ML11206A886
| ML11206A886 | |
| Person / Time | |
|---|---|
| Site: | Summer  |
| Issue date: | 07/20/2011 |
| From: | Mccall B Santee Cooper |
| To: | Martin R Plant Licensing Branch II |
| References | |
| Download: ML11206A886 (8) | |
Text
Santee Bill McCall, Jr.
Executive Vice President &
~ooper. Chief Operating Officer One Riverwood Drive Post Office Box 2946101 Moncks Corner, SC 29461-2901 (843) 761-4087 FAX: (843) 761-7037 July 20, 2011 Mr. Robert E. Martin Senior Project Manager Plant Licensing Branch 11-1 Division of Operating Reactor Licensing Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C. 20555-0001
Subject:
Virgil C. Summer Nuclear Station, Unit 1 - Request for Additional Information Regarding the 2011 Decommissioning Funding Status Report
Dear Mr. Martin:
In your letter dated June 21, 2011, you requested additional information in regard to the South Carolina Public Service Authority (Santee Cooper) submission of its 2011 Decommissioning Funding Status Report. Our response is contained in the attachment and exhibits accompanying this letter.
Sincerely, Bill McCall Executive Vice President & Chief Operating Officer Attachment We're Putting Our Energy to Work for You.
Attachment Response To Request For Additional Information By The Office Of Nuclear Reactor Regulation 2011 Decommissioning Funding Status Report For Virgil C. Summer Nuclear Station By letter dated June 21, 2011, the Office of Nuclear Reactor Regulation requested additional information regarding Santee Cooper's 2011 Decommissioning Funding Status Report for Virgil C. Summer Nuclear Station (VCSNS). This document along with enclosed exhibits provides the additional information requested.
RAI #1: Citation for real rate of return:
The Santee Cooper Board of Directors is the rate-regulatory authority for Santee Cooper.
On March 22, 1999 the Board of Directors adopted a resolution containing the following language: "Upon the recommendation of management, the Board of Directors authorizes the use of the effective yield of the trust portfolio for purposes of determining future decommissioning funding needs." This resolution, included as Exhibit 1, is the authorization for our earning rate assumptions.
We have assumed escalation rates for each of four decommissioning cost categories (labor, equipment & materials, waste burial, and other) identified in the 2006 site-specific study conducted by TLG Services, Inc (TLG) for VCSNS. The escalation rates used by Santee Cooper in the 2011 Decommissioning Funding Status (DFS) report were approved by the Vice President of Corporate Planning and Bulk Power on November 17, 2006 and represent our best estimates of future costs increases (see Exhibit 2).
RAI #2: Rate of escalation clarification:
The enclosed Exhibit 3, column B, shows an annual weighted average of the rates used to escalate radiological decommissioning costs. These costs are divided into four categories (labor, equipment and materials, waste burial and other) with a separate escalation rate for each category. The weighted average escalation rate reflects the weighting of each category escalation rate based on the respective category costs divided by total costs for all categories.
RAI #3: After-tax decommissioning funds as of December 31, 2010:
The South Carolina Public Service Authority (Santee Cooper) is a component unit of the state of South Carolina. As such, Santee Cooper is exempt from paying taxes.
RAI #4: Citation for site-specific study:
The 2006 TLG site-specific study projected radiological decommissioning costs of
$142,052,000 (Santee Cooper's 1/3 share) in 2006 dollars. This is the latest study
Attachment conducted for VCSNS. In the absence of a 2010 study, radiological decommissioning costs in 2010 dollars were calculated by applying escalation rates to the 2006 costs for each year between 2006 and 2010. The resulting escalated cost equals $164,164,076 in 2010 dollars which is greater than the 10 CFR 50.75(c) formula amount of $149,020,987.
Exhibit 4 shows a summary of annual radiological decommissioning expenses, annual trust deposits, annual projected earnings and end-of-year trust balances in 2010 dollars.
Exhibit 4 also shows the real rate of return assumed for each year.
