ML23153A034
| ML23153A034 | |
| Person / Time | |
|---|---|
| Issue date: | 07/30/1987 |
| From: | NRC/SECY |
| To: | |
| References | |
| PRM-MISC NOTICE | |
| Download: ML23153A034 (1) | |
Text
DOCUMENT DATE:
TITLE:
CASE
REFERENCE:
KEYWORD:
ADAMS Template: SECY-067 07/30/1987 PRM-MISC NOTICE - - NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS - STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL PRM-MISC NOTICE RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete
COMMISSIONERS Wllllam E. Long Edwyna G. Anderson Matthew E. McLogan DOCKET NUMBER
~ !'-TION RULE PRM u ~-
- ~l ~ [ -i JAMES J. BLANCHARD, Governor PUBLIC SERVICE COMMISSION 6545 Mercantile Way P.O. Box 30221 Lansing, Michigan 48909 CrlAit... I~-.*.
DEPARTMENT OF COMMERCE DOUG ROSS, Director *a7 AUG 10 p 3 :20 Mr. Benard C. Rusche, Director Office of Civilian Radioactive Waste Management U.S. Department of Energy 1000 Independence Ave., S.W.
Washington, D.C.
20585
Dear Mr. Rusche:
July 30, 1987 Enclosed is a petition for rulemaking and a memo in support of that rulemaking for consideration by the Department of Energy.
It is filed on behalf of the National Association of Regulatory Utility Commissioners.
I will be pleased to respond to any questions you may have.
Enclosures bee:
NWD Subcommittee dwy G. Anderson Chairperson, NARUC Committee on Electricity Chairperson, Subcommittee on Nuclear Waste Disposal 10 AU" J_; - ~
u.s NUCLEAR REGULA TORY COMMI SSIO~
DOCKETlt--!G & c: ":.'iCE rFCTION O"
rr
- a-.-~*-;..RY 0
.~
Pm
- 7/=>
(-:,
I AJ' Spec
- r*b,,
UNITED STATES OF AMERICA DEPARTMENT OF ENERGY In the Matter of
)
)
10 C.F.R. Part 961
)
)
STANDARD CONTRACT FOR DISPOSAL)
OF SPENT NUCLEAR FUEL AND/OR
)
HIGH LEVEL RADIOACTIVE WASTE
)
________________ )
PETITION FOR RULEMAKING
- s7 AUG 10 P 3 :20 GFC ! ;__,_
, I
'~
uOCJ-;[i,t,,,
.[ '.'tf.>
tjf\,i:.,h ~
Pursuant to Sections 501 and 644 of the Department of Energy Organization Act, 42 u.s.c. Sections 7191, 7254 (1982),
the National Association of Regulatory Utility Commissioners (NARUC) hereby petitions the Secretary of the Department of Energy to amend 10 C.F.R. Section 961.5 to
\
establish by rule a methodology for determining the fees to be paid by the Department of Energy into the Nuclear Waste Fund for the disposal of high-level nuclear wastes.. from, atomic energy defense activities conducted by DOE's Office of Defense Programs (DHLW).
This amendment will ensure that fees paid for DHLW will be "equivalent to" the fees paid by Purchasers of waste disposal services pursuant to 10 C.F.R.
Section 961.11.
The proposed rule would also address other important issues relating to the disposal of DHLW.
The allocation of costs between civilian and defense waste generators to support the repository program is a multi-billion dollar issue of great concern and interest to NARUC and its membership.
The NARUC is a quasi-governmental nonprofit organiza-
,.. tion,.founded.--in, 19.89..... Within its membership; are... the.,~11 _,., :*,.
governmental bodies of the fifty states and the District of Columbia engaged.in the economic and safety regulation of carriers and utiliti~s.
The mission of the NARUC is to serve the public interest by seeking to improve the quality and effectiveness of public regulation in America.
More specifically, the NARUC is composed of the state officials charged with regulating the retail rates and services of electric utilities within their respective jurisdictions.
Th~se officials have the obligation under state law to assure the establishment and maintenance of electric utility service as may be required by the public convenience and necessity, and ensure that such service is provided at rates and conditions which are just, reasonable and nondiscriminatory for all consumers.
On April 30, 1985,.the.President notified the_Depart-ment of Energy (DOE) that there was no basis for requiring a defense waste-only repository and directed the Secretary of Energy to proceed with arrangements to dispose of DHLW in repositories planned for civilian spent nuclear fuel and high-level radioactive wastes.
Internal DOE negotiations*
were held to establish an "equitable cost-sharing method" between civilian and defense waste generators to support the repository program.
On December 2, 1986, DOE's Office of Civilian Radioactive Waste Management (OCRWM) published in the Federal Register a "Notice of Inquiry" (NOI} inviting written comments on OCRWM's "tentative approach to inter-
,,.. *~*,.. preting the requirement -under.the Nuclear,. Waste Policy ;Act..:.,.**-"--*-
to arrange for disposal of high-level radioactiye waste from atomic energy defense activities conducted by DOE's Office of Defense Prqgrams (DP)."
