ML20196E594
| ML20196E594 | |
| Person / Time | |
|---|---|
| Issue date: | 06/15/1999 |
| From: | Shirley Ann Jackson, The Chairman NRC COMMISSION (OCM) |
| To: | J. J. Barton, Burton D, Dingell J, Randy Hall, Inhofe J, Lew J, Markey E, Thompson F, Walker D GENERAL ACCOUNTING OFFICE, HOUSE OF REP., HOUSE OF REP., ENERGY & COMMERCE, OFFICE OF MANAGEMENT & BUDGET, SENATE, ENVIRONMENT & PUBLIC WORKS, SENATE, GOVERNMENTAL AFFAIRS |
| Shared Package | |
| ML20196E599 | List: |
| References | |
| NUDOCS 9906280327 | |
| Download: ML20196E594 (48) | |
Text
- _ _ - _ _ - _ _ - - _ - _
@k
- b UNITED STATES g
NUCLEAR REGULATORY COMMISSION WASHINGTON; D.C. 20555-0001
[$
O June 15, 1999 CHAIRMAN The Honorable Fred Thompson, Chairman Committee on Governmental Affairs United States Senate Washington, D.C. 20510
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are presented in the enclosure.
As indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the GAO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendu l of its report, but does not funy consider in its findings and conclusions. The NRC believes that, if GAO had access to
//
data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that all
'/
licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance [h regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found no instances 6f unacceptable levels of assurance. Nonetheless, should the NRC find problems with licensee compliance or with the adequacy of rate regulatory oversight, the Commission wiil take further action, as necessary.
I can assure you that, as discussed in Enclosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed. in 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds. In 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final 9906290327 990615 PDR C0fets MtCC CORRESPONDENCE PDR
F I.'.
p 2-
[
standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Commission is confident that the regulations covering both the amount of decommissioning funds and the allowable assurance mechanisms for l
decommissioning are adequate to ensure sufficient funding for decommissioning.
Sincerely, h (/
- G _-
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Revic.v Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance cc: Senator Joseph I. Lieberman I
l l
L i
t I
i I
l
I l
l
- i [Q T.to%
UNITED STATES p
4 NUCLEAR REGULATORY COMMISSION f
WASHINGTON, D.C. 2055A001
- k..
[e June 15, 1999 CHAIRMAN The Honorable Dan Burton, Chairman Committee on Government Reform United States House of Representatives Washington, D.C. 20515
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are presented in the enclosure.
As indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the GAO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix I of its report, but does not fully consider in its findings and conclusions. The NRC believes that,if GAO had access to data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that all licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found no instances of unacceptade levels of assurance. Nonetheless, should the NRC find problems with !!cansee compliance or with ths adequacy of rate reguidtry oversight, the Commission will take further action, as necessary.
I can assure you that, as discussed in Enclosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommiscioning nuclear power plants are available when needed. In 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds. In 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive ree. valuation of its policies and regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final
1 i
2-standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Commission is confident that the regulations covering both the amount of decommissioning funds and the allowable assurance mechanisms for decommissioning are adequate to ensure sufficient funding for decommissioning.
I Sincerely, a
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning,
Funding Assurance cc: Representative Henry Waxman 1
A J
l
UNITED STATES p"
g NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001 e
,o em, June 15, 1999 CHAIRMAN The Honorable James M. Inhofe, Chairman Subcommittee on Clean Air, Wetlands, Private Property and Nuclear Safety Committee on Environment and Public Works United States Senate Washington, D.C. 20510
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decor nission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recom,nondations are presented in the enclosure.
As indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the GAO report are mis 9ading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix l of its report, but does not fully consider in its findings and conclusions. The NRC believes that, if GAO had access to data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that all licensees are on track to provide necessary funds for decornmissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found o instances of unacceptable D
levels of assurance. Nonetheless, should the NRC find p;oblems with licensee compliance or with the adequacy of rate regulatory oversight, the Cornmission will take further action, as necessary.
I can assure you that, as discussed in Enclosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed. In 1988, the NRC issued a final rule that required, cower reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds. In 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final
2 standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Commission is confident that the regulations covering both the amount of decommissioning funds and the allowable assurance mechanisms for,
decommissioning are adequate to ensure sufficient funding for decommissioning.
Sincerely,
/,, b / _-.
i
/
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance cc: Senator Bob Graham i
l
4 UNITED STATES
[
4 NUCLEAR REGULATORY COMMISSION WASHINGTON. D.C. 2055!H)001 e
.,,g*
June 15, 1999 CHALRMAN The Honorable Joe Barton, Chairman Subcommittee on Energy and Power Committee on Commerce United States House of Representatives Washington, D.C. 20515
Dear Mr. Chairman:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are presented in the enclosure.
As indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the GAO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix i of its report, but does not fully consider in its findings and conclusions. The NRC believes that, if GAO had access to data that the NRC recent!y obtained from licensees, some of its findings and conclusions would likely have changed. Base:1 on our review of the data, the NRC has concluded that ali l
licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found ng instances of unacceptable levels of assurance. Nonetheless, should the NRC find problems with licensee compliance or with the adequacy of rate regulatory oversight, the Commission will take further action, as necessary.
I can assure you that, as discussed in Enclosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed. In 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds. In 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final 1
m.
e 4
2 standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. : The Commission is confident that the regulations covering both the amount of decommissioning funds and the allowable assurance mechanisms for decommissioning are adequate to ensure sufficient funding for decommissioning.
Sincerely, J-wr Shirley Ann Jackson
Enclosures:
- 1. NRC Comments on Government Accounting Office Rsport
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance -
cc: Representative Ralph M. Hall l
l.
l UNITED STATES k
NUCLEAR REGULATORY COMMISSION p'
WASHINGTON, D.C, 20655-0001 e
1
\\
/
June 15, 1999 CHARMAN The Honorable David M. Walker Comptroller General of the United States General Accounting Office Washington, D.C. 20548
Dear Mr. Walker:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are presented in the enclosure.
A5 indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the GAO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a tact which GAO notes in Appendix l of its report, but does not fully consider in its findings and conclusions. The NRC believes that, if GAO had access to data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that gl!
licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found g instances of unacceptable D
levels of assurance. Nonetheless, should the NRC find problems with licensee compliance or with the adequacy of rate regulatory oversight, the Commission will take further action, as necessary.
I can assure you that, as discussed in Enclosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed. In 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds, in 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final i
I-L
2-standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Commission is confident that the regulations covering both the arnount of decommissioning funds and the allowable assurance mechanisms for decommissioning are adequate to ensure sufficient funding for decommissioning.
9 Sincerely, b
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance
UNITED STATES p
4 NUCLEAR REGULATORY COMMISSION WASHINGTON l D.C. 20550>-0001
'e
\\
,+*/
June 15, 1999 CHAIRMAN The Honorable Jacob J. Lew Director, Office of Management and Budget Washington, D.C. 20503
Dear Mr. Lew:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are presented in the enclosure.
As indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the G AO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix i of its report, but does not fully consider in its findings and conclusions. The NRC believes that, if GAO had access to data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that all licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found rLo instances of unacceptable levels of assurance. Nonetheless, should the NRC find problems with licensee compliance or with the adequacy of rate regulatory oversight, the Commission will take further action, as necessary.
I can assure you that, as discussed in Enclosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed. In 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds. In 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and regulations in this area. This roevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final
l standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Commission is confident that the regulations covering both the amount of decommissioning funds and the allowable assurance mechanisms for decommissioning are adequate to ensure sufficient funding for decommissioning.
Sincerely,-
~
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance
\\
l J
I I
l
UNITED STATES b
g NUCLEAR REGULATORY COMMISSION WASHIN GToNl D.C. 20555-0001 e
- +,o June 15, 1999 CHAIRMAN The Honorable Edward J. Markey United States House of Representatives Washington, D.C. 20515
Dear Congressman Markey:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are cresented in the enclosure.
As indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the GAO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of severa! key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix i of its report, but does not fully consider in its findings and conclusions. The NRC believes that, if GAO had access to data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that a_!!
licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found ng instances of unacceptable levels of assurance. Nonetheless, should the NRC find problems with licensee compliance or with the adequacy of rate regulatory oversight, the Commission will take further action, as necessary.
I can assure you that, as discussed in Enclosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed, in 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds, in 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final
.. 1 standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Cornmission is confident that the regulations covering both the amount of decommissioning funds and the allowable assurance mechanisms for decommissioning are adequate to ensure sufficient funding for decommissioning.
Sincerely,
(
Q Q
.1 r
i
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance i
g UNITED STATES 6
p" g
NUCLEAR REGULATORY COMMISSION g
WASHINGTON, D.C. 20555-0001 e
'S9 *****
June 15, 1999 CHAIRMAN The Honorable John D. Dingell United States House of Representatives Washington, D.C 20515
Dear Congressman Dingell:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Rtgulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are presented in the enclosure.
As indicated in Enclosure 1, the Nuclear Regulatory Commission (NRC) believes that, in general, the findings and conclusions of the GAG report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix I of its report, but does not fully consider in its findings and conclusions. The NRC believes that, if GAO had access to data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that all licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found no instances of unacceptable levels of assurance. Nonetheless, should the NRC find problems with licensee compliance or with the adequacy of rate regulatory oversight, the Commission will take further action, as necessary.
I can assure you that, as discussed in Er":losures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed. In 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds. In 1995, recognizing the impact that deregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final
h 2
standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Commission is confident that the regulations covering both the
' amount of decommissioning funds and the allowable assurance mechanisms for
_ decommissioning are adequate to ensure sufficient funding for decommissioning.
i Sincerely, b
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance
UNITED STATES A
[
g NUCLEAR REGULATORY COMMISSION l
WASHINGTON: D.C. 20555-0001
,,, g #
June 15, 1999 CHAIRMAN l
The Honorable Ralph M. Hall United States House of Representatives Washington, D.C. 20515
Dear Congressman Hall:
In accordance with the statutory obligation to respond to the recommendations by the General Accounting Office (GAO) within 60 days of receipt, I hereby submit our responses to the recommendations made by the GAO in its report entitled " Nuclear Regulation - Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants." Specific responses to GAO findings, conclusions, and recommendations are presented in the enclosure.
