NRC-05-0021, Decommissioning Funding Status Report

Decommissioning Funding Status Report

ML050960310
Person / Time
Site:	Fermi
Issue date:	03/31/2005
From:	O'Connor W Detroit Edison, DTE Energy
To:	Document Control Desk, NRC/FSME
References
NRC-05-0021
Download: ML050960310 (7)

Text

Wdiliam T. O'Connor, Jr.

Vice President, Nuclear Generation Fermi 2 6400 North Dixie Hwy., Newport, Michigan 48166 Tel: 734.686.5201 Fax: 734.686.4172 Detroit Edison A DThEaergy Companyv

- IM 10 CFR 50.75(f)(1)

March 31, 2005 NRC-05-0021 U. S. Nuclear Regulatory Commission Attention: Document Control Desk Washington D C 20555-0001

References:

1) Enrico Fermi Atomic Power Plant, Unit No. I NRC Docket No. 50-16 NRC License No. DPR-9

Subject:

Decommissioning Funding Status Report for Fermi 1 This letter provides the report required by 10 CFR 50.75(f)(1) on the status of the Detroit Edison Company's decommissioning fund for Fermi 1.

Fermi 1 is a permanently shutdown experimental sodium cooled breeder reactor, which last operated in 1972. It is in the SAFSTOR status and its possession-only license expires in 2025. Decommissioning activities are being performed with the goal of removing the radioactive material and terminating the Fermi 1 license. The estimated cost of decommissioning was reviewed and updated based on progress through 2004.

The requested annual decommissioning fund information for Fermi 1,reported in 2004 dollars, is provided as an enclosure to this letter. The prepayment trust method is being used to fund these activities at Fermi 1. Fund performance and decommissioning expenditures will continue to be monitored as the project progresses. Available options to provide assurance to the NRC are surety, insurance, or other guarantee. A DTE Energy company guarantee has been chosen as the assurance method for Fermi I's shortfall with the expectation that Detroit Edison will expense the shortfall over the next few years. An updated financial test, to demonstrate the criteria for the parent company guarantee continues to be met, is an attachment to this letter.

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-f USNRC March 31, 2005 NRC-05-0021 Page 2 Should you have any questions or require additional information, please contact Ms. Lynne Goodman of my staff at (734) 586-1205.

Sincerely, K William T. O'Connor, Jr.

Vice President, Nuclear Generation WTO/DTB/ljd Enclosure (1)

Attachment (1) cc: T. Smith P. Lee (NRC Region IHo)

L.Shekter-Smith (State of Michigan)

Regional Administrator, Region Im NRC Resident Office

sl-y Fnclosure to

.01 NRC-05-0021 Page 1 ENCLOSURE FERMI 1 NRC DECOMMISSIONING FUNDING STATUS REPORT Enrico Fermi Atomic Power Plant, Unit 1 NRC Docket No. 50-16 NRC License No. DPR-9

Enclosure to NRC-05-0021 Page 2 NRC Decommissioning Funding Status Report Fermi 1 (Millions of Dollars)

1. The decommissioning cost estimate for Fermi 1 is based on a site-specific estimate adjusted by an engineering review. The estimated remaining decommissioning cost in 2004 dollars. $26

2. The amount accumulated at the end of 2004 for decommissioning costs. The Fund value as of December 31, 2004 has been reduced $19 by $1 million due to dollars expended in 2004 and not yet reimbursed.

3. Amount fund is above (or below) estimated remaining costs. $(7)

4. The assumptions used regarding escalation in decommissioning cost, rates of earnings on decommissioning fund, and rates of other factors used in funding projections.

Decommissioning costs are assumed to increase at a rate equal to the fund's earnings.

5. Any modifications to the current method of providing financial assurance occurring since the last submitted report. None

6. Any material changes to the trust agreement: None

Attacnent 1 of NRC-05-0021 De iUi tte Deloitte & Touche LLP Suite 900 600 Renaissance Center Detroit, MI 48243-1895 USA Tel: +1 313 396 3000 Fax: +1 313 396 3618 www.deloitte.com INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES The DTE Energy Company Detroit, Michigan We have performed the procedures included in the U.S. Nuclear Regulatory Commission ("NRC")

Regulatory Guide 1.159 Assuring the Availability of Funds for Decommissioning Nuclear Reactors, which were agreed to by DTE Energy Company ("DTE"), solely to assist the specified parties in evaluating DTE's compliance with the financial test option as of December 31, 2004, included in the accompanying letter dated March 24, 2005 from Mr. David Meador, Chief Financial Officer of DTE.

