ML20035B250
| ML20035B250 | |
| Person / Time | |
|---|---|
| Site: | Calvert Cliffs, San Onofre  |
| Issue date: | 03/24/1993 |
| From: | Fields M Office of Nuclear Reactor Regulation |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 9304010081 | |
| Download: ML20035B250 (35) | |
Text
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OFFICE OF POLICY PLAhWING -
LICENSE RENEWAL: THE UTILITY DECISIONMAKING PERSPECTIVE OPP-93-01 February 19,1993 fysREGy47 O
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ii License Renewah The Utility Decisionmakina Perspective E E UTDM SUhBIARY The Office of Policy Planning (OPP) was requested to inquire into the decision process that a utility would undergo during its consideration of license renewal.
This inquiry was to include interactions with parties outside the utility that could influence the renewal decision, in order to better identify the range of issues and to some extent the qualitative decision criteria.
It is the purpose of this report to provide the utility decisionmaking perspective on the range of issues to be considered for license renewal based on contacts with utilities, State regulatory bodies, and other interested and affected parties.
The environment under which a utility would decide to pursue license renewal has become more complex in recent years.
This complexity arises from the competitive situation that exists in electric generation, the increasing involvement by the states in economic regulation of electric power generation, waste issues which have received significant public and political attention, and the need to make decisions based on projections and expectations of the NRC's license renewal process.
Principal among these are whether nuclear power is now or will be cost competitive for the involved utility and whether sufficient predictability will exist in the license renewal process and the disposal of high-level waste (HLW).
The perception of a distinct economic advantage for license renewal has also changed in recent years.
The cost of operating a nuclear plant in the renewed period, even with the cost factors realized by accrued depreciation and relatively low fuel charges, does not always compare favorably with alternative sources and energy management.
Because of current competition in electric generation and the emphasis on least cost planning and demand-side management, cost is the principal issue in determining not only the attractiveness _of license renewal but whether the facility should operate through its licensed lifetime.
The uppermost issue relevant to NRC activities was the need for clarity and predictability in the license renewal rule, related guidance documents, and NRC's case-by-case implementation.
Both utility and public utility commission (PUC) comments emphasized that the criteria and the process needed clarity so that an early assessment could be made of what would be needed to assure renewal and what it would cost.
Then a reasoned economic decision could be made on whether to go forward even with the recognition of some risk of later finding a problem which could affect the cost or attractiveness of renewal.
An associated need is for flexibility to accommodate renewal periods
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fil Ucense Renewah The Utility Dachkmmakino Per*_%ctive
-substant ally less than 20 years where power needs or cost i
factors so dictate.~A clear and predictable process may enable conditional rate approval by PUCs and Federal Energy Regulatory Commission (FERC), providing utilities greater assurance of cost i
recovery of capital additions for license renewal.
In pursuing the utility decisionmaking perspective, we looked for a decision process and a set of decision criteria that i
would be somewhat unique to nuclear plant license renewal.
What we found were a process and criteria, somewhat neutral to whether the generation' source was' fossil or nuclear, focussed on the short-and..long-term _ economic viability of the plant.
The utility relies on its engineering, legal, and financial staff to-develop analyses of the impact of proceeding with a plan for license renewal compared to various generation alternatives.
These include the need for power, both.from additional sources and ones currently in operation, the effect of competition from generating sources outside the utility, and the effect of demand-side management programs.
In one instance, even with a substantial equipment replacement, continued nuclear generation was cost-effective compared to new sources of power; however, the need for the capacity no longer existed. -Where nuclear generation differs from fossil is in the need to get the facility relicensed at all and the perceived risk that unforeseen costs l
may arise from required plant upgrades and the relicensing j
It was the element of uncertain cost'that arose most process.
often as a negative for nuclear relicensing.
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iV License Renewal: The Utirrty Decisionmakino Perspective
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CONTENTS 11 EXECUTIVE
SUMMARY
1 INTRODUCTION 1
DISCUSSION 1
The Environment for-License-Renewal 3
The Decision Process 4
Major Issues.
