ML15093A052

Independent Spent Fuel Storage Installation (Isfsi)Consolidated Decommissioning Funding Status Report - 2014

ML15093A052
Person / Time
Site:	Palo Verde
Issue date:	03/31/2015
From:	Weber T Arizona Public Service Co
To:	Document Control Desk, Office of Nuclear Material Safety and Safeguards, Office of Nuclear Reactor Regulation
References
102-07028-TNW/JR
Download: ML15093A052 (22)

Text

10 CFR 50.75(f)(1) 10 CFR 72.30 Qaps Palo Verde Nuclear Generating Station 5801 S. Wintersburg Road 102-07028-TNW/JR Tonopah, AZ 85354 March 31, 2015 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555-0001

Subject:

Palo Verde Nuclear Generating Station (PVNGS)

Units 1, 2, and 3 and Independent Spent Fuel Storage Installation (ISFSI)

Docket Nos. STN 50-528/529/530 and 72-44 Consolidated Decommissioning Funding Status Report - 2014 Pursuant to the requirements of 10 CFR 50.75(f)(1), 10 CFR 72.30 and in accordance with the guidance in NRC Regulatory Issue Summary 2001-07, Revision 1, 10 CFR 50.75 Reporting and Recordkeeping for Decommissioning Planning, dated January 8, 2009, Arizona Public Service Company (APS) is submitting the 2014 Decommissioning Funding Status Reports for Palo Verde Nuclear Generating Station (PVNGS), Units 1, 2, and 3, and for the PVNGS Independent Spent Fuel Storage Installation (ISFSI).

APS is relying upon the 2014 Annual Funding Status Report from each Participant Owner as well as the 2013 Decommissioning Cost Study for the Palo Verde Nuclear Generating Station, issued December 18, 2013, in providing the information in these reports. The report provided in Enclosure 1 to this letter contains the information requested in NRC Regulatory Issue Summary 2001-07, Revision 1, as well as the status of decommissioning funding for each PVNGS unit and for each of the Participants.

In order to reduce the ongoing burden of submitting separate reports on separate schedules for the ISFSI under 10 CFR 72.30 and under 10 CFR 50.75(f)(1), APS is including the ISFSI report as Enclosure 2.

A ui A member of the STARS (Strategic Teaming and Resource Sharing) Alliance Callaway

• Diablo Canyon

• Palo Verde

• Wolf Creek

102-07028-TNW/JR ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Consolidated Decommissioning Funding Status Report - 2014 Page 2 No commitments are being made to the NRC by this letter. Should you need further information regarding this submittal, please contact Mr. Michael Dilorenzo, Licensing Section Leader, at (623) 393-3495.

Sincerely, 2ý

/1' W4 A)I-Thomas N. Weber Department Leader, Regulatory Affairs TNW/JR/hsc

Enclosures:

1.

2014 Decommissioning Funding Status Report for Palo Verde Nuclear Generating Station Units 1, 2, and 3

2.

2014 Decommissioning Funding Status Report for the Independent Spent Fuel Storage Installation at Palo Verde Nuclear Generating Station cc:

M. L. Dapas B. K. Singal M. M. Watford C. A. Peabody NRC Region IV Regional Administrator NRC NRR Project Manager for PVNGS NRC NRR Project Manager NRC Senior Resident Inspector for PVNGS 2014 Decommissioning Funding Status Report for Palo Verde Nuclear Generating Station Units 1, 2, and 3 2014 Decommissioning Funding Status Report for PVNGS Units 1, 2 & 3 The Decommissioning Funding Status Report for the period ending December 31, 2014, is being submitted pursuant to 10 CFR 50.75(f)(1) by Arizona Public Service Company (APS) as the operator of Palo Verde Nuclear Generating Station (PVNGS), Units 1, 2 and 3. The information contained in this report is based on the best available information as provided by the Palo Verde Participants updated to the current revision of NUREG-1 307, Revision 15, Report on Waste Burial Charge, dated January 2013.

