ML13280A312
| ML13280A312 | |
| Person / Time | |
|---|---|
| Site: | Summer  |
| Issue date: | 07/29/2013 |
| From: | Crosby M Santee Cooper |
| To: | Martin R Plant Licensing Branch II |
| References | |
| TAC ME2250 | |
| Download: ML13280A312 (7) | |
Text
'santee cooper July 29, 2013 Mr. Robert Martin Senior Project Manager Plant Licensing Branch II-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 (VCSNS-1) - Request for Additional Information Concerning 2013 Decommissioning Funding Status Report (TAC No.
MF2250)
Dear Mr. Martin:
In your letter dated July 22, 2013, you requested additional information in regard to the South Carolina Public Service Authority (Santee Cooper) submission of its 2013 Decommissioning Funding Status Report. Our response is contained in the attachment and exhibits accompanying this letter.
Sincerely, NMichael R. Crosby Vice President Nuclear Operations and Construction Attachment cc: Bruce Thompson, SCE&G One Riverwood Drive I Moncks Corner, SC 29461-2901 1 (843) 761-8000 P.O. Box 2946101 I Moncks Corner, SC 29461-6101
Attachment Response To Request For Additional Information By The Office Of Nuclear Reactor Regulation 2013 Decommissioning Funding Status (DFS) Report For Virgil C. Summer Nuclear Station DOCKET NO. 50-395 By letter dated July 22, 2013, the Office of Nuclear Reactor Regulation requested additional information regarding Santee Cooper's 2013 Decommissioning Funding Status Report for Virgil C. Summer Nuclear Station, Unit 1 (VCSNS-1). This document along with enclosed exhibits provides the additional information requested.
REQUEST Provide the citation (e.g., an Order by the rate-regulatory authority) by the regulatory entity that allows for the assumptions used regarding rates of escalation in decommissioning costs, rate of earnings on decommissioning funds and rates of other factors as stated within the DFS report.
RESPONSE
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 2012 site-specific study conducted by TLG Services, Inc. (TLG) for VCSNS-1. The escalation rates used by Santee Cooper in the 2013 DFS report were approved by the Vice President of Nuclear Operations and Construction and represent our best estimates of future cost increases (see Exhibit 2).
Exhibit 1 MB-99-06 NUCLEAR OVERSIGHT COMMITTEE Authorization of Use of *March 22, 1999 Portfolio Effective Yield for Decommission Fund Planning ADOPTED /
REJECTED POSTPONED WHEREAS, Santee Cooper owns a one-third undivided Interest In the Virgil C.
Summer Nuclear Station Unit #1; and WHEREAS, The Nuclear Regulatory Commission (NRC) 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 promulgated regulations under the Atomic Energy Act of 1954, as amended, and the Energy Reorganliation 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 estabilsh 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 fundIngneeds.
- 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 INTER-OFFICE COMMUNICATION DATE: July 25, 2013 TO: Michael Crosby, Vice President, Nuclear Operations and Construction FROM: Thomas Wagner, Financial Analyst III, Nuclear Contract AdministrationT./)
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 VC Summer Nuclear Station 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 2006.
In 2012, TLG updated the 2006 decommissioning cost study, issuing a final report in February 2013. The chart below compares the results of the 2006 TLG study with the 2012 study update.
Comparison of TLG Study Results - $000s FL7-206t idy '.. b*2. 'L*dSt. 1 i.lrirease Year of Costs 2006 2012 2012 2012 Decommissioning Costs @ 1/3 $178,877 $220,431 $315,125 $94,694 The findings of the 2012 study indicate that since 2006, the overall estimated cost for decommissioning has escalated approximately $95 million more than anticipated by current funding assumptions. The 2006 TLG study included the assumption that the transfer of spent fuel to a repository at Yucca Mountain would commence no later than 2021 and be completed by 2052, or ten years after plant operations cease. The 2012 TLG study assumed the transfer of fuel would begin no later than 2055 and end in 2095, or 53 years after operations cease. This schedule for spent fuel storage in the 2012 study accommodates a deferred decommissioning of the plant within the required 60 year period (from the cessation of operations). The difference in the spent fuel storage end dates, or 43 years, adds approximately $91 million of additional spent fuel management costs to the 2012 study. The remaining
$4 million of the $95 million variance in total costs between the two studies is attributable to differences in estimated and actual cost escalations.
