ML19347E689

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Testimony of H Diekamp Re Need of Met Ed for Full Requested Rate Relief
ML19347E689
Person / Time
Site: Crane 
Issue date: 12/19/1980
From: Dieckamp H
METROPOLITAN EDISON CO.
To:
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ML19347E637 List:
References
NUDOCS 8105130228
Download: ML19347E689 (32)
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{{#Wiki_filter:s_c o ME/PN Stotcmant J-l / r ' Witness: H. DiecKamp .,_s (j Testimony of H. Dieckamp My name is Herman Dieckamp. I am acting President of Metropolitan Edison Company and President of General Public Utilities Corporation, the parent company of Met-Ed an6 Penelec. My testimony today is submitted on behalf of Met-Ed and Penelec. The* purpose of my testimony is to make it clear that Met-Ed must be granted its full requested rate relief of $76.5 million to cover its cash requirements from now until the Spring of 1982. All of our claimed rate relief is fully justified regardless of the particular ratemaking methodology employed. The cash needs of the company demand this level of rates. Further, it.hjas become clear that the need for that rate relief is so critical that we simply cannot wait until late April to begin collecting those revenna-' These proceedings must be expedited. Our ability to provi6e safe and adequate service and to maintain even minimal credit for Met-Ed is rapidly evaporating because our minimum spending obligations will exceed the cash resources available from customer rates. The Commission's Order of May 23, 1980, stated its inten-tion tc maintain ME's viability. There has been unanimous agree-ment in this proceeding that the resumption of generation of TMI-1 O slos uo @ n u n

3 at tho ocrlisst possiblo dato is of asjor inportanca to cucto-mers. Numerous studies have demonstrated that insolvency is no () solution and should be avoided. We are concerned because it appears that the parties to this proceeding fail to appreciate that, in the absence of early substantial rate relief, ME's viability cannot be maintained, resumption of TMI-l generation will inevitably be delayed and insolvency will be forced upon ME. For almost 22 months, we have struggled to avoid these results. The matter is now out of our hands. Without the requisite increase in rates, ME will not have the cash and credit resources to meet its required cash expenditures. After the Commission turned down Met-Ed's request for extraordinary relief, the banking group -- consistent with their prior testimony -- very significantly reduced the credit available to Met-Ed. A formula was applied which allowed borrowings only () against defined " Liquid Assets." (Letter of September 5, 1980; Exhibit E-19-1) Under that formula, the bank credit which is available to ME decreases by about $5 million each month. We then wrote to the Commission and described the reductions in expendi-tures we would have to make -- including many very significant reductions in spending directly related to customer service. (Letter of F. J. Smith to the Commission; Exhibit E-25). Subse-quently, we have written to the Commission each month to describe the status of our cash and credit position. (Letters of October 13, November 14 and December 17, 1980; Exhibits J-2, J-3 and J-5) By letter dated January 16, 1981, which is being of fered as i g U

Exhibit J-6, I cgain rcparted to tha Commissien stating tha credit situation at year-end 1980 and the projected levels of spending in

D [G Page 5 B. Reconciliation Electrical System Operations and Maintenance Cancellation of plans to recall 110 Operations and Maintenance personnel laid off on 10/31/80 (includes employee benefits) s 2.1 Reduction in scope of required station outages and other maintenance costs 1.0 Reduction in the planned tree trimming level which was the minimum accemptable 1.3 level Reduction in the planned expenditures for Load Management Program. This results in no planned expenditures for this putpose .9 All other reductions .1 Total Electrical System Operations and Maintenance s 5.4 () System Construction Existieg Fossil Generation 1.7 Reduction and deferrals of required projects including s.3 million associated with the Portland water chemistry project 4 Transmission and Distribution New Customers 2.9 1981 Minimum Requirements Level System Reinforcement and other 3.7 Reduction in planned projects and major equipment purchases that were required for reliable operation of the electrical system. C:) 1

i l l() Page 6 Load Management .5 Deferral oi required expenditures for special metering and other equipment associated with the Load Management Pregram 1 Total T&D s 7.1 General .4 Reduction in planned purchase of minimum needs for tools and equipment Total System Construction s 9.2 TMI-l Operation, Maintenance and Restart 3.6 Reductions to required capital expenditures s .5 Total Change i 15.1 O I ~ -r-* =

=() l i .(_) Page 7 III. Comparison of 1981 Interim Austere Expenditure Level with Estimated 1981 Expenditure Level in the September 12, 1980 Letter 1981 Interim Estimated 1981 Austere Level in Level 9/12/80 Letter Change A. Expenditures Electric System Operations and Maintenance Generation s 24.0 8 24.0 s Transmission and Distribution 21.8 22.0 (.2) Administrative and General 33.8 31.3 2.5 Total 79.6 77.3 2.3 System Construction New Generation .3 3.0 (2.7) Existing Fossil Generation 2.1 3.4 (1.3) Nuclear Fuel 9.5 7.6 1.9 Transmission and Distribution New Customers 9.5 4.4 5.1 System Reinforcement and Other 7.7 8.6 (.9) Load Management .8 (.8) Total T&D 17.2 13.8 3.4 General .4 .3 .1 Non-Electric .2 .3 (.1) Total 29.7 28.4

