ML20211N152

Forwards Proposed Rule, Financial Assurance Requirements for Decommissioning Nuclear Power Reactors, Being Reviewed by Pertinent Ofc & Will Be Sent to Edo.Staff Proposes Review by ACRS & CRGR Be Waived Until Publication

ML20211N152
Person / Time
Issue date:	04/08/1997
From:	Morris B NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES)
To:	Kress T, Ross D Advisory Committee on Reactor Safeguards, Committee To Review Generic Requirements
Shared Package
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References
FRN-62FR47588, RULE-PR-50 AF41-1-028, AF41-1-28, NUDOCS 9710160034
Download: ML20211N152 (4)

Text

1 April 8,1997 MEMORANDUM 10: Thomas S. Kress. Chairman Advisory Committee on Reactor Safeguards Denwood F. Ross. Acting Chairman Committee to Review Generic Requirements FROM: Bill M. Morris. Director Ibf

/ (b Division of Regulatory Applications Office of Nuclear Regulatory Research

SUBJECT:

PROPOSED RULE - FINANCIAL ASSURANCE REQUIREMENTS FOR DECOMMISSIONING NUCLEAR POWER REACTORS Please find attached a copy of the subject document which is being reviewed by the pertinent Offices and will'be sent to the EDO.

The staff proposes a review by the ACRS and the CRGR be waived until the proposed rule is published in the Federal Reaister and is in final form, This will provide you the benefit of any )ublic comments received and the staff's response to them. A draft copy of t7e subject document was provided for information on March 10. 1997.

The ACRS and the CRGR are requested to inform me of the acceptability of the proposed review process within two weeks of the date of issuance of this memorandum.

Attachment:

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/ NUCLEAR REGULATORY COMMISSION

$ ADVISORY COMMITTEE ON REACTOR SAFEGUARDS o, W ASHINGToN, D. C. 20666 April 8, 1997 a

MEMORANDUM TO: L. Joseph Callan

, Executive Dir et e tions FROM: John T. Larkins, 'T tDeNfrector ACRS/ACNW

SUBJECT:

PROPOSED RULE - FINANCIAL ASSURANCE REQfiIREMENTS FOR DECOMMISSIONING

, NUCLEAR POWER ret.CTORS During the 440th meeting of the Advisory Committee on Reactor Safeguards, April 3-4, 1997, the Committee decided not to review the subject proposed rule.

Reference:

Memorandum dated March 10, 1997, from David L. Morrison, Office of Nuclear Regulatory Research, NRC, to Addressees, Subjects Office Review and Concurrence on a Proposed Rule - Financial Assurance Requirements for Decommissioning Nuclear Power Reactors

, cc: J. Hoyle, SECY J. Blaha, OEDO

-J. Mitchell, OEDO D. Morrison, RES 1 B. Richter, RES J. Cortez, RES a- '/

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Feder:1 Regist:r / Vol. G1, No. 68 / Monday, April a,1990 / Prop sed Rules 4W d PbA15427 investigating or prosecuting entity has ACTiom Advance notice of proposed defined as " electric utilities" 8 under

! been taken. rulemaking. $ 50.2, to set aside funds annually over (h) Offsers. RilS may request offsets as the estimated life of the reactor for described in 5 3550.210 of subpart E of SUt4MARyt The Nuclear Regulatory decommissioning. The NRC provided Commission is considering amending its more flexibthty to its electric utility this hart to collect (i) scrowfunds. At liquidation all amounts owed.reguladons relating to financial licensees than other licensees because funds held in escrow or unapplied assurance requirements for the decommissioning of nuclear power electric utilities have existed in a highly funds will be applied against the debt. structured environment regulated by plants, potential deregulation of the

