ML20190A234

Request for Additional Information - Application for Order Consenting to Transfers of Control of Licenses (07/08/2020 E-mail)

ML20190A234
Person / Time
Site:	Indian Point
Issue date:	07/08/2020
From:	Richard Guzman NRC/NRR/DORL/LPL1
To:	Gaston R Entergy Nuclear Operations
Guzman R
References
EPID L-2019-LLM-0003, EPID L-2020-LLE-0010
Download: ML20190A234 (6)

Text

From: Guzman, Richard To: Gaston, Ronald William Cc: Danna, James; Mirzai, Mahvash; Couture III, Philip (pcoutur@entergy.com); Andrea Sterdis

Subject:

Indian Point Unit Nos. 1, 2, and 3 - REQUEST FOR ADDITIONAL INFORMATION - Application for Order Consenting to Transfers of Control of Licenses [EPID L-2019-LLM-0003, EPID L-2020-LLE-0010]

Date: Wednesday, July 08, 2020 4:31:09 PM

Dear Mr. Gaston,

By letter dated November 21, 2019 (Agencywide Documents Access and Management System (ADAMS) Accession No. ML19326B953), Entergy, on behalf of itself, Entergy Nuclear Indian Point 2, LLC, Entergy Nuclear Indian Point 3, LLC, Holtec International, and Holtec Decommissioning International, LLC (HDI) (together, Applicants), requested that the U.S. Nuclear Regulatory Commission (NRC) consent to:

1. the indirect transfer of control of Provisional Operating License DPR-5 and Renewed Facility Operating License Nos. DPR-26 and DPR-64 for IP1, IP2, and IP3 (IPEC), as well as the general license for the IPEC ISFSI (collectively the Licenses), to Holtec subsidiaries to be known as Holtec IP2 and Holtec IP3; and

2. the direct transfer of Entergys operating authority (i.e., its authority to conduct licensed activities at IPEC) to HDI.

The Applicants also requested that the NRC approve conforming administrative amendments to the Licenses to reflect the proposed transfer of the Licenses from ENOI to HDI, Holtec IP2 and Holtec IP3; and deletion of certain license conditions to reflect satisfaction and termination of certain obligations after the license transfers.

On December 19, 2019, HDI submitted, Post Shutdown Decommissioning Activities Report (PDSAR) including Site-Specific Decommissioning Cost Estimate (DCE) for Indian Point Nuclear Generating Units 1, 2, and 3, (ADAMS Accession No. ML19354A698).

Additionally, by letter dated February 12, 2020 (ADAMS Accession No. ML20043C539),

HDI submitted to the NRC, a Request for Exemption from 10 CFR 50.82(a)(8)(i)(A) and 10 CFR 50.75(h)(1)(iv) for IP1, IP2, and IP3 to allow the use of a portion of the Nuclear Decommissioning Trust (NDT) funds for management of spent fuel and site restoration activities, respectively. The submittal also requests, pursuant to 10 CFR 50.12, exemptions from 10 CFR 50.75(h)(1)(iv) to allow disbursements from the IP1, IP2, and IP3 NDT funds for spent fuel management and site restoration costs to be made without prior notice, similar to withdrawals in accordance with 10 CFR 50.82(a)(8). The exemption request is based on HDIs December 19, 2019, DECON PSDAR and DCE.

The NRC staff has reviewed the submittals and determined that additional information is needed to complete its review. The specific questions are found in enclosed request for additional information (RAI). On June 25, 2020, the NRC staff sent Entergy the questions as DRAFT RAIs via e-mail communication (ADAMS Accession No. ML20190A150). During a telephone call on July 7, 2020, the Entergy staff indicated that a response to the RAI would be provided within 30 days of issuance of the RAI.

If you have questions, please contact me at 301-415-1030 or via e-mail at Richard.Guzman@nrc.gov.

