United States Nuclear Regulatory Commission

Office of Public Affairs

Washington, DC 20555

Phone 301-415-8200 Fax 301-415-2234

Internet:opa@nrc.gov

No. 96-89 FOR IMMEDIATE RELEASE

(Monday, June 24, 1996)

NRC STAFF REMINDS LICENSEES OF REQUIREMENTS TO GET APPROVAL

FOR LICENSE TRANSFER, INFORM AGENCY ABOUT DECOMMISSIONING FUNDS

The Nuclear Regulatory Commission staff has reminded nuclear

power plant licensees of their obligation to obtain prior written

consent from the NRC for any changes that would constitute

transfer of their NRC license.

The staff has further told them they should promptly report

any new information concerning their financial qualifications and

decommissioning funding that could have a significant implication

for public health and safety.

These reminders are in an NRC administrative letter sent

June 21 to all holders of nuclear power plant operating licenses

or construction permits. The letter results from an NRC staff

action plan launched earlier this year in response to

deregulation of the electric power industry.

The administrative letter notes that increased competition

resulting from deregulation may induce power companies to split

their systems into functional areas, forming separate

subsidiaries for electrical generation. Other possible scenarios

include utility restructuring, mergers or corporate spinoffs.

NRC's concern is that licensed entities remaining after such

reorganizations must have access to adequate funds for safe

reactor operation and for decommissioning.

A copy of the administrative letter is attached.

#

Attachment
UNITED STATES

NUCLEAR REGULATORY COMMISSION

OFFICE OF NUCLEAR REACTOR REGULATION

WASHINGTON, D.C. 20555-0001

June 21, 1996

NRC ADMINISTRATIVE LETTER 96-02: LICENSEE RESPONSIBILITIES

RELATED TO FINANCIAL

QUALIFICATIONS

Addressees

All holders of operating licenses or construction permits for

nuclear power reactors.

Purpose

The U.S. Nuclear Regulatory Commission (NRC) is issuing this

administrative letter to remind addressees 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 Section 50.80 of Title

10 of the Code of Federal Regulations (10 CFR 50.80), "Transfer

of licenses." Additionally, this administrative letter reminds

addressees of their responsibility to assure that information

regarding licensee financial qualifications and decommissioning

funding assurance that may have a significant implication for

public health and safety is promptly reported to the NRC.

Lastly, this administrative letter points out the desirability of

providing the NRC advance notice of any plans for such changes so

that staff review resources can be allocated and NRC decisions

are not unnecessarily delayed. This administra- tive letter does

not transmit or imply any new or changed requirement or staff

positions. The submittal of advance notice of your planning in

this area is strictly voluntary; therefore, no specific action or

written response is required.

Background

The electric utility industry is entering a period of economic

deregulation and restructuring which will 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 companies or separate subsidiaries for

electrical generation within larger holding companies.

Disaggregation may involve utility restructuring, mergers, and
corporate spinoffs that lead to changes in owners or operators of

licensed power reactors and other material changes.

The NRC concern is that the remaining licensed entities have

access to adequate funds, such that funds are available for safe

reactor operation and decommissioning. The NRC has distinguished

between an "electric utility" and other licensees in this regard.

As defined in 10 CFR 50.2, an "electric utility" is an entity

that generates or distributes electricity for which the costs are

recovered by rates set by the entity or by a separate regulatory

authority. Rate regulators allow an electric utility to recover

prudently incurred costs of generating, transmitting, and

distributing electric services. Corporate restructuring that

changes the "electric utility" status of a power reactor licensee

or otherwise alters the basis under which a licensee received an

operating license for a power reactor should be brought to NRC

attention in a timely fashion.

Discussion

This administrative letter reminds all power reactor licensees of

their ongoing obligation to seek and obtain prior written consent

from the NRC for any changes that would constitute transfer of

the NRC license, directly or indirectly, through transfer of

control of the license pursuant to 10 CFR 50.80 and Section 184

of the Atomic Energy Act as amended. In addition, licensees

should assure that information regarding their financial

qualifications and decommissioning funding assurance that may

have a significant implication for public health and safety is

promptly reported to the NRC.

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 so as 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. For sales of interests in

power reactors, the NRC reviews are similar to those for mergers

or formation of holding companies.

While some restructuring plans occur with little warning, many

are anticipated well in advance of the desired implementation

date. Licensees should consider providing advance notification

of such plans to the NRC so that the staff can schedule the

appropriate resources for review. Because the number of staff

reviews in this area are expected to increase significantly in

the future, licensees that wait until shortly before a decision

is needed may find the staff unable to meet their desired

schedule.

To address changes that may result from economic deregulation,

the NRC issued, on April 8, 1996, an Advance Notice of Proposed
Rulemaking (61 FR 15427) that seeks comment on deregulation

issues as they may affect NRC decommissioning funding assurance

requirements. The NRC has also developed an Action Plan that

outlines additional steps the NRC intends to take to respond to

economic deregulation of its power reactor licensees. Until

these actions are com- plete, our current regulations are

governing. However, you should be aware that the NRC staff will

consult with the Commission when any new or unusual

restructurings alter your original licensing basis.

This administrative letter requires no specific action or written

response. If you have any questions about this letter, please

contact one of the persons listed below or the appropriate Office

of Nuclear Reactor Regulation (NRR) project manager.

signed by

Brian K. Grimes, Acting Director

Division of Reactor Program

Management

Office of Nuclear Reactor

Regulation

Contacts: Robert Wood, NRR

(301) 415-1255

Internet:rsw@nrc.gov

Bill Lambe, NRR

(301) 415-1277

Internet:wml@nrc.gov