ML20246H744

Certificate of Svc.* Certifies That V Stello 890503 Memo to Commissioners Re Plant Decommissioning Funding & Readiness for Low Power License Hand Delivered to Each Commissioner Ofc on 890503

ML20246H744
Person / Time
Site:	Seabrook
Issue date:	05/05/1989
From:	Reis E NRC OFFICE OF THE GENERAL COUNSEL (OGC)
To:
References
CON-#289-8566 OL-1, NUDOCS 8905160183
Download: ML20246H744 (14)

Text

- - - - - - . .

1. ,; .

j- H UNITED STATES OF AMERICA NUCLEAR REGULATORY COP 9tISSION 1 BEFORE THE COMMISSION

'89 fiAY -5 ' P3 :03 ' l a:

In the Matter of .

Boa. .

Docket Nos. 50-443 OL-01..

PUBLIC SERVICE COMPANY OF 50-444 OL-01 NEW HAMPSHIRE, g al. On-site Emergency Planning and Safety Issues

-(Seabrook Station, Units 1 and ?)-

1 1

CERTIFICATE OF SERVICE I I hereby certify that:

l (1) copies of the Memorandum From Victor Stello, Jr. to Chairman Zech, and Commissioners Roberts, Carr, Rogers, and Curtiss entitled. "SEABROOK DECOMMISSIONING FUNDING AND READINESS FOR LOW POWER LICENSE, DATED MAY 3, 1989" was hand delivered to the office of each Commissioner on May 3,1989.

(2) The above described document was sent by express . mail to the following addresees at the addresses set out below on* May 3, 1989, and a -

certificate of service was served by express mail to those addressees at those addresses on May 4,1989: John Trafficonte Esq.; Thomas Dignan, Jr., Esq.;

Diane Curran, Esq.; Robert A. Backus Esq., Paul McEachern, Esq.

E (3) The remaining addressees on this service list were served with the above described document by deposit in the United States mail, first class, or as described by an asterick, by deposit in the Nuclear Regulatory Commission's internal. mail system on May 4, 1989:

H. J. Flynn, Esq. Thomas G. Dignan Jr., Esq.

Assistant General Counsel Robert K. Gad, III, Esq.

Federal Emergency Management Agency One International Place 500 C Street, S.W. Boston, MA 02110-2624 Washington, DC 20472 Geoffrey Huntington, Esq.

Philip Ahrens, Esq. Assistant Attorney General Assistant Attorney General Office of the Attorney General Office of the Attorney General 25 Capitol U 't State House Station Concord, NH 03301 Augusta, ME 04333 E John Traficonte, Esq.

Stephen A. Jonas, Esq.

Assistant Attorney General Office of the Attorney General One Ashburton Place, 19th Floor Boston, MA 02108 8905160183 890505 PDR ADOCK 05000443i G PDR c

L s:

l'. ., p Diane Curran, Esq. Mrs. Anne E. Goodman, Chaiman v Hamon, Curran & Tousley- Board of. Selectmen

2001 S Street, NW 13-15 Newmarket Road Suite'430- Durham, NH 03824 Washington, DC 20009 Hon. Gordon J. Humphrey Calvin A. Canney United States Senate City Hall . 531 Hart Senate Office Building 126 Daniel Street Washington, DC 20510 Portsmouth,'NH 03801 Peter J. Matthews, Mayor Allen Lampert City Hall Civil Defense Ci*ector Newburyport, MN 01950 Town of Brentwood 20 Franklin' Michael Santosuosso, Chaiman Exeter, NH 03833 Board of Selectmen South Hampton, NH 03827 William Amstrong Civil Defense Director. Ashod N. Amirian, Esq.

Town of Exeter Town Counsel for Merrimac 10 Front Street 145 South Main Street Exeter, NH 03833 P.O. Box 38 , .

Bradford, MA 01835 Gary W. Holmes, Esq.

Holmes'& Ellis Robert A. Backus, Esq.

