S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION DIRECT TESTIMONY THOMAS S. LAGUARDIA ON BEHALF OF CONSUMERS ENERGY COMPANY

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1 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the Matter of the Application of ) CONSUMERS ENERGY COMPANY ) for Adjustment of its Surcharges for ) Case No. U-1415 Nuclear Power Plant Decommissioning ) for the Palisades Nuclear Plant ) ) DIRECT TESTIMONY OF THOMAS S. LAGUARDIA ON BEHALF OF CONSUMERS ENERGY COMPANY June, 24

2 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. Please state your name and business address. A. Thomas S. LaGuardia, 148 New Milford Road East, Bridgewater, CT 6752 Q. By whom are you employed and in what capacity? A. I am the President of TLG Services, Inc. (TLG), an engineering and field services company. On September 19, 2, Entergy Nuclear, Inc. acquired the stock of TLG Services with TLG thereby becoming a wholly owned, indirect subsidiary of Entergy Corporation. As such, I am also the Vice President of Decommissioning Services for Entergy Nuclear. Q. What are your responsibilities with TLG? A. I am responsible for the technical and business management of the engineering consulting services offered by TLG in the areas of decontamination, decommissioning, waste management and general engineering for nuclear and fossil-fueled generating stations. Q. Would you please state your educational background? A. I completed my Bachelor of Science degree in Mechanical Engineering at Polytechnic Institute of Brooklyn in 1962 and my Master of Science degree in Mechanical Engineering at the University of Connecticut in I am a registered Professional Engineer in Connecticut (No. 1393), New Jersey (No ), New York (No ) and Virginia (No ). I am Board Certified as a Certified Cost Engineer (No. 1679) by the Association for the Advancement of Cost Engineering, International (AACE). I am a member of the National Society of Professional Engineers, American Society of Cost Engineers, the American Nuclear Society, and the American Society of Mechanical Engineers. I founded TLG Engineering in April 1982 and TLG Services in I was employed by Nuclear Energy Services in Danbury, Connecticut, from 1973 until I te64-tsl 1

3 THOMAS S. LAGUARDIA DIRECT TESTIMONY founded TLG Engineering. Prior employment was with Gulf Nuclear Fuels Corporation (formerly United Nuclear Corporation [UNC]) and Combustion Engineering. Q. Have you previously testified before the Michigan Public Service Commission ( Commission )? A. Yes. I have testified in Case Nos. U in 1998, U-18 in 1995, and U-9668 in 199 on the subject of nuclear plant decommissioning and specifically on the costs associated with the decontamination and dismantling of the Big Rock Point and Palisades nuclear units. Q. What is the purpose of your testimony in this proceeding? A. I am presenting the results of the decommissioning cost analysis prepared for Consumers Energy Company ( the Company ) by TLG for the Palisades Nuclear Plant. My testimony discusses the results of the analysis, the decommissioning process and its feasibility. Q. Are you sponsoring any exhibits? A. Yes. I am sponsoring Exhibit A- (TSL-1), "Decommissioning Cost Study for the Palisades Nuclear Plant," TLG Document No. N , dated March 24. Q. Was this exhibit prepared by you or under your supervision? A. Yes. Q. What decommissioning experience do you have? A. My decommissioning experience began as site representative for UNC during the Boiling Nuclear Superheater Power Station (BONUS) reactor decommissioning in 1969 and 197. BONUS was a 17 megawatt-electric (MWe) demonstration power reactor located in Puerto Rico, and was the largest reactor decommissioned by entombment up to that te64-tsl 2

4 THOMAS S. LAGUARDIA DIRECT TESTIMONY time. The program involved extensive chemical decontamination of radioactive systems, selective piping and component removal, and entombment of the reactor vessel within a massive concrete barrier. The entombment has a design life of 125 years. My role as site representative was to act as a technical liaison and provide project engineering and schedule management assistance during system decontamination, component removal, vessel entombment and facility closeout. Following the BONUS program, I was assigned to the Elk River Reactor decommissioning project ( ). Elk River was a 2 MWe demonstration power reactor located in Minnesota that was decommissioned by complete dismantling. The program involved segmentation of the reactor vessel and internals using remotely operated cutting torches, as well as the packaging, shipping and controlled burial of the segments. Similarly, radioactive piping and components were removed, packaged, shipped and buried. Radioactive concrete was removed by controlled blasting. Nonradioactive concrete was demolished by wrecking ball. Initially, my role for UNC was consulting engineer and later lead engineer for UNC technical support for on site activities. I was Project Engineer for the detailed engineering and planning of the Shippingport Station Decommissioning Project from Shippingport was a 72 MWe light water breeder reactor located in Shippingport, Pennsylvania. In 1986, TLG, with its joint venture partner, Cleveland Wrecking Company (Cleveland), were contracted by the U.S. Department of Energy (DOE) to dismantle all of the piping and components at the plant and remove any contaminated concrete. My role for TLG/Cleveland was Project Director, and I selected and managed an on site project te64-tsl 3

5 THOMAS S. LAGUARDIA DIRECT TESTIMONY management team to hire and supervise work crews to accomplish the dismantling. Our work was completed and performed on schedule and within budget. I also assisted Atomic Energy of Canada, Ltd. in with the detailed engineering and planning for the decommissioning of the 238 MWe Gentilly Unit 1 reactor. My role was to provide overall decommissioning consulting services and detailed cost estimation of alternatives. TLG worked with the Northern States Power Company between in the preparation of the decommissioning plan for the Pathfinder Atomic Power Plant. Pathfinder, located in Sioux Falls, S.D., was a 6 MWe reactor initially placed in a safe storage condition (SAFSTOR) after an abbreviated operating life. TLG prepared detailed cost, schedule, and vessel activation estimates, analyzed the reactor vessel for use as its own shipping container, and prepared the decommissioning plan in support of plant decommissioning. TLG continues to assist the Sacramento Municipal Utility District with the decommissioning planning for the Rancho Seco Nuclear Generating Station. This work, ongoing since 1989, has included cost/benefit analyses, preparation of decommissioning alternative cost and schedule estimates, and assistance with the preparation of the decommissioning plan(s). From 199 to 1991, TLG assisted the Long Island Lighting Company in the decommissioning of the Shoreham Nuclear Power Station. This work included the preparation of a detailed reactor vessel activation analysis, cost estimates, schedules, management organization, waste volume estimates, and preparation of a draft decommissioning plan. te64-tsl 4

6 THOMAS S. LAGUARDIA DIRECT TESTIMONY In 199, TLG was selected by Cintichem, Inc. (a subsidiary of Hoffman- LaRoche) as Decommissioning Co-Manager of a 1 megawatt (MWt) thermal production reactor and associated hot cells and facilities located in Tuxedo, New York. TLG's staff prepared a reactor core activation analysis, and a cost and schedule estimate for the project. TLG assisted in the preparation of the decommissioning plan, which received Nuclear Regulatory Commission (NRC) approval in TLG's field management staff assisted in the on-site project management and supervision of the work crews in decommissioning and dismantling the facility. The program is complete with the license(s) terminated. My role in the project was Senior Decontamination and Decommissioning Expert on the Nuclear Safeguards Committee. TLG has also been involved in the engineering and planning activities associated with the decommissioning of the Yankee Rowe, Trojan, Maine Yankee, San Onofre-1, Humboldt Bay-3, Oyster Creek, and Big Rock Point nuclear units. This work includes activation analyses, preparation of decommissioning alternative cost and schedule estimates, and assistance with the preparation of the decommissioning plans. In addition, TLG was selected to prepare the steam generators and the pressurizer at Trojan, owned by Portland General Electric (PGE) for transport to the burial facility at Richland, WA. TLG was responsible for certifying package integrity, overseeing the grouting of the components and preparing any supporting transportation analyses. The project was successfully completed in October TLG also supported PGE in the detailed planning required for completing the decontamination and dismantling of the nuclear unit, including the intact removal and disposal of the reactor vessel and the highly radioactive internal components. te64-tsl 5

7 THOMAS S. LAGUARDIA DIRECT TESTIMONY TLG recently completed the removal of concrete from the Saxton reactor building and is currently overseeing radiological remediation efforts at ABB Combustion Engineering s site in Windsor, Connecticut. Q. Have you prepared or co-authored any studies or reports on decommissioning cost estimating and technology? A. Yes. While at Nuclear Energy Services, I was principal investigator for the Atomic Industrial Forum/National Environmental Studies Project (AIF/NESP) decommissioning study entitled "An Engineering Evaluation of Nuclear Power Reactor Decommissioning 9 Alternatives" (AIF/NESP-9). This study evaluated the costs, schedule and environmental impacts of decommissioning 11 MWe reactors (Pressurized Water Reactors [PWRs], Boiling Water Reactors [BWRs], and High Temperature Gas Reactors [HTGRs]). I also co-authored the "Decommissioning Handbook" for the DOE. The Handbook reported then-current decommissioning technology (as of 198); including decontamination, piping and component removal, vessel segmentation, concrete demolition, cost estimating and environmental impacts. At TLG in 1986, I co-authored "Guidelines for Producing Commercial Nuclear Power Plant Decommissioning Cost Estimates" (AIF/NESP-36) for the Atomic Industrial Forum, National Environmental Studies Project. The Guidelines identify the elements of costs to be included in the estimation of decommissioning activities for each of the principal decommissioning alternatives. Specific guidance in cost estimating methodology and reference cost data is also provided in this document. The major te64-tsl 6

8 THOMAS S. LAGUARDIA DIRECT TESTIMONY objective of this project was to provide a basis for a consistent cost estimating methodology. TLG Engineering also prepared a study in 1986 entitled "Identification and Evaluation of Facilitation Techniques for Decommissioning Light Water Power Reactors" (NUREG/CR-3587) for the NRC. The study evaluated the costs and benefits of techniques to reduce occupational exposure and waste volume from decommissioning. In addition, TLG prepared the Decommissioning Plan (DP) and Environmental Report (ER) for Dresden Unit 1 in 1985 and the ER for Indian Point Unit 1 in I have personally supervised TLG's staff in the preparation of site-specific decommissioning studies for 9% of the nuclear units in the United States (including Palisades and Big Rock Point), all of the Canadian commercial reactors, and units in Japan, Italy and South Africa. In 23, I was invited by the International Atomic Energy Agency (IAEA) to participate on the Technical Expert Group on Decommissioning (TEGDE). The purpose of this group is to prepare decommissioning guidance for developing nations. I am currently chairing the Subgroup on the Financial Aspects on Decommissioning, which is addressing the costs and financing of nuclear facility decommissioning. Q. Has the NRC approved site-specific cost estimates utilizing the TLG cost estimating methodology? A. Yes. The NRC has reviewed TLG's cost estimating methodology. In 199, the NRC approved the decommissioning plan proposed by TLG for the Pathfinder Atomic Power Station. Funding provisions were based upon a site-specific estimate developed by TLG. TLG was also selected by the Long Island Lighting Company, and later by the Long te64-tsl 7

9 THOMAS S. LAGUARDIA DIRECT TESTIMONY Island Power Authority, and the Sacramento Municipal Utility District to develop sitespecific cost estimates for inclusion in the decommissioning plans for the Shoreham Nuclear Station and the Rancho Seco Nuclear Generating Station, respectively. TLG also worked with Yankee Atomic Electric Company, Portland General Electric, Consumers Energy, Maine Yankee, Pacific Gas & Electric and Southern California Edison to develop the costs for decommissioning the Yankee Rowe, Trojan, Big Rock Point, Maine Yankee, Humboldt Bay and San Onofre nuclear units, respectively. These utilities have relied upon TLG cost studies because of TLG's experience and reputation in nuclear plant decommissioning, as well as the NRC s familiarity with the format and content of its estimates. These documents (plans) received NRC approval. Q. Please identify Exhibit A- (TSL-1). A. Exhibit A- (TSL-1), entitled "Decommissioning Cost Study for the Palisades Nuclear Plant," presents the results of a detailed decommissioning analysis for the Palisades Nuclear Plant (Palisades). The document provides line item cost expenditures and a schedule of performance for the decontamination and dismantling of the nuclear unit. The analysis relies upon the latest estimating tools and reflects advances in decommissioning cost methodology, scheduling and technical planning since the previous analysis was prepared. Q. What was the purpose of the decommissioning cost analysis? A. The primary objective in preparing the analysis was to accurately estimate the current cost to decommission the Palisades nuclear unit. This allows the Company to verify the adequacy of current funding levels so that contributions required to accumulate sufficient funds for decommissioning can be determined. te64-tsl 8

10 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. Please identify the decommissioning cost developed from your analysis for Palisades. A. The cost to decommission the Palisades nuclear unit, assuming a deferred dismantling scenario, is estimated to be approximately $868. million excluding incremental spent nuclear fuel (SNF) costs. Costs are included to place the unit into safe storage once operations cease, maintain the unit over the dormancy period, and ultimately, to decommission the facility and restore the site. The estimate is developed in 23 dollars and does not include future inflation or consider the cost of money over the time period involved. The cost to decommission the Palisades nuclear unit, including a preliminary estimate of incremental SNF costs, is estimated to be approximately $96.3 million in 23 dollars. Q. What is the basis for the current decommissioning analysis? A. The analysis relies upon site-specific, technical information, originally developed in an evaluation prepared in and later revised in 2-1. This information was updated to reflect current assumptions pertaining to the disposition of the nuclear unit and relevant industry experience in undertaking such projects. Q. What methodology was used to prepare the cost estimate? A. The methodology used to develop the cost estimate follows the basic approach presented in the AIF/NESP-36 study report, "Guidelines for Producing Commercial Nuclear Power Plant Decommissioning Cost Estimates," and the DOE's "Decommissioning Handbook." The estimating techniques have been augmented, when appropriate, to reflect experience gained in decommissioning at several of the large commercial units over the past 15 years. te64-tsl 9

11 THOMAS S. LAGUARDIA DIRECT TESTIMONY The two references describe a unit cost factor method for estimating decommissioning activity costs to standardize the estimating calculations. Unit cost factors for activities such as concrete removal ($/cubic yard), steel removal ($/ton), and cutting costs ($/inch) were developed from the labor information provided by the Company. Material information was taken in large part from R.S. Means, "Building Construction Cost Data 23." This publication is generally accepted as a source for this type of information. The activity dependent costs for decontamination, removal, packaging, shipping and burial were estimated using the item quantities (cubic yards, tons, inches, etc.) developed from plant drawings and inventory documents. The activity duration critical path, derived from such key activities such as the disposition of the Nuclear Steam Supply System (NSSS) and the relocation of the spent fuel, was used to determine the total decommissioning program schedule. The program schedule is used to determine the period dependent costs such as program management, administration, field engineering, equipment rental, quality assurance and security. The Company provided representative labor costs, which I reviewed and consider within the norm. The costs for conventional demolition of non radioactive structures, materials, backfill, and landscaping and equipment rental were obtained from standard industry sources such as R.S. Means. In addition, collateral costs were included for miscellaneous equipment and supplies, energy costs, permits, taxes, and insurance. The activity-dependent, period-dependent, and collateral costs were added to develop the total decommissioning costs. Consistent with cost estimating practice contingency was added. te64-tsl 1

12 THOMAS S. LAGUARDIA DIRECT TESTIMONY One of the primary objectives of every decommissioning program is to protect public health and safety in accordance with federal, state, and local statutes, rules, regulations, and permits. The cost estimate for Palisades includes costs for the necessary planning, engineering and implementation to provide this protection to the public. Q. What was the cost used in the analysis for low-level radioactive waste disposal? A. In any decommissioning study it is necessary to determine what low level radioactive waste disposal cost is appropriate. The cost of disposal for low level radioactive waste is affected by a number of factors, including the availability of disposal facilities and the curie content of the radioactive material. For purposes of developing an estimate for decommissioning the Palisades facility, the rate schedule for the Barnwell Low-Level Radioactive Waste Disposal Facility (Barnwell) was used as a proxy for the higher level waste. Barnwell s rates are based upon a base charge of $5.1 per pound with additional surcharges added for activity, dose rate, and/or special handling. Representative fees for disposal at the Envirocare facility in Clive, Utah were used for lower level material. The remaining volume of contaminated material was assumed to be processed off-site, i.e., for volume reduction, decontamination and/or release. Q. How did you determine the base cost for waste disposal? A. The base cost and surcharges for disposal of low level radioactive waste at the Barnwell facility are based upon published schedules. Comparable schedules are not available for the Envirocare facility; however, based on my background, knowledge and experience, I concluded that the rates used were representative and reasonable as an estimating basis for this study. te64-tsl 11

13 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. What is the purpose for the contingency included in the Palisades estimate? A. The purpose of the contingency is to allow for the costs within defined project scope that are highly probable to occur in the field but where the timing, duration, and severity cannot be accurately predicted and, thus, have not been included in the basic estimate. The Association for the Advancement of Cost Engineering (AACE) (in their Cost Engineers Notebook) defines contingency as follows: Contingency - specific provision for unforeseeable elements of cost within the defined project scope; particularly important where previous experience relating estimates and actual costs has shown that unforeseeable events which will increase costs are likely to occur. Past decommissioning experience has shown that unforeseeable elements of cost are likely to occur in the field and may have a cumulative impact. In the AIF/NESP-36 Guidelines Study (Chapter 13), referred to earlier, TLG examined the major activityrelated problems (decontamination, segmentation, equipment handling, packaging, shipping and burial) with respect to reasons for contingency. Individual activity contingencies ranged from 1% to 75%, of the related base cost depending on the degree of estimating difficulty judged to be appropriate from our actual decommissioning experience. The overall contingency, when applied to the appropriate components of the Palisades estimate, results in an average of approximately 2%. This is a reasonable contingency level given the nature of the estimate and should be included in the total cost estimate for planning purposes. te64-tsl 12

14 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. Does the estimated cost for decommissioning which you are presenting reflect future developments and increases or decreases in costs? A. The cost estimate prepared for Palisades is based upon present technology, the latest information available on decommissioning costs and on current federal regulations. There are, however, risks associated with decommissioning, such as regulatory changes. No provision is made to include future changes in cost, for example, due to improvements in technology, major regulatory changes, etc. Contingency dollars are expected to be fully expended throughout the program. Contingency, as used in the estimates, is restricted to cover uncertainties within the decommissioning process. Contingency, as used in this estimate, is not intended to cover price escalation and inflation in the cost over the duration of the decommissioning. It is important to note that contingency factors do not compensate for all of the risks that could increase decommissioning costs. Instead, contingency factors reflect only one type of risk -- the specific risks of increased costs resulting from conditions at the project site after the commencement of the decommissioning work. Contingency factors thus do not reflect other factors that could possibly increase costs, such as escalation rates for low-level radioactive waste disposal and other costs and factors not related to specific project conditions. Q. Is it fair to view contingency as a safety factor or cushion against future price increases? Please explain your answer. A. No. There is a general misconception about the use and role of contingency within decommissioning estimates, sometimes incorrectly viewed as a safety factor. Safety factors provide additional security and address situations that may never occur. In te64-tsl 13

15 THOMAS S. LAGUARDIA DIRECT TESTIMONY contrast, contingency dollars are expected to be fully expended throughout the program. They also provide assurance that sufficient funding is available to accomplish the intended tasks. An estimate without contingency, or from which contingency has been removed, can disrupt the orderly progression of the work and jeopardize a successful conclusion to the decommissioning process. Q. What was the estimated cost for Palisades decommissioning in the 2-21 analysis? A. The cost to decommission and dismantle the Palisades, in 2 dollars, was estimated at $739.7 million excluding incremental SNF costs and $83.2 million including incremental SNF costs, for the SAFSTOR decommissioning alternative. Q. What are the major reasons for the overall change since the previous study? A. In addition to reflecting the general effects of inflation and cost escalation over the three years, the analysis benefited from an expanded experience base gained both from field work in actual decommissioning programs and from plant-related decommissioning activities, such as plant outages, retrofits and change-out programs. The analysis uses the most current information available regarding the cost of decommissioning. Changes in the cost model resulted in some increases as well as decreases in individual cost elements. However, in general, the overall change in the total cost requirement was minimal and comparable to the effects due to inflation over the same time period. te64-tsl 14

16 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. Does the estimated cost of decommissioning include an allowance for disposal of highlevel radioactive waste? A. No. It is important to note that, although decommissioning of a site cannot be complete without the removal of all spent fuel and source material, the disposition of high-level waste is not included in the estimated costs. In accordance with the Nuclear Waste Policy Act of 1982 (Public Law ), the DOE is required by law to enter into contracts with owners and/or generators of spent fuel, pursuant to which the DOE is contractually responsible for final disposition of spent fuel as high-level nuclear waste. To cover the cost of spent fuel disposition, the DOE assesses the facility operator 1 mill/kwh based on net electrical generation. Therefore, the cost of disposal of spent fuel is accounted for separately and is specifically excluded from the decommissioning cost estimates. The radioactive wastes generated during the decommissioning process are generally categorized as Class A, B or C wastes in accordance with 1 CFR 61 and are considered low-level radioactive wastes. The wastes will be transported to a federal or state licensed commercial low-level waste facility for ultimate disposal in a near-surface burial facility, as required by the appropriate regulations in effect at the time of decommissioning. Waste exceeding Class C limits (commonly referred to as Greaterthan-Class C waste or GTCC) is also considered low level waste, but is not suitable for near-surface burial. If no commercial burial facility will accept this waste, it will be disposed of at a federal repository. te64-tsl 15

