ML20247N248
| ML20247N248 | |
| Person / Time | |
|---|---|
| Issue date: | 05/19/1998 |
| From: | Stewart Magruder NRC (Affiliation Not Assigned) |
| To: | Essig T NRC (Affiliation Not Assigned) |
| References | |
| PROJECT-689 NUDOCS 9805270089 | |
| Download: ML20247N248 (17) | |
Text
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UNITED STATE 3 g
j-NUCLEAR REGULATORY COMMISSION e
WASHINGTON, D.C. 20066 4001 May 19, 1998 MEMORANDUM TO: Thomas H. Essig, Acting Chief Generic issues and Environmental Projects Branch Division of Reactor Prograin Management Office of Nuclear Reactor Regulation FROM:
Stewart L. Magruder, Project Manager Mib d p
Generic issues and Environmental Projects Branch 0
Division of Reactor Program Management Office of Nuclear Reactor Regulation
SUBJECT:
SUMMARY
OF MAY 7,1998, MEETING WITH THE NUCLEAR ENERGY INSTITUTE (NEI) REGARDING DECOMMISSIONING FUNDING ASSURANCE On May 7,1998, representatives of NEl met with representatives of the Nuclear Regulatory Commission (NRC) at the NRC's offices in Rockville, Maryland. Attachment 1 provides a list of meeting attendees. Attachment 2 is the presentation material provided by NEl for the meeting.
The primary purpose of this meeting was to provide NEl the opportunity to comment further on the NRC's proposed rule on decommissioning funding assurance and to have joint NEl/NRC discussion of these comments.
NEl made'some brief initial comments, including their support of the need for flexibility in the proposed rule and also the need to keep decommissioning funding assurance and financial qualifications for operations separate.
Regarding decommissioning funding assurance, NEl proposed that the process for determining I
assurance should consist of two steps. The first step would be to determine whether or not an i
entity satisfies the criteria for a " qualified nuclear entity" as this concept has previously been proposed and defined by NEl. ' For those entities which do not satisfy the criteria, the second j
step would be for the NRC to conduct a case-by-case review to determine if an entity can I
. provide reasonable funding assurance through a combination of methods proposed by the
/
entity.
NEl noted that it had talked to 24 utilities regarding decommissioning funding assurance and that no specific set of criteria fits all utilities since there are many different types of owners of nuclear plants.
NEl stated that the NRC decision and rule regarding site-specific estimates of decommissioning costs should be reevaluated. NEl maintains that the NRC formula for minimum funding levels can result in significant overestimates of costs in some cases and that utilities will be forced to seek exemptions if the rule is not amended to permit site-specific estimates. NEl cited a letter dated May 4,1998, which it sent to Chairman Jac~kson explaining its position on this subject.
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. NEl noted that Alan Nelson (of NEI) is leading a group to recommend a draft proposal regarding site-specific estimates which will be provided for industry review and discussed with the NRC by late June /early July, Regarding time frames,' NRC remarked that the' proposed rule is due to the NRC Commission by June 30,1998, and that tl+ rule probably ' ill be issued abo' t the end of August.
w u
Changing the topic to evaluation of financial qualifications for operations, NEl maintained that utility executives need some degree of certainty regarding NRC regulations as restructuring continues and as outside investors become more involved in the changing electric power industry. NEl stated that it plans to offer inputs to help add more predictability to the process of evaluating financial qualifications for operationsc' NEl said the process should focus on examining overall financial qualifications and on the revenue and expense relationship for an
. entire company versus the financial aspects of a specific plant.
NRC stated that evaluation of financial qualifications for operations is dependent on a specific plant's projected expenses as compared to its revenues, whose sources may include the entire company.
. NEl stated that the NRC focus is on the public health and safety and that for operations the best indicator regarding public health and safety is plant performance rather than financial data.
