ML20198J940

Summary of 971217 Meeting W/Nuclear Energy Inst in Rockville,Md Re Decommissioning Funding Assurance.List of Attendees Encl

ML20198J940
Person / Time
Issue date:	01/07/1998
From:	Stewart Magruder NRC (Affiliation Not Assigned)
To:	Essig T NRC (Affiliation Not Assigned)
References
PROJECT-689 NUDOCS 9801140251
Download: ML20198J940 (15)

Text

-

t 6.

=(.o g** **269 j

~ '

j UNITED STATES

[

NUCLEAR REGULATORY COMMISSION

~

a k

4 WAsMINGToN, D.C. asteHeM

,j i

January 7. 1998-i l MEMORANDUM TO: Thomas H. Essig, Acting Chief Generic lesues and Environmental Projects Branch Division of Reactor Program Management i

Offion of Nuclear Reactor Regulation b

FROM:

Stewart L. Magruder, Project Manager M '8 A p Generic lasues and Environmental Projects Branch Division of Reactor Program Management Office of Nuclear Reactor Regulation

SUMMARY

OF DECEMBER 17,1997, MEETING WITH THE NUCLEAR ENERGY INSTITUTE (NEI) REGARDING DECOMMISSIONING.-

FUNDING ASSURANCE On December 17,1997, representatives of NEl met with representatives of the Nuclear Regulatory Commission (NRC) at the NRC's offices in Rockville, Maryland. Attachment 1 provides a list of meeting attendees.

?

The purpose of this meeting was to follow up the discussions from the October 2g,1997, meeting; allow NEl to present comments on the proposed rule on decommissioning funding assurance; have joint NEl/NRC discussion of these comments; and for the NRC to provide clarification on various aspects of the proposed rule.

- NEI commented that there was significant industry interest in the subject of decommissioning funding assurance and also in the NRC proposed rule and the NEl comment lenter on this subject. _ NEl agrees with the NRC view that reassnable assurance for decommissioning is very F

important, but feels that their approach to dealing with this issue is better than the proposed NRC approach.

1 A key NEl recommendation is that decommissioning should be separate from operations and maintenance (O&M), and their rationale is explained in their comment letter. NEl stated that

~

3 NRC's revised definition of ' electric utility" links decommissioning and O&M. To separate the i

two, NEl at this time prefers to keep the " electric utility" definition currently in 10 CFR 50.2 as is, @7 except in relation to decommissioning in 10 CFR 50.75. For Section 50.75, they propose using

. their

• qualified nuclear entity" concept in contrast to an " electric utility," primarily because they 4 -

feel operating companies which want to purchase and run nuclear reactors may fear having to -

cover decommissioning costs if these costs are not specifically separated from O&M costs by such a distinction.~ Also, NEl stated that as deregulation proceeds, the vertically integrated 7

" electric utility" will diminish to the point of being a nominal concept and that other types of.

3 'I

corporate structure for the deregulated era need to be considered instead, g

g J

9901140251 990107 PDR-REV0P ER C

}Q]

NBC HtE CENTER COPY gygggggg F-

_._g; o u d *

• 2

}

L T E ssig

-.2 January 7, 1998 r

- NRC responded by stating that the NRC staff view is that the revised definition in the proposed _

l rule using non-bypassable charges as part of the definition of ' electric utility

• would resolve the d66nition problem in a deregulated era and that NRC's intent is not to link decommissioning with O&M. Because of the link between 10 CFR 50.2 and 10 CFR 50.33(f), there is a need to -

have consistency. The NRC will consider NEl's " qualified nuclear entity" concept, except that -

the term may have IRS implications with the word ' qualified" potentially causing problems for_.

some companiesc NRC also noted that many' states are not pushing deregulation quickly and that for some time there is likely to be a hybrid industry of regulated and deregulated states. So

' the concept of

• electric utility" as proposed for revision by the NRC should be viable and useful

- in many situations during that hybrid period.

