View source for SNRC-1393, Forwards Exemption Request from 10CFR50.54(w),re Min Property Insurance Requirements,Until Plant Granted License to Operate

{{Adams
| number = ML20236S846
| issue date = 11/23/1987
| title = Forwards Exemption Request from 10CFR50.54(w),re Min Property Insurance Requirements,Until Plant Granted License to Operate
| author name = Leonard J
| author affiliation = LONG ISLAND LIGHTING CO.
| addressee name = 
| addressee affiliation = NRC OFFICE OF ADMINISTRATION &amp; RESOURCES MANAGEMENT (ARM)
| docket = 05000322
| license number = 
| contact person = 
| document report number = SNRC-1393, NUDOCS 8711300136
| document type = CORRESPONDENCE-LETTERS, INCOMING CORRESPONDENCE, UTILITY TO NRC
| page count = 26
| project = 
| stage = Other
}}

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                                      /ECj'                                 LONG ISL.AND LIGHTING COM PANY ha                 ._ _
SHOREHAM NUCLEAR POWER STATION P.O. BOX G10, NORTH COUNTRY RO AD + WADING RIVER. N.Y.11792 JOHN D. LEONARD, JR.
vice enesiotuv.uucuan openanous                                                                                                                         SNRC-1393 l
\                            NOV 2 31987                                                                                                                                                                                                         l 1
U.S. Nuclear Regulatory Commission ATTN:       Document Control Desk Washington, DC 20555 Exemption Request from the Requirements of 50.54(w)
Shoreham Nuclear Power Station - Unit 1 Docket No. 50-322 Gentlemen:
1 In accordance with our {{letter dated|date=October 3, 1987|text=October 3, 1987 letter}} discussing LILCO's                                                                                                                                                    I intent to file an exemption request from the requirements of 50.54(w), attached please find the completed request.                                                                                               As will be further discussed in the attachment, LILCO is requesting relief from the current $1.06 billion insurance requirements to a level of $337 million until such time as Shoreham is granted a license to operate above 5% power. As previously noted in our {{letter dated|date=October 3, 1987|text=October 3, 1987 letter}}, LILCO will maintain the current $620 million cover-age on Shoreham until the Commission has reviewed and decided upon our request.
Should you have any questions or require additional information regarding this exemption request, please do not hesitate to contact my office.
Very truly y                     s,
[
J d               06>e n D. Leonard, Jr.
Vic President - Nuc ea                                                                                                Operations BEG     ,o Attachment cc: W. Russell - Region 1 R. Lo - NRC Project Manager F. Crescenzo - Resident Inspector R. S. Wood - Office of Nuclear Reactor Regulation 0
8711300136 e71123                                                                                                                                                                                            gi DR      ADOCKOSOOg2

UNITED S'ilATES OF AMERICA NUCLEAR. REGULATORY COMMISSION Before the Director, Office of Nuclear Reactor Regulation
                                                                                    'i i
                                                      )
In the Matter of'                       )
                                                      )
LONG ISLAND LIGHTING COMPANY            )    Docket No. 50-322-OL  '
                                                      )
(Shoreham Nuclear Power Station)        )
                                                      )
LICENSEE'S-REQUEST FOR EXEMPTION FROM THE MINIMUM PROPERTY INSURANCE REQUIREMENTS OF 10 CFR 50.54(w)              l
: 1. BACKGROUND The revised-NRC regulations on property insurance requirements for NRC licensed power plants became effective on October 5, 1987.I! These regulations substantially increased the required minimum property insurance coverage          i from $620-million_to $1.06 billion for each reactor station         j site. The increased coverage reflects the knowledge gained.      !
as a' result of the clean-up efforts at Three Mile Island -      .l Unit 2 and is based on analyses performed by Pacific Northwest Laboratories for the NRC. !                               !
1/  10 CFR section 50.54 (w) . Final rule published August 5, 1987, 52 Fed. Reg. 28963.
2/  NUREG/CR-2601, Technology, Safety and Costs of Decommis-sioning Reference Light Water Reactors Following Postulated Accidents (hereinafter referred to as "NUREG/CR-2601")
(November 1982).                                                    l l
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!           c:   -
l                  Long . Island Lighting, Company ("LILCO" or "the Company"), in an {{letter dated|date=October 3, 1987|text=October 3, 1987 letter}} to the NRC, requested a waiver from the minimum coverage requirements of 10'CFR section 50.54(w).3/ Citing the unusual status of the Shoreham Nuclear Power Plant, LILCO indicated that compliance with the-regulations at this time would place an unnecessary burden on the Company. LILCO further indicated that a detailed exemption request, pursuant to section 50.12, would be submitted to the NRC by November 23, 1987. The waiver was necessary to address the period between the effective date of the modified rule (October 5, 1987) and the NRC's decision on our exemption request.
Pursuant to section 50.12 and consistent with the approach outlined in our letter of October 3, 1987, the following now details LILCO's request for exemption from the minimum property insurance requirements of section 50.54(w).
i i
3/  John D. Leonard, Jr. Vice President - Nuclear Operations to U.S. Nuclear Regulatory Commission - Document Control Desk, SNRC-1385 dated October 3, 1987

