ML20071A113
| ML20071A113 | |
| Person / Time | |
|---|---|
| Site: | Shoreham File:Long Island Lighting Company icon.png |
| Issue date: | 04/11/1991 |
| From: | Staffieri V LONG ISLAND LIGHTING CO. |
| To: | Murley T NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM), Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML20071A115 | List: |
| References | |
| NUDOCS 9104150236 | |
| Download: ML20071A113 (11) | |
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LONG ISLAND LIGHTING COM PANY
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j April 11, 1991 l
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U.S. Nuclear Ragulatory Commission L
Document Control Desk Washington, D.C.
20555 Attention:
Dr. Thomas E. Murley, Director Office of Nuclear Reactor Regulation l-I Long Island Lighting Company's Response to the NRC Staff's February 26, 1991 Letter Regarding Decommissioning Funding i
Shoreham Nuclear Power Station - Unit 1 j
Docket No. 50-322 l
Dear Dr. Murley l
There has been extensive discussion already of how Shoreham is going to meet the NRC's deccmmissioning/ funding requirements, primarily set forth in 10 C.F.R. S 50.75.1 To the extent necessary, Long Island Lighting Company (LILCO or the Company) hereby requests an exemption from certain of the literal requirements of S 50.75..LILCO believes that its plan for funding Shoreham's decommissioning, described herein, meets the intent of the NRC's funding regulations.
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Letter from Victor A. Staffieri, LILCO General Counsel, to Dr. Thomas E. Murley (June 11, 1989)(initial request for approval of decommissioning funding mechanism for Shoreham); Letter from Stewart'W. Brown, Project Manager, Non-Power Reactors, Decommissioning and Environmental Projects Directorate, to Victor Staffieri (Dec.
3, 1990)(acknowledging LILCO's June 11 request);
Commission vote on SECY-90-386 (Jan.
3, 1991) (establishing " case-by-case" approach for prematurely shut down reactors); Meeting between NRC Staff and LILCO/LIPA/NYPA, Rockville, Maryland (Feb.
13, 1991); Letter.from Dennis M. Crutchfield, Director, Division of Advanced Reactors and Special Projects, to John D. Leonard, Jr., LILCO Vice President, Office of Corporate Services and Office of Nuclear (Feb. 26, 1991) (requesting - revised decommissioning funding plan by March 28, 1991); Letter from John D. Leonard, Jr., to NRC (March 26, 1991) (requesting extension until April'11 to respond to Staff's February 26 letter).
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Dr. Thomas E. Murley April 11, 1991 Pago 2 LILCO's proposal includes not only the three months' anticipated advance payments provided for in S 3.5 of the Sito Cooperation and Reimbursement Agreement, but also a $10 million supplemental cash recorve to cover any unexpected complications in the planned 27-month, $186 million DECON process at Shoreham.
In addition, as indicated in the attached lotter from William J.
Cowan, General Counsel, New York Public Service Commission (PSC),
the PSC has reaffirmed its commitment to ensure the availability of the funds necessary to decommission Shoreham in accordance with the settlement Agreement.
LILCO believes that its funding proposal is consistent with the Commission's action, in its vote on SECY-90-386, adopting a
" case-by-case" approach for those plants that have closed prematurely, after t5p effective date of the decommissioning funding regulations.k' The Staff, by contrast, apparently views the Commission's vote on SECY-90-386 as constraining the Staff from issuing an exemption and approving LILCO's funding plan.
To the extent that the Staff believes that the Commission's action on SECY-90-386 does inhibit the Staff's discretion to grant exemptions, on a case-by-case basis, from the decommissioning funding regulations, LILCO respectfully suggests that the Staff refer LILCO's request to the Commission, to obtain the Commission's views as to the consistency of LILCO's funding plan with its vote on SECY-90-386.
An Exemption from the Decommissioning Funding Rules Is Justified, Given__Shoreham's Uniaue Circumstances LILCO's request meets all of the critoria for a regulatory exemption under 10 C.F.R. S 50.12(a).
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For example, Commissioner Rogers stated in his comments on SECY-90-386 that there is "no requirement under current regulations that a licensee have all funds required by the cessation of plant operations, five years thereafter, or by tho end of the license term for that matter."