As indicated in Enclosure 1, the Nuclear ReguL; wry Commission (NRC) believes that, in general, the findings and conclusions of the GAO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key factors. Specifically, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix l of its report, but does not fully consider in its findings and conclusions. The NRC believes that, if G AO had access to data that the NRC recently obtained from licensees, some of its findings and conclusions would likely have changed. Based on our review of the data, the NRC has concluded that al!
licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with NRC's decommissioning funding assurance regulations. I respectfully call your attention to the NRC's conclusion on page 5 of Enclosure 1 that, after completing our review of the data, the NRC has found.no instances of unacceptable levels of assurance. Nonetheless, should the NRC find problems with licensee compliance or with the adequacy of rate regulatory oversight, the Commission will take further action, as necessary.
I can assure you that, as discussed in Enciosures 1 and 2, the NRC has taken extensive action to ensure that adequate funds for decommissioning nuclear power plants are available when needed. in 1988, the NRC issued a final rule that required power reactor licensees to set aside funds or otherwise provide assurance of decommissioning funds. In 1995, recognizing the impact that doregulation and restructuring in the electric industry could have on decommissioning funding, the NRC initiated a comprehensive reevaluation of its policies and
- regulations in this area. This reevaluation culminated in a final policy statement on the financial assurance requirements for decommissioning nuclear power reactors in 1998, and a final
?
.g.
standard review plan on power reactor licensee financial qualifications and decommissioning funding assurance in 1999. The Commission is confident that the regulations covering both the l
amount of decommissioning funds and the allowable assurance mechanisms for decommissioning are adequate to ensure sufficient funding for decommissioning.
Sincerely,
{
A 1
Enclosures:
- 1. NRC Comments on Government Accounting Office Report
- 2. Chronology of Rulemaking & Regulatory Actions
- 3. Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance l
1 4
I
j r
ENCLOSURE 1 NRC COMMENTS ON U.S. GOVERNMENT ACCOUNTING OFFICE REPORT.
"BETTER OVERSIGHT NEEDED TO ENSURE ACCUMULATION OF FUNDS TO DECOMMISSf0N NUCLEAR PLANTS" On May 3,1999, the U.S. General Accounting Office (GAO) issued a final report, "Better Oversight Needed to Ensure Accumulation of Funds to Decommission Nuclear Power Plants."
This report evaluated information that was available from licensees' annual financial statements and other sources through the end of 1997. The NRC believes that, in general, the findings and conclusions of the GAO report are misleading, overstated, and erroneous primarily because the report is based on dated information and improper consideration of several key issues. Also, the GAO report relies on data that has substantially changed since 1997, a fact which GAO notes in Appendix i of its report but does not fully consider in its findings and i
conclusions. The NRC believes that, if GAO had access to data that the NRC recently obtained from reports from licensees submitted as of March 31,1999 (see response to issue 1), some of its findings and conclusions would likely have changed. Further, on March 26,1999, the NRC submitted comments on the GAO's draft report, which GAO notes but did not fully address. We reiterate and amplify these comments. We have summarized the GAO report's principal findings and conclusions and provide the NRC's response in turn:
- 1. The GAO report states that, under its baseline assumptions using 1997 data,36 of 76 power reactor licensees were not funding their decommissionir.g trusts at a sufficient rate to ensure that decommissioning funds will be available when their plants permanently shut down. This i
number dropped to 15 licensees with adjustments in funding levels that were made after 1997.
In the aggregate, GAO found that the NRC's power reactor licensees had collected approximately $16 billion toward a goal of $30 billion, with $14 billion remainino to be collected, in present value terms at the end of 1997. (GAO report, pps. 4 to 5.)
j NRC Response:
The NRC understands that GAO did not have access to data from the decommissioning funding status reports required for the first time by the September 22,1998, final rule.
The NRC received these reports as of March 31,1999. Based on these status reports, as of December 31,1998, power reactor licensees have on deposit approximately $22.5 billion in external decommissioning trusts fund accounts. The total needed to decommission the radiological portion of power plants, ba. sed on the generic formulas in 10 CFR 50.75(c), is approximately $31.9 billion, which the NRC requires to be available when plants permanently shut down. (GAO appeared to place emphasis on the fact that the NRC does not require assurance for non-radiological decommissioning costs. These costs are not included in the aggregate cost estimate as they are beyond the NRC's mandate to protect public health and safety from the potential effects of byproduct, source, and special nuclear materials.) Thus, in the aggregate, licensees have collected about 70 percent of the funds currently estimated to be needed for decommissioning using the NRC's generic formulas in 10 CFR 50.75(c), as compared to about 53 percent using the GAO's findings. The NRC believes that these more recent results indicate that licensees are significantly further along in their collections than GAO findings indicate. Additionally, the NRC notes that Appendix I of the GAO report apparently
.l.
1
7 includes more recent data. However, this data is not fully reflected in the findings and would have been expected to change GAO's conclusions significantly. (As described more fully in the response to issue 4, power reactor licensees have been allowed to collect funds over the licensed operating life of the plant, an approach that received thorough public comment in rulemakings completed in 1988 and 1998 (see Enclosure 2.))
- 2. According to GAO, the problem of underfunding is likely to be further exacerbated by the advent of economic deregulation of the electric utility industry, because increased competition will cause some plants (26 units, according to one study upon which the GAO report relied) to shut down prematurely before they have completed decommissioning funding. (GAO report, p.
5)
NRC Response:
As the NRC recognized several years ago, some plants may shut down prematurely as a result of economic pressures (e.g., the Trojan plant in Oregon, the Maine Yankee plant, the Connecticut Yankee plant, and the San Onofre Unit 1 plant in California).
i Consequently, substantial changes to NRC policies and regulations were initiated in l
1995 (see Enclosure 2) to address the connection between economic deregulation and j
safe operation and decommissioning of nuclear plants. To date,19 power plants have been shut down prematurely, most of them for economic reasons. None of the licensees of these plants had accumulated all necessary decommissioning funds at the time the plant was shut down. However, each of them has subsequently obtained all funds necessary or has obtained a commitment from its rate regulator (i.e., a State public utility commission (PUC) or the Federal Energy Regulatory Commission (FERC))
to collect necessary funds from ratepayers. These commitments were made independently of NRC requirements. Thus, GAO is incorrect to assert that plants subject to deregulation will no longer have access to adequate decommissioning funds.
In addition, the NRC's experience to date with States that have implemented restructuring programs indicates that each of these States has recognized the importance of assuring recovery of decommissioning costs and has implemented, or indicated its intention to implement, an assured source of cost recovery for decommissioning from ratepayers through mechanisms such as non-bypassable wires charges. These charges must be paid even after a plant has been rcmoved from the rate base or permanently ceases operation. Those charges that are temporary are structured to fully recover decommissioning costs over a defined transition period. For example, each of the 18 States with nuclear plants listed by GAO (see p.14 of the report) that have initiated deregulation, has imp;omented a framework for recovery of decommissioning costs. Also, the NRC notes that the National Association of Regulatory Utility Commissioners (NARUC), as well as individual PUCs and FERC, have stressed the importance of decommissioning cost recovery in NRC deliberations on its policy statement on economic deregulation and its 1998 decommissioning funding assurance rule (see Enclosure 2). The NRC views this development as significant and believes that the GAO report should have emphasized State approaches to decommissioning funding assurance in those States that have already initiated deregulation.
r 1
t
/e
/
in addition, the NRC's rule initiatives in this area explicitly account for this change, by recognizing the use of transition charges, non-bypassable wires charges, and other State-initiated approaches to decommissioning cost recovery. The NRC also notes that many other States with nuclear plants have not yet implemented deregulation initiatives and are unlikely to do so in the near future because of the typically lengthy process that is involved in implementing deregulation. Given current decommissioning funding status and the significantly smaller amounts remaining to be collected as evidenced by the March 31,1999, status reports as discussed previously, it is unlikely that licensees in these States will have significant unfunded decommissioning obligations by the time any deregulation initiatives are implemented. in the unlikely event that these States do not address decommissioning appropriately, as described in the response to item 3, the NRC has other mechanisms to ensure decommissioning funding.
The NRC also believes that an analysis of the actual plants that, according to GAO, are collecting at an insufficient rate suggests that GAO's concerns are overstated. In Appendix ! to the GAO report, GAO indicates that 17 licensees are undercollecting decommissioning funds. However, six of those 17 entities are government or cooperative utilities that set their own rates and have defined service territories that are less subject to deregulation and will thus be able to collect sufficient funds for decommissioning when needed. Similarly, four others are licensees in States that have implamented deregulation and whose decommissioning collections are guaranteed even in a deregulated environment. Five entities are in states that remain rate regulated; there is no indication that their regulated status will change in the near term. Finally, two entities have plants that have already shut down and are allowed to collect funding shortfalls from ratepayers. Thus, none of the licensees that GAO suggests in its baseline case are undercoll6cting decommissioning funds appears to be unable to collect funds from ratepayers for the foreseeable future.
- 3. GAO findings indicate that, to address the movement toward deregulating the electricity industry, in 1998 the NRC began requiring its licensees to provide additional financial assurances if rate regulators no longer guarantee collection of decommissioning costs from ratepayers. GAO further states that the NRC's alternative methods of decommissioning assurance rely on the continued financial health of the licensee or its parent company. Thus, the effectiveness of the NRC's 1998 regulatory changes willlikely depend on how vigorously the NRC monitors the financial health of its licensees. In this regard, licensees must now provide financial reports every two years to NRC so it can monitor financial assurance for decommissioning. (GAO report, p.4)
NRC Response:
The NRC disagrees with this finding with respect to existing licensees and new licensees resulting from license transfers, and the experience with State deregulation initiatives. The NRC's requirements provide for a variety of mechanisms for decommissioning funding assurance and were developed beginning in 1995 to reflect State developments in this area. Parent company guarantees are one mechanism.