                        ,   i-
: 2. INTRODUCTION j                              LILCO currently holds a low power         operating license for Shoreham.5/     While low power testing up to 5% of full power has~been successfully completed, the issuance of a full power license is delayed due to the unprecedented and continuing litigation on the Shoreham emergency plan. Although LILCO         is confident that the emergency plan will gain NRC approval and the Company will be granted a full power license, the continuing refusal of State and local governments to participate in emergency planning makes it impossible to predict when that will occur.       Thus, Shoreham may be restricted to low power operation for some time.
The insurance coverage requirements of 10 CFR.section-50.54(w) provide financial security for stabilizing and decontaminating licensed reactors in the event of a severe accident. The $1.06 billion coverage is based on analyses which assume an accident occurring while a facility is               ;
                                                                      !  LILCO contends that with operating at full reactor power.
4/    In the context of this exemption request, low power operation is considered only up to power levels of 5% of full power operation. Throughout the request, LILCO uses the phrases       5%
power and low power interchangeably.
5/    NPF-36 was issued on July 3, 1985 6/    NUREG/CR-2601, note 2, supra, Chapter 8.        The analysis refers to Safety Analysis Reports (SARs) prepared as part of the licensing process.      In the SAR, the accident analyses will typically assume an initial operating condition of 105%
reactor power to conservatively estimate 100% power accident conditions.

