ML20198S291
| ML20198S291 | |
| Person / Time | |
|---|---|
| Issue date: | 10/24/1997 |
| From: | Callan L NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO) |
| To: | |
| References | |
| SECY-97-253, SECY-97-253-01, SECY-97-253-1, SECY-97-253-R, NUDOCS 9801260140 | |
| Download: ML20198S291 (32) | |
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..............e.eee.eeea POLICY ISSUE (Notation Vote)
October 24. 1997 SECY-97-253 f_Q3: The Comissioners EB@: L. Joseph Callan Executive Director for Operations EUBX,CI: POLICY OPTIONS FOR NUCLEAR POWER REACTOR FINANCIAL QUALIFICATIONS IN RESPONSE TO RESTRUCTURING OF THE ELECTRIC UTILITY INDUSTRY PURPOSE:
D To provide the Commission with a discussion of policy options regarding the financial qualifications of its power reactor licensees to o>erate their facilities safely in iight of restructuring activities. Sun activities have occurred and appear to be accelerating in anticipation of the economic deregulation of the electric power industry, BACKGROUNQ:
in February 1996, the staff develo)ed and the Commission approved an " Action Plan for NRC Response to Electric Jtility Industry Restructuring and Economic Deregulation." Task 6 of this action plan included an evaluation of the adequacy of the requirements for license transfer applications under 10 CFR 50.80 in light of restructuring. The Commission issued a staff requirements memorandum dated January 25, 1996, in which it directed the staff to " perform a comprehensive review of existing rules to determine if the ongoing restructuring of utilities presents a challenge to the effectiveness of regulations...."
This paper discusses only policy options with respect to licensee financia! ,
qualifications for operating nuclear power plants. The Comission recently (7 published a proposed rule on financial assurance requirements for decommissioning nuclear power reactors. The staff believes that this and the decomissioning funding assurance rule complement each other, paper addressing different aspects of the same issue and, together, meet the I)h)L-requirements of the Comission's memorandum of January 25, 1996. '
CONTACTSi Robert S. 'lood, NRR 415-1255 Matthews, NRR
, SECY NOTE: TO BE MADO PUBLICLY ogn0'03 AVAILABLE WHEN THE FINAL SRM IS
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2 DISCUSSIOy: -
Traditionally. electric utilities licensed by the NRC to operate power reactors have generally been large, vertically integrated companies with substantial generation, transmission. distribution, and other assets. In return for having an exclusive franchise to 3rovide electric power in a defined geographic area, electric utilities lave had the rates that they charge their customers regulated by the State Public Utility Comissions (PUCs) and the Federal Energy Regulatory Commission (FERC). Such rate regulation has been almost exclusively " cost-of-service" regulation, by which electric utilities recover from their customers the prudently ireurred costs of providing electric service, plus a return on the equity capital useo to build their plants. One of the presumptions underlying this approach has been the " natural monopoly" status of the electric power industry, viz., that electric utility customers are captive customers that have essentially no alternative source for their electricity services. The general efficacy of this system in providing necessary funds for power reactor licensees to operate and decommission their r.uclear plants safely was the NRC's primary rationale in eliminating. in 1984 financial gualifications reviews for operating license (OL) applicants which were ' electric utilities" as defined in 10 CFR 50.2 (49 FR 35747: September 12. 1984).
The NRC maintained the distinction between electric utility and other .
licensees when it issued its decommissioning rulemaking in 1988 (53 FR 24018.
June 27, 1988). In that rulemaking the NRC differentiated between its electric utility licensees and other licensees by allowing electric utility licensees to collect decomissioning funds over the estimateo life of the reactor, rather than requiring the pre guarantees for all unfunded balances. payment of such funds or requiring The NRC also has viewed the determination of licensee financial qualifications for plant operations as being of secondary importance as a means of ensuring the protection of public health and safety. As stated in the 1984 financial qualifications rule. "A financial disability is not a safety hazard per se because the licensee can, and under the Comission's regulations would be obliged to, simply cease operations if necessary funds to operate safely were not available" (49 FR 35747, at 35749). While the staff continues to believe that this assumption is generally true events, as described below, at Maine Yankee suggest that financial stress can potentially affect operational safety at operating plants. Nevertheless, decomissioning funding assurance has been of more concern because, once a plant shuts down it loses its sot'ce of revenue with which to fund decomissioning.
With the advent of restructuring, some of the basic assumptions unperlying the NRC's financial qualifications regulations are being reconsidered. Many 1
The loss of " natural monopoly" status by generators, including nuclear generators, may aficct the assurance that power reactor licensecs will continue to be able to recover the costs of electricity that they produce.
This status was one of the underlying assumptions of the 1984 definition of (Footnote 1 continued on next page)
s 3
electricit/ generators may lose PUC or FERC cost-based rate regulation.
Further, electricity rates set by competition in a free market may riot provide the same degree of assurance of adequate funds for safe operation and decomissioning as traditional cost-of-service ratemaking. Even in the absencr o' full rate deregulation some companies will be under increasing cost pressure. For example, the " Independent Safety Assessment of Maine Yankee Atomic Power Company" (NRC Staff Report: October 1996) concluded:
" Economic pressure to be a low cost energy producer has limited available resources to address corrective actions and some plant improvement upgrades."
To address the above concerns, the staff is pro)osing three options for the Commission's consideration. In conjunction wit, Option 1, the staff has prepared the enclosed draft revisions and additions to parts of the NRC's regulations. Because of the uncertainty surrounding future deregulation, the staff belitves that whichever option is chosen will hkely be an interim step and may need to be modified as the thrust of deregulation becomes clearer.