GAO is correct that the NRC will have to monitor the finances of those licensees that choose to use this method of assurance. However, GAO failed to point out that no licensee is currently using this mechanism even though it is permitted. Alllicensees
.3-
either continue to be rate regulated, have access to non-bypassable wires charges, or, with the purchases of the Three Mile Island Unit 1 (TMI-1) and Pilgrim plants, intend to prepay estimated decommissioning costs. Thus, the NRC believec significant g
monitoring of licensees' financial health, while possible in some cases in the future, is not necessary at this point because of the nature of the assurance mechanisms that licensees are using today.
As discussed above, the assurance method of choice of those States with nuclear f
plants that have initiated deregulation is to institute non-bypassable wires charges or j
otherwise provide for recovery of decommissioning costs. The GAO report does not fully acknowledge this significant development. Of course, it is possible that some j
States in the future could choose not to address decommissioning funding assurance in their deregulation initiatives. However, this is unlikely given the record so far and statements by representatives of NARUC and FERC before the NRC.
o i
The GAO report also did not address the process that the NRC has in place to review l
applications for license transfers of nuclear power plants. Based on statements from I
the nuclear industry and its licensees, it is likely that there will be significant consolidation of the nuclear generating industry. The NRC has been told by some of its licensees that it can expect to see sales of from 6 to 12 nuclear plants within the next i
rear. Each of these sales, as well as all future sales, will involve a license transfer, in which the NRC will evaluate the technical and financial qualifications of the proposed transferees to operate the plant safely, as well as to ensure, pursuant to its regulations and a Standard Review Plan (SRP) on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance, that adequate funds for decommissior.ing will be available as needed (see Enclosure 3). As indicated previously, prepayment of decommissioning costs is being used by the buyers of the TMI-1 and Pilgrim plants.
Based on available information, the NRC expects that, for buyers that do not have rate regulatory oversigM. this will be the likely assurance mechanism to be used. However, if this approach is ru used, the NRC will insist on a mechanism with an equivalent level of assurance as provided in its regulations or it will not approve the transfer.
Finally, the NRC notes that the GAO report confuses financial monitoring of licensees that choose to use the parent guarantee method with the biennial decommissioning fund status report that describes the status of decommissioning funds. This report is separate from the explicit financial tests contained in the NRC's regulations that licensees must pass and submit to the NRC annually. The biennial reports contain information on external trust funds, which virtually all licensees are currently using and, so far, do not include guarantees. As an additional point, the NRC notes that the Commission also directed the staff to develop guidance that endorsed Financial Accounting Standards Board (FASB) initiatives in this area. Although action on this has been deferred pending further FASB action, it further illustrates the Commission's initiatives in this area.
- 4. GAO states that, in the decommissioning fund status reports, the NRC did not establish thresholds for clearly identifying acceptable levels of financial assurances or establish criteria for identifying and responding to unacceptable levels of assurances. (GAO report, p. 4; also
" Recommendations," p. 6 )
4
5 NRC Response:
I The NRC disagrees. The contents of the decommissioning fund status reports are stated explicitly in the NRC's regulations. Further, the regulations covering both the amount of decommissioning funds and the allowable assurance mechanisms for decommissioning clearly establish the NRC's requirements. In addition, as described previously, the NRC developed a SRP that, among other issues, addressed how the NRC would review these reports. (This SRP was issued in draft in January 1997 and in finalin March 1999 as NUREG-1577).
As provided in the NRC's regulations, the NRC will review the reports to determine, first, that licensees are collecting to the correct decommissioning cost estimate amount as specified in 10 CFR 50.75(c). If a licensee has either continued rate regulatory oversight or access to a non-bypassable wires charge imposed as a result of State restructuring initiatives, the NRC's regulations allow such licensees to collect decommissioning funds over the estimated 40-year operating life of the plant. (If the NRC approves license extension for a plant, the licensee of that plant would be allowed to accumulate funds over the extension period as well.) The NRC explicitly defers to PUCs and FERC (both in the preamble to the 1988 decommissioning rule and in the SRP) to establish the amortization schedules to collect any remaining unfunded decommissioning amounts for licensees that continue to be subject to their oversight, either directly or through non bypassable charge mechanisms. The NRC recognized that, for these licensees, specifying amortization rates would require ratemaking authority that the NRC does not have. Given that ratemakers have the ability to require these licensees to increase amortizations when shortfalls occur, the NRC disagrees with the GAO that it should insist on increased amortizations for these licensees. For licensees no longer subject to ratemaking authority, the NRC requires that the full estimated cost of decommissioning must be assured by one of the mechanisms allowed by the NRC. Thus, for these licensees, specifying an amortization rate would be
' meaningless, since the decommissioning amount based on 10 CFR 50.75(c) is required to be fully assured.
it is important to point out that licensees remain responsible _nd liable for decommissioning costs until the NRC terminates the license. The NRC considered, but specifically declined to require initial full funds or guarantees because it was unreasonable to do so and, for the majority of licensees, would impose an unjustified burden.
The NRC has completed its review of the first set of decommissioning fund status reports that were submitted by March 31,1999. Based on its review of these reports, the NRC has concluded that all licensees are on track to provide necessary funds for decommissioning commensurate with the NRC's regulations and are thus in compliance with the NRC's decommissioning funding assurance regulations. Although the NRC has noted a few ambiguities in the reports from a small minority of licensees, and is acting to have these licensees clarify these ambiguities, the NRC has found no instances of unacceptable levels of assurance. The NRC notes that, if it does find problems with licensee compliance or with the adequacy of rate regulatory oversight, it will take further action, as necessary. Finally, the Commission specifically directed the staff to provide it 9
F l
\\
1 with any additional recommendations for rulemaking based on the results of its review of
)
the status reports.
As indicated previously, all of the plants that have shut down prematurely have been allowed to accumulate sufficient funds to complete decommissioning. Mechanisms in place or being developed by rate regulators will allow prematurely shutdown plants to recover uncollected decommissioning costs from ratepayers. The GAO report does not include support for its view that States will alter this approach to shutdown plants prematurely. Thus, the NRC disagrees that premature decommissioning willlikely be a problem affecting financial assurance in the future.
In sum, the NRC has required the decommissioning fund status reports to determine licensee compliance with its regulations. Both the NRC's regulations and its SRP c 91icitly define what is required for different types of licensees in providing decommissioning funding assurance. Either licensees will be in compliance with these requirements, in which case the NRC needs to do nothing further, or licensees will not be in compliance, in which case the NRC will take appropriate action to ensure compliance, in either case, explicit criteria for compliance are already contained in the NRC's regulations.
- 5. The GAO report asserts that the NRC did not address bankruptcy in its amended regulations (GAO report, p. 32).
NRC Response:
The NRC agrees that bankruptcy is not specifically addressed in the amended regulations. However, in the preamble to the 1998 final decommissioning funding assurance rule and in other documents, the NRC discussed its experience with those few licensees that sought bankruptcy protection. When necessary, the NRC has provided, and intends to continue to provide, information and other input to the bankruptcy courts overseeing these cases. However, the NRC does not have the authority to change bankruptcy laws. The NRC has, however, sought legislation to give decommissioning expenses priority in any bankruptcy proceeding.
- 6. The GAO report recognizes that NRC-defined radiological decommissioning costs are a subset of the total decommissioning costs that a licensee may face. The GAO report further states that many licensees deposit funds for such non-radiological activities in their external decommissioning trusts. Finally, the GAO assumed under its " pessimistic" scenario that only 82 percent of funds in the decommissioning trusts would be available to pay for NRC-defined radiological decommissioning expenses, with the balance used to pay for non-radiological spent fuel costs and interim spent fuel management. (These percentages rise to 95 percent and 100 percent, respectively, for GAO's baseline and optimistic scenarios.) (GAO report, p.43) 9,
r NRC Resoonse:
Costs of activities such as demolition of non-radioactive structures and site restoration are not included in the NRC's decommissioning funding assurance requirements because they are not directly part of the NRC'c mission to protect public health and safety. The NRC believes that the GAO's assumptions for its " pessimistic" scenario do not take into account the NRC's very specific requirements in 10 CFR 50.82 with
{
respect to when and for what purpose decommissioning trust funds may be disbursed.
i Thus, the NRC has the authority to prohibit spending of decommissioning funds, accumulated pursuant to our requirements for radiological decommissioning, on non-NRC-defined decommissioning costs. The NRC expects to exercise this authority if it determined that expenditures for such costs would cause the funds available for radiological decommissioning expenses to be insufficient.
