ML20196C594
| ML20196C594 | |
| Person / Time | |
|---|---|
| Issue date: | 11/18/1988 |
| From: | Zech L NRC COMMISSION (OCM) |
| To: | Breaux J, Brooks J, Glenn J, Sharp P, Socolar M, Udall M, Jason Wright GENERAL ACCOUNTING OFFICE, HOUSE OF REP., ENERGY & COMMERCE, HOUSE OF REP., GOVERNMENT OPERATIONS, HOUSE OF REP., INTERIOR & INSULAR AFFAIRS, OFFICE OF MANAGEMENT & BUDGET, SENATE, ENVIRONMENT & PUBLIC WORKS, SENATE, GOVERNMENTAL AFFAIRS |
| Shared Package | |
| ML20196C601 | List: |
| References | |
| NUDOCS 8812080040 | |
| Download: ML20196C594 (13) | |
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UNITED STATES NUCLEAR REGULATORY COMMISSION n
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W ASHINGTON, D. C. 20555 November 18, 1988 CHAIRMAN The Honorable John Glenn, Chairman Committee on Governmental Affairs United States Senate Washington, DC 20510
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to recommendations by the General Accounting Office (GAO) within 60 days of publication, we hereby submit our responses to the recommendation made by the GA0 in their report, GA0/RCED-88-184, entitled "NRC's Decommissioning Cost Estimates Appear Low."
We co not agree with GA0's conclusion that NRC decommissioning cost estimates appear low.
The reasons for our disagreement are discussed in detail in the Enclosure.
NRC does agree, however, that decommissioning activities and costs need to be periodically re-examined.
We have underway a research program (described in the Enclosure) which will be used to adjust decommissioning cost estimates, as appropriate.
As recommended by GAO, this re-3 examination of decommissioning costs will consider experience gained from the Shippingport reactor and the differences raised by the GA0 study.
Sincerely, Akth) [At. }&lx Lando W. Z h, Jr
Enclosure:
As stated cc:
Sen. William V. Roth, Jr.
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%~ 1, UNITED STATES NUCLEAR REGULATORY COMMISSION Pf WASHINGTON, D. C. 20555 November 18, 1988 CHAIRMAN The Honorable Jack Brooks, Chairman Committee on Government Operations United States House of Representatives Washington, D. C.
20515
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to recommendations by the General Accounting Office (GAO) within 60 days of publication, we hereby submit our responses to the recommendation made by the GA0 in their report, GA0/RCED-88-184, entitled "NRC's Decommissioning Cost Estimates Appear Low."
We do not agree with GA0's conclusion that NRC decommissioning cost estimates appear low.
The reasons for our disagreement are discussed in detail in the Enclosure.
NRC does agree, however, that decommissioning activities and costs need to be periodically l
re-examined.
We have underway a research program (described in i
the Enclosure) which will be used to adjust decommissioning cost l
estimates, as appropriate.
As recommended by GAO, this re-examination of decommissioning costs will consider experience gained from the Shippingport reactor and the differences raised by the GA0 study.
Sincerely, Ad4 (V, Lando W. Ze J
Enclosure:
As stated j
cc:
Rep. Frank Horton
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CHAIRMAN The Honorable John B. Breaux, Chairman Subcommittee on Nuclear Regulation Committee on Environment and Public Works United States Senate Washington, D. C.
20510
Dear Mr. Chairman:
In accordance with the statutorf obligation to respond to recommendations by the General Accounting Office (GAO) within 60 days of publication, we hereby submit our responses to the recommendation made by the GAO in their report, GA0/RCED-88-184, entitled "NRC's Decommissioning Cos' Estimates Appear Low."
l We do not agree with GA0's conclusion that NRC decommissioning cost estimates appear low.
The reasons for our disagreement are discussed in detail in the Enclosure.
NRC does agree, however, that decommissioning activities and costs need to be periodically re-examined.
We have underway a research program (described in the Enclosure) which will be used to adjust decommissioning cos, estir,ates, as appropriate.
As recommended by GAO, this re-examination of decommissioning costs will consider experience gained from the Shippingport reactor and the differences raised by the GA0 study.
Sincerely, 1
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l Lando W. Ze
, Jr.
Enclosure:
As stated cc:
Senator Alan K. Simpson
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eh M, M CHA R AN The Honorable Horris K. Udall, Chairman Subcommittee on Energy and the Environment Committee on Interior and Insular Affairs United States House of Representatives Washington, D. C.