The staff also notes that this paper does not address the issue of the potential impact of the NRC's hearing process on the timely transfer of licenses under 10 CFR 50.80. This issue will be evaluated separately.
(footnote 1 continued from previous page)
" electric utility " In many rate deregulation scenarios being considered, electricity customers will eventually be able to select their electricity supplier. Some nuclear plant generators may not be able to compete with lower cost generators, anc may no longer have an assured customer base, even in cases where the nuclear plant remains subject to some form of rate regulation by its State PUC. However, many of the State proposals for nuclear plants would maintain regulation of nuclear licensees, and tie them to the entities that will continue to have regulated transmission and distribution functions. (These functions will remain " natural monopolies.) Because of dedicated revenue streams for decommis:1oning, and to a lesser extent, operations of nuclear plants that many States have proposed, the staff believes that the proposed modification to the definition of " electric utility" will remain workable and will be able to provide adequate assurance of power reactor licensees' ability to provide reasonable assurance that funds for operat4ons and decommissioning will be available, if future changes in economic deregulation suggest that the definition is no longer effective, the staff would propose to change it at that time. However, in the interim, given the current proposals for economic deregulation and the continuing uncertainty of many State approaches, the staff believes that the NRC should continue to distinguish between electric utilities and other power reactor licensees as discussed in Optivn 1 below.
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Dotion 1: Jgy.fse the reaulations in 10 CFR 50.33(f). 50.80. and Annendix C to
) art 50 and add a new section. 6 50.67. to Drovide enhanced.
continuina NRC evaluation of cost-licensira financial cualifications
, of licensees to ooerate their nuclear oower olants safely. l Summary.
-The staff has developed the attached draft rulemaking as a basis for discussion. The rulemaking would amend the NRC's financial qualifications regulations and guidance in SS 50.33(f), 50.80, and :
Appendix C to Part 50 and would add a new section, S 50.67 -to t provide for post-licensing financial qualifications reviews for licensees of lants that no longer meet the NRC definition of
" electric uti ity." This option would clarify the financial qualifications that would need to be demonstrated by those that no longer met the NRC definition of " electric utility." The princip61 features of this option are summarized as follows:
(1) The rulemaking would preserve the distinct on between electric utility and non electric utility licen:,ees, and to that extent would continue existing NRC policy. For those that do not w et the NRC definition of electric utility, the staff proposes to develop an ongoing requirement that licensees demonstrate financial qualifications either by bond ratings (which, the staff believes, are an effective substitute for financial qualifications reviews) or, as an equivalent measure of financial qualifications, by a combination of operational cost and ravenue projections and a liquidity test to demonstrate that operational expenses would be covered during an extended outage or other adverse conditions.
Although the new standard would set minimum requirements for financial utilities" qualifications under the NRC'sfor licensees definitionthat in S no longer 50.2, areproposed it is not " electric as a substitute for the Commission's primary reliance on inspection and other regulatory programs to ensure safety of operations.
Rather, the requirements would provide additional data for NRC to determine whether particular plants needed additional regulatory oversight. In a worst-case situation, where the licensee was unable to demonstrate that it was able to continue to operate NRCcouldorderthelicenseetoshutdownitsplant(s).gafely,the (2) All licensees, both electric utilities a,td non electric utilities, would be required to inform the NRC whenever they propose 2
-The Office of Analysis and Evaluation of Operational Data (AE00) has developed.and is evaluating the use of financial indicators for the Senior Management Meeting process. The recuirements discussed under Option-I would be separate from these financial incicators. NRR and AE00 will coordinate the development of any new requirements and indicators to optimize data use and to -
minimize duplication.
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5-to transfer more than 10 percent of their assets in any 12 month period to an unlicensed affiliate. This provision basically codifies the NRC staff's current practice with respect to reviewing holding companies but would also expand the practice to cover situations where divestiture of assets occurs in the absence of a license transfer action under S 50.80. Although the staff believes :
that continued rate regulator review of electric utilities normally ,
would render 6dditional NRC financial qualifications review unnecessary. asset divestiture can precede full deregulation. This requirement would alert the NRC that a licensee might lose electric utility status or that a licensee. notwithstanding continued rate regulation. might become financially stressed because of reduced resources. The staff believes that being notified of such asset transfers would give the NRC a basis to request further information ,
or to take appropriate regulatory action. Although the staff believes that the NRC may not have authority to require approval in advance of proposed asset transfers. the staff does not believe that formal NRC approval of such transfers would be necessary, as long as the staff had access to information on proposed traasfers.
(3) The staff also believes that licensees shoJ1d be required to inform the NRC whenever their rate regulators or other State bodies take significant actions that would reduce rate regulatory oversight. Although the staff is confident that it will learn of deregulation initiatives that affect specific licensees. this requirement would appropriately place the primary reporting burden with the licensee and would provide an additional accurate and current source of information on the status of its licensees.
(4) The staff proposes to make minor modifications to 10 CFR 50.80 to clarify that its provisions apply to direct and indirect transfers of control of a license, licensee, or right under a license, such as formation of a holding company, change of non-owner responsibility for operations where financial issues are relevant, and not oniv to transfers of the license itself. This approach would essentially maintain the approach that the staff currently uses.
