ML20211B236

Forwards 970910 Fr Re Proposed Rule, Financial Assurance Requirements for Decommissioning Nuclear Power Reactors. Public Comment Period Ends on 971124

ML20211B236
Person / Time
Issue date:	09/13/1997
From:	Bangart R NRC OFFICE OF STATE PROGRAMS (OSP)
To:	GENERAL
References
FRN-62FR47588 SP-97-066, SP-97-66, NUDOCS 9709250130
Download: ML20211B236 (21)

Text

.

r

_e.

SEP 141997

' STATE LIAISON OFFICERS STATE PUBLIC UTILITY COMMISSIONS FINANCIAL ASSURANCE REQUIREMENTS FOR DECOMMISSIONING NUCLEAR POWER REACTORS - PROPOSED RULE (SP 97-066)

The Nuclear Regulatory Commission is proposing to amend its regulations on financial assurance requirements for the decommissioning of nuclear power plants. The proposed amendments are in response to the potential deregulation of the power generating industry and respond to questions on whether current NRC regulations concerning decommissioning funds and their financial mechanisms will need to be modified. The proposed action would require power reactor licensees to report periodically on the status of their decommissioning funds and on the changes in their external trust agreements. Alto, the-proposed amendment would allow licensees to take credit for the earning on decommissioning trust funds. Enclosed for your information is a copy of the proposed rule as it appeared in the Federal Reaister on September 10,1997. The public comment period ends on November 24,1997.

Original 1ed BlCHARD L Richard L. Bangart, Director Office of State Programs

Enclosure:

As stated i.

l l

i 9709250130 970913 PDR STPRG ESGGEN PDR gg 81 C.-g-gn P"Qy i

du l

s i

q Distribution:

f h ll l DCD (SP03) l DIR RF A/S File PDR (YES.y') (NO_.)

ct,qoo3

, s v....

DOCUMENT NAME: G:\\SCD\\sp97066.S j

To receive a copy of stde document, inshcete in the boa: "C*

>p hithout attachment /enclosge "E' = Copy mth attachment! enclosure "N' = No copy OFFICE

$ ) OSP OS$$A OSP:Qf

e established, nuclear utilities. NEI estimated that financial mechanisms will need to be The ANPR specifically requested about ten years would be necessary to modified. The troposed action would comments on the above amendments bring about restructuring and require power reactor licensees to report and on six areas of consideration for deregulation. A few commenters periodically on the status of their decommissioning: suggested that from five to ten years decommissioning funds and on the

1. The timing and extent of would be sufficient. Two commenters changes in their external trust deregulation of the electric utility pointed to events in States that were agreements. Also,the proposed industry; scheduled to occur as early as 1998 and amendment would allow licensees to

2. Stranded costs; others predicted significant doregula,t,lon take credit for the earning on

3. Financial qualifications and w thin five years or less or " rapidly.

commenters s Rs hat decommissioning trust funds. decommissioning funding assurance for [w n 9gd ke 9,)9 gy DATES: Submit comments by November nuclear power plants: and require a considerabbe time to 24,1997. Comments received after this

4. Decommissioning funding

complete, date will be considered if le is practical assurance for a Federal Government to do so, but the Commission is able to licensee:

A.2 Restructuring or Deregulation assure consideration only for comments 5 The status of decommissioning Scenario received on or before this date. trust funds during the safe storage Phases ofDeregufation. Several ADonEssts: Mall comments to:The period: and commenters stated that an initial phase Secretary of the Commission. U.S.

6. Reporting on the status of of deregulation of the generation ce Nuclear Regulatory Commission, decommissioning funds.

wholesale electricity market his already Washington, DC 20555-0001. Attention: In response, the NRC received 650 begun and is likely to continue. Utilities Rulemekings and Adjudications Staff. comments from 42 commenters, and the are now preparing for deregulation by Deliver comments to: 11555 Rockville commenters have been classified into 4 undertaking cost reductions (e.g., Pike, Rockville, Maryland, between 7:30 groups. The largest group of workforce reductions, contract am and 4:15 pm, Federal workdays. respondents was utilities and utility renegotiations, regulatory asset Examine copies of comments received groups (28 commenters), followed by reductions. operating cost reductions), at: The NRC Public Document Room, public utility commissions and related strategic alliances and mergers, and 2120 L Street NW. (Lower Leve!). organizations (9 commenters). Two expansion into unregulated venues. Five Washington, DC. public interest groups submitted commenters expressed their belief that a 4. Federal Regirer / Vol. 62, No.175 / Wednisday, Sept:mber 10, 1997 / Propond Rul:s 47589 second deregulat,ry phsse would follow e Many, and perhaps all, entirely, regardless of what other States and lead to the restructuring of the transmission systems opassted on a do. transmission sector and to retail State-wide or region widFbasis. An ISO Four commenters feel that States will competition. Ilowever, many will operate the system, coordinating possibly or probably be compelled by cornmer. tars noted that significant energy production and delivery with competitive forces to deregulate, uncertainty exists regarding the breadth, demand and provide a pool based spot particularly if neighboring States do so. timing, and implernentation of the new market price for energy. RPMs or power One of these commenters added that competitive electricity business, market exchanges (PMEs) for States within a geograpi.ic region The pace of deregulation, according to competitive generation will accept bids (where there are no physical barriers to one cc.nmenter, will be set by Federal from all generators that want to electric transmission) are likely to and State regulation. One commenter participate in the market, establish the migrate to a similar industry structure, Stated that compeution would be clearing price, and determine the either as a result of Federal legislation phased in slowly with existing sequence of generator dispatch. Bilateral or market pressures. Two other generation asrets being "kept whole" contracts for the direct purchase of commenters provided examples of through standard regulated rates, power will also be allowed. market or political pressures that could Ultimote Extent of Rote Regulotlon or

• Different treatment for nuclear affect neighboring States' decisions to Dereguladon. Four commenters expect generation than for other types of deregulate.

that electricit prices from generators utility-owned generation. Rven if One commenter stated that some will ultimate be largely deregulated or nuclear generation is permitted to regulators in States that already enjoy unregulated, e commenter stated that compete in an open market, some low-cost electric serdce appear generation of electricity will become regulatory mechanisms may remain in reluctant to endorse competition P ace to ensure that nuclear related because of concerna that indigenous l partially deregulated, but may not be fully deregulated if reliance on market costs (safety, security, waste disposal, utilities will seek to sell power to the forces does not adequately ensure safe decommissioning) are recovered by external market where profit margins and reliable generation supplies, some means other than the market price could be greater. Should market factors of ower.One of these commenters provide an advantage to States that P Nine commenters expect that transmission rates will remain subject to stated that regulated local distribution foster competition (bf allowing Federal Energy ReFulatory Commission companies would end up owning indigenous utilities to gain strength by jurisdiction. Regional power markets nuclear generating plants, acquiring market share) States that endents e Continued economic viability for reslst competition could put their (RPM) and indefdiscusse[ stem operators (ISO) below) would nuclear generation for many years as a utilities at a disadvantage. While State also fall under FERC jurisdiction, result of marginal costs that are quite regulators may elect to defer the according to one commenter. Ten I w, Another commenter argued, decision on competition, economic or h wever, that there is no obvious social pressures could influence that commenters anticipate that distribution (retall) rates are likely to remain subject deregulated market for many or most decision. to State jurisdiction. One of these existing nuclear power plants because of Another commenter indicated that commenters stated that distribution the uncertainty of the costs of States implementing retail competition rates may be regulated under a price cap decommissioning and the disposal of may face the risk that a utility in a high level nuclear wastes. This neighboring State could obtain open or incentive based rlulation. c mmenter stated that neither NRC access without reciprocal access being Retail wheeling an pool. based mismakings nor short term passage of provided to in State uttilties seeking to pricing 8 will rovide market pricing at time will resolve these issues. A third enter the State that does not provide all levels, incfuding the retail level, according to one commenter. Three commenter asserted that competitive competition. commenters believe that retail wheeling Pressures willlead to the early, Three commenters remarked that read' retiremer.t of some nuclear plants, reform may proceed at different speeds will become widesfndicated that. One commenter argued that, given the in different States because oflocal One commenter nuclear power plants and non utility

• ""les under consideration and market and political pressures. One of

" ' "

• under way,it is no longer these commenters recommended that generators even if released from rate credibfe to assume that utilities can NRC accommodate the varied pace to regulation by States or FERC, ma{

always raise rates or otherwise recover avoid hindering or forcinbtransitions. i d to7eral a t n8 whatever costs are needed to safely regarding,nse to the ANP In respo s query uding S ate a Fe d hybrid, systems, one rate and decommission nuclear env;mmnentay ngu;ation. ofants. Another commenter suggested commenter believes that a hybrid p [ou that if the NRC chooses to proceed with system of regulation is likely to emerge S u one c m en er a mlemaking, the rule should as States deal with economic issues in stated that NRC should abandon any accommodate both nuclear units subject a varie of ways. Anotner commenter attempt to anticipate market structure

• to traditional mgulation and nuclear stated at a hvbrid system could exist other commenters suhested that the unha in the competitive markets.

for some time. A third commenter following features mi t characterize "(d roba lye st i the industry subsequent to deregulation A.3 Differences in State Policies and o ay not sult and restructurin implications in the feast expensive electricity. Under

• Furctional bundling which is the Commenters expressed viewpoints on a hybrid system, industry structure may l

. Iv st of generation, transmission. the likely differences in State vary from region to region. Other or on systems. deregulatory efforts and policies. One commenters, however, felt that a hybrid commenter declared that all States will system is unlikely to prevail. They p NrIe'r N 'tomer$y oNrhy. ultimately undergo restructuring and stated that a hybrid may be l iranamts ion system. Poobbesed pricing la e deregulation in some form. Nine operationally cumbersome or even poohns of electrictry produced by vertou, commenters, however, suggested that unworkable because the markets are not s*aastors for raale to consumn some States may rejeci restructuring defined by Pate boundaries and I l i 47590 Faderal Regleter / V:1. 62,- No.175 / Wzdnyday, Septimber 10. 1997 / Proposed Rul!s because the grid is highly integrated and decommissioning costs. Following are potsntial retail strended costs are orders interdependent. One of these viewpuints ty ' al of these comments. of magnitude larger than wholesale c:mmenters also stated that a The probab is high that regulatory stranded costs, a different solution to patchwork or hybrid system may reduce mechanisms wil be developed to this issue for retal' competitiota may the opportunities to market some replace cost recovery procedures ultimately be deemed appropriate. nuclear generation. Three commenters established through " traditional" Where stranded costs may be said they could not predict whether a ' regulatory procedures.These determined to be recoverable,it is hybrid system can exist or how one mechanisms (e.g., wire charges, non-conceivable that those costs will be State's policies will affect its neigbbors. bypassable custom 9r fees, including recovered through some form of non. One caramenter expressed concern securitization, exit foes) may be bypassable " wire" charge, different from current mechanisms,but The commenter further stated that it that deregulation and reduced oversight the probability of recoverability under is not clear how construction costs will at the State level may reduce the these mechanisms is no less than it be treated as State PUCs define policy certainty that out.of. State partial owners would have been under conventional for restructuring. FERC and some State cf nuclear facilities will collect and expend decommissioning funds. regulation. The mechanism chosen, and PUCs already have proceedings under its ass ciated eqaltable allocation of way to determine the amount and Response.The above 4uestions were cost nsponsibility between customers means of stranded cost recovery.There posed for comment so the NRC couId and shareholders, will be determined is also the possibility of Congressional obtalri estimates on the timing of through the inevitable give and take of action. NRC should take a proactive the restructuring process,if one is position with FERC and State regulators dif ere t PPr at a y used

lemented, that potential stranded costs, including in how States would address im[ERC,in Order 888, April 24,1996, those that may be related to specific deregulation. These comments are being effectivel established a brecedent that, decommissioning cost grouped under one response as they all for elect c sales under F C should be recovered by the electric contribute to whether the Commission jurisdiction, there will be full recovery utility as part of their rates. (Several should proceed with a proposed rule of allcosts that were prudently other commenters also su ested that now, While the responses to this set of incurred, based on an expectation of NRC should aggressively bby FERC questions ran the gamut of opinion on serving customers in the future, but and/or PUCs to allow utilities to recover this issue, the comments have not have or may become st anded as a result stranded decommissioning costs.)

