ML20196H721
| ML20196H721 | |
| Person / Time | |
|---|---|
| Issue date: | 03/24/1998 |
| From: | Wood R NRC |
| To: | Lewis S, Richter B, Uttal S NRC |
| Shared Package | |
| ML20196H655 | List: |
| References | |
| FRN-63FR50465, RULE-PR-30, RULE-PR-50 AF41-2-038, AF41-2-38, NUDOCS 9812090165 | |
| Download: ML20196H721 (9) | |
Text
, 'b From Robert Wood To: WND1.WNP2.SLU, WND1.WNP2.SHL, TWD2.TWP9.BJR Date: 3/24/98 8:26am Subjects NRR POSITION ON DECOMMISSIONING RULE Susan, Steve, and Brian; I met with Dave Matthews last Friday regarding his position on the draft final decommissioning funding rule language that we have been discussing. With a few clarifying changes to S 50.75 (e) (1) (v) on p. 6 that Dave made, he is comfortable in representing the current draft language as NRR's office position. Thus, it should be ready for content review by OGC management, barring any substantive changes that you may wish to recommend.
Bob CC: THE, WNP4.DBM 4
9812090165 981208 PDR PR 30 63FR50465 PDR Cl h l2690)SS qpp . 058
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S 50.2 Definitions.
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" Cost of service" regulation means the traditional system of rate regulation, or similar regulation including " price cap" or " incentive" '
regulation, in which a rate regulatory authority generally allows an electric
! utility to charge its customers the reasonable and prudent costs of providing !
electricity services, including capital, operations, maintenance. fuel. l l decommissioning, and other costs required to provide such services.
Electric utility means any entity that generates, transmits, or !
distributes electricity and that recovers the cost of this electricity either {
directly or indirectly, through rates established by a regulatory authority. ;
Rates must be established by a regulatory authority through " cost of service" regulation or similar ratemaking. An entity whose rates are established by a regulatory authority that cover only a portion of its nuclear plant costs will be considered to be an " electric utility" only for that portion of such costs that are collected in this manner. (Portions of a nuclear plant not covered by cost-of-service or similar ratemaking whose costs are equal to 10 percent l or less of the total plant's costs are considered to be de minimis and would l meet the NRC definition of electric utility.) Public utility districts. I municipalities, rural electric cooperatives, and other local. State, and Federal government entities, including associations of any of the foregoing, that establish their own rates and are able to recover their cost of service are included within the meaning of " electric utility."
Federal licensee means any NRC licensee, the obligations of which are i guaranteed by the full faith and credit of the United States Government.
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i Incentive regulation means the system of rate regulation in which a rate regulatory authority establishes rates that an electric generator may charge l its customers that are based on specified performance factors in addition to I cost-of-service factors.
l Non-bypassable charges mean those charges imposed over an established l time period by a government authority which affected persons or entities are j l i i
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- I required to pay to cover costs associated with construction, operation, maintenance, or decommissioning of a nuclear power plant. Such charges include, but are not limited to, wire charges stranded cost charges, transition charges, exit fees. Other similar charges, or the securitized proceeds of a revenue stream.
Price-cap regulation means the system of rate regulation in which a rate regulatory authority establishes rates that an electric generator may charge its customers that are based on a specified maximum price of electricity.
- 3. In Section 50.43, paragraph (a) is revised to read as follows:
6 50.43 Additional standards and orovisions affectina class 103 licenses for commercial oower.
(a) The Commission will give notice in writing of each application to such regulatory agency or State as may have jurisdiction over the rates and services incident to the proposed activity: will publish notice of the application in such trade or news publications as it deems appropriate to give reasonable notice to municipalities, private utilities public bodies, and cooperatives which might have a potential interest in such utilization or production facility: 'and will publish notice of the application once each week for 4 consecutive weeks in the Federal Register. No license will be issued by the Commission prior to the giving of such notices and until 4 weeks after the last publication in the Federal Register.
- * + * *
- 4. In Section 50.54, the introductory text of paragraph (w) is revised to read as follows:
S 50.54 Conditions of licenses.
