ML14156A220

NRR E-mail Capture - FW: Exelon Enforcement Conference Slides

ML14156A220
Person / Time
Site:	Dresden, Oyster Creek
Issue date:	05/19/2014
From:	Domeyer T Exelon Corp
To:	Joel Wiebe Division of Operating Reactor Licensing
References
Download: ML14156A220 (61)

Text

1 NRR-PMDAPEm Resource From:

Domeyer, Tamra:(BSC) [Tamra.Domeyer@exeloncorp.com]

Sent:

Monday, May 19, 2014 4:37 PM To:

Wiebe, Joel Cc:

Mozafari, Brenda; Tate, Travis

Subject:

FW: Exelon Enforcement Conference Slides Attachments:

Final 04-30-2013 PEC Presentation.pptx Joel:

Thank you for providing Exelon with an opportunity to propose redactions prior to making Exelon Generations presentation public. All of the redactions pertain to personal information that Exelon Generation requests be redacted for personal privacy under 10 CFR 2.390(a)(6).

Thank you.

Tami Tamra Domeyer Associate General Counsel Exelon Nuclear 4300 Winfield Road Warrenville, Illinois 60555 Office: 630.657.3753 l Mobile: 312.622.2312 tamra.domeyer@exeloncorp.com www.exeloncorp.com From: Wiebe, Joel [1]

Sent: Wednesday, May 07, 2014 11:56 AM To: Domeyer, Tamra:(BSC)

Subject:

Exelon Enforcement Conference Slides

Tami, The NRC has received a request (at this point, I do not know who made the request) to make the attached presentation slides public and we are considering doing so.

Should any information in the attached slides be withheld? If so, could you provide a redacted version?

Joel

Hearing Identifier:

NRR_PMDA Email Number:

1339 Mail Envelope Properties (357227E21471CD4D92F025B61B5C11E62629BA)

Subject:

FW: Exelon Enforcement Conference Slides Sent Date:

5/19/2014 4:36:43 PM Received Date:

5/19/2014 4:36:57 PM From:

Domeyer, Tamra:(BSC)

Created By:

Tamra.Domeyer@exeloncorp.com Recipients:

"Mozafari, Brenda" <Brenda.Mozafari@nrc.gov>

Tracking Status: None "Tate, Travis" <Travis.Tate@nrc.gov>

Tracking Status: None "Wiebe, Joel" <Joel.Wiebe@nrc.gov>

Tracking Status: None Post Office:

exchm-ccc-21.exelonds.com Files Size Date & Time MESSAGE 1086 5/19/2014 4:36:57 PM Final 04-30-2013 PEC Presentation.pptx 1383446 Options Priority:

Standard Return Notification:

No Reply Requested:

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Recipients Received:

Response to Apparent Violation Exelon Decommissioning Funding Exelon Decommissioning Funding Pre-decisional Enforcement Conference Presentation Pre-decisional Enforcement Conference Presentation April 30, 2013

Agenda Introduction - Joe Grimes Discussion of Facts - Adam Levin & Jeff Dunlap Review By Independent Expert Chuck Thebaud Review By Independent Expert - Chuck Thebaud Safety Significance/Corrective Actions - Pam Cowan Conclusion - Joe Grimes Appendix

Introduction

• The importance of accurate reporting and forthright communications Exelon understands:

p p

g g

with the NRC.

• The NRC investigation preliminarily concluded that four Exelon Decommissioning Funding Status (DFS) reports are inaccurate.

• The matter at issue here is reporting. The NRC does not take issue ith th i

hi h E l

l l t d th l

i it t

with the manner in which Exelon calculated the values in its reports.

(Jan. 31, 2013 NRC letter to Exelon, at 2 n. 2.)

Exelon Pre-decisional Enforcement Conference Presentation

Introduction Three basic questions arise:

1 Wh did E l

th ti g th d l g it 1.Why did Exelon use the reporting methodology it used?

2.Was Exelons methodology consistent with the regulations?

3.If not, did Exelon submit reports knowing that they were inconsistent with the regulations?

Exelon Pre-decisional Enforcement Conference Presentation

Introduction The Answers:

1. We believe that the reporting methodology and the contents of our reports were specifically authorized by the regulations and guidance.

2 NRC acceptance of Exelons filings supported our belief that

2. NRC acceptance of Exelon s filings supported our belief that our reports were consistent with the regulations.

3. No one at Exelon who was involved in the preparation, review, and submittal of the reports doubted the completeness and accuracy of our submittals.

A knowledgeable former NRC Staff subject matter expert agrees that our reports were consistent with both the letter and the f h l

i purpose of the regulations.