17 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. Does the presence of spent fuel on-site, following plant shutdown, affect the decommissioning process? A. Yes. Although the study does not address the removal or disposal of spent fuel from the Palisades site, it does consider the constraint that the presence of spent fuel on the site can impose on other decommissioning activities. The decommissioning analysis assumes that the residual inventory of spent fuel located in the storage pool at shutdown will be transferred to an on-site independent storage facility so that decommissioning operations may proceed and so that safe-storage costs are minimized. Q. Why did you include the cost for spent fuel management as a decommissioning expense? A. The NRC requires licensees to establish a program to manage and provide funding for the management of all irradiated fuel at the reactor until title of the fuel is transferred to the Secretary of Energy in 1 CFR 5.54 (bb). Decommissioning of the plant after it ceases operations necessarily includes the disposition of spent nuclear fuel until that title transfer. Q. Does the process of decommissioning extend beyond the removal of contaminated and activated material from the site? A. Yes. There are additional activities beyond the removal of contaminated material that will be undertaken in the process of releasing the site for alternative use. This work includes costs for dismantling site structures and site grading activities. Q. Why is it necessary to dismantle the structures at the site? A. Radiological decommissioning involves the removal of large components and substantial amounts of piping throughout the station site. The removal of this equipment causes te64-tsl 16

18 THOMAS S. LAGUARDIA DIRECT TESTIMONY substantial damage to the structures that will remain after radiological decommissioning is completed. The substantial damage caused by the removal of radiological components will essentially render the remaining structures unusable. At a minimum, the remaining structures will be damaged to such a large degree that any modifications to the structures to permit their continued use would not be cost effective. Given the substantial damage to station structures, and the advanced age of those structures at the time of decommissioning (at least 5 years old), it would not be cost-effective to use the facilities as a fossil or even a new nuclear generating facility at some later time. Moreover, changes in technology that have occurred and that will continue to occur over the years will eliminate any benefits that could be gained from using the equipment at the station sites, such as turbine equipment, that will remain in place at the end of the radiological decommissioning process. It is important to remember also that the Palisades structures were custom designed and built to support a specific nuclear unit that went into service during the early 197 s. They would most likely be an impediment rather than a benefit to any potential future plant, if one were ever to be constructed at the site. Moreover, the facilities infrastructures degrade without continual maintenance. Site restoration is the most appropriate and cost-effective option and should serve as the foundation for the decommissioning cost estimate. It is unreasonable to anticipate that these structures would be repaired and preserved after the radiological contamination is removed. te64-tsl 17

19 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. Are there any federal regulations applicable to decommissioning? A. Yes. The NRC has regulations dealing with the issue of decommissioning. These regulations are identified in Title 1 of the US Code of Federal Regulations (CFR) Parts 2, 3, 4, 5, 51, 7, and 72. The NRC provided specific decommissioning guidance in the Final Rule entitled "General Requirements for Decommissioning Nuclear Facilities" in the Federal Register of June 27, 1988 (53 Fed. Reg. 2418). Enacted to establish technical and financial criteria for decommissioning licensed facilities, the regulation addressed decommissioning planning needs, timing, funding methods, and environmental review requirements with the intent to assure that decommissioning of all licensed facilities would be accomplished in a safe and timely manner and that adequate licensee funds would be available for this purpose. Subsequent to the rule, the NRC issued Regulatory Guide 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors, which provided guidance to the licensees of nuclear facilities on methods acceptable to the NRC staff for complying with the requirements of the rule. The regulatory guide addressed the funding requirements and provided guidance on the content and form of the financial assurance mechanisms indicated in the rule amendments. In 1996, the NRC published revisions to the general requirements for decommissioning nuclear power plants. The amended regulations clarify ambiguities and codify procedures and terminology as a means of enhancing efficiency and uniformity in the decommissioning process. The amendments allow for greater public participation and better define the transition process from operations to decommissioning. The te64-tsl 18

20 THOMAS S. LAGUARDIA DIRECT TESTIMONY decommissioning cost analysis prepared for Palisades fully satisfies the requirements set forth in these regulations. Q. Describe the decommissioning alternatives delineated in the NRC rule. A. The supplemental information to the NRC Rule (53 Fed. Reg ) describes three decommissioning alternatives as acceptable: DECON (prompt removal/dismantling), SAFSTOR (mothballing) and, under special circumstances, ENTOMB (entombment). They are defined as follows: DECON is the alternative in which the contaminated equipment, structures, and site environs are removed and/or decontaminated to a level that permits termination of the license and allows the property to be released for unrestricted use shortly after cessation of operations; SAFSTOR is the alternative in which the nuclear facility is placed and maintained in a condition that allows the nuclear facility to be safely stored and subsequently decontaminated (deferred decommissioning) to levels that permit termination of the license and release for unrestricted use. ENTOMB is the alternative in which radioactive contaminants are encased in a structurally long-lived material, such as concrete; the entombed structure is appropriately maintained and continued surveillance is carried out until the radioactivity decays to a level permitting termination of the license and release of the property. It should be noted that the NRC provides that delayed decommissioning following initial mothballing or entombment activities should not exceed 6 years, unless it can be shown necessary to protect public health and safety (1 CFR 5.82 (a)(3)). This rule has limited the use of the ENTOMB alternative, although the NRC is currently in the process of re-evaluating its viability. The rule also requires utilities to perform a periodic review of the funding plan over the life of the facility. TLG's site specific cost estimate is formulated within the framework of the NRC's rule. te64-tsl 19

21 THOMAS S. LAGUARDIA DIRECT TESTIMONY Q. What is your recommendation for Palisades? A. The SAFSTOR alternative remains a reasonable basis to use for planning purposes for Palisades decommissioning funding. However, the actual method or combination of methods selected to decommission Palisades should be based on a detailed economic, engineering and environmental evaluation of alternatives at the time the decision is made to cease operations. Q. Would you describe the process of decommissioning a nuclear power reactor? A. Yes. The conceptual approach that the NRC has identified in their amended regulations is to divide decommissioning into three phases. The initial phase commences with the effective date of permanent cessation of operations and involves the transition of both plant and licensee from reactor operations, i.e., power production to facility de-activation and closure. During Phase I, notification is to be provided to the NRC certifying the permanent cessation of operations and the removal of fuel from the reactor vessel. The licensee would then be prohibited from reactor operation. Within two years of notification to cease reactor operations, the licensee is required to provide a Post-Shutdown Decommissioning Activities Report (PSDAR). This report would provide a description of the licensee s planned decommissioning activities, a corresponding schedule and an estimate of expected costs. The PSDAR would also address whether environmental impacts associated with the proposed decommissioning scenario have already been considered in a previously prepared environmental statement(s). Ninety days following the NRC s receipt of the PSDAR, the licensee can initiate certain decommissioning activities without specific NRC approval, under a modified 5.59 review process. The 5.82 rule would permit the licensee to expend/recover up to 3% of the generic decommissioning cost for planning, with an te64-tsl 2

22 THOMAS S. LAGUARDIA DIRECT TESTIMONY additional 2% available following the 9-day waiting period and certification of permanent defueling. Remaining funds would be available to the licensee with submittal of a detailed, site-specific cost estimate. The second phase identified by the NRC rule addresses licensed activities during a storage period, applicable to the dormancy phases of the deferred decommissioning alternatives, SAFSTOR and ENTOMB. Phase III pertains to the activities involved in license termination. The submittal of an application to terminate the license, along with a termination plan, marks the commencement of this phase. The termination plan would contain a detailed site characterization, i.e., location, type and amount of radioactivity, a description of any remaining dismantling activities to be accomplished, detailed plans for a final survey and the planned end use of the site. An updated cost to complete the decommissioning process would be required along with the reporting of any new or altered environmental consequences. TLG s cost estimate is divided into periods based upon major milestones. The cost for the SAFSTOR alternative for Palisades is presented in six periods, 1 through 6. Period 1 - SAFSTOR Preparation - This period begins upon shutdown of the facility, and involves site preparations to place the facility into safe-storage. The reactor is defueled with the fuel placed in the spent fuel storage pool until it is cooled sufficiently to be transferred to an alternative storage facility. Wastes remaining from plant operations are removed from the site and all systems nonessential to continued maintenance of the plant are isolated and drained. Activities include selective decontamination of contaminated systems to reduce radiation levels. While effective, the te64-tsl 21

23 THOMAS S. LAGUARDIA DIRECT TESTIMONY on-site decontamination processes are not expected to reduce residual radioactivity to the levels necessary to release the material as clean scrap. Therefore, all contaminated components will eventually have to be removed for controlled burial. However, decontamination will reduce personnel exposure during any subsequent maintenance activities. Period 2 - SAFSTOR Dormancy - This period begins upon the completion of the preparation period. During the first eight years of safe-storage the plant s spent fuel storage systems will be active as the spent fuel cools sufficiently to be relocated to a passive storage facility (the existing ISFSI). Following the transfer period, the facility is maintained so as not to create any additional radiological or industrial hazards and/or increase the future cost of decommissioning while protecting public health and safety. Period 3 - Deferred Decommissioning Preparations - This period begins with the reactivation of the facility and involves site preparations to initiate decommissioning. Activities include a detailed characterization of the plant, remediation of hazardous materials, and the engineering and planning necessary to support the planned decontamination and dismantling activities. Period 4 - Deferred Decommissioning Operations and License Termination - This phase addresses the removal of the radioactivity from the site. Activities include the removal of contaminated piping to and from major components. Selected major components such as the reactor coolant pumps and steam generator will be removed intact and transferred to a waste recovery vendor for processing and disposal. Smaller components, such as process system pumps, filters, filter housings, strainers, etc., will be loaded into containers for transport and/or disposal. te64-tsl 22

24 THOMAS S. LAGUARDIA DIRECT TESTIMONY The reactor vessel internals will be segmented and remotely loaded into steel liners for transport to the burial facility in heavily shielded shipping casks. The internal components will still have sufficiently high radiation levels to require all cutting to be done underwater or behind heavy shields, using cutting torches operated by remote control to reduce radiation exposure to the workers. The Palisades reactor vessel is assumed to be segmented for disposal. Concrete immediately surrounding the reactor vessel is expected to be radioactive and will be removed by controlled blasting. The surfaces of sections of interior floors within areas of the reactor building and other buildings in the power block are expected to be contaminated from exposure to contaminated air/water as a result of plant operations. Residual contaminated process equipment, pipe hangers, supports and electrical components will be removed and routed for off-site processing or controlled disposal. Finally, an extensive radiation survey will be performed to ensure all radioactivity above the levels specified by the NRC has been removed from the site. This period includes the review of the results of the license termination survey by the NRC and subsequent release of the site from the terms of the NRC s Part 5 operating license. The owner is then able to proceed with site restoration activities without constraint. Period 5 - Site Restoration - Site restoration at Palisades includes the dismantling of all non-essential structures, site services, and ancillary facilities. Upon the conclusion of this period, the site (with the exception of the spent fuel storage area), would be made available for alternative use. te64-tsl 23

25 THOMAS S. LAGUARDIA DIRECT TESTIMONY Period 6 - ISFSI Operations and Demolition - This period begins with the conclusion of the site restoration activities and continues until such time that the transfer of spent fuel from the site to a DOE facility is completed. Activities include the operation and maintenance of the ISFSI, transfer of the spent fuel to an off-site facility and the disposition of the ISFSI. Disposition activities include any decontamination of the facility required to terminate the Part 72 license and dismantling of the remaining structure such that the land is made available for alternative use without restriction. Q. Is it technically feasible to decommission a nuclear reactor? A. Yes. There is extensive experience in the United States and in other countries for the complete dismantling of nuclear plants. This experience includes the chemical decontamination, component removal, packaging, shipping and burial, and building demolition. This directly related experience shows that the Palisades nuclear unit can be completely dismantled. The feasibility of decommissioning in the U.S. is well documented in the successful dismantling of Shippingport Atomic Power Station, Elk River Reactor, Walter Reed Army Research Reactor, Ames Laboratory Reactor, Sodium Reactor Experiment Facilities, and the Cintichem Research Reactor. The 819 MWe Shoreham Nuclear Plant and the 33 MWe Fort St. Vrain high-temperature, gas-cooled reactor were successfully decommissioned and their operating licenses terminated. There are current decommissioning activities at a number of facilities. Q. In your opinion is the estimate in the Palisades analysis reasonable based on what is currently known and the state of technology? A. Yes. te64-tsl 24

26 THOMAS S. LAGUARDIA DIRECT TESTIMONY 1 2 Q. Does this conclude your testimony? A. Yes, it does. te64-tsl 25

27 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the Matter of the Application of ) CONSUMERS ENERGY COMPANY ) for Adjustment of its Surcharges for ) Case No. U-1415 Nuclear Power Plant Decommissioning ) for the Palisades Nuclear Plant ) ) EXHIBIT OF THOMAS S. LAGUARDIA ON BEHALF OF CONSUMERS ENERGY COMPANY June, 24

28 Case No.: U-1415 Exhibit: A- (TSL-1) Witness: TSLaGuardia Date: June 24 Decommissioning Cost Study for the Palisades Nuclear Plant

29 Document N , Rev. F DECOMMISSIONING COST STUDY for the PALISADES NUCLEAR PLANT prepared for Consumers Energy prepared by TLG Services, Inc. Bridgewater, Connecticut March 24

30 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Page ii of xiii APPROVALS Presided Quality Assurance Manager Project Manager Date 3, /?.o 4 Date Project Engineer Technical Manager TLG Services, Znc.

31 Palisades Nuclear Plant Decommissioning Cost Study Document N Rev. Page iii of xiii TABLE OF CONTENTS SECTION PAGE EXECUTIVE SUMMARY... vi-xiii INTRODUCTION Objectives of Study Site Description Regulatory Guidance Nuclear Waste Policy Act Low-Level Radioactive Waste Acts Radiological Criteria for License Termination SAFSTOR DECOMMISSIONING ALTERNATIVE Period 1 - Preparations for Safe-Storage Engineering and Planning Site Preparations Period 2 - Dormancy Period 3 - Preparations for Decommissioning Period 4 - Decommissioning Operations Period 6. Site Restoration ISFSI Operations and Decommissioning COST ESTIMATE... i Basis of Estimate Methodology Financial Components ofthe Cost Model Contingency Financial Risk Site-Specific Considerations Spent Fuel Management Reactor Vessel and Internal Components Primary System Components Main Turbine and Condenser Transportation Methods Low-Level Radioactive Waste Disposal Site Conditions Following Decommissioning Assumptions Estimating Basis Labor Costs TLG Services. Inc.

32 Palisades Nuclear Plant Decommissioning Cost Study Document N Rev. Page iv of xiii TABLE OF CONTENTS (continued) SECTION PAGE Design Conditions General Cost Estimate Summary SCHEDULE ESTIMATE Schedule Estimate Assumptions Project Schedule RADIOACTIVE WASTES RESULTS REFERENCES TABLES Cost and Schedule Estimate Summary... xll Summary of Decommissioning Cost Elements... xu Schedule of Annual Expenditures, Total Decommissioning Cost Schedule of Annual Expenditures, License Termination Schedule of Annual Expenditures, Spent Fuel Management Schedule of Annual Expenditures, Site Restoration Schedule of Annual Expenditures, Preliminary Incremental SNF Cost Decommissioning Waste Summary Summary of Decommissioning Cost Elements FIGURES 4.1 Activity Schedule Decommissioning Timeline A. B. C. TLG Services. lnc. APPENDICES Unit Cost Factor Development... A-1 Unit Cost Factor Listing... B-1 Detailed Cost Analysis... C-1

33 Palisades NucLeur Plant Decommissioning Cost Study Document N , Reu. Page u of xiii REVISION LOG 1- CRA No. Date Item Revised Reason for Revision TLG Seruices, Znc.

34 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Page vi of xiii EXECUTIVE SUMMARY This report presents an estimate of the cost to decommission the Palisades Nuclear Plant (Palisades) for the selected decommissioning scenario following the scheduled cessation of plant operations. The projected cost to decommission the nuclear unit for the deferred dismantling alternative (SAFSTOR), in year 23 dollars, is estimated at approximately $96.3 million, including contingency. The analysis relies upon site-specific, technical information, originally developed in an evaluation prepared in ,[11 revised in 2-1,[21 and updated to reflect current assumptions pertaining to the disposition of the nuclear unit and relevant industry experience in undertaking such projects. The updated estimate is designed to provide Consumers Energy with sufficient information to assess their financial obligations, as they pertain to the eventual decommissioning of the nuclear unit. The primary goal of the decommissioning is the removal and disposal of the contaminated systems and structures so that the plant s operating license can be terminated. The analysis recognizes that spent fuel will be stored at the site in the plant s storage pool andor in an independent spent fuel storage installation (ISFSI) until such time that it can be transferred to a U.S. Department of Energy (DOE) facility. Consequently, the estimate also includes those costs to manage and subsequently decommission these storage facilities. The estimate is based on numerous fundamental assumptions, including regulatory requirements, project contingencies, low-level radioactive waste disposal practices, high-level radioactive waste management options, and site restoration requirements. The estimate incorporates a minimum cooling period of approximately eight years for the spent fuel that resides in the storage pool when operations cease. The estimate also includes the dismantling of non-essential structures and limited restoration of the site. Alternatives and Remlations The Nuclear Regulatory Commission (NRC or Commission) provided initial decommissioning requirements in its rule adopted on June 27, 1988.[s] In this rule, the NRC set forth financial criteria for decommissioning licensed nuclear power 1 2 s Decommissioning Cost Study for the Palisades Nuclear Plant, Document No. CO , TLG Services, Inc., March Decommissioning Cost Study for the Palisades Nuclear Plant, Document No. CO , TLG Services, Inc., March 21. U.S. Code of Federal Regulations, Title 1, Parts 3,4,5,61,7 and 72 General Requirements for Decommissioning Nuclear Facilities, Nuclear Regulatory Commission, Federal Register Volume 53, Number 123 (p 2418 et seq.), June 27,1988. TLG Services, Inc.

35 ~~~~ ~ Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Page vii of xiii facilities. The regulations addressed planning needs, timing, funding methods, and environmental review requirements for decommissioning. The rule also defined three decommissioning alternatives as being acceptable to the NRC: DECON, SAFSTOR, and ENTOMB. The NRC also recognizes that some combination of the first two alternatives would be acceptable in some cases. DECON is defined as "the alternative in which the equipment, structures, and portions of a facility and site containing radioactive contaminants are removed or decontaminated to a level that permits the property to be released for unrestricted use shortly after cessation of operations."[4] SAFSTOR is defined as "the alternative in which the nuclear facility is placed and maintained in a condition that allows the nuclear facility to be safely stored and subsequently decontaminated (deferred decontamination) to levels that permit release for unrestricted use."[61 Decommissioning is to be completed within 6 years, although longer time periods will be considered when necessary to protect public health and safety. ENTOMB is defined as "the alternative in which radioactive contaminants are encased in a structurally long-lived material, such as concrete; the entombed structure is appropriately maintained and continued surveillance is carried out until the radioactive material decays to a level permitting unrestricted release of the property."[6] As with the SAFSTOR alternative, decommissioning is currently required to be completed within 6 years. The 6-year restriction has limited the practicality of the ENTOMB alternative at commercial reactors that generate significant amounts of long-lived radioactive material. In 1997, the Commission directed its staff to re-evaluate this alternative and identlfy the technical requirements and regulatory actions that would be necessary for entombment to become a viable option. The resulting evaluation provided several recommendations, however, rulemaking has been deferred pending the completion of additional research studies, e.g., on engineered barriers. In 1996, the NRC published revisions to the general requirements for decommissioning nuclear power plants to clarify ambiguities and codify procedures and terminology as a means of enhancing efficiency and uniformity in the 4 6 Ibid. 8 Ibid. Page FR2422, Column 3. Ibid. Page FR2423, Column 2. TLG Services. Inc.

