ULNRC-05796, Callaway Plant - Response to Request for Additional Information - 2011 Decommissioning Funding Status Report
| ML111540138 | |
| Person / Time | |
|---|---|
| Site: | Callaway  |
| Issue date: | 06/02/2011 |
| From: | Maglio S Ameren Missouri |
| To: | Document Control Desk, Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML111540136 | List: |
| References | |
| ULNRC-05796 | |
| Download: ML111540138 (11) | |
Text
'WAmeren MISSOURI Callaway Plant :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
June 2,2011 ULNRC-05796 u.s. Nuclear Regulatory Commission Attn: Document Control Desk Washington, DC 20555-0001 Ladies and Gentlemen:
DOCKET NUMBER 50-483 CALLA WAY PLANT UNIT 1 UNION ELECTRIC CO. FACILITY OPERATING LICENSE NPF-30 RESPONSE TO REQUEST FOR ADDITIONAL INFORMATION 2011 CALLAWAY DECOMMISSIONING FUNDING STATUS REPORT By letter ULNRC-05775 dated March 30, 2011, Union Electric Company (Ameren Missouri) submitted the 2011 biennial Decommissioning Funding Status Report for Callaway Plant in accordance with 10 CFR 50.75(f)(1).
On May 3, 2011, the NRC Project Manager transmitted by electronic mail a request for additional information regarding the Decommissioning Funding Status Report. Enclosure 1 to this letter provides Ameren Missouri's response to the request for additional information.
In addition, Enclosures 2 through 6 transmit additional documentation referenced in the responses to the request for additional information.
This letter does not contain new commitments.
If you have any questions concerning this letter, please contact Mr. Tom Elwood at (314) 225-1905.
Sincerely, 4J1r . Regulatory Affairs Manager BFHlnls PO Box 620 Fulton, MO 65251 AmerenMissouri.com ULNRC-05796 June 2, 2011 Page 2
Enclosure:
- 1. Ameren Missouri Response to Request for Additional Information Related to 2011 Decommissioning Funding Status Report for Callaway Plant, Unit 1 2. Application for Approval of Decommissioning Cost Estimate for Callaway Plant and Funding Level of Nuclear Decommissioning Trust Fund 3. Unanimous Stipulation and Agreement
- 4. Order Approving Stipulation and Agreement
- 5. Statement of Net Assets Available for Benefits 6. 2008 Decommissioning Cost Study for the Callaway Plant ULNRC-05796 June 2,2011 Page 3 cc: Mr. Elmo E. Collins, Jr. Regional Administrator U. S. Nuclear Regulatory Commission Region IV 612 E. Lamar Blvd., Suite 400 Arlington, TX 76011-4125 Senior Resident Inspector Callaway Resident Office U. S. Nuclear Regulatory Commission 8201 NRC Road Steedman, MO 65077 Mr. Mohan C. Thadani (2 copies) Senior Project Manager, Callaway Plant Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Mail Stop 0-8G 14 Washington, DC 20555-2738 Mr. James Polickoski Project Manager, Callaway Plant Office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Mail Stop 0-8B 1 A Washington, DC 20555-2738 ULNRC-05796 June 2, 2011 Page 4 Index and send hardcopy to QA File A160.0761 Hardcopy:
Certrec Corporation 4200 South Hulen, Suite 630 Fort Worth, TX 76109 (Certrec receives ALL attachments as long as they are non-safeguards and may be publicly disclosed.)
Electronic distribution for the following can be made via Responses and Reports ULNRC Distribution:
A. C. Heflin F. M. Diya C. O. Reasoner III L. H. Graessle S. M. Maglio T. B. Elwood S. L. Gallagher T. L. Woodward (NSRB) L. M. Belsky (NSRB) Mr. Paul Parmenter, Director (SEMA) Mr. Thomas Mohr, Senior REP Planner (SEMA) Mr. John Campbell, REP Planner (SEMA) Ms. Diane M. Hooper (WCNOC) Mr. Tim Hope (Luminant Power) Mr. Ron Barnes (APS) Mr. Tom Baldwin (pG&E) Mr. Wayne Harrison (STPNOC) Ms. Linda Conklin (SCE) Mr. John O'Neill (pillsbury Winthrop Shaw Pittman LLP) Mr. Dm Buntin (DNR)
ULNRC-05796 Enclosure 1 Page 1 of 7 Ameren Missouri Response to Request for Additional Information Related to 2011 Decommissioning Funding Status Report for Callaway Plant, Unit 1 By letter dated March 30, 2011 Union Electric Company (d/b/a Ameren Missouri) submitted the 2011 biennial Decommissioning Funding Status Report for Callaway Plant. The NRC subsequently issued a request for additional information (RAI) by email dated May 3,2011. Below are the individual RAls from that email followed by Ameren Missouri's responses.
