Text

LIC-205, Revision 4, Procedures for Nrc'S Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors.
	ML103410283
Person / Time
Issue date:	12/22/2010
From:	Kimberly Ferrell; Division of Policy and Rulemaking
To:	;
	Pittiglio, C L, NRR/DPR, 415-1435
References
	LIC-205, Rev. 4
	Download: ML103410283 (45)
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U.S. Nuclear Regulatory Commission Office of Nuclear Reactor Regulation NRR OFFICE INSTRUCTION Change Notice Office Instruction No.: LIC-205, Revision 4 Office Instruction

Title:

Procedures for NRC=s Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors Effective Date: December 27, 2010 Approved By: Kimberly Ferrell Approved Date: December 22, 2010 Primary Contacts: Clayton Pittiglio Aaron Szabo 301-415-1435 301-415-1985 Clayton.Pittiglio@nrc.gov Aaron.Szabo@nrc.gov Responsible Organization: NRR/DPR/PFAB Summary of Changes: This is the fourth revision of LIC-205,?Procedures for NRC=s Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors.@ This office instruction defines and documents how the staff performs its independent analysis of each operating power reactor licensee=s decommissioning funding status (DFS) report. The staff=s independent analysis determines whether licensees have provided reasonable assurance that sufficient funding for radiological decommissioning will be available for each operating power reactor at the time permanent termination of operations is expected. This revision reflects lessons learned from the review of the 2009 DFS reports.

Appendix A, ?Change History,@ identifies the method used to announce and distribute LIC-205.

Training: Self study by staff performing the independent analyses.

ADAMS Accession No.: ML103410283

ML103410283 OFFICE PFAB:DPR:NRR PFAB:DPR:NRR BC,PFAB:DPR:NRR DD:PMDA:NRR NAME CPittiglio ASzabo CRegan KFerrell DATE 12/07/2010 12/08/2010 12/14/2010 12/22/2010 NRR OFFICE INSTRUCTION LIC-205, Revision 4 Procedures for NRC=s Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors

1. POLICY The U. S. Nuclear Regulatory Commission (NRC) conducts a timely and independent analysis of licensee(s) reports, required to be filed pursuant to 10 CFR 50.75(f)(1), on the status of decommissioning funding assurance for each operating nuclear power reactor or part of a reactor that licensees own. These reports, which were initially submitted by March 31,1999 and are to be submitted at least once every two years thereafter by March 31, reflect funding assurance data as of the end of the preceding calendar year1 (the reporting year). The staff performs an independent analysis of each of these reports for operating plants to determine whether licensees have provided reasonable assurance that sufficient funding for radiological decommissioning of the reactor will be available at the time permanent termination of operation (license expiration date) is expected. This assurance is referred to herein as decommissioning funding assurance (DFA).

2. OBJECTIVES This office instruction defines, documents, and standardizes the process by which the staff performs an independent DFA analysis of the decommissioning funding status reports, thereby improving efficiency, effectiveness, consistency, and timeliness in determining the extent to which licensees provide reasonable assurance that adequate funding will be available for radiological decommissioning of operating power reactors at the time permanent termination of operation is expected.

3. BACKGROUND Based on the staff=s analysis of the initial decommissioning funding status (DFS) reports submitted, the staff conducts a lessons learned exercise after the completion of their DFS reports review. The lessons learned conducted following the completion of the March 31, 2009, resulted in the development of LIC-205, Rev. 3 and subsequently Rev. 4, ?Procedures for NRC=s Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors.@

4. BASIC REQUIREMENTS All operating power reactor licensees are required to submit DFS reports pursuant to10 CFR 50.75(f)(1)

(Ref. 1). The staff has the responsibility for analyzing DFS reports and informing the Commission in a timely manner of any staff concerns related to the results of the analysis. The staffs goal, subject to staffing availability and Commission priorities, is to perform the independent analysis of the DFS reports, conduct a quality assurance audit, and resolve all issues within six months (September 30 of the reporting year). The initial part of the analysis, which consists of the analyst completing Steps 1 - 5 defined in Section 4.1, should be completed within three months (June 30 of the reporting year) of the 1

Any licensee for a plant that is within 5 years of the projected end of its operation, or where conditions have changed so that it will close within 5 years (before the end of its licensed life) or has already closed (before the end of its licensed life) or for plants involved in mergers or acquisitions the licensee shall submit the report annually.

NRR Office Instruction LIC-205, Revision 4 Page 2 of 10 analysts independent analysis in order for the staff to complete their review within six months. The Quality Assurance (QA) audit (Step 6) is defined in Enclosure 4, Quality Assurance Plan for Decommissioning Funding Assurance. Enclosure 4 also discusses the validation of the computer code that the analyst uses for the analysis. The results of the analysts review (Step 7) is communicated to the Commission, and this may be done by Commission paper, memorandum or other appropriate communication tool.

4.1 Review Procedure This procedure identifies seven steps for the staff=s analysis of the DFS reports. Prior to the start of the staff=s analysis, the analysts, the QA reviewer(s), the senior level financial reviewer, and the first-level manager will hold training session(s) to discuss the independent analysis process, and the QA audit procedures. For an analyst to perform a proper review, it is essential that the analyst has a complete understanding of the LIC-205 review. This is accomplished by having the analysts review LIC-205 prior to the formal training, be prepared to discuss any areas of concern, and to perform a sample review. The first-level manager will document that the analysts training session(s) have been completed by sending a memo to the Division Director committing to senior management that the analysts, QA reviewer(s) are qualified to conduct the DFS Report review and placing the memo in the Agency Documents Access and Management System (ADAMS) to document that the pre-review training process in the DFS report review process has been completed.

