ML20211M864
| ML20211M864 | |
| Person / Time | |
|---|---|
| Issue date: | 03/29/1996 |
| From: | Martin T NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES) |
| To: | Meyer D NRC OFFICE OF ADMINISTRATION (ADM) |
| Shared Package | |
| ML20008B465 | List:
|
| References | |
| FRN-62FR47588, RULE-PR-50 AF41-1-016, AF41-1-16, NUDOCS 9710150166 | |
| Download: ML20211M864 (29) | |
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,j NUCLEAR REGULATORY COMMISSION
'2 WASHINGTON. D.C. 2065!L4001 March 29, 1996 MEMORANDVH TO:
David L. Meyer, Chief Rules Review and Directives Branch Division of Freedom of Information and Publications Services Office of Administration k'b FROM:
Thomas 0. Martin, Chief Regulation Development Branch Division of Regulatory Applications Office of Nuclear Regulatory Research
SUBJECT:
ADVANCE NOTICE OF PROPOSED RULEMAKING - NUCLEAR POWER REACTOR DECOMMISSIONING FINANCIAL ASSURANCE IMPLEMENTATION REQUIREMENTS (WITS-9500ll2)
On March 27, 1996, a revised staff requirements memorandum (SRM) was issued which approved publication of the subject Advance Notice of Proposed Rulemaking (ANPR) with the addition of some items. A revised public announcement that the staff was directed to use was also included with the SRM.
The staff has made the changes as requested by the Commission.
Picase implemer.t the Commission's action by arranging for publication of the attached ANPR in the Federal Register.
Also attached is a Congressional letter package (including diskette) for transmittal to 0CA.
Attachments:
1.
SRM dtd 3/27/96 2.
FRN + 3 Copies & Diskette 3.
Public announcement 4.
Congressional Let' 1r Package 9710150166 971003
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ATTACHMENT 1 SRM DATED MARCH 27, 1996
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ATTACHMENT 2 FEDERAL REGISTER NOTICE
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(7590-01-P]
l NUCLEAR REGULATORY COMMISSION 10 CFR 50.2, 50.75, and 50.82 l
RIN 3150-AF41 Financial Assurance Requirements for Decommissioning Nuclear Power Reactors I
AGENCY: Nuclear Regulatory Commission.
l ACTION: Advance notice of proposed rulemaking.
SUMMARY
The Nuclear Regulatory Commission is considering amending its regulations relating to financial assurance requirements for the decommissioning of nuclear power plants.
Potential deregulation of the power generating industry has created uncertainty with respect to whether current NRC regulations concerning decommissioning funds and the financial mechanisms will require a modification to account for utility reorganizations not contemplated when current financial assurance requirements were promulgated.
Additionally, the NRC is considering requiring power reactor licensees to periodically report on the status of their decommissioning funds. Allowing credit for earnings on decommissioning trust funds during extended storage will alto be considered. This advance notice of proposed rulemaking is issued to invite public comment on issues pertaining to the form and content of the NRC's nuclear power reactor decommissioning financial assurance requirements as they relate to electric utility deregulation.
OATE:
Submit _ comments by (insert a date to allow 75 days public comment]
,1996. -Comments received after this date will be 1
considered if it is practical to do so, but the Commission is able to assure consideration only for comments received on or before this date.
1 J.
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'ADDRESSESi Mail comments-to: The Secretary of the Commission, U.S. Nuclear
' Regulatory Commission, Washington, DC 20555-0001, Attention: Docketing and l
Service Branch.
Deliver comments-to:
11555 Rockville Pike, Rockville Maryland, between j
7:45 a.m. and 4:15 p.m. Federal workdays.
l Comments may be' submitted electronically, in either AScil-text or Wordperfect format _(version 5.1 or later), by calling the NRC Electronic Bulletin Board (BBS) on FedWorld.
The bulletin board may be accessed using a
~ personal computer, a modem, and one of the commonly available communications f
i
. software packages, or directly via Internet.
Background documents on the j
i i
advance' notice of proposed rulemaking are also available, as practical, for downloading and viewing on the bulletin board.
'If using. a personal computer and modem, the NRC ruitmaking subsystem on FedWorld can be accessed directly by dialing the toll free number 1-(800) 303-9672.
Communication software parameters should be set as follows:
parity to none, data' bits to 8, and stop bits to 1 (N,8,1). Using ANSI or VT-100 J
l terminal / emulation, the NRC rulemaking subsystem can then be accessed by j;
-selecting the " Rules Menu" option from the "NRC Main Menu." Users will find I
the~"FedWorld Online User's Guides' particularly helpful. Many NRC subsystems L
and data bases-also have a " Help /Information Center" option that is tailored t
4 to the particularLsubsystem.
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The NRC subsystem on FedWorld can also be accessed by a direct dial phone number for the main FedWorld BBS, (703) 321-3339, or by using Telnet via Internet: fedworld. gov, l' using (703) 321-3339 to contact FedWorld, the NRC subsystem will. be accessed from the t.ain FedWorld menu by selecting the
'" Regulatory, Government Administration.nd State Systems," then selecting
" Regulatory Information Hall." At that point, a menu will be displayed that has an option "U.S. Nuclear Regulatory Commission" that will take you to the NRC Online main menu. The NRC Online area also can be accessed directly by typing "/go nrc" at a FedWorld command line, if you access NRC from FedWorld's main menu, you may return to FedWorld by selecting the " Return to FedWorld" option from the NRC Online Main Menu.
However, if you access NRC at FedWorld by using NRC's toll-free number, you will have full access to all NRC systems, but you will not have access to the main FedWorld system.