Rather, Commissioner Rogers continued, a licensee's " legal and financial obligations are defined by its commitments in the staff-approved Decommissioning Plan.
not by operation of (the decommissioning funding) regulations alone."
The regulations, Commissioner Rogers concluded, "are goal-oriented and primarily intended to require appropriate planning, both financial and technical."
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T LoNb esLAND LioHTvNo compwNY Dr. Thomas E. Murley April 11, 1991 Page 3 A.
The Request Is Authorized by Law, Will Not Present an Undue Risk to the Public Health and Safety, and Is consistent with the common Dgfense and Security Applying the criteria.of $ 50.12(a) (1), LILCO's request is authorized by law, will not present an undue risk to the public health and-safety,-and is consistent with the common defense and security.
1.
The Procosed ExemDtion Is Authorized by Law Nothing in the Atomic Energy Act, 42 U.S.C. SS 2011 _et sea 2, or any other statute, specifies the exact method by which a licensee is to provide reasonable assurance that adequate funds
- will be-available to decommission a nuclear facility.
Accordingly, the NRC has flexibility in determining whether a licensee's plan for funding decommissioning is adequate.to
. protect the public health and safety from radiological hazards, including hazards that might be: associated with inadequate or untimely decommissioning.
2.
- The Proo.osed-Exemntion Presents'No Undue Risk
. The potential " risk" at issue-here is that funds will not bo
- made available-to decommission Shoreham in an adequate or timely manner, and that any deleys in decommissioning the plant resulting;from this unavailability of funds will present-a radiological hazard? LILCO's request does not present such a risk to the public= health and safety.-
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a.
The Three Month Cushion of Tunds,--Coupled with a $10 Million Supplemental Account, Assures that theresWill Be No Decommissionina Fundina: Shortfall LILCO ' proposes ta) fund Shoreham's-decommissioning through.
~ the mechanism established by-the site Cooperation and j
Reimbursement AgreementLbetweenfLILCO and the Long Island' Power Authority ; (LIPA), dated January:24, 1990-(Site Agreement).
Of particular-pertinence here, uader's 3.5 of the Site Agreement =,
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each month:LILCO places into LIPA-controlled accounts those-funds 1
- that.LIPA projects it will expend-in the. third following-month,_
resultinglin an average balance-in the-LIPA-controlled: accounts of three months' prospective expenses._ Under the site Agreement,
- LlPA'may at any. time submit: revised monthly cash flow projections L
to LILCO, Land'LILCO is' obligated-to provide money for the LIPA-L L
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LONG 4CLAND UOtmNG COMFWNY Dr, Thomas E. Murley April 11, 1991 Page 4 controlled accounts in accordance with the most recently provided cash flow projection.
The Site Agreement also provides that LILCO will advance LIPA any additional amount of operating or other funds required by any regulatory authority.A' There is no reason for concern that, under the funding
-mechanism established by the site Agreement, there will be any shortfall of funds to decommission Shoreham.
Since Shoreham's permanent closure with final approval of the Settlement Agreement in June 1989, LILCO has provided funds to maintain the plant in a condition consistent with the terms of its license and to undertake all regulatorily required activities.
LILCO's demonstrated ability to fund past Shoreham operating expenses provides assurance that the Company will be able to provide funds as needed to complete Shoreham's decommissioning in a saf/e and timely manner, consistent with LIPA's proposed schedule.
For example, in 1990, LILCO's entire Shoreham-related expenses, excluding property tax payments, totalled over $72.8 million.
In contrast, for 1992, the first full year of decommissioning activities, LIPA has projected costs totalling approximately $79.4 million, excluding property tax payments.2/
2/
The funding mechanism set forth in the Site A?reement implements the financial arrangements established in more general terms by the Amended and Restated Asset Transfer Agreement between LILCO and LIPA, dated April 14, 1989.
The Asset Transfer Agreement was approved by the New York PSC on April 13, 1989.
On June 7, 1990, the PSC approved the Site Agreement.
A/
On December 29, 1990, LIPA submitted its proposed decommir,sioning plan for Shoreham.
By letter dated January 2, 1991 (SNRC-1781), LILCO requested that the NRC consider LIPA's plan "as the one which must be submitted prior to or with an application for termination of license (10 C.F.R. S 50.82)."