$ Step 1 Check and analyze the completeness and adequacy of the information submitted in the DFS reports against the requirements of 10 CFR 50.75(f)(1) and the guidance of Regulatory Issue Summary (RIS) 2007-001, Rev.1 ?10 CFR 50.75(f)(1) Reports on the Status of Decommissioning Funds (March 31, 2001),@ dated January 8, 2009 (Ref. 2). Datasheet 1 (attached) is used to document this step. Step 1 is discussed further in Section 4.2.1. and is the first location in the analysis that, if any of the licensees assumptions are unreasonable, contain any apparent errors, omissions, or may require additional information, the analyst will develop a request for additional information (RAI) that identifies the issue. Any communication, RAI or documented discussion with the licensee, regarding the licensees submittal is conducted through the NRC licensing project manager. The analyst does not directly contact the licensee. If the licenses response to the RAI resolves the issue, the analyst will document the resolution on Datasheet 1. The locations of Data Sheets 1, 1A, 2, and 2A are identified in Enclosure 3.

$ Step 2 Transcribe DFS report data required for evaluating DFA to Datasheet 1 (attached) and categorize the licensee as either Category 1 or Category 2 (defined in Section 4.2.2). Step 2 is discussed further in Section 4.2.2.

$ Step 3 Calculate the estimated minimum financial assurance (MFA) funding amount in current dollars using the formulas in 10 CFR 50.75(c), and the latest available revisions of the supporting guidance in Regulatory Guide (RG) 1.159 (Ref. 3), NUREG-1307 (Ref. 4), and NUREG-1577 (Ref. 5). Step 3 is discussed further in Section 4.2.3.

NRR Office Instruction LIC-205, Revision 4 Page 3 of 10

$ Step 4 If the balance of the decommissioning fund reported by the licensee is less then the MFA, then determine the amount of decommissioning funding assurance provided by the licensee, in current dollars. Step 4 is discussed further in detail in Section 4.2.4.

$ Step 5 Determine whether there is reasonable assurance that funds will be available by comparing the licensee=s projected funds and any additional funding mechanism provided to the required MFA

, in current dollars, for each reactor. The analyst will note which licensee, if any, falls short of the MFA.

Step 5 is discussed further in detail in Section 4.2.5.

$ Step 6 The QA reviewer validates the adequacy and completeness of the analysts independent analysis of the DFS reports in accordance with the QA Plan in Enclosure 4 of this document. The QA reviewer performs Steps 1 through 6 on a random sample population to verify that the licensee=s information, as applicable, is accurate, complete, and the analyst=s independent analysis is valid. The QA reviewer then identifies any discrepancies in the QA audit-report, and discusses the discrepancies with the analyst. The analyst addresses and resolves all discrepancies and documents the resolution on his or her datasheets. If future DFS reviews/analyses are conducted without any change to the validated computer code, the QA auditor will need to only validate the input data that was used for the analysis.

The QA plan, ?Quality Assurance Plan for Decommissioning Funding Assurance@ is discussed further In Enclosure 4. The results of the analysts analysis of the DFS reports and the QA audit finding are to be placed in a folder in the ADAMS before the results of the review are provided to the Commission (Step 7).

$ Step 7 Once Steps 1 through 6 are completed, the analyst will provide the results of this review to the Commission. This may be done by Commission paper, memorandum or other appropriate communication tool.

4.2 Details of Steps 1, 3, 4, 5, and 6 Steps 1, 2, 3, 4, and 5 are described in detail in Subsections 4.2.1, 4.2.2, 4.2.3, 4.2.4, and 4.2.5., and Step 6 is discussed in detail in Enclosure 4.

4.2.1 Step 1: Review the DFS Report for Completeness of Information For Step 1, the analyst documents the licensee=s information submitted in accordance with 10 CFR 50.75(f)(1) and RIS 2007-01 on the attached datasheets. The RIS was issued to clarify the licensee must separate radiological from other non-radiological costs.

The regulation (10 CFR 50.75(f)(1)) identifies the information that must be included in the DFS report. The analyst records the applicable information on Datasheet 1. For the items identified below, Item 1, Item 2, and at least part of or all of Item 4 are applicable to each licensee and

NRR Office Instruction LIC-205, Revision 4 Page 4 of 10 must be included in the DFS report. Items 3, 5, 6, and 7 may or may not be applicable, but must be reported as such.

Item 1: Record the licensee=s calculated MFA pursuant to 10 CFR 50.75(b) and (c), and verify if the radiological and non-radiological decommissioning costs are separated; Item 2: Record the reported amount accumulated in the decommissioning trust funds (DTF) to the end of the calendar year preceding the date of the DFS report, and the labor, energy, and burial adjustment factors; Item 3: Record whether the licensee declared a schedule of the annual amounts remaining to be collected on Datasheet 1 and record the schedule of annual amounts remaining to be collected on Datasheet 2; Item 4: Review the licensee=s assumptions used in determining rates of escalation in decommissioning costs, reported rates of earnings on decommissioning funds, and any other reported rates or factors used in the funding projections, including any reference to a site specific cost estimate, with proper reference material. Record the values and determine if the assumptions are reasonable and document the finding on Datasheet 1.

