 |
NRC NEWS
U. S. NUCLEAR REGULATORY COMMISSION |
| Office of Public Affairs |
Telephone: 301/415-8200 |
| Washington, DC 20555-001 |
E-mail: opa@nrc.gov |
No. 96-126 FOR IMMEDIATE RELEASE
(Tuesday, September 24, 1996)
NRC ISSUES DRAFT POLICY STATEMENT
ON ECONOMIC DEREGULATION OF NUCLEAR POWER PLANTS
The Nuclear Regulatory Commission has issued a draft policy statement governing
its concerns and expectations as the electric utility industry moves into an era of
deregulation and increased competition.
The policy statement addresses NRC's concerns about the adequacy of
decommissioning funds and about the potential impact on operational safety.
The policy statement declares the NRC will:
-- Continue to conduct reviews of financial qualifications, decommissioning funding,
and antitrust requirements involving nuclear power plants, using standard review plans
currently under development;
-- Identify all owners, indirect as well as direct, of nuclear power plants;
-- Establish and maintain staff-level working relationships with state and federal rate
regulators;
-- Evaluate the relative responsibilities of power plant co-owners and co-licensees;
and
-- Re-evaluate the adequacy of regulations in light of economic and other changes
resulting from rate deregulation.
In a letter issued in June, NRC informed power reactor licensees of their continuing
responsibility to inform the agency or obtain advance approval of any changes that would
constitute a transfer of their license. The letter also reminded licensees of their
responsibility to report promptly any new information affecting their financial resources for
safe operation and decommissioning.
The policy statement stresses that the Atomic Energy Act and NRC regulations
provide that no license may be transferred unless the Commission consents in writing. The
agency has stated that NRC notification and prior approval are required for mergers,
formation of holding companies and the outright sales of facilities, or portions of facilities,
to ensure that the transferee is appropriately qualified.
Interested persons are invited to submit written comments by December 9 (75 days
after publication of a notice on this subject in the September 23 edition of the Federal
Register). They may be mailed to the Secretary, U.S. Nuclear Regulatory Commission,
Washington, DC 20555, Attention: Docketing and Service Branch, or submitted
electronically as described in the Federal Register notice.
###
Attachment: Draft Policy Statement
.
[7590-01-P]
NUCLEAR REGULATORY COMMISSION
10 CFR Part 50
Draft Policy Statement on the
Restructuring and Economic Deregulation of
the Electric Utility Industry
AGENCY: Nuclear Regulatory Commission.
ACTION: Draft Policy Statement request for public comment.
SUMMARY: The NRC is seeking comment on the draft statement of policy regarding its
expectations for, and intended approach to, its power reactor licensees as the electric utility
industry moves from an environment of rate regulation toward greater competition. The
NRC is concerned that rate deregulation and disaggregation resulting from various
restructurings involving power reactor licensees could have adverse effects on the
protection of public health and safety.
DATE: The public is invited to submit comments on this draft Policy Statement by
December 9, 1996. Comments received after this date will be considered if it is practical to
do so, but assurance of consideration cannot be given except as to comments received on or
before this date. On the basis of the submitted comments, the Commission will determine
whether to modify the draft Policy Statement before issuing it in final form.
ADDRESSES: Mail comments to: Secretary, U.S. Nuclear Regulatory Commission,
Washington DC 20555, Attention: Docketing and Service Branch.
Deliver Comments to: 11555 Rockville Pike, Rockville, Maryland, between 7:45 a.m.
and 4:15 p.m., Federal workdays.
Examine copies of comments received at: The NRC Public Document Room, 2120 L
Street NW (Lower Level), Washington, DC.
FOR FURTHER INFORMATION CONTACT: Robert S. Wood, Office of Nuclear
Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555,
telephone (301) 415-1255, e-mail RSW1@nrc.gov; or, for the antitrust aspects of this
policy statement, William Lambe, telephone (301) 415-1277, e-mail WML@nrc.gov.
SUPPLEMENTARY INFORMATION:
I. Purpose
The purpose of this draft policy statement is to provide a discussion of the NRC's
concerns regarding the potential safety impacts on NRC power reactor licensees resulting
from the economic deregulation and restructuring of the electric utility industry and the
means by which NRC intends to address those concerns. This draft policy statement
recognizes the changes that are occurring in the electric utility industry and the importance
these changes may have for the NRC and its licensees. The NRC's principal mission is to
regulate the Nation's civilian use of byproduct, source, and special nuclear materials to
ensure adequate protection of the public health and safety, to promote the common defense
and security, and to protect the environment. As part of carrying out this mission, the NRC
must monitor licensee activities and any changes in licensee activities, as well as external
factors that may affect the ability of individual licensees to safely operate and decommission
licensed power production facilities.
