ML20215A179

Forwards Draft Commission Paper in Support of Partial Exemptions from 10CFR171 Fees for Listed Facilities,Per Request.Supplemental Fact Sheets Also Encl.Sample Exemption Ltr for EDO Concurrence Being Prepared

ML20215A179
Person / Time
Site:	Yankee Rowe, La Crosse, Big Rock Point, 05000000
Issue date:	12/08/1986
From:	Zwolinski J Office of Nuclear Reactor Regulation
To:	Holloway C NRC OFFICE OF ADMINISTRATION (ADM)
References
NUDOCS 8612110194
Download: ML20215A179 (8)

Text

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. Decemb:r 8, 1986 MEMORANDUM FOR: C. James Holloway, Chief Licensee Fee Management Branch, RM FROM: John A. Zwolinski, Director BWR Project Directorate #1 Division of BWR Licensing

SUBJECT:

RESPONSE TO LFMB REQUEST FOR INPUT TO 10 CFR 171 EXEMPTION REQUESTS Per your recent request for input to three exemption requests we have prepared, a draft Comission paper in support of granting partial exemption to 10 CFR 171 on fees for Yankee, Big Rock Point and _La Crosse. We have prepared this paper using the factors identified in the rule regarding consideration of exemptions, per your request. For these three very old operating reactors we have developed

-a proposed fee to be assessed. Specifically for 101 plants licensed as of October 20, 1986. The approximate output is ?70,000 MWT. Recognizing that the NRC must recover 95 million dollars, we determined the cost per MWT to be

$352/MWT. Applying this cost /MWT factor, the following results are obtair,ed:

la Crosse $352 x 165 $58,000 Big Rock Point $352 x 240 $84,000 Yankee $352 x 600 $211,000 The draft Commission paper contains supplemental fact sheets for each facility.

We are also in the process of drafting a sample exemption letter for the signature of the EDO and will forward that under separate cover.

Noting that the second installment payment of $237,500 is due on or about' January 30, 1987, NRR stands ready to support your activities. The. principal contributor to the enclosure was E. McKenna with support from T. Rotella and R. Bevan. Should questions exist please contact me on X27595.

Original signed by John A. Zwolinski, Director PWR Project Directorate #1-Division of BWR Licensing

Enclosure:

As stated cc: R. Bernero H. Thompson -

G. Lear G. Johnson

.R. Scroggins

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4 For: The Commissioners From: Victor Stello, Jr.

j Executive Director for Operations l

Subject:

PARTIAL EXEMPTIONS FROM 10 CFR PART 171, ANNUAL FEE FOR POWER REACTOR OPERATING LICENSES

Purpose:

To reauest Commission review of staff actions on exemption requests from the annual fee for the Yankee (Rowe) Nuclear Power Station, the Ria Rock l

Point Plant, and the lacrosse Boiling Water Reactor.

Discussion: On September 18, 1986 the Commission adopted a final

,~ new rule, 10 CFR Part 171, Annual Fee for Power Reactor Operating Licenses (51 FR 33224). The rule,

which became effective October 20, 1986, provides i

that an annual fee shall be paid by the licensed owner for each power reactor holding an operating

license. The rule implements the Consolidated t

Omnibus Budget Reconciliation Act of 1985 (P.L.99-272), which require's the Commission to collect annual charges not to exceed 33 percent of its FY 1987 budgeted costs. As published in the final rule.

I the fee was to be $950 thousand per reactor. This was based on a FY 87 budget of $405 million. With the approved budget of $401 million, the fee is now

$940 thousand per license.