If you contact FedWorld using Telnet, you will see the NRC area and menus, including the Rules Menu. Although you will be able to download documents and leave messages, you will not be able to write comments or upload files (comments).
If you contact FedWorld using FTP, all files can be accessed and downloaded but uploads-are not allowed; all you will see is a list of files without descriptions (normal Gopher look). An index file listing all. files within a subdirectory, with descriptions, is available.
There is-a 15-minute time limit for FTP access.-
Although FedWorld also can be accessed through the World Wide Web, like FTP that mode only provides access for downloading files and does not display
.the NRC Rules Menu.
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i for more information on NRC bulletin boards call Mr. Arthur Davis, Systems Integration and Development Branch, NRC, Washington, DC 20555, telephone (301) 415-5780; e-mail AXD3@nrc. gov.
Examine copies of comments reccived at:
The NRC Public Document Room, 2120 L Street NW. (Lower Level)
Washington, DC.
i FOR FURTHER INFORMATION CONTACT:
Brian J. Richter. Office of Nuclear l
Regulatory Research, U.S. Nuclear Regulatory Comminion, Washington, DC 20555-000), telephone (301) 415-6221, e-mail bjr@nrc. gov.
SUPPLEMENTARY INFORMATION:
Background
Requirements pertaining to financial assurance for the decommissioning of nuclear power reactors are contained in 5 50.75.
Under 5 50.75(e)(3), the NRC allows power reactor licensees, who are defined as electric utilities"'
under i 50.2, to set aside funds annuall) over the estimated life of the reactor for decommissioning. The NRC provided more flexibility to its electric utility licensees than other licensees because electric utilities have existed in a highly structured environment regulated by State public
" Electric utility means any entity that generates or distributes elec-tricity 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 utilt-ty.'"
4
utility commissions (PVCS) or the Federal Energy Regulatory Commission (FERC).
Under i 50.75(e)(2), the NRC requires licensees other than electric utilities 1
to set aside an external sinking fund coupled with a surety method or I
insurance for any unfunded balance.
However, with the advent of deregulation, the distinction between electric utility licensees and other licenseet. will likely be reduced or eliminated.
Thus, the NRC needs to clarify the definition of " electric utility" and to require additional assurance of thu3e licensees whose power reactor costs are no longer regulated.
Typically, power reactor licensees place decommissioning funds in external trust or escrow accounts that are reserved for decommissioning activities.'
Vnder the definition of external sinking fund, power reactor licensees n.ust accumulate all the funds estimated to be needed for decommissioning by the time their facilities are permanently shut down.
Although 6 50.75(e) also allows power reactor licensees to use surety bonds, letters of credit, and prepayment to provide funding assuranco, virtually all power reactor licensees use the external sinking fund method of assurance.
in addition, 5 50.75(e)(3)(iv) provides that an electric utility th'at is a Federal Government, licensee need only provide assurance in the form of a statement of intent indicating that decommissioning funds will be obtained when necessary.
Note: Many licensees that have established decommissioning trust funds for their power reactors are making deposits into their trust accounts both for decommissioning costs as defined under 5 50.2 and for other decommission-ing-associated costs such as interir., 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 that clearly delineate the purposes of the sub-account. A trust or sub-account establisheo to provide assurance of NRC-defined decommissioning costs should be stipulatti to cover NRC-defined decommissioning costs before any other purpose.
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The intent of i 50.75 is to provile reasonable assurance that funds for decommissioning will be ava11able when necessary.
The inability of the licensee to provide funding for decommissioning may adversely affect protection of public health and safety. Also, a lack of decommissioning funds is a financial risk to taxpayers (i.e., if the licensee cannot pay for decommissioning, taxpayers would ultimately pay the bill).
In a related issue, when the Commission issued the decommissioning rule, the Commission believed that, for a regulated electric utility, an external reserve account collected over the estimated remaining reactor life would provide the necessary reasonable assurance. However, 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 assumed that during safe storage the rate of return on external decommissioning trust funds woul.1 equal the decommissioning cost escalation rate.
Thus, the after-tax, after-inflation earnings rate effectively would be zero.
When the NRC promulgated the 1988 decommissioning rule, it did not require licensees to report periodically on the status of their decommissioning funds.
NRC viewed licensee compliance with the funding assurance requirements as a matter to be determined througF uv inspectid process when necessary. Also, the NRC recognized in the 1969 j ecommis. M ig rule, the PUCs' and FERC's authority to set annual contribution rate to decomissioning funds and to establish investment and other management criteria for the funds. Tha PUCs and FERC also actively monitor these decommissioning funds as part of their rate regulatory responsibility.
Moreover, the Financial Accounting Standards Board (FASB), a national 6
I organization that sets accounting standards, recently initiated a review of reporting of decommissioning 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 power reactor licensees' financial statements. :lf adopted, this standard would likely give the NRC and others additional information on the status of decommissioning funds.-
1 However, the advent of deregulation, and consequently lw; oversight by FERC i
or by PVCS, makes it imperative that the NRC have a source of information to monitor the status of decommissioning. funds.
Specific Proposal The Commission is considering amending il 50.2, 50.75, and 50.82 to require that electric utility reactor licensees provide assurance that the full estimated cost of decommissioning will be available through an acceptable guarantee mechanism-if the licensees are no longer subject-to: rate regulation by PVCS or FERC, and do not have a guaranteed soccce of income.
The amendment would also allow licensees to assume a positive real rate of return on decommissioning funds.during the safe storage period.
Lastly, a periodic reporting requirement would be established.
Specific Considerations Advice and recommendations on a proposed rule reflecting the foregoing and any other_ points _ considered pertinent are invited from all interested 7
t
j persons.
