ML20058P991
| ML20058P991 | |
| Person / Time | |
|---|---|
| Issue date: | 08/15/1990 |
| From: | Carr K NRC COMMISSION (OCM) |
| To: | Conte S HOUSE OF REP. |
| Shared Package | |
| ML20058P995 | List: |
| References | |
| NUDOCS 9008210040 | |
| Download: ML20058P991 (2) | |
Text
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o*g UNITED STATES
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NUCLEA 1 REGULATORY COMMISSION
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y WASHINGTON, o. C. 20665
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August 15. 1990 l
CHAIRMAN t
t The Honorable Silvio 0. Conte i
U.S. Heuse of Representatives Washington, D.C.
20515
Dear Congressman Conte:
I am responding to your letter of July 20, 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 Internal Revenue Code in 1984, I can explain the basis for the NRC position on reliance on estimated tax deductions to fund decommissioning.
Before the Commission promulgated its decommissioning regulations in 1908, it carefully considered the options to ensure that funds would be available.
In the preamble to its final rulemaking on decommisAioning, 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 t
not' provide reasonable assurance that decommissioning will be carried out in a manner which protects public health and safety.
Accordingly, the proposes rule has been modified to eliminate the internal reserve as a 4
possible nethod of providing funds for decommissioning.
In reaching this conclusion, the Commissior noted that:
although the Atomic Entrgy Act ano 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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-..q:.;h: t: t; r regulatory actions may be necessary to protect the public health and safety, including the promulgation cf rules prescribing allowable funding methods for meeting decommi:sioning 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-l time of permanent shutdown, n n.m n.
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2 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 would not accrue until a'lter 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 decommissioning process.
We also note that decommissioning activities will not commence until well into the next century.
It is difficult to predict both future tax rates and a utility's financial ability to convert tax deductions into actual funds that the utility coule use to finance decommissioning activities if, for example, it did not have sufficient income from which to deduct decommissioning expenses.
We believe that the value of tax deductions so f ar 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 requiremrats 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 property for unrestricted use and termination of the license.
Those regulations do not impose requirements en funding such activities as 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 funds generated from tax deductions for these types of activities.
In conclusion, we believe that the staff guideline currectly interpret: the Atomic Energy Act of 1954, es 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.
[~A.L Kenneth M. Carr
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