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. Under the Settlement Agreement, upon the transfer of Shoreham to LIPA, LILCO will make payments in lieu of property tax payments, with the amount of those payments decreasing over time.
Given the short time frame at issue here, property tax.
(continued...)
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LONG f(4 LAND LIGHTING COMFWNY Dr. Thomas E. Murley April 11, 1991 Page 5 For 1993, at the conclusion of which Shoreham's decommissioning is scheduled be completed, LIPA projects costs of approylmately
$71.3 million, excluding property tax payments.
Thus, LIPA estimates that, during the final year of the decommissioning project, its Shoreham-related expenses Will be less than those which LILCO met during 1990.
Even during the first full year of DECON activities, LIPA's estimated expensos will be only slightly (less than 10%) in excess of those which LILCO has recently demonstrated it is capable of mooting.
LILCo's ability to provide fully the funds needed for Shoreham's decommissioning is further assured by the PSC's approval and subsequent support of the Site Agreement.
This point was reiterated at the meeting on February 13, 1995 in Rockville between the NRC and representatives from LILC,, LIPA, i
and the New York Power Authority INYPA), when Richard King, Assistant Counsel for the PSC, ccnfirmed that PSC approval of the Site Agreement was tantamount to a formal determination that LILCO will receive the rev9nues necessary to meet its decommissioning expenses.5/
Soo Transcript of Meeting between NRC and LILCO/LIPA/NYPA at 73 (Feb. 13, 1991).
It is most recently illustrated by the attached letter from William J.
Cowan, General Counsel for the PSC, in which, inter alia, Mr.
i Cowan confirms that the Public Service Commission remains committed to the effectuation of the Shoreham Settlement, including taking the steps necessary to ensure LILCo's access to and recovery of funds nocessary for decommissioning.
See Letter from William J. Cowan, General Counsel, New York PSC, to Dr. Thomas E. Murley, Director, Office of NRR at 2 (April 11, 1991).
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(... continued) payments (and payments in lieu of tax payments) are excluded from the cost comparison.
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Cf2 10 C.F.R. SS 50.75(e) (2) (iv), 50. 7 5 (e) (3 ) (iv).
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LONG IMLAND LIGHTING COMFWNY Dr. Thomas E. Murley April 11, 1991 Page 6 If any further assurance is needed that there will be no shortfall of funds to decommission Shoreham, with the approval of the NRC, LILCO commits to establishing a $10 tillion supplomontal account.
Consistent with 10 C.F.R. S 50.75(e) (1) (ii), this supplemental account will be segregated from other company assets and will be an immediately accessible source of funds to ensure that Shoreham's decommissioning is completed in a safe and timely mannor consistant with LIPA's decommissioning plan.
This fund will also be available to mitigate the offects of any unanticipated costs or unforeseen developments that might otherwise throaten to interrupt the decommissioning funding process.
b.
Shoreham's Mildly Contaminated Condition Ensures that the Public Health and Safety Would Not Do Threatened by any_ Delays in Shoreham's Decommissioning Shoreham's extremely limited operating history and subsequent low level of radioactivo contamination providos confidence that the pubile health and safety will not be threatened by the plant's decommissioning.
In its proposed decommissioning plan, LIPA catimatos that, apart from the radioactive fuel, the " total radioactivo inventory at Shoreham is about 602 curies, almost all of which is located in the (roactor pressure vossol) and its internals."
LIPA Decommissioning Plan at 1-6.
Outside the reactor prossura vessel, LIPA states, the
" radioactive inventory of the remaining structures and systems is about 3 millicuries."
Idt The nogligible radioactivo contamination at Shoroham is
_particularly significant, given that the NRC's critical concern in proposing that licensees develop specific decommissioning funding plans was to ensure that "doconmissioning can be accomplished in a safe manner and that lack of funds does not result in delays that nav'cause notqntial health and safet.y oroblems."
50 Fod. Reg. 5602 (Feb. 11, 1985) (emphasis added).
At Shoreham, the level of radioactivity is so extremoly low, compared to that of plants with any significant operating history (such as Rancho Soco and Fort St. Vrain), that even if the provision of funds were temporarily disrupted, any consequent delays in completing the plant's decommissioning would poso no public health and safety concerns.
