ML23089A389

(Vcsns), Unit 1 - Decommissioning Funding Status Report

ML23089A389
Person / Time
Site:	Summer
Issue date:	03/30/2023
From:	James Holloway Dominion Energy South Carolina
To:	Office of Nuclear Reactor Regulation, Document Control Desk
References
23-064
Download: ML23089A389 (1)

Text

Dom inion Energy South Carolina, Inc.

5000 Domin ion Boulevard, Glen All en, VA 23060 ~~~ Dominion Dominion Energy.com ~ Energy© March 30, 2023 United States Nuclear Regulatory Commission Serial No.23-064 Attention: Document Control Desk NRA/MLW R4 Washington, D. C. 20555-0001 Docket No. 50-395 License No. NPF-12 DOMINION ENERGY SOUTH CAROLINA (DESC}

VIRGIL C. SUMMER NUCLEAR STATION (VCSN S} UNIT 1 DECOMMISSIONING FUNDING STATUS REPORT Pursuant to 10 CFR 50.75(f)(1), Dominion Energy South Carolina, Inc. is providing a report on the status of decommissioning funding for its two-thirds ownership share of Virgil C. Summer Nuclear Station. Dominion Energy South Carolina, Inc. (previously known as South Carolina Electric & Gas Company) and the South Carolina Public Service.

Authority (Santee Cooper) have undivided ownership interests of two-thirds and one-third respectively in the V. C. Summer Nuclear Station. Santee Cooper discloses information pursuant to 10 CFR 50.75(f)(1) relative to its one-third ownership share in a separate submittal.

The required report is provided in the attachments to this letter.

Please contact Mr. Craig D. Sly at (804) 273-2784 if you have any questions or require additional information.

Sincerely, James E. Holloway Vice President - Nuclear Engineering and Fleet Support Dominion Energy South Carolina, Inc.

Serial No.: 23-064 Docket No.: 50-395 Page 2 of 2 Attachments:

1. Decommissioning Funding Status Report for Virgil C. Summer Nuclear Station, Unit 1; Summary Information as of December 31, 2022

2. Calculation of Amount of Decommissioning Funds Estimated to be Required Pursuant to 10 CFR 50.75 (b) and (c)

3. Explanation of Financial Assurance Mechanism and Amounts Remaining to be Collected

4. NEIL Certificate of Insurance cc: US Nuclear Regulatory Commission, Region II Marquis One Tower 245 Peachtree Center Avenue, NE, Suite 1200 Atlanta, Georgia 30303-1257 NRG Senior Resident Inspector V.C. Summer Nuclear Station Mr. G. Edward Miller NRC Project Manager, USNRC One White Flint North Mail Stop 09 E-3 11555 Rockville Pike Rockville, Maryland 20852-2738 Mr. G. J. Lindamood Santee Cooper - Nuclear Coordinator 1 Riverwood Drive Moncks Corner, South Carolina 29461

Serial No.: 23-064 Docket No.: 50-395 ATTACHMENT 1 DECOMMISSIONING FUNDING STATUS REPORT FOR VIRGIL C. SUMMER NUCLEAR STATION, UNIT 1

SUMMARY

INFORMATION AS OF DECEMBER 31, 2022 Virgil C. Summer Nuclear Station - Unit 1 Dominion Energy South Carolina, Inc.

Serial No.: 23-064 Docket No.: 50-395 Attachment 1, page 1 of 4 Decommissioning Funding Status Report for Vi rgil C. Summer Nuclear Station, Unit 1 Summary Information as of December 31, 2022 The following information is submitted pursuant to the requirement of 10 CFR 50. 75(f)(1 ):

The amount of The amount of decommissioning funds estimated to be decommissioning funds required pursuant to 10 CFR 50.75 (b) and (c) for estimated to be required Dominion Energy South Carolina, lnc.'s (DESC) two-pursuant to 10 CFR 50.75 thirds ownership of VCSNS is $369,310,480 (2022 (b) and (c); dollars). Please see Attachment 2 for the calculation of this amount.

The amount accumulated at Note: DESC does not maintain separate trusts for funds the end of the calendar year designated to cover radiological decommissioning costs preceding the date of the and funds to cover other decommissioning costs. Of the report; accumulated funds in the trust, approximately 88.69% are considered to be related to funding costs included in the NRC's definition of decommissioning pursuant to 10 CFR 50.75 (b) and (c), while the remaining 11.31 % are considered to be related to other decommissioning costs.