Exelon Pre-decisional Enforcement Conference Presentation

Factual Discussion An Overview of Exelon Submittals and Correspondence with the NRC Introduction - Joe Grimes Discussion of Facts - Adam Levin & Jeff Dunlap Review By Independent Expert - Chuck Thebaud Corrective Actions/Safety Significance - Pam Cowan Conclusion - Joe Grimes Conclusion - Joe Grimes Appendix

The Issue

> Amount Minus the credit

= Funds Required Formula Cost Amount per 50.75(c)

Site-specific Cost Estimate Amount Post-Shutdown Credit Funds Estimated to be Required Dresden Unit 2

$448.5 million N/A

($21.5 million)

$427.0 million Oyster Creek

$416.1 million

$441.6 million

($71.5 million)

$370.1 million

• Blue reflects value currently expected by NRC Staff.

y p

y

• Green reflects value reported by Exelon in its 2005 DFS report.

• Red reflects credit deducted from cost amounts.

Exelon Pre-decisional Enforcement Conference Presentation

Overview of Regulatory Reporting Requirements (2009 version)

Requirements (2009 version)

• The reporting requirement is in 10 CFR 50.75(f)(1), which requires that the information in the report must include:

information in the report must include:

-the amount of decommissioning funds estimated to be required under 10 CFR 50.75(b) and (c) ; and

-the amount [of decommissioning funds] accumulated to the end of the calendar year preceding the date of the report (i.e., the trust fund balance).

• 10 CFR 50.75(b)(3) requires that the amount must be covered by one or more of the methods described in paragraph (e), which allows the 2% post-shutdown credit.

s utdo c ed t Section 50.75(b) has four subparts, including (b)(3) which allows for the post-shutdown credit by reference to (e).

post shutdown credit by reference to (e).

Exelon Pre-decisional Enforcement Conference Presentation

How Did We Perform the Calculations for the 2005 Decommissioning Fund Status (DFS) Report?

E l

D d

U it 2 (F l C t A t)

Example: Dresden Unit 2 (Formula Cost Amount)

Formula Cost Amount Less The Post-Shutdown Credit Equals The Amount Of Funds Estimated Amount per 50.75(c)

Shutdown Credit Of Funds Estimated To Be Required Under 50.75(b) and (c)

Dresden Unit 2

$448.5 million

($21.5 million)

$427.0 million Calculated using the formula in 50.75(c)

Earnings from date of shutdown for 7 years (less Amount of money required on the date of shutdown to pay expenditures) -

50.75(b)(3) and 50.75(e) for decommissioning activities Exelon Pre-decisional Enforcement Conference Presentation

How Did We Perform the Calculations for the 2005 Decommissioning Fund Status (DFS) Report?

Decommissioning Fund Status (DFS) Report?

Example: Oyster Creek (Site Specific)

Formula Cost Amount Site-Specific Cost Estimate Less the Post-Shutdown Credit Equals the Amount of Funds Estimated Amount per 50.75(c)

Cost Estimate (If Greater Than Formula Cost Amount)

Shutdown Credit (from the site-specific cost estimate) of Funds Estimated to be Required Under 50.75(b) and (c)

Oyster Creek

$416.1 million

$441.6 million

($71.5 million)

$370.1 million Calculated using the formula in 50 75( )

Escalated to 2004 year end dollars Earnings from date of shutdown through 23 Year SAFSTOR (l Amount of money required on the date of shutdown to pay f

d i

i i

50.75(c)

SAFSTOR (less expenditures) -

50.75(b)(3) and 50.75(e) for decommissioning activities Exelon Pre-decisional Enforcement Conference Presentation

1998 Rulemaking

• Imposed biennial reporting requirement regarding status of decommissioning funding.

f f 12 31

-Report prior year trust fund balance as of 12/31.

-Report amount estimated to be required for decommissioning activities.

This amount is the certification amount for which financial assurance is required.

• Key requirement is to demonstrate sufficient funds for decommissioning at the time termination of operations is deco ss o g at t e t e te at o o ope at o s s expected (shutdown).

• Limited guidance provided in NUREG-1577.

Licensees are to report the amount estimated to be required as of the date of shutdown to pay for decommissioning activities in the future.

Exelon Pre-decisional Enforcement Conference Presentation

NUREG-1577, Rev. 1 (1999)

Exelon Pre-decisional Enforcement Conference Presentation

2002 Amendments to Section 50.75

• Section 50.75 was amended effective December 24, 2003 to clarify the post-shutdown credit allowed under 50.75(e).

Before shutdown Before shutdown

-Licensees may take credit for projected earnings at the rate of a two percent annual real rate of return during operations.