Economic Aspects of a License Renewal Decision 4
6 High-and Low-Level Waste.
7 Divarsity of Fuel Supply 7
Predictability in the License Renewal Process.
Sources of Influence on Decision for License Renewal.
8 State Public Utility Commissions and the Federal 8
Energy Regulatory Commission 10 Other State Agencies 11 The Public 11 Financial Markets.................
12 Public Interest Groups l
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1 Ucense Renewal: The Utility Decisionmakino Perspective INTRODUCTION In a memorandum to the Chairman discussing license renewal issues, dated November 6, 1992, the Executive Director for Operations (EDO) requested that OPP " expand on the work already performed to identify license renewal issues by inquiring further into the process that a utility would undergo in applying for a renewed license."
This inquiry was to include interactions that a utility would have with Federal, State, and local governments and with the State-public utility commission.
The results of this activity by OPP, in conjunction with license renewal issues already described, would identify the range of issues, and to some extent the qualitative decision criteria, to be used by a utility for determining whether or not to pursue license renewal.
It is the purpose of this report to provide the utility decisionmaking perspective on the broad range of issues to be considered for license renewal.
OPP conducted detailed interviews with management representatives of three utilities having substantial investment of resources on license renewal and plant life extension issues.
Detailed interviews were also conducted with two groups representing the public utility commission viewpoint.
In addition, contacts were made with other utility executives, persons representing utility interests, and an owners group representative, and representatives of two States, the financial community, and two public interest groups to assure that the full range of issues likely to arise in license renewal decisionmaking t
was identified.
DISCUSSION The Environment for License Renewal The environment under which a license renewal would be made has become more complex in recent years.
This complexity arises from a number of factors including the competitive situation that exists in electric generation, the increasing involvement by the states in economic regulation, waste issues which have received significant public attention, a flat demand for electricity in many regions, the system-specific economic viability of nuclear
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generation, and the need to make decisions based on projections and expectations of the NRC's license renewal process.
Principal among these are whether nuclear power is now or will be cost competitive for the involved utility and whether sufficient
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2 License Flenewal: The Utility Decisionmakino Perspective
-predretability will exist in the license renewal process and the disposal of high-level waste.
Our utility contacts indicated that the license renewal rule appeared to establish a satisfactory standard for license renewal.
However, since the completion of rulemaking, they feel that the NRC's'early implementation of the rule has significantly broadened the required review and, more importantly, has made the outcome of the renewal process less predictable thereby increasing their financial exposure.
This environment of uncertainty in what will ultimately be needed to succeed for license renewal is clearly the most troubling to the utilities.
State regulatory agencies are becoming much more active in approving plans for generating capacity.
In many states, this is accomplished by a program of integrated resource planning, meaning approval of new capacity only after exploration of alternatives, including programs to reduce growth in demand, called demand-side management.
In some cases, the process has treated a renewed nuclear license as a new facility, thus requiring approval at the state level.
We found no disagreement from utilities with the concept of integrated resource planning.
However, those we talked to perceived the process as biased against nuclear since it tends to focus on near-term economics.
In addition, concern was expresr,ed over the decisionmaking process which, for example, did not allow the assumption of license renewal for San Onofre, Unit 1, because it was too speculative, yet used other speculative assumptions, such as need reduction by demand side management.
Utilities are now competing with both nonutility generators (NUGs) and other utilities to supply the power and win new customers.
Existing and new capacity of the utility must be cost competitive.
PUC reviews take into account not only the prudence of expenditures but whether least cost options are utilized.
However, in some instances utilities are required to purchase NUG-supplied power even though a lower cost supply is available on their system.
(We were told of power being purchased at 8 cents per kWh and sold for 3.)
Utilities are faced with a difficult task of determining how much power will be coming from NUGs and its reliability since the NUGs are not obligated to a
serve an area, yet planning for reliable and cost effective power on their grid.
l At this time, license renewal is caught up.in cycle of i
short-term outlooks where natural gas is the current fuel favored
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for electricity generation.