NEl noted that their definition of ' qualified nuclear entity" as recommended for inclusion in Section 50.75 would require that a licensee meet one of three criteria (1) a regulated entity, (2) an entity with decommissioning funded through non-bypassable charges, or (3) en entity

{

with a binding contractual agreement with another party to provide reasonable assurance of the i

collection of its share of the unfunded decommissioning obligation.

NRC noted that contracts could take many forms and that, if contracts were to be allowed in such an expanded definition for Section 50.75, there would be a need to define clearly what types of contracts would be considered valid for the definition. Also, much case-by-case analysis is likely to be required for contracts since there will be numerous variations of any prescribed contract forms.

NEl agreed that there will be many types of contracts and that will lead to more case-by-case 4

decisions. They cited examples of several contract types, stating that some would be more robust or acceptable to the NRC than others to qualify for extemal sinking fund treatment.

- NEl recommended that the rule provide use of a three-tier general framework consisting of the steos below, with specific implementation details to be described in a regulatory guide:

(1) funding options for licensees that meet the criteria for a ' qualified nuclear entity",

(2) funding options for licensees that satisfy a set of new, standard financial criteria, or (3) a case-by-case review and approval by NRC staff of other innovative funding options.

< The case-by-case approach would be the least preferred of the three approaches, to be used if -

a licensee could not satisfy one of the first two.' Regarding the proposed new financial criteria, NEl plans to hire consultants to develop a set of criteria to be discussed with the NRC by late first quarter,1998.

'The NRC stated that ongoing recovery of decommissioning costs generally is being allow states which are moving into a deregulated environment. NRC stated that it will seriously E

consider allowing licensees to use a combination of funding methods to meet assurance 1

criteria,

. =

I 16 j

-TTEssig 3

January 7, 1998 a

NEl concurred with the use of combination of funding methods.. But NEl is concemed that -

some states may not allow full decommissioning cost recovery since there already have been 1

some serious challenges regarding stranded costs which may include decommissioning costs.

Also, NEl voiced concem that some states may present challenges for reactors experiencing premature shutdown In the form of prudency questions and large disallowances which may be -

.. forced on stockholders. NEl contends that decommissioning should be a ratepayer obligation and not one of stockholders.

3 4

NEl raised the issue of the delay in implementing Financial Accounting Standards Board (FASB) 158-B ' Accounting For Certain Liabilities Related To Closure Or Removal Of Long-i

. Uved Assets

• and the implications for the NRC draft Regulatory Guide that would endorse this standard; The NRC stated that, although endorsing the FASB standard remains an NRC goal, the reporting requirements in the proposed rule would, if adopted, accomplish the same goal.

Changing the subject to antitrust reviews, NEl next referred to SECY g7-227,

• Status of Staff -

Actions on Standard Review Plans for Antitrust Reviews and Financial Qualifications and Decommissioning-Funding-Assurance Reviews.* NEl commented that there is duplication of regulation regarding antitrust review of market power for entities which own nuclear plants, with the NRC and the Department of Justice both being responsible for such reviews. NEl noted -

that while the NRC is obligated to conduct antitrust reviews to meet Atomic Energy Act requirements, this can present an impairment in that an entity cont.idering purchase of a

. nuclear plant may be deterred since it would be likely to inherit any antitruet license conditions attached to that plant. Also, power marketing groups may not be able to market power from a nuclear plant in cases where they might own part of a nuclear plant. The NRC indicated that it will further evaluate this issue.

Project No. 689

Attachment:

As stated cc w/att: See next page 4

J 1

+

e e

i e

m---

m eer.

,,e n

--+.e...r.--

ov.e

.,v

f,.,

lst i

T.=Essig?

-3.-

January 7, 1998-q l

~

~

NEl concurred with the use of combination of funding methods.1 But NEl is concerned that.

some states may not allow full decommissioning cost recovery since there already have been some serious challenges regarding stranded costs which may include decommissioning costs.