The 88.69% is the ratio of:

1) The total radiological decommissioning cost estimate from a 1991 site-specific decommissioning cost study prepared for VCSNS, and

2) The total amount that served as the basis for collections through electric rates in an electric rate order issued by the Public Service Commission of South Carolina (SCPSC) in 1993. The calculation is as follows:

Site-specific study (1991) estimate of decommissioning costs pursuant to NRC definition (two-thirds portion) $118,256,667 Customer collection basis (two-thirds portion) 133,333,333

Serial No.: 23-064 Docket No.: 50-395 Attachment 1, page 2 of 4 Percent of costs/collections related to items included in NRC definition of decommissioning 88.69%

As such, 88.69% of the decommissioning fund balance, after-tax collections and program costs, are presented in The Financial Assurance Model in Attachment 3.

The total trust fund balance on December 31, 2022, was

$222,840,465 after tax. This balance includes cash and the cash surrender values of life insurance policies.

Advances of $54,890,000 from DESC to fund premium payments have not been deducted in arriving at this amount.

The portion of the above trust fund balance considered to be related to radiological decommissioning requirements addressed in the NRC's financial assurance formula was

$197,637,208 after tax on December 31, 2022. This balance includes cash and the cash surrender values of life insurance policies. Advances of $48,681,941 from DESC to fund premium payments that are considered to be applicable to this portion of the fund have not been deducted in arriving at the balance. These amounts reflect 88.69% of total balances, as described above.

The portion of the trust fund balance considered to be related to other decommissioning costs was $25,203,257 after tax on December 31, 2022. This balance includes cash and the cash surrender values of life insurance policies. Advances of $6,208,059 from DESC to fund premium payments that are considered to be applicable to this portion of the fund have not been deducted in arriving at this balance. These amounts reflect 11.31 % of total balances, as described above.

DESC's use of decommissioning funds does not require prior approval from the SCPSC. Moreover, DESC is unaware of any SCPSC requirement prohibiting the Company from using any portion of its decommissioning funds for radiological decommissioning costs. DESC will continue to assess the adequacy of annual collections and request rate relief as appropriate based upon results

Serial No.: 23-064 Docket No.: 50-395 Attachment 1, page 3 of 4 of models incorporating site-specific decommissioning cost study estimates.

A schedule of the annual Please see Attachment 3.

amounts remaining to be The after-tax annual collection amount is currently collected; $2,420,302, which was based on a 1991 site-specific decommissioning cost study. Annual amounts collected through rates have not changed since 1993. The after-tax collection amounts shown in the Financial Assurance Model in Attachment 3 represent 88.69% of the

$2,420,302, or $2,146,566.

The assumptions used Please see Attachment 3.

regarding escalation in decommissioning cost, rates of earnings on decommissioning funds, and rates of other factors used in funding projections; Any contracts upon which None the licensee is relying pursuant to paragraph (e)(1)(v) of this section; Any modifications occurring None to a licensee's current method of providing financial assurance since the last submitted report; Any material changes to None trust agreements; Site specific cost estimates The most recent site-specific decommissioning cost for license termination, spent study for VCSNS was completed in 2020. The cost fuel management and site estimates taken from that study (in 2019 dollars) were restoration; $470,330,000 for license termination, $216,426,670 for spent fuel management and $44,759,330 for site restoration. These estimates represent DESC's two-

Serial No.: 23-064 Docket No.: 50-395 Attachment 1, page 4 of 4 thirds ownership share of costs estimated for the DE CON decommissioning alternative.

Certificates of Insurance Current certificates of insurance evidencing DESC's coverage for premature decontamination and decommissioning liabilities are included in Attachment 4.

Serial No.: 23-064 Docket No.: 50-395 Attachment 2 CALCULATION OF AMOUNT OF DECOMMISSIONING FUNDS ESTIMATED TO BE REQUIRED PURSUANT TO 10 CFR 50.75 Cb) AND (c)

Virgil C. Summer Nuclear Station - Unit 1 Dominion Energy South Carolina, Inc.