During the past quarter century, J
coal, oil, natural gas, and nuclear have at various times, been
. thrust as the " fuel of the future," especially at the federal level.
This favored position in each case, has lasted only a few Renewable energy sources and demand-side management are years.
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promising alternatives which are favored by various groups.
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3 Ucense Renewat: The Utiitty Decisionmakino Persoective
-extra-burden, therefore, is required to sell the merits of alternatives out of favor at the time.
We were told that if a short-term benefit of license renewal could not be shown, acceptance by utility executives or regulatory agencies would be l
j unlikely.
1 Relative to the issues receiving current public attention, the disposal of high-level waste was prominent.
Even though i
local public support is generally strong near nuclear facilities t
because of jobs, taxes, and community integration, the longer-term need for onsite storage of spent fuel may erode this i
support.
At this time, low-level waste (LLW) issues did not appear to be a factor in the current environment for license renewal.
With respect to NRC's ability to influence this environment, l
the predictability of the renewal process is of primary concern.
Both utility and PUC comments emphasized that the criteria and the process needed clarity so that an early assessment could be made of what would be needed to assure renewal.
Then a reasoned economic decision could be made on whether to go forward even with the recognition of the risk of finding a last minute problem which could affect the economics or even preclude renewal.
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i The Decision Process J
In pursuing the utility decisionmaking perspective, we looked for a decision process and a set of decision criteria that r
would be somewhat unique to nuclear plant license renewal.
What l
we found were a process and criteria, somewhat neutral to whether the generation source was fossil or nuclear, focussed on the business aspects of meeting the utility's responsibilities.
The l
utility relies on its engineering, legal, and financial staff to develop analyses of the impact of proceeding with a plan for j
i license renewal compared to various generation alternatives.
These include the need for power, both from additional sources and ones currently in operation, the effect of competition from
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generating sources outside the utility, and the effect of demand-l side management programs.
In one instance, even with a i
substantial equipment replacement, continued nuclear generation was cost-effective compared to new sources of power; however, the need didn't exist for either.
Where nuclear generation differs from fossil is in the need to get the facility relicensed at all and the perceived risk that unforeseen costs may arise from required plant upgrades and the relicensing process.
It was the element of uncertain cost that arose most often as a negative for l
nuclear relicensing when contrasted to the perceived I
predictability of costs for fossil.
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4 License Renewah The Utility Decisionmakino Persoective i
Elements of the decision process are generally, technical, l
-regulatory, political, and economic or financial.
Evaluations are done for each of these elements and then synthesized into an overall conclusion for license renewal. -The utilities have concluded that the technical issues can be resolved.
First of all, they are familiar with the conditions of their facilities.
Secondly, they are confident that the knowledge is available to make any needed repairs or replacements.
The basic concern with regulatory issues is the cost of going through each of the i
processes involved, including the NRC, one or more PUCs or FERC, and where applicable, other state agencies.
To estimate regulatory cost, utilities look at the scope of the approval
- t process and the uncertainties.
For political considerations, l
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utility representatives told us they want to have a large fraction of public support.
Some described the extensive ongoing efforts to maintain and build public confidence in the utility and its activities.
One figure provided (more as an indicator than a hard number) was to keep at least a 50 percent approval rating.
This is especially important when major actions are being planned, such as license renewal.
To accommodate the more unquantified factors of these elements, primarily the uncertainties in the regularly process and the known opposition of various groups, those utilities we talked with require a I
considerable margin of economic advantage for the option of proceeding with license renewal.
r Major Issues Economic Aspects of a License Renewal Decision The perception of a distinct economic advantage for license renewal, extending the operating life of an already depreciated i
facility, has changed in recent years.
The cost of operating a nuclear plant in the renewed period, even with its low fuel charges, does not always compare favorably with alternative sources and energy management.
This was not generally considered to be an issue when license renewal was first considered.
However, because of the significant increases over inflation in i
operating and maintenance (O&M) costs for nuclear facilities, l
competition from generation sources inside and outside the utility, in addition to less-than-expected power demand has eroded the fuel-cost advantage.