ENCLOSURE 2 CHRONOLOGY OF RULEMAKING AND REGULATORY ACTIONS
- 1. June 27,1988:
Final Rule " General Requirements for Decommissioning Nuclear Facilities"(53 FR 24018)
- 2. August 1990:
Regulatory Guide " Assuring the Availability of Funds for Decommissioning Nuclear Facilities"
- 3. April 8,1996:
Advance Notice of Proposed Rulemaking " Financial Assurance Requirements for Decommissioning Nuclear Power Reactors" (61 FR 15427)
- 4. June 21,1996:
NRC Administrative Letter 96-02 " Licensee Responsibilities Related to Financial Qualifications"
- 5. September 23,1996:
" Draft Policy Statement on the Restructuring and Deregulation of the Electric Utility Industry" (61 FR 49711)
- 6. January 1997:
Draft " Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance (NUREG-1577)
- 7. August 19,1997:
" Final Policy Statement on the Restructuring and Economic Deregulation of the Electric Utility Industry"(62 FR 44071)
- 8. September 22,1998:
Final Rule " Financial Assurance Requirements for Decommissioning Nuclear Power Reactors"(63 FR 50465)
- 9. March 1999:
Final" Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance"(NUREG 1577, Rev.1)
1 NUREG-1577, Rev. I
\\
Standard Review Plan on
) Power Reactor Licensee Financial Qualifications and Decommissioning Funding
" Assurance 2
3 2
U.S. Nuclear Regulatory Commission p' "*%,
Office of Nuclear Reactor Regulation
[ r',,j Washington, DC 20555-0001
\\,,,,,,/
NUREG-1577, Rev. I k
Standard Review Plan on Power Reactor Licensee Financial Qualifications and g Decommissioning Funding g Assurance n
M U.S. Nuclear Regulatory Commission Office of Nuclear Reactor Regulation
[
Washington, DC 20555-0001
7.,
AVAILABILITY NOTICE Availability of Reference Materials Cited in NRC Publications NRC publications in the NUREG series, NRC regu-NRC Public Document Room l
lations, and Title 10, Energy, of the Code o/ Federal 2120 L Street, N.W., Lower Level Regulations, maybepurchasedfromoneof thefol-Washington, DC 20555-0001 lowing sources:
< htt p://www. n tc. gov /N R C/PDR/pd r 1. htm >
1.
The Superintendent of Documents U.S. Government Printing Office Microfiche of most NRC documents made publicly PO. Box 37082 available since January 1981 may be found in the Washington, DC 20402-9328 Local Public Document Rooms (LPDRs) located in
<http://www. access.gpo. gov /su docs >
the vicinity of nuclear power plants. The locations 202-512-1800 of the LPDRs may be obtained from the PDR (see previous paragraph) or through:
2.
The National Technical Information Service Springfield, VA 22161 -0002
<http://www.nrc. gov /NRC/NUREGS/
< http://www ntis. gov /ordernow>
SR1350/V9/lpdr/html>
703-487-4650 Publicly released documents include, to name a The NUREG series comprises (1) brochures few, NUREG-series reports: Federal Register no-(NUREG/BR XXXX), (2) proceedings of confer-tices; applicant, licensee, and vendor documents ences (NUREG/CP-XXXX), (3) reports resulting and correspondence; NRC correspondence and from international agreerpents (NUREG/lA-XXXX),
internal memoranda; bulletins and information no-(4) technical and administrative reports and books tices; inspection and investigation reports; licens-
[(NUREG-XXXX) or (NUREG/CR-XXXX)], and (5) ee event reports; and Commission papers and compilations of legal decisions and orders of the their attachments.
Commission and Atomic and Safety Licensing Boards and of Office Directors' decisions under Documents available from public and special tech-Section 2.206 of NRC's regulations (NUREG.
nical libraries include all open literature items, such XXXX) as books, journal articles, and transactions, Feder-al Register notices, Federal and State legislation, A single copy of each NRC draft report is available and congressional reports. Such documents as free, to the extent of supply, upon written request theses, dissertations, foreign reports and transla-as follows:
tions, and non-NRC conference proceedings may be purchased from their sponsoring organization.
Address: Office of the Chief Information Officer Reproduction and Distribution Copies of industry codes and standards used in a Services Section substantive manner in the NRC regulatory process U S. Nuclear Regulatory Commission are maintained at the NRC Library, Two White Flint Wash:ngton, DC 20555-0001 North, 11545 Rockville Pike, Rc 3ville, MD E-mail:
< DISTRIBUTION @nrc. gov >
20852-2738. These standards are available in the Facsimile: 301-415-2289 library for reference use by the public. Codes and standards are usually copynghted and may be A portion of NRC regulatory and technicalinforma-purchased from the originating organization or, if tion is available at NRC's World Wide Web site:
they are American National Standards, from-
<http://www.ntc. gov >
American National Standards institute All NRC documents released to the public are avail-11 West 42nd Street able for inspection or copying for a fee, in paper, New York, NY 10036-8002 microfiche, or, in some cases, diskette, from the
< http://www. ansi.org >
Public Document Room (PDR):
212-642-4900
NUREG-1577, Ru. I Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance Manuscript Completed: January 1999 Date Published: March 1999 Prepared by R. S. Wood Division of Reactor Program Management OITice of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 pmouq l
ABSTRACT The NRC is issuing this final Standard Review changes to the regulations resulting from Plan to describe the process it uses to review responses to the Advance Notice of Proposed the financial qualifications and methods of Rulemaking and the Draft Statement,it will providing decommissioning funding assurance be updated for any future initiatives. The NRC required of power reactor licenses. A separate is concerned that rate deregulation and
' SRP was issued for the NRC's antitrust review disaggregation resulting from various responsibilities in 1997. This Standard Review restructuring actions involving power reactor Plan is being used as the basis for reviews as licensees could have adverse effects on the the electric utility industry moves from an Protection of public health and safety, environment of rate regulation toward greater The NRCis publishing Revision 1 to competition. Although this final Standard NUREG-1577 to include footnote Review Plan reflects current regulations and information omitted in the original version policy, and has been updated to reflect published February 1999, iii NUREG-1577, Rev.1
1 CONTENTS Page Abstract.....................................................................
iii I.
Are as of Review..........................................................
1 II. Acceptance Crit e ri a.......................................................
I 1.
Financial Qualifications................................................
1 2.
Decommissioning Funding Assurance....................................
2 3.
Foreign Owne rship....................................................
2 III. Review Procedures........................................................
3 1.
Financial Qualifications................................................
3 Construction Permits..............................................
3 a.
b.'
Operating License Reviews.........................................
4
. Combined License Applications.....................................
5 c.
d.
Post-OL Non-Transfer Reviews......................................
5 Reviews of 'IYansfers of Licenses....................................
5 e.
2.
Decommissioning Funding Assurance....................................
7 Verifying the Initial Certificate Amount..............................
7 a.
b.
Evaluating the Biennial Decommissioning Funds Status Reports.........
9 Verifying Annual Amortization Amounts for External Sinking Funds......
9 c.
d.
Evaluating Investments in External Sinking Funds.....................
11 Evaluating External Sinking Fund Trust Documents....................
12
- e.
f.
Evaluating Other Financial Assurance Mechanisms....................
13 I V. Eval uation Findings.......................................................
14 V.
Imple me n t ation...........................................................
14
. V1. Re fe rence s...............................................................14 l
1 l
t v
NUREG-1577, Rev.1
STANDARD REVIEW PLAN ON POWER REACTOR LICENSEE FINANCIAL QUALIFICATIONS AND DECOMMISSIONING FUNDING ASSURANCE Review Responsibilities funding assurance requirements that the final rule implemented. Additionally, on Primary-Generic Issues and Environmental October 24,1997, the NRC staffissued Projects Branch (PGEB)
SECY-97-253, " Policy Options for Nuclear Secondary-None Power Reactor Financial Qualifications in Response to Restructuring of the Electric Utility Industry." On January 15,1998, the I.
AREAS OF REVIEW Commission responded to the staff's proposals The NRCis issuing this Standard Review Piaa in a staff requirements memorandum and (SRP) to describe the process it uses to review indicated that the NRC should continue its the financial qualifications and methods of current approach to evaluating the financial providing decommissioning funding assurance qualifications of license applicants and required of power reactor license applicants licensees of operating nuclear power plants.
and licensees. A separate Standard Review The Commission reconfirmed this view in a Plan on Antitrust Reviews was issued in staff requirements memorandum dated December,1997 (NUREG-1574). Also, a December 9,1998 on SECY-98-153-draft SRP Regarding Foreign Ownership,
" Update of Issues Related to Nuclear Power Control, or Domination of Applicants for Reactor Financial Qualifications in Response Reactor License will be issued shortly. The to Restructuring of the Electric Utility issue of foreign ownership, control, or Industry."If the NRC decides to change its domination is a policy matter that is under financial qualifications review criteria in the active consideration by the Commission. Each future, or if other changes to relevant NRC of these SRPs will be used as a basis for policies and requirements are adopted, the NRC will revise this SRP to reflect such reviews as the electric utility industry moves
- changes, from an environment of rate regulation toward greater competition and the attendant II.
ACCEPTANCE CRITERIA corporate restructuring that competitive forces will likely engender. The NRC issued a draft 1.
Financial Qualifications of this SRP in January,1997 (NUREG-1577),
Section 182.a. of the Atomic Energy Act of and received 6 public comment letters as a 1954, as amended, (AEA) provides that "Each result. This SRP, like the draft, reflects current application for a license... shall specifically NRC regulations and policy. Thus, some of the state such information as the Commission, by public comments received that suggested rule or regulation, may determine to be changes to current requirements for financial necessary to decide such of the technical and qualifications could not be considered, financial qualifications of the applicant... as However, the NRC has adopted comments on the Commission may deem appropriate for the existing processes and procedures in this SRP, license." The NRC's regulations governing where appropriate. Since the NRC issued the financial qualifications reviews of applications draft SRP, a fm' al rule on decommissioning for licenses to construct or operate nuclear funding assurance was issued on Septem.
power plants are in section 50.33(f) of Title 10 ber 22,1998 (63 FR 50465). This SRP reflects of the Code of Federal Regulations. Guidance the changes to the NRC's decommissioning for Construction Permit (CP) financial 1
NUREG-1577, Rev.1 N
qualifications reviews is provided in Appendix time of submission of the post-shutdown C to 10 CFR Part 50. Transfers of licenses are decommissioning activities report (PSDAR) governed by 10 CFR 50.80. If a license required in section 50.82, licensees should amendment is required by, for example, the have either (1) funds plus an estimate of addition of a new or renamed entity to the expected earnings on the fund, or (2) a license, the provisions of 10 CFR 50.90,50.91, guarantee, insurance, or other funding and 50.92 would be applicable. The reviewer assurance method for the total estimated i
will accept applications for licensing actions decommissioning cost, as provided in 10 CFR that provide required information pursuant to 50.75(e). Final funding plans, and adjustrnents l
the relevant sections cited above.
to them during any safe storage period, are also required, as necessary. For those licensees that shut down their power plants prematurely i
2.
