NL-09-1042, Financial Assurance Requirements for Decommissioning Nuclear Power Reactors (10 CFR 50.75(f)(1) -Supplemental Information

Financial Assurance Requirements for Decommissioning Nuclear Power Reactors (10 CFR 50.75(f)(1) -Supplemental Information

ML091831270
Person / Time
Site:	Hatch
Issue date:	07/02/2009
From:	Ajluni M Southern Nuclear Operating Co
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
NL-09-1042
Download: ML091831270 (5)

Text

Southern Nuclear Operating Company, Inc Post Office Box 1295 Birmingham. Alahamd 35201-1295 Tel 2059925000 July 2,2009 SOUTHERN'\

COMPANY EII,.,.!:.'I If) Serve lour \'Vorld Docket Nos.: 50-321 NL-09-1042 50-366 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D. C. 20555-0001 Edwin I. Hatch Nuclear Plant Financial Assurance Requirements for Decommissioning Nuclear Power Reactors (10 CFR 50.75(f)(1) - Supplemental Information Ladies and Gentlemen:

Southern Nuclear Operating Company (SNC) letter NL-09-0431, dated March 30, 2009, provided the status of decommissioning funding for the Edwin I. Hatch Nuclear Plant (Hatch) on behalf of the licensed owners. Upon review, the NRC requested additional clarification regarding the information provided by Oglethorpe Power Corporation (OPC). Specifically, the NRC requested that additional justification be provided regarding the basis for the assumed real rate of return of 3.92% for the OPC decommissioning trust fund. The requested information is provided by the enclosed OPC letter dated June 25, 2009.

This letter contains no NRC commitments. If you have any questions, please advise.

Sincerely,

~fr~

M. J. Ajluni Manager, Nuclear Licensing IVIJAlTWS/phr

Enclosure:

Oglethorpe Power Corporation letter dated June 25, 2009

U. S. Nuclear Regulatory Commission NL-09-1042 Page 2 cc: Southern Nuclear Operating Company Mr. J. T. Gasser, Executive Vice President Mr. D. R. Madison, Vice President - Hatch Ms. P. M. Marino, Vice President - Engineering RTYPE: CHA02.004 U. S. Nuclear Regulatory Commission Mr. L. A. Reyes, Regional Administrator Ms. D. N. Wright, NRR Project Manager - Hatch Mr. J. A. Hickey, Senior Resident Inspector - Hatch Oglethorpe Power Corporation Ms. A. F. Appleby, Vice President, Treasurer

Edwin I. Hatch Nuclear Plant Enclosure Oglethorpe Power Corporation letter dated June 25, 2009

tt OglethorpePower Oglethorpe Powel Corporalion 7\ 00 East Exchange Place Tucker. GA 30084 5336 rhone 770-270 7600 fax 770-270-7872 An Electric Membership C(J(}!JllralfV(!

June 25, 2009 Terry W. Sides Sr. Licensing Engineer Southern Nuclear Operating Company 40 Inverness Center Parkway P.O. Box 1295 Birmingham, AL 35201

Dear Terry:

By letter dated February 26, 2009, Oglethorpe Power Corporation (OPC) provided certification of decommissioning funding for its ownership percentage of the Edwin I. Hatch Nuclear Plant (Hatch) in accordance with the requirements of 10 CFR 50.75(f)(1). SNC letter NL-09-0431, dated March 30, 2009, provided the required information to the NRC for the Hatch owner companies. Subsequently, the NRC requested that SNC provide justification for the real rate of return of 3.92% on the decommissioning trust fund assumed by OPC.

OPC has elected to use an external sinking fund in accordance with the provisions of 10 CFR 50.75(e)(1)(ii) as the method of providing financial assurance of decommissioning funding. The provisions of 10 CFR 50.75(e)(1)(ii) include the following:

A licensee that has collected funds based on the formulas in §50.75(c) of this section may take credit for collected earnings on the decommissioning funds using up to a 2 percent annual real rate of return up to the time of permanent termination of operations. A licensee may use a credit of greater than 2 percent if the licensee's rate-setting authority has specifically authorized a higher rate. ... This method may be used as the exclusive mechanism relieved upon for providing financial assurance for decommissioning in the following circumstances:

(A) Bya licensee that recovers, either directly or indirectly, the estimated total cost of decommissioning through rates established by "cost of service" or similar ratemaking regulations. Public utility districts, municipalities, rural electric cooperatives, and State and Federal agencies, including associations of any of the forgoing, that establish their own rates and are able to recover their cost of service allocable to decommissioning, are assumed to meet this condition.

In accordance with the provisions of 10 CFR 50.75(e)(1)(ii), the minutes from the OPC Nuclear Decommissioning Trust (NOT) Investment Committee meeting dated February 23, 2009, include the establishment of a return of 6.85 %, consistent with the weighted average of the arithmetic mean of the expected returns being used in Oglethorpe's Asset Liability Model (ALM). OPC

Terry W. Sides June 25, 2009 Page 2of2 applied an escalation rate of 2.93 % to the estimated cost of decommissioning based on information provided by TLG Services. The delta between these values provides the real rate of return of 3.92 % shown in the 2009 OPC Decommissioning Funding Certification. The NOT rate of return of 6.85 %, which results in the real rate of return of 3.92 %, was subsequently incorporated into the Long-Range Financial Forecast submitted to, and approved by, the OPC Board of Directors, as documented in the May 18, 2009, Board Resolution.

Please advise if you need additional information.

Sincerely,

~}-~

Anne F. Appleby Vice President, Treasurer cc: Elizabeth B. Higgins, Oglethorpe Power Corp, EVP, CFO