ML20199E871
| ML20199E871 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 01/23/1998 |
| From: | Feigenbaum T NORTH ATLANTIC ENERGY SERVICE CORP. (NAESCO) |
| To: | NRC (Affiliation Not Assigned) |
| References | |
| AR#-98018402, NYN-98008, NUDOCS 9802020265 | |
| Download: ML20199E871 (6) | |
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(603) 474 9521 The Northeast Utilities System January 23,1998 Docket No. 50-443 NYN 98008 AR# 98018402 United States Nuclear Regulatory Commission Director, Office of Nuclear Reactor Regulation Washington, DC 20555-0001 Seabrook Station Six-Month Status Report on Efforts to Obtain Decommissioning Funding Insurance North Atlantic Energy Service Corporation (North Atlantic) is submitting, on behalf of Great Bay Power Corporation (Great Bay), a status report on the efforts of Great Bay to obtain a suitable decommissioning funding assurance arrangement which meets the requirements of 10 3
CFR 50.75(e)(2). In the NRC Order dated July 23,1997 which granted Great Bay a temporary exemption from the requirements of 10 CFR50.75(e)(2), the NRC imposed certain reporting conditions. One of those conditions requires Great Bay to provide the NRC with a written report six months from the date ofissuance of the Exemption Order on its efforts to obtain a suitable decommissioning funding assurance arrangement. The information and other descriptive -
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materials regarding Great Bay are provided by Great Bay.
2 As previously reported to the NRC, Great Bay retained AON Risk Services, Inc. (AON) to assist with its efforts to obtain decommissioning liability insurance. AON is a leading insurance.
brokerage and risk management services organization, with over 400 offices in 60 countries.
Over the last six months, AON has approached every insurer who it believed might have the ability to provide some form 'of decommissioning insurance to Great Bay. This survey included v
' Letter dated 7/23S7, from A.W. De Agazio, USNRC to T.C. Feigenbaum, North Atlantic, Extension of Temporary Exemption From Certain Requirements of 10CFR50.75," Reporting and Recordkeeping for Decommissioning Planning," Seabrook Station, Unit 1 Letter dated 6/4/97, frcm T.C. Feigenbaum, North Atlantic to USNRC, Great Bay Power Corporation Petition for Partial Reconsideration of Exemption Order Response to NRC Request for Additional lnformation and Request for Temporary Extension of Exemption l
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U.S. Nuclear Regulttory Commission Director, Office of Nuclear Re:ctor Regulation NYN-96008/Page 2 traditional insurance companies as well as companies known for insuring non traditional risks.
Among those parties approached by AON were American International Group (AIG), European.
Reinsurance Company of Zurich (European Re), Liberty Mutual Insurance Company, CNA Financial Insurance' Group, Zurich-American Insurance Group, Travelers Insurance Group, Berkshire Hathaway Companies, Centre Reinsurance' Group and CIGNA Property & Casualty-Companics.
Based on its discussions with the various companies, AON concluded that AIG and European Re were the most promising of the numerous insurers comactcd. AON conducted numerous discussions with AIG and European Re in an effort to develop an acceptable product. Senior management from Great Bay worked closely with AON in this process. In September 1997, Great Bay's Chief Executive Officer, Chief Operating Officer and its nuclear counsel met with representatives of AIG and European Re. Despite these efforts, AIG and European Re were not able to offer a product which would satisfy the requirements of 10 CFR 50.75(e)(2).
AON and Great Bay completed their exhaustive survey of the insurance market in December 1997. As indicated in the attached letter from AON dated December 11,1997, AON cot. eluded that there is no insurance company willing to accept a true transfer of Great Bay's decommissioning risk. The only products available are funding arrangements where the insurer would provide insurance with a limit equal to the amount of the premiums paid by Greet Bay. To insure the entire unfunded portion of_ Great Bay's decommissioning liability _using this type product would essentially mean prefunding the entire amount, which Great Bay is financially unable to do. Moreover, paying premiums to an insurer who then turns around and makes payments of an equal amount to the decommissioning trust simply adds another layer of fees and expenses which reduces the actual amount available to be invested in the decommissioning trust fund.
in addition to the exhaustive survey of the insurance market conducted by AON, North Atlantic c
and Great Bay have been active in discussions among various parties in the State of New Hampshire over the last six months regarding decommissioning funding assurance. A working group was formed consisting of representatives of North Atlantic, Great Bay, certain other Seabrook joint owners, the New Hampshire Public Utilities Commiasion, the Campaign for
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Ratepayers Rights, the Office of the Consumer Advocate, the Seacoast Anti-Pollution League, the Conservation Law Foundation, the Govemor's Office of Energy and Community Services, the Town of Seabrook, New Hampshire and State Senator Beverly Hollingworth. This working group has met on nine separate occasions over the last six months. No consensus has yet been achieved among the working group, but Great Bay expects discussions to continue in 1998.