If the assumptions are unreasonable, contain any apparent errors, omissions, or may require additional information, the analyst develops an RAI that identifies the issue. If the licensees response to the RAI resolves the issue, the analyst will document the resolution on Datasheet 1. In cases where the licensee=s real rate of return is greater than a 2 percent real rate of return or otherwise unsubstantiated, note on Datasheet 1 that a maximum 2 percent credit will be used.

Item 5: Record any contract upon which the licensee is relying pursuant to 10CFR50.75(e)(1)(v);

Item 6: Record licensee reported modifications to its current method of providing financial assurance since the last submitted DFS report; and Item 7: Record DFS report-identified changes in the licensee=s trust agreement since the last submitted DFS report, and determine if an additional review is necessary.

For Items 5, 6 and 7 above, for any contract upon which the licensee is relying, or for modifications to a licensee=s current method of providing financial assurance, or for material changes made to the trust agreement, the analyst will use Datasheet 1 to document that a contract was used or a change occurred, then review the contract or change with the Office of the General Counsel (OGC) assistance, as necessary, and document the findings on Datasheet 1. If the review cannot be completed in a timely manner, the analyst will document in the findings that the review is ongoing and notify Division management of a potential delay in the analyses of the DFS reports. If necessary, the analyst will develop an RAI as needed to resolve issues about information in the licensee=s submittal which the staff requires to be able to complete their review of the DFS reports. Any communication, RAI or documented discussion with the licensee, regarding the licensees submittal is conducted through the NRC licensing project manager and the analyst should not directly contact the licensee.

NRR Office Instruction LIC-205, Revision 4 Page 5 of 10 4.2.2 Step 2: Categorizing Licensees The analyst places licensees into one of two categories to be used to determine reasonable assurance defined in Step 5. Datasheets 1 and 2 document the category designation.

Category 1 licensees: (a) recover the estimated total cost of decommissioning through rates established by cost of service regulation, (b) are able to establish their own rates and, thus, able to recover all of their decommissioning costs, or (c) recover the total cost of decommissioning from nonbypassable charges. Category 1 licensees may rely on external sinking funds as their exclusive mechanism for providing DFA.

Category 2 licensees consist of all other licensees not authorized to exclusively use external sinking funds. These licensees have no rate regulatory authority to approve ongoing decommissioning funding and future collections adjustments and are all non-electric utilities that do not have access to nonbypassable charges that ensure all decommissioning costs will be paid. Category 2 licensees must provide assurance through other methods, such as prepaid decommissioning funds, a surety method, or a combination of methods, in accordance with 10 CFR 50.75(e)(1).

4.2.3 Step 3: Determine the MFA Funds Required Step 3, which can be performed before, after, or concurrently with Steps 1 and 2, will be performed as soon as the factors are available, which for the low-level waste burial adjustment factor may be before December 31 of the preceding year of the report and for energy and labor adjustment factors must be after December 31 of the preceding year. The analyst determines the estimated MFA required to demonstrate reasonable assurance for each reactor by using the formulas in 10 CFR 50.75(c), as recorded on Datasheet 1A and automatically transposed onto Datasheet 2. Enclosure 3 shows the location of Datasheets 1,1A, 2, and 2A.

(a) Using the reactor type (PWR or BWR) and power level described in 10 CFR 50.75(c)(1), establish a base amount for the MFA in 1986 dollars.

(b) Using the three cost adjustment escalation factors for labor, energy, and waste burial costs, and their relative weighting described in 10 CFR 50.75(c)(2), escalate the 1986 base amount to the current amount required for decommissioning each reactor. The current amount is expressed in dollars as of the end of the calendar year preceding the date of the report. The adjustment factors for labor and energy are published by the U.S. Department of Labor, Bureau of Labor Statistics (BLS)(Ref. 6), and the low-level waste burial adjustment factor is published in NUREG-1307 (Ref. 4). The latest BLS adjustment factors at the time of the licensees report to the NRC will be input in first; however, if the latest final BLS adjustment factors as of March 31 of the reporting year are lower, those adjustment factors will be used. The staffs analysis uses the lowest value for waste burial adjustment factor in the formula, and latest values for labor and energy. Section C.1 of RG 1.159 (Ref. 3) provides the overall guidance on adjusting the current amount, and also references sections in NUREG-1307 that contain the detailed methods for calculating the total MFA adjustments using the escalation factors. If necessary, the analyst will develop RAIs as needed to resolve issues about information in the licensee=s submittal which the staff requires to be able to complete their review the DFS reports.

NRR Office Instruction LIC-205, Revision 4 Page 6 of 10 (c) If the licensee provides a site-specific cost estimate, with the proper reference documentation, and the site specific cost is greater than the amount based on the formula in 10 CFR 50.75(c), the site specific cost amount will be used as the MFA.

4.2.4 Step 4: Determine the Amount of Decommissioning Funding Assurance By summing the items listed below, the analyst determines each reactor=s amount of decommissioning funding assurances.

(a) The balance of the DTF currently available at the end of the calendar year preceding the year the report is due.

(b) Amounts remaining to be collected may be acceptable as DFA if the licensee meets the cost recovery criteria or non-bypassable charges specified in 10 CFR 50.75(e)(1)(ii)(A) and (B), or the amount will be collected under the terms of a contractual obligation that meets the requirements of 10 CFR 50.75(e)(i)(v).