Decommissioning Funding Assurance (that is, before the scheduled end of their I
operating license term), section 50.82 provides Decommissioning funding assurance for that the schedule for collecting any balance of nuclear power plants is governed by 10 CFR funds estimated to be needed for decom-50.33(k),50.75, and 50.82 in a three-stage missioning will be determined on a case-by-process. First, as required in section 50.33(k),
case basis. Section 50.75(e) describes i
/
on or before July 26,1990, licensees were allowable funding assurance mechanisms and required to submit a report, including a the circumstances under which licensees may certification, specifying how financial use them. Section Ill.2. of this SRP provides assurance for decommissioning would be additional discussion of decommissioning provided. An applicant for an operating funding assurance. The reviewer will accept license (OL) under 10 CFR Part 50 or a the reports,information, and applications for combined license under 10 CFR Part 52 is licensing actions that conform to the required, pursuant to 10 CFR 50.33(k)(1), to requirements of these sections of the NRC's submit information in the form of a report regulations.
indicating how reasonable assurance will be l
3.
Foreign Owner-tip provided that funds will be available to decommission the facility. Second, licensees License applications for new facilities or for are required to adjust annually the amount of transfers of ownership of existing facilities may decommissioning funding assurance, using an include requests by foreign entities to own all amount equal to or greater than that required or part of a reactor facility. Section 103d of the under the formula in section 50.75(c)(2), and AEA prohibits the NRC from issuing a license report on the status of their decommissioning to an applicant if the NRC knows or has funds as provided by 10 CFR 50.75(f). Periodic reason to believe that the applicant is owned, adjustments to the funding amount should be controlled, or dominated by an alien, foreign made in coordination with a licensee's rate corporation, or foreign government.1 The regulator, if applicable, or by itself. Third, in reviewer will accept applications having accordance with section 50.75 (f),5 years foreign ownership considerations that address before permanent cessation of operations, a issues and provide information as described in 1
licensee must submit a preliminary the draft SRP Regarding Foreign Ownership, decommissioning cost estimate that includes plans for adjusting levels of funds assured for i The NRC regulation that implements this prohibition in the Atomic Energy Aa is 10 CFR 50.38. which states:
decommissioning to demonstrate that a reasonable level of assurance will be provided o,gC**,hjs
h"en ch ti Cm
^"Y
'8
's n C""lh
, n, or y
that funds will be available when needed to has reason to beiseve is owned, controlled or dominated by an ahen, cover the cost of decommissioning. By the
' )[y*'r0r 770I$"n"$cc*n's**'8" 8 "*'"**"""'"*'"*"8"*
- 8" '
p NUREG-1577, Rev.1 2
Control, or Domination of Applicants for institutions) upon which they are relying for Reactor Licenses.
financial assistance; (2) information to support the financial capability of stockholders, III. REVIEW PROCEI)URES corporate affiliates, and others to meet their cu Tent or intended commitments to the The reviewer uses the review procedures applicant (s); (3) any other information described in this section of the SRP as may be considered necessary by the Commission to appropriate for a particular case.
enable it to determine applicants' financial qualifications; and (4) applicants' statements 1.
Financial Qualifications of assets, liabilities, and capital structure as of a.
Construction Permit Reviews The NRC does not currently have any CP As provided in 10 CFR 50.33(f)(3), additional applications for review. All reviews for any information is required of newly-formed 2
new CP applications will be performed under entities when they are organized for the the following procedures. Section 50.33(f)(1) primary purpose of constructing or operating a requires CP apph,eants to submit information nuclear power plant. Thus, for example, the that " demonstrates that the applicant reviewer should treat such an operating possesses or has reasonable assurance of company as a newly-formed entity and should obtaimng the funds necessary to cover review information that is typically contained estimated construction costs and related fuel in operating or participation agreements. The cycle costs." Appendix C to 10 CFR Part 50 reviewer should also evaluate the ability of the provides more specific directions for plant owners to meet their obligations to the evaluatm, g the financial qualifications of CP operating company. If, for example, the apphcants. Reviewers should confirm that owners of an operating company meet the applicants have provided at least 3 types of definition of an " electric utility" as provided in mformation: (1) an estimate of construction 10 CFR 50.2, less detailed information will be costs, meluding plant costs ascribable to the required. (As described in the section on OL nuclear plant itself; general and overhead reviews, a newly-formed entity that is an plant costs, mcluding any transmission and
" electric utility" will not be subject to further distribution costs ascribable to the plant; and review.)
nuclear fuel cost for the first core load; (2) the source (s) of construction funds, including a 2
financial plan describm, g mternal and external The NRC views the term," newly-formed entity,"in the context of CP, ot, or posia reviews, as deing iargeiy seir.expianaiory, hui is sources of funds; and (3) the latest published providins the fo!!owins worLins definitions to assist the reviewer in annual financial reports, together with any determining whether an appheant is a " newly-formed entity" or an
" established entity;"
current interim financial statements that are A ac*t-/onned cat,,y is a company that has been formed or organized pertinent, including income, balance sheet,
' Sh sTon ng"aTu ear p P
ee 8
de m crp n nd s
an and cash flow statements.
established five year financial rec capabihty for raising and managmord, or demonstrated a financial g capital similar to the level required to fund a nuclear power plant's construction, capital additions, and In addition, the reviewer should determine operating and deammissioning expenses, as appropriate, or the whether applicants are subj.eet to section hcensee's stipulatu share of those operating expenses. A nuclear operating company ror.aed rrom an existing power reacior iicensee or 50.33(f)(3) and Appendix C to 10 CFR Part hcensees is a ac*ly-formed enti'y-50, which require newly-formed entities to
^"'**'#d'a'#y is a c mpany that has an established and proven financial, construction, operational, or decommissionmg record of five provide information showing: (1) the legal and years or more for managing or owning a nuclear power plant, or has an financial relationships they have or propose to
%'*li,,7,dj*fo'N',L*,',",8, '",d '"',"'8,'"8,,P,il,al si'"japi al
'i5 8
the levei q
,i 9n have with their stockholders, corporate additions, and operatins and decommissioning expenses, as affiliates, and others (such as financial
,,PpP$ ate, r the hcensee's stipulated share of those operating 3
NUREG-1577, Rev.1
The reviewer should evaluate new companies characteristics of various combinations of formed as the result of mergers to determine these organizations. If entities using unan-their status as " electric utilities" or, if they do ticipated ownership arrangements apply for not meet this definition evaluate their new cps, the reviewer may use the authority projected combined financial statements and under section 50.33(f) either to require other relevant information as described in this adequate information to assure himself or SRP to determine their financial qualifica-herself that the applican: has demonstrated tions. Similarly, the NRC will evaluate reasonable assurance of obtaining adequate formations of new holding companies over funds for the safe construction of the facility or existing licensees to determine the potential to deny issuance of a CP.
financialimpact of the new company on the b.
Operating License Reviews cxisting licensee, but will perform only a limited review if the licensee is an " electric
" Electric utilities" as defined in 10 CFR 50.2 utility". A newly-formed entity that has been are exempt under 10 CFR 50.33(f) from formed to buy and operate a nuclear plant as financial qualification reviews for OL its only significant asset (e.g., a " merchant applications. If the reviewer determines that plant", a "GENCO," or an exempt wholesale OL applicants are " electric utilities" and that generator (EWG)) would normally be all of their corporate owners (i.e., parent expected to submit more detailed information companies) have been identified, such to support its financial qualifications, unless it applicants will not be subject to further NRC meets the definition of" electric utility," than financial gr.alifications review. OL applicants other applicants. Corporate reorganizations that are not " electric utilities" are required (e.g., functional unbundling of nuclear plant under section 50.33(f)(2) to submit infor-operations from other corporate activities) or mation that demonstrates that they possess or initiation of contracts with other parties to have reasonable assurance of obtaining the provide nuclear plant operational support funds necessary to cover estimated operating would not normally be considered to fall costs for the period of the license. The within the definition of " newly-formed reviewer will confirm that non-electric utility entities," although such changes may be OL applicants have submitted estimates for subject to review pursuant to 10 CFR 50.80, as total annual operating costs for each of the described below. The reviewer will determine first 5 years of operation of their facilities, and the financial qualifications of a license have also indicated the source (s) of funds to applicant for a CP based on the adequacy of cover operating costs. Information on the the relevant information provided and the sources of funds should include projections of applicant's ability to meet the standards the market price of power in the area in which stipulated in the NRC's regulations.
the plant will be located, any long-term contracts that the applicant has for the plant, The NRC believes that this framework is contracts or other arrangements with relevant sufficient to provide reasonable assurance of transmission or grid reliability authorities that the financial qualifications of both electric designate the plant as a "must-run" facility, utility and non-electric-utility applicants under government-required charges designated for the various ownership arrangements currently nuclear plant operations (e.g., non-bypassable contemplated. These ownership arrangements wires charges), corporate revenues from other include: (1) holding companies; (2) operating, sources that may be used at the naclear plant, generating, or service company subsidiaries; and any other information relevant to the (3) merged companies; (4) independent power source of revenues. The reviewer will evaluate producers (IPPs); (5) exempt wholesale this information for reasonableness and will generators; and (6) " hybrid" companies with compare it to plants of similar size, design, and NUREG-1577, Rev.1 4
location. If applicable, the reviewer will also d.
