ML20126H629

Draft Regulatory Analysis of Decommissioning Financial Assurance Self-Guarantee Options for Matls Licensees

ML20126H629
Person / Time
Issue date:	11/03/1992
From:	NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES)
To:
Shared Package
ML20126H601	List: ML20126H598 ML20126H629
References
FRN-58FR3515, RULE-PR-30, RULE-PR-40, RULE-PR-50, RULE-PR-70, RULE-PR-72 NUDOCS 9301050271
Download: ML20126H629 (14)

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REGULATORY ANALYSIS OF DECOMMISSIONING FINANCIAL ASSURANCE SELF GUARANTEE OPTIONS FOR MATERIALS LICENSEES November 3, 1992 L

• Draft * *'

9301050271 921220 PDR--OHG NHEA PDR

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1. INTRODUCTION i

1.1 Background-t The U.S. Nuclear Regulatory Commission (NRC) has accepted a petition to l amend the current regulations establishing general requirements for  :

decommissioning licensee facilities to allow certain NRC non electric utility i reactor licensees to self guarantee decommissioning funding costs. In a  !

notice of receipt of petition for rulemaking published in the rederal Rettster [

(56 FR 48445) on September 25, 1991, NRC requested comments on the contents of a petition for rulomaking received from the General E1cetric Corporation (GE) f and the Westinghouse Electric Corporation (Westinghouse) requesting such an amendment. After reviewing the comments and other materials, the Commission in August 1992 directed the staff to proceed with regulatory amendments. This Regulatory Analysis was prepared pursuant to NUREG/BR 0058 to support the 1

regulatory action and examine the costs and benefits of the alternatives  ;

considered by the Commission.  :

NRC currently administers over 7,000 licenses for the possession and use i of nuclear materials under 10 CFR Parts 30, 40, 50 (excluding power reactors).  ;

70, and 72. Approximately 700 of the licensees who hold these licensos are required to provide financial assurances for decommissioning under rules  ;

promulgated in 1988 (53 FR 24018 June 27,1988) .

The rules on financial assurance for decommissioning provide that licensees under 10 CFR Parts 30, 40, 50, 70, and 72 must provide financial 7 assurance to ensure that decommissioning of licensed facilities will be

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accomplished in a safe and timely manner and that adequate funds will be available for this purpose. According to the decommissioning regulations.2 financial. assurance must be provided by one or more of the following methods:

(1) Prepayment. Prepayment is the deposit prior to the start of operation into an account segregated from licensee assets and outside the licensee's administrative control of cash or liquid assets such that the amount L of funds would be sufficient to pay deccmmissioning costs. Prepayment may be in the form of a trust. 1 escrow account, government fund, certificate of deposit, or deposit of government securities.

(2) A surety method, insurance, or other guarantee method. These methods guarantee that decommissioning costs will be, paid should the licensee default. A surety method may be in the: form of a surety bond, letter of credit, or line of credit. A parent

-1 NUREG/BR-0058. NRC Reculatory Analysis Guidelines. Revision 1 U.S.

L Nuclear Regulatory Commission, May 1984, 1

2 The same four alternativo methods of providing financial assurance . ire  ;

authorized for licensees under Parts 30, 40, 50, 70, and-72 in the following sections: 10 CFR SS 30.35(f), 40.36(e), 50. 75(e), 70.25(f) , and 72.30(c).  ;

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company guarantee of funds for deconnissionin6 costs based on a financial test may be used if the guarantee and test are as specified in Appendix A of 10 CFR Part 30. A parent company guarantee may not be used in combination with any other iinancial methods to satisfy the [deconaissioning financial assurance) requirements.