While thoro is no cause to worry that the mechanism set forth in the Site Agreomont, as I
supplemented by an immediately accessible $10 milljon external I
account, will fail to provide for adoquate decommissioning
l LON ISLAND UGH'rlND COMPANY Dr. Thomas E. Murley April 11, 1991 Page 7 funding, the inconsequential degree of contamination at Shoreham provides ample assurance that there is simply no public health and safety issue here.
Relatedly, the assurance provided by the absence of any true public health and safety issue is amplified by the probable conservatisms inherent in LIPA's proposed decommissioning plan,
'and the unlikelihood (given the plant's mildly radioactive condition) that LIPA has underestimated the scope or expense of
-the task confronting it.
For one thing, LIPA's decommissioning plan and resulting cost estimate are based on existing technologies which are routinely used throughout the nuclear-industry.
Further,.as the NYPA's Les Hill explained at the February 13, 1991 meeting in Rockville, LIPA's decommissioning cost estimate contains a large measure of conservatism with respect to such matters as the effectiveness of " soft" decontamination techniques, the volume of radioactive waste that 1will beLproduced by DECON activities, and the use of underwater dismantlement of reactors' internals (when less costly and time-consuming " hands on" methods may be feasible).
See Transcript of Meeting between NRC and LILCO/LIPA/NYPA at 166-67 (Feb. 13, 1991).
3.
The Proposed Exemption is consistent with the Common _D.pfense and Security The exemption request is consintent with the common defense and security.
The phrase " common defense and security," as used in S 50.12(a), refers principally to "the safeguarding of special nuclear material;.the absence of foreign-control over the applicant; the protection of Restricted Data; and_the availability of special nuclear material for defense needs."
Flo*ida Power & Licht Co. (Turkey Point Nuclear Generating Station, Units 3 and 4), 4 AEC 9, 12 (1967).
Such considerations are not at-issue here.-
B.
Special Circumstances Are Present that Purther Suonort LILCO's Reqqqat Applying the criteria of S 50.12(a)(2), at least two special circumstances are present that further support LILCO's request.
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LONG ISLAND LlGimNO COMPANY Dr. Thomas E. Murley April 11, 1991 Page 8 1.
Application of the Decommissioning Funding Regulations Is Not Necessary to Achieve the Underivina Purcose of the Rule When the NRC first proposed its decommissioning rules, it said that the " objective of the proposed rule on financing the decommissioning of nuclear facilities" was to require (the) licensee to provide reasonable assurance that adequate funds are available to ensure that decommissioning can be accomplished in a safe manner and that lack of-funds does not result in delays that may cause potential health and safety problems.
50 Fed. Reg. 5602 (Feb. 11, 1985).
Elsewhere, the NRC noted that the purpose in. requiring a licensee to have accumulated, at the time of permanent cessation of operations, the money needed for
'ssioning was to provide assurance that " adequate funds are dect
-s avai u le so that decommissioning can be carried out in a safe and timely manner."
Id2 at 5606.
The NRC stated that "[w)ithout i
this assurance, there could bo uncertainties concerning the availability of funds at the time of decommissioning."
142 These'" uncertainties" are of "two general types," the NRC continued, explaining thc6 the first uncertainty is that the financial condition of a particular organization is difficult to predict years into the future when decommissioning is likely to occur.
As a result it is possible that there may be priority anc competing claims to these assets.
50 Fed. Reg.'5606.
The "second type of uncertainty," the NRC said, in the " possibility that the nuclear facility could be
_ forced to-shut down prematurely, thus reducing the time for collecting funds."
Idx Neither of the uncertainties identified by the NRC in its proposed rule is of concern here.
Indeed, as for the latter uncertainty, the very fact that Shoreham Egg shut down prematurely, before LILCO had any opportunity to begin accumulating decommissioning funds, means that literal adherence to the NRC's funding rules is not possible in Shoreham's
LONO ICLAND LICHTING COMF%NY -
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Dr. Thomas E. Murley j
April 11, 1991 Page 9-j situation.
It also helps to define the time frame for deconmissioning and its funding.
As for the first uncertainty noted by the NRC -- the
" difficulty" of predicting, " years into the future," the l
financial condition of the utility providing the funds -- this also is of no practical concern here.