1. 3 TMI-1 Operations, Maintenance, Restart O&M 21.2 17.0 4.2 Capital 10.3 8.4
1. 9 Total 31.5 25.4 6.1 TMT-2 Operations and Maintenance 9.6 8.5 1.1 Total Expenditures

$150.4 4139.6 s10.8 O

i l .( ) - Page 8 B. Reconciliation Electrical System Operations and Maintenance Conemaugh 8 .6 The austere spending level includes a reforecast for Conemaugh Outage Costs .6 The austere spending level includes a replanning of the station outages for 1981 Postage .3 The austere spending level anticipates a postage increase R&D .5 The austere spending level contains a more up-to-date forecast for R&D r*quirements All other changes .3 -~g Total Electrical System Operations and Maintenance $ 2.3 \\v/ Syster. Construction New Generation $(2.7) 9/12/80 level included $3.0 for Merrill Creek Reservoir project not in 1981 Interim Austere Level Existing Fossil Generatic, (1.3) The Interim Austere Spending level includes the deferral and cancellation of the less critical projects included in the 9/12/80 level Nuclear Fuel 1.9 Reflects a reforecast of the allocation of contractual purchase obligations to the GPU Operating Companies Transmission and Distribution New Customers 5.1 i System Reinforcement and Other (.9) l (~} Reflects the deferral of distribution system ) N-reinforcement projects from the September 12, 1980 plan i j l 1

Page 9 Load Management (.J2 The Interim Austere level defers all previously planned load management expenditures Total T&D s 3.4 General .1 Essentially the same expenditures Non-Electric Essentially the same expenditures (.1) Total 8 1.3 ~ TMI-1 Operations, Maintenance, Restart 6.1 The 1981 austere level reflects the latest forecast reflecting increased scope of modifications and an extended start update TMI-2 Operations and Maintenance 1.1 Reflectsthelatestforecasto5TMI-2 activities Total Changes $10.8 1 I i l l l

l l (" l \\~/ Page 10 Additional Comments on Customer Impacts from Austerity Spending Levels Continued electric system operating and maintenance expense re-ductions below a reasonable norm, together with construction expenditure reductions, will continue to cause steady detoriation of the physical facilities necessary to serve our customers. This deterioration, while not immediately noticeable to the cus-tomer, has already reduced levels of built-in reserves and safety-factors below normal such that failure of a single fac-ility, line or substation, has the potential of causing an outage to 2,000 to 5,000 customers for a period in excess of eight hours. Distribution facilities are still being operated for the most part at voltages below 34.5 Kv even though a significant portion of the distribution system has been undergoing rebuilding to accommodate the increased economies and loading of the higher voltage. This has resulted in decreasing our ability to provide multiple sources of power to many distribution customers, a practice long established by the industry to ensure continuous service. O-Underground networks in the major cities are aged and fully loaded with much of the equipment at the substations incapable of being repaired which causes outages or low voltage to these cus-tomers while equipment is being placed under emergency conditions. Personnel available to provide service directly to the customers -- T&D linemen, engineering technicians, maintenance men and the like have been reduced through attrition and layoff from approx-imately 1470 in 1974 to approximately 900 in 1981, or about 40% reduction. Reductions in the tree trimming program are a good example of these effects. Planned tree trimming expenditures will be re-duced by 81.3 million to a level of $1.5 million. This is less than half of that required for a reasonably normal program. A normal, minimum program would require approximately $3 to $3.5 million annually, and would provide for trimming on an average of once every five to seven years. The reduced level in 1981, com-pounded by the reduced effort in 1979 and 1980, amounts to only 35% of the effort required under a normal program and reflects a trimming schedule of once every 20 years. A direct result of the reduction in levels of tree trimming is apparent in the following statistics: OV

t \\ Page 11 1976 - Average outage per customer due to tree conditions, including major storms, was 21 minutes - Excluding major storms, tree-related outages totaled 119,500 customer hours. - 32% of total customer outages were tree-related causes. 1980 - Average outage per customer due to tree conditions, including major storms, was 257 minutes. - Excluding major storms, tree-related outages totaled 256,000 customer hours. - 77% of total customer outages were tree-related Causes. Average customer outage time due to tree-related causes has increased by 12 times from 1976 to 1980. j CE)

