POLICY ISSUE

(Information) 

June 20, 2013 SECY-13-0066

FOR: The Commissioners 

FROM: Eric J. Leeds, Director 

Office of Nuclear Reactor Regulation 

SUBJECT: STAFF FINDINGS ON THE TABLE OF MINIMUM AMOUNTS 

REQUIRED TO DEMONSTRATE DECOMMISSIONING FUNDING 

ASSURANCE 

PURPOSE: 

To provide the Commission with a response to Staff Requirements Memorandum (SRM) 

SECY-06-0065, “Office of the Inspector General Recommendations on Decommissioning 

Funding Assurance,” specifically: 

“In the future (circa 2011) when more cost return information is available, NRR 

should review the formula used for decommissioning funding requirements and 

adjust it, if necessary.” 

SUMMARY: 

At this time, the U.S. Nuclear Regulatory Commission (NRC) staff does not recommend revising 

the formula (Table of Minimum Amounts), as found in Title 10 of the Code of Federal 

Regulations (10 CFR) 50.75(c)(1), or the adjustment factors at 10 CFR 50.75(c)(2). The 

foundation for the staff’s conclusion was through reviewing the formula in light of more recent 

information and decommissioning experiences. Staff contracted with Pacific Northwest National 

Laboratory (PNNL) to evaluate new information and the adequacy of the minimum 

decommissioning funding requirement, held a public meeting, and reassessed the formula in 

light of the PNNL study and stakeholder comments. This paper does not address any new 

commitments or resource implications. 

BACKGROUND: 

On February 6, 2006, the Office of the Inspector General (OIG) issued OIG 06 A 07, “Follow up 

Audit of the Nuclear Regulatory Commission’s Decommissioning Fund Program.” In its 

CONTACT: Michael A. Dusaniwskyj, NRR/DIRS 

 (301) 415-1260 
The Commissioners -2- 

consolidated list of recommendations, OIG suggested that the NRC staff, “Update NRC’s 

decommissioning formula considering the relationship between formula based and site-specific 

estimates.” On March 23, 2006, the NRC staff addressed recommendations in OIG-06-A-07 

through the issuance of SECY-06-0065. On May 17, 2006, the Commission directed the staff to 

assess the adequacy of the 10 CFR 50.75(c), “Table of Minimum Amounts,” which also is 

referred to as the minimum decommissioning funding formula or the formula. The formula 

defines the minimum acceptable dollar amount that a light-water power reactor must certify will 

be available for radiological decommissioning and decontamination of its reactor. 

Decommissioning Funding Assurance 

Each commercial power reactor licensee is required, pursuant to 10 CFR 50.75, to apply a 

decommissioning funding assurance process to demonstrate that the bulk of needed financial 

resources will be available for decommissioning activities. 

The formula establishes a minimum amount, or reference level, for which each commercial 

nuclear power reactor licensee must accumulate committed financial resources. By periodically 

recertifying to account for changing costs, and reporting that it is accumulating adequate 

financial resources during the operating life of the license, a licensee provides reasonable 

assurance for decommissioning funding. The formula addresses the minimum 

decommissioning funding assurance requirements for light-water reactors, and it reflects 

differences in anticipated decommissioning costs between pressurized-water reactors (PWR) 

and boiling-water reactors (BWR) based on their thermal capacity. Title 10 CFR 50.2, 

“Definitions,” defines decommissioning as the removal of a facility or site safely from service and 

reduction of residual radioactivity to a level that permits (1) release of the property for 

unrestricted use and termination of the license, or (2) release of the property under restricted 

conditions and termination of the license. The formula does not include the costs of spent fuel 

management, independent spent fuel storage installation decommissioning, site restoration, and 

other costs not related to radiological decontamination. 

As stated in the Statement of Considerations for 10 CFR 50.75: 

“The amount listed as the prescribed amount (formula) does not represent the 

actual cost of decommissioning for specific reactors but rather is a reference 

level established to assure that licensees demonstrate adequate financial 

responsibility that the bulk of the funds necessary for a safe decommissioning 

are being considered and planned for early in facility life, thus providing adequate 

assurance at that time that the facility would not become a risk to public health 

and safety when it is decommissioned.” (53 FR 24030, June 27, 1988) 

The formula uses a base of 1986 dollars (10 CFR 50.75(c)(1)), which a licensee must 

recalculate annually (and report biennially to the NRC) to current dollars by use of an 
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adjustment factor. The adjustment factor has a fixed weighted index of 0.65 for labor, 0.13 for 

energy, and 0.22 for low-level waste burial costs as stated in 10 CFR 50.75(c)(2). The 

adjustment factor accounts for inflation changes in labor costs, energy costs, and low-level 

waste burial costs. The adjustment factors are made publically available, for use by licensees, 

in biennial revisions of NUREG-1307, “Report on Waste Burial Charges.” (Each successive 

revision of NUREG-1307 captures the inflation from the previous two years). The result of this 

calculation raises the base 1986 dollars to a current year minimum amount of financial 

resources that the licensee must certify and hold in an approved financial instrument, which is 

typically an external trust. The total financial resources held in approved financial instruments, 

which includes expected earnings and rate collections, must be equal to or greater than the 

amount calculated by application of the formula. 

