ML20056H393
| ML20056H393 | |
| Person / Time | |
|---|---|
| Issue date: | 09/02/1993 |
| From: | Joseph Austin NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS) |
| To: | Hammond J UNITED KINGDOM |
| References | |
| REF-WM-3 NUDOCS 9309090245 | |
| Download: ML20056H393 (11) | |
Text
,
Mr. J. M. Hammond SEP 0 2133 First Secretary Environment, Energy and 1
Telecommunications British Embassy 3100 Massachusetts Avenue, NW Washington, DC 20008-3600
Dear Mr. Hammond:
In response to your letter of August 3,1993, we have enclosed responses to your questions regarding the decommissioning of nuclear facilities.
If you have any questions or would like to meet with us to discuss our responses, please contact me at 301-504-2560.
Sincerely, (Dridaal Signed by -
_)
John H. Austin, Chief L
Decommissioning and Regulatory Issues Branch Division of low-level Waste Management and Decommissioning
Enclosure:
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Responses to Decommissionino Questions General Considerations
- 1. Does the United States' nuclear industry operate within the public or private sector?
The nuclear industry in the United States has components within both the public and private sectors. The U.S. Department of Energy (DOE) is responsible for the defense uses of nuclear materials. The Nuclear Regulatory Commission (NRC) regulates the commercial uses of nuclear materials, including commercial nuclear reactors owned privately or publicly and commercial uses of nuclear materials at hospitals, universities, and within private industry. The NRC also regulates the use of non-defense nuclear materials by Federal agencies, e.g., Veterans Administration hospitals, etc. The NRC has an Agreement State program, in which 29 States regulate the possession and use of nuclear materials at hospitals, universities, and within the private sector.
- 2. Who is responsible for deciding policy on nuclear decommissioning generally, and in relation to individual plants?
The NRC is responsible for general decommissioning safety policy for its licensed facilities.
Licensees have the responsibility to propose decommissioning actions needed at their facilities.
NRC will review and approve these decommissioning plans prior to their initiation by licensees.
- 3. When examining costs for nuclear decommissioning, what are those costs intended to cover? Are, for instance, spent fuel storage and reprocessing and waste management costs following shutdown included?
The generic decommissioning cost estimates prepared by the NRC for nuclear power reactors include the costs of decommissioning planning, remediation, the waste disposal associated with remediation wastes, and the conduct of final surveys. NRC does not include in its power reactor decommissioning cost estimates the costs of spent fuel management, reprocessing, and the disposal of spent fuel.
The NRC cost estimates also do not include the costs of d&molishing buildings to a "greenfield" condition after the radioactive contamination has been removed to acceptable levels.
Further information on this subject can be found in Attachment 1, a copy of the Statement of Considerations for the decommissioning rulemaking promulgated in 1988.
- 4. What are the time-scales of current adopted decommissioning strategies for reactors, fuel cycle plant and research fac;11 ties?
(Time span from shut-down to final decommissioned state, at stage 3)
For power reactors the NRC allows the use of three decommissionirg strategies.
These strategies were intended for light-water reactor cases.
The immediate dismantlement strately (DECON) would result in dismantling within about 5 years after shutdown.
It is equivalent to the IAEA Stage 3 strategy. The delayed dismantlement strategy (SAFSTOR) would result in dismantling within 60 years after shutdown.
This timeframe was recommended i
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. based on studies that show there is no significant advantage, in reduced costs or worker exposures, in delaying dismantling beyond the 60-year period. A longer SAFSTOR period could he approved if the licensee can demonstrate that greater protection of public health and safety would result. The EMTOMB strategy could be used for those special cases where all of the residual activity decays to levels acceptable for unrestricted release in about 100 years. Current commercial power reactors would probably not be able to use this option since it is unlikely that radionuclide inventories would decay to levels acceptable for unrestricted release within 100 years.
For research and test reactors, fuel-cycle facilities, and materials licensees, our studies show that there is no significant advantage to delaying dismantlement after shutdown. Therefore, the immediate dismantlement strategy (DECON) is required for these facilities.
Further information on this subject can be found in Attachment 1, a copy of the Statement of Considerations for the decommissioning rulemaking promulgated in 1988.
Acoroval
- 5. At what stage (s) are operators obliged to submit, to Regulatory authorities, for approval, detailed plans for decommissioning?
