ML023600049

Summary of Meeting Held on September 24, 2002, with Entergy Operations Inc., to Discuss Issues Related to Decommissioning Funding

ML023600049
Person / Time
Site:	Arkansas Nuclear, River Bend, Waterford
Issue date:	12/26/2002
From:	William Reckley NRC/NRR/DLPM/LPD4
To:	Entergy Operations
Shared Package
ML023600116	List: ML023600049
References
Download: ML023600049 (16)

Text

December 26, 2002 LICENSEE: Entergy Operations, Inc.

FACILITIES: Arkansas Nuclear One, Units 1 and 2 River Bend Station, Unit 1 Waterford Steam Electric Station, Unit 3

SUMMARY

OF MEETING HELD SEPTEMBER 24, 2002, WITH ENTERGY OPERATIONS, INC., TO DISCUSS ISSUES RELATED TO DECOMMISSIONING FUNDING On September 24, 2002, representatives of the Nuclear Regulatory Commission (NRC) met with Entergy Operations, Inc. (EOI or the licensee) to discuss issues related to decommissioning funding for EOIs nuclear power plants in Arkansas and Louisiana.

Representatives from the Public Service Commissions of Arkansas and Louisiana attended the meeting and participated in the discussions of the issues. A list of the meeting attendees is provided as Attachment 1. The agenda for the meeting is provided as Attachment 2.

As outlined in the meeting agenda, the following issues or questions were discussed at the meeting:

1. Relationship between license renewal and decommissioning funds

2. Assumptions on rates of return on decommissioning trust funds

3. Schedules for contributing to decommissioning trust funds

4. Reasonable assurance of availability of decommissioning funding

5. NRC actions in response to questions about reasonable assurance of decommissioning funding The specific questions related to these issues were provided by the licensee in letters dated July 25, 2002 (Agencywide Documents Access and Management System (ADAMS) Accession No. ML022390430), and July 18, 2002 (ADAMS Accession No. ML022390429). A summary of the discussions related to each of the agenda items is provided as Attachment 3. The specific questions raised and discussions held at the meeting were related to requirements for external sinking funds used by electric utilities recovering the cost of decommissioning through rates established by rate setting authorities such as State public service commissions. Attachment 4 provides a list of selected documents related to the discussions that are available on the NRC web site or electronic record-keeping system (ADAMS).

ML022390429). A summary of the discussions related to each of the agenda items is provided as Attachment 3. The specific questions raised and discussions held at the meeting were related to requirements for external sinking funds used by electric utilities recovering the cost of decommissioning through rates established by rate setting authorities such as State public service commissions. Attachment 4 provides a list of selected documents related to the discussions that are available on the NRC web site or electronic record-keeping system (ADAMS).

DISTRIBUTION:

PUBLIC RidsNrrDlpm (JZwolinski/TMarsh) RidsNrrPMWReckley PDIV-1 Reading RidsNrrDlpmLpdiv (WRuland) RidsNrrPMTAlexion RidsOgcRp RidsNrrDlpmLpdiv1 (RGramm) RidsNrrPMDJaffee RidsAcrsAcnwMail Center RidsRgn4MailCenter (AHowell) RidsNrrNKalyanam RidsNrrLADJohnson MKotzalas (MXK5) SMorris (SAM1)

WMaier, RIV (WAM)

Mtg. Notice: ML022470377 PKG#: ML:023600116 ADAMS Accession No.: ML023600049 NRC-001 *See previous concurrence OFFICE PDIV-1/PM PDIV-1/LA DRIP/RPRP PDIV-1/SC NAME WReckley:rkb DJohnson BThomas* RGramm DATE 12/17/02 12/16/02 12/11/02 12/24/02 Meeting on Decommissioning Funding Issues Tuesday, September 24, 2002 Attendees Christopher Grimes NRR/DRIP/RPRP Brian Thomas NRR/DRIP/RPRP/FRAS Ronald Uleck NRR/DRIP/RPRP/FRAS Alex McKeigney NRR/DRIP/RPRP/FRAS Michael Dusaniwskyj NRR/DRIP/RPRP/FRAS Robert Gramm NRR/DLPM/PDIV1 William Reckley NRR/DLPM/PDIV1 Janice Moore NRC/OGC Steven Hom NRC/OGC John McGaha Entergy Operations Jager Smith Entergy Operations Les England Entergy Operations Tim Gragin Entergy Louisiana; Entergy Gulf States Steven Strickland Entergy Arkansas Donna Gray Arkansas Public Service Commission (PSC)