(5) The staff proposes to develop a new section. S 50.67, and to expand Appendix C to Part 50 to cover financial qualifications reviews of non electric-utility licensees over the licensing and operating life of the facility. Although provisions applicable to initial licensing are unlikely to be used in the near term, they are provided to make Appendix C applicable to the entire licensing process. The staff also believes that it is appropriate to provide more detailed guidance on financial qualifications for the entire operating life of a plant.
(6) The staff also pro)oses to slightly modify Section 50.33(f) and Appendix C to clarify w1at will be required from any future applicants for initial licensing. Ambiguities in the drafting language have led to conflicting interpretations.
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6-Attachment 1 provides a line in line out version of the changes to Part 50 that would be proposed if Option 1 were chosen.
00 tion 1 Benefits:
Option 1 essentially extends the NRC's current regulatory approach to cover post OL reviews for non electric-utility licensees.
Licensees that continue to meet the NRC's definition of " electric utility" would not be subject to post-CP reviews. Current regulations in S 50.33(f) require all CP applicants and OL applicants that do not meet the definition of electric utility in S 50.2 to provide information sufficient to demonstrate that they are financially qualified to construct and operate the facilities that they are proposing. This option would require the same information required at the OL review stage to be submitted periodically throughout a facility's operating life by non-electric utility licensees. Because of the likely advent of deregulation and full competition among electricity generators the staff does not believe that a one-time "sr.apshot" of a non electric utility a)plicant's financial ability to operate safely at the time of its
- 0. application necessarily provides meaningful information about its financial qualifications in the future. The staff beli ves that the proposed requirements would provide a systematic method for obtaining information that t1e NRC could use as part of its overail framework to evaluate a licensee's ability to continue to operate its facility safely.
The staff proposes as part of Option 1 to maintain the distinction between electric utility licensees as defined in S 50.2 and non-electric utility licensees, with the latter required to demonstrate financial qualifications throughout facility life. The staff does not believe that the logic underlying the 1984 financial qualifications rulemaking has. to date, changed significantly.
Some, regulators perhaps that wilmany,l allow recovery of nuclear plant costs plus alicens reasonable return on capital from ratepayers. As explained in footnote 1 above, notwithstanding the loss of monopoly status and assured ratepayer purchases that such status implies, the staff believes that many PUCs will continue to provide either direct rate regulation of nuclear plants or will develop effective substitutes such as dedicated line or wires charges that will provide a reasonably assured source of funds for operations and decommissioning. This approach has worket well for many years and should continue to provide the reasonable assurance of financial qualifications that the NRC concluded was demonstrated in the 1984 rulemaking. For States that do not allow adequate recovery of
- safety related costs the NRC will be able to take specific actica as provided under the current rule and as enhanced under Option 1.
Finally, adoption of Option I would reiterate the NRC's concerns about the possible effects that rate deregulation and disaggregation resulting from various restructuring actions involving power reactor licensees could have on the protection of public health end safety.
O -
1 (See the Final Policy Statement on the Restructuring and Economic '
D6.egulation of the Electric Utility Industry. (62 FR 4407):
August 19. 1997))
Ootion 1 Costs:
Additional NRC resources in the amount of up to 1 FTE might be required if the Comission adopts Option 1. However, because Option 1 would continue to exempt electric utilities from reporting post-CP financial qualifications on a regular basis, the impact on the NRC could be lower depending on how many licensees remained electric ut11 ' ties . Also, as discussed under 0) tion 2. which would continue current regulatory requirements, the NRC would continue to conduct ad hoc reviews of licensees through the S S 50.80 and 50.33(f)(4) processes and will continue to monitor State activities to help make general determinations of whether licensees in States sponsoring deregulation initiatives will remain electric utilities. Thus, it is not clear that Option 1 would necessarily entail more NRC staff resources than under the current regulations.
Each affected licensee would expend approximately 2 staff weeks of effort annually to prepare and submit to the NPC the information required in Option 1. Assuming that 50 licensees would lose electric utility status, the staff estimates total industry impact at approximately 2 staff-years annually. Additionally, the NRC would have to justify the increased information collection burdens of these requirements to the Office of Management and Budget.
One potential difficulty with Option 1 concerns the remedies the NRC has available if the NRC determines that a licensee is no longer financially qualified. Ordering a licensee to obtain additional funds for safety expenditures may not be feasible. Likewise, enf^rcement action involving the imposition of civil penalties would laely be counterproductive. The staff believes that such financial information should be used instead to target plants that need additional regulatory oversight to determine whether a particular 1"9nsee's financial situation is actually adversely impacting
- , rety. Upon completion of a safety assessment, NRC would have the opuons of letting the licensee continue to operate, restricting operations, or requiring the licensee to shut down. The NRC expects, either in a regulated or deregulated environment, that licensees
- financial incentives in minimizing the adverse financial impatts of poor plant performance will normally operate to provide adequate safety expenditures. However, in those situations where such incentives do not work as expected, the NRC wil', act to protect public health and safety.
Dotion 2: Do not chance the NRC's existino reculatory framework.
Sun)mEy:
The NRC's existing regulatory framework under S 50.33(f)(4) k
8-allows the NitC to seek additional financial qualifications information that it believes is necessary for the protection of public health and safety. This would include information frvin ,
licensees or States that meet the definition of " electric utility" when particular health and safety issues arise. This approach would involve continuing the process of ad hoc financial qualifications reviews under S 50.80 license transfers and other reviews in response to reports in the trade press and other sources of information about restructuring and deregulation actions affecting specific licensees.
