email: Justin.Poole@nrc.gov
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
DRAFT Point Beach Nuclear Plant, Units 1 and 2 The NRC staff has reviewed your submittal, dated July 27, 2009, outlining FPL Energy Point Beach, LLCs (FPL Energy) proposed plan of action to cover the shortfall in decommissioning funding assurance. Based on the Biennial Decommissioning Funding Report submitted on or about March 31, 2009, the NRC staff estimated a projected shortfall of approximately $43 million for Unit 1 and $46 million for Unit 2, as of December 31, 2008.
In your July 27, 2009 submittal, FPL Energy states that the decommissioning trust fund balance as of June 30, 2009, has grown to $196.4 million, an increase of $15.4 million for Unit 1, and has grown to $185.0 million, an increase of $14.5 million for Unit 2 from the December 31, 2008 balance indicated in the Biennial Decommissioning Funding Report that was submitted on or about March 31, 2009, by FPL Energy Point Beach, LLC.
FPL Energy has also proposed the use of a Parent Company Guarantee, based on a value derived by discounting the Minimum Decommissioning Funding Formula amount from the projected value at the time of permanent secession of operations, to a present value at the end of calendar 2009. FPL Energy proposed that the combination of the increase decommissioning trust fund balance as of June 30, 2009, along with the proposed discounted Parent Company Guarantee, will provide adequate decommissioning funding assurance.
Question 1 On July 27, 2009 FPL submitted a plan on behalf of the licensed owner FPL Energy, the 100 percent owner of Point Beach Nuclear Plant, Units 1 and 2, as part of the concurrent 2009 Biennial Decommissioning Review process, which describes how and when it intends to make adjustments to financial assurance mechanisms such that any shortfalls in decommissioning funding assurance for Point Beach Nuclear Plant, Units 1 and 2 are covered.
On page 2 of the decommissioning funding plan submitted, the licensee stated:
In order to address the funding difference for Point Beach 1, FPL Energy will cause FPL Group Capital Inc. to issue a decommissioning funding parent (company) guaranty for $13 million for Unit 1 and $14.5 million for Unit 2
[which is based on a] present value of NRC Minimum Calculation pursuant to 10 CFR 50.75.
10 CFR 50.75 (b)(1) states:
(b) Each power reactor applicant for or holder of an operating license, and each applicant for a combined license under subpart C of 10 CFR part 52 for a production or utilization facility of the type and power level specified in paragraph (c) of this section shall submit a decommissioning report, as required by 10 CFR 50.33(k).
(1) For an applicant for or holder of an operating license under part 50, the report must contain a certification that financial assurance for decommissioning will be (for a license applicant), or has been (for a license holder), provided in an amount which may be more, but not less, than the amount stated in the table in paragraph (c)(1) of this section adjusted using a rate at least equal to that stated in paragraph (c)(2) of this section.
(Emphasis added.)
NRC recognizes that if $13 million for Unit 1 and $14.5 million for Unit 2 were deposited in cash into the prepaid account, the increased balance would provide adequate financial assurance, as of June 30, 2009. The reason is that actual funds in a prepaid account can generate earnings.
However, FPL Energys plan to provide a parent company guarantee (PCG) in the amount of
$13 million for Unit 1 and $14.5 million for Unit 2 does not meet the requirements of 10 CFR 50.75(e)(1)(i). The PCG is a promise by the parent company to pay the decommissioning obligations of the licensee in the event the licensee fails to pay for decommissioning costs. By its nature, the PCG has no funds from which earnings can be generated. Your plan would generate earnings only on the actual balance in the account. The sum of the $196,376,577 balance plus earnings on the balance plus a $13 million for Unit 1 and the sum of the $185 million balance plus earnings on the balance plus a $14.5 million for Unit 2 PCG would not cover the minimum NRC requirement of 10 CFR 50.75(c), as of July 31, 2009.
In view of the above, provide a revised plan to cover the projected shortfall using a method that conforms to one of the methods provided in 10 CFR 50.75.