l s. l Mat-Ed Exhibit No. J-7 Docket No. R-80051196 Witness: H. M. Dieckamp FUNDS EMPLOT6D FOR TMI CLEAN UP [v~) l \\ In its September 18 order, the Commission directed that l Met-Ed provide the following information in this proceeding: A. Identification of the amounts disbursed for the non-insured cleanup and restoration costs at TMI since the accident and the anticipated expenditures for 1981 through 1893. B. Identification of the source of the revenues it has utilized for the cleanup at TMI since June 19, 1979, and the source intended to be utilized for clean up and restoration in 1981. While we believe that all of these inquiries have been respot.Jed to in various places in this record, it is the purpose of this testimony'to respond fully and directly to these questions. i l Expenditures: 1979, 1980 and Projections. It is important to characterize the kinds of expenditures which have been and will be incurred at TMI-2: First, there are those expenditures for activities required to address immediate concerns for public health and safety; maintain the shut down damaged reactor in a safe condition; and efforts necessary to insure public and worker health and safety in the near term. This category includes operation in compliance with the plant's technical specifi-cations and many support activities that are common to any nuclear facility, such as security, quality assurance and administra:ive functions. Except for items which reflect the i l effect of the accident, these activities are generally I ( {

() considered to be normal cperations and maintenance. These items, with minor exceptions, do not make any net progress on accomplishing a cleanup of the Unit 2 facility. The exceptions arise from the inclusion of activities that are inherent in maintaining a viable organization for accomplishing the scope of activities in this category or to fulfill fundamental requirements of the TMI-2 NRC license, both of which may be required for safety, in the near term. Second, these are those activities which we deemed to be necessary to fulfill our obligations in a responsible manner, e.g., those activities (which may be characterized as " cleanup") important for reducing intermediate and long-term threat to public and worker safety and those activities / necessary to comply with specific NRC requirements arisina of the accident. Third, there are the expenditures to clean up from the acciden't, i.e., to decontaminate the site and remove the fuel from the reactor. Fourth, there are the further expenditures to clean up from the te reconstruct and relicense the plant. This program wa's described in our letter of September 12, 1980 to NRC Chairman Ahearne (which was part of Exhibit E-25 l in this proceeding and which is Attachment 1 to this testimo'ny). The elements of the program are further elaborated in Attachment 2. Since that time, the NRC has responded with a Statement of Policy dated September 26, 1980 {} and a letter dated January 12, 1981, which are Attachment 3. w

() The most recent response basically affirms the need to maintain the minimum program, consisting of both actions to maintain the plant in a safe condition and some progress toward clean up, that is the basis for our planning. In 1980, we estimated the first area of expenses as being in the range of $17 million. With inflation, these costs will be in the range of $17 million to $20 million in 1981. This level of costs assumes no fundamental change from the present condition of the plant, i.e., no forcing emergency. With respect to the second area of costs, those directly related to clean up, in September of last year we reported to this Commission and to the NRC that we had reduced expenditures to an annual level of $7 million to $10 million. This is in full { compliance with the Commission's September 18 and 26 Orders. There were no expenditures included for restoration. The following chart summarizes these categories of expenditures since the accident and, as requested in the Commissions' Order, projects them forward through 1983: Expenditures Compelled To Operate The Plant Expenditure Expenditures For And Protect Public For Necessary Further Cleanup Health and Safety Clean Up And Restoration 1979 $ 35 $ J3 $0 1980 $ 17 $ 31 $0 Projected 1981 $ 20 $ 10 $0 1982 $ 21 $ 11* $0 1983 $ 22 $ 12* $0

  • Assumes no increase in cleanup activities over those plannned in 1981.

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.('T The above categorization was not developed until the .G! Commission entered its September 18 Order. Amounts for 1979 and 1980 are, therefore estimates of the amounts in these categories. Because of the demands of the system of accounts and the provisions of our insurance policies, we have booked these expenditures somewhat dif ferently from the above categorizations. On our books of accounts, the costs appear in this manner: Charged To Operations And Maintem.ance Expense Deferred Actual 1979 $3 $ 47 1980 $6 $ 42 Projected 1981 $9 $ 21 Os 1982 $10 $ 22 1983 $11 $ 23 Sources of Revenues. With respect to the source of revenues used for the cleanup, the Company received $88 million from its insurers through the end of 1980. This has been credited to the deferred account. Thus, through the end of 1980, the funds received from the insurance policies have been essentially equal to the amount of expenditures deferred since the accident. The amounts received have, however, exceeded the amounts expended solely for clean up because some of the activities which fall into the category of activities compelled for safe operation of the plant are now being reimbursed from insurance. () i

i (} With respect to sources of funds expected to be expended in - 1981, our projection is, as stated above, that approximately $30 million will be spent of which $20 million will be required for safe operation and $10 million for cleanup. Of these expenditures, aproximately $21 million will be paid from insurance funds and $9 million charged to expense. There will be no essential change in the size of the deferred account from year end 1980 to year end 1981. No customer revenues will be used to fund cleanup activities and, since no restoration activities will be undertaken, the same is true of that category of costs. Although the Commission's inquiry looks only through 1981, the levels of expenditures can be projected forward. Assuming the same level of work, i.e., about $60 million per year, and that about $40 million of this is recovered from insurance, the insurance will last through 1983. After that, an aaditional source of funding must be obtained to maintain the plant in a safe 4 condition. O F ,-,..a.,,, p._-, -.4 w. -,e_,._ . - -,.._,--.,.---,e, w-,

