NL-23-0014, Southern Nuclear Operating Co Submittal of Report on Status of Decommissioning Funding

Southern Nuclear Operating Co Submittal of Report on Status of Decommissioning Funding

ML23088A171
Person / Time
Site:	Hatch, Vogtle, Farley
Issue date:	03/29/2023
From:	Brown R Southern Nuclear Operating Co
To:	Office of Nuclear Reactor Regulation, Document Control Desk
References
NL-23-0014
Download: ML23088A171 (1)

Text

Regulatory Affairs 3535 Colonnade Parkway Birmingham, AL 35243 205 992 5000 tel 205 992 7601 fax March 29, 2023 Docket Nos.: 50-348 50-321 50-424 52-025 NL-23-0014 50-364 50-366 50-425 52-026 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D. C. 20555-0001 Joseph M. Farley Nuclear Plant Units 1 and 2 Edwin I. Hatch Nuclear Plant Units 1 and 2 Vogtle Electric Generating Plant Units 1 and 2 Vogtle Electric Generating Plant Units 3 and 4 Report on Status of Decommissioning Funding Ladies and Gentlemen:

Pursuant to 10 CFR 50.75(f)(1), Southern Nuclear Operating Company (SNC) Southern Nuclear Operating Company (SNC), on behalf of itself and Alabama Power Company, owner of Joseph M. Farley Nuclear Plant (Farley), and Georgia Power Company (GPC), Oglethorpe Power Corporation (OPC), Municipal Electric Authority of Georgia (MEAG) and the City of Dalton (Dalton Utilities), co-owners of Edwin I. Hatch Nuclear Plant (Hatch) and Vogtle Electric Generating Plant (Vogtle), submits this report on the status of decommissioning funding.

In accordance with 10 CFR 50.75(e)(1)(ii), owners of the SNC nuclear plants provide financial assurance by establishing external sinking funds in the form of trusts in which the total amount of funds will be sufficient to pay decommissioning costs at the time permanent termination of operations is expected.

As substantiated by the enclosed reports, SNC certifies that the bulk of funds necessary for the safe decommissioning of the referenced reactors will be set aside and will be sufficient to pay decommissioning costs at the time permanent termination of operations is expected.

This letter contains no NRC commitments. If you have any questions, please contact Ryan Joyce at 205.992.6468.

Respectfully submitted, R. Keith Brown Regulatory Affairs Director efb/cmg

SNC Report on Status of Decommissioning Funding NL-23-0014 Page 2

Enclosures:

1. Farley Decommissioning Financial Assurance Report

2. Hatch Decommissioning Financial Assurance Report

3. Vogtle 1 and 2 Decommissioning Financial Assurance Report

4. Vogtle 3 and 4 Decommissioning Financial Assurance Report cc: Regional Administrator - Region ll NRR Project Manager - Farley, Hatch, and Vogtle 1 & 2 VPO Project Manager - Vogtle 3 & 4 Senior Resident Inspector - Farley, Hatch, Vogtle 1 & 2, Vogtle 3-4 SNC Record RType: PP1.001

Joseph M. Farley Nuclear Plant Units 1 and 2 Edwin I. Hatch Nuclear Plant Units 1 and 2 Vogtle Electric Generating Plant Units 1 and 2 Vogtle Electric Generating Plant Units 3 and 4 Report on Status of Decommissioning Funding Enclosure 1 Farley Decommissioning Financial Assurance Report

NL-23-0014 Enclosure 1 Farley Decommissioning Financial Assurance Report Alabama Power Company Ownership Percentage - 100%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $551,654,000 $551,654,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $569,506,402 $555,749,283 of December 31, 2022 The amounts scheduled to be collected $464,149 $402,004 annually over the remaining life of the plant from years 2023 to 2037 (Unit 1) and to 2041 (Unit 2)

The amount of trust funds projected to be $1,529,342,000 $1,924,720,000 accumulated at license termination The amount of trust funds projected to be $1,067,607,000 $1,273,141,000 needed to meet the NRC minimum Surplus funds available for $461,735,000 $651,579,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. The Alabama Public Service Commission Order in Docket U-3295 has established a 2.5% real rate of return with a cost escalation of 4.5%

and earnings growth of 7%. No material changes have been made to the trust agreements or methods of providing assurance.

