ML23129A781

Procedures for NRCs Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors and Power Reactors in Decommissioning

ML23129A781
Person / Time
Issue date:	05/11/2000
From:	Fred Miller NRC/NMSS/DREFS
To:
References
REFS 70-15-00
Download: ML23129A781 (42)

Text

U.S. Nuclear Regulatory Commission

Office of Nuclear Material Safety and Safeguards

NMSS Office Procedure

Revision 0

Office Procedure No.: REFS 70-15-00

Procedure

Title:

Procedures for NRCs Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors and Power Reactors in Decommissioning

Effective Date: May 11, 2023

Revision No.: 0

Approved By: Fred Miller, Branch Chief, NMSS/REFS/FAB

Date Approved: May 11, 2023

Training/Special Instructions: ADM 504, Qualification Program, and On-the-Job Training, including Self Study

ADAMS Accession No.: P&P ML23129A781

NMSS Office Procedure - REFS-70-15 Revision 0

NMSS Procedure REFS-70-15 Revision 0

Summary of Changes Version Description of Changes Method Used to Date Last Announce & Distribute Modified 0 Initial Procedure 05/11/2023 1

PROCEDURES FOR NRCS INDEPENDENT ANALYSIS OF DECOMMISSIONING FUNDING ASSURANCE FOR OPERATING NUCLEAR POWER REACTORS AND REACTORS IN DECOMMISSIONING

1. PURPOSE

The U. S. Nuclear Regulatory Commission (NRC) conducts a timely and independent analysis of reports required by 10 CFR 50.75, Reporting and recordkeeping for decommissioning planning, and 10 CFR 50.82, Termination of license, on the status of decommissioning funding for each power reactor (operating or in decommissioning).

Operating reactor decommissioning funding status (DFS) reports, which were initially submitted by March 31,1999, and required on a biennial basis, thereafter, reflect funding assurance data as of the end of the preceding calendar year (the reporting year). For a plant that is within five years of the projected end of its operation, or where conditions have changed such that it will be prematurely shutdown within five years or has already ceased operations, this report shall be submitted annually. Pursuant to these requirements, the staff performs an independent analysis of DFS reports for power reactors to determine whether licensees have provided reasonable assurance that sufficient funding for radiological decommissioning of the reactor and site will remain available until license termination.

This office instruction includes provisions for the staffs independent analysis of licensees notifications of decommissioning trust fund (DTF) disbursements, DFS reports, and documentation of its findings in this regard. This, in turn, improves the efficiency, effectiveness, consistency, and timeliness in determining the extent to which licensees provide reasonable assurance that adequate funding will remain available for radiological decommissioning and license termination.

2. BACKGROUND

Following its analysis and completion of the biennial DFS report reviews, the staff participates in a lessons-learned discussion to capture opportunities for enhancing related guidance. This NMSS Operating Procedure 1 includes lessons learned following

1 Prior to the formation of the NRC Center of Expertise - Financial (COE-F), the majority of the Financial Assessment Branch (FA B) functions, including decommissioni ng funding oversight, resided in the Office of Nuclear Reactor Regulation (NRR) in the Financial Projects Branch (PFPB). As such, the procedures for reviewi ng decommissioning funding status r eports for operating reactors and reactors in decommissioning were described in NRR Office Instruction, LIC-205, Procedures for NRCs Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors and Power Reactors in Decommissioning. With the formation of the COE-F in NMSS, and the associated relocation of PFPB into the COE-F as FAB, essentially the functions of FAB Page 2 of 42 NMSS Office Procedure - REFS-70-15 Revision 0

the completions of the March 31, 2019, and March 31, 2021, DFS reports reviews, and recommendations from both the Reactor Decommissioning Financial Assurance Working Group (RD FAWG) Final report and the OIGs August 2021 Audit of the NRCs Oversight of the Adequacy of Decommissi oning Trust Funds (OIG-21-A-14) (ADAMS Accession Nos. ML20121A188 and ML21231A153, re spectively). Specifically, for reactors in decommissioning, this instruction clarifies oversight of decommissioning trust fund (DTF) expenditures as part of reviews of annual DFS reports, institutionalizes periodic cost-baselining of decommissioning cost estimates, institutionalizes a spot check program, improves process controls in the DFS review process, clarifies DFS report reviewer roles and responsibilities, procedures for closeout letters, and procedures for tracking DFS report analyses. Finally, this instruction institutionalizes guidance on reviewing 30-day DTF disbursement pre-notices.

3. INSTRUCTIONS

All operating power reactor licensees are required to submit DFS reports pursuant to 10 CFR 50.75(f)(1), by March 31 of the reporting year. Similarly, for a plant that is within five years of the projected end of its operation, or where conditions have changed such that it will be prematurely shutdown within five years or has already ceased operations, this report shall be submitted annually in accordance with 10 CFR 50.75(f)(1) and 10 CFR 50.82(a)(8)(v)-(vii). In this regard, the regulations provide licensees with the flexibility to provide financial assurance for decommissioning using either the MFA or a site-specific cost estimate (SSCE). Financial assurance for decommissioning using a SSCE is only required at the time period following two years after permanent cessation of operations or when the post-shutdown decommissioning activities report is submitted to NRC. At this time, staff should expect to see DFA to a SSCE (rather than the MFA) in the licensees annual submittal. The staff is responsible for analyzing these status reports and informing the Commission in a timely manner of any notable concerns related to the results of this analysis (e.g., unresolved trust fund shortfalls or a significant decline in a trust fund balance that may have an adverse impact on decommissioning activities). The staff will also report the results from its analysis via a memo (or other acceptable form of communication) from the Office of Nuclear Material Safety and Safeguards (NMSS), Division of Rulemaking, Environmental, and Financial Support (REFS), Financial Assessment Branch (FAB) to the Division of Operating Reactor Licensing (DORL) and the Division of Decommissioning, Uranium Recovery, and Waste Programs (DUWP), as appropriate. Licensees of operating reactors and reactors in decommissioning will be notified of compliance to NRC regulations via closeout letters similar to those referenced in this instruction.

This operating procedure includes provisions for performing the staffs analysis of DFS reports for operating reactors and reactors in decommissioning. In its review, the staff uses software (e.g., Microsoft Excel) as a tool to aid in verifying the licensees compliance to NRC decommissioning funding regulations, and independent calculation of this information. The software spreadsheets (herein referred to as datasheets contained in Appendix A - Datasheets) are protected (user access limited and cells locked) as a means to assure data integrity. Appendix C, Decommissioning Funding Status Report Milestone Table, presents milestones associated with the preparation

also moved from NRR to NMSS. Accordingly, FAB function-related guidance, such as LIC-205, should, to the greatest extent possible, be consolidated into NMSS guidance format.

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and completion of staff reviews consistent with use of this guidance.

3.1 Training

Staff performing reviews of DFS reports for operating reactors and reactors in decommissioning must be trained and qualified to do so. Given the similarity of these reviews, staff must be (at a minimum) task qualified to perform reviews of operating reactor DFS reports. Appendix L, Reactor Financial Reviewer Qualification Plan, to ADM-504, Qualification Program, includes the requirements to task qualify staff in performing DFA reviews for operating reactors. ADM-504 considers a period of self-study inherent in staff learning about the associated regulations and guidance for performance of DFS report reviews, and also on-the-job training. Staff who are in a developmental capacity (not qualified) may participate in these activities so long as they are working in coordination with qualified staff, and a qualified staff reviewer (for performance of this task) is the final signatory authorit y (i.e., secondary reviewer). ADM-504 also includes the recordkeeping requirements to document employee completed training.

The performance of DFS report reviews for the operating reactor fleet and reactors in decommissioning may involve participation from multiple branch staff members. In this circumstance, the lead financial analyst for each type of review (operating reactor versus reactor in decommissioning) shall organize a kickoff meeting with participating staff to assure alignment on roles and responsibilities for job performance, familiarity with procedural guidance, schedule milestones, deliverables, lessons learned from previous reviews, and any pitfalls to avoid (or things to be aware of).

3.2 Coordination with Offices

The lead financial analyst shall closely coordinate receipt of incoming DFS report submittals with DORL within NRR for operating reactors, and DUWP within NMSS for reactors in decommissioning, to assure documents have been submitted to NRC appropriately and timely; the appropriate resources are aligned and have been allocated to complete staff reviews of this information; and accounting codes have been established to capture the level of effort for this project(s). The lead financial analyst shall also closely coordinate with DORL and DUWP to align on expectations for staff deliverables consistent with this instruction and the timely completion of DFS report reviews. The Office of the General Counsel (OGC) should be advised of incoming work and the potential need to support staff reviews in this area. Specific attention should be given to ensure the following:

Budget / Fee Billable Work

The lead financial analyst shall request from the appropriate staff (e.g., OCFO or NRR DRMA/DORL) a unique cost activity code (CAC) to be opened for each DFS submittal to be reviewed. Also, one generic CAC shall be opened to account for project related non-fee billable work (e.g., updates to spreadsheets used for staff analysis or necessary Commission communication). Staff shall

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coordinate with DORL, the appropriate timing of when a CAC should be opened and closed.