After shutdown

-Following shutdown, licensees may also take credit using the two percent real rate of return:

percent real rate of return:

• through the period of decommissioning (safe storage, final dismantlement, license termination) if reasonable assurance is based on a site specific estimate (1998 rule); or based on a site specific estimate (1998 rule); or

• for the first seven years after shutdown, recognizing both cash expenditures and earnings, if reasonable assurance is based on f

2002 the formula cost amount (2002 rule).

Exelon Pre-decisional Enforcement Conference Presentation

Application of New Rule in Exelons 2005 Decommissioning Funding Status Report g

g p

• For operating plants not using a site specific estimate, Exelon based financial assurance on the formula cost Exelon based financial assurance on the formula cost amount contained in Section 50.75(c).

• Consistent with the new rule we took the formula cost

• Consistent with the new rule, we took the formula cost amount and, in accordance with 50.75(e)(1), applied the authorized two percent post-shutdown credit for t e aut o ed t o pe ce t post s utdo c ed t o seven years, recognizing cash expenditures and earnings.

• We reported the amount that reflected the formula cost amount less the post-shutdown credit.

Exelon Pre-decisional Enforcement Conference Presentation

Application of New Rule in Exelons 2005 Decommissioning Funding Status Report Decommissioning Funding Status Report

• For the four units that were already shutdown and one i

i ( i hi fi f h d f li d

operating unit (within five years of the end of licensed life), we based financial assurance on site-specific cost estimates estimates.

• Consistent with 50.75(e)(1), we applied the authorized post shutdown credit to these site specific cost post-shutdown credit to these site-specific cost estimates.

• We reported the amount that reflected the site specific

• We reported the amount that reflected the site-specific cost estimate less the post-shutdown credit.

Exelon Pre-decisional Enforcement Conference Presentation

Why Did Exelon Take the Credit on the Cost Side?

• Section 50.75(e) allows licensees to take certain credits, but it does not specify how those credits should be taken.

Wh did k i

h

• What we did know is that:

- Section 50.75(f)(1) makes clear that licensees must report the amount accumulated to the end of the calendar year preceding the date of the report (i.e., the trust fund balances), so the credit cannot be taken on the trust fund balance in the report.

- Licensees are required to report the amount of funds estimated to Licensees are required to report the amount of funds estimated to be required as of the date of shutdown.

• So, consistent with NUREG-1577, we applied the authorized post-h td dit t th f l

t t

t th it ifi shutdown credit to the formula cost amount or to the site-specific cost estimate, yielding the amount of decommissioning funds estimated to be required under 10 CFR 50.75(b) and (c) and to be d

d b

i 50 75(f)(1) reported under sub-section 50.75(f)(1).

Exelon Pre-decisional Enforcement Conference Presentation

How Was This Explained In The 2005 DFS Report?

• The DFS report transmittal letter stated that:

-the values reported in Attachment 1 reflect the amount of decommissioning funds for the operating reactors estimated to be required pursuant to 10 CFR p

g q

p 50.75(b) and (c).

• In Attachment 1 to the DFS report, Exelon included footnotes explaining that:

-the amount of funds estimated to be required was determined in accordance with 10 CFR 50.75(b) and the applicable formulas in 10 CFR 50.75(c).

-for Oyster Creek, footnote (4) explained that the site-specific estimate is for Oyster Creek, footnote (4) explained that the site specific estimate is

$441.6 million before adjusting for growth of the trust funds through the decommissioning period.

10 CFR 50.75(b)(3) provides that the amount of financial assurance must be covered using a method in 10 CFR 50.75(e) - the regulations that specifically co e ed us g a et od 0 C 50 5(e) t e egu at o s t at spec ca y authorize post-shutdown credits.

Exelon Pre-decisional Enforcement Conference Presentation

NRC Response to Exelons 2005 DFS Report

• It was NRC Staffs practice to independently calculate the formula cost amount pursuant to 10 CFR 50.75(c).

-This was documented later in LIC-205.

• Staff does not need information from Exelon to perform the calculation in 50.75(c).

• We knew the NRC staff would recognize that the amounts Exelon reported are not the same as the values established Exelon reported are not the same as the values established using only 50.75(c).

• We knew the NRC staff was aware of the new post-shutdown We knew the NRC staff was aware of the new post shutdown credit allowed when using the formula cost amount in 50.75(c).

Exelon Pre-decisional Enforcement Conference Presentation

NRC Response To Exelons 2005 DFS Report

• After the NRC completed its analysis, we had discussions about the calculations and values reported and the rate of return applied to Exelons formerly regulated units in Illinois.

• On March 30, 2006, the NRC issued SECY-06-0073, a report to the Commission on the status of decommissioning funding for all power reactors.

- Staff took issue with Exelons use of the higher rate of return during operation for the formerly regulated units in Illinois and required further action for 3 Illinois sites.

