ML23151A558

PRM-050-054 - 55FR09137 - Public Citizen, Receipt of Petition for Rulemaking (Critical Mass)

ML23151A558
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Issue date:	03/12/1990
From:	Chilk S NRC/SECY
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PRM-050-054, 55FR09137
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ADAMS Template: SECY-067 DOCUMENT DATE: 03/12/1990 TITLE: PRM-050-054 - 55FR09137 - PUBLIC CITIZEN, RECEIPT OF PETITION FOR RULEMAKING (CRITICAL MASS)

CASE

REFERENCE:

PRM-050-054 55FR09137 KEYWORD: RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete

STATUS OF RULEMARING PROPOSED RULE: PRM-050-054 OPEN ITEM (Y/N) N RULE NAME: PUBLIC CITIZEN, RECEIPT OP PETITION FOR ROLEMAKING (CRITICAL MASS)

PROPOSED ROLE FED REG CITE: 55FR09137 PROPOSED ROLE PUBLICATION DATE: 03/12/90 NUMBER OF COMMENTS: 17 ORIGINAL DATE FOR COMMENTS: 05/11/90 EXTENSION DATE: I I FINAL ROLE FED. REG. CITE: 57FR36909 FINAL RULE PUBLICATION DATE: 08/17/92 NOTES ON PETITION CONCERNS THE LICENSING OP INDEPENDENT POWER PRODUCERS FOR TATU& CONSTRUCTION AND OPERATION OF NUCLEAR POWER PLANTS. PETITION DEN F RULE IED BY EDO ON 9/27/92. FILE LOCATED ON Pl.

TO FIND THE STAFF CONTACT OR VIEW THE RULEMARING HISTORY PRESS PAGE DOWN KEY HISTORY OF THE RULE PART AFFECTED: PRM-050-054 ROLE TITLE: PUBLIC CITIZEN, RECEIPT OP PETITION FOR ROLEMAKING (CRITICAL MASS)

-OPOSED ROLE PROPOSED ROLE DATE PROPOSED ROLE SECY PAPER: SRM DATE: I I SIGNED BY SECRETARY: 03/06/90 FINAL ROLE FINAL ROLE DATE FINAL RULE SECY PAPER: SRM DATE: I I SIGNED BY SECRETARY: 07/27/92 STAFF CONTACTS ON THE ROLE CONTACTl: MICHAEL T. LESAR MAIL STOP: P-223 PHONE: 492-7758 CONTACT2: MAIL STOP: PHONE:

DOCKET NO. PRM-050-054 (55FR09137}

In the Matter of PUBLIC CITIZEN, RECEIPT OF PETITION FOR RULEMAKING

{CRITICAL MASS)

DATE DATE OF TITLE OR DOCKETED DOCUMENT DESCRIPTION OF DOCUMENT 12/20/89 11/22/89 PETITION OF PUBLIC CITIZENS ON LICENSING OF INDEPENDENT POWER PRODUCERS 03/07/90 03/06/90 FEDERAL REGISTER NOTICE - RECEIPT OF PETITION FOR RULEMAKING 05/02/90 04/27/90 COMMENT OF U.S. DEPARTMENT OF ENERGY

{WILLIAM H. YOUNG) ( 1) 05/03/90 04/30/90 COMMENT OF IONS {THOMAS W. ORTCIGER, DIRECTOR) ( 2) 05/07/90 05/03/90 COMMENT OF ALABAMA POWER COMPANY

{W. G. HAIRSTON, III, SR. V.P.) { 3) 05/07/90 05/01/90 COMMENT OF GEORGIA POWER COMPANY (W. G. HAIRSTON, III, SR. V.P.) ( 4) 05/11/90 05/10/90 COMMENT OF PUBLIC CITIZEN'S CRIT. MASS ENERGY PROJ.

(DANIEL BORSON) ( 5) 05/11/90 05/04/90 COMMENT OF DAVID SWANK ( 6) 05/11/90 05/10/90 COMMENT OF THE NEW YORK POWER AUTHORITY

{CHARLES M. PRATT, SR. VICE PRES. &) ( 7) 05/14/90 05/11/90 COMMENT OF PALISADES GENERATING COMPANY (DAVID L. BRANNEN, VICE PRESIDENT) ( 8) 05/14/90 05/11/90 COMMENT OF NUMARC (JOE F. COLVIN, EXEC. VICE PRESIDENT) ( 9) 05/14/90 05/10/90 COMMENT OF OCRE (SUSAN L. HIATT) ( 10) 05/14/90 05/10/90 COMMENT OF FPL (R.J. ACOSTA, ACTING VICE PRESIDENT) ( 11) 05/14/90 05/09/90 COMMENT OF SCE&G (O.S. BRADHAM) ( 12) 05/14/90 05/10/90 COMMENT OF PECO {G. A. HUNGER, JR.) { 13)

DOCKET NO. PRM-050-054 (55FR09137)

DATE DATE OF TITLE OR DOCKETED DOCUMENT DESCRIPTION OF DOCUMENT 05/ 14/90 05/10/90 COMMENT OF ALABAMA PUBL IC SERVICE COMMISSION (MARYE. NEWMEYER) ( 14) 05/ 15/90 05/ 11/90 COMMENT OF GENERAL ATOMICS (RICHARD A. DEAN ) { 15) 05/ 16/90 05/ 14/90 COMMENT OF FIVE POWER REACTOR LICENSEES (NICHOLAS S. FEYNOLDS, ESQ.) ( 16) 05/23/90 05/ 18/90 COMMENT OF WESTINGHOUSE ELECTRIC CORPORATION (WILLIAM J. JOHNSON ) ( 17) 08/ 12/92 07/27/92 NOTICE OF DENIAL OF PETITION FOR RULEMAKING .

PUBLISHED AT 57 FR 36909 ON 8/ 17/92 .

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• 92 AUG 12 P4 :21 NUCLEAR REGULATORY COMMISSION I.

10 CFR PARTS 50 AND 140 I I

[Docket No. PRM 50-54]

Public Citizen - Denial of Petition for Rulemaking AGENCY: Nuclear Regulatory Commission.

ACTION: Denial of petition for rulemaking.

SUMMARY

The Nuclear Regulatory Commission (NRC) is denying a petition for rulemaking (PRM 50-54) from Daniel Borson on behalf of the Public Citizen.

The petitioner requested that the NRC amend its regulations regarding the licensing of independent power producers to construct or operate commercial nuclear power reactors. The petition is being denied on the basis that current NRC regulations provide authority for the licensing of an Independent Power Producer (IPP)* should such an application be submitted and for a review of the applicant's financial qualifications to construct and operate a commercial power reactor.

• The staff views an independent power producer as one example of. a class of non-utility applicants. The staff believes that any action should include all non-utility applicants which, at present, may include several different entities with differing names, corporate structures, and operating characteristics. For examP.le, IPPs, Affiliated Power Producers (APPs),

Qualifying Facilities (QFs), and Exempt Wholesale Generators (EWGs). Not all of these entities are IPPs; however, al l of them would be non-utility applicants if they were to apply for a license to construct or operate a reactor.

ADDRESSES: Copies of the petition for rulemaking, the public convnents received, and the NRC's letter to the petitioner are available for_p~blic

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inspection or copying in the NRC Public Document Room, 2120 L Street NW.

(Lower Level), Washington, DC.

FOR FURTHER INFORMATION CONTACT: Joseph J. Mate, Office of Nuclear Regulatory Research, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone (301) 492-3795.

SUPPLEMENTARY INFORMATION:

I. The Petition II. Basis for Request III. Public Comments on the Petition IV. Reasons for Denial I. The Petition In a letter dated November 22, 1989, Mr. Daniel Borson, on behalf of the Public Citizen, filed a petition for rulemaking with the NRC. The petition, which consisted of two parts, requested that: 1) NRC promulgate rules concerning the licensing of IPPs in general; and 2) these rules include specific criteria for financial qualifications for an IPP seeking a construction permit, or an operating license for a commercial nuclear power reactor.

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II. Basis for Petitioners Request Since all licensees of co1t1nercial nuclear power plants are presently regulated utilities, NRC regulations for financial qualification of licensees for the construction and operation of these facilities assume that local, State or Federal regulatory bodies will ensure that nuclear licensees have sufficient funds to safely operate their facilities. Regulated utilities have defined fixed markets for their electricity and usually are assured a set return on the amount of investment in plants which is included in the rate

• base. However, IPPs, on the other hand, must compete openly in the wholesale marketplace and may not have a steady supply of customers for their power.

Consequently, while their rates are usually set by the Federal Energy Regulatory Commission (FERC}, if IPPs fail to sell all the electricity they produce, or if their plants fail to produce enough electricity, they may not make a profit. Therefore, the long tenn financial stability of an IPP is less certain than that of a regulated utility. This potentially precarious financial position may adversely affect the accrual of deconmissioning funds, the promptness of necessary maintenance and repairs, the payment of waste fees, and the ability to pay funds in the event of an accident at any conmercial nuclear plant as specified under the Price-Anderson Act.

Currently, there are no'regulations specifically addressing the licensing of IPPs or the transfer of licenses to IPPs.

In light of the above, Public Citi~en petitioned NRC to require an affinnative showing of financial qualification by an IPP seeking a construction pennit, an operating license, or a transfer of licenses.

Additionally, Public Citizen requested that the specific financial 3

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qualifications be made part of the IPPs application for a license. The financial questions should include but not be limited to requirin~.t~e IPP to:_

Establish a procedure to ensure that sufficient funds will be available for payment to the Nuclear Waste Fund established by the Nuclear Waste Policy Act.

Establish a mechanism to assure that the money which the Price-Anderson Act requires licensees to pay in the event of an accident at any commercial nuclear plant would be available when needed.

Pre-pay into an external fund the cost of decomissioning the reactor, or demonstrate the absolute assurance by a financial institution that sufficient funds will be available for decorrmissioning.

III. Public Conments on the Petition A notice of receipt of the petition for rulemaking was published in the Federal Register on March 12, 1990 (55 FR 9137). Interested persons were invited to submit written connents or suggestions concerning the petition by May 11, 1990. The NRC received 17 comments in response to the notice: 9 from public utilities/industry representatives, 2 from public corporations, 2 from State agencies, 2 from citizens groups, 1 from a private citizen, and 1 from the Department of Energy (DOE). The majority of the commenters (13) opposed granting the petition. The main reasons cited by the co11111enters who were opposed to the petition were:

The DOE, the New York Power Authority, and others, stated that they believed that current NRC regulations are sufficient to recognize an entity other than an electrical utility as a licensee for a nuclear power plant.

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Further, they stated that Part 50 contains language that allows the Commission to obtain information on the financial integrity of an IPP to assure itself that the IPP is qualified to build, operate, and provide for other financial obligations in connection with the plant for the life of the license.

The Nuclear Management and Resources Council {NUMARC) as well as several utilities pointed out that the petitioner failed to indicate any specific areas of the regulations that required change or to provide any arguments to justify the need for additional regulations at this time.

Financial qualifications for licensees are addressed in the current regulations {10 CFR Parts 50 and 140) and apply to all applicants.

A private citizen pointed out that the promulgation of additional rules is not required to ensure 'the protection of the health and safety of the public.

Several cormnenters pointed out that any lender or investor supporting an application from an IPP would clearly insist on adequate financial arrangements to address all significant contingencies.

The Palisades Generating Company pointed out that the IPP concept has not yet been applied to nucl~ar plants; even in the non-nuclear segment of the electric industry, the concept is still evolving.

The remaining four comenters were in favor of granting the petition.

The reasons provided for supporting the petition are as follows:

The State of Illinois stated that specific financiaj qualifications should be .made a part of the applicatio~ for an operating license.

Satisfactory monetary provisions for plant decommissioning, Price-Anderson insurance, and disposal of radioactive waste must be assured. IPPs should have no less culpability than a regulated utility.

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The Ohio Citizens for Responsible Energy stated that NRC has developed no substantive rules or a body of case law to address a situation such as the completion and operation of a nuclear reactor such as Perry 2 by an IPP.

Stringent financial qualification review and standards are essential to ensure that the IPPs have sufficient funds to cover appropriate expenses.

The Alabama Public Service Co11111ission stated that the assumption should not be made that current regulations would encompass new entrants such as IPPs. Further, IPPs need to know what will be required by the NRC to determine whether to construct or operate a nuclear reactor and be reasonably

• sure of making a profit.

Public Citizen sent in a letter to NRC and reiterated essentially what had been stated in their petition.

IV. Reasons for Denial Upon receipt of the petition from Public Citizen, the staff examined the petition in detail to determine which specific regulations the petitioner believed should be amended to address the licensing of an IPP, or which regulations were inadequate to determine the financial qualifications of an IPP. However, the petitioner provided no specific reference to the regulations in 10 CFR Chapter I that should be amended.

The staff then examined each of the 17 comments submitted by the public on the petition. None of the four co11111enters who favored granting the petition provided any reference to the specific regulations which should be amended by rulemaking. One of the conrnenters stated that specific financial qualifications should be made a part Qf the application for an operating 6

license and that satisfactory monetary provisions for plant decommissioning, Price-Anderson insurance, and disposal of radioactive waste should be assured._

The staff agrees that this type of information is important to any license application and such infonnation wil1 be reviewed in detail during any license review of an IPP. Another conmenter stated that IPPs should have no less culpability than a regulated utility. The staff also agrees with this statement. Another conunenter stated that NRC has not developed a Rhody of case law" to address IPPs. NRC has not developed a "body of case lawn because an IPP has yet to submit an application for a construction pennit or operating license, and the staff believes the current regulations provide authority to review an application by an IPP should one be submitted.

In its petition, Public Citizen has not presented any tangible evidence as to why or how the NRC regulations are inadequate. Nor does the Public Citizen demonstrate or state how the NRC would fail to apply existing regulations on a case-by-case basis to the circumstances of an IPP before making the necessary public health and safety findings prior to the issuance of any pennit or license. The staff agrees with the con111ents of the DOE, NUMARC, and others that the current regulations in 10 CFR Part 50 can be appropriately applied to IPPs.