Serial No.: 23-064 Docket No.: 50-395 Attachment 2, page 1 of 1 CALCULATION OF AMOUNT OF DECOMMISSIONING FUNDS ESTIMAT ED TO BE REQUIRED PURSUANT TO 10 CFR 50.75 (b) AND (cl Base Amount for PWR between 1,200 MWt and 3.400 MWt 1986 Base Cost = $(75 + 0.0088p) million

= $(75 + 0.0088 x 2900) million

= $100,520,000 Estimated Cost C'{ ear X) = (1986 $ Base Cost) (A Lx + B Ex+ C Bx)

Estimated Cost 2022 = ($100,520,000)((.65 X 3.027)+(.13 X 3.443)+(.22 X 14.067)}

= ($100,520,000) (1.968+0.448+3.095)

= $553,965,720 DESC's two-thirds ownership share of 2022 Estimated Cost = $369,310.480 Where:

p = 2,900 MWt A = .65 (NUREG 1307, Rev. 19)

B = .13 (NUREG 1307, Rev. 19)

C = .22 (NUREG 1307, Rev. 19)

Lx = 3.027 (Computed Below)

Ex = 3.443 (Computed Below)

Px = 2.451 (Computed Below)

Fx = 4.813 (Computed Below)

Bx = 14.067 (NUREG 1307, Rev. 19)

Lx = Base (Dec 2005 Value) x ECI (Qtr 4 2022) / 100

= (1.98 X 152.9) / 100

= 3.027 Px = December 2022 Value / January 1986 Value

= 279.9 / 114.2

= 2.451 Fx = December 2022 Value / January 1986 Value

= 394.7 / 82.0

= 4.813 Ex = ((.58Px) + (.42Fx))

= {(.58 X 2.451) + (.42 X 4.813)}

= (1.422 + 2.021)

= 3.443 The values for the labor adjustment factor (South Region), the energy adjustment factor, and the waste burial adjustment factor (Combination of Compact-Affiliated and Non-Compact Disposal Facilities) were taken from NUREG 1307, Revision 19.

Serial No.: 23-064 Docket No.: 50-395 Attachment 3 EXPLANATION OF FINANCIAL ASSURANCE MECHANISM AND AMOUNTS REMAINING TO BE COLLECTED Virgil C. Summer Nuclear Station - Unit 1 Dominion Energy South Carolina, Inc.

Serial No.: 23-064 Docket No.: 50-395 Attachment 3, page 1 of 4 Financial Assurance Mechanism DESC and Santee Cooper are joint owners of undivided interests in VCSNS. Under the joint ownership arrangement, DESC is the operator ofVCSNS and shares the ownership, operating costs and energy output of the plant with Santee Cooper in the proportions of two-thirds and one-third, respectively. Under the plan used by DESC to fund its share of the costs of decommissioning VCSNS, funds collected through rates are invested in life insurance policies on key company personnel who, in return for participating in the plan, may receive a two-year salary continuation benefit from DESC. DESC has established a decommissioning trust fund (trust fund) with U.S. Bank, N.A. as Trustee. DESC and the trust fund are beneficiaries of the life insurance policies. Lynch & Associates is the servicing agent for the life insurance policies. Through the purchase of life insurance contracts, DESC and the trust fund are able to take advantage of income tax provisions that allow DESC to accrue earnings on the life insurance contracts on a tax deferred basis. In a letter dated July 13, 1989, the NRC had no objection to the program as a funding vehicle for satisfying the investment criteria of its financial assurance regulations.

Further, this funding methodology has been approved by the SCPSC.

Gains and losses related to policy cash surrender values are tax-deferred. Upon the death of the insured, the policy proceeds are remitted tax-free. With regard to general account policies, the trust fund receives the cash surrender value (CSV) and DESC receives the death benefit component (minus any CSV paid; plus any interest due from the date of death) in order to recover its term premium and salary continuation payments, if applicable. With regard to separate account policies, DESC is currently reinvesting death benefits back into those policies. Designated amounts collected through electric rates, insurance proceeds, and interest on proceeds, less after-tax expenses of the program, are transferred by DESC to the trust fund.

As noted earlier in this report, DESC does not maintain separate trusts for radiological and non-radiological segments of the decommissioning process. However, based upon rate treatment received in our 1993 electric rate order, 88.69% of after-tax collections (and also 88.69% of the trust fund balances) are considered to relate to items included in the NRC's definition of radiological decommissioning.

In DESC's June 1993 electric rate case, the SCPSC approved gross annual collections for decommissioning in the amount of $3,224,920, based upon cost estimates contained in a 1991 site-specific study. In su_bsequent rate orders the PSC has not changed this amount. DESC reassesses the adequacy of annual collections on a periodic basis as site-specific decommissioning cost studies are completed. As noted earlier, $2,860,181 (88.69% of $3,224,920) or $2,146,566 after-tax, is considered to relate to items included in the NRC's definition of radiological decommissioning.

The Financial Assurance Model on the following page incorporates the 2023 beginning trust fund balance (gross of advances) and projections of annual amounts (after tax) collected through electric rates, program costs (after tax), investment earnings, and

Serial No.: 23-064 Docket No.: 50-395 Attachment 3, page 2 of 4 payments of amounts of decommissioning funds estimated to be required pursuant to 10 CFR 50.75 (b) and (c). Relevant assumptions used in the Financial Assurance Model are discussed on page 4 of 4.