Comments and supporting reasons are particularly requested on the following questions arranged by topic:
A.
Timina and Extent of Electric Utility Industry Dereaulation.
A.I.
What is the likely timetable for industry restructuring and l
deregulation?
A.2.
Will the electric utility industry go through several phases as it responds to deregulation and other competitive pressures? If so, what will be the likely major changes in business structure that may occur in each phase?
. Will rates remain regulated at the retail distribution level, with deregulation occurring fcr generation and transmission? Will retail wheeling become widespread and lead to deregulation of all -sectors of the electric utility industry? Or will rates remain regulated at the retail distribution level, with deregulation occurring within the generation and transmission sectors? What will likely be the final structure of the electric utility industry, assuming either partial or full deregulation?
A.3.
Some States appear to oppose deregulation. Will they be able to maintain their opposition if neighboring States deregulate? What will be the industry structure if some States deregulate more than others? Can a " hybrid" system exist effectively?
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B.
Stranded Costs, p
B.I.
How will restructuring affect large baseload plants that currently creceive rate relief to cover construction costs or have a portion yet to be 4
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l L.q rhased into the rate base'l Specifically, what is the probability that and degree to which these costs will be recoverable should a nuclear power plant be deamed to be non-competitive because of high construction costs? What will be the source of operating, maintenance, and capital improvement funds should such a nt, ear generator decide to continue operations? What will be the source of funds to prematurely and safely shut down an uneconomic plant? Are transmission access or other surcharges to cover stranded costs likely?
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C.
Nuclear Financial Qualifications ard Decommissioning Fundino Assurance.
C.I.
If nuclear plants are shut down prematurely, how will licensees who can no longer pass costs through to ratepayers provide for a shortfall of decommissioning funds?
C.2.
At what point does an operator of a nuclear power plant cease to be a " utility" as defined in i 50.2 of the NRC's regulations?
C.3.
If an electric utility reorganizes itself, including divesting parts of itself, so that the remaining entity operating a reactor is no longer regulated by a rate-setting State or Federal body, or will cease to be regulated by r. rate-setting State or Federal body if the reactor ceases operation, would it be appropriate to require financial assurance for the 6 commissioning costs in full prior to NRC approval of such reorganizations?
Such assurance could take the form of self-guarantee, parent company guarantee, certification by the rate-regulating entity, or other financial surety mechanism to cover the unfunded decommissioning costs.
Should the NRC require additional assurance for adequate funds for safe operation and decommissioning in anticipation of deregulation? Should the NRC require, as a 9
condition of approval of-certain reorganizations involving the transfer of
- control of. a nuclear power plant,-that newly created organizations or holding companies s'ign a binding agreement that holds them jointly liable for decommissioning costs associated with that nuclear power plant? What would be the-impact of~such actions?
C.4.
Should the NRC require-a licensee to provide a reasonable assurance of the availability of funds for decommissioning by imposing a 1
minimum leal of ne+. worth, cash flow, or other financial-measure (similar to 10 CFR Part 30 Appendices A and B)?
If below the minimum levels, the licensee would no longer be allowed to accumulate decommissioning costs over remaining facility life, but would need a guarantee that funds would be
- available for decommissWing through various financial measures. What financial measures would be ef fective and reasonable?
7 C.S.
Would PUCs and FERC be willing to certify that licensees under their jurisdictions, both electric utility and Part 50 licensees other.than electric utilities, would be allowed to collect sufficient revenues through rates to complete decommissioning funding?
C.6.
What would be the impact if the NRC required licensees to l-accelerate collection of decommissioning funds such that decommissioning l
- funding for all plants would be complete within 10 years (or some other time l
period)?
I l-C.7.
Assume that licensees have accumulated funds that are determined
(
to be adequate based on current estimates of decommissioning costs.
If these estimates turn out to be low far in the future (for example, if final i
' dismantlement occurs after a 50-year safe storage period), ho' t
underfunding be remedied? What measures should the NRC consider for obtaining il 10 e
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assurance of funds for such situations? Should the NRC require larger contingency factors in= estimates to cover such situations?
C.8.
Would it be feasible for the nuclear industry to develop a captive insurance pool to pay for decommissioning funding shortfalls that result from premature decommissioning? Could such a pool be structured similarly to Nuclear Mutual Limited (NHL) and Nuclear Electric Insurance Limited (NEIL),
who currently insure *n-site property damage and replacement power of member utilities?
C.9.
If PVC or FERC oversight is either substantially limited or eliminated, are there any other options-for financial assurance of-decommissioning that the NRC should consider?
D.
Decommissionina Funding Assurance and a Federal Government Licensee.
D.1 Section 50.75(e)(3)(iv) provides that an electric utility which is a Federal Government licensee need only provide assurance in the-form of a statement of intent indicating that decommissioning funds will be obtained when necessary.
Since a Federal utility licensee will likely be confronted with many of the same new competitive pressures as non-Federal utilities, the question arises, should the regulations continue to permit the provision of a-statement of intent as the method by which these licensees provide financial i
assurance.for deccmmissioning. There is, for example, no Federal law which clearly provides that the Federal Government would pay the Tennessee Valley
- Authority's financial.' decommissioning obligations should TVA be unable to do Does this fact or any other-factors militate for or against allowing so.
11
.j
'o Federal utility licensees to continue to use statements of intent as the method by which financial assurance for decommissioning is provided?
E.
Status of Decommissioninq Trust Funds Durina Safe Storage Period.
r E.1 What real rate (s) of return should the NRC allow licensees to use as credit for earnings on the decommissioning trust funds during the extended safe storage period?
E.2 What time period (s) should the NRC allow licensees to use in estimating the credit for earnings on the decommissioning trust funds during i
the extended safe storage period?