00 tion 2 Benefits:
Because of its authority under its existing regulations, the NRC can evaluate those licensee r3 structuring and dere that constitute a license transfer under S 50.gulation
- 80. Also,activities by not imposing additional reporting burdens on the general population of licensees the NRC can minimize additional im) acts on licensees.
Finally. Option 2 would require no new rulemacing costs.
00 tion 2 Costs:
- 0) tion 2 would not require the additional collection of information tlat would be obtained by promulgating Option 1. As such, the NRC might not have a systematic source of information on licensee restructuring actions. Accordingly, the risk that the NRC would fail to be aware of a licensee restructuring action would be greater under Option 2 than under Option 1. Additionally. Option 2 would not establish clear requirements for post-licensing financ1a1 qualifications reviews of non-electric utility licensees ard would not clarify in the NRC's regulations the current staff practice of treating changes in control of licenses through changes in control of licensees as subject to S 50.80 consent.
Opffgn3: Exoand financial aualifications reviews at the OL and cost-OL staaes to include all oower reactor licensees. includina those that are electric utilities, and clarif y the sCoDe of Section 50.80 transfer nrovisions.
Summary:
Option 3 would expand the OL and post-OL financial qualifications reviews that have been proposed in Option 1 to include electric utility licensees as well as non-electric-utilny licensees. This option would end the NRC's 13-year-old distinction between its electric utility licensees and other licensees, which the staff believes remains valid notwithstanding current State rate deregulation initiatives. In addition. Section 184 of the Atomic Energy Act relating to license transfers could be interpreted as clearly applying to changes in control of licensees by virtue of changes in control of licensees tnrough the acquisition of a controlling percentage of the voting stock of a licensee. If the
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Comission were to choose Option 3. S 50.80 would be amenged to i implement this interpretation by establishing a threshold level of transfers of voting stock that would require application by the proposed acquirer and NRC consent under 10 CFR 50.80.
Attachment 2 contains draft amended language for changes to S 50.80.
which although it is included under Option 3. coulo be adopted separately from other changes discussed in this option. Separate ,
amendatory language for Option 3 to cover the elimination of the i distinction between " electric utilities" and non electric utilities has not been developed at this point.
Ontion 3 Benefits.:
By establishing on going financial qualifications reviews for all licensees including ele:tric utilities, the NRC would be in a better position to identify and address the situation in which a rate regulator or other factors adversely affect the financial -
ability of a utility to operate its nuclear plant safely. However, because rate regulation has provided adequate funds for safe operations for the great majority of power reactor licensees and various State proposals to address the unique funding aspects of
. nuclear power plant operations and decommissioning the staff expects such situations to be rare. Further, the NRC can use its existing authority under either current regulations or those that
- might be adopted under Option 1 to evaluate s)ecial situations where a licensee remains an " electric utility" but 1as financial aroblems significant enough to affect the protection of public healt1 and safety.
00 tion 3 Costs.:
Such a broad-based increase in NRC's financial qualifications 3
A t h:shold of 25 percent may be used, based on U.S. statutes a>plicable to the domestic banking industry. Alternatively, a 10 percent tireshold could be chosen, which is derived from the Public Utilities Holding Company Act (PUHCA). That Act reads in part:
(7) " Holding company" means --
(A) any company which directly or indirectly owns. controls or holds with power to vote.10 per centum or more of the outstanding voting securities of a public utility company or of a company which is a holding company by virtue of this clause or clause (B) of this paragraph unless the Commission, as hereinafter provided by order eclares such company not to be a holding company ... (PUHCA.
Chapter 2C. 15 S 79b)
However, as PUHCA also recognizes, an entity could obtain effective control of a company with control of stock below whatever threshold level is chosen,
10-reviews would impact both NRC and licensee resources. In addition to Option 1 burdens which, at least for NRC resources. 6re unlikely to exceed 1 FTE. 0) tion 3 could require additional annual resource burdens of 2 to 3 1RC FTE and 2 to 3 licensee FTE total. This burden could possibly be even greater if additional resources from OGC are required. However, although " clarification" of a threshold for voting stock acquisitions may lead to an increase of S 50.80 applications being filed, the staff does not believe that electri utilitiesareoftensubjecttothesekindsofstockacquisitions.p Finally, establishing a low threshold could increase the time it would take applicant to obtain NRC approval.
RESOURCES:
If the Comission decides to proceed with Option 1 or Option 3. the staff will prepare a federal Regfster notice for the proposed rule and a regulatory analysis to support the rule. Resources to conduct the rulemaking effort for Option 1 are included in the FY 1997 and FY 1998 budgets as provided in the ,
action plan on electric utility restructuring and deregulation. Resources needed to implement Option 1. if adopted, are expected to be accommodated through a shif t in the financial qualifications casework load among existing staff. If the Commission selects Option 3. additional resources will be needed as outlined above. If the Commission adopts Option 2. no additional resources will be required.