- Nevertheless, the Staff concluded that for all remaining sites, including the remaining Exelon sites, when earnings credits and scheduled collections are factored in, decommissioning funding assurance now equals or exceeds the latest available (NRC determined) minimum decommissioning funding estimate (p. 4).

NRC Staff performed its own calculations to determine the 50.75(c) amounts and had to understand the values reported by Exelon.

Th NRC S ff d E l

d l

The NRC Staff accepted Exelons reported values.

Exelon Pre-decisional Enforcement Conference Presentation

2006 Decommissioning Funding Status Report

• We prepared the 2006 DFS report using the same methodology employed for the 2005 DFS report.

-For some plants, the formula cost amounts were reported inadvertently.

• In addition, the 2006 transmittal letter explained:

-To address the NRCs concerns arising from the 2005 DFS report, Exelon committed to provide site-specific cost estimates for the 3 Illinois sites at issue.

-Exelon explained that these estimates will be greater than the amount specified in 10 CFR 50.75(c) and will take credit for projected earnings on the external sinking funds using a 2.0% annual real rate of return through g

g g

the decommissioning period.

Exelon did not receive any comments from the NRC on the 2006 DFS Report Exelon did not receive any comments from the NRC on the 2006 DFS Report.

Exelon Pre-decisional Enforcement Conference Presentation

Exelons February 2007 RAI Responses Exelon s February 2007 RAI Responses

• On December 18, 2006, Exelon submitted site-specific SAFSTOR (60 years) estimates for Braidwood, Byron, and LaSalle.

Th NRC i d

R t f Additi l I f ti (RAI) t

• The NRC issued a Request for Additional Information (RAI) to Exelon, seeking information about whether the trust funds for Braidwood and Byron were sufficient to assure adequate funding for decommissioning.

• Exelon and NRC Staff held a telephone conference on February 22 2007 t di th th d l f

l l ti 22, 2007 to discuss the methodology for calculations.

Exelon Pre-decisional Enforcement Conference Presentation

Exelons February 2007 RAI Responses

• We responded to the NRCs RAI on February 27 2007 Our response is critical in considering enforcement action.

• We responded to the NRC s RAI on February 27, 2007.

• This was the first time we took post-shutdown credit for an operating plant based on the use of a 60 year SAFSTOR operating plant based on the use of a 60 year SAFSTOR period described in a site-specific study.

• We provided a year-by-year itemization of expenditures We provided a year by year itemization of expenditures from the trust fund, starting at plant shutdown and going through the completion of decommissioning, approximately 60 years later, for Byron, Braidwood, and LaSalle.

Exelon Pre-decisional Enforcement Conference Presentation

Exelons February 2007 RAI Responses Braidwood 1 Amount

($ millions)

Formula cost amount

$380.3 Site-specific cost estimate

$595.3 Post-shutdown credit

($298.9)

[...]

Amount reported in 2007 DFS report (site specific cost minus post-shutdown credit)

$296.4 p

)

12/31/06 trust fund balance + 2% earnings to

$297.4 balance + 2% earnings to shutdown in 2026 Actual trust fund balance as f 12/31/06

$204.1 of 12/31/06 Exelon Pre-decisional Enforcement Conference Presentation

Exelons February 2007 RAI Responses

• The Cash Flows (expenditures) shown on the previous slide are abbreviated for discussion purposes.

• The 2007 RAI Response shows:

-Below the expenditures, we identified the total estimated cost of decommissioning (all the expenditures added together).

g (

p g

)

-We adjusted the total costs by deducting for the post-shutdown credit, which results in the Funding Required at Shutdown.

-We also reported the total amount of Funding Available at Shutdown, p

g which reflected the estimated value of the trust fund at the time of shutdown based on the trust fund balance as of year end 2006 with projected earnings at the rate of 2% to the date of shutdown.

-The Funding Available at Shutdown exceeded the Funding Required at Shutdown.

Exelon Pre-decisional Enforcement Conference Presentation

2007 Decommissioning Funding Status Report

• The itemization of costs, estimated revenue, and most importantly, the clear identification of the difference between the total estimated cost of decommissioning and the Funding Required at estimated cost of decommissioning and the Funding Required at Shutdown in Exelons RAI responses is critical.

• Exelons methodology, terminology and specific calculations were provided in full to the NRC in early 2007.

• Exelon used that same methodology in its 2005, 2006, 2007, and 2009 reports 2009 reports.

• The values reported in Exelons March 21, 2007 DFS report as the amount of decommissioning funds estimated to be required for g

q Braidwood, Byron, and LaSalle are the same as the Funding Required at Shutdown in its February 27, 2007 RAI Responses.