51 Fed. Reg. 43566 (1986).
The NOI's "preferred alternative," which focused exclusively on calculating the fee to be paid into the Nuclear Waste Fund, provides the basic framework for the fee calculation approach of Petitioners' proposed rule.
In addition to the fee calculation methodology, the proposed rule would also address key issues not covered by the NOI but of significance to the disposal of DHLW.
These include the timing of payments, interest charges, acceptance rates and delivery schedules.
NARUC proposes to delete 10 C.F.R. Section 961.5 and substitute the following provision:
Section 961.5 Federal agencies and.depart-ments (a)
Federal agencies or departments requir-ing DOE's disposal services for SNF and/or HLW shall pay into the Nuclear Waste Fund a fee equivalent to the fees paid by Purchasers of waste disposal services pursuant to Section 961.11.
(b)
The term "defense high-level waste" (DHLW) as used in this subsection means high-level nuclear wastes from atomic energy defense activities conducted by
.. _,.DOE.'_s, Office of Defense.Programs.
term "total DHLW" means all DHLW, whether in disposable or non-disposable form, i~ existence or to be generated by existing or firmly committed facilities.
wastes for which a formal determination has been made for long-term control other than by disposal in a geologic repository shall not be included.
Quantities of wastes for which formal disposal decisions have not been made shall be multiplied by the (non-zero) probability that such waste will be disposed of in a geologic repository.
(c)
Starting with the quarter beginning on October 1, 1987, DOE shall make quarter-ly payments into the Nuclear Waste Fund for the disposal of DHLW generated during that quarter.
Fees must be paid into the Nuclear Waste Fund not later than the close of business on the last business day of the month following the end of each three month period.
Such quarterly payment shall be equal to the total DHLW fee (as defined in Section 961.S(g)) multiplied by the DHLW gener-ated during that quarter (in numbers of canisters)_ divided by. the total DHLW (in.... _,. _____ -~ _
L numbers of canisters) (as defined in Section 961.S(b)).
(d)
For DHLW generated on or after April 7, _
1983 and before October 1, 1987, DOE shall make a payment to the Nuclear Waste Fund in an amount equal to the total DHLW fee (as defined in Section 961.S(g)) multiplied by the DHLW gener-ated on or after April 7, 1983 and before Oct~ber 1, 1987 (in numbers of canisters) divided by the total DHLW (in numbers of canisters), plus accrued interest.
The interest rate shall be equal to the rate of return achieved on Nuclear Waste Fund monies invested in Treasury securities during the period from April 7, 1983 to October 1, 1987.
Such payment by DOE shall be made at the same time as the first quarterly payment is made pursuant to Subparagraph (c) above.
(e)
For DHLW generated prior to April 7, 1983, DOE shall make a one-time fee payment by paying into the Nuclear Waste Fund an amount equal to the total DHLW fee multiplied by the DHLW generated
.prior.to,Apri.l 7, 1983 (in numbers oL--,.*t--,-"-:,,
-J,_
canisters) divided by the total DHLW (in numbers of canisters).
DOE shall, within two years of the promulgation of this subsection, select one of the following one-time fee payment options:
(1)
Option 1 -- DOE's financial obligation for DHLW shall be prorated evenly over 40 quarters and will consist of the fee plus interest on the out-standing fee balance.
The interest from April 7, 1983, to date of the first payment is to be calculated based upon the 13-week Treasury bill rate, as reported on the first such issuance following April 7, 1983, and compounded.
quarterly thereafter by the 13-week Treasury bill rates as reported on the first such issuance of each succeeding assigned three-month period.
Beginning with the first payment, interest is to be calculated on DOE's financial obliga-tion plus accrued interest, at the ten-year Treasury note rate in effect on the date of the first payment.
In no event shall the end of the 40 quarters extend beyond the first scheduled
, *.-,delivery..date as reflected in the DOE-approved delivery commitment sched-ule:
All payments shall be made concur-rently ~ith the assigned three-month period payments.
At any time prior to the end of the 40 quarters, DOE may, without penalty, make full or partial lump sum payment at any of the assigned three-month period payment dates.
Subsequent quarterly payments will be appropriately reduced to reflect the reduction in the remaining balance in the fee due and payable.
The remaining financial obligation, if any, will be subject to interest at the same ten-year Treasury note rate over the remainder of the ten year period.*
(2)
Option 2 -- DOE's financial obligation shall be paid in the form of a single payment anytime prior to the first delivery, and shall consist. of the fee plus interest on the outstanding fee balance.
Interest is to be calculated from April 7, 1983, to the date of the payment based upon the 13-week Treasury rate, as reported on the first such issuance following April 7, 1983, and compounded quarterly thereafter._by the 13-week Treasury bill rates as reported on the first such issuance of each succeeding assigned three-month period until payment.