Attachmant 1 GENERAL O Mh Ebb = m':2"S= 201 2 O 6500 TELEX 136 482 ./ wm#s Dre::Ds:Numer 20: -263-6030y j Sep tember* 12, 1980 a I '.. I Tne Honorable John

  • F. Ahaarne, Chairman United States Nuclear Regulatory Commission j

Washington, D. C. 20355 I l Dear Chairman Ahearnet ~ I an writinE to. advise you of actions being taken by the D l wners relative to nII Unit 2. l l We have recently completed a review of our near-term planting for cleanup of that Unit. In that reviev ve considered many f actoi s including [ recent action by the Pennsylvania Public Utility Com=ission to deny the g request of Metropolitan Edison Co=pany for emergency rate relle 1.

However, a major determinant in developing ear revised plan was ou; unde rstanding of the schedule for f uture NRC actions on the cleanup. Tnat urderstanding i

is based on review of the recently issued draft Progra==atic Ir vironmen tal~ { != pact Statement, the NRC Plan for Cleanup Operations of THI-2 (FURIG 0698) and Mr. Lenton's letter of August 6,1980 to Mr. Arnold of CPU. 5 l Thos,e docu=ents, in conjunction -dth our experience with ) i RC action te date, have caused us, very reluctantly, to conclude that we should not rely on any significant regulatory guidance or definition of c:iteria or approval to proceed with major cleanup activities until co=plet i ion of the j fir.a1 PIIS. That co=pletion had been scheduled for late 1980 kt we under-s:and that serious consideration is being given to extending the period for l cocsents on the draf t PEIS vith resultant delay in its ce=pletion. Turthe:,1 the draf t PIIS indicates that even after issuance of the finel. statenant, ve cannot expect to have the definitive guidance and criteria required for. us to es tablish firm plans. Instead much of the cleanup criterks apparench-vill be developed in' the process of reviewing our proposals on 'a case by ce:e basis. We do not believe that such an approach permits ti=ely, effective progress. e We do not consider that this indicated regulatory approach letter to you of March I.,the =aximu= assurance of protecting the public healt My esrli provides 1980 and Mr. Arnold's letter te Mr. Denton cf et . lune 30, 1980, copy attached, identify our concern eith the extended schedu fet NRC action and addressed the actions we consider necessary ie, earlier cleanup. We vill cenment further in connection vith th to per=1: f e draft PII5.. y )J) pInoM O 1 l h j C g3ev Cenna! Pour

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Pcas 2 g l ,, Ur.ited States Nucitar Regulatory Commissics 1 i lO s, 1C differs' Bovever, recognizing that the controlling judgment of the 1 7 s and from ours en those issues, we cannot continue our current effort ractical expenditures to provide what we consider.to be the most rapid, t Accordingly, we are proceeding to adjust our efforts sa DfI-2 to, cleanup. I a level appropriate to the present and indicated situation while being careful to not adversely impact public health and safety. Specffically, .i the objectives of our revisad program are. e I 1. Maintain the plant in a sa.fe condition s-ich minimum but { l adequate operating personnel and site support staff. 2. Continue lir.ited decontamination of the Auxiliary Building - arear, lines, tanka. .j h i 3. Continue activities directed at cleanup of the Containment Building water (aump and reactor coolant system). 4 Continue carefully selected planning, engineering and i licensing activities aimed at containment Building dectn-ta=ination, fuel removal, support of licensing sube.ittals. 5. Support PEIS finalization. 6. Cogtinue develvp=ent of an appropriate Unit 2 Radiologd cal l Contrcls Program. [, Please note that we vill continue work to permit early cleanup of cent.u:inated water in the Containment Building and reactor cool /nt systen i even recognizing the NRC position that we are proceeding at our own risk. j Bowe ter, because of the NRC's present intent to not authorize ojeration of j the iubmerged Dezineralizer System until af ter completion'of the PIIS, we may :ut back overtime and other premium cost efforts. We also plan to j eent inue limited activities, such as additional contr.inment entzies, to pro"ide an improved basic for planning. i Tor completeneas in describing our situation, I think sone cornents r n the eff ect of recent Pennsylvania Public Utility Commission actions are helpful. 'Lne request of Metropolitan Edison Conpany for emergency rate relief, I to alleviate severe cash flow problems was recently denied by t?e Pennsylvadia Public Vtility Commission. This action in and of itself hampers Metropolitin, Edison Co=pany's ability to maintain the current level of effort on DfI-2. Novever, because some D'l-2 costs are covered by insurance and all DCI-2 costs are shared among Metropolitan Edison Comps =y and the other Ovne:a, that i=ps tt is not nearly as severe es it may initially appear. For eran;1a, our estina ta 1s that Metronolitan Edison's cash reouire: rents vill be reduced by about i l l $4 million dollars'over a six =onth period as a result of reducing the total expenditures on 2:1-2 by about 50:: or 527 millien during the ss::e period. Tne DCI-2 reduction is part of an overall progran to reduce O i 1 l

