ML18057B482
| ML18057B482 | |
| Person / Time | |
|---|---|
| Site: | Palisades  |
| Issue date: | 01/10/1992 |
| From: | Hoffman D CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.) |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NUDOCS 9201230078 | |
| Download: ML18057B482 (35) | |
Text
consumers Power POW ERi Nii MICHlliAN'S PROliRESS General Offices:
1946 West Parnell Road, Jackson, Ml 49201 * (617) 788-0463 January 10, 1992 U S Nuclear Regulatory Commission Attn: Document Control Desk Washington, DC.20555 DOCKET 50-255 - LICENSE DPR PALISADES PLANT -
David P Hoffman Vice President Nuclear Operations 10 CFR 50.33(k),
50.75 REVISED CERTIFICATION OF FINANCIAL ASSURANCE FOR DECOMMISSIONING In accordance with 10 CFR §§ 50.33(k) and 50.75, Consumers Power is submitting the attached Revised Certification of Financial Assurance for Decommissioning the Palisades Nuclear Plant, a 2650 MW't (licensed for 2530 MWt) pressurized water reactor facility.
Palisades began operating in December, 1971, and its operating license expires in 2007.
The revised certification supplements and amends the Certification of Financial Assurance for Decommissioning filed on July 26, 1990.
Pursuant to an Order of the Michigan Public Service Commission (MPSC) issued on November 20, 1991, in Case No. U-9668, Consumers Power has increased the surcharges it is collecting from its retail electric customers, and depositing them in the external sinking funds originally authorized by the MPSC.
A copy of the MPSC Order is enclosed as Exhibit B to the revised certification..
Exhibit A to the revised certification shows the calculation of the NRG certification amount, adjusted to 1991, in accordance with§ 50.75.
Based on the TLG Engineering, Inc. study which determined a decommissioning cost of $315,971,400 in 1989 dollars, the MPSC, in its November 20, 1991 order, authorized surcharges for electric service rendered on and after December 1, 1991 to recover an estimated annual amount of $25,464,400 for the decommissioning of Palisades, or a total of $346,421,788 in 1991 dollars.
This is greater than the certification amount required by§ 50.75.
David P.
Vice President CC:
Administrator, Region III, USNRC NRG Resident Inspector - Palisades Plant IH: ta~hmen L
_1-'
,pal, doc A CM5 ENERGY COMPANY
CONSUMERS POWER COMPANY Palisades Plant Docket 50-255 License DPR-20 REVISED CERTIFICATION OF FINANCIAL ASSURANCE FOR DECOMMISSIONING Consumers Power Company submits this Revised Certification of Financial Assurance for Decommissioning in compliance with 10 CFR §§ 50.33(k) and 50.75(b).
- 1.
Consumers Power owns a 100% undivided interest in the Palisades Plant.
- 2.
The amount required to demonstrate reasonable assurance of funds for decommissioning Palisades, calculated in accordance with 10 CFR § 50.75(c), is $144,432,080 in 1991 dollars as shown in Exhibit A.
- 3.
Consumers Power provides financial ass.urance for decommissioning Palisades by making deposits at least annually in external sinking funds.
- 4.
Pursuant to orders issued by the Michigan Public Service Commission (MPSC) on August 26, 1986, in Case No. U-6150 and December 2, 1986, in Case No.. U-8536, Consumers Power was collecting surcharges from its retail electric customers from January 1, 1987 to November 30, 1991, and depositing them in the external sinking funds.
These amounts were designed to assure the availability of funds to decommission Palisades after expiration of its license in the year 2007 in the amount of
$112,965,000 in 1990 dollars.
- 5.
The August 26, 1986 MPSC order in Case No. U-6150 required Consumers Power to file with the MPSC in 1990, and at three-year intervals thereafter, a report on the adequacy of the decommissioning funding.
Consumers Power filed such a report in April, 1990, based on a TLG Engineering, Inc. site-specific decommissioning cost study which estimated the total cost to decommission Palisades, in 1989 dollars, at $315,971,400.
Of the total, the report states that $267,801,000 is required to meet the*NRC definition of "decommission."
- 6.
Pursuant to an order issued by the MPSC on November 20, 1991 in Case No. U-9668, Consumers Power is collecting surcharges in an estimated annual amount of $25,464,400, from its retail electric customers for service rendered on and after December 1, 1991, and depositing them in the external sinking funds, to assure the availability of a total fund of $346,421,778 in 1991 dollars to decommission Palisades after expiration of its license in the year 2007 (as shown on Attachment A, page 5, of Exhibit E to the original Certification of Financial Assurance for Decommissioning filed on July 26, 1990).
A copy of the MPSC Order in Case U-9668 is attached as Exhibit B.
pal cert.doc
- 7.
My powers and duties as Vice President and Controller of Consumers Power Company, as set forth in the Company's By-Laws, authorize me to file this certification.
To the best of my knowledge, information and belief, the foregoing statements are true and correct.
Dennis DaPra Vice President and Controller Sworn and subscribed to this 9th day of January, 1992.
Marla A. Fall Jackson County, Michigan My Commission Expires October 17, 1994 pal_cert.doc
EXHIBIT A Consumers Power Company Pali sades Pl ant Docket 50-255
CONSUMERS POWER COMPANY Adjusted NRC Minimum Financial Assurance Amount For Nuclear Decommissioning Under 10CFR50.75(c)
January 1, 1991 BIG ROCK POINT NUCLEAR PLANT Escalation Factors for a BWR Plant:
Labor (L) =
1.212 Energy (E) =
1.062 Waste Burial (B)* =
2.331 BWR Escalation Formula:
Factor=
Factor=
0.65
- L + 0.13
- E + 0.22
- B 1.439 Base Amount for a BWR Plant less then 1,200 MWt:
Base Amount = $(104 + 0.009
- P) million (P = minimum power level in megawatt~ thermal = 1,200 MWt)
Base Amount=
$114,800,000 Adjusted NRC Minimum Financial Assurance Amount:
Minimum Amount = Base Amount* Factor Minimum Amount= $165,197,200 Note:
- - Assumes South Carolina is used for waste burial since it is the closest site to the Big Rock Point Nuclear Plant.