(w) Each power reactor licensee under this part for a production or utilization facility of the type described in Sections 50.21(b) or 50.22 shall take reasonable steps to obtain insurance available at reasonable costs and on reasonable terms from private sources or to demonstrate to the satisfaction of the Commission that it possesses an equivalent amount of protection covering l
the licensee's obligation, in the event of an accident at the licensee's reactor, to stabilize and decontaminate the reactor and the reactor station site at which the reactor experiencing the accident is located, provided that: l l
- 5. In Section 50.63 paragraph (a)(2) is revised to read as follows:
S 50.63 Loss of alternatina current oower.
(a) * * *
(2) The reactor core and associated coolant, control, and protection systems, including station batteries and any other necessary support systems.
must provide sufficient capacity and capability to ensure that the core is cooled and appropriate containment integrity is maintained in the event of a station blackout for the specified duration. The capability for coping with a station blackout of specified duration shall be determined by an appropriate coping analysis. Licensees are expected to have the baseline assumptions, analyses, and related information used in their coping evaluations available for NRC review.
- 6. In Section 50.73. paragraph (b)(2)(ii)(J)(2)(iv) is revised to read '
as follows:
S 50.73 Licensee event reoort system.
(b) *
(2)
(ii) * * *
(J) *
(2) * * *
(iv) The type of personnel involved (i .e. , contractor personnel, licensed operator, nonlicensed operator, other licensee personnel.)
- 7. In Section 50.75, paragraphs (a). (b). (d) and (e) are revised and paragraphs (f)(1). (2), and (3) are redesignated as paragraph (f)(2). (3), and (4) and a new paragraph (f)(1) is added to read as follows:
S 50.75 Reoortina and recordkeepinq for decommissionina olannina.
(a) This section establishes requirements for indicating to NRC how reasonable assurance will be provided that funds will be available for decommissioning. For power reactor licensees it consists of a step-wise
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l l l procedure as provided in paragraphs (b). (c). (e), and (f) of this section. '
l Funding for decommissioning of electric utilities is also subject to the I t
regulation of agencies (e.g.. Federal Energy Regulatory Commission (FERC) and State Public Utility Commissions) having jurisdiction over rate regulation.
The requirements of this section. in particular paragraph (c), are in addition to, and not substitution for, other requirements, and are not intended to be used, by themselves, by other agencies to establish rates.
(b) Each power reactor applicant for or holder of an operating license for a production or utilization facility of the type and power level specified l in paragraph (c) of this section shall submit a decommissioning report, as l required by 10 CFR 50.33(k) of this part. containing a certification that financial assurance for decommissioning will be provided in an amount which may be more but not less than the amount stated in the table in paragraph (c)(1) of this section, adjusted annually using a rate at least equal to that i stated in paragraph (c)(2) of this section, by one or more of the methods ;
described in paragraph (e) of this section as acceptable to the Commission. l l The amount stated in the applicant's or licensee's certification may be based on a cost estimate for decommissioning the facility. As part of the certification, a copy of the financial instrument obtained to satisfy the requirements of paragraph (e) of this section is to be submitted to NRC. !
(d) Each non-power reactor applicant for or holder of an operating license for a production or utilization facility shall submit a decommissioning report as required by 10 CFR 50.33(k) of this part containing a cost estimate for decommissioning the facility, an indication of which method or methods described in paragraph (e) of this section as acceptable to the Commission will be used to provide funds for decommissioning and a descriptinn of the means of adjusting the cost estimate and associated funding l level periodically over the life of the facility. 1 i
(e)(1)
(i) Prepayment. Prepayment is the deposit prior to the start of operation into an account segregated from licensee assets and outside the l licensee's administrative control of cash or liquid assets such that the L amount of funds would be sufficient to pay decommissioning costs. Prepayment may be in the form of a trust, escrow account, government fund, certificate of deposit deposit of government securities, or other payment acceptable to the i Commission. A licensee may take credit on earnings on the prepaid decommissioning trust funds using up to a 2 percent annual real rate of return from the time of funds' collection through the projected decommissioning period, including the periods of safe storage, final dismantlement, and '
license termination. if the licensee's rate setting authority does not j authorize the use of another rate. All actual earnings on existing funds may )
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l (ii) External sinking fund. An external sinking fund is a fund established and maintained by setting funds aside periodically in an account segregated from licensee assets and outside the licensee's administrative l control in which the total amount of funds would be sufficient to p6y {
decommissioning costs at the time termination of operation is expected. An i external sinking fund may be in the form of a trust escrow account.
