ML20211M752
| ML20211M752 | |
| Person / Time | |
|---|---|
| Issue date: | 09/01/1995 |
| From: | Cyr K, Morrison D, Russell W NRC (Affiliation Not Assigned), NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES), NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| To: | |
| Shared Package | |
| ML20008B465 | List:
|
| References | |
| FRN-62FR47588, RULE-PR-50 AF41-1-011, AF41-1-11, PROC-950901, NUDOCS 9710150128 | |
| Download: ML20211M752 (15) | |
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RULEMAKING PLAN FOR AMENDING NUCLEAR POWER REACTOR DECOMMISSt.0NING FL3NCIAL ASSURANCE l IMPLEMENTATION REQUIREMENTS i
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lead Office: Office of Nuclear Regulatory Research Staff
Contact:
Brian Ri.hter, RDB Concurrences:
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Attachment 2 Rulemaking Plan
RULEMAKING PLAN FOR AMENDING NUCLEAR POWER REACTOR DECOMMISSIONING FINANCIAL ASSURANCE IMPLEMENTATION REQUIREMENTS REGULATORY PROBLEM AND ISSUES TO BE RESOLVED The :taff has determined that there is a need to update NRC's financial assurance requirements for the decommissioning of nuclear power plants. The impact of deregulation of the power generating industry has created potential uncertainty with ressect to the availability of decomissioning funds and requires a modification of the financial mechanism required to provide the decomissioning funds when needed. Along with the modification, a monitoring of such a mechanism would be required.
Current rule reauirements.
Requirements pertaining to financial assurance for the decommissioning of nuclear power reactors are contained in i 50.75. Under i 50.75(e)(3), the NRC l allows power reactor licensees, who are defined as " electric utilities" under 10 CFR 50.2, to set aside funds annually over the estimated life of the reactor. If was the capability to collect funds through the ratepayer that allowed these licensees to use an external sinking fund. Under i 50.75(e)(2),
the NRC requires non-electric utilities to set aside an external sinking fund coupled with a surety methvi or insurance. However, with the advent of deregulation, the NRC needs to clarify the definition of " electric utility"'.
These funds are to be placed in external decommissioning trust or escrow accounts so as to be reserved oaly for decommissioning activities.' Under the definition of external sinking fund, power reactor licensees must accumulate all the funds estimated to be needed for decomissioning by the time their facilities are permanently shut down. Although 5 50.75(e) also allows power reactor licensees to use surety bonds, letters of credit, and
' Electric utility means any entity that generates or distributes electricity and which recovers the cost of this electricity, either directly or indirectly, through rates established by the entity itself or by a separate regulatory authority. Investor-owned utilities, including generation or distribution subsidiaries, public utility districts, municipalities, rural electric cooperatives, and State and Federal agencies, including associations of any of the foregoing, are included within the meaning of " electric utility."
- Note: Many licensees that have established decommissioning trust funds for their power reactors are making deposits into their trust accounts both for decomissioning costs as defined under i 50.2 and for other decomissioning-associated costs such as interim spent fuel management and storage and " green field" costs. The NRC allows licensees to deposit funds in the same trust account as long as the trust has sub-accounts which clearly delineate the purposes of the sub-account. A trust or sub-account established to provide assurance of NRC-defined decomissioning costs should be prioritized to cover NRC-defined decomissioning costs before any other purpose.
prepayment to provide funding assurance, virtually all power reactor licensees use the external sinking fund method of assurance.
Regarding the financial assurance implementation requirement, the intent of the current decomissioning rule is that the assurance mechanism ensures that funds for decomissioning can be obtained when necessary with reasonable assurance. The inability of the licensee to provide such assurance can be considered in some circumstances, if cleanup is over long periods, to result in a. health and safety issue and certainly is a financial risk to taxpayers (i.e., if the licensee cannot 3ay for decomissioning, the taxpayers would ultimately pay the bill.) Suc1 a finding provided the basis for the current decommissioning rule requirements. At the time the decomissioning rule was finalized, the Commission believed that for a regulated power reactor utility, an external reserve account collected over the estimated remaining reactor life would provide the necessary required reasonable assurance. As a conservatism built into the rule, the NRC decided not to allow licensees to take credit for earnings on their trust funds while their reactors were in extended safe storage. Rather, the NRC implicitly assumed that, during safe storage the rate of return on external decomissioning trust funds would equal the decomissioning cost escalation rate. Thus, the after-tax, after inflation earnings rate would effectively be zero.
