NRC-20-0018, Enrico Fermi Atomic Power Plant, Unit 1, Decommissioning Funding Status Report

Enrico Fermi Atomic Power Plant, Unit 1, Decommissioning Funding Status Report

ML20091K347
Person / Time
Site:	Fermi
Issue date:	03/31/2020
From:	Peter Dietrich DTE Energy
To:	Document Control Desk, Office of Nuclear Material Safety and Safeguards, Office of Nuclear Reactor Regulation
References
NRC-20-0018
Download: ML20091K347 (11)

Text

Peter Dietrich Senior Vice President and Chief Nuclear Officer DTE Energy Company 6400 N. Dixie Highway, Newport, MI 48166 Tel: 734.586.4153 Fax: 734.586.1431 Email: peter.dietrich@dteenergy.com March 31, 2020 10 CFR 50.75 NRC-20-0018 10 CFR 50.82 U.S. Nuclear Regulatory Commission Attention: Document Control Desk Washington, DC 20555-0001 Enrico Fermi Atomic Power Plant, Unit No. 1 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) and 10 CFR 50.82(a)(8)(v) on the status of DTE Electric Companys decommissioning funding assurance 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.

At a future date, decommissioning will be continued for the purpose of removing the remaining residual radioactive material and terminating the Fermi 1 license. The decommissioning estimate provided is based on an end of year review, as required.

The requested annual decommissioning fund information for Fermi 1, reported in 2019 dollars, is provided in Enclosure 1 of this letter. The prepayment trust method and DTE Electric Company funding combined with a DTE Energy parent company guarantee is providing funding assurance.

Documentation of the financial test for this guarantee is provided in Enclosure 2 of this letter.

The parent company guarantee requires providing the NRC with the DTE Energy Company 2019 Form 10-K Annual Report to the United States Securities and Exchange Commission. This report is available from the DTE Energy website.

No new commitments are being made in this submittal.

USNRC NRC-20-0018 Page 2 Should you have any questions or require additional information, please contact Ms. Margaret (Peg) Offerle, Manager- Nuclear Licensing, at (734) 586-5076.

Peter Dietrich Senior Vice President and Chief Nuclear Officer

Enclosures:

1. Decommissioning Funding Status Rep01t

2. DTE Energy Guarantee Financial Test cc: NRC Project Manager (K. Conway)

NRC Resident Office NRC Region III (P . Lee)

Regional Administrator, Region III

Enclosure 1 to NRC-20-0018 Enrico Fermi Atomic Power Plant, Unit 1 NRC Docket No. 50-16 NRC License No. DPR-9 Decommissioning Funding Status Report to NRC-20-0018 Page 1 Decommissioning Funding Status Report Fermi 1 A decommissioning funding status report is required in 10 CFR 50.75(f)(1) and 10 CFR 50.82(a)(8)(v). Each of the required items is discussed below.

1. The minimum decommissioning fund estimate, pursuant to 10 CFR 50.75 (b) and (c).

The decommissioning cost estimate for Fermi 1 is based on a site-specific estimate adjusted by ongoing reviews. The estimated remaining decommissioning cost in 2019 dollars, including $150,000 per year for SAFSTOR maintenance (which assumes 11 years) and a contingency of 30%, is approximately $23.2 million.

2. The amount accumulated at the end of calendar year preceding the date of the report for items included in 10 CFR 50.75 (b) and (c).

The market value of the Fermi 1 trust fund is currently approximately $2.9 million. There was minimal taxable income on the Fermi 1 Trust fund in 2019, so the after-tax value is the same as the fair market value.

3. The remaining balance of any decommissioning funds, and the amount provided by other financial assurance methods being relied upon.

The Fermi 1 trust fund is currently approximately $20.3 million below estimated remaining costs. A DTE Energy guarantee has been chosen as the assurance method for the shortfall. The current DTE Energy guarantee is $35 million.

4. The schedule of the annual amounts remaining to be collected for items in 10 CFR 50.75 (b) and (c).

DTE Electric Company is not collecting any additional amounts nor relying upon any contracts for the purpose of decommissioning funding assurance for Fermi 1.

5. The amount spent on decommissioning, both cumulative and over the previous calendar year.

The total cost of Fermi 1 decommissioning activities and SAFSTOR maintenance through December 31, 2019 was $85.5 million. This includes expenditure during initial decommissioning in the 1970s. No money was spent on decommissioning activities in 2019.

6. Any difference between actual and estimated costs for work performed during the year.

The budget for SAFSTOR maintenance for 2019 was $150K. The amount spent for SAFSTOR maintenance was $111.8K.

to NRC-20-0018 Page 2

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

Decommissioning costs are assumed to increase at a rate equal to 4.5% with earnings on the decommissioning fund assumed to be equal to 0%.

8. Any contracts upon which the licensee is relying pursuant to 10 CFR 50.75 (e) (1) (v).

None.

9. Any modifications to the current method of providing financial assurance occurring since the last submitted report.

None.

10. Any material changes to the trust agreement.

None.