The staff believes the existing regulations in 10 CFR 50.33 and 50.75 provide the authority to request the necessary infonnation from non-utility applicants to perf~nn a financial qualifications review, as well as require the applicants to set aside funds for decommissioning of the reactor. The i

regulations in 10 CFR 50.75(d) specifically address "non-electric utility applicantsR and require these applicants to submit a decommissioning report to the Commission describing the cost estimate for decommissioning the facility 7

and the manner (which must be acceptable to the Co1T111ission} in which the funds will be set aside. Moreover, 10 CFR 50.75(e}(2} specifically defi~e~ the acceptable financial assurance mech.anisms for a licensee other than an electric utility. Public Citizen has not indicated in its petition where the Conmission's regulations are inadequate for acco111110dating a non-utility applicant.

Non-utility applicants for operating licensees must demonstrate financial qualifications pursuant to 10 CFR 50.57, and 10 CFR 50.80 allows the Conmission to request information on the financial qualifications of any applicant for license transfer.

Each licensee, utility or non-utility, is required by 10 CFR 140.21 to maintain adequate monies, through several approved methods indicated in that section, to guarantee payment of .deferred premiums to satisfy its responsibility under the Price-Anderson Act. Moreover, if the suggested methods of guarantee are for .any reason inadequate or inapplicable for a particular licensee, 10 CFR 140.21{f} provides for *such other types of guarantee as may be approved by the Commission."

Pursuant to Public Citizen's concern that non-utility applicants will not have sufficient monies available to fund their requisite payment to the Nuclear Waste Fund, the staff believes that DOE, the agency that administers the Fund, is the best judge of whether a licensee has sufficient funds set aside to meet the costs of disposal of radioactive waste.

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For the reasons cited above, the NRC denies the petition.

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Dated at Rockville, Maryland this ,,27-aay of z:;7 , 1992.

For the Nuclear Regulatory Convnission.

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DOCKET NUMljc.n °'a- - S~

PET\T\ON RULE PRM ,'

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CO CKE 1£0 USNRC Westinghouse Energy Systems Box 355 Electric Corporation '90 MAY 23 A10 :29 Pittsburgh Pennsylvania 15230-0355 May 18, 1990 NS -NRC 3516

• Mr. Samuel J. Chilk Secretary U.S. Nuclear Regulatory Commission Wash i ngton, D.C. 20555 Attention: Docketing and Service Branch

Subject:

Public Citizen; Receipt of Petition for Rul emaking Docket No . PRM-50 -54 55 Fed. Reg. 9137 (March 12, 1990)

Request for Comments

Dear Mr . Chil k:

Westinghouse Electric Corporation ("Westinghouse") submits these comments in response to the request of the U.S. Regulatory Commission ("NRC" or "Commission") for comments on the Petition for Rulemaking entitled, "Public Citizen; Receipt of Pet i tion for Rulemaking" (55 Fed. Reg. 9137 - March 12, 1990).

Westinghouse believes that current regulations govern i ng licenses for the construction and operation of commercial nuclear power plants are equally applicable to independent power producers ( IPPs and no additional 11 11

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regulations are required for licensing of IPPs. These regulations require the review of the financial qualifications of IPPs, which do not qualify as "electric utilities", on a case -by -case basis. Because IPPs will have a variety of organizational structures and financial arrangements, and because there has been no NRC experience in evaluating the financial qualifications of IPPs, Westinghouse believes it is both desirable and appropriate for the Commission to continue this practice and to evaluate financial qualifications based on the specific circumstances associated with each IPP.

In i ts Petition for Rulemaking dated November 11, 1989, Public Citizen requests additional NRC regulations governing the licensing of IPPs in general. The Atomic Energy Act of 1954, as amended, and Commission regulations in 10 CFR Part 50, provide broad Commission authority to assure that applicants for Commission licenses are equipped to observe safety standards establ i shed by the Commission and to obtain such information as is necessary to provide such assurance. Commission regulations, which have been developed and tested over time, should not be modified absent a clear FEB 1 () 91 Acknowledged by card ........HmttiUtiMW11i*ll**'*

0326P*RAW-051890

U.S. NUCLEAR REGULATORY COMMIS""'

DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARY OF THE COMMISSION Documen Statistics Postmark Date _5"! __,_7_a_,

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Mr. Samuel J. Chilk NS-NRC 3516 demonstration of need. Petitioner's discussion of licensing of IPPs in general only references matters involving financial qualifications. No reasons are cited by Public Citizen, nor does Westinghouse know of any reasons, why existing Commission regulations relating to the issuance or transfer of construction permits or operating licenses are inadequate with respect to regulating IPPs. Accordingly, Westinghouse does not believe any changes should be made at this time.

Current NRC regulations in 10 CFR Section 50.33 require an applicant for an operating license or construction permit to submit information that demonstrates that the applicant possess es or has reasonable assurance of obtaining funds necessary to cover estimated costs of construction or operation. In addition, for a newly formed entity organized primarily for the purpose of constructing or operating a nuclear power facility, Section 50.33 requires the submission of information respecting the legal and financial arrangement the entity has with its shareholders or owners, its financial ability to meet contractual commitments, and any other information considered necessary by the Commission to enable it to determine the financial qualifications of the entity. Moreover, any established or newly formed entity is required to submit additional or more detailed information about its financial arrangements and status of funds, if the Commission considers the information appropriate, including information regarding the ability to conduct the activities authorized by the license and to decommission the facility. These regulations clearly provide the Commission with broad power to obtain the information necessary to make financial determinations with regard to IPPs. There is not need to establish additional procedures at this time in order to provide for the assurance of adequate funds.

The situation with regard to financial qualifications for IPPs is similar to the situation with respect to financial qualifications for electric utilities prior to the 1984 rulemaking with led to modifications of the financial qualification rule. The NRC, before the 1984 rulemaking, had in place a regulatory scheme which required finding of financial qualification for each electric utility in connection with the issuance of each individual construction permit and operating license. The 1984 amendments, which resulted from many years of experience with the financial qualification regulations, relaxed the financial qualification review requirements by eliminating the case-by-case review of financial qualifications for electric utilities.

At present, the NRC has had little or no experience with independent power producer applications for Part 50 license. Thus, the matter of additional regulations for financial qualifications of IPPs is not ripe for rulemaking.

IPPs will differ in organizational and financial arrangements. It is difficult or impossible to predict or anticipate the types of creative arrangements that will be utilized. Accordingly, it will be necessary for the Commission to perform a review of financial qualifications for each IPP on an individual basis in the same manner as was done for electric utilities 0326P*RAW*051890

Mr. Samuel J. Chilk NS -NRC 3516 prior to the adoption of the 1984 amendments. Thus, each case will be determined on its own merits. Each IPP will have to demonstrate financial qualifications, which would be subject to public hearing where applicable.

Westinghouse believes this is the preferable and, indeed, the only prudent course for the Commission to take at this time.

For the above reasons, Westinghouse urges the Commission deny the petition of Public Citizen.

Very truly yours, i l liam. J . Johnson, Manager Nuclear Safety Department RAW/hs 0326P-RAll-051890

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LAW OFFICES (ss Fte. of;37,) oockEiEO BISHOP, COOK, PURCEL L & REYNO L DS USHRC 1400 L ST REET, N.W.

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' ECOPIER, (202) 371*59 50 May 14, 1990 Mr. Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, o.c. 20555 Attn: Docketing and Services Branch Re: Public Citizen Petition for Rulemaking concerning criteria for Licensing and Financial Qualifications for Independent Power Producers (55 Fed. Reg. 9137)

Dear Mr. Chilk:

In accordance with the above-referenced notice of opportunity to comment on the Petition for Rulemaking (Petition) filed by Public Citizen, the following lomments are submitted on behalf of five power reactor licensees.

Public Citizen's Petition requests that:

the Commission promulgate rules governing the licensing of independent power producers (IPPs) to construct or operate commercial nuclear power reactors (and ] * *

• that these rules include specific criteria for financial qual i fications for an IPP seeking a construction permit or an operating license for a commercial nuclear power reactor.

54 Fed. Reg. at 9137. It is our position that the Nuclear Regulatory Commission's (NRC) current regulations are adequate to address the concerns identified by Public Citizen as the basis fo r its Petition. Accordingly, the Petition should be denied.

If, however, the NRC determines to go forward with the proposed rulemaking, it is imperative that any rules ultimately promulgated not affect the status of current licensees or of those entities that would seek licensing under NRC's current 1/ Washington Publ i c Power Supply System; South Carol ina Electric & Gas Company; Yankee Atomic Electric Company; l i - \

System Energy Resources, Inc. ; TU Electric.

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regulatory scheme. For example, under NRC's current definition of "electric utility," 10 C.F.R. § 50.2, an entity is, inter alia, an electric utility if it is either a generator or a distributor of electricity. While Public Citizen has not offered a definition of an IPP, any proposed definitional changes must avoid encompassing present NRC licensees (e.g., generating entities with no transmission facilities).

In addition, it should be noted that our comments are not intended to take a position as to whether rulemaking concerning IPPs is or is not ultimately necessary. Rather, our comments are provided to show that the reasons given by Public Citizen do not support the need for rulemaking at this time.

In its Petition, Public Citizen asserts that no NRC regulations exist to specifically address the licensing of IPPs.

In this regard, Public Citizen recommends that the NRC adopt three specific financial requirements for IPPs who seek to build and operate nuclear power facilities: (1) establish a procedure to ensure that sufficient funds will be available for payment to the Nuclear Waste Fund as established under the Nuclear Waste Policy Act (NWPA); (2) establish a mechanism to assure that monies required to be paid pursuant to the Price-Anderson Act are available when needed in the event of a nuclear power plant accident; and (3) provide only for the pre-payment into an external fund for the cost of decommissioning.

Public Citizen provides one principal argument for the imposition of these three requirements -- that IPPs, because they are not regulated utilities and thus have no guarantee of access to markets, may be unable to compete effectively in the sale of electricity. As a consequence, Public Citizen apparently reasons that this "potentially precarious financial position may adversely affect" the ability of IPPs to accrue sufficient funds for decommissioning, waste disposal and liability purposes. We address these arguments in turn below.

1. There is no Factual Basis for the Rationale Advanced by Public Citizen The rationale set forth by Public Citizen concerning the alleged lack of financial stability of IPPs is flawed because the Petition provides no factual support for this assertion. As explained below, the NRC has full authority to review the financial qualifications of a non-electric utility that applies to construct and operate a facility. It can also be expected that an IPP will not undertake to construct a nuclear unit without first obtaining long-term power sales contracts with purchasing utilities. Furthermore, in the last two years, excess capacity has dropped from its annual a~erage of eight to twelve percent in 1974 to about five percent. Energy analysts are Y Studness, The Financial Implications of Diminishing Utility Excess Capacity, Public Utilities Fortnightly, December 21, 1989, at pp. 33-34.

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observing plans to !ncrease capacity by many utilities in the early to mid-1990s.

Therefore, without a basis to argue that IPPs are, by definition, financially unstable, the three specific requirements offered by Public Citizen are unnecessary.

2. Adequate Regulations Exist To Address The Licensing of IPPs Public Citizen claims that "there are no NRC regulations specifically addressing the licensing of IPPs or the transfer of licenses to IPP's." 55 Fed. Reg. at 9137. Contrary to their assertion, however, NRC provides an elaborate scheme for the licensing of nuclear power reactors, and for implementing the Price-Anderson laws. S e e , ~ , 10 C.F.R. Part 2, Part 50 and Part 140. A significant part of this scheme includes evaluation of a potential licensee's financial qualifications.

Specifically, pursuant to Section 182a of the Atomic Energy Act of 1954 (AEA), 4 42 U.S.C. § 2232(a), the NRC is authorized to impose such financial requirements as it deems appropriate. The NRC implements this authority principally through 10 C.F.R.

§ 50.33(f).

Under§ 50.33(f), 5 an electric utility applicant for a construction permit must provide financial information sufficient to support a finding by the NRC that there is a "reasonable assurance" of the applicant obtaining the funds necessary to cover estimated construction costs and related fuel cycle costs. 6 1/ Id. (according to the North American Electric Reliability Council).

i/ Section 182a enables the NRC to pose appropriate financial questions to an applicant for a construction permit or operating license. The NRC has specifi cally stated that:

it does not intend to waive or relinquish its residual authority under Section 182.a of the Atomic Energy Act of 1954 (42 u.s.c. § 2232(a)) to require such additional information in individual cases as may be necessary for the Commission to determine whether an application should be granted or denied or whether a license should be modified or revoked.

49 Fed. Reg. 35747, 35751 (September 12, 1984).

,2/ Additional guidance on the type of financial information to be provided by license applicants is found in 10 C.F.R. Part 50, Appendix C.

W In 1984, the NRC eliminated financial qualifications review for electric utilities" (as defined under 10 C.F.R. § 50.2) at the operating stage, but not at the construction stage.

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If the applicant is a newly-formed entity, the NRC requires the following additional information: (1) its ability to meet contractual obligations and (2) the legal and financial relationships it has or proposes to have with stockholders or owners. In either case, the NRC reserves the right to request more detailed information from established or newly-formed entities -- this may include information regarding the licensee's ability to continue the conduct of licensed activities.

Therefore, Public Citizen is incorrect in its assumption that existing NRC regulations are not broad enough to address the licensing of IPPs.

In addition to the above, Public Citizen asserts in its Petition that specific criteria for the financial qualification of IPPs are necessary. First, Public Citizen argues that NRC should establish procedures to ensure IPPs will have sufficient funds available for payment to the Nuclear Waste Fund under the NWPA. Public Citizen suggests that funds be made available through "an insurance, surety bond, or pre-payment into the

[Nuclear Waste] fund at the time of each refueling for the amount of electricity expected to be generated" (emphasis supplied).

