ML20211N101
| ML20211N101 | |
| Person / Time | |
|---|---|
| Issue date: | 03/21/1997 |
| From: | Meyer D NRC OFFICE OF ADMINISTRATION (ADM) |
| To: | Morrison D NRC OFFICE OF NUCLEAR REGULATORY RESEARCH (RES) |
| Shared Package | |
| ML20008B465 | List:
|
| References | |
| FRN-62FR47588, RULE-PR-50 AF41-1-025, AF41-1-25, NUDOCS 9710160021 | |
| Download: ML20211N101 (88) | |
Text
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[/o u,%,k UNITED STATES Aulack thrtin 3- ')- NUCLEAR REGULATORY COMMISSION File
$ WA$HINGTON, D.C. 20565-0001
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March 21, 1997 MEMORANDUM T0: David Morrison, Director
! Of Nuclear gulatory Research ~
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FROM: AD . eyer, hief
/' t Rules Review and Directives Branc.1 Office of Administration
SUBJECT:
OFFICE CONCURRENCE ON PROPOSED RULE ENTITLED
" FINANCIAL ASSURANCE REQUIREMENTS FOR DECOMMISSIONING NUCLEAR POWER REACTORS" The Office of Administration has reviewed and concurs, subject to comments provided, on the proposed rule that responds to the pote'1tial deregulation of the power generating industry. We have attached a marked copy of the proposed rule that presents editorial and format corrections.
In the codified section of this proposed rule, the definitions in 650.2 must be placed in abhabetical order in the amendatory instruction and in-the
-codified text. de have revised each of the amendatory instructions and set out the codified text for each amended section in its entirety. The Office of the Federal Register requires that the full text of each amended provision be presented in codified text. We will e-mail Brian Richter a file that contains the codified text that we included in our comments.
-Brenda Chelton.-Information and Records Management-Branch, har informed us in a memorandum dated March 14, 1997, that this rule be placed or hold pending IRM's approve of the paperwork clearance package. You should contact Brenda Shelton (415-7230) for further guidance concerning this matter If you have any questions regarding the marked copy, please have a member of your staff contact Michael T. Lesar on 415-7163 or Alzonia Shepard on 415-6864.
Attachment:
As stated g
?3 9710160021 971003 PDR PR
,50 62FR47588 PDR
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lFOR: The Commissioners FROM: L. Joseph callan Executive Director for Operd. ions
SUBJECT:
PROPOSED RULE ON FINANCIAL ASSURANCE REQUIREMENTS FOR DECOMMISSIONING NUCLEAR POWER REACTORS PURPOSE:
To request Commission _ approval-to publish in the Federal Reaister a proposed rule on financial assurance requirements for decommissioning nuclear power reactors.
SUMMARY
This proposed rule is being developed to amend the NRC's regulations relating to financial assurance requirements for the decommissioning of nuclear power plants. This is in response to the anticipated deregulation of the power generating industry. The proposed action would revise the definition of
" electric utility" contained in 10 CFR 50.2 and would require power reactor licensees to periodically report on the status of their decon.missioning funds and funds for managing their irradiated fuel. Also, the staff is proposing to allow licensees to.take credit for the earnings on decommissioning trust funds.
BACKGROUND:
The staff submitted an advance notice of proposed rulemaking (ANfd) on 1 financial assurance requirements for_ decommissioning nuclear power reactors
-(SECY-96-030) to the Commission on February 8, 1996. A staff requirements memorandum (SRM)_on the same topic was issued on March 27, 1996, which approved publication of the ANPR with the addition of some items to be addressed through- public comment- (Enclosure 1} . A revised ANPR based on the CONTACT:
Brian'J. Richter, RES (301) 415-6221.
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Commission's ,(omments was published in the Federal ((61 Register FR 15427) on April 8, 1996L The attached Eedare4-P.e9Mer r,ctiu (FRN) nr4h roptised rule responds to the comments received on the.ANPR and submits th proposed amendments (Enclosure 6). .
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The ANPR requested public comment on a specific proposal to amend 55 50.2, 50.75,'and 50.82 and requested comment on six areas of consideration for decommissioning: (1) the timing and extent of deregulation of the electric utility industry, (2) stranded costs, (3) financial qualifications and decommissioning funding assurance for nuclear power plants, (4) decommissioning funding assurance for a Federal Government licensee, (5) the status of decommissioning trust funds during the safe storage period, and (6) reporting on the status of decommissioning funds. '
DISCUSSION:
Approximately 650 comments on the ANPR were received from 42 respondents. The
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commenters included 9 public utility commissions and organizations, 2 public interest groups, 28 utilities and utility groups, and 3 classified as "other."
Comments were requested on the specific proposal to amend 55 50.2, 50.75, and 50.82 to require that nuclear power reactor licensees provide assurance that the full estimated cost of decommissioning will be available through an acceptable guarantee mechanism if the licensees are no longer subject to rate regulations by State public utility corporations (PUCs) or the Federal Energy Regulatory Commission (FERC) and do not have a guaranteed source of income.
- The amendment would also allow licensees to assume a positive real rate of r m rn on decommissioning funds during the safe storage period. Lastly, a Nriodic reporting requirement would be established.
With respect to the proposed amendments, the staff was concerned by the possibility that the existing definition of " electric utility" in 5 50.2 would cause problems if left intact during deregulation of the electric ut;Ny industry. As a result, a revised definition is being proposed for i 50.2 and the relevant sections of Part 50 that refer to the words " electric utility" or
" utility" cre also being modified. The staff notes that the key comoonent of the revised definition is a licensee's rates being established by a rate-regulating authority. Further, should a licensee be under'the jurisdiction of such an authority for only certain components of the licensee's cost of operation (e.g., transmission access fees, system exit fees), the licensee would be considered to be an " electric utility" only for that part of the Commission's regulations to which those components pertain.
Another deregulation-related item that was included in the Commission's SRM relates to decommissioning funding assurance for a Federal Government licensee. Section 50.75(e)(3)(iv) states that an electric utility that is a Federal Government licensee need only provide assurance in the form of a ,
statement of intent indicating that decommissioning funds will be obtained i
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when necessary. The Office of the Inspector General published an audit report' on this ptic on April 3,1996, indicating that they found that s -h use of a letter Pr intent was questionable. Similarly, .most of the comments received stated'that the statement of intent should be eliminated as an option for any-Federal licensee so that all licensees would be playing on a level field.~ IneJsfaf t'is of the opinion that eliminating the statement of intent :
option for reasons of-economic " fairness" is not within the Commission's purview and further believes that any modification would result in a backfit l t might not be justifiable, given that the risk of a Federal licensee-et a--
bein able to fund its decommissioning expenses would be extremely small.
Hence, the staff is recommending no change to 10 CFR 50.75(e)(3)(iv).
r#9ar#ul cernin,m A The ANPR also addressed the status of decommissi nirig funds during the extended safe storage period.- Specifically, i asked whether licensees should be allowed to take credit for earnings on the dedmmissioning trust funds -
i during the safe storage period, what time periods NRC should allow licensees to use in estimating the credit for earnings, and what real rate of return
- should be allowed by the NRC. In response, the staff is proposing to allow credit on earnings from the time the funds are collected through the decommissioning period at a real rate of 2 percent. However, higher earnings amounts will be allowed during the period of reactor operation if specifically determined by a rate-setting authority.
With respect to the reporting requirement, the staff is proposing that each licensee report on-the status of its decommissioning funding for each power reactor at least once every three years, unless the reactor is within 5 years of the projected end of its operation, in which case it.must submit a report annually. p,(
Besides seeking comments on the above, the ANPR specifically ed' f7 comments on six areas of consideration.
-1. The first area of consideration related to the timing and extent of deregulation,- scenarios for deregulation, and the industry structure as a result of deregulation. On the issue of timing, commenters' predictions varied from as soon as 1998, to within 5 years, to a considerable length of time. As far as thoughts on a restructuring or deregulation scenario, individual commenters had some specific thoughts, but many commenters said there was significant uncertainty with respect to the breadth, timing, and implementation details of the new competitive-electric business. As one commenter noted, the pace of deregulation will be set by Federal and State legislatien. Commenters, in general, stated that the ultimate extent of deregulation will be the deregulation of electricity generation, but not transmission and distribution rates. With regard to resulting industry structure as a consequence of deregulation, there were diverse views, but as
'U.S.- Nuclear Regulatory tommission, Office of the Inspector General, "NRC's Decommissioning Finan:ial Assurance Requirements for Federal Licensees May Not Be Sufficient," OlG/95A-20, April 3, 1996.
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The Commissioners 4 some.commenters advised that the NRC should abandon any-attempt to anticipate market structure and any rule should accommodate nuclear reactors subject to traditional regulation and reactors in the new competitive markets. The last subset question in this area of the ANPR focused on the differences in State policies and implications. Again answers varied, but if one can draw an inference from present conditions, it 1ppears trIat reform may proceed at different speeds in different States because of local market and political pressures.
- 2. The second area of consideration in the ANPR was stranded costs at nuclear power plants. Many commenters thought regulators would allow prudently ;
incurred stranded costs to be recovered in some manner, especially j decommissioning costs. -However, the NRC is aware that stranded costs must be i addressed to ensure that they are being adequately handled and that licensees are not so financially affected as to put public health and safety in danger.
Subsequent to the publication of the ANPR, the NRC published its " Draft Policy Statement on the Restructuring and Economic Deregulation of the Electric Utility Industry," September 23, 1996 (61 FR 49711). It stated:
[ "Notwithstanding the primary role of economic regulators in rate matters, the NRC has authority under- the Atomic Energy Act of 1954, as amended, (AEA) to take cctions that may affect a licensee's financial situations when these actions are warranted to protect public health and safety." The policy also goes on.to explain' that, in the future, the NRC will consult more closely with the National Association 07 Regulatory Utility Commissioners (NARUC), FERC, and the Securities and Exchange Commission so that the NRC may express its 4 positions on safety and encourage the various regulatory bodies to continue to allow adequate expenditures for plant safety. Lastly, the proposed reporting requirements addressed below are seen by th( staff as vehicles for the
~ Commission to keep abreast of this potential problem. With the issuance of
-the draft policy statement, the staff considers the stranded cost question resolved and sees no need to take further action.
3 .- The- third area of consideration d
in the ANPR was financial qualifications and funding-assurance for ecommissioning nuclear power plants. -Thero were 9 sub-questions under this heading, covering funding assurance to cover premature shutdowns, a plant operator that ceases to be a utility, a variety '
of assurance options, financial test qualifications, PUC/FERC certification, the impact of accelerated funding, potential shortfalls because of underestimated costs, a cantive insurance pool, and other NRC options in-the case of a limited role for the PUCs or FERC. Again, the proposed reporting
- requirements addressed below are seen by tu staff as a vehicle for the NRC to keep informed of licensees' decommissioning funding assurance without adding any of the above requirements._ Should the staff become aware of potential shortcomings as a result _of the reporting requirements, necessary rulemakings will be proposed.
While " benchmarking" is not addressed in this rulemaking or in the ANPR, it is relevant to several of the comment areas and the staff wishes to raise the issue to the Commission. Benchmarking in this context refers to the amount of funding for decommissioning that the NRC believes a licensee should possess at
The Commissioners 5 given points in a nuclear power plant's operational life. For example, the NRC may require licensees to have accumulated 25 percent of their decommissioning funds (less the credit for earnings on decommissioning funds as allowed by this proposed rulemaking) by the end of the tenth year of a plant's operation, The present requirements in this area stipulate that the licensees are to provide the funds for decommissioning, but are not required to provide a specified amount each year. However, licensees are required in 5 50.75(b) to annually revise the total amount of funds they naed for decommissioning. The reporting requirements promulgated in this proposed rule will result in a detailed understanding of contributions by licensees relative to the life of their plants. A significant variability in these contributions or possible shortfalls in the amounts may result in a need for future rulemaking to address benchmarking as a regulatory requirement. A potential problem with benchmarking is that it would require licensees to base decommissioning estimates on the dated equations in 5 50.75(c), which some commenters considered overestimates. These decommissioning estimates are currently being evaluated as part of a rulemaking effort that is currently on hold pending accumulation of actual decommissioning cost data. The staff intends to address the issue of benchmarking as part of that future rulemaking.
Additional information on funding will also be available as a result of this proposed rulemaking's reporting requirement.
- 4. The fourth area of consideration is decommissioning funding assurance for a Federal Government licensee. Almost all commenters took the position that Federal licensees should be treated in the same way as non-Federal licensees.
The general consensus was that different treatment for Federal licensees could create competitive advantages for the Federal licensees and that NRC should ensure that the " playing field" remained level. Only TVA took the position that ample reasons exist for continuing the use of statements of intent as provided under the current regulations. However, TVA also provided an extended description of the steps it has taken to use an external trust, "all requirements" contracts, and its power to issue indebtedness to assure its decommissioning costs. Another factor that was considered in this decision is the previously referenced Office of the Inspector General's Audit Report.'
The report found that "...NRC's decision to allow Federal licensees to use a statement of intent...was based primarily on the assumption that the Federal Government would pay the financial obligations of the lone Federal licensee,...should it be unable to do so. However, based on our review of the U.S. Code and discussions with officials from the Department of the Treasury, the Office of Har,agement and Budget and TVA, we believe NRC's assumptior is questionable." The staff responded in the report stating: "TVA has a large, exclusive franchise area that has been granted by the Federal government since TVA's formation in 1933. ...This franchise virtually guarantees that TVA will :
receive extensive revenues from the sale of electricity (at rates it has the power to set) for the foreseeable future. Even in the remote case where TVA defaulted on its bonds, revenues from electricity sales would not cease." The staff's position is to not eliminate the special status afforded to Federai
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licensees, as the elimination would place an unjustifiable burden on any
- Federal licensee, given the very small risk of a Federal licensee not being '
able to moet .its decouissioning costs.
- 5. The_ status of decommissioning trust funds during the safe storage period was the next area of consideration. The majority of commenters supported - -
allowing credit for earnings on funds during extended storage periods. Some argued that if credits for earnings were not allowed, more funds than necessary would be collected, thereby generating unwarranted expense to
-licensees and customers and possible intergenerational inequities. Still others in support of credit for earnings stated that this should cover not only the extended safe storage period, but other periods as well. The staff proposes to allow licensees to take credit for earnings on external sinking funds from the time of the funds' collection through the decommissioning period. The proposed reporting requirement would provide the NRC with the '
ability to monitor licensees' decommissioning funds.
A related option was for the NRC to specify a r ce of return for licensees to
-use in calculating their earnings. Commenters suggested the use of variable rates of return dependent upon what the licensees were able to justify given their earnings-history, rates tied to bond rates, or rates established by States. The staff proposes use of a 2 percent real rate of return. The staff now recognizes that its implicit use of- a zero real rate of return was too conservative. Historically, real (i.e., inflations adjusted, after tax) rates of return _using U.S. Treasury issues have been around 2 percent, so the staff
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proposes to allow licensees to use this rate in their calculations. If rates actually are lower than this, 5 50.82 provides that licensees are to adjust decommissioning funds during safe storage to reflect changes-in cost estimates.
- 6. ; Reporting-on the status.of the decommissioning funds was the last area of consideration. While most commenters supported a reporting requirement, there was concern with content, frequency, and possible duplication of effort. The staff proposes a reporting requirement that would have licensees submit a report once every 3 years, and annually within 5 years of the planned end of operation. To make the report as simple as possible for the licensees to comply with, the staff. plans to issue a regulatory guide that would endorse the Financial Accounting Standards Board * (FASB) standard No.158-B,
" Accounting for Certain Liabilities Related to Closure or Removal of Long-Lived Assets," which is still in draft form. The staff plans to endorse this FASB standard as a means of providing guidance to licensees on complying with those portions of the NRC's regulations regarding licensee reporting on the status of its decommissioning funding. Licensees are to comply with the FASB l standard once it becomes final in order to remain consistent with generally 1 accepted accounting principles. The staff has reviewed the proposed contents '
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'FASB is a private body that establishes authoritative financial accounting and reporting standards. ,
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L The Commissioners 7 of the reports on decommissioning funds to ensure that the needs of the NRC are balanced versus the time constraints of the licensees in assembling them.
