ML24082A097
| ML24082A097 | |
| Person / Time | |
|---|---|
| Site: | Nuclear Energy Institute |
| Issue date: | 03/21/2024 |
| From: | Uhle J Nuclear Energy Institute |
| To: | Carrie Safford NRC/SECY/RAS |
| References | |
| NRC-2022-0046, 89FR12759 00005 | |
| Download: ML24082A097 (1) | |
Text
Dr. Jennifer Uhle Vice President Phone: 202.247.5717 Email: jlu@nei.org March 21, 2024 Carrie M. Safford Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 ATTN: Rulemaking and Adjudications Staff Submitted via Regulations.Gov
Subject:
Industry Comments on Fiscal Year 2024 Proposed Fee Rule (NRC Docket ID NRC-2022-0046)
Project Number: 689
Dear Ms. Safford:
On behalf of the Nuclear Energy Institutes (NEI)1 members, we provide the following comments for the U.S. Nuclear Regulatory Commission (NRC) staffs consideration as it finalizes the fiscal year 2024 fee rule.
We appreciated the public webinar meeting held by the NRC staff on March 7 to discuss the FY2024 proposed fee rule and its underlying basis and assumptions. These meetings are always informative, and we request that they be continued.
Because a full-year appropriation had not yet been enacted at the time of proposed rule issuance, the proposed budget is based on the NRCs FY2024 Congressional Budget Justification (CBJ) (NUREG-1100, Volume 39). The proposed fee rule reflects a total budget authority of $1006.3 million, an increase of $79.1 million or 8.5% over FY2023. The FY2024 budget request proposes the use of $27.1 million in carryover to offset the Nuclear Reactor Safety budget, resulting in a gross budget authority of $979.2 million, which is an increase of $52 million from FY2023. After accounting for excluded activities and net billing adjustments, the NRC must recover approximately $823.2 million in fees in FY2024; an increase of
$33 million over FY2023. Of this amount, the NRC estimates that $205.5 million will be recovered through 1 The Nuclear Energy Institute (NEI) is the organization responsible for establishing unified industry policy on matters affecting the nuclear energy industry, including the regulatory aspects of generic operational and technical issues. NEI's members include entities licensed to operate commercial nuclear power plants in the United States, nuclear plant designers, major architect/engineering firms, fuel cycle facilities, nuclear materials licensees, and other organizations and entities involved in the nuclear energy industry.
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NUCLEAR 1201 F Street NW
- Suite 1100 ENERGY Washington, DC 20004 INSTITUTE nei.org POWERING OUR CLEAN ENERGY FUTURE
Ms. Carrie Safford March 21, 2024 Page 2 Nuclear Energy Institute 10 CFR Part 170 service fees. The remaining $620.2 million would be recovered through the Part 171 annual fees in FY2024. This is an increase of $24.6 million when compared to FY2023.
On March 9, 2024, the President signed into law H.R. 4366, the Consolidated Appropriations Act, 2024, which provides FY2024 funding for the Nuclear Regulatory Commission. This bill directs significant changes to the NRC FY2024 proposed budget that are not reflected in the proposed fee rule. While we have attempted to reflect the more significant changes in our comments, the overall impact of changes on the proposed fee rule is not known currently.
Use of Fee-Based Carryover Funds In our March 24, 2022, comments on the FY2022 proposed fee rule, NEI urged the NRC to use its available discretionary authority to apply fee-based carryover funds for the purpose of reducing licensee fees. In response to our comments, the FY2024 CBJ, upon which the proposed fee rule is based, included the use of $27.1 million in carryover to offset the Nuclear Reactor Safety budget. Consequently, the proposed annual fee for the operating power reactor fee class remains effectively unchanged from FY2023. This is a welcome outcome for operating power reactor licensees.
The recently passed Congressional Appropriations Act 2024 (CAA) directs NRC to utilize an additional
$50.9 million in carryover. The CAA directs that $16 million of carryover be utilized for the University Nuclear Leadership Program (UNLP). With no further direction from Congress on the utilization of remaining carryover funds, we expect that they will be used to further offset the FY2024 budgets for Operating Power Reactors, Non-Power Production or Utilization Facilities (NPUFs), and, in particular, Fuel Cycle Facilities and Spent Fuel Storage/Reactor Decommissioning since the fees are proposed to increase from FY2023 levels by approximately 22% and 26%, respectively.