20515
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to recommendations by the General Accounting Office (GAO) within 60 days of publication, we hereby submit our responses to the recommendation made by the GA0 in their report, GA0/RCED-88-184, entitled "NRC's Decommissioning Cost Estimates Appear Low."
We do not agree with GA0's conclusion that NRC decommissioning cost estimates appear low.
The reasons for our disagreement are discussed in detail in the Enclosure.
NRC does agree, however, that decommissioning activities and costs need to be periodically re-examined.
We have underway a research program (described in the Enclosure) which will be used to adjust decommissioning cost estimates, as appropriate.
As recommended by GAO, this re-examination of decommissioning costs will consider experience gained from the Shippingport reactor and the differences raised by the GA0 study.
Sincerely, do k. Mk /
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Lando W.
Enclosure:
As stated cc:
Rep. Manuel Lujan, Jr.
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UNITED STATES
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WASHINGTON, D.C. 206F6 e
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The Honorable Philip R. Sharp, Chairman Subcommittee on Energy and Power Committee on Energy and Commerce United States House of Representatives Washington, D. C.
20515
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to recommendations by the General Accounting Office (GAO) within 60 days of publication, we hereby submit our responses to the recommendation made by the GA0 in their report, GA0/RCED-88-184, entitled "NRC's Decommissioning Cost Estimates Appear Low."
We do not agree with GA0's conclusion that NRC decommissioning cost estimates appear low.
The reasons for our disagreement are discussed in detail in the Enclosure.
NRC does agree, however, that decommissioning activities and costs need to be periodically re-examined.
We have underway a research program (described in the Enclosure) which will be used to adjust decommissioning cost estimates, as appropriate.
As recommended by GAO, this re-examination of decommissioning costs will consider experience gained from the Shippingport reactor and the differences raised by the GAO study.
Sincerely, d4 (N. M LandoW.Zeg,Jr
Enclosure:
As stated cc:
Rep. Carlos J. Moorhead
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WASHINGTON, D.C. 20056
'% +.... J CHAIRMAN November 18, 1988 The Honorable Milton J. Socolar Comptroller General of the United States General Accounting Office Washington, D. C.
20548
Dear Mr. Socolar:
In accordance with the statutory obligation to respond to recommendations by the General Accounting Office (GAO) within 60 days of publication, we hereby submit our responses to the recommendation made by the GAO in their report, GA0/RCED-88-184, entitled "NRC's Decommissioning Cost Estimates Appear Low."
We do not agree with GAO's conclusion that NRC decommissioning cost estimates appear low.
The reasons for our disagreement are discussed in detail in the Enclosure.
NRC does agree, however, that decommissioning activities and costs need to be periodically re-examined.
We have underway a research program (described in the Enclosure) which will be used to adjust decommissioning cost estimates, as appropriate.
As recommended by GAO, this re-examination of decommissioning costs will consider experience gained from the Shippingport reactor and the differences raised by the GA0 study.
Sincerely, T
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ando W. Zec, Jr
Enclosure:
As stated 7-
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,i NUCLEAR REGULATORY COMMISSION WASHINGTON. D.C. 20666 November 18, 1988 CHAIRMAN The Honorable Joseph R. Wright, Jr.
Director Office of Management and Budget Washington, D. C.
20503
Dear Mr. Wright:
In accordance with the statutory obligation to respond to recommendations by the General Accounti.y Office (GAO) within 60 days of publication, we hereby submit utr responses to the recommendation made by the GA0 in their rereort, GA0/RCED-88-184, entitled "NRC's Decommissioning Cost Estimates Appear Low."
We do not agree with GAO's conclusion that NRC decommissioning cost estimates appear low.
The reasons for our disagreement are discussed in detail in the Enclosure.
NRC does agree, however, that decommissioning activities and costs need to be periodically re-examined.
We have underway a research program (described in the Enclosure) which will be used to adjust decommissioning cost estimates, as appropriate.
As recommended by GAO, this re-examination of decommissioning costs will consider experience gained from the Shippingport reactor and the differences raised by the GAO study.
Sincerely, d&/4 U/
I. '.
LandoW.Zegh,Jr
Enclosure:
As stated i
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ENCLOSURE NRC Response to GAO Report, GA0/RCE0-88-184 The following is a discussion of NRC's review of the GAO report, GA0/RCED-88-184, and a description of the actions NRC is taking on the recomendation contained in the report.
I.
Sumary of NRC Review of the GAO Report NRC does not agree with the conclusion in the GA0 report that NRC de-comissioning cost estimates appear low.