(3) An external sinking fund in which deposits are made at least annually, coupled with a surety method or insurance, the value of which may yiecrease by the amount being accumulated in the sinking fund. Ao external sinking fund is a fund established and maintained by setting aside funds periodically in an account segregated from licensee assets and outside the licensee's administrative control in which the total amount of funds would be suificient to pay deconaissioning costs at any time termination of operation is expected. An external sinking fund may be in the

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form of a trust, escrow account, government fund, certificate of deposit, or deposit of government securities, (4) In the case of Federal, State, or local government licensees, a statement of intent . , indicating that funds for deconnissioning will be obtained when necessary,"3 k'ith the exception of the financial test component of the parent company guarantee, the terms and conditions of the various financial mechanisms that may be used as proof of financial assurance for decommissioning are provided in guidanc e . The financial test requirements are provided in the regulations, at 10 CFR Part 30 Appendix A, and are referenced in other pertinent Parts.5 The parent company guarantee provided for under the decommissionio6 financial assurance regulations contains two elements: a guarantee and an underlying financial test submission. Under this mechanism, a corporate parent of the licensee may submit a guarantee to NRC affirming that the corporate parent will pay the decommissioning costs if the licensee does not

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pay, For such a guarantee to be acceptable, the corporate parent must demonstrate t. hat it has adequate financial resources to cover the costs of decommissioning activities. The corporate parent makes such a demonstration when it provides specified documentation to NRC that it passes a financial test that measures the financial strength of the firm.

3 53 FR 24018, June 27, 1988, U S. Nuclear Regulatory Commission, Regulatory Guide 3,66. Standard Format and Content of Financial Assurance Mechanismn Required For Decommissionint Under 10 CFR Parts 30, 40, 70 and 72, June 1990, 5

The decommissioning regulations do not define " parent company." NRC has provided in Rerulatory Guide 3,66 that in order to qualify as a parent company a firm must demonstrate that it has " majority control of the licensee's voting stock." Regulatory Guide 3,66, pp. 3-21 and 3 23, 2-

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The financial test currently requires a parent corporation to meet, on  ;

an annual basis, one of two sets of alternative financial criteria. Under the -

first alternative, the parent company must demonstrate that it possesses tangiblo net worth of at least $10 million, as well as tangible net worth and net working capital at least six times the decommissioning cost estimate.

Tangible not worth is defined as net worth minus goodwill, patents, a

trademarks, and copyrights. The parent corporation must show that it

< possesses assets in the United States amounting to at least 90 percent of its total assets or at least six times the sum of the current decommissioning cost estimates being covered by the test. The parent corporation also must show that it meets or exceces at least two of three specified financial ratios (total liabilities to r,et worth less than 2.0; net income plus depreciation, ,

depletion, and amortization to total liabilities greater than 0.1; and current assets to current liabilities greater than 1.5). Under the second alternative of the financial test, the parent corporation must show that it-possesses tangible net worth of at least $10 million, as well as. tangible net worth at ,

least six times decommissioning costs. It also must show that it possesses assets in the United States amounting to at least 90 percent of-its total 4 assets or at least six times the sum of the current deconaissioning cost estimates being covered by the test. Finally, it must show that it has a current investment grade rating for its most recent bond issuance from one of two major bond rating organizations.

1.2 Statement of the Problem With this rulemaking, the NRC is seeking to address a number of issues raised in the petition and also presented by the NRC in-its Notice of Receipt of Petition for Rulemaking.6 The primary issues are (1) whether self- >

guarantees provided by licensees of sufficient financial strength and-stability would provide adequate financial assurance and-(2) whether use of self guarantees would substantially reduce the costs of financial assurance to those licensees that qualify to use a self-guarantee mechanism. The petition requests that NRC amend the decommissioning financial. assurance regulations to allow licensees to provide self guarantees of decommissioning funding using a more restrictive financial test than the financf.a1 test used in the NRC parent guarantee mechanism, i

1.3 Objective of the Proposed Rulemaking .

NRC's objective-in proposing a self guarantee mechanism is to reduce the cost burden of financial assurance on licensees while providing NRC with sufficient assurance that decommissioning costs will be funded when necessary.