Also, the Nuclear Decommissioning Financing Committee, the body established under New Hampshire law to assure adequate funding for the decommissioning of the Seabrook facility, has held five official meetings during the last six months where decommissioning funding assurance 1
U.S. Nuclear Regulatory Commission Director, Office of Nuclear Reactor Regulation NYN 98008/Page 3 for Seabrook was discussed. In addition, Senator Hollingworth has filed a bill in the hew llampshire State Senate, SB 140, which would make Seabrook joint owners other than Great Bay proportional guarantors of Great Bay's decommissioning liability should Great Bay default in its decommissioning obligations.
The efforts of NDFC, the decommissioning working group and the New Hampshire Legislature will, in the very near future, need to be integrated with the state's electric utility restructuring activities. It cannot be predicted wheter, or in what form, SB 140 will be passed or whether the working group or the NDFC efforts in New Hampshire will result in some form of decommissioning funding assurance that addresses Great Bay's situation.
Great Bay has diligently pursued a number of altematives to providing decommissioning funding assurance mechanisms. Since an insurance type product is currently not available and the outcome of the other initiatives in New Hampshire is uncertain, Great Bay, with the endorsement of the other Joint Owners, has concluded that the best available decommissioning funding assurance arraagement is for Great Bay to acceierate its payments to the deccmmissioning trust fund. This will result in Great Bay fully funding its decommissioning liability over a 25 year period rather than the licensed life of Seabrook. Accordingly, it is currently planned that a petition will be submitted on or about January 30,1998, seeking a determination from the NRC that Great Bay's accelerated funding ofits decommissioning liability through 2015 rather than the 2026 license period provides " reasonable assurance" of funding, or in the alternative seeking a permanent exemption.
Should you have questions regarding this matter, please contact Mr. Terry L. Harpster, Director of Licensing Services, at (603) 773-7765.
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Very truly yours, NORTH ATLANTIC ENERGY SERVICE CORP.
A i
Ted C. Feigenbaum
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Executive Vice President and ChiefNuclear Officer l
U.S. Nuclear Regulatory Commission Director, Office of Nuclear Reactor Regulation NYN-98008/Page 4 cc:
C. W. Smith, NRC Project Manager Project Directorate 1-3 Division of Reactor Projects -I/11 Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 Document Control Desk
- United States Nuclear Regulatory Commission Washington,DC 20555 John A. Tillinghast, President Great Bay Power Corporation Cocheco Falls Millworks 100 Main Street Suite 201 Dover, NH 03820-3835 R. K. Lorson, (49-NR)
Seabrook Station Senior Resident inspector NAESCO PO Box 300 7
Scabrook, NH 03874-0300 m
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ENCLOSURE TO NYN-98008 t
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Aon Risk Services December 11,1997 4
Mr Frank W Getman, Jr.
- Chief Operaung Officer Great Bay Power Corporation Cocheco Falls Mill Works
. 100 Main Street, Suite 201 Dover,NH 03820 3835
- RE: Efforts to obtain Decommissioning Liability Insurance ser Seabrook
Dear Frank:
This letter is meant to summarize our efforts to date on this project. Over the course of the past several months, we have approached every insurer who we feel has the potential
- to provide this product. The result of these efforts is that there is no insurance company who will accept a true transfer of this risk. What we do have available, from either American Intemational Group or European Re, are funding arrangements where these insurers will give an insurance policy with a limit equal to the amount of money you are -
willing to put in their bank account. They do provide a limit larger than the amount of money you give them initially, however, the rationale is that interest earnings on these funds will grow your money up to the limit ofliability they provide by the time a claim.
would have to be paid. - They charge taxes and an administrative loading of from 2 to 4%
to do this, so there annot be viewed as financially attractive arrangements for you. You are far better off to continue to place your money in the t ast arrangement as you are currently doing.
For the the record, the insurers who declined to provide anything are: Liberty Mutual,
- CNA, Zurich, Travelers, Berkshire Hathaway, Centre RE, and Reliance.
I am sorry the insurance market was not able to provide you with a financially desireable solution. Let me know if we can be of any further assistance.
Kind regards, A-c(
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- William B LaFrance, CPCU Senior Vice President DEC 15 $w s Aan Risk Smim. Inc nf Alassachuwm W High Street + Bmenn. Maxhuwers 02110. cel. (6Ih h24100. f.a (6t 7 512 2W
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