Communication with NRC Regional Offices

The lead financial analyst shall coordinate with Regional offices to ensure that the appropriate inspection documentation for reactors in decommissioning is available to the FAB reviewer to confirm licensee activity completion data provided in the DFS reports. If prior year inspection data is not available or the data to not reconcile with the information provided in the DFS report, the lead financial analyst shall coordinate with the appropriate Regional office to resolve the deficiency.

Communication with Licensees

Staff communication with licensees shall be coordinated through the appropriate DORL or Reactor Decommissioning Branch (RDB) Project Manager (PM) within DUWP. Should staff identify a need to request additional information (RAI), they shall develop an RAI using the guidance in LIC-101, License Amendment Review Procedures, and template in Appendix B to this document (or similar language). The RAI shall be transmitted from the FAB Branch Chief (BC) to the BC of the responsible DORL or DUWP branch for the reactor in question and will include the DORL or RDB PM on distribution.

3.3 Procedures for NRCs Independent Analysis of Decommissioning Funding Assurance for Operating Power Reactors

3.3.1 Preparation for Decommissioning Funding Assurance Reviews and Analyses

By March 31 of the reporting year, the lead financial analyst shall perform the following actions to ensure data (in a spreadsheet or other means) used by staff in its analysis is current and accurate:

• Verify the licensed megawatt thermal (MWt) value for each reactor is correct.

The lead financial analyst should use the operating license authority file in ADAMS (Technical Specifications Folder in the Main Library) and the NRCs internal/external website to ensure that all power uprates have been accounted for as of December 31 of the previous year.

• Ensure individual datasheets (similar to Appendix A, Datasheet 2) exist for each operating reactor being reviewed and populate the appropriate fields (i.e., Plant Name, Termination of Operations Date, etc.). Verify this information has been accurately recorded.

3.3.2 Review the Decommissioning Funding Status (DFS) Report for Completeness of Information

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The individual staff reviewer shall verify the completeness and adequacy of the information submitted in the licensees DFS reports against the requirements of 10 CFR 50.75(f)(1) and the guidance in Regulatory Issue Summary 2001-07, Revision 1, 10 CFR 50.75 Reporting and Recordkeeping for Decommissioning Planning, dated January 8, 2009. In doing this, the staff should use a checklist similar to the form provided in Appendix A (Datasheet 2) of this instruction. Statements or questions contained within Datasheet 2 consider information from past RAIs and help the staff determine the reasonableness of the DFS report submittal.

Of note, this step is the first point in the analysis where, if any of the licensees information in its submittal appears unreasonable, contains any apparent errors or omissions, or requires additional information, the staff shall engage the responsible DORL PM and draft an RAI to address this issue, as appropriate. The staff shall ensure that any issues identified and the need for an RAI are documented in the appropriate plant datasheet.

The information required in the licensees DFS report per 10 CFR 50.75(f)(1) is as follows:

1. The licensees calculated MFA (referred to as the NRC minimum formula) pursuant to 10 CFR 50.75(b) and (c). The staff should ensure this amount is accurately recorded in the appropriate plant datasheet and only includes radiological decommissioning costs as defined in 10 CFR 50.2, Definitions. If the licensee provides a SSCE amount, in addition to the MFA, the staff shall record this information in the appropriate datasheet and verify that the SSCE amount is equal to, or greater than, the MFA. The licensee should also specify the amount (MFA or SSCE) to which the licensee is providing financial assurance.

2. The amount of decommissioning funds accumulated at the end of the calendar year preceding the reporting year. The staff shall record the reported (after tax) amount accumulated in the DTF into the appropriate datasheet and ensure this value represents only the radiological decommissioning accumulated funds, not funds associated with spent fuel management, site restoration, or Part 72 specific independent spent fuel storage installation decommissioning.

3. The schedule of annual amounts remaining to be collected, if any. The staff shall record whether this information has been provided in the appropriate datasheet similar to Appendix A, Datasheet 5 - Cash Flow Analysis (LX) (Datasheet 5).

4. The assumptions used in determining rates of escalation in decommissioning costs, reported rates of earnings on decommissioning funds, and any other reported rates or factors used in the funding projections, including any reference to an SSCE, with proper reference material. The staff shall record the values provided by the licensee in the appropriate datasheet and determine whether the assumptions appear reasonable (e.g., annual real rate of return ranges between 2 to 6% on the average; anything over 2% should be verified by the plants public utility commission (PUC)). If the assumptions appear unreasonable, contain any apparent errors or omissions, or require additional clarification, the staff shall engage the responsible DORL PM and draft an RAI to address this issue, as appropriate.

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If the licensees response to the RAI resolves staffs concern, the analyst will document the resolution in the appropriate datasheet. If the licensees response to the RAI does not resolve the issue, then the analyst will notify their BC as to the issues and seek guidance for how to proceed to resolve any concerns. In cases where the licensees real rate of return is greater than two percent and unsubstantiated (not verified by a PUC), note on Datasheet 2 that a maximum of 2% credit will be used.

5. Any contract(s) upon which the licensee is relying pursuant to 10 CFR 50.75(e)(1)(v).

6. Any modification occurring to the licensees current method of providing financial assurance since the last submitted report. If the licensee is using a combined method under 10 CFR 50.75(e)(1)(vi), the financial analyst will review the combined method on a case-by-case basis.

7. Any material changes to trust agreements since the last submitted DFS report and determine if an additional review is necessary.

For items 3, 5, 6, and 7 above, the licens ees submittal should include the information required or a justification for why the information is not necessary. Additionally, any contract upon which the licensee is relying, or for modifications to a licensees current method of providing financial assurance, or for material changes made to the trust agreement, the staff shall document this information on Datasheet 2. The staff will review the contract or change with assistance, as needed, from OGC and document these findings. If this review cannot be completed in a timely manner, the staff will document in the findings that the review is ongoing and notify the lead financial analyst and/or BC of a potential delay in the analyses of the DFS reports. If the licensee wants to provide financial assurance using a site-specific amount, the licensee must still provide the MFA pursuant to 10 CFR 50.75(b) and (c). The staff shall record both amounts on the appropriate datasheets. The staff will develop an RAI as needed to resolve issues about information in the licensees submittal that the staff requires to be able to complete its review of the DFS reports.

3.3.3 Categorizing Licensees

Categorizing a licensee as a utility (Category 1), merchant (Category 2), or hybrid (Category 2H) is important to ensure that the mechanism (e.g., external sinking fund or prepayment) reported to NRC for DFA is acceptable under 10 CFR 50.75(e)(1). This information is typically captured in datasheet s similar to Datasheet 1 (referred to as the master spreadsheet) and 2. Staff shall verify this information is current (and has not changed) at the start of their review.

A category 1 licensee is a utility as defined in 10 CFR 50.2, which means it (a) can recover the estimated total cost of decommissioning through rates established by cost of service regulation, (b) is able to establish its own rates and, thus, can recover all decommissioning costs, or (c) can recover the total cost of decommissioning from non-bypassable charges as also defined in 10 CFR 50.2. Category 1 licensees may rely on external sinking funds as their exclusive mechanism for providing DFA.

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Category 2 licensees, also known as merchant pl ants, consist of all other licensees not authorized to exclusively use external sinking funds. These licensees have no rate regulatory authority to approve ongoing decommissioning funding and future collections adjustments and are all non-electric utilities that do not have access to non-bypassable charges that ensure all decommissioning costs will be paid. Category 2 licensees must provide assurance through other methods, such as prepaid decommissioning funds, a surety method, or a combination of methods, in accordance with 10 CFR 50.75(e)(1),

including use of a sinking fund in combination with other surety methods.

Category 2H licensees are hybrid licensees, which means they have multiple owners where one, or more, owners are Category 1 licensees that can recover costs in one, or more, of the three ways discussed above. The other owner(s) are Category 2 licensees and do not have rate regulatory authority and do not have access to non-bypassable charges.

3.3.4 Determine the Minimum Amount of Decommissioning Financial Assurance

The minimum amount of DFA required is the greater of the amount calculated using the formula in 10 CFR 50.75, or the amount stated by the licensee. The staff shall independently calculate the estimated MFA, in current year dollars, using the formula and escalation factors in 10 CFR 50.75 (b) and (c), and the latest available guidance in Regulatory Guide (RG) 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors, NUREG-1307, Report on Burial Charges: Changes in Decommissioning Waste Disposal Costs at Low-Level Waste Burial Facilities, and NUREG-1577, Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance.

When calculating the MFA, staff shall obtain the most recent available energy and labor escalation (adjustment) factor data from the U.S. Department of Labor, Bureau of Labor Statistics (BLS) as described in NUREG-1307. In this case, preliminary data may be used until final information becomes available; DFA should consider final values from BLS (when available). The staff shall compare its calculated MFA against the licensees provided MFA and also DFA amount if different. If the licensee provided DFA using a SSCE, for example, staff would independently calculate the MFA and compare it against the licensee provided MFA and DFA values. If using a SSCE, the staff shall ensure the estimated value from the SSCE is equal to or greater than the calculated MFA value.