36 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Page viii of xiii decommissioning process.[71 The amendments allow for greater public participation and better define the transition process hom operations to decommissioning. Regulatory Guide 1.184, issued in July 2, further described the methods and procedures acceptable to the NRC staff for implementing the requirements of the 1996 revised rule relating to the initial activities and major phases of the decommissioning process. The costs and schedule presented in this analysis follow the general guidance and processes described in the amended regulations. Methodolow The methodology used to develop the estimate described within this document follows the basic approach originally presented in the cost estimating guidelines[8l developed by the Atomic Industrial Forum (now Nuclear Energy Institute). This reference describes a unit factor method for determining decommissioning activity costs. The unit factors used in this analysis incorporate site-specific costs and the latest available information on worker productivity in decommissioning. An activity duration critical path is used to determine the total decommissioning program schedule. The schedule is relied upon in calculating the carrying costs, which include program management, administration, field engineering, equipment rental, and support services such as quality control and security. This systematic approach for assembling decommissioning estimates ensures a high degree of confidence in the reliability of the resulting cost estimate. Contingency Consistent with cost estimating practice, contingencies are applied to the decontamination and dismantling costs developed as specific provision for unforeseeable elements of cost within the defined project scope, particularly important where previous experience relating estimates and actual costs has shown that unforeseeable events which will increase costs are likely to occur. [91 The cost elements in the estimates are based on ideal conditions; therefore, the types of unforeseeable events that are almost certain to occur in decommissioning, based on industry experience, are addressed through a percentage contingency applied on a line-item basis. This contingency factor is a nearly universal element in all large-scale construction and demolition projects. It should be noted that contingency, as used in 7 U.S. Code of Federal Regulations, Title 1, Parts 2,5, and 51, Decommissioning of Nuclear Power Reactors, Nuclear Regulatory Commission, Federal Register Volume 61, (p et seq.), July 29, T.S. LaGuardia et al., Guidelines for Producing Commercial Nuclear Power Plant Decommissioning Cost Estimates, AIF/NESP-36, May Project and Cost Engineers Handbook, Second Edition, American Association of Cost Engineers, Marcel Dekker, Inc., New York, New York, p TLG Services, Inc.

37 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Page ix of xiii this analysis, does not account for price escalation and inflation in the cost of decommissioning over the remaining operating life of the station. The use and role of contingency within decommissioning estimates is not a safety factor issue. Safety factors provide additional security and address situations that may never occur. Contingency funds, by contrast, are expected to be fully expended throughout the program. Inclusion of contingency is necessary to provide assurance that sufficient funding will be available to accomplish the intended tasks, Low-Level Radioactive Waste Disposal The contaminated and activated material generated in the decontamination and dismantling of a commercial nuclear reactor is classified as low-level (radioactive) waste, although not all of the material is suitable for shallow-land disposal. With the passage of the Low-Level Radioactive Waste Policy Act in 198,[11 and its Amendments of 1985,[111 the states became ultimately responsible for the disposition of low-level radioactive waste generated within their own borders. Palisades is currently able to access the disposal facility in Barnwell, South Carolina. However, in June 2, South Carolina formally joined with Connecticut and New Jersey to form the Atlantic Compact. The legislation allows South Carolina to gradually limit access to the Barnwell facility, with only Atlantic Compact members having access to the facility after mid-year 28. It is reasonable to assume that additional disposal capacity will be available to support reactor decommissioning, particularly for the isolation of the more highly radioactive material that is not suitable for disposal elsewhere. However, for estimating purposes, and as a proxy for future disposal facilities, waste disposal costs are generated using available pricing schedules for the currently operating facilities, i.e., at Barnwell and the Envirocare facility in Utah. High-Level Radioactive Waste Management Congress passed the Nuclear Waste Policy Act [12J (NWPA) in 1982, assigning the responsibility for disposal of the spent nuclear fuel created by the commercial nuclear generating plants to the DOE. Two permanent disposal facilities were envisioned, as well as an interim storage facility. To recover the cost, the legislation created a Nuclear Waste Fund through which money is collected fiom the sale of electricity generated by the power plants. The NWPA, along with the individual disposal Low-Level Radioactive Waste Policy Act, Public Law , 198. Low-Level Radioactive Waste Policy Amendments Act of 1985, Public Law 99-24, Nuclear Waste Policy Act of 1982 and Amendments, U.S. Department of Energy s Office of Civilian Radioactive Management, TLG Services, Inc.

38 Palisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Rev. Page x of xiii contracts with the utilities, specified that the DOE was to begin accepting spent fuel by January 31,1998. Since the original legislation, the DOE has announced several delays in the program schedule. By January 1998, the DOE had failed to initiate the disposal of spent nuclear fuel and high level waste, as required by the NWPA and the utility contracts. As a result, utilities have initiated legal action against the DOE. While legal actions continue, the DOE has no plans to receive spent fuel prior to completing the construction of its geologic repository. Despite unfavorable rulings in the courts, the DOE has continued to link initial acceptance of commercial spent fuel to the schedule for a geologic repository, which it currently projects to begin operating in 21 at the earliest. However, the DOE has failed to communicate to utilities a revised schedule for acceptance of spent fuel. Thus, spent fuel logistics supporting this cost update are based on available information and projections related to the DOES initial performance, acceptance rates and use of spent fuel acceptance allocations assigned to Consumers Energy. These projections indicate that fuel from Palisades will not begin to be accepted by the DOE until 213. The NRC requires that licensees establish a program to manage and provide funding for the caretaking of all irradiated fuel at the reactor site until title of the fuel is transferred to the DOEPl Interim storage of the fuel, until the DOE has completed the transfer, will be in the storage pool and/or an ISFSI located on the Palisades site. The ISFSI, which is independently licensed and operated, wiu accommodate the inventory of spent fuel residing in the plant s storage pool at the conclusion of the required cooling period. Once emptied, the auxiliary building can be prepared for long-term storage. The DOES generator allocatiodreceipt schedules are based upon the oldest fuel receiving the highest priority. Given this scenario and an anticipated rate of transfer, spent fuel is projected to remain at the site for approximately 37 years after the cessation of operations. Consequently, costs are included within the estimate for the long-term caretaking of the spent fuel at the Palisades site until the year 248. Site Fkstoration The efficient removal of the contaminated materials at the site may result in damage to many of the site structures. Blasting, coring, drilling, and the other decontamination activities will substantially damage power block structures, 13 Domestic Licensing of Production and Utilization Facilities, US. Code of Federal Regulations, Title 1, Part TLG Services, Inc.

39 Palisades Nuclear Plant Decommissioning Cost Study Document N3-Z44-4, Rev. Page xi of xiii potentially weakening the footings and structural supports. Prompt demolition once the license is terminated is clearly the most appropriate and cost-effective option. It is unreasonable to anticipate that these structures would be repaired and preserved after the radiological contamination is removed. The cost to dismantle site structures with a work force already mobilized is more efficient and less costly than if the process were deferred. Experience at shutdown generating stations has shown that plant facilities quickly degrade without maintenance, adding additional expense and creating potential hazards to the public and the demolition work force. Consequently, this analysis assumes that non-essential site structures within the restricted access area are removed to a nominal depth of three feet below the local grade level wherever possible. The site is then backfilled, graded and stabilized. Financial Risk It has been TLGs experience that the results of a risk analysis, when compared with the base case estimate for decommissioning, indicate that the chances of the base decommissioning estimate's being too high is a low probability, and the chances that the estimate is too low is a higher probability. This is mostly due to the pricing uncertainty for low-level radioactive waste burial, and to a lesser extent due to schedule increases from changes in plant conditions and to pricing variations in the cost of labor (both craft and staff). TLG did not perform a risk analysis for this study and therefore the estimates in this report do not include any additional costs to address the perceived financial risk. Summary The cost to decommission Palisades is evaluated for the SAFSTOR decommissioning alternative. The estimate assumes the eventual removal of all the contaminated and activated plant components and structural materials, such that the facility operator may then have unrestricted use of the site with no further requirement for an operating license. Delayed decommissioning is accomplished within the 6-year period required by current NRC regulations. In the interim, the spent fuel remains in storage at the site until such time that the transfer to a DOE facility can be completed. Once the transfer is complete, the storage facilities are also decommissioned. The scenario analyzed for the purpose of generating the estimate is described in Section 2. The assumptions are presented in Section 3, along with schedules of annual expenditures. The major cost contributors are identified in Section 6, with detailed activity costs, waste volumes, and associated manpower requirements delineated in Appendix C. A cost summary is provided at the end of this section for the major cost components. TLG Seruices, Znc.

40 Palisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Rev. Page xii of xiii COST AND SCHEDULE ESTIMATE SUMMARY Costs 23$ (thousands) Schedule (months) SAFSTOR Preparations (includes pre-shutdown costs) 15, year Dormancy Maintenance 229,73 Decommissioning Preparations 11,217 Delayed Decommissioning 312,938 Site Restoration 78,794 Post Decommissioning ISFSI Operations 115,413 ISFSI Decontamination and Decommissioning 8, Total , Dl Columns may not add due to rounding TLG Services, Inc.

41 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Page xiii of xiii SUMMARY OF DECOMMISSIONING COST ELEMENTS (Thousands of 23 Dollars) Activity Total Decontamination Removal Packaging Shipping Low-Level Radioactive Waste Disposal Staffing Taxes Engineering Energy Waste Recycling Insurance ISFSI Expenditures Spent Fuel Pool Isolation NRC and EP Fees Site Characterization License Termination Survey Miscellaneous Support Equipment & Supplies Separation Program Fixed Indirect Overhead Site Security Spent Fuel Pool O&M 1,65 99,525 12,377 4,424 61,281 28,39 65,11 16,569 11,857 64,48 21, ,931 9,67 12,273 1,77 5,54 23,167 9,141 36,848 1,284 9,177 Total 96,325 NRC License Termination Spent Fuel Management Site Restoration 584,64 297,948 78,313 L11 Columns may not add due to rounding TLG Seruices, Znc.

42 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 1, Page 1 of 7 1. INTRODUCTION This report presents an estimate of the cost to decommission the Palisades Nuclear Plant (Palisades) for the scenario described in Section 2, following a scheduled cessation of plant operations. The analysis is designed to provide Consumers Energy with sufficient information to assess its financial obligations, as they pertain to the eventual decommissioning of the nuclear unit. It is not a detailed engineering document, but a financial analysis prepared in advance of the detailed engineering that will be required to carry out the decommissioning. 1.1 OBJECTIVES OF STUDY The objectives of this study are to prepare a comprehensive estimate of the cost to decommission Palisades, to provide a sequence or schedule for the associated activities, and to develop waste stream projections from the decontamination and dismantling activities. For the purposes of this study, the shutdown date was taken as March SITE DESCRIPTION Palisades is a single unit, pressurized water reactor located on the eastern shore of Lake Michigan, in Covert Township, approximately four and one-half miles south of South Haven, Michigan. The plant is owned by Consumers Energy. In late 2, Consumers Energy signed an agreement to transfer responsibility for operation of the Palisades Plant to Nuclear Management Company (NMC). The nuclear steam supply system (NSSS) consists of a pressurized water reactor and a two-loop reactor coolant system. Combustion Engineering was the supplier. The generating unit has a licensed thermal power rating of 253 Megawatts thermal (MWt), with a corresponding electrical rating of 73 net Megawatts electric (MWe) with the reactor at rated power. The balance of plant was designed and constructed by Bechtel Power Corporation as architectengineer and constructor. The reactor coolant system is comprised of the reactor vessel, a vertical cylinder with a removable hemispherical dome, and two heat transfer loops, each containing a vertical shell and U-tube steam generator, and two vertical, single-suction, centrifugal reactor coolant pumps. In addition, the system includes an electrically heated pressurizer, pressurizer relief tank, and interconnected piping. The system is housed within the reactor building, a TLG Services, Znc.

43 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 1, Page 2 of 7 prestressed, post-tensioned, concrete cylinder with a hemispherical dome connected to a conventionally reinforced concrete slab. A steel liner is anchored to the interior of the building forming a leaktight boundary. The building housing the NSSS is designed to provide biological shielding as well as missile protection for the steel containment shell. Heat produced in the reactor is converted to electrical energy by the steam and power conversion system. A turbine-generator system converts the thermal energy of steam produced in the generators into mechanical shaft power and then into electrical energy. The turbine-generator consists of a tandem (single shaft) arrangement of a double-flow high-pressure turbine, and two identical, double-flow, low-pressure turbine sections driving a direct-coupled generator. The turbine is operated in a closed feedwater cycle that condenses the steam, and the heated feedwater is returned to the steam generators. Heat rejected in the main condenser is removed by the circulating water system. This system is the heat sink for Palisades. Rejected heat from the main and the feedwater pump turbine condensers is dissipated to the ambient surroundings in a closed cycle system using two multi-cell, straight, mechanical draft cooling towers. 1.3 REGULATORY GUIDANCE I The Nuclear Regulatory Commission (NRC or Commission) provided initial decommissioning requirements in its rule General Requirements for Decommissioning Nuclear Facilities, issued in June 1988.[11 This rule set forth financial criteria for decommissioning licensed nuclear power facilities. The regulation addressed decommissioning planning needs, timing, funding methods, and environmental review requirements. The intent of the rule was to ensure that decommissioning would be accomplished in a safe and timely manner and that adequate funds would be available for this purpose. Subsequent to the rule, the NRC issued Regulatory Guide 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors, [2] which provided additional guidance to the licensees of nuclear facilities on the financial methods acceptable to the NRC staff for complying with the requirements of the rule. The regulatory guide addressed the funding requirements and provided guidance on the content and form of the financial assurance mechanisms indicated in the rule. The rule defined three decommissioning alternatives as being acceptable to the NRC: DECON, SAFSTOR, and ENTOMB. The DECON alternative, the option evaluated for this analysis, assumes that any contaminated or *Annotated references for citations in Sections 1-6 are provided in Section 7. TLG Services, Inc.

44 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 1, Page 3 of 7 activated portion of the plant s systems, structures, and facilities are removed or decontaminated to levels that permit the site to be released for unrestricted use shortly after the cessation of plant operations. The rule also placed limits on the time allowed to complete the decommissioning process. For SAFSTOR, the process is restricted in overall duration to 6 years, unless it can be shown that a longer duration is necessary to protect public health and safety. The guidelines for ENTOMB are similar, providing the NRC with both sufficient leverage and flexibility to ensure that these deferred options are only used in situations where it is reasonable and consistent with the definition of decommissioning. At the conclusion of a 6- year dormancy period (or longer for ENTOMB if the NRC approves such a case), the site would still require significant remediation to meet the unrestricted release limits for license termination. The ENTOMB alternative has not been viewed as a viable option for power reactors due to the significant time required to isolate the long-lived radionuclides for decay to permissible levels. However, with recent rulemaking permitting the controlled release of a site, the NRC has reevaluated this alternative.[s] The resulting feasibility study, based upon an assessment by Pacific Northwest National Laboratory, concluded that the method did have conditional merit for some, if not most, reactors. However, the staff also found that additional rulemaking would be needed before this option could be treated as a generic alternative. The NRC had considered rulemaking to alter the 6-year time for completing decommissioning and to clarify the use of engineered barriers for reactor entombments.[41 However, the staff has recently recommended that rulemaking be deferred, based upon several factors, e.g., no licensee has committed to pursuing the entombment option, the unresolved issues associated with the disposition of greater-than- Class C material (GTCC), and the NRC s current priorities, at least until after the additional research studies are complete. The Commission has concurred with the staffs recommendation. The NRC published revisions to the general requirements for decommissioning nuclear power plants in When the regulations were adopted in 1988, it was assumed that the majority of licensees would decommission at the end of the facility s operating licensed life. Since that time, several licensees permanently and prematurely ceased operations. Exemptions from certain operating requirements were required once the reactor was defueled to facilitate the decommissioning. Each case was handled individually, without clearly defined generic requirements. The NRC amended the decommissioning regulations in 1996 to clarify ambiguities and codify procedures and terminology as a means of enhancing efficiency and TLG Services, Inc.

45 Pdisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 1, Page 4 of 7 uniformity in the decommissioning process. The new amendments allow for greater public participation and better define the transition process from operations to decommissioning. Under the revised regulations, licensees will submit written certification to the NRC within 3 days after the decision to cease operations. Certification will also be required once the fuel is permanently removed from the reactor vessel. Submittal of these notices will entitle the licensee to a fee reduction and eliminate the obligation to follow certain requirements needed only during operation of the reactor. Within two years of submitting notice of permanent cessation of operations, the licensee is required to submit a Post- Shutdown Decommissioning Activities Report (PSDAR) to the NRC. The PSDAR describes the planned decommissioning activities, the associated sequence and schedule, and an estimate of expected costs. Prior to completing decommissioning, the licensee is required to submit an application to the NRC to terminate the license, which will include a License Termination Plan (LTP) Nuclear Waste Policv Act Congress passed the Nuclear Waste Policy ActLC] (NWPA) in 1982, assigning the responsibility for disposal of the spent nuclear fuel created by the commercial nuclear generating plants to the U.S. Department of Energy (DOE). Two permanent disposal facilities and an interim storage facility were envisioned. To recover the cost, the legislation created a Nuclear Waste Fund through which money is collected from the sale of electricity generated by the power plants. The NWPA, along with the individual disposal contracts with the utilities, specified that the DOE was to begin accepting spent fuel by January 31, After pursuing a national site selection process, the NWPA was amended in 1987 to designate Yucca Mountain, Nevada, as the only site to be evaluated for geologic disposal of high-level waste. Also in 1987, the DOE announced a five-year delay (1998 to 23) in the opening date for the repository. Two years later, in 1989, an additional seven-year delay was announced, primarily due to problems in obtaining the permits necessary from the state of Nevada to perform the required characterization of the site. Generators have responded to this impasse by initiating legal action and constructing supplemental storage as a means of maintaining TLG Services, Znc.

46 Palisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Rev. Section 1, Page 6 of 7 necessary operating margins. In an August 2 ruling,[v the US. Court of Appeals for the Federal Circuit reaffirmed the utility position that DOE had breached its contractual obligation. Legal actions with the DOE continue; however, the DOEs position has remained unchanged. The agency continues to maintain that its delayed performance is unavoidable because it does not have an operational repository and does not have authority to provide storage in the interim. Consequently the DOE has no plans to receive spent fuel from the commercial reactors until the repository is operational. The NRC requires that licensees establish a program to manage and provide funding for the management of all irradiated fuel at the reactor until title of the fuel is transferred to the Secretary of Energy, pursuant to Title 1 of the Code of Federal Regulations (1 CFR), s5.54 (bb).[*] This funding requirement is fulfilled through inclusion of certain high-level waste cost elements in the decommissioning estimate, as identified in Section 3. A supplemental spent fuel storage facility currently exists on the Palisades site that can accommodate the residual inventory in wet storage. Once the pool is emptied, the Auxiliary Building can be prepared for long-term storage. For estimating purposes, the DOE is assumed to initiate operations of its geologic repository in 21 and the pickup of Palisade s spent fuel beginning in the year 213. The DOEs generator allocatiodreceipt schedules are based upon the oldest fuel receiving the highest priority. Given this scenario and an anticipated rate of transfer, spent fuel is projected to remain at the site for approximately 37 years after the cessation of operations. Consequently, costs are included within the analysis for the continued operation of the storage pool and the expansion of the ISFSI, as required, and for the long-term caretaking of the spent fuel at the site until the year 248. [This evaluation is prepared without prejudice to the rights of Consumers Energy to pursue legal and contractual remedies from the DOE in light of recent court decisions.] TLG Seruices, Inc.

47 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 1, Page 6 of Low-Level Radioactive Waste Acts The contaminated and activated material generated in the decontamination and dismantling of a commercial nuclear reactor is classified as low-level (radioactive) waste, although not all of the material is suitable for shallow-land disposal. Congress passed the Low-Level Radioactive Waste Policy Act in 198,[91 declaring the states as being ultimately responsible for the disposition of low-level radioactive waste generated within their own borders. The federal law encouraged the formation of regional groups or compacts to implement this objective safely, efficiently, and economically, and set a target date of 1986 for implementation. After little progress, the Low-Level Radioactive Waste Policy Amendments Act of 1985, [ Jl extended the implementation schedule, with specific milestones and stiff sanctions for non-compliance. However, to date, no new compact facilities have been successfully sited, licensed, and constructed. Palisades is currently able to access the disposal facility in Barnwell, South Carolina. However, in June 2, South Carolina formally joined with Connecticut and New Jersey to form the Atlantic Compact. The legislation allows South Carolina to gradually limit access to the Barnwell facility, with only Atlantic Compact members having access to the facility after mid-year 28. It is reasonable to assume that additional disposal capacity will be available to support reactor decommissioning, particularly for the isolation of the more highly radioactive material that is not suitable for disposal elsewhere. However, for estimating purposes, and as a proxy for future disposal facilities, waste disposal costs are generated using available pricing schedules for the currently operating facilities, i.e., at Barnwell and the Envirocare facility in Utah RadioloPical Criteria for License Termination In 1997, the NRC published Subpart E, Radiological Criteria for License Termination, 11] amending 1 CFR 52. This subpart provides radiological criteria for releasing a facility for unrestricted use. The regulation states that the site can be released for unrestricted use if radioactivity levels are such that the average member of a critical group would not receive a Total Effective Dose Equivalent (TEDE) in excess of 25 millirem per year, and provided that residual radioactivity has been reduced to levels that are As Low As Reasonably Achievable (AL,AEk4). The decommissioning estimates for Palisades assume that TLG Services, Inc.