Duane Arnold Energy Center The NRC staff has reviewed your submittal, dated July 27, 2009, outlining FPL Energy Duane Arnold, LLCs (FPL Energy) proposed plan of action to cover deficiencies in providing decommissioning funding assurance discovered in its 70 percent ownership of Duane Arnold Energy Center, (DAEC) Biennial Decommissioning Funding Report that was submitted on or about March 31, 2009. At that time, the NRC staff estimated a projected deficiency in decommissioning funding assurance of approximately $48 million in total. This reflects the review of all three owners of DAEC, for decommissioning funding assurance.
In the July 27, 2009, submittal, FPL Energy states that the decommissioning trust fund balance as of June 30, 2009, has grown to $167.5 million, an increase of $3.9 million from the December 31, 2008 balance indicated in the Biennial Decommissioning Funding Report that was submitted on or about March 31, 2009, by FPL Energy Duane Arnold, LLC.
FPL Energy has also proposed the use of a Parent Company Guarantee, based on a value derived by discounting the Minimum Decommissioning Funding Formula amount from the projected value at the time of permanent secession of operations, to a present value at the end of calendar 2009. FPL Energy believes that the combination of the increase decommissioning trust fund balance as of June 30, 2009, along with the proposed discounted Parent Company Guarantee, provides decommissioning funding assurance.
On July 27, 2009, FPL submitted a plan on behalf of the licensed owners, FPL Energy 70 percent owner, and Central Iowa Power Cooperative (CIPCO), 20 percent owner, as part of the concurrent 2009 Biennial Decommissioning Review process, which describes how and when it intends to make adjustments to financial assurance mechanisms such that any shortfalls in decommissioning funding assurance for DAEC are covered.
On page 2 of the decommissioning funding plan submitted, FPL Energy DA stated:
In order to address the funding difference for DAEC, FPL Energy will cause FPL Group Capital Inc. to amend the existing decommissioning funding parent (company) guaranty for $93 million to increase the value of that parent (company) guaranty to $132.5 million, [which is based on a] present value of NRC Minimum Calculation pursuant to 10 CFR 50.75.
10 CFR 50.75 (b)(1) states:
(b) Each power reactor applicant for or holder of an operating license, and each applicant for a combined license under subpart C of 10 CFR part 52 for a production or utilization facility of the type and power level specified in paragraph (c) of this section shall submit a decommissioning report, as required by § 50.33(k).
(2) For an applicant for or holder of an operating license under part 50, the report must contain a certification that financial assurance for decommissioning will be (for a license applicant), or has been (for a license holder), provided in an amount which may be more, but not less, than the amount stated in the table in paragraph (c)(1) of this section adjusted using a rate at least equal to that stated in paragraph (c)(2) of this section.
(Emphasis added.)
Question 1 On Enclosure 4 of the July 27, 2009, submittal, CIPCO stated that a Real Rate of Return of 4 percent is assumed. Please provide the necessary evidence that allows CIPCO to use an assumed Real Rate of Return of 4 percent by the appropriate regulatory authority.
Question 2 Please provide a status of the remaining 10 percent owner of DAEC.
Question 3 NRC recognizes that if approximately $132.5M were deposited in cash into the prepaid account, the increased balance would provide adequate financial assurance, as of June 30, 2009. The reason is that actual funds in a prepaid account can generate earnings.
However, FPLs plan to provide a parent company guarantee (PCG) in the amount of $132.5M does not meet the requirements of § 50.75(e)(1)(i). The PCG is a promise by the parent company to pay the decommissioning obligations of the licensee in the event the licensee fails to pay for decommissioning costs. By its nature, the PCG has no funds from which earnings can be generated. Your plan would generate earnings only on the actual balance in the account. The sum of the $165.7M trust fund balance plus earnings on the balance plus a
$132.5M PCG would not cover the minimum NRC requirement of § 50.75(c), as of July 31, 2009.
In view of the above, provide a revised plan to cover the projected shortfall using a method that conforms to one of the methods provided in § 50.75.