55 Fed. Reg. at 9138.

Adoption of such a proposal would be inconsistent with the regulatory scheme set forth by Congress -- which an administrative agency generally may not change. Under the provisions of the NWPA, utilities which generate nuclear power are required to pay a fee based on electricity actually generated and sold. 42 U.S.C. § 10.222(a) (2); Consolidated Edison Co. v.

Department of Energy, 870 F.2d 694 (D.C. Cir. 1989). To tie the payments to some factor other than energy generated and sold would cut against the NWPA's regulatory scheme. Consolidated Edison Co., 870 F.2d at 697.

Second, Public Citizen argues that "pre-payment into an external fund or by an insurance or surety bond" is necessary to assure that funds required to be paid under the Price-Anderson Act are readily available. Again, the use of an up-front payment mechanism is unnecessary. Specifically, Section 170.b(3) of the AEA provides NRC with the authority to assure the availability of funds to meet any assessment of deferred premiums and to guarantee payments of such premiums. 42 u.s.c. § 2210(b) (3).

NRC requires licensees of large power reactors to prove their ability to meet retrospective premium obligations. 10 C.F.R.

§ 140.21.

Finally, Public Citizen argues that the NRC should require IPPs to provide pre-payment "into an external fund for the cost of decommissioning." 55 Fed. Reg. at 9138. As Public Citizen acknowledges in its Petition, limiting IPPs to a pre-payment method precludes the use of other financial assurance options provided for in the NRC's decommissioning rule (53 Fed. Reg. 24018 (June 27, 1988)), in particular annual payments into an

external trust over the life of the license. Public Citizen's rationale that IPPs are at greater risk of going out of business before the license is scheduled to terminate is too speculative to support imposition of such an expensive mechanism as pre-payment. To reiterate, the NRC has a more than adequate regulatory scheme in place to assess the financial qualifications of any applicant, including IPPs, before it issues a license.

Moreover, long-term power sales contracts with purchasing utilities may well include provisions for recovery of decommissioning expenses over the life of the contract. If these payments were paid over to an external trust, it would be difficult to distinguish an IPP from a single-asset nuclear electric utility in this regard, for whom the Commission has found pre-payment to be unnecessary.

In addition, Public Citizen's up-front payment scheme would be unduly burdensome on current ratepayers as well as the potential licensee. NRC has already stated that it "believes it is important not to impose inordinate financial burdens on licensees," 53 Fed. Reg. 24033, or to unduly impose costs on ratepayers in connection with recovery of costs for decommissioning. See Id. at 24031.

Conclusion Based on the foregoing, the rules sought by Public citizen are unnecessary and without merit. Therefore, Public Citizen's Petition should be denied.

Nichol lds Joseph , Jr.

Perry n

DOCKET NUMBER

+ GENERAL ATOMICS PETITION AIJLE

(_ 55 PRU -..51)-53/

Fi!(!:)9I 3 V L'DCK[ i E0 USNHC May 11, 1990 *90 MAY 15 P3 :40 Mr. Samuel J. Chilk Secretary U.S. Nuclear Regulatory Conmission Washington, D.C. 20555 Attention: Docketing & Service Branch

Dear Mr. Chilk:

RE: Public Citizen; Receipt of Petition for Rulemaking Docket No. PRM-50-54 55 Fed. Reg. 9137 (March 12, 1990)

Request for Cornnents General Atomics has reviewed the petition for rulemaking sutrnitted by Public Citizen and referenced above. As explained below, we believe the current regulations provide adequate opportunity for NRC review of the financial qualifications of any non-utility applicant and that the rigid financial conditions required in the petition would unnecessarily discourage opportunities for non-utility nuclear generation facilities. Based on these observations, we believe that there is no justification for materially changing the current regulation.

General Atomics is an energy and high technology corrpany which has been involved in the developnent of nuclear power plants for over thirty years. We were the primary developers of the Peach Bottom I and Fort St. Vrain High Tercperature Gas-cooled Reactors (H'IGR). In addition, GA has built nearly 70 training, research and isotope production (TRIGA) reactors worldwide. GA, in association with the Department of Energy and other members of the nuclear industry, is now developing the Modular H'IGR which derives an unparalleled level of safety from the inherent characteristics of the materials and design configuration . An industry effort is now underway to define a comnercial structure which the private sector can employ to license, construct and operate the initial cornnercial MH'IGR generating facility. It is entirely possible that an independent power producer (IPP) structure will be the rrost conpatible with current market conditions. As a result, GA is keenly interested in this petition which proposes to unduly restrict the means by which an IPP could satisfy its financial obligations including those related to the Nuclear Waste Policy Act (NWPA), the Price Anderson Act, and provisions for decommissioning.

The current NRC regulation (10CFR50.33(f)) specifically singles out non-uti l i ty applicants for a rrore thorough review of their financial qualifications. This section requires the applicant to sutmit infonnation which derronstrates assurance of obtaining funds for construction costs, fuel cycle costs, Ackn I d FEB l 2 l9Sl owe iged by card .............,11.-m~.......,,

10955 JOHN JAY HOPKINS DRIVE, SAN DIEGO, CA 92121-1194 P.O. BOX 85608, SAN DIEGO, CA 92138-5608 (619) 455-3000

U.S. NUC' 1.c-.~R Rf:1ULA'fOH

• l-OM J.:SS!ON DO" , NG & SER VICF.: " ECT ON OF 1c;.. OF mi: ~Esr,: f i1 Y OF THE COMMISS O\J Document Statistics Postmark Date _ _ _ _ _ _ _ __

Copies Received._J.--_ _ _ _ __

Add'I Copies Reprod Special Distribution~~.+-~ "'-'=--- -

Mr. Samuel J. Chilk Page 2 May 11, 1990 operation costs, and any other contractual obligations. It also allows the ccmnission to require sul:lllission of infonnation on financial arrangerrents to deccmnission the facility. While no specific financial arrangerrent is dictated, the Ccmnission clearly has sufficient authority to insure that the proposed arrangerrents are adequate. In the few existing (and proposed) cases of non-utility nuclear station ownership, the specific obligations addressed in the Public Citizen petition have generally been passed through the IPP to the participating utilities thus avoiding the additional costs of surety bonds on prepaynent which reduces the assurance of coverage.

If the rulemaking proposed in the petition were to be granted, any nuclear IPP would be financially handicapped relative to other generation options which might be less environmentally attractive for the specific location and ai;:plication. We see no reason for this handicap if the IPP makes other arrangerrents which satisfy these financial obligations.

The financial obligations referenced in the petition are recognized by the Ccmnission and recognized by any coonercial parties who would participate in a nuclear IPP and prudent business practice will require that they be satisfactorily addressed to preserve the equity position of the investors in any IPP. The petition neglects these facts, as well as not recognizing the adequacy of the current regulation, and should therefore be denied.

Respectfully,

~ \.9.-\~ t~ ~ Au Richard A. Dean senior Vice President Reactor Programs

STATE OF ALABAM, DOCKET NUMBER P TiON RULE PAM ALABAMA PUBLIC SERVICE COMMIS SIO N

(

55 60-51 f R... c:q I 3 7 J

STATE OFFICE BUILDING OOC.:KE1EO USttRC P.O. BOX991 MONTGOMERY, ALABAMA 36101

• 90 MAY \4 P\2 :21 JIM SULLIVAN, PRESIDENT WALLACE TIDMORE LYNN GREER, ASSOCIATE COMMISSIONER SECRETARY CHARLES B. MARTIN, ASSOCIATE COMMISSIONER May 10, 1990 Mr. Samuel J. Chilk Secretary U. s. Nuclear Regulatory Commission Washington, D.C. 20555 Re: Docket No. PRM-50-54

Dear Sir:

En c losed please f i nd for filing in the above-captioned proc eeding, an original and five (5) copies of the Comments of the Alabama Public Service Commission.

Sincerely,

!::;r.:-:_~

Federal Affairs Advisor Enc l osure FEB 12 199\

A~n ~ledged by card .....................;;.;,;""'"

U S NUCLEAR REGULATORY COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARV OF THE COMMISSION Document Statistics Postmark Date ~£ ........E_______

Copies Received_____/_ _ _ _ _ __

Add'I Copies Reproduced _0_.,,,,....-=----

Special Distribution f IIYS, PDR/

_ _ __,,,..1e=-'5 ar

DOCKETED ust-mc BEFORE THE NUCLEAR REGULATORY COMMISSIOij90 MAY WASHINGTON, D.C. 20555 14 P1 2 :2l DFF!CE OF SECRETARY In the Matter of ) DOCK[ 1 ll~G *

• Si:: *'VICF

) [3r{AI !LH Public Citizen; Receipt of ) Docket No. PRM-50-54 Petition for Rulemaking )

)

COMMENTS OF THE ALABAMA PUBLIC SERVICE COMMISSION The Alabama Public Service Commission (APSC) respectfully submits its Comments i n response to the Nuclear Regulatory Commission ' s (NRC) above referenced Notice of Receipt of a Petition for Rulemaking filed on November 22, 1989 with the Commission by Public Citizen.

I. INTRODUCTION Public Citizen has raised important issue to be considered in its petition. The petition requests a rulemaking to promulgate rules concerning licensing of Independent Power Producers (IPPs) to construct or operate commercial nuclear power reactors. The pet i tion also requests that any such rules include specific criteria for financial qualifications for IPPs seeking a construction permit or an operating license for a commercial nuc l ear power reactor.

The Alabama Public Serv i ce Commiss i on supports Public Citizen ' s petition for a rulemaking on the stated issues. The IPPs are performing an ever growing role in the generation of

electric power in this country. Pending l e g 's lation in Congress on Clean Air and Acid Rain will increase interest in the expanded use of nuclear power as a possible solution to the emission problems of fossil fuels presently used in electric generation.

The potential for IPPs to seek entrance into construction and operation of nuclear power reactors is substantial. Regulations to address these new entrants must be determined beforehand to protect the public interest, the IPPs and their shareholders.

II. LICENSING OF INDEPENDENT POWER PRODUCERS The APSC agrees with the petitioner that there is a need to have specific regulations in place that address licensing of IPPs to construct and / or operate nuclear power reactors. At present all commercial nuclear power licensees are regulated utilities.

The assumption should not be made that current NRC regulations would encompass new entrants such as IPPs that may seek licenses in the future. There are strong forces advocating an environment of competitive, market driven sources of power generation.

Recent history has shown in other industries that new entrants into previously regulated monopoly services are not held to the same levels of accountability or regulation as the regulated utility.

The producers of nuclear power, whether IPPs or regulated utilities, must be financially able to meet the responsibilities associated with the nu c lear environment. The licensee must be 2

a b l e to ensure the accrua l of d ecommi s sion i ng funds, timely attention to maintenance and repairs, the payment of waste disposal fees to the Department of Energy, and the ability to pay funds or have insurance coverage in the event of an accident at any commercial nuclear plant. As the petitioner stated, the long term financial stability of IPPs is less certain. The IPPs must be held to the same level of accountability for nuclear power production as the regulated utility. If nuclear power is to remain a viable part of our energy mix, it must be provided in a safe, long term, dependable manner.

III. SPECIFIC CRITERIA FOR FINANCIAL QUALIFICATION Public Citizen's petition asks for the NRC to include in its regulations specific criteria to require an affirmative showing of financial qualification by an IPP. The APSC agrees the difference in the certainty of the market for IPPs and regulated utilities requires a different approach for IPPs to insure the necessary funds are available for decommissioning costs, waste dis posal and accident coverage. IPPs' rates are regulated to by the Federal Energy Regulatory Commission (FERC) but in most cases IPPs do not come under the state regulatory agencies authority.

The regulated utility has a legal responsibility to provide service in the state jurisdictions. State regulatory agencies support this responsibility by allowing rates for the services that cover prudent costs incurred by the utility. IPPs do not 3

have this safety net. There is a higher risk of the IPP not being profitable or remaining in business for the life of the licenses than there is for a regulated public utility. The associated costs and responsibilities of nuclear power generation such as waste disposal and decommissioning will remain even if the IPP is not able to continue to provide service. The public interest demands that these nuclear related costs be insured before IPPs are allowed to receive a license to operate, construct or lease a nuclear reactor.

IV.

SUMMARY

The APSC believes there is a place and need for nuclear power in the energy base of this country. Nuclear power does, however, require different safeguards than other forms of generation. Parties providing nuclear power must be competent and financially able to address these safeguards.

Specific regulations that address licensing of IPPs to construct, operate or lease commercial nuclear reactors must be thoroughly investigated and in place before IPPs seek to obtain these licenses. This is vital to the IPPs as well in the public interest. The IPP needs to know what will be required by the NRC to determine if it can construct or operate a nuclear reactor and be reasonably sure of a profit.

While IPPs may have more risk in the market to sell their power and not have the protection of regulation to recover their 4

investment, th e y do not have the requirement to serve all customers. They can selectively choose the customer or market they desire to serve. There are advantages and disadvantages to bot h regulated monopoly markets and competitive open markets. In the production of nuclear power, however, the same level of need for safety and financial responsibility exist regardless of whether it is provided by a regulated public utility of an IPP.

The APSC believes that there is a present need for specific regulations for licensing of IPPs to construct, operate or lease nuclear reactors. The APSC supports the Petition for Rulemaking filed by P ublic Citizen in this docket and urges the NRC to initiate such a rulemaking.

Respectfully submitted, Federal Affairs Advisor Alabama Public Service Commission P.O. Box 991 Montgomery, Alabama 36101 (205) 242-5025 May 10, 1990 5

DOCKET NUMBE PETITION RULE PR b0 -5 t..j , )

7 (5SF£ OC/13};

COCKETEl:

PHILADELPHIA ELECTRIC COMPANY USNHC NUCLEAR GROUP HEADQUARTERS

• 90 HAY l4 P\2 :20 955-65 CHESTER BROOK BL VD.