As discussed in the Resolution of Comments on the Proposed Rule it was not the intent of the Commission i to promulgate a fee schedule that would have the

, effect of imposing fees at such a level that the

! owners of the handful of small older reactors would find it in their best economic interest to shut

their reactors down. Thus, the rule also contained

a provision (171.111 for exemption, in part, from

the annual fee, which states:

i l CONTACT:

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The Commissioners '

"The Commission may, upon application, grant an exemption in part from the annual fee required pursuant to this part. An exemption under this provision may be granted by the Comission taking into consideration the following factors:

a. Age of the reactor;

b. Size of the reactor:

, c. Number of customers in rate base;

, d. Net increase in KWh cost for each customer directly related to the annual fee assessed j under this part; and i

e. Any other relevant matter which the licensee believes justifies the reduction of the annual i fee."

i i Applications for exemption have been received from licensees for three small older reactors; these are provided in Enclosures 1 through 3. Each application l was evaluated using the criteria of Part 171.11 to determine whether a reduction was appropriate. The 4

factors considered for each plant are sumarized on the attached data sheets.

For these plants, the staff notes that the annual fee, on top of other fees already required by Part 170, provides a significant increase in power pro-duction costs. Because of the smaller generating capacity, the impact on individual customers is greater than for the same fee applied to large plants, and the ability to absorb such costs by the utility is similarly limited. Because of the unique designs of these plants, many of the generic reguhtory costs covered by the Part 171 fee are not applicable.

Based on these considerations, the staff concludet .

that imposition of the full annual fee would be a disproportionate burden and therefore that a reduction should be granted for Big Rock Point, Lacrosse and for Yankee.

The staff has elected to prorate the required fee based on the thermal megawatt power rating of the -

affected plants. The cost per megawatt is $352, based on a recoverable cost of $95 million and a  ;

total capacity for the 101 operating reactors (as of October 20,1986) of almost E70,000 MWt. Thus, the '

fees for Fiscal Year 1987 will be: (rounded to the nearest thousand dollars):

, Big Rock Point .

84,000

Lacrosse Boiling Water Reactor 58,000 j Yankee 211,000 i

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9 The Comissioners

Conclusion:

Pursuant to SECY 86-343, dated November 19, 1986, I intend to grant these three exemption requests.

However, should the Commission desire, I will withhold my approval pending resolution of any concerns which may evolve.

Recommendations: that the Commission:

Note that it would be my intention to issue partial exemptions to the licensee for Yankee, Lacrosse and Big Rock Point within 10 working days of the date of this paper unless otherwise instructed by the Comission.

Victor Stello, Jr.

Executive Director for Operations

Enclosures:

See Next Page O

The Commissioners '

Enclosures:

1. Letter dated October 21, 1986

, from A. R. Soucy (Yankee Atomic

! Electric Company) to V. Stello (NRC)

2. Letter dated October 28, 1986 from J. W. Taylor (Dairyland Power Cooperative) to Director, NRR.

3. Letter dated November 7, 1986 from

K. W. Berry (Consumers Power Company) to Executive Director for Operations.

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YANKEE NUCLEAR POWER STATION YANKEE ATOMIC ELECTRIC COMPANY DOCKET NO.50-029 FACILITY OPERATING LICENSE NO. DPR-3 Age of Reactor Yankee is the oldest commercial operating reactor at 26 years old. (License issued July 19, 1960, expiration date is November 4, 1997).

j Size of Reactor Yankee is about one-fifth the size of the average plant at 600 MW thermal, 175 MW electrical.

Number of customers in rate base Net increase in Kwh cost for each customer directly related to the annual 4

fee assessed.

! Yankee was formed for the exclusive purpose of constructing and operating New England's first nuclear plant. Yankee has no retail customers; the energy production is sold to the 10 New England utilities that own Yankee. The annual fee will increase costs per Kilowatt hour by approximately 1 mill, j which is about six times greater than the increase that will be experienced by

more recent vintage plants.

Other relevant matters

, Smaller plants are more sensitive to increasing costs, as evidenced by the relatively high operating and maintenance costs even with good plant capacity factors. Such sensitivity has been acknowledged in other regulatory contexts, such as the insurance rule and backfitting. .

SALP ratings have been consistently high, thus, special inspections and reviews of operating experience costs are lower.

