ML23094A111

Report of Status of Decommissioning Funding

ML23094A111
Person / Time
Site:	Summer
Issue date:	03/30/2023
From:	Cribb D Santee Cooper
To:	Office of Nuclear Reactor Regulation, Document Control Desk
References
Download: ML23094A111 (1)

Text

~~antee cooper" March 30, 2023 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk 11555 Rockville Pike Rockville, MD 20852

Subject:

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 (Atithority) and Dominion Energy South Carolina (DESC) have ownership interests of one-third and two~thirds, tespectively, in the Virgil C. Summer Nuclear Station, Unit

1. As provided in 10 CFR § 50.75 (f)(l), 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 retjuired 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 $185 million as of December 31, 2022. This one-third liability is funded by I

payments to an external sinking fund as provide~ for in 10 CFR § 50.75. The escalated one-third liability for license termination costs is expected to total $5~2 million, stated in dollars of the year of expenditure. The market value of the external fund was approxittjately $124 million, and the book value was' approximately

$152 million as of December 31, 2022. (Please see Attachmeijt 1.) .

A site-specific decommissioning study completed in 2020 identified the total decommissioning costs for the site. Total site decommissioning includes licen~e termination, spent fuel management and site restoration.

The total costs identified by the study exceed the NRC formula for minimum funding requirements. Further, as the result of a 2006 settlement with the Depkment of Energy (DOE), the Authority expects to receive reimbursement for spent fuel management costs incurred that would have been avoided had the DOE met its contractual obligation to store spent fuel. Thd one-third liability exceeding the NRC minimum funding requirements less DOE reimbursements is estimated by the Authority to be approximately $222 million as of December 31, 2022. The escalated one-third liability is expected to be approximately $3.579 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 appro~imately $79 million, and the book value was approximately

$90 million as of December 31, 2022. (Please se~ Attachment 1.)

If there are any questions concerning this report, please contact me at (843) 761-8000, extension 5812.

Sincerely,

~,7?4L Senior Director Generation DC:trw Attachments cc: Laura Dudes Carey "Mac" Read, Jr.

Ed Miller One Riverwood Drive -1 Moncks Corner, SC 29461-2901 I (843) 761-8000 I P.O. Box 2946101 I Moncks Corner, SC 29461-6101

Attachment 1 l(a). The minimum decommissioning fund estimate, pursuant to 10 CPR§ 50.75 (b) and (c). $184,655,240 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 3.027) + (.13 X 3.443) + (.22 X 14.067)}

$553,965,720 Authority's one-third share of2022 Estimated Cost= $184,655,240 Where:

.65 10 CPR§ 50.75 (c)(2)

.13 10 CPR§ 50.75 (c)(2)

.22 10 CPR§ 50.75 (c)(2) 3.027 (Computed Below) 3.443 (Computed Below) 2.451 (Computed Below) 4.813 (Computed Below) 14.067 (NUREG 1307 Rev. 19) 1986 $ Base Cost ($75,000,000 -t; .0088Pmillion)

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

$100,520,000 p 2,900MWt Lx Base Lx (Dec 2005) x ECI(Qtr 4 2022) / 100 1.98 X 152.9 / 100 3.027 December 2022 Value/ January 1986 Value 279.9 I 114.2 2.451 December 2022 Value/ January 1986 Value 394.7 I 82.0 4.813

{(.58Px) + (.42Px)}

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

(1.422 + 2.021) 3.443 Fourth Quarter 2022 / December 2022 values in the following Bureau of Labor Statistics indices were used to compute NRC minimum requirements:

Employment Cost Index -Total compensation, private industry, South region Series ID: CIU2010000000220I Producer Price Index - Commodities (Industrial electric power)

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

Series ID: wpu0573 1 of 5

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 decommissioning study. These costs were escalated through the end of the decommissioning period based on various indices and estimates. Ultimate decommissioning costs to be funded from the external trust are estimated at $592,281 ,945 in escalated dollars.