WAYNE, PA 19087-5691 OFF!Ci:- OF SE. -,~E1ARY (215) 640-6000 OOCK[TiNG SEi<\/ICf

HA NCl-i May 10, 1990 Mr. Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Attn

Docketing and Service Branch Washington, DC 20555

Subject:

Comments Concerning the Nuclear Regulatory Commission's 10 CFR 50 Petition for Rulemaking by Public Citizen (55 FR 9137, March 12, 1990)

Dear Mr. Chilk:

This letter is being submitted in response to the Nuclear Regulatory Commission's (NRC's) request for comments regarding the 10 CFR 50 petition for rulemaking filed by Public Citizen on November 22, 1989, and published in the Federal Register (55 FR 9137, dated March 12, 1990).

The Philadelphia Electric Company (PECo) appreciates the opportunity to comment on this petition for rulemaking which requests that the NRC promulgate rules governing the licensing of independent power producers (IPPs) to construct or operate commercial nuclear power reactors. In addition, the petitioner requests that these rules include specific criteria for financial qualifications for an IPP seeking a construction permit or an operating license for a commercial nuclear power reactor.

PECo considers that adequate regulations exist governing the financial and technical qualifications of applicants to construct or operate nuclear power plants. We endorse the Nuclear Management and Resources Council's (NUMARC's) position and comments regarding this petition for rulemaking. However, we would like to offer the following specific comments concerning this issue .

1 2 \?,?J\

ft~

Acknowledged by card .................

)

U.S. NUCLEAR REGULATOR COM *~S DOCKEl ING & SERVICE SECT!

OFFICE OF THE SECRETARY OF THE COMMISSION cument Statistics 5 II CJD

U.S. Nucl e a r Re g ulatory Commission Page 2 Th e NRC currently has authority under existing regulations to consider the financial qualifications of newly formed entities such as IPPs. Therefore, there is no rationale for adopting new regulations for a limited class of potential licensees. As an example, 10 CFR 50.33(f) requires that applicants submit information to permit the NRC to determine that the applicant is financially qualified to carry out the activities for which the permit or license is sought. Additionally, if the applicant is a newly formed entity organized primarily for the purpose of constructing or operating a nuclear power reactor, additional information may be required. Under existing regulations, the NRC specifically reserves the right to require the submission of additional or detailed information if the NRC considers this information appropriate. Similarly, 10 CFR 50.33(k) and 10 CFR 50.75(d) require that applicants for operating licenses submit information to the NRC which will demonstrate that the applicant has developed plans to assure that adequate funds will be available to decommission a nuclear facility . Currently, 10 CFR 50.75 specifically recognizes a s ituation where the licensee involved is not a typical utility company regulated by federal and state ratemaking agencies. In addition, 10 CFR 140.21 requires that each licensee demonstrate their ability to make funds available to the NRC on a timely basis for payment of any deferred indemnity premiums required under 10 CFR 140. This regulation makes no distinction between utility and non-utility licensees.

Finally, this petition for rulemaking requests that the NRC promulgate regulations to assure that the IPP applicants make payments to the fund administered by the U.S. Department of Energy (DOE) under the Nuclear Waste Policy Act. We consider a more appropriate request would be to have the DOE involved with the implementation of its own regulations, rather than having the NRC impose requirements to assure that payments are made to a fund administered by another agency.

If you have any questions, please do not hesitate to contact us.

s7a_

Manager 1~ } t1 Licensing Section Nuclear Engineering and Services

LJV\lr\L; I 1"1UITI~~

0

/

PFTITJQN RIii a; PRNJ 5o-57 .

6 South Carolina ~ ectnc &*Gas S1p5119 Olhe S. Bradham p O Box 88 J~nkinsville, SC 29065 "- o9I37

{!!!3 Fi"O Vice President Nuclear Operations (803) 345-4040 SCE&G l OCKE 'IED A-Comi,any USNHC May 9, 1990

• 90 ttAY \4 Pl2 :20 OFF!CE Of SE CHE TA RY DOCKETiNG & SfflVlfT 3RA NCl-i Mr. Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Attention: Docketing and Service Branch

Subject:

Virgil C. Summer Nuclear Station Docket No. 50/395 Operating License No. NPF-12 Connnents on Petition for Rulemaking for Independent Power Producers

Dear Mr. Chil k:

South Carolina Electric & Gas Company (SCE&G) has reviewed the Public Citizen petition for rulemaking (reference 55 Federal Register 9137) concerning financial qualifications for independent power producers. SCE&G fully supports the comments provided by NUMARC on this issue since there i s no evidence that the current regulations are insufficient.

If you have any quest ions, please call.

Very truly yours,

0. S. Bradham ARR/0S8:lcd c: 0. W. Dixon, Jr./T. C. Nichols, Jr.

E. C. Robers R. V. Tanner J. J. Hayes, Jr.

General Managers C. A. Price A. R. Rice NPCF NSRC RTS {PR 900006)

File (855.00AA)

F£8 l i: 199 Acknowledged by card ........,_wu ...... 111J,.,,,,

U.S. NUCLEAR REGULATORY COMMISSION OOCKETING & SERVICE SECTION OFFICE OF THE SECRETARY OF THE COMMISSION Document Statistics Postmark Date - -,,---r-,- - ---

!>/Jo / 1D Copies Received _ _.__ __ __

i\dd'I Copies Reproduced _ --3_ __ __

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DOCKET NUMBER S .I

..50 - ~

PETITION RULE PR8' _e0. Box 14000, Juno Beach, FL 33408-0420 (5s F/2. 0913 7_) t: OCKEi ED USNHC

• 90 KAY 14 Pl2 :19 L-90-172 Mr. Samuel J. Chilk Secretary

u. S. Nuclear Regulatory Commission Washington, D. c. 20555

- Attention: Docketing and Service Branch Re: Public Citizen; Receipt of Petition for Rulemaking -

Licensing of Independent Power Producers (55 Fed. Reg. 9137)

Requests for Comments

Dear Mr. Chilk:

On March 12, 19 9 O, the NRC published for public comment its notification of receipt of a petition for rulemaking dated November 22, 1989, which was filed by Public Citizen (55 Fed. Reg. 9137).

Public Citizen requested that the NRC promulgate additional rules governing the licensing of independent power producers to construct or operate commercial nuclear power plants. These comments are submitted on behalf of the Florida Power & Light Company (FPL).

The Nuclear Management and Resources Council, Inc. (NUMARC) has offered comments on the petition for rulemaking. FPL supports these comments and agrees that the existing rules and regulations governing the financial and technical qualifications of applicants to construct or operate nuclear power plants provide sufficient and appropriate authority for the NRC to establish suitable qualifications for any independent power producer to construct or operate a commercial nuclear power plant.

FPL appreciates the opportunity to comment on the subject petition for rulemaking *

.Yours truly,

-£/~

R. J. Acosta Acting Vice President - Nuclear Energy RJA/MSD/gp an FPL Group company Acknowledged by card ....  :..:?...!. if....~~L....

,\ j 1*

U.S. NUCLEAR REGULATORY COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARY OF THE COMMISSION Document Statistics Postmark Date 5' / lo / ? o Copies Received-....,--,....,1------

Add'I Copies Reproduced _.3--,...-_ _ __

Special Distribution IDS Po~ 1_ _ _

Wa.

DOCKET NUMBER . d

. PETITION RULE PRU ..50 Z,o6cKET rn (55 r Z 0~13~ c May 10, 1990

~ l\A'l \4 P\2 :15 COMMENTS OF OHIO CITIZENS FOR RESPONSIBLE ENERGY , INC *n &"OCRE")

ON PRM-50-54, PETITION FOR RULEMAKING FILE Dol5~,.0?,~~U:~\ ~i;f IZEN (55 FED. REG. 9137, MARCH 12, 1990) uOCKt *;~_;.{:. :_.L .

PRM-50-54 requests that the NRC develop regulations to address the licensing of nuclear power reactors owned or operated by independent power producers, for both new construction permits and operating licenses and acquisition of an existing permit or license from another licensee. The petition also sets forth specific criteria for financial qualifications for IPPs.

OCRE supports this petition. The nuclear power industry, particularly the en~ineering and consulting firms, see IPPs, and especially taking over the operation of existing plants, as a significant new business opportunity in a field where there are no new orders for nuclear power plants. The attempts of Quadrex Corp. to become the operator of Rancho Seco and Bellefonte provide ample evidence that the NRC may soon be f ac ing an l ' c ense application fr o m an IPP. The NRC needs to take a proactive approach in planning for this eventuality ,

just as the NRC has been proactive in planning for operating license renewal.

OCRE has a special interest in rules regarding the licensing of IPPs, as the Bechtel Corp. and other firms have expressed interest in completing and operating the unfinished Perry Unit

2. OCRE was an intervenor in the operating license proceeding for the Perry facility and continues to monitor the operation of Unit 1 and to participate in NRC proceedings concerning Perry. The situation with Perry Unit 2 is peculiar in that the licensing proceeding before the NRC's adjudicatory boards was for both units, but with the Cleveland Electric Illuminating Co. as the licensee. In addition, it has been five years since the proceedings before the Licensing Board have concluded and the record was closed. More years will pass before Unit 2 would be completed and ready to begin operations if completed by an IPP. It would also appear that, if construction were completed by an IPP, a transfer of the construction permit would be necessary. OCRE is especially concerned about the public hearing rights which would be associated with these actions. While public hearings for a transfer of license or license amendment are required by Section 189 of the Atomic Energy Act, the NRC has developed no substantive rules or a body of case law to address a situation such as the completion and operation of Perry Unit 2 by an IPP. What issues would be admissible in a proceeding to transfer the CP to an IPP? In a proceeding for an operating license for an IPP? Clearly, issues such as financial qualifications and management 12 \99\

1 f EB .""'"""$05!"

Acknowledged by card ................

• t

• * * . \*

JS NUCLE:AR REGULATORY COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARl(

OF THE COMMISSION Dc~ument Statistics rk Date  !;;f,o/ 1D I

C

/

• eceived pes Reproduced -'3=--~ - --

s,.. al Distnbut1on 'RI Ds 'f)R esa..r

competence of the IPP are appropriate. But what about the new issues which have arisen over time since the ASLB authorized licensing for both Perry Units 1 and 2? What about operating events and new data which have cast doubt on the validity of the ASLB's findings in the licensing proceeding? Would the doctrines of repose bar their consideration in an !PP licensing proceeding? These matters need to be addressed. It is OCRE's position that meaningful public participation is essential in all licensing decisions. Members of the public must be afforded the opportunity to raise and litigate all relevant issues. The fact that an issue was considered in a tandem licensing proceeding years earlier should not preclude its reconsideration when there are sound reasons to question the validity of a decision rendered years ago.

OCRE agrees with the petitioner with regard to the specific criteria for financial qualifications for IPPs. The absence of a guaranteed rate of return, which is the norm for electric utilities regulated by state regulatory bodies, puts IPPs in a much more precarious financial position. Stringent financial qualifications review and standards are essential to ensure that the IPPs have suffic i ent funds to cove r the co s ts o f safe operation, the costs of a nuclear accident, the costs of decommissioning, and the costs of nuclear waste disposal.

The NRC should grant PRM-50-54 and expeditiously develop the regulations needed to provide reasonable assurance that IPPs operating nuclear plants will not endanger the public health and safety. The NRC must also address the procedures needed for licensing IPPs and for assuring public hearing rights in these decisions.

Respectfully submitted, Susan L. Hiatt OCRE Representative 8275 Munson Road Mentor, OH 44060 (216) 255-3158 2

UVvf\CI NUMtjt;H

- - - - ~ -- TITION RULE PAM ,5,o-5~

(SsFROCJl.3'!,)

COCK[TEO (f)

USNRC NUCLEAR MANAGEMENT AND RESOURCES COUNCIL 1776 Eye Street, N.W

• Suite 300

• Washington, DC 20006-2496 -SO HAY \4 P\2 :10 (202) 872-1280 Joe F. Colvin OFF!CE OF S_EC}f !~RY Executive Vice President &

Chief Operating Officer May 11, 199l))CKEiiNG& ~Et,\I ICf.

BR.I\NC ..

Mr. Samuel J. Chilk Secretary U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Attent ion: Docketing and Service Branch RE: Public Citizen; Receipt of Petition for Rulemakinq Docket No. PRM-50-54 55 Fed. Reg. 9137 (March 12, 1990)

Regyest f or Comment s

Dear Mr. Chilk:

These comments are submitted on behalf of the Nuclear Management and Resources Council, Inc. ("NUMARC") in response to the request of the U.S.

Nuclear Regulatory Commission ("NRC") for comments on the petition for rulemaking entitled "Public Citizen; Receipt of Petition for Rulemaking" (55 Fed. Reg. 9137 - March 12, 1990).

NUMARC is the organization of the nuclear power industry that is responsible for coordinating the combined efforts of all utilities licensed by the NRC to construct or operate nuclear power plants, and of other nuclear industry organizations, in all matters involving generic regulatory policy issues and on the regulatory aspects of generic operational and technical issues affecting the nuclear power industry. Every utility responsible for constructing or operating a commercial nuclear power plant in the United States is a member of NUMARC. In addition, NUMARC's members include major architect-engineering firms and all of the major nuclear steam supply system vendors.

In its petition for rulemaking, dated November 22, 1989, Public Citizen requests that the Commission promulgate additional rules governing the licensing of independent power producers to construct or operate commercial nuclear power plants. Public Citizen also requests that these rules include specific criteria establ i shing financial qualifications for an independent power producer seeking a construction permit or an operating license for a commercial nuclear power plant. However, Public Citizen has not cited any infirmities in 10 C.F.R. Part 50 to suggest that current regulations regarding the necessary financial qualifications of entities seeking to construct or operate nuclear power plants are deficient. Nor is there any evidence that the provisions associated with the transfer of a license do not provide the NRC with sufficient regulatory authority to ensure that adequate protect i on is prov ided to public health and safety .

FEB 12 1991

~

d by card ................*""'

Ack.nowIedge

US NUCLEAR REGULATORY COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETAR¥ OF THE COMMISSION Document Statistics r Date _ Si /_9_o___ _

_ /_1__,_

1 ece1ved_--'- / _ _ _ _ __

pies Reproduced _ _ _ __

c_  :),~1nbut1on R rDs PDR.