At or about five years before permanent cessation of operations, (or within two years after an 

announced premature shutdown) a licensee must provide a site-specific decommissioning cost 

estimate (SSCE), which may be greater, but not less than, the formula amount. At this time, the 

SSCE becomes the minimum acceptable amount to which the licensee must certify. The intent 

of the SSCE is to provide an up-to-date assessment and a more accurate radiological 

decommissioning cost figure. The total financial resources held in approved financial 

instruments, which includes expected earnings and rate collections, must be equal to or greater 

than the SSCE amount over the remaining operating life of the reactor. 

DISCUSSION: 

The staff reevaluated the basis for the formula in light of more recent information and 

decommissioning experiences. Staff contracted with PNNL to evaluate new information and the 

adequacy of the minimum decommissioning funding requirement, held a public meeting, and 

reassessed the formula in light of the PNNL study and stakeholder comments. 

Licensees are under no regulatory obligation to disclose final decommissioning costs to the 

NRC after the operating license is terminated. This makes it challenging to establish an 

accurate decommissioning funding estimate. Furthermore, when overall decommissioning 

costs are available it is often difficult, if not impossible to distinguish those costs that specifically 

address the NRC’s radiological decommissioning requirements from the total cost of 

decommissioning, which includes all other non-radiological decommissioning activities. One 

lesson learned from past experience is that the decommissioning of any one reactor will likely 

present its own unique challenges and cost drivers. Unique site specific cost drivers are difficult 

to incorporate into a generic formula used to demonstrate reasonable assurance of funds for 

decommissioning but may be used to determine a conservative or bounding amount. 

Nonetheless, each licensee should identify and address such costs upon development and 

submission of the site-specific decommissioning cost estimate, as required, about five years 

before permanent cessation of reactor operations. 
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PNNL Draft Study: 

In 2009, the NRC contracted for a study by PNNL to reevaluate the adequacy of the minimum 

decommissioning fund requirement specified by the formula. As the original formula was based 

on two studies performed by PNNL in 1978 and 1980, PNNL sought to evaluate additional 

nuclear power plant decommissioning experience and changes in decommissioning technology 

and practices since that time. 

PNNL’s approach was to compare differences between the decommissioning cost estimates 

from the original studies with actual costs from four completed decommissioning projects, site 

specific decommissioning cost estimates prepared by licensees and other 

decommissioning-related information. PNNL evaluated decommissioning technology and 

practices in use today, reviewed 27 site-specific decommissioning cost estimates submitted by 

licensees to the NRC, considered actual costs, lessons learned and experience gained from the 

decommissioning of several large nuclear power plants (Trojan, Rancho Seco, Maine Yankee, 

and Haddam Neck), and evaluated current low-level radioactive waste (LLW) handling practices 

and disposal costs. Since Trojan, Rancho Seco, Maine Yankee, and Haddam Neck were 

decommissioned by electric utility licensees with access to ratepayer funds, the PNNL Draft 

Study contains no data on large merchant power plants as none have been decommissioned. 

PNNL’s study and reevaluation of the adequacy of the formula, by necessity, incorporated 

various estimates, assumptions, and hypothetical scenarios about reactor decommissioning. 

This was unavoidable as actual and final data regarding past power plant decommissioning 

experience applicable to today’s reactor fleet is limited, and future reactor decommissioning 

projects are often decades away. In addition, no large BWRs have yet completed 

decommissioning and, therefore, no such data was available to PNNL in its analysis. Moreover, 

several of the past reactor decommissioning projects evaluated by PNNL addressed unique and 

sometimes costly decommissioning issues that significantly contributed to final costs, such as 

soil remediation at Haddam Neck. Similarly low LLW disposal costs and one-piece removal and 

disposal of the reactor pressure vessel and most reactor internal components appeared to be 

the significant cost drivers for the low cost of radiological decommissioning of the Trojan facility. 

PNNL’s study is documented in draft report, “Assessment of the Adequacy of the 

10 CFR 50.75(c) Minimum Decommissioning Fund Formula,” (PNNL Draft Study), dated 

November 2011, Agencywide Documents Access and Management System (ADAMS) 

Accession No. ML13063A190, and is publicly available. In its conclusion, PNNL proposed a 

revised formula, including new weighting of the adjustment factors and a new base year (2010). 