' The staff believes that, on balance, the systematic collection of financial qualificotions information from " electric utility" licensees over the remaining operating lives of their facilities is not justified, given that such collection is likely to provide only a marginal increate in the protection of the public health and safety. There does not appear to be any compelling reason at this time to change the NRC's long-established approach to defer to rate regulators to establish adequate levels of operations and decomissioning funding for those that are (or will continue to be) under theirjurisdiction. Further, the imposition of a threshold level of transfers of voting stock provided under Option 3 could have implications relating to the prohibition in Section 103d. and 104d. of the Atomic Energy Act of 1954, as amended, of foreign ownership, domination, or control of licenses for comercial nuclear power plants In addition, both application of financial qualifications requirements on
" electric utility" licensees throughout remaining reactor operating life and imposition of a threshold have )otentially significant backfit implications that would~need to be reviewed )y the Committee to Review Generic Rec uirements. Such a requirement could be perceived as requirine substantial adcit.onal review and approval requirements on licensees. The staff does not believe that a backfit could be justified given the marginal benefits to the
?rotection of public health and safety that would result from adoption of Option 3.
9 e- -
31 C00RDINATI.QN:
The Office of the General Counsel has no legal objection to this paper. The Office of the Chief Financial Officer has reviewed this Commission paper for resource implications and has no objections. The Office of the Chief Information Officer has reviewed the policy options for information technology and information management implications and concu*s in it. However. if a proposed rule is develo)ed, a clearance package fur the information collection requirements must be su)mitted to the Offi e of Management and Budget for review no later than the date the proposed rule is published in the Federal Reaister.
RECOMMENDATION:
That the Commission 3Dorove Option 1 as a basis for the staff to proceed with a proposed rulemaking as outlined in Attachment 1.
L ose Callan Ex cutive Director for Operations Attachments: 1. Amendments to S 50.33(f) S 50.80, and Appendix C to Part 50, and new S 50.67 as described in Options 1.
- 2. Amendments to S 50.80 as described in Option 3 Commissioners' comments or consent should bo provided directly to the Office of the Secretary by c.o.b. Wednesday, Novembel 12, 1997.
Commission staff office comments, if any, should be submitted to the Commissioners NLT Wednesday, November 5, 1997, with an information copy to SECY. If the paper is of such a nature that it requires additional review and comment, the Commissioners and the Secretariat should be apprised of when comments may be expected.
DISTRIBUTION:
Commissioners OGC OIG OPA OCA CIO CPO EDO SBCY
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ATTACHMENT 1 O
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OPTION 1 10 CFR 50.33(f)
(f)- Except for an electric utility applicant for a license to operate a utilization facility of the type described in S 50.2)(b) or S 50.22.
Information sufficient to demonstrate to-the Commission the financial qualifications of. the applicant to carry out. in accordance with the-
.. regulations in this chapter, the activities for which the permit or license is sought. As applicable. the following shall be provided:
(1) If the application is for a construction pennit, the applicant shall submit information that demonstrates that the applicant possesses or has reasonable assurance of obtaining _the funds necessary to cover estimated construction costs and related fuel cycle costs. The applicant shall submit estimates of the total construction costs-of the facility and-related-fuel cycle costs, and shall. indicate the source (s) of funds to cover these costs.
(2) If the application is for an operating license, the applicant shall submit information that demonstrates the applicant possesses or has reasonable assurance of. obtaining the funds necessary to cover estimated operation costs forLthe period of the license. The applicant:shall submit estimates for total -
1 annual. operating costs for each of the first five years of operation of the facility'.;1Theiapplicantshallalsoindicatethe. source (s)offundstocover otheseLcosts : An applicationito renew or extend the. term of an operating Slicense-must-include-the sane financialTinformation' as is required in an b* '
- application-for an initial: license, r ' E .
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(3) Each application for a construction permit or an operating license !
submitted by a newly formed entity organized for the pr: mary purpose of constructing or operating a facility must also include information showing: *
(1) The legal and financial relationships thhMthehlf(formed Isntity 4
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has or proposes to have with its stockholdersp bohdholdef C or owners:
(ii) TheinewlyMgreed[entjtts 4M financial ability to meet any contractual obligation %fchJthelnswlyjformbdlentity)aMinedFrsdibrlpr@5e5 ;
to[i.nc0F tc the entity dich they hr.c incurred er prope cd te incur: and- ,
- (iii) Any other information considered necessary by the Comission to enable it to determine the applicant's financial qualifications.
e (4) $tWithstandin[the3Rception' described J^rfithi sisectig fori 1sctric Utilitfapplicantslfo611censesitdiope~raQutilizationJfacQities? the Comission may request an established entity or a newly formed entity thatM5 an;electtKUtil_itKasTdefinedfir[SsctionIS,0j2lof3his)jitt to submit additional er =re detailed information' respecting its financial arrangements and status of funds if the Commission considers this information appropriate.
This may include information regarding a licensee's ability to continue the conduct of the activities authorized by the license and to decommission the facility.
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5 10 CFR 50.80 Transfer of Licenses (a) No license for a production or utilization facility, or any right thereunder, shall be transferred, assigned or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of the license briripitl to any person, unless the Comission snall give its consent in writing.
(b) An application for @tten)6nsentJUride@hisissctibn transfer of a licen c shall include as much of the information described in 39 50.33 and 50.34 of this Part with respect to the ' identity and technical and financial qualifications of the prop;;cd tran:Avee licensee}folloWih(thsl proposed transfet as would be required by those sections if the application were for an initial license and if the license to bc Mseed s0bj6ctit61thsitFansfer is a class 103 license, the information required by S 50.33a. The Commission may require 6dditional informatim such as data respecting proposed safeguards against hazards from radioactive materials and the applicant'; qualifications bfithsilicsnseffollpingithey6@sdfranstfrj to protect against such hazards. The application shall include also a statement of the purposes for which the transfer cf +he 'iccr:01s requested, the nature of the transaction necessitating or making desirable the transfer of the 11cen:0. and an agreement to limit access ts Restricted Data pursuant to S 50.37. The Comuission may require any person who submits an application for 11cen:c pursuant to the provisions of this section to file a written consent from the existing licensee or a certified copy of an order or judgment of a court of competent jurisaiction attesting to the person s right (subject to the 1
l l
6 licensing requirements of the Act and these regulations) to possession of the facility in/olved.