Exelon Pre-decisional Enforcement Conference Presentation

Comparison of Exelons February 2007 RAI R

d It 2007 DFS R t V l Responses and Its 2007 DFS Report Values RAI Responses February 27, 2007 March 21, 2007 DFS Report Amount of y

Funding Required at Shutdown Values

($ thousands)

Decommissioning Funds Estimated To Be Required

($ millions)

Braidwood Unit 1 296,449 296.4 Braidwood Unit 2 303,206 303.2 B

U it 1 296 086 296 1 Byron Unit 1 296,086 296.1 Byron Unit 2 299,970 300.0 LaSalle Unit 1 332 895 332 9 LaSalle Unit 1 332,895 332.9 LaSalle Unit 2 327,489 327.5 The values reported in March 2007 were fully explained in the RAI Response.

Exelon Pre-decisional Enforcement Conference Presentation

April 24, 2007 NRC Acceptance of Exelons Approach Explained In Its 2007 RAI Responses Approach Explained In Its 2007 RAI Responses Exelon Pre-decisional Enforcement Conference Presentation

Acceptance of Exelons Certification Amounts Acceptance of Exelon s Certification Amounts

• Based on its review and acceptance of Exelons February 27, 2007 RAI Responses the NRC clearly understood Exelons 2007 RAI Responses, the NRC clearly understood Exelon s calculations and methodology for determining the amount estimated to be required at shutdown.

• On November 14, 2007, the NRC issued SECY-07-0200, which summarized the staffs review of all of the biennial decommissioning status reports submitted in March 2007.

g p

-The staff identified no concerns with the decommissioning funding assurance levels for the 104 operating nuclear power reactors.

Exelon believed that it was accurately reporting the information required for the NRC to make a finding of reasonable assurance, which is the purpose of the regulation.

Exelon Pre-decisional Enforcement Conference Presentation

2009 Decommissioning Funding Status Report

• In September 2008, Jeff Dunlap began assisting Adam Levin with the preparation of the DFS reports.

p p

p

• We prepared the 2009 report using the same methodology and reporting conventions as previously employed and p

g p

y p y accepted by the NRC.

Exelon reasonably believed that the reporting method used in its Exelon reasonably believed that the reporting method used in its 2007 DFS report would be acceptable for use in its 2009 DFS report.

Exelon Pre-decisional Enforcement Conference Presentation

Explanation In Exelons 2009 DFS Report

• Exelons 2009 Report provided the same explanations used in prior reports.

• Using the same reporting methodology, the 2009 DFS report transmittal letter identified projected funding shortfalls at Braidwood Byron LaSalle and Limerick Braidwood, Byron, LaSalle, and Limerick.

-The NRC also identified a shortfall for Clinton, based on the formula cost amount, as opposed to the site-specific estimate relied upon by pp p

p y

Exelon.

• The downturn in the financial markets in late-2008 caused h

i h

j d h f ll i d i

i i

these units to have projected shortfalls in decommissioning funding assurance.

Exelon Pre-decisional Enforcement Conference Presentation

RAI Responses Following 2009 DFS Report

• As requested, on July 29, 2009, Exelon provided the NRC with a Decommissioning Funding Plan, describing how it would achieve reasonable assurance for decommissioning the affected units.

• The NRC Staff issued multiple RAIs following Exelons submission of its 2009 DFS Report and July 29, 2009 Plan Plan.

• Exelons 2009 DFS Report, July 29, 2009 Decommissioning Funding Plan and the associated site-Decommissioning Funding Plan, and the associated site-specific cost estimates and RAI Responses all relied upon the methodology approved by the NRC in its April 24, 2007 letter.

Exelon Pre-decisional Enforcement Conference Presentation

August 27, 2009 Clinton Site-Specific Estimate Clinton Amount

($ millions)

Formula cost amount

$576.6 amount Site-specific cost estimate

$798.7 Post-shutdown

($389.2)

[...]

credit Amount Estimated to Be

$409.5 Required at Shutdown 7/31/09 trust fund balance +

2% earnings to

$450.6 2% earnings to shutdown Trust fund balance as of 7/31/09

$320.6 7/31/09 Exelon Pre-decisional Enforcement Conference Presentation

Exelons Site-Specific Cost Estimate for Clinton Clinton

• On August 27, 2009, Exelon submitted its site-specific cost estimate for Clinton to current NRC Staff.

estimate for Clinton to current NRC Staff.

-This submission highlighted, once again, Exelons application of the post-shutdown credit.

-The submittal provided a site-specific, year-by-year itemization of expenditures for Clinton, less the post-shutdown credit (also referred to as the decommissioning period credit), from shutdown through the g p

),

g completion of decommissioning.

