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ULNRC-06349 Enclosure IPage1of9NRCDecommissioning FundingStatusReport-201710CfR5O.75(f)(1) requireseachpowerreactorlicenseetoreporttotheNRConacalendaryearbasis,beginning onMarch31,1999,andevery2yearsthereafter, onthestatusofitsdecommissioning fundingforeachreactororshareofreactor itowns.UnionElectricCompanydlb/aAmerenMissouri("AmerenMissouri")
herebyreportsthedecommissioning fundingstatusforitsCallawayPlant("Callaway EnergyCenter").
ThescopeoftheAmerenMissouri2017NRCBiennialDecommissioning FundingStatusReportspecifically pertainsonlytothedecommissioning fundingstatusoftheCallawayEnergyCenter,or"plant".Decommissioning fundingfortheindependent spentfuelstorageinstallation (ISFSI)willbefileintheupdateddecommissioning fundingstatusreportfortheISFSIduein2018.AmerenMissouriisrequiredtofileupdatestodecommissioning costestimates andfundingadequacyprojections onatriennial basiswiththeMissouriPublicServiceCommission (MPSC)discussed morefullyinSection2,below.Thescopeofthesetriennial filingsincludesboththeplantandtheISFSI.AmerenMissouriobtainsseparateupdatedsite-specific decommissioning costestimates andpreparesseparateupdatedfundingadequacyanalysesfortheplantandfortheISfSIfortheMPSCtriennial filings.Whenmakingthesefilings,AmerenMissourirequeststhattheMPSCaddresstheplantandISfSIseparately intheirordersissuedpursuanttothefilings.Thedecommissioning trustfundestablished byAmerenMissourihasseparate, segregated sub-accounts forplantandISfSIdecommissioning funding.Thesitespecificdecommissioning studyreferenced inAmerenMissouri's 2017NRCbiennialdecommissioning fundingstatusreportisprovidedforinformation only.Thissitespecificstudywaspartofthedocumentation presented totheMPSCintheCompany's 2014MPSCtriennial updatefiling.Forthisreport,AmerenMissouriisusingtheNRCthreefactorformulafordetermining decommissioning fundingadequacy.
I.AmountofDecommissioning FundsEstimated tobeRequiredPursuantto10CFR50.75(b)and(c)Forthepurposesofthis2017NRCbiennialplantdecommissioning fundingstatusreport,AmerenMissouriisusingthe"three-factor formula"specified in10CFR50.75(b)and(c)'fordetermining decommissioning fundingadequacy.
Theminimumdecommissioning costestimate, pursuanttothe10CFR50.75(b)and(c)methodology, is$492,019,000, intermsof2016dollars.Thedetailedcalculations fromwhichtheaboveestimateisderivedarecontained inEnclosure
- 2.
.Enclosure 1Page2of9AmerenMissourialsohassitespecificdecommissioning costestimates fordecommissioning oftheCallawayEnergyCenterpreparedbyTLGServices, Inc.ofBridgewater, Connecticut.
Thespecificstudiesareconducted tocomplywithMissouriLaw:4CSR240-3.185 Submission ofReports Pertaining totheDecommissioning ofElectricUtilityPlants(3)OnorbeforeSeptember 1,1990andeverythree(3)yearsafterthat,utilities withdecommissioning trustfundsshallperformandfilewiththecommission coststudiesdetailing theutilities' latestcostestimates fordecommissioning theirnucleargenerating unit(s)alongwiththefundinglevelsnecessary todefraythesedecommissioning costs.Thesestudiesshallbefiledalongwithappropriate tariff(s) effectuating thechangeinratesnecessary toaccomplish thefundingrequired.
Inaddition, thecommission, atanytimeforjustcause,mayrequireautilitytofileanupdateddecommissioning coststudy,fundingrequirement andassociated tariff(s).
Thecurrentsite-specific analysisapprovedbytheMPSCwasperformed inMarch,2015.Itcalculated adecommissioning costestimateof$864,734,000 intermsof2014dollars.2 AmerenMissouriconsiders thissite-specific decommissioning costestimateof$864,734,000 astheestimateforwhichfundingadequacymustbeassuredforMPSCfundingadequacypurposes.
Duetoitssite-specific nature,itisamoreaccurateestimateofprojected decommissioning costs.Thesite-specific estimateisconsidered moreconservative asitincludesnon-radiological siterestoration expensesandspentfuelmanagement
- expenses, inadditiontoradiological licensetermination expenses.