(3)
Option 3 -- DOE's financial obligation shall be paid prior to two years after promulgation of this subsec-tion, in the form of a single payment and shall consist of all outstanding fees for DHLW generated prior to April 7, 1983.
Under this option, no interest shall be due for the period from April 7, 1983 to June 30, 1985.
Interest for the period from July 1, 1985 until the date of full payment on the outstanding fee balance is to be calculated based on the 13-week Treasury bill rates as reported on the first such issuance of each succeeding assigned three-month period.
(f)
In the event DOE fails to make a payment to the Nuclear Waste Fund when due, interest shall accrue at the rate established in Article VIII.C of the Standard contract until paid.
~)
The total DHLW fee shall equal 44.5% o£ the total Purchasers' fees (as defined in Section 961.S(h)).
(h)
As used in this subsection, the phrase "total Purchasers' fees" means the sum of the fees paid and to be paid by Purchasers as estimated in the most recent annual review pursuant to Section 302(a)(4) of the NWPA, including all one-time fees paid or to be paid pursu-ant to Article VIII.B.2 of the Standard Contract.
(i}
DOE shall review on an annual basis the assumptions and cost projections that support the allocation of costs estab-lished herein and, if any changes are deemed appropriate, propose changes to this allocation of costs by rulemaking.
The methodology to be applied in the annual review and adjustment of the total DHLW fee shall --
(1) allocate each cost element of the joint repository program according to the degree to which the cost element is dep~ndent upon the allocation factor, as follows:
(A)
Cost elements which are attributable solely to civilian waste or to DHLW_are identified as Separat Costs, and are allocated 100% to either civilian waste or DHLW, as appropriate; (B)
Cost elements which have no meaningful dependence on waste amounts and characteristics are identified as Fixed Costs, and are allocated 66.7% to civilian waste and 33.3% to DHLW; (C)
Cost elements which are fully dependent on waste characteristics and amounts are allocated on the basis of Piece Count or Areal Dispersion; and (D)
Cost elements which are partially dependent on waste character-istics and amounts are allocated at appropriate percentages among the Fixed Costs, Piece Count, and Areal Dispersion categories; and (2) use an appropriate overall allocation percentage derived from the above-stated principles in establishing the total DHLW fee as a fixed proportion of the total Purchasers' fees.
(j)
(1)
Cost elements identified in subjec-
~-tion.(m) as Areal Dispersion costs_
- r
,.__ \ >, *
' -*LI
are allocated to DHLW on the basis of the area required for DHLW di~posal at each repository -as a fraction of the total disposal area in each repository.
Such costs and fractions shall be calculated separately for each repository.
(2)
Cost elements identified in subsec-tion (n) as Piece Count costs are allocated to DHLW on the basis of the ratio of the total number of DHLW canisters at each repository to the total number of waste packages at each repository.
Such costs and waste package ratios shall be calculated separately for each repository.
(k)
The following cost elements are Separate Costs:
(1)
Repository Development and Engi-neering costs that are unique either to civilian waste or to DHLW; (2)
Canister Overpacking costs that are unique either to civilian waste or to DHLW; and (3)
Transportation costs that are unique either to civilian waste or to.DHLW.
(1)
The following cost elements are Fixed Costs:
( 1 )
( 2)
( 3 )
Repository Development and Engi-neering costs that are not unique either to civilian waste or to DHLW.
Engineering and Construction for --
( A)
Land;
( B)
Site;
( C) an appropriate percentage of Support and Utilities; and
( D)
Shaft and Ramp Development; Operations for (A)
Site; (B) an appropriate percentage of Support and Utilities; (C)
Shaft and Ramp Development; and (D)
Caretaker Phase; and (4)
Decommissioning.
(m)
The following cost elements are Areal Dispersion costs:
(1) an appropriate*percentage of support and Utilities;
-:* -,...-= -
(2)
Underground Development Operations (except for Boreholes and Waste Emplacement); and (3) *Backfill Phase.
(n)
The following cost elements are Piece Count costs:
(1)
Engineering and Construction for Waste Handling Building #1 at the First Repository; (2)
Operations at Waste Handling Building #1; (3) an appropriate percentage of Engineering and Construction for Support and Utilities; and (4)
Boreholes and Waste Emplacement.
(o)
The annual acceptance rate for DHLW (in metric tons) shall not exceed 13.33% of the acceptance rate for civilian waste (in metric tons), 400 metric tons per year, or 800 canisters per year, which-ever is least (in number of canisters).
(p)
(1)
At the first repository, DHLW shall not be accepted for geologic placement until five years after civilian waste shall have been accepted for geologic placement.
... --~.::
(2)
At the second repository, DHLW shall not be accepted for geologic placement until two years after civilian waste shall have been accepted for geologic placement.
(q)
In the event any other federal agency or department requires SNF or HLW disposal services from DOE, or if DOE requires such services for SNF or HLW other than DHLW, DOE shall establish a proposed fee equivalent to that paid by DOE (for DHLW) and by Purchasers.
Such fee shall be established by rulemaking.
