ML21099A107

Report of Status of Decommissioning Funding

ML21099A107
Person / Time
Site:	Summer
Issue date:	03/30/2021
From:	Curtis T Santee Cooper
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
Download: ML21099A107 (9)

Text

.1il~antee cooper*

Thomas B. Curtis Chiet' Generation Offi_cer (843) 761-4134 fax: (843) 761-7037 tbcurtis@santeecooper.com March 30, 2021 Document Control Desk U.S. Nuclear Regulatory Commission 11555 Rockville Pike Rockville, MD 20852 Re: Virgil C. Summer Nuclear Station Unit 1 Docket No. 50/395 Operating License No. NPF-12 Report of Status of Decommissioning Funding Ladies and Gentlemen:

The South Carolina Public Service Authority (Authority) and Dominion Energy South Carolina (DESC) have ownership interests of one-third and two-thirds, respectively, in the Virgil C. Summer Nuclear Station, Unit 1. As provided in 10 CFR § 50.75 (f)(1), each power reactor licensee is required to report to' the Nuclear. Regulatory Commission (NRC) on a calendar year basis, beginning March 31, 1999, and every two years thereafter, the status of its decommissioning funding for each reactor or share of reactor it owns. DESC has advised the Authority that it will disclose the required information relative to its two-thirds ownership share in a separate submittal.

The Authority's one-third share using the NRC formula for_ the minimum funding required for license termination is approximately ~156 million as of December 31, 2020. This one-third liability is funded by payments to an external sinking fund as provided for in ,.10 CFR § 50. 75. The escalated one-third liability for license termination costs is expected to total $528 million, stated in dollars of the year of expenditure. The market value of the external fund was approximately

$155 million as of De~mber 31, 2020. (Please see Attachment 1.)

• A site-specific decommissioning study completed in 2020 identified the total decommissioning costs for the site. Total site decommissioning includes license termination, spent fuel management and site restoration. The total costs identified by the study are in excess of the NRC formula for minimum funding requirements. Further, as the result of a 2006 settlement with the Department of Energy (DOE), the Authority expects to receive reimbursement for spent fuel management costs incurred thaf would have been avoided had the DOE met its contractual obligation to store spent fuel. The one-third liability in excess of the NRC minimum funding requirements less DOE reimbursements is estimated by the Authority to be approximately $230 million as of December 31, 2020. The escalated one-third liability is expected to be approximately

$3.643 billion, stated in dollars of the year of expenditure. The market value of the Authority's internal fund, designated-for spent fuel management and site restoration, was approximately $92 million as of December 31, 2020. (Please see Attachment 1.)

OneRlverwoodDnve I MoncksCO!ner,SC29461-2901 I (843)761-8000 I PO Box2946101 I MoncksCorner,SC29481-6101

U.S. Nuclear-Regulatory Commission ' 1 March 30, 202f Page2

. . f- '

If there are any questions concerning this report,*please contact me at (843) 761-4134.-

Sincerely,

~u Thomas Curtis, P. E.

TBC:frw Attachments .

cc: Laura Dudes Carey "Mac" Read, Jr.

Vaughn, Thomas

Attachment 1 l(a). The minimum decommissioning fund estimate, pursuant to 10 CFR § 50.75 (b) and (c). $155,973.533 Base Amount for PWR between 1,200 MWt and 3,400 MWt Estimated Cost (Year X) (1986 $ Base Cost) (ALx + BEx + CBx)

($100,520,000) {(.65 X 2.758) + (.13 X 2.257) + (.22 X 11.679)}

$467,920,600 Authonty's one-third share of2020 Estimated Cost= $155,973,533 Where:

A .65 10 CFR § 50.75 (c)(2)

B .13 10 CFR § 50.75 (c)(2)

C .22 10 CFR § 50.75 (c)(2)

Lx 2.758 (Computed Below)

Ex 2.257 (Computed Below)

Px 2.038 (Computed Below)

Fx 2.559 (Computed Below)

Bx 11.679 (NUREG 1307 Rev. 18) 1986 $ Base Cost ($75,000,000 + .0088Pmillion)

($75,000,000 + 25,520,000)