(c) Projected earnings as a result of applying the appropriate earnings credit at a compounded annual real-rate of return (real rate of return equals earnings rate minus escalation rate) to the DTF balance and acceptable amounts remaining to be collected. The regulations in 10 CFR 50.75(e)(1)(ii) allow a credit for projected earnings of up to a 2 percent annual real rate of return from the time of future funds collection through a specified period as described below.

Category 2 licensees are only allowed a projected real rate of return earnings credit on existing funds limited to a 2 percent maximum real rate of return. The period of time for which the credit may be taken depends on whether the licensee uses the 10 CFR 50.75(c) generic formula estimate or has submitted a site-specific estimate with a specified SAFSTOR period to estimate decommissioning costs. The allowed credit may be greater than the 2 percent real rate of return for Category 1 licensees if a licensee=s rate-setting authority has approved or assumed a higher rate in the most current rate case. The licensee must continue to be subject to future rate adjustments by a regulatory authority in order to be able to claim a real rate of return higher than 2 percent. Unless approved or assumed differently in the most current rate case (e.g. during DECON), the allowed credit greater than 2 percent for Category 1 licensees will only be credited up to the time permanent termination of operations is expected. The allowed credit may be less than 2 percent if the licensees chooses, or is required by its rate-regulator to use a lower rate, but the analysts will not use lower for analysis purposes.

A licensee using a generic formula defined in 10 CFR 50.75(c) to estimate decommissioning costs may take the earnings credit during the period of plant operation for the remaining years of the plant=s operating license. The licensee may take an additional pro-rata credit for the first seven years after shutdown as long as the credit recognizes the expected cash flow of expenditures for decommissioning during this period. The analyst should assume that the cash flow of expenditures is in an equal portion for each of the seven years thereby reducing the balance of projected funds by 1/7 of the funds per year. The funds should be expended by the end of the seventh year so that no more pro-rata earnings credit can be taken thereafter. If the NRC has renewed the license for a reactor, the licensee may take the allowed earnings credit through the extended license period, as well as the pro-rata credit through the first seven years after shutdown.

NRR Office Instruction LIC-205, Revision 4 Page 7 of 10 A licensee using a site-specific cost estimate may take the allowed earnings credit through the projected decommissioning period, provided that the site-specific estimate is based on a SAFSTOR period that is specifically described in the estimate. If the annual SAFSTOR costs are paid from the DTF, the annual costs of SAFSTOR, which does not included the cost of the storage of spent fuel must be deducted from the earnings credit. The decommissioning funds may not be drawn down to such a degree during the SAFSTOR period that the earnings credit would be materially affected.

This projected decommissioning period starts at the time of permanent shutdown through license termination.

The analyst will document the analysis on Datasheet 2 and will be automatically transposed onto Datasheet 2A. If necessary, the analyst may develop an RAI as needed to resolve issues about information in the licensee=s submittal which the staff requires clarification to be able to complete their review the DFS reports. Any communication, RAI or documented discussion with the licensee, regarding the licensees submittal is conducted with the NRC licensing project manager. The analyst does not directly contact the licensee (d) The amounts of DFA, if any, approved by other methods specified in 10 CFR 50.75(e)(1).

4.2.5 Step 5: Determine Reasonable Assurance The analyst compares the MFA from Datasheet 2 to the licensee=s amount of decommissioning funding assurance. The analyst=s independent calculation of the MFA is used in making the determination of reasonable assurance. For the determination of reasonable assurance, the analyst will round up the licensees financial assurance amount to the next million. For example, if the licensee provides financial assurance of $337.2 million, the analyst would round up to $338.0 million.

Below are the steps that the analyst applies for the independent determination of reasonable assurance. The steps identified below describe both the analysts calculation method and the computer generated analysis. Both methods are acceptable in calculating the DFA. The steps for calculating DFA are a sequenced approach that an analyst will apply for the calculation of the total DFA provided by the licensee. The computer generated analysis runs all of the steps, although all of the steps may not be necessary to demonstrate DFA. These steps and the analyst=s findings are documented on Datasheet 2:

$ The analyst=s MFA is compared to the licensee=s current amount of financial assurance for the reactor as of December 31 of the previous year. If the licensee=s current amount of financial assurance meets or exceeds staff=s MFA, the analyst makes a determination of reasonable assurance. If the licensee has not demonstrated MFA, the analyst will follow the next step.

$ The analyst will project the licensee=s current amount of the decommissioning trust fund (DTF) with a real rate of return of 2 percent through the decommissioning period as currently identified in 10 CFR 0.75(e)(1)(i). The expiration date of the license will be used to determine the amount of time remaining in the operations period. During the first seven years after termination of operations, the NRC allows a pro-rata credit which results in effectively adding an additional 3.5 years with the 2 percent credit applied after the end of the operating period for the immediate dismantlement option.

NRR Office Instruction LIC-205, Revision 4 Page 8 of 10 The allowed period may be greater than 3.5 years if a licensee has declared and documented additional years into decommissioning based upon a site-specific estimate with a specified SAFSTOR period. In this case the 2 percent or, if authorized by the licensees rate making authority, a higher rate can be applied to the projected total funds for the number of SAFSTOR years subject to the limitations regarding a draw down of funds during SAFSTOR as discussed in Section 4.2.3. If the licensee=s projected funds in DTF plus any other financial assurance meet or exceed the analyst=s MFA, the analyst makes a determination of reasonable assurance. If the licensees projected total funds plus any other financial assurance does not meet the MFA, the analyst will follow the next step.

