RC-99-0066, Submits Rept of Status of Decommissioning Funding (RR-1950), for Vsns Per 10CFR50.75

Submits Rept of Status of Decommissioning Funding (RR-1950), for Vsns Per 10CFR50.75

ML20205F608
Person / Time
Site:	Summer
Issue date:	03/31/1999
From:	Marsh K, Gabe Taylor SOUTH CAROLINA ELECTRIC & GAS CO.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
RC-99-0066, RC-99-66, NUDOCS 9904060330
Download: ML20205F608 (9)

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March 31,1999 gggg A SCANA COMPANY RC-99-0066

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, Document Control Desk i

U. S. Nuclear Regulatory Commission Washington, DC 20555

Gentlemen:

Subject:

VIRGIL C. SUMMER NUCLEAR STATION

-y j DOCKET NO. 50/395 g* 1 OPERATING LICENSE NO. NPF-12 REPORT OF STATUS OF DECOMMISSIONING FUNDING (RR-1950)

South Carolina Electric and Gas Company (SCE&G) and the South Carolina Public 7 Service Authority (SCPSA) have ownership interests of two-thirds and one-third

, m respectively in the V. C. Summer Nuclear Station (VCSNS). As provided in 10 CFR

'* 1 0 50.75(f)(1), SCE&G is required to report to the NRC, by March 31,1999, and every 4 two years thereafter, on the status of its decommissioning funding for its share of  ;

ownership of VCSNS SCPSA has informed us that it will disclose the required '

, information relative to its one-third ownership share in a separate submittal.

. The following information is submitted pursuant to the requirement of 10 CFR

(

15ohthfarolmo Doctric & GEC r il 5 er Nuclear Station 5 The amount of decommissioning The amount of decommissioning funds estimated UJenkinsville,5outhCoiolino -, funds estimated to be required to be required pursuant to 10 CFR 50.75 (b) and Pursuant to 10 CFR 50.75 (b) and (c) for SCE&G's two-thirds ownership of VCSNS is

. ??M51 (c); $181,003,013 (1998 dollars). Please see //

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. 803345.4344. - Attachment I for the calculations of this amount.

803345.5209 i ww f a com - The amount accumulated at the The trust fund balance as of December 31,1998 i endof the calendaryear was $29.906,084. The trust fund balance includes fpreceding the date of the report; cash and cash surrender values of life insurance L Donall L. Jones, P.L s pol cies held by the Trust. The face amount of life

((,j[,${'g ji insurance policies in force as of December 31, 1998 was $203,000,000. Please refer to Opemeing Experience j Attachment 11 for more information. Please note that approximately $3.4 million of the $29,906,084 y g gg a sena coma-  ;

is for items not included in 10 CFR 50.75 (b) and l s

South (or0III1c Dectric & Gas Co. i ,

VL Summer Mes 5:ation i i p

. P.O. Box 68 i M Jenkinsville,5cuth Curotaa i 29065.

h( 803.345 4480 - [4

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', .; NUCLEAR EXCELLENCE, A SUMMER TRADITION l g )Home 80318U414 - i 9904060330 990331

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Docum:nt Control Desk RR-1950 RC-99,0066 Page 2 of 3 A schedule of the annual Please see Attachment ll1 for a schedule of the annual I amounts remaining to be amounts remaining to be collected. Please note that co//ected; approximately 11% of the amounts shown in this schedule are for items not included in 10 CFR 50.75 (b) and (c).

The assumptions used regarding Please see Attachment IV for the assumptions used escalation in decommissioning regarding escalation in decommissioning cost, rates of I cost, rates of eamings on eamings on decommissioning funds, and rates of other )

decommissioning funds, and factors used in funding projections. )

rates of other factors usedin 1 funding projections; Any contracts upon which the None j licensee is relying pursuant to l paragraph (e)(1)(v) of this section; I

Any modifications occurring to a None.

licensee's current method providing financial assurance l since the last submitted report; Any materialchanges to trust Effective February 1,1996 SCE&G replaced NationsBank, agreements. N.A. with First Union National Bank as the Trustee. On December 4,1995 SCE&G provided written notification of this change to the NRC.