Yankee poses less of a potential hazard than most other plants because of its simpler design, diversity of heat removal systems, design margins, small core

. . size and the remote siting.

Because of the older design, many of the generic activities covered by the

rule are not applicable, such as thermal-hydraulics codes and earth science research.

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RIG ROCK POINT PLANT CONSUMERS POWER COMPANY DOCKET NO. 50-155 l

l FACILITY OPERATING LICENSE NO. DPR-6 Age of Peactor Big Rock Point is the oldest operating General Electric boiling water reactor 4 and one of the oldest commercial operating reactors at 22 years old. (License issued May 1, 1964, expiration date is May 31,2000).

Size of Reactor Big Rock Point is the second smallest comercial operating plant with an output i of 69 MW electrical. This output is less than one-tenth the size of the

average modern plant.

i Number of customers in the Big Rock Point rate base 20,600 at 85% Capacity Factor.

. Net increase in KWh cost for each customer directly related to the annual

j. Tee assessed

. The annual fee will increase costs per kilowatt hour by approximately 2.5 mills, which is about 12 times greater than the increase that will be

experienced by more recent vintage plants.

Other relevant matters Smaller plants are more sensitive to increasing costs, as evidenced by the relatively high operating and maintenance costs even with good plant capacity factors. Even without increased license fees, recent industry analyses have i shown Big Rock Point's operating costs on a kilowatt-hour basis to be among l

the highest in the industry.

! Because of the older design, many of the generic activities covered by the l rule are not applicable, such as thermal-hydraulics codes-and earth science

research.

Big Rock Point's small size and rural location is less of a potential hazard

-than other plants because of its simpler design, design margins, small core size, and the remote siting.

! SALP ratings have been above average over the last several years.

Current electric rates do not reflect the new fee. A new rate case with the Michigan Public Service Comission would have to be undertaken. The current state regulatory climate is volatile due in part to Consumers Power Company's recent financial problems, t

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LA CROSSE BOILING WATER REACTOR DAIRYLAND POWER COOPERATIVE DOCKET N0. 50-409 PROVISIONAL OPERATING LICENSE NO. OPR-45 Age of Reactor La Crosse Boiling Water Reactor (LACBWR) is one of the four oldest commercial operating reactors subject to the provisions of Part 171. The unit began commercial operation in November 1969.

Size of Reactor LACPWR is the smallest commercial nuclear power unit in the U.S. Its net generating capacity is 50 MWe.

Number of Customers in Rate Base Dairyland Power Cooperative (DPC1, owner and operator (licensee) is a generation and transmission cooperative whose 29 distribution cooperative provides service to 170,000 customers in the DPC region. This customer base is considerably less than that of other nuclear utilities, and is primarily of a rural nature.

Net Increase in KWh Cost LACBWR currently has the highest unit power cost of any base load plant in the DPC system. The annual fee required by Part 171 will increase the cost of production by approximately 3 mills per KWh. The increase would be 15-20 times greater for La Crosse than the increase that will be experienced at other (larger) reactors.

Other Relevant Matters LACBWR was constructed for the AEC to demonstrate the economic feasibility of small nuclear power generating plants. At the. urging of the AEC, DPC took ownership of LACBWR and assumed operational responsibility under a licensing agreement with AEC. The unit provides diversification to avoid complete dependency by DPC on coal. The economics are such that unless substantial relief from the fee required by Part 171 is provided, DPC could be forced to become entirely dependent on coal.

The sensitivity of small plants to increasing operational costs has historically

been recognized, in that most if not all other fees imposed by regulatory

-agencies, other government entities and private trades associations and industry group > to administer their programs and recover costs are based upon generating capacities of the plants.

As a very small nuclear unit, LACRWR poses less of a potential hazard than other nuclear units because of its small core size, simpler design, and over -

designed safety margins, and thus has historically required less regulatory attention than larger nuclear units.