2. Market value of the external trust fund on December 31, 2022 for items included in 10 CFR § 50.75 . $124,151.531 Book value of the external trust fund on December 31 , 2022 for items included in 10 CFR § 50.75. $152,219.462

3. Schedule of annual amounts remaining to be collected for items in 10 CFR § 50.75.

The Authority's decommissioning trust investment portfolio consists of U.S. Treasury Bills, Notes, and Strips and Federal Agency Securities. The 2022 rise in interest rates resulted in a trust market value that is lower than book value with an umealized loss of $28 million. The Authority determines its decommissioning funding based on its investment strategy of buying U.S. government securities and holding them until maturity. This buy and hold strategy mitigates temporary market declines and thereby provides justification for using book value as the starting point of the funding analysis. The schedule below adjusts the beginning balance from market to book and applies applicable real rates of return.

2022 Dollars Beginning Decommissioning Annual Ending Real Rates Year Balance Expenditures Deposits Earnings Balance of Return 124, 151 ,531 Market 28,067,931 Adiustment 2023 152,219,462 Book 0 1,188,530 153,407,991 0.0078 2024 153,407,991 0 1,130,924 154,538,915 0.0074 2025 154,538,915 0 1,138,179 155,677, 094 0.0074 2026 155,677,094 0 1,147,652 156,824,746 0.0074 2027 156,824,746 0 1,172,735 157,997,481 0.0075 2028 157,997,481 0 1,070,749 159,068,230 0.0068 2029 159,068,230 0 1,078,005 160,146,235 0.0068 2030 160,1 46,235 0 974,810 161,121 ,046 0.0061 2031 161 ,1 21,046 0 977,360 162,098,406 0.0061 2032 162,098,406 0 905,968 163,004,374 0.0056 ,

2033 163,004,374 0 911 ,031 163,915,405 0.0056 2034 163,915,405 0 899,732 164,815,137 0.0055 2035 164,815,1 37 0 904,670 165,719,807 0.0055 2036 165,71 9,807 0 909,636 166,629,443 0.0055 2037 166,629,443 0 914,629 167,544,072 0.0055 2038 167,544,072 0 902,895 168,446,967 0.0054 2039 168,446,967 0 907,761 169,354,728 0.0054 2040 169,354,728 0 912,653 170,267,381 0.0054 2041 170,267,381 0 91 7, 571 171,184,952 0.0054 2042 171 ,184,952 0 905,397 172,090,349 0.0053 2043 172,090,349 0 910,1 86 173,000,535 0.0053 2044 173,000,535 0 915,000 173,915,534 0.0053 2 of5

Attachment 1 2045 173,915,534 0 919,839 174,835,374 0.0053 2046 174,835,374 0 907,221 175,742,594 0.0052 2047 175,742,594 0 911,928 176,654,523 0.0052 2048 176,654,523 0 916,660 177,571,183 0.0052 2049 177,571,183 0 921,417 178,492,600 0.0052 2050 178,492,600 0 908,349 179,400,949 0.0051 2051 179,400,949 0 912,971 180,313,920 0.0051 2052 180,313,920 0 917,618 181,231,538 0.0051 2053 181,231,538 0 922,287 182,153,825 0.0051 2054 182, 153,825 0 908,765 183,062,591 0.0050 2055 183,062,591 0 913,299 183,975,890 0.0050 2056 183,975,890 0 917,856 184,893,745 0.0050 2057 184,893,745 0 922,435 185,816,180 0.0050 2058 185,816,180 0 908,455 186,724,636 0.0049 2059 186,724,636 0 912,897 187,637,532 0.0049 2060 187,637,532 0 917,360 188,554,892 0.0049 2061 188,554,892 0 921,845 189,476,737 0.0049 2062 189,476,737 10,991,383 872,615 179,357,969 0.0049 2063 179,357,969 26,379,320 732,615 153,711,264 0.0048 2064 153,711,264 26,379,320 609,793 127,941,737 0.0048 2065 127,941,737 26,379,320 486,382 102,048,799 0.0048 2066 102,048,799 26,379,320 362,381 76,031,860 0.0048 2067 76,031,860 26,379,320 232,821 49,885,361 0.0047 2068 49,885,361 26,379,320 110,220 23,616,261 0.0047 2069 23,616,261 15,387,937 38,583 8,266,906 0.0047 Total 152,219,462 184,655,240 0 40,702,684 8,266,906

4. The assumptions used regarding escalation in decommissioning cost, rates of earnings on decommissioning funds, and rates of other factors used in 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 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%), equipment and materials (1 .3%), waste burial (3.8%) and other (2.8%). These rates were proposed in an internal 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 categories.

