ML19350C325
| ML19350C325 | |
| Person / Time | |
|---|---|
| Site: | Shoreham File:Long Island Lighting Company icon.png |
| Issue date: | 03/25/1981 |
| From: | Tedesco R Office of Nuclear Reactor Regulation |
| To: | Pollock M LONG ISLAND LIGHTING CO. |
| References | |
| NUDOCS 8103310932 | |
| Download: ML19350C325 (5) | |
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UNITED STATES NUCLEAR REGULATORY COMMISSION n
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Docket No. 50-322
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Long Island Lighting Company ggg 26 pgh,~3
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ATTN: Mr. M. S. Pollock 6-7 Vice President - Nuclear 175 East Old Country Road
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7 Hicksville, New York 11801
Dear Mr. Pollock:
o,' i As you are aware, the U.S. Congress requires that the Nuclear Regulatory Comission provide the Subcomittee on Energy and Water Development a monthly report on the major actions taken on operating reactors and on licensing reviews of new facilities.
In a letter dated February 17, 1981, the Subcommittee on Energy and Water Development requested that the monthly report be amended to include various information for each impacted plant. One category of additional information requested is the utility's best estimate of the monthly cost to maintain each impacted unit in an inactive status while awaiting a full power operating license.
It is requested that you provide such an estimate including separate costs of replacement energy and the capital expense during the delay period.
The NRC will provide the information received to Congress.
For your information, enclosed is NRR's estimate of the cost of delay which we plan to include in the March 1981 report to Congress.
Your estimate should be provided orally to the Project Manager by noon Friday, March 27,1981 and confirmed in writing by April 3,1981. Please. follow format enclosed in pr ~
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Robert L. Tedesco, Assistant Director for Licensing Division of Licensing
Enclosure:
NRR's Estimate of Cost of Delay ec: See next page S10881OD
Mr. M. S. Pollock Vice President-Nuclear Long Island Lighting Company 175 East Old Country Road Hicksville, New York 11801 ccs:
Howard L. Blau, Esq.
Honorable Peter Cohalan Blau and C *.a. P.C.
Suffolk County Executive 217 Newbridge Road County Executive / Legislative Building Hicksville, New York 11801 Veteran's Memorial Highway Hauppauge, New York 11738 Jeffrey Cohen, Esq.
Deputy Commissioner and Counsel David Gilmartin, Esq.
New York State Energy Office Suffolk County Attorney Agency Building 2 County Executive / Legislative Building Empire State Plaza Veteran's Memorial Highway Albany, New York 12223 Hauppauge, New York 11788 Energy Research Group, Inc.
MHB Technical Associates 400-1 Totten Pond Road 1723 Hamilton Avenue - Suite K Waltham, Massachusetts 02154 San Jose, California 95125 Irving Like, Esq.
Stephen Latham, Esq.
Reilly, Like and Schnieder Twomey, Latham & Schmitt 200 West Main Street P. O. Box 398 Babylon, New York 11702 33 West Second Street Riverhead, New York 11901 J. P. Novarro Project Manager Joel Blau, Esquire
-Shoreham Nuclear Power Station New York Public Service Jammission P. O. Box 618 Wading River, New York 11792..
The Governor Nelson A. Rockefeller Bldg.
Empire State Plaza Albany, New York 12223 W. Taylor Revaley, III, Esq.
Hunton & Williams Ezra I. Bialik P. O. Box 1535 Assistant Attorney General Richmond, Virginia 23212 Environmental Protection Bureau New York State Department of Law Ralph Shipiro, Esq.-
2 World Trade Center Career & Shapiro New York, New York 10047 9 East 40th Street-New York, New York -10016 Edward J. Walsh, Esq.
General Attorney Long Island Lighting Company 250 Old' Country Road
.Mineola, New York 11501 Resident' Inspector /Shoreham NPS c/o U.S. Nuclear Regulatory Commission P. 0.-Box B Rocky Point,'New York 11778 h
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. COST OF DELAY Table 1 identifies ten nuclear units where the estimated construction e
ce"pletion date orecedes the completion of the licensing effort. The NRR staff was asked to develop estimates of the costs that will be incurred as a result of these licensing delays. These estimates appear in the attached Table 2.
One should be cognizant that the estimales are highly sensitive to underlying assumptions which are subject tu much unce-tainty- (fuel price escalation, sources of replacement energy available, expected performance of the nuclear unit in its initial
'l commercial start-up, etc. ).
Thus, the values reported in Table 2 should I
only be viewed as benchmark estimates.
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Cost of Reolacement Eneroy l
The selection of an alternative, energy source is not something one can readily t
predict.
Logically, "le utility will rely upon the least expensive alternative available.
.towever, what is available will depend on the system caoacity mix and the demarids existing on the system during the delay period. Depending on these factors, reolacement energy may be supplied by some combination of base, intermediate, and peaking units utilizing varying fuel sources, or thru outside purchases.
