ML20028G817

Forwards Proposed Findings & Draft Response to Util Request Re Decommissioning Funding for Facility

ML20028G817
Person / Time
Site:	Shoreham File:Long Island Lighting Company icon.png
Issue date:	08/15/1990
From:	Virgilio M Office of Nuclear Reactor Regulation
To:	Weiss S Office of Nuclear Reactor Regulation
References
NUDOCS 9009050051
Download: ML20028G817 (5)

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August 15, 1990 a...*

MEMORANDUM FOR:

Seymour H. Weiss, Project Director Non-Power Reactors,-Decommissioning and Environmental Projects Directorate FROM Martin J. Virgilio, Chief Policy Development and Technical Support Branch Program Management, Policy Development and Analysis Staff

SUBJECT:

PTSB RESPONSE TO LILCO DECOMMISSIONING FUNDING EXEMPTION REQUEST We have prepared the enclosed propo:,ed findings and draft response to a request from Long Island Lighting Company relating to decommissioning funding for Shoreham. AnyquestionsonthisshouldbedirectedtoRobertWood(x21255).

h Martin J. Virgitio, Chief Policy Development, and Technical Support Branch Program Management, Policy Developmen) and Analysis Staff

Enclosure:

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Mr. Victor A. Staffieri-General Counsel Long Island Lighting Company 175 East Old Country Road Hicksville, New York 11801

Dear Mr. Staffieri:

This responds to your letter dated June 11, 1990, in which you requested that the NRC either find acceptable LILCO's proposed method for funding Shoreham's decomissioning or, alternatively, grant an exemption for Shoreham from the NRC decomissioning funding regulations. We have reviewed the information and arguments contained in your letter and enclosures.. For the reasons stated below, we believe that the decomissioning regulations do apply to Shoreham.

Additionally, we have reviewed your request for an exemption from the require-ments of 10 CFR 50.33(k)(2) and 50.75(b) and find that LILC0 has failed to adequately demonstrate the existence of special circumstances, the basis for grantinganexemptionasrequiredby10CFR50.12(a)(2). As noted in the preamble to the decomissionin', rule, the Comission considered facilities that prematurely cease operation. However, because addition &1 guidance in this area exemption from the requirement of 10 CFR 50.33(k)(2) grant LILCO a schedular is now apparently necessary, the NRC is preparing to until 30 days after the NRC provides such guidance. The following discussion addresses the specific points raised in your letter:

1.

Whether the decomissioning rule contained in ll50.33(k), 50.75, and

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50.82 is applicable to Shoreham Your interpretation that the decomissioning rule does not apply to Shoreham relied on the Comission's Seabrook order, CLI-88-10. You refer to a statement in CL1-88-10 that "The hypothesized circumstances addressed in CLI-88-7--low-power testing not followed by comercial operation --

were not considered or contemplated in the decomissioning rulemaking.

Thus the rule does not apply to the Comission's requirements in CL1-88-7."

(28 NRC 573 (1988), at 584, your emphasis.) Based on your analysis of the Seabrook order, you conclude that "The same conclusion applies to Shoreham:

the decomissioning rule, designed to take advantage of the long lead times generally available to comercially operating plants in order to accumulate the substantial decomissioning costs anticipated for them, simply does not fit the present short-notice, clean-plant circumstances."

(Your letter of June 11,1990,atp.7)

As you note, the Comission's Seabrook order, CLI-88-10, was issued in response to contentions filed by intervenors with respect to the highly unusual financial circumstances faced by Public Service Company of New Hampshire, which led to its filing for protection under Chapter 11 of the U.S. Bankruptcy Code. The Comission's order required the applicants i

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• tv submit assurance for $72.1 million, which was derived from applicants' estimate, as modified by the Commission, of decomissioning costs that would occur if a full-power operating license was not issued after low-power testing. As you noted in your letter, the Comission stated in CLI-88-10 its belief that "it would be unduly onerous to require, for example, a totally prepaid external account beyond Applicant's control at this stage for so large a sum."

However, despite the inapplicability of specific provisions of the decomissioning rule to the Seabrook case, the Comission stated, "Notwithstanding its conclusion that the rule does not '

apply here, the Comission recognizes and affirms that the-safety concern underlying the rule that there be adequate funds available for safe and timely decomissioning is fully applicable to this case." To comply with the Comission's order applicants provided a surety bond for $72.1 million.

As part of its deliberations on the decomissioning rule, the Comission explicitly rejected use of internal funding, even for utilities such as LILC0 that receive approval from their public utility comissions to collect decomissioning costs through rates (53 FR 24018, at p. 24033, June 27, 1988). Thus, even if some provisions of the rule do not apply, LILCO's use of a promise to pay decomissioning costs to LIPA would not

_ provide adequate assurance as mandated by the rule.

Although you are correct to note that the decomissioning rule did not specifically consider prematurely shut down plants (or those that never achieved full-power operation), this observation does not lead to the conclusion that the decomissioning rule does not apply, but rather that specific provisions may be inapplicable or suspended upon issuance of an exemption. The statement on page 9 of your June 11, 1990, letterthat(1)

Shoreham's factual situation is indistinguishable from the " hypothesized circumstances" in Seabrook and, (2) the Comission's ruling in this case should be dispositTve, is mistaken as to the scope of the Seabrook case.