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i s The Rentrchio Jshn Fg hocrna, Chnirnan kptember 12, 1980',

Jnited States Nuclear Regulatory Con =/.ssion Page 3 0 Metropolitan Edison's cash requirements by $32 v.illion over th e next six to seven months. Our remaining 1.nsurance resources can be nor s effectival7 utilized to increase our cleanup efforts.once the NRC requirmatuts are j clarified. I think it is also it:portant to note that our program plans still envision an expenditure on TMI-2 of about $50 million pe r 7. ear. We have concluded that this course of action is the best, tad, indeed, p the only one open to us in view of the actions by the NRC and the Pennsylvasia Public Utility Con:=.ission.. We do not believe that the reducci,ms in our l ef forts in thez:selves, constitute any direct risk t.o health and safety. Rovaver, we also believe that the interests of public health rad safety. - l our ratepayers, and out investors all vould be better served by more promp dy establishing acceptable criteria for overall cleanup and in paTeicular, by l allowing us to proceed with cleanup of the contaminated wate'r <ts soon as possible. I note that Dr. Cunninghan of DOE expressed similar views in a letter -ated August 19, 1980 to Bon. Tom Bev111, Chairman, Sub :ounittee on Energy and Vater Levelopment of the House Co=nittee on Appropr Lations. I again urge that full' consideration be give.n to means to do tha { j We are advising your on-site staff of our detailed plans. However, I ! consider the significance of this action to be such that l uan ;ed to bring it to your personal attention. 3 We would. of course. be glad to meet with you to further discuss this matter if you desire. I '/ k very'.' y yours, 4j/, \\ S V.O ' dcA E 1 w.ar.p f ,/ h att s Mr. C. L. Jones, Secretary, Pennsylvania DER cc: t Chairman Susan M. Shanaman, PaPUC President George E. Barbour, NJ EPU e O i I. i i .) 1

l 4 ? /~ 's )T ACTIVITIES TO MAINTAIN THE PLANT IN A SAFE CONDITION The major activities included in this category are the following: ) 1. Provide required operation and surveillance of conditions of i plant equipment, systems and facilities. 4 2. Perform necessary maintenance (including minor modifications) of equipment and facilities. 3. Decontamination of Auxiliary Building as neces.sary to facilitate maintenance and operation of safety-related equipment. ~ 4. Processing of radioactive waste generated by this category of activities, including handling and shipment for offsite disposal. Shipment of some radioactive material that is in temporary storage on the site. 5. Radiological controls necessary to support this category of 1 activities including: surveillance of work in radiation areas; in-plant surveys and monitoring; personnel exposure, measurement and documentation; maintenance and calibration of equipment; emergency response capability and training. .I') Included in this activity is a continuation of the upgrading \\- of the radiological controls program to meet revised performance standards which have resulted from the TMI-2 accident. l 6. Measurement, analysis and documentation of the environmental impact of the facility. 7. Engineering functions incident to conduct of required operation and surveillance of conditions of plant equipment, systems and facilities. ) 8. Administer the technical and administrative interface with the regulatory agencies of the federal and state governments, including maintaining knowledge of current and proposed l regulatory requirements. 9. Provide technically oriented services to implement Quality Assurance, Training, Emergency Preparedness and independent [ Safety Assessment Programs. 10. Provide minimum required services in various support functions including fiscal management, security, industrial safety, facilities management, legal services, personnel administration, procurement and public communications. O