ccused the Commission to change its of moving to a competitive market. One PUC does not accept that any position that it must act now to be in a Although the FERC order pertains to source of electrical generation is "non-position to respond tb the upcoming wholesale markets, most believe the competitive" per se, and thus does not changes in the electric utility precedent has been set and the same accept that nuclear plants are non. environment that could affect protection standard will apply to stranded costs competitive because of high of public health and safety, lacreased that result from retail competition. It is construction costs, it is premature, an competition could result in economic reasonable to assume that legislators oversimplification of a complex issue, pressures that affect how licensees and generators will take distinct end a potenHal disincentive to mitigate cddress maintenance and safety in precautlorrs in relation to nuclear costs to label any type of generation nuclear power plant operations, as well generation. Even if nuclear plants are non competitive at this early stage in as the avallebilhy of adequate funds for permitted to compete on the same basis restructuring. Even if nuclear generation decommissioning. The comments as other baseload generation, regulatory is sold at less than current combined received and the NRC staff's mechanisms must be in place to et.sure fixed and variable costs, the market independent review of deregulation that certain costs (safety, security, waste price will probably exceed the variable activities also indicate that NRC power disposal, and plant decommissioning) component, so there will be some reactor licensees ere likely to have are recovered by some means other than recovery of fixed costs. Costs that are sufficient notice of changes in their the market price of power. Piausible not recoverable could be the subject of regulatory regimes so as to be able to mechanisms that regulators could use to Federal or State stranded cost secure necessary financial assurance for recover costs include cornpetition proceedings. Federal and State decommissioning should they no longer, transition charges and non bypassable authorities must inquire whether the qualify, in whole or in part, as electric chargos. One otility fully expects that unit is necessary to the continued safe utilities. (The staff notes that most,if there would be 100 percent recovery of and reliable operation of the not all. PUCs and FERC are addressin8 nuclear s'.randed costs in a restructured interconnected gnd, and if the answer is deco.nmissioning funding assurance in electric industry. yes, a proration of the costs may be their deregulatory initiatives.) Hence, llowever, other commenters necessary among all customer classes these comments reinforce the expressed some uncertainty. Some that benefit from the continued Commission's position that a rule is commenters thought cost recovery was operation of the unit. lf the unit is not necessury and timely, given electric appropriate, but did not address its necessary,it should be removed from utility restructuring and the likelihood. In some case *, commenters service. The individual State deregulation legislation being proposed advocated specific NRC action to commissions will have to decide who or enacted in seseral States and by address the situation. should bear the cost to prematurely shut Congress. One commentar stated it is premature down, as opposed to decommission, an to speculate as to who will ultimately uneconomic plant. B. Stronded Costs bear the responsibility for stranded costs A commenter stated that the treatment Many commenters expressed the view (estimated between $7 and $17 billion accorded stranded investment or costs that regulators are likely to allow in New Jersey alone). While FERC Order may vary from jurisdiction to prudently incurred stranded costs to be 888 addresses this issue for the jurisdiction and few generalizations are recovered in some manner.Many of who!esale market, that decision remains possible.The NRC should not become these commenters felt this was open to legal challenges that may affect embroiled in individual rate particularly true for prudently incurred its finaloutcorae Moreever,because proceedings or debates about particular Federal Register / Vol. 62, No.175 / WIdnesd;y, Sept mber 10, 1997 / Propos:d Rula 47591 cost recovery mechanisms, but should performing nuclear plants and charge, the bonds would be highly rated instead define a clear policy that, from encourage continued maintenance of and would thus reqaire a lower interest a public health and safety perspective, efficiently operated plants, many of the rate than riskier debt. Also, these - licensees must be allowed to maintain questions asked by the ANPR mlght fir.d securitired bonds would not be part of an adequate financial posture to support answers. Timeliness in identifying the utility's capital structure, and so ongoing safe operation and rly performing plants is critical would not reflect the higher cost of decommissioning. The NRC's policy ause while the industry is reforming equity capital. The spread in interest statements hould be a strong statement itself, the ability to affect the inventory cost between highly rated securitized s ofits expectations. NRC should of nuclear plants'is at its highest level. debt and lower rated utill:y capital tha' participats in the NARUC subcommittee Once plants have been evaluated, the includes both debt and equity makes addressing restructuring. NRC should be prepared with a task securitization attractive to many states. Some commenters stated that force to recommend an orderly plan for The NRC believes that securitization has decommissioning obligations are the disposition of those few plants and the potential to provide an acceptable qualitatively different from other operators who will not be recommended method of decommissionin8 unding f stranded costs. FERC has not yet for further operetions. assurance, although other mechanisms adopted a mechanism that provides for A few commenters believed that the that involve non bypassable charges recovery of decommissioning costs, full burden of covering the costs, provide comparable levels of assurance Order 888 provides for recevery of including decommissioning costs, of and should not be excluded frem wholesale stranded costs through the uneconomic nuclear plants should fall consideration by State authorities. " revenues lost" approach. Ilowever, this on utility shareholders rather than As stated in the NRC's " Draft Policy approach only accounts for and allows customers unless there is a compelling Statement on the Restructuring and recovery of fixed costs already incurred case otherwise. Economic Deregulation of the Electric by utilities and does not address costa Response. The Commission does not Utility Industry" September 23,1996 that must be collected in the future. A see a need to modify its position that its. (61 FR 49711):"Notwithstanding the better solution is for the Federal regulations need to be modified at this primary role of economic regulators in - Government to assure the continuing time to address the changing regulatory rate matters, the NRC hss authority recovery of decommissioning costs in situation for power reactor licensees under the Atomic Energy Act of1954, utility rates. through non.bypassAle because of the comments received. ,, amended,(AEA) to take actions that S ecifically, the Commission agrees may affect a licensee's financial fees to bei paid by utility customers P leaving the system, or through other with the commenters who hold the view situation when these actions are surcharges tied to the use of that regulate:s are likely to allow warranted to protect public health and transmission facilities. The NRC should Prudently incurred stranded costs to be safety " The policy also goes on to support cost recovery initiatives and recovered in some manner and do not explain that the NRC will work and help educate State commissions on the see a need to interfere in the financial consult more closely in the future with importance of ensuring continued full regulation of nuclear power plants with the National Association of Regulatory collection of decommissioning costs. respect to the questior of stranded costs. Utility Commissioners (NARUC). FERC, Another cortmenter noted that the Some of the comments,in which actions and the Securities and Exchange best ultimate assurance of the collection were pmposed for the NRC's Commission (SEC) so that the NRC may of the cost of decommissioning is the involvement with respect to stranded express its positions on safety and ability of the plant to operate at costs, were beyond the NRC's sphere of encourage the various regulatory bodies sufficiently low marginal costs to collect regulation. Examples include having the to continue their allowances of ade uate decommissioning costs in gross NRC identify poorly run plants, expenditures for plant safety, Lastl, the margins. The NRC could improve the requiring the plants to be sold and for likelihood of this outcome by (t) the Federal Government to be the proposed reporting requirements o this rulemaking an seen by the NRC as a encouraging the IRS to allow payments Purchaser of last resort and even run the vehicle for the Commission to monitor l P ants has bressed the issue of this potential concern. for decommissioning costs to be 9 ible on$y if th o e ed b a stranded decommissioning costs C. Nuclear Financial Quellfications and regdatory agency an7(a2) strengthenfng elsewhere in this notice. Howertr, the Decommissioning Funding Assurance e utilities

• efforts to recover stranded NRC is aware that stranded costs' C.1 Funding Assurance if Plants Shut th a

costs. As plants are turther depreciated c n n's, !n su cient Down Prematurely and the cost of nonnuclear generation escalates, existing plants will bocome funds to protect public health and Most commenters accepted the safety, must be addressed to ensure that premise of the question, whether costs nIers asserted that in the they are being adequately handled. of a shortfallin decommissioning o m e orn process of identifying well run plants Further, States are considermg a number funding of a prematurel shut down and seeking the sale or closing of the of ptions for assessin8 non bypassable plant could be passed a ong to not well-run plants, the problem of who charges to recover decommissioning ratepayers. This conclusion was based c sts, as well as other stranded costs. In part on past experience and in part should pay for unrecovered costs must be addressed.To the extent that the One such option is "securitization," on a belief that Sta'e PUCs will develop nonsalability is caused by problems which entails financing the recovery of methuis to ensure that oor management, the seller stranded costs through issuance of decommissioning costs are covered. created by ble. If the NRC or another is responsi bonds whose principal and interest Several commenters said that recovery w uld be repaid by an irrevocable, non-from ratepayers or shareholders would agency would undertake a p ram to sodress the problem of poort bypassable charge set by State statute on depend on the plant management's an electric utility's distribution responsibility for the premature C"SI ** Because the income stream shutdown. lf management were deemed ase. Dr.ft Policy siai.m.nt on the 8.structurtas and Economic Deregulation of the Electric Utmty to repay the bonds would be securitized responsible, efforts would be made to j Indutry, to t FR 49711: September 23.1996t by the irrevocable, non bypassable have the shareholders pay for r l 47592 Fcderal Regist:r / Vol. 62 No.175 / W:dntsday S ptImber 10, 1997 / Propossd Rul:s decommissioning: but if the A commenter stated that, contrary to seven commenters interpreted the management were not deemed the planned 40 year operating life of definition strictly and conduded that, if responsible, State PUCs would find nuclear power plants, material and an operator ceases t a satisfy the terms of methods to have the ratepayers provide operating evidence suggests plants' the definition, thepperator is nc longer the funds. Commenters noted that, in opsrating lives are closer to 15-25 years. a " utility." Severe 4 commenters u sed the past, decommissioning costs had Ifence, the plan to recoup almost the same sormula: an opera or been recovered for prematurely closed decommissioning costs of over a 40 year would rease to be a " utility" when it reactors (e g., Dresden 1. Fort St. Vrain, operating life may be unrealistic. ceases to provide service to retail on San Onofre Unit 1, Trojan, Yankee NE! took the position that the source wholesale cus.omers at rates set by-i Rowe). In a transition from full of funds to shut dows. a plant separate regulstory authority. One regulation to full competition, one Prematurely would bo different from commenter supported a clarification of commenter suggested a window to company to company and would have NRC's regulatir ns that would establish allow continued or possibly accelerated to come from other ongoing revenue its continued abt?ity to require the recovery, Another commenter said that streams of the company or from proper accumulaticn of a surcharge might be placed on alternative sources such as transmission decommissioning fus.ds, while two customers. Under competition, recovery or distribution charges, exit fees charged argued that the NRC sLould relax its could be made through other revenue customers leaving the system, or other definition to cover entitMs that purchase streams of the licensee, a non, regulatory charges. NEl also supported electricity and recover the. costs from bypassable fee, or debt or equity of the NRC requirements for financial rates char 8ed customers or i,mm other licensee. Two other coinmentets assurance, such as those currently found revenue guarantees. Another cu,*menter suggested that transmission charges in to CFR 5015. Five commenters argued that NRC should seek additional would be the most likely source of stated that they explicitly adopted the assurance in advance of deregulation. funding. Retained earnings of the utility NE! position. NEI stated the contrary argument, were suggested as a source of funds. &8Pom. The Commission noting that it is not apparent that any Two commenters expected shareholders recognizes the importance of licensee will fall outside the definition to be responsible for roviding decommissioning funding assurance for of" utility"in the near future, even after decommissioning funds in cases of prematurely shutdown plants and restructuring. NEl argued that as long as twlieves that its current case specific a licensee has adequate cost recovery P""" 'h"td *", including one PUC, approach, out!!ned in S 50.82, strikes mechanisms under the authorit[ of Stat Two commenters the best balance between level of or Federal regulations,it shoul conceded that PUCa might not have assurance and cost. The alternative of continue to be considered a utility. lurisdiction to require funding from requiring accelerated funding for all Other commenters argued that even ratepayers. Under such ctrcumstances, plants over a defined period, to cover after deregulation the price charged for one PUC stated, funding of the possibility of premature shutdown electricity will be established by the decommissioning would be greatly at some plants, would be too arbitrary regulatory process or in other ways that dependent on the financial viability of and would lead to wide variations in will mean a nuclear plant will continue the regulated firm. The risk of recovery impacts on licensees. Accelerated to be an " electric utility " One stated would rest squarely on its shareholders

• funding results in the inequitable inter-that the term " electric utility" should be if the shareholders could not pay,the generational problem of the present construed to include all entitles that liability would then transfer to generation paying for the have been authorized by a State PUC, taxpayers. For this reason, the decommissioning costs, while the future FERC, or other governing entity to commenter suggested, decommissioning generation may receive the benefits of recover decommissioning costs from might be naorded special treatment

• future electricity generation without customers. Two commenters expected One commenter argued that the incurring the costs of decommissioning. plants to remain subject to State PUC solution to premature shutdown was for Although the Commission is not jurisdiction, and therefore to satisfy the NRC to require assurance for proposing to expressly require regulatory definition. Another argued decommissioning costs prior to accelerated funding to address that if a portion of a vertically integrated approving reorganizations or license premature shutdowns, to the extent that company is subject to cost recovery transfers. Potential funding shortfalls licensees no longer qualify,in whole or pricing, the definition is satisfied. Two should be addressed, another argued, on in part, as electric utilities, they will, in said that if a plant sets its own rates for a case-by case basis, and might be effect, have to " accelerate" funding by electricity, the definition is satisfied.

cvolded by sale of the nuclear plant to getting "up-front" forms of financial One commenter rejected the NRC's an entity better able to manage it assurance. The staff expects, however, emphasis on an operator's satisfying the effectively. Two others suggested that a that PUCs and FERC will address definition of utihty, and argued that the proper funding mechanism would have decommissioning funding through cost emphasis should be on the financial l to be identified and put into place at recovery mechanisms. The Commission viability of the entity responsible for shutdown, without further specifying is awa4e that some plants have not decommissioning the unlt. what that mechanism could be in the operated for the full 40 years. However, R88Ponse. Consistent with the cptnlon of one of these commenters, it is likely that some plants will position taken in the ANPR. the NRC is such funding could be a difficult continue operating for the full 40 years Proposing to revise its definition of problem because currently, on an and beyond. Therefore, the Commission " electric utility" to introduce adoitional aggregate basis, utilities

