ML20058P967
| ML20058P967 | |
| Person / Time | |
|---|---|
| Issue date: | 08/15/1990 |
| From: | Carr K NRC COMMISSION (OCM) |
| To: | Mcgrath R HOUSE OF REP. |
| Shared Package | |
| ML20058P969 | List: |
| References | |
| NUDOCS 9008210034 | |
| Download: ML20058P967 (2) | |
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UNITED STATES ;
e n-NUCLEAR REGULATORY COMMISSION h
WASHINGTON, D. C. 20666 S
/
,, j August 15, 1990 CHAIRMAN l
The Honorable Raymond J. McGrath U.S. House of Representatives Washington, D.C.
20515-j
Dear Congressman McGrath:
I am responding to your letter ofcJuly 16, 1990,- in which you expressed concern about a statement in the-U.S. Nuclear Regulatory Commission's (NRC's) final Regulatory Guide, " Assuring the-Availability of Funds for Decommissioning Nuclear Reactors."
While I cannot comment on'the intent of Congress in revising' the j
internal Revenue Code in 1984 I can explain the basis for=the NRC'pcsition on reliance on es,timated tax deductions to fund decommissioning.
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Before the Commission promulgeted 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 decommissioning and hence_does 7
not provide reasonable assurance that decommissioning will be carried out in a manner _which protects public health :-and saf ety.
Accordingly. -the proposed. rule ' has been modified to eliminate the internal reserve as a possible method of providing funds for decommissioning.
g In reaching this conclusion, the Commission noted that:-
although the Atomic Energy Act and Energy-Reorganizction Act do not permit-the NRC to regulate rates or to supersede the decisions.of State or Federal agencies respecting !.he economics of nuclear
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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, 1988 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, t
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The Commission believes that relying on future tax deductions which may become available at the time the plant is decommissioned-is a form of internal reserve and thus prohibited by the NRC's-decommissioning rule.
Funds generated by tax deductions would flow directly to a company and thus, by definition, are internal rather than external reserves.
In addition, such tax deductions weuld not accrue until'after decommissioning work was completed for a particular tax year..Thus, such tax deductions could not be used to satisfy the regulatory requirement that necessary decommissioning funds be accumulated before the start of the t
decommissioning process.
We also note that decommissioning activities will not commence until well-into the next century.
It is dif ficult to predict both future tax rates and a utility's financial ability to convert. tax deductions into actual funds that the utility could use to-finance decommissioning activities if, i
for example, it did not have sufficient income from which to 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 the+ nur decommissioning funding regulations in Part 50 impose requirements with regard to funds needed for.the safe removal of a nuclear f acility from service and_ the reduction of residual radioactivity to a level that permits release of the property for unrestricted use and termination of the license.
Those regulations do not impose-requirements on funding such activities as demolition of non-radioactive structures, site restoration, and removal-of spent-fuel f rom 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 funds generated from tax deductions for these types of activities.
In conclusion, we believe that the staf f guiueline currectly interprets the Atomic Energy Act of 1954, as amended, the Energy 3eorganization Act of 1974, as amended, and the' Commission's existing decommissioning funding regulations.
I trust that this exolains the basis for the NRC position in this matter.
Sincerely, wak.
Kenneth M. Carr