ML20199G984

Summary of 971029 Meeting W/Nuclear Energy Inst in Rockville,Md Re Decommissioning Funding Assurance.List of Attendees Encl

ML20199G984
Person / Time
Issue date:	11/18/1997
From:	Stewart Magruder NRC (Affiliation Not Assigned)
To:	Essig T NRC (Affiliation Not Assigned)
References
PROJECT-689 NUDOCS 9711250349
Download: ML20199G984 (7)

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%,,, # November 18, 1997 MEMORANDUM TO: Thomas H. Essig, Acting Chief Generic issues and Environmental Projects Branch Division of Reactor Program Management Office of Nuclear Reactor Regulation FROM: Rtowart L. Magruder, Project Manager W M d. M.

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

SUMMARY

OF OCTOBER 29,1997, MEETING WITH THE NUCLEAR ENERGY INSTITUTE (NEI) REGARDING DECOMMISSIONING FUNDING ASSURANCE On October 29,1997, 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 in allow NEl to present comments on the proposed rule on decommissioning funding assurance, to have joint NEl/NRC discussion of these comments, and for the NRC to provide clarification on various aspects of the proposed rule. The limitiations on the topics for discussion during the meeting imposed by the Federal Advisory Committee Act (FACA) were discussed and agreed upon.

The NEl representatives opened the meeting by thanking the NRC staff for the opportunity to meet with them. The NEl representatives noted that they looked forward to hearing the staff's response to NEl's comments and any clarification regarding various aspects of the proposed rule. The NEl representatives stated that decommissioning is a very important issue from both a financial and a safety standpoint. They noted that Senator Murkowski recently sent a paper to his committee stating his requirements for electric industry restructuring. This paper indicated that financial assurance for decommissioning is very important. The NEl representatives stated that they hoped the NRC would support this view in any legislation that is drafted. They stated that they believe that it is important for the NRC to support important legislation such as this, and there is precedent for the NRC's having done so in the past.

The NEl representatives next stated that one key NEl proposalis the decoupling of the concepts of the funding of decommissioning costs from providing for O&M costs in the context of the definition of ' electric utility" as it exists in the proposed rule.' The NEl representatives ) I

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I The proposed rule 10 CFR 50.2 states that any entity that generates, transmits, or b distributes electricity is considered to be an " electric utility" when it has rates established either 9711250349 971118 * * .* 97 2WV PDR REVQP ER C , .

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T. Essig -2 November 18, 1997 stated that they believe that the NRC needs to provide additional flexibuity in its application of the ' electric utility" definition to reflect changes in the electric power industry (such as allowing for power costs from licensees to be recove ed from certain types of contracts or being part of a must run/must take ISO arrangement), or perhaps the NRC should get away from using the term ' utility

• altogether and have a more generic or umbrella term. NEl does not know what that term should be yet.

The NEl representatives next pointed out that it is likely that a ' distribution company" will be what an ' electric utility" means in the future. They notet ' hat for generating companies (or GENCO's) which own nuclear plants, there will need to be another approach to treatment of their operating costs and decommissioning costs which recognizes that many different methods may be used to provide for these two types of costs. A!so, the decommissioning aspect and the financial qualifications aspect of NRC rulemsking need to be separate. Both should be recognized as being very important. The NEl representatives stated that the issue is to ensure that a revenue stream is available so that a licensee can recover both types of costs. An example would be a GENCO having a long term contract that would recover both. The NEl representatives conceeded that if the GENCO only had a three year contract, it would need to come back to the NRC in three years with another source of funds to be reauthorized.

The NEl representatives stated that their position on the reporting issue is that language in the rule is acceptable. They believe that it is not a problem for the industry to report in general, but there could be some problems since the reports are required to comply with the finallanguage of Financial Accounting Standards Board (FASB) 158-8. " Accounting For Certain Liabilities Related To Closure Or Removal Of Long Lived Assets.' Since FASB 158-B is stillin draft form, it is not clear yet how much of a problem this will be.

The NEl representatives also stated that NEl has some difficulty understanding exactly what measures of adequacy the NRC will require for meeting decommissioning funding assurance tests if a licensee cannot meet the " electric utility" criterion of the NRC. They noted that many electric utilities and merchant nuclear plants cannot meet the criteria established in 10 CFR 50.75 and Appendices A and C to 10 CFR 30 (the six times and ten-times net worth multiples requirement were cited as an exampic.) NEl stated that they have tasked several people with

- evaluating this issue.