When the NRC promulgated the 1988 decomissioning rule, it did not require licensees to report periodically on the status of their decomissioning funds.
Rather, NRC viewed licensee compliance with the funding assurance requirements as a matter to be determined through the inspection process when necessary.
Also, the NRC respects the State Public utility Comissions' (PUCs) and the Federal Energy Regulatory Comission's (FERC) authority to set annual contribution rates to decomissioning funds and to establish investment and other management criteria for the funds. The PUCs and FERC also actively monitor decomissioning funds of licensees under their jurisdiction as part of their rate regulatory responsibility. Moreover, the Financial Accounting Standards Board (FASB), a national organization that sets accounting standards, recently initiated.a review of reporting of decomissioning obligations on electric utility financial statements. Although FASB has not established a final standard, it appears that it will increase the level of
' detail on their financial statements. If adopted, this standard would likely give the NRC and others additional information on the status of decomissioning funds. For these reasons, the staff has not devoted significant resources to date on determining decomissioning~ fund status.
Reaulatory oroblem to be resolved.
For the following reasons, the staff is considering amending the rule.
Issue A:- Should we limit or supplement the method for assuring the availability of decomissioning funds for situations where electric utilities' access to collection of funds from ratepayers becomes restricted due to the impact of deregulation?
FERC and several State PUCs (e.g., California and Michigan) have recently initiated policy changes that would, over the next several years, deregulate 2
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ut'ilities providing electric services. Although exact prediction of the structure of the future electric utility industry is difficult, there may be cases where companies providing electricity generation, including generation from nuclear power reactors, will be separated from companies 3roviding both :
bulk transmission services for wholesale and distribution to t1e end-use customer. As these policy changes were developing, several owners of NRC-licensed power reactors established holding companies that control NRC licensees.
In view of impending utility deregulation, the distinction between owners and operators of nuclear power plants may become less clear. All plant co-owners are licensees but they may only be licensed to possess the plant and its radioactive material. Normally, only one licensee, usually the majority owner, is licensed to operate the plant. However, some utilities have established generating subsidiaries to operate the plant. If the utility parent remains on the license, or otherwise comits through operating agreements or other mechanisms, to pay safety-related costs, including decomissioning, there should be no serious concern that decomissioning funds will be unavailable. However, as deregulation proceeds, both plant operators and co-owners may reduce or eliminate their links with affiliated electric utilities.
As indicated in C." a4-280 (November 18,1994), the staff's position is that there appears to be n, imediate safety concern with these reorganizations, particularly since the staff has sought and received comitments that licensees will notify the NRC when significant assets are transferred from a licensee to its non-licensed parent company. However in the longer-term, trends in deregulation and reorganization may cause power reactor licensees to have smaller asset bases and reduced recourse to decomissioning cost recovery through rates approved by PUCs or FERC. This would be contrary to the assumptions underlyino the Comission's decision to allow regulated electric utilities more liberal methods (i.e., uninsured external sinking fund) of providing deconaissioning funding assurance than cther NRC licensees.
Issue B: Should the NRC allow licensees to take credit for earnings on their trust funds during an extended safe storage period?
Some licensees have argued that they are able to earn L positive real rate of return on their decomissioning funds during safe scorage. These licensees argue that by requiring all decomissioning funds to have been collected by shutdown, the NRC may require some licensees to collect more funds from ratepayers than is absolutely r.acessary given the potential for accrual of interest. If, as a result, substantially more funds than needed are collected from ratepayers while the plant was operating, this would result in an unwarranted expense to licensees, their ratepayers, or stockholders. Also, inequities could be created between generations of ratepayers.
Issue C: Should the NRC determine compliance with decomissioning funding assurance rcgulations by power reactor licensees through a periodic reporting requirement or through the inspection process?
The NRC has not deemed it necessary nor has monitored licensee compliance with 3
the decommissioning rule's funding assurance requirements. The evolving situation with utility financial viability has resulted in a need for the NRC to monitor more closely the availability of decommissioning funds as required.