• does not beleve any change is required flexibility to address potential impacts l

decommissioning costs are only about for the planned 40-year life. of electric industry deregulation. The l 25 percent funded (about 39 billion out' Commission notes that the key C2 When Does an Operator Cease To component of the revised definition is a i of $35 billion), although plants are at i about 43 percent of their aggregate Be a Utility licenseo's rates being established either service lives. Early underfunding could On the question of when an operator through cost-of service mechanisms or force high back-end funding, making the of a nuclear power plant ceases to be a through other non-bypassable charge plants uncompetitive. " utility" as defined in 10 CFR 50.2, mechanisms, such as wire charges, non. Federal Register / Vcl. 62. No.175 / Wednesday, S ptImber 10, 1997 / Propos:d Rults 47593 bypassable customer fees, including require only an assurance level that (1) identify those nuclear plants securitization or t;xit fees, by a rate. commensurate with the completed that are not likely to survive the regulating authority. Several States are percentage of the operating Ilfe of the imposition of competitive forces (i.e.. considering deregulation of future plant. One commenter opposes advance those plants that are not run efficiently operations of nuclear pcwer plants so funding on the grounds that doing so or that cannot be made to run welli, or that revenues wm not be determined by would incorrectly view all properly (2) develop quantitative measures for cost-of. service but by market set prices, executed reorganizations as resulting in assessing the adequacy of Should a licensee be under the successor operaton being unqualified to decommissioning funds and rates of jurisdiction of a rate-regulating ensure decommissionlog compliance. accrual. New rules, according to one authority for only a portion of the One commenter believes that commenter, should be timed to enable licensee s cost of operation, covering assurance should be provided before utilities to take advantage of stranded only a corresponding portion of the licensees are exposed to the full cost recovery, decommissioning costs that are pressures of competition (3-5 years). Added Assurances for Safe Operation recoversble by rates set by a rate. Two commenters supported the idea of and Decommissioning. Many regulating authority, the licensee will be requiring assurance prior to NRC's commenters voiced opposition to the considered to be an " electric utility" approval of reorganizations that transfer ANPR's query regarding whether the only for that part of the Commission's control of a nuclear plant. NRC should require additional regulations to which those Many commenters favor requiring assurance for adequate funds for safe costs pertain. For exampk,porMns of o a licensee reasonable financial assurance for operation and decommigstoning in were able to collec' '.;, percent of its entities that cease to be rate regulated anticipation of deregulation. One decommissionir.g costs through rate. utilities. Meny of these commenters, commenter argued that additional regulated activities, such as traditional and others, view NRC's current assurances in this area may not add to cost of service regulation or use of non. regulations as basically adequate to or strengthen the obligation already bypassable charges, the remaining 60 address these situations, although the imposed by the terms and conditions of percent of the costs would need to be regulations might expand upon the the license. Others reasoned it accounted for in a manner consistent allowable methods of assurance, with m6thods acceptable for a licensee AdditionalFmoncia/ Assurance unnecessary, given other existing NRC requirements and FERC's framework for other than an electric utility, in this Methods. Additional financial assurance, recovery of stranded costs, including proposed rule,the definitions of several methods suggested include continued relevant terms are also provided for the rate-regulati entit determinations, an.. decommissioning. Only one commenter supported in contracts for ge or decommissioning additional assurance for safe operation appropriate a first time in $ 50.2. lt is noted that some e plant s output or in commenters misinterpreted the intent of the existing definition of" electric the transmission or distribution charges and decommissioning in anticipation of derefnt Liabi}ity. 5 in response to the ulation utility" with respect to entitles that of the licensee or its affiliate if the j, establish rates themselves. As stated in charges are assigned to the licensee or ANPR' rdi l d the proposed definition, those entitles its decommissionidg fund, and exit fees organita Ion oNolding compa$1 s include only public utility districts, charged against customers leavin the municipalities -rural electric system. A few commenters woul being held jointly liable for cooperatives, and State and Federal nclude any insurance for premature decommissioning costs, four agencies. Therefore, the proposed ecommissioning cause by an commenters supported the idea because definition is being pmffered as accident. One commenter would allow of the added assurance it would clarification and to show the contim.ed utilities to establish any method that Provide. Three commenters would importance the NRC places o.. 'he role may be developed, including methods consider te ufring joint liability on a of regulator authorities in tM ' ting of requiring approval of PUCs or FERC. Pro rata bas s, possibly taking into electric utilfties' rates with resN toTwo others would ellow assurance account the remaining years of licensed the collection of funds for through a plan for gradually recovering life. One commenter cautioned that decommissioning and other costs, This decommissioning funds via rates and jointly liable parties may disagree on is consistent with the NRC's draft policy Erices, even for deregulated entitles. decommissioning methods (e.g., rompt statement, utners argued that NRC should offer the vs. deferred) because of the cash ow utilities flexibility and that each implications. C.3 Assurance Options situation should be assessed on a case. Numerous otlier commenters opposed The following topics were discussed by-case basis if and when it occurs. the idea of joint liability, arguing that it by commenters in response to the Timing of Rulemaking. With regard to was unnecessary, would inhibit ANPR's quastions ralating to the options the timing of the rulemaking,a few flexibility, would weaken competitive to be considered if an electric utilPy commenters support prompt NRC Position, or would undermine the found itself opeinting a reactor that was regulatory action to ensure that separate corporate identity or the no longer regulated by a rate-setting adequate financial assurance is in place responsibility of the individual entities. State or Federal body, prior to restructuring, before waiting Some of these commenters suggested Full Up-Front Assurance. Most further to learn exactly how the industry that joint liability could be acceptable if commenters opposed requiring all will develop. Several other commenters, it were an optional mathod of financial nuclear plants to provide full up-front however, bellere that rulemaking is assuranca assurance, often arguing that it ls premature until more is known about One commenter stated that new unnecessary or that it is overly restructuring. Several commenters . owners and operators should have to burdensome to nuclear plant owners. suggested that NRC already has the assume the responsibilities and Many commenters reminded NRC that authority to approve or disapprove any deregulation does not inherently mean a transfer of license related to a merger or 'N Cont'Pt of joint liability is defined in total lack of regulation or a lack of cost reorganization. Two commenters stated

• • • I" F "Y #dl" 0

recovery. One commenter believed NRC that NRC should evaluate the co2bI r'b.Nas.N'.*n'dN'N'NtEt should, at the time of restructuring, regulations only after further studies is, that my be sued joinity. 47594 Feder:1 Regist;r / Vol. 62. No.175 / Wedn:sday, S;ptember 10, 1997 / Propos:d Rules liabilities of the previous owners and alternative decommissioning funding, utility to accommodate types of rate cperators. Another stated that the experience to date indicates that PUCa regulation not previously anticipated, financial assurance obligation should and FERC are addressing There are also sufficient existing options follow the owners and operators, decommissioning costs through various to demonstrate financial assurance for whether regulated or in. regulated, w ho recovery mechanisms. non-electric utilities. Entitles without have incentives to properly manage and The timing of the rulemaking was adequate financial capital may find it operate the units. addressed in the response to comments difficult to both finance up front Impoets. Many commenters claimed in section A of this notice. Any decommissioning funding and operate a that requiring full up-front assurance additional rulemaking in this area nuclear power plant safely. These newly would be overly burdensome to nuclear would result from experience gained formed companies may not be good plant owners Others argued that from industry and regulatory actions. As candidates for nuclest power plant cdditional assurances could inhibit several of the commenters stated, the ownership, competitiveness relative to nonnuclear~ NRC has the authorit to a prove or C 4 - Financial Test Qualifications facilities, impede reorganization, disapprove any trans er of conse cggravate potential stranded investment, related to a merger or reorganization. About half the commenters flatly or create additional problems for Section 184 of the Atomic Energy Act of opposed requiring licensees to utilities, ratepayers, or taxpayers at a 1954, as amended, and 10 CFR 50.80 demonstrate financial assurance by time when competitive forces are provide that control over a license may satisfying minimum standards of net already causing economic concerns. not be transferred, directly or indirectly, worth, cash flow, or other financial Examples of such problems would unless the Commission consents to such measures. Many of the commer*. ors, including include the difficulty for affiliated transfer in writing'do not explicitly NE1 and four commenters who odopted The regulations businesses to raise capital or the need for affiliated entitles to charge more for impose joint liability on co-owners and > the NEl position, argued that such a test its services reducing its competitive co-licensees. As stated by some was not necessary or appropriate. If position in the industry, Some commenters, joint liability may create NRC is concerned about the financial commenters argued thase effects could problems with respect to potential condition of a particular licensee, three reduce the likelihood that disagreement on decommissioning commenters said, an individualized decommissioning will be fully funded methods, the inhibition of flexibility, case by-case review would be more or could increase the likelihood of the weakening of competitive position, appropriate. Some commenters said that premature shutdown, and the difficulty in implementation. financial measures appropriate for Response. The Commission is Also, as some noted, joint liability may investor owned utilities would not be eddressing most of these comments by not be needed.The new owners and useful for cooperatives, or for utilities revising the definition of " electric operators should assume the obligation that do not have parent companies. utility" and by instituting a reporting to safely operate the facility and assure Because generation and transmission requirement. As to the issue of requiring adequate funding for decommissionirg, companies typically are highly full up front funding in advance of as they have the incentives to properly leveraged, with many of their assets in deregulation, the Commisslos. agrees manage and operate the units. More the nuclear generating facility, they with the commenters that such a importantly, however,is the fact that cannot meet a test with a tangible net requirement would be overly with the proposed modified definition worth requirement of ten times the burdensome if applied to alllicensees. of " electric utility," restructured entitles current decommissioning costs, but this flowever, given the proposed change to would either have to have adequate does not mean that they cannot satisfy the definition of " electric utility" in this coverage of decommissioning funding their financial obligations. A non. cetion, any licensee no longer overseen obligations through some non. bypassable charge was suggested as an by a rate. setting regulatory authority, bypassable cost recovery mechanism or attemative, i e., a licensee other than an electric would be required to provide the types Some commenters suggested that NRC utility, would need to comply with the of up front assurance described in should adopt more than one alternative decommissioning funding assurance $ 50.75(e)(2). Those licensees who test, none of which would be sequirements of $ 50.75(e)(2) unless that remain utilities would have the funding mandatory, Any alternative adopted licensee can otherwise conclusively assurance provided through being rate-should be consistent among owners, and demonstrate a govemment-mandated, regulated under $ 50.75(e)(3). The should not discriminate against one guaranteed revenue stream for all Commission considers this level of class of owners, and should not be unfunded decommissioning obligations. assurance to be adequate and therefore applied as a static one-time The options contained in that section sees no need to impose an additional requirement. Other suggestions include prepayment; an extemal sinking regulatory obligation of joint liability on -included a requirement that a firm fund coupled with a surety method or. co-owners or co-licensees, demonstrate that it had " ample margins, insurance for any unfunded balance; or Lastly, with respect to the question of subsequent to restructuring' to cover a surety method, insurance, or other impacts, the Commission has funding contributions or to cover guarantee method. considered the comments relating to decommissioning costs in the event of a The Commission emphasizes that the potentialimpacts in aniving at the premature shutdown. Another suggested changes to the definition of " electric positions taken. The Commission disclosure standards, developed through utility" introduce additional flexibility understands that financial assurance - the Financist Accounting Standards to address deregulatory developments. would place a burden on licensees that Board, for use in annual reports and Thus, the NRC would expect licensees may affect their competitiveness in a to-K filings,ihat would be reviewed by to be more likely to continue to qualify, deregulated environment The Federal regulators. Still anather argued in whole or in part, as electric utilities Commission has chosen to take an that measures of market value and cash under the revised definition. Although approach that would create no flow, rather than net worth, were licensees who no longer qualify,in additional financial impact over present appropriate in a competitive whole or in part, as electric utilities regulations for electric utilities and has environment, and that the ratio of could encounter difficulties in securing also expanded the definition of electric available cash and cash equivalents to Feder:1 Register / Vcl. 62. No.175 / Wedn:sday, Srptsmber 10, 1997 / Proposed Ruhs 47595 unfunded decommissioning C.5 PUC/FERC Certification had allowed recovery and expected requirements would be the best measure Only two commenters Rave them to act in the future in the same of ability to support decommissioning. un ulvocal su ort to the idea of way, but could not be certain that they along with an assessment af the utility's req ring PUC/kRC certification. Onewould issue certifications. Another PUC competitive situation. Determining encouraged NRC to undertake direct stated that it already hac and would whether a utility had minimum cash dialogue on certifications with the maintain authority to ensure that flow sufficient to maintain its plants in appropriate PUCs and FERC: the other ut' ties collect sufficient funds for a non. operating, interim stage prior to stated that PUCs and FERC must de:ommissioning. One commenter - decommissioning, and the eriod of undertake such certifications and that pointed out that FERC has jurisdiction ress upon them the only over rates for wholesale sales of time the utility could susta n such cash NRC should im!oing so. A few PUCs,in P, ", g',jn 8 flows, was suggested by one commenter. Importance of s a recomd One commenter t uggested using a the opinion of this commenter, such as through rates for retail ower sales, over financial test as an i $dicator, from California and New York. had already which PUCs have juriskiction. Relying which a Federal agency could determine recognir.ed the need to provide this that the utility needed assurance of assurance during restructuring. Two on Stat 4 regulators would be continued rate recovery of the other commenters expressed optimism particuh.rly problemat% 1r multi. State utilities. Another commenter stated that t a u sw" decommissioning obligation. g d! be within five years the issue would become moot and ce tification would Only two commenters endorsed a test the transition to competibon. with or of financial siatillity as a financial test without certification, but one went on to becomo impractica ocause of quellfication. One pointed to assets say that certification would robabl be competition and evolving antitrust law, unnecessary.Of these, six a opted t e hut sufficient to fund an immealate he er ad c uld decommissionin, or a minimum level NEl position, which was that without certif[d concentrate Instad on the, but in an of financial stabi ity (measured through new Federallegislation it would be shou investment grade securities) or difficult to require legally binding ~ licensees. Another corftmenter noted insurance, or a surety to cover certification from PUCE or FERC. decommissioning costs as three Requiring a licensee to obtain such that since a significant portion of potentially acceptable mechanisms.The, certification would place it in nuclear licensees' business are not FERC. regulated. FERC certification other approved of parent or self-noncompliance, with no way of would have no relevance to them. guarantees, but noted that generators achieving compliance. If a licensee did One commet.ter suggested procedures with nuclear facilities might have obtein certification, however, NEl through which NRC could interact with difficulty meeting the financial test suggested that it be allowed te satisfy State PUCs and FERC: the NRC could criteria, including the investment grade the financial assurance requirements determine that a utility's rate of bond isting requirement. ,stng that mechanism. recovery for decommissioning was Response. With the proposed revision Two commenters opposed to insufficient, and that determination of the definition of" electric utility " certification argued that it would be could be the basis of an action by a PUC licensees who no longer meet the new c unter Productive because the utility to modify the rates. w uld have no incentive to maintain definition will need to comply with the The final set of commenters argued requirements of $ 50.75(e)(2), which adequate decommissioning funds. that the question of certification was NARUC and several PUCs either one that the PUCs and FERC should describes the acceptable methods of opposed the idea or exfARUC noted first ressed stron8 determine reservations about it. f Response.The Commission does not om isst nin8 or licensee other that no current commission can bind a htate PUC's or FERC because of thelan to than an electric utility. These methods future commission at either the Federal are flexible and contain at least four or State level. However, NARUC was reasons given in many of the comments rnalor categories of acceptable methods confident that State PUCa would outlined above. Although " certification" to ensure funding foi decommissioning as identified in the previous response. examine the causes of undorfundinia,. If initially appeared to the NRC to be an It occurred, and seek remedies. A PUC option meriting further consideration. Few commenters offered insights on stated that it might not have the sinco ex other potential test qualifications, authority to certify that nuclear plant that PUberience to date has indica and FERC are addressing although several stated that the (~.incial licensees under its jurisdiction would decommissioning funding assurance structure of utihties means that meeting be allowed to collect decommissionin8 through more viable mechanisms, the the criteria in to CFR Part 30 could be funds through rates after restructurin8 NRC is not pursuing this option further. problematic. The GRC would need to and another PUC similarly stated that it conduct additional research and could not give a blanket guarantee that C.6 Impact of Accelerated Funding analyst, to determine which additional all licensees would be allowed to collect only a small number of commenters financial measures would be most revenues to complete decommissioning supported the idea of accelerating useful and appropriate if a financial test funding. A third PUC stated that no funding of dacommissioning costs. Two requirement for parent or self. guarantee current commission could legally bind a expressed general support. Two were pursued. Criteria could be future commission, so it could not provided quantitative analyses that identified and thresholds developed, identify an effective form of suggested that the impact of accelerated but evolution of the industry might certification. Another PUC also funding would not create a large m.an that the criteria would become expressed doubt about how certification financial burden on either licensees or outdated and misleading relatively would change current procedures,in ratepayers. The Public Utility quickly. llence, the Commission will which PUCa can adjust rates based on Commission of Texas reported analysis continue to evaluate this issue, but is the cause for and the prudence of the for thrt iTexas plants that suggested nct presentiy oliering any changes to its underfunding4 different PUC noted that, for a ten year recovery period, financiaNt criteria, that, in the past, ratemaking authorities electric base rates would need to be I 47596 - Federal Register / Vol. 62 NO,175 / Wednesday, Septrmber 10, 1997 / Propos:d Rules i increased by about 0.5 percent and the to be collected through accelerated probability that future cost estimates fund eamings would be increased by funding. could decrease rather than increase tbout 50 pert.ent. For a five-year Response.The Commission continues because of several factors, including recovery period, rates would increase by to be concerned with the availability occumulated industry experience, about 1 percent: total life-of facility and efficacy of financial assurance application of new technologies, and contributions by customers would be mechanisms for decommissioning for reductions in the ultimate disposal decreased by about 55 percent. In those licensees whose rate regulatory volumes of decommissioning wastes. addition to argutaents that the burden oversight by FERC or the State PUC's is They also suggested that periodic re-would not be great, another argument substantially reduced or eliminated. estimates of decommissioning costs and made in support of accelerated funding Under the NRC's current regulations adjustments to the rate of collection to was that, eflor funding was completed, (and as proposed to be modified in this reflect these re-estimates, both during the licenwee who had paid up their rule), licensees who no longer meet the operation and in the post operation decommissioning funds would be in a definition of " electric utility" may use phase, could resolve the problem. better competitive position, financial assurance mechanisms for Several other commenters Commanters also argued that earnings decommissioning as defined in to CFR emphasized solutions that involved ast from the accelerated funding, because 50.75(e)(2), including (11 Prepaymentt estimates. One PUC suggested that the they would have a longer