The authorized megawatts thermal (MWt) and expiration dates for authority to operate the PVNGS units pursuant to the licenses are as follows:

MWt Expiration date Unit I 3990 June 1,2045 Unit 2 3990 April 24, 2046 Unit 3 3990 November 25, 2047 APS is submitting this report on behalf of the seven Palo Verde Participants identified below.

Participant

% Share of Each Unit

1.

Arizona Public Service Company (APS) 29.10

2.

Salt River Project Agricultural Improvement and Power District 17.49 (SRP)

3.

El Paso Electric Company (EPE) 15.80

4.

Southern California Edison Company (SCE) 15.80

5.

Public Service Company of New Mexico (PNM) 10.20

6.

Southern California Public Power Authority (SCPPA) 5.91

7.

Los Angeles Department of Water and Power (LADWP) 5.70 Pursuant to the Participation Agreement governing the obligations of the PVNGS owners, each owner is required to establish and maintain Termination Fund(s) for the accumulation of funds to decommission PVNGS, including a requirement that such funds meet the regulatory requirements of the NRC for providing financial assurance for decommissioning, as well as other requirements. Every year, each PVNGS owner provides an Annual Funding Status Report and certifies compliance with these requirements. Copies of the most recent certifications for the 2014 reports are provided Page 1 2014 Decommissioning Funding Status Report for PVNGS 1, 2 & 3 as Appendix A to this Report. The information provided in this report is based upon the information in the 2014 Annual Funding Status Reports as certified by the Participants.

10 CFR 50.75(f)(1) requires, and Regulatory Issue Summary 2001-07, Revision 1, requests, that the following information be provided:

1. The amount of decommissioning funds estimated to be required pursuant to 10 CFR 50.75 (b) and (c).

2. The amount accumulated to the end of the calendar year preceding the date of the report (This report is for the period ending December 31, 2014).

3. A schedule of the annual amounts remaining to be collected.

4. The 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.

5. Any contracts upon which the licensee is relying pursuant to 10 CFR 50.75(e)(1)(v).

6. Any modifications occurring to a licensee's current method of providing financial assurance since the last submitted report.

7. Any material changes to trust agreements.

Item 1 The amount of decommissioning funds estimated to be required pursuant to 10 CFR 50.75 (b) and (c).

Response

NUREG-1 307, Revision 15, Report on Waste Burial Charge, dated January 2013, provides the following information.

Using the format used in the examples in Section 3.4 of NUREG-1 307, Sample Calculations of Estimated Reactor Decommissioning Costs, along with end of year inflation numbers:

Scenario Description1 Reactor Type:

PWR Thermal Power Rating:

3990 MWt Location of Plant:

West Region, Southwestern Compact LLW Disposition Preference:

Combination of Compact-Affiliated and Non-Compact Disposal Facilities LLW Burial Location:

Unknown (Generic LLW Disposal Site)

Base Cost (1986 Dollars):

$105 million [from 10 CFR 50.75(c)(1)]

Page 2 2014 Decommissioning Funding Status Report for PVNGS 1, 2 & 3 Lx

=

2.524 Ex

=

2.222 Bx

=

13.885 Decommissioning Cost (2014 dollars)

= ($105 million)*[(0.65)*(2.524)+(0.13)*(2.222)+(0.22)*(1 3.885)]

= $523 Million

1.

LLW Burial Location is currently Clive, Utah.

APS has reviewed the assumptions in this example as applicable to PVNGS. APS uses a site specific estimate of decommissioning costs. A comparison of the two costs is shown below:

TABLE 1 PVNGS Unit 10 CFR 50.75 (b) and (c)

Required' Unit 1 523 Million (2014$)

Unit 2 523 Million (2014$)

Unit 3 523 Million (2014$)

1. From NUREG-1307, Revision 15 calculation TABLE 2 PVNGS Unit Site Specific Basic Radiological Decommissioning' Unit 1 640 Million (2013$)

Unit 2 621 Million (2013$)

Unit 3 702 Million (2013$)

1.- These values come from the 2013 Decommissioning Cost Study, Table 6.1, page 73 of 160.