Recently the Cajun Electric Power Cooperative, a licensee of the River Bend nuclear power plant, filed for Chapter 11 Bankruptcy. Cajun is past due on the payment on some of its liabilities. Documents submitted by Cajun and Gulf States Utilities indican that Cajun has made and continues to make required payments for the ultimate decomissioning of the River Bend unit. Two other power reactor licensees went through Chapter 11 bankruptcy reorganization without degradation of decomissioning funding assurance Also, for the past several years Congress and various media organizations have requested the NRC to 3rovide information on the status of decomissioning funds. The NRC has t1us far been unable to honor these requests.
PRELIMINARY REGULATORY ANALYSIS Ootions.
Based on the information presented above, the options for rule amendment considerations concerning implementation of financial assurance mechanisms and monitoring of the financial assurance plan can be enumerated in the following three categories. The first relates to the financial assurance implementation mechanism. The second relates to the collection of decommissioning funds by licensees during the safe storage period. The last addresses licensee monitoring or reporting to confirm compliance with financial assurance requirements. Each of the three issues discussed above has both a no-action option and one that, if adopted, would change existing NRC policy.
A. Additional assurance needed due to deregulation?
4 (1) No action option (i.e., retain the current financial assurance implementation mechanism);
(2) Revise the regulations to reauire that electric utility reactor licensees provide assurance that the full estimated cost of decomissioning will be available through a formal guarantee mechanism if thoy are no longer able to set rates or are not subject to rate regulation by the PUCs or FERC (e.g., restrict the definition of " electric utility" in 550.2 to exclude reference to indirect ability to recover cost of electricity generation or
'To date, the Bankruptcy Court has considered decomissioning and other safety-related expenses for nuclear power plant licensees to be high priority expenses and has allowed them to be paid ahead of most other creditor claims.
While these experiences provide some comfort that bankruptcies are not presenting imediate problems for decomissioning fund adequacy, there is no assurance that Bankruptcy Courts will treat unregulated power generators in
-the same manner as regulated utilities.
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d distribution);
B. Allod credit for earnings during safe storage period? ;
(1) ho action option (i.e., continue to require all funds needed for decomissioning to be available at time of shutdown);
(2) Allow licensees to collect decomissioning funds during the safe storage period and/or allow licensees to assume a pcsitive real rate of return o') decomissioning funds during safe storage; C. Collection monitoring through reporting?
(1) No action option (i.e., continue to require no periodic reporting of decomissioning funding requirements, but allow for their inspection); and (2) Implement a periodic reporting requirement.
Decision criteria.
Option (A-1): Continue allowing power reactor licensees to fund decomissioning over the estimated remaining life of the facility eithout requiring a formal guarantee mechanism for the balance of decomissioning costs that remains unfunded. This option, the no action option, would maintain the distinction between electric utility licensees as currently defined and other NRC-licensed facilities and would continue to recognize the unique status of regulated electric utilities in terms of their ability to provide long-term assurance of decomissioning funding through the rate-mcking process.
Oation (A-2): Revise the Comission's decomissioning regulations to require t1at, in situations where an electric utility's access to collect funds from ratepayers is limited due to deregulation, power reactor licensees provide assurance of the full estimated cost of decomissioning through a formal guarantee mechanism. This could take the form of either:
(a) a guarantee of any unfunded decomissioning liability with prepayment, a surety bond, letter of credit, or other method allowed in i 50.75(e)(1)(iii); (b) a parent company or self guarantee through passing a financial test similar in scope to the ona contained in 10 CFR Fart 30, Appendices A and C, to assure ti.at a licensee has an adequate resource base to fund decomissioning; or (c) a certification to the NRC from the rate-making authority that all unfunded decomissioning obligations under NRC regulations will be collected in rates.
Licensees must be able to obtain funds for decomissioning when necessary.
The inability of a licensee to provide decomissioning funding assurance may result in a potential heath and safety issue and clearly a financial risk to taxpayers. .For a regulated power reactor utility, an externalThis reserve account reasonable would. provide the necessary required reasonable assurance.
assurance may cease to exist if electric utilities are deregulated, 5
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particularly if a power reactor is shut down prematurely '. Therefore, the staff regards Option (A-2) as the recomended option because it provides additional ast,urance that decommissioning funds will be available alcng with a tiered system of choices +.o licensees in selecting financial assurance mechanisms that are appropriate to their circumstances.