M --<

Mr. Samuel J. Chilk May 11, 1990 Page 2 In fact, there is no evidence that current regulatory requirements pertinent to Public Citizen's identified concerns (e.g., those regulations associated with resolution of ongoing operational issues, the accrual of appropriate decommissioning funds, the payment of waste fees required under the Nuclear Waste Policy Act of 1982, as amended, or the ability to provide funds required by the Price-Anderson Act, as amended, in the event of an acc ident at any commercial nuclear power plant) could not be appropriately applied to independent power producers in a suitable manner based on the specific circumstances associated with any particular independent power producer. One need look no further than the definition of "person" provided in 10 C.F.R. § 502 to recognize the clear intent of the Commission that the regulations in Part 50 apply to a much broader category t han electric utilities. An example of this comprehensive intent is contained in 10 C.F.R.

§ 50.40(b), which relates to the technical and financial qualifications of licensee applicants, and provides particular requirements for license applicants which are not electric utilities.

Fundamentally, NUMARC continues to ascribe to the philosophy that no regulations, or modifications to regulations, should be made that are not technically justifiable and justified. It is not in the public interest for the NRC to adopt regulations in the absence of evidence that further regulatory strictures are required.

We would be pleased to discuss this matter further with appropriate NRC Staff as they may deem it advisable.

Sincerely, r ,+.1.,uo 1

"'J F. Colvin JFC/RWB:bb

DOCKET ,/

PETITION RULE PRM ..5'tJ-c3 7 ~

[55 Fl:: 0913 ?J1 DOCKETED PAL I SADES GENERATING COMPANY USNRC Suite 701, 777 East Eisenhower Parkway Ann Arbor, Mi chi gan 48 10 6

• 90 AY 14 A1 :48 May 11, 1990 Secretary of the Commission

u. S. Nuclear Regulatory Commission Was hington, D.C. 20555 Att'n: Docketing and Service Branch Comments of Palisades Generating Company on Public Citizen's Petition for Rul emaking Docket No. PRM-50-54

Dear Sir:

By Federal Register notice on March 12, 1990 (55 Fed. Reg.

9,137), the Nuclear Regulatory Commission (NRC) solicited com-

- ments on a November 22, 1989 petition for rulemaking filed by Public Citizen. Public Citizen's petition asks that the NRC pro-mulgate rules for the licensing of Independent Power Producers (IPPs) to include an affirmative showing of fina nc i a l qualifica-tions by an IPP seeking a construction permit or operating license. More specifically, Public Citize~ seeks a rule requir-ing such IPP applicants to prepay or insure future decommission-ing , Price - Anderson, and nuclear Wd~te fund obligations.

In response, Palisades Generating Company (PGC) provides the Cu!TUT' Crit s hf o'W. PGC 1s a company be 1 ng 9 t 9.-rn 1 zed to acq l.i re the ff"ij 1 2 199\*

Acknowledged by card ................m ~

U S. NUCLEAR REGULATORY COMMISSK)N DOCKETING & SERVICE SECTION OFFICE_QF THE SECRETAR-Y OF THi: COMMIS ION Dor.ument 1attsties Postmark Date _S-J;1 ./-/.L.?.::..o_ _ __

Copies Rece ve / _ _ _ __

A d'I Con e rod - ed -'"'""~' - - - - -

Sr, tnouuon R. I CS , PDR 1 7eso:_,

Secretary, U.S. NRC May 11, 1990 Page Two Palisades Plant and to sell its capacity wholesale. While PGC may not be considered an IPF, PGC has an interest in Public Citizen's proposed rul-e'making_because Public Citizen's petition appears to assume, incorrectly, that any company selling power wholesale is an IPP.

At the outset, it should be observed that Public Citizen's petition is vague and does not identify with any precision who should be considered an IPP subject to Public Citizen's propos-als. The term "independent power producer" is not well defined.

IPP is not defined by any statute or regulation, but instead stems from a proposed FERC rule (a rule that has not been adopted). 53 Fed. Reg. 9,327 (1988). This vagueness is grounds in itself for denying Public Citizen's petition.

In addition, we Qelieve that ~he proposal by Public Citizen to establish new financi~l qualifications procedures and criteria for IPPs is based on faulty assumptions and is unnecessary and

, .,improv~i dent. Public _Citizen-'.s-pet.Ltion-appears to -pr~sume that IPPs would escape financial quaLi~ications review under existing rules. To the contrary, the NRC's existing financial qualifica-tion rules allow for such review. Second, Public Citizen's peti-tion suggests that special requireme~ts are appropriate because t~e financial via~~lity of IPPs may be jenuaus. Again to the

Secretary, U.S. NRC May 11, 1990 Page Three contrary, in order to protect their investment, any investors in or lenders supporting an !PP would insist on adequate financial arrangements to address significant contingencies; but the finan-cial assurances upon which the investors and lenders would insist might_ differ f ram the prepayment and _surety methods_ unreasonably demanded by Public Citizen. The NRC's financial qualifications rule would allow the NRC to evaluate, on a case-by-case basis, the financial arrangements proposed. The Public Citizen rulemak-ing would simply eliminate this flexibility for no good reason; and in so doing, Public Citizen's insistence on prepayment of or surety for decommissioning, Price-Anderson, and nuclear waste fund costs would very likely create an artificial barrier to much needed new generating capacity, to the great disservice of the public and national interest.

A. Flexible Regulation Serves the Public Interest The addition of new electric generating capacity has slowed

-even*questionable whether base -peak demand can be met by the mid-dle of the 1990's. Long-term projections of capacity versus demand prepared by the Electric Power Research Inst,,i tute ( EPRI) in 1987 indicate that about 810 GWe of additional installed

Secretary, U.S. NRC May 11, 1990 Page Four generating capacity will be needed through the year 2030 to meet increasing demand and replace retired units.

While there are many factors to which the worrisome decre~se 1n new capacity can be attributed, the rate treatment applied to many new plants in recent years is a major contributor. Having faced large "prudence" disallowances, many utilities are hesitant to invest in new capacity.

Innovative ratemaking approaches could prove to be a solu-tion to this dilemma. One such approach that has been gaining interest in the electric industry is the IPP concept; an IPP would be an entity permitted to sell power at prices established more competitively than in those set by traditional ratemaking methods. The opportunity presented by competitive pricing may be attractive to investors and hence renew investment in generating capacity.

The IPP concept has not yet been applied to a nuclear plant;

.. ,even -in' the *non-nuclear segment of the electric industry, the

• concept is still evolving. *Nevertheless, the investors and lend-e~s who are interested in such transactions are institutions well versed in project finance and who are not going to pursue such a project unless it is viable. A project would. only be consi~ered

Secretary, U.S. NRC May 11, 1990 Page Five viable if there were adequate financial arrangements to cover all major costs contingencies,'such as Price-Anderson assessments,

,decommissioning charges, and nuclear waste disposal costs.

While investors and lenders would insist on financial

• arrangements to cover major contingencies, they*might choose financial protection methods other than prepayment. In structur-ing each project and choosing the appropriate funding mechanisms for items such as Price-Anderson, decommissioning, and nuclear waste fund charges, the investors and lenders would consider many business issues, such as tax consequences and lending require-ments, all of which could effect the profitability of the ven-ture. There considerations might make the type of prepayment demanded by Public Citizen inappropriate. As a consequenc~{ if Public Citizen's demands were translated into new NRC rules, the

!PP concept might never be applied to a nuclear plant, and an opportunity to foster new generating capacity would have been squandered *

. B. __.,_ ..rrhe NRC' s Current .. Regulations Would Allow Firrancial-'Qual*Hications' 'Review, of !PP With Appropriate Flexibility.

The NRC's ~inancial qualifications rule, as it currently exists, would allow. the NRC to.review t-he~types of .. financi~l

Secretary, U.S. NRC May 11, 1990 Page Six arrangements proposed by an IPP on a case by case basis. Public Citizen's petition provides no clear explanation why the NRC's existing procedures are inadequate.

Public Citizen appears to assume that the NRC_would simply label an IPP as an "electric utility" and give no further thought to its financial qualifications. Such an assumption is not con-sistent with the NRC' s *regulations ( nor does the NRC condur;;t its regulatory affairs in so cursory a manner). The NRC has made it clear that it reserves the right to require such additional financial qualifications information in individual cases as may be necessary to decide a license application, even if the appli-cant qualifies as an electric utility under the NRC's definition.

See 47 Fed. Reg. 13,750, 13,752 (1982) .

.Public Citizen's proposed rule would also apply to IPPs applying for a construction permit. Under the NRC's existing regulations, a financial qualifications review 1s required for

.;.-~:-:<any~construction*;.permit.applicant. _See __ lO c.-F.R. S 50.3_3(f) and

• • --App.'.- C.--. This review *properly. focuses on construct ion and fuel .

cycle costs. It would be entirely unnecessary to require a con-struction permit applicant to prepay Price-Anderson, decommis-sioning, and nuclear waste fund costs, because none of these

Secretary, U.S. NRC May 11, 1990 Page Seven liabilities will exist until after the plant has, been granted an

. . 1/

operating license.-

While Public Citizen does not identify who*should*be ~onsid-ered an IPP for purposes of its proposed rulemaking (see note 1

• supra), its petition suggests that Public Citizen may incorrectly consider any wholesaler as an IPP.l/ See Petition for Rulemaking at 1-2 (distinguishing an IPP from a typical regulated utibity on the ground that "IPPs must compete openly in the wholesale mar-ketplace and may not have a steady supply of customers"). But one cannot assume that simply because a company sells its power wholesale, its supply of customers and revenues are uncertain.

Experience demonstrates otherwise.

The "Yankee" companies operating single nuclear plants *and selling the power wholesale have existed for years, and these companies have been steady, dependable, financially secure per-formers. The Yankee companies are corporations whose stock is

_,_-,' Jj _:,.The *decommissioning obligation with .which the NRC is con-

- *'cerned *is* *restricted to the decontamination and disposal of radioactively contaminated equipment and facilities. Until a nuclear plant operates, there is no radioactive contamination.

]:_/ As previously noted, there is not yet a statutory or regula-tory definition of an IPP, but under,,_t,he, FERC proposed rule, a* number of factors must be cons~dered to determine whether a company is an IPP.

Secretary, U.S. NRC May 11, 199-0 Page Eight owned by a number of utilities. Each of these utility sharehold-ers has executed a power purchase agreement committing to pur-chase .the. generated power at.cost, and a capital funds agreement providing for the company's capital requirements. Thus, these single-asset, wholesale companies have a completely steady supply of customers and revenues covering costs.

The recently proposed transfer of Palisades to PGC pr9vides another example of the inappropriateness of imposing Public Citizen's proposed financial requirements on a company because it sells its power wholesale. In the case of Palisades, PGC has executed a long-term power purchase contract requiring the pur-chaser to buy 100% of the available capacity. The rates under this power purchase agreement are designed to allow recovery of costs if the plant achieves a certain average capacity factor,1/

and moreover, the power purchase agreement includes pass-throughs of nuclear fuel, nuclear insurance (property insurance, Price-Anderson premiums, and Price-Anderson assessments), and decommis-

, * ~:-*sioning* costs *irrespective of power sold. Here, again,-;;: is a com-pany-*established as a single-asset wholesaler with an *assured ll Because the rates under PGC's power purchase.agreement are reasonably designed to recover costs, PGC should qualify as an electric utility under the NRC's rule.

Secretary, U.S. NRC May 11, 1990 Page Nine customer and power purchase contract specifically covering the major contingencies singled out by Public Citizen.

The previously contemplated acquisition of Rancho Seco by Quadrex provides yet another example. Although the terms of that transaction were never fully developed, the parties were consid-ering long-term power purchase contracts. Once again, it would not have been valid to assume that steady customers would-be lacking.

In contrast to these examples, we know of no case where a company has been set up to sell power from a nuclear plant in the wholesale market without a sourc_e of customers. Thus, experience is exactly opposite to Public Citizen's assumption.

Further, the examples above indicate that there are a number of ways other than the prepayment or surety demanded by Public Citizen by which a wholesaler can provide reasonable assurance that nuclear waste fund, Price-Anderson, and decommissioning

.--.-.,obligations *are funded.,* In the case of the Yankee companies, these obligations are backed by utility shareholders.

case, such obligations are covered by pass-throughs to a utility purchaser in a long-term power purchase contract. Thus, prepay-ment.and.surety are only two oL tha many.ways *major contingencies

Secretary, U.S. NRC May 11, 1990 Page Ten can be provided for.!/ Public Citizen would needlessly eliminate all other alternatives.

C. Conclusion In conclusion, the NRC's regulations already allow financial qualifications review of applicants when such review is deemed necessary. No new regulation is required to make sure relevant issues are considered. Further, there are many ways by whifh an operating license applicant proposing to sell power in the whole-sale market may provid~ for cost contingencies such as decommis-sioning, Price-Anderson premiums, etc. Such contingencies may be covered by shareholder commitments, by purchaser commitments, or perhaps by some novel approach not yet recognized. The NRC's regulations should and do have the flexibility to consider the variety of ways by which the operation of a plant and the various pertinent contingencies may be funded. Public Citizen's insis-tence on prepayment or insurance would needlessly eliminate this

,; __ flexibility.

- The Commission should also recognize that there is a national need for new generating capacity, which might be

!/- In the case of Quadrex's proposed acquisiti~n of Rancho Seco, prepayment of the decommissioning obligation was contemplated. -

Secretary, U.S. NRC May 11, 1990 Page Eleven supplied if varying financing and rate structures can be accommo-dated.* Public Citizen's petition would prevent the*NRC from con-*

sidering new approaches on an appropriate case-by-case basis.