The fee to be paid by DOE (for DHLW) and Pur-chasers shall thereafter be adjusted accordingly.
(r)
DOE shall not accept DHLW or SNF/HLW from any federal agency or department until all fees and interest, due and owing, established pursuant to this section have been paid.
(s)
DOE's annual report on the adequacy of fees shall take into account all pay-ments to be made by federal agencies or departments in determining whether an adjustment should be made to the fee paid by Purchasers.
A Memorandum in Support of Petition for Rulemaking is
- attached which sets forth the need for and provides.other pertinent information about the proposed amendment.
Dated:
July 30, 1987 Submitted by the Subcommittee on Nuclear Waste Disposal of the Committee on Electricity, Edwy G.
- rson, Subcommittee and Committee Chairs Commissioner, Michigan PSC Post Office Box 30221 Lansing, MI 48909 J
{!NITED STATES OF AMERICA -
DEPARTMENT OF ENERGY In the Matter of
)
)
10 C.F.R. Part 961
)
)
STANDARD CONTRACT FOR DISPOSAL
)
OF SPENT NUCLEAR FUEL AND/OR
)
HIGH LEVEL RADIOACTIVE WASTE
)
_________________ )
I.
INTRODUCTION MEMORANDUM IN SUPPORT OF PETITION FOR RULEMAKING On January 7, 1983, the President signed into law the Nuclear Waste Policy Act of 1982, Pub. L. No.97-425, 96 Stat. 2201 (codified at 42 u.s.c. Section 10101 et~
(1983)) (NWPA), to provide for the development of reposito-ries for the disposal of high-level radioactive waste (HLW) and spent nuclear fuel (SNF) and to establish *a program of research, development, and demonstration regarding the disposal of HLW and SNF.
Section 302 of the NWPA, 42 U.S.C.
Section 10222 (1983), authorizes the Secretary of the Department of Energy (DOE) "to enter into contracts with any person who generates or holds title to high-level radioac-tive waste, or spent nuclear fuel, of domestic origin for the acceptance of title, subsequent transportation, and disposal of such waste *or spent fuel.
Such contracts shall provide for payment to the Secretary of fees *.. suffi-cient to offset [certain described] expenditures Section 8(b) of the NWPA, 44 u.s.c. Section 10107(b)
(1983), directed the President to decide whether high-level nuclear waste from the nation's defense activities should be disposed of in the same geologic repositories as SNF/HLW from civilian power reactors.
On April 30, 19_85, the President notified DOE that there was no basis for requiring a defense waste-only repository and directed the Secretary of Energy to proceed with arrangements to dispose of defense wastes in the repositories being planned for civilian SNF/HLW.
This decision was consistent with DOE's recommen-dation to the President that there was no compelling reason for a defense waste-only repository and that the only significant advantage for either the defense-only or com-bined repository options was a "clear cost advantage" for the combined repository scenario. 1 DOE's June 1985 Mission Plan reflected the President's decision and stated that negotiations were underway within DOE to establish an "equitable cost-sharing method."
On December 2, 1986, the DOE's Office of Civilian Radioactive Waste Management (OCRWM) published in the Federal Register a "Notice of Inquiry" (NOI) setting forth as DOE's "preferred alternative" a cost-allocation method~l-ogy with three aspects cost elements, allocation bases, and fractions assigned to the allocation bases.
Repository program costs common to defense and civilian wastes were 1 Department of Energy, An Evaluation of Co1ID110rcial Repo§itory Capacity for the Disposal of Defense High-Level Wastes, DOE/DP-0020/1 (Jrme 1985).
2 -
divided into cost elements, and a fraction of each cost element was then*allocated to defense and civilian wastes.
Costs for functions attributable only to defense wastes were allocated solely to the defense sector; those attributable solely to civilian wastes were allocated solely to the civilian sector.
DOE selected three major cost elements:
development and evaluation, Repository 1 and 2 (subdivided as to engineering and construction, operations, decommis-sioning, and canister overpacking), and transportation.
The allocation bases which DOE used to split common costs between defense and civilian wastes were areal dispersion (the fraction of the disposal area used for defense wastes),
piece count (the ratio of the number of defense waste canisters to the total number of waste packages, including canisters, casks, and fuel assemblies) and share of canis-ters used in facility (which is a piece count variant used by DOE only for allocating costs specific to the waste handling buildings).
The NOI applied the areal dispersion allocation basis to development and evaluation, engineering, decommissioning, and some sub-elements of construction and operations.
The piece count method was applied to the remaining sub-elements of construction and operations.
The allocation of costs between civilian and defense nuclear wastes is a multibillion dollar issue of great concern to Petitioner.
Since the Nuclear Waste Fund operates on a full cost recovery-basis, any costs not recovered from the defense programs will _be.borne by the.
3 -
customers of utilities operating nuclear power plants.
The customers of electric utilities with nuclear power plants have been paying the costs of the nuclear waste program since 1983.