The Federal' Register notice--also addresses comments received on topics-not
- l. specifically addressed -in the ANPR. _
COORDINATION: N" # ##"We I fp thit Aden4 M4 The Office of the General Counsel has n.n_ legal objection to this paper. The-Office of the Chief Financial Office the Office of the Chief Information Officer s _=---m.m %w Jf"T6iigreniund- Affdre concur with-the centents e?
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L RECOMMENDATION:
M ksahs %by/sp y jpprfs, That the Commission: -.
- 1. - Approve the Notice of Proposed Rulemaking (Enclosure 2) for publication.
- 2. Certify that this rule, if- promulgated, will not_ have a negative economic impact on a substantial number of small entities in-order to satisfy requirements of the Regulatory Flexibility Act, 5'U.S.C. 605(b).-
- 3. Note:
- a. The rulemaking would be published in the Fedet al Reaister for a-75-day public comment period; 4
- b. A draft regulatory analysis (Enclosure 3) will bg available in the Public-Document Room; , pu ID I c. The Chief Counsel for Aivocacy of the mall Business Administration will be informed of the certification regarding economic impact on small entities and the reasons for it as required by the Regulatory Flexibility Act;
'd. This proposed rule amends information collection requirements t that are subject to the Paperwork Reduction Act of 1980 (44 U.S.C.
3501 et st.q.). This rule is being sent to the Office of Management and Budget for review and approval of the paperwork requirements;
- e. A public anticuncement (Enclosure 4) will be issued;
- f. The appropriate Congressional committees will be informed (Enclosure 5);
- g. It is estimated that this proposed action would result in an additional annual NRC burdesi of approximately one staff-week; and
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" The Commissioners 8
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[ h. Copies'of the Federal Register Notice of proposed rulemaking will-be distributed to all power reactor licensees. The notice will be
, sent.to_other interested parties upon request.
4 1-L. Joseph Callan Executive Director
! for Operations
Enclosures:
i 1. SRM dtd-3/27/96 (w/o attachment)
- 2. Federal Register Notice-+ disk '
- 3. Draft Regulatory Analysis
- 4. Draft Public Announcement-(To Be Prepared By OPA)
. 5. Draft Congressional Letters 6.-ANPR dtd 4/8/96 9
1 The Commissioners 8
- h. Copies of the Federal Register Notice of proposed' rulemaking will be distributed to all poser reactor licensees. The notice will be sent to other interested parties upon request.
L. Joseph Callan Executive Director for Operations
Enclosures:
- 1. SRM dtd 3/27/96 (w/o attachment)
- 2. Federal Register Notice A disk
- 3. Draft Regulatory Analysis
- 4. Draft Public Announcement (To Be Prepared By OPA)
- 5. Draft Congressional Letters
- 6. ANPR dtd 4/8/96 RECORD NOTE: A draft copy of the proposed rule was sent to OIG for information on .
DISTRIBUTION: CGallagher Central f/c FCostanzi LRiani DMendiola RDB r/f RAuluck
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e TheCommissioners 8 It is estimated that this proposed ar+ ion would re it in an g..
additional annual NRC burden of approximately on staff-week. ,
i h. Copies of the Federal Register Notice of prop ed rulemaking will l l
be distributed to all- power reactor licensee . The notice will be l
- s;.at to other interested parties upon requ t.
l L. Jos h Callan l Execu ive Director !
f Operations !
Enclosures:
- 1. SRM dtd 3/27/96 (w/o attachment)
- 2. - Federal Register Notice + disk
- 3. Draft Regulatory Analysis
- 4. Draft Public Announcement f (To Be Prepared By OPA) l 5. Draft Congressional Letters
- 6. ANPR dtd 4/8/96 RECORD NOTE: A raft copy of the proposed rule was sent to OlG f r information on _.
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-NUCLEAR REGULATOR COMMISSION i- 10 CFR Part-50 .
RIN 3150-AF41
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Financial Assurance Requirements for
. Decomissicning Nuclear- Power Reactors L -AGENCY: - Nuclear Regulatory Comission.
ACTION: Propos'ed rule.
SUMMARY
- The Nuclear Regulatory Commission (NRC)-is proposing to amend it:;
regulations on financial assurance requirements for the decomissioning of icOW+ /hwuJ nnm/mw ka n,Asn m u cu--
-nuclear power. plants.Ype potential deregulation of the power ge(nerating industry *$ 0[q on widIEpstt whether current NRC regulations ~ ,
concerning decommissioning funds:and their finaycial mechanisms will need to
. . dq cath'an tucuM be modified, d t 0=1Ly,(. he y propos . require power reactor licensees report periodically on the status of their decommissioning-
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f funds.and on the-funding for the management-of their irradiated fuel.: Fj lffe 44u,Ldm J & & NW h'w~ fe fak isij
-DATE:
tofef(i f dn' .m /sov>wsp % Q L u/- [ d :
Submit comments by nsert a date-to allow 75 days public comment]
, 1997. Comments received after this date will be considered if it is practical to_do so,- but the Commiss'.on is able to assure consideration only'for comments. received on or before.this date..
ADDRESSESi Mail' comments to: The Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Docketing and Service Branch.
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Deliver comments tot ll5$f, Rockville Pike, Rockville, Maryland, tatween .
7:da . and 4:15 p' , Federal workdays.
[6W Comments may b s mt(e enc $onic y i$iitherASCl!textor l Wordperfect format (version 5.1 or later), by calling the NRC Electronic f Bulletin Board (BBS) on FedWorld. The bulletin board may be acces' sed using a -
personal computer, a modem, and one of the commonly available communications !
foftwarepackages,ordirectlyviaInternet. Background documents on the udvance notice of proposed rulemaking are also available, as practical, for $
I downloading and viewing on the bulletin board.
i If using a personal computer and modem, the NRC rulemaking subsystem on FedWorld can be accessed directly by dialing the toll free number 1-(800) l 303-9672. Cunmunication software parameters should be set as follows: parity i to none, data bits to 8, and stop bits to 1 (N,8,1). Using ANSI or VT-100 ,
terminal emulation, the NRC rulemaking sudsystem can then be accessed by i
selecting the " Rules Menu" option from the "NRC Main Menu." Users will find the "FedWorld Online User's Guides" particularly helpful. Many NRC subsystems I and data bases also have a " Help /information Center" option that is tailored to the particular subsystem.
The NRC subsystem on FedWorld can also be accessed by a direct dial l phone number for the main FedWorld BBS, (703) 321-3339, or by using Telnet via Internet: fedworld. gov. If using (703) 321-3339 to contact FedWorld, the NRC subsystec will be accessed from the main FedWorld menu by selecting the
" Regulatory, Government Administration and State Systems," then selecting
' Regulatory Information Mall." At that point, ,
2nu will be displayed that has an option "U.S. Nuclear Regulatory rm.n .n" that will take you to the i NRC Online main, menu. The NRC Online area 3 a can be accesced directly by j L
-2
... _ _m. - _ . . _ _ . _ _ . - _ _ _ ._. _ . _ ._._ _ __._
.e i typing "/90 nrc" at a FedForld command line. if you access NRC from ,
FedWorld's main menu, you may return to FedWorld-by selecting the " Return to FedWorld" option from the NRC Online Main Menu. However, if you access N'RC a4 FedWorld by using NRC's toll-free number, you will have full access to all NRC systems, but you will not have access to the main FedWorld system.
If you contact FedWorld using Telnet, you will see the NRC area and menus, including the Rules Menu. Although you will be able to download documents and leave messages, you will not be able to write comments or upload l files (comments). If vou contact FedWorld using FTP, all files can be accessed and downloaded but uploads are not allowed; all you will see 'is a .
l list of files without descriptions (normal Gopher look). An index file listing all files within a subdirectory, with descriptions, is available. -
There is a 15-minute time limit for FTP access.
Although FedWorld also can be accessed through the World Wide Web, like FTP that mode only provides access for downloading files and does not display the NRC Rules Menu.
For more information on NRC bulletin boards call Mr. Arthur Davis, ,
Systems Integration and Development Branch, NRC, Washington, DC 20555, telephone (301) 415-5780; e-mail AXD30nrc. gov. /
Examine copies of comments received at: The NRC Public Document Room, <
2120 L Street NW.-(Lower level), Washington, DC.
FOR FURTHER INFORMATION CONTACT: Brian J. Richter, Office of Nuclear Regulatory Research, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone (301) 415-6221, e-mail bjrenrc. gov.
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l SUPPLEMENTARY INFORMATION:
Background
The NRC published an advance notice of proposed rulemaking (ANPR) for
" Financial Assurance Requirements for Decomissioning Nuclear Power Reactors" 61FR15427IonApril8,1996,. The NRC was seeking comments on its proposal to amend d 50.2, 50.75, and 50.82 to require that electric rtility reactor licensees provide assurance that the full estimated cost of decommissioning l their reactors will be available through an acceptable guarantee mechanism if ;
the licensees are no long2r subject to rate regulation by State public utility j
commissions (PUCs) or the Federal Energy kpov Regulatory { Commission (FERC) a l not have_a guaranteed source of income. The'Emendments would also allow 1 /
licensees to_ assume a positive real rate of return on decommissioning funds during the safe storage pariod. Lastly,'a periodic reporting requirement would be established. gg The ANPR specifically forcommentsontheaboveamendmentsandon sixareasofconsiderationfordecommissioning:O(1) e timing and extent of !
deregulation of the electric utility industry',k2) $tranded costs',h(3) l hnancial qualifications and decommissioning funding as:urance for nuclear l power plantsO(4)Mcommissioning funding assurance for a Federal Government
- m . s licensee,' TS) Jhe status of decommissioning trust funds during the safe storage period,' and k6) f porting on the status of decommissioning funds. I n l response, the NRC received 650 comments from 42 commenters, and the commenters hve been classified into 4 groups. *he largest group of respondents was utilities and utility groups (28 commenters), followed by public utility L
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setTA L r
commissions (PUCs) and related organizations (9). Two public interest groups submitted comments, as did a group of 3 commenters referred to as "other."
The discussion of the comments received is presented by general comment area and specific questions posed within each area. The questions appear in i the orde,r as presented,in the ANPR, followed by the Commission's responses.
Shcuwwn of
- Response)e' Comments i
l A. TINING AND EXTENT OF ELECTRIC UTILITY INDUSTRY DEREGULATION A.1 Likely Timetableg
! On the issue of the timing and extent of deregulation, most commenters addressed only the timing question. If commenters also discussed the question
! of extent, they generally only distinguished between deregulation of the a
wholesale market and deregulation of retail power sales, although timing i estimates usually referred to retail deregulation. Almost half of the commenters did not take a position on the timing issue. Seven commenters stated that the timing of deregulation could not be predicted.
Several commenters stated only that they took the same position as the Nuclear Energy Institute (NEI), an organization that represents many nuclear utilities. NEl estimated that about ten years would be necessary to bring about restructuring and deregulation. A few commenters suggested that from five to ten years would be sufficient. Two commenters pointed to events in States that were scheduled to occur as early as 1998 and others predicted significant deregulation within five years or less or " rapidly." Two-commenters suggested that deregulation would take place slowly and require a considerable timo. to complete.
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- 4 A.2 Restructurina or Dereculation Scenario Phases of Deregulation. Several commenters stated that an initial phase of deregulation of the generation or wholesale electricity market has already begun and is likely to continue. Utilities are now preparing for deregulation by undertaking cost reductions (e.g., workforce reductions, contract renegotiations, regulatory asset reductions, operating cost reductions),
strategic alliances and mergers, and expansion into unregulated venues.
Five commenters expressed their belief that a second deregulatory phase would follow and lead to the restructuring of the transmission sector and to retail competition. However, many commenters noted that significant uncertainty exists regarding the breadth, timing, and implementation of the new competitive electricity business.
The pace of deregulation, according to one commenter, will be set by federal and State regulation. One commenter stated that competition would be phased in slowly with existing generation assets being "kept whole" through standard regulated rates.
Ultimate Extent of Rate Requiation or Derequiation. Four commenters expect that electricity prices from generators will ultimately be lar og,;<iN deregulated or unregulated. Onecommenterstatedthatgenerationbwillbecome partially deregulated, but may not be fully deregulated if reliance on market forces does n'ot adequately ensure safe and reliable generation supplies.
Nine commenters expect that transmission rates will remain subject to Federal Energy Regulatory Commission (FERC) jurisdiction. Regional power markets (RPM) and independent system operators (150) (discussed below) would also fall under FERC jurisdiction, according to one commehter. Ten commenters anticipate that distribution (retail; rates are likely to remain subject to
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State jurisdiction. One of these commenters stated that distribution rates may be regulated under a price cap or incentive-based regulation.
Retail wheeling and pool-t ased pricing' will provide market pricing at all levels, including the retail level, according to one commenter. Three commenters believe that retail wheeling will become widespread.
One commenter indicated that nuclear power plants and non-utility generators, even if released from rate regulation by States or FERC, may remain under some forms of regulation, including State and Federal siting and environmental regulation.
Resultina Business and industry Structure e b ~ % g
.Although one commenter stated that NRC'should abandon any attempt to anticipate market structure, other commenters suggested that the following features might charactn ize the industry subsequent to deregulation and restructuring:
e Functional unbundling which is the divestiture of generation, transmission, or distribution systems.
e Many, and perhaps all, transmission systems operated on a State-wide or region-wide basis. An ISO will operate the system, coordinating energy production and delivery with demand and provide a pool-based spot market price for energy. RPMs or power market exchanges (PMEs) for competitive generation will accept bids from all generators that want to participate
' Retail wheeling refers to the selling of bulk power to a retail customer by way of a third party's transmission system. Pool-based pricing is a pooling of electricity produced by various generators for resale to consumers.
1 in the market, establish the clearing price, and determine the sequence of generator dispatch. Bilateral contracts for the direct purchase of
. power will also be allowed. l l
e' Different treatment for nuclear generation than for other types of :
utility-owned generation. Even if nuclear generation is permitted to compete in an open market, some regulatory mechanisms may remain in j place to ensure that nuclear-related costs (safety, security, waste disposal, decommissioning) are recovered by some means other than the market price of power. One of these commenters-stated that regulated local distribution companies would end up owning nuclear generating >
plants.
e Continued economic viability for nuclear generation for many years as a result of marginal costs that are quito low. Another commenter argued, however, that-there is no obvious deregulated market for many or most existing nuclear power planta because of the uncertainty of the costs of decommissioning and.the disposal. of high-level nuclear wastes. This l
commenter stated that neither NRC rulemakings nor short-term passage of time will resolve these issues. A third commenter asserted that
. competitive pressures will lead to the early retirement of some nuclear l plants.
One commenter argued that, given the changes under consideration and already under way, it is no longer credible to assume that utilities can l always raise rates or Otherwise recover whatever costs are needed to safely L Another commenter suggested that if l operate and decommission nuclear plants.
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the NRC chooses to proceed with a rulemaking, the rule should accommodate both nuclear units subject to traditional regulation and nuclear units in the competitive markets.
A.3 Differences in State Po11cies and Implications Commenters expressed viewpoints on the likely differences in State deregulatory efforts and policies. One commenter declared that all States will ultimately undergo restructuring and deregulation in some form. Nine commenters, however, suggested that some States may reject restructuring entirely, regardless of what other States do.
Four commenters feel that States will possibly or probably be compelled by competitive forces to deregulate, particularly if neighboring States do so.
One of these commenters added that States within a geographic region (where there are no physical barriers to electric transmission) are likely to migrate to a similar industry structure, either as a result of Federal legislation or market pressures. Two other commenters provided examples of market or political pressures that could affect neighboring States' decisions to deregulate.