Prepared by:.TLSimonsen Tax Dept, M-419, 8-1595 LAN \\home\\tls\\decom\\nrc\\91 mimamtw31 Page No. 1 24-Jun-91 08:21 AM
CONSUMERS POWER COMPANY Adjusted NRC Minimum Financial Assurance Amount For Nuclear Decommissioning Uncfer 10CFR50.75(c)
January 1, 1991 PALISADES NUCLEAR PLANT Escalation Factors for a PWR Plant:
Labor (L) =
1.212 Energy (E) =
1.021 Waste Burial (B)* =
2.494 PWR Escalation Formula:
Factor=
Factor=
0.65
- L + 0.13
- E + 0.22
- B 1.469 Base Amount for a PWR plant between 1,200.MWt and 3,400 MWt:
Base Amount = $(75 + 0.0088
- P) million (P = power level in megawatts thermal = 2,650 MWt)
Base Amount =
$98,320,000 Adjusted NRC Minimum Financial Assurance Amount:
Minimum Amount = Base Amount* Factor Minimum Amount= $144,432,080 Note:
- - Assumes South Carolina is used for waste burial since it is the closest site to the Palisades Nuclear Plant.
Prepared by: TLSimonsen Tax Dept, M-419, 8-1595 LAN \\home\\tls\\decom\\nrc\\91 mimamtw31 Page No. 2 24-Jun-91 08:21 AM
Labor (L) Escalation Factor Base Index Current Index CONSUMERS POWER COMPANY Adjusted NRC Minimum Financial Assurance Amount For Nuclear Decommissioning Under 10CFR50.75(c)
January 1, 1991 APP EN DX 88.400 January 1, 1986 107.100 January 1, 1991 Escalation Factor for L = Current Index I Base Index Escalation Factor for L =
1.212 The escalation factor for labor, L, was obtained from the "Monthly Labor Review,* published by U.S. Department of Labor, Bureau of Labor Statistics (March, 1991). As directed by NUREG-1307, data from Table 25, entitled "Employment Cost Index, private nonfarm workers, by bargaining status, region, and area size,* subtitle "COMPENSATION, Workers, by region, Midwest,* was utilized..
Enerv (E) Escalation Factor:
Electric Power (P):
Base Index Current Index 115.300 January 1, 1986 112.100 January 1, 1991 Escalation Factor for P = Current Index I Base Index Escalation Factor for P =
0.972 Fuel Oil (F):
Base Index Current Index 82.000 January 1, 1986 89.300 January 1, 1991 Escalation Factor for F = Current Index I Base Index Escalation Factor for F =.
1.089 BWR escalation factor for E = * (0.23
- P + 0.77
- F)
BWR escalation factor for E =
- 1.062 PWR escalation factor for E =
(0.58
- P + 0.42
- F)
PWR escalation factor for E =
1.021 The energy escalation factor, E, is an equation made up of two components, electric power, P, and fuel oil, F. A separate equation was used for BWR and PWR plants. The values for P and F were obtained from the "Producter Price Indexes,* published by the U.S. Department Labor, Bureau of Labor Statistics. Data from Table 6 entitled
'Producer Price Indexes for Commodity Groupings and lndMdual Items* was utilized per NUREG 1307. The value for P was taken from the East North Central regional data for industrial power (Commodity Code 0543 in Table 6). The value for F was taken from data for light fuel oil (Commodity Code 0573 in Table 6). The Producer Price Indexes do not provide region data for the value of F.
Page No. 3 24-Jun-91 08:21 AM
CONSUMERS POWER COMPANY Adjusted NRC Minimum Financial Assurance Amount For Nuclear Decommissioning Under 1 OCFR50.75(c)
January 1, 1991 Waste Burial (Bl Escalation Factor:
BWR Plant Base Index Current Index 1.000 January 1, 1986 2.331 January 1, 1991 Escalation Factor for B = Current Index/ Base Index Escalation Factor for B =
2.331 PWR Plant:
Base Index Current Index 1.000 January 1, 1986 2.494 January 1, 1991 Escalation Factor for B = Current Index/ Base Index Escalation Factor for B =
2.494 Values for Waste Burial, B, for both a BWR and PWR plant were obtained from the NRC's Report on Waste Burial Charges* (NUREG 1307) and assumes that South Carolina is used as the Waste burial site.
Page No. 4 24-Jun-91 08:21 AM
EXHIBIT B Consumers Power Company Palisades Plant Docket 50-255
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of CONSUMERS POWER COMPANY for adjustment of its surcharges for nuclear power plant decommissioning.
)
)
)
)
~~~~~~~~~~~~~~~-)
Case No. U-9668 At the November 20, 1991 meeting of the Michigan Public Service Commission in Lansing, Michigan.
PRESENT: Hon. Steven M. Fetter, Chairman :
Hoh. Ronald E. Russell, Commissioner Hon. John L O'Donne.11, Commissioner OPINION AND ORDER On June 29, 1990, Consumers Power Company (Consumers) filed an application request-ing Commission approval to adjust its nuclear plant decommissioning surcharges that had been previously approved in the Commission's December 2, 1986 order in Case No. U-8536.
Subsequent to the prehearing conference held on August 17, 1990, the parties reached a settlement agreement, attached as.Exlubit A However, on July 1, 1991, the Commission issued an order that returned the settlement agreement to the parties because it did not explicitly address the effect, if any, of Consumers' proposed sale of the Palisades plant.
The parties continued their negotiations and have reached a *supplemental settlement agreement, attached as Exhibit B. The supplemental stipulation addresses the concerns raised by the Commission.
After review of the supplemental stipulation, the Commission finds that approval of the stipulation and its supplement is in the public interest.