Accordingly, for the reasons stated above, Public Citizen's

• petition for. rulemaking should be denied as both unnecessary and unreasonable.

d~UAA~

Vice President Palisades Generating Company L:161DRL5423.90

1633 Broadway OOCKE I hiUMBER <f

~ -5

'\lewYo--k, '\lcwYo*I< 10019 212 468.6101 PETITION RULE PAM .., )

rs~ P/2. OC/137_;

L UO CK[T[D US NRC

, . NewYorkPower Charles M. Pratt Se'"lior Vice Pres1oent

. , Authority "90 t1AY 11 P4 :14 and Genera* Counsel May 10, 1990 Mr. Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, DC 20555 Att: Docketing and Services Branch Re: Public Citizen; Receipt of Petition for Rulemaking Docket No. PRM-50-54 55 Fed. Reg. 9137 (March 12, 1990)

Reguest for Comments

Dear Mr. Chilk:

The New York Power Authority ("Authority") is a corporate municipal instrumentality and political subdivision of the State of New York. The Authority generates, transmits and sells electric power and energy princ i pally at wholesale for the benefit of the people of the State. The Authority submits the following comments in response to the request of the U. s. Nuclear Regulatory Commission ("NRC") for comments on the petition for rulemaking entitled "Public Citizen; Receipt of Petition for Rulemaking" (55 Fed. Reg. 9137, dated March 12, 1990).

Petitioner Public Citizen suggests that new rules are necessary to govern licensing of independent power producers ("IPPs") to assure that they will have sufficient funds to construct or operate commercial nuclear power reactors and to satisfy insurance, environmental and other NRC requirements. Public Citizen's petition is targeted at those entities which are not " [ r]egulated utilities [which] have defined and generally fixed markets . * . and usually are assured a set return on * * . investment * . . . " Such a broad definition could be construed as including entities such as the Authority, which is not rate-regulated and does not have a guaranteed franchise area. It would be inappropriate to include the Authority within the ambit of the Public Citizen petition since the Authority is fundamentally different from the t yp i cal IPP .

AcKnowledged by car d .................

U.S. NUCLEAR REGULATORY COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRET ARY OF THE COMMISSION Document Statistics Postmark Date _J:.,__,E Copies Received_!_ __ _

Add'! Copies Reproduced 3 Special D1smbution H:>R.,, fi I1>'5,

- - -- --=Lesa..r-:_

Petitioner's unsupported assertion is that an IPP may not mee t its financial obligations. The Authority's financial qualifications to own and operate nuclear facilities, on the other hand, are well established. It is the largest non-federal public power organization in the United States, having assets of $5.7 billion. It has successfully operated the Indian Point 3 Nuclear Power Plant for 13 years and the James A. Fitzpatrick Nuclear Power Plant for 15 years. The Authority is financed by tax-exempt bonds with Aa/AA- ratings. It has a proven record of both safe operation and fiscal responsibility.

It would be unnecessary and, indeed, unfair, to burden it with additional regulation merely because of its character as a public authority.

In addit i on, it i s the Authority's opinion that the existing regulatory requirements codified in 10 CFR Part 50, with which the Authority complies, provide adequate safeguards to assure the financial stability of any licensee, so that additional regulation is unnecessary.

However, should the Commission decide to go forward wi th the suggeste d rulemaking the Authority urge s the Commission to draft any new rule narrowly, to focus only on those organizations which do not possess an operating license or who do not qualify under existing regulations.

Sincerely ,

~~

Charles M. Pratt Senior Vice President and General Counsel

DOCKET NUMBER L,,,.Sf PETITION RULE _PR_M_ ..JV

( 5°5 r/Z tft/37) DOG EiED UStffiC

~ MAY 11 P4 :16 May 4, 1990 Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, DC 20555 Attention:Docketing and Service Branch

Subject:

Docket No. PRM-50-54: Public Citizen; Receipt of Petition for Rulemaking The subject petition for rulemaking fails to take into account the existing NRC rules dealing with the subject of financial qualification of licensees, fails to acknowledge the Commissions underlying and longstanding mission of the protection of public health and safety, and fails to provide any arguments justifying the need for additional or special rulemaking on this subject.

The development of Independent Power Producers (IPPs) in the United States is based on the need to maintain electric rates as low as possible to ensure the continued competitiveness of the country.

In electricity, as in other industries, both the regulators and the customers recognize the potential benefit of a competitive marketplace. This recognition has brought about the development of IPPs. The financial capability of these IPPs is, like that of electric utilities, dependent on the individual entities. The potential of an IPP owning and operating a nuclear utilization facility was long ago recognized and dealt with by the Commission.

The financial qualifications of an applicant for a construction permit for a nuclear power reactor are specifically addressed in 10CFR2 .104 (b) ( 1) ( iii) :

( iii) Whether the applicant is financially qualified to design and construct the proposed facility; The determination of financial capability of the applicant for a construction permit is thus already required by the Code as part of the permitting process.

ffl Ao}tnow\edged by card...............***".

U, t11ur* * \} REGULATORY COMMISSION en, K~ flNG & SER\l *CE SECTION vfflCE OF THE SECRHAA:Y OF THE COMMISSION Docllnent Statistics Postmark Date S r/ 1S,/ C/ D Copies Received._ __.__,---_ __ _

Add'I Coples Reproduced __ 3______ .

Special Distribution Rt DS 'I) ktt.A.--

The financial qualifications of an applicant for an Operating License are specifically addressed in 10CFR2.104(c) (4):

(4) Whether the applicant is technically and financially qualified to engage in the activities to be authorized by the operating license in accordance with the regulations in this chapter, except that the issue of financial qualification shall not be considered by the presiding officer in an operating license hearing if the applicant is an electric utility seeking a license to operate a utilization facility of the type described in paragraph 50.2l(b) of paragraph 50.22; Since an IPP of the type described in the subject Docket would be a non-electric utility, it would necessarily require a financial review as part of the licensing process.

In the area of decommissioning funds, the Commission has previously adopted r e quirements, 10CFR50.75(d), which specifically call out the acceptable funding methods to be used for non-electric utilities. Since these requirements were only recently reviewed and ena cted , there has been no new developments in the interim tha t would necessitate additional rule making in this area.

In the area of satisfaction of Price-Anderson Act obligations, the petitioner states:

(g)iven the utilities' status as regulated monopolies, state and Federal agencies can work to help ensure that utilities are able to raise the necessary funds through other regulated operations if called upon to do so.

The petitioners assumption is that the ratepayer can be forced to provide the funds to meet the obligation in the case of an electric utility. since the net result would be an additional financial burden on the ratepayer, the regulatory bodies could use this technique to obtain funds from the ultimate customers of a no-electr ic utility (IPP) just as they could from the ultimate customers of an electric utility. This argument is based on the inability of the IPP to meet its financial obligations, yet the determination of financial capability is required to be made before a construction permit or operating license can be issued.

The promulgation of rules specifically dealing with IPPs is not required to ensure the protection of the health and safety of the public. The current rules provide adequate protective measures to ensure financial capabilities are present before licenses are issued. Given the refusal by regulatory bodies to allow a reasonable return on investment by electric utilities in nuclear power plants in recent history, there is no basis for the conclusion that IPPs will be less able, as a group, to satisfy their financial obligations. The capability of each applicant must, as with electric utilities, be determined on a case by case basis. To presuppose that a Fortune 500 company, potentially with

decades of nuclear experience, is inherently less capable of owning and safely operating a nuclear power plant than electric utilities ignores the business history of the United States. To unnecessarily burden these companies with additional requirements is a restriction to free trade, the bases of our economic system, and does not enhance the protection of the health and safety of the public. In fact, restrictions on IPP ownership of nuclear power plants could fo rce them to own and operate fossil powered plants which would negatively impact the overall public health and safety.

5iZJU David Swank 2138 Hamilton Ave.

Richland, WA 99352-2008

OOCKET NUMBER PETITION RULE !:!PR~M!...::~ m ~ 9/37

{'tD @

• oo t1l\Y ll p 4 :17 Buyers Up Congress Watch D Critical Mass D Health Research Group D Litigation Gr6t11J May 10, 1990 Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Attention: Docketing and Service Branch

Dear Mr. Chilk:

We are writing on behalf of Public Citizen to comment on the petition for rulemaking which we submitted on November 22, 1989 (Docket No. PRM-50-54). In the petition, we r equested that the U.S. Nuclear Regulatory Commis s ion (NRC) promu lgate rules governing the licensing of independent power producers (IPPs) to construct or operate commercial nuclear power reactors and that these rules include specific criteria for financial qualifications. Events in recent months confirm the need for such rules.

In the petition, we cited the Quadrex Corporation as an example of a non-utility IPP which might seek to own, construct and/or operate a nuclear reactor. While the Tennessee Valley Authority has, for the moment, ceased negotiations with Quadrex for the lease of the Bellefonte nuclear power plant, other existing or to-be-built nuclear power plants are now potential candidates for being owned, operated or constructed by non-utility IPP's.

For example, the Illinois Commerce Commission has recently suggested that the Commonwealth Edison Company sell one or more of its nuclear generating facilities to private investors. Under such an arrangement, there is no certainty that Commonwealth Edison would retain the operating licenses of these facilities.

Additionally, the Westinghouse Corporation has start ed to examine sites for development of its new prototype AP-600 nuclear reactor and has informally approached the Chairman of the Florida Public Service Commission regarding the matter. While Westinghouse is apparently hoping that a utility in Florida will order one of its new reactors , if this does not happen, Westinghouse could decide to develop the reactors on its own as an IPP.

FEB 12 l99\

Acknowledged by card .......................,,..,,

215 Pennsylvania Ave. SE Washington, DC 20003 (202) 546-4996

Postmqffl BiU _ =-~----

Copies Reseiva1L I - - - - -

Add'I 6eAie~ Aegr u d _..3_ _ __

Sp c1al D1stn~t1 /?_t b5 R LeyJ, r

Future changes in utility regulatory policies may favor the development of nuclear reactors by non-utility IPPs. A bill pending in Congre ss , the "Competitive Wholes ale Electri c Generation Act of 1989" (S. 406), introduced by Senator J.

Bennett Johnston (D-LA), would allow any firm or individual to construct and operate an electric generating facility and sell the power from that facility on the wholesale market free from the provisions of the Public Utility Holding Company Act. Such a facility could also be exempt from state regulation, thus granting the IPP owner no assurance of a steady rate of return on its investment.

The potentially precarious financial position of IPPs may adversely affect the accrual of decommissioning funds, the promptness of necessary maintenance and repairs, the payment of waste fees to the U.S. Department of Energy (DOE), and the ability to pay funds in the event of an accident at any commercial nuclear plant as specified under the Price-Anderson Act.

As we noted in our petition, the long-term financial stability of an IPP is less certain than that of a regulated utility, and an IPP is less assured of making a profit. An IPP cannot guarantee that it can sell all, or any, of the electricity its plant produces. Additionally, an IPP cannot rely on state and federal regulatory agencies for the ability to earn a steady rate of return or even to raise sufficient funds to meet its obligations, as can regulated utilities.

Rules which establish specific regulations governing the applications of non-utility independent power producers for construction permits and operating licenses can help ensure that IPPs meet minimum criteria necessary for the safe operation of nuclear power plants. Especially important among these are the establishment of specific financial qualifications such as those mentioned in the petition, including:

1) assurances that sufficient funds will be available for payment to the Nuclear Waste Fund established by the Nuclear Waste Policy Act (NWPA);

2) guarantees that the money which the Price-Anderson Act requires licensees to pay in the event of an accident at any commercial nuclear plant (i.e. up to $63 million) would be available when needed; and

3) the absolute assurance that sufficient funds will be available for decommissioning of the reactor.

The only acceptable methods for these assuring these obligations are met are prepayment, insurance, or surety bonds.

This is because there is a greater risk that an IPP may go out of business before the license is scheduled to be terminated. These

methods best guarantee that there will be sufficient funds for waste disposal, decommissioning and obligations in the event of an accident, even if the IPP were in severe financial distress.

Public Citizen urges the NRC to promulgate rules in accord with our petition for rulemaking. These rules must establish specific regulations governing the applications of non-utility independent power producers for construction permits and operating licenses and must include specific criteria for financial qualifications.

Sincerely,

~4--

Daniel Borson Nuclear Economics Analyst Public Citizen's Critical Mass Energy Project

Georgia Power Company 333 Piedmont Avenue DOCKET NUMBER Atlanta, Georgia 30308 PETITION RULE PRU 5o-5 4 Telephone 404 526-3195 (55 FR o~=n3 '7)

Mailing Address L'OLKL i LD 40 Inverness Center Parkway USNRC Post Office Box 1295 Birmingham, Alabama 35201 Telephone 205 868-5581

• ~ MAY -7 P2 :30 r, eleet, ,e, system W. G. Hairston, Ill C.. FF! CE. OF SECRE TARY Senior Vice President OOCK t f ING &. St ilV!Cf Nuclear Operations BRA NC~

May 1, 1990 Docket Nos. 50-321 50-424 HL-1070 50-366 50-425 ELV-01594 Mr. Samuel J. Chilk Secretary U. S. Nucte ar Regulatory Commission Washington, DC 20555 ATTN: Docketing and Service Branch Comments on Petition for Rulemaking "Public Citizen; Receipt of Petition for Rulemaking" 55 Federal Register 9137 of March 12, 1990

Dear Mr. Chil k:

Georgia Power Company has reviewed the petition for rulemaking, 10 CFR Part 50, "Public Citizen; Receipt of Petition for Rulemaking, published in the Federal Register on March 12, 1990. In accordance with the request for comments, Georgia Power Company hereby is in total agreement with the NUMARC comments to be provided to the NRC.

Should you have any questions, please advise.

Respectfully submitted, ul./J.~

W. G. Hairston, III WGH,III/JMG:kdc FEB 12 l99J Acknowledged by card ** ......................__...

U.S. NUCLEAR REGULATORY COMMI S10, DOCKETING & SERVICE SECTIO OFFICE OF THE SECRET ARY OF THE COMMISSION Document Statistics Postmark Date -=i<-Y~

S. - --

Copies Received_~ - - _

Add'I Copies Reproduced .3 _

Special Distributiori RJPS~ P/Jfl.1

DOCKET NUMBER I '/

5 tJ - .5 ~'?)