Valerie Boyce Arkansas PSC Karen Fricke Arkansas PSC Michael Fontham Louisiana PSC/Stone Pigman Dana Shelton Louisiana PSC/Stone Pigman Stephen Baron Louisiana PSC/J. Kennedy and Associates Tom Lewis Nuclear Management Company Jenny Weil McGraw-Hill Attachment 1

Agenda 9/24/02 Meeting on Decommissioning Funding Questions Raised by Entergy Operations, Inc.

 Introductions

 Decommissioning Funding Issues/Questions

 License Renewal

 Rate of Return

 Decommissioning Trust Fund Contribution Schedules Established by PSC

 Reasonable Assurance

 NRC Actions in Response to Questions Regarding Reasonable Assurance Attachment 2

Summary of Discussions

1. Relationship between license renewal and decommissioning funds A question has been raised related to the possible renewing of a license for an operating nuclear power plant and the collection of decommissioning funds. This topic was the primary subject addressed at a meeting held on March 12, 2001, between the NRC staff and EOI. A letter from EOI dated March 26, 2001 (J. McGaha to Chairman Meserve; ADAMS Accession No. ML010960432) formally requested an interpretation of NRC regulations in this area. The NRC responded to the EOI inquiry in a letter dated May 11, 2001 (Chairman Meserve to J. McGaha; ADAMS Accession No. ML011070650). During the meeting of September 24, 2002, the NRC restated the following main point from the letter dated May 11, 2001:

The NRC expects that decommissioning funding assurance will be provided such that the necessary funds will be available by the end of the licensed operating life, based on the current license term. Section 50.75 (e)(1)(ii) of the Commissions regulations provides that payments to an external sinking fund are to be made such that the total amount of funds would be sufficient to pay decommissioning costs at the time termination of operation is expected. The NRC interprets this section of its regulations to require that the accumulation of decommissioning funds in an external sinking fund be based on the remaining term of the license. Thus, if the NRC issues an operating license for a nuclear power plant for a term of 40 years, the decommissioning funds collection and earnings period should be based on that 40-year license term.

Decommissioning fund collection can be based on a renewed license (e.g.,

60 years) only after the NRC has approved the license renewal. Issuance of a renewed license is subject to a favorable review by the NRC and cannot be taken for granted....

There was a short discussion of the topic during which there seemed to be a general understanding by all participants that NRC regulations do not support a licensee taking credit for a service life for a nuclear power plant beyond the plant's existing operating license for the purpose of projecting decommissioning funds.

2. Assumptions on rates of return on decommissioning trust funds The second item discussed at the meeting involved the NRC requirements and appropriate assumptions related to the rate of return on existing principal in decommissioning funds. The NRC regulations related to acceptable assumptions for rates of return for external sinking funds are included in 10 CFR 50.75(e)(1)(ii), which states:

... A licensee may take credit for projected earnings on the external sinking funds using up to a 2 percent annual real rate of return from the time of future funds' collection through the decommissioning period. This includes the periods of safe storage, final dismantlement, and license termination, if the licensee's rate-setting authority does not authorize the use of another rate. However, actual earnings on existing funds may be used to calculate future fund needs....

Attachment 3

The real rate of return for decommissioning funds is the income earned from the principal in the fund minus the escalation of decommissioning costs. There was some discussion during the meeting about the use of NUREG-1307, "Report on Waste Burial Charges: Changes in Decommissioning Waste Disposal Costs at Low-Level Waste Burial Facilities," to update estimated decommissioning costs and to project such costs into the future. The staff acknowledged that actual cost increases described in NUREG-1307 were potentially useful in projecting future cost increases. The variations in assumed net rates of return are reflected in the table provided in Attachment 4.