2, PRELIMINARY IDENTIFICATION AND DESCRIPTION OF OPTIONS In analyzing the petition from GE and Westinghouse, NRC considered three '

regulatory options: (1) no action, (2) adopt the self guarantee as proposed by the petition; and (3) adopt the.self guarantee proposed in the petition but. ,

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' 6 56 FR 48445, September 25, 1991. The Federal Rerister' Notice summarizes arguments presented in the petition at pp. 4-8.

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. I modified to delete the $1 billion net worth requirement proposed by the i petitioners.

2.1 Option 1: No Action Under Option 1, NRC would continue to prohibit the use of any type of self. guarantee mechanism. Licensees that are. unable to obtain a parent company guar.ntee because they do not have a parent company will, as at present, be able to demonstrate financial assurance using one of the other financial assurance methods currently allowed (i.e., prepayment, surety method '

or insurance, external sinking fund coupled with a surety method or insurance, ,

and statement of intent).

2.2 Option 2: Adopt the Self-Cuarantee Proposed _.in the Petition f

.t Under this option, NRC would allow licensees to use the self guarantee  ;

proposed by CE and vestinghouse_in their petition for rulemaking. _The ,

petition dotails specific criteria for a self guarantee, which would be available for any licensee other than an electric utility licensed to operate a reactor under 10 CFR Part 50. Many of the criteria under the proposed self.

guarantee mechanism parallel requirements that are already applicable for parent guarantees and/or other mechanisms. The proposed criteria are listed below:7

1) The self-guarantee may not be used "in any ' situation'where_the-applicant or licensee has a parent company holding majority.

control of the voting stock of the company."

2) The applicant or licensee must demonstrate that it passes a financial test.- All of the following terms of'the. test must be satisfied:

(a) The company must have a current rating for its most recent bond issuance of AAA, AA, or A, as issued by Standard and Poor's 1n: Aaa Aa, or A, as issued by Moody's.

(b) The company must have tangible net. worth at least 10 times:

the total current decommissioning cost estimate for all decommissioning activities for_which the company _is responsible-as self guaranteeing licensee and as parent 7 guarantor, or thefcurrent amount. required if certification is used.

(c) The company.must_have tangible. net worth-of at_least

$1 billion.

(d) The company must have assets located in the United States amounting to.at least 90 percent of. total assets or at:ieast 10 times the total current decommissioning cost _ estimate for-7 56 FR 48446.-

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all decommissioning activities for which the company is responsible as self guaranteeing licensee and as parent-guarantor, or the current amount required if certification is used.

3) The applicant or licensee must continue to satisfy certain procedural requirements:

a) The company's independent certified public accountant must compare the data used by the company in the financial test with the amounts in the company's independently audited year end financial statements, b) The company must notify NRC within 90_ days of any matters coming to the attention of the auditor that cause the auditor to believe that the data specified in the financial test should be adjusted and that the company no longer passes the test, c) The company must have at least one class of equity securities registered under_the Securities Exchange Act of 1934 d) After the initial financial test, the company must repeat the passage of the test within 90 days after the close of each succeeding fiscal year.

e) If the company no longer passes the financial test, 'it must send notice of intent to establish alternate financial assurance. Such notice must be sent within 90 days after the end of.the fiscal-year for which the year _end data show that the company no. longer meets the financial test requirements. The licensee must provide alternate financial

} assurance within 120' days after the end.of such fiscal year.

4) The applicant 'or licensee must furnish its own guarantee that funds will be available for decommissioning: costs. The_ terms of.

this self guarantee must provide that:

(a) The self guarantee will remain in force _unless' written notice of cancellation is sent to NRCL :The self guaranteo,-

however,'must remain _in force'for 120 days after NRC--

receives notice of cancellation.

(b) _ Alternative financial assurance will be provided within 90 days after NRC receives notice :of car:ellation- of the self-guarantee.