RAI #1: Citation for real rate of return: Provide the citation (e.g, an Order by the rate-regulatory authority) by the regulatory entity that allows for the assumptions used regarding rates of escalation in decommissioning costs, rate of earnings on decommissioning funds and rates of other factors assumed as stated within the Decommissioning Funding Status (DFS) report. Within its DFS report, Union Electric Company reported that its assumption for its real rate of return is based on a 2.742 percent rate of escalation in decommissioning costs, and 8.3962 percent annualized rate of earnings on decommissioning funds. As stated in 10 CFR 50. 75(f) (1 ): fT]he information in this DFS report must include [. . .] the assumptions used regarding rates of escalation in decommissioning costs, rates of earnings on decommissioning funds, and rates of other factors used in funding projections
... Response Union Electric Company (UEC) is a Missouri electrical corporation subject to the regulatory authority of the Missouri Public Service Commission (MPSC). Under Missouri Law (see below), UEC is required every three years to perform and file with the MPSC a cost study detailing the latest cost estimates for decommissioning its Callaway Plant along with the funding level necessary to defray these decommissioning costs. 4 CSR 240-3.185 Submission of Reports Pertaining to the Decommissioning of Electric Utility Plants (3) On or before September 1, 1990 and every three (3) years after that, utilities with decommissioning trust funds shall perform and file with the commission cost studies detailing the utilities' latest cost estimates for ULNRC-05796 Enclosure 1 Page 2 of 7 decommissioning their nuclear generating unit(s) along with the funding levels necessary to defray these decommissioning costs. These studies shall be filed along with appropriate tariff(s) effectuating the change in rates necessary to accomplish the funding required.
In addition, the commission, at any time for just cause, may require a utility to file an updated decommissioning cost study, funding requirement and associated tariff(s).
On 09-02-2008, UEC filed its "Application for Approval of Decommissioning Cost Estimate for Callaway Plant and Funding Level of Nuclear Decommissioning Trust Fund" ("the Application")
in order to comply with 4 CSR 240-3.185.
Attachment 2 to that Application contained UEC's analysis of the required funding level for the decommissioning trust fund, including all of the financial and economic assumptions on which the funding analysis was based. Enclosure 2 (provided herewith) provides a copy of that Application and its associated Attachment
- 2. On 04-23-2009, UEC, the Staff of MPSC and the Office of Public Counsel entered into a "Unanimous Stipulation and Agreement" that among other things received UEC's application and required funding level analysis into evidence and requested the MPSC to approve the funding level requested by UEC in the application.
A copy of this "Unanimous Stipulation and Agreement" is provided in Enclosure
- 3. On 04-29-2009, the MPSC issued an "Order Approving Stipulation and Agreement" that among other things approved the foregoing "Unanimous Stipulation and Agreement." A copy of this Order is provided in Enclosure
- 4. The enclosed regulatory documents reflect MPSC's approval of the assumptions underlying the factors on which the funding adequacy analysis was based and that were stated in the 2011 Decommissioning Funding Status Report submitted to the NRC. RAI #2: Identify actual funds as of December 31, 2010: Provide the actual amounts of decommissioning funds in the external sinking fund accumulated for radiological decommissioning of Callaway, which must reflect the fund balance as of December 31,2010. Also, in order for the NRC staff to evaluate the total accumulations, provide a similar breakdown of the annual decommissioning contributions authorized by your rate regulating authority.