The general message offered by the NRC staff was that licensees are responsible to assume reasonable rates of return. The NRC staff would generally not challenge assumptions of low rates of return since this assumption would require higher current and near-term balances in the funds. The NRC staff reviews the assumed rates of returns and could, on a case-by-case basis, challenge specific assumptions if the assumptions were considered to be too high. As stated in 10 CFR 50.75(e)(1)(ii), assumed real rates of return above 2% need to be authorized by the appropriate rate-setting authority.

3. Decommissioning trust fund contribution schedules established by PSC Another topic discussed at the meeting relates to the periodic contributions to a decommissioning sinking fund. The principal of a sinking fund is that it ensures adequate money is available for decommissioning a nuclear facility at the end of its operating life by steadily growing the fund through periodic contributions and returns on investments. NRC regulations require that deposits be made periodically" (see 10 CFR 50.75(e)(1)(ii)). A typical approach to a sinking fund is that contributions are scheduled on an annual or other fixed interval. This practice is reflected in the NRC guidance document NUREG-1577, "Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance." The issue raised at the meeting was whether contributions could be made on alternative schedules, which might include making no contributions for multiple years.

The NRC regulations do not define a specific schedule for contributions to a sinking fund. The NRC staff stated during the meeting that it would evaluate the overall decommissioning funding plan to gain reasonable assurance that adequate funds would be available at the end of a nuclear facilitys operating life. Funding strategies that include an interruption of contributions to a sinking fund would be reviewed by the NRC staff to ensure that the contribution schedule does not result in an unreasonable or unrealistic loading of the contributions to some future date. Regarding fund contributions coming directly from ratepayers, the NRC recognizes the long history of effective rate regulatory oversight and recovery of safety-related expenses through rates and has largely deferred to the rate setting authorities on the timing of contributions to decommissioning trust funds. The discussion basically concluded with the staff acknowledging that decommissioning funding strategies might include a cessation of contributions for some period of time, provided that the strategy maintained a reasonable confidence in the adequacy of the decommissioning fund at the end of a facilitys operating life.

Such strategies may warrant additional monitoring and adjustments to ensure later contributions may be reasonably collected from ratepayers or other sources. The NRC staff may give added attention to such strategies and would make judgements and determine appropriate interactions, if needed, on a case-by-case basis.

4. Standards for "reasonable assurance" The NRC staff makes its judgment that there is reasonable assurance of adequate funding for decommissioning a nuclear power plant by comparing the projected balance of the fund at the end of a units operating life against the minimal funds defined in NRC regulations. The minimum estimation of decommissioning costs are defined by the equations in 10 CFR 50.75(c)(1). Licensees may also perform plant-specific calculations that result in estimations above those resulting from the generic formulas. It should be noted that the NRC regulations for required decommissioning funds do not address the cost of removal and disposal of spent fuel or of nonradioactive structures and materials beyond that necessary to terminate the license.

The NRC staff uses information provided by licensees to assure that decommissioning funds will cover the costs of decommissioning a facility at the end of its operating life. Licensees were required to provide an initial report, with certification that financial assurance for decommissioning will be provided, in accordance with 10 CFR 50.33(k) and 10 CFR 50.75(b).

Licensee are also required by 10 CFR 50.75(f)(1) to provide periodic (i.e., biennial if remaining operating life exceeds 5 years) reports providing information about decommissioning cost estimates, fund balances, assumptions on cost escalations and earnings, and other factors used in funding projections. Licensees are required to provide additional information as a licensed facility approaches or enters into decommissioning activities. The staff documents its reviews in reports such as SECY-01-0197, "Summary of DecommissioningTrust Funding Status Reports for Power Reactors." A listing of useful documents, such as SECY-01-0197, along with associated web addresses or accession numbers within the NRCs electronic record-keeping system, ADAMS, is provided in Attachment 4.

5. NRC actions in response to questions about reasonable assurance Discussions during the meeting often involved what, if any, actions the NRC would take in response to concerns about reasonable assurance in the adequacy of a licensees decommissioning fund. To date, the NRC staff has not had to take action in this area since the related reviews have, to the staffs satisfaction, concluded that the decommissioning fund for each facility has satisfied the minimal requirements. The staffs responses to the meeting were, therefore, somewhat hypothetical and were generally offered as options that would be considered more so than definitive actions and criteria.

