ML20198S416

Submits Impact of New Decommissioning Funding Rule on Great Bay.Staff Intends to Propose Some Addl Mechanisms That Appear to Offer Assurance Equivalent to What Existing Mechanisms Provide

ML20198S416
Person / Time
Site:	Seabrook
Issue date:	02/26/1998
From:	Wood R NRC
To:	Mccabe B, Thompson H NRC
Shared Package
ML20198S170	List: ML20198S166 ML20198S238 ML20198S285 ML20198S383 ML20198S416 ML20198S434 ML20198S456 ML20198S485 ML20198S492 ML20198S527 ML20198S568 ML20198S613 ML20198S664
References
FOIA-98-175 NUDOCS 9901110320
Download: ML20198S416 (2)

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Robert Wood To:

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Date:

Thu, Feb 26,1998 1:59 PM

Subject:

IMPACT OF NEW DECOMMIS310NING FUNDING RULE ON GREAT BAY Hugh & Brian; In anser to your question, it is unlikely that the final rule on decommissioning funding assurance that is scheduled to be issued later this year will solve the problem of Great Bay Power Co., a 12.1% owner of Seabrook. (Great Bay is the only power reactor co-owner / licensee that does not meet the definition of

" electric utility"in 9 50.2 and thus must provide assurance of any unfunded portion of its estimated decommissioning obligation.) To recap where they stand, under the current rule, Great Bay could provide this additional assurance through either prepayment of the total amount, or a surety bond, letter of credit, or insurance for the unfunded portion. Great Bay has informed the NRC that it has used an insurance / surety broker, AON Risk Services (AON), to search for a surety bond, etc. As of January 23, 1998, Great Bay statod '.nat they were unlikely to be able to get a surety short of essentially paying the l

unfunded amount upfront, which they cannot afford. AON indicates that because of the minimal demand

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and high risk of such bonds at this point, it is unlikely that sureties will become available in the near future.

Under the new rule, the staff intends to propose some additional mechanisms that appear to offer assurance equivalent to what the existing mechanisms provide. These include allowance for non-bypassable charges, long-term contracts, and other guarantee methods evaluated on a case-by-case basis. However, because of Great Bay's situation as a power wholesaler, it is not eligible for the non-bypassable charges that New Hampshire, among other states, has implemented as part of its restructuring plan. Also, Great Bay has tried to obtain long-term contracts for its power from Seabrook, but so far has been unsuccessful, except for one 10 MW(e) contract (out of the 200 MW(e) that it gets from Seabrook).

On January 30,1998, Great Bay submitted a petition (in effect, a request for exemption) asking that they be allowed to provide the required financial assurance by accelerating decomraissioning funding, so that Great Bay's share would be fully funded by 2015, rather than by 2026, when the Seabrook license is scheduled to expire. The staffs initial view of this is that accelerating funding over the next 17 vears (or even a somewhat shorter period) would not provide an equivalent level of assurance to that provided by other mechanisms in effect or being considered. This is not to say that Great Bay is in any imminent danger of default. Given the power market in New England, it is likely that Great Bay will be able to continue to fund its Seabrook operational and decommissioning obligations for the indefinite future based l

on revenues it receives from Seabrook power sales, as long as Seabrook does not have a prolonged l

outage.

l A more positive recent development is legislation that New Hampshire State Senator Hollingworth has introduced that would hold the other Seabrook co-owners jointly and severally liable if Great Bay were to default on its decommissioning funding payments. We have been told that this bill has passed the New Hampshire Senate and is being actively considered by the House. We also understand that the Governor is likely to sign the bill, if passed. If this legislation is enacted and provides, over an appropriate period of time, for the other co-owners to pay Great Bay's share, it could be treated as another guarantee method that could be ?cceptable under the new rule. Of course, this result will be dependent on the ultimate forms of both the new rule and the New Hampshire legislation.

Because of the policy implications of the latest Great Bay proposal, as well as their continued inability to comply with the current rule, the staff intends to prepare a Commission paper in the context of responding to Great Bay's recent petition for accelerated accumulation of decommissioning funds. We are currently awaiting for Great Bay to respond to a request for additional information, and should be able to develop the Comrnission paper soon after the response is received.

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