NEl stated that investors might buy a plant even if it is likely to lose money for several years based on the plant's own financialindicators (i.e., plant-specific revenues and expenses). But NEl contended that investors might not buy that same plant if the NRC were to deny licensing
{
approval for that plant on the basis of plant-specific financialindicators. The observation was i
made that, if the NRC decides to continue using financial criteria for evaluating operations, other criteria such as corporate assets might be included in NRC financial tests.
l NRC stated that 10 CFR 50.33(f) provides for the use of the revonues of the applicant and the
- plant's costs in determining reasonable assurance, and that 10 CFR 50.33(f)(4) allows the NRC to solicit information deemed relevant to the NRC's decision on an applicant's financial qualifications.
l NEl also discussed some aspects of the nonowner operator issue in general.
Project No. 689 Attachments: As stated cc w/att: See next page i
l' L
_u-------
T. Essig May 19, 1998 NEl noted that Alan Nelson (of NEI) is leading a group to recommend a draft proposal regarding site-specific estimates which will be provided for industry review and discussed with the NRC by late June /early July.
Regarding time frames, NRC remarked that the proposed rule is due to the NRC Comrnission by June 30,1998, and that the rule probably will be issued about the end of August.
Changing the topic to evaluation of financial qualifications for operations, NEl rnaintained that utility executives need some degree of certainty regarding NRC regulations as restructuring continues and as outside investors become more involved in the changing electric power industry. NEl stated that it plans to offer inputs to help add more predictability to the orocess of evaluating financial qualifications for operations. NEl said the process should focus on examining overall financial qualifications and on the revenue and expense relationship for an entire company versus the financial aspects of a specific plant.
NRC stated that evaluation of financial qualifications for operations is dependent on a specific plant's projected expenses as compared to its revenucs, whose sources may include the entire company.
NEl stated that the NRC focus is on the public health and safety and that for operations the best indicator regarding public health and safety is plant performance rather than financial data.
NEl stated that investors might buy a plant even if it is likely to lose money for several years based on the plant's own financialindicators (i.e., plant-specific revenues and expenses). But NEl contended that investors might not buy that same plant if the NRC were to deny licensing approval for that plant on the basis of plant-specific financial indicators. The observation was made that, if the NRC decides to continue using financial criteria for evsluating operations, other criteria such as corporate assets might be included in NRC financial tests.
NRC stated that 10 CFR 50.33(f) provides for the use of the revenues of the applicant and the plant's costs in determining reasonable assurance, and that 10 CFR 50.33(f)(4) allows the NRC to solicit information deemed relevant to the NRC's decision on an applicant's financial qualifications.
NEl also discussed some aspects of the nonowner operator issue in general.
Project No. 689 Attachments: As stated cc w/att: See next page DISTRIBUTION: See attached page DOCUMENT NAME: G:\\MSUM0507.98 [
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Ph SChN OFFICE PGEB NAME SMagruderY R[ood FAksMiewicz DATE 5/6/98 5/(7/98 5/jT/98
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i Distribution: Mtg. Summary w/ NEl Re Decommissioning Dated May 19, 1998 Hard Copy Docket N, j
PUBLIC PGEB R/F OGC ACRS SMagruder RWood EMail SCollins/FMiraglia BSheron BEoger JRoe DMatthews TEssig MMalioy FAkstulewicz
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NRC/NEl MEETING ON DECOMMISSIONING FUNDING LIST OF ATTENDEES May 7,19Ed NAME ORGANIZATION Richard Meyers NEl Adrian Heymer NEl Janet Ecker Morgan, Lewis & Bockius Jaime Ortiz BG&E Garth Richmond Winston & Strawn Robert Wood NRC/NRR Alex McKeigny NRC/NRR Michael Dusaniwskys NRC/NRR Brian Richter NRC/NRR Raj Auluck NRC/RES Stephen Lewis NRC/OGC Bonnie Williamson Nucleonics Week Millan Straka NUS
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DRAFT (1) A licensee that is a Qualified Nuclear Entity is allowed to use an external sinking fund in which deposits are made at least annually, or any other method or assurance as permitted by this section.