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Joseph M. Farley Nuclear Plant Units 1 and 2 Edwin I. Hatch Nuclear Plant Units 1 and 2 Vogtle Electric Generating Plant Units 1 and 2 Report on Status of Decommissioning Funding Enclosure 2 Hatch Decommissioning Financial Assurance Report

NL-23-0014 Enclosure 2 Hatch Decommissioning Financial Assurance Report Georgia Power Company Ownership Percentage - 50.1%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $338,858,000 $338,858,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $319,654,000 $294,111,000 of December 31, 2022 The amounts scheduled to be collected None None annually over the remaining life of the plant from years 2023 to 2034 (Unit 1) and to 2038 (Unit 2)

The amount of trust funds projected to be $534,022,000 $591,735,000 accumulated at license termination The amount of trust funds projected to be $470,892,000 $524,662,000 needed to meet the NRC minimum Surplus funds available for $63,130,000 $67,073,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Based on site-specific decommissioning cost studies, Georgia Power assumes a cost escalation of 2.78% for Hatch Unit 1 and 2.77% for Hatch Unit 2. Based on a 2% real rate of return, Georgia Power assumes an earnings growth of 4.78% and 4.77%

for Hatch Unit 1 and Unit 2, respectively. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 2 Hatch Decommissioning Financial Assurance Report Oglethorpe Power Corporation Ownership Percentage - 30%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $202,909,000 $202,909,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $186,156,225 $146,351,765 of December 31, 2022 The amounts scheduled to be collected None None annually over the remaining life of the plant from years 2023 to 2034 (Unit 1) and to 2038 (Unit 2)

The amount of trust funds projected to be $325,851,209 $308,500,158 accumulated at license termination The amount of trust funds projected to be $281,839,490 $314,217,688 needed to meet the NRC minimum Deficit/Surplus funds available for $44,011,719 <5,717,530>

decommissioning each Unit Surplus funds available for $38,294,189 decommissioning the Hatch station

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Oglethorpe assumes a cost escalation of 2.776% for Hatch Unit 1 and 2.771% for Hatch Unit 2. Based on a 2% real rate of return, Oglethorpe assumes an earnings growth of 4.776% and 4.771% for Hatch Unit 1 and Unit 2, respectively. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 2 Hatch Decommissioning Financial Assurance Report Municipal Electric Authority of Georgia Ownership Percentage - 17.7%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $119,717,000 $119,717,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $143,314,000 $142,792,000 of December 31, 2022 The amounts scheduled to be collected 1,202,000 524,000 annually over the remaining life of the plant from years 2023 to 2034 (Unit 1) and to 2038 (Unit 2)

The amount of trust funds projected to be $246,037,000 $276,096,000 accumulated at license termination The amount of trust funds projected to be $161,007,000 $177,721,000 needed to meet the NRC minimum Surplus funds available for $85,030,000 $98,375,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. MEAG assumes a cost escalation of 2.5% and a rate of earnings of 4.22% resulting in a real rate of return of 1.72%. MEAG also subtracts investment fees from the amount of funds projected to be accumulated at license termination. Annual contributions will be prorated in the final year with $801,000 deposited for Unit 1 in year 2034 and $262,000 deposited for Unit 2 in year 2038. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 2 Hatch Decommissioning Financial Assurance Report Dalton Utilities Ownership Percentage - 2.2%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $14,880,000 $14,880,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $12,796,824 $13,212,283 of December 31, 2022 The amounts scheduled to be collected $500,000 in 2023 $500,000 in 2023 over the remaining life of the plant $250,000 in 2024 $250,000 in 2024 The amount of trust funds projected to be $24,243,000 $30,375,000 accumulated at license termination The amount of trust funds projected to be $21,216,000 $23,878,000 needed to meet the NRC minimum Surplus funds available for $3,027,000 $6,497,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Dalton assumes a cost escalation of 3.0% and a rate of earnings of 5.00% resulting in a real rate of return of 2.00%.