II. Background
The electric utility industry is entering a period of economic deregulation and
restructuring which is intended to lead to increased competition in the industry. Increasing
competition may force integrated power systems to separate (or "disaggregate") their
systems into functional areas. Thus, some licensees may divest electrical generation assets
from transmission and distribution assets by forming separate subsidiaries or even separate
companies for generation. Disaggregation may involve utility restructuring, mergers, and
corporate spin-offs that lead to changes in owners or operators of licensed power reactors
and may cause some licensees, including owners, to cease being an "electric utility" as
defined in
10 CFR 50.2. Such changes may affect the licensing basis under which the NRC originally
found a licensee to be financially qualified to construct, operate or own its power plant, as
well as to accumulate adequate funds to ensure decommissioning at the end of reactor life.
Rate regulators have typically allowed an electric utility to recover prudently
incurred costs of generating, transmitting, and distributing electric services. Consequently,
in 1984, the NRC eliminated financial qualifications reviews at the operating license stage
for those licensees that met the definition of "electric utility" in 10 CFR 50.2 (49 FR 35747;
Sept. 12, 1984). The NRC based this decision on the assumption that "the rate process
assures that funds needed for safe operation will be made available to regulated electric
utilities" (49 FR at 35750). However, the NRC recognized that financial qualifications
reviews for operating license applicants might be appropriate in particular cases where, for
example, "the local public utility commission will not allow the total cost of operating the
facility to be recovered through rates" (49 FR at 35751). The Commission also has
expressed potential concern with various State proposals to implement economic
performance incentive programs.
In its 1988 decommissioning rule, the NRC again distinguished between electric
utilities and other licensees by allowing "electric utilities" to accumulate funds for
decommissioning over the remaining terms of their operating licenses. NRC regulations
require its other licensees (with the added exception of State and Federal government
licensees of certain facilities) to provide funding assurance for the full estimated cost of
decommissioning, either through full up-front funding or by some allowable guarantee or
surety mechanism.
A discussion of the current and future NRC review process will be contained in two
Standard Review Plans that the NRC plans to issue -- one for financial qualifications and
decommissioning funding assurance reviews and the other for antitrust reviews. In addition,
the NRC issued an Administrative Letter on June 21, 1996, that informed power reactor
licensees of their ongoing responsibility to inform, and obtain advance approval from the
NRC for any changes that would constitute a transfer of the license, directly or indirectly,
through transfer of control of the NRC license to any person pursuant to 10 CFR 50.80.
This administrative letter also reminded addressees of their responsibility to assure that
information regarding a licensee's financial qualifications and decommissioning funding
assurance which may have a significant implication for public health and safety is promptly
reported to the NRC.
III. Policy Statement
The NRC is concerned with the potential impact of utility restructuring on public
health and safety. The NRC has not found a consistent relationship between a licensee's
financial health and general indicators of safety such as the NRC's Systematic Assessment of
Licensee Performance (SALP). Thus, the NRC has traditionally relied on its inspection
process to indicate when safety performance has begun to show adverse trends. Based on
inspection program results, the NRC can take appropriate action, including, ultimately,
plant shutdown, to protect public health and safety. However, if a plant is permanently shut
down, that plant's licensee(s) may no longer have access to adequate revenues or other
sources of funds for decommissioning the facility. If rate deregulation and organizational
divestiture occur concurrently with the shutdown of a nuclear plant either by NRC action or
by a licensee's economic decision, that licensee may not be able to provide adequate
assurance of decommissioning funds. Thus, the NRC believes that its concerns with
deregulation and restructuring lie primarily in the area of adequacy of decommissioning
funds, although it is also concerned with the potential effect that economic deregulation
may have on operational safety.
As the electric utility industry moves from an environment of substantial economic
regulation to one of increased competition, the NRC is concerned about the pace of
restructuring and rate deregulation. Approval of organizational and rate deregulation
changes may occur rapidly without the NRC's knowledge. The pace and degree of such
changes could affect the factual underpinnings of the NRC's previous conclusions that
power reactor licensees can reliably accumulate adequate funds for operations and
decommissioning over the operating lives of their facilities. For example, rate deregulation
could create situations where a licensee that previously qualified as an "electric utility"
under 10 CFR 50.2 may, at some point, no longer qualify for such status. At that point, the
NRC may require licensees to submit proof pursuant to 10 CFR 50.33(f)(4) that they
remain financially qualified and will require them to meet the more stringent
decommissioning funding assurance requirements of 10 CFR 50.75 that are applicable to
non-electric utilities.