_(c) The'self guaranteefand supporting;financialftestLwill remain-n in force.until the Commission has terminated the' license or 1 until'another-acceptable financial _ assurance method has been put'into effect by the licensee.

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(d) The licensee 111 provide the Commission-with copies of all.

current reports filed with the Securities and Exchange j Commission under Section 13-of-the Securities Exchange Act-of 1934. ,

(e) The 1*.censee will provide-notice to the Commission within  !

20 days after the rating of its most recent bond issuance ~

ceases to be A or above by either Standard and Poor's or Moody's.

2.3 Option 3: Adopt the Self-Guarantee Proposed in the Petition Modified to Delete the $1 Billion Net Worth Requiremont Under Option 3, NRC would allow a self guarantee based on the financial test criteria proposed in the petition, but would omit the. requirement that tangible net worth must be greater than $1 billion. Thus, licensees'would still be required to have a current bond rating of A or better, tangible net worth at least 10 times the current decommissioning cost estimateL(or the current amount required if certification is used), and' assets located in the-United States amounting to at least 90 percent of total assets or 4t least 10 times the current decommisrioning cost estimate (or certification amount).

3. ANALYSIS OF OPTIONS 3.1 Methodology The method used by IRC to analyze the'three regulatory options described:

above, to determine the ntmber of licensees able to use each of the self-guarantee options,.and to evaluate the costs'and benefits of each option consists of several key steps. First,'NRC developed a financial data base of material licensees subject to financial assurance requirements under 10 CFR-Parts 30. 40, 50 - 70, or 72, NRC then used this database:to evaluate-the availability and assurance risk of the self guarantee options. Finally,-NRC; calculated and compared the costs and benefits of each regulatory optian, ,

Development of' Financial-Data' Base NRC's first step in-developing the financial data base was to identify all material licensees subject to financial assurance requirements under:10 CFR Parts 30,-40, 50, 70, or 72.8 NRC then collected financial data for--

8 Certain licensees-(such as universities)'were excluded from the.

analysis because.they generally prepare financial' data that.is not suited for- -

use in self-guarantee mechanisms. In additioa, Federal, State, and local government licensees were excluded' because theyl are . eligible to use a statement of intent to; assure for decommissioning costs, and would_ probably; opt for the statement of: intent. over the self-guarantee; . When a Part-50 non-utility licensee also held a license ' under Part -30,140, -70, or 72, - the

-analysis treated these licensees as Part 30, 40, 70, or-72 licensees..

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these licensees from Dun and Bradstreet and Staadard & Poor's. Licensees were eliminated from the data base if financial data were unavailable or of questionable quality.

Although the two self-guarantee options include a U.S. assets requirement, data on domestic assets could not be obtained from Dun at Bradstreet. This may lead to an overestimate of the number of firms abte a. o use a self guarantee option. Similarly, because no information is available on auditors' opinions, the osca base could not be used to evaluate whether licensees have their financial statements audited by independent certified accountants to confirm that their accounting practices are in conformity with generally accepted accounting practices. The absence of this information also could lead to an overestimate of the number of firms able to pass all financial tests.

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Availability The " availability" of the two self guarantee options refers to the number of NRC licensees that could use a particular option given their ability to satisfy the financial requirements of the option. Using the data base described above, NRC first determined whether each licenu- in the data base would be able to meet the requisite financial criteria. rCL then calculated availability by counting those licensees able to use the v If-guarantee option.

Assurance Risk

" Assurance" is a concept closely related to security; something given, deposited, or pledged to make certain the performance of an obligation or the payment of a debt. Although the licensee always retains primary responsibility for performance of the decommissioning regardless of the method of assurance used, most financial assurance mechanisms (e.g., prepayment mechanisms and surety mechanisms) provide a secondary level of protection to guard against the possibility that the licensee may be unable to meet its }

decommissioning obligation. Thus, the assurance risk associated with most mechaniums equals the possibility that both the licensee and the financial assurance provide r (e .g. , banks , sureties) will be unable to meet the required obligations.'