F.
Reportino on the Status of Decommission 1no Funds.
F.1 What information should the NRC require to be included in the periodic reporting requirements?
F.2 How often should the NRC raquire licensees to report on the status of decommissioning funding?
The preliminary views expressed in this notice may change in lignt of comments received.
In any case, there will be another opportunity for additional public comment in connection with any proposed rule that may be developed by the Commission.
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'PART 50--00MESTIC-LICENSING OF PRODUCTION AND UTILIZATION FACILITIES
-The authority citation for:Part 50 continues to read as follows:
AUTHORITY: Secs. 102, 103, 104,'105, 161, 182, 183, 186, 189, 68 Stat, i
936, 937, 938 -948, 953, 954, 955,=956, as amended..sec, 234, 83 Stat. 1244, as' amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 2232, 2233, 2236, 2239, 2282); secs. 201,_as amended, 202, 206, 88 Stat. 1242, as amended, 1244,'1246 (42 U.S.C. 5841, 5842, 5846).
Section 50.7 also issued under Pub. L.95-601, sec. 10, 92 Stat. 2951-as amended by Pub. L. 102-486, sec. 2902, 106 Stat 3123, (42 U.S.C. 5851).
Section 50.10 also issued under secs 101,18E, 68 Stat. 936, 955, as amended (42 U.S.C. 2131,.2235); sec. 102, Pub. L.91-190, 83 Stat. 853_(42 U.S.C.
4332).
Sections 50.13, 50.54(dd), and 50.103 also issued under sec.108, 68 Stat. 939,-as-amended-(42 U.S.C. 2138).
Sections 50.23,-50.35, 50.55,-and 50.56 also issueo under sec,185, 68 Stat. 955 (42 U.S.C. 2235). Sections 50.33a, 50,55a and Appendix Q also issued under sec.102, Pub. L.91-190, 83 Stat. 853.(42 U.S.C. 4332). Sections 50,34 and 50.54 also issued under sec. 204,_88_ Stat. 1245 (42 U.S.C. 5844).
Sections 50.58, 50.91, ar d 50.92 also issued _under Pub.
L'.97-415, 96 Stat. 2073 (42 U.S.C. 2239).
Section 50.78 also issued u'nder sec.122, 68 Stat. 939 (42 U.S.C. 2152).
Sections 50.80 and l
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50.81 also issued undt.r sec; 184, 68 Stat. 954, as amended (42 U.S.C, 2234).
Appendix F also issued under sec.187, 68 Stat. 955 (4? m' i C 2237).
Dated at Rockville, Maryland, this day of _ _
, 1996.
I for the Nuclear Regulatory Commission.
l l
John C. Hoyle, j
Secretary of the Cumission.
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ATTACHMENT 3 PUBLIC ANNOUNCEMENT n
NRC CONSIDERING REVISING DECOMMISSIONING FUNDING RULE TO REFLECT VIILITY DEREGULATION; PUBLIC COMMENTS ASKED The Nuclear Regulatory Commission is considering revi:ing 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 3
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 decomnissioning if they are no longer subject to rate regulation by state agencies or by the Federal Energy Regulatory Commission and do not have a guaranteed source of income.
E e
-Require utility licensees to report periodically on the status of their_ decommissioning funds. The present rule has no such L
requirement because state and Federal' rate-regulating bodies actively monitor these funds.. A deregulated nuclear utility would have no such monitoring.
Additionally, the NRC is considering permitting licensees to take e
credit for a positive, real rate of return on decommissioning trust funds during a period of safe stcrage -(a decommis::ioning phase when the plant is maintained in a condition that allows the radioactivity on site to decay).
Under the present rule, licensees cannot take credit for earnings on such funds during safe storage because it is assumed that inflation and taxes would-erode any investment return.
The NRC -is also requesting comment on whether the Federal Government licensees of operating power-reactors -should be allowed to continue to use statements of intent to meet decommissioning financial assurance requirements for power reactors.
Full deta:ls 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 abtained from the NRC Office.of Public Affairs.
Comments should be mailed to: The Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention:
Docketing and Service Branch. They may be delivered to 11555 Rockville Pike, 2
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 l
published for public comment before adoption in final form.
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i ATTACHMENT 4 CONGRESSIONAL LETTERS l
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j NUCLEAR REGULATORY COMMISSION t
WASHINGTON, D.C. 20066-0001 O
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'The_ Honorable Dan Schaefer, Chairman Subcommittee on Energy and Power Committee on Commerce United States House of Representatives Washintston, DC 20515
Dear Mr. Chairman:
Enclosed for the information of the Subcommittee is a copy of the advance
(
notice of proposed rulemaking on Nuclear Power Reactor Decommissioning Financial Assurance Implementation Requirements that-the NRC intends to l
publish shortly in the Federal Register.
This advance notice is being issued to invite public comment on issues pertaining to the form and content of the NRC's nuclear power electric
' decommissioning financial assurance requirements as they relate to electric utility deregulation in il 50.2, 50.75, and 50.82.
Sincerely, Dennis K. Rathbun, Director Office of Congressional Affairs
Enclosure:
Federal Register Notice cc: Representative Frank Pallone
- c. *.
The' Honorable-von Schaefer, Chairman-
--Subcommittee on Energy and Power-
- Committee on Commerce L
United States House of Representatives i
Washington, DC 20515
)
Dear Mr. Chairman:
- Enclosed for-the information of the Subcommittee is a copy of the advance-
-notice of proposed rulemaking.on Nuclear Power Reactor Decommissioning-
[-
Firioncial Assurance Implementation Requirements that the NRC-intends-to publ'sh shortly-in the Federal Register.
i
-This advance notice is-being issued to invite public comment--on issues-pertaining to the form and content of the NRC's nuclear power electric
- decommissioning financial assurance r.uirements as they relate'to electric
- util.ity deregulation in 55 50.2, 50.7
- 50.82.