The overriding concern is whether license renewal will be less expensive than available alternatives.
If it is not, with consideration of other factors described below, utilities will likely not proceed with license renewal.
i Change has occurred in the cost of fossil generation as well.
These relate primarily to new requirements of the clean i
Air Act somewhat improving the competitive position of nuclear i
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j License Renewal: The Utility Decisionmakino Persoective l
-compared to fossil.
In addition, a significant impact favoring i
nuclear could occur if a carbon tax, as opposed to an energy tax, were to be enacted.
This issue was mentioned only as an element j
of uncertainty and not one that would currently impact a license renewal decision.
The cost items that are given the greatest consideration are j
OEM costs, repairs and replacements, and decommissioning.
All l
J utilities indicated that OEM costs must be at or below the With l
general rate of inflation to make license renewal viable.
the recent trend of leveling OEM costs, this was believed to be a reasonable assumption.
Necessary replacement of major components are of concern, not only for the scale of the cost, but the cost recovery period.
Large expenses are capitalized (depreciated over a multi-year span) and smaller ones are expensed, (charged l
to ratepayers in the year of the expense).
The rules for cost l
recovery for in between items are not always consistent and depend on precedent and how the books are set up.
Therefore, l
what can be capitalized may differ from utility to utility.
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The rules of FERC and state PUCs are that costs can be j
recovered over the period of the existing license.
Therefore, i
utilities are faced with several issues on when and whether to c
make major investments in the plant.
In the case of a nuclear j
plant, its safety performance must be maintained up to the end of its license.
Thus if a major expense is necessary as the end of j
license is approaching, the decision may be to shut.down prior to j
license termination because of the short period for cost However, if the license has been renewed, FERC and l
recovery.
PUCs cost-recovery periods would change at the time of renewal to I
the end of the renewed license.
The undepreciated portion at the l
end of the current license is now depreciated over the period of the renewed license.
FERC would require a utility to file a l
changed depreciation schedule within six months of receiving a renewed license.
Without a renewed license, the incentive is to make the i
capital expense as soon as it is concluded that it is necessary so that the cost-recovery period is as long as possible.
Utilities can make capital expenditures in anticipation of obtaining a renewed license, however, such expenditures would For this generally be made at the risk to the stockholders.
1 an early approval of license renewal is important.
- reason, The period of funding for decommissioning is the same as for capital cost recovery.
FERC rules allow the period to.be extended in concert with the period of the renewed license.
The recent changes in anticipated decommissioning costs provides an incentive to extend the operating period to reduce the yearly j
decommissioning funding cost.
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6 Ueense Renewah The Utility Decisionmakino Persoective
-Finally, an issue that is new at least for some parts of the
-country is the substantial decrease in demand growth for electricity in the past two to three years.
This has increased the commercial pressure on all generating sources and raised consideration of whether the capacity of some plants, particularly smaller units, are needed at all.
Still, utilities i
and some PUCs are concerned about the number of nuclear plants whose licenses will expire in the following two decades and believe that the capacity will be needed -- either from the existing nuclear plants or with a replacement.
Elgh-and Low-Level Waste Prom the utility perspective, timely resolution of the HLW disposal issue is considered to be critical in order for them to proceed with a decision to apply for a renewed license.
The utilities expressed corporate concern about the potential, practical, and econcaic problems associated with long-tern storage of spent fuel on site if disposal or offsite storage is not provided by DOE.
However, it did not appear that these problems in and of themselves would significantly discourage a utility from deciding to renew a reactor license.
The utilities' greater concern is that absent the existence of an HLW disposal facility or at least an MRS for interin offsite storage, there would be sufficient public opposition to extending the operating life of nuclear power plants that pursuing license renewal would not be feasible.
From recent experience with efforts to expand onsite spent fuel storage at several reactors, the utilities know that lack of l
disposal for spent fuel is a public issue.
They have seen that there is what was referred to as a " psychological impediment" to allowing a utility to expand onsite storage without an HLW disposal' facility, because of the perception that such storage could become permanent.