Also, NEl voiced concem that some states may present challenges for reactors experiencing premature shutdown in the form of prudency questions and large disallowances which may be forced on stockholders. NEl contends that decommissioning should be a ratepayer obligation 4

L

. and not one of stockholders.

i i

= NEl raised the issue.of the delay in implementing Financial Accounting Standards Board -

L (FASB) 158-B " Accounting For Certain Liabilities Related To Closure Or Removal Of Long-L

~ Lived Assets" and the implications for the NRC draft Regulatory Guide that would endorse this~

standard. The NRC stated that, although endorsing the FASB standard remains an NRC goal, l

- the reporting requirements in the proposed rule would, if adopted, accomplish the same goal.

~

Changing the subject to anttrust reviews, NEl next referred to SECY g7-227, " Status of Staff j

Actions on Standard Review Plans for Antitrust Reviews and Financial Qualifications and -

Decommissioning-Funding-Assurance Reviews." NEl commented that there is duplication of regulation regarding antitrust review of market power for entities which own nuclear plants lwith s

- the NRC and the Department of Justice both being responsible for such reviews. NEl noted that while the NRC is obligated to conduct antitrust reviews to meet Atomic Energy Act requirements, this can present an impairment in that an entity considering purchase of a nuclear plant may be deterred since it would be likely to inherit any antitrust license conditions i

attached to that piar,t Also, power marketing groups may not be able to market power from a nuclear plant in cases where they might own part of a nuclear plant. The NRC indicated that it I

will further evaluate this issue.

Projsct No. 689

[

Attachment:

As stated cc w/att: See next page DISTRIBUTION: See attached page l

OFFICE PM:PGEB (A)SC:PGEB SC:PGEB NAME-SMagruder:swM MMal % [ FAkstulewicz DATEz il(o /98 1/ b/98 il 1 /98 y

e'-

y e-.

, w

+A

,w

,7.w.--

.-w-wtwv--

.--,-e&--

=o w-re

, +

• * - * =. <

b

-i l;

- Distribution: Mtg.- Summary w/ NEl Re'D ommissioning Dated-January;7.1998

.Hard Copy L esshetMe -

PUBLIC-PGEB R/F -

OGC ACRS SMagruder-

. RWood '

EMail -

SCollins/FMiraglia.

BSheron -

' RZimmerman JRoe DMatthews MMalloy FAkstulewicz AMcKeigney MDusaniwskyj MDavis CSmith CDeFino, OCM/SJ BRichter, RES JMate, RES RAuluck, RES SLewis, OGC WDean, EDO 4-F

NRCINEl MEETING ON DECOMMISSIONING FUNDING LIST OF ATTENDEES December 17,1997 NAME ORGANIZATION Richard Meyers NEl Adrian Heymer NEl John Lamberski Troutman Sanders LLP Janet Ecker.

Morgan, Lewis & Bocklus Robert Wood NRC/NRR Alex McKeigney NRC/NRR Michael Dusaniwskyj NRC/NRR Mike Davis NRC/NRR Craig Smith NRC/NRR Stu Magruder NRC/NRR Brian Richter NRC/RES Joseph Mate NRC/RES Raj Auluck NRC/RES Stephen Lewis NRC/OGC Clare DeFino NRCIOCM/SJ John Collier ICF Craig Dean ICF Llane Kucher McGraw-Hill Mike Neal NUSIS

s Nuclear Energy Institute Project No. 689 cc:

Mr. Ralph Beedle Senior Vice President -

Ms. Lynnette Hendricks, Director Plant Support and Chief Nuclear Officer Nuclear Energy Institute Nuclear Energy institute Suite 400 Suite 400 1776 l Street, NW 1776 i Street, NW Washington, DC 20006-3708 Washington, DC 20006-3708 Mr. Alex Marion, Director Programs Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. David Modeen, Director Engineering Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. Anthony Pietrangelo, Director Licensing Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. Nicholas J. Liparulo, Manager Nuclear Safety and Regulatory Activities Nuclear and Advanced Technology Division Westinghouse Electric Corporation P.O. Box 355 Pittsburgh, Pennsylvania 15230 Mr. Jim Davis, Director Operations Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708-l

?