One commenter stated that some regulators in States that already enjoy low-cost electric service appear reluctant to endorse competition because of concerns that indigenous utilities will-seek to sell power to the external market where profit margins could be greater. Should market factors provide an advantage to States that foster competition (by allowir.g indigenous utilities to gain strength by acquiring market share), States that resist 1
i competition could put their utilities at a disadvantage. While State ;
regulators may elect to defer the decision on competition, economic or social ~
pressures could influence that decision.
~
i Another commenter indicated that States implementing retail competition l may face the risk that a utility in a neighboring State could obtain open access without reciprocal access being provided to in-State utilities seeking-to enter the State that does not provide competition.
Three commenters remarked that reform may proceed at different speeds in different States b9cause of local market and political pressures. One of these commenters' recommended that NRC accommodate the varied pace to avoid
- p r
- hindering or forcing transitions.
!_ in response-to the ANPR's query regarding " hybrid" systems, one commenter believes 1that a hybrid system of regulation-is likely to emerge as States deal with economic issues in a variety of ways. Another comenter s
i stated that a hybrid system could exist for some time. A third commenter reported that, while a hybrid syster, could probably exist, it may not result
$ in the least expensive electricity. Under a hybrid system, industry structure may vary from region to region. Other commenters, however, felt that a hybrid '
system is unlikely to prevail. They stated that a hybrid may be operationally cumbersome or even unworkable because the markets are not defined by State boundaries and because the grid is highly integrated and interdependent. One of these commenters also stated that a patchwork or hybrid system may reduce
$ the opportunities to market some nuclear generation. . Three commenters said
- they could not predict whether a hybrid system can exist or how one State's policies will affect its neighbors. .
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1
- e One commenter expressed concern that deregulation and reduced oversight ;
at the State level may redcce the certainty that out-of-State partial owners ,
i of nuclear-facilities will collect and expend decommissioning funds.
l ffResovnse. The above questions were posed for commen't so the NRC could obtain i estimates on the timing of deregulation, phases, and possible different approaches that may be used in how States would address deregulation. These comments ars being grouped under one-response as they all contribute to j whether the' Commission should proceed with a proposed rule now. While the responses to this set of_ questions h ran the gamut of opinion on this issue, the comments have not caused the Commission to change its position that it must:act now to be in a position to. respond to the upcoming changes in the electric utility environment that could affect protection of. public health and l
safety. Increased competition could result in economic pressures that affect how licensees address maintenance and safety in nuclear power plant operations, as well as the availability of. adequate funds for decommissioning. ;
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.Hence, these comments reinforce the Commission's position that a rule is necessary and timely, given electric utility restructuring and the deregulation legislation being proposed or enacted in several States and by FERC, B. STRANDED COSTS Many commenters expressed the view that regulators are likely to allow 4 prudently-incurred stranded costs to be recovered in some manner. Many of these :ommenters felt this was particularly true for prudently incurred
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- . -decommissioning costs. Following-are viewpoints tyoical of these comments.
U. . . , . . _ . . _ . - _ . - . . . . , . . . _ _ . - - , . . - _ - _ . . - . . . . . _ . . _ - . - ~ _ ~._ _.~ - . . . _ _ _ _ , , , - - - . . _ - , , . _
The probability is high that regulatory mechanisms will be developed to replace cost recovery procedures established through " traditional" regulatory procedures. These mechanisms (e.g.', wire charges, non-bypassable customer l
fees, exit fees) may be different from current mechanisms, but the probability of recoverability under these mechanisms is no less than it would have been i under conventional regulation. The mechanism chosen, and its associated equitable allocation of cost responsibility between customers and shareholders, will be determined through the inevitable give and take of the restructuring process, if one is implemented. l FERC, in Order 888, April 24, 1996, effectively established a precedent that, for electric sales under FERC jurisdiction, there will be full recovery of all costs that were prudently incurred based on an expectation of serving customers in the future but have become stranoed as a result of moving to a competitive market. Although the FERC order pertains to wholesale markets, most believe the precedent has been set and the same standard will apply to stranded costs that result from retail competition. It is reasonable to assume that legislators and generators will take distinct precautions in relation to nuclear generation. Even if nuclear plants are permitted to compete on the same basis as other baseload generation, regulatory mechanisms must be in place to ensure that certain costs (safety, security, waste disposal, and plant decommissioning) are recovered by some means other than the market price of power. Plausible mechanisms that regulators could use to recover costs include competition transition charges and non-bypassable charges. One utility fully expects that there would be 100 percent recovery-of nuclear stranded costs 'n a restructured electric industry.
~ . . .
ther commenters expressed some unter Some commenters thought cost recovery was appropriate, but did not address its likelihood. In some cases, commenters advocated specific NRC action to address th' e situation.
One commenter stated it is premature to speculate as to who will ultimately bear the responsibility for stranded costs (estimated between $7 and $17 billion in New Jersey alone). While FERC Order 888 addresses this issue for the wholesale market, that decision remains open to legal challenges beran e that may affect its final outcome. Moreover, sincefpotential retail stranded costs are orders of magnitude larger than wholesale stranded costs, a different solution to this issue for retail competition may ultimately be .
deemed appropriate. Where stranded costs iray be determined to be recoverable, it is conceivable that those costs will be recovered through some form of non-bypassable " wire" charge.
The commenter further stated that it is not clear how construction costs will be treated as State PUCs define policy fcr restructuring. FERC and some State PUCs already have proceedings under way to determine the amount and means of stranded cost recovery. There is also the possibility of Congressional action. NRC should take a proactive position with FERC and State regulators that potential stranded costs, including those that may be related to specific decommissioning cost obligations, should be recovered by the electric utility as part of their rates. (Several other commenters also suggested that NRC should aggressively lobby FERC and/or PUCs to allow utilitiestorecoverstrandeddecommissioningcosts.)j;,)
OnePUCdoesnotacceptthatanysourceoffgenerationis"non-competitive" per se, and thus does not accept that nuclear plants are non-competitive because of high construction costs. It is premature, an
1 oversimplification of a complex issue, and a potential disincentive to mitigate costs to label any type of generation non-competitive at this early stage in restructuring. Even if nuclear generation is sold at less than current _ combined fixed and variable costs, the market price will probably
^
exceed the variable component, so there will be some recovery of fixed costs.
Costs that are not recoverable could be the subject of Federal or State stranded cost proceedings. Federal and State authorities must inquire whether the unit ic necessary to the continued safe and reliable operation of the interconnected grid, and if the answer is yes, a proration of the costs may be necessary among all customer classes that benefit from the continued operation 4
of the unit. If the unit is not necessary, it should be removed from service.
The individual State commissions will have to decide who :,hould bear the cost to prematurely shut down, as opposed to decommission, an uneconomic plant.
A commenter stated that the treatment accorded stranded investment or costs may vary from jurisdiction to jurf sdiction and few generalizations are possible. The NRC should not become embroiled in individual rate proceedings or debates about particular cost recovery mechanisms, but should instead define a clear policy that, from a public health and safety perspective, licensees must be allowed to maintain an adequate financial posture to support ongoing safe operation and decommissioning. The NRC's policy statement
- should be a strong statement on its expectations. NRC should participate in the NARUC subcommittee addressing restructuring.
'See Draft Policy Statement on the Restructuring and Economic Deregulation of the Electric Utility Industryf6114d RM, 49711; September 23,1996). (
4 Some commenters stated that decommissioning obligations are qualitatively different from other stranded costs. FERC has not yet adopted a I mechanism thct provides for recovery of decommissioning costs. Order 888 I
provides for recovery of wholesale stranded costs through the " revenues lost" approach. However, this approach only accounts for and allows recovery for fixed costs already incurred by utilities and does not address costs that must be collected in the future. A better solution is for the Federal Government to assure the continuing recovery of decommissioning costs in utility rates, i through non bypassable fees to be paid by utility customers leaving the system, or through other surcharges tied to the use of-transmission facilities. The NRC should support cost recovery initiatives and help educate State commissions on the importance of ensuring continued full collection of decommissioning costs.
Another commenter noted that the best ultiu. ate assurance of the collection of the cost of decommissioning is the ability of the plant to operate at sufficiently low marginal costs to collect decommissioning costs in gross margins. The NRC could improve the likelihood of this outcome by (1) encouraging the IRS to allow payments for decommissioning costs to be generally deductible rather than deductible only if they are ordered by a regulatory agency and (2) strengthening utilities' efforts to recover stranded costs. As plants are further depreciated and the cost of nonnuclear generation escalates, existing plants will become more competitive.
Some commenters asserted that in the process'of identifying well-run plants and seeking- the sale or closing of the not-well-run plants, the problem of who should pay for unrecover d costs must be addressed. To the extent that the nonsalability is den // L.
pro ems created by paor management, the seller is
responsible. If the NRC or another agency would undertake a program to address the problem of poorly performing nuclear plants and encourage continued maintenance of efficiently operated plants, many of the questions asked by the ANPR might find answers. Timeliness in identifying poorly performing plants is critical because while the industry is reformi'ng itself, the ability to affect the inventory of nuclear plants is at its highest level.
Onca niants have been evaluated, the NRC should be prepared with a task force to recommend an orderly plan for the disposition of those few plants and operators who will not be recommended for further operations. l A few commenters believed that the full burden of covering the costs, including decommissioning costs, of uneconomic nuclear plants should fall on utility shareholders rather than customers unless there is a compelling case ,
otherwise, ffResponse. The Commission did not see a need to modify its position because of the comments received. Specifically, the Commission agrees with the commenters who hold the view that regulators are .likely to allow prudently incurred stranded costs to be recovered in some manner and do not see a need to interfere in the finat.cial regulation of nuclear por plants with respect to the question of stranded costs. Some of the comments, in which actions were proposed for the NRC's involvement with respect to stranded costs, were not only problematic but were beyond the NRC's sphere of regulation. However, the NRC'is aware that stranded costs, insofar as their recovery affects public health and safety, must be addressed to ensure that they are being adequately handled. As stated in the NRC's " Draft Policy Statement on the Restructuring and Economic Deregulation of the Electric Utility Ir.dustry" f-September 23,
l 4 e i
1996 (61 FR 49711): 'Notwithstanding the primary role of economic regulators '
in rate matters, the NRC'has authority under the Atomic Energy Act of 1954, as amended, (AEA) to take actions that may' affect a licensee's financial l
situation when these actions are warranted to protect public health and safety." The policy also goes on to explain that the NRC will work and consult more closely in the future with the National Association of Regulatory Utility Commissioners (NARUC), FERC, and the Securities and Exchange Commission (SEC) so that the NRC may express its positions on safety and encourage the various regulatory bodies to continue their allowances of adequate expenditures for plant safety. Lastly, the proposed reporting c f p is p Je mm y requirementsiddrc:::dbel[areseenbytheNRCasavehicleforthe C,ommission to keep att+ this potential problem.
{piondoA C. NUCLEAR FINANCIAL. QUALIFICATIONS AND DECOMMISSIONING FUNDING ASSURANCE Col D adina Assurance if Plants Shut Down Prematurelyg Most commenters accepted the premise of the question, whether costs of a shortfall in decommissioning funding of a prematurely shut down plant could be passed along to ratept.yers. This conclusion was based in part on pae.t experience and in part on a belief that State PUCs will develop methods to ensure that decommissioning costs are covered. Several commenters said that recovery from ratepayers or shareholders would depend on the plant management'sresponsibilityfortheprematureshutdowg management were deemed responsible, efforts would be made to have the shareholders pay for decommissioning;butifthemanagementwerenotdeemedresponsiblebtatePUCs would find methods to have the ratepayers orovide the funds. Commenters noted 4 e tha't in the past, decommissioning costs had been recovered for prematurely closed reactors (e.g., Dresden 1, Fort St. Vrain, San Onofre Unit 1 Trojan, Yankee Rowe). In a transition from full regulation to full competition, one l
commenter suggested a window to allow continued or possibly accelerated nw e r ta l
recovery. Anotherfsa(idthatasurchargemightbeplacedoncustom$rs. Under l competition, recovery could be made through other revenue streams of the licensee, a non-bypassable fee, or debt or equity of the licensee. Two other
, commenters suggested that transmission charges would be the most likely source-I of funding. Retained earnings of the utility were suggested as a source of funds. Two commenters expected shareholders to be responsible for providing decommissioning funds in cases of premature shutdown.
Two commenters, including one PUC, conceded that PUCs might not have jurisdiction to require funding from ratepayers. Under such circumstances, one PUC stated, funding of decommissioning would be greatly dependent on the financial viability of the regulated firm. The risk of recovery would rest '
squarely on its shareholders, if the shareholders could not pay, the l
- liability would then transfer to taxpayers. For this reason, the commenter suggested, decommissioning might be accorded special treatment. '
One commenter argued that the solution to premature shutdown was for NRC to require assurance for decommissioning costs prior to approving reorganizations or license transfers. Potential funding shortfalls should be addressed, another argued, on a case-by-case basis, and might be avoided by sale of the nuclear plant to an entity better able to manage it effectively.
Two others suggested that a proper funding mechanisrc. would have to be identified and put into place at shutdown, without further specifying what that mechanism could be, in the opinion of one of these commenters that could
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be 'a difficult problem because currently, on an aggregate basis, utilities' ;
i
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- decomissioning costs are only about 25 percent funded (about $9 billion out ;
- . i I of $35 billion), although plants are at about 43 percent of their aggregate !
. . i service lives- . Early underfunding could force high back-end funding, making
- the plants uncompetitive.
- A comenter stated that, contrary to the planned 40-year operating life 4
{ of nuclear power plants, material and operating evidence suggests plants' ,
! operating lives are closer to 15-25 years. Tience, the plan to recoup ;
l .decomissioning costs of over a 40-year operating life may be unrealistic.
NE1 took the position that the source of funds to shut down a plant -
prematurely would te different from company to company and would have to come f
l from other ongoing revenue streams of the company or from alternative sources ,
such as transmission or distribution charges, exit fees charged customers
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leaving the system, or other regulatory charges. I:El also supported NRC l
i requirements for financial assurance, such as those currently found in 10 CFR .
50.75. Five commenters stated that they explicitly adopted the.NEI position.
) fResponse. - The Comission recognizes the importance of-decomissioning funding e assurance for prematurely shutdown plants and believes that its current case- ;
l- specific approach, outlined in 5 50.82, strikes the best balance between_ level y chut of'assuranceandcost.4Wiuiiespectt th: : r:a that plants dd not operated
- a h However, it is 4
for the full 40 yearg[he Comission is apeLGctt-likely that some plants will continue operating for. the full 40 years nd
- Therefore, the Comission does not believe any change is
^ ::n beyond.
j required for the planned 40-year life.
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C.2 WhenDoesanOperatorCeaseToBeaUtilityg On the question of when an operator of a nuclear power plant ceases to
, be a " utility" as defined in 10 CFR 50.2, seven commenters interpreted the l definition strictly and concluded that, if an operator ceases to satisfy the terms of the definition, the operator is no longer a " utility." Several
. . . l commenters used almost the same formula: an operator would cease to be a
, " utility" when it ceases to provide service to retail or wholesale customers at rates set by a separate regulatory authority. One commenter supported a clarification of NRC's regulatiens that would establish its continued ability to require the proper accumulation of decommissioning funds, while two argued that the NRC should relax its definition to cover entities that purchase electricity and recover the costs from rates charged customers or from other revenue guarantees. Another commenter argued that NRC should seek additional assurance in advance of deregulation.
NEl stated the contrary argument, noting that it is not apparent that any licensee will fall outside the definition of " utility" in the near future, even after restructuring. NEl argued that as long as a licensee has adequate cost-recovery mechanisms under the authority of State or Federal regulations, it should continue to be considered a utility.