As with most interactions between the NRC staff and licensees, the most likely initial response to a concern about financial assurance of a decommissioning fund would be a request from the staff to the licensee for additional information. The staff might ask for information about data, assumptions, and the licensees plans to deal with a projected shortfall or other condition. The emphasis and urgency given to the request for information would depend on the specific nature and magnitude of the concern. The staff could also choose to consult with a rate setting authority such as a State PSC. In the unexpected case that financial assurance and compliance issues could not be resolved to the satisfaction of the NRC using routine interactions, the agency would rely on the available regulatory, enforcement, and administrative tools to address the situation (e.g., granting relief, monitoring corrective actions, or requiring action). The staff emphasized that the NRCs regulatory authority was over the licensee and that the licensee is responsible for assuring the adequacy of the decommissioning funds.

List of Decommissioning-Related Documents on the NRC web site or ADAMS NRC Web Site Document URL Decommissioning http://www.nrc.gov/reactors/decommissioning.html (General) 10 CFR 50.75 http://www.nrc.gov/reading-rm/doc-collections/cfr/part050/

part050-0075.html SECY-01-0197 www.nrc.gov/reading-rm/doc-collections/commission/secys/2001/

(Summary Report) secy2001-0197/2001-0197scy.pdf NUREG 1577, www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1577/

Revision 1 (Decommissioning Standard Review Plan)

Proposed http://ruleforum.llnl.gov/cgi-bin/rulemake?source=DT_PLAN&st=prule Rulemaking on Decommissioning Trust Provisions Draft Regulatory http://ruleforum.llnl.gov/cgi-bin/downloader/rg_lib/123-0132.pdf Guide DG-1106 NUREG-1307, www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1307/

Revision 10, Report on Waste Burial Charges SECY-97-117, www.nrc.gov/reading-rm/doc-collections/commission/secys/1997/

Final Policy secy1997-117/1997-117scy.html Statement on Restructuring and Economic Deregulation of the Electric Utility Industry Attachment 4

ADAMS Document Accession No.

NUREG-1307, Revision 9, Report on Waste ML003757577 Burial Charges: Changes in Decommissioning Waste Disposal Cost at Low-Level Waste Burial Facilities Letter from Arkansas PSC, dated 8/29/02 ML022490126 (with background letters)

Letter from Entergy, dated 7/25/02 ML022390430 Letter from Entergy dated 7/18/02 ML022390429 Biennial Decommissioning Funding Report ML011000009 for Arkansas Nuclear One, dated 4/2/01 Biennial Decommissioning Funding Report ML010940134 for Grand Gulf Nuclear Station, River Bend Station, and Waterford Steam Electric Station, Unit 3, dated 3/30/02 cc:

Mr. John McGaha, President Ms. Valerie Boyce Entergy Operations, Inc. Staff General Counsel P.O. Box 31995 Arkansas Public Service Commission Jackson, MS 39286-1995 1000 Center P.O. Box 400 Mr. Jager Smith Little Rock, AR72203-0400 Entergy Operations, Inc.

1340 Echelon Parkway Mr. Michael R. Fontham, Jackson, MS 39213-8298 Stone, Pigman, Walther, Wittman

& Hutchinson, L.L.P.

Mr. Les England 546 Carondelet Street Nuclear Safety and Licensing New Orleans, LA 70130-3588 Entergy Operations, Inc.

1340 Echelon Parkway Ms. Dana M. Shelton Jackson, MS 39213-8298 Stone, Pigman, Walther, Wittman

& Hutchinson, L.L.P.

Mr. Timothy S. Cragin, Senior Counsel 546 Carondelet Street Entergy Services, Inc. New Orleans, LA 70130-3588 639 Loyola Avenue New Orleans, LA 70113 Mr. Stephen J. Baron, President J. Kennedy and Associates, Inc.

Ms. Donna Gray, Director 570 Colonial Park Drive, Suite 305 Financial Analysis Roswell, GA 30075 Arkansas Public Service Commission 1000 Center P.O. Box 400 Little Rock, AR72203-0400 Ms. Karen Fricke Financial Analysis Arkansas Public Service Commission 1000 Center P.O. Box 400 Little Rock, AR72203-0400

Entergy Operations, Inc.

cc:

Executive Vice President Mr. Craig G. Anderson

& Chief Operating Officer Vice President Operations, ANO Entergy Operations, Inc. Entergy Operations, Inc.