Sincerely, Dennis K. Rathbun, Director Office of Congressional Affairs
Enclosure:
Federal Register Notice cc:
Representative Frank Pallene 9
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- NUCLEAR REGULATORY COMMISSION WASHINGTON D.C. 2056dL4001
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The Honorable 1.auch Faircloth, Chairman
-Subcommittee on Clean Air, Wetlands, Private Property.and Nuclear Safety Committee on Environment and Public Works United States Senate Washington, DC 20510
Dear Mr. Chairman:
Enclosed for the information of the Subcommittee-is a copy of the advance notice of proposed rulemaking on Nuttear Power Reactor Decommissioning.
Financial Assu.ance Implementation Requirements that the NRC intends to publish shortly in the Federal Register.
This advance notice is being issued to invite public comment on issues pertaining' to the form and content of the NRC's nuclear power electric decommissioning financial assurance requirements as they relate to-electric 4
utility deregulation in $5 50.2, 50.75, and 50.82.
Sincerely, Dennis K. Rathbun, Director Office of Congressional Affairs
Enclosure:
Federal Register Notice cc:
Senator Bob Graham I
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The Honorable Lauch Faircloth, Chairman Subcommittee on Clear, ir, Wetlands,' Private s
Property and Nuclear Safety Committee on Environment and Public Works United. States Senate Washington, DC.20510
Dear Mr. Chaitman:
Enclosed for the information of:the Subcommittee is a copy of the advance notice of proposed rulemaking on Nuclear Power Reactor Decommissioning Financial ~ Assurance-Implementation Requirements that the NRC intends to publish shortly in the Federal Register.
This _ advance _ notice is being issued lto -invite public comment on issues per_taining to the form and content of the NRC's nuclear powor electric decommissioning financial assurance requirements as they relate to electric utility deregulation in 55 50.2, 50.75, and 50.82.
. Sincerely,
. Dennis K. Rathbun, Director Office of Congressional Affairs
Enclosure:
' Federal Register Notice cc: -Senator Bob Graham
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Fed:r:1 Registir / Vol. 61. No. 68 / Monday, April 8,1996 / Proposed Ruiss 15427
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u investi Acn0N: Advance notice of proposed defined as " electric utilities" e under been taketing or prosecuting entity has en.
rulemaking.
$ 50.2, to set eside funds annually over (h) Offsets. RHS may request offsets as the estimated life of the reactor for spentARY:The Nuclear Regulatory decommissioning. The NRC provided described in $ 3550.210 of subpart E of this part to collect amounts owed.
Camission is considering amending ite snore flexibility to its electric utility (t) Escrowfunds. At liquidation all regulations relating to financial licensees than other licensees because funds held in escrow or unapplied assurance requirements for the electric utilities have existad in a high.y funds will be applied against the debt.
decommissioning of nuclear powe' structured environment regulated by plants. Potential deregulation of t19 State public utility commissions (PUCs) pann sat seisement of a debt by power genersting industry has created or the Federal Energy latory compromise or edjueiment.
uncertainty with respect to whether Commienion (FERCL Un
~
Compromise or adjustment offers may current NRC regulations concerning
$ 50.75(e)(2), the NRC requires 11m==
~
be initiated by the debtor or by RHS.
decommissioning funds and the ohr than electrie utilities to set aside RHS will approve only those financial mechanisms will require a an external sinking fund coupled withi i
compromises arid adjustments that are modification to account for utility a surety method or insurance for muy l
in the best interest of the government.
reorganizations not contemplated when unfunded balance. However, with the -
f F
(a) Compromise. A compromise is an current financial assurance advent of dengulation the distinction-agreernent by RHS to release a debtor requirements were promulgated, between electric utility 11m=== and l
from liability upon receipt of a specified Additionally, the NRC is considering other licensees will likely be reduced or i l
lump sum that is less than the total requiring power reactor licensees to eliminated.nus,the NRC needs ta -
'3 l --
i amount due, periodically report on the status of their clarify the deihdtion of " electric uMity" 1
(b) Adjustments. An adjustment is an decommissioning funds. Allowing and to requim additional assurance of-i agreement by RHS to release a debtor credit for earnings on decommlesioning those Econsees whoon poww reactor from liability upon receipt of a reduced trust funds during extended storage will costs are no longer regulated.
]
I amount paid as an initiallump sw and also be considered. This advance notice Typhuy, power mactor Noensees q :'
- O' l l
periodic additional payments o.er a of proposed rulemaking is issued to place h funds is t m.
'^
pedod of up to five years.
invite public comment on issues -
external trust or encrow ecommets that.4,o c
(c) Timing of offes (t) For a pertaining to the fann and content of the am senerved for h=i=i==a=s
$ M settlement offer to be considered, NRC's nuclear power reactor activities.2 Under the ma-set== etg g 4 a
secured debts must be fully matured decommissioning financial assurance under the terms of the debt instrument requirements as they relate to electric tu====== unust = external sinking fund,. y~ eR abe fun or must have been accelerated by RHS.
utility deregulation. -
esta== tad Mhe neededfardadayW 3 (2) Unsecumd debts owed after the oATas:Suhmit comments by June 24.< m d=====mismissang by tio elssethstrWi 1996. canments received after this date 4 incilities ese par====any shut do sale of the security property may be -
proposed for compromise or adjustment will be considered if it is practical to do '
6go.75(e)alsoabusspendesMM[;
at any time. Debts that were never so, but the Counmission is able to assum seector tomeseMbe$ar4 W5g' secured may be proposed for consideration only for comments letters of credit.'eaul peepeguesEHDi h
compromise or adjustment when they received on or bok re this date. -
' pmvide esausemeau
(
are due and payable.