Other commenters argued that even after deregulation the price charged for electricity will be established by the regulatory process or ir. other ways that will mesn a nuclear plant will continue to be an " electric utility." One stated that the term " electric utility" should be construed to include all entities that have been authorized by a State PUC, FERC, or other governing entity to recover decommissioning costs from customers. Two commenters expected plants to remain subject to State PVC jurisdiction, and therefore to
g-l_
L l satisfy the reguiatory definition. Another argued that if a portion of a l
- vertically integrated company is subject to cost recovery pricingjthe 14efiniti0n is sati;fied, Two said that if a plant sets its own rates for
-e h tricity the definition is satisfied.
j One tamter rejected the NRC's emphasis on an operator's satisfying L
the definition of cility, and argued that i.he emphar' t.should be on the financial viability of the entity responsible for decommissioning the unit.
l f8fsponsg. Consistent with the position taken in the ANPR, the NRC is proposing to revise its definition of " electric utility." 1he Commission l notes that_ the key component of the revised definition is a licensee's rates being established through cost-of-service mechanisms by a rate-regulating authority. Several _ States are_ considering deregulation of future operations g- $c of nuclear power plants sue # that revenues will not be determined by cost-of-service but iy market-set prices. Should' a licensee be under the jurisdiction of a rete-regulating authority for only a portion of the licensee's cost of operation, covering only a corresponding portion of the~ decommissioning costs that are recoverat,le by rates set by a rate-regulating authority, the licensee will be considered to be an " electric utility" only for that part of the Commission's regulations to which those components pertain. For example, if a y
licensee were able to collect 40 percent of its decommissionino cce.ts through rate-regulated activities, the remaining 60 percent of the costs would need to be accounted for in a manner consistent with methods acceptable for a licensee other than an electric utility. Similarly, a licensee who collects non-decommissioning operation costs, not collected through these or similar mechanisms authorized by a rate-regulating authority, would not be considered I
an " electric utility" for the-purposes of financial qualifications to operate the facilities. In this proposed rulemaMef the definitions of several relevant terms are also provided for the first time in i 50.P. It is noted
- that some commenters misinterpreted the intent of the existing definition of l " electric utility" with respect to entities that establish rates themselves. -
1 As stated in the proposed definition, those entities include only public utility districts, municipalities, rural electric cooperatives,.and State and Federal agencies. Therefore,- the proposed definition is being proffered as i
4 clarification and to show the continued importance the NRC places on the role of regulatory authorities in the setting of electric utilities' rates with respect to the collection of funds for decommissioning. This is consistent with the NRC's draft policy statement.
C.3 Assurance Options The following topics were discussed by commenters in response to the ,
ANPR's questions relating to the options to be considered if an electric utility found itself operating a reactor that was no longer regulated by a
-rate-setting State or Federal body.
Full Up-Front Assuranceg Most commenters opposed requiring all r.uclear plants to provide full up-front assurance, often arguing that it is unn;cessary or that it is overly burdensome to nuclear plant owners. Many commenters reminded NRC that deregulation does not inherently mean a . total lack of regulation or a lack of .
cost recovery. One commenter believed NRC should, at the time of restructuring, require only an assura..ce level commensurate with the completed percentage of the' operating life of the plant. One commenter opposes advance funding on the grounds that doing so would incorrectly view all properly executed reorganizations as resulting in successor operators being unqualified to ensure decommissioning compliance.
One commenter believes that assurance should be provided before licensees are exposed to the full pressures of competition (3-5 years). Two commenters supported the idea of requiring assurance prior to NRC's approval of. reorganizations that transfer control of a nuclear plant.
Many comenters favor requiring reasonable financial assurance for entities that cease to be rate-regulated utilities. Many of these commenters, and others, view NRC's current regulations as basically adequate to address these situations, although the regulations might expand upon the allowable methods of assurance.
Adaitional Financial Assurance Methodsg Additional financial assurance methods suggested include continued rate-regulating entity determinations, an appropriate charge for decoma,issioning in contracts for the plant's output or in the transmission or distribution thc charges of the licensee or its affiliate if such charges are assigned to the licensee or its decommissioning fund, and exit fees charged against customers leaving the system. A few commenters would include any insurance for premature decommissioning caused by an accident. One commenter would allow utilities to establish any method that may be developed, including methods requiring approval of PUCs or FERC. Two others would allow assurance through
- a. plan for gradually recovering decommissioning funds via rates and prices, even- for deregulated entities. Others argued that NRC should offer the
utilities flexibility and that each situation should be assessed on a case-by-case basis if and when it occurs.
Timing of Rulemaking g With regard to the timing of the rulemaking, a few commenters support prompt NRC regulatory action to ensure that adequate financial assurance is in place prior to restructuring, before waiting further to learn exactly how the industry will develop. Several other commenters, however, believe that rulemaking is premature until more is known about restructuring. Several commenters suggested that NRC already has the authority to approve or disapprove any transfer of license related to a merger or reorganization. Two commenters stated that NRC should evaluate the regulations only after further studies that (1) identify those nuclear plants that are not likely to survive the imposition of competitive forces (i.e., those plants that are not run efficiently or that csnnot be made to run well), or (2) develop quantitative measures for assessing the adequacy of decommissioning funds and rates of accrual. New rules, according to one commenter, should be timed to enable utilities to take advantage of stranded cost recovery. ,
Added Assurances for Safe Operation and Decommissionino g h
Hany commenters voiced opposition to the ANPR's query regarding whether the NRC should require additional assurante for adequate funds for safe operation and decommi.ssioning in anticipation of deregulation. One commenter argued that additicnal assurances in this area may not add to or strengthen the obligation already imposed by the terms and conditions of the license.
Others reasoned it unnecessary, given other existing NRC requirements and l
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FERC's framework for recovery of stranded costs, including decommissioning.
Only onc commenter supported additional assurance for safe operation and
-decommissioning in anticipation of deregulation. l Jointliability'g In response to the ANPR's query regarding newly created organizations or holding companies being held jointly liable for decommissioning costs, four commenters supported the idea because of the added assurance it would provide.-
Three commenters would consider requiring joint liability on a pro rata basis, '
possibly taking into account the remaining years of licensed life. One commenter cautioned that jointly liable parties may disagree on
- decommissioning methods (e.g., prompt vs. deferred) because of the cash flow implications.
Numerour other commenters opposed the idea of joint liability, arguing that it was unnecessary, would inhibit flexibility, would weaken competitive position, or would undermine the separate corporate identity or the responsibility of the individual entities. Some of these commenters suggested that joint liability could be acceptable if it were an optional method of j financial assurance.
One commenter stated that new cwners and operators should have to assume the responsibilities and liabilities of the previous owners and operators.
Another stated that the financial assurance obligation should follow the Joint liability refers to the concept of joint and several liabili'.y which is defined in Black's Law Dictionary (4th Ed.) as:
A liability is said to be joint and several when the creditor may sue one or more of the parties to such liability separately, or all of them together at his option. Dicey, Nrties 230.
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l owners and operators, whether regulated or unregulated, who have incentives to properly manage and operate the units.
l Impactsg Many commenters claimed that requiring full up-front assurance would be i overly burdensome to nuclear plant owners. Others argued that additional
(- assurances could inhibit competitireness relative to nonnuclear facilities, impede reorganization, aggravate potential stranded investment, or create 1
additional problems for utilities, ratepayers, or taxpayers et a time when !
competitive forces are already causing economic concerns. Examples of such-problems would include the difficulty for affiliated businesses to raise capital, or the need for affiliated entities to charge more for its services reducing its competitive position in the industry. Some comenters argued these effects could reduce the likelihood that decomissioning will be fully funded or could increase the likelihood of premcture shutdown, fResponse. The Commission is addressing most of these comments by revising the definition of " electric utility" and by instituting a reporting requirement.
As to the issue of requiring full up-front funding in advance of deregulation, the'. Commission agrees with the commenters that such a requirement would be overly burdensome. However, given the proposed definition of " electric utility" in this action, any licensee 90 longer overseen by a rac,-setting regulatory authority, i.e., a licensee other than an electric utility, would need to comply with the decommissioning funding assurance requirements of 550.75(e)(2). The options contained in that section include prepayment; an external sinking fund coupled with a surety method or insurance for any I
unfunded balance; or a surety method, insurance, or other guarantee method.
The timing of'the'rulemaking was addressed in the response to ccmments in section A of this notice. Any additional rulemaking in this 7.rea would result'
! from experience gained from industry and regulatory actions, As several of
.the comenters stated _ the NRC has the authority to approve or disapprove any
. transfer of license related to a merger or reorganization. Section 184 of the l Atomic Energy Act of 19b4, as amended, and 10 CFR 50.80 provide that no license will be transferred, directly or indirectly, unless the Comission consents to such transfer in writing.
The regulations do not explicitly impose-joint liability on co-owners and co-licensees. As stated by some comenters, joint liability may create problems with respect to potential disagreement on decommissioning methods, the inhibition of flexibility, the weakening of competitive position, and the difficulty in implementation. Also, as some noted, joint liability may not be needed. The'new owners and operaters should assume the obligation as they have the incentives to properly manage and operate the units.- More importantly, however, is the fact that with the proposed definition of l
" electric utility," non-utilit'ies would be required to provide the types of up-front assurance described in 1 50.75(e)(2) and utilities would have the funding assurance provided through being, rate-regulated under i 50.75(e)(3).
The Commission considers this level of assurance to be adequate and therefore sees no need to-impose an additional regulatory obligation of joint and several liability on cc-owners or to-licensees. '
Lastly, with respect to the question of impacts, the Commission has considered the comments relating to potential impacts in arriving at the positions taken. The Cummission understands that financial assurance would f^
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. 4 place a burden on licensees that may affect their competitiveness in a deregulated environment. The Commission has chosen to take an approach that would create no additional financial impact over present regulations for electric utilities and has also expanded the definition of electric utility to
- accommodate types of rate regulation not previot. sly anticipated. fhereare also sufficient existing options to demonstrate financ,ial assurance for non-electric utilities. Entities without adequate financial capital may find it
- difficult to both finance up-front decommissioning funding and operate a
. 7 hoc nuclear power plant safely. h companies may not be good candidates for 1
nuclear power plant ownership. The Commission weighed the factors and determined that financially qualified entitias should be allowed to operate nuclear power plants and as a resul strshn proposes this rule.
C.4 finan_cial Test Qualifications About half the commenters flatly opposed requiring licensees to ,
, demonstratt financial assurance by-satisfying minimum standards of net worth, cash flow, or other financial measures.
l Many of the commenters, including NE1 and four commenters who adopted the NEl position, argued that such a test was not necessary or appropriate.
If Nkt is concerned about the financial ca.dition of a particular licensee, three commenters said, an' individualized cass-by-case review would be more appropriate. Some commenters said that f t iancial measures appropriate for investor-owned utilities would not be useful for cooperatives, or for.
utilities that do not have parent companies. Because generation and -
transmission companies typically are highly leveraged, with many of their assets in the nuclear generating facility, they cannot meet a test with a tangible net worth requirement of ten times the current decommissioning costs, i but this does not mean that they cannot satisfy their financial obligations.
4 A non-bypassable charge was suggested as an alternative.
Some commenters suggested that NRC should adopt more than one
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alternative test, none of which would be mandatory. Any alternative adopted i
should be consistent among owners, and should not discriminate against one class of owners,. and should not be applied as a static one-time requirement.
Other suggestions included-a requirement that a firm demonstrate that it had
" ample margins, subsequent to restructuring" to' cover funding contributions or
! to cover decommissioning costs in the event of a premature shutdown. Another suggested disclosure standards, developed through the Financial Accounting Standards Board, for use in annual reports and 10-K filings, that would be reviewed by Federal regulators. Still another argued that measures of market value and cash flow, rather than net worth, were appropriate in a competitive environment, and that the ratio of available cash and cash equivalents to unfunded decommissioning requirements would be the best measure of ability to support decommissioning, along with an assessment of the utility's competitive situation. Determining whether a utility had minimum cash flow sufficient to maintain its plants in a non-operating, interim stage prior to decommissioning, and the period of time the utility could sustain such cash flows, was suggested by one commenter.
One commenter suggested using a financial test as an indicator, from which a Federal agency could determine that the utility needed assurance of continued rate recovery of the decommissioning obligation.
l Only two commenters endorsed a test of financial stability as a ;
1 financial test qualification. One pointed to assets sufficient to fund an
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{ immediate decommissioni_ng, or a minimum level of financial stability (measured i through investment grade securities) or insurance, or.a surety to cover t
_ decommissioning costs as three potentially acceptable mechanisms. The other approved: of- parent or self-guarsntees, but noted that generators with nuclear 4
facilities might have difficulty meeting the financial test criteria,- ,
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- including the investment grade bond rating requirement.
Response. With the proposed revision of the definition of " electric utility," ,
licensees who no longer meet the new definition will need to comply with the requirements of 5 50.75(e)(2), which describes the acceptable methods of i financial assurance for decommissioning for a licensee other than an electric
- utility. These methods are flexible and contain at least four major categories of acceptable funding for decommissioning as identified in the
- previous response. Few commenters offered insights on other potential test qualifications, although several stated that the financial structure of 4
t.tilities means that the criteria in 10 CFR Part 30 could be-problematic. The NRC would need to conduct additional research and analysis.to determine which .
additional financial measures would be most useful and appropriate-if a financial test requirement for self-guarantee were pursued. Criteria could be identified and. thresholds developed, but evolution of the industry might mean that the criteria would become- outdated and .nisleading relatively quickly.
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Hence, the Commission doesinot plan to pursue this issue at this time.
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'I C.5 PUC/FERC Certification Only two commenters gave unequi"qcal support to the idea of requiring l PUC/FERC certification. One encourard NRC to undertake direct dialogue on
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- certifications with the appropriate PUCs and FERC; the other stated that PUCs
-and FERC must undertake such' certifications and that NRC should impress upon them the importance of doing so. A few PUCs, in the opinion of this commenter, such as California and New York, had already recognized the need to
- provide this assurance during restructuring. ,
Two other commenters expressed optimism that State regulators would resolve the decommissioning funding problem-in the transition to competition, with or without certification, but one went on to say that certification would probably be unnecessary. Of
'these, six adopted the NEI position, which was that without new Federal
. legislation it would be difficult to require legally binding certification from PUCs or FERC. Requiring a licensee to obtain-such certification would-L place it in noncompliance, with no way of achieving compliance. If a licensee did obtain certification, however, NEI suggested that it be allowed to satisfy tha financial assurar.ce requirements using that mechanism.
Two commenters opposed to certification argued that it would be counter-L productive because the utility would have no incentive to maintain adequate decommissioning funds. NARUC and several PUCs either opposed the idea or expressed strong reservations about it. NARUC noted first that no current commission can bind a future commission at either the Federal or State level, however, NARUC was confident that State PUCs would examine the causes of underfunding, if it occurred, and seek remedies. A PUC stated that it might not have the authority to certify that nuclear plant licensees under its jurisdiction would be allowed to collect decommissioning funds through rates after restructuring, and another Pur similarly stated that it could not give a blanket guarantee that all licensees would be allowsd to collect revenues to complete decommissioning funding. A third PUC stated that no current R
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4 commission could legally bind a future commission, so it could not identify an effective form cf certification. Anothbr PUC also expressed doubt about how
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i certif'ication would change current procedures, in which PUCs can adjust rates j based on the cause for and the prt.dence of the underfunding. A different PUC noted that, in the past, ratenaking authorities had allowed recovery and expected them to act in the future'in the same way, but could not be certain that they would issue certifications. Another PUC stated that it already has and would maintain authority to ensure that utilities collect sufficient funds
-for decommissioning. One comenter-pointed out that FERC has jurisdiction y
only over rates ~ for wholesale sales of power. Over 80 percent of decommissioning costs are recovered through rates for retail power sales, over which PUCs have jurisdiction. Relying on State regulators would be particularly problematic for multi-State utilities. Another commenter stated
' that within-five years the issue would become moot and certification would ,
become impractical bect.use of competition and' evolving antitrust law. A 4
public interest group had questions about whether PUCs and FERC could certify, but in any case thought NRC should concent' rate instead on the licensees.