In independently calculating the MFA, staff shall perform the following steps:

1. Using the reactor type (pressurized-water reactor or boiling-water reactor) and the power level (MWt) described in 10 CFR 50.75(c)(1), establish a base amount for the MFA in 1986 dollars.

2. Using the three cost adjustment escalation factors for labor, energy, and waste burial costs, and their relative weighting described in 10 CFR 50.75(c)(2),

escalate the 1986 base amount to the current amount required for decommissioning each reactor. The current amount is expressed in dollars as of the end of the calendar year preceding the date of the biennial submittal. The BLS publishes the escalation factors for labor and energy, and NUREG-1307 provides the low-level waste burial escalation factor. The latest BLS escalation factors at the time of the licensees report to the NRC will be input first; however, Page 8 of 42 NMSS Office Procedure - REFS-70-15 Revision 0

if the final BLS escalation factors for December or the fourth quarter of the year prior to the reporting year are lower, those adjustment factors will be used. The staff calculates the MFA using the lowest value for the waste burial escalation factor in the formula and the latest values for labor and energy. Section C.1 of RG 1.159 provides the overall guidance on adjusting the current amount and also references sections in NUREG-1307 t hat contain the detailed methods for calculating the total MFA adjustments using the escalation factors.

3. For reactors with multiple owners, determine the MFA for each co-owner, prorated for each co-owners ownership share. If the co-owners inform the NRC that they have made other arrangements for the sharing of decommissioning costs, the MFA determination should be made on the basis of the co-owners agreement.

4. If the licensee(s) has submitted the preliminary decommissioning cost estimate (PDCE) required about 5 years before the projected end of operations, pursuant to 10 CFR 50.75(f)(3), the minimum DFA requirement is that of the PDCE.

Likewise, if the licensee submits an SSCE for decommissioning, the minimum DFA is the SSCE. In both cases, the estimate must be equal to or greater than the amount determined by 10 CFR 50.75(c)(1) and (2).

3.3.5 Determine the Amount of Decommissioning Funding Assurance

The staff shall independently calculate the amount of DFA provided by the licensee in current dollars. By summing the items list ed below, the staff determines each reactors amount of DFA:

• The balance of the DTF as of the end of the calendar year preceding the year the report is due, if the funds meet the requirements of 10 CFR 50.75(e)(1)(i) or (ii).

• Amounts remaining to be collected. These collections may be acceptable as DFA if the licensee meets the cost recovery criteria or non-bypassable charges specified in 10 CFR 50.75(e)(1)(ii)(A) and (B), or the amount will be collected under the terms of a contractual obligation that meets the requirements of 10 CFR 50.75(e)(1)(v).

• Projected earnings as a result of applying the appropriate earnings credit at a compounded annual real rate of return (real rate of return equals the real earnings rate minus the escalation rate minus the rate of any other factors) to the DTF balance and acceptable amounts remaining to be collected. The regulations in 10 CFR 50.75(e)(1)(i) and (ii) allow a credit for projected earnings of up to two-percent annual real rate of return from the time of future funds collection through a specified period as described below. Category 2 (merchant) licensees are limited to a two-percent maximum real rate of return. The earnings credit may be applied during both operating and decommissioning periods. The maximum time during the decommissioning period for which the credit may be taken depends on whether the licensee uses the 10 CFR 50.75(c) generic MFA estimates or has submitted a SSCE with a specified SAFSTOR period to estimate decommissioning costs. The allowed credit may be greater than the two-percent real rate of return for Category 1 (utility) licensees if its rate-setting authority has approved or assumed a higher rate in the most recent case. The Page 9 of 42 NMSS Office Procedure - REFS-70-15 Revision 0

licensee must continue to qualify for future rate adjustments by a regulatory authority to be able to claim a real rate of return higher than two percent. Unless approved or assumed differently in the most current rate case (e.g., during DECON), the allowed credit greater than two percent for Category 1 licensees will be credited only up to the time when permanent termination of operations is expected. The staff shall use the real rate of return stated by the licensee in its DFS report, subject to the limitations described above.

A licensee using an MFA defined in 10 CFR 50.75(c) to estimate decommissioning costs may take the earnings credit during the period of plant operation for the remaining years of the plants operating license. The licensee may take an additional pro rata credit for the first seven years after shutdown as long as the credit recognizes the expected cash flow of expenditures for decommissioning during this period. Unless the licensee states otherwise, the staff shall assume that the cash flow of expenditures is one-eighty-fourth (1/84) of the formula amount each month. The funds should be expended by the end of the 84 months (7-year period) so that no more pro rata earnings credit can be taken thereafter. If the NRC has renewed the license for a reactor, the licensee may take the allowed earnings credit through the extended license period, as well as the pro rata credit through the first seven years after shutdown.

A licensee providing financial assurance using an SSCE may take the allowed earnings credit through the projected decommissioning period, provided that the SSCE is based on an acceptable decommissioning method (e.g., SAFSTOR) specifically described in the estimate. If the annual SSCE costs are paid from the DTF, the annual costs of SSCE, which do not include the cost of the storage of spent fuel, must be deducted from the earnings credit. The decommissioning funds may not be drawn down to such a degree during the SSCE decommissioning period that the earnings credit would be materially affected.

(This projected SSCE decommissioning period starts at the time of permanent shutdown and continues through license termination.)

• The amounts of DFA, if any, provided by other methods specified in 10 CFR 50.75(e)(1).

3.3.6 Determine Reasonable Assurance

For a single license (whether one or multiple owners), the staff determines whether there is reasonable assurance that adequate funds will be available for decommissioning by comparing the licensees projected funds and any additional funding mechanism (together DFA) to either (A) the required MFA, in current dollars, for each reactor, or (B) the SSCE provided, and assured to, by the licensee.

(A) Licensee is providing assurance using the MFA:

If the licensee is providing assurance us ing the MFA, the staff compares its independently calculated MFA to its independently calculated DFA in making its reasonable assurance determination. The staffs independent calculation of the MFA is used in making the determination of reasonable assurance, unless the licensee provides a certification amount or a cost estimate that is greater than the staffs MFA. For the determination of reasonable assurance, the staff will round up

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the licensees financial assurance amount to the next million. For example, if the licensee provides financial assurance of $337.2 million, the staff will round up to

$338 million.

In summary, below are the steps taken by staff for the independent determination of reasonable assurance when the licensee is providing assurance using the MFA.

These steps and the staffs findings are documented on the appropriate datasheets similar to those in Appendix A of this procedure.

Step 1: Current Funding and Projected Earnings

The staff will project the licensees current amount of the DTF with a real rate of return based on the assumptions provided by the licensee in the DFS report.

The staff shall use the real rate of return stated by the licensee in its DFS report, subject to the two percent limit, as applicable, through the termination date of operations. If the licensee is a Category 1 (utility), then the licensee should provide the documentation (i.e., PUC order) to support the assumptions, regardless of whether or not it results in a real rate of return of less than two percent. The staff will complete this task for each licensee of the unit (presuming multiple licensees exist) and document the information on a form similar to Datasheet 5, where L stands for the licensee and X is the licensee number for the unit. The final amount of assurance will then be totaled for each licensee and transcribed onto a form similar to Datasheet 4 - Summary sheet (Datasheet 4),

which will show the determination of whether there is DFA. For those units with multiple owners, the staff also will make a determination for each licensee based on the percentage of DFA responsibility.

Step 2: Accumulation

If the schedule of amounts remaining to be collected is provided, the staff shall record the amounts for each applicable Category 1 licensee. This schedule should be recorded on a year-to-year basis on a form similar to Datasheet 5.

Unless the licensee states otherwise, the staff should assume that the collections occur in equal monthly amounts throughout the year. Therefore, the staff shall use a midpoint method for calculation of the earnings credit (half of the collections for the year are credited at the beginning and the remaining at the end). The aggregate total for each licensee of the amounts remaining to be collected should be transposed onto a form similar to Datasheet 4. The staff shall add the total of the amounts remaining to be collected to the expected amount in the DTF at the termination of operations and shall enter a determination of whether there is DFA on Datasheet 4.

Step 3: Decommissioning Period

The staff shall use the real rate of return stated by the licensee in its DFS report, subject to the 2% limit, as applicable. If the assumptions provide for a real rate of return greater than 2% for a Category 1 licensee, the licensee must provide documentation that allows for the greater than 2% real rate of return during decommissioning. Category 2 licensees may only receive credit for a 2% real rate of return.

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Step 4: Other Assurances

The staff shall determine if the licensee has provided any additional assurance mechanisms, as specified in 10 CFR 50.75(e)(1). If the licensee has provided such mechanisms, the staff shall document the type of assurance (e.g., parent company guarantee) and amount on the summary datasheet (Datasheet 4).

Step 5: Current Total Funding: Combining Steps 1 Through 4

The staff shall add the assurance amount(s) from steps 1 through 4 above, thus combining all projected compounded amounts, accumulation amounts, and other assurance amounts. In this way, the staff can determine whether the licensee is providing adequate DFA for each licensee and reactor, and conclude whether the licensees DFA meets or exceeds, or fails to meet, the MFA requirement.