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L.. -                                                                                      i Shoreham operation limited to 5% reactor' power, compliance with the minimum coverage requirements of section 50.54 (w) (1) imposes an undue economic l burden.on the Company since, at low                       l power, both the probability of, and damage from a postulated-accident are significantly reduced. Consequently, until such time as LILCO is granted a license to operate.above 5% of full power, the required insurance coverage should be lower    .
The following. analysis justifies this conclusion. The                             !
analysis discusses the technical aspects of operation at low power and establishes that fuel failure will not occur in the event of a DBA-LOCA at 5% power.      This quantitative and qualitative discussion establishes that the DBA-LOCA analyzed for Shoreham operating at 5% is directly comparable with the accident scenarios considered in the Pacific Northwest study.
Based on these scenarios, actual damage estimates are developed for the Shoreham 5% power case. The technical data both on risk and damage are then considered in light of the legal standards for an exemption request under section 50.12.
This analysis concludes that LILCO's exemption request meets the requirements of section 50.12 and should be granted.
: 3. RISK'OF ACCIDENTS.DURING LOW POWER OPERATION A. Introduction The NRC has already concluded.that operation of nuclear power 1
plants at low power involves minimal risk to the public           j health and safety. Clearly, the Commission recognized this minimal risk when it promulgated the 10CFR 50.47 (d) emergency    ,
H
                     . planning rule change allowing nuclear plants to operate at low power without approved offsite emergency plans. I   In adopting the rule change, the Commission cited factors which     q l
in their view, significantly reduced.the risk.of an accident during low power operation.      These factors are:8/  (1) The additional time for operators to correct the loss of safety systems-needed to mitigate relatively high risk events, (2) the low fission product inventory during low power as k
compared to full power operation, and (3) the reduction in       f required. capacity for mitigating systems at 1.ow power. The NRC had previously used these factors to establish other           i i
I l
I 7/   10CFR section 50.47 (d) . Final rule published July 13, 1982,    l 47 Federal Register 30232.                                       j l
8/   See note 7, supra                                                 J l
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j       .,  a p
regulatory exceptions to otherwise stringent NRC' requirements and applied.these exceptions in situations. relating to low power operation. Examples of such decisions or rulemaking are:                                                             ,
i o     Elimination of the requirement for an effectiveness review by the Commission prior to the issuance of a low power license.9/
o    Issuance of a low power license for the i
San Onofre Nuclear Generating Station despite open emergency planning issues.10/
I The above examples typify the general acknowledgement in regulatory and engineering circles of the substantially reduced risk of an accident which exists during low power         i l
operation. In addition to this qualitative support, however, specific analysis for Shoreham that have been endorsed by the Staff, clearly demonstrates in quantifiable terms, the actual reduced risk of accident which exists during low power 1
I operation.
9/  10 CFR section 2.764. Final rule published September 30, 1981, 46 Fed. Reg. 47764 10/ Southern California Edison, et al., LPB-82-3, 15 NRC 61, 67 (1982)
  ".3,  <
          -B.'    Quantitative Risk Assessment for Shoreham Operation at Low-Power In' October, 1984,lan~NRC Licensing' Board granted LILCO an exemption to the1onsite power-requirements of 10CFR section 50, Appendix A.II! The analysis !,'which supported ~the granting offthe' exemption,' considered FSAR Chapter 15 events and discussed'the effect of 5%' low power operation on'public-health'and safety in the absence of licensed diesel, generators. The analysis demonstrated that based on accident 1
risk estimates, the. alternate-AC power sources installed.at.
that time were adequate compensation for the then unlicensed TDI diesel generators.
11/ Long Island _ Lighting' Company.(Shoreham Nuclear Power Station, Unit 1)'LBP-84-45. 20 NRC'1343 (1984). Made effective by Commission Order CLI-85-01. 'The Licensing Board decision was reversed, in'part, due to concerns on the physical security of temporary onsite electrical generating equipment. Long Island Lighting Company (shoreham Nuclear Power Station, Unit'
           .1) ALAB-800, 21 NRC 386 (1985).         The Appeal Board did not reverse, however, the Licensing Board's findings of fact' regarding the risk of accidents at 5% power.                                    Further, Shoreham was permitted to go " cold critical" based on the exemption. Additional details on risk assessment are available in LILCO's submittal in support of this exemption                                                                         !
request. Long Island Lighting Company (Shoreham Nuclear' Power Station, Unit 1), Application for Exemption, Docket No.
           '50-322-OL-9 (Low Power) May 22, 1984, 12/'Long Island Lighting Co.,       " Supplemental Motion for Low Power Operating License - Affidavit of Dr. Glenn G.                                     Sherwood, Dr.
Atambir S. Rao, and Mr. Eugene C. Eckert," Docket No. 50-322 (March 20, 1984)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _ _ _ - _ _ _ _ _ _ _ _ _ _ _ .      N

!                                                                                                         1 That same analysis is applicable here, particularly since the worst case accident considered (i.e. DBA-LOCA coincident with a loss of AC power) is directly comparable with the scenario's considered in the Pacific Northwest study.        The results of the 5% analysis show that risk estimates at-this power level are significantly lower than those calculated for full power operation.       Moreover, the analysis demonstrates                         l that fuel failure will not occur following a DBA-LOCA coinci-dent with a loss of offsite power during low power operation.
Factors which significantly contribute to the reduced risk                              ;
i estimate include the following13/,
1 j
o Given the power limitations during the 5% low power testing, the fission product inventory in the core                             !
will, for the most part, not exceed 5% of the values assumed in the FSAR.      In fact, because of the inter-mittent type of operation conducted during low power testing, equilibrium fission product inventory for power levels of up to 5% is unlikely to be achieved.
14!   This low fission product inventory                           j further reduces risk since the amount of decay heat                            !
present and the amount of radioactivity that could be released upon fuel failure are both substantially lower.
13/ See note 12, supra, at 19, 20 14/ As discussed in LILCO submittal SNRC-1036, dated April 11, 1984, fuel burnup during low power testing is estimated to be less than 200 MWD /MTU.