• time to earn (ii) an external sinking fund coupled NRC should allow utilities to use State-interest, would grow substantially and with a surety methad or insurance;(iii) required facility specific cost ostimrtes provide a gain to the licensees that they a surety method, insurance, or other if they were higher than NRC estimates, would not otherwise obtain, guarantee method, including parent Two others suggested that NRC should Licensees both supporting and company guarantees and self guarantees review cost estimates every five years, epposing accelerated fundhag noted that coupled with financial tests; and (iv), in with more frequent reviews as license unless the Internal Revenue Service the case of Federal, State, or local termination approaches. The Utility changed its rule on the deductibility of licenseos, a statement ofintent.

Decommissioning Group predicted that payments into the decoramissioning The Commission is concerned that shortfalls would be unlikely to arise t ust fund, the accelerated payments these financial assurance mechanisms suddealy or to be drastic. Two utilities would not be deductible.The NRC was may not be available to'some licensees also suggested that periodic reviews of urged to encourage the IRS to change and is thus asking for additional scat estimatas, coupled with increased the rule, comment on alternative methods of collections as necessary, would remedy Almost three quartars of the financial assurance that would provide underfunding. Two other commenters commenters opposed accelerated assurance equivalent to that aheady made only the general statement that funding of decommissioning. Their provided under the Commission's current procedures would be adequate, arguments against the idea stressed (1) ' regulations. For examp' le, in the advance and any shortfalls should be handled that it would adversely impact the notice of proposed rulemaking, the through appropriate funding competitive situation of nuclear Commission raised the issue of whether mechanisms. licensees and (2) that it would be requiring the acceleration of Some commenters mcognized that the inequitable because the amount that decommissionir)g funding over a shorter problem of underfunding arising after each plant would have to supply in an period of time (e.g., to years) than the the safe storage pedod could be serious, accelerated payment would depend on period of the operating license would une public interest group did not the age of the plant and the amount it provide an equivalent level of assurance suggest any remedy, stating only that had previously paid in the its to current allowed mechanisms. As NRC could be virtually certain that the decommissioning fund. The financial discussed above, most commenters funds accumulated for marketplace, rather than regulation, stated their opposition to accelerated de ommissioning would be insufficient, should determine the speed with which decommissionlng funding. Ilowever, A utility suggested that the only fundingis provided. Accelerated this opposition appeared to be solution would be to delay funding,in the view of some predicated on the assumption that the decommissioning activities to allow the commenters, could not be accomplished NRC wculd require accelerated funding decommissioning fund to accumulate through rate increases and would have for all power reactor licensees, and not additional earnings and to modify the to be paid by licensees' stockholders. only those who no longer met the decommissioning P ans to reduce cash l One commenter argued that utility definition of " electric utility." Thus, the flow needs. Another suggestion was that shareholders should bear the burden of Commission is asking for additional NRC could require every licensee to decommissioning costs, but would not comments on whether this, or some adopt an investment strategy that would do so under accelerated funding. Other other equivalent assurance mechanism, ensure that the decommissioning fund commenters argued that accelerated should receive additional consideration earned at least the rate ofinflation funding would shift the costs of in this rulemaking for those entitles measured by the consumer price index decommissioning onto current which would not be classified as (CPI), and that NRC could require the ratepayers from future ratepayers. " electric utilities.a utility to place additional money into Commenters believed accelerated the fund if necessary. C.7 Potential Shortfalls From Several commenters recommended funding would lead to cash flow Underestimates of Costs approaches to the probLm that involved problems for licensees and could result in increased borrowing to cover cash Commenters suggested a range of PUCs. Two subgested that underfunding outlays. Accelerated funding could lead responses to decommissioning shortfalls would be remediea by application to the to the shutdown of marginal facilities, occurring as many as 50 years into the PUC. One suggested such PUC which would be contrary to the intent future, after a period of safe storago, involvement would occur after the cf the policy and lead to additional None, however, clearly identified a shortfall was identified, the other shortfalls of decommissioning funding. source of funding to make up the suggested that PUCs would take One commenter argued that the amount shortfall. potential shortfalls into account prior to cf decommissioning funding that will NFJ and eight additional commenters utility restructuring and that the ultimately be required is too uncertain argued that there is a reasonable shortfall would not occur until after Feder:1 Regiter / Vol. 62, No.175 / Pedn:sday, Septzmber 10, 1997 / Pruposed Rulis 47597 several years of competition. This licensees to submit their current would be interested in supponing the commenter suggested that a wires financial assurance mechanisms for, financial obligations of its competitors. charge could be used to ensure that such NRC review, revision as necessary, and A cross-subsidy of this sort, one said, shortfalls did not occur. Three approval. The Commission reserves the was what deregulation was being commenters said that NRC should right to take the following steps in order undertaken to eliminate. Participation interveno with State PUCs to ensure that to assure a licensee's' adequate also might be effected by the policies of shortfalls do not occur, either accumulation of decommissioning individual State PUCs. Premium setting immediately or when tho underfunding f.mds: review, as needed, the rate of would be difficult because of the was recognized. A few commenters occumulation of decommissioning posCbility that utilities that had been argued that the causes ce the shortfall funds: and either independently or in prepared to pay their decommissioning should be identified.1: the plant's cooperation with either the FERC and costs would be reluctant to subsidize management was terpnsible, the the State PUC's, take ad iltional actions utilities that had not, and because additional decommissioning costs as appropriate on a case-by-case basis, premiums, to provide sufficient should be recovered from stockholders. including modification of a licensee's coverage, might need to be large. The NRC could require additional schedule for accumulation of Pool could face the problem of contributions if the invested decommissioning funds, motivating'therwise not be economic toutilit decommissioning funds are insufficient. It would o C8 Captive Insurance Pool do so, or motivating State PUCs to Alternatively,if the utility management is not responsible, customers should The idea of setung up a captive dir. allow the recovery of bear the additional cost. Ilowever, as insurance pool to pay unfunded . decommissioning costs through rates in one PUC acted, underestimates that are decommissioning costs did not obtain reliance on the pool. Some utilities not identilad until far into the future strong support. A few commenters might underestimate their could becon e a social problern. If the endorsed it, with qualifications. One decommissioning costs, to keep their underestimat e is not identifiel until said that,in fact, the mechanism would premiums low. A pool would increase after the plant is removed from service, more nearly msemble a mutual costs of electricity because,in addition no ratepayerv. will be required to insurance pool, and listed a number of to decommissioning costs, insurance provioe add,tional funding. If the factors, fr.cluding the size of premiums, premiums would need to be recovernd, companpdll exists and is solvent, when deregulation occurred Federal Finally, one aerious decommissionag sharehr.ders may be held

mtable, mandates, the ability to recover costs, shortfall might deplete the pool. '

but only to the point of I cy, and the attitude of participants, that Other commenters stated flatly that Gross undere*timates co ry well would determine success. Several they opposed the concept. Several said bankrupt the.ompany and place a commenters respcnded that if such a that it raised the problem ofinsuring significant bsrden on regulators and pool could be developed,it would be a against an event that a facility could legislators to step in to fund completion useful or constructive mechanism. cntose to create (the moral hazard of the decommissioning. NEI and six commenters taking the nroblem). An insurance pool would None of the commenters same position expressed doubts about create, at the least, an incentive for less recommended increasing contingency the usefulness of such a pool, but responsible ut!!ities to underfund their factors to provide for potential shortfalls suggested that the industry should decommissioning assurance, burdening far in the future. Several argued that examine it. They argued that in additio-responsible utilities with high insurance contingency factors are intended to to an insurance pool, NRC should also Premiums. Some commenters argued address " unforeseeable cost elements" consider sp*oroving self-insurance es an that licensees demonstrating strong or that contingencies are inappropriate option. financial capability should not be for some other reason. The size of such Almost half the commenters required to participate. Reinsurau e and contingencies would be too arbitrary. In expressed strong doubts about the diversification to larger pools wou d addition, some State PUCs would not insurance concept. No auch product make better policy,in the view of one apply larger contingencies, particularly currently exists, and insuring against commenter, since the current cost estimates already shortfalls in funding a known and Response, The Commission i untain a significant contingency factor. planned event would be a novel recognizes the problems associated with Finally, on, commenter argued that concept, open to problems of adverse the concept of a captive insurance pool larger contingencies would lead to over-selection and moral hazard.* Some as identified by the above commentors, collection and distortion of prices for commenters said it would be difficult to and believes that they are serious electricity Seven commenters loined underwrite, and wondered whether in a enough to eliminate this option from NEl in taking a position against the use competitive environment one company further consideration. The Commission of contingencies to address the problem is also of the opintor. that those in favor of potent..d shortfalls occurring far in .-if the tu of the insurable eveni varies b.tw n of this option do not offer sufficient the future. .no.1 bu en. trih buy r know their risk i.vei evidence that the identified problems Response.The Commission sees its ner than tim insunr. and il the coverise is not can be overcome. proposed reporting requirement as a 'nand '7 **n th' **"' r*k8 *iH t'nd to buy the way to keep informed of licensees * """"*""" ^' ' "Sul' ** l S8 *xPerience will C.9 Other Options for NRC in Case of decommissioning funding status and !"cr I*thN*s' ira'UMv',5*"N.*n0,'ind Limited Role for PUC or FERC potential unde estimates of cost, the process can cycle on itself until only the worst Commenters suggested a wide variety rt*k8 * l*ft " This P