In the case of self-guarantees, the guarantor is not required to set funds aside or obtain a third-party guarantee if it can demonstrate by means of a financial test that its financial resources are sufficient to pay the assured costs whenever those costs come due. Thus, for self guarantees, the assurance risk equals the possibility that the licensee will be unable to meet the required obligations. In other words, the assuranco provided by a self-guarantee is exposed to the risk that a decline in the financial andition of the self-guarantor will not be identified in time so that a prep-yment or This analysis assumer that all mechanisms are properly drafted and executed and are issued by qualified providers. Similarly, the possibility of collusion or fraud has not been considered.

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l third party financial assurance mechanism can be obtained to replace the self-guarantee. NRC analyzed this risk associated with self guarantees by evaluating the "misprediction" rates of components of financial tests proposed for use to screen potential self guarantors, and by evaluating the baseline failure rates for firms calculated by firm size (as measured by net worth),

Costs and Benefits The total cost of the proposed rule includes, in addition to implementation costs, the public and private costs associated with the self-guarantee mechanism. Private costs consist primarily of the fees that licensees must pay to a third party in order to obtain a financial assurance mechanism. Thus, firms can avoid much of the private cost of financial assurance if they can obtain a self-guarantee or a parent company guarantee.

Estimates of private costs were derived from the number of licensees able to pass the proposed self-guarantee test and the number of licenses held by such licensees.

Public costs of a self guarantee include the decommissioning costs that are assured by the self-guarantee but which the licensee does not pay due to bankruptcy. Although public costs can largely be avoided by not allowing the self guarantee, the. total cost (i.e., public plus private) may be reduced by allowing the self-guarantee if private costs decline more than public costs rise. The public costs of t'ao self-guarantee mechanism are calculated by multiplyin6 the assurance risk by the amount of the decommissioning costs expected to be assured using the mechanism. NRC's estimates of public costs reflect the assurance risk of each self guarantee by net worth category and the number of licenses covered by firms in each net worth category.

The net benefit of a self-guarantee would equal the savings to licensees resulting from use of the self-guarantee mechanism (rather then from a more expensive third party mechanism) minus any increase in public costs.

3.2 Availability of Self-Guarantee Options _

NRC's analysis indicates that option 2, the self guarantee option proposed in the GE and Westinghouse petition, could be used by approximately 20 materials licensees (estimated to hold the equivalent of about 54 licenses at decommissioning costs of $750,000 per license). Under option 3, which deletes the $1 billion tangible net worth requirement, an additional 7 firms (holding 11 licenses) with net worth less than $1 billion become capable of satisfying the requirements.

3.3 Assurance Risk The estimated annual assurance risk for Option 2 is 0.13 percent. In other words, there is a 0.13 percent chance that a licensee using the self-guarantee proposed by GE and Westinghouse will go bankrupt and be unable to cover the costs of decommissioning in a given year. The estimated assurance

-d risk for Option 3 is also 0.13 percent.10 There are no available data with which to estimate the default risk of A rated bonds by net worth category of the bond issuer. Furthermore, the premise of the bond ratings is that all A rated bonds should be of the same approximate risk (i.e., different bond ratings are assigned to different risk categories). NRC believes that this indicates that a net worth requirement and a minimum bond rating may be redundant, i.e., if net worth is factored into a firm's bond rating. Moody's data on the historical default risk of A rated bonds indicate that risk is about 0.13 percent per year. Although this risk is slightly higher than the risk associated with the third party financial assurance mechanisms allowed

under current regulations,11 the risk associated with the NRC parent guarantee is similar to the risk of the self-guarantee when the parent company / licensee relationship is not independent. NRC believes that the risk of the self-guarantee is extremely small. Furthermore, allowing use of a self guarantee mechanism reduces the sum of public and private costs (see below).

