ML20006C429

Requests Partial Exemption from FY90 10CFR171 Annual Fee & That Fee Be Limited to 19% of Applicable Fee

ML20006C429
Person / Time
Site:	Yankee Rowe
Issue date:	01/26/1990
From:	Tracy H YANKEE ATOMIC ELECTRIC CO.
To:	Stello V NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
References
ACCT-90-81, NUDOCS 9002080028
Download: ML20006C429 (10)

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v January'26, 1990 ACCT-90-81

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Fiscal Year ^1990, Application For. Partial m-

-Exemption From 10 C.F.R. Part 171. Annual Fee, M s

Yankee Atomic Electric' Company, Docket No. 50-M License No. DPR-3

Dear Mr.-Stello:

Pursuant to 10 C.F.R. 6 171.11, Yankee Atomic Electric Company (" Yankee") requestsapartial.exemptionfor. fiscal { year 1990 from the. annual fee imposed under 10 C.F.R.

S' 171.15'.

The Commission granted Yankee's requests for partial exemption.from the Part 171 annual-, fees'for fiscal years = 1987,'1988 and 1989,.in

'each> instance reducing 5 Yankee's foe.to 19 percent of the Eu'nadjusted annual fee.

(Sag. Attachments 2, 3 and 4. ).

Each of theamatters that Yankee.identifled.in support of'the previous

?x applicationscare applicable'today,'and thus justify an exemption

-for Yankee-from the FY'1990. annual fee,

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.f L With'outLa-partial exemption, Y approximate $1,135,000 for FY 1990.gnkee's annual fee likely will-As. explained in Yankee's 1

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This application for a partial exemption from the FY 1990 Part 171: fee incorporates by reference. Yankee's application g

'for.FY 1987.

(Sgg Attachment 1.)

i 2/:.While the NRC'has yet to publish a revised fee schedule incorporating; Congress' recent legislation amending section 7601 of the' Consolidated Omnibus Budget Reconciliation Act of i

1985, Vankee assumes that the FY 1990 annual fee will

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approximate'last year's fee, prior to the NRC's grant of a

. partial exemption, which was $1,135,000.

See 53 Fed. Reg.

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52,647, col. 1 (Dec. 29, 1988).

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PDR_ ADOCK, 05000029 Ato @

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Mr. Victor Stallo, Jr.

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January 26, 1990 Page 2 previous exemption applications, payment of the entire annual fee would have an impact on Yankee's cost of producing energy that is substantially more severe than the impact experienced by most other nuclear utilities.

Yankee's cost to produce electric power would increase by nearly 1 mill per killowatt hour (KWH), an increase approximately six times greater than the increase for a typical large, current vintage plant.

Yankee's current cost of energy production is already considerably higher than the costs sustained by many New England power plants.

As noted in our previous exemption applications, the Yankee plant is the oldest and one of the smallest commercial nuclear power reactors in the United States.

Yankee's operating l and its power contracts expire in approximately ten years.jcense Furthermore, the high level of performance at Yankee greatly reduces public exposure to potential hazards.

This is underscored by the Final SALP Report, which assessed the operation of the Ygnkee Nuclear Power Station from April 1988 through July 1989.

The Report reaffirmed Yankee's " strong orientation towards nuclear safety," concluding that active involvement by plant management has resulted in an " excellent operational record and good operation performance."

Final SALP Report at 2.

In addition, Yankee's small size and remote location reduces even further the potential hazard to the public.

Consequently, many of the generic costs underlying the Part 171 annual fee simply are not relevant to the Yankee plant.

For the foregoing reasons, Yankee requests a partial exemption from the FY 1990 Part 171 annual fee.

Consistent with the exemptions granted for the previous three fiscal years, the Company requests that the FY 1990 annual fee for the Yankee plant be limited to 19 percent of the otherwise applicable fee.

Please contact me if you have any questions or need any additional information.

Four extra copies of this application 1/

In 1988, the Commission approved an extension of the facility operating license for the Yankee Nuclear Power Station from November 1997 to July 2000.