The reasons for this are discussed in detail in Section !! below and are sumari:ed as follows:
1.
The cost estimates developed for NRC in a series of studies prepared by Battelle Pacific Northwest Laboratory (PNL) and used in the development of NRC regulations provide a more accurate representation of the estimated cost of decomissioning than those developed by the primary source cited by GA0 (TLG Engineering, Inc.).
PNL has reviewed the TLG estimates (see II.A below) and found that TLG:
(1) Overestimated the duration of the active decomissioning period; (2) Used overconservative work difficulty factors; (3) Included in its decomissioning cost estimate the removal of clean materials beyond that necessary to terminate the NRC license; (4) Overestimated the size of the security force needed.
l 2.
NRC believes that the GA0 report uses data inappropriately in com-paring the PNL with the TLG cost estimates.
The two independent modelr.
t should have been exainined to determine how they differ before being independently tested 25 times.
The GAO procedure merely confirms in 25 1
cases that the models differ in important respects, but does not validate one method over the other.
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3.
The GAO report has not sufficiently considered certain key elements of the decomissioning rule recently promulgated by NRC (53 FR 24018).
In particular, the rule contains the following provisions that assure the availability of funds for decomissioning:
(1)
The rule contains a continuing cost update process over the life of a facility (see II.C.1 below).
(2)
For fuel cycle licensees, the rule contains provisions for sub-mission of decomissioning funding plans on license renewal that may require larger amounts than the $750,000 per facility set-aside noted in the GAO Report (see II.C.2 betow).
For these reasons, we believe that NRC's deccmissioning cost estimates contained in the final rule provide a scund basis fur establishing reasonable assurance of the availability of funds needed for decomissioning. Neverthe-less, NRC recognizes the need to periodically reexamine decornissioning activities and costs and, in response to the GA0 recomendation, is continuing its active research program in this area, described in Section III below.
!!. _ Details of NRC's Review of the GAO report A.
Decomissioning cost estimates developed for NRC by PNL provide more accurate representatien of costs The GA0 conclusion that NRC's cost estimates are too low rests in part on differences between the estimates made by PNL and by TLG. The studies pre-parea by PNL and TLG are similar in that they contain detailed engineering analysns of decomissioning technology and costs; however, they differ in their undsrlying assumptions in key areas.
PNL is currently analyzing estimates made by TLG, Although complete results of their analysis will not be published for several months, preliminary findings are that TLU:
(1) overestimated the duration of the active decomissioning period; (2) used overconservative work difficulty factors; (3) included in the decomis-sioning cost estimate the removal of clean materials beyond that necessary 2
.,s to terminate the NRC license; and (4) overestimated the size of the security force reeded. When these considerations are used to adjust the TLG esti-mates, Fht finds that the TLG ano Ptil decomissioning cost estimates are within 10% of each other. Attachment 1 to this Enclosure contains a more in-depth discussion by PNL of these considerations.
In a very recent development in a Federal Energy Regulato:y Comissien rate case involving TLG cost estimates (FERC Docket No. EPCd-75-000, September 22, 1988), a witness for TLG indicated he had found an overestimate in his
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company's method for cost estimating that leads to a 31% excess in the TLG estir,iate for the duration of the active decomissioning period for a BWR.
(Attachment 1 indicates that this change results in a $9 million reduction in TLG's cost estimate).
B.
GA0 Report Used Cata Inappropriately The GAO report compares the NRC's estimates with those prepared by TLG Engineering for 25 nuclear reactors and presents a tabulated ccrparison for those 25 reactors. The GA0 report also cites three other decomissioning cost estimates from two other sources.
NRC believes that the GA0 comparison is an inappropriate use of data. The GA0 approach merely confirms that the PNL cost estimating method produces consistently lower estimates than that used by TLG.
It does not determine why this is true nor does it validate one method over the other.
With respect to the three other decomissioning cost estimates cited by GAO, no meaningful ccrparison can be rnade between them and the PNL studies since the underlying assur.ptions are not identified.
For example, those decom-missioning cost estimates may contain cost of demolition of nonradioactive structures following termination of the fiRC license (which PNL does not include in its estimates), and'some decomissioning cost estimates may contain unusually large contingency factors.
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GAO report did not suff;ciently consider certain key elements of the hRC's decomissioning rule 1.