The Commission FINDS that:
- a. Jurisdictfon is pursuant to 1909 PA 106, as amended, MCL 460.551 et seq.; 1919 PA 419, as amended, MCL 460.51 et seq.; 19_39 PA 3, as amended, MCL 460.1 et seq.; 1969 PA 306, as amended, MCL 24.201 et seq:; and the Commission's Rules of 'Practice and Procedure,
~
- 1979 Administrative Code, R 460.H et seq.
- b. The stipulation and its supplement should be approved~
THEREFORE, IT IS ORDERED that:
A The stipulation, attached as Exlubit A., and.the supplemental stipulation,* attached as Exlubit B, are approved.
B. Cons"umers Power Company is autho~ed to adjust its nuclear plant decommissioning
- surcharges as set forth in Exhibits A and B.
C. Consumers Power Company shall file with.the Commission, within 30 days, four copies of its tariff sheets covering t~e approved surcharges..
Page 2 U-9668
The Commission resexves jurisdiction and may issue further orders as necessary.
(SEAL)
By its action of November 20, 1991.
l~I Dorothy Wideman Its Executive Secretary Page 3 U-9668 MICIDGAN PUBLIC SERVICE COMMISSION Isl Steven M. Fetter Chairman Isl Ronald E. Russell Commissioner Isl John L. O'Donnell Commissioner
S T A T E 0 F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the Application
)
of CONSUMERS POWER COMPANY for
)
EXHIBIT A Adjustment of its Surcharges for
)
Case No. U-9668 Nuclear Power Plant Decommissioning )
)
STIPUI/JION On June 29, 1990 Consumers Power Company (Consumers) filed its Application in Case No. U-9668 requesting that the Michigan Public Service Commission (Commission) adjust its surcharges for nuclear power plant decommissioning.
Consumers request~d that the annual decommissioning provision for Applicant'.~
Big Rock Point Nuclear Plant (Big Rock) be $19,372,800 and the annual decommissioning provision for Applicant's Palisades Nuclear Plant (Palisades) be $25,464,400, for a total annual decommissioning provision of $44,837,200.
~
Consumers requested Applicant's annual decommissioning surcharges be adjusted to levels set forth in Attachment B to its Application.
An initial prehearing conference was held August 17, 1990.
The Commisison Staff is a participanc by virtue of Rule 7 (R 460.17) of the Commission's Rules of Practice and Procedure.
At the prehearing conference the Attorney General~ the Association of Businesses Advocating Tariff Equity (ABATE) and the Residential Ratepayer Consortium (RRC) were granted intervenor status.
By
2 lecter dated January 10, 1991 the Attorney General submitted to the Commission his *Attorney General's Vithdrawal of Intervention.*
Consumers filed the testimony and exhibits of seven witnesses in support of its request.
Cross-examination occurred in January 1991.
Consumers also submitted testimony of one witness by means of deposition, which testimony was received into the record as Exhibit A*6.
The Commission Staff filed the testimony of one witness, Mr. Berquist.
Mr.
Berquist stated in testimony Staff would not oppose Consumers proposal to increase the total annual decommissioning provision to the $44.8 million requested.
Mr. Berquist recommended that Exhibit A*l9 (TLS*S), Information Necessary to Obtain an IRS Schedule Ruling Amounts for Big Rock Point; Exhibit A~20 (TLS*G), Information Necessary to Obtain an I~ Schedule of Ruling Amounts for Palisades; and Exhibit A*24 (JES*l), Proposed Nuclear Decommissioning Surcharges be approved by the Commission.
Staff's witness was presented for cross-examination on April 17, 1991.
~
~
The RRC and ABATE did not present testimony of any witness.
Encouraged by the Commission's Rules of Practice and Procedure (Rule 33, R 460.43), a favorable Commission policy toward settlement; and Commission precedent, the signatories hereto have resolved through* settlement discussions all contested issues regarding these proceedings as set forth below.
For purposes of settling the issues in the above-captioned proceeding, and subject to the acceptance and approval of the Commission without modification, and without prejudice to the pre-negotiation positions of the parties, the signatories hereto agree and stipulate as follows:
- l. The estimated annual decommissioning provision necessary for funding the external trust funds for Big Rock is $19,372,800 and for Palisades is
$25,464,400 for a total estimated annual decommissioning provision of
$44,837,200 to be recovered through surcharge revenues.
3
- 2.
Surcharge revenues shall be allocated 43.21% to the Big Rock external trust funds and 56.79% to the Palisades external trust funds.
- 3.
Surcharges are.determined based on the following methodology:
The annual surcharge revenue requirement of $44,,837,200 is allocated to each rate schedule based on demand allocation factors.
The allocated surcharge revenue r~quirement is then divided by estimated l99l kWh sales for the rate co determine the surcharge by race.
The surcharges for each race class are listed in Exhibit A to the Stipulation, which is a copy of Exhibit A-24 (JES*l), Proposed Nuclear Decommissioning Surcharges.
- 4.
The surcharge amounts ~n Exhibit A shall be implemented for service rendered on and after the first day of the calendar month following the Commission's order in this case and will continue until revised by the Commission.
- 5.
Attached hereto as Exhibit B to this Stipulation is a summary of pertinent decommissioning funding practices ~o which the undersigned parties have agreed for purposes of this Stipulation.
Decommissioning funding practices were originally included in the Commission's order dated August 26, 1986 in Case No. U-6150, *tn the Matter of the Establishment and Treatment of Nuclear Plant Decommissioning Funds* and the Commission's.order dated December 2, 1986 in Case No. U-8536, *tn the Matter of the Application of Consumers Power Company for Authority to Establish Provisions to Fund Nuclear Power Plant Decommissionings.* Exhibit B sets forth those practices, as revised.to.
reflect current IRS, NRC, and MPSC requirements.
The undersigned parties' request that the Commission approve the revised Decommissioning Funding Practices for Consumers set forth in Exhibit B.
4
- 6.
Attached hereto as Exhibits C and D are summaries of the pertinent information used to calculate the annual decommissioning provision of
$19,372,800 for Big Rock and $25,464,400 for Palisades.