These concerns have been raised at various levels and some States have enacted statutes limiting the amount or the age of the spent fuel that is allowed to be stored by utilities on site at reactors.
The utilities indicate that disposal will have to be available in order to remove this obstacle t.o license renewal.
i The PUCs are also concerned about spent fuel disposal.
Recently, through the National Association of Regulatory Utility Commissioners'(:NARUC) an office of nuclear waste was established.
NARUC is concerned about the lack of progress in high-level waste l
disposal in light of the $8 billion that has been collected from their constituents and the increasing need to build costly onsite storage.
Since license renewal could exacerbate this situation, l
NARUC sees the waste issue as significant to the renewal process.
The function of the office of nuclear waste is to bring about i
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7 Lkense Renewah The Utility Decisionmakino Persoeetive
, communication and consensus-building among the various stakeholders, including NRC and DOE.
The utilities are concerned about LLW disposal and how it t
will affect reactor license renewal decisions to varying degrees depending on where they are located and the progress shown by their respective compacts or States towards developing new capacity.
Diversity of Fuel Supply We discussed the often cited benefit of diversity _in generating mix as an incentive for license renewal.
One argument i
for nuclear is that it provides an alternative to total reliance t
on fossil fuels, which is the alternative for a good share of the country.
Diversity is desirable not only for regional and national reliability, but also for individual utilities.
One utility explained that maintaining flexibility and diversity is the strongest position to be in.
When forced to cut off one For option, then the others can become more of a problem.
example, without the nuclear facility, fossil fuel suppliers and transporters can be more demanding.
Competition is needed to bargain.
However, if nuclear is not shown to be cost competitive, the diversity argument would not carry much weight, particularly at the state level.
Predictability in the License Renewal Process This issue, along with the economics of license renewal, was the one most cited and discussed by all parties.
The utilities and PUCs expressed the need for being able to determine with good assurance the cost and outcome of a renewal application.
We were told that clarity of expectations by the NRC and stability once set were crucial to the planning needed in the current environment.
The hearing process and the potential for backfitting without the benefit of 50.109 were cited ~as areas which needed special NRC attention to ensure that unwarranted requirements were not set.
Substantial costs for equipment replacement and, if necessary, for the renewal process itself could be accommodated if the risk of surprises and delays was e
minimal.
of course, all parties recognized that unforeseen events could require the NRC to change its requirements but this was an acceptable risk given that the economics and other factors favored a license renewal.
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B Ucense Renewah The UtNtv Decisionmakino Persoective Eources of Influence on Decision for License Renewal In applying for a renewed license, a utility will interact with various Federal, State, and local governments and their respective regulatory agencies, such as the State public utility commission, and with the nublic.
Requirements imposed on the utility in the pursuit of license renewal by these graups, or issues raised by these groups, will impact both the rtility license renewal decisionmaking process and the licenue renewal process itself.
Our contacts for this report provided an oppoItunity to 1
discuss license renewal interactions and concerns with representatives of nine states.
We found that even for this limited sample, there is considerable variability in the way these diff* rent states would expect to interact with the utilities relative to license renewal (partly because they are t
organized so differently), the opportunities for interaction, the l
tineing of interactions, requirements which would be imposed on the utilities, and the extent to which license renewal would require review and analyses as if for a new license.
State Public Utility Commissions and the Federal Energy Regulatory Commission Although the activities of the PUCs vary considerably between states, there is a trend toward more involvement in decisions traditionally left largely to utilities.
One of the activities that prompts this involvement is the need for what is c
i often called " integrated resource planning."
Integrated resource planning typically looks at a 5-to 15-year window to determine the power needs of the region, how they will be satisfied by e
available sources and by demand-side management, and makes assumptions regarding future fuel costs and plant reliability.
From these analyses, the future need for each power source in the mix, with its attendant cost of generation, can be assessed.
As in some recent cases involving nuclear plants, decisions involving continued operation, much less license extension, can lead to abandonment of the power source.
As a result, most PUCs expect to become involved in approval of a nuclear plant operating beyond the original NRC license; some may not, or only become involved if certain criteria were met.