• 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 3.3% as shown below). The Authority's Board of Directors approves all 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 authorizes the use of the effective yield of the trust portfolio for purposes of determining future decommissioning funding needs."

3 of5

Attachment 1 A B (A-Bl Projected Weighted Average Year Earning Rates Escalation Rates Real Rates of Return 2023 0.0350 0.0272 0.0078 2024 0.0346 0.0272 0.0074 2025 0.0346 0.0272 0.0074 2026 0.0347 0.0273 0.0074 2027 0.0348 0.0273 0.0075 2028 0.0341 0.0273 0.0068 2029 0.0341 0.0273 0.0068 2030 0.0335 0.0274 0.0061 2031 0.0335 0.0274 0.0061 2032 0.0330 0.0274 0.0056 2033 0.0330 0.0274 0.0056 2034 0.0330 0.0275 0.0055 2035 0.0330 0.0275 0.0055 2036 0.0330 0.0275 0.0055 2037 0.0330 0.0275 0.0055 2038 0.0330 0.0276 0.0054 2039 0.0330 0.0276 0.0054 2040 0.0330 0.0276 0.0054 2041 0.0330 0.0276 0.0054 2042 0.0330 0.0277 0.0053 2043 0.0330 0.0277 0.0053 2044 0.0330 0.0277 0.0053 2045 0.0330 0.0277 0.0053 2046 0.0330 0.0278 0.0052 2047 0.0330 0.0278 0.0052 2048 0.0330 0.0278 0.0052 2049 0.0330 0.0278 0.0052 2050 0.0330 0.0279 0.0051 2051 0.0330 0.0279 0.0051 2052 0.0330 0.0279 0.0051 2053 0.0330 0.0279 0.0051 2054 0.0330 0.0280 0.0050 2055 0.0330 0.0280 0.0050 2056 0.0330 0.0280 0.0050 2057 0.0330 0.0280 0.0050 2058 0.0330 0.0281 0.0049 2059 0.0330 0.0281 0.0049 2060 0.0330 0.0281 0.0049 2061 0.0330 0.0281 0.0049 2062 0.0330 0.0281 0.0049 2063 0.0330 0.0282 0.0048 2064 0.0330 0.0282 0.0048 2065 0.0330 0.0282 0.0048 2066 0.0330 0.0282 0.0048 2067 0.0330 0.0283 0.0047 4 of5

Attachment 1 2068 0.0330 0.0283 0.0047 2069 0.0330 0.0283 0.0047

5. Contracts upon which the licensee is relaying pursuant to 10 CFR § 50.75 (e) (1) (v).

None.

6. Modifications to the current funding assurance methods.

None.

7. Material changes to Trust Agreements.

None.

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

Year of 2022 Expenditure Dollars Dollars NRC Minimum Funding Requirements - License Termination (radiological decommissioning costs} (1} 184,655,240 592,281,945 Excess Site-Specific Study Costs (license termination, spent fuel management and site restoration costs) Net of Estimated DOE Reimbursements (spent fuel management costs} (2) 222,315,329 3,578,676,409 2020 Site-Specific Study Costs (license term ination, spent fuel management and site restoration costs) Net of Estimated DOE Reimbursements (spent fuel management costs} (2) 406,970,569 4,170,958,354 (1) Expenditure years are 2062-2069 (2) Expenditure years are 2062-2124

9. Market value of the internal fund on December 31, 2022 for spent fuel management and site restoration $79,297.877 Book vale of the internal fund on December 31, 2022 for spent fuel management and site restoration $90,069.654 5 of5

Attachment 2 INTER-OFFICE COMMUNICATIO DATE: November 9, 2020 TO: Thomas Cwtis, P.E., Chief Generation Officer FROM: Matthew McCants, P.E., Director, Generation Services~

SUBJECT:

vc Summer Unit 1 Decommissioning Cost Update As n,qulR:Jd by the Nuclear Regulatory Commission (NRC) and In accordance with prudent utility practice, Santee Cooper systemsUcally sets aside funds to provide for the eventual decommissioning ofVC SummerNuclearStatlon Unit 1. The annual decomml88ioning funding deposit amount Is currently baaed on NRC requk"ements. estimated cost escalation and fund earnings rates, the results of a site-specific decommJaalonlng coat study conducted by TLG Services, Inc. In 2016, estimated Departmert of Energy (DOE) rembUrsement of spent fuel storage OOICB, and a SAFSTOR (delayed decommialonlng) scenario.

