ML100970027

Decommissioning Funding Status Report

ML100970027
Person / Time
Site:	Fermi
Issue date:	03/31/2010
From:	Plona J DTE Energy
To:	Document Control Desk, NRC/FSME
References
NRC- 10-0025
Download: ML100970027 (15)

Text

Joseph H. Plona Site Vice President 6400 N. Dixie Highway, Newport, MI 48166 Tel: 734.586.5910 Fax: 734.586.4172 DTE Energy 10CFR50.75(f)(1)

March 31, 2010 NRC- 10-0025 U. S. Nuclear Regulatory Commission Attention: Document Control Desk Washington D C 20555-0001

,

References:

1) 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) on the status of Detroit Edison's decommissioning funding 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 cost of decommissioning continues to be evaluated as decommissioning proceeds.

The requested annual decommissioning funding information for Fermi 1, reported in 2010 dollars, is provided as an enclosure to this letter. The prepayment trust method and Detroit Edison funding combined with a DTE Energy guarantee is providing financial assurance.

Documentation of the financial test for this guarantee is also provided as an attachment to this letter.

USNRC March 31, 2010 NRC-10-0025 Page 2 Should you have any questions or require additional information, please contact Ms. Lynne Goodman of my staff at (734) 586-1205.

Sincerely, oseph H. Plona JHP/DTB/dtb Enclosures (1)

Attachments (4).

cc: T. Smith P. Lee (NRC Region III)

T. Strong (State of Michigan)

Regional Administrator, Region 11I NRC Resident Office

USNRC March 31, 2010 NRC-10-0025 Page 3 bcc: G. Cerullo W. A. Colonnello J. M. Davis L. S. Goodman T. Grimaldi R. Johnson A. Moore J. J. Musial K. L. O'Neill R. Pelzer D. Richards L. D. Schenk S. Stasek K. Stump Fermi 1 Staff Information Management (140 NOC) [Fermi 1 Decommissioning Funding Records]

NRR Chron File NRC Notebook (Fermi 1)

Enclosure to NRC-10-0025 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-10-0025 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 ongoing engineering reviews. The estimated.

remaining decommissioning cost in both nominal and 2010 dollars, including contingency. -$22

2. The market value of the Fermi 1 trust fund was approximately $2.6 million as of December 31, 2009. This amount is greater than the amount needed to return the facility to a passive safe storage condition if the project were to cease for any reason. -$2.6

3. Amount fund is above (or below) estimated remaining costs. -$(20)

A DTE Energy guarantee has been chosen as the assurance method for Fermi I's shortfall.

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 4.0% with earnings on decommissioning fund to be equal to 0%.

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

6. Any material changes to the trust agreement: None

Attachments to NRC- 10-0025 Page 1 ATTACHMENTS FERMI 1 NRC DECOMMISSIONING FUNDING STATUS REPORT

1) LETTER FROM CHIEF FINANCIAL OFFICER

2) DTE ENERGY PARENT COMPANY GUARANTEE

3) INDEPENDENT ACCOUNTANT'S REPORT

4) CERTIFICATE OF THE CORPORATE SECRETARY Enrico Fermi Atomic Power Plant, Unit 1 NRC Docket No. 50-16 NRC License No. DPR-9

Attachment I NRC-10-0025 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), 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 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 $22,000,000 $20,000,000 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 2009.

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, 2009.

FINANCIAL TEST: ALTERNATIVE II

1. Decommissioning cost estimates or guaranteed amount for facility

[license number DPR 9] $20,000,000

2. Current notes rating of most recent unsecured issuance of this firm Rating BBB-/Baa2 Name of rating service Standard & Poor's / Moody's Investors Service

3. Date of issuance of notes May 2009

4. Date of maturity of notes May 15, 2014

Attachnent 1 NRC-10-0025 5*. Tangible net worth** $4,238,000,000 6*. Total assets in the United States $24,168,000,000 Yes No

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

8. Is line 5at least6times 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 "Baa" or better (if issued by Moody's)*** X

• denotes figures derived from financial statements Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights "BBB" and "Baa" are rating categories, not specific ratings, so DTE Energy has interpreted the criteria to be that the ratings are within the BBB category or Baa category or better. DTE meets this standard.