Richard V. Guzman Senior Project Manager Plant Licensing Branch I Division of Operating Reactor Licensing Office of Nuclear Reactor Regulation Office: O-9C7 l Phone: (301) 415-1030 Richard.Guzman@nrc.gov Docket Nos.50-003, 50-247, 50-286 and 72-051

Enclosure:

Request for Additional Information cc: Listserv REQUEST FOR ADDITIONAL INFORMATION RELATED TO THE ENTERGY NUCLEAR OPERATIONS, INC.

APPLICATION FOR ORDER CONSENTING TO TRANSFERS OF CONTROL OF LICENSES AND APPROVING OF CONFORMING LICENSE AMENDMENTS FOR INDIAN POINT NUCLEAR GENERATING STATION, UNITS 1, 2, AND 3 DOCKET NOS. 50-3, 50-247, 50-286, AND 72-051 EPID L-2019-LLM-0003, EPID L-2020-LLE-0010 By letter dated November 21, 2019 (Agencywide Documents Access and Management System (ADAMS) Accession No. ML19326B953), Entergy Nuclear Operations, Inc. (ENOI),

on behalf of itself, Entergy Nuclear Indian Point 2, LLC, Entergy Nuclear Indian Point 3, LLC, Holtec International, and Holtec Decommissioning International, LLC (HDI) (together, Applicants), requested that the U.S. Nuclear Regulatory Commission (NRC) consent to:

(1) the indirect transfer of control of Provisional Operating License No. DPR-5 and Renewed Facility Operating License Nos. DPR-26 and DPR-64 for Indian Point Nuclear Generating Station, Units 1, 2 and 3 (referred collectively as the Indian Point Energy Center or IPEC), as well as the general license for the IPEC Independent Spent Fuel Storage Installation (ISFSI) (collectively the Licenses), to Holtec subsidiaries to be known as Holtec Indian Point 2, LLC (Holtec IP2) and Holtec Indian Point 3, LLC (Holtec IP3); and (2) the direct transfer of ENOIs operating authority (i.e., its authority to conduct licensed activities at IPEC) to HDI. The Applicants also requested that the NRC approve conforming administrative amendments to the Licenses to reflect the proposed transfer of the Licenses from ENOI to HDI, Holtec IP2 and Holtec IP3; and deletion of certain license conditions to

reflect satisfaction and termination of certain obligations after the license transfers. The proposed conforming license amendment would be approved, but not issued, until consummation of the proposed transaction. ENOI and HDI proposes to notify the NRC at least two business days prior to the expected closing date, so that the conforming license amendment can be issued concurrently with the transaction closing. On December 19, 2019, HDI submitted, Post Shutdown Decommissioning Activities Report (PDSAR) including Site-Specific Decommissioning Cost Estimate (DCE) for Indian Point Nuclear Generating Units 1, 2, and 3, (ADAMS Accession No. ML19354A698).

Additionally, by letter dated February 12, 2020 (ADAMS Accession No. ML20043C539),

HDI submitted to the NRC, a Request for Exemption from 10 CFR 50.82(a)(8)(i)(A) and 10 CFR 50.75(h)(1)(iv) for IP1, IP2, and IP3 to allow the use of a portion of the Nuclear Decommissioning Trust (NDT) funds for management of spent fuel and site restoration activities, respectively. The submittal also requests, pursuant to 10 CFR 50.12, exemptions from 10 CFR 50.75(h)(1)(iv) to allow disbursements from the IP1, IP2, and IP3 NDT funds for spent fuel management and site restoration costs to be made without prior notice, similar to withdrawals in accordance with 10 CFR 50.82(a)(8). These exemption requests are based on HDIs December 19, 2019, DECON PSDAR and DCE.

The NRC staff has reviewed the information provided in the aforementioned submittals and has determined that additional information as requested below is needed to complete its review.

Regulatory Basis for RAIs 10 CFR 50.80 states, in part:

(b)(1) An application for transfer of a license shall include:

(i) For a[n] operating license , as much of the information described in [10 CFR]

50.33 and 50.34 with respect to the identity and technical and financial qualifications of the proposed transferee as would be required by those sections if the application were for an initial license.