If the licensees DFA is provided through a combination of surety methods, the staff shall determine, based on Commission guidanc e, whether the combination provides assurance acceptable under the methods of 10 CFR 50.75(e)(1)(i) through (v), or other such equivalent, acceptable assurance.

(B) Licensee is providing assurance using a SSCE:

If the licensee is providing assurance usi ng a SSCE (whether in operations or in decommissioning), the staff shall perform the first two steps in Part (A) of the section above.

Step 3: Decommissioning Period

After completing Part A, Steps 1 and 2, the staff shall transcribe the appropriate expenses, by year, for each licensee onto a form similar to the Cash Flow Analysis Datasheet (Datasheet 5). If the licensee is an operating reactor, this may include any decommissioning planning costs that occur before the termination of operations. If the licensee is a reactor in decommissioning, the staff shall ensure that the licensee has provided adequate detail describing the decommissioning expenses to-date to ensure that only allowable expenses (i.e.,

legitimate decommissioning activities or expenses otherwise allowed by regulatory exemption) have been incurred. Unless the licensee states otherwise, costs for each year are assumed to be drawn down equally per month when performing the cash flow analysis. If the end-of-year trust fund balance is greater than or equal to zero at the end of the decommissioning period, then the licensee is providing DFA. Note that 10 CFR 50.82(a)(8)(i) limits withdrawals from the trust fund.

Step 4: Other Assurances

The staff shall determine whether the licensee(s) has provided any noncash equivalent assurance mechanisms. If the licensee has included this information, the staff shall document the type of assurance (e.g., parent company guarantee) and date approved on the appropriate Datasheet (4 and/or 5). For example, in the case of a parent company guarantee (PCG), this company met the qualifications in 10 CFR 30 App A on Month DD, YYYY.

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Step 5: Current Total Funding: Combining Steps 1 Through 4

The staff shall add the assurance amount(s) from steps 1 through 4 above, thus combining all projected compounded amounts, accumulation amounts, and other assurance amounts. In this way, the staff can determine whether the licensee is providing adequate DFA for each licensee and reactor, and conclude whether the licensees DFA meets or exceeds, or fails to meet, the SSCE requirement (the SSCE must be greater than the MFA).

If the licensees DFA is provided through a combination of surety methods, the staff shall determine, based on Commission guidanc e, whether the combination provides assurance acceptable under the methods of 10 CFR 50.75(e)(1)(i) through (v), or other such equivalent, acceptable assurance.

When Parts (A) and/or (B) are complete, the primary reviewer shall request a secondary peer review of each DFS report submittal using the guidance prescribed above. A primary and secondary staff review shall be performed for each DFS report. The staffs overall findings shall be documented on the appropriate datasheets and all datasheets shall be signed and dated by both reviewers. If the second reviewers finding does not support the initial finding, the reviewers shall discuss their findings and resolve and document any differences.

A staff determination of inadequate DFA should be made if the MFA exceeds the projected funds (rounded up to the next million), or if the end-of-year trust fund balance in an SSCE is less than zero during the decommissioning period. In this case, the staff shall contact either the DORL or NMSS PM to discuss a preliminary finding of inadequate financial assurance and necessary actions to remediate staffs concerns.

These actions may include follow-up contact with the licensee and a RAI (developed using the template in Appendix B). The licensee should consider guidance in RG 1.159 to remedy any potential funding shortfall. Any staff finding of inadequate DFA shall be communicated to the Commission.

Finally, once each phase of the review is completed (e.g., initial review, RAI issued, secondary review, etc.), the FAB SharePoint page dedicated to the review cycle shall be updated appropriately.

3.4 Procedures for NRCs Independent Analysis of Decommissioning Funding Assurance for Reactors in Decommissioning

3.4.1 Preparation for Decommissioning Funding Assurance Review and Analysis

By March 31 of the reporting year, the designated analyst or lead financial analyst shall perform the following actions to ensure data used by staff in its analysis is current and accurate:

• Ensure that all annual submittals for plants in decommissioning have been provided to the NRC officially and are publicly available in ADAMS. Since DUWP/RDB would be the recipients for these reports, staff should coordinate this activity with RDB.

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• Once requested by RDB to perform these reviews, staff shall ensure individual datasheets (similar to Datasheet 3) exist for each reactor in decommissioning being reviewed and populate the appropriate fields (i.e., Plant Name, Termination of Operations Date, etc.).

• Verify this information has been accurately recorded.

3.4.2 Review the Decommissioning Status Funding Report for Completeness of Information

The individual staff reviewer shall verify the completeness and adequacy of the information submitted in the licensees DFS reports against the requirements in 10 CFR 50.82 (a)(8)(v) - (vii). In doing this, the staff shall input the relevant information contained within the report into the appropriate datasheets (similar to Appendix A, Datasheet 3).

The analyst will document whether any of the licensees information in its submittal appears unreasonable, contains any apparent errors or omissions, or requires additional information. The staff shall ensure that any issues identified and the need for an RAI are closely coordinated with the appropriate RDB staff.

The regulations at 10 CFR 50.82(a)(8)(v) - (vii) identify the information that must be included in the DFS report for a reactor licensee in decommissioning. The items identified below are applicable to each licensee, and are as follows:

10 CFR 50.82(a)(8)(v)

1. The amount spent on decommissioning, both cumulative and over the previous calendar year, the remaining balance of any decommissioning funds, and the amount provided by other financial assurance methods being relied upon.

2. An estimate of the costs to complete decommissioning, reflecting any difference between actual and estimated costs for work performed during the year, and the decommissioning criteria upon which the estimate is based.

3. Any modifications occurring to a lice nsee's current method of providing financial assurance since the last submitted report.

4. Any material changes to trust agreements or financial assurance contracts.

Note: For any contract upon which the licensee is relying, or for modifications to a licensees current method of providing financial assurance, or for material changes made to the trust agreement, the staff shall document this information on Datasheet

3. The staff will review the contract or change with assistance, as needed, from OGC and document these findings. If this review cannot be completed in a timely manner, the staff will document in the findings that the review is ongoing and notify the lead financial analyst and/or BC of a potential delay in the analyses of the DFS reports. The staff will develop an RAI as needed to resolve issues about information in the licensees submittal that the staff requires to be able to complete its review of the DFS reports.

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10 CFR 50.82(a)(8)(vi)

5. If the sum of the balance of any remaining decommissioning funds, plus earnings on such funds calculated at not greater than a 2 percent real rate of return, together with the amount provided by other financial assurance methods being relied upon, does not cover the estimated cost to complete the decommissioning, the DFS report must include additional financial assurance to cover the estimated cost of completion.

10 CFR 50.82(a)(8)(vii)

6. The amount of funds accumulated to cover the cost of managing the irradiated fuel.

7. The projected cost of managing irradiated fuel until title to the fuel and possession of the fuel is transferred to the Secretary of Energy.

8. If the funds accumulated do not cover the projected cost, a plan to obtain additional funds to cover the cost.

3.4.3 Determine the Amount of Decommissioning Funding Assurance

The staff independently calculates the amount of DFA provided by the licensee, in current dollars. This is performed consistent with the guidance provided in Section 3.3.5 of this instruction. Since the staff is reviewing the DFS report submittal for a reactor in decommissioning, it should focus on the particular guidance pertaining to a licensee who is providing DFA using a SSCE in lieu of the MFA.

3.4.4 Determine Reasonable Assurance

As part of this review, the analyst will determine whether there is reasonable assurance that adequate funds will be available to complete decommissioning by comparing the licensees SSCE to its projected funds (until license termination) and staffs independent calculation of this information. The analysis will be performed on a licensee and reactor basis using the guidance in Section 3.3.6.B of this instruction, including the subsequent guidance on peer reviews and resolution of staff concerns. The analyst shall document any concerns, including an SSCE that is reported below the MFA or a shortfall in funding.

Once each phase of the review is completed (e.g., initial review, RAI issued, secondary review, etc.), the FAB SharePoint page dedicated to the review cycle shall be updated appropriately.

3.5 Lead Analyst Review for Completion and Accuracy

Once initial and secondary reviews of DFS report submittals have been performed, the lead financial analyst shall ensure that each individual review is complete and has undergone the review process.

For both operating reactors and reactors in decommissioning, the lead financial analyst will review each data sheet in the individual reactor DFS workbook to ensure that all

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inputs have been addressed, there are no outstanding Excel formula code errors, and that the review has been signed and dated by both the primary and secondary reviewers. Any deficiencies noted by the lead analyst shall be communicated to the appropriate analyst(s) for disposition. Once any deficiencies have been addressed, the lead analyst shall review the updated data sheet(s) for completeness and accuracy.

3.6 Presentation of Results (Operating Reactors and Reactors in Decommissioning)

Once initial and secondary reviews of DFS report submittals have been performed, and the lead analyst has reviewed each review is complete and accurate, the staff shall ensure that branch, division, office management (including NRR and NMSS), and the Commission are informed, as appropriate, of the staffs DFA findings.

Any noteworthy concerns identified by sta ff (e.g., unresolved trust fund shortfalls or significant declines in trust fund balances that may have an adverse impact on decommissioning activities) shall be communicated to the Commission.