Although new and unique restructuring proposals will necessarily involve ad hoc
reviews by the NRC, the Commission will exercise direct oversight of such reviews to
maintain consistent NRC policy toward new entities. The NRC has considered mergers, the
formation of holding companies, and the outright sales of facilities, or portions of facilities,
to require NRC notification and prior approval in accordance with 10 CFR 50.80 in order
to ensure that the transferee is appropriately qualified. For example, the NRC determines
whether the surviving organization will remain an "electric utility" as defined in 10 CFR
50.2.
In consideration of these concerns, the NRC will be evaluating deregulation and
restructuring activities as they evolve. The NRC will take all appropriate actions to carry
out its mission to protect the health and safety of the public and, to the extent of its
statutory mandate, to ensure consistency with Federal antitrust laws.
The NRC intends to implement policies and take action as described in this policy
statement to ensure that its power reactor licensees remain responsible for safe operations
and decommissioning. In summary, the NRC will:
(1) Continue to conduct its financial qualifications, decommissioning
funding and antitrust reviews as described in the Standard Review Plans
being developed in concert with this policy statement;
(2) Identify all owners, indirect as well as direct, of nuclear power
plants;
(3) Establish and maintain staff-level working relationships with State
and Federal rate regulators;
(4) Evaluate the relative responsibilities of power plant co-owners/co-
licensees; and
(5) Reevaluate its regulations for their adequacy to address changes
resulting from rate deregulation.
IV. Issues Related to Restructuring and Economic Deregulation
of the Electric Utility Industry
The NRC believes that its regulatory framework is generally sufficient to address
many of the restructurings and reorganizations that will likely arise as a result of electric
utility deregulation. In many instances, the NRC's review process will follow the current
framework, or will otherwise follow policies consistent with the NRC's current regulations.
However, the NRC believes that several other policy issues need to be further evaluated and
options developed. Therefore, this section addresses NRC policies with respect to electric
utility restructuring and economic deregulation both as these policies can be carried out
under current regulations and as matters under consideration for further resolution.
A. NRC Responsibilities vis-a-vis State and Federal Economic Regulators.
The NRC has recognized the primary role that State and Federal economic
regulators serve in setting rates that include appropriate levels of funding for safe operation
and decommissioning. For example, the preamble to the 1988 decommissioning rule stated:
"The rule, and the NRC's implementation of it, does not deal with financial ratemaking
issues such as rate of fund collection, procedures for fund collection, cost to ratepayers,
taxation effects, equitability between early and late ratepayers, accounting procedures,
ratepayer versus stockholder considerations, responsiveness to change and other similar
concerns.... These matters are outside NRC's jurisdiction and are the responsibility of the
State PUCs and [the Federal Energy Regulatory Commission] FERC" (53 FR at 24038;
June 27, 1988).
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 situation when these actions are warranted to protect
public health and safety. To date, the NRC has found no significant instances where State
or Federal rate regulation has led to disallowance of funds for safety-related operational and
decommissioning expenses. Some rate regulators may have chosen to reduce allowable
profit margins through rate disallowances, or licensees have for other reasons encountered
financial difficulty.
In order for the NRC to make its safety views known and to encourage rate
regulators to continue their practice of allowing adequate expenditures for nuclear plant
safety as electric utilities face deregulation, the NRC intends to take a number of actions to
increase cooperation with State and Federal rate and financial regulators to promote
dialogue and minimize the possibility of rate deregulation or other actions that would have
an adverse safety impact. We intend to work and consult with the State PUCs through the
National Association of Regulatory Utility Commissioners (NARUC), and with FERC and
the Securities and Exchange Commission (SEC) to coordinate activities and exchange
information.
B. Co-owner Division of Responsibility
Many of the NRC's power reactor licensees own their plants jointly with other, non-related organizations. Although some co-owners may be only authorized to possess the
nuclear facility and its nuclear material, and not to operate it, the NRC views all co-owners
as co-licensees who are responsible for complying with the terms of their licenses. Public
Service Company of Indiana, Inc. (Marble Hill Nuclear Generating Station, Units 1 & 2),
ALAB-459, 7 NRC 179, 200-201 (1978). The NRC is concerned about the effects on the
availability of operating and decommissioning funds, and about the division of responsibility
for operating and decommissioning funds, when co-owners file for bankruptcy or otherwise
encounter financial difficulty. The NRC is evaluating courses of action to ensure that
operating and decommissioning costs are paid by owners.