For reactors, a preliminary decommissioning plan is required to be submitted, although not for approval, within 5 years of the intended permanent shutdown. The most significant component of the preliminary decommissioning plan is a site-specific decommissioning cost estimate.
If there is a projected shortfall in decommissioning funds, that have been set aside during operations, the licensee would have 5 years to provide the additional monies. Within two years after shutdown, and in no case less than one year from the expiration of the operating license, the licensee must submit, for approval, a proposed decommissioning plan. The proposed decommissioning plan would include the choice of the deconmissioning i
strategy to be used, a description of the radiologic controls that will be j
in place during decommissioning, a description of the planned final survey, an updated site-specific cost estimate, and a description of the technical specifications, quality assurance, and physical security programs that will be in place during decommissioning.
If a power reactor licensee chooses the SAFSTOR option, the proposed decommissioning plan would sidress those activities that would take place during the SAFSTOR period. The licensee would provide a proposed decommissioning plan, for approval, for the dismantling of the facility prior to undertaking dismantling operations.
Certain fuel-cycle and materials licensees would be required to submit a proposed decommissioning plan, for approval, prior to initiating dismantling operations. Other materials licensees, whose decommissioning involves activities that are similar to activities routinely used during
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- 6. Is Regulator approval of the plans conditional upon any kind of financial assurance from the operator?
For most cases, licensees will have established sufficient financial assurance prior to decommissioning and no additional licensing conditions will be needed. However, in those cases where there may be insufficient l
financial assurance, the NRC could condition approval of the i
decommissioning plans on obtaining additional financial assurance.
- 7. Are financial conditions attached to the granting of licenses and in extending licenses for decommissioning activities? Do regulatory bodies take into account the ability to meet decommissioning costs when granting licenses?
The NRC's financial assurance requirements were promulgated in 1988. These l
I regulations required reactor licensees to provide financial assurance by July 26, 1990.
Certain materials licensees, having possession limits in excess of specified thresholds, were required to provide financial assurance by July 27, 1990.
In addition, new applicants for licenses, as well as applicants for license renewal, must also meet the financial i
l assurance requirements if their possession limits exceed the thresholds.
If a licensee is unable to meet the financial assurance requirements, a license would not be granted.
Spent Fuel / Waste Manaaement i
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- 8. Is there a separate provision for disposal of spent fuel and radioactive i
I waste in the companies' books?
(i.e., outside the decommissioning l
provision) l Power reactor licensees ;nust provide, under 10 CFR 50.54(bb), a plan for i
i providing funding for the management of spent fuel from shutdown until l
title and possession of the spent fuel is transferred to DOE for ultimate l
disposal. The costs and methods of disposal of other radioactive wastes (i.e., non-spent fuel wastes) would be considered in the preliminary and proposed decommissioning plans.
- 9. When is it expected that facilities will be available for the disposal of l
High Level, Intermediate Level, and Low Level radioactive wastes?
The DOE is responsible for developing the high-level waste repository at Yucca Mountain, Nevada.
The current DOE schedule for beginning operations at the high-level waste repository is 2010.
Low-level waste disposal facilities, that accept intermediate wastes with up to Class C concentrations (as defined in 10 CFR Part 61), are currently operating in i
Hanford, WA and Barnwell, SC. New low-level waste disposal sites are l
scheduled for operation between about 1996 and 2000.
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F 10.
Is construction of such disposal facilities proposed for the future and if so when will they be likely to be completed?
See response to Question No. 9 above.
11.
What will be the impact on decomissioning costs and on funding if availability of waste disposal resources is delayed?
The Nuclear Waste Policy Act set up a fund for the development of the high-level waste repository. Utilities are charged I mil /kw-hr for nuclear generated power to cover the costs of the high-level waste repository. The charges for low-level waste disposal are set by the currently operating low-level waste disposal facilities.
Our decommissioning financial assurance requirements require that reactor licensees update their cost estimates on an annual basis to account for increases in labor, energy, and waste disposal costs. Materials licensees are required to periodically update their cost estimates.
Currently, we are reviewing updated materials licensee decomissioning cost estimates on a five year basis. These updates will enable increases in waste disposal costs to be factored into decomissioning cost estimates. We also plan to periodically amend our regulations to account for increased decomissioning costs. Therefore, the impacts to changing waste disposal costs should not be significant.
Fundina 12.