10 CFR 50.33 states, in part:

(f)(2) If the application is for an operating license, the applicant shall submit information that demonstrates the applicant possesses or has reasonable assurance of obtaining the funds necessary to cover estimated operation costs for the period of the license. The applicant shall submit estimates for total annual operating costs for each of the first five years of operation of the facility. The applicant shall also indicate the source(s) of funds to cover these costs.

(5) The Commission may request an established entity or newly-formed entity to submit additional or more detailed information respecting its financial arrangements and status of funds if the Commission considers this information appropriate. This may include information regarding a licensees ability to continue the conduct of the activities authorized by the license and to decommission the facility.

(k)(1) For an application for an operating license , information in the form of a

report, as described in [10 CFR] 50.75, indicating how reasonable assurance will be provided that funds will be available to decommission the facility.

10 CFR 50.75 states, in part:

(b)(1) the report must contain a certification that financial assurance for decommissioning has been provided.

(b)(2) The amount must be covered by one or more of the methods described in [10 CFR 50.75(e)]

(e)(1)(i) Prepayment is the deposit made preceding the transfer of a license under [10 CFR] 50.80 into an account segregated from licensee assets and outside the administrative control of the licensee and its subsidiaries or affiliates of cash or liquid assets such that the amount of funds would be sufficient to pay decommissioning costs. Prepayment may be in the form of a trust.

(h)(1) Licensees that are not electric utilities as defined in [10 CFR] 50.2 that use prepayment to provide financial assurance shall provide in the terms of the arrangements governing the trust that (iv) Disbursements or payments from the trust, other than for payment of ordinary administrative costs (including taxes) and other incidental expenses of the fund (including legal, accounting, actuarial, and trustee expenses) in connection with the operation of the fund, are restricted to decommissioning expenses until final decommissioning has been completed.

10 CFR 50.82 states, in part:

(a)(8)(i) Decommissioning trust funds may be used by licensees if...

(B) The expenditure would not reduce the value of the decommissioning trust below an amount necessary to place and maintain the reactor in a safe storage condition if unforeseen conditions or expenses arise and; (C) The withdrawals would not inhibit the ability of the licensee to complete funding of any shortfalls in the decommissioning trust needed to ensure the availability of funds to ultimately release the site and terminate the license.

(a)(8)(vi) If the sum of the balance of any remaining decommissioning funds, plus earnings on such funds calculated at not greater than a 2 percent real rate of return, together with the amount provided by other financial assurance methods being relied upon, does not cover the estimated cost to complete the decommissioning, the financial assurance status report must include additional financial assurance to cover the estimated cost of completion.

(a)(8)(vii) the licensee must annually submit to the NRC, by March 31, a report on the status of its funding for managing irradiated fuel. The report must include the following information, current through the end of the previous calendar year:

(A) The amount of funds accumulated to cover the cost of managing the irradiated fuel; (B) The projected cost of managing irradiated fuel until title to the fuel and possession of the fuel is transferred to the Secretary of Energy; and (C) If the funds accumulated do not cover the projected cost, a plan to obtain additional funds to cover the cost.

Background Information - RAI 1 - Reasonable Assurance that Funds Will Be Available for Decommissioning; Consideration of All Significant Decommissioning Costs a) In both the LTA and the HDI PSDAR, estimated license termination (i.e., radiological decommissioning) costs and spent fuel management costs are listed as $469,456,000 and

$188,278,000, respectively, for IP2, and $583,168,000 and $371,370,000, respectively, for IP3. Also, the LTA provides that HDIs funding plan for spent fuel management and site restoration activities relies on the use of NDT funds[1] and the HDI PSDAR indicates that decommissioning will include the expansion of the existing ISFSI pad for 65 additional casks.[2] However, the HDI PSDAR work breakdown structure (WBS) identifies Construction of ISFSI costs of just under $6 million, for IP1 only, under line item 01.02.10.02.01, with no additional WBS line items identified for this activity throughout the remainder of the document.