                                                                              .h
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o During 5% lcw power operation, incre/ased time is                                                                                    ,
                                                                        /(' /            .
j available for preventative or miti/gatingraction.                        At                                               ,
5% power, the amount of decay heat produced in the-                                                                    a"iN
                                                                                                                                                              \
reactor vessel results in a' slower pressure and temperature increase than would be experienced at 100%
power. This gives the operetbi more th.me to take                                 ,
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                                                                                                                                                             .]
                                                                                                                     <'                                     g manual action (e.g., manually initiating reactor                             ../              +
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cooling) rather than relyind on automatic action. >2n .g
                                                               .' /                                          j effect, the operator may end 3he transient before ' ' . .
there is any substantial impact'on the plant.
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                                                                                           .e-o During 5% low power operation, there is a substantial                                                                           j reduction in the required capacity for mitigating systems. Because of the lower levels,of decay 7 heat                                i present following operation at 5% pcwer, the demand for core cooling and auxiliary systems is substan-                                                                          ,f4
                                                                                                              -            \*                                   r tially reduced, permitting the operation of fewer systems and components te mitigate any event.
                                                                                                                         '                                         i Based on the 5% analysis performed, LILCO determined that                                         f all the accidents and transients analyzed under Chapter 15 of                                                                       (i the FSAR, the loss of coolant accident (LOCA) is the most e
limiting when considering loss of AC power.                       Inherent in the                                                           ,
loss of AC power scenario is the assumption that the ECCS                                                                                   ,
e pumps are unavailable.15/           Calculations to-determine the (Ame f
15/ The Pacific Northwest Laboratory analysis that established
                  $1.06 billion insurance requirement, used as its limiting accident scenario, a large break LOCA with felayed ECCS operation.          NUREG/CR2601, note 2, supra, 6-2.               Hence, the 5%                                               ,         / n power analysis for Shoreham with no ECCS available is directly comparable with the accident scenarios considered in the Pacific Northwest Laboratory study.
is L-_____-______.____.  - _ _ _

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r to' reach 10CFR50.'k6' limits were performed for four (4).
distinct vyyiations of this accident scenario.                 These             {
calculations, fine results of which were endorsed by the Staff 16/; j,j[resultedinadeterminationthat~n- fuel w                        .
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I 4
16/ USNRC NUREG 0420 Supplement No. 6, dated August                 9., 1984, 15-1 to 15-8.         The'four cases considere'd wt&e:
a)    The -first case.uses a core thermal peaking factor of approximately'5. (A pe.ak rod MAPLHGR of 1.34 kw/ft was used). Using 13CFR50(46 Appendix K models and assumptions, core uncovocy time was dalculated for
                           /            infinite operation at 5% power. This case indicates that 55 minutes are required to reach the peak cladding r         '
c                  temperature limit of 2200'F. Even at 55 minutes, no fuel fai. lures wele, predicted tococcur.
I b)    This case utilizes a core therr.al peaking factor of 3.38 (A peak rod MApLHGR of 0.91 kw/fc was used). Using approved Appendix K models and assumptions, core encovery time was calculated for infinite reactor operation at 5% power. This case indicates that 86 minutes are required to reach the peak cladding temperature limit of 2200*F. No fuel failures were
       -!*-                             predicted.           ,
c)    This case takes into account a bound on the expected operating history of the core during ths startup phase.
A cere thermal peaking factor of 3.38 corresponding to a
,e                                      peak rod MAPLHGR pf 0.91 kw/ft was used in the analysis.
Approved Appendix ri models end assumptions were used.
This case indicates that 110 minutes are required to reach the peak".}1 adding termerature limit of 2200'F.              No fuel failurss were predicted.'                   /'
                                                                /
d)   A more realistic LOCA analysis without the stringent Appendix K criteria was performed. A core thermal peaking factor of 3.38 corresponding to a peak rod MAPLHGR of 0.91 kw/ft was assumed in the analysis. This case takes into account a bound on the expected operating history of the core during the startup test                      ;
phase.       The (results indicate that there would be 3 to No      4    ,
hours available prior to reaching the 2200*F limit.
fuel failuret yere predicted.
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- _ _ - _ . _ _ _ _ - - ._      _         .i