In accordance with this instruction and in coordination with NRR/DORL and NMSS/DUMP, the lead financial analyst will complete a closure letter(s) (refer to Section 4.6 of this instruction) to be used to communicate with licensees the results of staffs review in this regard. For efficiency, staff should consider sending a single letter to all licensees who have demonstrated compliance with NRC decommissioning reporting requirements with an enclosure that provides a summary of staffs findings. Staff will draft a single letter to each applicable licensee should any adverse DFA finding be identified.

The staff shall also report the results from its analysis of the reactors in decommissioning via a memo (or other acceptable form of communication) from FAB to DUWP/RDB.

3.7 Review Completion

Once individual reactor reviews are complete, staff shall notify the lead financial analyst in this regard. The lead financial analyst shall take appropriate steps to ensure that CACs are closed timely, including consideration for staff preparation of closure letters similar to those found at ADAMS Accession Nos. ML15357A397 (for DFS report reviews demonstrating compliance) and ML16008A117 (for DFS report reviews identifying a funding shortfall). A completion letter memorandum shall also be drafted, as appropriate, and sent to RDB. In this regard, an example memo can be found at ADAMS Accession Number ML15341A140.

Any CACs should remain open until closure letters are declared as publicly available in ADAMS for reactor reviews.

4. RESPONSIBILITIES AND AUTHORITIES

Branch Chief (BC), Financial Assessment Branch (FAB)

The BC is responsible for oversight of DFS report review activities associated with operating reactors and reactors in decommissioning, and timely closure of associated Page 16 of 42 NMSS Office Procedure - REFS-70-15 Revision 0

CACs. This includes assignment of resources to perform the activities identified in this office instruction commensurate with their qualifications and ensuring staff procedures are used, as appropriate. The BC should also ensure appropriate and effective communications among stakeholders are maintained, including those to the Commission and NMSS as described herein.

The BC is also responsible for performance of as-needed spot-checks in accordance with this instruction.

Lead Financial Analyst, FAB

The lead financial analyst, in collaboration with the BC, is responsible for coordinating the DFS report reviews. This includes ensuring a quality of work is maintained and CACs are opened and closed timely. The lead financial analyst will also serve as the liaison to DORL and DUWP for this activity, and as appropriate is also responsible for drafting any communication to be sent to the Commission (e.g., Commission memorandum), NRR, NMSS, and the licensees regarding these reviews.

Financial Analyst, FAB

The financial analyst is responsible for the DFS report review process, including following this office instruction and all other regulations and supporting guidance.

Notably, the financial analyst is responsible for assuring current and accurate information is used in its analysis, the integrity of any electronic tools such as software spreadsheets is maintained at all times, and communication among key stakeholders (e.g., management, DORL, DUWP, and OGC) is clear, effective, and timely.

The financial analyst is also responsible for performance of as-needed spot-checks in accordance with this instruction.

Financial Analyst (Secondary Staff Reviewer - Peer Check), FAB

The secondary reviewer is responsible for independently validating the adequacy and completeness of the initial DFS report review, analysis, and conclusion(s), consistent with this guidance document. Should the secondary reviewer identify any discrepancies with the staffs initial review, they shall discuss these findings with the initial reviewer, and/or lead financial analyst, as appropriate. The initial reviewer shall take appropriate steps to resolve any discrepancies and document resolution of these actions. Any remaining concerns shall be communicated to the BC as appropriate.

Branch Chief, Division of Operating Reactor Licensing

The DORL BC is responsible for managing the review and processing of license amendments and other requests requiring NRC approval, and serves as headquarters contact with licensees, the Regions and other stakeholders in matters pertaining to assigned facilities. The DORL BC will process any related close-out communications with the licensees.

Project Manager, Division of Operating Reactor Licensing

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The DORL PM is responsible for ensuring that applicable licensing steps are completed in accordance with the process described in this instruction, including necessary coordination and communication with licensees.

Branch Chief, Reactor Decommissioning Branch, Division of Decommissioning, Uranium Recovery, and Waste Programs, NMSS

The RDB BC is responsible for managing the review and processing of license amendments (for licensees in decommissioning) and other requests requiring NRC approval, and serves as headquarters contact with these licensees, the Regions and other stakeholders in matters pertaining to assigned facilities.

Project Manager, Reactor Decommissioning Branch, Division of Waste Management and Environmental Protection, NMSS

The RDB PM is responsible for ensuring that applicable licensing steps are completed in accordance with the process described in this instruction, including necessary coordination and communication with licensees.

Branch Chief, Regional Office

The Regional office BC is responsible for ensuring that inspection data is current and is performed in accordance with appropriate NRC guidance. The Regional office BC will coordinate with the Lead Analyst to ensure two-way information flow regarding licensee financial information, informing both FAB DFA analysis and individual plant inspections.

5. REFERENCES

Miscellaneous

Atomic Energy Act of 1954, as amended.

U.S. Department of Labor, Bureau of Labor Statistics

Code of Federal Regulations (CFR)

10 CFR Part 50, Domestic Licensing of Production and Utilization Facilities.

10 CFR 50.2, Definitions.

10 CFR 50.75, Reporting and Recordkeeping for Decommissioning Planning.

Nuclear Regulatory Commission Documents

NRR OI LIC-109, Acceptance Review Procedures.

NRR OI LIC-205, Procedures for NRCs Independent Analysis of Decommissioning Funding Assurance for Operating Nuclear Power Reactors and Power Reactors in Decommissioning

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ML013330264).

OIG-06-A-07, Follow-up Audit of the Nuclear Regulatory Commissions Decommissioning Fund Program, February 6, 2006 (ADAMS Accession No. ML060370376).

OIG-21-A-14, Audit of NRCs Oversight of the Adequacy of Decommissioning Trust Funds, August 19, 2021 (ADAMS Accession No. ML ML21231A15)

Reactor Decommissioning Financial Assurance Inter-Office Working Group Final Report, May 1, 2020 (ADAMS Accession No. ML20120A550)

Regulatory Guide 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors Rev. 2 (ADAMS Accession No. ML112160012).

Regulatory Issue Summary 2001-07, Rev. 1, 10 CFR 50.75 Reporting and Recordkeeping for Decommissioning Planning, January 8, 2009 (ADAMS Accession No. ML083440158).

SECY-06-0065, Office of the Inspector General Recommendations on Decommissioning Funding Assurance, March 23, 2006 (ADAMS Accession No. ML060590524).

Staff Requirements Memorandum (SRM) to SECY-07-0197, Reactor Decommissioning Trust Fund Oversight by Other Agencies and Recommendations Regarding Further Commission Action, January 9, 2008 (ADAMS Accession No. ML080100481).

6. APPENDICES

Appendix A - Datasheets Appendix B - Request for Additional Information Guide Appendix C - Decommissioning Funding Status Report Milestone Table Appendix D - Spot Check Program Appendix E - Dispositioning Notifications of Decommissioning Trust Fund Planned Disbursements

7. EFFECTIVE DATE

May 11, 2023

ADAMS Accession No.: ML23129A781 OFFICE NMSS/REFS/FAB NMSS/DRMA/OMT NMSS/REFS/FAB:BC NAME SHarwell LMoorin FMiller DATE 05/09/2023 05/10/2023 05/10/2023 NMSS Office Procedure - REFS-70-15 Revision 0

Appendix A

Datasheets

Examples of datasheets used by staff in performi ng their analysis are included in this Appendix.

The main purpose of each datasheet is described below:

Datasheet 1 - Minimum Decommissioning Funding Assurance Data

This datasheet provides an overview of t he key components necessary to calculate the minimum formula amount.

Datasheet 2 & 3 - Licensee submittals

Datasheets 2 and 3 are intended to capture pertinent information contained within the licensees submittal to demonstrate compliance with 10 CFR 50.75 and 10 CFR 50.82 decommissioning funding reporting requirements for operating reactors and reactors in decommissioning.

Datasheet 4 - Summary Datasheet

This datasheet provides a summary of the staff s quantitative analysis and finding(s) for meeting operating reactor decommissioning funding assurance requirements (DFA).

Datasheet 5 - Cash Flow Analysis (LX)

This datasheet provides the details of the staffs quantitative analysis for DFA.

In its electronic form, this datasheet compiles inputs from information in datasheets 2 and 4.

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DATASHEET 2OPERATING REACTOR DFA REVIEW

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Instructions for Completing Decommissioning Funding Status Report Reviews for Operating Reactors

This instruction sheet is intended to be an aid for the analyst performing the decommissioning funding status (DFS) report reviews for operating reactors. An alternate instruction sheet is available for the analyst to review the DFS report for a reactor in decommissioning.

Using the licensees submittal, the analyst shall enter all required information into this datasheet. In performing this task, the analyst shall verify whether the 10 CFR 50.75(f)(1) reporting requirements have been provided, and annotate Y, N or NA, as appropriate.

Detailed information related to the calculation of the Table of Minimum Amounts value (minimum formula amount or MFA) and the determination of decommissioning funding assurance (DFA) can be found in NUREG-1307, Rev. 16, Report on Waste Burial Charges:

Changes in Decommissioning Waste Disposal Costs at Low-Level Waste Burial Facilities, Final Report, and this guidance document.