( 3550.253 Settlement of a debt by State public uulity commissions (pUCs) power generating industry has created compromise or adjustment. or the Federal Energy Regulatory uncertainty with respect to whether Compromise or adjustment offen. may cunent NRC regulations concerning Commission (FTRC). Under be initiated by the debtot or by RllS. $ 50.75(e)(2), the NRC re.luires licensees decommissioning funds and the Riis will approve only those financial mechanisms will require a other than electric utilities to set aside compromises and adjustments that are an external sinking fund coupled with modification to account for utility in the best interest of the govenunent, a surety method or insu ance for any (a) Compromise. A compromise is an reorganizations not contemplated when unfunded balance. Ilowe rer, with the current financial assurance advent of dereguladon, the distinction agreement by RilS to release a debtor requirements were promulgated.

between electric utility licensees and from liability upon receipt of a specified Additionally, the NRC la considering lump stun thet is less than the total other limnsees will likely be reduced or requiring power reactor licenwes to eliminated. Thus, the NRC needs to amount due, perio*, ally report on the status of their *

(b) Adjustments. An adjustment is an decommissioning funds. Allowing clarify the definition of " electric utility" agreement by RilS to release s debtor credit for earnings on decommissioning and to require additional assurance of from liability upon reipt of a reduced trust funds during extended storage will those licensees whose power reactor amount paid as an initial lump sum and also be considered. This advance notice costs are no longer regulated, periodic additional paym mts over a of proposed rulemaking is issued to Typically, power reactor licensees period of up to five years. invite public comment on lasues place decommisaloning funds in (c) Timing of offers. (1) For a rtaining to the form and content of the external trust or escrow accounts that settlement offer to be considered. C's nuclear power reactor are reserved for decommissioning wcured debts must be fully matured decommissioning financial auurance activities.s Under the definition of under the terms of ti.e debt instrument external sinking fund, power reactor requirements as they relate to electric or must have been accelerated by RilS. utility deregulation. limnsees must acx:umulate all the funds (2) Unsecured debts owed after the estimated to be needed for . .

DATES: Submit conunents by June 24, decommissioning by the time their sale of the security property may be proposed for compromise or adjustment 1996. Comments received after this date facilities are permanently shut down.

at any time. Debts that were never will be considered if it is practical to do Although $ 50.75(e) also allows power so, but the Commisalon is able to assure secured may be proposed for reactor licensees to use swety banda,*

consideration only for comments letters of credit, and propeysasnt toa ." .

compromise or adjustment when they received on or before this date.

are due and payable. provide funding assuranca,visteelly all M k ,*E, (d) lietentwn of security property. The ADDREssts: Mall commenta to:'Ite power reactor liconeses neathe h Af Secretary of the Commission', U.S. sinking fund method of -9==== Wl8 W N, debtor if the compromisemay retain payment the security or the init propert[al Nuclear Regulatory Commission, in addition $ 50.75(e)(3)(iv) M-payment made as part of an adjustment Washington, DC 20555-0001, Attention: that an electric utility thatis a '

offer is at least equal to the net recovery Docketing and Service Branch. Government licaneca need only provide value, and it is in the best interest of the Deliver comments to: 11555 Rockville aasurance in the form of a s maaramat a of.

government to allow the debtor to retain Pike, Ruckville. Maryland, between 7:45 intent indicating that decomrnisoloning the security property. a.m. and 4:15 p.m. Federal workdays. funds will be obtained when noosseary.

For information on submitting .

$ 3550.2563550.300 (Reewved) comments electronically, see the i-n.ctric wins mane any entaryhe s ww

. Dated: Mart.h 8.1906. discussion under Electronic Access in or distributes el.cuicity and which reco we the Inge smuinitys, lementary laformation Section. ca : of thk electricity, either dire or indirecdy.

Acting Under Secretary. ltuml Iconomic and theExamSupfne copies of comments received th'oush r.w. t m.h.d by me hatt w by ,

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communityDevelopment. at: The NRC Public Document Room. $ M ,'c*3," M *,$,."o'Yes u diare 2120 L Street NW. (Lower level),

IFR Doc. 964492 Filed 4-5-90: a.45 sml Washington, DC.

eubadarta. pubue stuity diarican, rural eimsic coopw.unn ead sans and radmal 8""8 C00' **'"

• FOR FURTHER INFOne4ATl0N CONTACTt Brian J. Richter, Office of Nuclear d 8 "g c"3ed.d the y

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Dgulatory Researth, U.S. Nuclear ei.ctric wtay. ,e Many ucen== the haveinne$hshed "t i .