? -(y 11. Construct an interim solid waste storage facility. Tnis l ) facility is a Unit 1 restart commitment and is needed to upgrade the current marginally adequate solid radioactive waste storage capability. ACTIVITIES TOWARD CLEANUP The activities which fall within this category are: 1. Support finalization of the Draft Programmatic Environmental Statement (PEIS). The PEIS finalization requires technical information from the Company. Since this document must be completed to satisfy the National Environmental Policy Act before undertaking major cleanup activities, our support of the finalization of the PEIS in a responsive and timely manner is essential to the protection of public health and safety. The PEIS is scheduled to be finalized in early 1981. 2. Complete construction and startup of the Submerged Demineralizer System (SDS). This system is being installed to process Containment Building sump water and the water being circulated through the reactor coolant system. The processing of this water is a high priority activity to improve the assurance of public health and safety. It will be inappropriately delayed if the rs Company is required to suspend all work on the system. (-) 3. Continuation of the technical planning effort including the gathering of data on conditions inside the Containment Building and the development of criteria to be applied to cleanup activities. 4. Engineering to support licensing the completion of base line engineering documents. Acceptability of tecnnical plans and criteria for cleanup can only be established by the submission of specific proposals to the NRC for their review, comment and subsequent approval. Such approvals should be obtained prior to undertaking detailed engineering ans procurement. While we do not propose at this time to pursue detailed engineering, procurement or construction activities necessary to accomplish cleanup tasks, we do believe that the baseline engineering work necessary to be ready to proceed with those activities should be pursued aggressively so as to minimize the potential threat to public health and safety by avoiding unecessary delay in the cleanup. 5. Completion of engineering and design efforts necessary to license and a system for solidification of EPICOR II first stage liners. The Company has been ordered by tne Nuclear Regulatory Commission to proceed expeditiously i with solidification of EPICOR II resin liners.

6. Additional efforts on decontamination of the Auxiliary O Building. Our first category included limited work on decontamination of the Auxiliary Building.

However, safety of the workmen and provision of adequate access for maintenance and inspection of equipment essential to maintaining the reactor in a safe condition are enhanced in direct proportion to the degree of cleanup of the Auxiliary Building.

7. Continue to improve the Company's management control programs. The unprecedented nature of the tasks that lie ahead in completing the cleanup of Unit 2 makes it essential that the Company utilize all the time that is available to strengthen its ability to properly manage all aspects of the cleanup. 8. Continue limited operation of the EPICOR II System. The minimum possible level of other efforts, as well as any t efforts over and above the minimum, will generate contaiminated water which can be processed by EPICOR II. Such processing further reduces the threat to the safety of the workmen and through to a lesser extent, the threat to the general public. 9. Proceed with solidification of second and third stage EPICOR II resign liners. The NRC Order referenced in the Comment to Item 5 also applies to these resin liners. O~ Since these resin liners contain considerably less radioactive material than the first stage liners, it is feasible to solidify them using current industry practices which will minmize the engineering effort associated with accomplishing this task. Accomplishing the solidification would put the second and third stage liners in the required condition for shipment to an off-site disposal f acility at the earliest date.

10. Continue shipment of radioactive waste material.

Given the uncertainty of continued availability of off-site disposal facilities for receipt of TMI-2 waste, it is prudent to continue our scheduled shipments. 9 O ~ [p'2 htG o UNITED STATES 'p NUCLEAR REGULATORY COMMISSION 2 g WASHINGTON, D. C. 20555 /7 t 8 (/ / January 12, 1981 CHAIRMAN Mr. Herman Dieckamp, President General Public Utilities Corporation 100 Interpace Parkway Parsippany, New Jersey 07054

Dear Mr. Dieckamp:

This letter is in response to your letter of September 12, 1980 concerning your near-term planning of the cleanup of Three Mile Island Unit 2. In your letter, you outlined the actions being taken by the General Public Utilities (GPU) Corporation to scale down the cleanup effort at the site. You state that, in addition to the recent danial by the Pennsylvania Public Utilities Comission of the request of the Metropolitan Edison Company for emergency rate relief, a major reason for scaling down the TMI-2 cleanup effort is your understanding of the schedule for future NRC actions regarding the cleanup. Specifically, you conclude that you should not rely on significant regulatory guidance, acceptance criteria, or approval to proceed with major cleanup activities until the NRC staff completes its final programatic environmental C] impact statement (PEIS) related to the cleanup. You base your conclusion on your review of the draft PEIS (NUREG-0683), the NRC Plan for Cleanup Operations at Three Mile island Unit 2 (NUREG-0698), Mr. Denton's letter of August 6, 1980 to Mr. Arnold (GPU), and NRC actions to date related to cleanup activities. Finally, you express concern about the schedule for publication of the final PEIS and question whether the document will contain the regulatory guidance and acceptance criteria necessary for you to establish firm cleanup plans. The NRC has reviewed licensee efforts to maintain the safe shutdown of the TMI-2 facility and progress with certain cleanup operations in view of the actions being taken by GPU to scale down the cleanup effort at the site and issuance of the September 18, 1980 PREHEARIN3 STATEMENT AND ORDER of the Pennsylvania Public Utility Comission (PPUC). The PPUC has ordered the licensee to cease and desist from using any operating revenues for cleanup and restoration costs at the damaged TMI-2 facility which are not covered by insurance. On September 23, 1980, Met Ed, in a petition for a temporary stay l of the abo 9e cease and desist requirement, stated that it was unable to comply i with that order "without violating Federal law." In response to this statement, j the Comitsion issued a STATEMENT OF PCLICY on September 29, 1980 to emphasize that all of our health, safety and environmental requirements applicable to TMI-2 must be fully complied with by the licensee, regardless whether those requireme1ts appear to conflict with the PPUC order. A copy of the STATEMENT OF POLICY is enclosed for your information. } vffgrnS03% u I