C. Financial Qualifications Reviews
The NRC believes that the existing regulatory framework contained in
. 50.33(f) and in the guidance in 10 CFR Part 50, Appendix C, is generally sufficient at this
time to provide reasonable assurance of the financial qualifications of both electric utility
and non-electric utility applicants and licensees under the various ownership arrangements
of which the staff is currently aware. Licensees that remain "electric utilities" will not be
subject to NRC financial qualifications review, other than to determine that such licensees,
in fact, remain "electric utilities." However, the NRC is evaluating the need to develop
additional requirements to ensure against potential dilution of capability for safe operation
and decommissioning that could arise from rate deregulation and restructuring.
Section 184 of the Atomic Energy Act and 10 C.F.R. . 50.80 provide that no
license shall be transferred, directly or indirectly, through transfer of control of the license,
unless the Commission consents in writing. The NRC intends to review transfers for their
potential impact on the licensee both to provide adequate funds for safe operation and
decommissioning, and to maintain adequate technical qualifications and organizational
control and authority over the facility. Such consent is clearly required where a corporate
entity seeks to transfer a license it holds to a different corporate entity. See Long Island
Lighting Co. (Shoreham Nuclear Power Station, Unit 1) CLI-92-4, 35 NRC 69 (1992).
The NRC staff has advised licensees that agency consent should be sought and obtained
under . 50.80 for the formation of a new holding company over an existing licensee. Other
types of transactions, including those involving transfers of operating authority or
responsibility to non-licensed organizations, have been considered by the staff on a case by
case basis as to whether . 50.80 consent is required. The NRC is evaluating what types of
transfers or restructurings should be subject to . 50.80 review. Effective December 28,
1995, all orders approving . 50.80 transfers have been signed by the Director, Office of
Nuclear Reactor Regulation. The NRC staff will inform the Commission of unique or
unusual licensee restructuring actions.
D. Decommissioning Funding Assurance Compliance Reviews
The NRC believes that the existing decommissioning funding assurance provisions in
. 50.75 generally provide an adequate regulatory basis for new licensees to provide
reasonable assurance of decommissioning funds. However, to address this and other issues
related to decommissioning funding assurance in anticipation of rate deregulation, the NRC
published an advance notice of proposed rulemaking (ANPR) (61 FR 15427; April 8,
1996).
E. Antitrust Reviews
The NRC must be able to accurately identify all owners of its licensees to
meaningfully assess whether there have been "significant changes" since the licensing
reviews. The NRC anticipates that competitive reviews over the next 5 to 10 years will
arise primarily from changes in control of licensed facilities. The regulatory review
addressing transfer of control of licenses under 10 CFR 50.80 will be used to determine
whether new owners or operators will be subject to an NRC significant change review with
respect to antitrust matters.
ELECTRONIC ACCESS
Comments may be submitted electronically, in either ASCII text or WordPerfect
format (version 5.1 or later), by calling the NRC electronic Bulletin Board (BBS) on
FedWorld. The bulletin board may be accessed by using a personal computer, a modem,
and one of the commonly available communications software packages, or directly via
Internet. Background documents on the draft policy statement are also available, as
practical, for downloading and viewing on the bulletin board.
If using a personal computer and modem, the NRC Rulemaking subsystem on FedWorld can be accessed directly by dialing the toll free number (800) 303-9672.
Communication software parameters should be set as follows: parity to none, data bits to 8,
and stop bits to 1 (N,8,1). Using ANSI or VT-100 terminal emulation, the NRC
Rulemaking subsystem can then be accessed by selecting the "Rules Menu" option from the
"NRC Main Menu." Many NRC subsystems 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 telephone
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 subsystem will be
accessed from the main FedWorld menu by selecting the "Regulatory, Government
Administration and State Systems," then selecting "Regulatory Information Mail." At that
point, a menu will be displayed that has an option "U.S. Nuclear Regulatory Commission"
that will take you to the NRC Online main menu. The NRC Online area also can be
accessed directly by typing "/go nrc" at a FedWorld 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 NRC at 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 files (comments). If you
contact FedWorld using FTP, all files can be accessed and downloaded but uploads are not
allowed; all you will see is a 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 can also 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 AXD3@nrc.gov.
Dated at Rockville, Maryland, this 16th day of September 1996.
For the Nuclear Regulatory Commission.
/s/
_____________________________________
John C. Hoyle,
Secretary of the Commission.
|