$100,520,000 p 2,900MWt Lx Base Lx (Dec 2005) x ECl(Qtr 4 2020) / 100 1.98 X 139.3 / 100 2.758 December 2020 Value/ January 1986 Value 232.7 / 114.2 2.038 December 2020 Value/ January 1986 Value 209.8 I 82.0 2.559 Ex {(.58Px) + (.42Fx)}

{(.58 X 2.038) + (.42 X 2.559)}

(1.182 + 1.075) 2.257 Fourth Quarter 2020 I December 2020 values in the following Bureau of Labor Statistics mdices were used to compute NRC minimum requirements:

Employment Cost Index - Total compensation, private industry, South region Series ID: Cill2010000000220I Producer Price Index - Commodities (Industrial electric power)

Series ID: wpu0543 Producer Price Index - Commodities (Light fuel oils)

Series ID: wpu0573 1 of 4

Attachment 1 l(b). Escalation of the Authority's one-third share of the minimum funding requirement through the end of decommissioning.

Cost categories Labor, Equipment & Materials, Burial, and Other were estimated in a site-specific decomnussiomng study. These costs were escalated through the end of the decommissioning period based on vanous indices and estimates. Ultimate decommissioning costs to be funded from the external trust are estimated at $527,797,403 in escalated dollars.

2. Market value of the external trust fund at December 31, 2020 for items included m 10 CFR § 50.75. $154,879.581

3. Schedule of annual amounts remaimng to be collected for items m 10 CFR § 50.75.

2020 Dollars Beginning Decommissioning Annual Ending Real Rates Year Balance Expenditures Deposits Earnings Balance of Return 2021 154,879,581 0 325,247 155,204,828 0.0021 2022 155,204,828 418,680 279,369 155,902,877 0.0018 2023 155,902,877 418 680 187,083 156,508 640 0.0012 2024 156 508 640 418 680 109 556 157 036 876 0.0007 2025 157 036 876 418 680 109 926 157 565 482 0.0007 2026 157 565,482 418,680 94 539 158,078,701 0.0006 2027 158 078,701 418,680 79,039 158,576,421 0.0005 2028 158,576,421 418,680 63,431 159,058 531 0.0004 2029 159,058,531 418680 47,718 159,524 929 0.0003 2030 159 524,929 418680 63 810 160 007 419 0.0004 2031 160,007,419 418,680 64 003 , 160 490,102 0.0004 2032 160 490,102 418,680 64196 160 972,978 0 0004 2033 160,972,978 418,680 64,389 161,456,047 0.0004 2034 161,456,047 418,680 48,437 161,923,164 0.0003 2035 161,923,164 418,680 48,577 162,390,421 0.0003 2036 162 390,421 418,680 48,717 162,857,818 0.0003 2037 162,857,818 418,680 48 857 163,325 355 0.0003 2038 163,325,355 418,680 32 665 163 776 700 0.0002 2039 163 776 700 418 680 32,755 164,228,136 0.0002 2040 164 228 136 418 680 32,846 164,679,661 0.0002 2041 164 679,661 418,680 32 936 165 131 277 0.0002 2042 165,131,277 9,284,140 15 585 155,862,722 0.0001 2043 155,862,722 22,281,933 13,358 133,594,147 0.0001 2044 133 594,147 22,281 933 11 131 111,323 345 0.0001 2045 111,323 345 22 281 933 8,904 89,050 316 0.0001 2046 89 050 316 22 281 933 0 66 768 383 0.0000 2047 66,768,383 22,281,933 0 44,486,450 0.0000 2048 44,486,450 22,281,933 0 22,204,517 0.0000 2049 22 204 517 12 997 795 0 9,206,722 0.0000 Total 154,879,581 155,973,533 8,373,600 1,927,074 9,206,722 2 of4

Attachment 1

4. The assumptions used regarding escalation in decommissioning cost, rates of earnings on decommissioning funds, and rates of other factors used m funding projections follow:

• The previous schedule of annual amounts remaining to be collected is based on a DECON method of decommissioning. In contrast, the Authority currently intends to utilize a SAFSTOR method of decommissioning.