47 Winnacunnet Road Backus, Meyer & Solomon Hampton, NH 03842 116 Lowell Street Manchester, NH D3106 J. P. Nadeau Board of Selectmen Paul McEachern, Esq.

'10 Central Street Shaines & McEachern Rye, NH 03870 25 Maplewood Avenue P.O.-Box 360 Judith H. Mizner, Esq. Portsmouth, NH 03801-79 State Street Newburyport, MA . 01950 Charles P. Graham, Esq. i McKay, Murphy & Graham Robert Carrigg, Chairman 100 Main Street Board of Selectmen Amesbury, MA 01913 Town Office Atlantic Avenue William S. Lord North Hampton, NH 03862 Board of Selectmen 4 Town Hall - Friend Street l Sandra Gavutis, Chairman Amesbury, MA 01913 I Board of Selectman RFD #1, Box.1154 Kensington, NH 03827 R. Scott Hill-Whilton, Esq.

Lagoulis, Clark, Hill-Whilton

& McGuire 79 State Street Newburyport, MA 01950

{ d.

1 Barbara J. Saint Andre, Esq. Ms. Suzanne Breiseth Kepelman & Paige, P.C. Board of Selectmen 77 Franklin. Street Town of Hampton Falls Boston, MA 02110 Drinkwatter Road Hampton Falls. NH 03844 Atomic Safety and Licensing Appeal Panel.(8)* Docketing and Service Section*

U.S. Nuclear Regulatory Comission Office of the Secretary Washington, DC 20555 U.S. Nuclesc Regulatory Comission Washington, DC 20555 Atomic Safety and Licensing Board i Panel (5)

U.S. Nuclear Regulatory Comission

. Washington, DC 20555-Edwin J. Rpis Deputy Aptistant General Counsel Reactor Licensing Branch

6 4

a acoq#o g UNITED STATES

! o, NUCLEAR REGULATORY COMMISSION

-l WASHINGTON, D. C. 20$55

...e

/ May 3, 1989 hh HEMORANDUM FOR: Chairman Zech B NY -5 P3 :03  !

Commissioner Poberts Commissioner Carr Commissioner Rogers Commissioner Lcrtiss FROM: Victor Stello, Jr. <

Executive Director for Operations 4

SUBJECT:

SEABROOK DECOMMISS10t!!NG FUNDING AND READINESS FOR LOW POWER LICENSE j

The staff has completed its review of the Seabrook decommissioning funding '

assurance program required by Comission Decision CLI-88-10 of December 21, )

1988. The staff has concluded that the Applicants have provided reasonable l assurance that adequate funds are available for decommissioning the Seabrook facility in accordance with the provisions of CLI-88-10. As required by i CLI-88-10 and the Comission's Order of March 22, 1989, Notice is hereby made {

to the Comission that Applicants have met the Corsnission's requirements. l A copy of the staff's evaluation is enclosed.

I On May 2,1989, the 'pplicants certified the Seabrook facility is ready for j licensing and reque. ed that NRC issue a low-power testing license. The {

Region I staff has c;ncluded that the facility and PSNH management are i prepared to receive a low-power license and conduct testing at power levels

• not to exceed 5% of full power, in accordance with the provisions of the license.

In accordance with the Comission's Order of March 22, 1989, a low power license l will not be issued for the Seabrook facility before a Comission ruling on matters  ;

covered by that Order. The Director of NRR is prepared to premptly issue a license l to the Applicants upon authorization by the Comission that a low-power license l may be issued. t O

l_ l Ykor StM o, Jr Executive Director for Operations

Enclosure:

As stated cc: SECY OGC Service List CONTACT: '

R. Wessman, DRP/NRR x21433 ,g g{ '

W  ;

.- i

' l STAFF EVALUATION OF PSNH DECOMMISSIONING FUNDING ASSURANCE PLAN FOR'SEABROOK SUBMITTED IN ACCORDANCE WITH COMMISSION DECISION CLI-88-10 l

BACKGROUND In CLI-88-10 the Comission accepted in part and rejected in part the Decomis- ] 1 sioning funding plan submitted by the Applicants in response to CLI-88-07. The Comission established a requirement that " reasonable assurance that funds are available for decommissioning must be provided for a sum of $72.1 million before licensing for low-power operation." (p. 1.)