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Tha SALP Program is intended to provide the NRC a " rational basis" for allocating its limited sources.

Final SALP Report at 1.

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/ January 26',~1990.

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and the accompanying attachments are enclosed'for the

' Commission's-use.- We ask that.the one additional copy enclosed 4,

be stamped received by?the commission ~and returned to our J

messenger.-

Very truly.yours,-

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Tracy, Jr.

Treasurer J

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In The Matter.of

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Docket No. 50-29 YANKEE ATOMIC ELECTRIC COMPANY

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License No. DPR-3

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(Yankee Plant)

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AFFETCATTON FOR FARTIAL EXEMPTION Pursuant to 10 CFR Section 171.11, Yankee Atemic Elec-tric Company-(" Yankee") hereby applies for a partial-exemption-l f rom the requiremects =t Sectio:t.171.15 of the Commission 's rules and regulations.

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- h Statement In support of this application, Yankee submits the fol-l lowing:-

1.

Yank +e is a Massachusetts ccrporation-organized in' l

1954:and is an " electric utility" as defined in 10 CFR Sec-l.

tion 2.A(S b vankma La,tha.holdar of NRC License No. DPR-3, dated July 19, 1960.

2.

Sections 171.11 and 171.15 were recently adopted by

.l the Commission,-and Section 171.15 imposes an annual license l-L,;

surcharge on power reactor licensees,-which for fiscal 1987 is e ;-

S950,000.

This surcharge is in addition to the Commission's l'-

Part 170 license fees, which are use related.

See Annual Fee for it l'

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Power' Reactor Operating Licenses and Conforming Amendment, 51

' Ped. Reg.- 33,224-(September 18, 1986) (Final-Rule).

Section 171.11 provides:for exemptions from that annual fee.

The Jexemption provision states as follows:

An exemption under this provision may be granted by the' Commission taking into consid-eration the following factors:

(a) Age of the reactor; (b) Size of the reactor; (c)= Number of customers in rate base;

'(d) Net increase in KWh cost for each customer directly related to the annual fee as-sessed under this-part; and (e) Any other relevant matter which the'li-censee believes justifies the reduction.

of the annual fee.

These criteria are addressed in the paragraphs-that follow.

3.

-The. Yankee plant is a 175 net MWe pressurized water

. reactor that-began. operating on November 10, 1960.

Yankee is the oldest-operating commercial nuclear power plant in the United States.

Yankee's operating'llcense expires in'll years, and its current power contracts expire in only 5 years.2

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Yankee is seeking judicial review of the final rule imposing

-the Part 171 license fee, and submission of this exemption application is not intended to waive any of Yankee's objectionsLto the rule.

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Pursuant to the power contracts referred to in the text, Yankee sells all of its energy production to 10 New England utilities, each of which sponsored Yankee's construction in the 1950's and are today-Yankee's sole shareholders.

Those sponsoring utilities, in turn, resell energy purchased frcm (Footnote 2 Continued on Next Page '

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4.

Aside from being the oldest commercial 1 reacter,

-Yankee as one of the smallest ecmmercial nuclear power plants in' tne United States.

5.

A surcharge of S950,000 in license fees will in-crease: Yankee's power costs by nearly 1 mill per kilowatt hour (KWH) (a charge ~ comparable to the entire cost of' waste disposal, as presently assessed by DOE).

Please note that this surcharge j

'is on top of our current Part 170 license fees of more than

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S200;000'per-year.

6.

An increase of this magnitude is unreasonable for such a'small reactor.

The impact on-Yankee power costs will be

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.approximately six_ times as great as it will-be for a typical j

large, current vintage plant.

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The decision to renew the Yankee power contracts in

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1991'will be based on-economics, which for a small plant.like

' Yankee are at best marginal.

Current Yankee production costs are nearly 4 cents /KWH, whereas many plants in-New England have pro-

- l (Footnote 2 Continued from Previous Page)

Yankee to their own wholesale and~ retail markets.