In 2019, TLG Initiated an update to the 2016 decommla8kri'lg cost study and completed the update In 2020. The chart below compares the results of the 2016 TLG study with the 2020 study.

Comoart50D0 fTLG StudIV Results $000s 2016Studv 2020Stlldv IDcreue YearofCosts 2016 2019 2019 2019 Decommlsslo~

Costs01/3 41S,076 446,763 451,799 5,036 The findings of the 2020 study Indicate that since 2016, the overall cost for dec;ommlasionwlg has escalated approximately $5.0 mlllon more than anticipated by current func:Js,g assumptions. The variance Is attrlbutable to the addition of several structures to plant lnvfflOJY (craft traloog cenler, nuclear 1ralnlng center and annex, new *nuclear office building, Industrial pump house, chiller and switchgear, head assembly buHdlng, and two bullet resistant enclosures) and differences In estimated and actual cost escalations.

In conjunction wlh the 2020 decommissioning cost study, TLG completed a related asset *retirement oblgation .(ARO) study. Thia second study was used as baels for updallng the ARO Nablllty associated with decommissioning VC Summer Unit 1. Based on the resulta 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:

Attachment 2 VC Summer Unit 1 Decomrnfssionfng Cost Update November 9, 2020 PageTwo current Proposed CostcateFIY

. Escalllllon

_ . Escalation Aau,nptlon Labor 2.70% 2.79%

Equipment& Materials 1.20% 1.27%

Burtal 3.78% 3.80%

Other 2.78% 2.80%

The proposed escalatk>n rates for Labor, Equipment & Materials, and Other are derived from publlshed Indices and are U88d by TLG to establsh a basis for change In the ARO llabflty. No readily avalable published Index for 8111111 (low-level radioactive waste dlspolal) costs exla; however, TLG determined that adding one percent to the Constner Price Index reasonably C0ITelated to the change In BurlBJ costs over the last decade.

The TLG 2020 decommissioning cost study Includes SAFSTOR (delayed decammlsslonlng) scenartos for both 60 and 80 years of plant operatton. Current funding Is based on a 60-year plant life: however, Domiion'e plan ill to extend the operallng lcenae an adcltional 20 years and operate the plant a total of 80 years. In order to align with Dominion and better project fll'ldlng needs, It Is recommended that an 80-year plant life be adopted for decommissioning funding IUP()888. The one-third cost for a SAFSTOR scenario 888Uming 80 years of plant operations Is $416 mlllon. The 80-year SAFSTOR scenario coat estimate is less than the 60-year scenario due to a shorter tine period for operating the spent fuel storage facilty Bftsr plant shutdown.

Projected earnklgs for the trust and the irtemal fund were reevalualad by Santee Cooper's TrNSll'y 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 reqtired minimum funding amount was also updated based on the prescribed mlnlmun 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 eacalatlon factor. The energy escalation factor decreased 0.7% while the burial factor stayed the same. The Impact on trust f ~ was mlnlmal.

Based on the resuts 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 fundtli amount, the current DOE spent fuel storage cost reimbursement assumption, and a SAFSTOR scenario, the annual fundmg amount wilt need to Increase to approximately $2.5 m iHion. It Is expected that Implementing the propoaed decommissioning contributions as outlined below, along with projected wnlnge, wl IUfflclenlly provide for Santee Cooper's share of the cost to decommialon VC Summer Unit 1.

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

Attachment 2 VC Summer Unit 1 Decommissioning Cost Update November 9, 2020 Page Three

ml&

2020 Later Current Proposed Increase Fundq Fundlna (Deaeue)

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 Concunence: i ,U,, t ~ r:/,. ll I<. 2o'ZO Thomas Qlrtfs, P.E. Date Chief Generation Officer cc: Pamefa Williams Ken l.Dtt Suzame Ritter Daniel Manes