By John Stang
Limited liability companies and the COVID-19 pandemic’s effects on long-term scheduling dominated discussion in a Nuclear Regulatory Commission webinar Tuesday on nearly completed recommendations for financial assurances for decommissioning of commercial nuclear power plants.
The session was intended to receive input from the public on April 6 draft final recommendations from a working group of NRC staff on decommissioning financial assurance. Comments are being accepted through April 21, with the recommendations to be finalized in May.
The intent is to identify whether the NRC’s regulatory infrastructure is sufficient to ensure funds are available to complete decommissioning of any nuclear power plant, given new approaches to the business over the last decade.
The use of limited liability companies (LLCs) has been central to one new model for decommissioning retired nuclear power plants – in which the owner-operator sells the property to another company, which then assumes all responsibility for its management and ownership of the trust fund that pays for decommissioning.
Limited liability companies are financial structures in which the owners are not liable for the new entity’s debt. Being an LLC also gives a company certain tax options in some cases.
Energy technology company Holtec International, in particular, has used LLCs for the acquisition and decommissioning of nuclear plants in Massachusetts and New Jersey, and intends to use them for planned deals in New York state and Michigan.
Holtec is not alone in this approach. NorthStar Group Services formed an LLC, NorthStar Vermont Yankee, for its ongoing decommissioning of the Vermont Yankee nuclear power plant. NorthStar and partner Orano USA jointly formed Accelerated Decommissioning Partners for similar jobs, with an LLC handling the first contract for the Crystal River facility in Florida.
Some participants in the Tuesday event expressed concerns about LLCs shielding their parent companies from responsibility if there is not enough money in a trust to finish a specific job. They pointed to Holtec’s complicated network of subsidiaries for its planned decommissioning of the three reactors at the Indian Point Energy Center in New York.
The proposed corporation setup at Indian Point is as follows: Holtec International subsidiary Holtec Decommissioning International (HDI) oversees all of its decommissioning projects, including the trust funds, as the licensed operator. The subsidiary plans to hire Comprehensive Decommissioning International, another LLC jointly owned by HDI and Canadian engineering megacorporation SNC-Lavalin. Comprehensive Decommissioning International will manage decommissioning, minus the reactor trust funds, at Indian Point.
“This elaborate labyrinthian structure is meant to obfuscate information. …. They are protecting themselves in layers and layers of shell companies,” Michelle Lee, of Beacon, N.Y.-based Hudson River Sloop Clearwater, said during the webinar.
James Lampert of Pilgrim Watch, an advocacy group near the Pilgrim Nuclear Power Station in Massachusetts, worried about parent corporations not being held liable for any financial problems faced by their decommissioning subsidiaries. “How will (the NRC) enforce against the LLCs if they fall short?” he said.
This issue has been raised by the attorneys general for New York and Massachusetts, and by nongovernmental organizations, as they have sought hearings in the NRC review of license transfer applications to Holtec for Indian Point and Pilgrim.
The NRC approved the transfer of Pilgrim’s reactor and spent fuel storage licenses in August 2019. It is still considering the Indian Point application.
“The trust funds are heavily scrutinized by the NRC. We are required to submit an annual report to the NRC on decommissioning costs to the NRC,” Holtec spokesman Joe Delmar said Thursday by email. “If the NRC believed the trust funds are insufficient, they can impose restrictions if the balance were to be off significantly — the NRC could ask to stop work or require additional funding from Holtec into the trust funds before decommissioning work can proceed.”
Bruce Watson, chief of the NRC’s Reactor Decommissioning Branch, said the agency is reviewing the Indian Point LLC situation.
Lampert, Lee, and a few other participants in the Tuesday event said stock-market losses due to the COVID-19 pandemic could also reduce the value of decommissioning trust funds.
Lee added the COVID-19 crisis could delay decommissioning work in general, which could increase costs. So far, decommissioning providers have said they are sustaining operations while enacting additional safety measures to prevent the potential spread of the respiratory disease among workers.
Reactor Unit 1 at Indian Point, in the village of Buchanan 24 miles north of New York City, has been closed since 1974. Entergy plans to retired Unit 2 by the end of this month, followed by Unit 3 no later than April 30, 2021.
Last April, the New Orleans-based power company said it would sell the complex to Holtec International, which would decommission all three reactors. However, the NRC must first approve the transfer of the plant’s reactor and spent fuel storage licenses. Holtec hopes to finalize buying Indian Point by the third quarter of 2021. Holtec is looking at tackling decommissioning and site restoration from 2024 to 2036, at a total cost of $2.3 billion.
The company has already begun decommissioning at Pilgrim and the Oyster Creek Nuclear Generating Station in New Jersey. It also plans to buy Entergy’s Palisades Power Plant in Michigan, which is scheduled for retirement in 2022.
On Tuesday, NRC staff reaffirmed that the working group had identified no gaps in the existing regulatory framework for financial assurance of decommissioning. The webinar followed a similar Feb. 5 event on an earlier version of the recommendations.
“After completing review, the applicable NRC regulations and policy statements, the WG determined that the existing regulatory framework provide an adequate means for NRC to determine whether there is reasonable assurance of sufficient funding for reactor decommissioning, for all known types of current reactor fleet decommissioning plans and business models,” the April 6 draft says.
Federal regulations for decommissioning financial assurance include requiring plant owners to file annual updates to their reactor decommissioning cost estimate and to cover the anticipated expense; having a bank or other separate trustee manage the funds, with NRC oversight; and limiting withdrawals only for radiological decommissioning, with exceptions possible from the agency.
The working group, though, did recommend seven enhancements to improve licensing and oversight for the agency’s reactor decommissioning financial assurance program. It recommended formation of a separate group of NRC personnel to update the guidance contained in various documents toward this goal.
Among the recommendations:
- Clarify that nuclear power companies’ annual decommissioning funding status reports should provide a clear accounting by activity how money was spent.
- Prepare a baseline for periodic baselining of decommissioning expenses, comparing site-specific projections against the actual amount of money spent for work.
- Update the existing financial assurance portions of the inspection procedures for organization, management, and cost controls for retired reactors, “to clarify expectations for the oversight of decommissioning financial assurance.” That would include taking out language regarding evaluations of decommissioning cost data and financial assurance from licensees. “Instead, inspectors will record in periodic inspection reports all major on-going and completed decommissioning activities.”
- Creating a program for spot checks of decommissioning trust funds for reactors that are undergoing decommissioning.