Qualified Nuclear Entity: For the purposes of decommissioning, a licensee is considered a qualified nuclear entity 1 if one or more of the following requirements are satisfied:
(i) decommissioning funds are recovered through a cost of service mechanism; (ii) decommissioning is funded through a non-bypassable charge set by a regulatory agency, or in the case of public power entities, the board of directors / governors; or (iii) sufficient long term contractual arrangements 2 exist to fund either directly or indirectly the outstanding decommissioning payments (s),
(2) A licensee that does not satisfy the criteria for a qualified nuclear entity shall submit a report to the NRC describing how financial assurance for deconunissioning activities will be achieved. The licensee may use any combination of the following methods to justify why there is reasonable assurance that decommissioning would be funded:
(i) accelerated funding, (ii) an external sinking fund approach, (iii) a parent company guarantee, (iv) prepayment of the outstanding decommissioning fund contribution, (v) posting of a surety bond for the full outstanding decommissioning payment (s) with a guarantor, (vi) insurance with a guarantor, or (vii) any other method, as described in a licensee specific analyses that is reviewed and approved by the NRC and supports the conclusion that there is reasonable assurance that the licensee will be able to fund decommissioning.
5 An entity whose rates are established by a regulatory authority by mechanisms that cover only a portion ofits costs will be considered to be a *oualified nuclear entity" only for that portion of the costs that are collected in this manre Licensees that are public utility districts, municipalities, rural electric cooperatives and Federal and State agencies, including associations of any of the foregoing, that establish their own rates are considered a " qualified nuclear entity."
The contractual agreement (s) should be equal to the amount required to fund the outstanding decommissioning payment (s), taking into account the earnings on the prepaid funds, as defined in i 50.75.
DRAFT The combination of methodologies chosen, the schedule of payments for accelerated funding, and the amount of the total outstanding unfunded i
contribution to be financed, paid or assured, may be based on:
(A)the financial strength of the company, (B)the status of the decommissioning fund with respect to the time remaining to commencement of decommissioning activities, and (C)the licensee's contribution history with respect to the decommissioning fund.
(3) If a licensee no longer satisfies the criteria for a " qualified nuclear entity", or the criteria described in Paragraph (2) above shall:
(i) notify the NRC within 30 days, and (ii) submit to the NRC details of how decommissioning funding will be assured within 180 days of the initial NRC noti 6 cation.
(4) The Commission reserves the right to take the following steps to assure a licensee's adequate accumulation of decommissioning funds: review, as needed, the raw of accumulation of decommissioning funds; and either independently or in cooperation with FERC, the State PUC's, take additional actions as appropriate on a case-by case basis.
(5) Within nine months of [the effective date of the rule], each licensee shall submit for NRC review and approval an estimate of the present value cost of decommissioning, sufficient to remove (the facility) safely from service and allow for termination of the license for each power reactor or part of a nuclear power reactor that it owns. The estimate will be based on a NRC approved 1
methodology. Subsequent to the initial report, the estimate will be submitted on a biennial basis consistent with the reporting requirements of paragraph xx of this section taking into account inflation and other variable cost factors that are based on NRC endorsed reports.
(6) A licensee may submit an alternative estimating methodology for review and approvalin the same time frame as its decommissioning estimate.
1
?
Nuclear Energy Institute Project No. 689 l.
l cc:
Mr. Ralph Beedle' Ms. Lynnette Hendricks, Director l
Senior Vice President.