This amount was the sum of:

Reactor decommissioning $19.7 million Spent fuel storage 25.0 million  !

Spent fuel disposal 13.0 million / -

i Contingent) 14.4 million >

This financial assurance could be in the form of a pre-paid external account, surety or other guarantee. Also a separate and segregated account guaranteed I i

by at least two of the joint owners whose financial health has not been called into question would be acceptable.

2 SUBMITTALS FROM THE APPLTCA;T In response to CLI-88-10, the Applicants made four written submittals to the staff, one on March 20, 1989, a second delivered at a public meeting on April 20, 1989, a third, on April 27, 1989, and a fourth, on May 3, 1989, clarifying one aspect of an earlier submittal, in response to staff reviews. '

The March 20 submittal included (1) an irrevocable Surety Bond purchased from Aetna Casualty and Surety Company (Aetna C & S, the " surety company" or the "the surety") which promises to pay to the trustee the amount of $72.1 million (approx.) according to an annual schedule of payments over the 28-year period in the event any Applicant defaults on payment of decommissioning costs, (2) a Pre-Operational Funding Agreement between FIRST NH INVESTMENT SERVICES CORPO-RATION (FirstNHISC)andthejointowners,and(3)aSEABROOKPRE-0PERATIONAL DECOMMISSIONING TRUST AGREEMENT between the same parties as (2). First NHISC is the trustee for any funds that may be drawn from the pre-operational decom-missioning trust fund (including any monies from the surety bond).

On March 31, 1989, the staff provided the following coments to the Applicants on their March 20 submittal.

i 1. The Comission's funding requirer.ents in CLI-88-10 were

! based upon values expressed in 1988 constant dollars 1 (see CLI-88-10 pp. 14,15). The Comission adopted the Applicants' response to CLI-88-07, "The Plan", to l develop its estimate of decommissioning and fuel stor- i age costs. Section 3, Table 2, Note 1 of "The Plan" l states "ALL VALUES ARE IN 1988 DOLLARS." Table 2 presented the estimated costs associated with return-ing Seabrook Unit I to unrestricted use and termination l of the NRC license in the event low power testing had '

been completed and a full power license was not granted.

The Surety does not state that the expenditure amounts

, that appear in the Surety are in 1988 constant dollarti.

l

. j 3

2. The language ~ of the Surety does not appear to address contingencies other than denial of awfull power license, e.g.,_ where the Applicants. withdraw their application for a full power license subsequent to operation in accordance with a low power license or where the Appli-cants are granted a license for operation at power

. levels above 5 percent but less than full power. The Surety, or whatever assurance mechanism is used, should me.ke clear that funds as required by CLI-88-10 will be available in all cases "in the event that low power

~

operation has occurred and a full power license is not granted" CLI-88-07, 28 NRC at 273, CLI-88-10, 28 NRC ,

p.4.

l A public meeting was held on April 20, 1989, for the purpose of receiving Applicants' proposals for treating the staff's coments on the March 20 submittal. The Applicants proposed to account'for inflation, making up the shortfall in the Surety Bond by purchasing zero coupon U.S. Treasury Bonds to mature in the years necessary to make up the shortfall. Applicants proposal also (1) assumed 3.5 percent inflation based on the Council of Economic Advisors andOMBforecasts,(2)removedtheeffectsofdouble-countingoffuelstorage costs, (3) provided assurance of fuel storage costs of approximately $36 million and, (4) used the 25 percent contingency factor, as in CLI-88-10. Finally, the Applicants proposed not to apply an inflation factor to fuel disposal costs, of

$13 million, because they believed that DOE would not charge this amount under the conditions at issue. The staff urged the applicant to verify that this was the case and reply back to the staff.