• • q p

UNITED STATES :

i k> f NUCLEAR REGULATORY COMMISSION l

r-WAsMINaToN, D.C. 3000He01 v-ses.*

_ January 7, 1998 MEMORANDUM TO: Thomas H. Essig. Acting Chief Generic issues and Environmental Projects Branch Division of Reactor Program Management

?

Office of Nuclear Reactor Regulation FROM:

Stewart L. Magruder, Project Manager MT -

Generic lesues and Environmental Projects Branch Division of Reactor Program Management Office of Nuclear Reactor Regulation

SUMMARY

OF DECEMBER 17,1967, MEETING WITH THE NUCLEAR ENERGY INSTITUTE (NEl) REGARDING DECOMMISSIONING FUNDING ASSURANCE On December 17,1997, representatives of NEl met with representatives of the Nuclear Regulatory Commission (NRC) at the NRC's offices in Rockville, Maryland. ' Attachment i provides a list of meeting attendees.

The purpose of this meeting was to follow up the discussions from the October 29,1997, meeting; allow NEl to present comments on the proposed rule on decommissioning funding assurance; have joint NEl/NRC discussion of these comments; and for the NRC to provide clarification on various aspects of the proposed rule.

NEl commented tnat there was significant industry interest in the subject of decommissioning funding assurance and also in the NRC proposed rule and the NEl comment letter on this subject.' NEl agrees with the NRC view that reasonable assurance for decommissioning is very important, but feels that their approach to dealing with this issue is better than the proposed NRC approach.

A key NEl recommendation is that decommissioning should be separate from operations and 8

maintenance (O&M), and their rationale is explained in their comment letter NEl stated that

- NRC's revised definition of ' electric utility" links decommissioning and O&M To separate the two, NEl at this time prefers to keep the " electric utility" definition currently in 10 CFR 50.2 as is, except _in relation to decommissioning in 10 CFR 50.75. For Section 50.75, they propose using their " qualified nuclear entity" concept in contrast to pn ' electric utility," primarily because they feel operating companies which want to purchase and run nuclear reactors may fear having to

- cover decommissioning costs if these costs are not specifically separated from O&M costs by such a distinction. Also, NEl stated that as deregulation proceeds, the vertically integrated

• electric utilit *y will diminish to the point of being a nominal concept and that other types of coroorste structure for the deregulated era need to be considered instead.

4 9

e-+s.-t

, v-f p

--v*,4.==-essp---

--1pr

.*see.

rw w

+"--

r

--r--e*w ae,*---

"I.-- 7 r-'--ie wr+'-

• y T.Essig; January 7. 1998.

NRC responded by stating that the NRC staff view is that the revised definition in the proposed

. rule using non-bypassable charges as part of the definition of ' electric utility" would resolve the definition problem in a deregulated era and that NRC's intent is not to link decnmmissioning.

with O&M Because of the link between 10 CM 50.2 and 10 CFR 50.33(f), there is a need to have consistency.: The NRC will consider NEl's " qualified nuclear entity" concept, except that the term may have IRS implications with the word " qualified" potentially causing problems for some companies. NRC also noted that many states are not pushing deregulation'quickly and-that for some time there is likely to be a hybrid industry of regulated and deregulated states. So the concept of ' electric utility" as proposed for revision by the NRC should be viable and useful in many situations during that hybrid period.

NEl noted that tholi definition of ' qualified nuclear entity

• as recommended for inclusion in Section_50.75 would require that a licensee meet one of three criteria (1) a regulated entity, (2) an entity with decommissioning funded through non-bypassable charges, or (3) an entity

= with a binding contractual agreement with another party to provide reasonable assurance of the collection of its share of the unfunded decommissioning obligation.

