ML19211C125
| ML19211C125 | |
| Person / Time | |
|---|---|
| Site: | SHINE Medical Technologies |
| Issue date: | 07/17/2019 |
| From: | SHINE Medical Technologies |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| 2019-SMT-0054 | |
| Download: ML19211C125 (15) | |
Text
Chapter 15 - Financial QualificationsTable of Contents CHAPTER 15FINANCIAL QUALIFICATIONSTABLE OF CONTENTSSectionTitle Page SHINE Medical Technologies15-iRev. 015.1FINANCIAL ABILITY TO CONSTRUCT THE SHINE FACILITY ........................15.1-1 15.2FINANCIAL ABILITY TO OPERATE THE SHINE FACILITY..............................15.2-115.2.1ESTIMATE OF OPERATING COSTS ..............................................15.2-115.2.2FUNDS TO COVER ESTIMATED OPERATION COSTS ................15.2-215.3FINANCIAL ABILITY TO DECOMMISSION THE SHINE FACILITY ..................15.3-115.3.1DECOMMISSIONING REPORT .......................................................15.3-115.4FOREIGN OWNERSHIP, CONTROL, OR DOMINATION .................................15.4-1
15.5NUCLEAR INSURANCE
AND INDEMNITY ......................................................15.5-1
15.6REFERENCES
...................................................................................................15.6-1 Chapter 15 - Financial QualificationsList of TablesLIST OF TABLES NumberTitleSHINE Medical Technologies15-iiRev. 015.2-1Operating Costs for the First Five Years of Operation15.2-2Estimated Funding for the First Five Years of Operation Chapter 15 - Financial QualificationsList of FiguresLIST OF FIGURES NumberTitle SHINE Medical Technologies15-iiiRev. 0 None AEAThe Atomic Energy Act of 1954COGScost of goods sold CPConstruction PermitDCEdecommissioning cost estimateFOCDForeign Ownership, Control, or Domination ITinformation technology LEUlow-enriched uraniumMo-99molybdenum-99NDASneutron driver assembly system OLOperating LicenseTc-99mtechnetium-99mChapter 15 - Financial QualificationsAcronyms and AbbreviationsACRONYMS AND ABBREVIATIONSAcronym/AbbreviationDefinition SHINE Medical Technologies15-ivRev. 0 Chapter 15 - Financial QualificationsFinancial Ability to Construct the SHINE FacilitySHINE Medical Technologies15.1-1Rev. CHAPTER 15 - FINANCIAL QUALIFICATIONSThe purpose of this chapter is to present the financial information for the SHINE medical isotope facility, which establishes that SHINE is financially qualified to own, construct, operate, and decommission the facility. The following informat ion regarding financia l qualifications is described in this chapter:a.The financial ability to construct the facility, as authorized by the Construction Permit (CP).b.The financial ability to safely operate the facility.
c.The financial ability to safely decommission the facility at the end of the facility's operatinglicense.d.Information regarding Foreign Ownership, Control, or Domination (FOCD).
e.Information regarding Nuclear Insurance and Indemnity.The SHINE financial information is provided in accordance with 10 CFR 50.33(d)(3)(iii), 10 CFR 50.33(f) and (k), and the implementing regulations regarding the Price-Anderson Act contained in 10 CFR 140.15.1FINANCIAL ABILITY TO CONSTRUCT THE SHINE FACILITYThe NRC has set forth requirements for applicants for a construction permit pursuant to 10 CFR 50.33(f) to submit suff icient information to demonstrate t hat the applicant possesses or has reasonable assurance of obtaining the funds necessary to cover estimated construction costs and related fuel cycle costs. Additionally, the applicant should indicate the source(s) of funds to cover these costs. The NRC has previously concluded that SHINE is "financially qualified to engage in the activities authorized" under the terms of the construction permit (USNRC, 2016). SHINE provided updated financial qualification information to the NRC in an application for transfer of control of the SHINE construction permit, submitted in accordance with 10 CFR 50.80 (SHINE, 2018a and SHINE, 2019). SHINE maintains the financial qualification to construct the SHINE facility, consistent with the NRC construction permit determination.