For each nuclear kilowatt-hour generated and sold after April 7, 1983, utilities pay 1 mill to a Nuclear Waste Fund created by the NWPA and administered by DOE.
For SNF generated before April 7, 1983 (and in-core burned fuel as of April 7, 1983), utilities are charged a "one-time fee" equivalent to an industry-wide average of 1 mill per kilowatt hour.
Unless paid in full by June 30, 1985, the "one-time fee" accumulates interest at Treasury bill rates.
These costs, as with all costs of operating utilities, are passed on to the ratepayers.
The NWPA requires that there be an allocation of the costs of developing, constructing, and operating the reposi-tories between civilian and defense wastes.
The NWPA also mandates that the federal government pay the costs resulting from the permanent disposal of high-level defense nuclear wastes and that the amounts paid for disposal of defense wastes be "equivalent to" the fees paid for civilian spent fuel.
Section 302(b)(4) of the NWPA, 42 u.s.c. Section 10222(B)(4) (1983). But, unlike the utilities, the DOE Defense Programs (DP) have yet to make a single payment to the Nuclear Waste Fund.
Petitioner believes that the "tentative approach" set forth in the NOI and favored by DOE was arbitrary in many respects and unreasonably understated the ~ees-which should 4 -
be paid for the disposal of defense wastes.
It also ignored key operational issues such as acceptance rates and delivery schedules for defense high-level waste (DHLW)._-
The approach also overstated the amount of civilian spent fuel likely to be generated and underestimateq the quantities of defense wastes, thereby yielding an inequitably low defense waste fee.
The effect of understating the defense fee would be to compel a civilian spent fuel fee which is higher than warranted.
DOE should, therefore, adopt a methodology which more fairly allocates the cost of the high-level radioactive waste program between defense and civilian wastes.
Such a proposal is set forth in the proposed Section 961.5, and explained in part III below.
II.
RULEMAKING PROCEEDING Section 961.5 of 10 C.F.R. provides:
Federal agencies or departments requiring DOE's disposal services for SNF and/or HLW will be accommodated by a
suitable interagency agreement reflecting, as appropriate, the terms and conditions set forth in the contract in Section 961.11;
- provided, however, that the fees to be paid by federal agencies will be equivalent to the fees that would be paid under the contract.
Currently the only federal agency or department requiring DOE's disposal services is DOE -- predominantly for defense programs high-level radioactive wastes (DHLW).
In effect, DOE.has committed to negotiate an "appropriate" fee with itself.
The procedure utilized by the DOE is of concern because of the OOE's conflict of interest in-this matter.
5 -
--- --=
The National Association of Regulatory
. Utility Commissioners (NARUC) so testified on May 5, 1986 before the U.S.
Senate Subcommittee on Energy* Research and Development of the Committee on Energy and Natural Resources.
The issue of defense waste payments was a major concern of our testimony, in which we alerted the Congress:
"The Defense Programs Office of the DOE has negotiated with the waste management office, in
- camera, to determine an equitable allocation payment formula for defense waste disposal.
The NARUC is concerned with the conflict of interest in two divisions within the DOE negotiating with each other on such an important public issue.
The NARUC is concerned interests of ratepayers may not be adequately protected in such~negotia-tions.
In fact, the DOE budget could benefit from an agreement that allows the disposal of defense wastes to be subsidized by ratepayers.
Following an agreement, the terms will be pub-lished in the Federal Register for comment; however, the agent to determine information to be released, and to receive and resolve all recom-mendations and critique is the Department itself.
The resolution process appears to the NARUC not to be very amenable to outside suggestion and gives no encouragement to thoughtful and 6 -
concerned parties.
We believe the Congress should exert significant attention to assuring that sufficient information to allow informed comment is released, and that the rights of all interested parties are protected throughout the resolution of this matter."
There is no indication in the NOI, issued 19 months later, of any of the discussion that ensued between these two offices.
The NARUC is denied an opportunity to protect ratepayers' interests after the NOI issuance because the arguments previously resolved are not publicly known.
The NARUC regretfully concludes that, through its silence, the DOE has deliberately acted to deny the public information.
III. COST ALLOCATION An equitable approach to the allocation of costs between the defense sector and the Purchaser is obtained by retaining the NOI cost element/allocation f*actor combina-tions for which the allocation factor is reasonably related to the cost element, while modifying the remaining combina-tions so that each cost element is rationally related to its allocation factor coefficient.
This approach is then applied to more reasonable projections of spent fuel and defense wastes than were used in the NOI.
The definition of DHLW set forth in proposed Section 961.S(b) includes all DP waste -- whether or not in dispos-able form -- which is in existence or is_to be generated by existing or firmly committed facilities.
The-definition_
7 -
excludes entirely only those wastes for which defipite decisions have been made for long-term control other than by disposal in a geologic repository.
Wastes for which long-term control decisions have not yet been made are included; the uncertainty is taken into account by multi-plying the quantities of these wastes by the probability that the determination will be made to dispose of them in a geologic repository.