RAI #5: Decommissioning scenario inconsistency:
The 2006 TLG site-specific study included decommissioning costs estimates for both DECON and SAFSTOR scenarios. For the purpose of decommissioning funding, Santee Cooper chose to use an assumption of DECON over an assumption of SAFSTOR because DECON is the more conservative funding approach. With a DECON scenario, funds accumulate faster than under a SAFSTOR scenario. This puts Santee Cooper in a better position to deal with unforeseen events (e.g. early plant shutdown, unanticipated cost increases, etc.).
Exhibit 1 MB-99-06 NUCLEAR OVERSIGHT COMM ITTEE Authorization of Use of *March 22, 1999 Portfolio Effective Yield for Decommission Fund Planning ADOPTED /_ _
REJECTED POSTPONED RESOLU IN WHEREAS, Santee Cooper owns a one-third undivided Interest In the Virgil C.
Summer Nuclear Station Unit #1; and WHEREAS, The Nuclear Regulatory Commission (NRO has issued Facility License No.
NPF-12 to the South Carolina Electric Gas Company and the South Carolina Public Service Authority (Santee Cooper); and WHEREAS, The NRC has prom.ulgated regulations under the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, requiring that owners of licensed nuclear facilities provide that funds are available for required decommissioning activities; and WHEREAS, Santee Cooper has elected to establish an external trust fund and an Internal fund. to provide for these activities; and WHEREAS, Santee Cooper must furnish a funding plan to the NRC that will demonstrate that adequate funds will be available to meet these decommissioning activities; and WHEREAS, The Board of Directors is empowered as a state regulatory authority to set rates and charges necessary to provide for Santee Cooper's expenses and has complete regulatory authority over Santee Cooper.
NOW, THEREFORE, BE IT RESOLVED That upon the recommendation of management, the Board of Directors authorizes the use of the effective yield of the trust portfolio for purposes of determining future decommissioning funding'needs.
- If approved by CommIttee, this Resolution will be presented to the full Board for approval.
This resolution was referred to and approved by the full Board.
Exhibit 2 M-*Santee prCooper INTER-OFFICE COMMUNICATION Date: November 17, 2006 To: Suzanne H. Ritter, VP, Corporate Planning and B 'fk P r From: Sylleste H. Davis, Manager, Wholesale Mark e4s
Subject:
Decommissioning Study Update As required by the Nuclear Regulatory Commission ("NRC") and in accordance with prudent utility practice, Santee Cooper systematically sets aside funds to provide for the eventual decommissioning of the VC Summer Nuclear Station's Unit 1. The amount of annual decommissioning funding deposit is currently based on NRC requirements, estimated cost escalation and fund earnings rates, and the results of a site-specific decommissioning study conducted by TLG Services, Inc. ("TLG") in 1999.
In September 2006, an updated decommissioning cost study was completed by TLG at the request of SCE&G and Santee Cooper. The chart below compares the results of the 1999 TLG study with the 2006 study update.
Comparison of TLG Study Results - $000s
.1999Stdv.. ..... .2006: Studv Inc (Dec).I Year of Costs 1999 2006 2006 2006 Decommissioning Costs @ 1/3 $143,419 $185,014 $178,877 (6,137)
The findings of the 2006 study indicate that since 1999, the overall estimated cost for decommissioning has escalated $6 million less than anticipated by current funding assumptions.
This variance is attributable to differences between estimated and actual cost escalations.
Based on the results of the 2006 TLG decommissioning study, current cost escalation assumptions have been reviewed and changes are recommended. The new proposed cost escalation assumptions by cost category are as follows:
Cost Category ~ Current Proposed Escalatio'n Escalation AssLimption, Assumptio~n Labor 4.00% 4.56%
Equipment & Materials 1.98% 0.39%
Burial 7.50% 2.92%
Other 3.38% 3.51%
Proposed changes to the escalation assumptions for "Labor", "Equipment & Materials", and "Other" cost categories are recommended based on actual cost escalations between the 1999 TLG study and the 2006 TLG study. A change is also recommended to the escalation assumption for burial costs, and is based on a rate currently being used in industry studies according to TLG and which coincides with the Consumer Price Index (CPI).