$ The analyst will add to the amount of financial assurance any acceptable amounts remaining to be collected by the licensee through the operating period with no additional funds credited after the end of the operating period (license expiration date). The analyst will calculate the additional projected amount of the licensee=s funds by applying the 2 percent, or if authorized by its rate making authority, a higher real rate of return to the additional funds from the years in which the funds are to be added through the expected end of permanent operations. Normally no additional contributions are recognized after the expected end of permanent operations. The analyst will also apply the pro-rata credit to the projected total funds through the NRC=s allowed decommissioning period. If the projected total funds in the DTF plus other financial assurance methods meet or exceed the analyst=s MFA, the analyst makes a determination of reasonable assurance, provided there are no factors that would otherwise prevent a finding of reasonable assurance.

$ The analyst will record the total amount of financial assurance, including all applicable earnings and amounts remaining to be collected.

$ If the MFA exceeds the projected funds that have been rounded up to the next million, the analyst should:

- Document the preliminary finding on Datasheet 2, and request that another analyst verify the analyst=s preliminary findings. The second analyst performs a review of the DFS report in question following the procedure described herein;

- Documents findings on a separate datasheet (supplemental datasheet) and notes on the original datasheets that an independent review was conducted;

- If the second analyst=s finding does not support the initial finding that the first analyst=s MFA is greater than the rounded up amount of projected financial assurance, then the second analyst should discuss his or her findings with the analyst and resolve and document the differences in their initial finding on supplemental Datasheet; If the second analysis finds the licensee=s rounded up amount of financial assurance is less than the MFA, the first analyst contacts the NRC licensing project manager, discusses the preliminary finding of inadequate financial assurance with the licensee, and documents the discussion with the licensee on Datasheet 2. If appropriate, the licensee should be requested to submit additional information through an RAI. Following the analysts review of the licensee=s revised submittal, if the analyst determines that the additional assurance provided by the licensee is inadequate, the course of action to address the funding shortfall will be determined

NRR Office Instruction LIC-205, Revision 4 Page 9 of 10 following the guidance in RG 1.159. The finding of inadequate financial assurance will be provided to the Commission using one of the communication tools described in with Step 7.

5. RESPONSIBILITIES AND AUTHORITIES Division Level The Division Director is responsible for ensuring that the staff follows the regulations, LIC-205, and supporting guidance in processing and analyzing the biennial reports.

Branch Chief The Branch Chief is responsible for oversight of DFS report review activities. This includes assigning staff to perform the activities identified in this Office Instruction and interfacing with the staff to ensure procedures are followed.

Staff The assigned analysts and the QA reviewer are adequately trained and conduct their review activities in accordance with the regulations and the guidance included in this Office Instruction.

6. PERFORMANCE MEASURES The DFS Report review is to be completed in six months, subject to staffing availability and Commission priorities.

7. PRIMARY CONTACTS Clayton Pittiglio 301-415-1435 Clayton.Pittiglio@nrc.gov Aaron Szabo 301-415-1985 Aaron.Szabo@nrc.gov

8. RESPONSIBLE ORGANIZATION NRR/DRP/PFAB

9. EFFECTIVE DATE December 27, 2010

NRR Office Instruction LIC-205, Revision 4 Page 10 of 10

10. REFERENCES

1. Code of Federal Regulations, Title 10, Part 50, Section 50.75, ?Reporting and Recordkeeping for Decommissioning Planning@ (10 CFR 50.75).

2. Regulatory Issue Summary 2007-001,Rev. 1,?10 CFR 50.75(f)(1) Reports on the Status of Decommissioning Funds, (January 8, 2009).

3. Regulatory Guide 1.159, ?Assuring the Availability of Funds for Decommissioning Nuclear Reactors@ (Latest Revision).

4. NUREG-1307, ?Report on Waste Burial Charges,@ (Latest Revision).

5. NUREG-1577, Rev. 1, ?Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance@ (March 1999).

6. U.S. Department of Labor, Bureau of Labor Statistics, ?Employment Cost Indexes, updated annually.@

7. SECY-07-0197, Reactor Decommissioning trust Fund Oversight by Other Agencies and Recommendations Regarding Further Commission Action.

Enclosures:

1. Appendix A - Change History

2. Computer Model Description

3. Datasheets

4. Quality Assurance Plan for Decommissioning Funding Assurance

5. Example Decommissioning Funding Status Report Analysis

Appendix A - Change History Office Instruction LIC-205 LIC-205 Change History - Page 1 of 1 Date Description of Changes Method Used Training to Announce

& Distribute 12/22/2010 This is the forth revision of LIC-205,?Procedures for NRC=s E-mail to NRR Self Study Independent Analysis of Decommissioning Funding Assurance staff for Operating Nuclear Power Reactors.@ This office instruction defines and documents how the staff performs its independent analysis of each operating power reactor licensee=s decommissioning funding status (DFS) report. This revision reflects lessons learned from the review of the 2009 DFS reports. Appendix A, ?Change History,@ identifies the method used to announce and distribute LIC-205.

03/08/2010 This is the third revision of LIC-205,?Procedures for NRC=s E-mail to NRR Self Study Independent Analysis of Decommissioning Funding Assurance staff for Operating Nuclear Power Reactors.@ This office instruction defines and documents how the staff performs its independent analysis of each operating power reactor licensee=s decommissioning funding status (DFS) report. This revision reflects lessons learned from the review of the 2009 DFS reports. Appendix A, ?Change History,@ identifies the method used to announce and distribute LIC-205.