These probability multipliers are to be greater than zero and less than one.
However, the definition of DHLW excludes projected wastes from projected facilities.
The annual process of fee adequacy review provides for annual revision of waste estimates and the inclusion of projected wastes from new facilities once they are firmly conunitted.
Given the long construction periods for such facilities, and the subsequent waste cooling periods prior to disposal, there is a sufficient disposal planning horizon to accommodate such wastes without at-tempting to lengthen the planning horizon by making these highly uncertain predictions.
In the Proposed Rule, the cost elements which have no meaningful dependence on waste amounts and characteristics are identified as Fixed Cost.
The Fixed Costs are essentially the same per reposito-ry, and are thus closely proportional to the number of repositories included in the program.
The reductions in these Fixed Cost categories are-the primary source of overall savings when a single repository_defense. program 8 -
and a two-repository civilian program are combined into a two-repository joint program.
Indeed, the decision to combine the repository programs constituted an implicit judgment that these costs savings were adequate compensa-tion for the increased complexity of operating a combined repository.
Therefore, it is essential that these Fixed Costs be allocated so that the savings from combined operations are equitably shared.
The savings from combined operations will be the elimination of one of the three repositories required for separate operations or approxi-mately one-third of the Fixed Costs.
These one-third savings are shared equitably in combined operation if each sector pays two-thirds of what it would have paid for these Fixed Costs in separate operations.
The resulting equita-ble allocation of Fixed Costs is, therefore, two-thirds and one-third of Fixed Costs assigned to the civilian and defense sectors respectively.
The cost elements which are allocated on the basis of piece count and areal dispersion are allocated on the basis of repository-specific data rather than on the unweighted average data used in the NOI.
The use of unweighted averages is inappropriate because the unweight~d averages applied to both repositories erroneously undercalculate the defense waste share.
The total of defense costs using the Proposed Rule allocation is $7.4 billion, compared to the
$3.4 billion estimated in the NOI.
The.principal source of 9 -
. -:* -_-= _
this difference is.the allocation of costs in the Fixed Costs category.
To assure equity, DOE DP payments to the Nuclear Waste Fund should be based on a percentage of civilian payments, i.e., the ratio of civilian waste fees to DHLW fees should equal the ratio of civilian waste costs to DHLW costs.
Specifically, at 30.8% of the total projected costs, the defense costs are 30.8/(1-.308) = 44.5% of civilian costs.
Thus, for the current relative amounts of civilian wastes and DHLW, total defense fees would be set at 44.5% of total civilian fees.
This percentage will be altered to reflect changes in the relative amounts of civilian waste and,DHLW.
However, the timing of fee payment in both cases is based on when the fission product wastes are generated.
Specifi-cally, the one-time defense payment for wastes generated prior to April 7, 1983 would be equal to the fraction of total defense wastes generated prior to that date multi-plied by the total defense fee, and the subsequent quarter-ly fee payments would be similarly prorated based on the actual quarterly rate of defense fission product waste generated.
Interest would be paid on both the one-time payment and the quarterly payments for the period from their due dates until paid into the Fund.
The allocation fraction would be reexamined on an annual-basis, together with the 1 mill/kwh civilian spent fuel fee, and adjusted as appropriate based upon revised cost estimates and changes in civilian and defense waste projections.
10 -
. - --* -=--=
- ..~ -
The possibility of future decisions that woulq desig-nate major additional amounts of existing defense wastes for' repository disposal is a circumstance tha-t is unique to defense waste because of the significant amounts of such waste for which no final decision has been made as to ultimate disposition.
Using the principles discussed above, the fees for disposal of such defense wastes subse-quently designated for repository disposal would be due based on when the wastes were generated, and not when the repository disposal decision was made.
However, it should be noted that to the extent that the total cost estimate proves to be accurate and the distinction between Fixed Costs and waste-dependent costs has b~en made correctly, the Fixed Costs have already been identified_ and appropri-ately assigned and committed.
The costs of the additional defense waste disposal would, therefore, be only the incremental costs of disposing of such wastes.
The civil-ian waste costs and fees would be totally unaffected by the additional defense waste.
The fact that it is possible to minimize or, at the limit, eliminate the impact on one sector of disposal decisions made in the other sector is a very strong argument in favor of the cost allocation process suggested above in which the Fixed Costs of the disposal program are accurately identified and equitably shared, and the remaining waste-dependent costs are, in effect, borne independently.
11 -
IV.
MECHANISM FOR PAYMENT OF DEFENSE WASTE FEES The proposed mechanism for payment of the defense waste fees has been_designed to parallel the payment mechanism for fees paid by utiliti*es. Utilities are required to make quarterly payments into the Nuclear Waste Fund, currently established at 1 mill per kilowatt-hour of net electricity generation.
Proposed Section 961.S(c) would require DOE similarly to make a quarterly payment based upon the rate at which DOE has generated DHLW in that quarter.
These payments would begin with the calendar quarter starting October 1, 1987, with the payment due by December 31, 1987.