ULNRC-05796 Enclosure 1 Page 3 of 7 Within its DFS report, Union Electric Company stated that the amount accumulated in the decommissioning fund to the end of the calendar year preceding the date of the DFS report for items included in 10 CFR 50. 75(b) and (c) is $318,849,33, and that the schedule of annual amounts remaining to be collected is $6,486,378 per year from 2011 through 2023. Union Electric Company further stated that the decommissioning fund balance is a total amount intended to cover the full green fielding of the Callaway site and that the funds in the trust are not segregated into those required for radiological decommissioning versus non-radiological decommissioning.
As stated under 10 CFR 50. 75(f) (1), licensees must identify "the amount accumulated to the end of the calendar year preceding the date of the report. " This actual amount is dedicated for NRC decommissioning activities as defined in 10 CFR 50.2. Response A copy of the trustee's "Statement of Net Assets Available for Benefits" as of December 31, 2010 is provided as Enclosure
- 5. Based on the valuations contained in this statement, the following fund valuation was derived: Market Value: Less: Book Value: Equals: Unrealized Gain I ncome Tax Rate = 20% $ 336,821,356.77 246,961,235.02
$ 89,860,121.75 Income Tax on Unrealized Gain:$ 17,972,024.35 After-Tax Liquidation Value: $ 318,849,332.42 This is the total fund valuation.
There is no segregation of amounts for radiological versus non-radiological decommissioning.
Missouri's definition of "decommissioning" encompasses both the radiological and non-radiological structures, systems and components of the plant, as stated in the following:
4 CSR 240-20.070 Decommissioning Trust Funds (1) As used in this rule, decommissioning means those activities undertaken in connection with a nuclear generating unit's retirement from service to ensure that the final removal, disposal, entombment or other disposition of the unit and of any radioactive ULNRC-05796 Enclosure 1 Page 4 of 7 components and materials associated with the unit, are accomplished in compliance with all applicable laws, and to ensure that the final disposition does not pose any undue threat to the public health and safety. Decommissioning includes the removal and disposal of the structures, systems and components of a nuclear generating unit at the time of decommissioning.
Since origination, there has only been one decommissioning fund for Callaway Plant. This fund has always encompassed both the radiological and radiological decommissioning.
Splitting the fund would require UEC to request and obtain approval from the MPSC. Due to the small percentage of cost associated with non-radiological decommissioning
<<13 0/0) and the significant increase in the overhead cost for multiple funds and smaller fund amounts, it was determined that there were no advantages to splitting the trust fund. Tables 3.1 a through 3.1 c in Enclosure 6 delineate, by year, the expenditures for License Termination, Spent Fuel Management, and Site Restoration categories.
The License Termination category provides expenditures that are consistent with "decommissioning" as defined in 10 CFR 50.2 and 10 CFR 50.75. As indicated in the Tables, the majority of the radiological decommissioning activities will have been completed before the start of non-radiological decommissioning activities.
In addition, Missouri law requires triennial updates of the decommissioning cost estimate and of funding adequacy.
Missouri law also provides for the changing of rates charged to ratepayers to recover any changes in funding levels necessitated by the triennial update analyses.
For this reason, UEC considers the amount in the fund to be fully adequate to cover both radiological decommissioning as defined in 10 CFR 50.2 and non-radiological decommissioning activities as defined in 10 CSR 240-20.070.
The triennial update process required by Missouri statutes is considered adequate to ensure that any funding shortfalls will be addressed and corrected in a timely manner and meets the conditions of 10 CFR 50.75(e)(1)(ii)(A).
The applicable sections from the Missouri Code of State Regulations are as follows: 4 CSR 240-3.185 Submission of Reports Pertaining to the Decommissioning of Electric Utility Plants (3) On or before September 1, 1990 and every three (3) years after that, utilities with decommissioning trust funds shall perform and file with the commission cost studies detailing the utilities' latest cost estimates for decommissioning their nuclear generating unit(s) along with the funding levels necessary to defray these decommissioning costs. These studies shall be filed along with ULNRC-05796 Enclosure 1 Page 5 of 7 appropriate tariff(s) effectuating the change in rates necessary to accomplish the funding required.
In addition, the commission, at any time for just cause, may require a utility to file an updated decommissioning cost study, funding requirement and associated tariff(s).