NUCLEAR REGUL.ATORY Regulatory Commission. Washington,

'Mu COMMISSION DC 20555-0001, telephone (301) 415- daccami*alautas d

"*' '" "w'* "$ d*** "8@g tr*H D'*ds t* **8'I**h sQj2 10 CFR Part 50 6221, e-mail bir@nrc. gov. underise.2 and tar other ? - '

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RIN 3150-AF41 8"* "'8"""" **d 8"8' ***9F'8 8D Back3round W NRC au'mn t8<===== eOm te dsomsp'"'38eeg'<

Financial Assurance Requgroments ,or .mne tram acmust u lame a es most he asbe , e Decommitosioning Nuclear Power Kequirements pertainig to financial '

assurance for the decommissioning of exounts sub+cwunt that A trumca er rly d.un w the gthe subameme Reactors provide ensurancs of Naceased b m o f.

nisclear wer reactors are contained in 3,,,,,untanta AGENCY: Nuclear Regulatory $ $0.75, mcod.nn.s Commission.

der $ $0.75(e)(3). the NRC w, d*come -- shoddheinpuheidw ^g u 4 enets bedes allows power reactor licensees, who are any othe purpons. -

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1!WE8 redtrel Register / Vol. 61."No. 68 / Monday, April 8,1996 / Proposed Rules "9 ' . We intent of $ 50.75 is to provide Specific Proposal sourte of operating, maintenance, and r===anable assurancs that funds for The Commission is considering capital improvement funds should such

. ,; 4mrrnnmlastoning will be available amending $$ 50.2,50.75, and 50.82 to a nuclear generator decide to continue

! .c (. when necessag. ne inability o.f the require that electric utility reactor operations? What will be the source of

, licanese to pmvide funding for licensees provide assurance that the full funds to prematurely and safely shut s 4 deonmanimaloning may adversely affect estimated cost of decommissioning will down an uneconomic plant? Arc

, , y A pect6ction of public health and safety. be available through an acceptable trans: .sion access or other surcharges

• . (Also, a lack bf decommissioning funds guarantee mechanism if the beensees t cover stranded costs likely?

y la arial lek t to taxpayers (i.e.,!! the are no longer subject to rate regulation 'C. Nuclear financial Quahfications and

.,y manot pay far try PUCa or FFRC and do not has e a laatunt x yers would Decommissioning fund /ng Assurome i

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]Q guaranteed source of income. The amendment would also allow licensees C.1. If nuclear plants are shut down prematurely, how will licensees who u

t. f 9-' $qw% ga rdissue, g w in the to assume a positive real rate of return can no lonBer pass costs through to

"' sdu ng e h* . E decenaudseloning rule,the Commission ufe ratepayers provide for a shortfall of tY,*I

' 3 believed that, for a regulated electric 8 I rt ' decommissioning funds?

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' Mutility, an external reserve account ' ",hg',"y jguirement w u d be C.2. At what point does an operator of colledad over the estimated remaining a nuclear power plant cease to be a

. reactor life would provide the necessary Specific Considerations " utility" as defined in $ 50.2 of the

, reasonable assurancs. Ilowever, as a Advice and recommendations on a NRC's regulationst

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• ameervatiam bidit into the rule, the proposed rule reflecting the foregoing U N "" # " O Y " 8""

, NRC decided not to ellow licenaces to and any other points considered Half, including divesting parts ofitself,

't take aedit for earnings on their trust pertinent are invited from all interested so that the remaining entity o erating a

[

s funds while their reactors were in persons. Comments and supporting mam h no bgm aguW y a e

