BVY 10-008, Decommissioning Funding Assurance Documentation

Decommissioning Funding Assurance Documentation

ML100470701
Person / Time
Site:	Vermont Yankee
Issue date:	01/28/2010
From:	Michael Colomb Entergy Nuclear Operations
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
BVY 10-008, TAC ME0583
Download: ML100470701 (20)

Text

Entergy Nuclear Operations, Inc.

Vermont Yankee P.O. Box 0250 Eny320 Governor Hunt Road Vernon, VT 05354 Tel 802 257 7711 Michael J. Colomb Site Vice President BVY 10-008 January 28, 2010 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555

Subject:

Decommissioning Funding Assurance Documentation Vermont Yankee Nuclear Power Station Docket No. 50-271 License No. DPR-28

References:

1. Letter, Entergy to NRC, "Status of Decommissioning Funding for Plants Operated by Entergy Nuclear Operations, Inc. for the Year Ending December 31, 2008 - 1 OCFR50.75(f)(1)," ENOC-09-00007, dated March 30, 2009

2. Letter, NRC to VYNPS, "Entergy Nuclear Vermont Yankee LLC's Status of Decommissioning Funding Assurance for Vermont Yankee Nuclear Power Station (TAC No. ME0583)," dated June 18, 2009

3. Letter, Entergy to NRC, "Decommissioning Funding Assurance Plans,"

ENOC-09-00024, dated August 13, 2009

4. Letter, NRC to VYNPS, "Request for Additional Information'to Support the Review of the Vermont Yankee Nuclear Power Station Decommissioning Financial Assurance Plans (TAC No, ME0583)"

dated September 29, 2009

5. Letter, Entergy to NRC, "Revised Decommissioning Funding Assurance Plan," ENOC-09-0034, dated October 29, 2009

6. Letter, NRC to VYNPS, "Decommissioning Funding Status Report for Vermont Yankee Nuclear power Station (TAC No. ME0583)," dated December 8, 2009

Dear Sir or Madam:

Entergy Nuclear Operations, Inc. (Entergy) submitted the biennial report of decommissioning funding status in Reference 1. NRC requested follow up telephone conference calls in Reference 2 regarding the decommissioning funding status for the subject plants. Entergy provided further information in Reference 3, and NRC requested additional information in Reference 4. Reference 5 provided the response to NRC's additional information request and Reference 6 accepted Reference 5.

On January 7, 2010, NRC requested certain Parent Guarantee verifying documentation be provided, which is included as Attachments 1 through 3 of this letter. The Parent

,4ooi

BVY 10-008 / page 2 of 2 Guarantee was provided effective December 31, 2009 as demonstrated by the Attachments to this letter.

This letter contains no new Regulatory Commitments.

Should you have any questions concerning this submittal or require additional information, please contact Mr. David J. Mannai at (802) 451-3304.

Sincerely,

[MJC/JTM]

Attachments:

1., Entergy Corporation Pare'nt-Guarantee of Funds for Decommissioning: Letter from Chief Financial Officer to Demonstrate Financial Assurance (3 pages)

2. Independent Accountants Report on Applying Agreed Upon Procedures (4 pages)

3. Entergy Corporation Parent Guarantee and Certificate (8 pages) cc: Mr. Samuel J. Collins, Region 1 Administrator U.S. Nuclear Regulatory Commission 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 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

BVY 10-008 Attachment 1 Vermont Yankee Nuclear Power Station Entergy Corporation Parent-Guarantee of Funds for Decommissioning:

Letter from Chief Financial Officer to Demonstrate Financial Assurance (3 pages)

ENTERGY CORPORATION P.O. Box 61000 NEW ORLEANS, LA 70161 (504) 576-6106 LEO P. DENAULT EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER January 26, 2010 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington DC 20555-0001

Subject:

Entergy Corporation Parent - Guarantee of Funds for Decommissioning:

Letter from Chief Financial Officer to Demonstrate Financial Assurance I am the Chief Financial Officer of Entergy Corporation, 639 Loyola Avenue, New Orleans, LA 70113, a corporation. This letter is in support of this firm's use of the financial test to demonstrate financial assurance, as specified in 10 CFR Part 50.