Serial No.: 23-064 Docket No.: 50-395 Attachment 3, page 3 of 4 Financial Assurance Model External Trust Beginning Schedule of Annual Program Costs, Decommissioning Investment External Trust Year Balance Collection Amounts Ne/Tax Payments Earnings Ending Balance 2022 197,637,208 2023 197,637,208 2,146,566 114,696 3,993,382 203,662,460 2024 203,662,460 2,146,566 173,758 4,112,705 209,747,973 2025 209,747,973 2,146,566 114,696 4,235,597 216,015,440 2026 216,015,440 2,146,566 114,696 4,360,946 222,408,256 2027 222,408,256 2,146,566 114,696 4,488,803 228,928,929 2028 228,928,929 2,146 ,566 114,696 4,619,216 235,580,015 2029 235,580,015 2,146,566 173,758 4,751,056 242,303,879 2030 242,303,879 2,146,566 114,696 4,886,715 249,222,464 2031 249,222,464 2,146,566 114,696 5,025,087 256,279 ,421 2032 256,279,421 2,146,566 114,696 5,166,226 263,477,517 2033 263,477,517 2,146,566 114,696 5,310,188 270,819,575 2034 270,819,575 2,146,566 173,758 5,455,848 278,248,231 2035 278,248,231 2,146,566 114,696 5,605,602 285,885 ,703 2036 285,885,703 2,146,566 114,696 5,758,351 293,675,924 2037 293,675,924 2,146,566 114,696 5,914,156 301,621,950 2038 301 ,621 ,950 2,146,566 114,696 6,073,076 309.726,896 2039 309 ,726,896 2,146,566 173,758 6,233,994 317,933,698 2040 317,933,698 2,146.566 114,696 6,399,311 326,364,879 2041 326,364,879 2,146,566 114,696 6,567,935 334,964,684 2042 334,964,684 2,146,566 114,696 17,586,213 6,388,207 325,798,548 2043 325,798,548 2,146,566 114,696 52,758,640 5,501,436 280,573,214 2044 280,573,214 2,146,566 114 696 52 ,758,640 4,596,929 234,443 ,373 2045 234,443,373 2,146,566 114,696 52,758,640 3,674,332 187,390,935 2046 187,390,935 2,146,566 114,696 52,758,640 2,733,283 139,397,448 2047 139,397,448 2,146,566 114 696 52,758,640 1,773,414 90,444,092 2048 90,444,092 2,146,566 114,696 52,758,640 794,346 40,511,668 2049 40,511,668 2,146,566 114,696 35,172,427 147,422 7,518,533 TOTAL 197,637,208 57,957,282 3,333,040 369,310,480 124,567,563 7,518,533

Serial No.: 23-064 Docket No.: 50-395 Attachment 3, page 4 of 4 Relevant assumptions used in the model to project decommissioning funds through 2049 are as follows:

• Estimated program costs (after tax) that are paid by DESC or the trust include salary continuation payments to beneficiaries of the insured and administrative costs.

These costs are shown in the model at 88.69% of total estimated program costs.

• Repayment of advances of $54,890,000 from DESC to fund premium payments have not been reflected in the model. Advances of $48,681,941, or 88.69%, are considered to be applicable to the fund balance shown in the model.

• The assumed real rate of return on invested funds is 2% based on the provisions of 10 CFR 50.75(e)(1)(ii) which allows "up to a 2 percent annual real rate of return" for licensees that provide decommissioning cost estimates according to the NRC formulas under 10 CFR 50.75(c).

• This 2% earnings credit is taken through the presumed dismantlement period, as allowed for licensees that use the NRC formula under 10 CFR 50.75(c) to derive decommissioning cost estimates.

• Amounts totaling $369,310,480 in 2022 dollars estimated to be required pursuant to 10 CFR 50.75 (b) and (c) based upon the DECON method are expended evenly over the dismantlement period 2042-2049.

It should be noted that the above does not consider the effects of presumed income tax deductibility of decommissioning payments in the years in which such payments are made. Additionally, the above Financial Assurance Model incorporates the NRC formula-based cost estimates and the DEGON (immediate decommissioning) methodology. In contrast, DESC currently intends to utilize a deferred decommissioning (SAFSTOR) methodology. Under the SAFSTOR methodology, the site will be placed and maintained for an extended period in a condition that allows for subsequent decontamination to levels that permit release for unrestricted use in 2104.