Comparison of Options (A-1) and (A-2): The regulatory analysis for Option (A-
- 1) was considered in the 1988 decommissioning rule. Because this option proposes to continue the curreit methods of funding assurance, no additional costs or benefits should occur. Option (A-2) would impact only those licenseer that were no longer able to set rates subject to a PUC or FERC.
There are presently no power reactor licensees in this category. For those non-rate ;etting licensees that would attempt *.o qualify for a parent company or self-guarantee, the staff estimates 8 to 40 hours4.62963e-4 days <br />0.0111 hours <br />6.613757e-5 weeks <br />1.522e-5 months <br /> would be needed to complete the financial test documents. The burden on the NRC to review these documents would be approximately 2 hours2.314815e-5 days <br />5.555556e-4 hours <br />3.306878e-6 weeks <br />7.61e-7 months <br /> per licensee. If one-third of the present licensees were in this category, the total burden on the NW: is estimated to be less than 100 staff hours.
Those licensees unable to qualify for the financial test would be required under Option (A-2) to obtain a surety bond, letter of credit, or other acceptable guarantee mechanism for the projected unfunded decommissioning expense balance. If this balance is assumed to be $100 million for the typical licensee, at a cost of 1% to 2% of the amount guaranteed, the cost per affected licensee would be $1 million to o million per year. This cost would decline as licensees' decomissioning trust funds increased over time. Total cost to all licensees would thus be $40 million to $120 million per year to start, but would subsequently decline as decommissioning trust funds increased. However, these costs would only be incurred in cases where licensees can no longer collect decommissioning costs through rate payments.
Option (B-1): Continue to require all funds needed for decomissioning to be available at time of shutdown.
' For power reactor licensees who are " electric utilities" as defined in i 50.2, including generating or operating subsidiaries, decomissioning funding assurance for prematurely shut down plants was addressed in a 1992 rulemaking (57 FR 30383; July 9, 1992). This rule amended i 50.82 to provide that the NRC will evaluate, on a case-by-case basis, the decommissioning funding plans of licensees who have not accumulated sufficient funds because their plants were shut down prematurely. Essentially the NRC evaluates the particular safety and financial situation of each licensee to determine if the ability of a licensee to collect funds after shutdown provides reasonable assurance that funds will be available when needed. The staff has evaluated several funding plans on a case-by-case basis and has found that, for electric utilities that are s egulated or set their own rates, this approach has worked well. However, without rate regulation or rate-setting ability, assurance of decommissioning costs, particularly for prematurely shut down plants, may not be adequately provided under current NRC policy.
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Option (B-2): Allow licensees to collect decomissioning funds during the safe storage period and/or allow licensees to assume a positive real rate of return on decomissioning funds during safe storage.
With respect to when decomissioning funds should be available, reasonable assurance is best provided by having funds collected during plant operation (Option (B-1)). However, the assumption of a zero real rate of return is too conservative. Given that historically, real (i.e. inflation-adjusted, after-tax) rates of return using U.S. Treasury issues have been around 2%, the staff proposes to allow licensees to use this rate in their calculations (Option (B-2)). If rates turn out to be lower than this, 5 50.82 already provides that licensees are to adjust decomissioning funds during safe storap to reflect changes in cost estimates. Thus, there is little risk that there will be major shortfalls in decommissioning funds.
Comparison of Options (B-1) and (B-2): Since Option (B-1) is the present situation, and the staff is proposing relief from current requirements, Option (B-2), there is no adverse impact on licensee or NRC resources.
Option (C-1): Continue to require no periodic reporting, but rely on the inspection process to determine power reactor licensee compliance with NRC decommissioning funding requirements.
Option (C-2): Implement a periodic reporting requirement.
With respect to reporting requirements, the staff recomends Option (C-2), to implement a periodic reporting requirement. The staff needs appropriate assurance that licensees are collecting their required decomissioning funds.
This car. be done by licensees submitting a simple statement to the NRC of information they have available regarding funds in their external account.
This choice is considerably less costly to both the licensee and the NRC than relying on inspections and involves little effort. It is intended that in the proposed rule coments be solicited from the public on which method of providing such information to the NRC would be preferred.