This firm guarantees, through the parent company guarantee submitted to demonstrate compliance under 10 CFR Part 50, up to $40 million of the decommissioning costs of the following facility owned or operated by a subsidiary of this firm. The current cost estimate or amount of decommissioning funding assurance required, and the amount being guaranteed, are shown for the facility:

Name of Location of Current Amount Being Facility Facility Cost Estimate Guaranteed Vermont Yankee Vernon, VT $513,385,033 $40,000,000 Nuclear Power Station License No. DPR-28 Entergy Corporation is required to file a Form 10K with the U.S. Securities and Exchange Commission for the latest fiscal year.

The fiscal year of Entergy Corporation ends on December 3151. The figures for the following items (Financial Test II) marked with an asterisk are derived from this Entergy Corporation's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended December 31, 2008, because the guarantee was made effective December 31, 2009.

I hereby certify that the content of this letter is true and correct to the best of my knowledge.

Ld&P. Denault Executive Vice President and Chief Financial Officer AIs 7/ 0 Date

FINANCIAL TEST: ALTERNATIVE II (10 CFR Part 30 App. A. Section IIA.2.)

Entergy Corporation Parent Guarantee of Funds For Decommissioning Dollars in thousands 1 Guaranteed amount for Vermont Yankee Nuclear Power Station, License No. DPR-28,

$40,000

2. Current bond or credit rating of most recent unsecured issuance of this firm (see NOTE/ below)

Rating BBB corporate credit ratinq as of July 13, 2009 Name of rating service Standard & Poor's

3. Date of issuance of bond (See NOTE/ below)

4. Date of maturity of bond (See NOTE/ below)

• 5. Tangible net worth** (if any portion of estimates for decommissioning is included in total liabilities on your firm's financial statements, you may add the amount of that portion to this line) $7,589,420

• 6. Total assets in United States (required only if less than 90 percent of firm's assets are located in the United States)

Yes No

7. Is line 5 at least $10,000? X

8. Is line 5 at least 6 times line 1? X

9. Are at least 90 percent of firm's assets located in the United States? If not, complete line 10. X

10. Is line 6 at least 6 times line 1? N/A

11. Is the rating specified on line 2 "BBB" or better (if issued by Standard & Poor's) or "Baa" or better (if issued by Moody's)? X NOTE/ Entergy Corporation does not have any recent bond issuances. Notes were issued in 2002 and 2003, but these were issued via private placement and were not rated. Ratings supplied above are the current credit ratings from the indicated rating agency.

• Denotes figures derived from financial statements.

• • Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.

RECONCILING SCHEDULE ENTERGY CORPORATION YEAR ENDED DECEMBER 31, 2008 Dollars in thousands Per Recon- Per Line Number in Financial ciling CFO's CFO's Letter Statements Items Letter Total Shareholders' Equity $7,966,592 Less: GoodWill (377,172)

Tangible Net Worth $7,589,420 $7,589,420

BVY 10-008 Attachment 2 Vermont Yankee Nuclear Power Station Independent Accountants Report on Applying Agreed Upon Procedures (4 pages)

Deloitte. D elo .Delolite tte Suite 4200

& Touche LLP 701 Poydras Street New Orleans, LA70139-4200 USA Tel: +1 504 581 2727 Fax: +1 504 561 7293 www.deloitte.com INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Board of Directors Entergy Corporation New Orleans, Louisiana We have performed the procedures enumerated below, which were agreed to by Entergy Corporation (the "Company"), solely to assist the Company in connection with the Company's and the Nuclear Regulatory Commission's ("NRC") evaluation of the Company's compliance with the requirements specified in Appendix A, Section 11A.2 to Part 30 of 10 CFR, the Financial Test: Alternative I1(the "Financial Test") as of December 31, 2008 included in the letter from the Chief Financial Officer of the Company dated January 26, 2010 to the U.S. Nuclear Regulatory Commission. The Company's management is responsible for 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 those 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.

It should be understood that (1) we make no representations regarding the Company's determination and presentation of non-GAAP measures (such as tangible net worth), and (2) the non-GAAP measure presented may not be comparable to similarly titled measures reported by other companies. -lowever, the following procedures were applied to the attached schedules on pages 2 and 3 of Appendix A as indicated with respect to the symbols explained below.

A. We compared these amounts to the Company's audited financial statements for the year ended December 31, 2008 and found such amounts to be in agreement.