48 Pdisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Reu. Section 1, Page 7 of 7 the site will be remediated to a residual level consistent with the NRCprescribed level. It should be noted that the NRC and the Environmental Protection Agency (EPA) differ on the amount of residual radioactivity considered acceptable in site remediation. The EPA has two limits that apply to radioactive materials. An EPA limit of 15 millirem per year is derived from criteria established by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund)."21 An additional limit of 4 millirem per year, as defined in 4 CFR , is applied to drinking water."s] On October 9, 22, the NRC signed an agreement with the EPA on the radiological decommissioning and decontamination of NRClicensed sites. The Memorandum of 1141 provides that EPA will defer exercise of authority under CERCLA for the majority of facilities decommissioned under NRC authority. The MOU also includes provisions for NRC and EPA consultation for certain sites when, at the time of license termination, (1) groundwater contamination exceeds EPA-permitted levels; (2) NRC contemplates restricted release of the site; and/or (3) residual radioactive soil concentrations exceed levels defined in the MOU. The MOU does not impose any new requirements on NRC licensees and should reduce the involvement of the EPA with NRC licensees who are decommissioning. Most sites are expected to meet the NRC criteria for unrestricted use, and the NRC believes that only a few sites will have groundwater or soil contamination in excess of the levels specified in the MOU that trigger consultation with the EPA. However, if there are other hazardous materials on the site, the EPA may be involved in the cleanup. As such, the possibility of dual regulation remains for certain licensees. The present study does not include any costs for this occurrence. TLG Services, Ine.

49 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 2, Page 1 of SAFSTOR DECOMMISSIONING ALTERNATIVE The following sections describe the basic activities associated with the SAFSTOR decommissioning alternative. Although detailed procedures for each activity identified are not provided, and the actual sequence of work may vary, the activity descriptions provide a basis not only for estimating but also for the expected scope of work, i.e., engineering and planning at the time of decommissioning. The NRC defines SAFSTOR as "the alternative in which the nuclear facility is placed and maintained in a condition that allows the nuclear facility to be safely stored and subsequently decontaminated (deferred decontamination) to levels that permit release for unrestricted use." The facility is left intact (during the dormancy period), with structures maintained in a sound condition. Systems not required to operate in support of the spent fuel pool or site surveillance and security are drained, deenergized, and secured. Minimal cleaning/removal of loose contamination and/or fixation and sealing of remaining contamination is performed. Access to contaminated areas is secured to provide controlled access for inspection and maintenance. This study does not address the cost to dispose of the spent fuel residing at the site; such costs are funded through a surcharge on electrical generation. However, the study does estimate the costs incurred with the interim on-site storage of the fuel pending shipment by the DOE to an off-site disposal facility. The conceptual approach that the NRC has described in its regulations divides decommissioning into three phases. The initial phase commences with the effective. date of permanent cessation of operations and involves the transition of both plant and licensee from reactor operations (i.e., power production) to facility de-activation and closure. During the first phase, notification is to be provided to the NRC certifying the permanent cessation of operations and the removal of fuel from the reactor vessel. The licensee would then be prohibited from reactor operation. The second phase encompasses activities during the storage period or during major decommissioning activities, or a combination of the two. The third phase pertains to the activities involved in license termination. The decommissioning estimate developed for Palisades is also divided into phases or periods; however, demarcation of the phases is based upon major milestones within the project or significant changes in the projected expenditures. 2.1 PERIOD 1 - PREPARATIONS FOR SAFESTORAGE In anticipation of the cessation of plant operations, detailed preparations are undertaken to provide a smooth transition from plant operations to its intended safe-storage configuration. Through implementation of a staffing TLG Services, Inc.

50 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 2, Page 2 of 11 transition plan, the organization required to manage the intended preparation activities is assembled from available plant staff and outside resources. Preparations include the planning for permanent defueling of the reactor, revision of technical specifications applicable to the operating conditions and requirements, a characterization of the facility and major components, and the development of the PSDAR Engineerin9 and Planninp The PSDAR, required within two years of the notice to cease operations, provides a description of the licensee s planned decommissioning activities, a timetable, and the associated financial requirements of the intended decommissioning program. Upon receipt of the PSDAR, the NRC will make the document available to the public for comment in a local hearing to be held in the vicinity of the reactor site. Ninety days following submittal and NRC receipt of the PSDAR, the licensee may begin to perform major decommissioning activities under a modified 1 CFR $5.59 procedure, i.e., without spec& NRC approval. Major activities are defined as any activity that results in permanent removal of major radioactive components, permanently modifies the structure of the containment, or results in dismantling components (for shipment) containing GTCC, as defined by 1 CFR 561. Major components are further defined as comprising the reactor vessel and internals, large bore reactor recirculation system piping, and other large components that are radioactive. The NRC includes the following additional criteria for use of the process in decommissioning. The proposed activity must not: foreclose release of the site for possible unrestricted use, significantly increase decommissioning costs, cause any significant environmental impact, or violate the terms of the licensee s existing license. Existing operational technical specifications are reviewed and modified to reflect plant conditions and the safety concerns associated with permanent cessation of operations. The environmental impact associated with the planned decommissioning activities is also considered. Typically, a licensee will not be allowed to proceed if the consequences of a particular decommissioning activity are greater than that bounded by previously evaluated environmental assessments or impact statements. In this instance, the licensee would have to submit TLG Seruices, Inc.

51 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 2, Page 3 of 11 a license amendment for the specific activity and update the environmental report. The decommissioning program outlined in the PSDAR will be designed to accomplish the required tasks within the ALARA guidelines (as defined in 1 CFR $2) for protection of personnel from exposure to radiation hazards. It will also address the continued protection of the health and safety of the public and the environment during the safestorage period. Consequently, with the development of the PSDAR, activity specifications, cost-benefit and safety analyses, work packages and procedures, would be assembled to support the proposed decontamination and dismantling activities Site Preparations The process of placing the plant in safe-storage includes, but is not limited to, the following activities: a a Characterization of the site and surrounding environs. This includes radiation surveys of work areas, major components (including the reactor vessel and its internals), internal piping, and primary shield cores. The transfer of spent fuel from the storage pool to the ISFSI. Isolation of the spent fuel storage services and fuel handling systems so that safe-storage operations may commence on the bdance of the plant. This activity may be carried out by plant personnel in accordance with existing operating technical specifications. Activities are scheduled around the fuel handling systems to the greatest extent possible. a a a Draining and de-energizing of the non-contaminated systems not required to support continued site operations or maintenance. Disposing of contaminated filter elements and resin beds not required for processing wastes Erom layup activities for future operations. Decontamination of the reactor coolant system. TLG Services, Inc.

52 Pdi~ades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 2, Page 4 of 11 Draining of the reactor vessel, with the internals left in place and the vessel head secured. Draining and de-energizing non-essential, contaminated systems with decontamination as required for future maintenance and inspection. Preparing lighting and alarm systems whose continued use is required; de-energizing portions of fire protection, electric power, and WAC systems whose continued use is not required. Cleaning of the loose surface contamination from building access pathways. Performing an interim radiation survey of plant, posting warning signs where appropriate. Erecting physical barriers and/or securing all access to radioactive or contaminated areas, except as required for inspection and maintenance. Installing security and surveillance monitoring equipment and relocating security fence around secured structures, as required. 2.2 PERIOD 2 -DORMANCY The second phase identified by the NRC in its rule addresses licensed activities during a storage period and is applicable to the dormancy phases of the deferred decommissioning alternatives. Dormancy activities include a 24-hour security force, preventive and corrective maintenance on security systems, area lighting, general building maintenance, heating and ventilation of buildings, routine radiological inspections of contaminated structures, maintenance of structural integrity, and a site environmental and radiation monitoring program. RRsident maintenance personnel perform equipment maintenance, inspection activities, routine services to maintain safe conditions, adequate lighting, heating, and ventilation, and periodic preventive maintenance on essential site services. An environmental surveillance program is carried out during the dormancy period to ensure that releases of radioactive material to the environment are prevented and/or detected and controlled. Appropriate emergency procedures are established and initiated for potential releases that exceed prescribed Services, Inc.

53 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 2, Page 5 of 11 limits. The environmental surveillance program constitutes an abbreviated version of the program in effect during normal plant operations. Security during the dormancy period is conducted primarily to prevent unauthorized entry and to protect the public from the consequences of its own actions. The security fence, sensors, alarms, and other surveillance equipment provide security. Fire and radiation alarms are also monitored and maintained. While remote surveillance is an option, it does not offer the immediate response time of a physical presence. Spent fuel is transferred from the ISFSI to a DOE facility throughout this period. After an optional period of storage (such that license termination is accomplished within 6 years of final shutdown), it is required that the licensee submit an application to terminate the license, along with an LTP thereby initiating the third phase. 2.3 PERIOD 3 - PREPARATIONS FOR DECOMMISSIONING Prior to the commencement of decommissioning operations, preparations are undertaken to reactivate site services and prepare for decommissioning. Preparations include engineering and planning, a detailed site characterization, and the assembly of a decommissioning management organization. Final planning for activities and the writing of activity specfications and detailed procedures are also initiated at this time. Variations in the length of the dormancy period are expected to have little effect upon the quantities of radioactive wastes generated from system and structure removal operations. Given the levels of radioactivity and spectrum of radionuclides expected from thirty to forty years of plant operation, no plant process system identified as being contaminated upon final shutdown will become releasable due to the decay period alone, i.e., there is no significant reduction in the waste generated from the decommissioning activities. However, due to the lower activity levels, a greater percentage of the waste volume can be designated for off-site processing and recovery. The delay in decommissioning also yields lower working area radiation levels. As such, the estimates for the delayed scenarios incorporate reduced ALARA controls for the SAE'STOR's lower occupational exposure potential. Although the initial radiation levels due to 6OCo will decrease during the dormancy period, the internal components of the reactor vessel will still exhibit sufficiently high radiation dose rates to require remote sectioning under water TLG Services, Znc.

54 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 2, Page 6 of 11 due to the presence of long-lived radionuclides such as 9Wb, 59Ni, and G3Ni. Portions of the biological shield will still be radioactive due to the presence of activated trace elements with long half-lives (ISzEu and 154Eu). It is assumed that radioactive corrosion products on inner surfaces of piping and components will not have decayed to levels that will permit unrestricted use or allow conventional removal. These systems and components will be surveyed as they are removed and disposed of in accordance with the existing radioactive release criteria. As such, the controls used in the decontamination and dismantling of the nuclear unit will be similar to those employed in a more immediate decommissioning scenario. The LTP, submitted as a supplement to the FSAR or its equivalent, must include: a site characterization, description of the remaining dismantling activities, plans for site remediation, procedures for the final radiation survey, designation of the end use of the site, an updated cost estimate to complete the decommissioning, and any associated environmental concerns. The NRC will notice the receipt of the plan, make the plan available for public comment, and schedule a local hearing. LTP approval will be subject to any conditions and limitations as deemed appropriate by the Commission. The licensee may then commence with the final remediation of site facilities and services. Significant decommissioning activities in this phase include: Characterization of the site and surrounding environs. This includes radiation surveys of work areas, major components (including the reactor vessel and its internals), internal piping, and primary shield cores. Specification of transport and disposal requirements for activated materials and/or hazardous materials, including shielding and waste stabilization. Development of procedures for occupational exposure control, control and release of liquid and gaseous effluent, processing of radwaste (including dry-active waste, resins, filter media, metallic and non-metallic components generated in decommissioning), site security and emergency programs, and industrial safety. 2.4 PERIOD 4 - DECOMMISSIONING OPERATIONS This period includes the physical decommissioning activities associated with the removal and disposal of contaminated and activated components and structures, including the successful termination of the 1 CFR $5 operating license. Significant decommissioning activities in this phase include: TLG Services, Inc.

55 Palisades NucZear Plant Decommissioning Cost Study Document N , Rev. Section 2, Page 7 of 11 Construction of temporary facilities and/or modification of existing facilities to support dismantling activities. This may include a centralized processing area to facilitate equipment removal and component preparations for offsite disposal. Reconfiguration and modification of site structures and facilities as needed to support decommissioning operations. This may include the upgrading of roads (on- and off-site) to facilitate hauling and transport. Modifications may be required to the containment structure to facilitate access of largeheavy equipment. Modifications may also be required to the refueling area of the building to support the segmentation of the reactor vessel internals and component extraction. Design and fabrication of temporary and permanent shielding to support removal and transportation activities, construction of contamination control envelopes, and the procurement of specialty tooling. Procurement (lease or purchase) of shipping canisters, cask liners, and industrial packages. Decontamination of components and piping systems as required to control (minimize) worker exposure. Removal of piping and components no longer essential to support decommissioning operations. Removal of control rod drive housings and the head service structure from reactor vessel head. Segmentation of the vessel closure head. Removal and segmentation of the upper internals assemblies. Segmentation will maximize the loading of the shielded transport casks, i.e., by weight and activity. The operations are conducted under water using remotely operated tooling and contamination controls. Disassembly and segmentation of the remaining reactor internals, including the core former and lower core support assembly. Some material is expected to exceed Class C disposal requirements. As such, the segments will be packaged in modified fuel storage canisters for geologic disposal. Segmentation of the reactor vessel. A shielded platform is installed for segmentation as cutting operations are performed in-air using remotely operated equipment within a contamination control envelope. The water TLG Services, Inc.

56 Palisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Rev. Section 2, Page 8 of 1I level is maintained just below the cut to minimize the working area dose rates. Segments are transferred in-air to containers that are stored under water, for example, in an isolated area of the refueling canal. Removal of the activated portions of the concrete biological shield and accessible contaminated concrete surfaces. If dictated by the steam generator and pressurizer removal scenarios, those portions of the associated cubicles necessary for access and component extraction are removed. Removal of the steam generators and pressurizer for material recovery and controlled disposal. These components can serve as their own burial containers provided that all penetrations are properly sealed and the internal contaminants are stabilized, e.g., with grout. Steel shielding will be added, as necessary, to those external areas of the package to meet transportation limits and regulations. Removal of remaining plant systems and associated components as they become nonessential to the decommissioning program or worker health and safety (e.g., waste collection and treatment systems, electrical power and ventilation systems). Removal of the steel liners from refueling canal, disposing of the activated and contaminated sections as radioactive waste. Removal of any activatedl contaminated concrete. Surveys of the decontaminated areas of the containment structure. Remediation and removal of the contaminated equipment and material from the auxiliary, condensate demineralizer and radwaste storage buildings and any other contaminated facility. Radiation and contamination controls will be utilized until residual levels indicate that the structures and equipment can be released for unrestricted access and conventional demolition. This activity may necessitate the dismantling and disposition of most of the systems and components (both clean and contaminated) located within these buildings. This activity facilitates surface decontamination and subsequent verification surveys required prior to obtaining release for demolition. Routing of material removed in the decontamination and dismantling to a central processing area. Material certified to be free of contamination is released for unrestricted disposition, e.g., as scrap, recycle, or general TLG Services, Inc.

57 Palisades Nuclear Plant Decommissioning Cost Study Document N3-144O-4, Rev. Section 2, Page 9 of 11 disposal. Contaminated material is characterized and segregated for additional off-site processing (disassembly, chemical cleaning, volume reduction, and waste treatment), and/or packaged for controlled disposal at a low-level radioactive waste disposal facility. Incorporated into the LTP is the Final Survey Plan. This plan identifies the radiological surveys to be performed once the decontamination activities are completed and is developed using the guidance provided in the Multi-Agency Radiation Survey and Site Investigation Manual (MARSSIM). I151 This document incorporates the statistical approaches to survey design and data interpretation used by the EPA. It also identifies state-of-the-art, commercially available instrumentation and procedures for conducting radiological surveys. Use of this guidance ensures that the surveys are conducted in a manner that provides a high degree of confidence that applicable NRC criteria are satisfied. Once the survey is complete, the results are provided to the NRC in a format that can be verified. The NRC then reviews and evaluates the information, performs an independent confirmation of radiological site conditions, and makes a determination on final termination of the license. The NRC will terminate the operating license if it determines that site remediation has been performed in accordance with the LTP, and that the terminal radiation survey and associated documentation demonstrate that the facility is suitable for release. 2.6 PERIOD 6 - SITE RESTORATION Following completion of decommissioning operations, site restoration activities will begin. Efficient removal of the contaminated materials and verification that residual radionuclide concentrations are below the NRC limits will result in substantial damage to many of the structures. Although performed in a controlled, safe manner, blasting, coring, drilling, scarification (surface removal), and the other decontamination activities will substantially degrade power block structures including the reactor, auxiliary and turbine buildings. Under certain circumstances, verifying that subsurface radionuclide concentrations meet NRC site release requirements will require removal of grade slabs and lower floors, potentially weakening footings and structural supports. This removal activity will be necessary for those facilities and plant areas where historical records, when available, indicate the potential for radionuclides having been present in the soil, where system failures have been recorded, or where it is required to confirm that subsurface process and drain lines were not breached over the operating life of the station. TLG Services, Inc.

58 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 2, Page 1 of 11 Prompt dismantling of site structures is clearly the most appropriate and cost-effective option. It is unreasonable to anticipate that these structures would be repaired and preserved after the radiological contamination is removed. The cost to dismantle site structures with a work force already mobilized on site is more efficient than if the process were deferred. Site facilities quickly degrade without maintenance, adding additional expense and creating potential hazards to the public as well as to future workers. Abandonment creates a breeding ground for vermin infestation as well as other biological hazards. This cost study presumes that non-essential structures and site facilities are dismantled as a continuation of the decommissioning activity. Foundations and exterior walls are removed to a nominal depth of three feet below grade. The three-foot depth allows for the placement of gravel for drainage, as well as topsoil, so that vegetation can be established for erosion control. Site areas affected by the dismantling activities are restored and the plant area graded as required to prevent ponding and inhibit the refloating of subsurface materials. Concrete rubble produced by the demolition of the reactor building is sent to a waste processing facility for disposal. Rubble produced by the demolition of the remaining structures is processed to remove rebar and miscellaneous embedments. Processed material from the remaining structures is trucked to an off-site area for disposal as construction debris. 2.6 ISFSI OPERATIONS AND DECOMMISSIONING The ISFSI will continue to operate under a separate and independent license (1 CFR 72) following the termination of the $5 operating license. Assuming the DOE starts accepting fuel in 21, transfer of spent fuel from Palisades is anticipated to start in the year 213 and is assumed to continue with the final spent fuel shipment presumed to occur in the year 248. At the conclusion of the spent fuel transfer process, the ISFSI will be decommissioned. The Commission will terminate the $72 license if it determines that the remediation of the ISFSI has been performed in accordance with an ISFSI license termination plan and that the final radiation survey and associated documentation demonstrate that the facility is suitable for release. Once the requirements are satisfied, the NRC can terminate the license for the ISFSI. The assumed design for the ISFSI is based upon the use of a multi-purpose canister and a concrete overpack for pad storage. For purposes of this cost TLG Services, Inc.

59 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 2, Page 11 of 11 analysis, it is assumed that once the inner canisters containing the spent fuel assemblies have been removed, any required decontamination performed, and the license for the facility terminated, the modules can be dismantled using conventional techniques for the demolition of reinforced concrete. The concrete storage pad will then be removed, and the area graded and landscaped to conform to the surrounding environment. TLG Services, Znc.

60 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 3, Page 1 of COST ESTIMATE The cost estimate prepared for decommissioning Palisades considers the unique features of the site, including the NSSS, power generation systems, support services, site buildings, and ancillary facilities. The basis of the estimate, including the sources of information relied upon, the estimating methodology employed, site-specific considerations, and other pertinent assumptions, is described in this section. 3.1 BASIS OF ESTIMATE The estimate was developed with site-specific, technical information originally developed in an evaluation prepared in 1998[161 and revised in 2.[171 The information was reviewed for the current analysis and updated as deemed appropriate. The site-specific considerations and assumptions used in the previous evaluation were also revisited. Modifications were incorporated where new information was available or experience from ongoing decommissioning programs provided viable alternatives or improved processes. 3.2 METHODOLOGY The methodology used to develop the estimates follows the basic approach originally presented in the AIFINESP-36 study report, Guidelines for Producing Commercial Nuclear Power Plant Decommissioning Cost Estimates, [181 and the DOE Decommissioning Handbook. [19] These documents present a unit factor method for estimating decommissioning activity costs, which simplifies the estimating calculations. Unit factors for concrete removal ($/cubic yard), steel removal ($/ton), and cutting costs ($/inch) were developed using local labor rates. The activity-dependent costs were estimated with the item quantities (cubic yards and tons), developed from plant drawings and inventory documents. Removal rates and material costs for the conventional disposition of components and structures relied upon information available in the industry publication, Building Construction Cost Data, published by R.S. Means.[zOl This analysis reflects lessons learned from TLGs involvement in the Shippingport Station Decommissioning Project, completed in 1989, as well as the decommissioning of the Cintichem reactor, hot cells, and associated facilities, completed in In addition, the planning and engineering for the Pathfinder, Shoreham, Rancho Seco, Trojan, Yankee Rowe, Big Rock Point, Maine Yankee, Humboldt Bay-3, Oyster Creek, Connecticut Yankee, and San Onofre-1 nuclear units have provided additional insight into the process, the TLG Services, Inc.