! c *~ extended sale storage. Rather, the NRC reasons are particularly requested on the setting State or Federal tody, or will

assumed that during safe storage the rate following questions arranged by topic

cease to be regulated by a rate-setting

) of return om external decommissioning State or lederal body if the reactor

' . trust funds would equal the A. 74 ming and Extent of Electric Utility ceases operation, would it be

' Q deoos

'=la= root escalation rate. Industry Deregulouon appropriate ta require financial Y A.1, What is the likely timetable for assurance for the decommissioning

' JhS ))hua, the after ta"x. after inflation p1 earnings sete obctively would be rem. Industry restructuring and deregulationy costs in full prior to NRC approval of 9 $4when the NRC pmmulgated tbn 1988 A.2, Will the electnc utility industry such reorganizations? Such assurance Nc ' dammmladoalag rule,it did not require go through several phases as it responds could take the fonn of self guarantee.

O li-a== to soport periodically on the to deregulation and other competitive arent company guarantee, certification c statue of tineir riam-mi ssioning funds. pressurest if so, what will be the likely {>y the rate-regulating entity, c. otact .

NRC eiewed licensee compliance with major changes in busine s structure that financial surety mechanism to cover the the funding ensurance requirements as a may occur in each phasef Will rates unfunded decommissioning costs.

ii saatter to be detennined through the remain regulated at the retall Should the NRC require additional inspection process when necessary. distribution level, with deregulation assurance.for adequate funds for safe Also, the NRC recognited in the 1988 occurring (or generation and operation and decommissioning in decommissioning rule, the PUCs' and transmission? Will retail wheeling anticipation of deregulation? Should the FERC's authority to not annual become widespread and lead to NRC require, as a condition of approval contribution rates to decommissionh, deregulation of all sectors of the electric of certain reorganir.ations involving the funds and to establish investment and utility industry? Or will rates remain transfer of control of a nuclear power other management criteria for the funds. regulated at the retail distribution level, plant, that newly created organizations The PUCs and FERC atso actively with deregulation occurrius within the or holding comi iantes sign a binding monitor these decommissioning funds generation and transmission sectorst agreement that holds them jointly liable as part of their rate regulatory What will lit.cly be the final structure of for decommissioningtosts associated responsibility, Moreover, the Financial the electric utility industry, assuming with that nuclear power plant? What Accounting Standards Board (FASUI, a either partial or full deregulation? would be the impact of such actionst national organization that sets A.3. Some States appear to oppose C.4. Should the NRC require a accounting standants, recently initiated deregulation. Will they be able to licensee 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 utility financial statements. Although industry structure if some States minimum level of net worth, cash flow.

FASB has not established a final

• deregulate more than others? Can a or other financial measure (similar to 10 standard it appears thi it wtilincrease " hybrid" system exist effectivelyf CFR Part 30, Appendices A and D)? If the level of detail on pc wer reactor below the minimum levels, the licensee licensees' financial stctements. If B. Stronded Costs. would no longer be allowed to adopted, this standard would likely give, B.1. Ilow will restructuring affect accumulate decommissioning costs over the NRC and others additional large baseload plants that currently remaining facility life, but would need information on the status of roccive rate rehef to cever construction a guarantee that funds would be decommissioning funds. Ilowever, the costs or have a portion yet to be phased available for decommissioning through advent of deregulation, and into the rate base? Specifically, what is various financial measures. What ,

consequently less oversight by FERC or the probability that and degree to which financial measures would be effective

. by PUCs. makes it imperative that the these costs will be recoverable should a and reasonable? '

NRC have a source ofinfonnation to nuclear power plant be deemed to be C.5. Would PUCs and FERC te willing monitor the status of decommissioning non-competitive because of high to certify that licensees under their funds. tonstruction costs? What will be the jurisdictions, both electric utility and f

