Jul 26, 2014

NRC: Exelon 'Deliberately' Misreported Plant Closure Funds

Oyster Creek owner says plant acted 'in good faith'

NRC: Exelon 'Deliberately' Misreported Plant Closure Funds

The Nuclear Regulatory Commission has accused Exelon Corporation, the owner and operator of Oyster Creek Generating Station, of misreporting the status of funds utilized to prepare nuclear power plants for shut down.

The investigation, initiated on Sept. 10, 2010, found that a senior Exelon executive and an Exelon manager appeared to have “deliberately” provided incomplete and inaccurate information in decommissioning funding status reports. The decommissioning fund is used to return a site back to pre-facility conditions once the power plant is shut down.

“Our regulations require that the funds continue to grow at a rate to ensure there will eventually be sufficient monies to cover the costs of the radiological decommissioning of each site,” NRC spokesman Neil Sheehan said.

Exelon disputes the findings and said there was no intent to mislead investigators.

Plant owners must update the NRC on the status of the fund every two years, or every year if a plant is within five years of being permanently shutdown, Sheehan said. The next update from Exelon is due to the NRC in March.

The NRC’s Office of Investigation identified apparent violations of the federal agency’s requirements that are being considered for “escalated enforcement action” in accordance with the NRC Enforcement Policy, said Ho K. Nieh, Division of Inspection and Regional Support for the NRC’s Office of Nuclear Reactor Regulation, in a letter to Exelon.

It was found that Exelon failed to provide complete and accurate information to the NRC in the 2005, 2006, 2007 and 2009 decommissioning funding status reports, Nieh said. There were multiple instances in which the amount reported was a value less than the minimum required by the Code of Federal Regulations.

“Exelon submitted estimates that were not calculated in accordance with regulations, yet represented and certified that the estimates were calculated in accordance with regulations,” Nieh said in the letter.

The NRC requires licensees to report estimates of decommissioning costs that are greater but not less than estimates calculated in accordance with that code.

“The under reporting of decommissioning funding cost estimates for 2009 was of particular concern to the NRC staff because the total amount of shortfalls was significant and impacted several reactors in the Exelon fleet,” the inspection report says.

Exelon 'Disputes the Findings'

An Exelon spokesman said the company acted "in good faith" when reporting to the NRC.

Decommissioning funding for Oyster Creek remains stable, Exelon spokesman David Tillman said.

“Exelon Generation cooperated fully during the investigation and remains fully capable of meeting its decommissioning funding responsibilities,”

The calculations used to determine the funds are “complex and highly technical,” Tillman said, calling the NRC’s findings allegations.

Exelon believes the mention of a “senior Exelon executive” in the NRC’s report is an error, he said.

“Exelon Generation acted in good faith when providing decommissioning funding data to the NRC, reporting timely and accurate information based on our understanding of the regulations,” Tillman said.

Each year Exelon submitted the reports, the NRC reviewed the information and never made additional requests, he said.

“Exelon Generation disputes the findings and we look forward to meeting with the NRC to discuss this matter in detail,” he said. “We are not aware of any evidence supporting a conclusion that Exelon employees performed or condoned deliberate misconduct or intentionally violated regulatory requirements.”

Funds 'Currently at the Appropriate Level'

Sheehan explained the plant owners have the option of using the NRC’s formula or a site-specific estimate to calculate the minimum amount of money that should be contained in the decommissioning fund. But if a site-specific formula is used, which was the case with Exelon, the amount calculated may not be less than the NRC minimum requirement.

“The investigation found that the Exelon employees involved were able to avoid detection by the NRC by increasing their discounted values over time,” Sheehan said.

“The NRC does not have any current concerns regarding decommissioning funding assurance for any of the Exelon nuclear power plants,” he said. “However, the agency is continuing to look at escalated enforcement for what we believe to be earlier inaccurate and incomplete reporting of decommissioning fund totals for the facilities.”

Before the NRC makes an enforcement decision, Exelon will be participating in a pre-decision enforcement conference that will be transcribed and closed to the public. The conference will be held within the next 30 days.

“The conference will afford Exelon the opportunity to provide its perspective on the apparent violation and any other information that Exelon believes the NRC should take into consideration before making an enforcement decision,” Nieh said in the letter.

In the inspection report, the NRC noted that in 2009 a senior Exelon Executive stated that consequences of not meeting the minimum funding amount require a deposit in the amount necessary to make up for the shortfall, a parent company guarantee backed by six times the face amount in net tangible assets or another funding mechanism such as a letter of credit.

“All of the funds are currently at the appropriate level for each plant. These concerns deal with earlier reporting on decommissioning trust fund totals,” Sheehan said. “The NRC takes very seriously the need for companies to provide fully accurate and truthful information in all areas, including the amount of funding set aside for the eventual decommissioning of each site.”

Twenty-three of Exelon's plants, including Oyster Creek, had an aggregate shortfall of roughly $1 billion, Sheehan said.

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