Item 2 The amount accumulated to the end of the calendar year preceding the date of the report. This report is for the period ending December 31, 2014.

Response

Each Participant is entitled to exercise its own judgment regarding additional contingency factors and scope of work beyond the scope of work assumed in the site specific study. In addition, assumptions regarding decommissioning cost escalation and trust fund earnings may affect funding levels. Therefore, Participants may accumulate funds based upon a Basic Radiological Decommissioning Cost Estimate and Total Decommissioning Cost Estimate that exceed the amounts noted above. Regardless of Page 3 2014 Decommissioning Funding Status Report for PVNGS 1, 2 & 3 such independent judgments, each Participant meets NRC requirements for purposes of estimating the decommissioning funds to be required, because the site specific estimates of costs noted above for the Basic Radiological Decommissioning of each PVNGS unit exceed the NRC minimum formula amount calculated in accordance with 10 CFR 50.75(c), NUREG-1 307, Revision 15, Report on Waste Burial Charges and Regulatory Guide 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors.

The following table shows the actual accumulated funds by Participant at the end of the reporting year 2014.

Total Trust Balances at End of Reporting Period (In Thousands $) 1,2 Participant Unit 1 Unit 2 Unit 3 Accumulation Accumulation Accumulation APS 202,805 251,851 208,810 SRP 113,393 112,821 117,351 EPE 76,487 76,227 71,949 SCE 336,810 345,056 355,588 PNM 75,822 82,046 81,464 SCPPA 54,275 55,281 60,501 LADWP 43,737 41,527 43,145 Total 903,329 964,809 938,808

1. These values represent liquidation values (i.e., after fees, expenses and taxes) as estimated by each Participant.

2.

As indicated these amounts are total accumulated trust balances as of December 31, 2014, that eventually will be utilized to pay for radiological, non-radiological, spent fuel and ISFSI decommissioning costs.

Based upon the 2013 Decommissioning Cost Study, the portion of the Total Trust Balances reported above that are intended to be utilized to pay for NRC radiological license termination and ISFSI radiological license termination costs, in 2013 dollars, are as follows:

Page 4 2014 Decommissioning Funding Status Report for PVNGS 1, 2 & 3 Decommissioning Cost Study Estimates for Selected Decommissioning Functions (In Thousands $) 1 Purpose Unit 1 Unit 2 Unit 3 Radiological

$639,588

$620,908

$701,937 ISFSI2

$3,063

$3,063

$3,063

1. These values come from the 2013 Decommissioning Cost Study, Table 6.1, page 73 of 160 and Appendix L, page 151 of 160 and have not been escalated to 2014 dollars.

2.

ISFSI decommissioning is a common cost for all three units, and is equally allocated above. The total ISFSI decommissioning cost estimate is $9,188 million (the figures above do not add due to rounding) and is consistent with the reported value in Enclosure 2, before the escalation example.

Item 3 A schedule of the annual amounts remaining to be collected.

Response

Pursuant to the Participation Agreement, as amended and reformed, the Participants agreed that each Participant would commit to minimum levels of accumulation of funds, regardless of fund investment performance, pursuant to a pre-established percentage funded commitment or "Funding Curve" for each year through the end of plant life.

Each Participant's percentage funding commitment was based upon an analysis which incorporated the Participant's individual business judgments (subject to regulatory approvals, as applicable) with respect to expected rates of fund investment earnings and escalation in total decommissioning costs. Every three years a site specific decommissioning cost estimate is performed, and each Participant applies the new site specific cost estimate to its pre-established Funding Curve. Each Participant is committed to minimum levels of accumulations, which cannot drop below a Funding Floor (which is never less than eighty percent of the Participant's Funding Curve and was established to take into account market fluctuations in the early years of fund accumulation).