Exhibit C to this Stipulation is a copy of Exhibit A*l9 (TLS*S), Information Necessary to Obtain an *IRS Schedule of Ruling Amounts for Big Rock.
Exhibit D to this Stipulation is a copy of Exhibit A-20 (TLS-6), Information Necessary to Obtain an IRS Schedule of Ruling Amounts for Palisades.
This information was relied upon by the parties to determine the surcharge amounts and is subject to the acceptance arid approval of the Commission. It is a condition of this Stipulation that the Commission will expressly rely upon Exhibits C and D.
- 7.
The signatories to this Stipul~tion agree and understand that this Stipulaton does not limit any party's right to take other or different positions on similar issues in other administrative proceedings, or*appeals related thereto:
Each signatory agrees not to appeal 0 challenge or contest a Commission order adopting this.Stipulation if the Commission accepts and approves* this Stipulation without modification.
The parties further agree and understand that this Stipulation is entered into for the sole and eXl)ress purpose of reaching a compromise among positions. of parties to this proceeding who are executing this Stipulation. All offers of settlement and discussions relating to settlement are and shall be privileged.
- 8.
This Stipulation is based on the facts and circWIStances of this case and is intended for final disposition of Case U-9668.
The signatories hereto
- request that the Commission grant prompt approval of this Stipulation. If this Stipulation is not approved by the Commission without change, this Stipulation shall be void in all respects, shall be deemed to be withdrawn, shall not be a part of the record in this proceeding, and shall be without prejudice to the pre-negotiation positions of the parties.
- 9.
The Commission Staff certifies that this Stipulation is reasonable and in the public interest.
5
- 10.
The signatories hereto agree to waive Section 81 of the Administrative Procedures Act of 1969 (MCL 24.281) as it applies to the issues in this proceeding, if the Commission approves this Stipulation without modification.
6 WHEREFORE, the parties hereto respectfully request the Commission to approve this Stipulation and make it effective in accordance with its terms by final order.
MICHIGAN PUBLIC SERVICE COHMISSI STAFF by~~~Ez::._--=:::_~~~:i-~~~
Da d oges Assistant Attorney eneral 1000 Long Blvd., uite ll Lansing, MI 48910 CONSUMERS POWER COMPANY by 4M:#vef Oz~
H. Richard Chambers 212 West Michigan Avenue Jackson, MI 49201 RESIDENTIAL RATEPAYERS CONSORTIUM ).
by k~?.f.vt Diane R. Royal 115 West Allegan Suite 210 Lansing, MI 48933-1712.
ASSOCIATION OF BUSINESS ADVOCATING TARIFF EQUITY by ---------------------------------
Joseph R. Assenzo Hill, Lewis 200 N. Capitol Avenue, Suite 600 Lansing, MI 48910 Date
,5"--~-t,'
Date --------
l 2
3
- 4.
5 6
7 8
9 10 11 ll 13 14 13 16 Exhibit A to Stipulation CONSUM!RS POWEi COHPANY Pt'Opo1ed Nuclear Decoami11ionin1 SurchAr1e1 (a) leaidencial Service laces A*l, A*2, A*3, A*4, A*5 Cenerel Service lace1 8, l*l Cenerel Service iace1 C, 1*2, t-4 (C)
Primary Service lace 8*1 Primary Service laces D, 1*3, CC*l, CC*2, E*l,
!*2, !-4, t, F-1, I
!leccric Heaciaa Service !Ace CH WaceT H.. ciaa Service lace H Ti..-of-Day Farm Irriaacioa lace II Primary Eleccric Furnace !Aces J, J*l Secoad&ry PY811ia1 Servic* Ltce PS*l Pri.. ry PY8pia1 Sel"Vice lace PS-2 Primary Puapiac Service lace PS-3 Str**cliahc1aa Service l&ce L-l Str.. cli1hcia1 Ser'lice I.at** L*2, L*l Area I.i&Acina Ltce L*4 aa390-12-uo1 Caa* No...
u_-9_6_6... a...,_,..._-.!'""'-
Ezhibic A*
(JES*l)
Wi tn* 11 -.J_t __ s_a_v_o.-i.-e ___ ___
Dace Augu1t 1990 Paa*
l of l Su!'c:harse*.
(b)
$.0016.18
- 001813
.001685
.001716
.001351
.001395
.001523
!001813
.001332
.001432
.001496.
.* 001151
.000980
.000980
.000980
.001134
Case No. U-9668
!zhibit B to Stipulation
- DECOMMISSIONING FUNDING PRACTICES FOR CONSUMERS POYER COMPANY Page l of 3
- 1.
Consumers will file four copies of tariff sheets indicating the approved surcharges with the Commission within thirty days of the date of the Commission's order approving the surcharges.
- 2.
The method of funding. the decommissioning cost of Consumers' nuclear power plants shall be by the means of external trust funds.
Two separate external trust funds have been set up for each plant and segregated from Consumers' assets and outside its control.
The external trust funds shall be i.ised solely for the payment of the costs incurred for* decommissioning nuclear power plants of Consumers, its successors or ass*i~s, and to P8;Y administrative and other incidental expenses, inclt,\\4ing taxes, if applicable,
.of the funds.
One fund is a Nuclear Decommissioning Trost Fund (Section 468A tr:ust},* as defined in Section 468A of the Internal Revenue Code of 1954, as amended (the Code), and the second fund is *a trust fund (Non-Section 468A trust) to receive payments above the amounts which are permitted to be placed in the Section 468A trust.
Consumers shall fund these trusts by charging in its rates surcharges for nuclear plant decommissioning.
~.
_3.
Consumers shall_ practice federal income tax normalization (deferred*
taxes) for book accounting and ratemaking purposes regarding book/tax timing differences, if any, ~pplicable to its provision for nuclear plant decommissioning costs coincident with rate recognition of such provision.
- 4.
Consumers. shall pay to the Section 468A trust with respect to each year for which a provision for nuclear plant decommissioning is in effect, the lesser of the revenues from such provision or the jurisdictional portion of the Ruling Amount for such year.
The balance remaining, if any, shall be paid into the Non-Section 468A trust.