• Costs are escalated by four categories identified in the 2020 site-specific study using the following rates: labor (2.8%), eqmpment and materials (1.3%), waste burial (3.8%) and other (2.8%). These rates were proposed man mternal memorandum and approved on November 12, 2020 by the Chief Generation Officer and represent the Authority's best estimate of future cost increases (see Attachment 2). The schedule below shows weighted average escalation rates reflecting the above cost categories weighted by individual category costs over the sum of the four categones.

• LLW will be disposed of using a combination of compact-affiliated and non-compact disposal facilities.

• The trust fund accrues earnings in accordance with estimated effective yield (approximately 2.8% as shown below). The Authority's Board ofDrrectors approves all 1 customer rates. As the rate-regulatory authority, the Board adopted on March 22, 1999 a resolution containing the following language: "Upon recommendation of management, the Board of Directors authonzes the use of the effective yield of the trust portfolio for purposes of determining future decommissioning funding needs."

A B ( A- B)

Projected Weighted Average Year Earning Rates Escalation Rates Rea~ Rates of Return 2021 0.0292 0.0271 0.0021 2022 0.0289 0.0271 0.0018 2023 0.0284 0.0272 0.0012 2024 0.0279 0.0272 0.0007 2025 0.0279 0.0272 0.0007 2026 0.0279 0.0273 0.0006 2027 0.0278 0.0273 0.0005 2028 0.0277 0.0273 0.0004 2029 0.0276 0.0273 0.0003 2030 0.0278 0.0274 0.0004 2031 0.0278 0.0274 0.0004 2032 0.0278 0.0274 0.0004 2033 0.0278 0.0274 0.0004 2034 0.0278 0.0275 0.0003 2035 0.0278 0.0275 0.0003 2036 0.0278 0.0275 0.0003 2037 0.0278 0.0275 0.0003 2038 0.0278 0.0276 0.0002 2039 0.0278 0.0276 0.0002 2040 0.0278 0.0276 0.0002 2041 0.0278 0.0276 0.0002 2042 0.0278 0.0277 0.0001 2043 0.0278 0.0277 0.0001 3 of4

Attachment 1 2044 0.0278 0.0277 0.0001 2045 0.0278 0.0277 0.0001 2046 0.0278 0.0278 0.0000 2047 0.0278 0.0278 0.0000 2048 0.0278 0.0278 0.0000 2049 0.0278 0.0278 0.0000

5. Contracts upon which the licensee ts relaying pursuant to IO CFR § 50.75 (e) (I) (v).

None.

6. Modifications to the current funding assurance methods.

None.

7. Material ,changes to Trust A~ents.

None.

8. Authority's one-third share of the 2020 Site-Specific Study (SAFSTOR method).

Year of 2020 Expenditure Dollars Dollars NRG Minimum Funding Requirements - License Termination radial ical decommissionin costs 1 155,973,533 527 797,403 Excess Site-SpecifiQ Study Costs (license termination, spent fuel management and site restoration costs) Net of Estimated DOE Reimbursements s nt fuel mana ement costs 2 230 104,579 3 643 160,951 2016 Site-Specific Study Costs (license termination, spent fuel management and site restoration costs) Net of Estimated DOE Reimbursements s nt fuel mana ement costs 2 386 078,112 4 170,958,354 (1) Expenditure years are 2042-2049 (2) Expenditure years are 2042-2124

9. Market value of the internal fund at December 31, 2020 for spent fuel management and site restoration $91,947.470 4 of4

Attachmen t 2

~ ,antee cooper' INTER-OFFI E COMMUNICATION DATE: November 9, 2020 TO: Thomas Curtis, P.E., Chief Generation Officer FROM: Matthew Mccants, P.E., Director, Generation Services "9"

SUBJECT:

VC Summer Unit 1 Decommissioning Cost Update As required by the Nuclear Regulatory Commission (NRC) and in accordance with prudent utility practice, Santee Cooper systematically sets aside funds to provide for the eventual decommissioning of VC Summer Nuclear Station Unit 1. The annual decommissioning funding deposit amount is currently based on NRC requirements, estimated cost escalation and fund earnings rates, the results of a site-specific decommissioning cost study conducted by TLG Services, Inc. in 2016, estimated Department of Energy (DOE) reimbursement of spent fuel storage costs, and a SAFSTOR (delayed decommissioning) scenario.