Post-OL Non-transfer Reviews use information from Moody's, Standard and Ibors, and Value Line or other widely accepted The NRC does not systematically review its rating organizations to assist in his or her power reactor licensees once it has issued an review. If a license applicant has an OL, other than for transfers discussed in investment-grade', rating or equivalent from Section Ill.1.e. However, section 50.33(f)(4) at least two of these sources, or has states: "The Commission may request an demonstrated that it has met the electricity established entity or newly-formed entity to supply and demand test described above, the submit additional or more detailed informa-reviewer will find such applicants financially tion respecting its financial arrangements and qualified. If an applicant cannot meet these status of funds if the Commission considers criteria, the reviewer will also consider other this information to be appropriate. This may relevant financial information (i.e., informa-include information regarding a licensee's tion on cash or cash equivalents that would be ability to continue the conduct of the activities sufficient to pay fixed operating costs during autbaized by the license and to decommission an outage of at least 6 months, the amount of the tacility." The NRC has used this provision decommissioning funds collected or guaran-nly in limited situations and normally will not teed for the plant in relation to the current
'.equire licensees, including those that are not estimated decommissioning cost, and any electric utilities, to report on their fm, ancial other relevant factors). An OL applicant that qualifications at specified intervals. However, is a newly-formed entity organized for the reviewers have and will continue to conduct primary purpose of operating the facility is gen ral f 11 w-up reviews of alllicensees by required to submit the information described screening trade and financial press reports, in 10 CFR 50.33(f)(3). On the basis of the and other sources of information. Reviewers information submitted, the reviewer will issue will use this mformation to determine whether findings with respect to the financial
} rec mmend any additional NRC action, qualifications of such OL applicants. If the in luding requests for additionalinformation reviewer determines that a license applicant and the assignment of additionalinspection does not meet these financial qualification resources to monitor the adequacy of plant standards, he or she will either deny issuance safety performance.
or transfer of the OL, condition the OL, or e.
Reviews of Transfers of Licenses recommend initiation of other regulatory action to mitigate financial qualifications NRC regulations in 10 CFR 50.80 require concerns.
Commission review of and written consent to direct as well as indirect transfers of operating licenses, including licenses for nuclear power c.
Combined License Applications plants owned or operated by " electric utilities."4 When the transfer involves a As authorized in 10 CFR Part 52, applicants change in the licensee listed on the NRC may apply for a combined CP and OL license.
license, the applicant must also apply for a In accordance with section 52.77, all such license amendment under section 50.90. The applications must contain all of the reviewer will determine whether, in the case of information required under section 50.33, a direct transfer, a proposed transferee is including information regarding financial 2 All power reactor licensees are required, pursuant to 10 CFR 50.7 (b),
qualifications. The review procedures as
' '"b "d '""" fi"*"*i '* P -
' $cIfy" fan ('r!'hiih; $ '/'*"'*jff/"'r"% '"$T "i described in Sections III.1.a. and b. will be 8
'd' ~
r y
r, n,
c ase
,as
, or n used to review any combined applications that any manner disposed of either voluntarity or invoiuntarity, direcily or the NRC receives.
indirectly, through transfer of control of the hcense to any person, unless the Commission shall give its consent in writing?
5 NUREG-15~/7, Rev.1
1 qualified to hold the license, or whether, in the Approval of a transfer under section 50.80 will case of an indirect transfer, the holder of the be accomplished by order. When appropriate, license is qualified to hold the license. Section a conforming license amendment will be 50.80(b) requires license transfer applicants to issued. (A name change of a licensee that does include as much of the information with not involve license transfer considerations respect to, among other things, the financial under section 50.80 will be effected by a qualifications of the proposed holder of the license amendment issued administratively license as required in section 50.33(f). Thus, under section 50.90.) In addition, reviewers the reviewer will use the criteria described in should review transfers for their potential I
other sections of III.1. of this SRP, as impact on the licensee not only to determine I
appropriate, to conduct his or her license the adequacy of funds for safe operation and j
transfer reviews.
decommissioning, but to ensure that the j
licensee maintains adequate technical 1
qualifications and organizational control and To date, the NRC has evaluated transfers authority over the facility.5 All orders involving mergers, acquisitions, formations of approving section 50.80 transfers are signed by holding companies, and sales of portions of the Director, Office of Nuclear Reactor facilities to other parties. The reviewer should Regulation (NRR). Additionally, the Director, evaluate the f;nr.ncial qualifications associated NRR, will consult with the Commission on all with these transfers by: (1) determining applications for transfers of licenses that whether the proposed holder of the license represent new or unusual approaches or will remain an " electric utility" following the organizations.
,direct or indirect transfer; (2) for non-
" electric-utility" applicants, reviewing the For mergers and restructuring actions recent financial performance of the proposed involving the formation of holding companies, transferee, or,if the proposed transferee is a the reviewer determines whether the surviving new entity such as an operating, generating, or licensed owner or operator will remain an service company subsidiary, evaluating the
" electric utility" as defined in section 50.2.
ownership or participation agreement with its Because of the concern that the establishment owners or other responsible party; and (3) of a holding (parent) company over a licensee identifying all parent companies that are not could eventually result in the parent depleting licensed by the NRC or did not undergo an assets from the licensee to such an extent that NRC section 50.80 review.
the ability to fund safe operations and decommissioning could be affected, the reviewer should recommend that transfer The reviewer should treat applications PProvals be conditioned to require the, involving changes of ownership, mergers, licensee to inform the NRC before significant formation of holding companies, and other assets are transferred from the licensee to its restructuring proposals that go beyond corporate name changes or internal parent or related company. When co-owners have requested NRC consent to transfer their reorganizations as potential transfers of licenses, directly or indirectly, through transfer interests in power reactors, the reviewer should determine the fmancial qualifications of control of the license, as subject to section 50.80 review, and not merely subject to a f e ch buyer to own or operate its proposed section 50.90 license amendment review. In percentage share of the facility by following some cases, a reviewer will need to conduct a the same procedure as desenbed in other sections of III.1. of this SRP. Generally, the
" threshold" review to determine whether the proposed action does,in fact, constitute a 5 A separate sar on technical quahfications of license transfer appli.
transfer subjeet to seetion 50.80.
cants is being developed.
NUREG-1577, Rev.1 6
reviewer should not deem as license transfers relationships other than sale-leaseback 7 under section 50.80 those internal corporate transactions. See Arizona Public Service Co.
reorganizations (i.e., that do not entail (Palo Verde Nuclear Generating Station, Unit mergers, holding company formations, 1), CLI-85-17,22 NRC 875 (1985).
acquisitions, or divestitures) that do not alter the licensee's status as an " electric utility," do 2.
Decommissioning Funding Assurance not substantially affect corporate ownership or a.
Verifying the Initial Certification Amount identity of the licensee, or do not otherwise materially affect the licensce's financial As part of the reporting requirements in qualifications. However, the reviewer should section 50.75(f), a licensee s calculations of both the basic certification formula amount determine whether such reorganizations are subject to NRC review and determine whether and the annual escalation amount are subject to NRC verification. As described in section the licensee's techm, cal qualifications are affected by the reorganization.
III.2.b. of this SRP, NRC regulations require licensees to report information on The reviewer should also evaluate financial decommissioning funds at least once every two qualifications of non " electric-utility" years following the initial report filed by applicants on the basis of financial data based March 31,1999.
on current information from the financial (1) Power reactor licensees were required to ratings services such as Moody's and l'alue certify by July 27,1990, that they would Line. To date, the NRC has not found any have adequate funds to decommission proposed restructuring actions in which the each unit by the time they plan to shut the surviving licensee would not remain an unit down. Pursuant to section 50.33(k), a
" electric utility" or that would render the new applicant for an OL is required to proposed transferee not financially qualified.6 g
gg g
g The reviewer will publish the results of such an indicating how reasonable assurance of evaluation in a Safety Evaluation Report decommissioning will be provided. The (SER), which is used by the Associate Director reviewer should confirm that this of Projects staff to issue an order, with a certification is based on the applicable license amendment when appropriate. These formulas contained in sections 50.75(c)(1) actions are noticed in the Federal Register.
and (2), or upon a site-specific estimate, NRC regulations in 10 CFR 50.81 govern the pr vided that the estimate is not less than relationships that licensees may have with the value derived from section 50.75(c),
their creditors, including trustees under any using the following criteria:
mortgage, pledge, or lien and court-appointed (a) Section 50.75(c)(1) contains two trustees under bankruptcy proceedings. This formulas to determine the certi-section permits the creation of such creditor fication amounts in 1986 dollars for relationships, provided that creditors do not pressurized water reactors (PWRs) take possession of the facility and are subject and boiling water reactors (BWRs).
to the same restrictions under NRC The formulas include scaling factors regulations and the AEA as the licensee. The to account for size differences in NRC does not typically review creditor reactors. The decommissioning cost rangesin 1986 dollars are from $85.6 6 In one case,the NRC received informaun as part of a request for 7 sale leaseback transactions typically involve the licensed owner of a opproval of the formation of a holding company over a licensee that nuclear power plant selling all or a portion ofits share of the plant to indicated that the licensee did not meet the NRC's defmition of an an investor, who then leases back that portion of the facdity to the
" electric utdity "llowuer, the formation of the holdmg company in licensee. The licensee continues to " possess" and/or operate the plant this case did not cause the licensee's status as an " electric utility" to and is responsible for safe operation and decommissioning under the change.
terms of the NRC heensa.
7 NUREG-1577, Rev.1
I I
million to $105 million for PWRs and (2) A licensee's calculations of both the basic l
from $114.8 million to $135 million certification formula amount and the for BWRs.
escalation amount from 1986 to the current year are subject to NRC verification. Such verification will be (b) Section 50.75(c)(2) contains a formula to determine the annual change determined primarily by the reviewer's (inflation or escalation, although evaluation of the biennial reports required deflation is also possible) in the three in 10 CFR 50.75(f), as described in III.2.b.
primary decommissioning cost of this SRP, but may also be accomplished
{
components-labor, energy, and through the NRC inspection process, low level waste (LLW) burial charges.
Although data may be over a year
)
out-of-date, the licensee is required to have performed an escalation calculation The 1990 certifications should within the previous 12 months.
have included escalation Because escalation in the three calculations from 1986 dollars to 1989 or 1990 dollars.
decommissioning cost factors, labor, j
energy, and LLW disposal, are given
{
regionally in the reference documents, Licensees are required t the reviewer should check a licensee's recalculate the formula amounts methodology and sources in making annually to account for changes in the calculations.
the three decommissioning cost I
factors during the previous year.