Each case of premature closure of plants in relation to funding for decom-missioning should be examined individually.

In addition, the statement that the Comission indicated that PSNH would be required to satisfy the decomissioning regulations only)at the time Seabrook achieved full power commercialoperation(footnote 7 is incorrect. PSNH was expected to comply with applicable provisions of the rule prior to full-power operation.

While we would agree that the certification requirements contained in 650.33(k) and il50.75(a)-(c) were designed to apply to plants 'that will continue to operate for many years, other provisions such as ll50.75(e),

50.75(f) and 50.82 apply to plants near or at shutdown, regardless of how long they operated. Paragraph 50.75(f) requires a licensee to prepare a preliminary decomissioning plan based on a site-specific decomissioning cost estimate within five years of shutdown. Section 50.82(a) requires a proposed decomissioning plan to be submitted within two years following permanent cessation of operations, if such cessation occurred after July 27, 1988.

For plants permanently ceasing operation prior to July 27, 1988, a proposed decomissioning plan is to be submitted but may be modified to reflect the specific situation at the plant.

Paragraph 50.82(c)(1) requires that "[f]unds needed to complete decomissioning be placed into an account segregated from licensee assets and outside the licensee's administrative control during the storage or surveillance period, or a

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• surety method or fund statement of intent be maintained in accordance with the criteria of $50.75(e).' This segregation of decomissioning funds is equally pplicable to the DECON method of decomissioning as provided in 650.75(e(1)(11).

Thus, although certain aspects of the decomissioning rule may not apply to prematurely decommissioned plants, LILCO is still required to provide reasonable assurance of the funds needed to decomission Shoreham by following applicable portions of the rule.

2.

Wh_ ether LILC0 should be granled an exemption from the decomissioning

_regulations The NRC staff disagrees with two statements in your letter that are presented as support for an exemption from the decomissioning rule's funding requirements.

However, until the staff receives clarification from the Comission that these views remain Comission policy for prematurely shutdown plants, you will receive a schedular exemption from these provisions as indicated above.

First, your letter states that there

.= rio health and safety considerations at Shoreham compelling adherence to the requirement that, at the time of termination of operation, all the funds necessary for decomissioning must be in place. As justification for this statement, you indicate that LILC0 is obliged to pay all costs of decomissioning and the New York PSC has already agreed that LILCO may recover the costs of decomissioning directly from its ratepayers.

In response, we believe that this situation is similar to that in which most other utilities would find themselves at the time of shutdown.

When considering the rule, the Comission recognized that most utilities would receive approval from their PUCs for decomissioning costs or would have already accumulated sufficient funds for decomissioning.

Neverthe-less, the Comission declined to allow utilities generally to accumulate funds during the dismantlement or storage period. According to the rule, assurance of decomissioning funds requires that funds be in place prior to comencement of decomissioning.

Second, your letter states that the requirement that decomissioning funds be maintained in a segregated " external" fund is not applicable to Shoreham's present circumstances. Rather than being accumulated over an extended period, your letter indicates that the funds that LILCO will provide to LIPA for deposit in LIPA-controlled accounts will be continu-ously spent by LIPA as it undertakes Shoreham's decomissioning. Again, we believe that this scenario is not appreciably different from those of other utilities that choose to dismantle their plants imediately. The Comission considered the use of internal funds at various decomissioning stages and under different financial circumstances (including public vs.

state ownership) and chose to disallow internal funding in all cases.

Without an outside trustee, neither LILCO's nor LIPA's obligation to pay for decomissioning could be considered to be external funding as defined in650.75(e).

In addition, the monthly funding of decomissioning costs with a three month cushion by LILCO may be unacceptable. Such a proposal would tend to limit the flexibility needed for long-term projects like decomissioning.

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At a minimum, unless the Comission decides that a special policy is warranted for prematurely decomissioned plants, the NRC staff would expect LILCO to provide the following in the funding plan portion of its decomissioning plan:

1.

A detailed site-specific estimate of the cost to decomission Shoreham should be provided commensurate with 550.82. Although a statement on page 10 of your letter ir.dicates that "the DECON method may be the most appropriate decommissioning alternative for Shoreham," no additional estimate of cost or decomissioning alternatives has been provided.

2.

Funds for decommissioning Shoreham should be placed in an external trust, either by LILCO or LIPA, until such time as they are needed to perform decomissioning work. Any proposal that defers funding into the dismantle-ment or storage period will have to be approved by NRC pursuant to its exemption procedures in 950.12. Until you are able to nrovide a detailed site-specific estimate and a schedule for performing decomissioning work, and until the policy issues cited herein are resolved, we are unable to consider the request for exemption from il50.33(k) and 50.75 containea in your June 11, 1990 letter.

3.

We also believe that even if the NRC were to approve an exemption to the requirement to have all funds prior to the start of decomissioning, we would be unable to acce)t your proposed funding schedule, which provides only a three month "cus11on" of decomission funds in advance of actual decomissioning work. As noted above, we are unable to consider your exemption request until the Comission has resolved certain policy issues. We will advise you when those issues have been resolved.

If you have any questions regarding this letter, please contact Stewart Brown on(301)492-1427.

Sincerely, James G. Partlow, Associate Director for Projects Office of Nuclear Reactor Regulation 1

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