As noted earlier, DESC will continue to assess the adequacy of annual collections and request rate relief as appropriate, based upon results of models incorporating site-specific decommissioning cost study estimates and a SAFSTOR method of decommissioning.

Serial No.: 23-064 Docket No.: 50-395 ATTACHMENT 4 NEIL CERTIFICATE OF INSURANCE POLICY NO. P22-082: Primary Property and Decontamination Liability Insurance Virgil C. Summer Nuclear Station - Unit 1 Dominion Energy South Carolina, Inc.

CERTIFICATE OF INSURANCE ISSUED TO: United States NRC ADDRESS: Washington, DC 20555 Attention: William Dean Director of Nuclear Reactor Regulation THIS IS TO CERTIFY that insurance has been effected with NUCLEAR ELECTRIC INSURANCE LIMITED, 1201 N Market Street, Suite 1200, Wilmington, Delaware 19801, under Policy No. P22-082 as follows:

MEMBER INSURED: DOMINION ENERGY SOUTH CAROLINA, INC.

ADDRESS: P.O. Box764 Columbia, South Carolina 29218 PROPERTY INSURED: Summer Nuclear Station COVERAGE: Primary Property and Decontamination Liability Insurance AMOUNT OF A. Except as provided in Item 6.B and 6.C, the Insurer's maximum Limit of INSURANCE: Liability resulting from any one Accident will not exceed $1.060.000.000.

B. The Insurer's maximum Limit of Liability resulting from any one Accident that involves coverage under paragraph I.A.1,Section I.For Section I.G will not exceed $1.060.000.000: provided, however, that not more than

$1.060.000.000 of such Limit of Liability may be used for losses that are covered under Policy provisions other than paragraph I.A 1,Section I.For Section I.G.

INSUREDS: South Carolina Electric and Gas Company and South Carolina Public Service Authority POLICY TERM: 12:01 a.m. on April 1, 2022 to 12:01 a.m. on April 1, 2023, Standard time in Hamilton, Bermuda LOSS PAYEE CLAUSE:

A. Expenses covered under Section I.A.1 (Nuclear Liability Coverage) shall be adjusted with the Member Insured and payable to:

South Carolina Electric and Gas Company P22-082 United States NRC

B. All other covered Losses, except for expenses covered under Section I.G. shall be adjusted with the Member Insured and payable to:

Loss. if any under this policy. except losses to Nuclear Fuel. and except as to materials and supplies and except as otherwise provided shall be adjusted with South Carolina Electric & Gas Company except as to any particular loss less than the greater of Ten Million Dollars

{$10.000.000} and three per centum (3%) of the sum of <x> the principal amount of Securities Outstanding on the date of such particular loss and {y) the principal amount of the Class A Bonds Outstanding on the date of such particular loss. other than Class A Bonds delivered to and held by the Trustee hereunder. to be made payable to The Bank of New York Mellon Trust Company. N.A.. successor to Nations Bank of Georgia. National Association. as trustee as the interest of the Trustee may appear.

Payments. if any. under this policy with respect to loss or damage to the Nuclear Fuel covered under the Amended and Restated Nuclear Fuel Agreement dated October 25. 2012. between South Carolina Fuel Company. Inc. and Wells Fargo Bank. National Association. as Collateral Agent. shall be made to such Collateral Agent as its interest may appear.

C. Expenses covered under Section I.G. (Decommissioning Liability Coverage) shall be adjusted with the Member Insured and payable to:

South Carolina Electric & Gas Nuclear Decommissioning Trust and South Carolina Public Service Authority Nuclear Decommissioning Internal Fund.

The Member Insured may, by written notice to the Insurer, designate other payees under Items 10 A, B or C.

This Certificate is not transferable and may be canceled by NUCLEAR ELECTRIC INSURANCE LIMITED by giving 60 days written notice to the party to whom this Certificate is issued prior to cancellation of the insurance described herein, unless specifically provided for otherwise under the Terms, Conditions and Exceptions of the Policy.

THIS CERTIFICATE is for information only; it is not a contract of insurance but attests that a policy as numbered herein, and as it stands at the date of this Certificate, has been issued by the Company. Said policy is subject to change by endorsement and cancellation in accordance with its terms.

EFFECTIVE DATE OF THIS CERTIFICATE: April 1, 2022 CERTIFICATE EXPIRES: April 1, 2023, unless canceled sooner.

Signed by:

NUCLEAR ELECTRIC INSURANCE LIMITED Jon Levis, CPCU, AU-M, ARe Manager - Underwriting P22-082 United States NRC