b) The HDI PSDAR states, [b]ased on an integrated evaluation of estimate uncertainty and discrete risk events utilizing industry accepted risk modeling tools and techniques in addition to a review of industry experience with similar decommissioning projects, a Contingency Allowance of 18 percent was determined to be reasonable for the IPEC decommissioning project.[3] NUREG-1713, Standard Review Plan for Decommissioning Cost Estimates for Nuclear Power Reactors (ADAMS Accession No. ML043510113),

provides that a site-specific cost estimate should provide costs for contingency and also states that the site-specific cost estimate may summarize the results of the detailed analyses with the underlying detail submitted as supplementary information. However,

[t]he summary data should be sufficiently detailed to demonstrate that the licensee has considered all significant decommissioning costs, and should reference the detailed cost estimate.[4]

RAI 1 - Reasonable Assurance that Funds Will Be Available for Decommissioning; Consideration of All Significant Decommissioning Costs a) With IP2 and IP3 each having similar thermal capacity and each having similar spent fuel inventory as depicted in the HDI PSDAR, Table 3-6, IPEC DOE Fuel Acceptance Allocation, explain the features of the cost estimating techniques and/or the decommissioning assumptions that account for the approximate $114 million difference in the license termination costs forecast for IP2 and IP3 and the approximate $183 million difference in the spent fuel management costs forecast for IP2 and IP3. Additionally, identify within the LTA and/or the HDI PSDAR the costs associated with the expansion and/or construction of additional ISFSI capacity, the units from which the spent fuel to be stored in the additional ISFSI capacity originate, and the NDT from which such expenses will be funded.

b) Provide additional detail to demonstrate that the Contingency Allowance of 18 percent considers all significant decommissioning costs.

[1] LTA, cover letter, page 4 of 6.

[2] HDI PSDAR, pages 13 and 65.

[3] HDI PSDAR, page 95.

[4] NUREG-1713, pages 20 and 26-27.

Background Information - RAI 2 - Reasonable Assurance that Funds Will Be Available for Decommissioning; Segregation of NDTs from Licensee Assets Pursuant to the terms of the Membership Interest Purchase and Sale Agreement (MIPA),

closure of the MIPA will result in IPECs transfer to Nuclear Asset Management Company, LLC (NAMCo), a wholly-owned subsidiary of Holtec. NAMCo will emerge as the direct parent company owner of Holtec IP2 and Holtec IP3, and Holtec IP2 will own the IP1 and IP2 licenses and Holtec IP3 will own the IP3 license. Holtec IP2 and Holtec IP3 will also respectively own each units associated assets and real estate, including each units NDT.

The NRC recently approved the transfers of the Oyster Creek Nuclear Generating Station license from Exelon Generation Co. to Oyster Creek Environmental Protection, LLC, as owner, and HDI, as decommissioning operator, and of the Pilgrim Nuclear Power Station license from ENOI to Holtec International, as owner, and HDI, as decommissioning operator. These license transfer approvals resulted in the transfer of NDTs to Holtec International subsidiaries.

In general, 10 CFR 50.75(h)(1) restricts disbursements from an NDT to decommissioning expenses for the unit associated with the NDT. The LTA states that Holtec IP2 and Holtec IP3 will continue to hold the NDT assets in trusts segregated from their other assets and outside of their administrative control.

RAI 2 - Reasonable Assurance that Funds Will Be Available for Decommissioning; Segregation of NDTs from Licensee Assets Identify the corporate practices, processes, and safeguards that will be in place following the transaction that will ensure that NDT assets of IP1, IP2, and IP3, will remain segregated from one another and from the NDT assets for Oyster Creek and Pilgrim and that decommissioning expenses specific to each unit, including funds used to manage spent fuel, will be accounted for, managed, and expensed from the appropriate NDT.