NRC noted that contracts could take many forms and that, if contracts were to be allowed in such an expanded definition for Section 50.75, there would be a need to define clearly what types of contracts would be considered valid for the definition. Also, much case-by-case

- analysis is likely to be required for contracts since there will be numerous variations of any prescribad contract forms.

NEl agreed that there will be many types of contracts and that will lead to more case-by-case decisions. They cited examples of several contract types, stating that some would be more robust or acceptable to the NRC than others to qualify for extemal sinking fund treatment.

NEl recommended that the rule provide use of a three-tier general framework consisting of the steps below, with specific implementation details to be dascribed in a regulatory guide:

_ (1) funding options for licensees that meet the criteria for a " qualified nuclear entity",

(2) funding options for licensees that satisfy a set of new, standard financial criteria, or

- (3) a case-by-case review and approval by NRC staff of other innovative funding options.

The case-by-case approach would be the least preferred of the three approaches, to be used if a licensee could not satisfy one of the first two. Regarding the proposed new financial criteria, NEl plans to hire consultants to develop a set of criteria to be discussed with the NRC by late first quarter,1998.

'The NRC stated that ongoing recovery of decommissioning costs generally is being allowed b states which are moving into a deregulated environment. NRC stated that it will seriously consider allowing licensees to use a combination of funding methods to meet assurance l

criteria.

f

_,. ~

.- ~ _, - -

T.-Essig' 3,

Januat y 7, ~1998 i -

NEl concurred with the use of combination of funding methods. But NEl is concerned that some states may not allow full decommissioning cost recovery since there already have been some serious challenges regarding stranded costs which may include decommissioning costs.

Also, NEl voiced conoom that some states may present challenges for reactors experiencing premature shutdown in the form of prudency questions and large disallowances which may be forced on stockholders. NEl contends that decommissioning should be a ratepayer obligation and not one of stockholders.

NEl raised the issue of the delay in implementing Financial Accounting Standards Board (FASB) 158-B " Accounting For Certain Liabilities Related To Closure Or Removal Of Long _

Uved Assets

• and the implications for the NRC draft Regulatory Guide that would endorse this standard. The NRC stated that, although endorsing the FASB standard remains an NRC goal, the reporting requirements in the proposed rule would, if adopted, accomplish the same goal.

Changing the subject to antitrust reviews, NEl next referred to SECY-g7 227, " Status of Staff Actions on Standard Review Plans for Antitrust Reviews and Financial Qualifications and Decommissioning-Funding Assurance Reviews." NEl commented that there is duplication of regulation regarding antitrust review of market power for entities which own nuclear plants, with the NRC and the Department of Justice both being responsible for such reviews. NEl noted that while the NRC is obligated to conduct antitrust reviews to meet Atomic Energy Act requirements, this can present an impairment in that an entity considering purchase of a nuclear plant may be deterred since it would be likely to inherit any antitrust license conditions attached to that plant. Also, power marketing groups may not be able to market power from a nuclear plant in cases where they might own part of a nuclear plant. The NRC indicated that it will further evaluate this issue.

Project No. 68g

Attachment:

As stated

.cc w/att: See next page 3

e 4

4 4

a w

+.-

mm,~~

.u.

nm

-4

,---y,

l 1

__,9 t-T. E ssig 3

- January 7, 1998_

1

- NEl concurred with the use of combination of funding methods. But NEl is concemed that1 some states may not allow full decomm!ssioning cost recovery since there already have been some serious challenges regarding stranded costs which may include decommissioning costs.-

' Also, NEl voiced concern that some states may present challenges for reactors experiencing _

premature shutdown in the form of prudency questions and large disallowances which may be forced on stockholders. NEl contends that decommissioning should be a ratepeyer obligation '

. and not one of stockholders.