Who is responsible for preparing / agreeing to estimated costs of decommissioning?
In general, power reactor and materials licensees can use NRC prepared decommissioning cost estimate default values specified in the regulations or can prepare their own cost estimates. For research and test reactors and some materials licensees, a site-specific cost estimate is required to be prepared by the licensee. NRC reviews the licensee prepared cost estimates as part of the decomissioning financial assurance reviews.
13.
What basic assumptions underlie decomissioning cost estimates - e.g.,
steady / increasing / decreasing / level of nuclear production; availability of/timescales for waste disposal routes; discount ratas; lifetime of nuclear plant?
Our decommissioning cost estimates are not based on assumptions regarding changes in the level of nuclear production.
Spent fuel disposal costs are covered by the 1 mil /kw-br charges discussed above in the response to 0~9stion 11.
For low and intermediate waste disposal, we use the current costs set by the operating low-level waste disposal sites. Changes iri disposal rates would be accounted for in the required cost estimate updates.
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. The cost estimates that were used to develop the decomissioning costs in the 1988 regulations use constant dollars. However, we are in the process of updating our cost estimates using dollars discounted at a 3 percent annual rate. These updated studies will be published over the next two to three years.
Power reactor licensees are allowed to use an external sinking fund mechanism for financial assurance. These external sinking funds are assumed to be in effect over the licensed operating period for the plant, that is, 30 to 40 years.
If a power reactor should shutdown prematurely, NRC staff will evaluate modifications to the funding requirements on a case-by-case basis. All other NRC i"censeci will have financial assurance mechanisms in place that cover the entire cost of decomissioning and, therefore, will not be dependent of the time period of operation.
14.
Where an operator is unable to meet decommissioning costs, do agreements exist whereby parent companies / associates or other subsidiaries become responsible for those costs? Are any such agreements enforceable by government?
Unless a licensee is using a parent guarantee as a decommissioning financial assurance mechanism (this is one of the acceptable financial assurance instruments allowed under NRC regulations), parent companies or subsidiaries would, in general, not be responsible for decomissioning costs.
If a parent guarantee is used, the instrument will have language that will make it enforceable by the NRC. Without a parent guarantee, NRC would have to have a legal basis to " pierce the corporate veil" to recover funds from parent corporations or subsidiaries.
15.
Do binding agreements exist whereby the government is able to recover money from parent companies / subsidiaries should the government find itself obliged to pay a defaulting operator's decommissioning costs?
Unless the licensee is using a parent guarantee to meet the decommissioning financial assurance requirements, NRC does not have such binding agreements.
16.
What estimates exist for the costs of decomissioning nuclear facilities in the nuclear industry for existing and proposed plants? Where possible give price base and identify whether costs are discounted or undiscounted.
I We are providing Attachment 2, which lists decommissioning cost studies performed for the NRC by Pacific Northwest Laboratories (PNL) for various nuclear facilities.
These studies are based on undiscounted costs. We use these studies as the basis for our review of licensee cost estimates. As a i
great deal of data, that can not be simply summarized, is presented in these reports, we suggest obtaining copies of the reports for your analysis.
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. Considerations relatino to industries with secrecated funds for the purp3se of meetino decommissionina costs 17.
Is there a requirement for segregated funds to be established to manage funds required to meet long-term decommissioning liabilities?
The decommissioning financial assurance requirements allow prepayment, surety, guarantee, insurance, and external sinking fund mechanisms for private entities. All of these instruments involve third parties and have language that effectively segregates licensee assets in the event of bankruptcy.
Prepayment and sinking fund mechanisms require that assets be held outside of the licensee's control.
18.
If the answer to 17 above is "yes" then; (i)
How does this operate? How often are contributions made?
Licensees can either provide for the entire cost of decommissioning using a prepayment method or use a sinking fund in which periodic payments are made over time. There are no specific requirements for the frequency of the periodic payments, but licensees are generally making payments on an annual basis.
If materials licensees use the sinking fund option, they must also cover the remaining portion of their financial assurance commitment with another acceptable mechanism (surety bond, letter of credit, etc.).
(ii)
Is it based on statutory / regulatory requirements?
The regulations (10 CFR 30.35, 40.36, 50.75, 70.25, and 72.30) require that funds used in prepayment and sinking fund instruments are segregated and held outside of the licensee's administrative control. There are no statutory requirements in this area.