No material changes have been made to the trust agreements or methods of providing assurance. However, the amount of funds accumulated as of December 31, 2022 is down approximately $6.9M for Unit 1 and $6.1M for Unit 2 from the last biennial report. In 2022, SNC identified the decline in funds, and Dalton confirmed that funds had been withdrawn from an internal account that Dalton never intended to serve as part of the 10 CFR 50.75 funding. This internal account was originally reported as an internal sinking fund in the 1999 biennial report. When questioned by the NRC Staff in 1999, Dalton responded that this internal account was a contingency fund, was not meant to demonstrate compliance with 50.75, and would not be included in future reports. Despite their intent, Dalton continued to report the internal account to SNC, and SNC included the funds from the internal account in the biennial reports. Time and personnel turnover has made it hard to reconstruct how this happened, but Dalton believes it was just an administrative oversight. On October 7, 2022, SNC and staff from NRC/NMSS/REFS held a virtual meeting discuss this issue and its impact on this decommissioning funding status report for Hatch Units 1 and 2. As shown in the table above, the funds from the internal account were not needed to demonstrate sufficient financial assurance for decommissioning.

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Joseph M. Farley Nuclear Plant Units 1 and 2 Edwin I. Hatch Nuclear Plant Units 1 and 2 Vogtle Electric Generating Plant Units 1 and 2 Report on Status of Decommissioning Funding Enclosure 3 Vogtle Units 1 and 2 Decommissioning Financial Assurance Report

NL-23-0014 Enclosure 3 Vogtle 1-2 Decommissioning Financial Assurance Report Georgia Power Company Ownership Percentage - 45.7%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $265,176,000 $265,176,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $159,415,000 $182,889,000 of December 31, 2022 The amounts scheduled to be collected $805,000 None annually over the remaining life of the plant from years 2023 to 2047 (Unit 1) and to 2049 (Unit 2)

The amount of trust funds projected to be $515,392,000 $604,121,000 accumulated at license termination The amount of trust funds projected to be $516,173,000 $544,423,000 needed to meet the NRC minimum Deficit/Surplus funds available for <$781,000> $59,698,000 decommissioning each Unit Surplus funds available for $58,917,000 decommissioning the Vogtle 1-2 station

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Based on site-specific decommissioning cost studies, Georgia Power assumes a cost escalation of 2.70% for Vogtle Unit 1 and Unit 2. Based on a 2% real rate of return, Georgia Power assumes an earnings growth of 4.70%. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 3 Vogtle 1-2 Decommissioning Financial Assurance Report Oglethorpe Power Corporation Ownership Percentage - 30%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $174,076,000 $174,076,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $108,602,652 $98,375,539 of December 31, 2022 The amounts scheduled to be collected None None annually over the remaining life of the plant from years 2023 to 2047 (Unit 1) and to 2049 (Unit 2)

The amount of trust funds projected to be $342,134,106 340,238,544 accumulated at license termination The amount of trust funds projected to be $338,596,782 $357,670,730 needed to meet the NRC minimum Deficit/Surplus funds available for $3,537,324 <$17,432,186>

decommissioning each Unit Deficit of funds available for <13,894,862>

decommissioning the Vogtle 1-2 station

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Based on site-specific decommissioning cost studies, Oglethorpe assumes a cost escalation of 2.697% for Unit 1 and 2.703% for Unit 2.

Based on a 2% real rate of return, Oglethorpe assumes an earnings growth of 4.697% and 4.703% for Unit and Unit 2 respectively. No material changes have been made to the trust agreements or methods of providing assurance.

The Oglethorpe trust fund balances had recovered by February 28, 2023. At that time, the deficit had been cured and a surplus of funds available for the Vogtle 1-2 station in the amount of $24,214,871, as shown below.