l government fund, certificate of deposit deposit of government securities, or l other payment acceptable to the Commission. A licensee may take credit for earnings on the external sinking funds using up to a 2 percent annual real rate of return from the time of funds' collection through the decommissioning period. including the periods of safe storage, final dismantlement, and license termination. if the licensee's rate-setting authority does not authorize the use of another rate. All actual earnings on existing funds may be used to calculate future fund needs.
(iii) A surety method, insurance, or other guarantee method:
- (I.) These methods guarantee that decommissioning costs will be paid. A surety method may be in the form of a surety bond, letter of credit, or line
! of credit. Any surety method or insurance used to provide financial assurance i for decommissioning must contain the following conditions:
(A) The surety method or insurance must be open-ended, or, if written
- for a specified term, such as five years, must be renewed automatically unless l 90 days or more prior to the renewal day, the issuer notifies the Commission. 4 l the beneficiary, and the licensee of its intention not to renew. The surety l or insurance must also provide that the full face amount be paid to the j beneficiary automatically prior to the expiration without proof of forfeiture if the licensee fails to provide a replacement acceptable to the Commission within 30 days after receipt of notification of cancellation.
l (B) The surety or insurance must be payable to a trust established for
! decorissioning costs. The trustee and trust must be acceptable to the Commissics An acceptable trustee includes an appropriate State or Federal government ,gency or an entity which has the authority to act as a trustee and whose trust operations are regulated and examined by a Federal or State agency.
(II.) A parent company guarantee of funds for decommissioning costs based on a financial test may be used if the guarantee and test are as contained in Appendix A of 10 CFR Part 30. However, notwithstanding the provisions of Appendix A of 10 CFP,30. for reactor licensees a parent company guarantee may be for that portion of total decommissioning costs estimated to be needed for decommissioning pursuant to S 50.75(c). S 50.75(f) or S 50.82.
that have has not yet been deposited in an external sinking fund:
(III.) For commercial companies that issue bonds, a guarantee of funds by the applicant or licensee for decommissioning costs based on a financial ,
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l test may be used if the guarantee and test are as contained in Appendix C of 10 CFR Part 30. However, notwithstanding the provisions of Appendix C of 10 CFR 30, for reactor licensees a parent company guarantee may be for that portion of total decommissioning costs estimated to be needed for decommissioning pursuant to S 50.75(c). S 50.75(f). or S 50.82, that have has not yet been deposited in an external sinking fund. A guarantee by the applicant or licensee may not be used in any situation where the applicant or licensee has a parent company holding majority control of voting stock of the company.
(iv) An external sinking fund whose source of revenues is a non-bypassable charge. the total amount of which will provide the funds I estimated to be needed for decommissioning pursuant to S 50.75(c). S 50.75(f).
or S 50.82.
(v) An external sinking fund whose source of revenues is a binding.
,[ contractual obligation (s) on the part of a licensee's customer (s), the total amount of which over the duration of the contract (s) will provide the <
licensee's share of uncollected funds estimated to be needed for ,
decommissioning pursuant to S 50.75(c). S 50.75(f). or S 50.82. To be
/ acceptable to the Commission as a method of decommissioning funding assurance.
/ the terms of the contract (s) shall include provisions that the electricity
( buyer (s) will pay for the decommissioning obligations specified in the I contract (s), notwithstanding the operational status either of the licensed 1
/ power reactor to which the contract (s) pertains or force majeure provisions.
j All proceeds from the contract (s) for decommissioning funding will be !
( deposited to an external sinking fund. The Commission reserves the right to !