• nom of financial easurance options for NRC h

flowever, the Commission has -

• d','"* "M "$ p'*j,*,g'non 18 known **$enn(n c,s.

to consider if PUC or FERC oversight is l undertaken a study to analyze the actual ae ,n i l costs incurred by the power reactor control. once a laa has occurred. and th. limited or eliminated. One utility licensees that are in the process of intentional destruction of property. u.s. Nucl.ar suggested that financial assurance l decommissioning, and the Commission Resulatory comrni ion. -o..i n. costs, and requirements should be focused on the l will act accordingly after studying those ^"((*bj,',Y,yk' h.Yd$u$y7r Unds,7 financial viability of the responsible results. Further, the Commission has the Noci, pow., pi.n, p.commi,*'onins Expense /. entity. Other utilities suggested, as authority to require power reactor NUMUCR-nfo. December 1981. nonregulatory adowings, self guarantees i l 47 6 Federal Reglater / Vol. 62, No.175 / Wednesday Sept:mber 10, 1997 / Proposed Rul:s or other tuts of financial strength such strength of the utility,the size of the D. Federal Government flcensee Use of as owr.ership of other revenue-remaining unfunded obligation, the age Statement offntent producing assets (e.g., electricity of the plant, and other factors as may t>e Slightly fewer than half of the transmission and/or distribution and/or appropriate to the specific situation. commenters (20 commenters) expressed naturalpsoperations). Another Another believes NRC could retain an opinion on this question. Almost all rekvant factor could be whether the control through licensing constraints commenters took the position that licensee has insurance for premature and financial evaluations made when Federal licensees should be treated in de6vmmissioning caused by an NRC approves transfers of assets and the same way as non Federal licensees. accident;One commenter stated its licenses-NEI argued that regardless of who owns cpposition to the use of surety bends A number of utilities commented that the plant, a number of options for andinsurance because of coat and NRC need not identify all options financial assurance should be allowed, !!mited availability-immediately, but could ultimately and the current opdons should continue Two utility commenters suggested authorize a number of alternative to be permitted. One commenter stated that regulatory approaches include approaches, either based on to CFR clearly that because Federal licensees mandated or allowed stranded cost 50.75 or on options that have not yet were expected to face the same recovery through a charge or, been ecognized. A PUC commenter problems as other licensees, they should distribution or transmission or some asked NRC to work collaboradvely with be required to set aside funds rather othat charge on all electdc power or States to explore, as necessary, than rely on statements of intent. energy sales, regulatory certification that alternative financial assurance Several commenters pointed out that such costs willbe recovered, and other mechanisms in the event that privately different treatment for Federal licensees arrangements involving regulatory owned nuclear generators are na longer could create competitive advantages for control such as priarity dispatch for regulated. the Federallicensees. NRC should cuclear units. Another comrnenter One commenter s sted that NRC's ensure that the playing field remained su ested that NRC could request FERC support for exisung walobli ations level. One licensee argued that if a t) c arify Order No. 888 to make certain to pwvide a national nuclear fu financial assurance option, such as a that comprudve access Mn repository would also contribute to the criteria,it should be available for use by statement of intent, meets NRC's transmission chtrges intended t financial assurance of responsible recover stranded costs also includz a c d lui ni Anoth'. all licennees. Others took the position loed.proportionete comribuJon to fund {j l1dfor f al au nce to b, that the statement ofintent should not n decommissioning costs. Another mandated at the Federallevel, and a 1,e allowed, because it does not provide commenter stated that NRC and FERC third said NRC should consider whether any assurance. Its use by Federal cost legislation tgress to adopt stran,a should urge Con DOE responsibility can 'oe developed for licensees means that the taxpayers are at will ensure recovery of decommissioning costs as the most providing solutions to Providing the anurance. One licensee decommissioning-questioned the long-term financial pruderst solution. The commuter condition of the Tennessee Valley specifically advoct'en a whos charge Four commenters said no other Authority (TVA). One commenter tnat would include decommissioning opdons were necessary. They reasoned argued that use of tax exempt bonds

costs, that current options are sufficient provides a similar competitive One commenter asked NRC to irres Ive of PUC or FERC oversight, advantage to those licensees who can consider its actions in the event that a regu atory oversight is unlikely to be issue them licensee enters into bankruptcy. In such curtailed, and FASB standards and Only TVA took the position that a case,the NRC couH enter the competitive pressures will provide ample reasons exist for continuing the proceeding anel argue that full fundin3 sufficient assurance, use of statements of intent as provided for decommiutoning must be fulfilled Response. The Commission believe s under the current regulations. However, as the first priority, The commenter also that additional consideration of TVA also provided an extended esked NRC to consider proposing accelerated decommissioning funding or description of the steps it has taken to legislation that would amend the other alternative financial assurance use an external trust,"all requirements" Bankruptcy Code to give first priority to mechanisms may be warranted, as contracts, and its power to issue nuclear decommissioning costs, as the discussed in f ts response at C.6. In indebtedness to ensure its Supreme Court h. already held for addition,it should be pointe <i out that decommissioning costs.

hazardous waste cleanup costs. the Commission enters bankruptcy Response. The NRC's Office of the NEI and several other commenters proceedings to protect the integrity of Inspector General published an Audit raised the possibility that NRC could the decommissioning funding, as Report, "NRC's Decommissioning rely on the Financial Accounting suggested by a commenter. Also,the Financial Assurance Requirements for Standards Board s (FASB) financial Commission is proposing use of the Federal Licensees May Not be s disclosuns for information in assessing FASB standard as a means for the Sufficient," OIC/95A-20, dated April 3, the nature, timing, and extent of the reporting decommissioning obligations. 1996. The report found that company's commitment ofits future - Further, the Commission believes that "* *

• NRC's decision to allow Federal

. nsources, the proposed change to the definition of licensees to use a statement of should evaluate each utility, iter, NRCa particular address all conungencies wbunto to According to one commer " electric utility" will be ad intent ** *

• was based primarily on respect to the assumption that the Federal situation on a case-by case basis to -

financial assurance for Government would pay the financial detennine the degree of assurance decommissioning under deregulation. obligations of the lone Federal needed depending on the financial Further, the proposed reporting licensee, * *

• should it be unable to requirement wilt provide the NRC with do so. However, based on our review of e m rinanciat icountins tandarda noard is a the opportunity to be informed on the the U.S. Code and discussions with s

private body that establishes authoritative Anancial eaounung and reporuns standards in the united status of liceusees' financial assurance officials from the Department of the smu. for decommissioning. Treasury, the Office of Management and 4 r Feder:1 Register / Vol. 62, No.175 / Wedntsday, Srptrmber 10, 1997 / Propos:d Rults 47599 Budget and TVA, we believe NRC's

• The period before safe storage, in a qualified or nonquallfled trust.

assumption is questionable." The report when funds are accumulated Another commenter suggested that also found "* *

• that, although not

• The decommissioning period, when plant specific annualized rates could be required. TVA has established a fund funds flow out of the trusts; and justified based on historical data, dedicated to meet its decommissioning

• Both the accumulation and outflow Considerable judgment will be needed obligations, flowever, because this is an peribds.

to develop the rate, argued one utility internal fund it can be used for other Three commenters expressed the grc.up, but no mure judgment than is OP nion that States.hould decide needed in developing decommissioning i purposes. In fact TVA had at one time temporarily depleted its whether or not to allow credit for cost estimates. decommissicning fund." Projected earnings. Three commenters suggested that The majority of those who One group of commenters understood NRC use long-term, historical rates for that NRC's ANPR considered a net the asset cllocation employed, adjusted colnmented were opposed to allowing the TVA's use of a statement ofintent' Positive rate of return when assesaing by the long term, historical inflation their reason basically being that all the status of decommissioning funding

rate, licensees should have the same level during a SAFSTOR period, and not that Six commenters stated that NRC a licensee would be allowed to consider should not specify a sink e allowable l

laying field. The Commission,. prospectively during the license term rate of return, but shoul define the ele $ nation the possibliity of a not pesitive rate of basis on which licenseca may select an esae en ofin ent - option for a Federallicensee can be return over some extended period repriate positive real rate, following shutdown and prior to actual apfour commenters expressed the view justified on a public health and safety decommissioning. These commenters that States should decide the rate, and basis. The Commission believes that the felt that it would be largely irrelevant to a fifth commenter thought either States risk of a Federallicensee not being able start considering positive earnings or FERC should decide the rate, Another to fund iis decommissioning expenses is during a SAFSTOR period because, by commenter thought the rate should be remote, as the Commission is proposing the time of termination of operations, determined by an (unidentified) to define a " Federal licensee

• as having the full faith and credit backing of the licensees should have already

" acceptable third party " Federal Government. The Commission accumulated sufficient funds to pay for Qne commenter suggested an after tax considers the issue of whether TVA decommissioning. rate of 3 percent as reasonable and Another commenter disagreed with eqhievable with acceptable levelt of qualifies for the use of a statement of the position that excludes the benefit of investment risk (e.g.,50 percent equity, intent to be distinguishable from the future tax deductions (i.e., in "non. 50 parcent fixed income). Another r4uestion of whether other " Federal qualified" trust accounts)in commenter proposed a rate of 3 percent hcensees" should have this option. determining the adequacy of a licecsee's because that rate is the historical real Further, the Commission does not decommissioning funding program return on Treasury bonds. One believe it to bein the public interest to because the deductions will have value commenter felt NRC should float the foreclose the possibility of a future licensee with the full faith and credit for those who assume the responsibility values based on contemporary 30-year for decommissioning. Treasuries. backing of the Federal Government Response. The Commissinn is Two commenters opposed the use of using a statement of intent Hence, the proposing to allow credit for eurnings a positive rate assumption for earnings Commission does not propose to and believes that its existing imolicit during extended safe storage, arguing eliminate the statement ofintent as an assumption of a zero rate of retdrn is too that earnings assumptions could be option for Federal licensees, but realizes conservative and not bome out by the manipulated and that earnings could that this pA no longer being able to meet data. The Commission is proposing otherwise act as a hedge against roposed definition may result in the T\\ licensees may take credit using a 2 increases in th cost of NRC's definition of "Foderal licenseo." percent real rate of return from the time decommissioning. E. Trust Fund Eornings Creditfor of the funds' collection through the Response. Based on the NRC review Extended Safe Stomge Period decommissioning period. As stated of historical data, real (i.e., inflation below, this proposed action providos adjusted, after tax) rates of retum using Two commenters opposed credits for licensees relief from current U.S.Troasury issues have been on the earnings during extended safe storage-requirements with no adverse impact on order of 2 percent. Therefore, the arguing that earnings assumptions could public health and safety, licensees, or Commission proposes to use a 2 percent be manipulated and that eamings could NRC resources, and the proposed real rate of return throughout the otherwise act as a hedge agalnst increases in the cost of reporting requirements would allow the decommissioning collection period as o licensees

• decommissioning funds to be default eamings amount and in the safe decommissioning. Seventeen monitored by the Commission, storage period as a specified amount.