Comparisons of Options (C-1) and (C-2): Because of close PVC and FERC monitoring, the staff believes that the great majority of licensees prepare and submit annual reports on decommissioning fund status to their rate regulators. Asking licensees to submit a copy of this report to the NRC would require only minimal effort by each licensee. On the othar hand, obtain.ng this information through.the inspection process would likely be more burdensome for the NRC and for those licensees inspected each year. The staff concluded that the benefit of obtaining this information through a reporting requirement, in terms of both determining licensee compliance with NRC decommissioning funding regulations and responding to Congressional and other requests, outweigh the minimal impact of the requirement and, as explained below, would be less burdensome to licensees and the NRC than relying on the NRC inspection process. Thus, the staff is proposing options for the Commission's consideration.
If the NRC imposed a periodic reporting requirement (e.g., every 3 years) on
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the status of decommissioning funding assurance, the staff estimates that licensees would submit approximately 100 reports every 3 years, or an average of 33 reports each year . In some cases, t report will cover more than one power reactor owned by the same licensee. In other cases, co-owners will submit separate reports for their proportionate shares of the same reactor. l The impact on licensee resources should be minimal. As indicated above, most '
power reactor licensees already prepare annual reports for their PVCS or FERC containing the information that would be required in a periodic report. Also, i virtually all licensees receive periodic reports from their decommissioning trustees giving the status of decomissioning funds. Thus, no licensee should f.eed to expend additional preparation time in complying with an NRC reporting requirement. The impact on licensees would be in copying and transmitting information they already have, which staff estimates to be approximately 2 stiff-hours po. licenser
- 66 ntaff-hours annually. If the NRC were to use FASB informat'.in, if it Decomes available, no additional impact on licensees would occur sin ce the staff could obtain this information from publicly available sourcas. l.icensees that the NRC chose to inspect in any year would spend at least S staff-hours and, possibly, considerably more time preparing for the inspection, assisting the NRC during the inspection, and responding to the inspection results.
It should take approximately 1 NRC-staff hour on average to review and analyze each report. An annual surenary report based on the submissions r trrent up to that year should require approximately 8 NRC-staff hours to prepare and disseminate. No contractor effort should be needed. Thus, total NRC staff eff rt should be about 41 staff-hours annually (i.e. , 33 reports x 1 NRC-staff hour + 8 NRC-staff hours) for a decomissioning funding status report. Using FASB information would entail similar staff effcrt.
I The primary option to annual reports would be for the NRC to monitor compliance through selective annual inspections of IIcensees. A reasonable annual inspection rate would be about 20%, or approximately 22 units, each year. Although the time to review each report would ba tne same (i.e., 1 staff-hour for cach report), the staff would require additional coordination and coriimunication time with the licensee for each inspection. If inspections were condur+ed from NRC headquarters by written correspondence or telephone, staff estimates an additional 1.5 staff-hours per inspection would be required for this coordination and communication time. If inspections were conducted at licensees' f a. 'lities, required coordinai. ion and comunication time would likely increase on average to at least 8 staff-hours per inspection. An annual sumary report Nsed on the ar.ncal it.soections conducted would also requirt bout 8 staff-?.ours to prepare and disseminate. Thus, annual NRC staff requirements for an inspection approach would be from 53 Gaff-hours for headquarters-based inspections to 206 staff-hours for field-based inspections.
Therefore, the staff believes that a periodic report would likely have a much smaller impact on NRC staff resources than selective inspections.
With respect to the be.ckfit rule, the conditions under which nucl a r power reactors have Deen replated have changed greatly since the rule was written.
Because of the NRC responding to these changing circumstances, this action is a case of adequate protection, not requiring a backfit analysis. Specifically with r pect to Option (A-2), the lack of adequate financial assurance is a 8
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k potential health and safety conurn and a financial risk to taxpayers. The choice of a tiered option approach for the licensee, however, would help mitigate impacts that the use of an Option (A-2) requirement would impose.
With respect to the backfit rule regarding Option (C-2), the reporting i
-requirement is a reasonable and cost-effective mechanism to confirm compliance. Use of Option (C-2) would be a much more efficient expenditure of effort on the part of the licensee and the NRC than selective inspections.
However, to mitigate any impacts this action would impose, it is intended that comments be solicited from the public on the option to choose for the reporting requirement.