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning estimate per 10 $174,076,000 $174,076,000 CFR 50.75(c)

The amount of trust funds accumulated as of $115,532,362 $104,652,678 February 28, 2023 The amounts scheduled to be collected annually over None None the remaining life of the plant from years 2023 to 2047 (Unit 1) and to 2049 (Unit 2)

The amount of trust funds projected to be $361,243,560 359,238,823 accumulated at license termination The amount of trust funds projected to be needed to $338,596,782 $357,670,730 meet the NRC minimum Deficit/Surplus funds available for decommissioning $22,646,778 $1,568,093 each Unit Surplus of funds available for decommissioning the $24,214,871 Vogtle 1-2 station Page E3 - 2

NL-23-0014 Enclosure 3 Vogtle 1-2 Decommissioning Financial Assurance Report Municipal Electric Authority of Georgia Ownership Percentage - 22.7%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $131,718,000 $131,718,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $143,295,000 $137,929,000 of December 31, 2022 The amounts scheduled to be collected $678,000 1,156,000 annually over the remaining life of the plant from years 2023 to 2047 (Unit 1) and to 2049 (Unit 2)

The amount of trust funds projected to be $401,496,000 $444,574,000 accumulated at license termination The amount of trust funds projected to be $244,198,000 $256,561,000 needed to meet the NRC minimum Surplus funds available for $157,298,000 $188,013,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. MEAG assumes a cost escalation of 2.5% and a rate of earnings of 4.22% resulting in a real rate of return of 1.72%. MEAG also subtracts investment fees from the amount of funds projected to be accumulated at license termination. Annual contributions will be prorated in the final year with $57,000 deposited for Unit 1 in year 2047 and $193,000 deposited for Unit 2 in year 2049. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 3 Vogtle 1-2 Decommissioning Financial Assurance Report Dalton Utilities Ownership Percentage - 1.6%

10 CFR 50.75(f)(1) Requirements Unit 1 Unit 2 The NRC minimum decommissioning $9,285,000 $9,285,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $7,414,151 $6,391,238 of December 31, 2022 The amounts scheduled to be collected $500,000 in 2023 $500,000 in 2023 over the remaining life of the plant $250,000 in 2024 $250,000 in 2024

$250,000 in 2025 $250,000 in 2025 The amount of trust funds projected to be $28,218,000 $28,791,000 accumulated at license termination The amount of trust funds projected to be $19,441,000 $20,625,000 needed to meet the NRC minimum Surplus funds available for $8,777,000 $8,166,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Dalton assumes a cost escalation of 3.0% and a rate of earnings of 5.00% resulting in a real rate of return of 2.00%.

No material changes have been made to the trust agreements or methods of providing assurance. However, the amount of funds accumulated as of December 31, 2022 is down approximately $3.2M for Unit 1 and $3.6M for Unit 2 from the last biennial report. In 2022, SNC identified the decline in funds, and Dalton confirmed that funds had been withdrawn from an internal account that Dalton never intended to serve as part of the 10 CFR 50.75 funding. This internal account was originally reported as an internal sinking fund in the 1999 biennial report. When questioned by the NRC Staff in 1999, Dalton responded that this internal account was a contingency fund, was not meant to demonstrate compliance with 50.75, and would not be included in future reports. Despite their intent, Dalton continued to report the internal account to SNC, and SNC included the funds from the internal account in the biennial reports.

Time and personnel turnover has made it hard to reconstruct how this happened, but Dalton believes it was just an administrative oversight. On October 7, 2022, SNC and staff from NRC/NMSS/REFS held a virtual meeting discuss this issue and its impact on this decommissioning funding status report for Vogtle Units 1 and 2. As shown in the table above, the funds from the internal account were not needed to demonstrate sufficient financial assurance for decommissioning.

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Joseph M. Farley Nuclear Plant Units 1 and 2 Edwin I. Hatch Nuclear Plant Units 1 and 2 Vogtle Electric Generating Plant Units 1 and 2 Report on Status of Decommissioning Funding Enclosure 4 Vogtle Units 3 and 4 Decommissioning Financial Assurance Report

NL-23-0014 Enclosure 4 Vogtle 3-4 Decommissioning Financial Assurance Report Georgia Power Company Ownership Percentage - 45.7%

10 CFR 50.75(f)(1) Requirements Unit 3 Unit 4 The NRC minimum decommissioning $265,176,000 $265,176,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $6,939,098 $0 of December 31, 2022 The amounts scheduled to be collected $6,939,098 $7,143,932 annually over the life of the plant The amount of trust funds projected to be $833,967,000 $860,945,000 accumulated at license termination.