Chapter 15 - Financial QualificationsFinancial Ability to Operate the SHINE FacilitySHINE Medical Technologies15.2-1Rev. 015.2FINANCIAL ABILITY TO OPERATE THE SHINE FACILITYThe SHINE facility is licensed as a Class 103 facility in accordance with 10 CFR 50.22, for commercial and industrial facilities. The costs of owning and operating the facility are devoted to commercial activities. SHINE has requested an Operating License (OL) for a term of 30 years.
The SHINE facility produces medical isotopes, primarily molybdenum-99 (Mo-99). Mo-99 is the precursor of the diagnostic imaging isotope technetium-99m (Tc-99m), which is used in medical procedures worldwide. Financial reports and certified financial statements are submitted annually in accordance with 10 CFR 50.71(b). The total annual operating costs for each of the first five years of operation of the SHINE facility have been estimated. Oper ating costs will be funded from the expected revenues associated with the sale of Mo-99 and other radioisotopes produced by the facility.
SHINE expects that this revenue will be more than the operating costs incurred. The information below demonstrates that SHINE has reasonable assurance of obtaining the funds necessary to cover estimated operation costs for the period of the license.15.2.1ESTIMATE OF OPERATING COSTSTable 15.2-1 provides the budgetary estimate of operating costs for the first five years of operation of the SHINE facility. The estimated costs presented in Table 15.2-1 are divided into two primary categories: costs of goods sold (COGS) and organizational expenses. The bases for the estimated operational costs of the facility for the first five years are discussed below as they relate to these categories.The COGS is comprised of three key elements:*Production personnel costs are based on an estimate of the number of employees required for the production facility. This estimate includes personnel performing duties related to operations, engineering, radiation protection, and maintenance, as well as supervisory and management personnel. The production personnel cost estimate includes salary and benefits. *Irradiation and processing costs include ma intenance, replacement, and consumable costs associated with neutron driver assembly system (NDAS) main components, low-enriched uranium (LEU), and consumable supplies. As described in Table 15.2-1, the first year costs under this category are signific antly lower than later years, as expected, based on minimal first year replacement projections. -For NDAS main components, SHINE has a binding contract with Phoenix, LLC that specifies the costs of NDAS main components on a firm-fixed basis. The contract with Phoenix, LLC serves as the basis fo r this operating cost estimate.-The LEU cost estimate is based on the total amount of LEU expected to be consumed within the SHINE facility and information provided during discussions with the U.S. Department of Energy/National Nuclear Security Administration Production Office and Y-12 National Security Complex in Oak Ridge, Tennessee. -Consumables consist of chemicals and materials used to produce, process, or refine medical isotopes or target solution, including tritium. This category also includes disposable or frequently replaced materials and chemicals that are used in facility operations or systems.
Proprietary Information - Withh eld from public disclosure under 10 CFR 2.390(a)(4)Chapter 15 - Financial QualificationsFinancial Ability to Operate the SHINE FacilitySHINE Medical Technologies15.2-2Rev. 0*Other fixed costs include operating costs associated with utilities, general facility and equipment maintenance and repair, and property taxes. -The SHINE facility utility costs are based on the estimated nominal electricity consumption of the facility (including NDAS operational requirements) and a quote from Alliant Energy, the SHINE facility electricity provider. -General facility and equipment maintenance and repair costs consist of component and part replacements based on preventative and corrective maintenance estimates.
The maintenance and repair costs were estimated at system levels and compiled for the entire facility. -Property taxes as estimated as a percentag e of the cost of the SHINE facility real property and local tax rates as provided by the City of Janesville.