Yankee has no other customers.

In this connection, it should also be noted that Yankee is often referred to as a " single asset" utility.- Yankee was formed for the exclusive purpose of constructing and operating New England's first nuclear plant.

Unlike other utilities, Yankee will not construct any_ future generating facilities,-nuclear or otherwise.

Once the Yankee plant is removed from service and decommissioned, Yankee Atomic will cease to operate as a utility company.

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' duction costs of less-than three cents.. An increase of $950,000 in-license fees on'a.small plant like Yankee will widen this gap

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still further.

The intent of the Section 171.11 exemption provi-s sion is to avoid such adverse impacts on the operators of small, older reactors.

See 51 Fed. Reg. at 33,227, col.

2.

8.

The sensitivity of a small reactor to increased v

expenses 1s-clear in a recent analysis of 1985 nuclear. utility operating and maintenance (O&M) costs (Attachment A).

TheLstudy shows that despite an excellent capacity factor (80%), and tight budget controls, Yankee's O&M costs are close to the highest in

'the industry.

9.

Furthermore, because of its small size, Yankee poses less.of a potential hazard than most other commercial plants (inventory of fission product is-. proportional to size).

More-over, Yankee is located in a very remote area, which-reduces the hazard to the public still further.

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Section'171.11 also refers to "(nlumber of customers in rate

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base" and "(nlet increase in KWh cost for each customer directly related to the annual fee assessed under this-part."

Yankee has no retail customers as noted, all of its energy production is sold to the 10 New England utilities that own Yankee as energy supply for their respective systems.

And, as indicated above, Yankee estimates that the Part 171 vv:

license fee will increase Yankee's cost per kilowatt hour by

.approximately 1 mill, which is about 6 times greater than the increase that will be experienced by more recent vintage plants.

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The requested exemption is also justified-C in view cf the fact that many of the generic costs underlying the Pa r t : 171-annual fee are not relevant to' Yankee Atomic.

See cen-erally, 51 Fed. Reg.- 24,078,-24,079 (1986) (Proposed Rule).

This

/ includes costs-associated with the following:

NRC research directed to future plant designs (id.

at 24,079, col. 3) (as explained previously, YaEEee-is a single-asset. utility and will not construct-1 1

any generating plant, nuclear or otherwise, in the future);

-NRC research directed toward verified thermal hy-i draulic computer codes (id. at col. 2), development of probabilistic risk assessment (PRA) technology i

and earth sciences research (Eas (id, at col. 3) id. at-

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(since its inception, Yankee 24 080, col. 1) independently developed substantial in-house, state-of-the-art analytical capabilities for plant s

engineering and design, including NRC-approved' thermal hydraulic codes, fuel performance models and methods to assess seismological risk - ; examples of. reports which describe these capabil~1 ties are YAEC 1234,

-i YAEC 1274P, YAEC 1300 and YAEC 1331); indeed, Yankee was licensed ~as an' Atomic-Energy Act' 3

section 104(b) power reactor demonstration project for, among other things, research-and development of power reactor technology.

See-1 A.E.C.

26-(1957);

NRC research and regulation directed to large, 9

contemporary plants and advanced future designs id. 24,079 at col. 2 and 24,080 at col. 3),

e.g.,

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.(Iant siting criteria, construction quality p

assurance and vendor topical reports related to standard designs; Review of applications for licenses to operate nuclear power reactors (id. at 24,080, col. 3);

Specialized inspection and enforcement measures (id. at 24,081, col. 1) (Yankee Atomic has an excellent overall record of high performance and reliability and receives consistently high SALP ratings, see Attachment B).

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11.

The different status of small, older generation plants has been recognized in other regulatory contexts as.well, e.o., the Commission's property insurance and backfitting-rules (10 C.F.R. 55 50.54(w) and 50.109).

Simply put, because kilowatt hour production for small, older generation plants is an order of magnitude-lower than that of more recent plants, the different cost-benefit relationsnip of various expenses, including the new Part-171 fees, must be t cognized.