Management is responsible for DTE's compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

The procedures that we performed and related findings are as follows:

1. We compared the amounts in items 5 and 6 under the caption Alternative II in the letter referred to above to supporting analyses prepared by DTE personnel, after rounding to the nearest $1 million, and noted no differences.

2. Detail amounts on such analyses described in item I above were then compared to accounting records underlying the audited consolidated financial statements of DTE and its subsidiaries as of and for the year ended December 31, 2004, on which we have issued our report dated March 15, 2005, after rounding to the nearest $1 million, and we noted no differences.

We were not engaged to, and did not, perform an examination, the objective of which would be the expression of an opinion on the accompanyingletter dated March 24, 2005. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the information and use of the Board of Directors and management of DTE and the NRC and is not intended to be and should not be used by anyone other than these specified parties.

March 24, 2005 Member of Deloitte Touche Tohmatsu

Attachert 1 of NR-O5-0021 Page 2 of 3 LETTER FROM David E. Meador, CHIEF FINANCIAL OFFICER OF DTE Energy Company, CORPORATE PARENT of The Detroit Edison Company, INCLUDING COST ESTIMATES AND DATA FROM AUDITED FINANCIAL STATEMENTS U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, D.C. 20555-0001 I am the Chief Financial Officer of DTE Energy Company (DTE or firm), 2000 2nd Avenue, Detroit, Ml 48226-1279, a Michigan corporation. This letter is in support of this firm's use of the financial test to demonstrate financial assurance, as specified in 10 CFR Part 50.

DTE guarantees, through the parent company guarantee submitted to demonstrate compliance under 10 CFR Part 50, the decommissioning of the following facility owned by The Detroit Edison Company, a Michigan corporation and wholly-owned subsidiary of this firm. The current cost estimates for decommissioning, and the amounts being guaranteed, are shown for each facility:

Name of Location of Current Amount Being Facility_ Facility Cost Estimates Guaranteed Enrico Fermi 6400 N. Dixie Hwy $26,000,000 $9,000,000 Atomic Power Newport, MI 48166 Plant Unit I This firm is required to file a Form 1OK with the U.S. Securities and Exchange Commission for the latest fiscal year 2004.

This fiscal year of this firm ended on December 31. The figures for the following items marked with an asterisk are derived from this firm's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended December 31, 2004 FINANCIAL TEST: ALTERNATIVE 11

1. Decommissioning cost estimates or guaranteed amount for facility

[license number DPR 9] $9.000,000

2. Current bond rating of most recent unsecured issuance of this firm Rating Baa2 Name of rating service Moody's

3. Date of issuance of bond June 4 2004 1.159-58

aAttanrit 1 of NC05-0021 Page 3 of 3

4. Date of maturity of bond June 1 2007 5*. Tangible net worth** $3,468.000.000 6*. Total assets in the United States $21,282.000,000 Yes No

7. Is line 5 at least $10 million? X

8. Is line 5 at least 6 times line 1? X

9. Are at least 90 percent of firm's assets located in the United States? If not, complete line 10. X

10. Is line 6 at least 6 times line 1? X

11. Is the rating specified on line 2 "BBB" or better (if issued by Standard & Poor's) or "Baa2" or better (if issued by Moody's) X

• denotes figures derived from financial statements as adjusted. Total assets in the U. S. reflect adjustments for international investments. U.S. based assets represent 99.9% of assets owned by DTE Energy.

• • Tangible net worth is defined as net worth minus goodwill, patents trademarks, and other intangibles. In accordance with NRC guidance, the decomissioning guarantee related to Fermi 1 has been added to the tangible net worth.

DTE Energy Company By David E. Meado Executive Vice President and Chief Financial Officer, DTE Energy Company March 24, 2005 1.159-58