For purposes of determining compliance with NRC's minimum financial assurance requirements, based upon an evaluation of the existing balances and earnings to be Page 5 2014 Decommissioning Funding Status Report for PVNGS 1, 2 & 3 credited using the 2% real rate of return as authorized in 10 CFR 50.75(f)(1)(i) & (ii),

minimum financial assurance is achieved. Some Participants continue to make annual contributions of additional amounts as authorized by rate setting authorities and/or as required by the Participation Agreement.

The amounts of additional annual funding reported by the Participants for the year 2014 are as follows:

Annual Contributions by Participant in 2014 Participant Unit 1 Unit 2 Unit 3 PatiipntContribution Contribution Contribution APS

$449,137

$14,967,975

$1,831,831 SRP

$130,000

$130,000

$137,000 EPE

$1,358,433

$1,678,168

$1,498,702 SCE

$0

$0

$0 PNM

$1,281,931

$1,354,927

$2,250,000 SCPPA

$0

$0

$0 LADWP

$0

$0

$0 Item 4 The 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.

Response

For purposes of determining compliance with NRC's minimum financial assurance requirements, NRC's regulations authorize a 2% real rate of return. The actual rates of earnings and escalation assumed by rate setting authorities for the Participants may vary, but compliance with NRC's requirements is demonstrated when the NRC's 2% real rate of return is applied.

Item 5 Any contracts upon which the licensee is relying pursuant to 10 CFR 50.75(e)(1)(v).

Response

No PVNGS Participant is relying upon a contract for purposes of providing decommissioning funding within the meaning of 10 CFR 50.75(e)(1)(v).

Page 6 2014 Decommissioning Funding Status Report for PVNGS 1, 2 & 3 Item 6 Any modifications occurring to a licensee's current method of providing financial assurance since the last submitted report.

Response

Based upon trust fund balances reported as of December 31, 2014, and credit for a 2%

real rate of return for projected earnings, all Participants currently satisfy NRC's decommissioning financial assurance requirements in accordance with the requirements of the prepayment method in 10 CFR 50.75(e)(1)(i). However, some Participants continue to make annual contributions of additional amounts as authorized by rate setting authorities and/or as required by the Participation Agreement.

Item 7 Any material changes to trust agreements.

Response

Based upon the Annual Funding Status Reports submitted to APS by the participants, Salt River Project changed their trustee during 2014.

Page 7

APPENDIX A Certifications

ARIZONA PUBLIC SERVICE COMPANY'S CERTIFICATE FOR ANNUAL FUNDING STATUS REPORT FOR PERIOD ENDING DECEMBER 31, 2014 Lee R. Nickloy, Vice President and Treasurer of Arizona Public Service Company certifies on behalf of Arizona Public Service Company that the provisions of trust agreement(s) establishing, and all other instruments providing for investment management of, the Termination Fund(s) of Arizona Public Service Company, taken together, comply with Section 8A.7.2.2 and all other provisions of the Arizona Nuclear Project Participation Agreement, dated as of August 23, 1973, as amended by Amendment Nos. 1 through 16, establishing requirements for such agreements and instruments; and further certifies that, to the best of the knowledge of Lee R.

Nickloy, the information contained in the report to which this Certificate is attached is true and corTect and accurately sets forth the status of the ermination Funds of Arizona Public Service Company as of the date stated.

DATED:

February 2:, 2015

/,/

Lee R..frickloy Vice President & Treasurer

SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT'S CERTIFICATE FOR ANNUAL FUNDING STATUS REPORT FOR PERIOD ENDING DECEMBER 31, 2014 Steven J. Hulet, Treasurer and Senior Director of Financial Services, Salt River Project Agricultural Improvement and Power District, certifies on behalf of Salt River Project Agricultural Improvement and Power District that the provisions of the trust agreement establishing, and all other instruments providing for investment management of, the Termination Fund of Salt River Project Agricultural Improvement and Power District, taken together, comply with Section 8A.7.2.2. and all other provisions of the Arizona Nuclear Power Project Participation Agreement, dated as of August 23, 1973, as amended by Amendment No. 1 through 13, establishing requirements for such agreements and instruments; and further certifies that, to the best of the knowledge of Steven Hulet, the information contained in the report to which this Certificate is attached is true and correct and accurately sets forth the status of the Termination Fund of the Salt River Project Agricultural Improvement and Power Districts as of the date stated.