12.

Therefore, Yankee submits that a surcharge of S950,000 on top of'our current license fees (approximately

$200,000 per year) is unreasonable for the small Yankee plant,-

which is; located in a rural area and has an excellent safety, regulatory and enforcement record.

Yankee requests that the Part 171' fee imposed on it not exceed $50,000.

We feel that this=

amount should be more than adequate to recognize the benefit to-Yankee of the various costs that are to be recovered through the

-Part 171 fees.

13.

In addition, repeating the exemption application process each year would be costly.and time consuming for the Staff'as well as Yankee.

For that reason, the partial exemption requested here should be made permanent.

The facts that support this application will not change in any way that would undermine the validity of the exemption..,:

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14.

Finally, Yankee would welcome the opportunity to meet at the Staff's convenience to discuss this application; if additional information is needed in connection with tne applica-tion, please: contact the undersigned.

Conclusion Based upon the foregoing, Yankee respectfully requests that it be granted a, permanent, partial exemption'frem the re-quirements of 10 CFR Section 171.15.

It is Yankee's position that the surcharge levied on top of our Part 170 license fees should not' exceed S50,000.

Respectfully submitted, YANKEE ATOMIC ELECTRIC COMPANY By m F-M A. R. Soucy-

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Treasurer and Chief Financial Officer 1671 Worcester Road Framingham, Massachusetts 01701 Telephone:

617-872-8100 Octoberh_I,1986

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APPENDIX B c

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' APR 151987 1

i Docket No. 50-29 l

s Yankee Atomic Electric Company ATTN:

Mr. A. R. Soucy, Treasurer 1671 Worcester Road Framingham, MA 01701

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Gentlemen:

By application dated October 21, 1986, your Company requested a partial l

and permanent exemption from the annual fee requirements of 10 CFR 171 for your Yankee Plant.

Specifically, you requested that the ar.nual fee be reduced from $950,000 per year to $50,000 per year.

In your app 11 cation, you stated that the Yankee Plant is the oldest and one of the smallest comercial nuclear power plants with a generating capacity of i

175 MWe.

It is your conclusion that the impact of tne annual fees on

" Yankee power costs will be approximately six times as great as it will be for a typical large, current vintage plant" and this is not reasonable for a small reactor such as yours.

We have completed our evaluation of your application in accordance with the provisions of 10 CFR 171.11 and from this evaluation we have deter-mined that a partial exemption is appropriate for the Yankee Plant. The

$950,000 annual fee has been reduced to $1c3.000. This partial exemption is limited to FY 1987 only and, therefore, is not a permanent exemption from the fee requirements of 10 CFR 171 To determine the most equitable method of adjusting the annual fee for

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your plant, various approaches were considered. These approaches are enclosed for your infomation. As you can see from the enclosure, the approaches were for feel based on the (1) thermal MW power rating (this adjustment approach could only be considereo because it had been detemined that the Yankee Plant met the intent of 10 CFR 171.11), (2) impact on the licensee, (3) comparison of mill rate increases, end (4) licensed operating life'of the reactor.

Although the results were

..is fairly close in dollar amounts, the amounts for items 1 and 2 were averagad to determine an equitable and fair adjustment of $183,000 for the Yankee Plant.

I Since your Company has made the first FY 1987 quarterly payment of

$237,500 and your annual fee for FY 1987 has been reduced to $183,000, we are taking the necessary steps to refund the sum nf $54.500 to you by

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electronic transfer. We plan to complete this wire transfer within a week after your receipt of this letter.

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i If there are cuestions regarcing this matter, contact Mr.

Donald M. Scroggins cr. 301/492-4750.

Sincerely.

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[L Victor Stello, Jr.