P.O. Box 31995 1448 S. R. 333 Jackson, MS 39286-1995 Russellville, AR 72801 Director, Division of Radiation Director Control and Emergency Management Division of Solid Waste Management Arkansas Department of Health Mississippi Department of Natural 4815 West Markham Street, Slot 30 Resources Little Rock, AR 72205-3867 P.O. Box 10385 Jackson, MS 39209 Winston & Strawn 1400 L Street, N.W. President Washington, DC 20005-3502 Claiborne County Board of Supervisors P.O. Box 339 Mr. Mike Schoppman Port Gibson, MS 39150 Framatone ANP, Richland, Inc.

Suite 705 Senior Resident Inspector 1911 North Fort Myer Drive U. S. Nuclear Regulatory Commission Rosslyn, VA 22209 P.O. Box 399 Port Gibson, MS 39150 Senior Resident Inspector U.S. Nuclear Regulatory Commission General Manager, GGNS P.O. Box 310 Entergy Operations, Inc.

London, AR 72847 P.O. Box 756 Port Gibson, MS 39150 Regional Administrator, Region IV U.S. Nuclear Regulatory Commission State Health Officer 611 Ryan Plaza Drive, Suite 400 State Board of Health Arlington, TX 76011-8064 P.O. Box 1700 Jackson, MS 39205 County Judge of Pope County Pope County Courthouse Office of the Governor Russellville, AR 72801 State of Mississippi Jackson, MS 39201 Vice President, Operations Support Entergy Operations, Inc. Attorney General P.O. Box 31995 Asst. Attorney General Jackson, MS 39286-1995 State of Mississippi P.O. Box 22947 Wise, Carter, Child & Caraway Jackson, MS 39225 P.O. Box 651 Jackson, MS 39205

Entergy Operations, Inc.

cc:

Director, Nuclear Safety Director - Nuclear Safety and Regulatory Affairs Entergy Operations, Inc.

Entergy Operations, Inc. River Bend Station P.O. Box 756 P.O. Box 220 Port Gibson, MS 39150 St. Francisville, LA 70775 Mr. William A. Eaton Attorney General Vice President, Operations GGNS State of Louisiana Entergy Operations, Inc. P.O. Box 94095 P.O. Box 756 Baton Rouge, LA 70804-9095 Port Gibson, MS 39150 Mr. Brian Almon Manager - Licensing Public Utility Commission Entergy Operations, Inc. William B. Travis Building River Bend Station P.O. Box 13326 P.O. Box 220 1701 North Congress Avenue St. Francisville, LA 70775 Austin, TX 78701-3326 Senior Resident Inspector Mr. Paul B. Hinnenkamp P.O. Box 1050 Vice President - Operations St. Francisville, LA 70775 Entergy Operations, Inc.

River Bend Station President of West Feliciana P.O. Box 220 Police Jury St. Francisville, LA 70775 P.O. Box 1921 St. Francisville, LA 70775 Director Nuclear Safety Assurance Ms. H. Anne Plettinger Entergy Operations, Inc.

3456 Villa Rose Drive 17265 River Road Baton Rouge, LA 70806 Killona, LA 70066-0751 Mr. Michael E. Henry, Administrator General Manager Plant Operations and State Liaison Officer Waterford 3 SES Department of Environmental Quality Entergy Operations, Inc.

P.O. Box 82135 17265 River Road Baton Rouge, LA 70884-2135 Killona, LA 70066-0751 General Manager - Plant Operations Resident Inspector/Waterford NPS Entergy Operations, Inc. P.O. Box 822 River Bend Station Killona, LA 70066-0751 P.O. Box 220 St. Francisville, LA 70775 Parish President Council St. Charles Parish P.O. Box 302 Hahnville, LA 70057

Entergy Operations, Inc.

cc:

Chairman Louisiana Public Service Commission P.O. Box 91154 Baton Rouge, LA 70825-1697 Mr. Joseph E. Venable Vice President Operations Entergy Operations, Inc.

17265 River Road Killona, LA 70066-0751 Mr. Michael R. Kansler Vice President, Operations Support P.O. Box 31995 Jackson, MS 39286-1995