Clearly, if a utility were ready to spend significant resources toward license renewal, it would lessen the risk to the utility to have the regulator on board.
Any PUC or FERC activities.are triggered by termination and renewal of the NRC operating license.
Except for this, the original FERC and PUC approvals could have been for a different period or perhaps indefinite as is usuaily the case for fossil facilities.
Both FERC and the PUCs indicated that
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License Renewah The Utility Decisionmakina Perspective
-necessary rate adjustments i.r license renewal would consider the same factors as any other instance of rate making.
Acerovals and Reviews Generally'there are three areas where utilities interact with a PUC or FERC:
(1) the issuance of a certificate of need whereby the facility is authorized for construction, and the finding of used and useful whereby the facility operation is found to be in the public interest; (2) ratemaking including rates for power. charged.to custcmers and matters such as prudence of the expenditures; and (3) integrated resource planning.
Integrated resource planning is a fairly recent undertaking of most PUCs.
The approach is to review and approve in advance the type and capacity of generating capability in a service area, or perhaps region over a forecast period.
Frequently, demand-side management 's a part of this plan, which includes active implemLnta;'.on of a program for reducing demand on the system.
Some utilities in our survey have a perception that PUCs allow higher rates of return on investment when the rate case involves a fossil rather than a nuclear expenditure.
They indicated their belief that risk / reward for nuclear is out of balance because if lower nuclear fuel costs save money, the benefit is passed to the consumer but if higher costs accrue because of nuclear issues the company picks up the tab.
This provides a lower incentive to extend the operating period of a nuclear facility.
In addition, a new consideration for some PUCs in evaluating alternatives includes externalities -- costs to the public that are not born by utilities costs or reflected in rates.
Damage to air and water quality is most frequently mentioned.
Concern was expressed that such an evaluation may not be truly reflective of the costs and benefits of nuclear generatien, for example the air quality issue.
Radiological releases may be counted for a nuclear plant, but not for fossil-fired plants, in spite of the significant amounts of radiological releases f rom some f ossil plants, dependent o:4 the origin of the fuel.
. criteria for Approval Although PUCs' activities and approval criteria vary from state to state, cost of power to the consumer is the overriding criterion for approval.
If the economic benefits of license renewal are marginal, an application will have problems.
The burden is on the utility to show the action is a prudent choice for ratepayers.
l Some utilities we spoke with feel that PUCs tend to have a shorter-tern horizon than the utilities.
One indication of thic i
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10 License Renewal: The Utility Decisionmakino Perspective sis that the economic advantage of l cense renewal has to be shown l
i in the near term.
If it is shown that it is the right economic choice only in the long run, it may not be acceptable.
Period of Cost Recovery Although the rules of cost recovery through rate regulation are rather straightforward, some utilities expressed concerns with actual situations.
One questioned how undepreciated assets from the original period would be treated in the renewal period.
Some PUCs may not allow taking credit for license renewal without a renewed license.
Utilities are faced with an uncertainty when capital additions are needed to continue for the remainder of the original license.
An increasing tendency in this situation is to shut down before the original license expires rather try to recover a major expenditure in just a few years.
One utility indicated that a way around this is to make the capital additions as soon as possible to extend the period of recovery.
A representative of a state commission confirmed that e PUC likely could not approve a major capital addition late in the current operating license unless there is some assurance of continued operation.
However, if NRC set out just what had to be done to receive approval of license renewal and the utility laid i
out a plan for meeting this, the PUC may be able to approve expenditures provisionally, subject ot prudence requirements.
This could be a reasonable risk for the utility.
other State Agencies The involvement of state agencies other than the public utility commissions varied considerably.
At one extreme are those agencies that would consider a renewed license as a continuation of the current license, or those whose interest is triggered by specified time intervals rather than the expiration of the NRC operating license.
In these cases, there would be no licenses or permits issued specifically because of license c
renewal.
On the other extreme is an initiative in the Minnesota state legislature to require a certificate of need for license renewal.