06/02/2008 This is the second revision of LIC-205,?Procedures for NRC=s E-mail to NRR Self Study Independent Analysis of Decommissioning Funding Assurance staff for Operating Nuclear Power Reactors.@ This office instruction defines and documents how the staff performs its independent analysis of each operating power reactor licensee=s decommissioning funding status (DFS) report. This revision reflects lessons learned from the review of the 2009 DFS reports. Appendix A, ?Change History,@ identifies the method used to announce and distribute LIC-205.

4/24/2006 This is the first revision of LIC-205, ?Procedures for NRC=s E-mail to NRR Self Study Independent Analysis of Decommissioning Funding Assurance staff for Operating Nuclear Power Reactors.@ This office instruction defines and documents how the staff performs its independent analysis of each operating power reactor licensee=s decommissioning funding status (DFS) report, and reflects lessons learned from the review of the 2005 DFS reports.

Enclosure 1

COMPUTER MODEL FORMULA Enclosure 2

The Formulas in Datasheets 1 and 2 Derived Accordingly.

Data Sheets 1, 1A, 2, and 2A are located in G drive, and hard copies are in Enclosure 3.

The G Drive location is G:\ADRO\DPR\PFAB\Biennial Report Info\20xx Biennial\Plants\plant name.xls. Note that 20xx represents the year of the review.

Datasheets 1A and 2A can be found in G:\ADRO\DPR\PFAB Biennial Report Info\TotalBiennials.xls.

Datasheet 1:

Under Part 4, calculate the difference between the licensees assumed rate of earnings on decommissioning trust funds less the rates of escalation in decommissioning costs and rates of other factors and escalation to derive the real rate of return. If less than or equal to 2 percent, use the rate in the projection calculations. If greater than 2 percent, verify that the licensee is eligible to use the higher rate.

Datasheet 1A:

Datasheet 1A derives the NRC MFA based on type of plant, MWth of the unit and location based on the most recent BLS website. Datasheet 1A is linked to Datasheets 1 and 2 and will fill the NRC MFA for each individual plant, as long as the datasheets are linked. The NRC MFA process can be done individually, if necessary, but should be completed by using Datasheet 1A.

Datasheet 2:

NRC MFA: The inputs are entered by the analyst into another table (labeled Datasheet 1A) which are linked to Datasheet 2 and the analyst is to follow the steps for MFA listed below; however, one can also manually enter the inputs into Datasheet 2. The NRC staff will input the type of plant (BWR/PWR); the MWth of the unit; the ECI, Base Lx, Px and Fx, all derived from the BLS website. The Lx is derived from (ECI multiplied by (*) Base Lx) divided by (/) 100.

Example, if a PWR plant, is 0.58

Px + 0.42

Fx. If a BWR plant, 0.54

Px + 0.42

Fx. The NRC MFA is calculated by 0.65

Px + 0.13

Ex + 0.22

Bx. If the licensee provides a site-specific cost estimate that is greater than the NRC MFA, it will be used for the rest of the calculations.

Total Trust Fund Balance Step 1:

The total trust fund balance is an aggregate of all of the licensees amounts that are provided and transcribed on to Datasheet 1 and copied automatically onto Datasheet 2. The years left in the license is calculated from: Years Remaining = Year of Termination of Operations - Current Date of Operation (end of the calendar year preceding the date of the report). Total Earnings is calculated by: Total Earnings = (1+ Real Rate of Return) exponentially increased (^) by Years Remaining (as defined above)

Trust Fund Balance. If the total earnings is greater than the NRC MFA, the licensee has demonstrated DFA.

Step 2:

If provided with annuities, the total annuity equals the value of the annuity * [([(1 + real rate of return) exponentially increased by (^) number of annual payments] - 1) / real rate of return]. If the annuities stop before the termination of operations, the total of step 2 equals the total annuity * [(1 + real rate of return) ^ amount of time left]. Steps 1 and 2 are then added together to determine if the amount is greater than the NRC MFA, the licensee has demonstrated DFA.

If provided with annuities that are not the same amount, then the NRC staff, after entering See Annuity Sheet in the value of annuity per year, enters the amounts into the annuity sheet. The total accumulation for each year is equal to the annuity * [(1 + real rate of return) ^ (termination of operations - year of the annuity). The total is a summation of all of the total accumulations for each year. That number is then inserted into total for Step 2.

Step 3:

The Total Earnings equals Steps 1 and 2. The Total Earnings for DECON = Real Rate of Return

Total Earnings. The total of Steps 1 through 3 is a summation of all the steps. If the licensee does not demonstrate DFA, the shortfall is determined by the total of Steps 1 through 3

- NRC MFA.

Step 4:

The real rate of return is the real rate of return provided by the licensee and was transcribed on Datasheet 1. The real rate of return will only be used:

a) if licensee provides rate setting authority verification that the amount is allowed to be used; b) if all factors to determine the real rate of return are not adequate, the NRC sends an RAI to the licensee requesting the licensee provide all factors necessary to determine the real rate of return.

c) if verification is required, the NRC sends an RAI to the licensee requesting the licensee provide the rate setting authority verification of the amount allowed; and d) if the licensee has not documented the use of their real rate of return beyond the licensee terminate date, the licensees real rate of return will only be used for the remaining time of license operation.