Aconseess: Mail mmmants to: %e powerneestor s
(d) fletenhon of security property. De Satary of the CmWM U.S.
fundmisend
' debtor may retain the security proport Nuclear Regulatory Cornmtanton.T
= In
- i== ' $ Sts.
If the compromise payment or the ini 1 M M*g Washington, DC 20555-e001 Attentbnit that en electric utility is payment made as part of an adjustment. Docketing and Service Branch.
Goverussent ne===== amed W 4 offer is at least equal to the net recovery \\
. Deliver comments to: 11555 Rockville - assurener,isi the terum efe stIssesnteSM Pike, Rockville, Maryland, between 7:45 intent indi=rieg that d====maamtemen value, and it is in the best in5 rest of the Ey government to allow the debtor to retain a.m. and 4:15 p.cn. Federal workdays. D funds will be ahme==d when musessesy.GM/S the security property.
- Forinformation on submitting - 9
"? 4 Nf mMg@d?
g saan =gaan ena Ineeerved) comments electronically, see the.
, i-sisaric mumy meses"emy'esn'ayestemuseush%
discussion undar Electronic Arr=== in E er disethness enesensierand stash mesussee% Aj
. Dad M a. tus' lementary Information Section.7 een at mis etenrisay. enkse er M. M 4
+ the Supfne copies of comments voceived S'oush sen umbhshed by he,-
Y y
las* S="Ik887 wary.RumJ Economicand-BWUs
.M Exam Acting Undersecr at: he NRC Public Document Room, e,@ "*"'*"Y e dessemann 2 % M [
communityDevelopment.
2120 L Street NW. (Lower Level).^
sehssdiarise, esen,dermeds,-Md - r i
[FR Doc. 96-6492 Filed 4-5-96; 6:45 aml Washington.DC. ~ " ~
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Financial Assurance 7---?
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essurance for the ocornminaloning of.
- t**cco*=t ^ *** d -
nucker power reactars am con 6ain=d in L l""'.d'C"Q',,'Y', -
(MQ Reacte 3
$ 50.75. Under $ 50.75(e)(3).the NRC coveesec.dmameddanssumissemesseneetm0esh Y Aopcv: Nuclear Regulatory -
allows power reactor licensees, who are ' eny othar perpees. @ any WWW - %j Commission.
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- @p< A5438 ? _ ' Federal Register / Vol. 61/No. 68 / Monday, April 8,1996 / Proposed Rules
- ,J ti 74 wL c
hTheint t k$ 50.75 is to rovide -
SpeciDc Proposal source of operatmg, maintenance, and i
4 Y[kgp -'a=Ma assurana that f ds for y
~ '" willbe svadable' s
The Commission is considering capital improvement funds should such gs*]g _-
s '5%esinW i,hinability of the amending $$ 50.2,50.75, and 50.82 to a nuclear generator decide to continue g g : %%to p~rovide fundmg for M ~
. require tht.t electric utility reactor operations? What will be the source of
' licensecs provide assurance that the full funds to prematurely and safely shut
- g( A f E
- g sney adversely allect y = estimated cost of deconunissioning will. down an uneconomic plant? Are S
1 of
, health and safety.,. be available through an ac ptable transmission accias or other surcharges aApgcpi aleek
'=
t= toning funds guarantee mechanism if the licensees t cover stranded costs likely?
, j,} ?.Wglea bandal sisk to taxpayers (i.er.lf the are no longer sub)ect to rate regulation
'C Nuclear financial Qualifications and
. g %qy Jesudesempoet pay fo'3 by PUCs or FERC, and do not have a Decommissioning Funding Assumnce iCQQ g gi78r8
- uld.
guaranteed source ofincome.The
- [b k@[%.dtnesselselesdag rule, the Commission t
issue,when b ?,
, amendment would also allow licensees C.1, if nuclear plants are shut down prematurely, how willlicensees who f
.Seguentesten lasued the S-t1 setu
- ["'
can no longer pass costs through to l4f 4 ds safe storaSe Period.1.asti ratepayers provide for a shortfall of N % n=Hisy, an external reserve account ^ < ' 'g* "g"I'***I *(a periodic 7 m W besteemi that, for a regdated electric.
'. ' Mut f be decommissiordng funds?
C.2. At what point does an operator of n.,e=Weier the estimated semaining '
a nuclear power plant cease tobe a l b
.1 ' asoc6erlife would provide the necessary. S ecinc Considerations
" utility" as defined in 5 50.2 of the P
!W9 s.a
.wa assurana.'Howeverlas a Advice and recommendations on a NRC's regulations?
