ML20058P921
| ML20058P921 | |
| Person / Time | |
|---|---|
| Issue date: | 08/15/1990 |
| From: | Carr K NRC COMMISSION (OCM) |
| To: | Hansen J HOUSE OF REP. |
| Shared Package | |
| ML20058P924 | List: |
| References | |
| NUDOCS 9008210016 | |
| Download: ML20058P921 (2) | |
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M to uq%g UNITED STATES NUCLEAR REGULATORY COMMISSION a
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,I w AsHINGTON, D. C. 20666 August 15, 1990 CHAIRMAN The konorable James V. Hansen j
U.S. House of Representatives Washington, D.C.
20515
Dear Congressman Hansen:
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I am responding to your letter of June 26, 1990, in which you expressed concern about a statement in the U.S. Nuclear Regulatory Commission's (NRC's) final Pegulatory Guide, " Assuring the Availability of Funds for Decommissioning Nuclear Reactors."
i While I cannot comment on the intent of Congress in revising the Internal Revenue Code in 1984, I can explain the basis for the NRC position on reliance on estimated tax deductions to fund decommissioning, l
Before the Commission promulgated its decommissioning regulations in 1988, it carefully considered the options to ensure that funds would be available.
in the preamble to its final rulemaking on decommissioning, the Commission concluded that:
the internal reserve does not provide reasonable assurance that funds will be available when needed to pay the costs of decomn.issioning and hence does i
not provide reasonable assurance that decommissioning will be carried out in a manner which protects public I
health and safety.
Accordingly, the proposed rule has been modified to eliminate the internal reserve as a possible method of providing funds for decommissioning, in reaching this conclusion, the Commission noted that:
although the Atonic Energy Act and Energy Reorganization Act do not permit the NRC to regulate rates or to supersede the decisions of State or Federal agencies respecting the economics of nuclear
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n t a.j e r regulatory actions may be necessary to protect-the public health and safety, including the promulgation of rules prescribing allowable funding methods for meeting decommissioning costs.
53 FR 24018 at p. 24033, June 27, 1989 Sections 50.75(e)(1)(ii) and 50.82(c)(1) of 10 CFR also provide that funds needed for decommissioning are to be accumulated by the time of permanent shutdown.
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The Commission believes that relying on future tax deductions which may become available at the time the plant i s decommissioned is a form of internal reserve and thus prohibited by the NRC's decommissioning rule.
Funds generated by tax deductions would l
l flow directly to a company and thus, by definition, are internal rather than external reserves.
In addition, such tax deductions would not accrue until af ter decommissioning work was completed for a particular tax year.
Thus, such tax deductions could not be used to satisfy the regulatory recuirement that necessary decommissioning funds be accumulated before the start of the decommissioning process.
We also note that decommissioning activities will not commence until well into the next century.
It t
is difficult to predict both future tax rates and a utility's financial ability to convert tax deductions into actual funds that the utility coul'c use to finance decommissioning activities if, for example, it did not have sufficient income from which to i
deduct decommissioning expenses.
We believe that the value of tax deductions so far in the future is subject to considerable uncertainty, thereby further reducing the assurance that funds may be available for decommissioning.
It should be noted that our decommissioning funding regulations in Part 50 impose requirements with regard to funds needed for the safe removal of a nuclear f acility f rom service and the reduction of residual radioactivity to a level that permits release of the l
property for unrestricted use and termination of the license.
Those regulations do not impose requirements on funding such activities 's demolition of non-radioactive structures, site restoration, and removal of spent fuel from the reactor.
These latter activities have been estimated to cost as much as $50 million to $60 million at some sites.
Utilities would not be restricted by the NRC in using f unds generated from tax deductions for these types of activities.
In conclusion, we believe that the staff guideline currectly interprets the Atomic Energy Act of 1954, as amended, the Energy-Reorganization Act of 1974, as amended, and the Commission's existing decommissioning funding regulations.
I trust that this explains the basis for the NRC position in this matter.
Sincerely, nnW.
Kenneth M. Carr
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