GA0 points out in its report that minimal data exist on decomissioning costs. The NRC, in considering preparation of cost infomation by PNL and by TLG and in developing decomissioning regulations, recognized the uncertainty involved in forecasting such estimates over the reactor operating life when there is little historical data upon which to base the estimate. Hence, the Supplementary Infomation of 53 FR 24018, pgs. 24029-24031, and the Pule Text, Section 50.75(a), describe a continuous step-wise procedure over time to provide reasonable assurance of funds for decomissioning (see Attachment 2).
The first step is for an applicant or licensee to establish funding provi-sions in an amount which may be more, but not less, than the prescribed amounts indicated in the decomissioning rule (these are the amounts indicated in the GA0 report: $105 million for a PWR, $135 million for a BWR). These prescribed amounts do not represent the actual cost of decom-missioning for specific reactorst rather, they represent a reference or threshold review level established to assure that, early in facility life, licensees demonstrate that the bulk of the funds necessary for a safe decomissioning are being considered and plarned for.
The second step is the continuous updating of the initial amount over the life of the facility. Licensees must annually adjust their estimates to account for inflation and increases in waste burial costs at disposal sites in the U.S.
The NRC will be publishirg a report on a yearly basis, NUREG-1307, entitled "Report on Waste Burial Charges," which will update the situation on waste disposal and waste disposal charges.
In addition, NRC will review the amounts in the rule in light of technology changes.
- Finally, the decomissioning rule requires licensees, 5 years prior to the end of operations, to submit a preliminary decomissioning plan containing a cost estimate for decomissioning based on an up-to-date assessment of the actions necessary for decomissioning and plans for adjusting levels of funds assured 1
for decomissioning.
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The third step is submittal of a site specific cost estimate as part of the decomissicaing plan at the time the facility permanently ceases operation.
The combination of the three steps will provide reasonable assurance that at the time of the end of the facility's operational life, su/ficient funds will be available to permit decommissioning to proceed in a manner which protects public health and safety.
2.
With respect to fuel cycle facilities, the GA0 report characterizes NRC's regulations as recuiring a set-aside of $750,000 for each facility and then cites specific examples of cost estimates for fuel cycle facilities which are larger than that arcunt.
We believe that GA0 did not fully understand our regulations. As amended, 10 CFR Sections 40.36(c)(2) and 70.25(c)(2) require each holder of a license of this type to submit within 2 years of the effective date of the final rule eithar a funding plan or a certification in the amount of $750,000. However.
Sections 40.36(c)(2) and 70.25(c)(2) go on to state that if the licensee sulmits the certification of $750,000 at that time, he must also submit a decomissioning funding plan (containing a cost estimate) at the time of license renewal.
The NRC expects that this funding plan will contain cast estimates in the range cited by GA0.
Interim use of certification was allowed as a means of reducing administrative effort involved in obtaining reasonable finarcial assurance for decemissioning until application for license renewal was made, at which time the funding plan eculd be more ef ficiently reviewed together with the renewal application. This procedure is considered to provide reasonable assurance of the availability of funds for decomissioning fuel cycle facilities.
3.
The GA0 expressed concern in its report that public utility comissions may use the NRC's estimates in setting rates. However, the NRC's Supple-mentary Information to the Final Rule and Section 50.75(a) of the Final Rule text explicitly indicate that the amounts in the rule are not intended to bind ratemaking bodies to that figure and that these requirements are not intended to be used by themselves by other agencies to establish rates.
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F-III. Conclusion and Response to GAO Recomendation Centrary to the GAO Report. NRC believes that the final decomissioning rule contains decomissioning cost estimates that provide a sound basis for establishing reasonable assurance of the availability of funds for decom-missioning nuclear facilities.
Nevertheless, the NRC recognizes both the uncertainty in estimating decom-missioning costs and the differences of opinion that exist with respect to the adequacy of licensee funding provisions. Therefore, the NRC has underway several research programs to provide additional infonnation in this area.
One prcgram will obtain additional technical information from the conduct of actual decomissioning projects. Currently the program is focused on the Shippingport reactor, which is in the process of being decomissicned.
Another NRC program will obtain source tenn data frem reactors so as to better assess radionuclides present at the time of decomissioning. A third NRC program will provide a current technical assessment of decomissioning technology, safety, and costs. This program will update earlier PNL studies by incorporating results from the two programs above as well as other in-formation developed since the PNL studies were prepared. This effort will also include a review of differences between the PNL and TLG estimates.
These programs will implenent the GA0 recorrendation to reexamine decomis-sioning cost estimates to determine whether they appropriately reflect all the costs that, utilities and fuel cycle operators believe are needed to decomission their facilities.
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