I > KM na===reetism built into the rule, th*
M pronosed rule reflecting the foregoing C3. If an eledric uuhty niorganim b ;/p}f[NRC deelded not to allow licensees to - ' ano any other points considered itself, including divesting parts ofitself,
[_
W M tehe candit for earnings on their trust 4 pertinent are invited from all interested so that the rernaining entity o erating a p;, fNSandswhilethei(reactorswerein personscComments and supporting setting State or Fede7ra body, or will react ris n 1 nger 1ated y a rate-
- ; ? ? S;n. ausseded seas storage Rather,the NRC reasons are particularly requested on the 0
assumedthat da safe storage the rate following questions arraord by topic:
cease to be regulated by a rate-settmg i
p.VB lofsetssa em d====tuloning State or Federal body if the reactor 2
l
~W m l A 9ypg.isst hads would equalthecost escaldion rde., 'IndustryDeregulation appropriate to require financial A. Timing and Extent off f.ric Utility ceases operation, would it be J
e u
- Nh@hbes, the eRer ta"x, after4aflation A.1, What is the likely timetable for assurance for the decommissionin3 sets anw*Wely would be aero.. ' industry restructuring and deregulation 7 c sts in full prior to NRC approval of l
dh the NRC psumulgated the 1988 '. A.2. Will the electnc utility industry such reorganizations? Such assurance l x i
8g U-7 lineesses ts sapest' periodically on the to deregulation and other competitive Parent company guarant.ee, certification
' " t rule,it did not require go through several phases as it responds could take the form of self gaarantee, l
! + 6 Sheshesef their darw====l'aloning funds.
pressures? If so, what will be the likely by the rate-regulating entity, or other
(
. M i NRC sleeved lla===aa compliance with major changes in business structurs that financial surety mechanism to cover the j'
@ ' ?$the handing esaurence ants as a may occur in each phasef Will rates unfunded decommissioning costs.
nestaarto be datermined hthe remain regulated at the rotat!
Should the NRC require additional
+4 2y' 3 "
when necessary.
distribution level, with deregulation assurance.for adequate funds for safe iP Also, the r=carlsed in the 1988 occurring (or generation and operation and decommissioning in
%p l decom alastoning rule, the PUCs' and transmission? Will retail wheeling anticipation of deregulation? Should the
?
k 3
VERC's authoeiry to set annual become widespread and lead to NRC require, as a condition of approval
- 1(contribu' ion ratas to decommissioning deregulation of all sectors of the electric of certain reorganizations involving the a
fund sad to establish investment and utility industry? Or will rates remain transfer of control of a nuclear power
)... '
. Tis JCs and FERC also actively with deregulation occurring within the or holding companies sign a binding othe6 aanagement criteria for the funds. regulated et the retail distribution levul, l
P ant, that newly created organizations mc ltor these decommisaloning funds generation and transmission sectors?
agreement that holds them jointly liable a
p as past of their rate regulatory What will likely be the final structure of for decommicsioning costs associated I
responsibility. Moreover, the Financial the electric utility industry, assuming with that nuclear power plant? What i
j Accounting Standards Board (FASB). a either partial or full deregulation?
would be the impact of such actions?
i national organization that sets A.3. Some States appear to oppose C.4. Should the NRC require a j
accounting standards, recently initiated deregulation. Will they be able to licensen to provide a reasonable a review of reporting of maintain their opposition if neighboring assurance of the availability of funds for decommissioning obligations on electric States deregulate? What will be the decommissioning by imposing a I
utility financial statements. Although industry structure if some States minimum level of not worth, cash flow, FASB has not establishad a flual
- deregulate more than others? Can a or other financial measure (similar to 10 I
i standard. it appears that it will increase
- hybrid" system exist effectively?
CFR Part 30. Appendices A and B)? If 2'
the level of detail on power reactor below the minimum levels, the licensee 1
licensees' financial statements. If B. Stranded Costs-would no longer be allowed to h
adopted, this standard would likely give B.1. How will restructuring affect accumulate decommissioning costs over I
~ he NRC and others additional large baseload plants that currently remaining facility hfe, but would moed t
q
(
I information on the status of receive rate relief to cover construction a guarantee that funds would be decommissioning funds, llowever, the costs or have a pmtlen yet to be phased available for decommissioning through
! l.
advent of deregulation, and into the rate base? Specifically, what is various financial measures. What t
consequently less oversight by FERC or the probability that a.nd degree to which financial measures would be effective f
9 by PUCs, makes it imperative that the these costs will be recoverable should a and reasonable?
NRC have a source r,f information to nuclear power plant be deemed to be C.S. Would PUCs and FERC be willing monitor the status of decommissioning non-competitive because of high to certify that licensees under their funds.
construction costs? What will be the jurisdictions, both electric utility and
4 Fed:r:1 Registir / Vol. 61, No. 68 / Monday, April 8,1996 / Proposed Rules 15429 5
Pr.rt 50 licensees other than electric financial assurance for Internet: fedworld. gov. If using (703) -
l e
utilities, would be allowed to collect decommissioning is provided?
321-3339 to contact FedWorld, the NRC
.; i sufficient revenues through rates to subsystem will be acx:essed from the '
s I complete decommissioning funding?
]
jag 8 y#
main FedWorld menu by selecting the:
~l ds f
C.6. What would be the impact if the Regulatory, Covernment -
NRC required licensees to accelerate E.1. What real rate (s) of return should Administration and State Systems,"
collection of decommissioning funds the NRC allow licensees to use as credit - then selecting " Regulatory Information such that decommissioning funding for for earnings on the decommissioning Mall." At that point, a menu will be.
all plants would be complete within 10 trust funds during the extended safe displayed that has an option "U.S.
years (or some other time periodly storage period?
Nuclear Regulatory Commission" that ;
j C.7. Assume that licensees have E.2. What time period (s) should the will take you to the NRC Onhae main accumulated funds that are determined NRC allow licensees to use in estimating menu. The NRC Online area also can be '
i to be adequate based on current the credit for earnings on the -
accessed directly by t ' ing"/go um"at..
estimates of decommisdoning costs. If decommissioning trust funds during the a FedWorld comman
. llyou~ access q
these estimates turn out to be low far in extended safe storage period?