(iii) Does the company retain control of the funds?
No.
(iv) How much should be held in the fund at any one time and who dictates the amount to be held?
Licensees must provide sufficient funds to meet the financial assurance requirements in 10 CFR 30.35, 40.36, 50.75, 70.25, and 72.30. The amount will vary depending on the type of licensee, the possession limits established in the license, and the type of material being possessed.
(v)
How is the amount to be put into the fund calculated?
The amount of financial assurance is determined by the default values specified in the regulations or, in some cases, by site-specific cost estimates.
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(vi) To what extent are inflation and interest rates taken into account in deciding the amount in the fund?
See response to Question 13. Power reactor licensees are required to update costs annually to reflect inflation and must periodically adjust their annual fund contributions to account for both inflation and interest earned on their funds.
(vii) What is the justification for any discount rates used?
Current decommissioning cost estimates do not incorporate discount j
rates.
In the updated decommissioning cost studies that are under preparation by PNL, we will be using a discount-rate of 3 percent.
This rate is considered reasonable for use in estimating expenditures to be made in a ten to thirty year timeframe. Use of higher discount l
rates (e.g., 8-15 percent) may be appropriate for expenditures to be made over the next one to three years, but generate unrealistic i
results for expenditures over decade timeframes.
(viii)
Under what circumstances can the amount in the fund be altered?
See response to Question 11 for changing the amount to account for i
increases in costs. Any request to lower the. amount of surety would be treated on a case-by-case basis. A licensee could also lower the j
surety amount to account for completed remediation activities.
j 19.
What is the impact of taxation on decommissioning costs and the funds I
set aside for them? Are any tax reliefs available and if so at what l
point are these received?
l Tax provisions in the United States were amended last year to broaden allowable investments for funds set aside for decommissioning.
Funds placed'in external decommissioning trusts are treated as tax-deductible expenses in the year they are deposited.
Previously, only funds invested I
in certain ways were considered to be tax exempt.
In addition, last year's amendment will lower the tax rate on the earnings on decommissioning funds from 34 percent to 20 percent. We have not quantified the impact of the new law, but we expect it will be significant for electric utilities. The tax benefits will continue to occur annually.
20.
Where segregated funds are required, do these take any account of the possibility of early shut-down? How will any deficit in funds required be remediated?
l Generally, for power reactors, when an external sinking fund is used, the total decommissioning funds are required to be in the fund by the time the 1
license expires (normally a thirty to forty year period).
In the event of premature shutdown, the NRC will evaluate any shortfall in funds on a case-by-case basis.
In several premature shutdown cases, NRC staff has allowed licensees proposing SAFSTOR to accumulate the needed funds over the same period as if the plant were to operate to its license expiration date.
I h Where the DECON option has been chosen, the licensee has provided funding apprcpriate for that option.
21.
Do auditors have any particular role or duty with regard to the adequacy of the segregated fund in the light of future cash demands?
The NRC staff requires only that the licensee have the required amount of financial assurance and that an acceptable mechanism is used. The NRC staff does not monitor the types of investments made.
If there are loses in the investments, the licensee would be required to make up the difference so that the required amount of coverage remains in place.
Regulatory bodies such as State Public Utility Comissions and the Federal Energy Regulatory Commission monitor decommissioning funds closely.
Audited financial statements often note that decommissioning is a contingent liability that the licensee will ultimately incur.
22.
Over what period is the segregated fund built up?
This will depend on the operating objectives of the licensee.
For power reactors using external sinking funds, the fund is normally built up over the period of the operating license (thirty to forty years).
23.
Is the amount required in the fund by the end of the plant's operating life the total or discounted amount?
Currently, it is the total amount estimated to be needed in doll 3rs of the year of permanent shutdown.
24.
How will the question of shortfalls be addressed in the event that actual decommissioning costs exceed the amount in the fund?
The licensee is required to fund any shortfalls in a decommissioning fund.
For reactors, the NRC requires that a preliminary decommissioning plan be submitted 5 years prior to shutdown to identify any shortfalls prior to the cessation of plant operations (see response to Question 5).
If shortfalls develop during the decommissioning process, the NRC will review the licensee's proposed funding plan on a case-by-case basis.
25.
Have operators, obliged to maintain such segregated funds, suffered difficulties as a result of not having these significant sums available for reinvestment in the business?