I certify that the information is true and correct to the best of my knowledge DTE Energy Company By__

David E. Meador Executive Vice President and Chief Financial Officer, DTE Energy Company March 26, 2010

Attachrrent 2 NRC-10-0025 PARENT COMPANY GUARANTEE Guarantee made this 25th day of March 2010 by DTE Energy Company, a corporation organized under the laws of the State of Michigan, herein referred to as "guarantor," to our subsidiary, The Detroit Edison Company (DECo) of Detroit, MI, obligee.

Recitals 1, The guarantor has full authority and capacity to enter into this guarantee under its

.bylaws, articles of incorporation, and the laws of the State of Michigan, its State of incorporation. Guarantor has approval from its Board of Directors to enter into this guarantee.

2. This guarantee is being issued so that DECo will be in compliance with regulations issued by the Nuclear Regulatory Commission (NRC), an agency of the U.S.

Government, pursuant to the Atomic Energy Act of 1954, as amended, and the

.Energy Reorganization Act of 1974. The NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 50, which require that a holder of, or an applicant for, a license issued pursuant to 10 CFR Part 50 provide

• assurance that funds will be available when needed for required. decommissioning activities.

3. This guarantee is issued to provide financial assurance for decommissioning

• activities at the Fermi Atomic Power Plant Unit I as required by 10 CFR Part 50.

The guarantee amount is as follows: $20,000,000 for the Fermi Atomic Power Plant Unit 1.

4. The guarantor meets or exceeds the following financial test: ALTERNATIVE II and agrees to notify DECo and the NRC of any changes in its ability to meet the criteria in compliance with the notification requirements as specified in 10 CFR Part 50.-

The guarantor meets the financial test of (a) below:

(a)(i) A current rating of its most recent unsecured notes issuance of: AAA, AA, A,or BBB as issued by Standard and Poor's, or Aaa. Aa, A, or Baa as rated by Moody's; and 1

Attachrrent 2 NRC-I0-0025 (ii) Tangible net worth is at least $10 million and at least six times the current guarantee amount (or prescribed amount if a certification is used); and (iii) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the current guarantee amount (or prescribed amount if certification is used). or (b)(i) Net working capital and tangible net worth each at least six times the current guarantee amounts (or prescribed amount if certification is used);

and (ii) Assets located in the United States amounting to at least 90 percent of its total assets or at least six times the amount of the current guarantee amounts (or prescribed amount if certification is used); and (iii) Meets two of the following three ratios: a ratio of total liabilities to net worth less than 2.0; a ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities that is greater than 0.1; and a ratio of current assets to current liabilities that is greater than 1.5; and (iv) Tangible net worth of at least $10 million.

5. The guarantor has majority control of the voting stock for the following licensee(s) covered by this guarantee. Licensee: The Detroit Edison Company; Facilities: Enrico Fermi Atomic Power Plant, Unit 1 6400 N.

Dixie Hwy, Newport, MI 48166, license number DPR - 9.

6. Decommissioning activities as used below refers to the activities required by 10 CFR Part 50 for decommissioning of facility identified above.

7. For value received from DECo and pursuant to the authority conferred upon the guarantor by the September 28, 2006 resolution of the Finance Committee acting on delegation of authority from the DTE Energy Company Board of Directors , a certified copy of which is attached, the guarantor guarantees that if the licensee fails to perform the required decommissioning activities, as required by License No- DPR-9, due to lack of funds, the guarantor shall (a) provide all funds necessary, up to the amount of this guarantee in 2010 dollars and as adjusted for inflation, to carry out the required activities, or (b) set up a trust fund in favor of DECo in the amount of the current guarantee amount for these activities.

2

NRC-10-0025

8. The guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report and reconciling schedule to the NRC annually within 90 days of the close of the parent guarantor's fiscal year.