Plant Support -
and Chief Nuclear Officer Nuclear Energy Institute Nuclear Energy Institute Suite 400 Suite 400 1776 i Street, NW 1776 i Street, NW Washington, DC 20006-3708 Washington, DC 20006-3708 Mr. Alex Marion, Director Programs Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. David Modeen, Director Engineering Nuclear Energy Institute Suite 400 1776 I Street, NW Washington, DC 20006-3708 Mr. Anthony Pietrangelo, Director Licensing Nuclear Energy Institute Suite 400 1776 l Street, NW Washington, DC 20006-3708 Mr. Nicholas J. Liparuto, Manager Nuclear Safety and Regulatory Activities Nuclear and Advanced Technology Division Westinghouse Electric Corporation P.O. Box 355 Pittsburgh, Pennsylvania 15230 Mr. Jim Davis, Director Operations Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 L__._m._._____._
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UNITED STATES NUCLEAR REGULATORY COMMISSION O
E WASHINGTON, D.C. 30666-0001 May 19, 1998 MEMORANDUM TO: Thomas H. Essig, Acting Chief Generic Issues and Environmental Projects Branch Division of Reactor Program Management Office of Nuclear Reactor Regulation FROM:
Stewart L. Magruder, Project Manager Mi%d Generic issues and Environmental Pr jects Branch U
Division of Reactor Program Management Office of Nuclear Reactor Regulation
SUBJECT:
SUMMARY
OF MAY 7,1998, MEETING WITH THE NUCLEAR ENERGY INSTITUTE (NEI) REGARDING DECOMMISSIONING FUNDING ASSURANCE On May 7,1998, representatives of NEl met with representatives of the Nuclear Regulatory Commission (NRC) at the NRC's offices in Rockville, Maryland. Attachment 1 provides a list of meeting attendees. Attachment 2 is the presentation material provided by NEl for the meeting.
The primary purpose of this meeting was to provide NEl the opportunity to comment further on the NRC's proposed rule on decommissioning funding assurance and to have joint NEl/NRC discussion of these comments.
NEl made some brief initial comments, including their support of the need for flexibility in the proposed rule and also the need to keep decommissioning funding assurance and financial qualifications for operations separate Regarding decommissioning funding assurance, NEl proposed that the process for determining assurance should consist of two steps. The first step would be to determin'e whether or not an entity satisfies the criteria fm a " qualified nuclear entity" as this concept has previously been proposed and defined by NEl. For those entities which do not satisfy the criteria, the second step would be for the NRC to conduct a case-by-case review to determine if an entity can provide reasonable funding assurance through a combination of methods proposed by the entity.
NEl noted that it had talked to 24 utilities regarding decommissioning funding assurance and that no specific set of criteria fits all utilities since there are many different types of owners of nuclear plants.
NEl stated that the NRC decision and rule regarding site-specific estimates of decommissioning costs should be reevaluated. NEl maintains that the NRC formula for minimum funding levels can result in significant overestimates of costs in some cases and that utilities will be forced to seek exemptions if the rule is not amended to permit site-specific estimates. NEl cited e letter dated May 4,1998, which it sent to Chairman Jackson explaining its position on this subject.
l l
I
)
.1 T. Essig May 19, 1998 NEl noted that Alan Nelson (of NEI) is leading a group to recommend a draft proposal regarding site-specific estimates which will be provided for industry review and discussed with the NRC by late June /early July.
Regarding time frames, NRC r9 marked that the proposed rule is due to the NRC Commission by June 30,1998, and that the rule probably will be issued about the end of August.
Changing the topic to evaluation of financial qualifications for operations, NEl maintained that utility executives need some degree of certainty regarding NRC regulations as restructuring continues and as outside investors become more involved in the changing electric power
{
industry. NEl stated that it plans to offer inputs to help add more predictability to the process of evaluating financial qualifications for operations. NEl said the process should focuc on examining overall financial qualifications and on the revenue and expense relationship for an l
- entire company versus the financial aspects of a specific plant.
NRC stated that evaluation of financial qualifications for operations is dependent on a specific plant's projected expenses as compared to its revenues, whose sources may include the entire company.
NEl stated that the NRC focus is on the public health and safety and that for operations the best indicator regarding public health and safety is plant performance rather than financial data.
NEl stated that investors might buy a plant even if it is likely to lose money for several years based on the plant's own financial indicators (i.e., plant-specific revenues and expenses). But NEl contended that investors might not buy that same plant if the NRC were to deny licensing approval for that plant on the basis of plant-specific financialindicators. The observation was made that, if the NRC decides to continue using financial criteria for evaluating operations, other criteria such as corporate assets might be included in NRC financial tests.