The SHINE facility organizational expenses are comprised of two key elements:*Logistical personnel costs include individuals performing duties such as: finance, accounting, licensing, quality, information tech nology (IT), human resources, and other business supporting roles, as well as supervisory, management, and executive personnel. The SHINE facility logistical personnel cost estimate includes salary and benefits.*Other administrative costs include insurance costs, IT equipment expenses, legal support, and other costs related to general support of business operations. 15.2.2FUNDS TO COVER ESTIMATED OPERATION COSTS SHINE intends to cover its operating costs through the sale of medical isotopes, primarily Mo-99. SHINE has entered into contracts to sell Mo-99 to three customers: GE Healthcare; Lantheus
Medical Imaging, Inc.; and HTA Co., Ltd. [
]PROP The SHINE facility has significant production capacity, in excess of the contract obligations, that is available for additional sales to fully cover the expected operating costs. Table 15.2-2 provides the first five years of Mo-99 sales covered under these contracts, as well as the excess production capacity available within this timeframe, and minimum projected additional sales based on available production capacity for the first five years of operation. [
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PROP SHINE is confident of obtaining the fu nding necessary to cover its expected operating costs by either expanding its existing Mo-99 sales contracts or entering into new Mo-99 sales contracts. Medical isotopes sales will fully cover the expected operating costs of the SHINE
facility.
Proprietary Information - Withh eld from public disclosure under 10 CFR 2.390(a)(4)Chapter 15 - Financial QualificationsFinancial Ability to Operate the SHINE FacilitySHINE Medical Technologies15.2-3Rev. 0In addition to pursuing additional sales contracts, [
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PROPIn the unlikely event that SHINE fails to obtain additional financing or is unable to establish additional Mo-99 sales contracts, SHINE will not be able to operate its facility.
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PROP Proprietary Information - Withh eld from public disclosure under 10 CFR 2.390(a)(4)Chapter 15 - Financial QualificationsFinancia l Ability to Operate the SHINE FacilitySHINE Medical Technologies15.2-4Rev. 0Table 15.2 Operating Costs for the First Five Years of Operation (in $ thousands)Year 1Year 2Year 3Year 4Year 5Cost of Goods Sold (COGS)
Production PersonnelIrradiation and Processing[ ]
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PROP Proprietary Information - Withh eld from public disclosure under 10 CFR 2.390(a)(4)Chapter 15 - Financial QualificationsFinancia l Ability to Operate the SHINE FacilitySHINE Medical Technologies15.2-5Rev. 0Table 15.2 Estimated Funding for the First Five Years of Operation (in $ thousands)Year 1Year 2Year 3Year 4Year 5Contract RevenueMinimum Contract Revenue[ ]
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PROPProjected Additional Mo-99 SalesAvailable Facility Production Capacity (after maximum contra ct obligation met)Additional Sales Needed [ ]
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PROPOperating CostsTotal Operating Costs[ ]
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PROP Chapter 15 - Financial QualificationsFinancial Ability to Decommission the SHINE FacilitySHINE Medical Technologies15.3-1Rev. 015.3FINANCIAL ABILITY TO DECOMMISSION THE SHINE FACILITY15.3.1DECOMMISSIONING REPORTThe decommissioning report contains information, in accordance with 10 CFR 50.33(k), describing how SHINE will provide reasonable assurance that funds will be available for the decommissioning process. The dec ommissioning report includes: *a cost estimate for decommissioning the facility;*the method or methods described in 10 CFR 50.75(e), as applicable, that will be used to provide funds for decommissioning; and*a description of the means of adjusting the cost estimate and associated funding level periodically over the life of the facility.15.3.1.1Decommissioning Cost EstimateThe decommissioning cost estimate (DCE) for the SHINE facility is $51,000,000. The estimate considers costs for decommissioning activities as described in NUREG-1757, Volume 3, Section 4.1 and Appendix A.3 (USNRC, 2012), including planning and preparation, decontamination and dismantling of