The submittal of April 27 contained a number of enclosures and attachments, the most relevant for this evaluation are: (1) a comitment to purchase zero coupon U. S. Treasury Bonds to make up shortfalls in the Surety Bond due to projected inflation,(2)atableshowinga20-yearscheduleofsourceand

+

l I

4 use of funds should the joint owners fail to make payments for decommissioning and fuel handling called NEW HAMPSHIRE YANKEE POST FIVE PERCENT DECOMMISSIONING FUNDANNUALSTATEMENTOFAPPLICATIONANDSOURCEOFFUNDS, EXHIBIT 2,(3)a schedule showing the plan for purchasing the Treasury Bonds called NEW HAMPSHIRE YANKEE POST FIVE PERCENT DECOMMISSIONING FUND SUPPLEMENTARY PRE-0PERATIONAL DECOMMISSIONING TRUST PRO FORMA SCHEDULE OF INVESTMENT PORTFOLIO, EXHIBIT 4, (4) A SEABROOK SUPPLEMENTARY PRE-OPERATIONAL DECOMMISSIONING TRUST AGREEMENT incorporating the agr;ement to receive and pay out funds from the proceeds of the Treasury Bonds, (5) a comitment to purchase the Treasury Bonds prior to the issuance of a low power license, and (6) a letter dated April 27, 1987, from DOE which states that DOE is obligated to take the fuel for final disposal but that since no electricity will have been generated and sold under the situation assumed for this review, there would be no financial liability under the contract with DOE for such disposal.

In p oviding funds to account for inflation, the Applicants made certain adjustments to the cost estimates set out in CLI-88-10. First, the Applicants took into account the double-counting of the cost of fuel storage in the first 49 months of the decommissioning period. The Applicants therefore removed this double-counting before calculating the dollar amount of additional assurance required. Secondly, the Applicants accounted for the fact that the estimated fuel storage cost of $25 million in CLI-88-10 was expressed as an annuity.

Since the Applicants are providing the assurance with a combination of a Surety Bond and U. S. Treasury Bonds rather than an annuity the Applicants properly adjusted the amount required.

.' k i

5 l

i

]

The Applicants reasonably accounted for inflation by adjusting annua ~i cost upward at 3.5 per cent per year to account for inflation except for fuel disposal. The fuel disposal cost was not adjusted for inflation because of the DOE statement that there would be no charge for disposal of the fuel, i

Certain features of the Surety Bond and the Treasury Bonds should be noted.

The Surety Bond has a 28-year payout schedule (if called upon) which generally follows the expected annual costs. The payout in any one year can be made j i

later than scheduled, but not earlier. The Treasury Bonds, although ccmitted to the decommissioning activities, can be liquidated earlier than the maturity date. In each year, the sum of the two sources, together with any payment comitments carried forward, is equal to or greater than the expected fund j requirements. If a repository is available earlier than the 28th year, proceeds from sale of the Treasury Bonds could fund any end-of-storage costs.

The net effect of the Applicants' adjustments provide for comitments of a dollar flow of $112,389,969 from these sources, if necessary, over the 28-year period (seeApril 27, 1989 submittal, EXHIBIT 2). )

I With respect to fuel disposal costs, the letter from DOE provided in the I Applicants' April 27, 1989 submittal states that DOE is required to take the 1

fuel from Seabrook at no cost to the joint owners. It is not necessary that this portion of the costs be escalated to take into account future inflation. 1 l

l l

l 1

.' l The staff researched the qualifications of Aetna C&S to serve as surety for the bond which has been negotiated and of First NH Investment Services '

Corporation to be the trustee for funds that may be paid into a trust account as a part of the decommissioning assurance program. Each is qualified to perform its expected services. Each has substantial resources and experience.

In the case of Aetna, it is rated highly by insurance and investment rating services. It is an approved surety by the U.S. Treasury for accounts of up to nearly three times the $72.1 million.