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                        -      failuress were piedicted' to occur when the 10CFR 50.46 limit a
           +
was reached.      Further, the analysis showed that delays in
  ~
3 -? '       .ECCS operation from one to four hours could be tolerated with e,   .
ho fuel failure predicted to. occur.
SinceL'the Shoreham1 specific 5% analysis was performed, the o
               "            ' TDE diesel generators have been licensed.       In addition, LILCO has made a number of major modification and procedure changes M        e                               .
             'y                which servs1to'further minimize'the risk of low power                                           J l
operation.      These include:
1 l
o     The addition of Colt diesel generators on site which can supply 4160 V AC' power through the 69 KV switchyard.
                              'o     Highly enriched sodium pentaborate used in the Standby Liquid Control (SLC) system increases the allowable time for successful initiation of the ' alternative reactivity control measures and ATWS mitigation.
1 o     Installation of an Automatic Depressurization System (ADS) inhibit' switch provides the operating staff with an easy means to avoid automatic depressurization when it would produce unacceptable plant effects.
o     Revision of the Shoreham emergency operating procedures permits throttled low pressure Emergency Core Cooling Systems (ECCS) and condensate to be used during ATWS l                                     events as part of the enhanced reactivity control procedure.

i While'not specifically quantified for 5% low power operation,                        ;
i such improvements should further reduce the risk of an                              j l
accident during low power' operation. Moreover, these factors                   i k
provided added support to the conclusion that fuel failure                         j i
will not occur at 5% low power operation following a DBA-LOCA with. loss of AC power.17/                                                         1 i
C. The Minimal Risk of a Major Core Melt Accident at 5% Power Makes the $1.06 Billion Insurance Coverage of 10 CFR section 50.54(w) Excessive for'Shoreham The express purpose of the property insurance rule is to provide assurance of ample funds to support the stabilization and decontamination of a large power reactor following a postulated accident. The $1.06 billion coverage currently required is based on an analysis which assumes:      (1) full power operation, (2) 100% fuel cladding failure, and (3) 50%
fuel melting.18/ As the above analysis clearly shows, none of those assumptions are valid for Shoreham operating at 5%
power. In addition to the marked differences in these assumptions, a secondary benefit of 5% low power operation when compared to full power operation that warrants consideration, is the significantly reduced worker dose rates from exposure to neutron activated components that were factored into the Pacific Northwest study.
17/ See note 11, supra 18/ NUREG/CR-2601, Note 2, supra, at 7-12
                                                                                                                                 - _ - _ _ . __-____m

     'Specifically,:the Pacific Northwest Study es.timates worker dose rates assuming 30 effective full power operating years 19!,.whereas Shoreham has only operated for 1.94 effective full power operating days. Even were Shoreham to continue to operate in this mode for the next few years,.the worker' dose rate considerations in the context of on-site property insurance would be small. -Hence, the $1.06 billion coverage does not accurately reflect the funds which would be required for stabilization and decontamination activities at Shoreham operating at 5% power following a DBA-LOCA coincident'with the loss of AC power. Thus, some lower                                             '
minimum coverage based on credible accident scenarios should                                           ;
i be imposed.                                                                                           l l
19/ NUREG/CR-2601, Note 2, supra, at 8-3 I
I
: 4.                  REQUIRED COVERAGE BASED ON CREDIBLE ACCIDENT SCENARIOS DURING LOW POWER OPERATION The Pacific Northwest Laboratory study                              !which analyzed the cost of stabilization and decontamination activities at large power reactors considered three different accident scenarios. The postulated accident scenarios, numbered in increasing order of difficulty of the post accident cleanup are summarized below:
Table 4.0-1   Summary of AccidegyjParameters for the Reference Reactor Accidents Accident Parameter                       Scenario 1                  Scenario 2                                        Scenario 3 Accident                         Small LOCA;                   Small LOCA;                                     Large LOCA description                     ECCS functions                ECCS delayed                                    ECCS delayed
                                                 % Fuel cladding                       10                          50                                                                            100 Failure
                                                 % Fuel melting                         0                                 5                                                                       50 200                        1000                                                                        1600 Reactor coolgnt released (M )
Core Damage                       Minor                         Moderate                                                                    Severe Physical damage                     None                     Minor damage                                      Loss of to reactor                                                   to valves &                                       elec. &
building                                                     equipment.                                        other ser-Contamination                                     vices.
of bldg. ven-                                     Major damage tilation                                           to bldg.
system                                             components 20/ NUREG/CR-2601, Note 2, supra 21/ Id. at 8-2, 8-3