B. We compared the "Tangible Net Worth" amount as shown in the column "Per CFO's Letter" included in the Reconciling Schedule on page 3 of Appendix A to the "Tangible net worth" amount presented on line 5 of the Financial Test: Alternative II Schedule on page 2 of Appendix A and found such amounts to be in agreement.

C. We proved the arithmetic accuracy of the statement and noted no exception.

We were not engaged to, and did not, conduct an examination, the objective of which would be the expression of an opinion on compliance. 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 and management of the Company and the U.S. Nuclear Regulatory Commission, and is not intended to be and should not be used by anyone other than these specified parties.

January 27, 2010 Member of Deloitte Touche Tohmatsu

Q- ENTERGY CORoRArION vO.-i P ,o iEnte Wv E ORLEANS LA 76

• 50)576-6106 LEO P. DENAULT EXCTMVE VM PRESIDENTAND CHIEPPFINANCIALOFI4CR January 26, 2010 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington DC 20555-0001

Subject:

Entergy Corporation Parent - Guarantee of Funds for Decommissioning:

Letter fromr Chief Financial Offi.erto De6nonstrate Financial A.surance I am the Chief Financial Officer of Entergy COiporati0hn 639 Loyola Avenue, New Orleans, LA 70113, a corporation- This letter is in support of this firm's use of the finanrcial test to demonstrate financial assurance 'as specified in 10 CFR Part 50:

This firm guarantees, through the parent company guarantee submitted to demonstrate conpliance under 10 CFR Part 50, up to $40 million of thepdecimmssioning costs of the following' facility owned or operated'by *a subsidiary of this 'fiir.h 'th;c ent cost estiniat6 or amount of decommissioning funding assurance required, and the 'amuntbing bgirante9d, are sh6own'fo?;th facility:

Name of Location of Current Amount Being Facility li Cost iEtimate Gd*arahteed Vermont Yankee Vernon, VT $513,385,033 $40,000,000 Nuclear Power Station License No. DPR-28 Entergy Corporation is required to file a Form 10K with the U.S. Securities and Exchange Commission.for the latest fiscal-year.

The fiscal year of Entergy Corporation ends on-Decernber, 31. The figures, for-the following items (Financial Test II) marked with an asterisk ar*e idenved from this.-Entergy' Corporatins indedendently audited, year-end financial stateme ts and.fobtn6tes for the latest completed fiscal year, ended Deceember 31, 2008, because the gUarante6e{,as made effective December 31, 2009.

I hereby certify that the content of this letter is and cor cttohthe bestof my knowledge.

Executive Vice President and Chief Financial Officer Date

FINANCIAL TEST: ALTERNATIVE II (10 CFRPart 30App. A. Section i1A.2.)

Entergy Corporation Parent Gabrantee of Funds For Decommissioning Dollars in*ihousands

1. Guaranteed amount for Vermont Yankee Nuclear Power Station, License No. DPR-28

$40,000

2. Current bond or credit rating of most recent unsecured issuance of this firm (see NOTE/ below)

Rating, BBB corporate credit rating as of July 13, 2009 Name of rating service Standard & Poor's.

3. Date of issuance of bond (See NOTE/ below)

4. Date of maturity of bond (See NOTE/ below)

• 5. Tangible net worth** (if any portion of estimates for decommissioning is included in total liabilities.onyour firm's financial statements, you may add the amount of that portion to this line) j~9,~08

• 6. Total assets in United States (required only ifless than 90 percent of firm's assets are located in the United, States)

Yes No

7. Is line 5 at least $10,000?

8. Is line 5 at least 6 times line 1?

9. Are at least 90 percent of firm's assets located in the United States? If not, complete line 10. x

10. Is line 6 at least 6 times line 1? N/A

11. Is the rating specified on line 2 'BBB" or better,(if issued by Standard & Poor's) or "Baa" or better (if issuedby Moody's)? X NOTE/ Entergy Corporation does not have anyrecent bondiissuances. Notes were issued in 2002 and 2003, but these were issued via private placement 'I'ndvere riot rated. Ratings supplied above are the current credit ratings from the indicated rating agency.

Denotes figures derived from financial statements.

Tangible net worth is defined asnet worth minus goodwill, patents, trademarks, and copyrights.