Such payments shall be made on or before the
Page 2 of 3 21st day of the monch following the month in which the billings for nuclear plant decommissioning are made.
- 5.
Consumers shall file with the Commission wichin 30 days of filing its preliminary decommissioning plan for Big Rock with the Nuclear Regulatory Commission, but in any event no later than March 31, 1995, a report on the adequacy of the existing annual decommissioning provision for Big Rock and Palisades, if then owned by Consumers.
Any person desiring copies of this report shall, upon request, be furnished with same by Consumers.
Should any person petition the Commission for a hearing on the appropriateness of the annual decommissioning provision, and upon good cause shown, the Commission may commence a hearing to be conducted in accordance with the Administrative Procedures Act, 1969 PA 306, MCL 24.201, ~
~.; MSA 3.560(101), !,t ~*
- 6.
'Ole report to the Commission described in paragraph 5 shall include a review of:
- a.
fund adequacy in light of the amount needed for decommissioning;
- b.
inflation rates;
- c.
fund earning rates*;
- d.
remaining life of nuclear generating units;
- e.
requirements of other taxing and/or regulatory bodies;
- f.
administrative and incidental expenses of the fund;
- g.
measures Consumers anticipates will be used to control the* costs of decommissioning, including the identification of qualified contractors and the role of competitive bidding in the selection of contractors.
- 7.
Consumers shall promptly request from the Internal Revenue Service a schedule(s) of annual amounts for nuclear plant decommissioning (the "Ruling Amount(s)") under Section 468A of the Code.
Jurisdictional schedules may be requested. It shall further be the obligation of Consumers to seek to
Page 3 of 3 minimize the payments of taxes with respect to jurisdictional amounts collected for decommissioning.
- 8.
Each year Consumers will file, under this case number, each trust's annual financial statements and audit report, if any, with the Commission.
Upon request,.such statements and reports will also be provided to any person.
Each trust shall meet the following objectives:
- a.
'nle trustee shall optimize after-tax earnings over the life of the trust, giving consideration to liquidity, risk, diversification, and other prudent investment objectives.
'nle trustee shall not invest in any securities issued by Consumers, its successors or assigns.
'nle trustee of a Section 486A trust shall limit investments to those allowed by Section 468A of the Code and the regulations thereunder.
- b.
'nle trustee shall have a net worth of at least stoo million.
- c.
No part of the assets of the trust may be used for, or diverted to/
any purpose other than to fund, in whole or in part, the costs of nuclear plant decommissioning or to pay administrative and other incidental expenses, including taxes, if applicable, of the fund.
- d.
If any part of any contribution made to the trust is determined by the Commission to be in excess of the amount actually expended for decommissioning, after decommissioning has been completed, the excess jurisdictional amount.shall be refunded to Michigan ratepayers, as determined by the Commission.
Should the amount contributed'. to the trust be insufficient to cover the costs of decommissioning Consumers may petition the Commission for relief.
- e.
'nle trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements and transactions, and all accounts, books and records relating thereto shall be open to inspection and audit at reasonable times by Consumers, its designee or the Commission.
'nle Commission shall be notified by Consumers prior to any such inspection or audit.
'nle Commission may direct Consumers to conduct an audit or inspection.
- f.
'nle trust agreement shall be administered, construed and enforced according to the laws of the State of Michigan.
- 9.
Consumers shall keep the Commission informed of contractor prequalification, bidding, regulatory, operational and financial milestones of decommissioning of Big Rock, and Palisades,* if then owned by Consumers, on a timely basis once information becomes known to Consumers Power.
Case No. 0-9668 Exhibit C to Stipulation CONStJKERS PO\\l'Ell COMPANY C.-* No.
Exhibit Vlt:n***
Dace Page No.
Infocaacion N*c****ry co Obcain an
- IRS Schedule of Ruling Amounc.s for 11g R.ock Point U*9668 A*
(TLS*5)
T LS!monaen Augu.c, 1990 l of 2
- a.
Th* amount of deco1111issioning coats that are co be included in Consumers Pover's coat of sesvice for each taxable year.~ing ch* period beginning January l, 1991 and ending Decemb*r 31, 2000 is co b* based on ch*
surcharge races included u Exhibit A of ch* order.
Th* surchargu vere calculated co initially yield $19,372,800 annually, based on **ti.maced 1991 electric sales.*
- b.
Th* proposed method of decommissioning is ch* prompt removal/dismantling 11echod. *
- c.
Th* eatimated year 1n vhich substantial decommissioning costs vill first be incurred 1s 2000.
- d.
Estimated year in vhich deco111111issioning vill b* subatancially completed is 2016.
Th* tocal **Cimaced cosc of decomilissioning expressed in current dollars (1~89 dollars) for-Michigan jUrisdiction is $160,343,431.
- f.
The to cal HCimated COSC of decommissioning exprHHd in fucure dollars for Michigan jurisdiction is $414,930,924.
- g.
Listed below for each taxable year iri ch* period chat 'begins vich the
- sci.maced year in vhich subacancial decommissioning coat vill first be incurred and ends vich the utimaced year in vhicb ch* decommisaioning of the nuclear po¥er plant vill be substantially complece, are ch* **ti.mated future coat of decommissioning expressed 1n future dollars at ch* time of expend! tur* :
II.A:
'QIS:
IA&t
~SZIS:
IA4':
~HSi 2000 7,927,!170 2006 51,471,178 2012 4,!147,445 2001
- 14. 3!15. 771 2007 3,382,132 2013 4,824,435 2002 1.5,231,473 2008 3,!188,442 2014
!I, 119
- 1!14 2003 17,428,976 2009 3,807,337 201.5 5,430,968 2004 56,173,975
.2010 4,039,584 2016 3,366,707 2005 209,951,137 2011 4,285,640
CONSUKEU POVER. COKPAlf'!
C.H No.
Exhib1c qicnesa Dace Page No.