-The submittal clearly identified the post-shutdown credit (decommissioning period credit) used to calculate the amount (decommissioning period credit) used to calculate the amount estimated to be required as of July 31, 2009.

-The credit was based upon a 2% real rate of return and the number of years between shutdown and the year of the expenditure.

Exelon Pre-decisional Enforcement Conference Presentation

NRC Current Staffs December 10, 2009 Acceptance of Clinton Site-Specific Cost Estimate Clinton Site Specific Cost Estimate Exelon Pre-decisional Enforcement Conference Presentation

Summary

• We had a reasonable basis for believing that the DFS Reports and RAI Responses Exelon submitted were consistent with:

the plain language of the regulations;

- the plain language of the regulations;

-the requirement to provide reasonable assurance; NUREG 1577; and

-NUREG-1577; and

-the NRC Staffs repeated conclusions regarding compliance with the requirements of 10 CFR 50.75.

• The current Staffs expectations regarding the contents of the DFS Reports reflects a change from our experience with the prior reports.

-Exelon altered its reporting format for the 2011 DFS Report to be more consistent with the expectations of the current Staff reviewers more consistent with the expectations of the current Staff reviewers.

Exelon Pre-decisional Enforcement Conference Presentation

Review By Independent Expert Introduction - Joe Grimes Discussion of Facts - Adam Levin & Jeff Dunlap Review By Independent Expert Chuck Thebaud Review By Independent Expert - Chuck Thebaud Corrective Actions/Safety Significance - Pam Cowan Conclusion - Joe Grimes Appendix

Robert Wood Report

• Robert S. Wood, a former senior NRC manager, reviewed Exelons 2005, 2006, 2007, and 2009 DFS reports (and related p

(

documents).

• Mr. Wood was the principal author of the 1998 rule, which created the biennial reporting requirement and authorized the post-shutdown credit for plants using a site-specific estimate.

M W d l t NUREG 1577 d th l

t

• Mr. Wood also wrote NUREG-1577 and other relevant documents.

• His views and conclusions deserve considerable weight

• His views and conclusions deserve considerable weight.

Exelon Pre-decisional Enforcement Conference Presentation

Key Observations on the Regulations Exelon Pre-decisional Enforcement Conference Presentation

Mr. Woods Conclusions (R

9 )

(Report at 9.)

(Report at 14.)

Exelon Pre-decisional Enforcement Conference Presentation

Mr. Woods Conclusion Mr. Wood s Conclusion (Report at 15.)

Exelon Pre-decisional Enforcement Conference Presentation

Corrective Actions/Safety Significance Introduction - Joe Grimes Discussion of Facts - Adam Levin & Jeff Dunlap Review By Independent Experts Chuck Thebaud Review By Independent Experts - Chuck Thebaud Corrective Actions/Safety Significance - Pam Cowan Conclusion - Joe Grimes Appendix

Corrective Actions

• In June 2010, prior to the NRC investigation, Exelon initiated a Focused Area Self-Assessment (FASA) of its decommissioning reports.

-The FASA team included Exelon personnel from multiple disciplines.

-The review determined that all regulatory requirements had been met.

-The FASA team made recommendations for reporting that are more consistent with the current Staffs expectations consistent with the current Staff s expectations.

• Exelons March 2011 DFS report reflected changes made based on the recommendations from the self-assessment.

-The NRC has acknowledged that the 2011 report meets the Staffs current reporting expectations.

Exelon Pre-decisional Enforcement Conference Presentation

Corrective Actions

• Exelon has adopted practices for additional levels of internal review of the funding analysis and reports.

-Exelon procedures now require a preparer, an independent reviewer, and an approver.

-The decommissioning funding spreadsheet and calculations have been validated through Exelons Nuclear Software QA Program.

E l

h id tifi d t ti l i f

2011 th t

• Exelon has identified a computational issue from 2011 that Exelon corrected internally and through an amendment to its 2011 report.

Exelon Pre-decisional Enforcement Conference Presentation

Exelons Reporting Had No Adverse Impact On Safety Safety

• The methodology used for reporting did not impact:

th t

l f di t t

-the actual funding status;

-the magnitude of any shortfalls identified; or

-Exelons certification of financial assurance

-Exelon s certification of financial assurance.

• Therefore, no adverse impact to safety or funding assurance.

Exelon Pre-decisional Enforcement Conference Presentation

Conclusion Introduction - Joe Grimes Discussion of Facts - Adam Levin & Jeff Dunlap Review By Independent Expert Chuck Thebaud Review By Independent Expert - Chuck Thebaud Corrective Actions/Safety Significance - Pam Cowan Conclusion - Joe Grimes Appendix

Conclusion Conclusion

1. Why did Exelon use this reporting methodology?

We read the regulations and NUREG 1577 to authorize a credit for post

-We read the regulations and NUREG-1577 to authorize a credit for post-shutdown growth.