- Another commenter noted that since a significant portion of nuclear licensees' L business are not FERC-regulated, FERC certification would have no relevance .to 1
them.
One commenter suggested procedures through which NRC could interact with I ; State PUCs and FERC; the NRC could determine that a utility's rate of recovery-for decommissioning was insufficient, and that determination could be the basis of an action by a PUC to modify the rates.
j The final set of commenters argued that the question of certification was one that the PUCs and FERC should determine.
i j'
[hI Response. _The _ Commission sees no need to implement certification by the State PUC's or FERC because of the reasons given in many of the comments outlined -
above. Especially problematic is the case that a current utility commission
-cannot-bind a future utility commission on an action such as this.
3 en w C.6 Impact of Accelerated Funding Only a small number of commenters supported the idea of acceleratir.g funding of decommissioning costs. Two expressed general support. Two provided quantitative analyses that suggested that the impact of accelerated funding would not create a large financial burden on either licensees or ratepayers. The Public Utility Commission of Texas reported analysis for lthree T9xas plants that suggested that, for a ten-year recovery period,
- electric base rates would need to be increased by about 0.5 percent and the
} fund earnings would be increased by- about 50 percent. For a five-year recovery period, rates would increase by about 1 percent; total life-of-facility contributions by customers would be decreased by about 55 percent.
t In addition to arguments that the burden would not be great, another argument made in support of accelerated funding was that, after funding was completed, the licensees who had paid up their decommissioning funds would be in a better competitive position. Commenters also argued that earnings from the accelerated funding, because they would have a longer time to earn interest, would grow substantially and provide a gain to the licensees that they would not otherwise obtain, i i
Licensees both supporting and opposing accelerated funding noted that I unlest the Internal Revenue Service changed its rule on the deductibility of .
payments into the decommissioning trust fund, the accelerated payments would 4
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< 4 not be deductible. - The NRC was urged- to encourage the IRS to change the rule.
Almost three-quarters of the commenters opposed accelerated funding ofl decommissioning. Their arguments against the idea stressed (1) that it would ,
adversely impact the competitive situation of nuclear licensees and (2) that
- it.would be inequitable because the amount that each plant would have to __
supply in an accelerated payment would depend on the age of _the plant and the amount it had previously paid in the its decommissioning fund. The financial marketplace, rather than regulation, should determine the speed with which i funding is provided. Accelerated funding, in the view of so.'.ie commenters, i _tould not be accomplished through rate increases.and would have to t paid by licensees' stockholders. One commenter argued that utility shareholders should bear the burden of decommissioning costs, but would not do so under accelerated funding. Other commenters argued that accelerated funding would shift the costs of decommissioning onto current ratepayers from future ratepayers. Commenters believed accelerated funding would-lead to cash flow problems for licensees and could result in increased borrowing to cover _ cash outlays. ~ Accelerated funding could lead to the shutdown of marginal facilities, which would be contrary to the intent of the policy and lead to additional shortfalls of decommissioning funding. One commenter argued that the amount of decommissioning funding that will ultimately be required is too
- uncertain to be collected through accelerated funding, i
i ) Response. The Commission does not see any need to require accelerated funding and agrees with the comments of those who oppose such action.
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l C.7 Potential Shortfalls from Underestimates of Costs Commenters suggested a range of responses to decommissioning shortfalls occurring as many as 50 years into the future, after a' period of safe storage.
None, however, clearly identified a source of funding to make up the shortfall. . . .
NEI and eight additional commenters argued that _there is a reasonable probability that future cost estimates could decrease rather than increase because of several factors, including accumulated industry experience, 1
application of new technologies, and reductions in the ultimate disposal volumes of decommissioning wastes. They also suggested that periodic re-estimates of decommissioning costs and adjustments to the rate of collection to reflect these re-estimates, both dur:ng operation and in the post-operation phase, could resolve the problem.
Several other commenters emphasized solutions that involved cost estimates. One PVC suggested that the NRC should allow utilities to use State-required facility-specific cost estimates if they were higher than NRC estimates. Two others suggested that NRC should review cost estimates every five years, with more frequent reviews as license termination approaches. The Utility Decommissioning Group predicted that shortfalls would be unlikely to arise suddenly or to be drastic. Two utilities also suggested that periodic reviews of cost estimates, coupled with increased collections as necessary, would remedy underfunding. Two other commenters made only the general statement that current procedures would be adequate, and any shortfalls should be handled through appropriate funding mechanisms.
Some commenters recognized that the problem of underfunding arising after the safe storage period could be serious. One public interest group did
not suggest any remedy, stating only that NRC could be virtually certain that the funds accumulated for decommissioning' would be insufficient. A utility suggested that the only solution would be to delay decommissioning activities to allow the decommissioning fund to accumulate additional earnings and to
- odify the decommissioning plans to reduce cash flow needs. Another .
p suggestion was that NRC could require every licensee to adopt an investment strategy that would ensure that the decomiiissioning fund earned at least the rate of inflation measured by the CPI, and that NRC could require the utility-c to place additional money into the fund if necessary.-
d Several commenters recommended approaches to the problem that involved PUCs. Two suggested that underfunding would be remedied by application to the PUC. One. suggested such PVC involvement would occur after the shortfall was
-identified, the other suggested that PUCs would take potential shortfalls into account prior to utility restructuring and that the shortfall would not occur i until after several years of competition. This commenter suggested that a s wives charge could be used to. ensure that such shortfalls did not occur.
Three commenters said that NRC should intervene with State PUCs to ensure that L shortfalls do.not occur, either immediately or when the underfunding was recognized. A- few commenters argued that the causes of the shortfall should .
be identified. If the plant's management was responsible, the additional decommissioning costs should be recovered from stockholders. NRC could require additional contributions if the invested decommissioning funds are
'nsufficient.
i Alternatively, if the utility management is not responsible,
- customers should bear the additional cost. However, as one PUC noted, 1
-underestimates that are not identified until far into the future could become a social problem. If the underestimate is not identified until after the
a- .
.e4
- i plant' is removedIfrom-service, no ratepayers will be required to provide additional funding._ If-the companyjstill exists and .is solvent, shareholders may'be held accountable, but.only to the point of insolvency.- Gross underestimates could very well bankrupt the company and place a significant i- . -
- burden:on regulators and legislators to step in to fund completion'of the i- decommissioning.-
None of the commenters recommended _ increasing contingency factors to provide .for potential shortfalls far'in the future. Several argued that
- contingency factors are intended to address "unforessaable cost elements" or
. thst contingencies are inappropriate.for some other reason. The size of such contingencies would be too arbitrary. In addition, some State PUCs 'would not 1
[ apply larger contingencies, particularly since the current cost estimates f-
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already contain a significant contingency factor. Finally, one commenter 1 argued that _ larger contingencies would lead to over-collection and distortion
. of prices for electricity, Seven commenters joined NEl in taking a position against the use.of contingencies to address the problem of potential l shortfalls. occurring far.in the future.
jfResponse. The Commission sees its proposed reporting re'quirement as a way to
- keep informed of licensees' decommissioning funding status and potential-p However, the Commission has undertaken a study to
-underestimates of cost.
analyze the actual costs incurred by the power reactor-licensees that are in the process of decommissioning, and the Commission will act accordingly af ter studying those.results. Further, the Commission has the ability to require
- power. reactor licensees to submit their current financial assurance mechanisms for NRC review, -revision as necessary, and approval .
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' C\B Captive Insurance Pool The idea of setting up a captive insurance pool to pay unfunded decommissioning costs did.not obtair, strong support. A few commenters endorsed it, with qualifications. One said that, in fact, the mechanism would more nearly resemble a mutual insurance pool, and listed a number of factors, i
including the size of premiums, when deregulation occurred, Federal mandates, the ability to recover costs, and the attitude of participants, that would
- determine success. Several commenters responded that if such a pool could be c. -
developed, it woul useful or constructive mechanism.
NEI and six commenters taking the same position expressed doubts about y
_ the usefulness of such a pool, but suggested that the industry should examine it. They arguert that in addition'to an insurance pool, NRC should also consider approving self-insurance as an option.
7 Almost half the commenters expressed strong doubts about the insurance-concept. No such product currently exists, ano inse, ring against shortfalls in funding a known and planned event would be a novel concept, open to problems of adverse selection and moral hazard'. Some commenters said ~1t would be difficult to underwrite, and wondered whether in a competitive environment one compan[would be interested in supporting the financial obligations of its
'"If _the risk of the insurable event varies between potential buyers, if the buyers know their risk level better than the insurer, and if the coverage is_not mandatory, then the worst risks will tend to buy the most insurance.
As a result, the loss experience will tend to be higher than expected, premiums-will increase, the best risks will leave the programs, and the process lcan cycle on itself until only the worst risks are left." This phenomenon is known as adverse selection. Moral hazard is defined as a
_ general laxity in loss prevention, laxity in cost control, once a loss has occurred, and the intentional destruction of property. U.S. Nuclear Regulatory' Commission, " Design, Costs, and Acceptability of an Electric Utility Self-Insurance Pool for Asst. ring' the Adequacy of Funds for Nuclear Power Plant Deconuissioning Expense," NUREG/CR-2370, December 1981.
__. __ x
competitors.: A cross-subsidy of this sort, one said, was what' deregulation
-was being undertaken to eliminate. Participation also might be affected by the policies'of individual State PUCs. Premium setting would be difficult because of the possibility-that utilities that had been prepared to pay-their decommissioning costs would be reluctant to subsidize. utilities that had not, and because" premiums, to pruvide sufficient coverage, might need to be large.
1
- - The pool could face the problem of motivating utilities to close plants when it would otherwise not be economic to do so, or motivating State PUCs to L disallow the recovery of decommissioning costs through rates in reliance on ;
the pool. Some utilities might underestimate their decommissioning costs, to
^
keep their premiums low. A pool would increase costs of electricity because, in addition ta -aissioning costs, insurance premiums would need to be recovered.- F'-
y, one serious decommissioning shortfall might deplete the pool.
Other commenters stated flatly that they opposed the concept. Several ;
said that it raised the problem of insuring against an event that a facility could choose to create (the moral hazard-problem). An insurance pool would create, at the least, an . incentive for less responsible utilities to underfund their decommissioning assurance, burdening responsible utilities with'high insurance premiums. Some commenters argued that licensees demonstrating
- strong financial capability should not be required'to participate.
Reinsurance and diversification to larger pools would make better policy, in the view of one commenter.
3 ) Response. The Commission recognizes the problems associated with the concept of-a captive insurance pool as identified by the above commenters. Any one of
the identified problems is serious enough to eliminat'e this option from further consideration. The Commission is also of the opinion that those in
' favor-of this option do not offer sufficient evidence that the identified problems can be overcome.
C9 Other Options for NRC in Case of Limited Role for PUC or FERC Comenters suggested a wide variety of financial assurance options for NRC to consider if PVC or FERC oversight is limited or eliminated. One utility suggested that financial assurance requirements should be focused on j the financial viability of the responsible entity. Other utilities suggested, as nonregulatory showings, self-guarantees or other tests of financial strength such as ownership of.other revenue-producing assets (e.g.,
electricity transmission and/or distribution and/or natural gas operations), c Another relevant factor could be.whether the licensee has insurance for premature decommissioning caused by an accident. One commenter stated its opposition to the.use of surety bonds and insurance because of cost and limited availability.
Two utility commer,ters suggested that regulatory approaches -include mandated or allowed stranded cost recovery through a charge on distribution or transmission or some other charge on all electric power or energy sales, regulatory-certification that such costs will be recovered, and other arrangements involving regulatory control such as priority dispatch for nuclear units. Another commenter suggested that NRC could request FERC to clarify Order. No. 888 to make certt.in that competitive access or other transmission charges intended to recover stranded costs also include a load-proportionate contribution to fund decommissionig costs. Another commenter r - . . .
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- stated-that NRC and FERC.should urge Congress-to adopt stranded cost legislation that will ensure recovery of decommissionirg costs as tiie most prudent solution. The commenter specificallyl advocates a wires charge that H would in'clude decommissioning' costs.
-One-commenter asked NRC to consider its actions it, the event that a licensee enters into bankruptcy.- In such'a case, the NRC could enter the 4
proceeding andLargue that full funding for decommissioning must be fulfilled-d as the first priority. The commenter also asked NRC to consider proposing
/ -legislation that would amend the Bankruptcy Code to give first priority to ,
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nuclear decommissioning costs, as the Supreme Court has already held for
. ' hazardous waste cleanup costs.
NFI and several other commenters raised the possibility that-NRC could-rely on the Financial Accounting Standards Board's' (FASB) financial disclosures for informa, tion in assessing the nature, timing, and extent of the company's commitment of its future resources.
According to one commenter, NRC should evaluate each-utility's particular situation on a case-by-case basis to determine the degree of assurance needed depending on the financial strength of the utility, the size of the remaining unfunded-obligation, .the age of the plant, and other factors as may be appropriate to the specific situation. 'Another believes NRC could 1 retain control through licensing constraints and financial evaluations made
.;when NRC approves transfers of assets and licenses.
A number-of utilities. commented that NRC need not identify all options immediately, but could ultimately authorize a number of alternative i
'The-Financial Accounting Standaros Board is a private body that establishes authoritative financial accounting and reporting standards in the United States. l l
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y apprcaches, either based on 10 CFR 50.75 or on options that have not yet been
- - recognized.-. A PVC commenter asked NRC to work collaboratively with States to
- explore, as necessary,; alternative financial assurance mechanisms in the event that privately owned nuclear generators are no longer regulated.
One commenter suggested that NRC's support for existing Federal obligations to provide a national nuclear fuel repository would also 4
contribute to the financial assurance of responsible nuclear decommissioning.
Another called for financial assurance to be mandated at the Federal level, .
and a third said NRC should consider whether DOE responsibility can be l- developed for providing solutions to decommissioning.
i Four commenters said no other options were necessary. They reasoned that current options are sufficient irrespective of PVC or FERC oversight, regulatory oversight is unlikely to be curtailed, and FASB standards and competitive pressures will provide sufficient assurance.
fResponse. The Commission agrees with the last four commenters who said no other options were necessary and hence no modification _to the regulations is
! required on the Commission's part because of these comments. The Commission 4 believes that the proposed change to the definition of " electric utility" will be adequate to address' all contingencies with respect to financial assurance for decommissioning under deregulation. Further, the proposed reporting requirement will provide the NRC with the opportunity to be informed on the status of licensees' financial assurance for decommissioning.
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. : D. Federal- Government Licensee Use of Statement of-Intent Slightly fewer than half of the commenters (20 commenters) expressed an
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opinion on this question. Almost all commenters took the position that
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4 Federal licensees should be treated in the same way as non-Federal licensees.
NEI argued that.regardless of who owns ,the , plant, a number of options for financial assurance should be allowed, and the current options should continue to-be permitted. _0ne commenter stated clearly that because Federal licensees
- were expected to face.the same prob ~lems as other licensees, they shoul.d be required to set aside funds rather than rely on statements of intent. Several commenters pointed out that different treatment for Federal licensees could create competitive advantages for the Fed _ral licensees. NRC should ensure that the playing field remained level. One licensee-argued that if a financial assurance option, such as a statement of intent, meets NRC's
- criteria, it should be available for use by all licensees. Others took the position that the statement of intent should not be allowed, because it does not provide any assurance. Its use by Federal licensees means that the taxpayers are providing the assurante. One licensee questioned the long-term financial condition of TVA. One commenter argued'that use of tax exempt bonds provides a similar competitive advantage to those licensees who can issue them.
Only TVA took the position that ample reasons exist for continuing the
- use of statements of intent as provided under the current regulations.
. However, TVA also provided an extended description of the steps it has taken to use an external trust, "all requirements" contracts, and its power to issue indebtedness to ensure its decommissioning costs.