An underlying assumption of all these scenarios is that the accident begins with the plant operating at full reactor power.
Thus, large fission product inventories exist and the operators are limited both in time to diagnose and respond to the event and in the capability of safety systems for combating the accident.
These factors increase the possibility of core damage depending upon the type of initiating occurrence (small or large LOCA) and the functioning of safety systems.
The calculated costs of stabilization and decontamination activities for each of these scenarios is as follows:
Table 4.0-2  Summary of Cleanup Cost for a Reference Pressurized Water Rgggtor (PWR) and Boiling Water Reactor (BWR)
Cost (in millions)
Plant Type      Scenario 1           Scenario 2        Scenario 3 PWR          105.2                223.8             404.5 BWR          128.5                228.2             420.9 The $1.06 billion given in section 50.54 (w) (1) was established using the PWR Scenario 3 cleanup costs ($404.5M) and increasing this amount by normal operation and maintenance expenses ($125M),
cost escalation ($209M), and miscellaneous expenses ($323M).23/
22/ NUREG/CR-2601, Note 2, supra at 11-14, 16-27 23/ 52 Fed. Reg. 28963, 29864 Column 2 15 -

As evidenced by the quantitative and qualitative analyses on risk given in'Section 3 above, an accident which results in 100% fuel cladding failure and 50% fuel melting, is highly unlikely during low power operation at Shoreham.                            Thus, the cost estimates for a l
Scenario 3: accident for Shoreham operating at low power are excessive.                           Similarly, since a Scenario 2 accident' assumes fuel clad failure and melting, this scenario is also inappropriate in determining clean up costs for Shoreham operating at 5%.
Given that fuel cladding failure is not predicted to occur during low power operation at Shoreham, LILCO contends that a prudent application of the Pacific Northwest study to Shoreham would be to assume a small break LOCA, in which minimal fuel cladding failure and no fuel melt is expected to occur.24/                                         Hence, accident Scenario 1 is the most appropriate in determining the required insurance coverage for Shoreham.
Based on the Pacific Northwest' study, the cost of stabilization and decontamination activities following a Scenario 1 accident is
              $128.5 million (Table 4.0-2). Similar to the method used by the NRC in establishing the $1.06 billion requirement, the $128.5 million should also be increased to include normal operation and maintenance costs, miscellaneous expenses, and potential cost escalation.                          By using the same scaling factors as the NRC, the
              $128.5 million increases to a total cleanup cost of $337 million.25/
24/ See note 16, supra 25/ The $337 million figure was determined by multiplying the ratio of BWR accident 1 costs to PWR accident 3 costs, times the sum of the normal operation etc. costs. The resultant value was then added to the BWR accident scenario 1 costs,                                                                                   j
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l l                                 5._  REQUIREMENTS FOR GRANTING AN EXEMPTION PURSUANT TO 10 CFR SECTION 50.12                                                      I l
A. Legal Standard Section'50.12 provides the standard for obtaining an exemption from specific NRC regulations.      The rule uses a two tier test to determine if a licensee's request for an exemption should be granted.      First, the request must not have an adverse impact on the public.      Thus, the regulation specifies that the Commission may grant such requests which are:
                                              "( A)uthorized by law, will not present an undue risk to the public health and safety, and are    consistent with the common defense and security."26/
Cecond, the rule requires special circumstances to exist further justifying the need for an exemption.27/ Such circumstances arise where the application of the regulation imposes undue hardship or other costs, does not achieve the purpose intended, conflicts with other rules or requirements of the Commission, or where the exemption would result in a benefit to the public health and safety.
26/ 10 CFR section 50.12 (a) (1) 27/ 10 CFR section 50.12 (a) (2) (i) thru (vi)