9. The guarantor and the licensee agree that if the guarantor fails to meet the financial test criteria at any time after this guarantee is established, the guarantor and the licensee shall send, within 90 days of the end of the fiscal year in which the guarantor fails to meet the financial test criteria, by certified mail. notice to the NRC.

If DECo fails to provide alternative financial assurance as specified in 10 CFR Part 50, as applicable, and obtain written approval of such assurance from. the NRC within 180 days of the end of such fiscal year, the guarantor shall provide such alternative financial assurance in the name of DECo or make full payment under the guarantee to a standby trust established by DECo.

10. Independent of any notification under paragraph 9 above, if the NRC determines for any reason that the guarantor no longer meets the financial test criteria or that it is disallowed from continuing as a guarantor for the facility under License No. DPR - 9 the guarantor agrees that within 90 days after being notified by the NRC of such determination, an alternative financial assurance mechanism as specified in 10 CFR Part 50 as applicable, shall be established by the guarantor in the name of DECo unless DECo has done so.

11. The guarantor as wellas its successors and assigns shall remain bound jointly and severally under this guarantee notwithstanding any or all of the following:

amendment or modification of license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50.

12. The guarantor agrees that it will be liable for all litigation costs incurred by DECo or the NRC in any successful effort to enforce the agreement against the guarantor.

13. The guarantor agrees to remain bound under this guarantee for as long as DECo must comply with the applicable financial assurance requirements of 10 CFR Part 50, for the previously listed facility, except that the guarantor may cancel this guarantee by sending notice by certified mail to the NRC and to DECo, such cancellation to become effective no earlier than 120 days after receipt of such notice by both the NRC and DECo as evidenced by the return receipts. If the licensee fails to provide alternative financial assurance as specified in 10 CFR Part-50, as applicable, and obtain written approval of such assurance within 120 days after the sending of the above notice by the guarantor, the guarantor shall provide such alternative financial assurance.

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Attachrrent 2 NRC-10-0025

14. The guarantor expressly waives notice of acceptance of this guarantee by the NRC or by DECo. The guarantor also expressly waives notice of amendments or modification of the decommissioning requirements and of amendments or modifications of the license.

15. If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to the NRC during each year in which this guarantee is in effect.

I.hereby certify that this guarantee is true and correct to the best of my knowledge.

Effectivedate: M4A..Cq 2-/ "2010 DTE Energy C David E. Meador, ExecutiveVVice Chief Financial Officer Signature of witness or notary:

W The Detroit EdsCompany N. A. Khouri, VcPresident and Treasurer Signature of witness or notary; "]U..

R y NOTAWyPUBU STATE OF U OOUW0L~Y0FVAYNE 4

Attachrret 3 NRC-10i%

J-°cWATERHOUS(4PERS E c PricewaterhouseCoopers LL.P PricewaterhouseCoopers Plaza 1900 St. Antoine Street Detroit Ml 48226-2263 Telephone (313) 394 6000 Facsimile (313) 394 6555 Report of Independent Accountants To The Detroit Edison Company We have performed the procedures enumerated below, which were agreed to by The Detroit Edison Company (the "Company") and the U.S. Nuclear Regulatory Commission ("NRC"), solely to assist you in the Company's compliance with the NRC financial assurance regulations, 10 CFR Part 50, as of December 31, 2009, as detailed in the "Letter from David E. Meador, Chief Financial Officer of DTE Energy Company, Corporate Parent of The Detroit Edison Company, Including Costs Estimates and Data from Audited Financial Statements" (the "Letter") to be provided to the NRC. The Company is responsible for the Letter. 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 those 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.

1. We compared the amount of "Tangible net worth" per line 5 of the Letter to "Total Equity" less the sum of "Goodwill" and "Intangible assets," as reflected in the audited consolidated financial statements of DTE Energy Company as of December 31, 2009, and found the amounts to be in agreement.

2. We compared the amount of "Total assets in the United States" per line 6 of the Letter to a schedule prepared by the Company from its accounting records. We compared the amounts listed on the schedule to the corresponding amounts included in the Company's accounting records and found the amounts to be in agreement.