OGC'S LEGAL SUFFICIENCY ANALYSIS DEMONSTRATING THAT NO KNOWN BASIS EXISTS FOR LEGAL OBJECTION OGC finds that the options for the rulemakings delineated in this plan are within the authority of the Comission, granted to the agency to protect the public health and safety through licensing of commercial productio.. and utilization facilities under the Atomic Energy Act of 1954, as amended.
Of primary concern in developing the proposed rule is the question of the backfit justification for the proposed rule. Since the primary impetus for the rulemaking appears to be the newly developed corporate organizations, the proposal seems to be a prime candidate for justification as changes necessary to maintain " adequate safety." For the options addressing new corporate organizations, the staff should plan to explicitly address the question of
" adequate protection of public health and safety" in discussing the aaplicability of backfit rule. The backfit issue must also be addressed for t1e issue of periodic reporting. It is premature at this juncture to reach a conclusion on whether a reporting requirement can be justified under the backfit rule..
The staff will need to consider and get appropriate OMB approvals related to paperwork reduction activities as the financial reporting options are pursued.
As the staff pursues the options related to various corporate organizations, it will be necessary to develop strong Justifications for why certain reactor owners and operstors are being designated as requiring additional actions for financial assurance. These justifications will provide significant input for the backfit discussions to the extent the justifications are used to explain the basis for concluding that " adequate public health and safety" considerations satisfy backfit questions associated with this rulemaking.
While the above issues must be addressed as the options in this plan are pursued, there is nothing evident at this time to indicate that these legal issues will prevent successful pursuit of the course of action recomended in this rulemaking plan.
AGREEMENT STATE CONSIDERATIONS Although Agreement States do not license power reactors, they are involved to some degree in the low level waste disposal process and associated costs.
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- SUPPORTING DOCUMENTS-A Regulatory Guide or Branch -Technical Position will need to be published for this action.
RESOURCES REQUIRED Resources are included in the current Five Year Plan to complete and implement the rulemaking - The offices involved are RES, NRR, and OGC.
l IS IT RECOMENDED THAT THE EDO ISSUE:THE RULE IN ACCORDANCE WITH MANAGEMENT
- DIRECTIVE 9.177 No. Due to the imposition of additional requirements of reporting and l providing. additional assurance of decommissioning fund availability, this is L regarded as-more than a minor amendment and should require a notation vote on j - the part of the Comission.
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LEAD OFFICE STAFF AND STAFF WITHIN EACH OFFICE WHO WILL BE INVOLVED RES/DRA Thomas Nartin Brian Richter /Raj Auluck NRR Seymour Weiss Anthony Markley/ Robert Wood OGC ; Stewart Treby Bradley Jones-ilSE 0F STEERING GROUP No.- These rule amendments are not considered to be significantly complex to warrant a steering group.
ENHANCED PUBLIC' PARTICIPATION l
No. The impacts of up-front decomissioning funding have already been accounted ;for in earlier decommissioning rulemaking. These proposed amendments are simply providing the licensees with greater flexibility of implementation.
SCHEDULE Expressed in terms of; time from approval of the Rulemaking Plan..
Proposed rule to EDO, includes Regulatory Guide' 1 year Public .ccanent period ends 18 months l Final rule to EDO .2 years 10
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l NRC CONSIDERING REVISING DECOMMISSIONING FUNDING RULE TO REFLECT UTILITY DEREGULATION; PUBLIC COMMENTS ASKED The Nuclear Regulatory Commission is considering revising NRC's regulations on decommissioning funding to better reflect conditions brought about by restructuring and deregulation of the electric power industry.
Before proceeding with publication of a proposed rule, however, the Commission is seeking public comments on several issues involved. The deadline for submission of comments is .
Present NRC regulations, adopted in 1988, permit a nuclear electric utility to set aside decommissioning funds annually over the estimated life of a plant. But those same regulations give electric utilities more flexibility than non-utility licensees in setting up a financial assurance mechanism. The reason is that utilities have long operated in a highly structured, regulated and non-competitive environment with assured ratepayer revenues to meet prudent costs. However, with the growing trend toward deregulation of the electric power industry, questions have arisen as to whether a nuclear power licensee could lose a regulated rate base as a source of funds to cover the unfunded balance of decommissioning expenses.