For this state, the certificate of need proceeding extends beyond the one traditionally issued by the PCC at the construction stage In this or prior to allowing the facility into the rate base.
various state agencies participate as intervenors in the
- case, PUC proceeding.
The state officials interviewed believe that a
. certificate of need would be required for any major energy facilities, including nuclear waste facilities.
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11 License Renewah The Utility Decisionmakino Perspective
-Even though the federal environmental impact statements for nuclear facilities may have been reviewed at the state level for s
the construction permit and operating license stage, regulation of energy facilities in Minnesota has changed since the 1970's.
More information will be required in order for the state to complete its review.
We were told by the utility in this state that it is trying to avoid major action on any nuclear issue until more is known how the legislature will decide the issue of certificate of need for license renewal.
Activities on license renewal will be low key for now.
The Public Those utilities we interviewed described efforts in maintaining support for the facility as an industry and business in the area.
Utility employees work with business and community leaders as a means of continuing this support.
While this factor it may not affect the decision to proceed with license renewal, was clear that the support of the surrounding communities is considered very important and the utility would not want to proceed without it.
More important than the issue of license renewal is the likelihood of needing to store low-and high-level waste on site in order to keep the plant running.
We were told that this is most likely to raise concerns from interest groups from outside the region.
Local public support is therefore i
valuable as a counter.
Public relations is directed at several groups, including, the public at 'arge, shareholders, state government departments, the legislature, and local districts.
All are target audiences.
Some utilities expressed a concern for the hundreds of workers when the plant is eventually shut down.
Also, they are concerned that jurisdictions now benefitting from the substantial taxes paid by the utility may suffer when the plant is shut down.
A sizable fraction of total taxes may be paid by assessments on the nuclear plant.
A renewed license would delay loss of these revenues to the governmental units.
Financial Markets Utilities are capital intensive and therefore heavily dependent on outside financing.
High bond ratings and other favorable financial indicators are important for low-cost financing.
Utilities are concerned that some financial analysts view nuclear investment as riskier than other electric utility
, investments and that higher financing costs arise.
In the utilities' view, a handicap with nuclear is that problems are considered to be generic, whereas problems in other industries or fossil powered electric plants are specific to that facility.
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12 License Renewah The Utility Decisionmakino Persoective Jor example, a forced outage at any nuclear plant has to be explained to financial markets.
In our direct conversation with the utility analyst of a the issues he major brokerage house concerning license renewal, raised were similar to those of the utilities, PUCs, and FERC.
These are:
(1) what are the economics compared to other forms of energy; (2) are there any big investments needed, for example steam generator replacement; (3) is there a facility for the spent fuel; (4) what is the situation regarding public i
(5) is the nuclear decommissioning fund adequate; and i
opposition; will the NRC keep pressing for improvements even though the (6) plant is operating satisfactorily?
He did not feel that nuclear investments were treated differently in the financial markets where the financial performance was similar.
i Public Interest Groups Public interest groups have concerns about the renewal of operating licenses known for both plant-specific and generic issues.
We found the high-level waste issue and the ability to keep older plants well maintained to be the principal generic We heard from an intervenor and officials of agencies i
concerns.
i in one state that the Mark I containment would be an issue for license renewal.
The issue, which could apply to other features i
of currently operating plants, was whether the NRC should renew the license for a plant having a Mark I containment if the NRC would not find it acceptable for a new plant.
Without a j
High-level waste disposal is a significant issue.
solution, there should be no license renewal in the eyes of the i
public interest groups.
The biggest unknown in their view is the opening of Yucca Mountain.
They are concerned that an eastern I
HLW repository may be reopened.
Also, there is opposition to storage of spent fuel on nuclear plant sites.
At the local level there is concern that as a plant ages, capacity factors decline.
They feel there is a connection between declining capacity factors and unresolved safety issues.
A national intervenor group we interviewed was very displeased with the large portion of issues to be excluded for individual cases with the draft GEIS for license renewal.
Furthermore, this organization felt that NEPA reviews should be Need for done periodically during the 40-year operating life.
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power was mentioned as an issue that should be periodically revisited.
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