Inthe2015study,approximately 80.10%($692,622,000) ofthe$864,734,000 site-specific costestimateisassociated withphysicaldecontamination anddismantling ofradloactive systemsandstructures suchthatthelicensecanbeterminated.
Management andtransferofspentfuelaccountsfor6.67%($57,716,000) ofthesitespecificcostestimate.
Theremaining 13.23%($114,396,000) isfordemolition ofdesignated non-radioactive structures andlimitedsiterestoration.
Thesestudiesareconsidered snapshotsofthedecommissioning costandareusedtodetermine ifanychangesarerequiredinthecontributions tothedecommissioning fund.Duetothecomplexity ofthestudytheuseofanycostescalation factorswouldintroduce considerable uncertainty intotheescalated cost.Sincethisstudyisconducted everythreeyears,Amerendoesnotescalatethestudycostestimates fortheyearsbetweenstudyperiods.Aninformational onlycopyofthe2015Site-Specific Decommissioning CostAnalysisfortheCallawayEnergyCenterisprovidedinEnclosure
- 3.
.Enclosure 1Page3of92.AmountofDecommissioning FundsAccumulated totheEndoftheCalendarYearPreceding theDateofthisReportThetotalamountaccumulated inthedecommissioning fundasofDecember31,2016is$557,359,488.46.
Thisisan"aftertaxliquidation value"whichreflectsthefinalfundsthatwouldbereceiveduponliquidation ofthefund'sassetsandthepaymentofincometaxesonrealizedcapitalgains.Thisiscalculated asfollows:3 MissourifERCTOTALJurisdictional Jurisdictional OverallSubaccount Subaccount fundMarketValue:$590,948,957.89
$15,527,076.47
$606,476,034.36 Less:BookValue:350,999,418.94 9,893,885.90 360,893,304.84 Equals:Unrealized Gain:$239,949,538.95
$5,633,190.57
$245,582,729.52 IncomeTaxonUnrealized Gain@20%Rate:$47,989,907.79
$1,126,638.1 1$49,116,545.90 After-Tax Liquidation Value:$542,959,050.10
$14,400,438.36
$557,359,488.46 Copiesofthetrustee's "Statement ofNetAssetsAvailable forBenefits" asofDecember31,2016confirming theforegoing valuation amountsisprovidedinEnclosure 4.Thisdecommissioning fundbalanceindicated aboveisatotalamountintendedtocoverthefullgreen-fielding ofthesite.Thefundsinthetrustfundarenotsegregated intosub-accounts forradiological decommissioning versusnon-radiological decommissioning.
Basedontheallocation percentages contained inthe2015sitespecificdecommissioning costestimate, thedollaramountsoftheoveralltrustfundallocated forthedecommissioning costcategories canbederived:Licensetermination:
80.10%of$557,359,428
=$446,444,950 SpentFuelManagement:
6.67%of$557,359,488
$37,175,878 SiteRestoration:
13.23%of$557,359,488
$73,738,660 Missouri's definition ofdecommissioning encompasses boththeradiological andnon-radiological structures, systemsandcomponents oftheplant,asstatedinthefollowing sectionfromtheMissouriCodeofStateRegulations:
ULNRC-06349 Enclosure IPage4of94CSR240-20.070 Decommissioning Trustfunds(1)Asusedinthisrule,decommissioning meansthoseactivities undertaken inconnection withanucleargenerating unit'sretirement fromservicetoensurethatthefinalremoval,disposal, entombment orotherdisposition oftheunitandofanyradioactive components andmaterials associated withtheunit,areaccomplished incompliance withallapplicable laws,andtoensurethatthefinaldisposition doesnotposeanyunduethreattothepublichealthandsafety.Decommissioning includestheremovalanddisposalofthestructures, systemsandcomponents ofanucleargenerating unitatthetimeofdecommissioning.
Missourilawrequirestriennial updatesofthedecommissioning costestimateandoffundingadequacy.
Missourilawalsoprovidesforthechangingofrateschargedtoratepayers torecoveranychangesinfundinglevelsnecessitated bythetriennial updateanalyses.
forthesereasons,AmerenMissouriconsiders theamountinthefundtobefullyadequatetocoverradiological decommissioning withanexcessthatcouldbeappliedtonon-radiological decommissioning.