UNLP Should be Excluded from Fee Base The FY2024 proposed budget does not include funding for the University Nuclear Leadership Program (UNLP). However, the Consolidated Appropriations Act 2024 included $16 million for UNLP and directed the use of fee-based carryover funds for this purpose. This is contrary to the Nuclear Energy Innovation and Modernization Act (NEIMA) of 2018, where UNLP is one of the activities excluded from recovery using fee-based funding. The FY2024 payment, combined with similar payments in FY2023, FY2022 and FY2021, totals $64 million in payments by licensees that should have been excluded from the fee base.
We are encouraged by the NRCs inclusion of UNLP in the CBJ for FY2025. By doing so, we anticipate that NRC will comply with the NEIMA restriction on the use of fee-based funds for the UNLP.
Licensee Fees Should Not Subsidize Other Federal Agencies The FY2024 budget includes approximately $6 million to subsidize rent for the Food and Drug Administration (FDA) and the National Institutes of Health (NIH). In its October 12, 2021, letter to
Ms. Carrie Safford March 21, 2024 Page 3 Nuclear Energy Institute Congress on NEIMA, NRC identified that over the course of this lease the nuclear industry will pay approximately $48 million to subsidize rent for the Food and Drug Administration (FDA) and the National Institutes of Health (NIH) in the 3WFN building. These payments do nothing to support the agencys mission and should not be funded through fees collected from NRC licensees and, ultimately, electricity rate payers. We encourage the NRC to continue its discussions with Congress to remove these payments from the fee base.
Corporate Support Budget We appreciate the NRC efforts to manage and reduce Corporate Support costs. However, these efforts do not appear to be effective. The Corporate Support budget for FY2024 is 30.2% of total budget authority compared to the FY2024 NEIMA limit of 29%. In FY2025 the NEIMA limit on Corporate Support budget decreases to 28%. However, the NRCs proposed budget for FY2025 has a Corporate Support budget that increases to 31.9% of total budget authority. We encourage NRC to double its efforts to reduce Corporate Support costs.
Budget Trend Operating Plants Approximately 83% of the fee class budget for FY2024 is from the power reactor fee class.2 Over the past five years the Part 170 fee-for-service collections have decreased by 24%, meaning that the NRCs fee-for-service workload has decreased by roughly 34%3. Yet, over this same period, the budget for operating reactors has increased. Consequently, a greater percentage of the operating budget is required to be recovered through annual fees. As shown in the Figure below, the percentage of the operating plant budget that is derived from annual fees (currently at 76.4%) continues to increase; up from 68% in FY2019. This growing disparity between fee-for-service collections and overhead, combined with the increasing levels of carryover, point to a need for the NRC to reevaluate its budget and fee collection model.
2 Without the allocation of $27.1 million of carryover funding, the value would be higher.
3 Hourly rate in FY2024 of $321/hr compared to hourly rate in FY2019 of $278/hr.
Ms. Carrie Safford March 21, 2024 Page 4 Nuclear Energy Institute Research and Test Reactors The FY2024 proposed fee rule represents a 1.5% increase in the annual fee for the three paying licensees in the fleet. Notably, we understand that in FY2025, the number of fee-paying facilities will drop from three to two. Because of this significant change (representing a 33% reduction of the fee-paying licensee base),
we are concerned about the downstream effects this could place on the two remaining licensees, resulting in a disproportionate financial impact and burden. This undesirable outcome has been observed with prior year fee rules in several other business lines, including NPUFs, when the size of the fleet is significantly downsized, yet the overall business line is not commensurately reduced.
The NRC staff highlighted this fact in the February 22, 2024, Commission briefing on the Research and Test Reactor (RTR) Regulatory Program. The staff stated that they were currently pursuing mitigating solutions for FY2025. We look forward to hearing more from the NRC staff on any solutions, and we are open to supporting further dialogue on this topic. As this FY2025 decrease in the number of facilities is known, we expect the NRC to reduce its resources commensurately. This is especially important considering their primary national mission of education, research, training, and outreach, as highlighted in the Atomic Energy Act, Section 104(c).