Exhibit 2 Page 2 Decommissioning Study Update November 17, 2006 Based on the results of the 2006 TLG decommissioning cost estimate and on the proposed cost escalation assumptions, the amounts on deposit in the Santee Cooper decommissioning funds are currently sufficient to meet anticipated future VC Summer Unit 1 decommissioning obligations. However, these funds could become insufficient should cost escalation assumptions or decommissioning cost estimates change in the future.
The TLG decommissioning cost estimate does not include additional amounts for financial risk or uncertainty. Consideration of these financial risks affects funding decisions. Examples of these risks as identified in the TLG study include, but are not limited to, the following:
- 1. Premature Decommissioning
- 2. Need for Employee Severance Packages following Decommissioning
- 3. Regulatory Changes
- 4. Price Escalation Uncertainty
- 5. Fund Earnings Rate Uncertainty.
These risks, as well as the funding assumptions, must be reviewed periodically and are likely to result in changes to future funding level requirements.
As a result of the TLG study update and an evaluation of estimated cost escalation rates, it is recommended that additional deposits into the decommissioning funds be suspended until such time that assumption changes or policy changes require that deposits be reinstated. Funding will be re-evaluated annually, and consideration given to actual fund balances, projected funds'.
earnings rates, and NRC minimum funding requirements, among other considerations. In addition, the decommissioning cost study will be updated periodically to reflect current regulations, technologies, and trends.
Please let me know if you need additional information.
Concurrence: ,-I Date:
Suzanne,)H. Ritter VP, Cbl-porate Planning and Bulk Power cc: Elaine Peterson R.M. Singletary Jim Brogdon Glenda Gillette Jeff Armfield
Exhibit 3 VC Summer Nuclear Station Decommissioning Trust Real Rate of Return A B (A-B)
Projected, Weighted Average Year *Earning Rate(1) Escalation Rate (2) Real-Rate of Return..
2011 0.0535 0.0375 0.0160 2012 0.0547 0.0377 0.0170 2013 0.0557 0.0378 0.0179 2014 0.0555 0.0380 0.0175 2015 0.0540 0.0382 0.0158 2016 0.0536 0.0383 0.0153 2017 0.0543 0.0385 0.0158 2018 0.0536 0.0386 0.0150 2019 0.0536 0.0387 0.0149 2020 0.0538 0.0389 0.0149 2021 0.0542 0.0390 0.0152 2022 0.0542 0.0391 0.0151 2023 0.0542 0.0393 0.0149 2024 0.0542 0.0394 0.0148 2025 0.0542 0.0395 0.0147 2026 0.0542 0.0396 0.0146 2027 0.0542 0.0397 0.0145 2028 0.0542 0.0399 0.0143 2029 0.0542 0.0400 0.0142 2030 0.0542 0.0401 0.0141 2031 0.0542 0.0402 0.0140 2032 0.0542 0.0403 0.0139 2033 0.0542 0.0404 0.0138 2034 0.0542 0.0405 0.0137 2035 0.0542 0.0406 0.0136 2036 0.0542 0.0407 0.0135 2037 0.0542 0.0408 0.0134 2038 0.0542 0.0409 0.0133 2039 0.0542 0.0409 0.0133 2040 0.0542 0.0410 0.0132 2041 0.0542 0.0411 0.0131 2042 0.0542 0.0412 0.0130 2043 0.0542 0.0411 0.0131 2044 0.0542 0.0408 0.0134 2045 0.0542 0.0419 0.0123 2046 0.0542 0.0427 0.0115 2047 0.0542 0.0426 0.0116 2048 0.0542 0.0422 0.0120 2049 0.0542 0.0417 0.0125 2050 0.0542 0.0350 0.0192 2051 0.0542 0.0349 0.0193 2052 0.0542 0.0349 0.0193 (1) Projected earning rate based on the effective yield of the trust portfolio.