Executive Director for Operations

Enclosure:

i Computation of Proposed Adjustec Annual Fees o

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C0prt'iAT10t.' Or it0P05E: ALJL'5TED ANNt'!L FEE TO EE ASSE 5 SED U5;% ire A VE E GE U 'O ME THOLS SnM E EL0,r,),

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\\ PO te Dowe Me t *.: c t ( see to Deten-ine Ac:t.st$c Fee:

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Therral l'egawatt 600 ftWt' i

rating Ratio 2671 MWt Plant / Averege Plantpj

$211,000

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Con;aretle inpact of

$156,000 l

Ar.et,a1 Fee on Plant Kilevatt hour costs 3,/

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Preresec Adjusted Arrual

$183,000 Fee herage of rethods 1 ano 2 (1 of Unadjusted Annual Fee)

(191) 5 Other Iters For Comoarison:

Increaseinmillrateb 1 mill per Kk'h Remaining years of 14/40 I

operation 35%

i 1# rce the determination is rede that a pertial exemption, in the fem of an adjustec.

0 fee, is appropriate and af ter applying the factors in 10 CFR 171.11, several possible retects may be,used to determine the adjusted fee either singly or in combination.

Using these two methocs, the resultant collar emounts were averaged to arrive at the ny ac;usted annual fee. The acjusted fee unoer Part 171 is collected in accition to fees collected under 10 CFR 170.

.2_/Under this nethod, the adjusted fee is deterrined oy multiplying the unadjusted annual 'ee (5940,000) by the thermal megawatt rating of the plant civided by the average thermal r+gewatt-rating of the 101 licensec plants (2671 M t).

1/Uncerthismethod,theunacjustedannualfee($940,000) is adjusted such that the incremental kilowatt.hrur costs for the plant are similar tc the increrf rtal costs for larger recern plants, b'Thea.ountof.increaseifthe10CFR171araualfeeof 1950,00C were to be usec.

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Attrehunt 3 l

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March 29, 1988 Docket No. 50-29 Yankee Atomic Electric Company ATTN: Mr. A. R. Soucy Treasurer 1671 Worcester Road t

Framingham, Mass 01701

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i Gentlemen:

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Your application dated September 16, 1987, requested that the 10 CFR 171 FY 1988 annual fee for the Yankee Plant be reduced to $178,000 of the published annual fee of $936,000. You cited as the bases for such exemption the smallness and age of the plant; its low generating capacity of 175 MWe1 and that the impact of annual fees is approximately 6 times greater than for a typical large, current vintage plant.

From our evaluation of your application in accordance with 10 CFR 171.11, we have determined that a partial exemption of the FY 1988 annual fee it appropriate for the Yankee Plant. Therefore, an exemption is hereby approved. This exemption results in a reduction of the annual fee to 19 percent of the $936,000 using the averaging method applied in the i

exemption approved for FY 1987 on April 15, 1987. Accordingly, the Yankee Plant annual fee is currently $180,000. Enclosed is invoice No.

G0612 for this amount.

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As you are aware, legislation was signed in December 1987 which requires NRC to collect 45 percent of its FY 1988 budget of $392.8M in fees under i

10 CFR 170 and 171.

Consequently, the FY 1988 annual fee amount of t

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$936,000 will be adjusted. At such time as the amount of the increased annual fee under 10 CFR 171 for FY 1988 has been determined, your i

Company will be billed for an additional sum which will be 19 percent of the increase for each plant. On this basis, your Company will be issued i

another invoice for annual fees for FY 1988, t

If there are any questions regarding this exemption, contact Mr. C. James Holloway, Jr., on 301/492-7225.