Dated:-

)q 9

-01 Steven J. Hulot, Treasurer & Senior Director, Financial Services

EL PASO ELECTRIC COMPANY CERTIFICATE FOR ANNUAL FUNDING STATUS REPORT FOR PERIOD ENDING DECEMBER 31, 2014 Russell G. Gibson, Vice President-Controller, certifies on behalf of El Paso Electric Company that the provisions of trust agreements establishing, and all other instruments providing for investment management of, the Tlermination Funds of El Paso Electric Company, taken together, comply with Section 8A.7.2.2 and all other provisions of the Arizona Nuclear Power Project Participation Agreement, dated as of August 23, 1973, as amended by Amendment Nos.

1 through 14, establishing requirements for such agreements and instruments; and further certifies that, to the best of the knowledge of Russell G. Gibson, the information contained in the report to which this Certificate is attached is true and correct and accurately set forth the status of the Termination Funds of El Paso Electric Company as of the date stated.

DATED: March 19,2015

__4_

Russell G. Gibson Vice President-Controller

LeaingteWyi lcrct Southern California Edison Company Certificate for Annual Funding Status Report For the Period Ending December 31, 2014 Tres Petmecky, Vice President and Treasurer of Southern California Edison, certifies on behalf of Southern California Edison that the provisions of the trust agreement establishing, and all other instruments providing for investment management, of the Termination Funds of Southern California Edison Company, taken together, comply with Section 8.A.7.2.2 and all other provisions of the Arizona Nuclear Power Project Participation Agreement, dated as of August 23, 1973, as amended by Amendments No. I through 16, establishing requirements for such agreements and instruments; and further certifies that, to the best of the knowledge of Tres Petmecky, the information contained in the report to which this Certificate is attached is true and correct and accurately sets forth the status of the Termination Funds of Southern California Edison Company as of the date stated.

Dated: March 13, 2015 WYCeLIA;< M^c*TMECKY III YieProdsident and Treasurer Southern California Edison Company 2

SOUTHERN CAL IFORNIIrAEDISO/N Palo Verde/2014 TFC Repotit

PNM Resources Corporate Headquarters, MS 0905 Albuquerque, NM 87158 FAX (505) 241-4386 MANUAL OF THE TERMINATION FUNDING COMMITTEE Public Service Company of New Mexico Certificate for Annual Funding Status Report For Period Ending December 3 1, 2014 Terry R. Horn, Vice President and Treasurer of Public Service Company of New Mexico, certifies on behalf of the Public Service Company of New Mexico, that the provisions of the trust agreement establishing, and all other instruments providing for investment management of, the Termination Funds of Public Service Company of New Mexico, taken together, comply with Section 8A.7.2.2 and all other provisions of the Arizona Nuclear Power Project Participation Agreement, dated as of August 23, 1973, as amended by Amendment Nos. 1 through 16, establishing requirements for such agreements and instruments; and further certifies that, to the best of the knowledge of Terry R. Horn, the information contained in the report to which this Certificate is attached is true and correct and accurately sets forth the status of the Ternination Funds of Public Service Company of New Mexico as of the date stated.