Based on the results of the 2012 study, current cost escalation assumptions have been reviewed and changes are recommended. The new proposed cost escalation assumptions by cost category are as follows:
. .- .Current Proposedp "CostCategory Escalation Escalation p jAn uaptio~n:
____________________ Assumption ______________
Labor 4.56% 3.13%
Equipment & Materials 0.39% 5.95%
Burial 2.92% 2.92%
Other 3.51% 4.96%
Michael Crosby )it xnfL_[ 2 July 25, 2013 Page Two Proposed changes to the escalation assumptions for Labor, Equipment & Materials, and Other are recommended based on actual cost escalations between the 2006 TLG study and the 2012 TLG study.
No change is recommended to the escalation assumption for Burialbased on actual costs from the 2006 and 2012 TLG studies.
As noted above, an assumption of 43 additional years of interim storage of spent fuel increased decommissioning costs by approximately $91 million in the 2012 TLG study. The federal government is responsible for the long-term disposal of spent fuel. DOE is currently reimbursing for a significant portion of the construction costs of a dry cask storage facility at VC Summer Unit 1. It is expected that a significant portion of the spent fuel management cost identified in the 2012 TLG study will also be reimbursed by DOE during the time period DOE does not have a facility to accept spent fuel. How much of the spent fuel management cost DOE will reimburse has not been estimated by SCE&G. Using the current information about DOE reimbursements for the construction costs of the dry cask storage facility, a recommendation is proposed to assume 75% of spent fuel storage costs in the 2012 TLG study will be reimbursed by DOE.
Decommissioning funding requirements were recalculated based on the 2012 TLG decommissioning cost estimate, on the proposed cost escalation assumptions, on the proposed DOE reimbursement assumption, and on updated earnings projections for the decommissioning trust and internal decommissioning fund. Projected earnings for the trust and the internal fund were recently reevaluated by Santee Cooper's Treasury department and both have increased. From May 2012 to March 2013, the average estimated earnings rate for the trust increased from 4.5% to 4.9%, while the average rate for the internal fund increased from 4.3% to 4.7%. Due to the DOE reimbursement assumption and the higher projected earnings for the decommissioning trust and internal fund, the annual amount to be deposited into the trust will decrease by approximately $600,000. The required annual funding amount for the decommissioning trust is approximately $2 million beginning in 2014. Half of the $2 million will come from the internal decommissioning fund, while the remaining $1 million will come from operations.
The NRC required minimum funding amount was also updated. The NRC minimum amount increased by 9% over the prior year primarily due to an increase in the waste burial escalation factor. Despite an increase to the NRC minimum amount, trust funding levels will be decreased due to the projected increase in trust earnings.
Implementing the proposed deposits into the decommissioning trust, along with projected earnings, will sufficiently provide for meeting the NRC required minimum amount. Further, the proposed transfers from the internal decommissioning fund to the decommissioning trust, along with projected earnings, will leave sufficient funding in the internal fund for the remaining estimated decommissioning costs. It is recommended that the proposed annual transfer of $954,840 commence after January 1, 2014. Please note that for Central cost of service purposes, as well as other customers' rates, the $954,840 transfer is applied against the monthly deposit to the trust and does not constitute an additional cost for our customers.
Effective January 1, 2014, the new monthly deposit requirement is as follows:
201i3 2014 &Lat&i:
Current Proposed li.r.ase..
_ _Funding
_ _; gin'ding
. '(Dec.rease)
Trust $213,225 $164,785 ($48,440)
Internal Fund $0 $0 $0 Transfer from Internal Fund ($79,855) ($79,570) $285 Total Monthly $133,370 $85,215 ($48,155)
Total Annual $1,600,440 $1,022,580 ($577,860)
Exhibit 2 Michael Crosby July 25, 2013 Page Three Please let me know if you have any questions or would like to discuss further.
Concurrence:
Mic ael Crosby Date VP, Nuclear Operations & Construction cc: R.M. Singletary (M-606)
Jim Brogdon (M-603)
Jeff Armfield (M-602)
Suzanne Ritter (M-301)
Glenda Gillette (M-202)
IV santee cooper ZIP 29461 P.O. Box 2946101 Moncks Corner, SC 29461-6101 FIRST CLASS MAIL Post Office Box 2946101
- K-
~K> /mcvtp Moncks Corner, SC 29461-6101 "Dependable Power; Dependable People" TO: Mr. Robert Martin Senior Project Manager Plant Licensing Branch ii--T-Division of Operating Reactor Licensiný Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C. 20555-0001