The analyst shall ensure the following information is accurately recorded:

General Items

Plant Name - the name of the facility.

Docket Number - the proceeding number associated with the facility. Docket number is usually found on cover page of licensees submittal.

Date of Operation - this date should correspond with December 31 of the year prior to the licensees submittal. For example, a licens ees DFS report submitted on March 31, 2017, should reflect information as of December 31, 2016.

Termination of Operations - this date should correspond with the termination of the facility operating license.

Specific Items

1. The staff shall independently calculate the estimated MFA, in current year dollars, using the formula and escalation factors in 10 CFR 50.75 (b) and (c), and the latest available guidance in Regulatory Guide (RG) 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors, NUREG-1307 and NUREG-1577, Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance and compare it to the MFA amount provided by the licensee.

If using a site-specific cost estimate (SSCE), the staff shall ensure the estimated value from the SSCE is equal to or greater than the MFA value calculated by the analyst.

2. The analyst shall confirm that the licensee has provided the decommissioning trust fund amount as of December 31 of the precedi ng calendar year, and that this amount is clearly identified for radiological decommissioning purposes only. If funds within the decommissioning trust fund are identified for purposes other than radiological decommissioning, the funds should be clearly delineated by the licensee. If the funding

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amounts are not clearly delineated, a request for additional information (RAI) shall be issued. RAIs are processed through the respective PM.

3. The analyst shall note if there are payments into the decommissioning trust fund (DTF) remaining. Depending on the answer (e.g., payment schedules, amount leftover for payment), a RAI may be required.

4. The analyst shall note if the licensee provided its assumptions regarding the return, health and potential growth of its decommissioning funding. The analyst shall record these factors and assess their validity. If the results of this effort be unable to confirm the assumptions, then a RAI shall be issued.

5. The analyst shall note if the licensee provided information regarding the use of contracts.

As allowed per 10 CFR 50.75 (e)(1)(v), a licensee may use a guarantee of a power production purchase contract with an entity (e.g., a utility) to demonstrate a source of funding for decommissioning. The analyst shall annotate Y or N as appropriate.

6. The analyst shall note if the licensee provided information regarding any modifications to the licensees method of providing decommissioning funding assurance. The analyst shall annotate Y or N as appropriate.

7. The analyst shall note if the licensee provided information regarding any material changes to trust agreements. The analyst shall annotate Y or N as appropriate. If Y, the staff will review the contract or change with assistance, as needed, from the Office of General Counsel and document these findings.

8. The analyst shall confirm that the licensees DFS report was received by March 31 of the reporting year per 10 CFR 50.75(f)(1). The analyst shall annotate Y or N as appropriate.

9. Based on the information provided by the licensee, the staffs independent verification of the information, and staffs calculation of minimum funding assurance, a determination is required on whether or not the licensee has demonstrated it has the necessary financial instruments in place to successfully fund a future decommissioning effort as required.

The analyst shall annotate Y or N as appropriate.

10. Upon completion of the review, the analyst shall sign and date the instruction sheet. To confirm that the information and the actions of the licensee will meet regulatory requirements, a secondary reviewer shall sign and date the instruction sheet.

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DATASHEET 3REACTOR IN DECOMMISSIONING DFA REVIEW

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Instructions for Completing Decommissioning Funding Status Report Reviews for Reactors in Decommissioning

This instruction sheet is intended to be an aid for the analyst performing the decommissioning funding status (DFS) report reviews for reactors in decommissioning. An alternate instruction sheet is available for the analyst to review the DFS report for an operating reactor.

Using the licensees submittal, the analyst shall enter all required information into this datasheet. In performing this task, the analyst shall verify whether the 10 CFR 50.82(a)(8) reporting requirements have been provided, and annotate Y, N or NA, as appropriate.

Detailed information related to the calculation of the Table of Minimum Amounts value (minimum formula amount or MFA) and the determination of decommissioning funding assurance (DFA) can be found in NUREG-1307, Rev. 16, Report on Waste Burial Charges:

Changes in Decommissioning Waste Disposal Costs at Low-Level Waste Burial Facilities, Final Report, and this guidance document.

The analyst shall ensure the following information is accurately recorded:

DFS Report Information that meets 10 CFR 50.82(a)(8)(v)

1. The analyst shall verify that the licensee provided the values for the cumulative amount spent on decommissioning, the amount spent on decommissioning over the previous calendar year, the remaining balance of any decommissioning funds, and the amount of decommissioning funding assurance provided by other methods (e.g., surety bond, letter of credit) and document this information into the datasheet, as appropriate.

2. The analyst shall verify that the licensee provided the estimated cost of remaining decommissioning activities as stated in the most recent site-specific decommissioning cost estimate (SSCE) update, reflecting the difference between actual and estimated costs for work performed during the previous year, and the decommissioning criteria upon which the estimate is based, and document this information into the datasheet, as appropriate.

3. The analyst shall note if the licensee provided information regarding any modifications to the licensees method of providing decommissioning funding assurance. The analyst shall annotate Y or N as appropriate.

4. The analyst shall note if the licensee provided information regarding any material changes to trust agreements. The analyst shall annotate Y or N as appropriate. If Y, the staff will review the contract or change with assistance, as needed, from OGC and document these findings.

DFS Report Information that meets 10 CFR 50.82(a)(8)(vi)

If the sum of the balance of any remaining decommissioning funds, earnings credit, and amount provided by other financial assurance methods does not cover the estimated cost to complete decommissioning, the analyst shall verify that the licensee provided additional financial assurance to cover the estimated cost of completion of radiological decommissioning activities.

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Appendix B

Request for Additional Information Guide

Month Day, 2015 U.S. Nuclear Regulatory Commission

A 1000 Example Road Example, Maine

REQUEST FOR ADDITIONAL INFORMATION IN RELATION TO EXAMPLE PLANTS 2015 DECOMMISSIONING FUNDING STATUS REPORT Docket No.50-000

John Doe:

On March 30, 2015, A, on behalf of B and C, submitted to the U.S. Nuclear Regulatory Commission (NRC) their decommissioning funding status report, as required by 10 CFR 50.75(f)(1) (ML Number ML0000000). Within the repor t, A, B and C reported that they were allowed a real rate of return greater than the amount allowed by the NRC, but did not provide documentation of that allowance. Pursuant to 10 CFR 50.75(f)(1), if A, B and C wish to be allowed the amount greater than the NRC minimum, provide documentation by a PUC, or other regulatory body, of a real rate of return greater than the NRC minimum within 30 days from the date of this letter. If you have any questions or comments, please contact the information below.

Sincerely,

Jane Doe, NRR/DORL 301-415-0000 Jane.doe@nrc.gov

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Appendix C

Decommissioning Funding Status Report Milestone Tables

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Appendix D

Spot-Check Program

The U.S. Nuclear Regulatory Commission (NRC) conducts periodic independent reactor decommissioning trust fund oversight analyses (spot-checks) of licensee bank statements, as-needed. The intent is to improve efficiency, effectiveness, consistency, and timeliness in confirming that decommissioning funding status reports, filed by licensees with the NRC, do not contain inadvertent mistakes or, in the worst case, false information. This Appendix includes criteria for when an as-needed spot-check is warranted.

=

Background===

In January 2008, the staff implemented a decommissioning spot-check program as a means to validate the accurate reporting of licensee decommissioning trust fund balances and compliance with existing decommissioning funding assurance requirements. Through a series of site-visits and financial statement reviews between April 2008 and June 2014, the staff sampled over 100 licensee decommissioning trust fund account statements for discrepancies in reporting. The staffs reviews did not reveal any significant reporting discrepancies; therefore, the staff recommended to the Commission to use the program only on an as-needed basis.

In Staff Requirements Memorandum (SRM) on SECY-15-0005, Recommendation to Sunset the Decommissioning Trust Fund Spot-Check Program, (Agencywide Documents Access and Management System Accession (ADAMS) No. ML15058A111) dated February 26, 2015, the Commission approved the staffs recommendation to sunset the decommissioning spot-check program in its current form and perform spot-checks on an as-needed basis. Additionally, the SRM directed the staff to provide the Commission with a Commissioners Assistant (CA) note describing what factors will be used to determine when it is appropriate to perform as-needed decommissioning fund spot-checks moving forward. As provided in CA Note, Commissioners Assistant Note in Response to Staff Requirements Memorandum SECY-15-0005, Recommendation to Sunset the Decommissioning Trust Fund Spot-Check Program, dated September 4, 2015 (ADAMS Accession No. ML15189A050), this appendix includes the factors to be considered by the staff for determining when an as-needed spot check should be performed.

Additionally, the RDFAWG Final Report, dated April 29, 2020 (ADAMS Accession No. ML20121A188), recommended that staff modify NRC staff guidance to establish the procedures and processes for a spot check program of the DTF for licensees of power reactors in decommissioning. Implementation of the spot check procedure for reactors in decommissioning on an as-needed basis, defined by the initiation criteria below, will provide information to analysts in addition to the information in DFS reports and periodic inspection reports.