61 Palisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Reu. Section 3, Page 2 of 25 regulatory aspects, and the technical challenges of decommissioning commercial nuclear units. The unit factor method provides a demonstrable basis for establishing reliable cost estimates. The detail provided in the unit factors, including activity duration, labor costs (by craft), and equipment and consumable costs, ensures that essential elements have not been omitted. Appendix A presents the detailed development of a typical unit factor. Appendix B provides the values contained within one set of factors developed for this analysis. Work Difficultv Factors TLG has historically applied work difficulty adjustment factors (WDFs) to account for the inefficiencies in working in a power plant environment. WDFs were assigned to each unique set of unit factors, commensurate with the inefficiencies associated with working in codined, hazardous environments. The ranges used for the WDFs are as follows: Access Factor 1% to 2% Respiratory Protection Factor 1% to 5% RadiatiodALAFtA Factor 1% to 17.5% Protective Clothing Factor 1% to 3% Work Break Factor 8.33% The factors and their associated range of values were developed in conjunction with the AIFR\TESP-O36 study. The application of the factors is discussed in more detail in that publication. Scheduling Prowam Durations The unit factors, adjusted by the WDFs as described above, are applied against the inventory of materials to be removed in the radiologically controlled areas. The resulting man-hours, or crew-hours, are used in the development of the decommissioning program schedule, using resource loading and event sequencing considerations. The scheduling of conventional removal and dismantling activities are based upon productivity information available from the "Building Construction Cost Data" publication. An activity duration critical path is used to determine the total decommissioning program schedule. The schedule is relied upon in calculating the carrying costs, which include program management, administration, field engineering, equipment rental, and support services such as quality control TLG Services, Inc.

62 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 3 of26 and security. This systematic approach for assembling decommissioning estimates ensures a high degree of confidence in the reliability of the resulting cost estimate. 3.3 FINANCIAL COMPONENTS OF THE COST MODEL TLGs proprietary decommissioning cost model, DECCER, produces a number of distinct cost elements. These direct expenditures, however, do not comprise the total cost to accomplish the project goal, i.e., license termination and site restoration. Inherent in any cost estimate that does not rely on historical data is the inability to specify the precise source of costs imposed by factors such as tool breakage, accidents, illnesses, weather delays, and labor stoppages. In the DECCER cost model, contingency fulfills this role. Contingency is added to each line item to account for costs that are difficult or impossible to develop analytically. Such costs are historically inevitable over the duration of a job of this magnitude; therefore, this cost analysis includes funds to cover these types of expenses Contingencv The activity- and period-dependent costs are combined to develop the total decommissioning cost. A contingency is then applied on a he-item basis, using one or more of the contingency types listed in the AIFNESP-36 study. "Contingencies" are defined in the American Association of Cost Engineers "Project and Cost Engineers' Handbook'"zl1 as "specific provision for unforeseeable elements of cost within the defined project scope; particularly important where previous experience relating estimates and actual costs has shown that unforeseeable events which will increase costs are likely to occur." The cost elements in this analysis are based upon ideal conditions and maximum efficiency; therefore, consistent with industry practice, a contingency factor has been applied. In the AIFDJESP-36 study, the types of unforeseeable events that are likely to occur in decommissioning are discussed and guidelines are provided for percentage contingency in each category. It should be noted that contingency, as used in this analysis, does not account for price escalation and inflation in the cost of decommissioning over the remaining operating life of the station. \ The use and role of contingency within decommissioning estimates is not a "safety factor issue." Safety factors provide additional security and address situations that may never occur. Contingency funds are TLG Services, Inc.

63 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 4 of 25 expected to be fully expended throughout the program. They also provide assurance that sufficient funding is available to accomplish the intended tasks. An estimate without contingency, or from which contingency has been removed, can disrupt the orderly progression of events and jeopardize a successful conclusion to the decommissioning process. For example, the most technologically challenging task in decommissioning a commercial nuclear station is the disposition of the reactor vessel and internal components, now highly radioactive after a lifetime of exposure to core activity. The disposition of these components forms the basis of the critical path (schedule) for decommissioning operations. Cost and schedule are interdependent, and any deviation in schedule has a significant impact on cost for performing a specific activity. Disposition of the reactor vessel internals involves the underwater cutting of complex components that are highly radioactive. Costs are based upon optimum segmentation, handling, and packaging scenarios. The schedule is primarily dependent upon the turnaround time for the heavily shielded shipping casks, including preparation, loading, and decontamination of the containers for transport. The number of casks required is a function of the pieces generated in the segmentation activity, a value calculated on optimum performance of the tooling employed in cutting the various subassemblies. The expected optimization, however, may not be achieved, resulting in delays and additional program costs. For this reason, contingency must be included to mitigate the consequences of the expected inefficiencies inherent in this complex activity, along with related concerns associated with the operation of highly specialized tooling, field conditions, and water clarity. Contingency funds are an integral part of the total cost to complete the decommissioning process. Exclusion of this component puts at risk a successful completion of the intended tasks and, potentially, subsequent related activities. The following list is a composite of some of the activities, assembled from past decommissioning programs, in which contingency dollars were needed to respond to, compensate for, and/or provide adequate funding of decontamination and dismantling tasks: TLG Services, Inc.

64 Pdisades Nuclear Plant Decommissioning Cost Study Document N3-1&-4, Rev. Section 3, Page 5 of 25 Incomplete or Chartged Conditions: Unavailable/incomplete operational history that led to a recontamination of a work area because a sealed cubicle (incorrectly identified as being non-contaminated) was breached without controls. Surface coatinge covering contamination that, due to an incomplete characterization, required additional cost and time to remediate. Additional decontamination, controlled removal, and disposition of previously undetected (although at some sites, suspected) contamination due to access gained to formerly inaccessible areas and components. Adverse Working Conditions: Lower than expected productivity due to high temperature environments, resulting in a change in the working hours (shifting to cooler periods of the day) and additional manpower. Confined space, low-oxygen environments where supplied air was necessary and additional safety precautions prolonged the time required to perform required tasks. Maintenance, Repairs and Modifications: Facility refurbishment required to support site operations, including those needed to provide new site services, as well as to maintain the integrity of existing structures. Damage control, repair, and maintenance from bird nestings and their fouling of equipment and controls. Building modification, i.e., re-supporting of floors to enhance loading capacity for heavily shielded casks. Roadway upgrades on site to handle heavier and wider loads; roadway rerouting, excavation, and reconstruction. Requests for additional safety margins by a vendor. TLG Services, Inc.

65 Palisades Nuckar Plant Decommissioning Cost Study Document N , Rev. Section 3,Page 6 of 25 Requests to analyze accident scenarios beyond those defined by the removal scenario (requested by the NRC to comply with total scope of regulation ). Additional collection of site runoff and processing of such due to disturbance of natural site contours and drainage. Concrete coring for removal of embedments and internal conduit, piping, and other potentially contaminated material not originally identsed as being contaminated. Modifkations required to respond to higher than expected worker exposure, water clarity, water disassociation, and hydrogen generation from high temperature cutting operations. Additional waste containers needed to accommodate cutting particulates (fines), inefficient waste geometries, and excess material. Labor: Turnover of personnel, e.g., craft and health physics. Replacement of labor is costly, involving additional training, badging, medical exams, and associated processing procedures. Recruitment costs are incurred for more experienced personnel and can include relocation and living expense compensation. Additional personnel required to comply with NRC mandates and requests. Replacement of personnel due to non-qualification and/or incomplete certification (e.g., welders). Schedule: Schedule slippage due to a conflict in required resources, i.e., the licensee was forced into a delay until prior (non-licensee) commitments of outside resources were resolved. Rejection of material by NRC inspectors, requiring refabrication and causing program delays in activities required to be completed prior to decommissioning operations. TLG Services, Inc.

66 Palisades Nucleur Plant Decommissioning Cost Study D o c u N3-IN-4, ~ ~ ~ Rev. Section 3, Page 7 of 25 Weather: Weather-related delays in the construction of facilities required to support site operations (with compensation for delayed mobilization made to vendor). The cost model incorporates considerations for items such as those described above, generating contingency dollars (at varying percentages of total line-item cost) with every activity. The purpose of the contingency is to allow for the costs of high probability program problems occurring in the field where the occurrence, duration, and severity cannot be accurately predicted, and so their associated costs have not been included in the basic estimate. Past decommissioning experience has shown that unforeseeable elements of cost are almost certain to occur in the field and may have a cumulative impact. For this study, TLG examined the major activity-related problems (decontamination, segmentation, equipment handling, packaging, transport, and waste disposal) that necessitate a contingency. Individual activity contingencies ranged from 1% to 75%, depending on the degree of difficulty judged to be appropriate from TLGs actual decommissioning experience.. The contingency values used in this study are as follows: Decontamination 5% Contaminated Component Removal 25% Contaminated Component Packaging 1% Contaminated Component Transport 15% Low-Level Radioactive Waste Disposal 25% Reactor Segmentation NSSS Component Removal Reactor Waste Packaging Reactor Waste Transport Reactor Vessel Component Disposal 75% 25% 25% 25% 5% GTCC Disposal 15% Non-Radioactive Component Removal 15% Heavy Equipment and Tooling 15% Supplies 25% Engineering 15% TLG Services, Inc.

67 Palisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Rev. Section 3, Page 8 of 25 Energy 15% Characterization and Termination Surveys 3% Construction 15% Taxes and Fees 1% Insurance 1% Staffing 15% The contingency values are applied to the appropriate components of the estimates on a line item basis. A composite value is then reported at the end of each estimate. For example, the composite contingency value reported for the SAFSTOR alternative is 2.37%, as delineated within the detailed cost table in Appendix C Financial Risk In addition to the routine uncertainties addressed by contingency, another cost element that is sometimes necessary to consider when bounding decommissioning costs relates to uncertainty, or risk. Examples can include changes in work scope, pricing, job performance, and other variations that could conceivably, but not necessarily, occur. Consideration is sometimes necessary to generate a level of confidence in the estimate, within a range of probabilities. TLG considers these types of costs under the broad term financial risk. Included within the category of financial risk are: Transition activities and costs: ancillary expenses associated with eliminating 5% to 8% of the site labor force shortly after the cessation of plant operations, added cost for worker separation packages throughout the decommissioning program, national or company-mandated retraining, and retention incentives for key personnel. Delays in approval of the decommissioning plan due to intervention, public participation in local community meetings, legal challenges, and national and local hearings. Changes in the project work scope from the baseline estimate, involving the discovery of unexpected levels of contaminants, contamination in places not previously expected, contaminated soil previously undiscovered (either radioactive or hazardous material contamination), variations in plant inventory or configuration not indicated by the as-built drawings. TLG Services, Inc.

68 Palisades Nuclear Plant Decommissioning Cost Study Document N3-lM-4, Rev. Section 3, Page 9 of 25 Regulatory changes, e.g., affecting worker health and safety, site release criteria, waste transportation, and disposal. Policy decisions altering national commitments, e.g., in the ability to accommodate certain waste forms for disposition, or in the timetable for such, e.g., the start and rate of acceptance of spent fuel by the DOE. Pricing changes for basic inputs, such as labor, energy, materials, and burial. Some of these inputs may vary slightly, e.g. -1% to +2%; burial could vary from -5% to +2% or more. It has been TLGs experience that the results of a risk analysis, when compared with the base case estimate for decommissioning, indicate that the chances of the base decommissioning estimate s being too high is a low probability, and the chances that the estimate is too low is a higher probability. This is mostly due to the pricing uncertainty for low-level radioactive waste burial, and to a lesser extent due to schedule increases from changes in plant conditions and to pricing variations in the cost of labor (both craft and staff). This cost study, however, does not add any additional costs to the estimate for Gnancial risk since there is insufficient historical data from which to project future liabilities. Consequently, the areas of uncertainty or risk are revisited periodically and addressed through repeated revisions or updates of the base estimate. 3.4 SITESPECIFIC CONSIDERATIONS There are a number of site-specific considerations that affect the method for dismantling and removal of equipment from the site and the degree of restoration required. The cost impact of the considerations identified below is included in this cost study Spent Fuel Management The cost to dispose of spent fuel generated from plant operations is not reflected within the estimate to decommission the Palisades site. Ultimate disposition of the spent fuel is within the province of the DOEs Waste Management System, as defined by the M A. As such, the disposal cost is financed by a 1 mill/kwhr surcharge paid into the DOEs waste fund during operations. However, the NRC requires licensees to establish a program to manage and provide funding for the TLG Services, Znc.

69 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 1 of 25 management of all irradiated fuel at the reactors until title of the fuel is transferred to the Secretary of Energy. This funding requirement is fulfilled through inclusion of certain high-level waste cost elements within the estimate, as described below. The total inventory of assemblies that will require handling during decommissioning is based upon several assumptions. The pickup of commercial fuel is assumed to begin in the year 21 and will proceed on an oldest fuel first basis. Any delay in the startup of the repository or decrease in the rate of acceptance will correspondingly prolong the transfer process and result in the fuel remaining at the site longer. An ISFSI will be used for supplemental storage until such time that the transfer of spent fuel to the DOE can be completed. Assuming that the DOE commences repository operation in 21, fuel is projected to be removed from the Palisades site beginning in the year 213 with the transfer completed by the year 248. Operation and maintenance costs for the storage facilities are included within the estimates and address the cost for staffing the facilities, as well as security, insurance, and licensing fees. The estimates include the costs to purchase, load, and transfer the fuel storage canisters. Costs are also provided for the final disposition of the facilities once the transfer is complete. Reuositorv Startuu Operation of the DOES yet-to-be constructed geologic repository is contingent upon the review and approval of the facility's license application by the NRC, the successful resolution of pending litigation, and the development of a national transportation system. For estimating purposes, the spent fuel management plan described in this section is predicated upon the DOE initiating the pickup of commercial fuel in the year 21. Spent Fuel Management Model The DOE'S repository program assumes that spent fuel will be accepted for disposal from the nation's commercial nuclear plants in the order (the "queue") in which it was removed fiom service ("oldest fuel &st").izzl TLG Services, Inc.

70 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 3, Page 11 of 25 Canister Design A multi-purpose storage canister with a 24-fuel assembly capacity, is assumed for future cask acquisitions after plant shutdown. A unit cost of $495, is used for pricing the internal multi-purpose canister (MPC), with an additional cost of $164, for the concrete overpack. Canister Loadinp. and Transfer An average cost of $25, is used for the labor to loadhansport the spent fuel from the pool to the ISFSI pad, based upon industry experience. An average cost of $2, is used to estimate the cost to transfer the fuel from the ISFSI to the DOE. ODerations and Maintenance Annual costs (excluding labor) of approximately $977, and $6, are used for operation and maintenance of the spent fuel pool and the ISFSI, respectively. ISFSI Design Considerations The capacity of the ISFSI is based upon a vertical spent fuel storage system, utilizing the MPC design. The ISFSI is assumed to have the capacity to store the residual inventory present in the spent fuel pool at the cessation of operations. Fiftyfive casks are projected to be required for the storage of spent fuel in support of decommissioning, based upon a loading of 24 assemblies per cask. Three casks will be required for the storage of GTCC material generated in the segmentation of the reactor vessel internals. Consumers Energy provides the spent fuel storage canisters and concrete overpacks for both the spent fuel and GTCC casks. The ISFSI storage pad is sized to accommodate the casks required for decommissioning as well as the transfer of current dry fuel storage inventory to MPC's. Approximately 5% of the overpacks are assumed to have some level of neutron-induced activation as a result of the long-term storage of the fuel, i.e., to levels exceeding free-release limits. Approximately 1% of the concrete and steel is assumed to be removed from the overpacks for controlled disposal. The cost to dispose of this material, as well as the demolition of the ISFSI facility, is included in the estimates. TLG Services, Inc.

71 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 3, Page 12 of Reactor Vessel and Internal Components The NSSS (reactor vessel and reactor coolant system components) will be decontaminated using chemical agents prior to placing the unit into safe storage. A decontamination factor (average reduction) of 1 is assumed for the process. The reactor pressure vessel and internal components are segmented for disposal in shielded, reusable transportation casks. Segmentation is performed in the refueling canal, where a turntable and remote cutter are installed. The vessel is segmented in place, using a mastmounted cutter supported off the lower head and directed from a shielded work platform installed overhead in the reactor cavity. Transportation cask specifications and transportation regulations will dictate segmentation and packaging methodology. The number of cask shipments out of the reactor building is expected to average three every two weeks. Non-cask shipments will be limited to ten per week. The dismantling of the reactor internals will generate radioactive waste considered unsuitable for shallow land disposal, i.e., GTCC. Although the material is not classified as high-level waste, the DOE has indicated it will accept this waste for disposal at the future high-level waste repository.[231 However, the DOE has not been forthcoming with an acceptance criteria or disposition schedule for this material, and numerous questions remain as to the ultimate disposal cost and waste form requirements. As such, for purposes of this study, the GTCC has been packaged and disposed of as high-level waste, at a cost equivalent to that envisioned for the spent fuel. It is not anticipated that the DOE would accept this waste prior to completing the transfer of spent fuel. Therefore, until such time the DOE is ready to accept GTCC waste, it is reasonable to assume that this material would remain in storage at the Palisades site. Intact disposal of the reactor vessel and internal components can provide savings in cost and worker exposure by eliminating the complex segmentation requirements, isolation of the GTCC material, and transporthtorage of the resulting waste packages. Portland General Electric (PGE) was able to dispose of the Trojan reactor as an intact package. However, its location on the Columbia River simplified the transportation analysis since: TLG Services, Inc.

72 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 13 of 25 the reactor package could be secured to the transport vehicle for the entire journey, i.e., the package was not lifted during transport, there were no man-made or natural terrain features between the plant site and the disposal location that could produce a large drop, and transport speeds were very low, limited by the overland transport vehicle and the river barge. As a member of the Northwest Compact, PGE had a site available for disposal of the package - the US Ecology facility in Washington State. The characteristics of this arid site proved favorable in demonstrating compliance with land disposal regulations. It is not known whether this option will be available when Palisades ceases operation. Future viability of this option will depend upon the ultimate location of the disposal site, as well as the disposal site licensee s ability to accept highly radioactive packages and effectively isolate them from the environment. Consequently, the study assumes the reactor vessel will require segmentation, as a bounding condition Primarv Svstem Comaonents The following discussion deals with the removal and disposition of the steam generators, but the techniques involved are also applicable to other large components, such as heat exchangers, component coolers, and the pressurizer. The steam generators size and weight, as well as their location within the reactor building, will ultimately determine the removal strategy. A trolley crane will be set up for the removal of the generators. It can also be used to move portions of the steam generator cubicle walls and floor slabs from the reactor building to a location where they can be decontaminated and transported to the material handling area. Interferences within the work area, such as grating, piping and other components, will be removed to create sufficient laydown space for processing these large components. The generators will be rigged for removal, disconnected from the surrounding piping and supports, and maneuvered into the open area where they will be lowered onto a down-ending cradle. Once each steam generator has been placed in the horizontal position, nozzles TLG Services, Inc.

73 Palisades Nuclear Plunt Decommissioning Cost Study Document N , Rev. Section 3, Page 14 of 25 and other openings will be welded closed. The lower shell will have a carbon steel membrane welded to its outside surface for shielding, if required, during transport. The interior volume will be filled with lowdensity cellular concrete for stabilization of the internal contamination and to satisfy burial ground packaging requirements. When this stage has been completed, each generator will be moved out of containment and lowered onto a multi-wheeled transporter to be staged at an onsite storage area and await transport to the disposal facility. The pressurizer will be removed using the same technique. Each component will then be loaded onto a railcar for transport to the disposal facility. Reactor coolant piping is cut from the reactor vessel once the water level in the vessel (used for personnel shielding during dismantling and cutting operations in and around the vessel) is dropped below the nozzle zone. The piping is boxed and transported by shielded van. The reactor coolant pumps and motors are lifted out intact, packaged, and transported for disposal Main Turbine and Condenser The main turbine will be dismantled using conventional maintenance procedures. The turbine rotors and shafts will be removed to a laydown area. The lower turbine casings will be removed from their anchors by controlled demolition. The main condensers will also be disassembled and moved to a laydown area. Material is then prepared for transportation to an off-site recycling facility where it will be surveyed and designated for either decontamination or volume reduction, conventional disposal, or controlled disposal. Components will be packaged and readied for transport in accordance with the intended disposition Transportation Methods TLG Services, Inc. Contaminated piping, components, and structural material other than the highly activated reactor vessel and internal components will qualify as LSA-I, I1 or I11 or Surface Contaminated Object, SCO-I or 11, as described in Title 49PI The contaminated material will be packaged in Industrial Packages (IP I, 11, or 111, as defined in subpart ) for transport unless demonstrated to qualify as their own shipping containers. The reactor vessel and internal components are expected to be transported in accordance with 571, as Type B. It is conceivable that the reactor, due to its limited specific activity, could qualifv as LSA I1 or

74 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 15 of However, the high radiation levels on the outer surface would require that additional shielding be incorporated within the packaging so as to attenuate the dose to levels acceptable for transport. Truck transport assumes a maximum normal road weight limit of 8, pounds for all shipments, with the exception of the overweight shielded casks. Transport of the highly activated metal, produced in the segmentation of the reactor vessel and internal components, will be by shielded truck cask. Cask shipments may exceed 95, pounds, including vessel segment@), supplementary shielding, cask tie-downs, and tractor-trailer. The maximum level of activity per shipment assumed permissible was based upon the license limits of the available shielded transport casks. The segmentation scheme for the vessel and internal segments is designed to meet these limits. The transport of large intact components, e.g., steam generators, large heat exchangers and other oversized components, will be by a combination of truck, rail, and/or multi-wheeled transporter. The low-level radioactive waste requiring controlled disposal will be sent to one of two currently available burial facilities. Transportation costs are based upon the mileage to either the Envirocare facility in Clive, Utah, or the Barnwell facility in South Carolina. A regional site is assumed as the destination for off-site processing. Transportation costs are estimated using published tariffs from %-State Motor TransitP] Low-Level Radioactive Waste Disposal To the greatest extent practical, metallic material generated in the decontamination and dismantling processes is treated to reduce the total volume requiring controlled disposal. The treated material, meeting the regulatory and/or site release criterion, is released as scrap, requiring no further cost consideration. Conditioning and recovery of the waste stream is performed off site at a licensed processing center. Material requiring controlled disposal is packaged and transported to one of two currently available burial facilities. Very low-level radioactive material, e.g., structural steel and contaminated concrete, is sent to Envirocare. More highly contaminated and activated material is sent to Barnwell. Disposal fees are based upon current charges for operating waste, with surcharges added for the highly activated components, e.g., generated in the segmentation of the reactor vessel. TLG Services, Inc.