Thetriennial updateprocessrequiredbyMissouristatutesisconsidered adequatetoensurethatanyfundingshortfalls willbeaddressed andcorrected inatimelymanner.Theapplicable sectionsfromtheMissouriCodeofStateRegulations areasfollows:4CSR240-3.185 Submission ofReports Pertaining totheDecommissioning ofElectricUtilityPlants(3)OnorbeforeSeptember 1,1990andeverythree(3)yearsafterthat,utilities withdecommissioning trustfundsshallperformandfilewiththecommission coststudiesdetailing theutilities' latestcostestimates fordecommissioning theirnucleargenerating unit(s)alongwiththefundinglevelsnecessary todefraythesedecommissioning costs.Thesestudiesshallbefiledalongwithappropriate tariff(s) effectuating thechangeinratesnecessary toaccomplish thefundingrequired.
Inaddition, thecommission, atanytimeforjustcause,mayrequireautilitytofileanupdateddecommissioning coststudy,fundingrequirement andassociated tariff(s).
4CSR240-20.070 Decommissioning Trustfunds(7)Uponthefilingoftheappropriate tariff(s) assetin4CSR240-3.180, thecommission shallestablish ascheduleofproceedings whichshallbelimitedinscopetothefollowing issues:(A)Theextentofanychangeinthelevelorannualaccrualoffundingnecessary fortheutility's decommissioning trustfund;and(B)Thechangesinrateswhichwouldreflectanychangeinthefundingleveloraccrualrate.
ULNRC-06349 Enclosure 1Page5of9Inpasttriennial filings,theMPSChasacceptedthesitespecificdecommissioning costestimates andthefundingadequacyanalysesbasedonfullgreenfieldingoftheunit,aswouldbeindicated underMissouri's legaldefinition ofdecommissioning.
Thereisnobasisforassuminganychangeinthispracticeinthefuture.Consequently, itcanbeconsidered thatthetrustfundbalanceindicated isatotalbalance,notsegregated onthebasisofradiological versusnon-radiological funding.AstheMissourimechanism forassuringfundingadequacyandforrecovering decommissioning expensesfromratepayers includesthenon-radiological decommissioning expensesaswellastheradiological
- expenses, itisnotnecessary tosegregate thedecommissioning fundbalances.
Anyshortfalls infundingforfullgreenfieldingareexpectedtoberecovered fromratepayers aspartofthetriennial fundingadequacyupdatingprocess.3.ScheduleoftheAnnualAmountsRemaining tobeCollected:
AsofDecember31,2016,thescheduleoftheannualdecommissioning expenseamountsremaining tobecollected fromratepayers is$6,314,620peryearforyears2017throughyear2043and$5,047,370.92 foryear2044.Astheoperating licenseexpiresOctober18,2044anddecommissioning expensecollections fromratepayers areassumedtoceaseuponthecessation ofplantoperations, 2044isa"partialyear"forcollection andfundingpurposes, withtheannualamountbeingpro-rated forthreecalendarquarterspluseighteendays:(75%x$6,314,620)
+[(18/365) x$6,314,620]
$5,047,370.92 Thefundingadequacyanalysisperformed byAmerenMissouriandapprovedbytheMPSCisbasedoncashflowsdeposited intothedecommissioning trustfund.Quarterly depositsintothefundaremadeonthe25thofthemonthfollowing eachquarter-end.
Therefore, eachyear'scashcontributions tothedecommissioning fundwillreflecttheexpensecollected fromratepayers fromQ4ofthepreceding yearplusthatforQI,Q2andQ3ofthecurrentyear.forthatreason,whenlookingatthefundingadequacyanalysisperformed fortheplant,the"AnnualCashInflowFromContributions ToFund"valuefortheyear2044willindicate$6,626,026.
Thatrepresents theexpensecollected fromratepayers forQ4of2043plustheprorated$5,047,370.92 fortheJanuary1,2044throughOctober18,2044,calculated above.4.ActionsbyRegulatory RateSettingAuthorities, Assumptions UsedRegarding RatesofEscalation inDecommissioningCosts, RatesofEarningsonDecommissioning Funds,andRatesofOtherFactorsUsedinFundingProlections:
ULNRC-06349 Enclosure 1Page6of9Inaccordance withthepreviously cited4CSR240-3.185 requirement, AmerenMissouriwasrequiredtofileanupdateddecommissioning costestimateandfundingadequacyanalysiswiththeMPSCbySeptember 1,2014.However,duetotheanticipated NRCapprovalofAmerenMissouri's licenseextension application withinashorttimeframefollowing thefilingduedate,AmerenMissouriandtheMP$CStaffconcurred thatitwouldbeappropriate todeferthisfilinguntiltheoperating licenseextension wasapproved.
