ML20082L288

Advises NRC of Delay in Submittal of Decommissioning Funding Plan Beyond Commitment Date of 910830.Brief Synopsis of Util Activities to Date Re Preparation of Plan Encl.Plan Currently Scheduled for Submittal by mid-Oct 1991

ML20082L288
Person / Time
Site:	Fort Saint Vrain
Issue date:	08/30/1991
From:	Brey H PUBLIC SERVICE CO. OF COLORADO
To:	Weiss S NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM), Office of Nuclear Reactor Regulation
References
P-91263, NUDOCS 9109040050
Download: ML20082L288 (6)

Text

L h Public Service' 00"la-August 30, 1991 Fort St. Vrain Unit No. I r

P-91263 i

U.S. Nuclear Regulatory Commission

-l ATTN: Document. Control Desk

. Washington, D.C.

20555 i

[

ATTN:

Dr. Seymour H. Weiss, Director Non-Power Reactor, Decommissioning and Environmental Project Directorate Docket No. 50-267 j

I

SUBJECT:

SCHEDULAR DELAYS IN SUBMITTAL OF THE FORT ST. VRAIN DECOMMISSIONING FUNDING PLAN

REFERENCE:

PSC letter, Crawford to Weiss, dated April 26, 1991 i

.(P-91118)

Dear-Dr. Weiss:

The purpose of.this letter is to inform the NRC of a delay in the I

i submittal of.the Decommissioning Funding Plan beyond the commitment

'date previously established by Public Service Company of Colorado i

(PSC).

In - the above reference, PSC informed the NRC that the L-Decommissioning Funding Plan would be submitted to the NRC in the

-third quarter of 1991, In conversations subsequent. to that i

submittal, PSC informed the NRC that it was FSC's intent to submit the Funding Plan prior to August 30, 1991.

The Decommissioning.

[

Funding Plan is now scheduled for submittal by mid-October,1991.

PSC regrets any inconvenience caused by the delay in this submittal date.-

However, the delay is necessary to provide the necessary quality needed in this-important element of the Proposed Decommissioning Plan.

The attachment to. this letter provides a brief synopsis of PSC's activities to date relative to preparation of the Cecommissioning Funding Plan.

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9109040050 910830 PDR ADOCK 0S000267 I

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P-91263 August 30, 1991 Page 2 If you have any questions concerning this submittal, please contact Mr. M. H. Holmes at (303) 480-6960.

Very truly yours, Zk m e O.D H. L. Brey, Manager Nuclear Licensing and Resource Management Division HLB /CRB:cb Attachment cc:

Regional Administrator, Region IV Mr. J.B. Baird Senior Resident Inspector Fort St. Vrain Mr. Robert M. Quillin, Director Radiation Control Division Colorado Department of Health 4210 East llth Avenue Denver, CO 80220

ATTACHMENT TO P-91263 PREPARATION OF THE DECOMMISSIONING FUNDIN'G-PLAN l

FOR FORT ST. VRAIN I.

INTRODUCTION 1

The purpose of this attachment is to provide the status of Public l Service Company. of Colnrado (PSC) activities related to preparation of the Decommissioning Funding Plan for Fort St. Vrain..As noted in the cover letter, -PSC. plans _ to_ submit' its Decommissioning Funding

_ Plan in support of the Proposed Decommissioning Plan by; mid-October l

1991.- Included -in this attachment is a summary of, PSC's activities l

-.to date, as well as preliminary -findings and proposed-approaches to j

be used in preparation of the Decommissioning Funding ~ Plan.

II.

DETERMINATION.0F DECOMMISSIONING FUNDING OPTION

[

PSC review of :10 CFR 50.75(e) identified the following to be the j

possible options for decommissioning funding assurance:

(1)

Precavment prior'to t'he start of operation, into an account segregated from licensee assets and outside the licensee's administrative control.

(2) 1xternal Sinkina

Fund, establ i shed - and maintained by periodically. placing funds in an account segregated from licensee assets and outside the licensee's - administrative ControI.

(3)

Guarantee Method. in the form of a surety bond, insurance, letter of-credit, or line of credit.

I As reported in the Decommissioning Cost Estimate provided to the NRC in.PSC letter, Crawford to Weiss, dated June 6,1991. (P-91198), the cost to decommission Fort St. Vrain, based on a commencement date of January-'1, - 1992, is estimated to be $137 millinn.

However, as of j-June 30, 1991, the current balance of funds collected in-the external trust; fund (based on SAFSTOR) is approximately $26.8 million.

Therefore,- PSC has: decided that the most prudent-approach to provide the necessary financial. assurance for decommissioning is _to utilize i-the balance of the existing external trust-fund, combined with a financial guarantee for the unfunded balance of the decommissioning

. costs.

III.