Alabama Power Company 40 Inverness Center Parkway Post Office Box 1295 Birmingham , Alabama 35201 PETITION RULE PR (55 P£ O?l.3J,! (J) l.JLr.E~EO Telephone 205 868-5581 U~N,~C W. G. Hairston, Ill Senior Vice President Nuclear Operations

• 90 MAY - 7 P2 :31 Alabama Power A

the southern electric system Docket Nos. 50-348 50-364 Mr. Samuel J. Chilk Secretary U. S. Nuclear Regulatory Commission Washington, DC 20555 ATTN: Docketing and Service Branch Comments on Petition for Rulemaking "Public Citizen; Receipt of Petition for Rulemaking" 55 Federal Register 9137 of March 12, 1990

Dear Mr. Chilk:

Alabama Power Company has reviewed the petition for rulemaking, 10 CFR Part 50, "Public Citizen; Receipt of Petition for Rulemaking," published in the Federal Register on March 12, 1990. In accordance with the request for comments, Alabama Power Company hereby is in total agreement with the NUMARC comments to be provided to the NRC.

Should you have any questions, please advise.

Respectfully submitted, N l ft.;+/- ,-w:-

w. G. Hairston, III WGH,III/JMG:kdc cc: Mr. S. D. Ebneter Mr. S. T. Hoffman Mr. G. F. Maxwell

u ..: r.uLATORY COMM!' S10

[JL, ,Ki...Tll~ll II< SER11CE SECTIO~

OFFICE OF THE ECRETARY OF THE COM1 AISSION Document Statistics

". t./. 0 - - - - -

Postmark Date -'-'-_._,,'

Copies Received_(_ __

Add'I Copies Reproduced ~ _

Special Distribution 'DR [;6,1 Le:A-r

DOCKET NUMBER ~ )

,,.--~-"" TITION RULE PR ~ -5t/ G,/

cs-s F/2 0913 7) LOLKL,[L' U NRC STATE OF ILUNOIS DEPARTMENT OF NUCLEAR SAFETY 1035 OUTER PARK DRIVE SPRINGFIELD, IL 62704 Thomas W. Ortciger (217) 785-9900

~tQ1/4X.U~

DIRECTOR April 30, 1990 U. S. Nuclear Regulatory Commission Secretary of the Commission Washington, DC 20555 Attn: Docketing and Service Branch RE: "Public Citizen; Receipt of Petition for Rulemaking;"

10CFR50;55 Federal Register 9137-9138 (March 12, 1990).

The Illinois Department of Nuclear Safety (IDNS) hereby submits its comments on the above-identified petition for rulemaking. The petition for rulemaking was filed with the Commission by Public Citizen (petitioner), a non-profit research and advocacy group. The Illinois Department of Nuclear Safety

{IDNS) is the lead agency in Illinois for preparing emergency plans for, and in cooperation with the Illinois Emergency Services and Disaster Agency, coordinating emergency responses to accidents at nuclear plants.

IDNS agrees that specific financial qualifications should be made part of an application for, or transfer of, an operating license. We also agree with the petitioner's contention that satisfactory monetary provisions for pl ant decommissioning, Price Anderson insurance, and disposal of radioactive waste must be assured. IPPs should have no less culpability than a regulated utility licensee wishing to operate a nuclear power plant. Therefore, adequate financial backing must be assured.

In summary, IDNS agrees that regulations are needed to ensure that IPPs have sufficient financial resources to conduct normal business, support industry financial commitments concerning waste disposal and decommissioning, and ensure assets are available to support cleanup of an accident.

W'l.'....:~PlL-1,........~-.

Th.omas W.

Director TW0:rkw FEB 12 199\~. _.

Acknowledged by card .............................

GUL r)RY COMMISSION

\ S... t V CE SECTIO~

OFFICf F THE- SECRETARY OF THE COMMISSION Document Statistics Postmark Date - 4/30/71J

+-

Copies Received_..,___ _ _ __

Add'I Copies Reproduced _.3 _ _ __

Specia 1stnbut1on i<IDS PDR L

DOCKET NUMBER Pi:"TITION RULE PR S0-5L/

Department of Energy ( 55 F£ cY1 /3?)

Washington , DC 20585 00GKCED April 27 , 1990 USNRC

'90 MY -2 P6 :42 OFFIC'" Of SECRF fARY DOCK£TING & SFiiVICF:

BRANC~

U.S . Nuclear Regulatory Commission c/o Secretary of the Commission Washington, D.C. 20555

Dear Sir:

On March 12, 1990, the Nuclear Regulatory Conrnission (NRC) published for public comment a notice of receipt of a petition for rulemaking, "Public Citizen; Receipt of Petition for Rulemaking," dated November 22, 1989. The Department of Energy disagrees with the petitioner that additional rules are necessary specifically for licensing independent power producers (IPPs), or for specific criteria for financial qualifications for IPPs, and recommends denial of the petition.

Current NRC rules are sufficient to recognize an entity other than an electric utility as a licensee for a nuclear powerplant.

In addition, Part 50 contains language that will allow the Commission to obtain information on the financial integrity of the IPP to assure itself that the IPP is qualified to build, operate, and provide for other financial obligations in connection with the plant for the life of the license.

As an example, 10 CFR Part 50 contains specific requirements with respect to procedures by which the licensee is to meet its funding obligations for decommissioning and for assuring the Commission that it can obtain funds necessary to cover estimated operation costs for the period of the license . In addition, Part 50 allows the Commission to request" . . . any other information considered necessary by the Commission to enable it to determine the applicant ' s financial qualifications."

ACKl'\OW\edged b~ card ........................*********

CLEAR REGULATORY COMMtSSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRET.ARV OF THE COMMISSION DoctnentSlatiatics Po m rt< Date _ _ _ _ _ _ __

~~-~--'------

NJtJ' I . ir.ec:t 3 Specrrt' J?tOS,------

POI(,

l-esa1.- _'_ __

2 Further, we see no basis to assume that the financial capabilities of an IPP require special treatment. Public Citizen states that an IPP " * . . may not have a steady supply of customers" and, therefore, not be able to meet its financial obligations. We believe, however, that an IPP would have a long-term contract with a buyer for most or all of the output of the plant prior to construction or acquisition of control via license transfer. This contract and its sanctity would be the basis for financial investment in the project and the foundation for establishing the financial qualifications of the applicant.

Sincerely, JC/~~~

Wil l i am H. Y~g 0 Assistant Secretary for Nuclear Energy

DOCKET NUMBER PETITION RULE PAM 6tJ-5 f (Ss?;e;}Cf/3 7)

[7 NUCLEAR REGULATORY COMMISSION 10 CFR Part 50

[Docket No. PRM-50-54]

PUBLIC CITIZEN; RECEIPT OF PETITION FOR RULEMAK ING AGENCY : Nuclear Regulatory Commission.

ACTION : Petftfon for rulemaking; notice of receipt.

SUMMARY

The Commiss i on i s publ i shing for publ i c commen t a notice of receipt of a petition for ru lemaking dated November 22, 1989, which was filed with the Commission by Public Citizen. The petition was docketed by the Commission on December 19, 1989, and has been assigned Docket No. PRM-50-54. The petitioner requests that the Commission promulgate rules governing the licensing of i ndependent power producers (IPPs) to construct or operate co1T111ercial nuclear power reactors. The petitioner also requests that these rules include specific criteria for financial qualifications for an IPP seeking a construction permit or an operating license for a co1T111ercial nuclear power reactor.

DATES : Submit comments by (60 days after date of publication in the Federal Register). Comments received after this date will be considered if it is practical to do so, but the Commissi on is able to assure consideration only for comments received on or before this date.

ADDRESSES: All persons who desire to submit written conments concerning the petition for rulemaking should send their conrnents to the Secretary of the Colllllission, U.S. Nuclear Regulatory Conrn1ssion, Washington, DC 20555, Attention: Docketing and Service Branch.

Deliver coments to the One White Flint North Building, 11555 Rockville Pike, Rockville, Maryland between 7:30 a.m. and 4:15 p.m., Federal workdays.

For a copy of the petition, write the Regulatory Publications Branch, Division of Freedom of Information and Publications Services, Office of Administration, U.S. Nuclear Regulatory Conrnission, Washington, DC 20555.

The petition and copies of c011111ents received may be inspected and copied for a fee at the NRC Public Document Room, 2120 L Street NW. {Lower Level),

Washington, DC.

FOR FURTHER INFORMATION CONTACT: Michael T. Lesar, Chief, Rules Review Section, Regulatory Publications Branch, Division of Freedom of Infonnation and Publications Services, Office of Administration, U.S. Nuclear Regulatory Colllllission, Washington, DC 20555, Telephone: 301-492-7758 or Toll Free:

800-368-5642.

SUPPLEMENTARY INFORMATION:

I. Petitioner Public Citizen is a non-profit research and advocacy group founded in 1971 to address a broad range of consumer and environmental issues.

II. Licensing of Independent Power Producers {IPPs)

The petitioner believes that there is a growing movement towards non-utility IPPs owning, constructing and/or operating nuclear reactors. The petitioner cites as an example, the Quadrex Corporation of California, an engineering firm, that the petitioner states is considering leasing the uncompleted Bellefonte nuclear power plant from the Tennessee Valley Authority.

The petitioner asserts that other engineering firms have expressed an interest in constructing and operating nuclear power plants as IPPs. Further, the petitioner states that " *** there are no NRC regulations specifically addressing the licensing of IPPs or the transfer of licenses to IPPs. There is, therefore, a need for the NRC to expressly address the licensing of IPPs in its regulations.

This includes both the application for a new construction permit or operating license as well as for the acquisition of an existing license from another license."

The petitioner states that all licensees of conmercial nuclear power plants are presently regulated utilities. The petitioner believes that NRC regulations for financial qualification of licensees for the construction and operation of these facilities assume that local, state or Federal regulatory bodies will ensure that nuclear licensees have sufficient funds to safely operate their facilities.

The petitioner states that 11

• • • [rJegulated utilities have defined and generally fixed markets for their electricity and usually are assured a set return on the amount of investment in plants which is included in their ratebase. However, IPPs must compete openly in the wholesale marketplace and

may not have a steady supply of customers. Consequently, while their rates may be set by the Federal Energy Regulatory Comission (FERC), if IPPs fail to sell all the electricity, they may not make a profit. Therefore, the long-tenn financial stability of an IPP is less certain than that of a regulated utility, and may go out of business more easily. 11 The petitioner asserts that 11

• • • [t]his potentially precarious financial position may adversely affect the accrual of deconvnissioning funds, the promptness of necessary maintenance and repairs, the payment of waste fees to the U.S. Department of Energy (DOE), and the ability to pay funds in the event of an accident at any connnercial nuclear plant as specified under the Price-Anderson Act.

III. Criteria for Financial Qualifications The petitioner believes that specific financial qualifications should be made part of an IPP application for a license, the findings that the NRC must make before granting a license, and any licensing hearing or other proceeding, including a transfer of license proceeding.

The petitioner believes the IPP's should be required to:

(1) "[e]stablish a procedure to ensure that sufficient funds will be available for payment to the Nuclear Waste fund established by the Nuclear Waste Policy Act (NWPA). The NWPA currently requires licensees of conmercial nuclear power plants to charge their customers one mil (0.1 cents) per kilowatt-hour of electricity produced by those plants and to place the money into a fund managed by the Department of Energy (DOE) for the disposal of

.rad1oactive waste. Additionally, the U.S. Court of Appeals for the District of Columbia {Consolidated Edison Co. of New York. Inc. v United States Department of Energy, 870F.2d 694, March 17, 1989) recently ruled that the amount to be collected for the fund must account for electricity lost in transmission or consumed on site. 11 Some acceptable procedures suggested by the petitioner that may be developed for payment to the Nuclear Waste Fund

" *** include an insurance, surety bond, or pre-payment into the fund at the time of each refueling for the amount of electricity expected to be generated.n (2) "[e]stablish a mechanism to assure that the money which the Price-Anderson Act requires licensees to pay in the event of an accident at any conmercial nuclear plant *** would be available when needed. 11 The petitioner asserts that this could be done by requiring either pre-payment into an external fund or by an insurance or surety bond method. The petitioner believes that 11

• • • (g]iven the utilities' status as regulated monopolies, state and Federal agencies can work to help ensure that utilities are able to raise the necessary funds through other regulated operations if called upon to do so.

The financial status of IPPs, however, is likely to be more tenuous, and added precautions should be taken to ensure their ability to meet the requirements of the Price-Anderson Act."

(3) provide pre-payment " *** into an external fund for the cost of decomissioning the reactor, or demonstrate the absolute assurance by a financial institution that sufficient funds will be available for decomissioning. Current licensees are allowed to demonstrate financial

assurance by these two methods as well as by the establishment of an external trust into which the licensee makes annual payments during the life of the license."

The petitioner states that 11

• • • [t]he reason for limiting IPPs to pre-payment and insurance or surety bond methods is that there is a greater risk that any IPP may go out of business before the license is scheduled to be tenninated.

Accordingly, these methods best guarantee that there will be sufficient funds for decommissioning the plant."

Dated at Rockville, Maryland, this br: day of ~~ , 1990.

Samuel J. Chilk, Secretary of the Contnission.