(2) Projected escalation rates weighted by decommissioning cost category costs.
Exhibit 4 VC Summer Nuclear Station (1/3 Share)
Decommissioning Fund Deposit/Expenditure Schedule 2010 Dollars Beginning Decommi.:sio..ng Annual '"a Rtid Rate Year Balance Expenditure~s () . Deposits Earn."ings Balance of Return 2011 95,662,377 250,860 1,530,598 97,443,835 0.0160 2012 97,443,835 250,860 1,656,545 99,351,240 0.0170 2013 99,351,240 250,860 1,778,387 101,380,487 0.0179 2014 101,380,487 250,860 1,774,159 103,405,506 0.0175 2015 103,405,506 250,860 1,633,807 105,290,173 0.0158 2016 105,290,173 250,860 1,610,940 107,151,973 0.0153 2017 107,151,973 250,860 1,693,001 109,095,834 0.0158 2018 109,095,834 250,860 1,636,438 110,983,131 0.0150 2019 110,983,131 250,860 1,653,649 112,887,640 0.0149 2020 112,887,640 250,860 1,682,026 114,820,526 0.0149 2021 114,820,526 250,860 1,745,272 116,816,658 0.0152 2022 116,816,658 250,860 1,763,932 118,831,449 0.0151 2023 118,831,449 250,860 1,770,589 120,852,898 0.0149 2024 120,852,898 250,860 1,788,623 122,892,381 0.0148 2025 122,892,381 250,860 1,806,518 124,949,759 0.0147 2026 124,949,759 250,860 1,824,266 127,024,885 0.0146 2027 127,024,885 250,860 1,841,861 129,117,606 0.0145 2028 129,117,606 250,860 1,846,382 131,214,848 0.0143 2029 131,214,848 250,860 1,863,251 133,328,959 0.0142 2030 133,328,959 250,860 1,879,938 135,459,757 0.0141 2031 135,459,757 250,860 1,896,437 137,607,054 0.0140 2032 137,607,054 250,860 1,912,738 139,770,652 0.0139 2033 139,770,652 250,860 1,928,835 141,950,347 0.0138 2034 141,950,347 250,860 1,944,720 144,145,926 0.0137 2035 144,145,926 250,860 1,960,385 146,357,171 0.0136 2036 146,357,171 250,860 1,975,822 148,583,853 0.0135 2037 148,583,853 250,860 1,991,024 150,825,736 0.0134 2038 150,825,736 250,860 2,005,982 153,082,579 0.0133 2039 153,082,579 250,860 2,035,998 155,369,437 0.0133 2040 155,369,437 250,860 2,050,877 157,671,174 0.0132 2041 157,671,174 250,860 2,065,492 159,987,526 0.0131 2042 159,987,526 6,819,969 1,991,178 155,158,735 0.0130 2043 155,158,735 23,501,379 1,724,711 133,382,068 0.0131 2044 133,382,068 39,577,056 1,256,987 95,061,999 0.0134 2045 95,061,999 27,939,283 825,609 67,948,325 0.0123 2046 67,948,325 18,398,850 569,819 50,119,294 0.0115 2047 50,119,294 18,398,850 367,957 32,088,401 0.0116 2048 32,088,401 15,244,239 202,130 17,046,292 0.0120 2049 17,046,292 8,793,230 103,163 8,356,225 0.0125 2050 8,356,225 30,678 159,851 8,485,398 0.0192 2051 8,485,398 7,968 163,614 8,641,044 0.0193 2052 8,641,044 5,452,574 61,537 3,250,008 0.0193 Total 95,662,377 164,164,076 7,776,660 63,975,047 3,250,008 (1) Disbursements based on 2006 site-specific study per 10 CFR 50.75 (e)(1)(ii) and NRR 01 LIC-205 (Rev. 3) 4.2.4 (pg 8)