If you have any questions, please call Mr. Donald L. Jones at (803) 345-4480.

Ve truly yours,

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b Vice President Nuclear Operations, SCE&G ek -J' ,

Kevin B. Marsh j Senior Vice President and i Chief Financial Officer, i SCE&G GJT/KBM/DLJ/dr i

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Docum:nt Control Desk RR-1950 RC-99 .0066 Page 3 of 3 c: - J. L. Skolds L. M. Padovan W. F. Conway J. B. Knotts, Jr.

M. R. Cannon INPO Records Center R. R. Mahan - RTS (RR 1950)

R. J. White - File (50.084)

L.' A. Reyes DMS (RC-99-0066)

NRC Resident inspector 1

Docum:nt Control D:sk Attachment I j RR-1950 RC-99-0066 Page 1 of 1 l l

ATTACHMENT l CALCULATION OF AMOUNT OF DECOMMISSIONING I FUNDS ESTIMATED TO BE REQUIRED I PURSUANT TO 10 CFR 50.75 (B) AND (C);

i Base Amount for PWR between 1,200 MWt and 3,400 MWt -

1986 Base Cost = $(75 + 0.0088p) million

= $(75 + 0.0088 x 2900) million .

= $100,520,000 '

Estimated Cost (Year X) = (1986 $ Base Cost)(ALx4 BEx + CBx) ]

Estimated Cost 1998 = ($100,520,000) {(.65 x 1.558) + (.13 x .848) + (.22 x 7.173)) j

= $271,504,520 j SCE&G's two-thirds ownership share of 1998 Estimated Cost = $181,003.013 Where:

p = 2,900 MWt A = .65 (NUREG 1307 Rev. 8)

B = .13 (NUREG 1307 Rev. 8)

C = .22 (NUREG 1307 Rev. 8)

Lx = 1.558 (Computed Below) 4 Ex = .848 (Cornputed Below) l Px

= 1.117 (Computed Below)

Fx

= .478 (Computed Below) ,

=

Bx 7.173 (NUREG 1307 Rev 8) i Lx =

(138.1)a., m, X (1.441)se u,,g./ (127.7)a.,i,u ,

= 1.558 i Px

= 12/98 Value / January 1986 Value

= 127.5/114.2

=-

1.117 I Fx

= 12/98 Value / January 1986 Valu:

= 39.2 / 82

= .478 l

=

Ex {(.58Px) + (.42Fx)}

=

{(.58 x 1.I17) + (.42 x .478))

= .848 December 31,1998 values in the following Bureau of Labor Statistics indices were used to compute NRC minimum requirements:

Employment Cost index - South Region (SeriesID: ecul32021)

Producer Price Index - Commodities (Series ID: wpu0543)

Producer Price Index - Commodities (Series ID: wpu0573)

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l Docum:nt Control Desk Attachment 11 RR-1950 ,

RC-99-0066 I Page 1 of 2 i

I ATTACHMENT ll EXPLANATION OF FINANCIAL ASSURANCE l MECHANISM AND AMOUNTS I COLLECTED TO DATE Financial Assurance Mechanism l