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• Fed 2r:1 Regleiter / Vol. 61. No. Ga / Monday, April 8,1996 / Proposed Rules 15429 e w part 50 licensees other than electric financial assurance for Internet: fedworld gov. lf using (703) utilities, would be allowed to collect docommissioning is provided? 321-3339 to contact FedWorld, the NRC sufficient revenues thmugh rates to subsystem willle accessed from the complete docommissionirs fundingt C6. What would be the impact if the n

ri f i g'l [ main FedWorld menu by selecting the Regulatory, Government NRC required licensees to accelerate E.1 ' hat real rate (s) of return should Administration and State Systems,"

collection of decomrnissioning funds the Nat miow licensees to use as credit then selecting " Regulatory information such that decommissioning funding for Ir earnings on the decommissioning Mall." At that point, a menu will be all plants would be complete withia to trust funds during the es ended safe displayed that has an option "U.S. '

years (or some other time period)y storage period? Nuclear Regulatory Commission" that C.7. Assume that licensees have E.2. What tirne period (s) should the will take you to the NRC Online main accumulated funds that are determined NRC allow !!censees to use it. estimating menu. The NilC Online area also can be to be adequate based on current the credit for earnings on the accessed directly by typing "/go arc" at estimates of decommissioning costs. If decommissioning trust funds during the a FedWorld commandline. If you amean these estimates tum out to be low far in extended safe storage period? NRC from FedWorld's main menu, you the future (for example,if final F. lieporting on the Status of may return to FedWorld by se%cting the dismantlement occurs after a 50-year Decornmissioning Funds " Return to FedWorld" option from the safe storage period), how will NRC Online Main Menu. Ilowever,if underfunding be remedied? What F.1. What information sho aid the NRC require to be included in the you access NRC at FedWorld by usinE I .

measures should the NRC consider for NRC's toll. free number, you will have 1 obtaining assurance of funds for such E* '

o,'P 8d d full a cess to all NRC systems, but you p olten situations? Should the NRC require l 1srger contingency factors in estimates uNe licensees to re ort on the status FedWorld system.

[demmmissioning i ding?

" ""C"**'

I to cover such situations? The prelimina views iressed in if you c ntact FedWorld using Telnet.

C.8. Would it be feasible for the ou will see the NRC area and inenus, this notice may c ange in I ght of nuclear industry to develop a captive comments received. In any case, there [ndudin Ruks h Abgli insurance pool to pay for will be another opportunity for y u will able to download , h, decommissioning funding shortfalls that additional public comment in documents and leave'mossegno, you will ,

result from premature connection with any posed rule that n t be able to write mmments or tipload .

decommissioning? Could such a pool 18 may be developed by t e Commission, es (ctmunanW ma t structured similarly to Nuclear Mutual FedWorld using , all files can,be> q g Limited (NML) and Nuclear Electric Electronic Access aaer. sed and downloaded but up . , ,

Insurance Limited (NEIL), who Comments may be submitted are not allowed; all you will seele a pq currently insure on site property electronically,in either ASCll text or of files without doncriptions (aceanal q damage and replacement power of Wordperfect format (version 5.1 or member utilitiest later), by calling the NRC Electronic Gopher look). An index file listingply g p o M,g.

C.9. If PUC or FERC oversight is either Bulletin Board (DBS) on FedWorld. The files within descriptions, a subdirectory, is available. These is n.ta with .g h A,.y substantially limited or eliminated. are there any other options for financial bulletin board may be accessed using a personal computer, a modem, and one mWuk ume M be mQ.@gg Although FedWorld alsotanhemg ; . y assurance of decommissioning that the of the commonly available accessed through the World Widaypebg; ;,%j ,

' NRC should considerf communications software packa es, or Il ' *'

• D. Decommissioning funding Assumnce d y a '

g, d im d **'l "

th a anc ce of display the NRC Rules Menu. - a . .

and a Federa1 Government fJcensee I'or more ini rmation on NRCbulletin F M Wag Mso udlah D.1 Section 50.75(e)(1)(iv) provides as practical, for downloading and boards call Mr. Arthur Devia. Syptoma . .