First NH Investment Services Corporation is a wholly-owned subsidiary of a large New Hampshire bank holding company. It already has approval from the State of New Hampshire to be the trustee of the decommissioning fund forth-coming if Seabrook obtains a full power operating license. First NH Investment Services Corporation has the authority to act as a trustee and its trust operations are regulated and examined by agencies of the State of New Hampshire. First NH Investment Services Corporation is an acceptable trustee and the Trust Agreements are acceptable.

CLI-88-10 calied for the funding assurance to be available "in the event that low-power operation has occurred and a full power license is not granted."

The term of the Surety Bond provided by the Applicants continues until the earlier of a final non-appealable grant of a license to operate at any power l 1evel over 5 percent or a final non-appealable determination that no further l decommissioning (after low power operation) is required. The obligation under the Surety Bond to pay in the event of a default does not comence until the 1

7 l

4 NRC orders decommissioning as a result of a denial by NRC of a full power '

license." In its March 31, 1989 letter, the Staff. indicated the need to i

resolve the question of timing.

The Applicants' response indicates their recognition that in the event of such a withdrawal of the application for a full power lictase, the NRC has sufficient authority to condition such withdrawal on such terms and conditions i as may be needed to adequately assure safety and financial assurance. Similarly, l the Applicants assert that if interim operation at a power level higher than 5 percent were proposed, such operation would require further licensing approval by the Comission and that the Comission has sufficient authority to impose any needed license conditions with respect to decommissioning. ,

I We agree. The financial assurance arrangements employing the Surety Bond and l

Treasury Bonds cover the specific circumstances at issue in the proceeding to which CLI-88-10 was addressed. In the event that other circumstances arise in the period prior to July 27, 1990, when the decommissioning funding rule requirementsbecomeapplicable(10CFR50.33(k))suchaswithdrawalora request for interim operation at a power level higher than 5 percent, these actions require Comission approval and the Commission has adequate authority to impose necessary decommissioning funding assurance requirements on such withdrawal or license amendment.

l l

t ,

~

\

8 I

i STAFF CONCLUSIONS q

l

(

The staff finds that the decommissioning assurance plan provides reasonable assurance that the activities required by CLI-88-10 will be funded even if (1) no full power license is issued after a low power license has been granted, and (2) any one or more of the joint owners does not pay its share of the decomis-sioning costs.

The decommissioning assurance plan provides at least $72.1 million reasonably adjusted for inflation of decommissioning and fuel storage costs and cost contingency over the 28-year period.

The proposed funding arrangements consisting of a Trust and a Surety Bond, covering part of needed funds, satisfy the provisions of 50.75(e)(1)(iii).

The proposed funding arrangement, consisting of a prepaid trust account funded with Treasury Bonds covering the remaining funds needed to provide adequate fundingassurance,satisfiestheprovisionsof50.75(e)(1)(1).

We therefore conclude that the Applicants' submittal is acceptable to provide the necessary assurance and meets the Comission's requirements as set forth in CLI-88-10.

l l

( :. .

..' Edward A.' Brown Seabrook Nuclear Power Statior.

Public Service Company of New Hampshire cc:

Thomas Dignan, Esq. E. Tupper Kinder, Esq.

,A John A. Ritscher, Esq. G. Dana Bisbee, Esq.

Ropes and Gray Assistant Attorney General Office of Attorney General 225 Franklin Boston, Street Massachusetts . 02110 208 State House Annex Concord, New Hampshire 03301 Mr. Bruce B. Beckley, Project Manager Public Service Company of New Hampshire Resident Inspector.

Post Office Box 330 US Nuclear Regulatory Commission

. Manchester,.New Hampshire 03105 Post Office Box 1149 Dr. Mauray Tye, President Sun Valley Association Mr. A. M. Ebner, Project Manager 209 Summer Street United Engineers & Constructors Haverhill, Massachusetts 01830 Post Office Box 8223 Robert Backus, Esq.

Backus, Meyer and Solomon Steven 01eskey, Esq..

116 Lowell Street Office of the Attorney General Manchester, New Hampshire 03106 One Ashburton Place P.O. Box 330 Diane Curran, Esq. Boston, Massachusetts 02108 Harmon and Weiss 2001 S Street, NW Carol S. Sneider, Esq.