-Subtracting that credit from the greater of the formula amount or a site-specific estimate pro ided the amo nt of decommissioning f nds specific estimate provided the amount of decommissioning funds estimated to be required at shutdown, and we reported that amount.

-Our correspondence with NRC, and subsequent findings by NRC, supported b li f th t t f ll li d ith th i

t our belief that our reports fully complied with the requirements.

2. Was Exelons methodology consistent with the regulations?

-Yes - - and a knowledgeable retired NRC subject matter expert agrees.

3. If not, did Exelon submit reports knowing that they were inconsistent with the regulations?

-Absolutely not.

Absolutely not.

Exelon Pre-decisional Enforcement Conference Presentation

Conclusion

• Although we dispute these allegations, we do not dispute the importance of accurate reporting and forthright communications with the NRC.

• This is a disagreement over the proper reporting convention.

Thi di t d t

t f

t ti This dispute does not warrant enforcement action.

• Exelons reporting convention and format had no effect on the amount of financial assurance required or the amount and amount of financial assurance required or the amount and adequacy of financial assurance provided.

• Exelon has consistently provided reasonable assurance that e o as co s ste t y p o ded easo ab e assu a ce t at adequate funds will be available for the decommissioning of its plants, which is the purpose of the rule.

Exelon Pre-decisional Enforcement Conference Presentation

Questions and Answers Questions and Answers Exelon Pre-decisional Enforcement Conference Presentation

Appendix Introduction - Joe Grimes Regulatory Background - Pam Cowan Discussion of Facts Adam Levin & Jeff Dunlap Discussion of Facts - Adam Levin & Jeff Dunlap Review By Independent Expert - Chuck Thebaud Conclusion - Joe Grimes Appendix

Overview of Regulatory Requirements

• The purpose of the 50.75 reporting requirements is to provide reasonable assurance that funds will be available for decommissioning 10 CFR 50 75(a) decommissioning. 10 CFR 50.75(a).

• Reasonable assurance consists of a series of steps as provided in paragraphs (b), (c), (e), and (f) of Section 50.75.

The requirement is to provide reasonable assurance. Reasonable q

p assurance, in turn, requires consideration of the requirements in subsections (b), (c), (e), and (f).

Exelon Pre-decisional Enforcement Conference Presentation

Overview Of Regulatory Requirements

• 10 CFR 50.75(b)(1) requires that the report contain certification that financial assurance for decommissioning has been provided in an amount which may be more but not less than the amount in an amount which may be more, but not less, than the amount resulting from the calculation in 10 CFR 50.75(c) (the formula cost amount).

• 10 CFR 50.75(b)(3) requires that the amount must be covered by one or more of the methods described in paragraph (e).

10 CFR 50 75( ) ll di h

if i f ll

• 10 CFR 50.75(e) allows a credit when certifying, as follows:

-For the formula cost amount: pro-rata credit for projected earnings on the funds at the rate of 2% (or as set by the rate authority) during on the funds at the rate of 2% (or as set by the rate authority) during the first seven years following shutdown

-For a site-specific cost estimate: credit for projected earnings on the funds from the time of shutdown through the projected decommissioning period.

Exelon Pre-decisional Enforcement Conference Presentation

Overview of Regulatory Requirements

• Exelons DFS reports:

-Provided certification of financial assurance for decommissioning that used the formula cost amount in 50.75(c) or a site-specific cost estimate (if greater) and the allowed credit in 10 CFR 50.75(e), as referenced in 50.75(b);

-Identified the amount presented in the report as the Amount of Radiological Decommissioning Funds Estimated To Be R

i d t th d t f h td Required at the date of shutdown.

• Applying the allowed credit to the formula cost amount or site-specific cost estimate was appropriate as it provided what was specific cost estimate was appropriate as it provided what was described in the regulation as the amount of money estimated to be required at the time of shutdown.

Exelon Pre-decisional Enforcement Conference Presentation

Recap of Exelons Position

• The manner in which Exelon reported funding assurance complies with the spirit, intent, and language of Section 50.75.

• We respectfully disagree with an interpretation of the regulations that

• We respectfully disagree with an interpretation of the regulations that requires licensees to report the formula cost amount or a greater value.

- Section 50.75 does not say licensees must report the formula cost amount or a greater value.

Rather Section 50 75 requires licensees to certify that financial assurance has been

- Rather, Section 50.75 requires licensees to certify that financial assurance has been provided. The amount of that financial assurance must be based on an amount that is at least as great as the formula cost amount.

- And, Section 50.75 requires that licensees report the amount of funds estimated to be required under 10 CFR 50.75(b) and (c).