NEl raised the issue of the delay in implementing Financial Accounting Standards Board (FASB) _158-B ' Accounting For Certain Liabilities Related To Closure Or Removal Of Long-Lived Assets' and the implications for the NRC draft Regulatory Guide that would endorse this standard.- The NRC stated that, although endorsing the FASB standard remains an NRC goal, the reporting requirements in the proposed rule would, if adopted, accomplish the same goal.

Changing the subject to antitrust reviews, NEl next referred to SECY g7-227, " Status of Staff Actions on Standard Review Plans for Antitrust Reviews and Financial Qualifications and Deccmmissioning-Funding-Assurance Reviews." NEl commented that there is duplication of-regulation regarding antitrust review of market power for entities which own nucisar plants, with

+

the NRC and the Department of Justice both being responsible for such reviews. NEl noted i

that while the NRC is obligated to conduct antitrust reviews to meet Atomic Energy Act requirements, this car, present an impairment in that an entity considering purchase of a nuclear plant may be deterred since it would be likely to inherit any antitrust license conditions attached to that plant. - Also, power mariteting groups may not be able to market power from a

nuclear plant in cases where they might own part of a nuclear plant.- The NRC indicated that it will further evaluate this issue.

Project No. 68g

Attachment:

As stated cc w/stt: See next page DISTRIBUTION: See attached page OFFICE PM:PGEB (A)SC:PGEB SC:PGEB t

NAME SMagruder:swM MMa % I FAkstulewicz DATE 1/(o /98 il b/98

-1/ 'I g8

/

4 1

y

_, ~ _.,

ry m v

e,_,

,m

..,s-

~ -

20..

Dhtabution: Mig. Summary w/ NEl Re Decommissioning Dated __ January 7. 1998 '

Hard. Copy Docket File I

PUGUCs PGEB R/F.

OGC ACRS-SMegruder RWood i

EMail

~ SCollins/FMiraglia BSheron RZimmerman JRoe-DM,stthews MMalloy FAkstulewicz AMcKeigney MDusaniwskyj MDavis CSmith CDeFino, OCM/SJ BRichter, RES JMate, RES RAuluck, RES Slowis, OGC -

WDean, EDO L

.o*

'~

NRCINEl MEETING ON DECOMMISSIONING FUNDING 5

LIST OF ATTENDEES December 17,1997 NAME ORGANIZATION Richard Meyers NEl-Adrian Heymer -

NEl John Lamberski Troutman Sanders LLP Janet Ecker Morgan, Lewis & Bockius Robert Wood NRC/NRR Alex McKeigney NRC/NRR Michael Dusaniwskyj NRC/NRR Mike Davis NRC/NRR Craig Smith NRC/NRR Stu Magruder NRC/NRR Brian Richter NRC/RES Joseph Mate NRC/RES Raj Auluck NRC/RES Stephen Lewis NRC/OGC Clare DeFino NRC/OCM/SJ John Collier ICF Craig Dean ICF Llane Kucher McGraw-Hill Mike Neal NUSIS e

L Nuclear Energy institute.

Project No. 68g e

cc:

Mr. Ralph Boedle Ms. Lynnette Hendricks, Director Senior Vice President -

Plant Suppo1

- and Chief Nuclear Officer Nuclear Energy instituto Nuclear Energy Institute Suite 400 Suite 400 1776 i Street, NW 1776 i Street, NW Washington, DC 20006-3708 Washington, DC 20006-3708 Mr. Alex Marion, Director Programs Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. David Modeen, Director Engineering Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. Anthony Pietrangelo, Director Licensing Nuclear Energy institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. Nicholas J. Liparulo, Manager Nuclear Safety and Regulatory Activities Nuclear and Advanced Technology Division Westinghouse Electric Corporation P.O. Box 355 Pittsburgh, Pennsylvania 15230 Mr. Jim Davia, Director Operations Nuclear Eners,y institute Suite 400 1776 i Street, NW Washington, DC 20006-3708-l

.