Spot-Check Process

Factors to be considered by the staff as a basis to perform an as-needed spot-check include:

1) A licensee (or its representatives) is i ndicted or convicted of fraudulent financial activities; or

2) A licensee or parent company declares bankruptcy per Chapter 7 or 11 of the U.S.

Bankruptcy Code; or

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3) A licensing action (e.g., license transfer) reveals a significant decline in a licensees trust fund balance that may have an adverse impact on decommissioning activities; or

4) The staff substantiates an allegation of licensees misrepresenting decommissioning trust fund balances or making improper withdrawals from the trust fund.

This procedure identifies nine steps for the staff to complete when performing an as-needed spot-check. Steps 1 through 6 shall be performed by the financial analyst in all cases; however, Steps 7 through 9 should only be performed if the staff notes any concerns.

Step 1: Training

Financial analyst assigned to perform an as needed spot-check must be trained and qualified to do so in accordance with Appendix L, Reactor Financial Reviewer Qualification Plan, to ADM-504, Qualification Program. A non-qualified staff member may accompany a qualified staff member on a spot-check visit for developmental purposes.

Step 2: Internal and External Contacts

At least 1 month before the spot-check is to be conducted, the financial analyst must request that the appropriate Office of Nuclear Reactor Regulation, Division of Operating Reactor Licensing (DORL) Project Manager (PM) notify the licensee of the upcoming spot-check, including actual or approximate date(s). The lice nsee should receive at least 10 days notice.

The DORL PM should notify the appropriate NRC region of the upcoming spot-check. The analyst shall confer with the budget coordinator to obtain a CAC number for performance of this task.

Step 3: Planning and Preparation

The analyst who will be conducting the spot-check, and any other NRC staff accompanying (for training purposes) the analyst, shall record all hours expended for the preparation, documentation, travel, and spot-check effort. In addition, the analyst must set up the travel accommodations through eTravel to the respec tive licensees location where the original financial documents are maintained.

Step 4: Spot-Check Onsite Documents

Before traveling, the analyst shall bring the most recent revision of LIC-205 and a copy of the Initial Onsite Observations of the Independent Reactor Decommissioning Trust Fund Oversight Analysis worksheet, found in Attachment 1 to this appendix, for each unit and licensee that the financial analyst will be inspecting and, for each unique unit and licensee, the most recently submitted DFS report.

For example, if the financial analyst is reviewing one unit with two licensees and another unit with one of the same licensees as the first unit, the analyst must bring three copies of the Initial Onsite Observations and the DFS report(s) for each unit and licensee.

Step 5: Onsite Review

At the licensee site, the following steps shall be taken for each licensee or unit:

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(1) For each unique plant or licensee, the analyst must: (1) transcribe on the Initial Onsite Observations worksheet for the unit, the licensee, percentage owned of the unit by the licensee, location of the original bank statements, and licensee contact being inspected; (2) analyze any possible discrepancies between the information the licensee submitted in its DFS report, under Title 10 of the Code of Federal Regulations (10 CFR) 50.75(f)(1), in relation to the amount accumulated to the end of the calendar year preceding the date of the report and the bank statement(s) the licensee used for the DFS report (3) determine whether the original documents were verified to show that the trust fund balance is equal to the actual trust balance claimed in the last DFS report; 1 and (4) if possible, determine the reason for the finding in the above substep and note the trustee name, the amount of qualified and nonqualified accounts, whether the trust fund is commingled with nonradiological funds, and any other pertinent information.

(2) The analyst shall request 2 a copy of each licensees original bank statement(s) from the year preceding the most recent DFS report submittal to the NRC and, if applicable, any internal or external documentation that the licensee has describing a differential between the amount in the market value of the trust fund(s) and the amount reported to the NRC.

(3) As the information documented on the Initial Onsite Observations worksheet is preliminary, the analyst shall not disclose observations made in the report at the time of the spot-check to the licensee.

Step 6: Documentation of Initial Findings

After returning to Headquarters, the analyst shall input the completed Initial Onsite Observations worksheet and any other documentation provided by the licensee into ADAMS as proprietary and non-publicly available.

Step 7: Determination of Potential Issues and Issuance of Letter

Within 30 days of conducting the spot-check, the analyst shall determine whether there are any potential issues with the spot-check and develop a memorandum to the DORL PM with the official financial findings. The determination is made on a case-by-case basis. If the analyst determines that there are no potential issues with the spot-check, he or she shall prepare a memorandum following the template found in Attachment 2 to this appendix. If the analyst determines that there are potential issues with the spot-check, he or she shall use the template found in Attachment 3 to this appendix in preparing the memorandum. The memorandum will then be transmitted to the respective DORL BC from the IFIB BC.

DORL will then issue the letter to the licensee and make it publicly available, unless it contains Sensitive Unclassified Nonsafeguards Information.

Step 8: Request Additional Information Issuance, If Applicable If potential issues are found within 30 days of the spot-check, but not before the memorandum is prepared, the analyst shall prepare a request for additional information (RAI) to be sent to the licensee to resolve the potential issue. This action shall be completed through coordination with the DORL PM and OGC, as appropriate.

1 If the reason the trust fund balance does not match the amount in the DFS report is that the licensee is commingling funds, the analyst should still answer No but include the reason for the discrepancy.

2 The licensee is not required to provide the bank statements to the financial analyst.

Page 35 of 42 NMSS Office Procedure - REFS-70-15 Revision 0

Step 9: Additional Resolution, If Applicable

Assuming that the RAI response(s) provided to the NRC by the licensee resolve all potential issues, the NRC will submit a close out letter to the licensee via DORL. If the RAI response(s) provided to the NRC by the licensee do not resolve all potential issues, then the NRC will proceed on a case-by-case basis to resolve any outstanding issues.

Step 10: Resolution of Potential Issues, If Applicable

If the NRC discrepancies in the DFS reports filed with the agency, depending on the nature and seriousness of the discrepancies, the staff should recommend to the Commission, in the next Commission paper summarizing DFS reports for nuclear power reactors, further modifications to the decommissioning funding assurance program.

ATTACHMENTS

(1) Initial Onsite Observations of the Independent Reactor Decommissioning Trust Fund Oversight Analysis Worksheet (2) Spot-Check ReviewNo Potential Issues Template (3) Spot-Check ReviewPotential Issues Template

Page 36 of 42 Appendix D - Attachment 1

INITIAL ONSITE OBSERVATIONS OF THE INDEPENDENT REACTOR DECOMMISSIONING TRUST FUND OVERSIGHT ANALYSIS

UNIT: ____________________________________________________

LICENSEE: ____________________________________________________

PERCENT OWNERSHIP: ____________________________________________________

LOCATION OF REVIEW: ____________________________________________________

LICENSEE CONTACT: ____________________________________________________

ORIGINAL DOCUMENTS VERIFIED TO SHOW TRUST BALANCE IS EQUAL TO ACTUAL TRUST BALANCE CLAIMED IN LAST DECOMMISSIONING FUNDING STATUS REPORT:

[ ] YES [ ] NO

ATTACHMENTS PROVIDED: [ ] YES [ ] NO

OVERSIGHT REVIEW AND AUDIT FINDINGS:

ADDITIONAL COMMENTS:

PERFORMED BY: _____________________________

DATE OF REVIEW: _____________________________

Page 37 of 42 Appendix D - Attachment 2

SPOT-CHECK REVIEWNO POTENTIAL ISSUES TEMPLATE

TO: [BRANCH CHIEF], Chief Financial Assessment Branch or [Branch Name]

[Division]

FROM: [STAFF REVIEWER]

Financial Assessment Branch or [Branch Name]

[Division]

SUBJECT:

NRC STAFFS SPOT-CHECK REVIEW OF [LICENSEE]S [PERCENTAGE OWNERSHIP] OWNERSHIP INTEREST IN [NUCLEAR POWER PLANT(S)

AND DOCKET NOS.] ON [DATE]FINDING OF NO POTENTIAL ISSUES

Pursuant to Staff Requirements Memorandum to SECY-15-0005, Recommendation to Sunset the Decommissioning Trust Fund Spot-Check Program, (Agencywide Documents Access and Management System Accession (ADAMS) No. ML15058A111) dated February 26, 2015, the Commission approved the staffs recommendation to sunset the decommissioning spot-check program in its current form and perform spot-checks on an as-needed basis. The purpose of these spot-checks is to validate the accurate reporting of licensee decommissioning trust fund balances and compliance with existing decommissioning funding assurance requirements.

Specifically, the staff is to ensure that the amount of the licensees decommissioning trust fund reported to the NRC in its decommissioning funding status (DFS) report is equivalent to the amount the licensee has in its bank account, as of December 31 of the preceding year. After providing at least 10 days prior notice, the NRC staff, on [DATE], performed the spot-check at

[LOCATION OF INFORMATION], where [LICENSEE] holds/receives the original bank statements for [NUCLEAR POWER PLANT(S)] from [NAME OF TRUSTEE].