The amount of trust funds projected to be $784,544,000 $809,350,000 needed to meet the NRC minimum Surplus funds available for 49,423,000 $51,595,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Georgia Power assumes a cost escalation of 2.75% for Unit 3 and 2.76% for Unit 4 with a 2% real rate of return for after-tax earnings growth. For Unit 3, reference the November 15, 2021 Order Adopting Stipulation filed in Georgia Public Service Commission Docket# 43838. For Unit 4, GPCs annual contribution is estimated because the Georgia PSC has not issued an order. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 4 Vogtle 3-4 Decommissioning Financial Assurance Report Oglethorpe Power Corporation Ownership Percentage - 30%

10 CFR 50.75(f)(1) Requirements Unit 3 Unit 4 The NRC minimum decommissioning $174,076,000 $174,076,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $2,317,284 $0 of December 31, 2022 The amounts scheduled to be collected $4,778,438 $5,208,625 annually over the life of the plant The amount of trust funds projected to be $541,842,000 $602,009,000 accumulated at license termination The amount of trust funds projected to be $515,846,000 $532,378,000 needed to meet the NRC minimum Surplus funds available for $25,996,000 $69,631,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. Oglethorpe Power assumes a cost escalation of 2.753% for Unit 3 and 2.764% for Unit 4 and a 2% real rate of return on growth of the funds. Annual contributions will be prorated at the beginning and end of the plant life as appropriate based on actual start/end dates. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 4 Vogtle 3-4 Decommissioning Financial Assurance Report Municipal Electric Authority of Georgia Ownership Percentage - 22.7%

10 CFR 50.75(f)(1) Requirements Unit 3 Unit 4 The NRC minimum decommissioning $131,718,000 $131,718,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $0 $0 of December 31, 2022 The amounts scheduled to be collected $4,910,000 $5,376,000 annually over the remaining life of the plant The amount of trust funds projected to be $482,687,000 $528,710,000 accumulated at license termination The amount of trust funds projected to be $353,672,000 $362,513,000 needed to meet the NRC minimum Surplus funds available for $129,015,000 $166,197,000 decommissioning

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. MEAG assumes a cost escalation of 2.5% and a rate of earnings of 4.22%. MEAG also subtracts investment fees from the amount of funds projected to be accumulated at license termination. Annual contributions will be prorated in the first and final year as appropriate based on actual start/end dates. No material changes have been made to the trust agreements or methods of providing assurance.

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NL-23-0014 Enclosure 4 Vogtle 3-4 Decommissioning Financial Assurance Report Dalton Utilities Ownership Percentage - 1.6%

10 CFR 50.75(f)(1) Requirements Unit 3 Unit 4 The NRC minimum decommissioning $9,285,000 $9,285,000 estimate per 10 CFR 50.75(c)

The amount of trust funds accumulated as $175,000 $0 of December 31, 2022 The amounts scheduled to be collected $300,000 $300,000 over the life of the plant The amount of trust funds projected to be $35,249,000 $34,219,000 accumulated at license termination The amount of trust funds projected to be $27,515,000 $28,397,000 needed to meet the NRC minimum Surplus funds available for $7,734,000 $5,822,000 decommissioning.

• The NRC minimum decommissioning estimate is based on NUREG-1307, Rev. 19, for the burial factor, the 4th quarter 2022 BLS ECI South Region index for labor, and the Sept. 2022 indices for energy. On January 23, 2023, the Dalton Utilities Board of Directors authorized an annual contribution of $300,000 for Vogtle Unit 3 beginning in 2023 and for Unit 4 beginning by the end of the year in which fuel is first loaded into the Unit 4 reactor, if practicable. Dalton assumes a cost escalation of 2.753% for Unit 3 and 2.764% for Unit 4 and a real rate of return of 2.00%. No material changes have been made to the trust agreements or methods of providing assurance.

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