Mr. Herman Dieckamp O While we understand that you are currently having discussions with the PPUC to V clarify your understanding of that order, we intend to ensure compliance with standing Comission orders, regulations and other requirements imposed by this Commission for purposes of protecting public health and safety and the environ-ment. To this end, the NRC has developed a list of activities required to be performed during the period in which discussions are ongoing with the PPUC and until Met Ed's financial status is clarified. These previously imposed require-ments are sumarized in the enclosed Table 1. Items 1-15 of the Table are considered to be minimum activities required in the near term to maintain the TMI-2 reactor in a safe shutdown condition to ensure public health and safety, along with protection of the environment. These activities include operation in compliance with the plant's Technical Specifications and necessary support functions (e.g., security, quality assurance and administrative functions). Items 16-23 of the Table are activities required to reduce potential threats to public health and safety, and the environment over a longer term. With regard to Item 20, we are concerned about the lack of progress that has been made to comply with the Commission's order of October 16, 1979 requiring solidification of EPICOR-II spent resins. Over 12 months later, we have not received a plan for compliance with the Commission's order for even the low-level activity second and third stage liners. We have technical concerns about potential problems with the near-term stability of some of the resins and the integrity of s)me of the liners. Therefore, there should be no further delay in the developnent either of definitive plans to solidify the EPICOR-II spent resins or of proposals for alternative methods to stabilize these wastes. This could include a request to be relieved of the requirement for solidification. O You are requested to submit such plans or proposed alternative methods, includ-ing a commitment to a schedule identifying major milestones, within six weeks of this letter. In addition, we believe Metropolitan Edison must take more positive action in planning and making entries into the now-vented containment. You are aware that on September 12, 1980, the Commission agreed to extend the coment period on the draf t PEIS to November 20, 1980 in response to requests by Governor Thornburgh, EPA and members of the public. In view of this action, the staff anticipates that the final PEIS will be issued by the end of March 1981, after review by the Commission. With regard to NRC approval of major cleanup activities prior to issuance of the f5al PEIS, I must point to the Commission's understanding of its responsibilities under the Atomic Energy Act i and the Natie.1 Environmental Policy Act. The Commission's interpretation of ( its rasponsibilities in connection with the decontamination of TMI-2, consistent with these laws, is generally expressed in its Statement of Policy and Notice t of Intent to Prepare a Programatic Environmental Impact Statement, dated November 21, 1979. Simply put, the Commission has a responsibility to fully evaluate the environmental impacts of decontamination, including involving the l public into the Commission's decisionmaking process regarding environmental issues and alternatives before commitments to specific cleanup choices are made. The f'nalization of the PEIS will not preclude prompt Commission action if needed to cope with emergency situations. However, barring any unforeseen emergency situations, we intend to pursue our regulatory responsibilities in p the manner cutlined in our November 21 policy statement and in the August 6, V 1980 letter from Mr Denton to Mr. Arnold.

Mr. Herman Dieckamp b"' Your letter states that it is your belief that the ack of definitive guidance and criteria from the NRC does not permit timely anc effective progress toward cleanup. It is true that at this time, the NRC has not been able to prescribe complete criteria to you for ultimate disposal of the wastes. The ultimate disposal of radioactive solid materials is a complex issue. We have long endorsed the disposal of normal reactor low level solid wastes at commercial shallow land burial sites. Certain types of waste generated by THI-2 cleanup operations will contain types and amounts of radioactivity that are significantly greater than normal reactor low level wastes. Such wastes will have to be put into an interim form which can be safely stored until -subsequent steps can be developed. These steps will probably include transfer to a DOE site. Regarding the processed water, as you have indicated to the TMI Advisory Panel, sufficient storage will be available on site to allow at least two years of storage. Consequently the disposal criteria for this waste need not be decided in order for you to move ahead with the cleanup process. I would be pleased to discuss these matter \\s with you. S Incerely, g rbe/Wk L( i , John F. Ah i O~ Eaciosures: 1. September 29, 1980 Commission Statement of Policy 2. NRC Staff's List of Activities to be Performed by the TMI-2 Licensee O