OnMarch6,2015,theNRCapprovedtheCompany's application fora20-yearoperating licenseextension OnApril1,2015,AmerenMissourifiledits"Application forApprovalofDecommissioning CostEstimateforCallawayEnergyCenterandFundingLevelofNuclearDecommissioning Trustfund"(FileNo.E0-2015-0253).
Attachment 1tothisapplication contained theMarch,2015decommissioning costestimatefortheCallawayEnergyCenter.Attachment 2totheapplication contained AmerenMissouri's analysisoftherequiredfundinglevelforthedecommissioning trustfund,including allofthefinancial andeconomicassumptions onwhichthefundinganalysiswasbased.Acopyoftheapplication anditsAttachment 2isprovidedinEnclosure 54PriortotheMPSCissuinganOrderinthecase,theISFSIwascompleted anditwasrecognized thattheMarch2015sitespecificdecommissioning costestimatedidnotincludeanycostsforISFSIdecommissioning.
AmerenMissouriandtheMPSCStaffenterintoa"Non-Unanimous Stipulation andAgreement" toaddressing thecomponents ofplantdecommissioning thathadbeencoveredintheApril1,2015filingandtheadditional scopeoftheISFSIdecommissioning.
Arevisedfundingadequacyanalysiswasdeveloped separately addressing thefundingadequacyofbothplantandISfSIdecommissioning.
OnMarch14,2016,this"Non-Unanimous Stipulation andAgreement" wasfiledwiththeMPSCandwasrevisedonMarch30,2016tocorrectcertainclericalerrors.Acopyofthefinal"Non-Unanimous Stipulation andAgreement" andassociated fundingadequacyanalysisisprovidedinEnclosure 6.OnApril6,2016,theMPSCissuedan"OrderApproving Stipulation andAgreement" (effective May6,2016).IntheOrder,theMPSCapprovedthethefollowing actuarial assumptions usedinbyAmerenMissouriinitsreviseddecommissioning fundingadequacyanalysisfiledwiththe"Non-Unanimous Stipulation andAgreement":6
.TheMissourijurisdictional allocator is100%..Thefederalincometaxrateis20%..Thestateincometaxrateis0%..Thecomposite federal&stateincometaxrateis20%..Anassetallocation of65%equitiesand35%bondsisassumedtoexistthrough2043,atwhichtimeallequityinvestments willbedivested.
.Investment management andtrustfeesareestimated at15basispointsannually.
.Aninflation rateof2.300%isassumedforgeneral("CPI")inflation.
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ULNRC-06349 Enclosure 1Page7of9.Thepre-tax&expensenominalreturnonbondsisassumedtobe3.400%..Thepre-tax&expenserealreturnonbondsisassumedtobe1.100%.Thepre-tax&expensenominalreturnonequitiesisassumedtobe8.500%..Thepre-tax&expenserealreturnonequitiesisassumedtobe6.200%.Thepre-tax&expensenominalweighted-average returnisassumedtobe6.715%throughthe2043dateofdivestiture ofequityinvestments.
.Thepre-tax&expenserealweighted-average returnisassumedtobe4.415%throughthe2043dateofdivestiture ofequityinvestments.
.Thepre-tax&expenserealweighted-average returnisassumedtobe1.100%following the2043dateofdivestiture ofequityinvestments.
Basedontheforegoing assumptions, theanticipated annualdecommissioning contributions wouldbeadequateuptoanannualdecommissioning inflation rateof3.5864%.Theannualized rateofeamingondecommissioning fundreturn(pre-taxandfee)requiredattheabovelevelofinflation is6.242%.AcopyoftheMPSC"OrderApproving Stipulation andAgreement" isprovidedinEnclosure 7.5.AnyContracts UponWhichtheLicenseeisRelyingonPursuantto10CFR50.75(E)(L)(V):
None6.AnyModifications Occurrin%
toaLicensee's CurrentMethodofProviding Financial Assurance SincetheLastSubmitted Report:None.TheCompanyhasusedthe"External Sinkingfund"methodsinceI985.7.AnyMaterialChangestoTrustAgreements:
Therehavebeennomaterialchangestothequalified trustagreement sincethelastreport.Thenon-qualified trustthatwasrequiredbyIllinoishasbeeneliminated, asAmerenMissourinolongerhascustomers inIllinois.