The annual DOE review of fee adequacy would take into account all payments owed and projected by federal agencies and departments to the Nuclear Waste Fund.
The utilities have been making quarterly,payments into-the Nuclear Waste Fund for electricity generated and sold after April 7, 1983.
Since DOE did not begin making its equivalent payments at that time and has failed since to make any payment, a "catch-up" mechanism is needed.
Proposed Section 961.S(d) provides for a one-time matching payment by DOE based upon the amount of DHLW generated after April 7, 1983 and before October 1, 1987 (the pro-posed start of quarterly payments).
Such a matching payment by DOE would be made at the same time the first quarterly payment is made pursuant to Subsection 961.S(b).
The interest charged to DOE for*this, in effect, late payment. would, *be equal, to, the average return on-,-the 12 -
investmept of Nuclear Waste Fund monies since April 7, 1983.
Such interest payment would compensate the Nuclear Waste Fund for the earnings which it was unable to earn on the DHLW fees.
This interest component is needed to make the DHLW payments "equivalent" to those for civilian wastes.
Utilities were required to make a one-time fee payment to the Nuclear Waste Fund for spent fuel discharged, or in core, prior to April 7, 1983.
Article VIII.B of the Stan-dard Contract provides three payment options.
Utilities had the option of a one-time payment of such fee on or before June 30, 1985, without any interest obligation.
Proposed Section 961.5(e)(3) permits DOE to make a similar one-time payment based upon the amount of DHLW generated prior to April 7, 1983.
In addition, DOE -would pay inter-est on its equivalent one-time fee payment for the period between June 30, 1985 and the date of full payment, again at the rate of return experienced on investment of monies in the Nuclear Waste Fund during that period.
Alternative-ly, proposed Section 961.S(e)(l) and (2) allow DOE to elect to pay its equivalent one-time fee on terms equivalent to those of Option 1 or Option 2 in Article VIII.B of the Standard Contract, with the appropriate interest.
The proposed payment mechanism set forth in Petition-er's proposed Section 961.5 is as important as the cost allocation to ensure that the defense program pays its fair share' including compensating the Nuclear* Waste*rFund --for,,..,' L *.,,-,.-' -
.,,_, 'c,. -
13 -
interest earned on payments made by the utilities since April 7, 1983.
V.
ACCEPTANCE RATES AND DELIVERY SCHEDULES Subsections 961.S(o) and (p) incorporate the projected acceptance rates and delivery schedules set forth in DOE's Mission Plan Amendment, DOE/RW-0128 (1987).
Civilian waste is estimated to be accepted at the first repository begin-ning in 2003, and DHLW in 2008, hence the proposed rule's five-year differential.
The proposed rule draws its two-year differential for the second repository from DOE's projectiqn that civilian waste is to be accepted beginning in 2023, and DHLW in 2025.
The proposed rule also limits the annual a~ceptance rate for DHLW to whichever is least (in number of canisters):
13.33% of the acceptance rate for civilian waste (which is DOE's projected.-.annual ratio._
of DHLW (400 metric tons) to civilian waste (3000 metric tons)), 400 metric tons per year, or 800 canisters per year.
VI.
CONCLUSION Since 1983, the customers of utilities alone have been carrying the cost of the geologic repo~itory development, evaluation, site selection, site characterization and program management activities.
The NWPA requires DOE defense programs to pay a portion of the combined civilian-defense waste program costs in a manner equivalent to the fees paid by the utilities.
Petitioner supports a
,-, ** methodology fo~ cost-a-llocations *which has--as, its,,,framework-,.. -.,.-,,,*:,.,** *.~_-
14 -
the cost elements and allocation categories proposed by DOE in its NCI.
This methodology then combines each cost element with the allocation category to which it is _most rationally related, and utilizes the most reasonable and current data and cost projections available.
The mechanism for fees to be paid by DOE appropriately parallels the fee payment mechanism for the utilities.
The fees to be paid by the utilities and recovered from their ratepayers were determined by rulemaking after public comment.
No less formal a process would be appro-priate in establishing the fee to be paid by DOE.
Peti-tioner NARUC urges the adoption of the proposed rule.
Petitioner stands ready to work with DOE to refine the cost.
sharing allocation methodology and other important issues based on the most reasonable, -current data and_ assumptions available.
Dated:
July 30, 1987 Submitted by the Subcommittee on Nuclear Waste Disposal of the Committee on Electricity NATIONAL ASSOCIATION OF REGULATORY UTI COMMISSIONE son, Subcommittee Chairs Commissioner, Michigan PSC Post Office Box 30221 Lansing, MI 48909 15 -
QefQ-.E' ~ SEti~ OF TJtE= {J;)fltlttl.siJOAJ DOCKET NUMBER,...
M,' ~
.., rtto ~17h-E'S OF M1Ell.1CJJ Ml. a.m~,qe6ULhT7Jt4Y lJUJWVl,j,.eRM -~c-1/4, UL "10 L f J,t ~ f1t*-llf rf i /t*f;fio,.,I
'bOtteT II*----
1
- r !'..