SCE&G is the operator of VCSNS and shares the operating costs and energy output of the plant I with the SCPSA in the proportions of two-thirds and one-third, respectively. SCE&G has a program referred to as the Cost of Money Reduction Plan (COMReP), for funding its share of the 1 costs of decommissioning VCSNS. Under this plan, funds collected through rates are used to l purchase life insurance policies on key company personnel who receive a two year salary continuation benefit for participating in the plan. SCE&G has established a decommissioning trust fund (trust fund) with First Union National Bank as Trustee. SCE&G and the trust fund are beneficiaries of the life insurance policies. COMReP, Inc. of Omaha, Nebraska, formerly i Financial Marketing Services, Inc., is the servicing agent for the life insurance policies. Through the purchase of life insurance contracts, SCE&G and the trust fund are able to take advantage of current income tax provisions that allow SCE&G to accrue earnings in the life insurance contracts on a tax deferred basis. This funding methodology has been approved by the South Carolina Public Service Commission (PSC). The COMReP program was presented to the Nuclear Regulatory Commission (NRC) by Financial Marketing Services, Inc. on October 20,1988. The COMReP program was also described in SCE&G's certification of financial assurance submittal, pursuant to 10 CFR 50.33(k)(2), dated July 26,1990.

I Amounts collected through electric rates for decommissioning are transferred by SCE&G to the i trust fund in compliance with the financial assurance requirements of the NRC. The value of the policies compounds on a tax deferred basis. Upon the death of insured personnel, the policy j proceeds are remitted tax free. The trust fund receives the cash surrender value and SCE&G  !

receives amounts in excess of the cash surrender value in order to recover its term premium and l salary continuation payments. Amounts in excess of these costs are remitted to the trust fund. l l

Amounts Accumulated A financial model, developed by COMReP, Inc., projects the growth of the trust fund balance (projected cash flows are discussed in Attachment Ill). Based upon the model, funds produced j by the plan through the year 2029, at the completion of decommissioning, are projected at  !

$267,673,000 (see Attachment 111). The model assumes cash flows that incorporate PSC approved collections from customers that were designed to generate funds in excess of amounts required to cover costs related to 10 CFR 50.75 (b) and (c). The estimated portion of this l

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Docum:;nt Control Desk Attachment ll l

RR-1950 RC-99-0066 l Page 2 of 2 amount that relates to items included in 10 CFR 50.75 (b) and (c) is derived as follows:

l Funds produced by the plan through the year 2029 $267,673,000 Present Value (1998) of $267,863,000 using 1.87% discount rate (1) $150,719,371 Percentage related to radioactive cleanup (2) 88.69 %

Amount (1998) for Radioactive cleanup only $133,673,010 (1) The 1.87% is the real rate of return as used in the COMReP model.

(2) Radioactive Cleanup Per 1991 site specific study (two-thirds portion) $118,256,667 Customer collection basis (includes some site restoration) (two-thirds portion) $133,333,333 Percentage related to radioactive cleanup 88.69 %

NOTE:

The COMReP program produces cash flows which are different from more traditional funding programs. In the early years of the COMReP program, the trust fund's value is increased almost solely by the tax deferred accumulation of the cash surrender value of the life insurance policies, in later years, the trust fund's value is increased by both the tax deferred accumulation and by the tax free receipt of life insurance proceeds as the result ofincreasing mortality among the participants. The combination of cash accumulated in the COMReP program and cash generated by the tax deductibility of decommissioning expenditures when decommissioning occurs will provide the funds for decommissioning VCSNS as shown below:

Decommissioning funds required pursuant to 10 CFR 50.75 (b) and (c) $181,003,013 for SCE&G's two-thirds ownership of VCSNS Funds available:

COMReP funds $133,673,010 Funds generated from tax deductibility of decommissioning expenditures $ 69.233.652 Total Funds available $202.906.662 Funds in excess of projected requirement $ 21.903.649 I

P Docum:nt Control Desk Attachment lil RR-1950 RC-99-0066 Page 1 of 2 ATTACHMENT lli SCHEDULE OF AMOUNTS TO BE COLLECTED In its March 1984 Electric Rate Case, SCE&G proposed an adjustment for VCSNS decommissioning,'which was approved by the PSC. SCE&G was collecting $1,630,024 gross of taxes from the customera. The PSC approved an increase in this amount in the June 1993 rate case based upon increased costs estimates contained in a site specific study in 1991. SCE&G now collects $3,224,920 gross of tax annually.