commenters, however, supported The NRC acknowledges that the allowing credit for earnings on funds E.1 Real Kate of Return historical data is subject to some degree during extended storage periods. Some Five commenters took the position ofinterpretation, and that a 3 percent of these commenters argued that if that NRC should not specify a single real rate may be viewed by some as a credits for earnings are not allowed, allowable rate of return, but should "reasonabis" measure for this more funds than necessary would be allow licensees to take credit for any parameter. While some may propose use collected, thereby generating rate they can justify given their specific of higher values based on other types of unwarranted expense for licensees and situation. Some of these commenters investments, the Commission believes customers and possibly supported their positions by stating that the proposed value represents as close intergenerationalinequities. licensees employ different investment to a " risk free" return as possible and An additional eight commenters strategies depending on factors such as has increased confidence that the 2 supported allowing earnings credits, not the number of plants, when they expect percent value can be consistently only for the extended safe storage to begin decommissioning. applicable achieved. Higher earnings amounts will period, but also for other periods: State taxes, and whether the funds are be allowed during the period of reactor 4 47600 Feder;l Regist:r / Vol. 62. No.17S / Wrdnesday, September 10, 1997 / Proposed Rules operation if specifically approved by a the NRC is requiring the funding, it is should assume oversight of rate. setting authority. To the extsat that reasonable for the NRC to p: ovide for a decommissioning funds, eamings in a given year prove to be positive rate of return on the collected Response. The Ccmmission is greater than 2 percent, the balance of the funds, whore justified. Further, the NRC proposing that a periodic reporting Jund will be greater than anticipated. is proposing a longer period in which requirement be implemented so that the Licensees may take this higher balant.e credit should be allowed for eamings Commission has appropriate assurance into account in calculating subsequent because the justification for allowing a that licensees are collecting their contributions to their sinking funds. positive rate of retum over the safe required decommissioning funds. The This means the size of subuquent storage period also holds for allowlag benefits of obtaining this information contributions will decrease, even credit from the time of fund collection through a reporting requirement,in though these subsequent contributions through the decommissioning period. terms of both determining licensee will still be based on a 2 percent Agala, the proposed reporting compliance with NRC decommissioning semings assumption. If rates turn out to requirement provides the PRC with the funding regulations and respor ding to be lower than this, to CFR 50.82 already ability to monitor license 6 Congressional and other requests, provides that licensees are to adjust decommissioning funds. Lastly, this outweigh the minimalimpact of the decommissioning funds during safe proposed action provides licensees requirement and would be less storage to reflect changes in cost relief from current requirements with no burdensome to licen.ees and the NRC estimates. Thus, there is little risk that adverse impact on public health and than relying on the existing NRC there will be malor shortfalls in safety, licensees, or NRC resources. inspection process. decommissioning funds. Further, the F. Reporting on the Stotus of F.1 Contents proposed reporting quirements will Decommissioning Funds Three commenters atsted that a ow the licensees ecommissioning reporting requiraments would be funds to be monitored by the Many commenters supported a unobjectionable if they were minimal Commission, reporting requirement in light of and limited to material of the nature E.2 Appropriate Time period {onyms boutd historically provided to State regulators omm a ionin RC r in other financial reports. Similarly, Twelve commenters exprmsed the should require relatively com rehensive others stated that NRC should rely on view that credit for projected earnings reports because NRC's author y extends the same inf emati n as will be required should be allowed over the full length beyond that of FERC and the States, and by the pmpose l FASD statement of the extended safe storage period. An tmcause TERC and the States do not regarding accounting forattain additional eight commenters also always require uniform information to liabilities related to closuo or removal thought credit should be allowed for be submitted at regular intervals. Ont ofI ng-lived assets. Five commenters earnings projected over additional commenter stated that an NRC agreed with the NLt that te orts should periods: regulatory amendment is needed even tm kept as simple as possib. One e The period before safe storage, in the absence of deregulation to correct c mmenter stated that comprehensive when funds are accumulated.

• The decommissioning period, when the flawed a,ssumption that PUCa and reports should be prepared for each ERC acme y monhor facility, integrating infctreation for all funds flow out of the trusts.

d "ds e Both the accumulation and outflow l $ i "i E cwners.Thus,if a facility has multiple iU and FERC co or sta owners, one consolidated report would periods. monitoring efforts are, in most cases, be prepared with separate data for each Two more would allow commensutste credit for a period with limited in scope and usy take place owner attached. On the other hand, one site-specific schedules for funding and infrequently (i.e. when a rate case is commenter argued that reports thould filedl. Each PUC is enerall concerned be based on the licensee's interest in the decommissioning. Another commenter noted that cc ader.ble judgment would uly almut its juris lctima ponlon of nuclear unit and not on a total unit be needed to determine the appropriate the decommissioning funds, and FERC's basis, time period, but no more than would be jurisdiction is limited to only the One group of commenters stated that i needed tn develop the decommhsloning wholesale ponion of a company's sales. NRC could make the annual reports cost estimate. Four commenters, all Moreover, many States do not have from plant operators available to the PUCs or PUC groups, felt NRC should jurisdiction over municipal snd public, which would be cor.sistent with leave the issue of the length of the CMPerative agencies, some of which are the availability of information required period to the States, owners or partial owners of nuclear roposed FASB standards. under [C stated that New Jersey's I Only two commenters suggested that plants. Therefore, the NRC may be the 3 pg ~ credit be limited to a fixed number of only regulating a8ency that can provide reporting rules may be adequate for years. One of these suggested to years, an effective and timely monitoring NRC's purposes. The other proposed a maximum of 20 function for all the funds required for Suggested contents for the reports years, and a minimum of 5 years. decommissioning. included 50 items under the lollowing Two commenters opposed the use of Three commenters opposed a general headings: Decommissioning positive earnings assumptions during reporting requirement as unnecessary. Costs and Activities, Contributions, any period, arguing that earnings while two others believed such a Trust Status and Activity,Other assumptions could be manipulated and requirement was premature and could FinancialInformation, and several ~ that earnings could otherwise act as a conflict with or be duplicative of Miscellaneous items. hedge against increases in the cost of information that may be required by Response. The Come.ission is in the forthcoming FASL standards. Two process of issuing a d' aft regulatory decommissioning. commenters stated that NRC guide on this propored requirement Response. The Commission proposes to allow licensees to take credit for requirements should not duplicate which would endo na FASB draft r arnings on external sinking funds from requirements of States or FASB. Lastly, standard No.158-B," Accounting for the time of the funds' collection through a commenter stated that if PUC Certain Liabilities Related to Closure or the decommissioning period. Because oversight is limited or eliminated NRC Removal of Long lJved Assets."The ^ Fderal Register / Vol. 62, No.175 / Wedn:sday, SeptImb:r 10, 1997 / Propcmd Rults 47601 NRC is endorsing this draft FASD events (e.g., merger, acquisitten, One commenter stated that the stanoard as a means of providing financial deterioration). This commenter requirements for subsccounts should be gulthnce for licensees to comply with also suggested that limited or negative walved. Their position is that licensees those portions t.f the NRC's regulations growth of the fund in a given year due that have contributed monies to a single regarding a licensee's reporting on the to overall market conditions should not trust fund for multiple status of its decommissioning funding. automatically trigger adjustments to decommissioning related purposes be Licensaes would comply with the FASB funding levels but rather that a 3 to 5-required simply to demonstrate to the standard once it becomes final in order year time frame shc.ild be used. NRC that there are or will be sufficient to remain consistent with generally Response. The Commission is assets in the trust fund,in the aggregate, accepted accounting principles. The proposing that every licensee submit its to pay for the NRC defined NRC believes that the FASB standard initial report on the piatus of decommissioning cost of the nuclear would,if adopted, provide the required decommlssioning funds to the NRC unit and for any other information, flowever, because of the within 9 months after the effective date decommissioning related purposes ambigully in the FAsil standard with of this rule, and at least once every 2 ' identified in the trust agreement. respect to whether the required years thereafter. Annual submission is Re8Ponse. The Comm'ssion is not concerned with the aetails of how a information will be reported or, a per-not being proposed as an option because unit basis, the NRC has defined its the NRC believes it can adequately licensee keeps accounts for reporting requirement to include such review licensee financial assurance decommissioning as long as a licensee per unit information. The NRC has status for decommissioning biennially is able to demonstrate, on a per unit basis, the amount of funds identified reviewed the proposed contents of the while reducing licensee reporting reports on decommissioning funds to burden. However, the licensee (s) of any and available for the required,hus, th ensure that the needs of the agency are plant that is within 5 years ofits decommissioning pu oses,'t planned end of o erstion would be Commission accepts e commenter s balanced versus the time constraints of the licensees in assembling the reports. required to submft its report annually.Position in general, although it notes The Commission is also proposing to that there is no current requirement, re:iuire that any modifications ta a G. Comments ori Topics Not Specificolly only guidance, relating to the use of licensee's external trust agreement also Rolsedin the ANPA subaccounts. A conmenter stated that NRC should be reported. . h Cl d ked b undertake as a priority task the Commenters suggested several actions "#I identification of nuclear plants that do specificall in t e NPR First,a commenter stated that NRC should n t perform well. For plants with Several commenters stated that licersees should report on the stattis of Performance problems, NRC should take decommissioning funds on an amiual re9utre sites to be decommissioned to aggressive steps to ergbade the fi Id" I h basis. Others believed reports should be,,Q utdelin s' Perator to sell the tant to another p 8 required no more frequently than operator at a price at recognizes its annually. NEI stated that NRC should e5Pon he om ss i" g ,, 9 ce d nsko$ market value or to terminate the license. t1 n not require licensees to report on the in some cases, particularly when plants status of their decommissioning funds f the reactor facility is removed to a were financed with bond indcatures or any more frequently than every 3 to 5 level acceptable to the NRC, there is no other instruments that limit the owner's years. NEl noted that SEC rules and longer a health and safety concem ability to sell the plant or impose pro osed FASB standards require preventing the NRC license from heing conditions on such sales, these utilfties to disclose the terminated. restrictions would need to be identified decommissioning costs in financial A commenter suggested the in the process ofidentifying well-run statements. Imposition of a mandatory insurance plants?Further, the commenter states Two commenters suggested reporting requirement for licenses to cover fund that if the p' mt does not produce a at 5 year intervals. One of these shortfalls at the time of premature price acceptable to the operator, the suggested that interim status reports decommissioning in States where Federal Govemment will offer a price could be required on an annual basis, accelerated collection from ratepayers that will provide the operator with some One commenter stated that NRC and intergenerational subsidies are not fraction of the purchase price and take should require no more frequent

allowed, over control and ownership, including reporting boyond FASB requirements.

Responra.The Commission does not any decommissioning fees that have Another commenter stated that reports agree with the commenter on the need been collected. The Federal Government should be no less frequent than for mandatory insurance. As stated in would restart any plant it believes can specified by the Securities and the response to comments on Stranded continue as a source of power and will Exchange Act of1934. Costs, Section B, the previously decommission the others from public One commenter suggested that NRC referenced " Draft Policy Statement on

funds, consider more frequent reporting for the Restructuring and Economic Responselhe Commission does not plants approaching the end of Deregulation of the Electric Utility see its position as one to force a licensee commercial operation and for plants Industry" stated that the NRC has the to sellits plant. While the NRC does experiencing operating problems. One authority "to take actions that may aggressively attempt to identify poorly commenter stated that the timing of affect a licensee's financial situation performing plants through such required reports should parallel that of when these actions are warranted to processes as the " Watch List," the other reports such as FERC Form 1, SEC protect public health and safety." The decision as to whether another entity l_

10-K, and annual financial reports. Commission believes that there are should become the operator of a facility l Similarly, two commenters felt that enough alternatives available to address is for the cwners of that facility to make. annual reports should be caused by NRC the potential problems caused by Although the NRC would have to by September 30 of the following year, premature decommissioning so that approve any transfer of control over any i Two commenters stated that interim mandatory insurance would not be power plant license under Section 184 reports could be reqziewd for significant required. of the Atomic Energy Act t.nd 10 CFR .a 4 = n s 47602 Federal Register / Vol. 62 No.175 / Wedntsday. Siptzmber 10, 1997 / Propos:d Rules 50 80, the NRC is reluctant to become is proposing this rulemaking now, The would be able to identify a!! the involved in the business dedslon-Commission wishes to prepare for a.ty potential types of licensees to which it making processes of the hcensees on new types of nuclear power generating will be exposed. Therefore, new and such matters. As to the 6RC taking over licensees resulting from the States' unique restructuring proposals will poorly performing plsw,the Atomic actions. liowever, the Commission is necessarily involve ad hoc reviews by Energy Act confers "tskeover" authority well aware that this proposed the !EC. Further, the Comtnission will on the NRC only to extremely limited rulemaking may ncibe the last action exerclas direct oversight of such revieves circumstances. SuSection 108 of the for it to undertake in this area. to maintain consistent NRC policy Atomic Energy Act (42 U.S.C. 2138) One commenter stated that the toward new entitles. In addition to the limiting such nacrity to circumstances Corrmissloa should support revisions to proposed definition revisions, the where "* *