Ia.tormacion Necessary co Obcain an IaS Schedule of Ruling Aaouncs for Big Rock Poinc 0*9668 A*
{n.5*5)
T LS'iionaen Auguac, l990 2 of 2
- h.
Th* HCizaaced deco111111sdoning coac expresaed in 1989 dollars, VH. converced co a tucura **Ci.maced 'decoaaiuion1ng cosc in yaar 2000 dollar.,.u.sing an umual 1nflacion rat* of 6.; 1' compounded amfu.ally, u.sing ch* following equacion:
FV - Eacimacad decommissioning cosc expressed in year 2000 dollars PV -* Eacimaced decoaaisdoning cosc exprHa*d in l989 dollars 1 - Inflation race of 6.lt
.n
- Number of years {2000
- 1989)
FV -
P"1 Cl + i)n
- i.
Th* assumed afcer*cax race of reeurn co be earned by ch* amouncs collected for decoaaissioning is 7.lt.
J.
Th* propo**d period 0"'19r vhicih decommissioning coses vill be included in ch* cosc of seronce i* J&rN&r'f t; 1991 chrough December 31, 2000.
During Chis cill9 period a variable amounc deco11111is*ioning cosc vill be included in coac of **r"'ic* depending on ch* cocal amounc o! *l*c~ic sales *. Thia vill be calculaced u.sing cha projected. sales for 1991 and an escim&ced annual decolllllisaioning cosc o~ $~9,372,800._
- k.
11l*.. cizaaced dace on which Ch* plane will no longer be inc'ludad in ch*
coac of **r?ice i* Kay 31, 2000.
- l.
Th*.. ciaaced year in which Ch* plane vill no longer be included in ch*
co*c of *aar?tca, baaed cm Ch* firsc racem*k1 ng USUlllptiona chat vere uaed by Che eo..t.aicm in escabliahing or approving rat** during Che first racemak.ing proc:e-.ding in which Ch* nuclear pover plcc vu included in Co11S1mer* Power'* race bue vu l912.
- 11.
Th* Commiaaicm relied upon ch* decormiuioning coac acudy prepared by TLC Engineering, daced Karch 1990, in decemining Che amount of dec011111iuioning coses co be included in Consuzaers Power'* coat of service.
Case tio. U-'IC>C><<t Exhibit D to Stipulation CONSUMERS P0\\1Ell COMPAlf'i Cue No.
Exhibit
\\11tnesa Dace Page No.
Information Necessary to Obtain an IRS Schedule of R.uling Amounc.s for Palisades U*9668' A*_(Tt.S*6)
T L Simonsen Augwsc, 1990 l of 2
- a.
Th* amount of decommissioning coses we are co be included in Consumers Power's cosc of service for each taxable year during the period beginning January l, 1991 and ~nding December 31, 2007 is co be based on the surcharge races included as Exhibit A of the order.
nie*surcharges*were calculated to initially yield $25,464,400 annually, based on estimated 1991 electric sales.
- b.
'th* proposed method of decommissioning is the prompt removal/dismantling method.
- c.
Th* estimated year in which substantial decommissioning coses will first be incurred is 2007.
- d.
Estimated year in which decommissioning will be substantially completed is 2018.
- e.
The total estimated cost of decommissioning for the Michigan jurisdiction expressed in current dollars (1989 dollars) is $308,314,149.
- f.
!he total escimacad cost of decommissioning for cha Michigan jurisdiction expras~ed in fucure dollars is $1,150,068,822..
- g.
Uscecl below for each tax.able year in the period we begins vith the estimated year in which substantial* decommissioning cost vill first be incurred and ends vith the estimated year in which cha decommissioning of the nuclear pover plane will be substantially complete, are cha estimated fu:Ure cost of decommissioning *Xllressed in f~cure dollars at the time* of eltl'encli Cl.Ir*:
IaG i;g~s;
- ~
~g~s; 2007 27,536,390 2013 233,196,328 2008 36,385,044.
2014 99,004,816 2009 41,493,523 2015 7,061,773 2010 U0,259,002 2016 7,485,479 2011 273,791,395 2017 7,934,608 2012 290,218,878 2018 5,701,586
CONSllMER.S PO\\l'Ell COMP>JfY Cue No.
ExhibiC V1tnesa Dae*
Page No.
In.f ormacion Necessary co Obtain an IRS Schedule of Ruling Amounts for PalisadH U*9668 A*_(Tt.S*6)
T L Simonsen Augusc, 1990 2 of 2 *
- h.
Th* escim&cad dacommissioning cos.c expressed in 1989 dollars, was converud to a fucure escimaced decommissiofting cosc in year 2007 dollars, using an
&ZmU&l inflacion race of 6.0\\ coarpounded armu.ally, u.sing th* following
. equacion:
FV - £.lei.maced deccimmissioning cosc expressed in year 2000 dollars
'lV - Escimaced decommissioning cosc expressed in 1989. dollars i
- Inflacion race of 6.0\\
n
- Number of years (2007
- 1989)
FV - PV*(l ~ i)n
- i.
Th* assumed after-tax race of recurn co b* earned by che amou.ncs collected for decommissioning is,,7. l,.
- j.
- The prol'osed period over vhich decoaimissioning cosc.t vill be included in ch* cosc of service is January l, 1991 through December 31, 2007.
During chis cime period a va:iable amounc deco11111issioning cosc vill be included in cosc of service del)ending on the tocal amounc of eleccric sales.
This vill be calculaced using the projecced sales for 1991 and an estimated annual decommissioning cost of $25,464,400.
k~
Th* escimaced daca on vhich the plane vill no longer be included in the cosc of service is March 13,.. 2007.
- l.
Tha escimacad dace on vhich cha plmc vill no longer "b* inclw:iad in the cost of service, b&sed on the firsc racemaking assumpcions chat were used by the Colllllli.ssion in escablishing or &l)l)roving races during the firsc racemald.ng proceeding in which cha nuclear iiovar iilanc vu included in CoUSlmers Power's raca b&se vu December 31,'2005.
- m.