that an electric utility which is a Federal viewing on the bulletin board. Integration and Development M Government licensee need only pmvide if using a personal computer and NRC, Washington, DC 20555, telephone assurance in the form of a statement of modem, the NFC rulemaking subsystem (301) 415-5780&usal1 N.3m ., ,

intent indic sting that decommissioning on FedWorld can be accessed directly funds will be obtained when necessary. by dialing the toll free number 1-(800) PART 50-DOMESDC LICENSWG dd '

Since a Federal utility licensee will PRODUCDON ANDUDLIEATION E~

303-9ti72. Communication software FACILIDES #

likely be confronted with many of the parameters should be set as follows:

same new competitive pressures as non- parity to none, data bits to 8, and stop The authority citation for Part 90 M

- 'NM '

1 Federal utilltbs, the question arises, bits to 1 (N,8.1). Using ANSI or VF-100 continues to read as follows( yMQlj ;

should the regulations continue to terminal emulation, the NRC rmit the provision of a statement of Authorey: Secs. 'to2,in3.'104,10sini,M '

rulemaking subsystem can then be ntent as the method by which these 182,1as,tso,1soesSent.pse,937.900C[L, accessed by selecting the " Rules Menu'* 948,953. 954,955, see, as asesoded, est!. ' e licensees provide financial assurance for option from the "NRC Main Menu." 234, a3 Stat.1244, en amended (42 U.SC M- '

decommissioning. There is, for example, User = will find the "FedWorld Online *21st,2133,21:4.21s5,2201,2132,12se, $ v -

'c no Federal law which clearly provides User's Guides" particularly helpful. 2238,2239,22:2h esca. 201, as emendedAA '

that the Federal Government would pay Many NRC subsystems and data bases also have a "lielp/laformation Center., 202. 20s, sa Stat.1242, as unende&m4M ; f;'

the Tennessee financial Valley Authoritb's decommissionias ob getions t248 (42 U.S.C 6841, as42 saast y q, g l' should TVA be unable to do so. Does option that is tailored to the particular subsystem.

,o "[,' *2S 'i Pub. L 102-48a, sec. 2002,10e StaL 3:23 (42 L -

this fact or any other factors militate for The NRC subsystem on FedWorld can or against allowing Federal utility also be accessed by a direct dial phone U.S.C sast). Sect on 50.10 also issued un% e secs.101,185, es Stat. eso. 955, se ====M -

licensees to continue to use statements number for the main FedWorld BBS, (42 U.S.C 2131.1235h sec.102, Puh. L Ct-of intent as the method by which (703) 321-3339, or by using Telnet via 190. 83 Stat 853 (42 U.S C 4332L Sections

1. "8%g 8

yo *t UNITED STATES 3*'

, 'e j NUCLEAR REGULATORY COMMISSION wAssisatoN, D C. 2065W1

/

April 10, 1997 MEMORANDUM TO: David L. Morrison, Director l Office of Nuclear Regulatory Research {

FROM: Carl J. Paperiello, Director O /

Office of Nuclear Material Safety and Safeguards (r j

SUBJECT:

0FFICE REVIEW AND CONCURRENCE ON A PROPOSED RULL -

FINANCIAL ASSURANCE REQUIRfMENTS FOR DECOMMISSIONING NUCLEAR P0k'ER REACTORS -

As requested in your memorandum dated March 10, 1997, our stafi has reviewed the Comission Paper entitled, " Proposed Rule on Financial Assurance Requirements for Decomissioning Nuclear Power Reactors." We concur with one coment. In Item 2 on page 4, it appears premature to say that the stranded cost question is resolved when it is unclear how the costs will be handled for each plant. We suggest saying, "NRC staff will continue to monitor this area throughout the deregulation process and take whatever actions are necessary to ensure that adequate decomissioning funds will be made available for all plants."

CONTACT: Timothy C. Johnson,'NMSS/DWM 415-7299 3 2n N /h- Ddfw lh