4 CSR 240-20.070 Decommissioning Trust Funds (7) Upon the filing of the appropriate tariff(s) as set in 4 CSR 240-3.180, the commission shall establish a schedule of proceedings which shall be limited in scope to the following issues: (A) The extent of any change in the level or annual accrual of funding necessary for the utility's decommissioning trust fund; and (8) The changes in rates which would reflect any change in the funding level or accrual rate. As of December 31,2010, the MPSC authorized an annual contribution of $6,486,378.00 to the decommissioning trust fund. This annual contribution was authorized in their "Order Approving Stipulation and Agreement" discussed in the response to RAI #1. RAI #3: Citation for site-specific study: Provide the site-specific cost estimate for Callaway, unless it was previously submitted to NRC. If the cost estimate was previously submitted to NRC, then provide a reference to its submittal.
The site-specific cost estimate should include a summary schedule of annual expenses, projected earnings, and of-year fund balances, expressed in 2010 dollars. Also, provide the site-specific cost estimate in 2010 dollars and describe the cost escalation factor(s) used to escalate the cost estimate to 2010 dollars in a total and year-to-year format. Within its DFS report, Union Electric Company referenced a site-specific cost estimate (SSCE) of approximately
$572,473,275 (2008 dollars) for the physical decontamination and dismantling such that the license can be terminated, but did not provide a copy of the SSCE for the NRC staff's review. Please provide the report. Under 10 CFR 50. 75(e)(1 ) (i) and (ii): the licensee must specifically describe the safe storage period in order to take credit for projected future earnings when it uses a site-specific estimate as the basis for using the prepayment or external sinking fund methods of financial assurance ULNRC-05796 Enclosure 1 Page 6 of 7 Response Enclosure 6 provides a copy of the 2008 Decommissioning Cost Study for the Callaway Plant. The cost estimates contained in the report are in 2008 dollars. This specific study was conducted to comply with Missouri Law: 4 CSR 240-3.185 Submission of Reports Pertaining to the Decommissioning of Electric Utility Plants (3) On or before September 1, 1990 and every three (3) years after that, utilities with decommissioning trust funds shall perform and file with the commission cost studies detailing the utilities' latest cost estimates for decommissioning their nuclear generating unit(s) along with the funding levels necessary to defray these decommissioning costs. These studies shall be filed along with appropriate tariff(s) effectuating the change in rates necessary to accomplish the funding required.
In addition, the commission, at any time for just cause, may require a utility to file an updated decommissioning cost study, funding requirement and associated tariff(s).
Decommissioning reports like this one are prepared as a snap shot in time of the projected decommission costs for Callaway.
This cost in turn is used by UEC to prepare the triennial decommissioning funding adequacy analyses filing, which is submitted for MPSC review and approval.
This analysis is used to determine any changes in the ratepayer's contributions to the decommissioning fund. Since this study is conducted every three years, UEC does not escalate the study cost estimates for the years between study periods. RAI #4: Anticipated divestiture from equity investments:
Clarify for the NRC staff's review, the impact that the anticipated divestiture of equity investments in 2022 will have on the trust fund and future annual decommissioning contributions.
Under 10 CFR 50. 75(f) (1 ), Union Electric Company provided a schedule of the annual amounts remaining to be collected for Callaway up until the end of plant life in 2024. However, as part of its investment and return assumptions provided within the DFS report, Union Electric Company stated that a divestiture from its equity investments will occur in 2022.
ULNRC-05796 Enclosure 1 Page 7 of 7 Under 10 CFR 50. 75(e) (2): The NRC reserves the right to [. .. J ensure a licensee's adequate accumulation of decommissioning funds ... Response In the funding analysis that was presented to the MPSC in the 2008 triennial update filing, it was assumed that, for the "Expected" scenario, the fund would be transitioned out of equity investments in 2022. The premise for this is to reduce the higher volatility associated with equity investments as the decommissioning date approaches.
The transition to fixed income investments will reduce the fund's overall rate of return in the years following the transition since fixed income will have a lower rate of return than the blend of equity and fixed income used in the years prior to 2022. This difference in rate of return was included in UEC's analysis of the required funding level for the decommissioning trust fund contained in attachment 2 of Enclosure
- 1. The current annual decommissioning contribution takes into account the lower rate of return expected after 2022 to ensure adequate funding for decommissioning.