The primary function of the PNNL proposed formula was for comparison against the current 

formula. 
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Public Meeting: 

On February 27, 2013, the NRC held a (Category 2) public meeting (meeting announcement: 

ADAMS Accession No. ML13014A378) to discuss and solicit input from the public, industry, and 

other interested groups on the potential adjustments to the Table of Minimum Amounts in 

10 CFR 50.75(c)(1) and (2) for commercial nuclear reactors. The meeting was widely attended 

and included representatives of the Nuclear Energy Institute, Entergy, Morgan Lewis, the State 

of New York Attorney General’s Office, and others (meeting summary can be found in ADAMS 

Accession No. ML13063A174). 

During the meeting, participants indicated that the Table of Minimum Amounts could 

successfully accomplish its purpose, which is to establish a common minimum standard 

measurement to which each licensee must accumulate committed financial resources during the 

life of the operating license. No participant advocated changing the Table of Minimum Amounts. 

Subsequently, on April 26, 2013, Mr. Ralph Anderson, Senior Director, Radiation Safety and 

Environmental Protection at the Nuclear Energy Institute, a participant at the public meeting, 

submitted correspondence (ADAMS Accession No. ML13140A234) that stated: 

“In summary, we (NEI) do not believe that any adjustment to the formula used for 

decommissioning funding requirements is necessary at this time. This 

conclusion is based on our review and understanding of previous NRC staff 

views on the decommissioning funding process, current industry funding 

practices and experience, and actual industry decommissioning and license 

termination results. 

In April 2012, the U.S. General Accounting Office (GAO) published Report 

GAO-12-258, “NRC’s Oversight of Nuclear Power Reactors’ Decommissioning 

Funds Could Be Further Strengthened.” The report does not specifically 

recommend that the formula used for decommissioning funding requirements be 

changed.” 

 

Staff Analysis: 

The NRC staff considered the results of the PNNL study in its reevaluation of the formula used 

to establish a minimum amount, or reference level, for which each commercial nuclear power 

reactor licensee must accumulate committed financial resources for radiological 

decommissioning. 

The NRC staff independently calculated decommissioning funding amounts as prescribed by 

the current formula for 104 power reactor licenses (reactor count prior to May 7, 2013), based 

on data from the 2011 biennial decommissioning funding status (DFS) reports submitted by 
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each licensee. The NRC staff also calculated the decommissioning funding amount using the 

proposed Table of Minimum Amounts from the PNNL study for all 104 power reactor licenses. 

Staff then compared the results of the two sets of calculations and, on average, the proposed 

formula yielded an amount that was 6.8 percent higher for PWRs and 15.4 percent lower for 

BWRs. 

The NRC staff considered the differences reflected in the comparison of the results and 

concluded that the current formula provides a reasonable minimum financial value, or reference 

level, for reasonable assurance of decommissioning funding. This is acceptable because it is a 

reference level established to assure that licensees demonstrate adequate financial 

responsibility that the bulk of the funds necessary for safe decommissioning are being 

considered and planned for early in facility life. 

Furthermore, under 10 CFR 50.75(f)(1), staff’s evaluation of decommissioning funding 

assurance includes review of DFS reports every two years. This review of decommissioning 

funding assurance by the staff provides a periodic opportunity for review of current industry and 

market financial considerations, providing an opportunity to take additional steps if necessary as 

stated in 10 CFR 50.75(e)(2): 

“The NRC reserves the right to take the following steps in order to ensure a 

licensee’s adequate accumulation of decommissioning funds: review, as 

needed, the rate of accumulation of decommissioning funds; and, either 

independently or in cooperation with the FERC and the licensee’s State PUC, 

take additional actions as appropriate on a case-by-case basis, including 

modification of a licensee’s schedule for the accumulation of decommissioning 

funds.”1

 

The staff’s last completed review of the DFS reports has found that licensees are currently 

providing reasonable assurance of decommissioning funding (See SECY-11-0149, “Summary 

Findings Resulting from the Staff Review of the 2010 Decommissioning Funding Status Reports 

for Operating Power Reactor Licensees”). 

GAO’s recent report, GAO-12-258, “NRC’s Oversight of Nuclear Power Reactors’ 

Decommissioning Funds Could Be Further Strengthened,” noted that the minimum formula is 

generally less than the SSCE. GAO recommended that the NRC define what is meant when it 

says the minimum formula represents the bulk of the funds needed for decommissioning. 

Applying the results of the PNNL study, the minimum formula represents the low end of the 

range of decommissioning costs. This is acceptable because significantly raising the minimum 

could result in requiring some licensees to provide financial assurance greater than the funds 

 

1

 This section does not permit the NRC to require a licensee to accumulate more funds than called for by 

the regulation. 
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needed to decommission. However, the minimum formula does not relieve the licensee from 

providing assurance that funds will be available when needed for the full cost of radiological 

decommissioning. The current regulatory system provides for the cases where the cost 

estimate exceeds the minimum formula by requiring a SSCE five years before permanent 

shutdown, or within two years following a premature shutdown. The SSCE then becomes the 

amount of financial assurance the licensee must certify and provide. The regulatory system has 

been successful in the past, since no reactor has failed to perform its decommissioning 

obligation due to lack of funds. 