75 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 16 of Site Conditions Following DecommissioninE 3.6 ASSUMPTIONS The NRC will terminate (or amend) the site licenses if it determines that site remediation has been performed in accordance with the license termination plan, and that the terminal radiation survey and associated documentation demonstrate that the facility is suitable for release. The NRC's involvement in the decommissioning process will end at this point. Building codes and environmental regulations will dictate the next step in the decommissioning process, as well as the owner's own future plans for the site. Non-essential structures or buildings severely damaged in decontamination process are removed to a nominal depth of three feet below grade. Structures and buried piping will be completely removed from the site. Concrete rubble will be trucked to a waste processing facility for disposal. Structural scrap steel will be disposed of at a local landfill. Subsurface voids will be backfilled with imported clean fill and capped with topsoil. The site will be graded such that the site will have a final contour consistent with adjacent surroundings. The estimates do not assume the remediation of any significant volume of contaminated soil. This assumption may be affected by continued plant operations and/or future regulatory actions, such as the development of site-specific release criteria. The following are the major assumptions made in the development of the estimates for decommissioning the site Estimating Basis ' The study follows the principles of AURA through the use of work duration adjustment factors. These factors address the impact of activities such as radiological protection instruction, mock-up training, and the use of respiratory protection and protective clothing. The factors lengthen a task's duration, increasing costs and lengthening the overall schedule. ALARA planning is considered in the costs for engineering and planning, and in the development of activity specifications and detailed procedures. Changes to worker exposure limits may impact the decommissioning cost and project schedule. TLG Services, Inc.

76 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 17 of Labor Costs Utility staffing requirements will vary with the level of effort associated with the various phases of the project. Once the decommissioning program commences, the operations staff will be reduced to only those staff positions necessary to support the decommissioning program. The staffing levels assumed in this estimate, as provided by Consumers Energy, reflect the management provisions experienced at other decommissioning projects recently completed and currently underway. Costs for site administration, operations, construction, and maintenance personnel are based upon average salary information provided by NMC or from comparable industry information. Consumers Energy will hire a Decommissioning Operations Contractor (DOC) to manage the decommissioning. The owner will provide site security, radiological health and safety, quality assurance and overall site administration during the decommissioning and demolition phases. Contract personnel will provide engineering services, e.g., for preparing the activity specifications, work procedures, activation, and structural analyses, under the direction of Consumers Energy. The craft labor required to decontaminate and dismantle the nuclear units will be acquired through standard site contracting practices. The current cost of labor at the site is used as an estimating basis Desim Conditions Any fuel cladding failure that occurred during the lifetime of the plant is assumed to have released fission products at sufficiently low levels that the buildup of quantities of long-lived isotopes (e.g., 137Cs, 9Sr, or transuranics) has been prevented from reaching levels exceeding those that permit the major NSSS components to be shipped under current transportation regulations and disposal requirements. The curie contents of the vessel and internals at final shutdown are derived fkom those listed in NUREG/CR-3474.[26] Actual estimates are derived from the curie/gram values contained therein and adjusted for the different mass of the Palisades components, projected operating life, and different periods of decay. Additional short-lived isotopes were derived from CR-13[27] and CR-672,[28] and benchmarked to the longlived values &om CR TLG Services, Inc.

77 Palisades Nuclear Plant Decommissioning Cost Study Document N3-1&-4, Rev. Section 3, Page 18 of 25 The control elements are disposed of along with the spent fuel, i.e., there is no additional cost provided for their disposal. Since the top of the reactor vessel contains minimal shielding it is assumed that the entire containment roof as well as the upper half of the walk are considered activated, and will be disposed of as radioactive material. The reactor building crane will be sent to a waste processing facility for disposal General Transition Activities Existing warehouses will be cleared of non-essential material and remain for use by Consumers Energy and its subcontractors. The plant s operating staff will perform the following activities at no additional cost or credit to the project during the transition period: Drain and collect fuel oils, lubricating oils, and transformer oils for recycle andlor sale. Drain and collect acids, caustics, and other chemical stores for recycle andor sale. Process operating waste inventories, i.e., the estimates do not address the disposition of any legacy wastes: the disposal of operating wastes during this initial period is not considered a decommissioning expense. Scrar, and Salvage The existing plant equipment is considered obsolete and suitable for scrap as deadweight quantities only. Consumers Energy will make economically reasonable efforts to salvage equipment following final plant shutdown. However, dismantling techniques assumed by TLG for equipment in this analysis are not consistent with removal techniques required for salvage (resale) of equipment. Experience has indicated that some buyers wanted equipment stripped down to very specific requirements before they would consider purchase. This required expensive rework after the equipment had been removed from its installed location. Since placing a salvage value on this machinery and equipment would be speculative, and the value would be small in comparison to the overall decommissioning expenses, this analysis TLG Services, Znc.

78 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 19 of 25 does not attempt to quantify the value that an owner may realize based upon those efforts. It is assumed, for purposes of this analysis, that any value received from the sale of scrap generated in the dismantling process would be more than offset by the on-site processing costs, and that scrap may represent a liability (incur a cost to dispose of this material). The dismantling techniques assumed in the decommissioning estimates do not include the additional cost for size reduction and preparation to meet furnace ready conditions. For example, the recovery of copper from electrical cabling may require the removal and disposition of any contaminated insulation, an added expense. With a volatile market, the potential profit margin in scrap recovery is highly speculative, regardless of the ability to free release this material. Therefore, as an explicit recognition of scrap as a potential liability, an allowance for the disposal of clean metallic waste has been included. Furniture, tools, mobile equipment such as forklifts, trucks, bulldozers, and other property owned by Consumers Energy will be removed at no cost or credit to the decommissioning project. Disposition may include relocation to other facilities. Spare parts will also be made available for alternative use. Enerey For estimating purposes, the plant is assumed to be de-energized, with the exception of those facilities associated with spent fuel storage. Replacement power costs are used for the cost of energy consumption during decommissioning for tooling, lighting, ventilation, and essential services. Insurance Costs for continuing coverage (nuclear liability and property insurance) following cessation of plant operations and during decommissioning are included and based upon current operating premiums. Reductions in premiums, throughout the decommissioning process, are based upon the guidance and the limits for coverage defined in the NRC s proposed rulemaking Financial Protection Requirements for Permanently Shutdown Nuclear Power Reactors. [291 The NRC s financial protection requirements are based on various reactor (and spent fuel) configurations. TLG Services, Inc.

79 Palisades Nuclear PZant Decommissioning Cost Study Document N , Rev. Section 3, Page 2 of 25 Property taxes on existing plant structures and equipment are reduced over the phase in which they are removed throughout the decommissioning schedule and plant site restoration, terminating upon ISFSI. Site Modifications The perimeter fence and in-plant security barriers will be moved, as appropriate, to conform to the Site Security Plan in force during the various stages of the project. 3.6 COST ESTIMATE SUMMARY Schedules of expenditure are provided in Tables 3.1 through 3.5. Decommissioning costs are reported in the year of projected expenditure; however, the values are provided in thousands of 23 dollars. Costs are not inflated, escalated, or discounted over the period of expenditure. The annual expenditures are based upon the detailed activity costs reported in Appendix C along with the schedule discussed in Section 4. TU: Services, Inc.

80 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 21 of 25 TABLE 3.1 SCHEDULE OF ANNUAL EXPENDITURES TOTAL DECOMMISSIONING COST (thousands, 23 dollars) Equipment & Year Labor Materials Energy Burial Other Total ,77 4,89 31,337 6,64 11, , , , , , , , , , , , , ,846 19,176 48,137 18,246 46,222 4,71 46,99 4,697 18,916 2,266 23,616 7,19 1,968 3,63 1,68 1,68 1,68 1,612 1,68 1,68 1,68 1,612 1,68 1,68 1,68 1, ,68 1, ;49 1, , ,396 1, ,849 26,88 2,784 2,727 1, ,69 8,698 14,631 12,854 16,33 16,33 16,33 16,372 15,33 16,33 8,28 4,261 4,239 4,239 4, ,467 17,363 8, ,63 12,92 17,368 9,868 4,31 4,31 4,31 4,313 4,31 4,31 4,31 4,313 4,31 4,31 4,31 4,313 4,31 4,31 4,31 2,23 2,48 3,698 62,736 62,61 28,86 28,86 28,86 28,163 28,86 28,86 14,862 7,286 7,266 7,266 7,266 7,286 42,84 99, , ,96 77,737 36,612 48,336 23,977 6,969 6,969 6,969 6,985 6,969 6,969 6,969 6,986 6,969 6,969 6,969 6,986 6,969 6,969 6,969 22,434 8, ,688 71,92 14,198 88,27 331,491 96,326 TLG Services, Inc.

81 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 22 of 25 TABLE 3.2 SCHEDULE OF ANNUAL EXPENDITURES LICENSE TERMINATION (thousands, 23 dollars) Equipment & Year Labor Materials Energy Burial Other Total ,397 26,975 1,261 1,261 1,261 1,265 1,261 1,261 1,269 1,277 1,273 1,273 1,273 1,277 31,38 45, ,614 42,398 13,11 1, ,89 3,185 I 7 7 I ,168 18,223 4,7 4, ,395 1, ,849 26,88 2,184 2,727 1,167 13,541 8,82 4,755 4,165 4,155 4,768 4,755 4,155 3,882 3,391 3,381 3,381 3,381 3,391 8,13 16,812 7,672 6,1 6,83 8,744 15,831 5,318 41,22 6,138 6,138 6,138 6,155 6,138 6,138 5,327 4,816 4,862 4,862 4,862 4,815 4,62 96,914 97,666 74,723 74,619 24,3 1, , ,24 66,826 6,841 85,246 14, ,64 TLG Services, Inc.

82 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 23 of 25 TABLE 3.3 SCHEDULE OF ANNUAL EXPENDITURES SPENT FUEL MANAGEMENT (thousands, 23 dollars) Equipment & Year Labor Materials Energy Burial Other Total ,372 4,361 1,493 1,493 1,493 1,622 1,493 1,493 4,768 1,491 1,486 1,486 1,486 1,491 1,487 1,487 1,488 1,491 1,487 1,487 1,487 1,661 1,68 1,68 1,68 1,612 1,68 1,68 1,68 1,612 1,68 1,68 1,68 1,612 1,68 1,68 1,68 1,624 2,49 2, , , , , , , , , , , ,796 4,31 4,31 4,31 4,313 4,31 4,31 4,31 4,313 4,31 4,31 4,31 4,313 4,31 4,31 4, ,193 2,69 2,48 8,698 2,418 11,29 21,947 21,947 21,947 22,8 21,947 21,947 9,626 2,411 2,44 2,44 2,44 2,411 2, ,878 1,999 1,993 2,287 2,274 4,416 6,969 6,969 6,969 6,986 6,969 6,969 6,969 6,986 6,969 6,969 6,969 6,986 6,969 6,969 6,969 6,92 8, ,161 3,732 7,176 2, ,18 297,948 TLG Services, Inc.

83 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 3, Page 24 of 26 TABLE 3.4 SCHEDULE OF ANNUAL EXPENDITURES SITE RESTORATION (thousands, 23 dollars) Equipment & Year Labor Materials Energy Burial Other Total ,11 1,683 1,217 1,214 4,328 2,738 8, ,426 6,938 2, ,417 16,631 7, ,197 1,86 1,228 1,226 9,194 44,419 18,863 ~~ ~ 39,333 11, ,436 78,313 TLG Services, Inc.

84 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 3, Page 25 of 25 TABLE 3.5 SCHEDULE OF ANNUAL EXPENDITURES PRELIMINARY INCREMENTAL SNF COST (thousands, 23 dollars) Equipment & Year Labor Materials Energy Burial Other Total 28 6,363 6, ,444 1, ,331 4, ,331 4, ,331 4, ,343 4, ,331 4, ,331 4, ,331 4, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,962 1,74 44,61 92,311 TLG Services, Inc.

85 Palisades Nuclear Plant Decommissioning Cost Study Document N3-laa-4, Rev. Section 4, Page 1 of 4 4. SCHEDULE ESTIMATE The schedule for the decommissioning scenario considered in this study follows the sequence presented in the AIF/NESP-36 study, with minor changes to reflect recent experience and site-specific constraints. In addition, the scheduling has been revised to reflect the spent fuel management plan described in Section A schedule or sequence of activities is presented in Figure 4.1 for the SAFSTOR decommissioning alternative. The scheduling sequence assumes that fuel is removed from the spent fuel pool within the first eight years after operations cease. The key activities listed in the schedule do not reflect a one-to-one correspondence with those activities in the cost tables, but reflect dividing some activities for clarity and combining others for convenience. The schedule was prepared using the "Microsoft Project 22" computer software.[3] 4.1 SCHEDULE ESTIMATE ASSUMPTIONS The schedule reflects the results of a precedence network developed for the site decommissioning activities, i.e., a PERT (Program Evaluation and Review Technique) Software Package. The work activity durations used in the precedence network reflect the actual man-hour estimates from the cost tables, adjusted by stretching certain activities over their slack range and shifting the start and end dates of others. The following assumptions were made in the development of the decommissioning schedule: The Auxiliary Building is isolated until such time that all spent fuel has been discharged from the spent fuel pool to the DOE or to the ISFSI. All work (except vessel and internals removal) is performed during an &hour workday, 5 days per week, with no overtime. There are eleven paid holidays per year. Reactor and internals removal activities are performed by using separate crews for Merent activities working on different shifts, with a corresponding backshift charge for the second shift. Multiple crews work parallel activities to the maximum extent possible, consistent with optimum efficiency, adequate access for cutting, removal and laydown space, and with the stringent safety measures necessary during demolition of heavy components and structures. TLG Services, Inc.

86 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 4, Page 2 of 4 For plant systems removal, the systems with the longest removal durations in areas on the critical path are considered to determine the duration of the activity. 4.2 PROJECT SCHEDULE The period-dependent costs presented in the detailed cost table are based upon the durations developed in the schedule for decommissioning Palisades. Durations are established between several milestones in each project period; these durations are used to establish a critical path for the entire project. In turn, the critical path duration for each period is used as the basis for determining the period-dependent costs. A second critical path is also shown for the spent fuel cooling period, which determines the release of the auxiliary building for final decontamination. A project timeline is provided in Figures 4.2. Milestone dates are based on a shutdown date of March 14, 211. TLG Services, Inc.

87 ~~~~ Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. section 4, Page 3 of 4 FIGURE 4.1 ACTIVITY SCHEDULE ID TsskNsme I 'V I 2 Reacti vate Site ~~~~ Period 3a Unit 1. Re; %ctivate Site 4 Reel - 5 PreL.. 6 Perform site tinara< 7 DOC staff mohilixe 3 Landscape Site I TLG Services, Inc.

88 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Section 4, Page 4 of 4 FIGURE 4.2 DECOMMISSIONING TIMELINE (not to scale) Shutdown: March 14,211.. Spent Fuel Storage Pool Operations ISFSI Operations Period 1 Period 2 Transition and Dormancy Preparations... Period 3 Period 4 Preparations D~commissioning Operatione..., /212 3/226 9/226 1/23 6/232 7/249 Storage Pool Empty 5/219 ISFSI Empty 12/248 TLG Services, Inc.

89 Palisades Nuclear Plant Decommissioning Cost Study Document N3-14#-4, Rev. Section 5, Page I of3 5. RADIOACTIVE WASTES The objectives of the decommissioning process are the removal of all radioactive material kom the site that would restrict its future use and the termination of the NRC license(s). This currently requires the remediation of all radioactive material at the site in excess of applicable legal limits. Under the Atomic Energy Act,WI the NRC is responsible for protecting the public from sources of ionizing radiation. Title 1 of the Code of Federal Regulations delineates the production, utilization, and disposal of radioactive materials and processes. In particular, $71 defines radioactive material and $61 specifies its disposition. Most of the materials being transported for controlled burial are categorized as Low Specific Activity (LSA) or Surface Contaminated Object (SCO) materials containing Type A quantities, as defined in 49 CFR $ Shipping containers are required to be Industrial Packages (IP-1, IP-2 or IP-3, as defined in subpart ). For this study, commercially available steel containers are presumed to be used for the disposal of piping, small components, and concrete. Larger components can serve as their own containers, with proper closure of all openings, access ways, and penetrations. The volumes of radioactive waste generated during the various decommissioning activities at the site is shown on a line-item basis in Appendix C and summarized in Table 5.1. The quantified waste volume summaries shown in the table are consistent with $61 classifications. The volumes are calculated based on the exterior dimensions for containerized material and on the displaced volume of components serving as their own waste containers. The reactor vessel and internals are categorized as large quantity shipments and, accordingly, will be shipped in reusable, shielded truck casks with disposable liners. In calculating disposal costs, the burial fees are applied against the liner volume, as well as the special handling requirements of the payload. Packaging efficiencies are lower for the highly activated materials (greater than Type A quantity waste), where high concentrations of gamma-emitting radionuclides limit the capacity of the shipping canisters. No process system containingkandling radioactive substances at shutdown is presumed to meet material release criteria by decay alone, i.e., systems radioactive at shutdown will still be radioactive over the time period during which the decommissioning is accomplished, due to the presence of long-lived radionuclides. While the dose rates decrease with time, radionuclides such as 137Cs will still control the disposition requirements. TLG Services, Znc.

90 Pdisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 6, Page 2 of 3 The waste material generated in the decontamination and dismantling of Palisades is primarily generated during Period 4 of the SAFSTOR alternative. Material that is considered potentially contaminated when removed from the radiologically controlled area is sent to off-site processing facilities for conditioning and disposal. Heavily contaminated components and activated materials are routed for controlled disposal. The disposal volumes reported in the table reflects the savings resulting from reprocessing and recycling. For purposes of constructing the analysis, the rate schedule for the Barnwell facility was used as a proxy for the higher activity waste. This schedule was used to estimate the disposal fees for most plant components and all activated concrete unsuitable for processing or recovery. An average disposal rate of approximately $5.1 per pound was used, with additional surcharges for activity, dose rate, and/or handling added as appropriate for the particular package. The remaining volume of contaminated metallic and concrete debris is processed and conditioned at an off-site facility. The contaminated metallic waste stream includes the lower activity components such as miscellaneous steel, metal siding, scaffolding, and structural steel. Metals are recycled at a unit rate of $2.85 per pound. Concrete, soil, asbestos and other bulk debris are disposed of at a rate of $.5 per pound or approximately $5 per cubic foot. Dry active wastes, e.g., cloth, paper and plastics, are sent to the Envirocare facility for direct disposal from the site at $2.82 per pound or $56.4 per cubic foot, at an assumed density of 2 pounds per cubic foot. TLG Services, Inc.

91 Palisades Nuclear Phnt Decommissioning Cost Study Document N , Rev. Section 6, Page 3 of3 TABLE 5.1 DECOMMISSIONING WASTE SUMMARY Waste Volume Weight Class' (cubic feet) (pounds) Low-Level Radioactive Waste Barnwell, South Carolina (contaminatedactivated metallic waste and concrete) A 51,566 4,627,251 B 3, ,87 C ,9 Envirocare, Utah (miscellaneous steel, contaminatedactivated concrete) Containerized A 11,973 1,36,674 Bulk A 11,23 12,197,49 Geologic Repository (Greater-than Class C) >C ,3 Total 2 169,147 18,448,676 Processed Waste (Off-Site) Scrap Metal 326,836 26,73,56 68,498, Waste is classified according to the requirements as delineated in Title 1 CFR, Part Columns may not add due to rounding. TLG Services, Inc.