• tV Congress declares that Internal Revenue Code Section 468A Commission is proposing two other a state of war us national emergency regarding deductibility for contributions modifications. The first is to reqaire exists' ' *,"

to an external fund. power reactor licensees to periodically A commenter stated that the NRC Response, The commenter does not report on the status of their shouM develop a reliable, sound make a suggestion as to what should be decommissioning funds and changes to done in this rulemaking. Rather, the their external trust agreements. Second, estirnate (or method of estimating)ld suggestion goes to questions regarding the Commission is proposing to ellow decommissioning costs, and shou updve the estimates on a regular basis consideration of whether any changes to licensees to take credit for the earnings to incorporete technological and other the U.S. Code are needed to sddress on decommissioning trust funds. The ch nges. decommissioning financial assurance, Commission does not see the need to Response. The Commission is in particular sny changes to the Bank-take acdons proposed by some planning to revise its estimates of ruptcy Code. This matter will be commenters that would, in its view, decommissioning costs after it obtains addreaed separately by the NRC as part strain licensees unnecessarily, because actual plant specific data from ongoin8 of its input to en inter agency (eview of licensees' competing needs. decommissioning projects, process for the developmex on Another commenter stated that NRC proposed legislation. Section By Section Description of shot.!d sponsor tecimical conferences Lastly, a commenter stated that the Changes on decommissioning so the pacciof NRC should hold all licensees to the 10 CFh Port 50 t6chnological resolutions for cleaning same high standard for assurance of up and decommissioning plants couM decommission.ng funds predously, the Section 50.2 is amended to revise the be incressed. NRC had cae s'andard for non+tility definition of" electric utility"in Response. While the prvposed action licensees and a much more lenient response to deregulation of the electric is not a suggested rulemaking, the standard for rate reguhted utilities. NRC generating industry. The section also is Commission is taking the suggestion must establish str% and thorough amended by the insertion of definit!cns under consideration. However, the standards for the collection, investment, of previously undefined terms that aid Commission is aware of a number of segregation, and reporting of in the understanding of the NRC's deregulation and decommissicning decommissioning smds and those - rulemaking position. Further," Federal conferences that have been held or are standards must apply to all licensees, licensee" is defined, so that the being planned. including thone tuat hrve unditionally characteristics of a licensee that may A commenter stated that the NRC bean considered res" plated Wihties. make use of a statement ofintent as a should ask separately about other Response. The Cc:amission posi'.lon mechanism to satisfy financial financial issues because chan8es to the is that it is not necessary to impose any assurance requirements for definition of " ele-tric utility" could additional decommissioning funding decommissioning is clarified. Sections have irrplications in cortexts uther than requirements on those entities that meet 50.43,50.54,50.63,50.73, and 50.75 are decommissioning, such as general the proposed definition of " electric amended to replace the term "licenaos" financial qualifications reviews for utility.' However, as apiained above, or a similar term depending on the initial licensing and related license the Commission believes that those context for the term " electric utility" to amendments, from which utilities are entities that rc longer meet the be consistent with the proposed changes now exempted, proposed definition should be required to 10 CFR 50 2. Response. While the Commission is to meet the more " strict" standards. The Section 50.43 is amended so States not presently asking questions on other Commission also believes that most are added to regulator; agencies as finmcialissues,it is attempting to power reactor licensees would be these entitles to which the Commission address the concems by proposing allowed to fund decommissioning costs will give notice of application for a class revisions to Part 50 to be consistent with through non-bypassable charges. 103 license for a commercial power the proposed change in the definition of To summarize, the Commission's generation facility. "electr?.c utility " underlying philosophy of financial section 50.54(w)is amended by A commenter stated that NRC should assurance for decommissioning is requiring that power reactors, as delay action as the Texas PUC has unchanged. Basically, those licensees opposed to electric utilities, obtain initiated three regulatory investigation that remain " electric utilities" by the insurance in the manner prescribed, projects focusing on the rest ucturing Commission's revised definition should Section 50.63 is amended so that and partial deregulation of the electric follow the same financial assurance licensees, as opposed to the onginally industry in that State. Further, the State regulations as before. However, the used term utilities, are required to

• has not developed a formal policy on Cammission believes that this proposed provide specific reaterial for NRC many of the issues set torth in the rulemaking provides for adequate review relating to reactor core and ANPR.

protection in the face of a changing associated systems. Response. it is because of the number environment that was not envisioned Section 50.73 is armnded to refer to and variety of State actions being when the existing rule was originally " licensee" rather that. " utility" proposed in the areas of deregulation written. Further, with deregulation, the personnel in stating the information and restructuring that the Commission Commission does not believe that it required to be reported regarding 1 Fe teral Register / Vol. 62, No.175 / Wednesday, Sept:mber 10, 1997 / Proposid Rules 47603 personnel errors related to matters " Return to FedWorld" option f om the amendments would allow licensees to requiring a Licen*ee Event Report. Section 50.75 is amended in three ' NRC Online Main Menu. Ilowever,if take credit for the caming on you access NRC at FedWorld by using decommissioning trust funds. paragraphs to include the definitional. NRC's toll free number, you will have These propued changes could have change in the reporting and full access to all NRC systems, but you the following effects on nuclear power recordkeeping for decommissioning - will not have access to the main reactor licensees:(1) Potentially planning. FedWorld system. requiring licensees who have been Section 50.75 also is amended to if you contact Fed % orld using Telnet, " deregulated" to secure allow licensees to take 2 percent credit you will see the NRC area and menus, decommissionini; financial assurance on earnings for prepaid trust funds and lncluding the Rules Menu. Although instruments that provide full current external sinking funds, to Institute a you will be able to download coverage of pro}ected decommissioning reporting requirement for licensees on documents and leave messages, you Cll costs, l2) limiting the types of licensus the status of their decommissioning not be abte to write comments or upload that can qualify for the use of funding and o changes to licensees' files (comments). If you contact Statements ofIntent to satisfy external trust agreements. FedWorld using FTP, all files can be decommissioning financial assuranu ElectronicAccess accessed end downinaded but uploads requirements (3) requiring periodic are not allowed; all you will see is a list reporting on the status of their Comments may be submitted of files without descriptions (normal accamulation of decommissioning electronically,in either ASCII text or Gopher look). An index file listing all hmds, thus leading to the potential for Wordperfect format (version 5.1 or files with!u a subdirector later), by calling thc NRC Electronic descriptions,is available.y, with the NRC to require some remedial action There is a 15 If the licensee a actions are inadequate, Bulletin Board (DBS) on FedWorld. The minute time limit for FTP access, and (4) permitting licensees to assume bu!!etin board may be accessed using a Although FedWorld also can be a real rote of return of two percent per personal computer, a modem, and one accessed through the World W;de Weh annum, or such other rate as is of,the commonly available like FTP that mode only providw

• sa permitted by a Public Utility rommunications software packages, or for downloading files and does ;wt Commission or the Federal Energy directly via Internet. Background display th6 INRC Rules Menu.

Regulatory Commission, on their documents on the advance notice of You may also access the NRC's accumulated funds. These actions are of proposed rulemaking are also evallable, interactive rulemaking web site through the type focused upon finacial as practical, for downloadine and the NRC home page (http:// assurances and mechanisms to assure viewing on the bulimin board, www.ntc. gov). This site rovides the funding for decommissioning and are If using a personal computer and same access as the Fed orld bulletin not actions that would have any effect mcdem, the NRC rulemaking subsystem board, including the facility to upload upon the human environment. Neither on FedWorld can be accessed directly coinments as files (any format)if your this action nor the alternatives by dialing the toll free number 1-(800) web browser supports that function. considered in the Regulatory Analysis 303-9672. Communication software For more information on NRC bulletin supporting the proposed rule would parameters should be set as follows: boards call Mr. Arthur Davis, Systems lead to any increase in the effect on the parity to none, data bits to 8, and stop Integration and Development Branch, environmerit of the deconmissionin8 bits to 1 (N,8,1). Using ANSI or VT-100 NRC, Washington, DC 20555, telephone activities considered in the final rule terminal emulation, the NRC (301) 415-5780; e-mail AXD3@nrc. gov. published on June 27,1988 (53 FR rulema:dng subsystem can then be For information about the interactive 24018), as analyzed in the Final Generic accessed by selecting the " Rules Menu" rulen.aking site, contact Ms. Carol EnvironmentalImpact Statement on option from the"NRC Main Menu." Gallagher,(301) 415-6215: e mail Decommissioning of Nuclear Facilities Users will find the "FedWorld Online CAG@nic. gov. (NUREG-0586, August 1988).s User's Guides" particular1 helpful. NRCs data bases Finding ofNo Sigru.f. cant Promulgation of these rule changes Manf ave a "ubsystems an also Help /information Center" Environmentallmpoct: Awilobility would not introduce any impacts on the environment not previously considered option that is tailored to the par'icular The NRC is proposing to amend its by the NRC. Therefore, the' Commission subsystem. regulations on financial assurance has determined, under the National The NRC subsystem on FedWorld can requirements for the decommissioning Environmental Policy Act of 1969, as also be accessed by a direct dial phone of nuclear power plants. The proposed amended, and the Commission's number for the main FedWorld BBS, amendments are in response to the regulations in subpart A of 10 CFR Part (703) 321-3339, or by using Telnet via likelihood of deregulatlon of the power 51, that this rule,if adopted, would not Internet: fedworld gov, if using (703) generating industry and resulting be a major Federal action significantly 321-3339 to contact FedWorld, the NRC questions on whether current NRC affecting the quality of the human subsystem will be accessed from the regulations concerning environment and, therefore, an main FedWorld menu by selecting the decommissioning funds and their environmental impact statement is not " Regulatory, Government financial mechanisms will need to be. required. No other agencias or persons Administration and State Systems," modified. The proposed action would were contacted in reaching this then selecting " Regulatory Information revise the definition of" electric utility" Mall." At that point, a menu will be contained in 10 CFR 50.2, would add a

• Copies of NUREG-osaa are available for displayed that has an option "U.S.

definition of " Federal licensee" to in*P*ction or CDPyins for a fee from the NRC Pubhc Nuclear Regulatory Commission"that address the issue of which licensees y,Wl,y,7,*,[2[20ssEoDeIphone t will take you to the NRC Online main may use statenents ofintent, and would tao 2) su-32n. fu (202) e34-3343 copies may be menu. The NRC Online area also can be require power reactor licensees to report purchased at curreni rates from th. u.s. accessed directly by typing "/go nrc" at periodically on the status of their Government Prinuns Office. P.O. Dos 3?o892. a FedWorld command line if you access decommissioning funds and on the "*["8M,2 2 ejate hk*hindr )u'2n ~ NRC from FedWorld's main menu, you changes in their external trust service by minns ms at s285 Pon Royal Road, may return to FedWorld by selecting the agreements. Also, the proposed sgins eld. VA 221st. n a, -1 .a-- 47604 Federal Register / Vol. 62. No.175 / Wedarsday Sept:mber 10, 1997 / Propc:ed Rults determination, and the NRC staff is not displays a currently valid OMB control definitions; add new reporting aware of any other documents related to number. requirements pertaining to the use of consideration of whether there would be PMPayment and external sinking funds; Replatory Anolpis any environmentalimpacts of the impose new reporting requirements for proposed action. The foregoing The Commission has prepared a draft power reactor tiennsees on the status of constitutes the environmental regulatory analysis on this proposed decommissioning funding that specify assessment and finding of no significant regulation. The analysis examines the the timing and contents of such reports; impact for this proposed rule, costs and benefits of the altematives and permit power reactor licensees to 0 d Paperwork Behction Act Statement han'bys si $v l$e forYn'spe$ tion f;[, t a 2,p ru t $de 9 his proposed rule amends in the NRC Public Document Room' decommissionin from the time the information collection requirements that 2120 L Street NW. (Lower Level), funds are set asi e through 6 end of are subject to the Paperwork Reduction Washington, DC. Single copies of the the decommissioning period. These Act of 1995 (44 U.S.C. 3501 et s analysis may be obtained from Brian J. This rule has been submitted ton..), Richter, Office of Nuclear Regulatory Proposed actions are necessary to e Office of Management and Budget for Research, U.S. Nuclear Regulatory ensure that nuclear power reactou review and approval of the information Commission. Washington, DC 20555-Provide for adequate protection of the collection requirements. 0001, telephone (301) 415-6221, e-mail health and safety of the public in the information colbection is estimated toilho public re orting burden for this b)r@nagn face of a changing mimnment not The Commission requests public envisioned when the reactor everage a hours per response, including comment on the draft analysis, decommissibning funding regulations the time for reviewing instructions, Comments on the draft analysis may be were promulgated. submitted to the NRC as indicated Although some of the changes nearching existing data sources, gathering and me.ntaining the data under the ADDRESSES beading. proposed to the regulations are needed, and completing and reviewing Regulatory flexibility Certification reporting requirements, which are not* the informatiou collection. The U.S. covered by the backfit rule, other na d ce w o Nuclest Ragulatory Commission is y gy; g 9g 9 9 oO (b)) elements in the proposad changes could seekin ublic comn.ent on the be considered backfits because they as amended by the Small Business collections contained in the 1,roposed Regulatory Enforcement Fairness Act of would modify or clarify procedures potent a impact of the information with respect to (1) acceptable 104-121 (March 29' s decommissioning funding options 1996, Public Law rule and on the following issues: 1996), the Commission i:ertifies that thi

1. Is the proposed laformation collection rule will not,if promulgated, have a under various scenarios,(2) what necessary for the proper performance of the si ificant economic impact on a licensees may use statements of intent, functions of the P.RC, tncluding whether the su stantial number of small entitles, and (3) permitted credit for real rates of This proposed rule affects only the return on funds set aside for e es i a e o en acc te.

3. Is there a way to enhance the quality,

!! censing, operation, and decommissioning. The NRC has utility, ard clarity of the information to be decommissioning of nuclear power determined to treat this action as an collectedt plants. The companies that own these adequate protection backfit, because the

4. How can the burden of the information plants do not fall in the scope of the action is necessary for the NRC to collection tu entmized. including the use of definition of "small entities" set forth in maintain assurance of adequate funding automated collection techniquest the NRC's size standards (10 CFR 2.810). for power plant decommissioning, Send comments on any aspect of this Backfit Anolysis particularly in the face of the proposed information collection, uncertainties associated with electric including suggestions for reducing the The nlmlatory analysis for the utility restructuring and deregulation.

burden, to the Infonnation and Records Pmposed rule also constitutes the Accordingly, these proposed changes to documentation for the evaluation of Management Branch (T-6 F33), U.S. the regulations are required to satisfy to Nuclear Regulatory Commission, backfit requirements, and r.o separate CFR 50.109(a)(5) and a full backfit a s is ot red pursuant to 10 fnte efin d n 0 R 501 b fl et ic nic a BJS10NRC. GOV; and to the Desk rule applies to Officer Office ofInformation and

• *

• modification of or addition to List of Subjects in 10 CFR Part $4 Regulatory Affairs.NEO!1-10202, systems, structures, compe ients, or design of (3150-0011), Office of Management and a facility; or the design approval of Antitrust, Classified information.