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. 4 Response. The NRC's Office of the Inspector General published an Audit -
Report, "NRC's Decommissioning Financial Assurance Requirements for Federal Licensee:, May Not be Sufficient," OIG/95A-20, dated April 3,1996. The report found that "...NRC's decision to allow Fede al licensees to use a statement of intent...was based primarily on.the assumption that the Federal Government would pay the financial' obligations of the lone Federal licensee,...should it be unable to do so. However, based on our review of the U.S. Code and discussions with officials from the Department of the Treasury, the'0ffice of Management and Budget and TVA, we believe NRC's assumption is questionable."
The report also found "...that, although not required, TVA has established a fund dedicated to meet its decommissioning obligations. However, because this is an internal fund it can be used for other purposes. In fact, TVA had at one time temporarily depleted its decommissioning fund."
'While the majority of those who commented were opposed to allowing the TVA's use of a statement of intent, their reoson was basically that all licensees should have the same " level playing field." This argument and those relating to economic regulation in general do not fall within the Commission's-
-purview.
Further, the Commission does not believe that the elimination of-the i statement of intent option can be justified as its elimination would result in an undue burden without any commensurate improvement in public health and safety. The Commission believes that the risk of a Federal licensee not being ,
able to fund its decommissioning expenses is remote. The Federal licensee has an exclusive franchise that guarantees revenues from the sale of electricity-for th'e foreseeable future. Should the Federal licer.see have future financial difficulties, it will still have substantial revenues from its sale of
.e e s electricity from other than nuclear sources that may be used for-Hence,the.Cohmissiondoesnotproposeto-eliminatethe decommissioning.
statement of intent as an option for Federal *'censees.
E.- TRUST FUND EARNINGS CREDIT FOR EXTENDED SAFE STORAGE PERIOD Two commenters opposed credits for earnings during extended safe storage, arguing that earnings assumptions could be manipulated and that earnings could otherwise act as a hedge against increases in the cost of decommissioning. Seventeen commenters, however, supported allowing-credit for earnings on funds during extended storage periods. Some of these commenters
- argued that if credits for earnings are not allowed, more funds than necessary would be collected, thereby generating unwarranted expense for licensees and customers and possibly intergenerational inequities.
An additional eight commenters supported' allowing earnings credits, not only for the extended safe etorage period, but also for other periods.
. e The period before safe storage, when funds are accumulated; e The decommissioning period, when funds flow out of the trusts; and e Both the accumulation and outflow periods.
Three commenters expressed the opinion that States should decide whether or not to allow credit for projected earnings.
One group of commenters understood that NRC's ANPR considered a net positive rate of return when assessing the status of decommissioning funding
- during a SAFSTOP period, and not that a licensee would be allowed to consider prospectivelydurinathelicensetermthepossibilityof_adetpositive' rate of return over some extended period following shutdown and prior to actual decommissioning. These commenters felt that it would be largely irrelevant to l
start considering positive earnings during a.SAFSTOR period because, by the-
. time of termination of operations, licensees should have already accumulated l
- 'afficient funos.to pay- for decommissioning.
Another coramenter disagreed with the position that excludes the benefit of future tax deductions (i.e., in "non-qualified" trust accounts) in
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determining. the adequacy of a licensee's decommissioning _ funding program because the deductions will havo value for whomever assumes the responsibility l- for decommissioning.
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[fResoonse. The Co'mmission is_ proposing to allow crtdit for earnings and:
believes-that its existing implicit assumption of a zero rate of return is too conservative and not borne out by the data. The. Commission is proposing-ipe re en i licensees may .take credit using a 2"g real rate of return from the time of.the <
. funds' collection through the decommissioning period. As stated below, this L
proposed action provides licensees relief fror current requirements that have no adverse impact on public health and safety, licensees, or NRC resources, and the proposed reporting requirements would allow the licensees'
. decommissioning funds to be monitored by the Commission.
[.
E.1 Real Rate of Return Five commenters took the position that NRC should not specify a single allowable rate of return, but should allow licensees to take credit for. any rate they can justify given their specific situation. Some of these
- commenters supported their. positions by stating that licensees employ
- different investment strategies depending on iactors such as the number of
' plants, when they expect to begin decommissioning, applicable State taxes, and
whether.the funds are in a qualified or nonqualified trust. Another commenter 1 suggested that plant-specific annualized rates could be justified based on historical data. Considerable judgment will:be needed to develop the rate,
. argued one utility group, but no more judgment than is needed in developing I
decommissioning cost estimates.
Three commenters suggested that NRC use long-term, historical rates for 4
the asset allocation employed, adjusted by the long-term,- historical inflation rate.
Six commenters stated that NRC should not specify a single allowable rate of return, but should define the basis on which licensees may select an appropriate positive real rate.
Four commenters expressed the view that States should decide the rate, and a'fifth commenter. thought either States or FERC-should decide the rate.
Another commenter thought the rate should be determined by an (unidentified)
" acceptable third party."
One commenter suggested an after-tax rate of 3 percent as reasonable and achievable with acceptable levels of investment risk (e.g., 50 percent equity, 50 percent fixed income). Another commenter proposed a rate of 3 percent because that rate is the historical real return on Treasury bonds. One commenter felt NRC should float the values based on contemporary 30-year
-Treasuries.
Two commenters opposed the use of a positive rate assumption for earnings during extended safe storage. arguing that earnings assumptions could be manipulated and that earnings could otherwise act as a hedge against increases in the cost of decommissioning.
L'
fR$sponse. The Commission proposes to use a 2 percent'real rate of return throughout the decommissioning' collection period as a default earnings amount and in the safe storage period as a specified amount. Given that historically, real- (i.e., inflation adjusted, after tax) rates of return using y
U.S.Treasuryissueshavebeenaround2 percent,-theComm($sion' proposes-to ,
allow licensees to use this rate in their calculations. While some may propose use of a higher value based on other types of investments,- the Commfs'sion believes the proposed value represents as close to a " risk free" return ~as possible. Higher earnings n.ounts will be allcwed during _the period of reactor operation if specifically determined by a rate-setting authority.
< If rates turn out to be lower than this, 5 50.82 already provides that
- ' licensees are to adjust ' decommissioning funds during safe storage to reflect
' changes in cost estimates. Thus, there is little risk that there will be major shortfalls in decommissioning funds. Further, the proposed-reporting
! = requirements will allow the licensees' decommissioning funds to be monitored by'the Commission.
i E.2 Appropriate Time Period Twelve commenters expressed the view that credit for projected earnings
'should be allowed over the full length of the extended safe storage period.
An additional eight commenters also thought credit should be allowed for earnings projected over additional periods:
o The oeriod before safe storage, when funds are accumulated.
e The decommissioning period, when funds flow out of the trusts.
- Both the accumulation and outflow periods.
. - -- ~.. - - - - . . _ - ~ . - . _ - . . . _ . .- -
Two more would allow commensurate credit for a period with site-specific schedules for. funding and decomissioning. Another commenter noted that considerable judgment would be needed to determine the appropriate time period, but no more than would be needed to develop the decommissioning cost estimate. Four commenters, all PUCs or PUC groups, felt NRC should leave the l
issue of the length of.the period to the States. ;
, only two commenters suggested that credit be limited to a fixed number of years. One of these suggested 10 years. The other proposed a maximum of-20 years, and a minimum of 5 years.
Two commenters opposed the use of positive earnings assumptions during any period, arguing that earnings assumptions could-be manipulated and that earnings could otherwise act as a hedge against increases in the cost of decommissioning.
1
- 6a Response. The Commission ' proposes to allow licensees to take credit for earnings on external sinking funds from the time of the funds' collection j through the decommissioning period. Because the NRC is requiring the funding,
. it is appropriate for the NRC to provide for a positive rate of return on the collected funds. Further, the NRC is proposing a longer period in which credit should be allowed for earnings because the justification far allowing a positive rate of return over the safe storage period also holds for allowing credit from the time of fund collection through the decommissioning period.
Again, the proposed reporting requirement provides the NRC with the ability to monitor licensees' decommissioning funds. Lastly, this proposea action provides licensees relief from current requirements with no adverse impact 07 public health and safety, licensee:;, or NRC resources.
t F. REPORTING ON THE STATUS OF DECOMMISSIGNING~ FUNDS Many commenters supported a reporting requirement-in light of concerns
- about decommissioning funding. Some of these felt that NRC should require relatively comprehensive reports because NRC's authority extends beyond that o.f FERC and the States, and because FERC and the-States do not always require uniform information to be submitted at regular intervals. One commenter stated that an NRC regulatory amendment is needed even in the absence of deregulation.to correct the flawed assumption th 4t PUCs and FERC actively monitor decommissioning funds. The commanter stated that PUC and FERC 4 monitoring efforts are, in most cases, limited in scope and may take place infrequently (i.e., when a rate case is filed). Each PUC is generally concerned only about_ its jurisdictional portion of the decommissioning funds, and FERC's jurisdiction is limited to only the wholesale portion of a company's sales. Moreover, many States do not have jurisdiction over municipal and cooperative agencies, some of which are owners or partial oaners of nuclear plants. Therefore, the NRC may be the only regulating agency that can provide an effective and timely monitoring function for all'the funds
- required for decommissioningi
-Three commenters opposed a reporting requirement as unnecessary, while two others believed such a requirement was premature and could conflict with or-be duplicative of information that may be required by forthcoming FASB l standards. Two commenters stated that NRC requirements should not duplicate requirements of States or FASB. Lastly, a commenter stated that if PUC oversight is limited or eliminated, NRC should assume oversight of decommissioning funds.
1
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4 hc Response. - The Sommission is proposing that a_ periodic reporting requirement
, 1 be implemented so that the Commission has appropriate assurance that licensees-
.are collecting their required decommissioning funds. The benefits of -
e obtaining this information through a reporting requirement, in terms of both' l determining-licensee compliance. with NRC- decommissioning funding regulations and _ responding.to Congressional _ and other requests, outweigh the minimal-impact of the requirement and would be less burdensome to licensees-and the NRC than relying on the existing _NRC inspection process.
F.1 Contents
~
Three commenters stated that reporting requiraients wou.o be unobjectionable if they were minimal and limited to material of the nature historically provided to State regulatcrs or in other! financial reports.
h Similarly, others stated that NRC should rely on the same information as will
, be re;uired-by the proposed FASB statement regarding accounting for certain
-liabilities related to closure or removal of long-lived assets. Five commenters agreed with the NEI that reports should be kept as simple as
~
- possible. One commenter stated that comprehensive reports should be prepared i-for each facility, integrating information for all owners. Thus, if a
. facility has multiple owners, one consolidated report would be prepared with separate data for each owner attached. On the other hand, one commenter
. argued that reports should be based on the licensee's interest in the nuclear 1 unit and not on a total unit bas);.
One group of.commenters stated that NRC could make the annual reports 3
from plant operators available to the public,' which would be consistent with 4
the availability of information required under proposed FASB standards.
. - n n - -- - - -,w,r ,
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A PUC stated that New Jersey's reporting rules may be adequate for NRC's purposes.
Suggested contents for the reports included 50 items under the following 1
general headings: Decommissioning Costs and Activities, Contributions, Trust
' ^
Status and Activity, Other Financial Information, and several Miscellaneous items. i fResponse. Th'e Commission is in the process of issuing a-draft regulatory
[ . guide on this proposed requirement which would endorse FASB draf t standard
- No.158-B, " Accounting for Certain Liabilities Related to Closure or Removal of Long-Lived Assets." The NRC is endorsing this draft FASB standard as a means of providing guidance for licensees to comply with those portions of- the N/2 C 'S fe-!::ier's regulations regarding a licensee's.rcporting on the status of its decommissioning funding. Licensees would-comply with the FASB standard once it becomes final in order to remain consistent with generally accepted accounting principles. The NRC has reviewed the proposed contents of the reports on decommissioning funds to ensure that the needs of the agency are balanced versus the time constraints of the licensees in assembling them.
-F.2 Frequency Several commenters stated that licensees should report on the status of decommissioning funds on-an annual basis. Others believed reports should be required no more frequently than annually. NEl stated that NRC should not require licensees to report on_the status of their decommissioning funds any
more frequently than every 3 to 5 years. NEl noted that SEC rules and proposed FASB standards require utilities to disclose the decommissioning costs in financial statements.
Two commenters' suggested reporting at 5-year intervals. One of these suggested that interim status reports could be required on an annual basis.
One commenter stated that NRC should require no more frequent reporting beyond FASB requirements. Another commenter stated that recorts should be no less frequent than specified by the Securities aad Exchange Act of 1934.
. One commenter suggested that NRC consider more frequent reporting for plants approaching the end of commercial operation and for plants experiencing operating problems. One commenter stated that the timing of required reports should parallel that of other reports such as FERC Form 1, SEC 10-K, and annual financial reports. - Similarly, two commenters felt that annual reports should be caused by NRC by September 30 of the following year. Two commenters stated that interim reports could be required for significant events (e.g.,
merger, acquisition, financial deterioration). This commenter also suggested that limited or negative growth of the fund in a given year due to overall market conditions should not automatically trigger adjustments to funding v
levels but rather that a 3- to 5-year time frame should be used.
Response. The Commission is proposing that every licensee submit its report j o on the status of decommissioning funds to the NRC at least once every 3 years.
Annual submission is not being proposed as an option because the NRC believes it can adequately review licensee financial assurance. status for decommissioning triennially while reducing licensee reporting burden.
However, any plant that is within 5 years of its planned end of operation J-- would submit its report annually.
G. COMMENTS ON TOPICS'NOT SPECIFICALL) RAISED IN THE ANPR
. Commenters suggested several actions that NRC had not asked about , , _
specifically in the ANPR. First, a commenter stated that NRC should require sites to be decommissioned to " green field" status, consistent with FERC
, guidelines.
d
-) Response. The Commission's position is that once radioactive contamination of the reactor facility is removed to a level acceptable to the NRC, there is no
-longer a health and safety concern preventing the NRC license from being terminated.
~
A commenter suggested.the imposition of a mandatory insurance requirement for licensees to cover fund shortfalls at the time of premature decommissioning in States where accelerated collection from ratepayers and intergenerational subsidies are not allowed, p
RResponse. ThogCommission does not. agree with the commenter on the need for l '
mandatory irsurance. As stated in the response to comments on Stranded Costs, Section1B,.the previously referenced " Draft Policy Statement on the Restructuring and Economic-Deregulation of the Electric Utility Industry" stated that;the NRC has the authority "to take actions that may affect a licensee's financial situation when these actions are warranted to protect public health and safety." The commi.sion believes that there are enough l
l
. . -. .~ .--.~ --- . . - - . - - . - .-
, alternatives available _to address the potential problems caused by premature decommissioning so that mandatory insurance would n'ot be required.
One commenter stated that the requirements for subaccounts should be l waived. Their position is that licensees that have contributed monies to a single trust fund.for multiple decommissioning-related purposes be required simpl:' to demonstrate to the NRC that there are or will be sufficient assets in the trust fund, in the aggregate, to pay for the NRC-defined
-decommissioning cost of the-nuclear unit t.nd for any other decommissioning-related purposes identified in the trust agreement.
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- . jf Response. The Commissions is not as concerned with the details of how a licensee
- keeps accounts for depommissioning as much as that a licensee shou '
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< be able to demonstrate to Qe Cessiissica the amount of funds identified ,xs and available for the required decommissioning purposes. Thus, the Commission accepts the commenter's position in general, although it notes that there is no current re_quirement, only g'uldance, relating to the use of. subaccounts.
L A commenter stated that NRC should undertake at a priority task the identification of nuclear plants that do not perform well.
For plants with performance problems, NRC should toh aggressive steps to persuade the operator to sell the plant to another operator at a_ price that recognizes its market value or to terminate the_ license.
- In some cases, particularly when plants were financed with bond indentures or other instruments that limit the owner's ability to sell the plant or irapose conditions on such sales, these
~
restrictions would need to be identified in the process of identifying well--
.~ .. _ _ . . _ _ . _ _ _ . . _ _ _ _ _ . _ . _ . _ _ _ _ _ . _ _ . .