92 Palisades Nuclear Plunt Decommissioning Cost Study Document N , Rev. Section 6, Page 1 of 4 6. RESULTS The analysis to estimate the costs to decommission Palisades relied upon the sitespecific, technical information developed for a previous analysis prepared in 1998 and revised in 2. While not an engineering study, the estimates provide Consumers Energy with sufficient information to assess its financial obligations, as they pertain to the eventual decommissioning of the nuclear station. The estimate described in this report is based on numerous fundamental assumptions, including regulatory requirements, project contingencies, low-level radioactive waste disposal practices, high-level radioactive waste management options, and site restoration requirements. The decommissioning scenario assumes continued operation of the plant s spent fuel pool for a minimum of eight years following the cessation of operations for continued cooling of the assemblies. The existing ISFSI will accommodate the residual inventory of spent fuel assemblies following the cooling period and will operate throughout the decommissioning of the nuclear unit until such time that the DOE can complete the transfer of the assemblies to its repository. The cost projected to decommission the Palisades nuclear unit is estimated to be $96.3 million. The majority of this cost (approximately 6.8%) is associated with the physical decontamination and dismantling of the nuclear unit so that the license can be terminated. Another 31.% is associated with the management, interim storage, and eventual transfer of the spent fuel. The remaining 8.2% is for the demolition of the designated structures and limited restoration of the site. The primary cost contributors, identified in Table 6.1, are either labor-related or associated with the management and disposition of the radioactive waste. Program management is the largest single contributor to the overall cost. The magnitude of the expense is a function of both the size of the organization required to manage the decommissioning, as well as the duration of the program. It is assumed, for purposes of this analysis, that Consumers Energy will oversee the decommissioning program, using a DOC to manage the decommissioning labor force and the associated subcontractors. The size and composition of the management organization varies with the decommissioning phase and associated site activities. However, once the operating license is terminated, the staff is substantially reduced for the conventional demolition and restoration of the site, and the long-term care of the spent fuel. As described in this report, the spent fuel pool will remain operational for a minimum of eight years following the cessation of operations. The pool will be TLG Services, Inc.

93 Palisades Nuckar Plant Decommissioning Cost Study Document N , Rev. Section 6, Page 2 of 4 isolated and an independent spent fuel island created. Over the eight-year period, the spent fuel will be packaged into transportable steel canisters for loading into a DOE-provided transport cask. The canisters will be stored in concrete overpacks at the ISFSI until the DOE is able to receive them. Dry storage of the fuel under a separate license provides additional flexibility in the event the DOE is not able to meet the current timetable for completing the transfer of assemblies to an off-site facility and minimizes the associated caretaking expenses. The cost for waste disposal includes only those costs associated with the controlled disposition of the low-level radioactive waste generated from decontamination and dismantling activities, including plant equipment and components, structural material, filters, resins and dry-active waste. As described in Section 5, disposal of the lower level material, including concrete and structural steel, is at the Envirocare facility. The more highly radioactive material is sent to the Barnwell facility, with the exception of selected reactor vessel components. Highly activated components, requiring additional isolation from the environment, are packaged for geologic disposal. The cost of geologic disposal is based upon a cost equivalent for spent fuel., A significant portion of the metallic waste is designated for additional processing and treatment at an off-site facility. Processing reduces the volume of material requiring controlled disposal through such techniques and processes as survey and sorting, decontamination, and volume reduction. The material that cannot be unconditionally released is packaged for controlled disposal at one of the currently operating facilities. The cost identified in the summary table for processing is allinclusive, incorporating the ultimate disposition of the material. Removal costs reflect the labor-intensive nature of the decommissioning process, as well as the management controls required to ensure a safe and successful program. Decontamination and packaging costs also have a large labor component that is based upon prevailing union wages. Non-radiological demolition is a natural extension of the decommissioning process. The methods employed in decontamination and dismantling are generally destructive and indiscriminate in inflicting collateral damage. With a work force mobilized to support decommissioning operations, non-radiological demolition can be an integrated activity and a logical expansion of the work being performed in the process of terminating the operating license. Prompt demolition reduces future liabilities and can be more cost effective than deferral, due to the deterioration of the facilities (and therefore the working conditions) with time. The reported cost for transport includes the tariffs and surcharges associated with moving large components andlor overweight shielded casks overland, as well as the TLG Services, Inc.

94 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 6, Page 3 of 4 general expense, e.g., labor and fuel, of transporting material to the destinations identified in this report. For purposes of this analysis, material is primarily moved overland by truck. Decontamination is used to reduce the plant s radiation fields and minimize worker exposure. Slightly contaminated material or material located within a contaminated area is sent to an off-site processing center, i.e., this analysis does not assume that contaminated plant components and equipment can be decontaminated for uncontrolled release in-situ. Centralized processing centers have proven to be a more economical means of handling the large volumes of material produced in the dismantling of a nuclear unit. License termination survey costs are associated with the labor intensive and complex activity of verifying that contamination has been removed from the site to the levels specified by the regulating agency. This process involves a systematic survey of all remaining plant surface areas and surrounding environs, sampling, isotopic analysis, and documentation of the findings. The status of any plant components and materials not removed in the decommissioning process will also require confirmation and will add to the expense of surveying the facilities alone. The remaining costs include allocations for heavy equipment and temporary services, as well as for other expenses such as regulatory fees and the premiums for nuclear insurance. While site operating costs are greatly reduced following the final cessation of plant operations, certain administrative functions do need to be maintained either at a basic functional or regulatory level. TLG Services, Inc.

95 Palisades Nuclear Plant Decommissioning Cost Study Document NSO-144-4, Rev. Section 6, Page 4 of 4 TABLE 6.1 SUMMARY OF DECOMMISSIONING COST ELEMENTS (thousands of 23 dollars) Work Category cost % Decontamination Removal Packaging Shipping Low-Level Radioactive Waste Disposal Staffing Taxes Engineering Energy Waste Recycling Insurance ISFSI Expenditures Spent Fuel Pool Isolation NRC and EP Fees Site Characterization License Termination Survey Miscellaneous Support Equipment & Supplies Separation Program Fixed Indirect Overhead Site Security Spent Fuel Pool O&M 1,65 99,525 12,377 4,424 61,281 28,39 65,11 16,569 11,857 64,48 21, ,931 9,67 12,273 1,77 5,54 23,167 9,141 36,848 1,284 9, Total , NRC License Termination Spent Fuel Management Site Restoration 584, , , I11 Columns may not add due to rounding TLG Services, Inc.

96 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 7, Page 1 of 3 7. REFERENCES U.S. Code of Federal Regulations, Title 1, Parts 3, 4, 5, 51, 7 and 72, General Requirements for Decommissioning Nuclear Facilities, Nuclear Regulatory Commission, Federal Register Volume 53, Number 123 (p 2418 et seq.), June 27, U.S. Nuclear Regulatory Commission, Regulatory Guide 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors, October 23. U.S. Code of Federal Regulations, Title 1, Part 2, Subpart E, Radiological Criteria for License Termination. U.S. Code of Federal Regulations, Title 1, Parts 2 and 5, Entombment Options for Power Reactors, Advanced Notice of Proposed Rulemaking, Federal Register Volume 66, Number 2, October 16, 21. U.S. Code of Federal Regulations, Title 1, Parts 2, 5 and 51, Decommissioning of Nuclear Power Reactors, Nuclear Regulatory Commission, Federal Register Volume 61 (p et seq.), July 29, Nuclear Waste Policy Act of 1982 and Amendments, U.S. Department of Energy s Office of Civilian Radioactive Management, Maine Yankee Atomic Power Company, Connecticut Yankee Atomic Power Company, and Yankee Atomic Power Company v. United States, U.S. Court of Appeals for the Federal Circuit decision, Docket No , -5139, -514, August 31,2. U.S. Code of Federal Regulations, Title 1, Part 5, Domestic Licensing of Production and Utilization Facilities, Subpart Conditions of Licenses. Low-Level Radioactive Waste Policy Act, Public Law , 198. Low-Level Radioactive Waste Policy Amendments Act of 1985, Public Law 99-24, January 15,1986. U.S. Code of Federal Regulations, Title 1, Part 2, Subpart E, Radiological Criteria for License Termination, Federal Register, Volume 62, Number 139 (p 3958 et seq.), July 21, TLG Services, Inc.

97 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 7, Page 2 of 3 7. REFERENCES (continued) Establishment of Cleanup Levels for CERCLA Sites with Radioactive Contamination, EPA Memorandum OSWER No , August 22, U.S. Code of Federal Regulations, Title 4, Part , Maximum contaminant levels for beta particle and photon radioactivity from man-made radionuclides in community water systems. Memorandum of Understanding Between the Environmental Protection Agency and the Nuclear Regulatory Commission: Consultation and Finality on Decommissioning and Decontamination of Contaminated Sites, OSWER a, October 9, 22. Multi-Agency Radiation Survey and Site Investigation Manual (MARSSIM), WREG/CR-1575, Rev. 1, EPA 42-R-97-16, Rev. 1, August 2. Decommissioning Cost Study for the Palisades Nuclear Plant, Document No. C , TLG Services, Inc., March Decommissioning Cost Study for the Palisades Nuclear Plant, Document No. CO , TLG Services, Inc., March 21. T.S. LaGuardia et al., Guidelines for Producing Commercial Nuclear Power Plant Decommissioning Cost Estimates, AIFLNESP-36, May W.J. Manion and T.S. LaGuardia, Decommissioning Handbook, U.S. Department of Energy, DOE/EV/1128-1, November 198. Building Construction Cost Data 23, Robert Snow Means Company, Inc., Kingston, Massachusetts. Project and Cost Engineers Handbook, Second Edition, p. 239, American Association of Cost Engineers, Marcel Dekker, Inc., New York, New York, Civilian Radioactive Waste Management System Total System Description, Revision 2 (TDR-CRW-SE-2), DOERW-5, September 21. TLG Services, Inc.

98 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Section 7, Page 3 of 3 7. REFERENCES (continued) "Strategy for Management and Disposal of Greater-Than-Class C Low-Level Radioactive Waste," Federal Register Volume 6, Number 48 (p et seq.), March U.S. Department of Transportation, Title 49 of the Code of Federal Regulations, "Transportation," Parts 173 through 178, Tri-State Motor Transit Company, published tariffs, Interstate Commerce Commission (ICC), Docket No. MC and Supplements, 2. J.C. Evans et al., "Long-Lived Activation Products in Reactor Materials" NUREG/CR-3474, Pacific Northwest Laboratory for the Nuclear Regulatory Commission. August R.I. Smith, G.J. Konzek, W.E. Kennedy, Jr., "Technology, Safety and Costs of Decommissioning a Reference Pressurized Water Reactor Power Station," NUREG/CR-13 and addenda, Pacific Northwest Laboratory for the Nuclear Regulatory Commission. June H.D. Oak, et al., "Technology, Safety and Costs of Decommissioning a Reference Boiling Water Reactor Power Station," NUREGER672 and addenda, Pacific Northwest Laboratory for the Nuclear Regulatory Commission. June 198. "Financial Protection Requirements for Permanently Shutdown Nuclear Power Reactors," 1 CFR Parts 5 and 14, Federal Register Notice, Vol. 62, No. 21, October 3, "Microsoft Project 22," Microsoft Corporation, Redmond, WA, 22. "Atomic Energy Act of 1964," (68 Stat. 919). TLG Services, Inc.

99 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Appendh A, Page I of 4 APPENDM A UNIT COST FACTOR DEVELOPMENT TLG Services, Inc.

100 Palisades Nuclear Plant Decommissioning Cost Study Document N , Reu. Appendis A, Page 2 of 4 APPENDIX A UMT COST FACTOR DEVELOPMENT Example: Unit Factor for Removal of Contaminated Heat Exchanger < 3, lbs. 1. SCOPE Heat exchangers weighing < 3, lbs. will be removed in one piece using a crane or small hoist. They will be disconnected from the inlet and outlet piping. The heat exchanger will be sent to the waste processing area. 2. CALCULATIONS Act Activity ID Description Activity Duration (minutes) Critical Duration (minutes)* a b C d e f g h i Remove insulation Mount pipe cutters Install contamination controls Disconnect inlet and outlet lines Cap openings Rig for removal Unbolt from mounts Remove contamination controls Remove, wrap, send to waste processing area Totals (Activity/Critical) ) 6 3) 6 ( Duration adjustment(s): + Respiratory protection adjustment (5% of critical duration) + RadiatiodALARA adjustment (17.5% of critical duration) Adjusted work duration i Protective clothing adjustment (3% of adjusted duration) Productive work duration + Work break adjustment (8.33 % of productive duration) Total work duration (minutes).x** Total duration = 1.33 hr * * alpha designators indicate activities that can be performed in parallel _ TLG Services, Inc.

101 Palisades Nuckar Plant Decommissioning Cost Study Document N3-144O-oOa, Rev. Appendix A, Page 3 of 8 APPENDIX A (continued) 3. LABOR REQUIRED Crew Number Duration Rate cost (hours) ($W Laborers $28.92 $87.46 Craftsmen $41.36 $ Foreman $42.44 $425.8 General Foreman $44.26 $111.2 Fire Watch $28.92 $14.51 Health Physics Technician $43.1 $ Total labor cost $2, EQUIPMENT & CONSUMABLES COSTS Equipment Costs ConsumablesMaterials Costs -Blotting paper $.38 sq ft (1) -Plastic sheetshags $O.OS/sq ft {2} -Gas torch consumables 163 $3.79/hr x 1 hr {3} none $19. $4.5 $3.79 Subtotal cost of equipment and materials $27.29 Overhead 6% profit on equipment and 16. % $4.37 Total costs, equipment & material $31.66 TOTAL COST: Removal of contaminated heat exchanger <3 pounds: $2,717.8 Total labor cost Total equipment/material costs: Total craft labor man-hours required per unit: $2, $ TLG Services, he.

102 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Appendix A, Page 4 of 4 5. NOTES AND REFERENCES Work difficulty factors were developed in conjunction with the AIF (now NEI) program to standardize nuclear decommissioning cost estimates and are delineated in Volume 1, Chapter 5 of the Guidelines for Producing Commercial Nuclear Power Plant Decommissioning Cost Estimates, AIF/NESP-36, May References for equipment & consumables costs: 1. ww.mcmaster.com online catalog 2. R.S. Means (23) Section , page R.S. Means (23) Section , page 25 Material and consumable costs were adjusted using the regional indices for Kalamazoo, Michigan. TLG Services, Inc.

103 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Append& B, Page 1 of 8 APPENDIX B UNIT COST FACTOR LISTING (SAFSTOR: Power Block Structures Only) TL.G Services, Znc.

104 Palisades Nuclear Plant Decommissioning Cost Study Document N3.144-W, Rev. Appendix B, Page 2 of 8 APPENDIX B UNIT COST FACTOR LISTING (Power Block Structures Only) Unit Cost Factor Cost/Unit( $) Removal of clean instrument and sampling tubing, $/linear foot Removal of clean pipe.25 to 2 inches diameter, $/linear foot Removal of clean pipe >2 to 4 inches diameter, $/linear foot Removal of clean pipe >4 to 8 inches diameter, $/linear foot Removal of clean pipe >8 to 14 inches diameter, $/linear foot Removal of clean pipe 214 to 2 inches diameter, $/linear foot Removal of clean pipe >2 to 36 inches diameter, $/linear foot Removal of clean pipe 136 inches diameter, $/linear foot Removal of clean valves >2 to 4 inches Removal of clean valves 24 to 8 inches Removal of clean valves >8 to 14 inches Removal of clean valves >14 to 2 inches Removal of clean valves >2 to 36 inches Removal of clean valves 236 inches Removal of clean pipe hangers for small bore piping Removal of clean pipe hangers for large bore piping Removal of clean pumps, c3 pound Removal of clean pumps, 3-1 pound Removal of clean pumps, 1-1, pound Removal of clean pumps, >1, pound Removal of clean pump motors, 3-1 pound Removal of clean pump motors, 1-1, pound Removal of clean pump motors, >1, pound Removal of clean turbine-driven pumps < 1, pounds Removal of clean turbine-driven pumps > 1, pounds , , , , ,725.1 TLG Services, Inc.

105 Palisades Nuclear Plant Decommissioning Cost Study Document Reu. Apped B, Page 3 of 8 APPENDIX B (continued) Unit Cost Factor Cost/Unit($) Removal of clean PWR turbine generator Removal of clean heat exchanger <3 pound Removal of clean heat exchanger ~3 pound Removal of clean feedwater heaterldeaerator Removal of clean moisture separatorheheater Removal of clear PWR main condenser Removal of clean tanks, <3 gallons Removal of clean tanks, 3-3 gallons Removal of clean tanks, S3 gallons, $/square foot surface area Removal of clean electrical equipment, <3 pound Removal of clean electrical equipment, 3-1 pound Removal of clean electrical equipment, 1-1, pound Removal of clean electrical equipment, >1, pound Removal of clean electrical transformers < 3 tons hmoval of clean electrical transformers > 3 tons Removal of clean standby diesel-generator, <lo kw Removal of clean standby diesel-generator, 1 kw to 1 MW Removal of clean standby diesel-generator, >1 MW Removal of clean electrical cable tray, $/linear foot Removal of clean electrical conduit, $/linear foot Removal of clean mechanical equipment, <3 pound Removal of clean mechanical equipment, 3-1 pound Removal of clean mechanical equipment, 1-1, pound Removal of clean mechanical equipment, >1, pound Removal of clean WAC equipment, <3 pound 113, , , , , , , ,27.4 1, , , , TLG Services, Inc.

106 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Appendix B, Page 4 of 8 APPENDIX B (continued) Unit Cost Factor Cost/Unit($) Removal of clean WAC equipment, 3-1 pound Removal of clean HVAC equipment, 1-1, pound Removal of clean HVAC equipment, >1, pound Removal of clean HVAC ductwork, $/pound Removal of contaminated instrument and sampling tubing, $/linear foot Removal of contaminated pipe.25 to 2 inches diameter, $/linear foot Removal of contaminated pipe >2 to 4 inches diameter, $/linear foot Removal of contaminated pipe >4 to 8 inches diameter, $/linear foot Removal of contaminated pipe >8 to 14 inches diameter, $/linear foot Removal of contaminated pipe >14 to 2 inches diameter, $/linear foot Removal of contaminated pipe >2 to 36 inches diameter, $/linear foot Removal of contaminated pipe 236 inches diameter, $/linear foot Removal of contaminated valves >2 to 4 inches Removal of contaminated valves >4 to 8 inches Removal of contaminated valves >8 to 14 inches Removal of contaminated valves >14 to 2 inches Removal of contaminated valves >2 to 36 inches Removal of contaminated valves >36 inches Removal of contaminated pipe fittings >2 to 4 inches Removal of contaminated pipe fittings > 4 to 8 inches Removal of contaminated pipe fittings 8 to 14 inches Removal of contaminated pipe fittings > 14 to 2 inches Removal of contaminated pipe fittings >2 to 36 inches Removal of contaminated pipe hangers for small bore piping Removal of contaminated pipe hangers for large bore piping , , , , TLG Services, Znc.

107 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Appendix B, Page 6 of 8 APPENDIX B (continued) Unit Cost Factor Cost/Unit($) Removal of contaminated pumps, <3 pound Removal of contaminated pumps, 3-1 pound Removal of contaminated pumps, 1-1, pound Removal of contaminated pumps, >1, pound Removal of contaminated pump motors, 3-1 pound Removal of contaminated pump motors, 1-1, pound Removal of contaminated pump motors, >1, pound Removal of contaminated turbine-driven pumps < 1, pounds Removal of contaminated turbine-driven pumps < 1, pounds Removal of contaminated heat exchanger <3 pound Removal of contaminated heat exchanger >3 pound Removal of contaminated tanks, <3 gallons Removal of contaminated tanks, >3 gallons, $/square foot Removal of contaminated electrical equipment, c3 pound Removal of contaminated electrical equipment, 3-1 pound Removal of contaminated electrical equipment, 1-1, pound Removal of contaminated electrical equipment, >1, pound Removal of contaminated electrical cable tray, $/linear foot Removal of contaminated electrical conduit, $/linear foot Removal of contaminated mechanical equipment, <3 pound Removal of contaminated mechanical equipment, 3-1 pound Removal of contaminated mechanical equipment, 1-1, pound Removal of contaminated mechanical equipment, >1, pound Removal of contaminated HVAC equipment, <3 pound Removal of contaminated HVAC equipment, 3-1 pound , , , , , , , , , , , , , , , , TLG Services, Inc.

108 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Appendix B, Page 6 of 8 APPENDIX B (continued) Unit Cost Factor CostfUnit($) Removal of contaminated WAC equipment, 1-1, pound 2, Removal of contaminated WAC equipment, >1, pound 4, Removal of contaminated WAC ductwork, $/pound 2.1 RemovaVplasma arc cut of contaminated thin metal components, $/linear in Additional decontamination of surface by washing, $/square foot 5.3 Additional decontamination of surfaces by hydrolasing, $/square foot Decontamination rig hook up and flush Chemical flush of components/systems, $/gallon Removal of clean standard reinforced concrete, $/cubic yard Removal of grade slab concrete, $/cubic yard Removal of clean concrete floors, $/cubic yard Removal of sections of clean concrete floors, $/cubic yard Removal of clean heavily rein concrete w/#9 rebar, $/cubic yard Removal of contaminated heavily rein concrete why9 rebar, $/cubic yard Removal of clean heavily rein concrete wm18 rebar, $/cubic yard Removal of contaminated heavily rein concrete why18 rebar, $/cubic yard Removal heavily rein concrete why18 rebar & steel embedments, $/cu yd Removal of below-grade suspended floors, $/cubic yard Removal of clean monolithic concrete structures, $/cubic yard Removal of contaminated monolithic concrete structures, $/cubic yard Removal of clean foundation concrete, $/cubic yard Removal of contaminated foundation concrete, $/cubic yard Explosive demolition of bulk concrete, $/cubic yard Removal of clean hollow masonry block wall, $/cubic yard Removal of contaminated hollow masonry block wall, $/cubic yard , , , , , TLG Services, Inc.