(c) After appropriate notice to interested persons. including the existing licensee, and observance of such proceaures as may be required by the Act or regulations or orders of the Comission. the Commission will apprcve an application for approvaliof the transfer of ; license, if the Commission determines:
(1) That the propcsed transferee lifensef!folloWiiip]th6W6p'o5edltrsnifeij is qualified to be the hclder M the licensch: and (2) That the transfer of-the license is otherwise consistent with applicable pravisions of law regulations, and orders issued by the Commission pursuant thereto.
m
APPENDIX C TO PART 50 - ^ CUIDE r0o THE FINANCIAL DATA AND RELATED ~
INFORMATION REQUIRED TO ESTABllSH OR MAINTAIN FINANCIAL GUALIFICATIONS FOR '
FAClllTY CONSTRUrTION PERMITS.:0PERATING LICENSESL WJD' POST-0PERATING LICENSE REVIEWS GENERAL INFORMATION This appendix is intended to apprise bonstruction;pefmitLandioperatir.ij
- 11cen'sslapplicantsand-licenseesfforproductionorutilizationfacilitiesof the types described in 5 50.21(b) or S 50.22. or testing facilities. of the 4 general kinds of financial data and other related in% nation that will demonstrate the financial qualification of the applicant orllicenses to carry ,
out the activities under'theTpe'rmit;crilicense for @ich the permit 1: :*gM .
The kind and depth of information described in this gede ' ppendix a 46 are not intended to be a rigid and absolute requirements. In some instances, additional materia -
be needed. In any case the applicant ordlicensee should include information other than that specified, if such information is pertinent to establishing the applicant's br"licehsse3 financial ability to construct andf6[serate the proposed facility.
It 1: important to ob;crve c'00 that Botn S 50.33(f) and this appendix distinguish between applicants which are established organizations and those which are newly-formed entities organized primarily for the purpose of engaging in the activity for which the permit 6FMlidsnse is sought. Those in the former category will normally have a history of operating experience and be able to submit financial statements reflecting the financial results of
I B
past operations. With respect. however, to the applicant which is a newly-formed company established primarily for the purpose of carrying out the licensed activity, with little or ne prior operating history, somewhat more detailed data and supporting documentation 6f fits" finahcial arrangement 5for financ]hl;planswillgenerallybenecessary. tor this reason. the this appendix describes separately the scope of information to be included in applications by each of thsse two classes of applicants. FbrthirT.as[prbVidsd
~
[ing50l33(1EfaniapplicantiforTanLoperatingflil cerise (or s'11censee isinot pubj ectlto' a f fi.nanci bl]Ual i ficatibns4 revi eEi f: itl can ::demonstFate; toTth'e satisfaction lof7the' Commission that itlfpriiai.nstan "electriclutilitif as definsd lin Sl_50'.2?
Indetermininganapplicant'sTor111 dens ~ eel financial qualifications.
the Commission will require the minimum amount of information necessary for that purpose. No special forms are prescribed for st Mitting the informatior,.
In many cases the financial information usually contained in current annual financial reports. including summary data of prior years, will be sufficient for the Commission's needs. The Commission reserves the right. however. to require additional financial information at the construction permitVoperafij@
liceiselstagelorlpostidpefat;ingllicense stages. particularly in cases in which the proposed power generating facility will be commonly owned by two or more existing comoanies or in which financing depends upon long-term arrangements for sharing of the power from the facility by two or more electrical generating companies. I(csse' slwheFelsn@rilfi csht3ppl fssTf6Fls pombihsdT6nstFddtichysrmit7 hndf6pefatihgijljEsiiss Under301CFRjPsg55 infdritiati oni rbqUi Fsd hWith'l pespectJ to3hsW1,1 cahfsifihandi s Ghuhli fiEhti'oiis
f 2
tQorisQU?tiand;ciperatb;ilts?fabilityishal,1)b6;sUbmittsd(jointl[Withith6 Part Kapp]icalisn)
Applicants and!lic6hssss are encouraged to consult with the Commission with respect to any questions they may have relating to the requirements of the Comission's regulations or the information set forth in this appendix.
I. APPLICATIONS FOR CONSTRUCTION PERMITS A. Applicants that are Established Organizations
- 1. Estimate of construction costs. For electric utilities, each applicant's estimate of the total cost of the proposed facility should be broken dc m as follows and be accompanied by a statement describing the bases '
from which the estimate is derived:
(a) Total nuclear production plant costs. . . . . . . . . . . . . . $........
(b) Transmission, distribution, and general...........
plant costs $........
(c) Nuclear fuel inventory cost for first core'. . . . . . . $ .......
Total estimated cost . . . . . . . . . . . . . . . . . . . . . . $ .......
If the fuel is to be acquired by lease or other arrangement than Section 2.790 of 10 CFR Part 2 irdicates the circumstances under which information submitted by applicants may ue withheld from public disclosure.