Accordingly, the Commission is considering changing its decommissioning funding regulations to:
Require that electric utility reactor licensees assure NRC that they can finance the full estimated cost of decommissioning if they are no
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longer subject to rato regulation by state agencies or by the Federal l Energy Regulatory Commission and do not have a guaranteed source of income.
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e Require utility licenseen to report periodically on the status of their decommissioning funds. The present rule has no such requirement because state and Federal rate regulating bodies actively monitor these funds. A deregulated nuclear utility would have no such monitoring.
o Additionally, the NRC is considering permitting licensees to take credit for a positive, real rate of return on decommissioning trust funds during a period of safe storage (. decommissioning phase when the plant is maintained in a condition that allows the radioactivity on site to decay). Under the present rule, licensees cannot tak credit for earnings on such funds during safe storage because it is assumed that inflation and taxes would erode any investment return.
e The NRC is also requesti.g comment on whether the Federal government licensees of operating power rear. tors should be allowed to continue to use statements of intent to meet decommissioning financial assurance requirements for power reactors.
Full details are available in the NRC's Advanced Notice of Proposed Rulemaking on this matter, published in the edition of the Federal Register.
The notice also may be accessed on the NRC Electronic Bulletin Board on Fedworld, or may be obtained from the NRC Office of Public Affairs.
l Comments should be mailed to: The Secretary of the Commission, U.S.
1 i Nuclear Regulatory Commission, Washington, DC 20555, Attention: Docketing and Service Branch. They may be delivered to 11555 Rockville Pike, Rockville, Maryland, between 7:45 a.m. and 4:15 p.m. on Federal workdays. Comments also may be submitted electrorically through the NRC Electronic Bulletin Board on I fedWorld.
NRC's preliminary views expresst.d in the proposed rulemaking notice may change in light of comments reca1ved. Any proposed rule developed also will be published for public comment before adoption in final form.
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ACTION: Morrison, RES
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/ g UNITED STATES Cys: Tay1or 8 o NUCLEAR REGULATORY COMMISSION Milhoan
,, $ I W ASHIN GTON, D.C. 20555 REVISED Thompson
/ Blaha g% * * * * * # March 27, 1996 MLesar, ADM BShelton IRM OFFICE OF THE SECRETARY BRichter. RES MEMORANDUM TO: James M. Taylor Exe t ve Director for Operations FROM: Jo Nb C. Hofle, Secretary
SUBJECT:
SIAFF REQUIREMENTS - SECY-96-030 - ADVANCE NOTICE OF PROPOSED RULEMAKING - NUCLEAR POWER REACTOR DECOMMISSIONING FINANCIAL ASSURANCE IMPLEMENTATION REQUIREMENTS The Commission has approved publication of the Advanced Notice of Proposed Rulemaking with the addition of some items concerning
, the last two issues in the paper to be addressed through public l comment, such as the following two examples:
- 1) The rate of return or time period. to be assumed for the decommissioning funds.
- 2) The periodicity of reporting and the amount of ~
information to be included on the status of the decommissioning funds.
The- FederaliRegister r otice shhuldL also!be edited to include ' the
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following inserted text:
- p. 5: Inew $ before.last $ ) :~
In addition, SL 50' 75 (e) (3) (iv) provides that an electric utility which is:a-Federal government-licensee.need only
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provide' assurance in the form of'a statement-of intent '
indicating that decommissioning funds-will:be obtained'when necessary3
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Section -50:.75 (e) (3) (iV)"provid'es;'thatTaniel'ectrict utilitp which;is-a: Federal. government-' licensee need-only provide assurance 1inLthe form of;a. statement of: intent ~ indicating SECY NOTE: THIS SRM, SECY-96-030, AND THE VOTE SHEETS OF ALL COMMISSIONERS WILL BE MADE PUBLICLY AVAILABLE 5 WORKING DAYS FROM THE DATE OF THIS SRM.