80.0 Percent of NRC's Operating Reactor Budget from Annual Fees 68.3 72.2 70.3
Ms. Carrie Safford March 21, 2024 Page 5 Nuclear Energy Institute Fuel Cycle Facilities As stated in a recent NEI letter4 to the NRC, continued unpredicted and significant 10 CFR Part 171 annual fee increases for the existing fuel cycle facility fleet are not sustainable at a time when the domestic industry is growing to support the increased global carbon-free electricity demand. Further, as acknowledged by the current Administration, a safe and secure domestic fuel supply chain is a matter of national security. Yet, the proposed FY2024 fee rule includes an approximate 22% fee increase for the eight fuel cycle facilities subject to the rule. This increase is compounded by the approximate 19% fee increase for these same facilities in FY2023 above FY2022 levels. To mitigate these impacts, NRC should, at minimum, apply available carryover funds to eliminate the proposed 22% fee increase above FY2023 levels.
In 2019, the NRC staff reduced the annual fees of the fuel cycle facility fleet to reflect less NRC oversight effort due to the lower risk profile of these facilities compared to that of operating commercial reactors.
However, in FY2023, the fuel facilities annual fee rose again by approximately 19% with the Category I annual fee was only $0.3M less than operating reactors. For FY2024, the NRC is proposing that Category I facilities pay $0.82M more than operating power plants. This is illogical and must be rectified.
Any significant reduction in collected billable hour work under 10 CFR Part 170 perturbates the total fee collection system supporting this small operating fleet, and results in a disproportionate negative economic impact which cannot be absorbed. Such annual fee increases cannot be passed on to fuel customers or suppliers under existing service contracts. Rather, the fuel cycle facilities must absorb and fund these costs from their respective current calendar year operating budgets. In some cases, funds must be diverted from program modifications or equipment replacement or upgrades.
Future Policy Adjustments for Micro-Reactors We recognize that there are no further policy changes proposed this year following last years addition of another minimum fee and variable rate for non-light water reactors under 10 CFR 171.15. NEI encourages the NRC to consider other changes to the fee structure for micro-reactors. Specifically, the overall licensing and ongoing oversight costs for micro-reactors need to be less than 1% of the total cost of manufacture and operations. If the policy in the current fee rule places undue economic burden on micro-reactors through annual fees that do not reflect lower oversight costs, due to their simplicity and very small radionuclide inventories, then the annual fees will challenge their economic viability. The current minimum fee, set equal to that of the NPUF fee class, is expected to be a significant percentage of annual operating costs for micro-reactors.5 Further, the distribution of NPUF fees for dozens of reactors among a fraction of payers (only three NPUF licensees are subject to annual fees) is not representative of commercial micro-reactor expectations to each pay their share of annual fees. The scaling of many tens or hundreds of 4 NEI letter dated December 1, 2023, from J. Schlueter, NEI to H. Osborne, CFO and J. Lubinski, NMSS (ML23335A175) 5 NEI paper, NRC Annual Fee Assessment for Non-Light Water Reactors, November 2020 (ML20328A173)
Ms. Carrie Safford March 21, 2024 Page 6 Nuclear Energy Institute micro-reactors up to 4500 MWth will continue to propagate the disproportionate impact and there may be a need for the policy to be revisited as early as next year.
Notification of Significant Changes in Advance of Final Rule Most licensees must estimate and budget their NRC fees well in advance of the proposed fee rule and upon issuance must adjust their operating budget to accommodate the changes. Given the significant changes that are likely to result from the Consolidated Appropriations Act of 2024, we strongly encourage the NRC to use any means available to notify licensees of any substantial changes made during the crafting of the final rule. This would provide licensees the additional time needed to realign their budgets.
Please contact me if you have any questions regarding these comments.
Sincerely, Jennifer Uhle Vice President c:
Ms. Jennifer Golder, NRC/CFO Mr. Anthony Rossi, NRC/OCFO i