3.4 Public and Private Costs of Self-Cuarantee Options In this analysis, public costs are defined as the amount of decommissioning costs that would be required to be paid by the public sector due to the financial failure of licensees and/or their guarantors without the substitution of another source of financial assurance. Private costs are defined as the cost of financial assurance mechanisms that.must be obtained by licensees in order to comply with regulatory requirements.

Mechanisms based on financial tests, such as a parent company guarantee and a self-guarantee, reduce private costs by allowing licensees.to demonstrate financial assurance without incurring _ the fees associated with- the use of third party mechanisms such as letters of credit,: surety bonds, etc.

The private costs associated with financial test mechanisms-are assumed to be the costs of preparing the necessary submissions to NRC and the cost of preparation of letters from an independent auditor.

For the three options, Table 3.1 presents and compares the estimated private costs, public costs, and total costs _(private plus public costs).of NRC's decommissioning financial assurance requirements for materials licensees regulated under 10 CFR Parts 30, 40, 70, and 72:

10 - NRC's estimates of the assurance risk associated with Options 2 atM i are identical because the assurance risk for Option 3 was-used'to proxy for

- the risk associated with Option 2 (which could not-be calculated directly).

Because Option' 2 contains every requirement in Option 3 plus an additional

$1 billion tangible net worth requirement, the actual assurance risk associated with Option 2 is likely to be-slightly-less than the figure cited above.

11 For example, the risk associated with small licensees (those with less than $10 million in tangible net. worth) using letters of credit from savings as.d loans _is estimated at 0.055 percent.

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Table 3.1 Public and private costs of financial assurance with and without proposed self-guarantee (S000)12 Private Public Total Financial Assurance Option Costs Costs Costs 1: All licensees use $3,060 $26 $3,086 parent company guarantee or bank letter of credit 2: All licensees use $2,453 $78 $2,531 proposed self guarantee, parent company guarantee, or bank letter of credit 3: All licensees use $2,329 $89 $2,418 modified self-guarantee (without $1 billion requirement), parent company guarantee, or bank letter of credit Option 1 The first scenario represents the existing baseline, i.e.,

the self-guarantee is not allowed, and licensees that are capable of obtaining a parent company guarantee are assumed to use that mechanism. Licensees that are unable to obtain a parent company guarantee are assumed to use letters of credit at an annual cost of 1.5 percent of their face value, option 2 The second scenario anticipates use of the self-guarantee by all licensees that meet the financial conditions of the self-guarantee. Similarly, licensees that are capable of obtaining a parent company guarantee are assumed to still use that mechanism.13 Under this scenario, only licensees

-that are unable to use either a self-guarantee or a parent company guarantee are assumed to obtain letters of credit.

Here, public costs are higher than under the first scenario, but both private costs and total costs are further reduced.

12 Source: ICF calculations. The costs in the table do not reflect any decrease in private decommissioning costs that would occur if the public assumes the decommissioning costs that are unfunded by the private sector.

13 Because the NRC parent company guarantee is available only to licensees that are subsidiaries, and the proposed self-guarantee is available only to licensees that have no parent company, the two tests cover separate groups of licensees. In some cases, however, a firm may be both a licensee-and a parent company to other licensees.

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Option 3 The third scenario represents tho option based on the financial test criteria proposed in the petition, but without the requirement that tangible net worth must be greater than $1 billion. Under this scenario, the availability of the self guarantee increases to include a few more licensees. public costs rise, but private costs fall by a greater amount, representing an additional decrease in total costs.

As Table 3.1 demonstrates, while private costs decline substantially under the proposed self guarantee (Option 2), public costs rise. Total annual-costs, however, are lower when the self-guarantee mechanism is available. For c example, total annual costs are reduced by an estimated $555,000 under option 2. Allowing use of the modified self guarantee (Option 3) reduces total annual costs by an estimated $668,000.