Thisnon-qualified trustwasneverfunded7.8.References 1.ULNRC-06201, "STATUSOFDECOMMISSIONING FUNDING,"
datedMarch30,2015 ULNRC-06349 Enclosure 1.Page8of91TheNRCformulasinsection10CfR50.75(c)includeonlythosedecommissioning costsincurredbylicensees toremoveafacilityorsitesafelyfromserviceandreduceresidualradioactivity tolevelsthatpermit:(1)releaseofthepropertyforunrestricted useandtermination ofthelicense;or(2)releaseofthepropertyunderrestricted conditions andtermination ofthelicense.Thecostofdismantling ordemolishing non-radiological systemsandstructures andthecostsofmanaging andstoringspentfuelonsiteuntiltransfertoDOEarenotincludedinthe10CfR50.75(c)costformulas.
2Thisestimateisapplicable tothe60-yearoperating life,DECONdecommissioning alternative
- scenario, andispresented inAppendixGoftheMarch,2015sitespecificdecommissioning costestimate.
ThisistheoptionAmerenMissouriintendstoutilizeforplantdecommissioning.
3Thevaluations oftheMissouriandFERCjurisdictional subaccounts areutilizedinthisreporttocalculate thetotalvaluation oftheplantdecommissioning fundasthetruststatements producedbythetrusteedonotincludeaconsolidated reportthatdoesnotincludetheISfSIdecommissioning subaccounts.
Consequently, toprovidesupporting documentation, itwasnecessary toprovidethetruststatements forthetwocomponent plantdecommissioning funds:theMissouriandFERCsubaccounts andsumtheirvaluations.
4TheMarch,2015sitespecificdecommissioning costestimate(Attachment 1tothe"Application forApprovalofDecommissioning CostEstimateforCallawayEnergyCenterandFundingLevelofNuclear Decommissioning Trustfund")isprovidedinEnclosure 3tothisreport.SAttachments tothe"Non-Unanimous Stipulation andAgreement" thatarenotrelevanttothedecommissioning fundingstatusoftheplantwerenotincludedinEnclosure 7.Specifically, theseweretheISFSIdecommissioning costanalysisandtheupdatedinvestment guidelines forthedecommissioning fundforwhichapprovalwasbeingrequested.
6ThefundingadequacyanalysisfiledwiththeMPSCbytheCompanyinthisCaseNo.E0-2015-0253 wasbasedontheindicated returnassumptions.
TheMPSCorderinthiscaseapprovedtheproposedannualMissouricontribution levelof6,314,620,effective January1,2016.Atthetimeofthisupdatefiling,theMissourijurisdiction isresponsible for100%ofthedecommissioning liability.
7onFebruary10,2005,theMPSCapprovedAmerenMissouri's proposedtransferofitsIllinoiselectricandgasproperties toanIllinoisaffiliate, AmerenIllinois.
TheclosingdateforthepropertytransferwasMay2,2005.Inaccordance withtheMPSCOrder,thetax-qualified decommissioning trust'sIllinoisjurisdictional sub-account waseliminated following theclosing.Ninety-eight percentoftheassetsintheexistingIllinoissubaccount asoftheclosingdatewerereallocated totheMissourisub-account andthe ULNRC-06349 Enclosure 1Page9of9remaining twopercentwerereallocated totheWholesale sub-account.
Asaresultofthetransfer, AmerenMissourinolongerhasanyIllinoisratepayers andwillnolongercollectdecommissioning contributions inIllinoisforitsCallawayPlant,whichislocatedinMissouri.
Thedecommissioning liability previously bornebytheIllinoisratepayers wastransferred toAmerenMissouriandWholesale customers.
Decommissioning expensescollected fromMissourijurisdictional ratepayers wasincreased by$272,194annuallyinaccordance withtheMPSCOrdertoaccountfortheincreased decommissioning liability bornebytheMissouriratepayers following thepropertytransfer.
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