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96 e run plant's. Further, the commenter states that if the plant does.not produce a price-acceptable to the operator, the Federal Government will offer a price that will provide the operator with some fraction of the purchase price and d
take over control and ownership, ~ including any decommissioning fees that have been' collected. The Federal Government would restart any plant it believes can continue as a source o, power and will decommission the others from public funds.
Response. TheQdmmissiondoesnotseeitspositionas te be etrig to force a licensee to sell its plant, neither is it mandated to purchase nor
' operate nuclear power plants.
A commente$ stated that the NRC should develop a reliable, sound estimate (or. method of estimating) decommissioning costs, and should update the estimates -on a regular basis to incorporato technological and other changes.
4
)aResponse. The Commission is planning to revise its estimates of decommissioning costs after -it obtains more "real world" data' from ongoing decommissioning projects.
Another commenter stated that NRC should sponsor technical conferences on decommissioning so the pace of technological resolutions-for cleaning up and decommissioning plants could be increased.
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e While the proposed action is not a suggested rulemaking, the p
3 Commission is taking the suggestion under consideration. Ho.;ever, the n
Commis'sion is aware of a number of deregulation and decommissioning !
conferences that have been held or are being planned.
- . l A comenter stated that the NRu should ask separately about other
!- financial issues because changes to the definition of " electric utility" could have implications in contexts other than decomissioning, such as general
- financial qualifications reviews for initial licensing and related license j amendments, from which utilities are now exempted.
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Response. While the Commission is not presently asking questions en other
!' financial issues, it is attemptir.g to address the concerns by proposing revisions to r @ f Part 50 to be consistent with the proposed change in the definition of " electric utility."
1
- - A-commenter stated that NRC should delay action as the Texas FUC has initiated three regulatory investigation projects focusing on the i restructuring and partial deregulation of the electric industry in thst State.
Further, the State has not developed a forma policy on many of the' issues set forth in the ANPR.
i O Response, it is because of the number and vatiety of State actions being
- +
proposed in the areas of deregulation and ref.tructuring that the Commission is proposing this rulemaking now. TheC$mmissionwishestoprepareforanynew
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, types of nuclear power generating licensees resulting from the States' i
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' One commenter stated-that the Commission should support revisions to r- Seethn Internal Revenue Code 1468A regarding deductibility for contributions to an external fund.
l l9l Response. This request is not within the Commission's purview.
Lastly, a commenter stated that the NRC should hold all licensees to the l l
same high standard for assurance of decommissioning funds. Previously, the NRC had one standard for non-utility licensees and a much more lenient standard for rate-regulated utilities. NRC must establish strict and thorough ;
standards for the collection, investment, segregation, and reporting of decommissioning funds ar.d those standards must apply to all licensees, including those that have traditionally been considered regulated utilities.
Response. The Commission position is that it is not necessary to impose any additional decommissionit;g tunding requirements on those entities that meet the proposed definition of " electric- utility." However, as explained above,
.the,Cddnissionbelievesthatthoseentitiesthatnolongermeettheproposed definition will need the more " strict" standards.
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To summarize, the Commission's underlying philosophy of financial assurance for decommissioning is unchanged. Basically, those licensees that remain " electric utilities" by the Commission's revised definition should follow the same financial assurance regulations as before. However, with deregulation, the Commission does not believe that it would be able to identify all the potential types of licensees to which it will be exposed.
Therefore, new and unique restructuring proposals will necessarily involve ad hoc reviews by the NRC. Further, the, Commission will exercise direct oversight of such reviews to maintain consistent NRC policy toward new entities. In addition to the proposed definition revisions, the Commission is proposing two other modifications. The first is to require power reactor licensees to periodically report on the status of their decommissioning funds and funding for the management of its irradiated fuel. Second, the Commission is proposing to allow licensees to take credit for the earnings on decommissioning trust funds. The Commission does not see the need to take JH actions proposed by some commenters that would, in.the [ = i d M view, strain licensees unnecessarily, because of licensees' competing needs.
SECTION-BY-SECTION DESCRIPTION OF CHANGES 10 CFR Part 50 Section 50.2 is amended to revise the definition of " electric utility" in response to deregulation of the electric generating industry. The section amended by the insertion of definitions of previously undefined terms that aid in understanding the revised definition of " electric utility."
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Sections 50.4' 50.54, 50.63, 50.73, and 50.75 are amended to accommodate the revised definition of " electric utility" in Section 50.2.
Sect .a 50.43 is amended so States are added to regulatory agencies as those entities to which the Commission will give notice of application for a class 103 license f r a commercial power generation facility.
~
W) g is amended in.-paragraph-(wg byga h.iI?)/N //#npa Section 50.5 W pbtain insurance in the manner as opposed to electric utilities,(bb/
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- H prescribed. i TW 7 fpctiong s also amended in-paragraph-tbg to account for the new reporting requirements.
Section 50.63 is amended so that licensees, as opposed to the originally used utilities, are required provide specific material for NRC review relating to reactor core and associated systems.
Section 50.73 is amended to clarify the type of personnel involved in a t.icensee Event Report.
Section 50.75 is amended in three paragraphs to the u definitional change in the reporting and recordkeeping for decommissioning planning.
Section 50.75 amended to allow licensees to take 2 percent credit on earnings for prepaid trust funds and external sinking funds, and to institute a reporting requirement for licensees on the status of their decommissioning funding, y.g &f E~/edrs n a c l"M
[gg. J. Environmental Impact: Categorical Exclusion The NRC has determined that this proposed regulation is the type of action described as a categorical exclusion in 10 CFR 51.22(c)(10)(i).
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Therefore, neither an environmental, impact _ statement nor an environmental
-assessment has been prepared for this proposed regulation.
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Paperwork Reduction Act Statement This proposed rule amends information collectio requirements that are subject to the Paperwork Reduction Act of. 1995 (44 U.S.C. 3501 et seq.). This rule has been w bmitted to the Office of Management and Budget for review and
-approval of the Information collection requirements.
The public 'aporting burden for this information collection is estimated to average 2 hours2.314815e-5 days <br />5.555556e-4 hours <br />3.306878e-6 weeks <br />7.61e-7 months <br /> per response, including the time for reviewing
) instructions, searching existing data sources, gathering and maint$inir.g the
- data needed, and completing and reviewing the information collection. The U.S. Nuclear Regulatory Commission is seeking public comment on the potential i
{ impact of the information collections contained in the proposed rule and on
-the following issues:
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- l. Is the proposed information collection necessary for the
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proper performance of the functions of the NRC, including whether the information will have practical utility?
- 2. Is the estimate of burden accurate?
- 3. Is there a way to enhance the quality, utility, and clarity of the information to be collected?
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- 4. How can the burden of the information collection be minimized. including the use of automated collection techniques?
Send coments on any aspect of thi_s proposed information colkection,
[includingsuggestionsforreducingtheburden,totheInformationand Records Management Branch (T-6 F33), U.S. Nuclear Regulatory Comission.
Washington, DC 20555-0001, or by Internet electronic mail at BJS19NRC. GOV; and to the Desk Officer, Office of Information and-Regulatory Affairs, NE0B-10202 (3150-0011), Office of Management and Budget, Washington, DC 20503.
Coments to OMB on the information collections or on the above issues should be submitted by (insert date 30 days after publication in the Federal Reaister). Coments received after this date will be considered if it is practical to do so, but assurance of consideration cannot be given to coments received after this date, d
Public Protection Notification The NRC may not conduct or sponsor, and a person is not required to respond to, an information collection unless it displays a currently valid OMB control number.
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e t Regulatory Analysis The Commission has prepared a draft regulatory analysis on this proposed regulation. The analysis examines the costs and benefits of the alternatives considered by the Commission. The draft analysis is available for inspec, tion in the NRC Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC. Singic copies of the analysis may be obtained from Brian J. Richter, Office of Necicae Regulatory Research, U.S Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone (301) 415-6221, e-mail bjr@nrc.go/.
The Commission requests public comment on the draft analysis. Comments on the draft analysis may be submitted to the NRC as indicated under the ADDRESSES heading.
Regulatory Flexibility Certification In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C.
605(b)) as amended by the Small Business Regulatory Enforcement Fairness Act of 1996. Pub. L. No. 104-121 (March 29, 1996), the Commission certifies that this rule will not, if promulgated, have a significant economic impact on a substantial number cf small antities. This proposed rule affects only the licecsing, operation, and decommissioning of nuclear power plants. The companies that owr these plants do not fall in the scope of the definition of "small entities" set forth in the Regu'aury riexibiiny act or tne smali Bucinest Size Standants set out in +t4uns issueo oy % Q siness Administration at 12.g g_p.ar-t h N[r b er .r!aitb//f f// (//2.6/C) i
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Backfit Analysis The regulatory analysis for the proposed rule also constitutes the documentation for the evaluation of backfit requirements, and no separate backfit analysis has been prepared.- As defined in 10 CFR 50.109, the backfit rule-applies to " modification of or an addition to systems,_ structures,
{ components, or design of a facility; or the design approval of manufacturing license-for a facility; or the procedures or organization-required to design, construct, or operate a facility...." resulting from new or amended provisions in Commission rules. Such backfitting can be plant-specific or apply to
-multiple facilities (" generic backfitting").
The proposed amendments to NRC's requirements for the financial assurance of decommissioning of nuclear power plants address generic requirements. The proposal would revise the definition of " electric utility" and add several associated definitions that are generic in nature; amend generically new reporting requirements pertaining to the use of prepayment and external sinking- funds; and enact generic new reporting requirements for power reactor licensees on the status of decommissioning funding that specify the timing and contents of such reports.
The NRC has determined that the backfit rule,10 CFR 50.109, does not apply to this proposed rule, and therefore, that-a backfit- analysis is not required for this proposed rule, because these amendnients do.not' involve any provisions which would impose backfits as defined in 10 CFR 50.109(a)(1).
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List of Subjects in 10 CFR Part 50 Antitrust, Classified infon..ation, Criminal penalties, Fire protection, .-
Intergovernmental relations, Nuclear power plants and reactors, Radiation protection, Reactor siting criteria, Reporting and recordkeeping requirements.
For the reasons set out in the preamble and under the authority of the /
Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. Q 3, the NRC is proposing to adopt the following amendments to 10 CFR Part 50.
PAP.T 50--00MESTIC LICENSING OF PRODUCTION AND UTillZATION FACILITIES
- 1. The authority citation for Part 50 continues to read as follows:
AUTHORITY: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68 Stat.
936, 937, 938, 948, 953, 954, 955, 956, as amended, sec. 234, 83 Stat. 1244, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 2232, 2233, 2236, 2239, t
2282); secs 201, as amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846).
Section 50.7 also issued under Pub. L.95-601, sec.10, 92 Stat. 2951 (42 U.S.C. 5851). Section 50.10 also issued under secs. 101, 185, 68 Stat. 955 as amended (42 U.S.C. 2131, 2235), sec. 102, Pub. L.91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections 50.13, and 50.54(dd), and 50.103 also issued under sec. 108, 68 Stat. 939, as amended (42 U.S.C. 2138). Sections 50.23, 50.35, 50.55, and 50.56 also issued under sec. 185, 68 Stat. 955 (42
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b U.S.C. 2235). Sections 50.33a, 50.55a and Appendix Q also issued under sec. I 102, Pub. L.91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections 50.34 and 50.54 ;
also issued under sec. 204, 88 Stat.1245 (42 'J.S.C. 5844). Sections 50.58, ,
50.91, and 50.92 also issued under Pub. L.97-415, 96 Stat. 2073 (42 U.S.C.
2239). Secticn 50.78 also issued under sec.122, 68 Stat. 939 (42 U.S.C. _,
, 2152). Secticus 50.80 - 50.81 also issued under sec. 184, 68 Stat. 954, as ,
amended (42 U.S.C. 2234). Appendix F also issued under sec. 187, 68 Stat. 955-(42 U.S.C 2237).
3 .- rl l
- 2. p%650.2g maded by revish; the definition of 'jlectric- gA; e
p utility 3nY EI tin]-thedefinitionsoffa'nsmissionaccessfees,futemexit h
M' fegi, jistribution lino charaes, and "disf .nf s,envien" reaulatioEn h d l ,x a y k k e d e J ~ tr rn d n ) 4 AA M: >
uo. t vp~ga- , y 4 37ectricutfiftymeansanyentitythatgenerates, transmits,or ,
O l dLstributes electricity and that recovers the cost of this electricity through
, rates established by a regulatory authority, such that the rates are k sufficient for the licensee to operate, maintain, and decommission its nuclear
- plant safely. Rates must be established by a regulatory authority either directly through traditional " cost of service" regulation or indirectly i through mechanisms such as transmission access fees, system exi'. fees, or distribution-line charges. An entity whose rates are established by a 1
regulatory authority by these mechanisms that cover only a portion of the cost of decommissioning will be considered to be an " electric utility" only for that portion of the decontamination costs that are c.ollected in-this manner.
Similarly, a licensee who collects non-decommissioning operation costs, not collected through these or_ similar mechanisms authorized by a rate-regulating
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authority, would not be cnnsidered an " electric utility" for the purposes of financial. qualifications to operate the facilities. Public utility districts.
municipalities, rural electric cooperativer., and State and Federal agencies.
l including associations of any of the foregoing, that establish their own rates an included within the meaning of " electric utility."
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" Cost of ervice" reaniatfu,. g the traditional system of rate
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regulation in wh.ch a rate regulatory authority allows an electric utility to charge its customers all reasonable and prudent costs of providing electricity i services, including a retrrn on the investment required to provide such l services.
h Y' Y Y Y r p)eodJ Distefbution ifne charaes ar4 those charges or fees levied for use of the distribution-system by an electricity supplier.
k Y' Y h Syrtemexftfeef,adt$t)chargesorfeesforthegeneration, Y
transmission, or distribution costs incurred by an electric services provider to a customet' who no longer intend; to purchase electric services from that provider. ,
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Tr.ra g fssion access fees ar/ those charges or fees for the ute of a transmission system by electricity generators,
- g d N -M -I 7 3- Par.t 50 ondedby)ev irg t Alowi bA eh k
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l - D'l50.43(a) In the first sentence, insert the words "or State" after:- ins
'. Commission will nive notice in writina of each application to such rdaulatory
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l 50.54(w) replace "Each clectric utility licensee..." wit $ "Each power
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reactor licensee. . . " '
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i 50.54(bb) add the followina:
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Each power reactor licensee shall rep / ort to the NRC at least-once every
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3 years on the status of its funding for'the management of its irradiated fuel
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at the reactor following permanent cessation of operation of the re' actor. Any
' licensee for a plant that is withi!5 years of the projected end of its 4
operation shall submit such a r,e/ port annually.
/
5 50.63(a)(2) replace " Utilities. .." with " Licensees. . ." in the last sentence.
l 50.73(b)(2)(ii)(J){ )(iv) modify to read as: "The type of personnel involved (i .e. con' tractor personnel . licensed operator, nonlicensed operator 2
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other licensee personnel.)"
/
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5 50.75(a) {n the second~ sentence replace "For electric utilities..." with
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"For power _ reactor licensees..."
_l 50//5(b) replace " power reactor" for r electric utility" in the first
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I 50.75(d) replace "Each non-electric utility applicant. . ." with "Eachnon-
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- 4. With respect to the status of decommissioning t st funds during safe storage period:
Part50isamendedbyaddingthefollowing/oi50.75(e)(1)(i). ,
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A licensee may tah credit on earning s on /the prepaid decommissioning
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trust funds using a 2 percent annual rea1 rate of return from the time of the funds' collection through the decommsioning s/ period, if the licensee's rate-setting authority does not author e the use of another rate. [
Part 50 is amended by a ding the following to i 50.75(e)(1)(ii).