LIPA will decommission Shoreham immediately, using the DECON method, following a brisk 1
27 month timetable that is scheduled to conclude by the end of 1993.
Therefore, the NRC does not have to worry about looking
" years into the future" to estimate LILCo's continuing financial stability.
Rather,'as a practical matter, the NRC need only be satisfied that LILCO will continue to generate sufficient funds to finance decommissioning through the end of 1993.
And for this, it has the assurance of the New York State Public Service Commission.
Similarly, when the NRC promulgated its final decommissioning rule, it stated that its funding requirements have-the narrow focus of protecting public health and safety by having in place basic minimum standards for funding methods which provide reasonable assurance of funding for docommissioning in a safe and timely manner.
53 Fed. Reg. 24,038 (June 27, 1988).
In itself, even without the
$10'million supplemental account, the funding method developed by
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LILCO and LIPA and approved by the PSC provides " reasonable assurance of funding for decommissioning in a safe and timely manner,"~1n light of Shoreham's unique circumstances (1) slight irradiation; (2) ease of decontamination; (3) near-term, highly.
certain' schedule and decommissioning process; and-(4) state-level
-regulatory commitment to promote decommissioning and ensure funding.
Accordingly, LILCO believes its proposal meets the intent of 10 C.F.R.
S 50.75 and, thus,. to the extent deemed necessary, an exemption from the literal requirements of that provision is justified.
Egg 10 C.F.R. S 50.12 (a) (2) (ii),
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LOND CLAND LlOHT1NO COMPANY Dr. Thomas E. Murley April 11, 1991 Page 10 2.
Compliance with the Letter of the Decommissioning Funding Rules Would Impose an Undue Burden on LILCO and its RatoDavers Pursuant to LIPA's proposed decommissioning plan, Shoreham will be decommissioned using the DECON method, over a span of 27 months, beginning in October 1991 and concluding by the end of 1993.
LIPA conservatively estimates that the total cost of decommissioning, including a $7,127,000 contingency, will be
$180,292,000.
Thus, the regulatory burden on LILCO -- if the Company were required to come up with entire $186,292,000 before DECON activities are begun -- would be the cost of raising the entire amount up front, as compared with allowing LILCO to provide the $186,292,000 over the scheduled 27 month DECON period.
Alternatively, if a letter of credit for the
$186,292,000 or an equivalent suraty bond were to be obtained by October 1991, the regulatory burden on L1LCO would be the cost associated with securing such a letter of credit or bond.
LILCO has determined that obtaining a letter of credit for the $186,292,000 -- ti.e least expensive option 1/ -- would cost the company at least one percent por year for the amount guaranteed at the start.
Thus, if the letter of credit were for the entire projected term of the decommissioning period, 27 months, the total cost would be approximately $4.2 million, above amounts actually needed to complete the plant's decommissioning.
Even if the letter could be drawn down annually as money was expended, the total cost would be approximately $3.09 million.
As explained above, protection of the public health and safety by no means require such expenditures.
LILCO submits that the marginal ascurance -- if any -- that might be conferred by requiring the Company to fund Shoreham's decommissioning entirely in advance does not justify such costs.
This additional burden placed upon the-residents of Long Island, particularly during the present economic climate, would be unwarranted.
E22 10 c.F.R.
5 50.12 (a) (2) (iii).
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While LILCO has not precisely quantified the cost associated with (1) acquiring all at once $186,292,000 and placing that sum in an external account or (2) obtaining a surety bond of equivalent value,-the Company believes either option wculd cost more than obtaining a letter of credit.
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li Dr. Thomas-E. Murley
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April 11, 1991 l
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conclusion For the reasons given above, LILCO respectfully requests that, as necessary, the NRC issue an exemption from the
-decommisoloning funding regulations in 10 C.F.R. S 50.75 and approve the decommissioning funding mechanism established by tho LILCO-LIPA Site Agreement, with its three month funding cushion, and as supplemented by the $10 million supplemental account described h6:ein.
Very truly yours, 44v' A.
M Victor A. Staf ri General Counsel Long Island Lighting Company 1
Of Counsel Hunton-& Williams Riverfront Plaza, East Tower 951 East __Byrd Street Richmond, Virginia 23219-Attachment cc:'
S.
Brown R._: Wood-T.iMartin 1
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