Annual amounts collected, detailed in the COMReP model, are summarized in the following table and include all cash flows related to the cash and cash investments held by the trust fund. The projected cash flows related to the trust fund include collections from utility customers, cash flows from COMReP transactions and after-tax program costs / gains on other trust fund investments.

Cash flows from COMReP transactions consist primari!y of (1) premium payments (2) death benefit proceeds reduced by salary continuation benefit payments, net of tax (3) policy loans taken for premium payments (4) policy loan repayments and (5) policy loan interest payments, net of tax.

Collections After-Tax from Cash Flows Program Net Cash Flow Customers from COMReP Costs / Gains to Trust Fund Year ($000) ($000) ($000) ($000) 1985 1,517 -1,675 -10 -168 1986 827 -126 25 726 1987 835 69 61 965 1988 1,022 -259 105 868 1989 1,133 -1,988 70 -785 1990 1,133 -1,691 40 -518 1991 1,022 -2,053 3 -1,028 1992 1,022 -4,215 -156 -3,349 1993 1,581 27 -97 1,511 1994 1,991 -301 -16 1,674 1995 1,991 -346 45 1,690 1996 1,991 -4,775 -74 -2,858 1997 1,991 -4,465 -112 -2,586 1998 1,991 -4,584 -139 -2,732 1999 1,991 -8,303 -156 -6,468 2000 1,991 -3,858 -157 -2,024 2001 1,991 -3,854 -164 -2,027 2002 1,991 -3,752 -198 -1,959 2003 1,991 -3,564 -185 -1,758 2004 1,991 -2,732 -185 -926 2005 1,991 -2,339 -144 -492 2006 1,991 -2,808 -158 -975 1 2007 1,991 3,402 -163 5,230 l

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s Document Control Desk Attachment lli RR-1950 RC-99-0066 Page 2 of 2 Collections After-Tax from Cash Flows Program Net Cash Flow Customers from COMReP Costs / Gains to Trust Fund Year -($000) ($000) ($000) ($000) 2008 1,991 -1,663 -157 171 2009 1,991 -1,497 -154 340 2010 1,991 -1,547 -137 307 2011 1,991 835 -72 2,754 2012 1,991 -783 7 1,215 2013 1,991 2,250 105 4,346 2014 1,991 5,418 280 7,689 2015 1,991 1,267 406 3,664 2016 1,991 2,551 610 5,152 2017 1,991 8,214 984 11,189 2018 1,991 5,153 1,437 8,581 2019 1,991 6,233 1,864 10,088 2020 1,991 5,980 2,331 10,302 2021 1,991 4,053 2,768 8,812 2022 1,991 9,358 3,222 14,571 2023 N/A 15,096 3,658 18,754 2024 N/A 5,508 3,876 9,384 2025 N/A 8,670 3,630 12,300 2026 N/A 14,297 2,365 16,662 f

2027 N/A 11,879 286 12,165 l 2028 N/A 15,849 -1,231 14,618 2029 N/A 117.850 -5.252 112.598 67,831 180,781 19,061 267,673 l

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Document Control Desk Attachment IV RR-1950 RC-99-0066 Page 1 of 1 ATTACHMENT IV FINANCIAL ASSUMPTIONS ,

Assumptions: -

Financial:

Inflation Rate 2.77 %

Insurance Company Portfolio Earnings Rate 8.00%

Decommissioning Fund Earnings Rate 4.64 %

Outside Loan Rate 6.20 %

Tax Rate:

1985-1986 49.24 %

1987-1987 43.60 %

1988-1988 37.63 % +

1989-1992 37.30 %

1993-2030 38.25 %

Insurance Coverage:

Current Face Amount $203,000,000 Employees Covered 1,480 Average Individual Coverage $137,162 Gross Annual Premiums $6,036,710 Mortality 1983 GAM (100%) Ultimate