facility comp onents, costs of equipment and supplies, radioactive waste characterization, waste packaging and shipment, waste disposal, contingency costs, contractor costs, and radiation su rveys. The DCE assumes that decommissioning activities begin immediately after radioisotope pr oduction activities and operations involving radioactive materials cease. The DCE encompasses the costs necessary to decommission and release the site for unrestricted use in accordance with 10 CFR 20.1402.15.3.1.2Method to Provide Funds for DecommissioningIn accordance with 10 CFR 50.75(e), SHINE will maintain an external escrow account in which deposits will be made periodically, coupled with a surety method, insurance, or some other form of guarantee. This escrow account, coupled with a surety method, insurance, or some other form of guarantee, is intended to provide reasonable assurance that funds will be available to decommission the facility.15.3.1.3Means of Adjusting Decommissioning Cost Estimate and Funding Level The decommissioning funding level will be adjusted every three years, or when the amounts or types of materials at the facility change, to demonstrate that a reasonable level of assurance will be provided that funds will be available when needed to cover the cost of decommissioning. The triennial adjustments account for inflation, for othe r changes in the prices of goods and services (e.g., disposal cost increases), for changes in facility conditions or operations, and for changes in
expected decommissioning procedures, as applicable. The triennial adjustments account for changes such as:*leaks and spills of radioactive material pr oducing additional facilit y contamination or residual radioactivity in on-site subsurface material;*newly detected facility, soil, or groundwater contamination;
- waste inventory increasing above the amount estimated;*waste disposal costs increasing above the amount previously estimated, including any additional costs associated with the availability of disposal facilities; Chapter 15 - Financial QualificationsFinancial Ability to Decommission the SHINE FacilitySHINE Medical Technologies15.3-2Rev. 0*facility modifications and changes in on-site materials inventories;*actual remediation costs that exceed previous cost estimates; and*on-site disposal remediation costs that exceed previous cost estimates.
Chapter 15 - Financial QualificationsForeig n Ownership, Control, or DominationSHINE Medical Technologies15.4-1Rev. 015.4FOREIGN OWNERSHIP, CONTROL, OR DOMINATIONSHINE is not owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government. SHINE is not acting as an agent or representative of another person in filing this
application.
Chapter 15 - Financial QualificationsNuclear Insurance and IndemnitySHINE Medical Technologies15.5-1Rev. 0
15.5NUCLEAR INSURANCE
AND INDEMNITY The insurance and financial protection requirem ents of the Price-Anderson Act, pursuant to Section 170 of The Atomic Energy Act (AEA) of 1954, as amended, are applicable to SHINE.
SHINE has determined that maintaining financial protection in the amount of $1.5M, covering each of the eight utilization facilities and the production facility, satisfies the financial protection requirements of the Price-Anderson Act (SHINE, 2018b). SHINE will also maintain an indemnification agreement with the NRC that extends for the life of the license.
Chapter 15 - Financial QualificationsReferencesSHINE Medical Technologies15.6-1Rev. 0
15.6REFERENCES
SHINE, 2018a.
Application for Order Approving Indirect Transfer of Control of Construction Permit and Conforming Administrative Construction Permit Amendment, SHINE Medical Technologies, Inc., December 11, 2018 (ML18347A215).
SHINE, 2018b.
Request for Confirmation of the 10 CFR Part 140 Financial Protection Requirements for the SHINE Facility, SHINE Medical Technologies, Inc., August 27, 2018 (ML18239A219).
SHINE , 2019. SHINE Medical Technologies, Inc. Applic ation for Order Approving Indirect Transfer of Control of Construction Permit Response to Request for Additional Information, SHINE Medical Technologies, Inc
., March 8, 2019 (ML19071A055).USNRC , 2012. Consolidated Decommissioning Guidance - Financial Assurance, Recordkeeping, and Timeliness
, NUREG-1757, Volume 3, Revision 1, U.S. Nuclear Regulatory Commission
, February 2012 (ML12048A683).
USNRC, 2016. Commission Memorandum and Order, CLI-16-04, U.S. Nuclear Regulatory Commission
, February 25, 2016 (ML16056A094).