After the NRC staffs spot-check of [NUCLEAR POWER PLANT(S)] at the location of the original bank statements, the NRC staff found no issues related to the amount reported to the NRC in the [YEAR] DFS report of [AMOUNT REPORTED TO THE NRC] and the stated amount in the bank statements dated December 31, [YEAR]. The bank statements of [LICENSEE]

[were/were not] divided between [NUMBER] qualified bank account(s) and [NUMBER]

nonqualified bank account(s). The total of all of the accounts [IS/IS NOT] equivalent to the amount provided to the NRC in the [YEAR] DFS report.

[IF NOT EQUIVALENT], [LICENSEE] provided t he NRC staff with documentation of the reason for the discrepancy between the total amount in the bank statements, as of December 31,

[YEAR], and the amount reported to the NRC in the [YEAR] DFS report. The NRC allows for commingling of both nonradiological and radiological funds in the same bank account.

[LICENSEE] provided the NRC staff with the distribution between radiological and nonradiological funds as [AMOUNT/PERCENTAGE OF RADIOLOGICAL] and

[AMOUNT/PERCENTAGE OF NONRADIOLOGICAL], respectively. The internal documentation provides that the amount designated to the NRC for radiological decommissioning in the December 31, [YEAR], bank statement is equivalent to the amount reported to the NRC in the DFS report.

Because no issues were found in the NRC sta ffs spot-check of [NUCLEAR POWER PLANTS],

this memo serves to close out Technical Assignment Control (TAC) No(s). [TAC NOs].

Page 38 of 42 SPOT-CHECK REVIEWPOTENTIAL ISSUES TEMPLATE

TO: [BRANCH CHIEF], Chief Financial Assessment Branch or [Branch Name]

[Division]

FROM: [STAFF REVIEWER]

Financial Assessment Branch or [Branch Name]

[Division]

SUBJECT:

NRC STAFFS SPOT-CHECK REVIEW OF [LICENSEE]S [PERCENTAGE OWNERSHIP] OWNERSHIP INTEREST IN [NUCLEAR POWER PLANT(S)

AND DOCKET NOS.] ON [DATE]FINDING OF POTENTIAL ISSUES

Pursuant to Staff Requirements Memorandum to SECY-15-0005, Recommendation to Sunset the Decommissioning Trust Fund Spot-Check Program, (Agencywide Documents Access and Management System Accession (ADAMS) No. ML15058A111) dated February 26, 2015, the Commission approved the staffs recommendation to sunset the decommissioning spot-check program in its current form and perform spot-checks on an as-needed basis. The purpose of these spot-checks is to validate the accurate reporting of licensee decommissioning trust fund balances and compliance with existing decommissioning funding assurance requirements.

Specifically, the staff is to ensure that the amount of the licensees decommissioning trust fund reported to the NRC in its decommissioning funding status (DFS) report is equivalent to the amount the licensee has in its bank account, as of December 31 of the preceding year. After providing at least 10 days prior notice, the NRC staff, on [DATE], performed the spot-check at

[LOCATION OF INFORMATION], where [LICENSEE] holds/receives the original bank statements for [NUCLEAR POWER PLANT(S)] from [NAME OF TRUSTEE]. [PROVIDE ANY UNIQUE INFORMATIONE.G., KEEP INFORMATION AT ANOTHER LICENSEES LOCATION/OTHER LICENSEE IS RESPONSIBLE FOR REPORTING TO NRC.]

After the NRC staffs spot-check of [NUCLEAR POWER PLANT(S)] at the location of the original bank statements, the NRC staff found potent ial issues related to the amount reported to the NRC in the [YEAR] DFS report of [AMOUNT REPORTED TO THE NRC] and the stated amount in the bank statements dated December 31, [YEAR]. The bank statements of

[LICENSEE] [were/were not] divided between [NUMBER] qualified bank account(s) and

[NUMBER] nonqualified bank account(s). The total of all of the accounts is not equivalent to the amount provided to the NRC in the [YEAR] DFS report.

[IF COMMINGLING], [LICENSEE] provided the NRC staff with documentation of the breakdown of the commingling of funds, allowed by the NRC to prevent unnecessary costs to the licensee, within the qualified and nonqualified bank accounts. [LICENSEE] provided the NRC staff with the distribution between radiological and nonr adiological funds as [AMOUNT/PERCENTAGE OF RADIOLOGICAL] and [AMOUNT/PERCENTAGE OF NONRADIOLOGICAL], respectively.

The internal documentation provides that the amount designated to the NRC for radiological decommissioning in the December 31, [YEAR], bank statement is not equivalent to the amount reported to the NRC in the DFS report. The total discrepancy between the amount provided as NRC radiological funds and the amount reported to the NRC in the DFS report is

[DIFFERENCE].

During the meeting with [LICENSEE], the NRC staff member noted the discrepancy in their

Page 39 of 42 findings. [MENTION ANY INTERACTION BETWEEN NRC STAFF AND LICENSEE IN RELATION TO EXPLANATION OF DISCREPANCY.]

Because potential issues were found in the NRC staffs spot-check of [NUCLEAR POWER PLANTS], further action may be required.

Page 40 of 42

Appendix E

Dispositioning Notifications of Decommissioning Trust Fund Planned Disbursements

The U.S. Nuclear Regulatory Commission (NRC) occa sionally receives notifications from power reactor licensees of planned disbursements from decommissioning trust funds (DTFs). Such notifications are addressed to the NRR Office Dire ctor and/or the NMSS Office Director, with the expectation that the NRC can object to such planned disbursements within 30 days of the licensees notification. Without such objection, the licensee will proceed to disburse funds from the DTF as presented in the notification.

Notifications to the NRC are generated by licensees in response to:

• NRC regulatory requirements; and/or

• License conditions; and/or

• Commitments between the licensee and the DTF trustee as reflected in the Trust Agreement.

Proposed Process for Dispositioning DTF Notifications

• Preliminary coordination action - Initially coordinate with NMSS/RDB and NRR/DORL counterparts/PMs, to ensure upon their receipt of future pre-notices of disbursements, that the PM forward the pre-notice to the FAB Branch Chief for action. Such coordination will also require outreach to front offi ce personnel (NRR and NMSS), to ensure the appropriate Branch (DORL or RDB) receives such notices for action should they be received by the FO.

• Upon receipt of a notification from PM -

FAB staff will seek to determine if the notification is a result of an exception to 10 CFR 50.75(h)(1)(iv), and/or if the result of a license condition and/or Trust Agreement commitment.

Staff will determine if notification informs the NRC of a planned disbursement that is not authorized by NRC regulations at 10 CFR 50.75 and 10 CFR 50.82.

Finally, FAB will inform the appropriate Project Manager (NMSS and/or NRR) so they may inform their Office Director, to object/respond to the notification or to not respond. In the case of take no action/do not respond, an example of e-mail correspondence, addressed from the RDB or DORL PM to NMSS and/or to NRR Office Directors, is provided below citing some details as to the status of funds, etc.,

per FABs analysis of the pre-notice.

Should staff conclude the Office Director should object, FAB will coordinate the response, with NRR/NMSS project manager collaboration, including OGC awareness.

• Tracking by FAB, RDB, and DORL - FAB will recommend to DORL that they track this correspondence and associated internal NRC e-ma ils in their DORS system; FAB will recommend RDB establish a tracking system for their correspondence on this

Page 41 of 42 issue. FAB will retain in a SharePoint site the disposition of its analyses and communications with RDB and DORL PMs.

Example email:

Subject:

Review of Entergy Pre-Notice of Disbursement - Staff concludes there is no reason to object

John and Andrea -

We have reviewed the attached April 8, 2021, Pre-Notice of Disbursement from Decommissioning Trusts, (ADAMS Accession No. ML21098A178) from Entergy Nuclear Operations, regarding the notification of the planned disbursement from decommissioning trust funds (DTFs) for Indian Point Units 2 and 3. As cited by the licensee, Master Decommissioning Trust Agreement (MTA) language indicates that such notifications are required prior to the disbursement being contemplated. The MTA is an agreement by and between, Entergy and its subsidiaries, and the Trustee, Bank of New York Mellon.

Staff in the Financial Assessment Branch (FAB) within the Division of Rulemaking, Environmental, and Financial Support, NMSS, eval uated this notification, which is governed by a 30 business day response waiting period, in which the NRC may object. Without such objection, negative consent will prevail, and the licensee and Trustee would pursue their anticipated disbursement actions.

As background, the current DTF balances for Units 2 and 3, as of December 31, 2020, are

$793.73 million and $990.70 million, respectively. The licensee indicates that for each DTF, disbursements per the notification will not exceed $2 million and are for decommissioning planning costs, [are] less than or equal to three (3) percent of the generic amount specified in 10 CFR 50.75 [per DTF] and [are] for legitimate decommissioning planning expenses.

Staff concludes that there is no reason to object to plans for disbursement as presented in the notification. These expenditures are consistent with NRC regulations and appear reasonable in view of expected decommissioning planning that is occurring at the Indian Point Energy Center site.

Thank you.

Richard Turtil, MBA, MS Finance, BS Ch.E.

Senior Financial Analyst and Acting Chief Financial Assessment Branch Division of Rulemaking, Environmental, and Financial Support Office of Nuclear Material Safety and Safeguards U.S. Nuclear Regulatory Commission Telephone: 301-415-5555

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