We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on the Letter. 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 Detroit Edison 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 24, 2010

Attachrrent 4 NRC-10-0025 DTE ENERGY C-OMPANY Certificat'e oftl!e CoiporateSecretaly I, Sandra Kay: Enni'&s, thie :duly ele cted ýand acting Corporate Seet'ary of DTE Energy Compa!ny, aMicigang cop*0-'ration (the ",Gonpany"')--do liereby certify Hasfollows:

Attached- heretd as Ekhibit.A ,is a true and cotredt coipy' of fes6lutiohs ("Resoltitins")

ad6dpted At diheeiing of th,:.Boafd Of Difectors, of tlie Comipany held 6ii Septemiber 28, 2006,. at which meeting ýa quonum was prqse~n* apd. a4ting ti-ropgugougt, ai a4. .su6h, Resolutions haveý n6t "been amepnde, modified, supplemented pescinded or aid are in effect.on-thei date hereofi; IN WITNESS: WHEREOF, I have set mny hand tIs h. 5th day,of March, 201.Q, DTE ENERGY COMPANY By: Qv~~94 Samidra Kay-Enhiis Corporate S'e~cfetaryý

.ttachrrent 4 NRC-I0-0025.

GuaranteeIncrease WI ERAS, management periodically reviews gucarantesrcquired to support the.

actions..ofsubsidiary companies; andhas advised theFinanceComimiittee thatguarantees

-forthe ben of-affiliates engaging innon-trading',activities (excludingguartees related to synthetic fuel fadility~sales' tfausactions) -and guarateesrielated to synthetic fuiel failiysals tran.sac-tions are adequatiein the .amo6ts authrcdby t h_Board on April 28,'2005 ('Piior ReslUtib")'; -andfurtherf WHE4"REAS, managemient has :advised tlie *inane, 0Cmmittee of this:Bo.arld, and the FYinance ýCommitt~ee recommnends to this Board thatit is necessary, and ladvisable to

incerease the auithority undler :the Prior Resolition frflom $ .9 biion to $2.3 billion with respet*to -theguarantees for the benefitwogaffiliates engaging in trading, activities, such minoreased amountbeing prpimaly'for the..ptrOseof exchange trading activity; RESOLVED,;.'that the resolutions&.rlating to guarantee authorityvadopted bythis Board..on April28,, 2005 be, and they hereby are, resdinded and replaced byW ýth resolutions'herein adorited; and further RESOLVED, that, the Chief Financial Officor, Treasurer , and each Assisiant Treasitercoltivey. the "Responisible Officers") ofti opn e~adec fte herebyyis, kuthorizedtooissue the guarantees of this Company.for Ihe benefit of affiliates engagingwin trading activities inthe aggrgateoprincipal amount of up to $2.3 billion; ind RESOLED;, that theRsponsible Officets of thisC6ompanhybe, and eachof them ehereby is, authorizedlto issue the' guaatitees of this0Compy -forihtebenefitoQ'affiiates engaging nnon-trading, acivities (excluding guarantees relatie to,:synthetic fuel facility

sales transactions) in the aggregate principal amountfof up to $850 million; and further RBSOLVED,,that the Respoisiblb Officersof this,Company' be,and each ofthgm hereby is, 'authorized to, issue the guarantees ofthis Company in such .ouiirts.as any

,sudh.Responsibie O-'ficer deemis niecessary, appfrpriate or advisable,, in such Responsible Officer'sdiscretion, for the sale(s) offsyntetic fuelfaci1ities ofhitCornpay's affiliates; and RESOLVED; that the iResponsibi Officers, the Corpoirt& Secretary iand each Assistant Corporate 'Secretary of this Company be, and each of them hiereby is, authorized to d0oallacts and deeds and .e.xecute ana deliver all suichdocumnents -as each of suci named o.fficers deemiito .be. necess-ar-yi, apprbpriate woradvikablel' to carry ,into effect!

thepurpose and intefit of thesexeso.o0.!lonts0 Yr.blqEnrgy Company 1eetingqotheBarii of Di recto m September28, 2006