(e.g., lack of funds for capital investment and expansion. loans at high rates to cover operating costs, etc.)
The NRC staff is unaware of any licensee difficulties from our requirement to maintain segregated funds. Generally, the amount of funds set aside is a small percentage of an electric utility's annual revenues so the impact of not being able to use decommissioning funds for internal business investment should not be substantial.
Considerations where alternative fundina methods have been adqpted D
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-g-26.
Where segregated funds are not mandatory, does the Government and/or regulatory body require any kind of assurances / guarantees that funding will be available when required?
If prepayment or external sinking fund mechanisms are used, the licensee must set aside funds in a segregated account. However, if a licensee chooses not to use prepayment or an external sinking fund, it must use another acceptable mechanism (i.e., surety, guarantee, insurance, and government statements of intent). Additional detail of these acceptable mechanisms are provided in 10 CFR 30.35, 40.36, 50.75, 70.25, and 72.30 and in Attachment 1.
We are also attaching (Attachment 3) a copy of a recent j
proposed rule that uses a self-guarantee mechanism.
27.
If the answer to 26 is "yes," what form must these assurances take?
We are providing under Attachments 4 and 5 our guidance and recommended wording for our acceptable financial assurance mechanisms.
28.
Apart from normal requirements for audit of company accounts, what form of monitoring, if any, exists to ensure that companies are adequately i
l providing for long-term decommissioning liabilities and that these provisions will be backed up ay the appropriate funds at the time of expenditure?
The NRC staff reviews the individual financial assurance cost estimates and mechanisms provided by the licensees to ensure that licensees have provided complete cost estimates and that the instruments have the appropriate legal wording te protect NRC rights in the event that the instrument needs to be drawn upon.
29.
Where no segregated fund is required, do regulations exist to limit the ways in which an operator should invest cash so as to protect the provision amount or is the operator free to invest the total provision amount as it pleases?
The NRC does not prescribe specific investments. However, the licensee is always responsible for maintaining the required amount of financial assurance and any investment losses would have to be made up.
30.
How have inflation / interest rates / rate of return affected the amount of the provision (and any investment) to be set aside each year?
The NRC staff is unaware of any licensee problems in these areas.
31.
What is the impact of taxation on decommissioning costs and the funds provided? Are any tax reliefs available and if so at what point are these received?
See the response to Questi6n 19.
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. 32.
Where a facility has shut-down, and no segregated funds exist, is cash to the value of the provision set aside for decommissioning then put into a separate fund?
l The NRC requires that certain licensees have financial assurance to meet our decomissioning requirements.
If licensees use other the" prepayment or sinking fund methods and if the NRC needs to draw on another mechanism, the l
monies are placed into a standby trust fund from which the NRC staff can direct its use.
Normally, however, a financially viable licensee will not have to draw on a surety, guarantee, or insurance mechanism and will provide for decomissioning costs from internal accounts derived from operating funds.
In this case, the NRC has no requirements for how the decommissioning is funded, except that the licensee must maintain an acceptable financial assurance instrument in accordance with the decommissioning financial assurance requirements.
33.
Do auditors have any particular role or duty with regard to the adequacy of decommissioning provisions and the assets behind them?
No. See the response to Question 21.
34.
To what extent do the provisions take into account such variable factors as early shut-down?
t See the response to Question 24.
j 35.
Over what period is the provision built up?
See the response to Question 22.
36.
What is the mechanism for adjustment of provisions to reflect inflation, interest, changes in cost estimates?
For power reactors, the regulations,10 CFR 50.75, provide a formula for updating the decommissioning cast estimates to reflect changes in labor, i
energy, and waste disposal costs, the primary components of decommissioning inflation.
For other licensees, the methods used for cost adjustment are i
reviewed on a case-by-case basis.
37.
Is the amount of provision required by the end of the plant's operating i
life the total or discounted amount? If discounted, what assurances are l'
there that, with cessation of the plant's income stream, the reinvested money wil continue to appreciate?
See the responses to Questions 23 and 24. There is no assurance that l
future investment income will appreciate. However, if there are losses, j
the licensee is required to make up any shortfalls to maintain the required amount of financial assurance. Normally, we would not experc a utility to simply stop providing power or cease all operations.
In the United States, because of the monopolistic structure of power utilities, a utility would still have income from other power producing plants with which to pay decommissioning shortfalls.
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