- 50.75(b) specifically requires that the amount reported account for the post-shutdown credit authorized in 50.75(e).

• In its DFS reports Exelon reported amounts reflecting the amounts of

• In its DFS reports, Exelon reported amounts reflecting the amounts of decommissioning funds estimated to be required under 50.75(b) and (c) and those reported amounts were clearly based on the formula cost amount or a greater site-specific cost estimate.

Exelon Pre-decisional Enforcement Conference Presentation

Executive Positions at Exelon President and Chief Nuclear Officer, Exelon Nuclear Exelon Generation Exelon Generation Senior Vice President of Engineering and Technical Ser ices Executive Positions Services Vice President of Nuclear F

l Fuels Director of Spent Fuel and Decommissioning The individuals involved in Decommissioning Manager, Spent Fuel and Decommissioning involved in preparing these reports were not Exelon Decommissioning executives.

Exelon Pre-decisional Enforcement Conference Presentation

Florida Power Corporation Violation of 50.75

• Florida Power Corporation (FPC) submitted a decommissioning funding status report on March 25, 2009, in which it asserted that its report complied with the requirement in 50 75(f)(1) complied with the requirement in 50.75(f)(1).

-50.75(f)(1) requires licensees to report the amount of decommissioning funds accumulated to the end of the calendar year preceding the date of the report (i e the trust fund balance) the report (i.e., the trust fund balance).

• FPC reported a value lower than the actual trust fund balance as of December 31, 2008.

• In a March 14, 2011 letter, the NRC concluded that FPCs failure to accurately report the amount accumulated to the end of the calendar year preceding the date of the report in the 2009 report [was] a violation of 10 CFR 50.75(f)(1).

• Nonetheless, the Staff determined that the regulatory violation was minor and not subject to enforcement action because the actual fund balance was greater than reported and than the minimum amount required under 10 CFR 50.75(b) and (c).

Exelon Pre-decisional Enforcement Conference Presentation

50.75 Reporting Has Required Clarification

• RIS 2001-07, Rev. 1, January 2009 demonstrates that reporting expectations are not always as clear to utilities as exemplified by the statement the NRC staff has learned that some licensees in statement the NRC staff has learned that some licensees, in response to the requirement that they report the amount of decommissioning funds accumulated to the end of the calendar year di g th d t f th t h t d t f th t preceding the date of the report, have reported as part of that amount funds accumulated to address State costs and spent fuel management costs.

• The original RIS stated that licensees are expected to separate funding estimates related to the costs of decommissioning included in the NRCs definition of decommissioning in 10 CFR 50.2.

g Exelon Pre-decisional Enforcement Conference Presentation

Technical Reading of the Reporting Requirement Before September 2007 Requirement Before September 2007

• Prior to late 2007, Section 50.75(b)(1) required certification that financial assurance for decommissioning had been provided in an amount which may be more but not less than the amount stated in the table in paragraph (c)(1) of this section.

- Subsection (c) contained two subparts: (1) a table of minimum amounts to demonstrate reasonable assurance and (2) an adjustment factor.

• On September 27, 2007 the regulations were changed to require certification in an amount which may be more but not less than the amount stated in the table in paragraph (c)(1) of this section adjusted using a rate at least equal to that stated in paragraph (c)(2) of this section.

Exelon Pre-decisional Enforcement Conference Presentation

Technical Reading of the Reporting Requirement Before September 2007 Requirement Before September 2007

• If Staff is going to impose an overly technical and limited interpretation of the regulations then based on that interpretation of the regulations, then based on that interpretation, no violation can be found with respect to Exelons 2005, 2006, and 2007 DFS Reports.

• Prior to September 2007, the amount to certify decommissioning funding assurance was based only on the value in the table in (c)(1) - without any adjustment for value in the table in (c)(1) without any adjustment for escalation factors.

-The maximum amount stated in the (c)(1) Table is:

• $105 million for PWRs; and

• $135 million for BWRs.

Th t E l

t d i 2005 2007 ll t

• The amounts Exelon reported in 2005-2007 were all greater than these amounts.

Exelon Pre-decisional Enforcement Conference Presentation

Statute of Limitations Statute of Limitations

• The applicable statute of limitations requires the NRC t i iti t ti i

i g i il lt i

i g to initiate an action imposing a civil penalty or issuing an order to modify, suspend, or revoke a license, or to prohibit an individuals involvement in licensed activity prohibit an individual s involvement in licensed activity within 5 years from when the event occurred.

• Accordingly, the statute of limitations has run with Accordingly, the statute of limitations has run with regard to the 2005, 2006, and 2007 DFS Reports.

Exelon Pre-decisional Enforcement Conference Presentation