Enclosure 2 to NRC-20-0018 Enrico Fermi Atomic Power Plant, Unit 1 NRC Docket No. 50-16 NRC License No. DPR-9 DTE Energy Guarantee Financial Test

LETTER FROM Peter B. Oleksiak, CHIEF FINANCIAL OFFICER of DTE Energy Company, CORPORATE PARENT of DTE Electric Company, INCLUDING COST ESTIMATES AND DATA FROM AUDITED FINANCIAL STATEMENTS r

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), One Energy Plaza, Detroit, MI 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 DTE Electric Company, a Michigan corporation and indirect 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 $23,200,000 $35,000,000 Atomic Power Newport, MI 48166 Plant Unit 1 This firm is required to file a Form 10K with the U.S. Securities and Exchange Commission for the latest fiscal year 2019.

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, 2019.

FINANCIAL TEST: ALTERNATIVE II

1. Decommissioning cost estimates or guaranteed amount for facility

[license number DPR 9] $23,200,000

2. Current notes rating of most recent unsecured issuance of this firm Rating BBB / Baa2 Name of rating service Standard & Poors / Moodys Investors Service

3. Date of issuance of notes October 2019

4. Date of maturity of notes November 1, 2022/March 01, 2030

5*. Total net worth** $11,672,000,000 6*. Tangible net worth*** $6,815,000,000 7*. Total assets in the United States $41,863,000,000 Yes No

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

9. Is line 6 at least $21 million? X ___

10. Are at least 90 percent of firms assets located in the United States? If not, complete line 11. X ___

11. Is line 7 at least 6 times line 1? X ___

12. Is the rating specified on line 2 BBB or better (including adjustments of + and -) as issued by Standard & Poors or Baa or better (including adjustments of 1,2 or 3) as issued by Moodys X ___

• Denotes figures derived from financial statements

• • Total net worth is defined as net worth minus net book value and goodwill of the Fermi 1 nuclear facility

• • • Tangible net worth is defined as Total net worth above minus goodwill and intangible assets

I certify that the information is true and correct to the best of my knowledge Roni DTE Energy Company By: _____________________________

Peter B. Oleksiak Senior Vice President and Chief Financial Officer, DTE Energy Company Date: March 31, 2020

Report of Independent Accountants To the Management of DTE Electric Company We have performed the procedures enumerated below, which were agreed to by DTE Electric Company and the U.S. Nuclear Regulatory Commission (NRC), solely to assist you in evaluating DTE Electric Company's compliance with the NRC financial assurance regulations, 10 CFR Part 50, as of December 31, 2019, as detailed in the Letter from Peter B. Oleksiak, Chief Financial Officer of DTE Energy Company, Corporate Parent of DTE Electric Company, Including Costs Estimates and Data from Audited Financial Statements (the Letter) to be provided to the NRC. DTE Electric Company is responsible for the Letter. 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 enumerated below either for the purpose for which this report has been requested or for any other purpose.

The procedures performed and results thereof are as follows.

1. Compared the amount of Total net worth per line 5 of the Letter to Total DTE Energy Company Equity as reflected in the audited consolidated financial statements of DTE Energy Company (the Company) as of December 31, 2019 and found the amounts to be in agreement.

2. Compared the amount of Tangible net worth per line 6 of the Letter to a schedule prepared by the Company from DTE Energy Companys accounting records and found the amounts to be in agreement. Compared the amounts listed on the schedule to the corresponding amounts included in DTE Energy Company's accounting records and found the amounts to be in agreement. Reconciled the schedule to the audited consolidated financial statements of DTE Energy Company as of December 31, 2019.

3. Compared the amount of Total assets in the United States per line 7 of the Letter to a schedule prepared by the Company from DTE Energy Companys accounting records and found the amounts to be in agreement. Compared the amounts listed on the schedule to the corresponding amounts included in DTE Energy Company's accounting records as of December 31, 2019 and found the amounts to be in agreement.

4. Inquired of the Chief Accounting Officer of DTE Energy Company as to whether any off-balance sheet transactions exist that could materially adversely affect the ability of DTE Energy Company to pay decommissioning costs. The Chief Accounting Officer responded that there are no significant off-balance sheet transactions that could materially adversely affect DTE Energy Company's ability to pay decommissioning costs.

5. Compared the notes rating per line 2 of the Letter to the current rating for DTE Energy Companys most recent uninsured, uncollateralized, and unencumbered bond issuance provided by Standard and Poors and Moodys as follows:

Rating agency Rating per Line 2 of the Letter Rating per rating agency Standard and Poors BBB BBB Moodys Baa2 Baa2 PricewaterhouseCoopers LLP, 500 Woodward Avenue, Detroit, MI 48226 T: (313) 394 6000, F:(313) 394 6555, www.pwc.com

This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an audit or examination, the objective of which would be the expression of an opinion, or a review, the objective of which would be the expression of a conclusion, on the Letter. Accordingly, we do not express such an opinion or conclusion. 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 Management of DTE Electric Company and the U.S. Nuclear Regulatory Commission and is not intended to be and should not be used by anyone other than these specified parties.

March 18, 2020 2