~a. ::r,\ffo2 A PETlT70N FO (< ~UtE°M'914 Alt n-Vttitrot\f<<.
~
rcR 17 P2 :48
~ti!\-\ ~*"'-"'""' *A: f1'111,y. ~ fM>'"11~-hl,,i !/OAlu 'i"'"-' '-9,L.
JeJ;-f.,1"'-f tied. +o ~\lt~ &,,. i~tMAi.*o-a ~d ~1\vn*~' c.,,.._..._e'4ia'-,"
a.ff"'tn-<<\t_. 'bMflo~u~ Of 11( (.o..,,,.,1~1wt OWfl. a ~~ °" ~e&ttiatl~
.\t\t~ \il\fl w\.AU\,+ S"ffO" ~4 ope,rairt o,,.d fll~lfc. hU.oil1i ;,. wlt,-r.4 1M eo....,~idft GMI /,r cc.~ ~,LA,,ut Are *",A"ffll.
- oN,\ ~t
! ~"*c,.~.(l G'Om"~~c i,i se.~l frtX..Ud.~c,,..J at:ft/,it'i o~ O-*lsiot1 ~d ~\ OCCA~{o,t-to ~i/6.d fu1'h*t NA.t,*~s ;,. '-'h1~ 1\t ~:<<!l"1 G-4 ~ ~flo~ets w1, ;..,o\ttl. ~-#rlld i~ ittsolrtM+aJ oJI,,, ~
4'r/
-lM. CPt-\ a& ttie.g~~ or ~-d,1._cc_ fkot't<All~ *~ U,t~i,sial ~ct~~
J\,;,\, ~r4,<.e.\o stitl Co"',u\J,-o" ~ f 0, ~i\D~, a..d it-f ~,lL kt*sf.f/of "k ei,._.,1,11.ls te\\\\-~t,\el~twt I\U,ttl,u o,,.& Op>> -d ~ht,vm,rt of
~\~ ~<<uM+-le~ \WA~ \Mf---1,~,..t.-k.. $.,.ti c.~LMtJ.
~1/21\1°"~ ~w~J"~Y\S ~~
cit,*i(M lhtp wtff.ia1.._ Ev,WAH,, flAnnl~ a,,..~
'T~ ~°'"t ~1 i" OJt f.o, ftA, a.-4 fea.AA~ rt~;dtMoe w,1111'11 ~ t);"W#
~~" NllltAt ~
~
e---Cullh'M ~I\**~ ~e.
~~S-tS :;ptnt<<d: l.u.,,.se4 ~ oferdtd 1M RM~*f,, 11toitn1 tAlftntUM1"4-,,,,.S d.t~,tu ~°" ~ ~ \~kt{ i, ~L ~"1-hOe\S qf j?fi!!._~_~,-~ t~~i,~
0~ o.t ~-Cttioti ~~t. \.11)..i'-"', ~~iw.. ul\,., l, AWlll!t 1\\\\-ltnswl it'\ Ul~W1.1\si111 qrowd1~s ~
~lortf -ID ~ wi 'k. l.,~t<<<.1 de-1,6, f is.~ 9i~tAA ~
~~t f{ ~-.tiA C-"UM\'cA'tt111S
~ Q.ft Sfo.t\l~ ~i\J.le.,
J eNII\ "'~ oMo~,,\,,, ~
f"\,\ic.. ~,c.~CA\~, '"' ~ _ ~~ ()o,~ pct,d,'!, ".t,~ I
~\d i" ~f 1.N(li._ ~t..et~uwt o~ ~", ~\- 10\S-~ e~~~'~ V\YMl~
~Wt~ "'~ ~~,'s&l**.,.c~.., *\~ we.A. ~\o,o\M\t~ \.t,ol ~
,.,, jutl ~,-,, i
~~~ v\okct.~ ~,,~ \w:~ i~ M ~, ~ :~t.\4 tl,lft9-~.t *_!j-~
~w.*,"t\.iOt\ !" ~
-tMl\t.\~ lA~.. 9A~Ot\,
- -*-* **----- -* S.W
- \*'- -,~-GJ~1 ftro,- <.o.j.tni"4 win. w, ttt \t \kJ., -:r,..fu-lo Clili"-, !1.1:l"l'lfl 1115:l; ****
.;,;:Rd- --'
Dlfl> 4~v 11.,-r tWJwaA. Q_ )J,0,
. A..
r I
, \ -
I u. *-s. NUCLEAR r.*,&t*LA*:"(jRY COMMISSION DOCK::::*;*.
- -,1 :~;:;H Off, '
Postma*\*.J. !
- Copies "
Add'I (...,
.a.-
"(
J
.. ' \
I I
. t r
1
.. 9t,: Zd
. (
l Ll 83.:!
za.
f J....;.)._;
l ~--
I J,,
I',
I I.