Dated: o2- * ---,/

Terry R. Horn, Vice President and Treasurer

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY ANAHEIH

• AzusA " BANNING

- BURBANK

- CERAITOS 1160 Nicole Court COLTON

• GLENDALE

• Los ANGELES

- PASADENA Glendora, CA 91740 RIVERSIDE

• VERNON

- IMPERIAL IRRIGATION DISTRICT (626) 793-9364 ° Fax: (626) 793-9461 SCPPAwww.scppa.org SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY CERTIFICATE FOR ANNUAL FUNDING STATUS REPORT FOR TIIE PERIOD ENDING DECEMBER 31, 2014 Bill D. Carnahan, Executive Director of Southern California Public Power Authority certifies on behalf of Southern California Public Power Authority that all other instruments providing for investment management of the Termination Funds of Southern California Public Power Authority, taken together, comply with Section 8A.7.2.2 and all other provisions of the Arizona Nuclear Project Participation Agreement dated as of August 23, 1973, as amended by Amendment Nos. 1 through 13 establishing requirements for such agreements and instruments; and further certifies that, to the best of the knowledge of Bill D. Carnahan, the information contained in the report to which this certificate is attached is true and correct and accurately sets forth the status of the Termination Fund of So California Public Power Authority as of the date stated.

Dated: February 26, 2015 BILL. D. CARNAIIAN Executive Director of Southern California Public Power Authority

Los Angeles Department of Water & Power ERIC GARCETrI' Mayor Commission MEL LEVINE, President WILLIAM W. FUNDERBURK JR., Vice President JILL BANKS BARAD MICHAEL F. FLEMING CHRISTINA E. NOONAN BARBARA E. MOSCHOS, Secretary MARCIE L. EDWARDS General Manager LOS ANGELES DEPARTMENT OF WATER & POWER CERTIFICATE FOR ANNUAL FUNDING STATUS REPORT FOR THE PERIOD ENDING DECEMBER 31, 2014 Philip Leiber, Chief Financial Officer of Los Angeles Department of Water and Power certifies on behalf of Los Angeles Department of Water and Power that all other instruments providing for investment management of the Termination Funds of Los Angeles Department of Water and Power, taken together, comply with Section 8A.7.2.2 and all other provisions of the Arizona Nuclear Project Participants agreement, dated August 23, 1973, as amended by Amendments Nos. 1 through 16, establishing requirements for such agreements and instruments; and further certifies that, to the best of his knowledge, the information contained in the report to which this certificate is attached is true and correct and accurately sets forth the status of the Termination Funds of Los Angeles Department of Water and Power as of the date stated.

Dated: February 25, 2015 VHILIP LEIBER Chief Financial Officer Los Angeles Aqueduct Centennial Celebrating 100 Years of Water 1913-2013 111 N. Hope Street, Los Angeles, California 90012-2607 Mailing address: Box 51111, Los Angeles, CA 90051-5700 Telephone: (213) 367-4211 www.LADWP.com 2014 Decommissioning Funding Status Report for the Independent Spent Fuel Storage Installation at Palo Verde Nuclear Generating Station 2014 Decommissioning Funding Status Report for PVNGS ISFSI Pursuant to 10 CFR 72.30, each licensee for an Independent Spent Fuel Storage Installation (ISFSI), including an ISFSI licensed under the General License provided for in 10 CFR Part 72, Subpart K, is required, at intervals not to exceed 3 years, to resubmit a decommissioning funding plan with adjustments as necessary to account for changes in costs and the extent of contamination, as well as information regarding the financial assurance provided for funding such costs. On behalf of the owners of Palo Verde Nuclear Generating Station, Units 1, 2 and 3 (PVNGS) and the PVNGS ISFSI, Arizona Public Service Company (APS) provides the requested information below:

1.

Information on how reasonable assurance will be provided that funds will be available to decommission the ISFSI:

See response to number 4 below, which discusses the appropriate method of financial assurance contemplated under 10 CFR 72.30(e).

2.

A detailed cost estimate (DCE) for decommissioning:

In 1998, TLG Services, Inc. (TLG) prepared a site specific Decommissioning Cost Study for the PVNGS (DCE), which included the costs of decommissioning the ISFSI. This report has been updated, most recently in 2013. The most recent TLG Report found that the total cost of decommissioning the PVNGS ISFSI (license termination radiological only) after sixty years of operation would be $9.2 million in 2013 dollars. Assuming an escalation factor of 3.5 percent, this cost is approximately $9.5 million in 2014 dollars. This cost estimate includes the cost of an independent contractor to perform all radiological decommissioning activities, an adequate contingency factor of 15.7 percent, and the cost of meeting the 10 CFR 20.1402 criteria for unrestricted release.