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regalationsicontinue? to;permite thelprovision of b a? stiaEemshE bf e intenth as 6 the method?bylwhich b thes'ef licensess t providef~~~
fl'nancial) assurance 3f6rfdecommissijknins $ Thereliisidfo f examplej;$nokPederalflaw/which$ clearly!providesythatsthe Federaligovernme'nt S wouldspayl the RTennessse ; Valley ~~~~"
AuthorityM affinancialtdecommi'ss1661ng joblicat.ionsfishoUldSTVA
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be-tunableitoldotsobJDoesithisifactjorjany'otherifactors~ ~
militateiforfor.. ag einstFallowingffederal3 utilitpfliceiihess
'tof continueitfo wh1;chJf,ihanl:ial 5 use fstatehients?ofMintentilasithil methodiby~
jass,ursticejf,or,Mejbmmis~s'ionirig}isQroviped,?
The attached public announcement should be. substituted for the announcement proposed in the paper.
(-9994 RES (SECY Suspense 3/30/96) 9500112
Attachment:
As stated cc: Chairman Jackson Commissioner Rogers Commissioner Dicus OGC OCA OIG Office Directors, Regionc, ACRS, ACNW, ASLBP (via E-Mail)
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es fi NRC.CONSIDERING' REVISING DECOMMISSIONING FUNDING RULE--
E*
TO REFLECT UTILITYLDEREGULATION;-PUBLIC O MMENTS ASKED:-
i:
4 l1 The-Nuclear Regulatory Commission'is considering revising
. NRC's: regulations on decommissioning funding to better reflect conditions brought about by restructuring and deregulation of the i
- t. electric power: industry. '
j- 1 Before proceeding with publication of a proposed rule, 1-however, the Commission is seeking public. comments on several I ' issues involved. The deadline for submission of comments is i >
1 . .
j Present NRC^ regulations, adopted in~1988, permie, a nuclear i electric-utility to set aside decommissioning funds-. annually over i.; the estimated i :c of a plant, But :hoselsame regulations give electric utilities.more flexibility than non-utility licensees in
," setting ^ up ' a : financial assurance mechanism. The reason is=that utilities-have..long operated in a highly structured, regulated.
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iandinon-competrtive environment with assured; ratepayer revenues
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oto meet. prudent costs. However, with the growing trend!toward Lderegulation of.the electric power industry,' questions have arisen as to whether.a nuclear _ power licensee'could Icse a regulated; rate base as a source of funds to cover the unfunded balance of decommissioning-expenses.
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g .- - , r- . . . . . - . . - -. _ .. _ -- ._.- _ - . . _ _ _ .- _ _.
bJ u : Accordingly,xthe Commission- is contiidering. changing its ,
. decommissioning funding regulations tos j m
9 Require thatJelectric. utility reactor' licensees assure-
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1 NRC;that'they.can finance the full' estimated cost-of. ,
' decommissioning if.'they are no longer subject to rate regulation by state agencies or by the Federal-Energy l Regulatory Commission;and do not-have a guaranteed
. source of income.
'O Require utility _ licensees to' report _ periodically on the status.of:their decommissioning funds. The present rule has no such requirement because state and Federal-
' rate-regulating bodies actively monitor these funds. A deregulated nuclear-utility would have no'such monitoring.
s e -Additionally,_ the NRC is.considering permitting licensees to take credit for a positive, real rate of
-return 1on decommissioning _ trust funds during a period of safe storage (a decommissioning phase when the plant is maintained in a condition that allows-the radioactivity on_ site to decay). Under the present rule, l'icensees cannot take credit for earnings on such funds during safe storage because it is assumed that inflation-and taxes would erode any investment return.
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v e The NRC is also requesting comment on whether the sole federal governmentilicenseesiof" operating power reactors operating licenecc, Tennesccc Valley Authority, should be allowed to continue to use statements of intent to meet decommissioning financial assurance requirements for its power reactors.
Full details are available in the NRC's Advanced Notice of Proposed Rulemaking on -his matter, published in the edition of the Federal Register. The notice also may be accessed on the NRC Electronic Bulletin Board on Fedworld, or may be obtained from the NRC Office of Public Affairs.
Comments should be mailed to: The Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555, Attention: Docketing and Service Branch. They may be delivered to 11555 Rockville Pike, Rockville, Maryland, between 7:45 a.m. and 4:15 p.m. on Federal workdays. Comments also may be submitted electronically through the NRC Electronic Bulletin Board on FedWorld.
NRC's preliminary views expressed in the proposed rulemaking notice may change in light of comments received. Any proposed rule developed also will be published for public comment before adoption in final form.