The Commission relied Ul)On the decolllllli.ssioning cosc st:Ueiy prel)ared by TLC Engineering, dacad March 1990, in determining the amounc of decommissioning cosc.s co be included in Cons\\mlers Paver's case of service.
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the Matter of the Application of CONSUMERS POWER COMPANY for Adjustment of its Surcharges for Nuclear Power Plant Decommissioning
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SUPPLEMENTAJ. 5'1."IPULATION Case No U-9668 EXHIBIT B At a hearing on May 2, 1991 Consumers Power Company ("Consumers"), the Michigan Public Service Commission ("Commission") Staff and the Residential Ratepayer Consortium ("RRC") jointly sponsored a Stipulation (the "May.2 Stipulation") to resolve all issues in Case No U-9668.
The Association of Businesses Advocating Tariff Equity
("ABATE")
filed a
Statement of Non-Opposition.
On July l, 1991 the Commission issued its Order Returning the Stipulation:
In its Order,.the Commission directed the. parties to explicitly address certain matters related to the effect of the proposed sale of the Palisades Plant on decommissioning, if agreement could be reached, and returned the Stipulation to the parties for further action. For purposes of settling the issues in the above-captioned proceeding, subject to the acceptance and appro~al of the Commission without modification, and without prejudice to the pre-negotiation position of the parties, the signatories hereto hereby supplement the May 2, 1991 Stipulation and agree and stipulate as follows:
9668\\Sap&ip.82A
2
- l.
. Separate Palisades and Big Rock Point: nuclear decommissioning surcharges shall be implemented.
The separat:ion of nuclear power plant decommissioning surcharges for each rate class by nuclear facility shall be as set forth in Exhibit E to this Supplemental Stipulation. Exhibit E is a copy of Exhibit A-26 (JES-3). *Column (b) of Exhibit E shows the total surcharge amounts as set forth in Exhibit A to the May 2 Stipulation.
Columns (c) and (d) of Exhibit E show the allocation of the total surcharge amounts in Column (b) using the allocation percentages of 56.79% to the Palisades external trust funds and 43.21% to the Big Rock Point external trust funds, respectively.
The Palisades Nuclear Decommissioning surcharge amounts set forth in Column (c) and the Big Rock Nuclear Decommissioning surcharge amounts set fort:h in Column (d) shall be implement:ed for service rendered on and after the first day of the calendar month following the Commission's order in this case.
- 2.
Consumers has reached an agreement, subject to certain contingencies, to sell the Palisades plant to the Palisades Genera~ing Company (PGC) and to purchase the electricity generated by that facility.
Consumers states that the PGC transaction is designed such that on and after the date PGC takes title to the Palisades.plant Consumers will pay decommissioning charges to PGC.
The signatories hereto agree *that:, if the sale is consummated, the Palisades Nuclear Decommis~ioning surcharges set forth in Column (c) of Exhibit E will be terminated upon consummation of the sale. Thus, effective on. the date of the sale of the Palisades plant to PGC, the remaining nuclear decommissioning surcharges will be the Big Rock Nuclear Decommissioning surcharges set forth in Column (d) of Exhibit E.
9668\\Sup&ip.82A
3
- 3.
The signatories hereto agree to amending paragraph 1 of Exhibit B to the May 2 Stipulation to read:
"l.
Consumers will file four copies of tariff sheets indicating the approved surcharges with the Commission within thirty days of the date of the Commission's order approving the surcharges.
If the sale of the Palisades plant to PGC is consummated, Consumers will file with the Commission, within thirty days of the date PGC takes title to Palisades, four copies of tariff sheets indicating revised surcharges which do not include Palisades decommissioning surcharges, effective on the date the sale is consummated."
- 4.
Pursuant to the Commission's Order, dat~d August 26. 1980 in Case No. U-6150, the method of funding the decommissioning costs for Consumers' nuclear power plants is by the means of external trust funds.
Two separate external trust funds have been set up for the Palisades plant, segregated from Consumers' assets and outside its control. One fund is a Nuclear Decommissioning Trust Fund (Section 468A Trust) as defined in Section 468A of the Internal Revenue Code of 1954, as amended.
The second fund (Non-Section 468A Trust) is a trust fund to receive payments above the amounts which are permitted to be placed in the Section 468A Trust.
Consumers funds these trusts by charging in its rates surcharges for nuclear plant decommissioning. Consumers asserts that, if the sale of the Palisades plant takes place, Consumers Power intends to (i) transfer all right, title and interest it holds as beneficiary or trustor of the Section 468A and Non-Section 468A Palisades decommissioning trusts to PGC, or (ii) transfer the trust assets or cash equal to such assets to a Section 468A Trust and a Non-Section 468A Trust established by PGC for Palisades plant decommissioning, with the transfer structured to minimize adverse tax consequences, if any, under the tax laws then in effect.
The transaction contemplates that the trusts created by PGC shall be subject to substantially the 9668\\Sup&ip.82A
4 same restrictions and conditions as Consumers' current decommissioning trusts, subject to any required approval of the appropriate regulatory agencies and changes in law that may occur.
Following the consummation of the PGC transaction, Consumers will file a report with the Commission within 30 days setting forth the amounts of the Palisades Section 468A and Non-Section 468A trusts transferred to PGC, the costs, including tax costs, if any, resulting from the transfer, and other relevant information requested by the Comm.ission, together with copies of the PGC trust agreements.
If any taxes or transaction costs are due bec~use of the transfer of the funds from Consumers to PGC, Consumers agree~ that either it or PGC will pay those costs.
Consumers agrees that any taxes or transaction costs it pays will not diminish the funds or be part of the cost of service to its ratepayers.
Consumers commits that in the event of the sale of Palisades to PGC, that Consumers will, as a shareholder of PGC, exercise a reasonable level of supervision and diligence with respect to the trust funds established by PGC.
- 5.
Following the completion of decommissioning, Consumers will file a
report with the Commission setting forth the amounts expended on decommissioning, accompanied with supporting documentation, and whether any excess in the decommissioning trust funds remain. If decommissioning funds for.
the Palisades plant are ultimately found to be in excess of amounts needed for decommissioning by the appropriate regulatory agency, any excess amounts returned to Consumers by PGC will be reported to the Commission and will be distributed in accordance with an order of the Commission.