, evaluate the terms of any contract (s) offered as assurance for decommissioning j
/ funding. j l
t (vi) For a power reactor licensee that is a Federal licensee, or for a )
non-power reactor licensee that is a Federal. State. or local government l licensee, a statement of intent containing a cost estimate for '
decommissioning, and indicating that funds for decommissioning will be obtained when necessary.
(vii) Any other mechanism, or combination of mechanisms, which provides, as determined by the Commission upon its evaluation of the specific circumstances of each licensee submittal, assurance of decommissioning funding equivalent to that provided by the mechanisms specified in S 50.75(e)(1)(I) -
(vi). However, mechanisms that provide for guarantees of performance of decommissioning, as opposed to guarantees of payments of specified amounts, shall not be used in combination with other mechanisms.
(e)(2) For a licensee other than an electric utility, acceptable methods of
( providing financial assurance for decommissioning are -- i I
(i) Prepayment: i (ii) An external sinking fund, in which deposits are made at least I annually, coupled with a surety, insurance, other guarantee mechanism, the i value of which may decrease by the amount being accumulated in the sinking fund.
(iii) An external sinking fund whose source of revenues is a non- '
bypassable charge, the total amount of which will provide the funds estimated to be needed for decommissioning pursuant to S 50.75(c). S 50.75(f). or' ;
S 50.82,- *
(iv) An external sinking fund whose source of revenues is a binding, long-term contractual obligation (s) on the part of a licensee's customer (s). :
the total amount of which over the duration of the contract will provide the !
, uncollected funds estimated to be needed for decommissioning pursuant to S 50,75(c). S 50.75(f). or S 50.82, To be acceptable to the Commission as a method of decommissioning funding assurance, the terms of the contract shall include provisions that the electricity buyer (s) will pay for all -!
l decommissioning obligations specit.ed in the contract (s) notwithstanding the .
operational status either of the licensed power reactor to which the contract pertains or force majeure provisions. All proceeds from the contract for i' decommissioning funding will be deposited to an external sinking fund. The Commission reserves the right to evaluate the terms of any contract offered as ;
assurance for decommissioning funding. !
.(v) A surety method, insurance, or other guarantee method: or (vi) Any other mechanism, or combination of mechanisms, as provided in S 50.75(e)(1)(vii). i (e)(3) For an electric utility, the Commission reserves the right to l take the following steps in order to ensure a licensee's adequate accumulation ;
of decommissioning funds: review, as needed. the rate of accumulation of [
decommissioning funds; and, either independently or in cooperation with the i FERC and the licensee's State PUC. take additional actions as appropriate on a i case-by-case basis, including modification of a licensee's schedule for i accumulation of decommissioning funds. Acceptable methods of providing l financial assurance for decommissioning are -- ,
(i) Prepayment:
L (ii) An external sinking fund in which deposits are made at least ;
j annually. and whose' source of revenues may be any combination of traditional l l cost-of-service regulation, or a non-bypassable charge, or long-term contract ;
acceptable to the Commission:
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(iii) A surety method, insurance, or other guarantee method: l (iv) A statement of intent: or
. j (v) Any other mechanism, or combination of mechanisms, as provided in S :
- 50.75(e)(1)(vii). i I' !
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, e (f)(1) Each power reactor licensee shall report on a calendar year basis, to the NRC by March 31. [the year after the year of the effective date l of the final rule]. and at least once every 2 years thereafter on the status of its decommissioning funding for each reactor or part of a reactor that it owns. The information in this report must include, at a minimum: the amount of decommissioning funds estimated to be required pursuant to 10 CFR 50.75(b) and (c): the amount accumulated to the end of the calendar year prior to the date of the report: a schedule of the annual amounts remaining'to be collected: the assumptions used regarding rates of escalation in l decommissioning costs, rates of earnings in decommissioning trust funds, and rates of other factors (e.g., discount rates) used in funding projections; and any modifications occurring to a licensee's current trust agreement since the i last submitted report. Any licensee for a plant that is within 5 years of the l l projected erd of its operation, or where conditions have changed such that it l will close within 5 years before the end of its licensed life, or has already closed, shall submit such a report annually.
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