For the purpose of this assessment, the staff has assumed that all replacement energy will be made-up by capacity already on the applicant's system. Where a system is heavily conmitted to a particular energy source, replacement energy.. is viewed as coming totally from that source.
If a system's capacity is heavily distributed among two or more fuel sources, the replacement energy is assumed to be equally distributed among those energy sources.
It is assumed that the nuclear unit would have operated at an average capacity factor of 60% during the delay period. The fuel costs in mills per kWh are based on the following assumptions. The fuel cost for coal, oil, and natural gas is based on' actual. values (t per MM BTU) paid by each utility as of June 19C0.
There values were converted to mills per kWh based on average plant heat rates of 11,000 BTU per kWh for oil and gas-fired plants and 10,000 STU per kWh for coal fired plants. These cosits were then escalated at a nominal 10". per year to reflect estimated costs in the 1981-83 timeframe. The nuclear fuel cost
.is based on a 1977 estimate of 7.83 mills per kWh (assumes no recycle), and escalated at a nominal rate of 5% per year to reflect estimated cost in the 1981-83 timeframe. These nuclear fuel cost assumptions are based on Table 11 of NUREG -0480 (Coal and Nuclear: A Comparison of the Cost of Generating
. Baseload Electricity by Region).
Capital Expense' Durino the Delay period
'The capital expense represents the interest chargr.s associated with carrying the capital ir. vestment durir.; the delay 'oeriod.
For the purposes of this analysis it is assumed that interest accrues on the completed capital cost-of the fac'lity at-the. annual rate of 10% per year. 'It is our position that this does not represent a real cost to the utility or its ratepayers but rather snifts the financial burden from one group to the other (transfer
-. payments) and shifts payments in time. Thus for example, if during the celay
- no enclosed.
O period the state PUC does not allow the interest payments to be passed through to the ratepayer, the stockholders and the utility will be recaired i
to absorb this cost as it is incurred.
However, once the nuclear uni' does become operational, these additional interest charges will be capitalized and recovered by the utility and its stockholders over the unit's useful life.
However, because of current cash flow considerations the utility would prefer that the ratepayer absorb the capital expense as soon as practical.
Alternatively, whereas the ratepayers will be will be assessed higher carrying charges in the future once t becomes cperational.
It is argued that what they will be saving in carrying charges during the delay period can be invested by them at the current opportunity cost of money to enable them to repay the additional carrying charges of the future.
This neutral position with respect to increased capital expense is subject to a number of simplifying assumptions:
During the period of delay, the money retained by custcmers a.
which would otherwise b paid in rates if the unit were operating can be invested at financial returns equivalent to those costs paid by the utility in carrying the plant in its construction work in progress account.
b.
There is adequate regional power supply in the short-term such that there is no need to make real economic resource commitments to expedite completion of other generating
- capacity, The delayed nuclear unit does not deteriorate during the c.
delay period such that its useful operational life is shortened.
d.
The delayed start-up does not result in the unit being technologically obsolete during the end of its useful life which has now been stretched out because of the delayed start-up.
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COST OF REPLACEMNT ENERGY AND CAPITAL EXPENSE INCURRED DUE TO LICENSING del AYS (All COST EsitMATES ARE IN CURRENT D0ll ARS)
COST OF REPL ACEM[NT '
[NERGY gli Al.
EXPENSE
_ _g Average 7sti-Total RWcE Estimated Expense Cost of Incre-mated Replace-snent Capital Delay Capital Replace-Nuclear sental length ment Energy Cost During Expense
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Energy Cost Per. of Unit at Delay Per REPLACEMENT FUEL fuel
, Cost Cost Delay Cost Month Completion Period Month MIX X 6
6 6
0 UNii mee COAL OfL GAS Mills /kWh Mills /kWh Mills /kWh, MonJM_11_ x_10 11 x 10 gj, gg
$1 a 10 Summer 900 50 50 31.1 10.0 21.1 8
66.4 8.3 800 53.3 6.7 Diablo Canyon) 1084 100 62.2 9.5 52.7 12 300.2 25.0 1050 105.0 8.8 Diablo Canyon 2 1106 100 68.4 10.0 58.4 5
141.4 28.3 840 35.0 7.0 San Onofre 2 1100 100 60.3 9.E 50.8 6
147.0 24.5 1820 91.0 15.2 Zieuwr 792 50 50 44.6 10.0 34.6 3
36.0 12.0 1030 25.8 8.6 McGuire I 1180 100 16.9 9.5 7.4 11 41.8 3.8 770 70.6 6.4 Susquehanna 1 1050-50 50 27.2 10.0 27.2 8
100.0 12.5 1840 122.7 15.3 Waterford 3 1110 100 50.7 10.5 40.2 3
58.5 19.5 1230 30.8 10.3 Shoreham 1 820 100 41.3 10.0 31.3 1
11.2 11.2 2210 18.4 18.4 Comanche Peak i 1150 100 26.6 10.5 1 s.1 2
16.2 8.1 1820 18.7 9.3
- See accompanying text for explanation and underlying assmptions
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