l l'
l In applying this test to LILCO's exemption request, two of the-considerations in the first-tier of the analysis present no barrier to.the exemption. Clearly,.the action requested is authorized by law. The NRC has the legal authority to set insurance requirements for licensees and has exercised that authority in the past. In fact, the NRC has already granted a number of requests toflower insurance requirements in situations involving small power reactors or those of unusual design. These exemptions are summarized below.
Table 5.0-1   Summary of Previous Exemptions Granted to Section 50.54(w)
Licensee / Reactor Size !            Requested Maximum Coverage Pacific Gas & Electric Co./               $100,000,000.
Humbolt Bay (63 MW(e))
Yankee Atomic Electric Co./               $500,000,000 Yankee Nuclear (175 MW(e))
Consumers Power Co.                        $500,000,000 Big Rock Point (72 MW(e))
Public Service Co., of Colorado            $500,000,000 Fort St. Vrain (330 MW(e))
Dairyland Power Corp./                     $500,000,000 Lacrosse (50 MW(e))
Dairyland Power Corp./                     $180,000,000 Lacrosse (50 MW(e))
I Hence, the exemption posed by LILCO is authorized by law.       l l
28/ It is also important to note that at 5% power, Shoreham produces approximately 40 MW(e). This is less than rated power levels for the plants noted above that have been granted an exemption.
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18 -

g  4 l                               Moreover, the exemption request has no impact on common defense and security. The phrase " common defense and        j 1
L                               security" refers to the common defense and security of the l
United States. ' !- Neither the property insurance rule-nor LILCO's' exemption request have any relation to national defense or security.
J Consequently, in determining whether a reduction in the minimum required insurance coverage should be granted two remaining factors must be considered: (1) whether there is no undue risk to the public health and safety, and (2) whether special circumstances exist to justify the exemption.
B. No Undue Risk to the Public Health and Safety The property insurance rule addresses the risk of a licensee having insufficient funds to adequately support stabilization and decontamination activities at a nuclear facility following a postulated accident. To minimize such risk, section 50.54(w) establishes three financial and procedural requirements. First, a minimum amount of insurance must be carried ($1.06 billion).
29/ 42 U.S.C. Paragraph 2014 (9)

 !;          . .:                                                                   1 Second, by October 4,-1988, the insurance funds must be-I
                  . payable to separate trusts dedicated for cleanup costs.
Finally, the licensee, in the event of an accident, must L                  provide a decontamination plan to the NRC for their review.
As'a group, these provisions assure sufficient financial integrity to support cleanup activities. Only the first of-these requirements is at issue here.
In requesting a reduction in the required minimum coverage, LILCO is not increasing.the risk considered by section 50.54(w). As has been demonstrated, a core melt accident at Shoreham is not predicted during low power operation.      Thus, with the minimum amount of insurance ($1.06 billion) being based'on such a severe scenario, the imposition of this level
[
of coverage requirement on LILCO is neither justified nor necessary to address the risk of insufficient funding.
The $337 million coverage proposed by LILCO has been demon-strated to provide adequate assurance of funding for stabili-zation and decontamination activities at Shoreham following a postulated accident at low power. Further, with LILCO seeking an exemption only to the minimum coverage require-ments and not to the trust fund or decontamination plan l
provisions, the overall intent of the rule will still be met. i
                                                                                     /
J Hence, no undue risk to the public health and safety arises.      J 4
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1 C.                Special Circumstances Exist Which Further Support LILCO's Exemption Request Section 50.12 lists the types of special circumstances which support the granting of an exemption request.                 A number of these circumstances exist in this current matter.
: 1.                Application of the Regulation in the Particular Circumstances Would Not Serve the Underlying Purpose of the Rule or is Not Necessary to Achieve the Underlying Purpose of the Rule.
l l                 As discussed in Section 4.B, above, the $1.06 billion coverage required by section 50.54(w) is clearly excessive                     5 with regard to Shoreham operating at low power.                 The $337 million proposed by the Company is sufficient to provide ample assurance of funding for stabilization and decontami-nation activities following a low power accident.                 Thus, the application of the $1.06 billion requirement is not necessary to achieve the underlying purpose of the rule.
: 2.               Compliance Would Result in Undue Hardship or Other Costs That Are Significantly in Excess of Those Contemplated When the Regulation Was Adopted.
LILCO currently maintains $620 million property insurance coverage on Shoreham.               This coverage has been in effect for approximately 2 1/2 years at an average yearly premium of
                   $3.3 million.               If LILCO were to procure the $1.06 billion coverage required by section 50.54(w), the yearly insurance premium would rise to approximately $4.4 million.                 The