A licensee may take credit for earnings on the external sinking funds using a 2 percent annu real rate of return from the time of the funds' collection through e decommissioning period, if the licensee's rate-setting authority does not.cuthorize the use of another rate.
l
- 5. Wi,th respect to reporting requirements:
-In l 50.75(f) paragraphs (1). (2), and (3) are redesignated as paragraphs i
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(2) '(3), and (4), respectively, and a new paragraph (1) is added to read as ,
i follo/.ws:
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P i (1) Each power reactor licensee shall report to the NRC at least once every 3 years on the status of its decommissioning funding for each reactor or part thereof that it owns. The information in-this report shall include, at a j;
minimum: whether the licensee meets the' definition of " electric utility" -
- containedini50.2andthebasisforsupportingthdtclassification;the !
i amountofdecommissioningfundsestimatedtobefl equired-pursuantto10CFR "
50.75(b) and (c); the amount accumulated to th date of the report; a schedule
. /
of the annual amounts remaining to be colle.ctad; and the assumptions used, regarding rates of escalation in decommissioning costs, rates of earnings in '
decommissioning trust funds, and rates 'j of other factors (e.g., discount rates) i used in funding projections. Any lic~ensee for a plant that is within 5 years of the projected end of its operat, ion shall submit such a report annually.
/
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DatedatRockville,Maryiand,this day of , 1997. >
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For the Nuclear Regulatory Commission.
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i 1 / John C. Hoyle,
,/ Secretary of the Commission.
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- 3. In S50.43, paranraph (a) is revised to read as follows: :
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- S50.43 Additional st m.ards and provisions affecting class 103 licenses for commercial power.
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. . (a) The Commission will give notice in writing of each applicatiod to such regulatory agency or State as may have jurisdiction over the rates and services incident to the proposed activity.; will publish notice of the application in such trade or news publications as it deems appropriate to give reasonable. notice to municipalities, private utilities, public bodies, and 1
cooperatives which might have a potential interest in such utilization or production facility; and will publish notice of the application once each week '
for 4 consecutive weeks in the FEDERAL REGISTER. No license will be issued by the Commission prior to um giving of such notices and until 4 weeks after the
- last publicaiaon in the FEDERAL REGISTER.
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- 4. In S50.54.1paragraphj (w) and (bb) are revised to read as follows:
i S50.54 Conditions of licenses.
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(w) Each power eactor licensee under this part for a production'or utilization-facility of the type described in S50.21(b) or S50.22 shall take reasonable steps to obtain insurance available at reasonable costs and on reasonable terms from private sources or to demonstrate to the satisfaction of the Commission that it possesses an equivalent amount of protection covering the licensee's obligation. in the event of an accident at the licensee's reactor, to stabilize and decontaminate the reactor and the reartor station 61
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l site at which'the reactor experiencing the accident is located, provided that:
_(iab) For nuclear power reactors licensed by the NRC, the licensee shall g
within 2 years following permanent cessation of operation of the reactor or 5 years before expiration of the reactor operating license, whichever occurs first. submit written notificationLto the Commission for its review and preliminary approval of the projram by which the licensee intends to manage and provide funding for the management of all irradiated fuel at the reactor following permanent cessation of operation of the reactor until title to the irradiated fuel and possession of the fuel is transferred to the Secretary of Energy for its ultimate disposal in a repository. Licensees of nuclear power reactors that have permanently ceased operation by April 4.1994 are required to submit such written notification by April 4.1996. Final Commission review will be undertaken as part of any proceeding for continued licensing under i part 50 or part 72_of this chapter. The licensee must demonstrate to NRC that
-the elected actions will'be consistent with NRC requirements for licensed
[ possession of irradiated nuclear fuel and that the actions will be implemented on a timely basis. Where -implementation of such actions requires NRC authorizations, the licensee shall verify in the notification that submittal !
- for such acti 3 have been or will be made to NRC and shall identify them. A copy of the notification shall be retained by the licensee as a record until i ,
expiration of the reactor operating license. The licensee shall notify the NRC of any significant changes in the proposed waste management program as described in the initial notification. Each power reactor licensee shall bh
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report to the NRC at ledst once every 3 years on the status of its funding for the management _of its irradiated fuel at the reactor following permanent cessation of' operation of the reactor. Any licensee for a plant that is within 5 years of the' projected end of its operation shall submit such a report annually.
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- 5. In SE0.63. paragraph (a)(2) is revised to read as follows:
S50.63 Loss of alternating current power.
(a) * *
- f (2) The reactor core and associated coolant, control, and protection
, systems including station batteries and any other necessary support systems.
must provide sufficient capacity and capability to ensure that the core is cooled'and appropriate containment integrity is maintained in the event of a station blackout for the specified duration. The capability for coping with a 4
station blackout of specified duration shall be determine by an appropriate coping analysis. Licensees are expected to have the baseline assumptions.
4 analyses, and related information used in their coping evaluations available i for NRC review.
j 6.-In550.73, paragraph (b)(2)(ii)(J)(2)(3)isrevisedtoreadas follows:
550.73 Licensee event report system.
1
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- . (b)
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(2)
. (ii) * * *
(J) s (2)- * *
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(p) The type of personnel involved (i.e. contractor personnel, licensed operator, nonlicensed operator, other licensee personnel.)
- 7. In S50.75, paragraphs (a), (b), (d).-(e)(1)(1), (e)(1)(ii) are
, ,,0 pwo ouru revised and paragraphs (f)(1)(2f3) are redesignated as (f)(2)(3g4) and a new paragraph (f)(1) is added to read as follows: "#
l S50.75 Reporting and recordkeepings for decommissioning planning.
1 (a) This section established requirements for indicating to NRC how :
reasonaiAe assurance will be provided that funds will be available for decommissioning. For power reactor licensees it consists of a step-wise
,w procedure as provided in paragraphs (b).(c). (e), end (f) of tnis section.
-- - (7 x'
)
Fundingfordecommissioningof_electricutilities(:***[powerreactors]**3y ~ _ , -
1s also subject to the regulation of agencies (e.g., Federal Energy Regulatory Commission (FERC) and State Public Utility Commissions) having jurisdiction over rate regulation. The requirements of this section, in particular paragraph (c), are in addition to, and not substitution for. Other requirements, and are not intended to be used. by tt'emselves, by other
' agencies to establish rates.
(b) Each power reactor applicant for or holder of an operating license for a production or utilization facility of the type and power level specified in paragraph (c) of this section shall submit a decommission report, as required by 650.33(k) of this par ontaining a certification that financial assurance for decommissioning will be provided in an amount which may be more but not less than the amount stated in the table in paragraph (c)(1) of this section, adjusted annually using a rate at least equal to that stated in paragraph (c)(2) of this section, by one or more of the methods described in paragraph (e) of this section as acceptable to the Commission. The amount y
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stated in the applicant's or licensee's certification may be based on a cost estimate for decommissioning the facility. As part of the certification, a copy 'of the financial-instrument obtained to satisfy the requirements of paragraph (e) of this section is to be submitted to NRC.
(d) Each non-power reactor applicant for or holder of an operating license for a production or utilization facility shall submit a decommissioning report as required by S50.33(k) of this part containing a cost estimate for decommissioning the facility, an indication of which method or methods described in paragraph (e) of this section as acceptable to the Commission will be used to provide funds for decommissioning, and a description of the means of adjusting the cost esiinate and associated funding level periodically over the life of the facility.
(e)(1) * *
(i) Prepayment. Prepayment is the deposit prior to the start of operation into an account segregated from licensee assets and outside the licensee's administrative control of cash or liquid assets such that the amount of funds would be sufficient to pay decommissioning costs. Prepayment may be in the form of a trust escrow account, government fund, certificate of deposit or deposit of government securities. A licensee may take credit on earning on the prepaid decommissioning trust funds using a 2 percent annual real rate of return from the time of the funds' collection through the
' decommissioning period, if the licensee's rate-setting authority does not authorize the use of another rate.
(ii) External sinking fund. An external sinking fund is a fund established and maintained by setting funds aside periodically in an account i segregated from licensee assets and outside the licensee's administrative 72 j 1
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control in which the total amot'nt of funds would be sufficient to pay decommissioning costs at the time termination of operation is expected. An external sinking fund may be in the form of a trust, escrow account, government fund, certificate of deposit or deposit of government securities.
A licensee may take credit for earnings on the external sinking funds using a 2 percent annual real rate of return from the time of the funds' collection through the decommissioning period, if the licensee's rate-setting authority does not authorize the use of another rate.
- *
- g f (f)(1) Each power reactor licensee shall report to the NRC at least once every 3 years on the status of its decommissioning funding for each of a p,%.c reactor or part theFeofthat it owns. The information in this report must include, at a minimum: whether th'e licensee meet the definition of " electric utility" contained in S50.2 and the basis for supporting that classification; the amount of decommissioning funds estimated to be required pursuant to 10 CFR 50.75 (b) and (c)::the amount accumulated to the date of the report: a schedule of the annual amounts remaining to be collected: and the assumptions used regarding rates of escalation in decommissioning costs, rates of earnings 73
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.in decommissioning trust funds, and rates of other factors (e.g., discount rates) used in funding projections. -Any licensee for a plant that is within 5 years of the projected end of its operation shall submit such a report annually.
- w *
- Dated at Rockville, Maryland, this day of . 1997.
For the Nuclear Regulatory Commission.
John C. Hoyle.
Secretary of the Commission.
4 #
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g, \- UNITED STATES g g NUCLEAR REGULATORY COMMISSION- cnf*]\!ED C WASHINGTON, D.C. 20555-0001
%, p g9] $R )i ni 1: 30 March 10, 1997 g,g ., i , a US!!RL MEMORANDUM TO: Samuel J. Collins, Director Office of Nuclear Reactor Regulation -
Carl J. Paperiello, Director Office of Nuclear Material Safety and Safeguards James Lieberman, Director Office of Enforcement
. Richard L. Bangart, Director Office of State Programs William J. Olmstead, Associate General Counsel for Licensing and Regulation Office of the General Counsel
-David (J. Meyer, Chief Rules Review and Directives Branch Office of Administration Brenda Jo. Shelton, Chief Information and Records Management Branch Office of Information Resources Management Ronald M. Scroggins, Acting ,
Chief Financial Officer Anthony J. Galante Cnief Information Officer David L. Morrison, Director FROM:
Office of Nuclear Regulatory Researc/ #4 , !b#A
SUBJECT:
OFFICE REVIEW AND CONCURRENCE ON A PROPOSED RULE - FINANCIAL ASSURANCE REQUIREMENTS FOR DECOMMISSIONING NUCLEAR POWER REACTORS Your concurrence is requested on the attached Commission Paper.
The following is a summary of this request:
1.
Title:
Proposed Rule on Financial Assurance Requirements for Decommissioning Nuclear Power Reactors
- 2. RES Task Leader: Brian J. Richter (415-6221) f i Cl?v LiY 3 pf'
e9 --o.s- * - =~A* 3 **we 5 4 A> r P ~,w s *,--ex -A~.A.,,. cea - A A6 rsms k - u nnnu3,mAi-+--- -,- >s-- -- m 2,easta_-,- 1_a- , 4 & Mt 4-a n 1s-n,=
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. . . l Samuel J. Collins et.al. -
- 3. Cognizant Individuals: NRR - Robert S. Wood (415-1255) i NMSS - Timothy C. Johnson (415-8538) 4 OGC - Stephen H. Lewis (415-1684)
- 4. Reauested Actisn: Review and concurrence ;n Commission Paper.
- 5. Reauested Completion Date: April 4, 1997
" 6. Backaround: This proposed rule is being developed to amend the NRC's regulations relating to financial assurance requirements for the decommissioning of nuclear power plants. This is in response to the anticioated deregulation of the power generating industry. The proposed action would revise the definition of " electric utility" contained in-10 CFR 50.2 and would require power reactor licensees to periodically report on the status of their decommissioning funds and-funds for managing their irradiated fuel. Also, the staff is proposing to allow licensees to take credit for the earningt vi decommissioning trust funds. The SECY suspense date is April ti. 1997.
- 7. Resources to implement this rulemaking have nut been included in the Internal Program / Budget Review FY 1995-1999. Additional resources would '
'be required for, review of the reports required by this rule. Copies of this concurrence package.have been forwarded-the Controller for coordi-nation of resource issues per the E00 memorandum of June 14, 1991, ACRS, ACNW and the IG for information.
Attachment:
Commission Paper w/encls, cc w/ attachment:
R M. Scroggins, OC H. T. Bell , - IG J.'Larkins, ACRS & ACNW
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ENCLOSURE 1 4
4 SRM DTD MARCH 27,1996 I
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UNITED STATES
.*- 8 o NUCLEAR REGULATORY COMMISSION I W ASHIN GTON. D.C. 20Sa5 REVISED h .
March 27. 1996 o....++'
- OFF8CE OF THE SECREYARY c
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MEMORANDUM TO: James M. Taylor . . . , , , , ,
l Exe t ve Director for Operations C. Hoyle, Secretary
FROM: Jo -
p SUBJET: S AFF_ REQUIREMENTS - SECY-96-030 - ADVANCE NOTICE-OE PROPOSED RULEMAKING - NUCLEAR POWER REACTOR DECOMMISSIONING FINANCIAL ASSURANCE IMPLEMENTATION REQUIRCMENTS i .
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-The Commission has approved publication of the Advanced Notice of
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Proposed Rulemaking with the addition of some items concarning the last two issues in the paper to be addressed through_public
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comment, such as'the following two examples:
- 1)- The rateiof return or time period to be assumed for the decommissioning funds.
-2) The periodicity of reporting and the_ amount of information to:be included on the status of the j- decommissioning funds.
The? Federal?RegisterTnotice sh6uldjalso beledited tofinclude[the-followingfi'nserted text:
p.15E(newij before last 1) :
' In -, addition, SiSO .75 (e) (3) (iv)lprovideskthatlan electric s utility which is a- Federal: governmentJ11censeelneed?only-providefassurance-inithe4 form ofla7 statement:foflintent
-indicating-.;that: decommissioning fundsfwillibe1obtained;when necessary.
- p. < lif (new T1; D rand ; relabel remainingils{ as {E-F);:
Section L50 i ? 5 (e) (3) ?(iv)d provid'es: thatij any electric: utility whichiis--a" Federal l government > licensee needDonlyiprovide' assurance'in the form,of5a statementiof1 int'ent: indicatiing SECY NOTE: THIS SRM, SECY-96-030, AND THE VOTE SHEETS OF ALL COMMISSIONERS WILL BE MADE PUBLICLY AVAILABLE 5 WORKING DAYS FROM THE DATE OF THIS SRM.
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that' decommissioning / fund's7w1111be obtained when necessary.
Since a Federal. utility::lic.ensee.:will.likely be confronted with:manyfof the!.sameUnew$ competitive pressuresCas-non-federal-utilities; the4 question 1 arises,;should-the .
regulationsJcontinuesto' of intont as theimeth6d? permit?
2 the6 provision bpishich?these 3 licensees ofprovide Jalstatementi
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financialiassurandetf6r7dec6mmi'ssionitisi ' TherelisMf6r"
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example,JnodPedeialN dwYwhichscisarijfpsovides % 4t!Qip FbderaispoVernmenttG6uidfjhphE.he:Tennesseet:Vall'ey~ ^ ^
Authority!sifinancis11ds6ontniisei ing?oblishbi'6ns7sh6sildETVA be aunable3: toid61isotMD6ssilhlssf ast%o$ank!fothersfact6Es^* ' '
mili tate % f orfor3& gains Epall6singsf ederaltu tility/111'censee s
'to": cont i~nhen tio %sel'stuteinistichi@6f whichTfinanci'al?';assusadhej$6$ aihtient%sl: tihsF me tG ehommissioningsisi;prov;ide~d?
The attached public announcement should be substituted for the announcement proposed in the paper.
(EDO) (SECY Suspense: 3/30/96)
Attachment:
As stated 1 cc: Chairman Jackson Commissioner Rogers Commissioner Dicus OGC OCA OIG Office Directors, Regions, ACRS, ACN% ASLBP-(via E-Mail) 4
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A ENCLOSURE 2 E
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l FEDERAL REGISTER NOTICE s
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