Sincerely, L

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Enclosure:

1 Invoice for $180,000 l

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G0612 mee eene masa = ne a maam unwes, ammesse assie ne=== mass a ne sea, me anos ans v.s. numaan memAveny cowd o m os op asso m m A w March 29, 1988 I

osvision or assouemme.use puwsce i

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I omm en Yankee Atomic ElectrCc Company ATTN: Mr. A. R. Soucy Treasurer man 1671 Worcester Road Janet M. Rodriguez Framingham, MA 01701

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api 492-4200

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maman Fiscal Year.1988 annual. fee oursuant to 10 CFR 171

$180.000.00 Plant Name:

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Docket No.:

50-29 i

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Note:

Legislation was signed in D'ecember 1987 which requires NRC to collect 45 percent of its FY 1988 budget of $392.8M in fees under 10 CFR 170 and 171. Consequently, the FY 1988 annual ice amount will be adjusted. At such time as the amount of the u

L increased annual fee under 10 CFR 171 for FY 1988 has been j

determined, your Company will be billed for an additional sum l

which will be 8.5 percent of the increase for each plant. On l

this basis, your Company will be issued another invoice for annual fees for FY 1988, t

M DW 1180.000.00 l

TERMS: Method of Paymeni;. Payment of the amount shown on this invoice must be made by electronic transder of funds in accordance with the attached procedures.

1 Interest. Interest will accrue from the invoice date at the annual rate of g percent. Payment is due on the invoice date. However, interest will be waived iT payment is received within 30 days from the invoice date.

NOTE:

For NRC debt collection procedures, including interest and penalty provisions, see l

31 U.S.C. 3717, 4 CFR 101-105, and 10 CFR 15.

' Additional Tems and' Conditions are on the reverse side of this form.

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4 A_001TIONAL TERMS AND CONDITIONS Refund. The U.S. Nuclear Regulatory Comission (NRC) will refund iny overpayeent in accord-ance with 10 CFR 171.21, to include any interest paid.by the licensee on such amount. NRC may not pay interest on the principal amount of the annual fee which was paid to NRC and is later refunded.

Penalty Cheros and Administrative Costs. A penalty charge will be assessed on any portion of a debt that is delinquent for more than 90 days at the annual rate of 6 percent (4 CFR 102.13(e)). This charge shall be calculated on or after the 91st day of delinquency, but shall accrue from the date that the debt became delinquent. For this purpose, a debt is

" delinquent" if it has not been paid by the invoice date. Administrative costs will be assessed against a debt that remains delinquent for over 30 dayst such assessment shall be i

based on the actual additional costs incurred in processing and handling the delinquent debt, but not less than $10.00 per month.

Other Consequences foe Failure to Pay on a Timely Basis.

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a) If a quarterly installment of the annual fee is not received within 30 days from the j

invoice date, the balance of the annual fee becomes due and payable, with interest and penalties calculated from the invoice date (10 CFR 171.25).

b) If the annual fee is not paid when due, the Comission may refuse to process any appli.

cation submitted by or on behalf of the person with respect to any license issued to the person, and may suspend or revoke any licenses held by the person (10 CFR 171.23). The suspension or revocation of a license does not waive or affect any debt due from a licensee.

Application for Exemption from the Annual Fee Pursuant to 10 CFR 171.11.

a) The NRC will not extend the 30-day interest wed ver period because of the submission of an application for exemption from the annual fee pursuant to 10 CFR 171.11.

b)

If the NRC grants an exemption, the NRC will make an adjurtment upon invoicing the balance of the annual fee and will make a refund only to the extent that the annual fee payment (s) received from the licensee exceed the adjusted annual fee.

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APPENDIX D m meeg'g -

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w w..weton.o.c.asmus M ! ? 1800 Docket No. 50 29 Yankee Atomic Electric Company ATTN: Mr. A..R. Sour,y Treasurer and Chief i

Financial Officer i

580 Main Street Bolton, MA 01740-1398 i

L Gentlemen:

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We received your letter dated January 5,1989, requesting a partial i

exemption from the fee requirements of 10 CFR 171 for the Yankee Plant for FY 1989. Our review of your request will be completed as, soon as i

possible. When we have reached a decision on it, a 'Yetter will be sent l

to you providing the results of our review.

Your Company will not be billed for any annual fee payments for the Yankee Plant for fY 1989 while your application is under consideration.

Sincerely.

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. James Ho loway, Jr., Chie l

l cense Fee Management Branch l

Division of Accounting and Finance i

Office of Administration and Resources Management l

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