Budget, Washington, DC 20503. manufacturing license for a facility: or the Criminal penalties Fire protection, procedures or organization required to Intergovernmental relations, Nuclear Comments to OMB on the informati< n design, construct. or operate a facility; an[ of power plants and reactors, Radiation collections or on the above issues which may result imm a new or amende ymtection, Rcedor slting eriteria. should be submitted by October 10, revision in the Commission rules or the d8 Porting and recordkeeping 1997. Comments received after this date mposition of a regulatory staff position will be considered if it is practical to do interpreting the Commission rules that is , requirements. 80, but assurance of consideration either new or different from a previously For the reasons set out in the cannot be given to comments received sPplicable staff position * * *: preamble and under the authority of the after this date. The proposed amendments to NRC's Atomic Energy Act of 1954, as amended, Public Protection Notifwation mquimments for the financial assurance the Energy Reorganization Act of 1974, of decommissioning of nuclear power as amended, and 5 U.S.C. 553, the NRC The NRC may not conduct or sponsor, plants would revise the definition of is proposing to adopt the following and a person is not required to respond electric utility," define " Federal amendments to 10 CFR Part 50. to, an informathn collection unless it licensee," and add several associated Federal Itegister / Vol. 62. Ns.175 / Wednesday, September 10, 1997 / Proposed Rul< 605 PART 90-00MESTIC LICENSING OF "siectric udlity" only for that portion of equivalent amount of prot tion PRODUCTION AND UTIL11ATl0N the costs that are collected in this covering the licensee's obilgation,in the FACILITitt manner. public utillt districts, event of an accident at the licensee's

1. The authority citation for part 50 municipalities, rural lectric reactor, to stabillre and decontaminate continues to read as follows:

cooperatives, and State and Federal the reactor and tha reactor station site at agencies, including associatlous of any wh!ch the ruebr experiencing the Aether 4ey becs. 102,103.104,105, tot, of the foregoing,that stablish their own accident is located, provided that: 182.1as, s ee, t es. 6a stat. eso, est, est, rates are included within the meaning of 4 + + + + Ms. Mi,954. 966,956, u amended, ec. 234. 83 5 tat.1244. u nn. ended (42 U.S C electdc utility."

6. In $ $0.63, are aph (s)(2)is e

2132,2133, flat,2138,!!01,2212,2233, revised to read i owet 2238. 2239. 2282h tota. 201, as atoonded, fedem/llcenseeIneans an NRC H MrM rmnt PM. 202,200, a8 Stat.1242. as amended,1244, licensee that has the full fel andc' adit 1246142 U.S C $841,6842,6848). backing of the United States Gedion 60.7 also luued under Pub. L 96-Government.

2) The reactor core and associated a01, sec.10. 92 Stat. 2981 (42 U.S.C 68Sil.

coolant, control, and protection systems, section 60 to slaa luu d under pcs.101, Non. ponohle chorges means thJoe including station Satteries and any other 188. 68 stat. 955 u amendsd (42 U.S.C st at. 2235). sec.102, Pub. L 91 190,83 Stat. 853 charge mposed b a governmental necessary ort systems, must provide su at capacit and (42 U.S.C 4332) Sections 60.13,anj authority which a ed persons or capability to ensure that t ne cora is 1 60.64(dd), and 60,103 eleo lseued under sec. endtles are utred to pay to cover cooled and appro riste containment 108. 68 Stat. 839, as amended (43 U.S.C costs asaccist with operation

• integrit is maint ined in the event of a 2138). Sortions 60.23,60 39,60 66, and 60.66 maintenance, and decommissioning of a stadon lockout for the e eclfled also issued under uc.18b, te Stat. 958 (42 nuclear power lant. Affected IndIVIdu8 8 h 8 0088 U b duradon. The capability or coping with adia a is ue nder 102 ub.

a station blat Lout of specified duration 9" ' 8 L 91-100,83 $ tat. 863 (42 U.S.C 4332). utaWs el[mepedod. shall be determined by an appropriate Sections 60.34 and 60.64 also issued undet co ing anal sis. !Jcensees are expected Dec. 204. tf Stat. 4249 (42 U.S.C 6844). to ave the sellnb assumptions, hertions 6048. 60 91, and 60.93 also leeued

3. In i 60.43, paragnph (a)is revised anel ses, and related Informadon used under Pub. L 97-415, to Stat. 2013 (42 to toad as followst U.6 C 2139). Section 60.78 also luued under in 11 tr coping evaluations available for sec.132,68 $let. 939 (43 U.S.C 2182).

$ W.as Additional etenderde and NRC review

• Sections 60.80-60.81 also luued under sec.

provielene sneeWag eiens 108 licenses for 1a4. 68 6 tat. 954, as amended 14I U.S C sommerotel power. f, in $ 50.73, paragraph 22:4). Appendt F also luued under sec. [b)(2)(il)(J)(2)(lv)is revised to read as ter, os Stet. 956 (42 U.S.C 2237). (a) The Commission will give riotice ICIIDW8:

2. In i 60.2 the definition of Elerfric in writing of each application to such

$ H.73 uoensee event mpo,e system. Utility, is reviabd and the definitions of regulatory agency or State as may have ^ost of serrkw trgulaflon. Federal . urisdiction over the rates and services * .:ensee, and Non bypassable charycs acident to the osed activit ; will

4)...

g)... a e added in alphabetical order to read put.llsh notice o e a iplicatio in such r (u) * *

• as follows; trade or news publicat ons as it Jeems g)...

480.2 Defintoona. appropriate la give teasonable notice to i )* municipalltles, private utillues, public 1./v) The type of personnelinvolved bodies, and cooperatives which might (i.e., contractor personnel, licensed Cost of service regulation means the have a potentialinterest in such operator, nonlicensed operator, other traditional system of rate reguladon in utilizatlon or production facility; and 11 'ensee personnel.) which u rate regulatory authority allows will publish notice of the applicadon an electric utility to charge its customer

• once each week for 4 consecutive weeks e

e all reasonsble and prudent costs of in the Federal R leter, No license will

7. In 6 50.75, paroF ha (a), (b),(d),

(e)(1)(1), (e)(1)(ll), and )(3) introductory prvviding chictricity serview, including be issued b the mmission prior to text are revised and agraphs (0(1), a return on the investment required to the iving o such notices and until 4 after the last publication in the (2), and (3) are rede gnated as provide such services. w Federal Regleter-paragraph (0(2), (3), and (4) and a new graph (0(1)is added to read as Electric utility means any entity that i e e ow,. genstates, tratumits, or distributes

4. In $ 50.54, the introducto text of electricity and that recovers the cost of agraph (w)is revised to res as 6 60.75 Reporting and C T.g for this electricity through rates established lows:

decommisoloning pionning. by a regulatory authority, such that the (a) This section establishes rates are sufficient for the licenses to $ D0.54 Condesions of licenses. requirements for indicating to NRC how operate, maintain, and decommission its reasonable assurance will be provided nuclear plant safely. Rates must be (w) Each power reactor licensee under that funds will be available for established b a regulatory authority this part for a production or utilizadon decommissioning. For power reactor either directl through traditional cost facillty of the type described in licensees it consists of a step wise of service regulation or Indirec0y $$ $0.21(b) or 50.22 shall tske precedure as provided in paragraphs (b), through another non.bypassable charge rt,asonable steps to obtain insurance (c),(e), and (0 of this section. Funding mechanism. An entity whose rates are available at reasonable costs and on for decommissioning of electric utilities established by a relulatory authority by reasonable terms from private sources or is aisc subject to the regulation of mechanisms that cover only a portion of to demonstrate to the antisfaction of the agencies (e g., Federal Energy its costs will be considered to be an Commission that it possesses an Regulatory Commission (FERC) and 4*/606 Federal Regleter / Val. 62, No.175 / Wedn:sday Sept:mber 10, 1997 / Pr: posed Rults I State Public Utility Cosimissions) licchwe's rate-setting authority does rect discount rates) used in funding having jurisdiction over rate regulation. authorire the use of another rate. projections; and any modifications ( 'lte requirements of this section,in (ii) External sinking fund. An extemal occurring to a licensee's current trust 1 .particular paragraph (c), are in addition sinking fund is a fund established and agrectnent since the last submitted to, and not substitution for, other maintained by 6ett.ng funds aside report. Any licensee for a plant that is requirements, and are not intended to be periodically in an account segregated within 5 years of the projected end of + used, by thempives, by other agencies from licenwe e asets and outslde the its operation shall submit such a report to establish rates. licensee's administrative control in annually. 1 (b) Each power reactor applicant for which the total amount of funds would e i or holder of an operating license for a be sufficient to pay dec:,,mmissioning Dated at Rockville Maryland, thin 4th day production or utillution facility of the costs at the time termination of of septemter,1997, operation is expected. An external For the Nuclear Regulatory Cornrnlulon. type and p(owerlevel specified ln sinking fund may be in the form of a M aC.Herle. paragraph c)of this section shall subrnit a decommissioning report, as trust, escrow account, governm ent fund' Sceretaryo/the Commission. required by 10 CFR $0.33(k) of this part certificate of deposit, or drposit of IFR Doc. 97-23962 Filed 94-97; 8.45 arn) containing a certification that financial government securilles. A licen vre iney assurance for decommissioning will be take credit for enmings on the ext 6rnal provided in an amount which may be sinking funds using a 2 percent annual more but not less than the amount real rate of return from the time of the stated in the tabb in paraproph (c)(t) of funds' collection through the DEPARTMENT OF TRANSPORTATION I this section, adjusted annually using a decommissioning eriod,'f the rate at least equal to that stated in licenwe's rete sett ng authodty does tiot Om of M Sum paragraph (c)(2) of this section, by one authorise the use of another rate, H CFR Port 166 or rnore of the methods described in paragraph (e) of this section as (3) For an electric utility, its rates [tdeke: No. 08T-47-2801; Not6ce No. acceptable to the Commission. The must be sufficient to scover the cost of 'IS j Amount stated in the opplicant's or the electricity it generates, transmits, or MIN 2106-AC46 l licensee's certification may be based on distributes. These rates must be a a cost estimate for decommissioning the established by a regulatory authority Computer Reservations System (CRS) facility. As part of the certification,a such that they are sufficient for the , Regulations copy of the financialinstrument licensee to operate, maintain, and AntNCY Office of the Secretary

• obtained to satist the requirements of decommission its plant safely.The Transportation paragraph (e) of t is onction is to be Commission reserves the right to take ACTm: Advance notice of proposed submitted to NRC.

the following steps in order to assure a licensee's adequate accumulation of miemadng (d) Ladi non. power reactor applicant decommissioning funds: mview, as

SUMMARY

The Department is initiating for or holder of an operating license for sweded, the rate of accumulation of this rulemaking to determine whether it a production or utilization facility shall deramissioning funds; and either should continue or modify its existing suumit a decon.missioning report as independently or in cooperation with rules governing airline computer required by to CFR 50.33(k) of this peft either the FERC and the State PUC's' mservations systems (CRS ). Unless containing a cost sistimate for take additional actions as appropriate extended by the Department, the decommissioning the facility, an on a case by. case basis, including existing rules (14 CFR part 255) will indication of which method or methods modification of a licensee's schedule for expire on December 31,1997. It is the

.fescribed in paragraph (e) of this accumulation of decommissioning Department's preliminary position that action as acceptable to the Commission funds. Acceptable methods of providing the rules should be continued, probably will be und to provide funds for tnancial assurance for with revisions.

d3 commissioning, and a description of decommissioning for an electric utility DATES: Comments must be submitted on the means of adlusting the cost estimate are-oMom November 10,1997. ReptY and associated funding level "bmined on or periodical 1y over the life of the facility, (f)(1) Each power reactor licensee c, b 1O9 (e)(1) shall mport to the N"C within 9 months I

(1) Prepayment. Prepayment is the after ithe effective 6te of the final rule), ADDAESSES: Comments must be filed in j

deposit prior to the stort of operation and at least once every 2 years themafter Room Ple401 Docket 49812, U.S.

8 Into an account segregated from licensee on the status ofits decommissioning Department of Transportation,400 7th assets and outside the licensee's funding for each roactor facility or part St. S.W., Washington D.C. 20590. Late administrative control of cash or liquid of a mactor facility that it owns. The filed c mments will be considered to anets such that the amount of funds information in this report must include, the extent possible. To facilitate would be sufficient to pay at a minimum: the amount of consideration of comments, each a

decommissioning costs. Prepayment decommissioning funds estimated to be c mmenter should file six copies ofits

+

c mments.

8 may be in the form of a trust, est Dw required pursuant to 10 CFR 50.75(b) account, government fund, certificate of and (c): the amount accumulated to the F04 FURTHER INFORMATION CONT ACTI 4

deposit, or deposit of government cate of the report, a schedule of the Thomas Ray, Offico of the General a

securities. A license e may take cadit on annual amounts remaining to be Counsel,400 Seventh St. SW.,

earnings on the prepaid collected; the assumptions used Washington, DC 20590 (202) 366-4731, i

, decommissioning trust funds using a 2 regarding rates of escalation in SUPPLEMENTARY IWORMATION: The percent annual real rate of return from decommissioning costs, rates of CRS operations pted its rules governing Department ado the time of the funds' collection through earnings in decommissioning trust.

14 C.F.R. part 255-the decommissioning pericd,if the funds, and rates of other factors (e.g.,

because CRSs had become essential for i

e I

-