NRC from FedWorld's main menu,you. -
(
the future (for example,if final F. Reporting on the Status of may return in FedWorld by selecting the dismantlement occurs after a 50-year Decommissioning Funds
" Return to FedWorld" option from tle t.
l sata storage period), how will underfunding be remedied? What F.1. What informatim shald the NRC Online Main Menu. However,if 3
you access NRC at FedWorld by using ;
N mquim to Mncluded in 6e
~
meisures should the NRC consider for NRC's toll-free number, you will have obtiining assurance of funds for such Py, owgn sh u d full access to all NRC systems, but you ~
re 8
e situations? Should the NRC require requ$e licensees to report on the status w nd ave acasa to main,,
p-4 larger contingency factors in estin.ates to cover such situations?
of decommissioning fundingt FedWorld system.
\\
- a. a :
m If yn contact WMd usingNndr
(
this notice ma an in hght of
. you wiu see the NRC area and menus, p., f C 8. Would it be feasible for the The prelimin views expressed in nuclear industry to develop a captive I"'I"dA"hable to download myj e Rules Menu. Anthengh gs i comments received. any case, there insurance pool to pay for will be another opportunity for you will decommissioning funding shortfalls that additional public comment in documents and leave massegos, you.willg g,
p result from prematum connection with ao posed rule that n ne a e to write esaments er uploedg p g decommissioning? Could such a pool be may be developed by t e Commission.
es (cmammts)
-w structured similarly to Nuclear Mutual FedWorld using
., all Sles ca ; hew,pyp
~
4.q n
l Limited (NML) and Nuclear Electric Electronic Accees eccessed and dowpLwlad but are n tallowed (allyouwillestits g[Q v i
lasurance Limited (NEIL), who Comments may be submitted g
i currently insure on-site property electronically,in either ASCII text or.
' of files without dehcripticas (nesmann ggg;g dama8e and replacement power of Wordperfect format (version 5.1 or
. Gopher look). An index fue listlugallggg ~ y Ales witMu a NM%g yj 7'g m:mber utilities?
later), by calling the NRC Electronic C.9. If PUC or FERC oversight is either Bulletin Board (BBS) on FedWorld.%e ' descriptions, is available. ThessIsa 4
.y substantiall limited or eliminated, are bulletin board may be accessed using a minute timslimit for FTP accom%$gg thrre any other options for financial personal computer, a modem, and one =
. AhhwgyedWeeW alsoaushew%gg assurance of decommissioning that the of thecommonlyavailable accessed through the World WidspuQ p,q
' NRC should consideri communications software packa['n, or, he Nhat mode caly JoMesaccuse q;W direct)Y via Internet' Backgroun for downlonding Blas dansnotuW u D. Decornmissioning Funding Assurance
- dis [or more information est NRC bidletin lay the NRC Rules Menu.M &
and a Federal Government Licensee docume t ed n
g,, A ards canMr. ArthurDavis,Spese a
U(
king
},,
D.1, Section 50.75(e)(3)(lv) provides as practical, for downloading and tbzt an electric utility which is a Federal viewing on the bulletin board.
Int ation and Deralopment Breach, Government licensee need only provide 11using a personal computer and.
. NR{ Washington,DC 20565,telaph=gy -
4
=p assurance in the form of a statement of modem, the NRC rulemaking subsystem '(301) 415-5780: e mail AE _ _. ggy. ',
int:nt indicating that decommissioning
~on FedWorld can be accessed directly PART50-DOMESTICNk )U*?
funds will be obtained when necessary, by dialing the toll free number 1-(800) '
~
- PRODUCT 10HMNT10864 N Since a Federal utility licensee will 303-9672. Communication software liksly be confronted with many of the - ; parameters should be set as follows:
FACluTlES ~ jf f dMM4,M same new competitive pressures as non-parity to none, data bits to 8, and stop 4
~ Re authority citaucu for Part 30 W N;m%
Federal utilities. the question arises, bits to 1 (N,8,1). Using ANSI or VT-100 continues to read as foll Qg should the regulations continue to terminal emulation, ti,e NRC Autherty: Secs 710t, hos.305, tosl$6 permit the provision of a statement of rulemaking subsystem can then be
'ta2;1sa,tso 1se,es sent.sse,se7,ses,@hh f,;
int:nt as the method by which these accessed by selecting the " Rules Menu" 948,953,954,955, too, as anaended, ses.
234,as Stat.1244,as amended (42 UACMN, N " '
lic;nsees provide financial assurance for ' option from the "NRC Main Menu.".
N decommissioning. There is, for example, Users will find the "FadWorld Online 2132,2133,2134,21ss,2201,2232,2sas & f p q no Federal law which clearly provides User's Guides" particularly helpful.
9 2236,2239,22s2)mes.201,as--MM& g]-
thit the Federal Government would pay - Many NRC subs tems and data bases.
202,20s, sa Stat.1242,as amendeditasevy @
ths Tencessee Valley Authority's also have a "He ation Center ~
1246 (42 UAc ss41, ss42, se4el. s y m.4 g fintncial decommissioning obligations option that is tai ored to the particular
[o#
jh should TVA be unable to do so. Does n
2S
?
su ystem.
this fact or any other factors militate for e NRC subsystem on FedWorld can Pub.1.102-486, sec. 2902, tos Stat, st23 42 d,
UAC. sastl. Section 50.10 also imod under ?
or against allowing Federal utility also be accessed by a direct dial phone secs. tot, tes, es Stat. 936, oss, ag====w Q (< ^..
licensees to continue to use statements number for the main FedWorld BBS.
(42 UAC. 2131,lt235h sec. to2. Pub. I;. 91 P 1"
of intent as the method by which (703) 321-3339, or by using Telnet via 190, e3 Stat. 853 (42 UAC. 43321. Sections f,
- ~,
?
)
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