9668\\Sup&ip.82A
5
- 6.
The signatories to this, Supplemental Stipulation agree and understand that the May 2 Stipulation, as supplemented by this Supplemental Stipulation, does not limit any party's right to take other or different positions on similar issues in other administrative proceedings, or appeals related thereto.
Each signatory agrees not to appeal, challenge or*contest a Commission order adopting the May 2 Stipulation, as.supplemented by this Supplemental Stipulation, if the Commission accepts and approves the May 2 Stipulation, as supplemented by this Supplemental Stipulation, without modification.
The parties further agree and understand that the May 2 Stipulation, as supplemented by this Supplemental Stipulation, is entered into for the sole and express purpose of reaching a compromise among positions of parties to this proceeding who are executing this Supplemental Stipulation. All offers of settlement and discussions relating to settlement are and shall be privileged.
- 7.
The May* 2 Stipulation, as supplemented by this Supplemental Stipulation, is based on the facts and circumstances of this case and is' intended for final disposition of Case U-9668.
The signatories hereto request that the Commission grant prompt approval of the May 2 Stipulation, as supplemented by this Supplemental Stipulation. If the May 2 Stipulation, as supplemented by this
- Supplemental Stipulation, is not approved by the Commission without change, the May 2 Stipulation, as supplemented by this Supplemental Stipulation, shall be void in all respects, shall be deemed to be withdrawn, shall not be a part of the record in this proceeding, and shall be without prejudice to the pre-negotiation positions of the parties.
9668\\SupSOp.82A
e 6
- 8.
The Commission Staff certifies that the May 2 Stipulation, as supplemented by this Supplemental Stipulation, is reasonable and in the public interest.
. 9.
The signatories hereto agree to waive Section 81 of the
- Administrative Procedures Act of 1969 (MCL 24.281) as it applies to the issues
.in this proceeding, if the Commission approves the May 2 Stipulati9n, as supplemented by this Supplemental Stipulation, without modification.
9668\\Sup.Stip.82A
7 WHEREFORE, the parties hereto respectfully request the Commission to approve the May 2 Stipulation, as supplemented by this Supplemental Stipulation, and make it effective in accordance with its terms by final order.
MICHIGAN PUBLIC SERVICE COMMISSION STAFF vid Voges Assistant Att rney General 1000 Long Bl d, Suite 11 Lansing, MI 48910 CONSUMERS POWER COMPANY By ---~-~----~~ef-~____;;;:;..;..;.......;....__U-._. __
H Richard Chambers 212 West Michigan Avenue Jackson, MI 49201 RESIDENTIAL RATEPAYERS CONSORTIUM Allegan, Suit Lansing, MI 48933-1712 ASSOCIATION OF BUSINESSES ADVOCATING TARIFF EQUITY By ~----------------
Joseph R Assenzo Hill Levis 200 N Capitol Avenue, Suite 600 Lansing, MI 48910 9668\\SupStip.82A Date /c)- 't--9' /
Date
/0 91 Date -------
~.
- .... _~_
CASE NO. U-9668 Exhibit E to Supplemental Stipulation CONSUMERS POW!Jl COMPAHY Separation of Surch.&r1** by Nuclear Facility Total Case No.-U-_9_6_6_8...._ _ ___,_
Exhibit A-(JES-3)
Witness J E Savoie Date August l990 Page
.-l_o_f...._.l...... _~~
56.79%
43.21%
Rate (a)
Surcharge* Palisades* Big Rock*
(b)
(c)
(d)
Residential Service Rates A-1, A-2, A-3, A-4, A-5
$.001618
$.000919
$.000699 2
Ceneral Service Rates B, l~l J
Ceneral Service Rates C, 1-2, E-4 (C) 4 Primary Service Rate B-1 5
Primary Service ~tes O, i-3, CC-1, CC-2, E-1, E-2, E:-4, *r, F-1, I 6
Electric Heating Service late CH 1
Water Heating Service Rate H 8
Time-of-Day Farm Irrigation !Ate II 9
Primary Electric Furnace lat** J, J-1 LO Secondary Pumping Service !Ate P!-1
.l Primary Pumping Service a.ca P!-2 12 Primary Pumping **serv~ca !At* PS-3 13 Screeclighting Service lace L-1 14 Streetlighting Service latal L-2, L*3 15 Area Lighting R.te L-4
~~
Unmetered Service Rate UI
~E:Jtpresaed in dollars per kWh.
e:xo 390-12-Rao i
.001813
.001685
.001716
.001351
.00159'
.001525
.001113
.001532
.001432
.001496
.0011'1
.0009_80
.000980
.000980
.001134
.0*01030
.000957
.000975
.000767
.000906
.000866
.001030
.000870
.000813
.000850
.000654
.00055 7
.000557
.000557
.000644
.000783
.000728
- 000 74 l
.000584
.000689
.0006S9
.000783
.000662
.000619
.000646
.000497
.000423
.000423
.00042J
.000490
STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the matter of the application of CONSUMERS POWER COMPANY for adjustment of its surcharges for nuclear power plant decommissioni~g
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Case No. U-9668 STATEMENT OF NON-OBJECTION
-4!' *.
The Association of Businesses Advocating Tariff Equity does not object to the entry of the Stipulation executed *by consumers Power Company, the Staff.of the Miehigan Public Service commission, and the Residential* Ratepayer Consortium in the above captioned case.
Dated:
October 25, 1991 L021558 Respectfully submitted, Association of Businesses Advocating Tariff Equity By Its Attorneys HILL LEWIS Timothy P. Collins (P34375)
Joseph f* Assenzo (P41405)
\\-:
r b..e. :t_,..
. -*-JI..
f-- *:r-\\.::...t<-v\\.._,~
200 N. Capitol Avenue, suite 600 Lansing, Michigan 48933 Telephone:
(517) 484-4481
,