Steps 4, 5, and 6 are calculated the same way as Steps 1, 2, and 3, but with the licensees real rate of return. Steps 1, 2 and 3 applied a 2 percent real rate of return. Step 6 does not allow for a greater than 2 percent real rate of return unless granted by the rate setting authority, and even when a real rate of return of greater than 2 percent is used, 2 percent would be used during the immediate dismantlement period unless the licensee has documented that the rate regulatory authority has also included the higher real rate of return for the dismantlement period.

Step 7:

The final amount of DFA for each plant is linked to Datasheet 2A for each plant. The percentage difference from one year to the next is calculated by subtracting the new reporting date from the previous reporting date and then dividing by the previous reporting date. That total amount of DFA for the reporting date is then subtracted from the NRC MFA as provided in Datasheet 1A and 2 to provide the amount above (or below) the NRC MFA. The percentage above (or below) the NRC DFA is developed by dividing the difference between the DFA and the NRC MFA by the NRC MFA; a color is then given based on the percentage of DFA.

DATASHEETS Enclosure 3

DATASHEET 1 - LICENSEES DATA Datasheets are located on the G Drive. Datasheet 1 and 2 location is G:\ADRO\DPR\PFAB\Biennial Report Info\20xxBiennial\Plants\plantsname.xls Note that 20xx represents the year of the review. Datasheets 1A and 2A can be found in:

G:\ADRO\DPR\PFAB Biennial Report Info\TotalBiennials.xls Plant name: Docket Number:

1 The minimum financial assurance (MFA) estimate pursuant to 10 CFR 50.75(b) & (c):

Did the licensee identify the amount of estimated radiological funds? (Y/N) 2 The total amount of dollars accumulated at the end of the appropriate year: (see below)

Licensee: % Owned: Category: Amount in Trust Fund:

Licensee 1:

Licensee 2:

Licensee 3:

Licensee 4:

Licensee 5:

Licensee 6:

Total Trust Fund Balance $0 3 Schedule of the annual amounts remaining to be collected: (provided/none) 4 Assumptions used in determining rates of escalation in decommissioning costs, rates of earnings on decommissioning funds, and rates of other factors used in funding projections: (see below)

Post-RAI Rate of Rate(s) of PUC Allowed RAI PUC Allowed Rates Escalation Real Rate Return on Other Verified through Needed Verified through Determined Rate of Return Earnings Factors (Y/N) Decom (Y/N) (Y/N) (Y/N) Decom (Y/N) (Y/N) 0.00%

5 Any contracts upon which the licensee is relying? (Y/N) 6 Any modifications to a licensee's method of providing decommissioning funding assurance? (Y/N) 7 Any material changes to trust agreements? (Y/N)

If a change has occurred, the reviewer will document on this sheet that a change has occurred and identify the reviewer who will evaluate the change: (see below)

DATASHEET 2 MFA CALCULATION Plant name: Docket Number: 0 Month: Day Year:

Date of Operation: 12 31 Termination of Operations:

Latest Latest BWR/PWR MWth 1986$ ECI Base Lx Lx Px Base Px Fx Base Fx Ex Bx Month Px Month Fx

$97,598,400 0.0 0.00 0.65 0.00 0.000 0.0 114.2 0.000 0.0 82.0 0.13 0.000 0.22 0 NRC Minimum: $0 Site Specific:

Amount of NRC Minimum/Site Licensee: % Owned: Category Specific: Amount in Trust Fund:

Licensee 1: 0.00% 0 $0 $0 Licensee 2: 0.00% 0 $0 $0 Licensee 3: 0.00% 0 $0 $0 Licensee 4: 0.00% 0 $0 $0 Licensee 5: 0.00% 0 $0 $0 Licensee 6: 0.00% 0 $0 $0 Total Fund Balance: $0 Step 1:

Earnings Credit:

Real Rate of Years Left Trust Fund Balance: Return per year in License Total Earnings: Does Licensee Pass:

$0 2% 0.00 $0 NO Step 2:

Accumulation:

Value of Annuity per year (amount/See Real Rate of Number of Annual Annuity Sheet) Return per year Payments: Total Annuity:

2% $0 Real Rate of Years remaining after Total Annuity Return per year annuity Total Step 2:

$0 2% 0.00 $0 Total Step 1 + Step 2 Does Licensee Pass:

$0 NO Step 3:

Decom Period:

Real Rate of Decom Total Earnings for Total Earnings: Return per year Period: Decom:

$0 2% 7 $0 Total of Steps 1 thru 3: Does Licensee Pass: Shortfall:

$0 NO $0

DATASHEET 2 MFA CALCULATION (CONTD)

If licensee is granted greater than 2% RRR Step 4:

Earnings Credit:

Real Rate of Return Years Left Trust Fund Balance: per year in License Total Earnings: Does Licensee Pass:

$0 2.00% 0.00 $0 NO Step 5:

Accumulation:

Real Rate of Return Number of Annual Value of Annuity per year per year Payments: Total Annuity:

$0 2.00% 0 $0 Real Rate of Return Years remaining after Total Annuity per year annuity Total Step 5

$0 2.00% 0.00 $0 Total Step 4 + Step 5 Does Licensee Pass:

$0 NO Step 6:

Decom Period:

Real Rate of Return Decom Total Earnings for Total Earnings: per year Period: Decom:

$0 2.00% 7 $0 Total of Steps 4 thru 6: Does Licensee Pass: Shortfall:

$0 NO $0 Calculations Performed By: Date:

DATASHEET 2 MFA CALCULATION (CONTD)

ANNUITY Termination of Operations: 0 0 0 Real Rate Total Year Annuity: of Return: Accumulation

$0

$0 Total: $0 If licensee is granted greater than 2% RRR Real Rate Total Year Annuity: of Return: Accumulation Total: $0

20xx DECOMMISSIONING FUNDING STATUS REPORT Tabl e 2. NRC Mi ni mum Decommissi oning Fundi ng Assurance as of December 31, 20xx 1986$*((.65*Lx) + (.13*Ex) + (.22*Bx)) = 2016$

NUREG-1307, REV. xx Year: 2016 Latest Base Latest NRC Minimum Loc Cat Plant Name MWth 1986$ ECI Base Lx Lx Px Fx Base Fx Ex Bx Month Px Px Month Fx Formula S 1 Arkansas Nuclear One, Unit 1 PWR 2568 $97,598,400 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Arkansas Nuclear One, Unit 2 PWR 3026 $101,628,800 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2H Arnold (Duane) Energy Cent er BWR 1912 $121,208,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 NE 2 Beaver Valley Power Station, Unit 1 PWR 2900 $100,520,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 NE 2H Beaver Valley Power Station, Unit 2 PWR 2900 $100,520,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Braidwood Station, Unit 1 PWR 3586 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Braidwood Station, Unit 2 PWR 3586 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Brown's Ferry Nuclear Power St ation, Unit 1 BWR 3458 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Brown's Ferry Nuclear Power St ation, Unit 2 BWR 3458 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Brown's Ferry Nuclear Power St ation, Unit 3 BWR 3458 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Brunswick Steam Electric Plant , Unit 1 BWR 2923 $130,307,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Brunswick Steam Electric Plant , Unit 2 BWR 2923 $130,307,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Byron St at ion, Unit 1 PWR 3586 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Byron St at ion, Unit 2 PWR 3586 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 1 Callaway Plant PWR 3565 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 2 Calvert Cliffs Nuclear Power Plant , Unit 1 PWR 2700 $98,760,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 2 Calvert Cliffs Nuclear Power Plant , Unit 2 PWR 2700 $98,760,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Cat awba Nuclear St ation, Unit 1 PWR 3411 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Cat awba Nuclear St ation, Unit 2 PWR 3411 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Clinton Power Stat ion BWR 3473 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 W 1 Columbia Generating Station BWR 3486 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Comanche Peak St eam Elect ric St ation, Unit 1 PWR 3458 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Comanche Peak St eam Elect ric St ation, Unit 2 PWR 3458 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 1 Cook (Donald C.) Nuclear Power Plant, Unit 1 PWR 3304 $104,075,200 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 1 Cook (Donald C.) Nuclear Power Plant, Unit 2 PWR 3468 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 1 Cooper Nuclear Station BWR 2381 $125,429,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Crystal River Nuclear Plant, Unit 3 PWR 2609 $97,959,200 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Davis-Besse Nuclear Power Stat ion PWR 2772 $99,393,600 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 W 1 Diablo Canyon Nuclear Power Plant, Unit 1 PWR 3411 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 W 1 Diablo Canyon Nuclear Power Plant, Unit 2 PWR 3411 $105,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Dresden Nuclear Power Station, Unit 2 BWR 2957 $130,613,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 2 Dresden Nuclear Power Station, Unit 3 BWR 2957 $130,613,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Farley (Joseph M.) Nuclear Plant, Unit 1 PWR 2775 $99,420,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Farley (Joseph M.) Nuclear Plant, Unit 2 PWR 2775 $99,420,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 1 Fermi (Enrico) Atomic Power Plant, Unit 2 BWR 3430 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 NE 2 Fitzpatrick (James A.) Nuclear Power Plant BWR 2536 $126,824,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 MW 1 Fort Calhoun Station PWR 1500 $88,200,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 NE 2 Ginna (Robert E.) Nuclear Power Plant PWR 1775 $90,620,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Grand Gulf Nuclear St ation BWR 3898 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Harris (Shearon) Nuclear Power Plant PWR 2900 $100,520,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Hat ch (Edwin I.) Nuclear Plant, Unit 1 BWR 2804 $129,236,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 1 Hat ch (Edwin I.) Nuclear Plant, Unit 2 BWR 2804 $129,236,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 S 2 Hope Creek Nuclear Power Stat ion BWR 3840 $135,000,000 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 NE 2 Indian Point, Unit 2 PWR 3216 $103,300,800 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 NE 2 Indian Point, Unit 3 PWR 3216 $103,300,800 0.65 0.00 0.000 114.2 0.000 82.0 0.13 0.000 0.22 $0 Database 1A continues for all 104 plants

Positive 0 - 10% 10 - 25% 25 - 50% 50 - 75% 75 - 100% 100 % +

Negative 0 - 5% 5 - 10% 10 - 15% 15 - 25% 25 - 30% 30 - 40%

License Type OL Plant Name Total DFA as of Total DFA as of Total DFA as of Total DFA as of Total DFA as of

& Number Expires PWR or BWR MWth 12/31/2016 12/31/2014 12/31/2012 12/31/2010 12/31/2008 OL-FP DPR-51 2034 Arkansas Nuclear One, Unit 1 PWR 2568 #DIV/0! #DIV/0! #DIV/0! #DIV/0!