Company estimates that a $337 million policy would have
                   . yearly premiums of $2 million. Thus the exemption could reduce insurance costs by approximately $2.4 million per year.
i These are significant cost differences. Currently, all Shoreham expenses, including insurance payments, are capitalized (i.e., included in the cost of the plant) . By requiring the Company to procure the current regulatory minimum amount of coverage ($1.06 billion), the Commission would unduly increase the capital cost of Shoreham by $2.4 million for each year the plant is limited to low power operation. By allowing LILCO to procure insurance coverage commensurate with the risk and damage estimates for low power operation, the capital cost of the unit would reflect only justified insurance expenses. Hence, the imposition of the current regulatory requirement on LILCO would impose an undue economic burden.
: 3. There is Present Another Material Circumstance Not Considered When the Regulation Was~ Adopted For Which it Would Be in the Public Interest to Grant an_ Exemption When the property insurance rule was first adopted in 1972, anti-nuclear power sentiments were almost non-existent.
Consequently, once a nuclear plant received a low power license,-barring any major technical problems during initial testing, a full power license would be issued shortly thereafter. Hence, the period between the issuance of a low power and full power did not pose a significant concern when the regulation was adopted.
This is no longer true. Public opposition to nuclear power has increased since the original rule was adopted.       In particular, with respect to Shoreham, the sole obstacle to full power operation has, for several years, been the refusal of State and local government to cooperate in emergency planning. Shoreham was approved for low power testing on July 3, 1985. Given the nature of the licensing process, it is impossible to predict when full power approval will be granted. This period of delay between low and full power approval was unheard of when the property insurance rule was first adopted. Indeed, the emergency planning rules that are now the source of the delay were not enacted until almost a decade after the original property insurance rule.      There-fore, the current situation presents a material circumstance 1
not considered when the regulation was adopted.      Considering the economic impact of the excessive insurance coverage on the cost of Shoreham, it would be in the public interest to grant this exemption.
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: 6. CONCLUSION p
Adherence to the $1.06 billion insurance coverage require-I                         ments of section 50.54(w) is not necessary to meet the intent of the rule and would place an undue economic burden on LILCO. The risk of operation at 5% power is substantially
                          .below that associated with full power. operation. Further, even in the worst case accident considered, no fuel failure is expected to occur. This conclusion is consistent with the position long held by the NRC that operation at low power poses minimal risk to the public health and safety.      Thus, since the $1.06 billion coverage is based on a core melt accident and, as discussed, this type of event is highly unlikely for Shoreham operating at 5% power, some reduced level of insurance should be required.
LILCO proposes to maintain $337 million property insurance coverage for Shoreham. This value is based on the cleanup costs estimated by Pacific Northwest Laboratories for a LOCA which results in minimal fuel failure and no fuel melting (Accident Scenario 1). This accident, while still highly unlikely, is the most reasonable assumption for analyzing insurance requirements as long as Shoreham is limited to 5%
power operation.
The analysis demonstrates that this exemption request meets the two-tier criteria of section 50.12. The proposal is authorized by law, has no impact on the common defense and security and poses no undue risk to the public health and
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safety. Further, special circumstances dictate granting the exemption:- adherence to the regulation, as adopted, is not necessary to meet the intent of the rule; compliance with the r'egulation as-is will result in undue hardship; and circumstances different from those considered when the rule was adopted now exist.
In light of the above, LILCO. requests that while Shoreham is limited to 5% power, insurance coverage under section 50.54(w) for the plant be limited to $337 million.
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