Table 3.2 also shows'the total costs of financial assurance under the three regulatory options being considered, but it presents the total costs for 15, 20, and 30 years .1' Again, total costs are lowest when the self-guarantee mechanism is available. Under Option 2, which would-allow the self-guarantee proposed by the petitioners, total costs would be reduced by an estimated $5,759,000 over 15 years, $6,915,000 over 20 years, and $8,530,000 over 30 years. Dropping the $1 billion net worth requirement would further reduce total costs by $1,170,000 over 15 years, $1,404,000 over 20 years, and-

$1,732,000 over 30 years.

These cost savings may not be large relative to total decommissioning costs; however, the cost savings are substantial relative to total financial assurance costs.

3.5 Decision Rationale for Selection of Proposed Option on the basis of the analyses summarized above, the Commission is considering Options 2 and 3 and is asking for public comments on those options.

4. FINANCIAL AND ECONOMIC IMPACTS OF-SELF-GUARANTEE RULEMAKING 4.1 Impacts on Licensees Adoption of a self-guarantee option is not expected to produce any negative financial or economic impacts. Because a self-guarantee option will generate cost savings for those licensees able to use the self-guarantee, the-rulemaking is expected to produce positive financial impacts. Other licensees that cannot use the self-guarantne, including licensees that qualify as small businesses, will be unaffected by the rulemaking and therefore should not experience significant impacts.

Costs shown represent the net present value of annual costs for 15, 20, and 30 years, assuming a discount rate of 5-percent.

i Table 3.2 Total net present value of financial assurance costs over 15,_20, and 30 years, with and without proposed.

self-guarantee ($000)15 15 20 30 Financial Assurance Option years years years 1: All licensees use $32,027 $38,453 $47,433 parent company guarantee or bank letter of credit 2: All licensees use $26,268 $31,538 $38,903 proposed self-guarantee, parent company guarantee, or bank letter of credit 3: All-licensees use $25,098 $30,134 $37,171 modified self guarantee (without the $1 billion requirement), parent company guarantee,-or bank letter of credit 4,2 Impacts on NRC and the Staces No significant impacts are expected for NRC or the States because the effort to review and administer the self guarantee is expected to be comparable to that associated with the parent company guarantee and other-mechanisms currently allowed. In each case, NRC or the States will be required to review financial assurance submissions, and the size and scope of relf-guarantee submissions are not expected to differ significantly from the mechanisms currently allowed,

5. IMPLICATIONS FOR OTHER NRC REGULATORY PROGRAMS

-Currently, self-guarantees-are not allowed-in NRC's financial assurance pro 6 rams for low-level radioactive waste disposal facilities,- uranium recovery facilities, or for power reactors. While much of the analysis'behind the proposed self-guarantee rulemaking may-be generally. applicable to these other.

programs, licensees in these programs may;also be significantly different from materials Itcensees in at least three ways:

(1) The decommissioning cost estimates typical of these licensees may._

be much higher than is' typical of materials licensees. Higher 15 Source: ICF calculations.

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=a cost estimates could alter the optimal balance between public and I

private' costs. -

(2) The'.iumber of licensees in these programs-is-likely to be far smaller than the number of materials licensees. Fever facilities could alter the balance between'public and private costs'. 3 (3) The financial' characteristics of these 1icensees may. be very .

different from those of materials licensees', 'Different financial- .

characteristics could suggest different financial test criteria and perhaps different baseline failure rates, ,

Because the present analysis, for the reasons stated above, may not fully apply to NRC's other financial assurance programs, NRC is not proposing-a self-guarantee option for these programs at the present time.

.6. IMPLEMENTATION SCHEDULE FOR PROPOSED OPTION This' action will be implemented immediately or<within several' months following the passage of the- final rulemaking.

REFERENCES ICF Incorporated, Analysis of Assurance Provided by Current and proposed Financial Assurance Mechanisms. Draft Report, November-1992. .

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