Below is the effect of the following on the detailed cost estimate since the previous report:

a. Spills of radioactive material producing additional residual radioactivity in onsite subsurface material: None

b. Facility modifications: None

c. Changes in authorized possession limits: None

d. Actual remediation costs that exceed the previous cost estimate: None Page 1 2014 Decommissioning Funding Status Report for PVNGS ISFSI

3.

Identification of and justification for using the key assumptions contained in the decommissioning cost estimate:

The key ISFSI assumption from the 2013 Decommissioning Cost Study is that some activation of the liner material in the casks is assumed to occur over the dry storage period of the spent fuel. The cost of the disposition of this material, as well as the conventional demolition of the ISFSI facility, is included in the estimate.

4.

A description of the method of assuring funds for decommissioning from 10 CFR 72.30(e), including means of adjusting cost estimates and associated funding levels periodically over the life of the facility:

The PVNGS owners are using the prepayment and external sinking fund methods as authorized in 10 CFR 72.30(e)(5) and 50.75(e)(1)(i)-(ii). The owners recover their costs for decommissioning through cost of service ratemaking, including the estimated costs to decommission the PVNGS ISFSI, which are included in the TLG Report.

APS notes that Section 1.6 of the Public Service Company of New Mexico's (PNM) Annual Funding Status Report, which is provided as Attachment 5 to the decommissioning funding status report provided as the Enclosure to the APS letter dated March 30, 2011 (ADAMS Accession No. 110950393), provides the basis for its using the external sinking fund method as follows:

Costs associated with [Public Service Company of New Mexico's (PNM)] interest in Unit 3 have never been in retail rates and such costs were permanently excluded from New Mexico retail rates by an [New Mexico Public Regulation Commission] order issued in 1989. Effective January 30, 2009, PNM sold its natural gas utility operations to a third party. PNM in the year 2010 collected about 84 percent of its electric utility revenues from cost-of-service based rates. As a consequence, PNM collects the vast majority of its Unit 3 decommissioning costs through cost-of-service based revenues within the meaning of 10 CFR 50.75(e)(1)(ii)(A), notwithstanding the exclusion of PVNGS Unit 3 from retail rates. PNM's electric revenues from its interest in Unit 3 represented 8 percent of PNM's electric revenues in the year 2010.

In the event that funds remaining to be placed into the PVNGS owners' external sinking funds are no longer approved for recovery in rates by competent rate making authorities or if the funds no longer qualify using the prepayment method, the PVNGS owners will make changes to provide financial assurance using one or more of the methods stated in 10 CFR 72.30(e)(1)-(4).

Page 2 2014 Decommissioning Funding Status Report for PVNGS ISFSI The Participation Agreement governing the obligations of the PVNGS owners requires that the site specific DCE for PVNGS be updated once every three years. This provides the means for updating the cost estimate and required funding levels associated with the decommissioning of the PVNGS ISFSI.

5.

The volume of onsite subsurface material containing residual radioactivity that will require remediation to meet the criteria for license termination:

APS assumes that there is no volume of onsite subsurface material at the PVNGS ISFSI that contains residual radioactivity that will require remediation to meet the criteria for license termination.

6.

A certification that financial assurance for decommissioning has been provided in the amount of the cost estimate for decommissioning:

Pursuant to the Participation Agreement governing the obligations of the PVNGS owners, each owner is required to establish and maintain Termination Fund(s) for the accumulation of funds to decommission PVNGS, including a requirement that such funds meet the regulatory requirements of the NRC for providing financial assurance for decommissioning, as well as other requirements. Every year, each PVNGS owner provides an Annual Funding Status Report and certifies compliance with these requirements. Copies of the most recent certifications for the 2014 reports are provided as Appendix A to Enclosure 1.

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