1
i 8 10 purchase, the application should shall so state. The items to be included in these categories sh6914 sha'il be the same as those defined in the applicable clectric plant and nuclear fuel inventory accounts prescribed by the Federal tnergyRegulatoryCommissionoranexplanationmustlbegivenastoany departure therefrom.
Since the composition of construction cost estimates for production and utilization facilities other than nuclear power reactors will vary according to the type of facility, no particular format is suggested for submitting such estimates. The estimate should shall, however, be itemized by categories of cost in sufficient detail to permit an evaluation of its reasonableness,
- 2. Source of construct 1on funds. The application should shall include a brief statement of the applicant's general financial plan for financing the cost of the facility, identifying the source or sources upon which the applicant relies O(intends;t6Mlf for the necessary construction funds, e.g., internal sources such as undistributed earnings and depreciation accruals brjthepcash5fl W sbdrce5 or external sources such as borrowings.
3, Applicant's financial statements. Tbe application sne44 E6633 also include the ap711 cant's latest published annual financial report, together with any current interim financial statements that are pertinent. If an annual financial report is not published, the balance sheet and operating statements covering the latest complete accounting year together with all
-pertinent notes thereto and certification by a public accountant should $lidll; be furnished,
e 11 B. Applicants that are Newly-formed Entitles
- 1. Estimate of construction costs. The information that will normally be required of applicants tha' are newly-formed entities will not differ in scope from that required of c tablished Organizatkas mayjequife[ additional detailithanithat7reuired q tof:16stablishedEorgahilations. Accordingly, applicants should shhil submit estimates as described above for established organizdtions andSiF5dditionZpF6videEsL?hisldditioriallinformhtion Lon '
bstilmatsfoficonstrUct16ln" costs?lasithe;NRC(maffbgUesM g
- 2. Source of construction funds. Tijdf appli csti'bdfshhil]1nclDds? al bri ef s' tatementiofTthe@plicant's[geneFsilfinhnei51[pla(fogfinandfiiggth;b30st of theTfadflity] The application should shall identify the source or sources upon which the applicant relies 0;r31ntEnd(t61Felf for the funds necessary to pay the cost of constructing the facility, and the amount plajined to be obtained from each. h'ith rc pect to cach 50urc0 The application sheaM 5h'all_
describe in detail the applicant's legal and financial relationshipsMif Establ,15hed} with its stockholders, corporate affiliates, or others (such as financial institutions) upon which the applicant is relying UFNntehds'lt6[Fe]j for financial assistance. Ifthesourcesoffundstyberelieduponinclude parent companies or other corporate affiliates, ir. formation to support the financial capability of each such company or affiliate to mcct its c0=itments iriakeyf@FFent[66fpt0}shjpjthljp6ngib0t'ibh5 to the applicant should shsll, be set forth in the application. This information should be of the sam' tind and scope as would be required if the rarent companies or affiliates were in fact the applicant. Ordinarily, it will be nc ;;;ry that Copies of
12 agreements or contracts among the companies shall be submitted.1Davai.lable.
As noted earlier in this appendix, an applicant that is a newly-formed entity will normally not be in a position to submit the usual types of balance sheets and income statements reflecting the results of prior operations. The applicant shedd shall, however, include in its application a statement of its assets, liabilities, and capital structure as of the date of the application.
- I Ij3PPL _ICATIONS[FORJ OPERATING 3ICENSES QA gibbhtsithat][ ate]"Elsctfid Uti])tieh" Applichrithfor!operatin[1.ite6)ssykhsthsgestablished[orinewl 3f6Fmed enti tj e52thatya re((sisctr,i bfutili ti ssTas36 fins @i hlS J50l2[h re[spEsstffrom furthe@ demons _trati onibf.jfi.hsnctiliqualj fisati orilsH HoWeyer!TsUdh@pplj dants inustidsmonstrate3hstithef Min.-1fattTMgttis3definitidsbysIsdtFiEntility?
CEAPpythhtilthat!sts'lndtiTledt: Hic!ytilitis^ig dE Applicbytsif6(6pefafih[1 jyri5652wh[ethsf est5bl ishsd (6h@ibil9jfoFinsd Ent
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IIICPOST0PERATINGIL!CENSEWNANCQQQUAL.IFICATIONS A Q Lic6hsse5"thbtl bid?Cisttbf(Ut1)i t ie5
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[ Note: The NRC has recently proposed changes to the definitica of "olectric utility " Among other things, the changes would allow a nuclear power plant license applicar,t or licensee to qualify as an electric utility for the purposes of deconmissioning funding assurance if that applicant's or licensee's rate regulator allows recovery of decommissir.ning costs through some non-oypassable charge to ratepayers. Additionally, entities whose rates cover only a portion of their decommissioning costs would be considered
" electric utilities" only for thct portion of their decommissioning costs.
However, applicants or licensees would be considered electric utilities for the purpose of the requirements of financial qualifications to operate a nuclear aower reactor under S 50.33(f) of this part and this appendix only if all of tie prudently incurred costs (as determined by the licensee's ratemaking authority) associated with operation of the nuclear power plant were allowed to be recovered either through traditional cost-of-service rate regulation or through nor-bypassable charges for operation costs that are similar to those levied for decommissioning cost recovery.]