The NEl representatives next raised the issue of how the NRC would deal with a merchant plant that does not fall under the umbrella as defined by the NRC. They stated that they through cost-of-service mechanisms or through other non-bypassable charge mechanisms-such as wire charges or non-bypassable customer fees-by a rate-regulating authority so that the rates are sufficient for the licensee to operate, maintain, and decommission its nuclear plant safely. Also, the proposed rule states that if a licensee is under jurisdiction of a rate-regulating authority for only a portion of the licensee's cost of operation, covering only a corresponding portion of the decommissioning costs that are recoverable by rates set by a rate-regulating authority, the licensee will be considered to be an " electric utility

• only for that part of the Commi:.sion's regulations to which those portions of costs pertain.

T. Essig -3 . Nn 18. W believe that there is a need for a more case-by-case review, versus using simple and rather inflexible criteria. While the NRC needs to prescribe as much as feasible, it also needs to be tioxible enough to allow for more complex financial situations than in the rule. Otherwise, there

-may be some forcing of some plants to decommission earlier than necessary. For example, the criterie should not just be that the licensee has to meet test A or test D when, for some licensees, it would be adequate to meet part of A, part of B, part of C, and so forth. The NEl representatives also stated that the NRC should consider allowing a combination of

- mechanisms, which is prohibited under current regulations.

The NEl representatives next stated that they believe that there are other aspects of meeting the financial qualifications tests that should be considered by the staff.- Examples are the use of parent company assets in holding company situations and the ongoing funding of decommissioning even when a company goes bankrupt. They also stated that they believe that ,

the treatment of decommissioning funds in ba%ruptcy situations needs more careful consideration in the rule.

The NEl representatives stated that they would like to meet again with the staff in about two weeks on these issues (mid November). They noted that NEl has a working level task force and an executive level task force looking at the issues and the NEl representatives wanted to talk to the executives before additional discussions with the staff. The staff agreed with NEl's proposal to meet again on this subject.

Project No. 689

Attachment:

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T. Essig believe that there is a need for a more case-by-case review, versus using simple and rather inflexible criteria. While the NRC needs to prescribe as much as feasible, it also needs to be flexible enough to allow for more complex financial situations than in the rule. Otherwise, there may be some forcing of some plants to decommission earlier than necessary. For example, the criteria should not just be that the licensee has to meet test A or test B when, for some licensees, it would be adequate to meet part of A, part of B, part of C, and so forth. The NEl representatives also stated that the NRC should consider allowing combination of mechanisms, which is prohibited under current regulations, r The NEl representatives next s'.ated that they believe that there are other aspects of meeting

!i- the financial qualifications tests that should be considered by the staff. Examples are the use of parent company assets in holding company situations and the ongoing funding of .

. decommissioning even when a company goes bankrupt. They also stated that they believe that >

the treatment of decommissioning funds in bankruptcy situations needs more careful

consideration in the rule, 4-

~* 7 The NEl representatives stated that they would like to meet again with the staff in about two

, = weeks on these issues (mid November). They noted that NEl has a working level task force " '

~, e and an executive level task force looking at the issues and the NEl representatives w.;nted to talk to the executives before additional discussions with the staff. The staff agreed with NEl's

, proposal to meet again on this subject.

Project No. 689

Attachment:

As stated cc w/att: See next page DISTRIBUTION: See attach page OFFICE PM:PGEB (A)SC:PGEB SC.PgdEB NAME SMagruder:swM MCash d FAhuMcz" DATE 11/M/97 11//)/97 tdhh97

NRC/NEl MEETING ON DECOMMISSIONING FUNDING LIST OF ATTENDEES October 29,1997 NAME ORGANIZATJON Richard Meyers NEl Adrian Heymer NEl Alan Nelson NEl Janice Owens NARUC Steve Reckford BGE Celvin Blinder BGE Lisa Decker BGE Fred Valentino PECO Energy Janet Ecker Morgan, Lewis & Bocklus Ray Ng Bechtel Nancy Chapman Bechtel TL Harpster NAESCO Thomas Essig NRC/NRR Robert Wood NRC/NRR Alex McKeigny NRC/NRR Michael Dusaniwskys NRC/NRR Mike Davis NRC/NRR Mike Case NRC/NRR Richard Dudley NRC/NRR Stu Magruder NRC/NRR Brian Richter NRC/RES Raj Auluck NRC/RES Stephen Lewis NRC/OGC Clare DeFino NRC/OCM/SJ Spiros Droggitis NRC/OSP Attachment 1

Nuclear Energy !nstitute Project No. 689 cc: Mr. Ralph Boedle . Ms. Lynnette Hendricks, Director Senior Vice President 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 l 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 s

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

Distribution: Mtg. Summary w/ NEl Re Decommissioning Dated November _18._199L Hard Copy Docket Pfle PUBLIC .

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