In 2019, TLG initiated an update to the 2016 decommissioning cost study and completed the update in 2020. Toe chart below compares the results of the 2016 TLG study with the 2020 study.

Comoarisono fTLG Stud1vResu Its -$000 s 2016Studv 2020Study Increase Year of Costs 2016 2019 2019 2019 Decommissioning Costs@t/3 415,076 446,763 451,799 5,036 The findings of the 2020 study indicate that since 2016, the overall cost for decommissioning has escalated approximately $5.0 million more than anticipated by current funding assumptions. The variance is attributable to the addition of several structures to plant inventory (craft training center, nuclear training center and annex, new nuclear office building, industrial pump house, chiller and switchgear, head assembly building, and two bullet resistant enclosures) and differences in estimated and actual cost escalations.

In conjunction with the 2020 decommissioning cost study, TLG completed a related asset retirement obligation .(ARO) study. This second study was used as basis for updating the ARO liability associated with decommissioning VC Summer Unit 1. Based on the results of the two studies, current cost escalation assumptions have been reviewed and changes are recommended. The new proposed cost escalation assumptions by cost category are as follows:

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Attachm ent 2 VC Summer Unit 1 Decommissioning Cost Update November 9, 2020 Page Two Current Proposed Cost Category Escalation Escalation Assumption Assumption Labor 2.70% 2.79%

Equipment& Materials 1.20% 1.27%

Burial 3.78% 3.80%

Other 2.78% 2.80%

The proposed escalation rates for Labor, Equipment & Materials, and Other are derived from published indices and are used by TLG to establish a basis for change in the ARO liability. No readily available published index for Burial (low-level radioactive waste disposal) costs exists; how.ever, TLG determined that adding one percent to the Consumer Price Index reasonably correlated to the change in Burial costs over the last decade.

The TLG 2020 decommissioning cost study includes SAFSTOR (delayed decommissioning) scenarios for both 60 and 80 years of plant operation. Current funding is based on a 60-year plant life; however, Dominion's plan is to extend the operating license an additional 20 years and operate the plant a total of 80 years. In order to align with Dominion and better project fundmg needs, it is recommended that an 80-year plant life be adopted for decommissioning funding purposes. The one-third cost for a SAFSTOR scenario assuming 80 years of plant operations is $416 million. The 80-year SAFSTOR scenario cost estimate is less than the 60-year scenario due to a shorter time period for operating the spent fuel storage facility after plant shutdown.

Projected earnings for the trust and the internal fund were reevaluated by Santee Cooper's Treasury department and both have decreased. From March 2019 to May 2020, the weighted average estimated earnings rate for the trust decreased from 3.3% to 3.0%, while the weighted average rate for the internal fund decreased from 3. 7% to 3.3%.

The NRC required minimum funding amount was also updated based on the prescribed minimllTI funding formula and updated escalation rates. The NRC minimum amount increased 0.9% from the prior year due to a 2.5% increase in the labor escalation factor. The energy escalation factor decreased O. 7% while the burial factor stayed the same. The impact on trust funding was minimal.

Based on the results of the 2020 TLG decommissioning cost study, the proposed escalation rates, the recommended adoption of an 80-yearplant life, the updated earnings rates and NRC minimum fundrg amount, the current DOE spent fuel storage cost reimbursement assumption, and a SAFSTOR scenario, the annual funding amount wlll need to increase to approximately $2.5 million. It is expected that implementing the proposed decommissioning contributions as outlined below, along with projected earnings, will sufficiently provide for Santee Cooper's share of the cost to decommission VC Summer Unit 1.

Effective January 1, 2021, the new monthly contribution requirement is as follows:

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Attachm ent 2 VC Summer Unit 1 Decommissioning Cost Update November 9, 2020 Page Three 2021 &

2020 Later Current Proposed Increase Funding Funding (Decrease)

Trust $9,605 $0 ($9,605)

Internal Fund $9,125 $205,355 $196,230 TotaJ Monthly $18,730 $205,355 $186,625 Total Annual $224,760 $2,464,260 $2,239,500 Please let me know if you have any questions or would like to discuss further.

MJM :trw Concurrence:~ ~

Thomas Curtis , P.E. Date Chief Generation Officer cc: Pamela W illiams Keri Lott Suzanne Ritter Daniel Manes 3 of 3