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.IV? E APPLICATIONSj FORl LICENSETTRANSFERSf UNDER'10' CFR[50:80 Each ;11.ceriseel^orlspplichntJfor'hficEhfeUwhitheifan7sisctFic ;btility"Thi definhdiiMS150l2FoF~a hon-;slectricibtilitfEisirsquifedyt6?obtainTplrior Writteh[donsent0,fromithe;NRClif[iti;ihtbnds' tol4ake~anfll15ttibh;.th5t[Gould
'constitut6^a"t;ransferioffa?licsnSef6F'tFahsfer of c6hi^r61Tof@l4 nseluhder; 5[50280EEThs1NRCUir(c6nnEhtion Wit _hlahfjpgp6sedimefggda@isit_idhy6F Ries t.iLtbE5Jipolfi n[alidsntdT:~or:lf!Fm5ti onT6f ~a1;hol di ng 30mparif['wfil per foris (thresholdRe01ssjto'detsrmi;he;)hethsf;t hE;prbpossd[ set 10nNodld reqQi reitheiNRCEsfWrj tt6hibchsentfUhdsr? $150l.80 !MTjiQJRC@il](considsKah
)ction;1 thht?would @s5bl tii n ? a siisw : enti typbbtsi hihgiths[poWdri tojd6htFolis h0cisa riposer;jla ntf l ftense;[:o@litsriss6'lss? s ili'dihseJtFsnsfsEnndsr[SJ 50180 65thi s ipa;rt f rbquiFi ng[NRC;'c6iis5ntQThs] NRC ~ con 5j dsrs;lthsQthe[f6rnisti 6hibff a hes; ho] di ng [{6mpinj]'o9erfsni;iki sting]li dehissioribpsFisillbsnisEI5]pirent sompianf.l6r}6cmpaniesfcopstitDtiW41tFansfsp6fTcbhtFoHpbFssbht@ojSj;50;801 [A J i censee iiustTrsport7lt(ths' NRC1an[ prop 6ssd idiVes.ti thfssoffas56ts~skdEEdiiig 30fpescenQin W12{m6 nth!'pbiji odlbp50thil iten5ee # 51 bboks! offscl660nt[jUrs05ht t61SJ50!67,(bg V 444. ANNUAL FINANCIAL STATEMENT Each holder of a construction permit brp6p5F6tg1;i;dsn5s for a production or utilization facility of a type described in S 50.21(b). or S 50.22. or a testing facility is required by S 50.71(b) to file its annual fir:mcial report with the Commission at the time of issuance thereof. This requirement does not apply to licensees or holders of construction permits for
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I 11 medical and research reactors.
VI 4#. ADDITIONAL INFORMATION The Commission may, from time to time, request the applicant, whether an established organization or newly-formed entity. brjlicsns;se to submit
- additional or more detailed information respecting its financial arrangements and the status of funds if such information is deemed necessary to enable the Commission to determine an 6pplicant's 6(lj;dshsisjs financial qualifications for b@ndet the license.
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4 ATTACHMEMT 2 4
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OPTION 3 l
10 CFR 50.80 Transfer of Licenses c
(a) No license for a producticn or utilizStion facility, or any right -
thereunder, shall be transferred, assigned, or in any manner disposed of.
either voluntarily or involuntarily, directly or indirectly, through transfer ofccatrolofthelicensebrjrighttoanyperson,unlesstheCommissionshall give its consent in writing.
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. Transfeh? of ~ control (6flthej license :^or? fight?
lfor ;thejurpos61ofi thi sMbcyidnishall ?i ncl udenbut; noti be3imi ted } t6ll(ijiithb
- caseldf?;hd;ekistingJorpofitel1JcsrisAeHa@ui;r,i;ng);(IFco6tfo17With[pcWif tb potd;of 25}etcentfoFfinoreT6f
- lthsfoUtstandingjyoting3s3ur'itissidfithe lifclenseejfbrs(2fthijowsFitp3ontrollin?;any[ni Jidsriths7elsctiohyoffalmdjoriti bf(thW boa rd(ofidi;r6ct6ts; of(thell.1,censiesl (b) An application for Written [c6hsEhtidndeffthis s'ecti6d transfer of 0 11cen0 shall include as much of the information described in SS 50.33 and 50.34 of this Dart with respect to the identity and technical and financial I
qualifications of the peopcced transferca ljdsnsissifolloWing]ths?jr6p65sd transfes as would be required by those sections if the application were for an initial license and if the license to be issued subjectit6ftbi(tFansfsbisa class 103 license, the information required by S 50.33a. The Commission may require-additional information such as data respecting proposed safeguards against hazards from radioactive materials and the applicant's qualifications 66thpijbssidif611MiiigthsXWsidjtF56sfsii to protect against such hazards. The application shall include also a statement of the purposes for which the transfer of the liten:c is requested. the nature of the transaction
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b necessitating or making desirable the transfer of the 'icence, and an agreement to limit access to Restr.icted Data pursuant to S 50.37. The Commission may require any person who submits an application for licen;c pursuant to the provisions of this section to file a written consent from the existing licensee or a certified copy of an order or judgment of a court of competent jurisdiction attesting to the person's right (subject to the licensing requirements of the Act and these reguLtions) to possession of the facility involved.
(c) After appropriate notice to interested persons. including the existing licensee, and observance of such procedures as hiay be required by the Act or regulations or orders of the Commission, the Commission will approve an application for app (6valfof the transfer of a 11cen:0, if the Commission determines:
(1) That the pr+g,0cd tran;ferec liceMee;f611o#filgBhe; pro @seditrarisfer is qualified to be the holder of the licensee: and (2) That thd transfer of the licence is othen 'se consistent with applicable provisions of law, regulations, ano eders issued by the Commission pursuant thereto.
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