NRC stated that 10 CFR 50.33(f) provides for the use of the revenues of the applicant and the plant's costs in determining reasonable assurance, and that 10 CFR 50.33(f)(4) allows the NRC to solicit information deemed relevant to the NRC's decision on an applicant's financial qualifications.
NEl also discussed some aspects of the nonowner operator issue in general.
Project No. 689 Attachments: As stated cc w/att: See next page
)
- .t
- T. Essig
-2 May 19, 1998 NEl noted that Alan Nelson (of NEI) is leading a group to recommend a draft proposal regarding site-specific estimates which will be provided for industry review and discussed with the NRC by late June /early July.
Regarding time frames, NRC remarked that the proposed rule is due to the NRC Commission by June 30,1998, and that the rule probably will be issued about the end of August.
Changing the topic to evaluation of financial qualifications for operations, NEl maintained that utility executives need some degree of certainty regarding NRC regulations as restructuring continues and es outside investors become more involved in the changing electric power industry. NEl stated that it plans to offer inputs to help add more predictability to the process of evaluating financial qualifict tions for operations. NEl said the process should focus on examining overall financial qualifications and on the revenue and expense relationship for an entire company versus the financial aspects of a specific plant.
. NRC stated that evaluation of financial qualifications for operations is dependent r a_ specific plant's projected egenses as compared to its revenues, whose sources may include the entire company.
NEl stated that the NRC focus is on the public health and safety and that for operations the best indicator regarding public health and safety is plant performance rather than financial data.
NEl stated that investors might buy a plant even if it is likely to lose money for several years based on the plant's own financialindicators (i.e., plant-specific revenues and expenses). But NEl contended that investors might not buy that same plant if the NRC were to deny licensing approval for that plant on the basis of plant-specific financial indicators. The observation was made that, if the NRC decides to continue using financial criteria for evaluating operations, other criteria such as corporate assets might be included in NRC financial tests.
NRC stated that 10 CFR 50.33(f) provides for the use of the revenues of the applicant and the plant's costs in determining reasonable assurance, and that 10 CFR 50.33(f)(4) allows the NRC to solicit information deemed relevant to the NRC's decision on an applicant's financial qualifications.
NEl also discussed some aspects of the nonowner operator issue in general.
Project No. 689 Attachments: As stated cc w/stt: See next page DISTRIBUIlON: See attached page j
L DOCUMENT NAME: G:\\MSUM0507.98 [
/\\
Phk SC;Ph7' OFFICE PGEB NAME SMagruderY R[ood FAkStdiewicz l
DATE 5/N98 5/ 6/98 5/j 98
~-
Distribution: Mtg. Summary w/ NEl Re Decommissioning Dated May.19, 1998___ _
Hard Copy Docket File P'JBLIC '
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.i NRC/NEl MEETING ON DECOMMISSIONING FUNDING LIST OF ATTENDEES May 7,1998 NAME ORGANIZATION Richard Meyers NEl Adrian Heymer NEl Janet Ecker Morgan, Lewis & Bockius Jaime Ortiz BG&E Garth Richmond Winston & Strawn Robert Wood NRC/NRR Alex McKeigny NRC/NRR Michael Dusaniwskys NRC/NRR Brian Richter NRC/NRR Raj Auluck NRC/RES Stephen Lewis NRC/OGC Bonnie Williamson Nucleonics Week Millan Straka NUS
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DRAFT
. (1) A licensee that is a Quali6ed Nuclear Entity is allowed to use an external sinking fund in which deposits are made at least annually, or any other method or assurance as permitted by this section.
Qualified Nuclear Entity: For the purposes of decommissioning, a licensee is considered a quali6ed nuclear entity! if one or more of the following requiren ents are satis 6ed:
(i) decommissioning funds are recovered through a cost of service
. mechanism; (ii) decommissioning is funded through a non-bypassable charge set by a regulatory agency, or in the case of public power entities, the board of directors / governors; or (iii) sufficient long term contractual arrangements 2 exist to fund either directly or indirectly the outstanding decommissioning payments (s).