Licensees may use information from Calculations are to be based on several tables of regional data in the data from the U.S. Bureau of U.S. Department of Labor, Bureau of Labor Statistics and current Labor Statistics cited in section versions of NUREG-1307 as 50.75(c). Such information is subject 3
specified in section 50.75(c)(2).
to reviewer or inspector confirmation j
(Power reactor licensees are that the choice of data is reasonable.
j required to change their collec-That is, site-specific data should not tion amounts periodically. For vary substantially from generic cost licensees that remain under rate data without demonstrable reason.
co n e ith licensees usual rate (3) The NRC formulas in section 50.75(c) cycles. Licensees that are not rate include only those decommissioning costs regulated or do not have access to incurred by licensees to remove a facility non-bypassable charges for r site safely from service and reduce j
decommission ing should adjust residual radioactivity to a level that I
their funding levels over permits: (1) release of the property for reasonable periods. In all cases, unrestricted use and termination of the however, pursuant to section license; or (2) release of the property 50.75(e)(2), the NRC reserves the under restricted conditions and right, either in cooperation with a termination of the license. Thus, for f
licensee's rate regulators or example, the costs of dismantling or independently, to take action on a demolishing non-radiological systems and case-by-case basis to modify a structures are not included in the NRC licensee's schedule for the cost formulas. In addition, the costs of accumulation of decommission managing and storing spent fuel on site ing funds.)
until transfer to the Department of Energy NUREG-1577, Rev.1 8
for permanent disposal are not included in close within 5 years, or has already closed, NRC cost formulas. Therefore, the is required to submit the report annually.
reviewer will ensure that either-(2) As long as the information described Such costs are not included in licensee above is included in the report, no specific formula calculations; or reporting format is required. However, each licensee should indicate the If such costs are included, they are assurance mechanism being used as a separately identified and are not used source of revenues for the external sinking for NRC-required decommissioning fund (e.g., traditional " cost-of-service funding assurance.
ratemaking, a non-bypassable charge, long-term contracts that the NRC has b.
Evaluating the Biennial Decommissioning found to be acceptable pursuant to 10 Fund Status Reports CFR 50.75(e)(1)(v)).8 If the assumed real earnings rate on an external sinking fund The reviewer should confirm that the exceeds 2 percent, each licensee should following information is contamed in the indicate the specific rate ruling or decision biennial decommissioning fund status reports:
by its rate regulator that documents the earnings rate being used, as provided in 10 CFR 50.75(e)(1 I or ii). If a licensee is using an assuran)c(e)mec(hanism other than (1) As provided in 10 CFR 50.75(f)(1), each power reactor licensee is required t report to the NRC on a calendar year an external sinking fund, it should include basis, beginning on March 31,1999, and as part of the report adjustments to the every 2 years thereafter, on the status of assurance mechanisms (e.g., a surety bond its decommissioning funding for each or letter of credit) to account for any reactor or share of a reactor that it owns.
escalation since the previous report.
The information in this report must c.
Verifying Annual Amortization Amounts include, at a minimum: the amount of for External Sinking Funds decommissioning funds estimated to be required, pursuant to 10 CFR 50.75(b)
The reviewer should verify the accuracy of the and (c), or a site-specific estimate, as annual amortization amounts for external appropriate; the amount accumulated to sinking funds using the following procedures:
the end of the calendar year preceding the (1) Once a licensee has established the date of the report; a schedule of the decommissioning cost for each ofits annual amounts remaining to be collected; the assumptions used regarding rates of reactors in current-year dollars, the reviewer should confirm that the licensee escalation in decommissioning costs, rates of earnings on decommissioning funds, will have this amount (less future estimated earnings as provided in 10 CFR and rates of other factors used in funding projections; any contracts upon which the 50.75(e)(1)(I) or (ii)) by the time it plans licensee is relying pursuant to 10 CFR to shut down by using one of the financial assurance mechanisms allowed in section 50.75(e)(1)(ii)(C); and any modifications to a licensee's current method of 50.75(e). Virtually all power reactor licensees so far have chosen to use an providing financial assurance occurring external sinking fund. This assurance since the last submitted report. Any licensee for a plant that is within 5 years of
','yh*'f,*"!,',h'!,T, V*,'%,'f*r"'*!'IE*ie!n"It[o5*o"fe'ir the projected end of operation, or where gleargi=,'grgagsjigreagrgn 2g, rage N ill conditions have changed such that it will repation for that poruon of their rates.
9 NUREG-1577, Rev.1
1 method requires a licensee, or a desig-amount estimated to be necessary to nated representative of a licensee, to complete decommissioning. If the source make payments, at least annually,into an of decommissioning trust funds is a external trust fund held by a third party, State-mandated non-bypassable charge, usually a bank licensed by a State, acting the reviewer should, as appropriate, as trustee The trustee willinvest a evaluate the assumptions used in licensee's deposits in order to earn calculating and collecting the charge to l
interest and dividends to increase the determine that it, plus estimated future value of the fund. If a licensee earnings, will be adequate over the permanently shuts down its reactor at the stipulated collection period, to provide the expected end of the reactor's operating funds estimated to be needed for life, it should have sufficient funds (less decommissioning. Provisions should be future estimated earnings) to complete made in the non-bypassable charge to decommissioning, either by immediate cover increases in decommissioning cost dismantlement or by storage over some estimates. If the non-bypassable charge period followed by deferred dismantle-does not have such provisions, the licensee l
ment. If, on the other hand, a licensee will be required to use one of the other permanently shuts down its reactor decommissioning funding assurance prematurely, it will need to accumulate mechanisms allowed in 10 CFR 50.75(e) any shortfall in decommissioning funds for the unfunded difference. The reviewer (less future estimated earnings). As should exercise greater oversight of those provided in section 50.82(c), the collection licensees that no longer have such rate period for making up any shortfall will be regulatory oversight. In either case, the determined on a case-by-case basis.
NRC reserves the right to review, as needed, the rate of accumulation of (2) In the 1988 decommissioning rule, the decommissioning funds, and, either NRC deferred to the ratemaking authority independently or in coordination with a of the PUCs and FERC to set annual rates licensee's rate regulators, take additional for decommissioning. As rate deregulation actions as appropriate on a case-by-case proceeds, some licensees may no longer basis, including modification of a have rate regulatory oversight with respect licensee's schedule for the accumulation to decommissioning. (To the extent such of decommissioning funds. When the oversight continues to be provided,it may reviewer evaluates licensees' amortization include direct oversight as provided in schedules, he or she should use the traditional cost-of-service or similar following benchmarks:
ratemaking, or indirect oversight through government-mandated non-bypassable (a) Some licensees will base their charges or other mechanisms.) The NRC amortization schedules on the expects that, for licensees that continue to certification amount adjusted to have direct or indirect rate regulatory current-year dollars. At its simplest, oversight, it will continue to be able to licensees should have an annual defer to rate regulators to determine the amortization amount that equals the appropriate amortization schedule for adjusted certification amount divided decommissioning funds, provided that by the remaining years of projected there is reasonable assurance that, at the plant operation. This amount will time of permanent cessation of change as the certification amount is operations, decommissioning funds plus continually readjusted to account for estimated earnings will be available in the inflation and trust fund earnings and NUREG-1577, Rev.1 10
as the remaining operating life PUCs,if applicable. Rate cases are decreases, typically on a three-year cycle, but the licensee should document (b) Other licensees will project decom-decommissioning rate filings and their missioning costs out to the planned underlying assumptions.
time of permanent shutdown by inflating costs at some predetermined Licensees that no longer have rate I
inflation rate. They will most likely regulatory oversight or access to non,
also discount the fund by the expected bypassable charges for decommissioning earnings rate on the fund. On the should adjust their assurance mechanisms basis of these calculations, licensees annuaHy to reflect any changes in i
t will be able to calculate an annual e mnussi mng c n es m s desed
//
amortization amount that, coupled from the formulas or site-specific estimates in 10 CFR 50.75(c).
with projected earnings, will equal the inflated certification amount.
(d) Some licensees are part owners of power reactors. In such cases, the Although projected inflation rates reviewer should evaluate separately may be expected to vary, they each licensee's amortization schedule should be in the 2 percent to 5 for its share of the facility, unless the percent range based on recent lead licensee has agreed to coordinate economic experience. Some funding documentation and reporting licensees may use higher rates for for all co-owners.
LLW disposal costs.
d.
Evaluating Investments in External Proj.ected earnings rates on funds Sinking Funds may also vary. A licensee, of course, may take credit for any The reviewer should use the following criteria earnings already accumulated.
to evaluate investments in external sinking However, projected future earn-funds:
ings are limited to a real rate (i.e.,
the nominal earnings rate less (1) For power reactor licensees that are either inflation) of up to two percent, subject to cost-of-service rate regulation unless a licensee's rate regulator or have access to a non-bypassable authorizes the use of a higher charge (s) to recover the estimated costs of rate.
decommissioning, the NRC will typically defer to State PUCs and FERC to set (c) The decommissioning rule is struc-standards for the types of investments tured to allow for changes in amorti-allowed for external sinking funds. For zation rates over time. Thus, it is not other power reactor licensees, the NRC essential that a licensee achieve has specified in Regulatory Guide 1.159 prorated annual amortizations as long that external decommissioning trust fund as the licensee periodically adjusts the investments should be " investment-amortization rate to compensate for grade."9
(
changes in the certification amount and the fund earnings rate.
(a) For example, this means that corporate or municipal bonds or Licensees' adjustments to the preferred stocks should be rated at o
amortization rate do not need to be made least "BBB" by Moody's or an annually, but should be coordinated with
, Regulatory Guide 1.159," Assuring the Availability of Funds for licensees' rate case schedules with their Decommissioning Nuclear Reactors." August 1990.