PSC PRELIMINARY INVESTIGATION PSC began preliminary planning efforts for the Decommissioning Funding Plan ' in March' 1991, in conjunction with preparation of the detailed Cost Estimate. This preliminary effort included review of I

i-i

I Attachment to P-91263 August 30, 1991 Page 2 the regulatory guidance provided in NRC Regul atory Guide 1.159,

" Assuring the Availability of funds for Decommissioning Nuclear Reactors".

PSC also contacted New Hampshire Yankee, who prepared the funding Plan for Seabrook required by the NRC prior to low-power operation.

New Hampshire Yankee had obtained a surety bond in accordance with 10 CFR 50.75(e)(3) to provide proof of financial assurance.

PSC's approach was to evaluate all possible guarantee methods, including evaluation of prepayment by use of treasury certificates, so as NOT to prematurely exclude any option from consideration.

PSC contacted potential banking and insurance brokers capable of providing either the line of credit, a letter of credit, insurance or a surety bond.

As a result of these ef forts, PSC prequalified a list of 15 potential banks and lending institutions, and 2 potential insurance brokers.

PSC prepared and issued a Request for Proposal to provide the Financial Guarantee for Decommissioning of Fort St. Vrain in the amount of $125 million.

This RFP was based on obtaining a 4 year declining balance instrument, as the remaining decommissioning cost decreased during the course of decommissioning.

PSC also contacted the NRC (Robert Wood, NRR) to discuss PSC's overall approach.

Mr. Wood's preliminary evaluation indicated that the following approaches appeared reasonable, including:

(1)

Use of an approach that utilizes both the existing external trust fund and a financial guarantee for the remaining unfunded balance of decommissioning costs.

(2)

Selection of a separate trustee and identification of PSC as the beneficiary.

(3)

Acceptability of a declining balance financial guarantee, since the decommissioning cost will decrease during the course of decommissioning and can be measured by the completion of key decommissioning milestores.

(4)

Concurrence with the rationale that letter of credit (LOC) or surety bond agreements would not bec me effective until the NRC approved both the Proposed Decommissioning MD Funding Plans.

IV. COMPETITIVE BID PROCESS FOR SELECTION OF THE FINANCIAL GUARANTEE At the time the RFP was issued, there was substantial interest in the market to provide the financial guarantee.

Based on the responses received by PSC, the total cost of the financial guarantee (cost of

i Attachment to P-91263 August 30, 1991 Page 3 the declining balance instrument) ranged from approximately $2.1 -

$3.7 million.

These quoted prices were based exclusively on Letters of Credit and Surety Bonds.

However, options were also available in certain proposals to convert to a construction line of credit if PSC elected to convert the letter of credit to fund the actual decommissioning expenses.

The response from the insurance brokers was that it did not appear feasible to provide an insurance product that would meet the requ;rements and needs of Reg. Guide 1.159.

Following review of these responses, PSC identified a short list of two banks (for LOCs) and one insurance broker (surety bond).

PSC met with representatives of these institutions individually to discuss their proposals, and on August 2,1991, selected one of the banks to provide PSC with an irrevocable letter of Credit.

V.

PREPARATION OF DECOMMISSIONING FUNDING PLAN PSC has prepared a proposed outline of the Funding Plan which includes the following:

1.

Selection of Funding Approach [per 10 CFR 50.75(e)]

11.

Update of the Decommissioning Cost Estimate Ill.

Financial Guarantee A.

Current Status of External Trust Fund B.

Letter of Credit IV.

Decommissioning Trust Agreement A.

Trustee, Grantor (FaC),

and Beneficiary (PSC)

Responsibilities B.

Provisions (and Cepy) of Trust Agraement V.

Decommissioning Financing Options Available to PSC VI.

Proposed Methods to Maintain and Revise the Funding Plan As part of the Funding Plan submittal, PSC will provide an update to the Decommissioning Cost Estimate.

This update is necessary since the cost estimate ori5 nally submitted in November 1990 (with further i

detailed estinate provided in Anril 1991) was based on start of physical decommissioning activities on January 1,

1992.

Since defueling to the Independent Spent Fuel Storage Installation (ISFSI) will not be complete until July 1992, the cost estimate will be updated to reflect the cost of these delays, as well as other corrections such as the cost of purchasing the irrevocable Letter of Credit.

PSC will also provide the Decommissioning Trust Agreements with the Funding Plan.

Selection of the Decommissioning Trustee and preparation of the trust agreements is separate from preparation of

o Attachment to P-91263 i

August 30, 1991 Paga 4 the Letter of Credit.

PSC is investigating an appropriate trustee and researching the nec9ssary provisions to be included in these trust agreements.

Mthough not a requirement, the NRC has requested (during telecon with Robert Wood, NRR) and PSC will provide information related to the methods that may be used to finance the decommissioning costs.

This will include identification of the financing options (and limits) available to PSC, including both debt and oculty instruments i

that we approved and available to provide these func s.

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