1 UNITED STATES OF AMERICA O auc't^a accu'atoar con 4tssion +. - STATEMENT OF POLICY ~ The Pennsylvania Public Utility Comission (PUC) has ordered Metropolitan Edisor. Company (Met Ed) to cease end desist from using any 5-operating revenues for clean-up and restoration costs at the damaged C Three Mile Island Unit 2 reactor which are not covered by insurance. Hed,Ed's activities at Three Mi'e Island are licensed by the Nuclear Regulatory Commission. On September 23, 1980. Met Ed. in a petition for .a temporary stay of the above cease and desist requirement, stated 'that it was unable to comply with that order "without violating Federal law." It is that statement by Met Ed which prompts this Comission to issue this policy statement. While uc will continue to work cooperatively with the State of O, Pennsylvania on all aspects of the Three Mile Island accident, this ' 8., ',Comission emphasizes most strongly that all of our health, saf.ety and . environmental requirements applicable to Three Mile Island Unit 2 must -{- .be fully complied with by Met Ed. We take no position on whether the . actions of the PUC create an irreconcilable conflict with HRC requirements which have been imposed on Het Ed er which may be imposed in the future. We wish to state clearly, however, that in the event of any such conflict i 4 NRC health, safety and environmental requirements must supersede S' tate agency requirements that result in a lesser degree of protection to the e 'ppblic.. In short. the Comission will not excuse Met Ed from compliance 1 )- with any order, regulation or other requirement imposed by this Comission .for purposes of protecting public health and safety or the environment. i- ~ t.ssved 7.2/go l, :, J.$.: I

o ~ TABLE 1 NRC Staff's List of Activities Required to be Performed by the TMI-2 Licensee tc Protect the Public and Worker Health and Safety and the Environment 1. Maintain adequate control and confinement of radicactive materials.1/ 2. Minimize the volume of water used in cleanup activities, maximize reuse of processed water, and reduce cross-contamination of processed water to the maxinum practicable extent.l_/ 1. Maintain the facility and perform surveillance activities required by the Technical Specifications. Included in this activity is the per-formance of a test to verify stable core cooling by losses to ambient.1/ 4. Perform necessary maintenance, including minor modifications, of equipment and facilities ( i.e., winterization of the Reactor Building cooling system). Included in this activity is the associated training of operators, and minor modifications identified as bein upon design reviews and initial operating experience.1/ g desirable based 5. Decontaminate the Auxiliary Buil' ding as necessary to facilitate main-tenance and operation of safety-related equipment.1/ pd 6. Process radioactive waste generated by activities in this list, in-cluding handling and packaging for offsite disposal. Continue shipments for disposal of radioactive raterial.1/ 7. Perform radiological controls necessary to support activities in this list, including: surveillance of work in radiation areas; in-plant surveys and monitoring; personnel exposure, measurement and documentation; maint,enance and calibration of equipment; emergency response capability; and training. Included in this activity is a continuation of the up-grading of the radiological controls program to meet revised performance standards which have resulted from the TMI-2 ac:.ident.1/ 8. Perform measurement, an lysis and documentation of the environmental impact of the facility. / l 9. Perform engineering functions (e.g., review of plant procedures) incident to conduct of required operation and surveillance of conditions of plant equipment, systems and facilities.1/

10. Administer the technical and administrative interface with the regulatory agencies of tae federal and state governments, including maintaining know-i ledge of current and proposed regulatory requirements.1/

J 1/ Minimum activities required to maintain the TMI-2 reactor in a safe shutdown condition and to insure public and worker health and safety and envirnnmental protection in the near term.

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11. Provide technically oriented services to i=plement quality assurance, trai ning, rgency preparedness and independent safety assessment programs.
12. Provide minimum required services in various support functions (e. g., security).1]
13. Provide repair or replacement of the failed source range neutron monitor.

Cor.tinue efforts to achiqve improved monitoring of core neutronics, util-izing other instruments.1/

14. Perform decontamination efforts inside the Coptainment Building necessary to support required maintenance activities.1'
15. Cow lete, bject to NRC approval, an interim solid waste storage facility.

16. Support finalizat Statement (PEIS).{ofi of the Draft Programmatic Environmental Impact

17. Develop the capability to decontaminate the radioactive water within the reactor building sump and the reactor coolant system. 2/

p 18. Continue the t' chnical planning effort, including the gathering of data e V on conditions inside the Containment Building and the development of criteria to be applied to cleanup activities. _2/

19. Provide engineering to support licensing and co@letion of base line engineering documents._2/

20. Coglete development, engineering and design efforts necessary to obtain NRC, approval for construction and operation of a system for solidification of EPICOR-II ling,r of these wastes._'/s or propose Cternative methods for the stabilization 21. Continue decontamination of the Auxiliary Building. 2/ 22. Continue to improve the Conany's management control programs. 2] 23. Continue operation of the EPICOR-II System on an as needed basis. 2/ 1/ Minimum activities required to maintain the TMI-2 reactor in a safe shutdown condition and to insure public and worker health i and safety and environmental protectisan in the near term. ' p 2f Activities required for reducing the intermediate and long-term threats V to public and worker health and safety. .}}

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