11 NUREG-1577, Rev.1
equivalent rating by another bond ments and have them available for NRC rating agency. (Standard and Poors, inspection.
Duff and Phelps, and Fitch are examples of other major rating e.
Evaluating External Sinking Fund Trust agencies.)
Documents The reviewer should use the following criteria (b) Common stocks are not rated.
to evaluate external sinking fund trust i
Although the NRC does not explicitly documents:
H prohibit external trusts from being j
invested in common stocks, NRC (1) Power reactor licensees were required to guidance indicates that speculative submit executed or conformed copies of issues (e.g., stocks of companies with their external sinking fund trusts (or other limited operating history, or that have assurance mechanisms, if used) by July 27, I
low " safety" rankings from rating 1990. Essentially, all power reactor agencies) should be avoided. There is licensees are currently using external no simple way to determine whether a sinking fund trusts. These trusts were stock issue is speculative. A licensee's reviewed by the NRC shortly after own stock, as well as those of other submission in 1990. The NRC notified power reactor licensees are those few licensees whose trust provisions inappropriate.
were found to be deficient. In accordance with 10 CFR 50.75(f),10 icensees are l
(c) As long as an external trust is invested required to submit any material revisions in a diversified portfolio of bonds, to trust agreements to ensure that NRC stocks, and other investments, losses records are current. Material revisions to on any one issue should not signifi-trust agreements include: (1) changes in cantly affect the overall value of the trustees; (2) provisions for payment into trust fund. Further, because external and out of the trust; (3) changes in trust trust funds are required to be adjusted investment management; and (4) any periodically, losses in one year may be other changes that would have a direct recouped by increased amortizations bearing on the amount, availability, and in following years. When the reviewer assurance of funds for decommissioning.
evaluates the amortization amounts, The reviewer should follow review he or she should ensure that licensees procedures for these changes similar to are revising their amortization rates those it used for the 1990 submissions.
based on the current net market value of their trust investment portfolios.
(2) The NRC does not require licensees to use specific trust wording. However, (2) The reviewer should confirm that power sample wording is provided in Appendix egulatory Guide 1.159. 'Ilrusts reactor licensees that are either subject to cost-of-service rate regulation or have are acceptable in this respect if they access to a non-bypassable charge (s) to contain the following provisions:
recover the estimated costs of (a) The trust should be segregated from decommissioning have documented any the licensee's assets and outside the rate regulators' decisions with respect to licensee's administrative control. The investments in external sinking funds and licensee should avoid day-to-day have them available at a licensee location investment decisions.
for possible NRCinspection. Other licensees should document their invest-io see ni.o section 2.i.6. of nesuiaiory cuide 1.159.
NUREG-1577, Rev.1 12
i (b) The trustee should be licensed to act combined amount should at least equal as trustee by State or Federal current estimated decommissioning costs.
authority.
(3) Licensees or license applicants who use (c) Disbursements from the trust should long-term contracts as a method of be restricted to decommissioning demonstrating decommissioning funding expenses or for transfer to another assurance must demonstrate that the l
assurance mechanism acceptable Provisions of the contracts meet the under section 50.75(e). Licensees may criteria specified in 10 CFR make withdrawals from decom.
50.75(e)(1)(v),
missioning trust funds as long as the (4) As indicated in 10 CFR 50.75(e)(1)(vi),
purpose of such withdrawals meets the reviewer should evaluate other j
the criteria specified in section decommissioning funding assurance 50.82(a)(8)(I). In addition, licensees mechanisms or combinations of are restricted at various stages of the mechanisms proposed by licensees or l
decommissioning process by section license applicants on a case-by-case basis
[
50.82(a)(8)(ii) to (iv) in the amounts to determine that the mechanism or of funds they may withdraw for combination of mechanisms provide decommissioning expenses until the NRC has terminated the license.
assurance of decommissioning funding equivalent to that provided by the Finally, licensees may not use decom-mechanisms specified in 10 CFR 50.75(e) missioning trust funds for " opera.
(1)(I)-(iv).
tional" expenses (e.g., waste disposal costs while a plant remains in C. Foreign Ownership Operating status).
As indicated in Section II.3. of this SRP, foreign ownership, control, or domination of a f.
Evaluating Other Financial Assurance Mechanisms power reactor licensee is prohibited by the Atomic Energy Act and the NRC's regulations.
The reviewer should evaluate other acceptable Because the Commission has determined that financial assurance mechanisms using the all co-owners of reactor facilities are following criteria:
co-licensees, each licensee of a power reactor must be evaluated to determine that it is not (1) If a power reactor licensee decides to owned, controlled, or dominated by an alien, switch from an external trust to some foreign corporation, or foreign government. In other assurance mechanism, the licensee each case, the staff will evaluate the totality of should submit information on this new the facts and circumstances against Com-mechanism to the NRC in accordance with mission precedent (e.g., GeneralElectric Co.
section 50.9 and Regulatory Guide 1.159, and Southwest Atomic Energy Assoc.,3 AEC 99 Section 2.6.1. Sample wording of other (1966)) in order to determine whether foreign mechanisms is provided in Regulatory ownership, control or domination exists. The Guide 1.159.
NRC has not determined whether any percentage ownership would be sufficiently (2) Third-party guarantee mechanisms, such small as to be considered de minimis. (The as surety bonds or letters of credit, should staff notes that, normally,it does not evaluate guarantee the total amount of currently power reactor licensees to determine the estimated decommissioning costs. If these degree to which foreign entities or individuals mechanisms are used in combination with own their voting stock.) A comprehensive other assurance mechanisms, the discussion of NRC review criteria for 13 NUREG-1577, Rev.1
l l
evaluating these issues is contained in a draft Except in those cases in which the applicant SRP Regarding Foreign Ownership, Control, proposes an acceptable alternative method for or Domination of Applicants for Reactor complying with specified portions of the License that will be issued soon.
NRC's regulations, the method described herein will be used by the staffin its IV.
EVALUATION FINDINGS evaluation of conformance with Commission The reviewer verifies that sufficient l
information has been provided to satisfy the VI.
REFERENCES requirements of this Standard Review Plan section and the underlying regulations, and 1.
Part 50 " Domestic Licensing of concludes that his or her evaluation is Production and Utilization Facilities" of tufficiently complete and adequate to support Title 10 of the Code of Federal Regulatwns i
the conclusion to be included in the staff's (10 CFR Part 50)
[
safety evaluation report that the applicant (1) is financially qualified to conduct the activities
-10 CFR 50.33(f) under the license, (2) has satisfied the NRC's
-10 CFR 50.33(k) decommissioning funding assurance
-10 CFR 50.75 requirements, and (3)is not owned,
-10 CFR 50.82 controlled, or dominated by a foreign
-10 CFR Part 50, Appendix C individual or entity.
2.
Part 30 " Rules of General Applicability to V.
IMPLEMENTATION Domestic Licensing of Byproduct Material" of Title 10 of the Code of The following is intended to provide guidance FederalRegulations (10 CFR Part 30) to applicants and licensees regarding the NRC staff's plans for using this SRP.
-10 CFR Part 30, Appendices A and C r
NUREG-1577, Rev.1 14
NRC FORM s24 u8 NUCLEAR RESULATORY COMMisslON
- 1. REPORT NUMBER G48)
ESE BIBLIOGRAPHIC DATA SHEET (Assigned 14 NRC, Add vol., supp.,Crr.,
(See mahminns on she revene)
- 2. TITLE AND SUBTITLE NUREG-1577. Rev.1 Standard Review Plan on Power Reactor Ucensee Financial Quahfications and Decommissioning Funding Assurance 3.
DATE REPORT PUBLISHED l
MONm YEAR March 1999
- 5. AUTHOR (S)
- 6. TYPE OF REPORT Robert S. Wood
- 7. PERIOD COVERED (kwAmere Deses) l-
- 8. PERFORMING ORGANIZATION. NAME AND ADORESS pr NRC, prs =de omson, Ofree w Regen, u s Nucana Aeguietry Commesen, are mehrig astess. accatac f
proven nome ww manmo ensees)
Division of Reactor Program Management jl Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Comission I
Washington, DC 20555-0001
- 9. SPONSORING ORGANIZATION - NAME AND ADDRESS (r As9C, type 'Same as above" #contockr. provsfe NRCDrum otoe wRegen, US NucAserRepudador ma mesneessus>
Same As Above
- 10. SUPPLEMENTARY NOTES
- 11. ABSTRACT 900 weds er aess) i The NRC is issuing this Standard Review Plan to describe the process it uses to review the financial qualifications and the methods of providing decommissioning funding assurance required of power reactor license applicants and existing licensees.
The NRC is publishing Revision 1 to NUREG-1577 to include footnote information omitted in the original version published February 1999.
\\
- 12. KEY WORDS/DESCRIPTORS (Les wcrds a persses shot wm esset,.semetu m beeen, am,apat) 13 AVAE.A8lVTY STATEMENT Standard Review Plan unlimited Financial Quahfications 14 SECURrrYCLASSFCATION Decommissiong Funding Assurance t
(N F=ee) unclassified t% brav unclassified
- 15. NUMBER OF PAGES
- 16. PRICE NRC FORM 336 Q4g)
1 i
l Printed on recycled paper Federal Recycling Program
999 1
HC D
R IA A
.P M
a 7
wS 4 EE G SFC.
A D R O s
tN N N cA ST UI iE M
sG R
aA E
T P
F SO P
ECNARU S
CD IL NU RF O G TCIN AN EO RI S RS EI W M O M PO N C E
O D N D A N LP A S
WN EO I
I VT EA RC DIF RI AL D A N U AQ TL SAICNAN IF NO IS 1
S 0
0 IM0 03 4
M5 O5 E,
S 5
SS E C 0 SU T Y 2 ENE A R I T C
BfR 1
S T v.
DA N ALP e
EL R
R TUO OO 7
N G T FF I
7 G
F Y ERIN O
5 U
TL 1
G R H A
S N
E A A PE E
R LW U
C N
UN P