T~QNSM)TTED FROM 202 467 5546

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Dear Mr. Murley:

P@lic Cititen be~eby pati~ion1 tbe u.s. N~clear ae9~lat0r1 Commiaaion (NJ\C) under section 2.802 to promu1;ate rule* oovernin; the l!cenain9 of 1.ndependent power J rocbic:er1 t:tPPa) to colistruct or operate 1

coffllT'*rc1a1 nuclear power reactor,_

Thia petition conaista of twc partai fira~, a request that the lf~C promulgate rules concerning tte licenain9 of tPPa in general, and aeccnd, a request that any rula1: include ,pacific criteria for  :

financial qualifications tor an n~P aeek1ng a ccnatruetion pe-rrnit or an opera:inc; license fo:t a c:ommetctal rn.aclear power reactor.

ta;; Ji ,Tbe 11scn1Sa; 0C.XEP1 ~n q1aeia1 Since all 11cenaeaa of coMerctal ~ucl*a: power plants *re presentlf re9u1ated utilitiea, HRC regulation* Ce~ financial qualification of licen1ees tor th* ccn1truction *nd operation of these facilities aa,uma ihat looal, state or feder*l riac;ulatory bodies will ena~r* th*t nuclear licen**** hAYt *~f!ioient funds to safely ope~ate their fac1liti***

Now, however, there ie a 9rowin9 moveman~ towards non*uti1ity independent power producers (IP~*> ownihg, constructin; and/or operating nuclear reactor.a. For example, the Q1.iadrex Corporation of California, an en9in1erin9 firm, ia oonslderin; leasin9 the uncompleted Bellefont* plant from the Te~n*~see Valley Authority. Similarly, aoma other nuclear engineering firin1, mo1t notablJ we,tin;houie, have e~pre,aed an interest in oonstr~ctin9 and op*ratin9 nuclear planta **

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ae9ulated utilities have d9finee1 and 9enerally fixed markets tor their electricity and ua~ally a:e assure~ A eet return on the amourit of

• inveatment in pllnts which is inelud~d in their ratebase. However, lPPs must compete openly in the wholes.ale mai-k,t9lace and may not have a ,teady s~pply of custo~&rs. -:~nsequently, While their rates way be 11' P*nnqlvaP\la Ave, SI' C W~ahfflpot1, DC 30,03 C (102' so.~989

U.S. NUCLEAR REGULATORY COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARY OF THE COMMISSION Document Statistics mark Date - - -------

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-J Dea:- Mr- Murleyt P@lio Cititen hereby 9eti~icn1 the u.s. Nuclear Re;~latory Commission (Nl\C) under Sectlon 2.802 to promu191te rule* 9ovornin; the li'cenaing of independent: power t*r0d~cer1 {%tP1) to construct or operate commereia1 nuclear p0wer reactor$.

This petition eonaista of twc partai firat# a request that the lmC ~xcmulgate ru.lea concerning tr.e lictnain; ct %Pia tn general, and aeccnd, a requ*st that any rula11 includ.e 1pecific c>:iteri* for  :

financial qualifications for an XtP aeektnq a ccnstruetion permit or an opera:ing: license for a ceimmarctal ratclear powei- raaotor.

I.Art;. xi .Tbe 11s1n1~ns ot,XPPa ~n ,uomra1 Sine* all licen*ees of oomr.ierc1a1 nucl*a~ power plants *re presently re;ulated utilities, NRC ~e;ulation* ~~t financial qualification of licensee, tor the c~nstr\lction *nd ope:at1on Qf theae faciliti** ae,ume that looal, atmte o. federal ria;ulatory bodies w111 ensure th*t nuclear lic*n***a hAYO *~ftioient funds to aafely ope%ete their facilities.

Now, however/ there ia a 9~0win9 moveman~ tOWatda nonwuti1ity independent power prc~ucera (Xiis) owning, construotin9 aod/or operating nuclear reactor*. ror example, the Qu.acuex Corporation of California, an engin1arin9 firm,. is considering le*siflg;*the uncomplet.,cl Bellefonte plant trom the TeAne3see Val1ey Authoritr;*.stmilarly, ao~e other nuel*ar engineering firit11, most notablr Westinghouse, have expresaed an interest 1n oonatr~ctin9 .and oparating nuc1ear plant***

J'PPa. -

Regulated utilities have ~~ti~ed and 9enerally fixed markets fQr their electricity and us~ally are assured l s,t return on the amourit of*

invaatment in pllnts whi~h is includ&d in their ratebase. However, lPPs must compete openly in the ~holes~l* mark*t~lace and may not have

, a steady S\lPPlY ot cu1to:nars. -:.onsequently, While their rat.es rray be JU P,iwylvanfa Ave. SI' C W:aahutgk>II. DC ao:J(),1 C (J02' 54~-499fJ

U.S. NUCLEAR REGULAT~V COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETAR\'

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• • t by the r*d*ral E~er;y Re9\\1atory cowaaion (2'~),

ae11 all the electricity they produce o~ it their plants fail to if !PP* fail to prcduc~ enough electricity, they ~*Y not make a protit. nerefore, ~he lon;~term fina.neial stability ot an !fP ia l**a certiin thao that of a ra;ulated utility, and it may 90 cut of*b~ainese more aa1ily.

Thit poten~iolly preca~ioua financi*l po*ition may adv*r*ely aftect the accrual ot decol'IU!li1aicning tu.ncla, the prcmptnesa ot neoeaear~ maintenanQe and repaii'a, the p&ym4nt of w&ste feea to the o.s. Department of BnEU:"9y (lXlS), and th* ll>ility to p~y f~nd.S in the

-*~ent of an accident at any commeio1a1 nuclear plant as *i:,ecified under the i~ice-AndersoQ Act.

Ci:rre~tly, there are no NRC re;ulationa apecificall~ addreaain~

the lican*ing ot lPfa er tbe tra"sfer ot 1icenaas to lPP1. there 11 thereto~* a need for the NRC to eX))rea11v ~des.re** the licen11ng cf lPPa in ite r*gula~£ons. Thia incl~d*a ~oth the a.pp1iaation fc~ a ne~

construotion permit or operating license aa well a* for the acqu1sit1on of an exiating lioen*e fro~ another 11cenaee.

Jher*fore, under the ~roviaion*ot 10 CiR 2-802, Public Cit1t*n bereDY petitions the Nucl*a~ a.;ulatory Commi*aion to uunediately promulgate rules to eatabliah specitLo regulations ;overnin; tbe

• applieaticns of non*utilit~ independent power prod:\icera for oonstruotion permita and operatin~ licenaea.

4t !ea u,. s;,;!fig c;:it*~£0, -'D* f$n10i.it1 suol.i{Ls:Ation

$eeond1 Public Ci~i*en also pttitiona the ~c to ~*qt.lire an affirmative ehowing of financial qijalification by an lPP seeking a constn1ction permit, a~ oper&tin9 liceaae o~

• tr~~*ftr ot licen*e, Additionally, the apecitic fina.ncial quiliticationa ehould ~* made part of the tfP'a applicatio.n tor* l1cen1e, th* findings that the NkC muat

~ake befor* grantil'lg a licenae, and *ni licensing hearing or othe~

p~oceeding, incl~ding a tranefer of licenae proceeain9. These financial qualifi~atioM should includ.a, b~t ara not limited to, requirin9 the %PP to1 a) Establish a proeedue to e.nau~e that sufficient funds will be available for payment ~o th* Nucl*ar Waste Fund **t.abliahed b~ the Nuclear Waste Policy Act (NWi'A). The NWPA cu~rently requires licenaeea of commercial nuclear power plat1ts to charge their custorn.e., one m1l (0.1 cents) par kilowatt-hour of elact~icity produ~d by those plante and to plaee the money into a f\llld n~aged by the OiOt fot th* diapoaal of rad.ioa0tive waste. AdditionallYt tht u.s. Court o~ Appeals :o~ the Diat.:d.et t>f Columbi* cconso~i'11tt'1.!,;;!iS.QD cg,. ,,of lieM l.Qrk<< Xnc ,.:t, 110,ted St.ates Dept, ot...lner;y. a101*.2d 69 , Mtu:,ch 1,, 19S9) recantly ruled that the amount to be ccllect~d tor the tund ~ust 1ecount tor electricity lo$t in transmission or con*umed on site. Jince an %PP cannot guarantee that it can sell all, or a.n~, or the electricity its plant produces, specific procedure& !or IPPs must be devel0ped.

• Ac0*1table proeadurea .may~include an tnsur~n;e c= surety ~ond or pre-payment into the fund at the time ot each-~efualing for the amount of electricity expected to b* 9eneratad.

b) matal>li*h a mechanism to aaaut.'* that th* mon,y which the Pric*~Anderson Act requires licensees to p&y in the tvent ot an accid&nt at any oomtneroial nuclou plMt (i.e. up to $63 million) wculd be available when ne.-ded. Qiven utllitiea' at&t\lS ** regulated

~onopoliea, atat* and federal a9encies ca~ work t.o help ensure that utilitiea are al)le to ~aise the neo****Z1' funds throu9h other re;ulat*d operation* it oalled upon to do Bo. ~he tinanoia.l etatu1 of IPPt, however, ia lik*lY to bt mora tenuous, and 1c:ld.ed1>r*c*uti~ns should be taken to onaure their abil~ty to me*t,the ~equ1~-.nta of the Pr1c*-

And*rson Act. Thia aho~1d be done by requir!nq *ither pre-payment into

- an extarna.l fund or by an insura.nce or ew-:ety bond. methc:id.

c) Pre-pay into an external fund the coat ct dee~iaaioning the reactcr, or derncnatrate the abaolute aeau~anoe by a financial institution that tufficitnt funda will be available for decommi11£cning. Current lioena~s* are allowed to demonatrate

!inaneial assurance by these two methods aa w*ll aa ~Y the e1tabli1hment ot an external tru£t into which the licen*** ~akes annual

.payments during the lite of the licen*** The reaaon to~ limiting lPP1 to pre-payment and in1urance or surety bond methods ie that there it &

greattr risk that any lfP may 90 out ot b~sinea* before the license i1 schedu~ed to be termin&tod. Aoc~rding1y, theae two ffiethcdt best guara~tee that there will be eufticient fu.nQa for deeommi1aionin9 tht plant.

In aum, to avoid tha problems mtntionad above which may result from the licensing of IPPs to oon1tr~ct or op*¥at* eommeroial nuel*ar power plants, Public Citizen r*q\t*1t1 that the NN: p:0m~l9ate rag~lationa to add~*** the *~ove and to include in eucb re;ulat£ona aJ:>41Qific or1t*ria for tinanoia1 qu*11~icationa.

Sinoert1y, dL,t;,L.__

Daniel Bo~1on.

Nuclear Bconomica Analyst Public Citi~*n'e Critical Maas

&ner9y P.roject

RANSMITfED FROM ZOZ 40( ~~~o

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.8u)'ISn Up cCon.smt* wmoh CCrilfeol Abt cHtcllth ~ an,up t:iJJu,cdon Orwp November 22, 1989 contact, Paniel Bgraon 202*!46-49~6 Wedneadaf, 10:00 a.m. ~en Boeaon9

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- WASHINGTON, D.c. - ln a legal petition tor i:U1em&kin9 delivered today to the u.s. Nucl*ar b;ulatczy Co:nm.f.1sion (Nae), tw:,lic Citizen ot independent powe~ producer* (Jiia) to eo~struct and/or operate commerc~al nuclear power plants. The m01t i:nmediate effect of these propoaed~rules would lik*lY ~e ot t.ha Calitornia*baaed Q~adrax Corporation which ia expe~t*d to ~repose to 1eaae from the Tennessee Vall*~ Authority (TVA) the uncomp)&ted hll*fonte nucle*r power p1a.nt e1n sc0tt1boro, Alabama.

Add!tionally, f\ll)lic Cit1z*n'a pttition call* on th* mu: to

• require an atfimative ahowing of financial ct\,\ali~icatton by an %JP eeekin9 a oonstniotton pemit, an operating lioenae, o~ a trat1sfer of 1icen**** Such requirements might include establishing prooedure* to

• • • ~re that 1utti0i nt tunes are available for nuolear wa1te fee payments, deoommieaioning ooat1, and payments in the event of an accident at any commercial nucl~*~ power pl*nt, Onlike nucl*a~ utilitiea whi~~ have vi~ual1y ;ua~anteed marketa to~ their power, lPFa would not ~a assured* protit on their investment. Nuclear IPPs mi;ht *lso be less financially stable than JU Pfi\1'11)'IY11nla AW. 1B C Wi:u!IJn,fWI. DC 2am ,0 [JCJIJ 54MIN

tecau.1ated utilities and may go out of t>usin*es more easily.

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~It a nucle*r IPP oan't pi-c>duoe enou9h power or sell enou;h of the power it produces;' it m.ay_ not l>* a>Jl.e to pay fo:r tll* neotesary ma.intenance and repair of itt plant,* stated Daniel Bo~*?n,

• nuclea~

economioa analyst with Publio citiaen. *unless the NRC oo~** up with some apteial rules tor IPt,, the 1afe ope:ration of nuclear >>lants ~un

~Y lPPs could be oompromised.q Under the terms ot the expectad Quad::ex proposal, TVA would tran,ter the pl~t's licen** to Quad.re.a, which wo~ld then oompl*te the plut and operate it. Ot priu.ry concern :L* the paor finanoial.

-*ti*n9th of Quad~ex, a relatively sm~ll company with a.nnual net

~*venu,s cf oniy about $50 million. Sy CO=Pari1on, compl*ting h1lefonta ha1 been estimated to coat up to $2 billion, and ahould the plant be retired early, decol't\Dliaaioning =o*t* could *xce*d $1 billion.

• It 1eem1 inconca£vab1t that the Nae could allow a financial li9ht-w,1;nt like Quadrex ~o ocmpl,t* ae11et~nte if it m1y not even have tht reao~~c*s to operat* the plant 1afely,* charge Ken Bosaon;,

director of Pul>lic .Citi~en'a Critical Mass lne;-gy troject. *Yet,

-c~~rent Nl\C licensing regulation* **Y nQt be enough to ~revent thia."

A ccpy of the petition 1& attaohtd, f f f I Public Citizen it a non*prof1t reaeareh aftd adYocacy group founded in 19?1 ~1 Ralph Nade~ t0 add.real a broad range ot cone~mer and environ.mantal L*aue1. Th* Critical Ma.a* bargy Project is the energy policy arm ot Publie Citiien.

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