2

RECONCILING SCHEDULE ENTERGYlrs &ousands YEAR ENDED DECEBR3,20 Dolars~iith:o"u-sý'a~nds.

Per Recon- Per Line Number in Financial ciling CFO's CFO's Letter Stat6ments Atem s Letter Total Shareholders' Equity Less: Goodwill Tangible Net Worth 2- f$7,5879,4:270 ~9,2 tj

'3 1'.

,fr ,

BVY 10-008 Attachment 3 Vermont Yankee Nuclear Power Station Entergy Corporation Parent Guarantee and Certificate (8 pages)

GUARANTEE Guarantee made as of the 31st day of December, 2009 by Entergy Comroration. a corporation formed pursuant to the laws of the State of Delaware. herein referred to as "guarantor," to its subsidiary, Entergy Nuclear Vermont Yankee, LLC, obligee (or licensee).

Recitals

1. The guarantor has full authority and capacity to enter into this guarantee under its bylaws, articles of incorporation, and the laws of the State of Delaware, its State of incorporation. Guarantor has approval from its Board of Directors to enter into this guarantee.

2. This guarantee is being issued so that the obligee will be in compliance with regulations issued by the Nuclear Regulatory Commission (NRC), an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. The NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 50, which require that a holder of, or an applicant for, a license issued pursuant to 10 CFR Part 50 provide assurance that funds will be available when needed for required decommissioning activities.

3. This guarantee is issued to provide financial assurance for radiological decommissioning activities for the Vermont Yankee Nuclear Power Station, as required by 10 CFR Part 50. The radiological decommissioning guarantee amount of this guarantee is $40 million for the Vermont Yankee Nuclear Power Station.

4.. The guarantor meets or exceeds the following financial test criteria in the NRC's Financial Test II of 10 CFR Part 30 Appendix A, A.2, and agrees to notify obligee and the NRC of any changes in its ability to meet the criteria in compliance with the notification requirements as specified in 10 CFR Part 50.

The guarantor meets the following financial test:

(a)(i) A current rating of its most recent bond issuance of AAA, AA, A, or BBB as issued by Standard and Poors, or Aaa, Aa, A, or Baa as rated by Moodys:

and (ii) Tangible net worth is at least $10 million and at least six times the guarantee amount; and (iii) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the current guarantee amount.,

5. Through its wholly-owned subsidiaries, the guarantor has majority control of the voting stock for the following licensee covered by this guarantee: Entergy Nuclear Vermont Yankee, LLC, Vermont Yankee Nuclear Power Station, P.O.

Box 0250, 320 Governor Hunt Road, Vernon, VT 05354, NRC License No.

DPR-28.

6. Decommissioning activities as used below refers to the activities required by 10 CFR Part 50 for decommissioning of the facility identified above.

7. For value received from obligee and pursuant to the authority conferred upon the guarantor by the unanimous resolution of its directors, a certified copy of which is attached, the guarantor guarantees that if the licensee fails to perform the required decommissioning activities, as required by License No.

DPR-28, due to the lack of funds, the guarantor shall (a) provide all funds necessary, up to the amount of this guarantee, to carry out the required activities, or (b) set up a trust fund in favor of the obligee in the amount of this guarantee for these activities.

8. The guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report and reconciling schedule to the NRC annually within 90 days of the close of the parent guarantor's fiscal year.

9. The guarantor and the licensee agree that if the guarantor fails to meet the financial test criteria at any time after this guarantee is established, the guarantor and the licensee shall send, within 90 days of the end of the fiscal year in which the guarantor fails to meet the financial test criteria, by certified mail, notice to the NRC. If the licensee fails to provide alternative financial assurance as specified in 10 CFR Part 50, as applicable, and obtain written approval of such assurance from the NRC within 180 days of the end of such fiscal year, the guarantor shall provide such alternative financial assurance in the name of licensee or make full payment under-the guarantee to a standby trust established by licensee.

10. Independent of any notification under paragraph 8 above, if the NRC determines for any reason that the guarantor no longer meets the financial test criteria or that it is disallowed from continuing as a guarantor for the facility under License No. DPR-28, the guarantor agrees that within 90 days of being notified by the NRC of such determination, an alternative financial assurance mechanism as specified in 10 CFR Part 50 as applicable, shall be established by the guarantor in the name of licensee unless licensee has done so.