. Suite 430 Office of the Assistant Attorney General Washington, D.C. 20009 One Ashburton Place P.O. Box 330 Philip Ahren, Esq. Boston, Massachusetts 02108 Assistant Attorney General State House, Station f6 D. Pierre G. Cameron, Jr., Esq.

Augusta, Maine 04333 General Counsel Public Service Company of New Hampshire Mr. Edward A. Brown, President Manchester, New Hampshire 03105 and Chief Executive Officer New Hampshire Yankee Division Mr. James M. Peschel Public Service Company of Public Service Company of New Hamsphire New Hampshire P.O. Box 300

. Post Office Box 300 Seabrook, New Hampshire 03874 Seabrook, New Hampshire 03874 Seacoast Anti-Pollution League Regional Administrator, Region I 5 Market Street U.S. Nuclear Regulatory Commission Portsmouth, New Hampshire 03801 475 Allendale Road 25 Maplewood Ave.

King of Frussia, Pennsylvania 19406 Ms. Diana P. Randall Ashod N. Amirian, Esq.

70 Collins Street Town Counsel for Merrimac Seabrook, New Hampshire 03874 376 Main Street Haverhill, Massachusetts 08130 Mr. T. Feigenbaum Public Service Company of New Hamsphire Post Office Box 330 Seabrook, New Hampshire 03874

Edward A.-Brown, Public Seabrook Nuclear Power Station Service Company of New Hampshire cc:

.Mr. Calvin A. Canney, City Manager Mr. Alfred V. Sargent, City Hall Chairman 126 Daniel Street Board of Selectmen Portsmouth, New Hampshire 03801 Town of Salisbury, MA 01950 Board of Selectmen Senator Gordon J. Humphrey RFD Dalton Road ATTN: Tom Burack Brentwood, New Hampshire 03833 531 Hart Senate Office Building U.S. Senate Ms. Suzanne Breiseth, Washington, D.C. 20510 Board of Selectmen Town of Hampton Falls Drinkwater Road Mr. Owen B. Durgin, Chairman-

'Hampton Falls, New Hampshire 03844 Durham Board of Selectmen Town of Durham Mr. Guy Chichester, Chairman Durham, New Hampshire 03824-Rye Nuclear Intervention Comittee Jane Spector c/o Rye Town Hall Federal Energy Regulatory 10 Central Road Comission Rye, New Hampshire 03870 825 North Capital Street, N.E.

Room 8105 Chairman, Board of Selectmen Washington D. C. 20426 RFD 2

' South Hampton, New Hampshire 03827-Mr. R. Sweeney R. Scott Hill - Whilton Three Metro Center Lagoulis, Clark, Hill-Whilton Suite 610

& McGuire Bethesda, Maryland 20814 79 State Street Newburyport, Ma. 01950 Mr. Richard Strome, Director Ms. R. Cashman, Chairman New Hampshire Office of Emergency Board of Selectmen Management Town of Amesbury State Office Park South Town Hall 107 Pleasant Street Amesbury, Massachusetts 01913 Concord, New Hampshire 03301 Adjudicatory file (2)

Honorable Peter J. Matthews Atomic Safety and Licensing Board Mayor, City of Newburyport Panel Docket City Hall U.S. Nuclear Regulatory Comission Newburyport, Massachusetts 01950 Washington, D.C. 20555 Mr. Donald E. Chick, Town Manager Congressman Nicholas Mavroules Town of Exeter 70 Washington Street 10 Front Street Salem, Massachusetts 01970 Exeter, New Hampshire 03823 Mr. G. Thomas Mr. John C. Duffett Public Service Company of President and Chief Executive Officer New Hampshire Public Service Company of New Hampshire Post Office Box 330 1000 Elm St., P.O. Box 330 Seabrook, New Hampshire 03874 Manchester, New Hampshire 03105

_ _ _ _ - _ - _ _ _ _ _ _ _ _ _ _ - _ _ _