At a public meeting held March 2, 2011, the NRC staff informed stakeholders that it was 

concerned that the minimum formula did not include property taxes or remediating soil 

contamination as part of the cost of decommissioning (ADAMS Accession No. ML110690199). 

However, the staff has concluded that these costs are not needed in the formula for the 

following reasons. These costs are highly site-specific, and difficult to incorporate into the 

minimum formula. With respect to property taxes, the amount of tax is not a significant cost 

driver for immediate decommissioning. Property taxes can be significant if decommissioning is 

carried out over many years, as the SAFSTOR option provides. However, when a licensee 

chooses the SAFSTOR option, it must also account for annual costs of safe storage until the 

license is terminated. These costs as well as property taxes must be included in the SSCE. 

With respect to soil contamination, the Decommissioning Planning Rule, which became effective 

in December 2012, requires the licensee to monitor subsurface contamination and keep records 

of the contamination for decommissioning planning. The remediation costs must be included in 

the SSCE. 

CONCLUSION: 

At this time, NRC staff does not recommend revising the Table of Minimum Amounts, as found 

in 10 CFR 50.75(c)(1), or the adjustment factors at 10 CFR 50.75(c)(2). The formula in 

10 CFR 50.75(c) successfully establishes a common minimum standard measurement, or 

reference level, to which each licensee must accumulate committed financial resources during 

the life of the operating license as it was intended and described above. Licensees continue to 

have the flexibility to use a SSCE to determine if larger amounts of funding are needed for 

radiological decommissioning. Licensees may voluntarily fund the decommissioning trust to any 

level higher than the minimum identified by use of the formula. A final step requires that at 

five years before permanent shutdown, or within two years following a premature shutdown, 

licensees must certify funding to the five year SSCE. These requirements along with the 

requirements for reporting decommissioning funding to the NRC provide a robust program to 

assure that licensees will have adequate funds available for decommissioning. The regulations 

have been amended when needed to recognize changes in the industry and lessons learned. 

Historically this process has been successful as sufficient funding was available to complete 

decommissioning of nuclear power plants to NRC regulations, as necessary. 
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The NRC staff recognizes that future changes to the formula may be needed when 

decommissioning cost data for small modular reactors is available (Reference SECY-11-0181, 

“Decommissioning Funding Assurance for Small Modular Nuclear Reactors”). The Table of 

Minimum Amounts may need to be adjusted to reflect the special nature of small modular 

reactors through rulemaking. The staff will continue to evaluate future industry changes and 

take actions to propose revisions to the decommissioning funding regulations, as necessary. 

COORDINATION: 

The Office of the General Counsel has reviewed this paper and has no legal objection. The 

Office of the Chief Financial Officer has reviewed this paper for resource implications and has 

no objection. The Office of Federal and State Materials and Environmental Management 

Programs, the Office of Nuclear Material Safety and Safeguards, and the Office of New 

Reactors have reviewed this paper and have no objections. 

 /RA/ (Jennifer L. Uhle for) 

 Eric J. Leeds, Director 

 Office of Nuclear Reactor Regulation 
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The NRC staff recognizes that future changes to the formula may be needed when 

decommissioning cost data for small modular reactors is available (Reference SECY-11-0181, 

“Decommissioning Funding Assurance for Small Modular Nuclear Reactors”). The Table of 

Minimum Amounts may need to be adjusted to reflect the special nature of small modular 

reactors through rulemaking. The staff will continue to evaluate future industry changes and 

take actions to propose revisions to the decommissioning funding regulations, as necessary. 

COORDINATION: 

The Office of the General Counsel has reviewed this paper and has no legal objection. The 

Office of the Chief Financial Officer has reviewed this paper for resource implications and has 

no objection. The Office of Federal and State Materials and Environmental Management 

Programs, the Office of Nuclear Material Safety and Safeguards, and the Office of New 

Reactors have reviewed this paper and have no objections. 

/RA/ (Jennifer L. Uhle for)

 Eric J. Leeds, Director 

 Office of Nuclear Reactor Regulation 

200600262 

ADAMS Accession No.: ML13127A234 SECY Paper *via email

OFFICE NRR/DIRS/IFIB Tech Editor* NRR/DIRS/IFIB:BC NRR/DIRS:D NRR/DIRS 

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DATE 05/29/2013 05/29/2013 05/28/2013 06/04/2013 06/13/2013 06/20/13 

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