11, The guarantor as well as its successors and assigns shall remain bound jointly and severally under this guarantee notwithstanding any or all of the following: amendment or modification of license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50..

12. The guarantor agrees that it will be liable for all litigation costs incurred by the licensee or the NRC in any successful effort to enforce this agreement against the guarantor.

13. The guarantor agrees to remain bound under this guarantee for as long as licensee must comply with the applicable financial assurance requirements of 10 CFR Part 50, for the previously listed facility, except as provided in Paragraph 14 below and except that the guarantor may cancel this agreement by sending notice by certified mail to the NRC and to the licensee, such cancellation to become effective no earlier than 120 days after receipt of such notice by both the NRC and licensee as evidenced by the retum receipts. If the licensee fails to provide alternative financial assurance as specified in 10 CFR Part 50, as applicable, and obtain written approval of such assurance within 120 days after the sending of the above notice by the guarantor, the guarantor shall provide such alternative financial assurance.

14. This guarantee shall terminate three calendar days after the completion of any transaction involving a transfer of control of Entergy Nuclear Vermont Yankee, LLC and NRC License No. DPR-28, under circumstances where:

(i) guarantor no longer directly or indirectly owns a majority voting interest in Entergy Nuclear Vermont Yankee, LLC; and (ii)the transaction and direct or indirect license transfer are completed pursuant to the prior written consent of the NRC including the imposition of any conditions upon the transferee regarding decommissioning funding assurance as deemed appropriate by the NRC.

15. The guarantor expressly waives notice of acceptance of this guarantee by the NRC or by licensee. The guarantor also expressly waives notice of amendments or modification of the decommissioning requirements and of amendments or modifications of the license.

16. If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to the NRC during each calendar year in which this guarantee is in effect.

! hereby certify that this guarantee is true and correct to the best of my knowledge.

Effective date: December 31, 2009 Entergy Corporation Authorized signature for guarantor

_Steven C. McNeal Name of person signing Vice President & Treasurer Title of person signing Signature of witness or notary: xtZC,. 4.JA. 14&atLý..

Entergy Nuclear Vermont Yankee, LLC Authorized signature for licensee Steven C. McNeal NWame of person signing Vice President & Treasurer___

Title of person signing Signature of witness or notary: ,'Zta4-iU-..,. .

ENTERGY CORPORATION CERTIFICATE The undersigned, Daniel T. Falstad, Assistant Secretary of Entergy Corporation, a corporation organized under the laws of the State of Delaware (the "Corporation"),

hereby certifies as follows:

I. Attached hereto as Exhibit A is a true and correct copy of the Resolution duly adopted by the Board of Directors of the Corporation at a meeting on January 26, 2007, which adopted an Approval Authority Policy; neither said Resolution nor said Policy has been amended since such date, except that non-substantive changes to the Policy that did not require Board approval were made as of July 7, 2009, and both said Resolution and said Policy are in full force and effect. The Approval Authority Policy provides authority for Stephen C. McNeal, as Entergy Corporation's Vice President & Treasurer, to execute a $40 million Guarantee in favor of Entergy Nuclear Vermont Yankee, LLC.

2. The following person has been duly appointed or elected, has qualified and is now acting as an officer of the Corporation in the capacity set before his name, and the signature set opposite his name is his signatures:

OFFICE NAME SIGNATURE Vice President Steven C. McNeal "

and Treasurer ..- & ..

Steven C. McNeal tRemainder of this page left intentionally blanki

IN WITNESS WHEREOF, I have hereunto set my hand this ZW day of January 2010.

AssnistantSecretar Assistant Secretary

EXHIBIT A ENTERGY CORPORATION BOARD MEETING MINUTES JANUARY 26, 2007 System Approval Authority Policy Mr. deBree reported that the Finance Committee reviewed the modifications to the Corporation's Approval Authority Policy. On behalf of the Finance Committee, Mr. deBree recommended that the Board of Directors adopt the following resolution.

After consideration, upon motion duly made and seconded, the following resolution was unanimously adopted:

RESOLVED that the modifications to the Entergy System Approval Authority Policy be, and they hereby are, approved as described to and filed with the records of the meeting.