(2) A licensee that does not satisfy the criteria for a quali6ed nuclear entity shall submit a report to the NRC describing how financial assurance for decommissioning activities will, be achieved. The licensee may use any combination of the following methods to justify why there is reasonable assurance that decommissioning would be funded:
(i) accelerated funding, (ii) an external sinking fund approach, (iii) a parent company guarantee, (iv) prepayment of the outstanding decommissioning fund contribution, (v) posting of a surety bond for the full outstanding decommissioning payment (s) with a guarantor, (vi) insurance with a guarantor, or (vii) any other method, as described in a licensee specific analyses that.
is reviewed and approved by the NRC and supports the conclusion that there is reasonable assurance that the licensee will be able to fund decommissioning.
8 An entity whose rates are established by a regulatory authority by mechanisms that cover only a portion ofits costs will be considered to be a " qualified nuclear entity" only for that portion of the costs that are collected in this manner. Licensees that are public utility districts, municipalities, rural electric cooperatives and Federal and State agencies, including associations of any of the foregoing, that establish their own rates are considered a " qualified nuclear entity."
8 The. contractual agreement (s) should be equal to the amount required to fund the outstanding decommissioning payment (s), taking into account the earnings on the prepaid funds, as defined in i 50.75.
I
DRAFT The combination of methodologies chosen, the schedule of payments for accelerated funding, and the amount of the total outstanding unfunded contribution to be financed, paid or assured, may be based on:
(A)the financial strength of the company,
)
(B)the status of the decommissioning fund with respect to the time remaining to commencement of decommissioning activities, and l
(C)the licensee's contribution history with respect to the decommissioning fund.
l (3) If a licensee no longer satis 6es the criteria for a "quali6ed nuclear entity", or the criteria described in Paragraph (2) above shall:
(i) notify the NRC within 30 days, and 1
(ii) submit to the NRC details of how decommissioning funding will be assured within 180 days of the initial NRC notification.
l (4) The Commission reserves the right to take the following steps to assure a licensee's adequate accumulation of decommissioning funds: review, as needed, the rate of accumulation of decommissioning funds; and either independently or in cooperation with FERC, the State PUC's, take additional actions as appropriate on a case by-case basis.
(5) Within nine months of[the effective date of the rule), each licensee shall submit for NRC review and approval an estimate of the present value cost of decommissioning, sufficient to remove (the facility) safely from service and allow for termination of the license for each power reactor or part of a nuclear power reactor that it owns. The estimate will be based on a NRC approved methodology. Subsequent to the initial report, the estimate will be submitted on a biennial basis consistent with the reporting requirements of paragraph xx of this section taking into account inflation and other variable cost factors that are based on NRC endorsed reports.
(6) A licensee may submit an alternative estimating methodology for review and approvalin the same time frame as its decommissioning estimate.
l t
i
_ - _ _ _ _ _ - _ - _ _ _ _ _ ~
F Nuclear Energy Institute Project No. 689 cc:.
Mr. Ralph Beedle Ms. Lynnette Hendricks, Director Senior Vice President Plant Support and Chief Nuclear Officer Nuclear Energy Institute Nuclear Energy institute Suite 400 Suite 400 1776 i Street, NW 17761 Street, NW Washington, DC 20006-3708 Washington, DC 20006-3708 Mr. Alex Marion, Director Programs Nuclear Energy Institute Suite 400 1776 l Street, NW Washington, DC 20006-3708
- Mr. David Modeen, Director Engineering Nuclear Energy Institute Suite 400 1776 i Street, NW Washington, DC 20006-3708 Mr. Anthony Pietrangelo, Director Licensing Nuclear Energy Institute Suite 400 1776 i Street, NW i
Washington, DC 20006-3708
]
Mr. Nicholas J. Liparuto, Manager Nuclear Safety and Regulatory Activities Nuclear and Advanced Technology Division J
Westinghouse Electric Corporation P.O. Box 355 Pittsburgh, Pennsylvania 15230 Mr. Jim Davis, Director Operations Nuclear Energy Institute Suite 400 1776 l Street, NW Washington, DC 20006-3708 1
j