109 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Appendix B, Page 7 of 8 APPENDIX B (continued) Unit Cost Factor Cost/Unit($) Removal of clean solid masonry block wall, $/cubic yard Removal of contaminated solid masonry block wall, $/cubic yard Backfill of below-grade voids, $/cubic yard Removal of subterranean tunneldvoids, $/linear foot Placement of concrete for below-grade voids, $/cubic yard Excavation of clean material, $/cubic yard Excavation of contaminated material, $/cubic yard Excavation of submerged concrete rubble, $/cubic yard Removal of clean concrete rubble, $/cubic yard Removal of contaminated concrete rubble, $/cubic yard Removal of building by volume, $/cubic foot Removal of clean building metal siding, $/square foot Removal of contaminated building metal siding, $/square foot Removal of standard asphalt roofing, $/square foot Removal of transite panels, $/square foot Scarifying contaminated concrete surfaces (drill & spall) Scabbling contaminated concrete floors, $/square foot Scabbling contaminated concrete walls, $/square foot Scabbling contaminated ceilings, $/square foot Scabbling structural steel, $/square foot Removal of clean overhead cranes/monorails < 1 ton capacity Removal of contaminated overhead cranes/monorails < 1 ton capacity Removal of clean overhead cranes/monorails 11-5 ton capacity Removal of contaminated overhead cranes/monorails >lo-5 ton capacity Removal of polar cranes > 5 ton capacity, each , , , ,58.46 TLG Seruices, Inc.

110 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Appendix B, Page 8 of8 APPENDIX B (continued) Unit Cost Factor CostNnit($) Removal of gantry cranes > 5 ton capacity, each Removal of structural steel, $/pound Removal of clean steel floor grating, $/square foot Removal of contaminated steel floor grating, $/square foot Removal of clean free-standing steel liner, $/square foot Removal of contaminated.free-standing steel liner, $/square foot Removal of clean concrete-anchored steel liner, $/square foot Removal of contaminated concrete-anchored steel liner, $/square foot Placement of scaffolding in clean areas, $/square foot Placement of scaffolding in contaminated areas, $/square foot Removal of chain link fencing, $/linear foot Removal of asphalt pavement, $/square foot Landscaping with topsoil, $/acre Cost of CPC B-88 LSA box & preparation for use Cost of CPC B-25 LSA box & preparation for use Cost of CPC B-12V 12 gauge LSA box & preparation for use Cost of CPC B-144 LSA box & preparation for use Cost of LSA drum & preparation for use Cost of cask liner for CNSI cask Cost of cask liner for CNSI 8-12A cask (resins) Cost of cask liner for CNSI 8-12A cask (filters) Decontamination of surfaces with vacuuming, $/square foot 18, , , , , , TLG Services, Inc.

111 Palisades Nuclear Plant Decommissioning Cost Study Document N , Rev. Append& C, Page 1 of 16 APPENDIX C DETAILED COST ANALYSIS TLG Services, Inc.

112 E8E Ba u *LL u lz 511 zn WL otc % Ea w*

113 Table C Palisades Nuclear Plant SAFSTOR Decommissioning Cost Estimate (Thousands of23 Dollars) 3.m3 972

114

115 Table C Palisades Nuclear PIant SAFSTOR Decommissioning Cost Estimate (Thousands of 23 Dollars) - 5, % 2696

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127 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the Matter of the Application of ) CONSUMERS ENERGY COMPANY ) for Adjustment of its Surcharges for ) Case No. U-1415 Nuclear Power Plant Decommissioning ) for the Palisades Nuclear Plant ) ) DIRECT TESTIMONY OF KURT M. HAAS ON BEHALF OF CONSUMERS ENERGY COMPANY June, 24

128 KURT M. HAAS DIRECT TESTIMONY Q. Please state your name and address. A. Kurt M. Haas, Big Rock Point Restoration Project, Charlevoix, Michigan. Q. By whom are you employed, Mr. Haas, and in what capacity? A. I am employed by Consumers Energy Company (Consumers or Company) as the Site General Manager of the Big Rock Point Restoration Project. Prior to becoming the Site General Manager of the Big Rock Point Restoration Project, I was Director of Engineering at the Palisades Nuclear Plant. Q. How long have you been the Site General Manager of the Big Rock Point Restoration Project? A. I became the Site General Manager in June 2. Q. What are your responsibilities as the Site General Manager? A. I am responsible for safely and efficiently dismantling and decommissioning the Big Rock Point Nuclear Plant and returning the entire plant site to a natural setting. In this capacity my responsibilities include the management of all aspects of decommissioning and site restoration work. Safety, operations, radiation protection and environmental services, construction, security, contract administration, planning, scheduling, and cost control functions all report to me. Q. Please describe your educational background and experience prior to attaining your current position. A. I earned a Bachelor of Science Degree in Nuclear Engineering from the University of Michigan, Ann Arbor in December Upon graduation I joined Iowa Electric Light and Power as a Nuclear Results Engineer at the Duane Arnold Energy Center, Palo, Iowa. Following startup testing and initial operation of the facility, I joined Consumers Power te64-kmh 1

129 KURT M. HAAS DIRECT TESTIMONY Company in November Initially I performed project engineering work for various projects at the Palisades Nuclear Plant and the Big Rock Point Nuclear Plant while stationed in the corporate offices in Jackson. In early 1979 I transferred to the Midland Nuclear Plant as the Plant Reactor Engineer charged with preparing the site for nuclear fuel handling, storage and operation. In 1983 as the Shift Engineering Supervisor I began formal training for certification and licensing as a Senior Reactor Operator (SRO). To gain additional operating experience I transferred to the Palisades Nuclear Plant in February 1984 and was promoted to Reactor Engineering Superintendent in the fall of In this position I was responsible for the design, testing and operation of nuclear fuel and the reactor and storage of spent nuclear fuel. In January 1985 I received an SRO license for Palisades from the United States Nuclear Regulatory Commission (NRC). During this period I was responsible for the evaluation, selection and implementation of dry fuel storage technology for spent nuclear fuel at Palisades Nuclear Plant. In January 199 I was promoted to Radiological Services Manager with responsibility for radiological and environmental services programs at Palisades. During my tenure in this position steam generators were replaced at Palisades, which necessitated a substantial staff augmentation of radiation protection personnel to safely conduct the replacement. From 1994 to the fall of 1997 I led various projects and departments at Palisades including leading a 7-person team to facilitate and respond to an NRC Diagnostic Evaluation of the plant, improvement in dry fuel storage loading, Director of Safety and Licensing, and Manager of Training. From October 1997 to May 2 I was the Director of Engineering for Palisades and was responsible for all design and engineering support of the facility. te64-kmh 2

130 KURT M. HAAS DIRECT TESTIMONY Q. Are you a member of any professional organizations? A. Yes. I am a member of the American Nuclear Society. I also participate as a member of the decommissioning working group of the Nuclear Energy Institute, an industry support group located in Washington, D.C.. Q. What is the purpose of your testimony? A. The purpose of my testimony is to (i) identify the retirement date for the Palisades Nuclear Plant, (ii) explain why the Company has selected the specific decommissioning option that was used for the Company s Palisades decommissioning cost estimate prepared by TLG Services, Inc. (TLG), (iii) address why certain assumptions were used in the Palisades decommissioning study, (iv) identify energy rates used in estimating Palisades decommissioning costs, and (v) address measures the Company anticipates will be used to control costs of Palisades decommissioning. Q. Are you sponsoring any exhibits in connection with your testimony? A. Yes. I am sponsoring the following exhibits: Exhibit A- (KMH-1) Decommissioning Timeline for Palisades Exhibit A- (KMH-2) US Department of Energy letter on waste acceptance timing dated June 3, 1997 Exhibit A- (KMH-3) Region 3 Regional Waste Acceptance Schedule (1998) Q. Were these exhibits prepared by you or under your direction and supervision? A. Exhibit A- (KMH-1) was prepared under my supervision. Exhibits A- (KMH-2) and A- (KMH-3) are documents that were prepared by the Department of Energy. te64-kmh 3

131 KURT M. HAAS DIRECT TESTIMONY Q. Please describe the Palisades Nuclear Plant. A. The Palisades Nuclear Plant is a single unit, large pressurized water reactor located near South Haven, Michigan which first produced electrical power at the end of The net demonstrated capability is about 789 Mwe. The plant is owned by Consumers Energy and is operated for Consumers Energy by the Nuclear Management Company, LLC. Q. How long is Palisades licensed to operate? A. The Nuclear Regulatory Commission (NRC) has issued a 4-year operating license for the Palisades Plant that expires on March 24, 211. Q. Is this end date a change from the original license end date for the plant? A. Yes. The original license expiration date was March 14, 27. The Company applied to the NRC for an extension of the expiration date to recapture the four-year construction period for the facility. The NRC has traditionally granted 4-year licenses for nuclear facilities beginning with the date of issuance of the construction permit. Most operating nuclear power facilities have applied for and received permission to extend their operating licenses by removing the construction period from the 4-year license time frame. On December 14, 2 the Company received approval from the NRC to continue to operate Palisades through March 24, 211. Q. Should the current license expiration date of 211 be used for purposes of this proceeding? A. Yes. The Company currently plans to operate the plant to the end of the NRC license life. Assuming the plant will be operated to any date other than the approved NRC license termination date would be speculative. Palisades is one of the oldest operating nuclear plants in the United States. The Company is in the process of reviewing whether te64-kmh 4

132 KURT M. HAAS DIRECT TESTIMONY a license extension might be an option. No decision has been made by Consumers management whether to seek a license extension. Even if a decision is made to seek a license extension, preparation of the license extension application and the NRC review process could easily take several years, with no certainty of result. The plant cannot operate beyond the license date. In my opinion the current NRC license date should be used for purposes of this case. Q. Is the plant within the NRC s safety criteria related to embrittlement of the reactor vessel? A. Presently the plant is within the NRC s safety criteria related to embrittlement of the reactor vessel. The Company believes that the plant can be safely operated to the end of its license life without exceeding the NRC s safety criteria. This is an area that would undoubtedly be taken into consideration if any extension were ultimately sought. Q. Have any nuclear plants in the United States been operated beyond 4 years? A. No. Q. What regulation or guide has the NRC published regarding the decommissioning of nuclear power plants? A. The NRC has issued a number of regulations and guides dealing with nuclear power plant decommissioning. On June 27, 1988 the NRC issued its Final Rule (Volume 53 Fed Reg No 123, pp ; 1 CFR Parts 3, 4, 5, 51, 7 and 72) on the General Requirements for Decommissioning Nuclear Facilities. (the Final Rule). On August 28, 1996 the NRC issued amendments to this rule (Volume 61 Fed Reg No 46, pp ). In August 199 the NRC published Regulatory Guide 1.159, Assuring the Availability of Funds for Decommissioning Nuclear Reactors (the Guide). The latest te64-kmh 5

133 KURT M. HAAS DIRECT TESTIMONY revision of the Guide, Revision 1, was issued in October 23. The Final Rule, as amended, and the Guide address decommissioning planning, timing, and funding, among other things. The NRC also issued NUREG/CR-5884 in November 1995 entitled Estimating Pressurized Water Reactor Decommissioning Costs. Regulatory Guide 1.184, Decommissioning of Nuclear Power Reactors, dated August 2 was also issued by the NRC. This regulatory guide, in conjunction with others, describes methods and procedures that are acceptable to the NRC staff for implementing requirements of the Final Rule, as amended, that relate to the initial activities and the major phases of the decommissioning process. Q. What is the NRC s definition of decommission? A. The NRC defines the term decommission as follows: Decommission means to remove a facility or site safely from service and reduce residual radioactivity to a level that permits- (1) Release of the property for unrestricted use and termination of the license; or (2) Release the property under restricted conditions and termination of the license. (Reference 1 CFR 5.2) Q. What decommissioning methods are described by the NRC in the Final Rule? A. The NRC has identified three different decommissioning methods. These three methods are referred to as DECON, SAFSTOR and ENTOMB. DECON is the method in which the equipment, structures, and other parts of the facility and site containing radioactive contaminants are removed or decontaminated to a level that permits the property to be released for use in accordance with the NRC s definition of decommissioning as soon as practical following final plant shutdown. SAFSTOR is the method in which the facility te64-kmh 6

134 KURT M. HAAS DIRECT TESTIMONY is placed in a safe and stable condition and maintained in that state until it is subsequently dismantled and decontaminated (deferred decontamination) to allow the property to be released in accordance with NRC regulations ENTOMB is the alternative method in which radioactive contaminants are encased in a structurally long-lived material, such as concrete; the entombed structure is appropriately maintained and continued surveillance is carried out until the radioactive material decays to a level permitting the unrestricted release of the property. Under the DECON, SAFSTOR or ENTOMB method the entire process must be accomplished within 6 years of final shutdown. Q. Is the ENTOMB option a viable one for Palisades? A. No. The extended operating history of nuclear power reactors, including Palisades, results in the buildup of significant levels of long-lived radioactive materials. These radioactive materials would exceed the limits for unrestricted release of the site even after 1 years of storage. Thus, the 6 year process limitation of the Final Rule could not be achieved. Q. What method of decommissioning did the Company direct TLG to use for the Palisades Plant decommissioning cost study? A. The Company directed TLG to use SAFSTOR in its decommissioning cost analysis. Exhibit A- (KMH-1) shows the decommissioning timeline assumed in the decommissioning cost study for Palisades. Q. Why did the Company choose to use a SAFSTOR method for the Palisades decommissioning study in its evaluation of fund adequacy? A. The Palisades Plant has about seven years remaining on its operating license. In order for the DECON option to be viable a low-level radioactive waste facility must remain te64-kmh 7

135 KURT M. HAAS DIRECT TESTIMONY available for the period needed to decommission Palisades Plant. At this time there is uncertainty as to whether a low level radioactive waste facility will be available when Palisades undergoes final shutdown. Palisades is currently able to access the disposal facilities in Barnwell, South Carolina and Clive, Utah. However, in June 2, South Carolina formally joined two other states to form the Atlantic Compact. The legislation allows South Carolina to gradually limit access to the Barnwell facility with only compact members having access after mid-28. The SAFSTOR option results in a greater likelihood that a low level radioactive waste storage facility will be available for decommissioning of Palisades. Second, using a SAFSTOR option provides an opportunity to use trust fund earnings to a greater extent to fund decommissioning. By having a period of time prior to commencing decontamination and dismantlement activities, it is possible to use more after-tax earnings during the safe storage period to fund a portion of the decommissioning costs. Third, the Company cannot state with certainty when the Department of Energy (DOE) will take spent fuel from the Palisades Plant. The assumption that a SAFSTOR option will be used is consistent with the assumed schedule for DOE transfer of spent fuel from the plant. The site cannot be released for unrestricted use until the DOE has removed all fuel from the site. Q. Why did the Company choose to use a site-specific cost estimate for the Palisades decommissioning study? A. The NRC requires assurance of fund adequacy for decommissioning costs. The NRC regulations in 1 CFR 5.75 provide that licensees of commercial nuclear plants set aside te64-kmh 8

136 KURT M. HAAS DIRECT TESTIMONY sufficient funds to pay decommissioning costs at the time termination of operation is expected. The company is required to provide a site specific cost estimate for Palisades with its Post Shutdown Decommissioning Activities Report (PSDAR). This report is required to be filed with the NRC in accordance with 1 CFR 5.82(a)(4)(i) prior to or within two years following permanent cessation of operations. Using site-specific cost estimates provides a more accurate projection of what costs will actually be incurred. Q. Do NRC decommissioning funding requirements address adjustment of cost estimates and associated funding levels during decommissioning? A. Yes. Decommissioning funding requirements from 1 CFR 5.82 require that a licensee continue to be able to provide reasonable assurances that adequate funds will be available for decommissioning. A licensee must notify the NRC if there are changes that significantly increase the decommissioning cost. There is also a provision which requires that there must be a means of adjusting cost estimates and associated funding levels over the storage and surveillance period for decommissioning activities if there are delays or other changes in the completion of decommissioning. Q. Under the SAFSTOR option will any decommissioning activities be able to proceed at Palisades between the date of final plant shutdown and when dismantlement begins? A. Yes. Certain equipment and structures can be removed and/or isolated from other buildings or components as soon as the final shutdown occurs. Draining and deenergizing of systems no longer required to support necessary systems and structures may occur. Cleanup and decontamination of certain systems may take place. Transfer of spent fuel into dry fuel storage will take place once the fuel has sufficiently cooled. However, most decommissioning activities will be delayed. te64-kmh 9

137 KURT M. HAAS DIRECT TESTIMONY Q. Explain how spent fuel management requirements prior to transfer of fuel to dry fuel storage affect decommissioning activities. A. It is necessary to store highly radioactive spent nuclear fuel after removal from the reactor in the water filled spent fuel pool for an appropriate cooling period. Only after the spent fuel has cooled in the water filled spent fuel cooling pool for an appropriate time can the spent fuel be safely removed for storage in a dry fuel storage system or moved to a dry transportable system without concern of overheating. As a result, during the cooling period while the spent fuel is in the spent fuel pool, all electrical, mechanical and structural support systems must be maintained in a fully operational condition. Support capabilities including operations, maintenance, radiation protection, emergency response and security must also be maintained. Q. What assumptions are made in the Palisades decommissioning cost study for cooling times for spent nuclear fuel prior to moving this spent fuel to dry storage? A. The Palisades decommissioning cost study assumes that the cooling time for the last spent fuel to be discharged after final shutdown of the plant will be 8 years. Q. Is NRC approval of spent fuel storage management plans required? A. Yes. 1 CFR 5.54(bb) states that for licensed nuclear power reactors: the licensee shall, within 2 years following permanent cessation of operation of the reactor or 5 years before expiration of the reactor operating license, whichever occurs first, submit written notification to the Commission for its review and preliminary approval of the program by which the licensee intends to manage and provide funding for the management of all irradiated fuel at the reactor following permanent cessation of operation of the reactor until title to the irradiated fuel and possession of the fuel is transferred to the Secretary of te64-kmh 1

138 KURT M. HAAS DIRECT TESTIMONY Energy for its ultimate disposal in a repository. Final Commission review will be undertaken as part of any proceeding for continued licensing under part 5 or part 72 of this chapter. The licensee must demonstrate to NRC that the elected actions will be consistent with NRC requirements for licensed possession of irradiated nuclear fuel and that the actions will be implemented on a timely basis. Where implementation of such actions requires NRC authorizations, the licensee shall verify in the notification that submittals for such actions have been or will be made to NRC and shall identify them. A copy of the notification shall be retained by the licensee as a record until expiration of the reactor operating license. The licensee shall notify the NRC of any significant changes in the proposed waste management program as described in the initial notification. Q. For purposes of the current Palisades decommissioning study, what assumptions were used regarding the timing and rate that spent nuclear fuel will be removed from Palisades? A. At this point in time it is not possible to determine with certainty when the DOE will begin to accept spent fuel. Given this uncertainty Consumers Energy directed TLG to assume that the DOE will begin accepting spent fuel in the year 21. By letter dated June 3, 1997 Consumers Energy was informed by DOE that their draft program plan showed, among other things, that a repository at Yucca Mountain would be available by year 21 if certain approvals were received. I have included a copy of this letter as my Exhibit A- (KMH-2). The assumed rate of acceptance is based on the Regional Waste Acceptance Schedule for Consumers that the DOE published in September 1998 in Document DE-RP1-98RW32. I have attached a copy as Exhibit A- (KMH-3). There are no allocations to Consumers in year 1. It was assumed that the Big Rock Point te64-kmh 11

139 KURT M. HAAS DIRECT TESTIMONY Plant would use the Company s allocations in years 2 and 3 and that Palisades would begin using the Company s allocations in year 4. The Palisades allocations for each year after the first 1 years are assumed to be the average of the Palisades allocations for the first 1 years. Q. Is Consumers seeking recovery in this case of incremental spent nuclear fuel costs resulting from delays in acceptance of spent nuclear fuel by the DOE? A. No. Storing spent fuel at the plant is an integral part of decommissioning. However, for purposes of evaluating fund adequacy the Company has excluded preliminary estimates of incremental spent nuclear fuel costs. The estimated cost to decommission Palisades in 23 dollars of $868 million excludes incremental spent nuclear fuel costs. The Company may include these costs in future analyses if deemed appropriate. However, these costs are not included in the current analysis of fund adequacy and are not included in development of the requested surcharges. Consumers Energy filed a complaint in the United States Court of Claims in December 22 concerning the failure of the DOE to begin removing spent fuel from the Company s nuclear plant sites. If our litigation against DOE is successful, we anticipate future recoveries of costs from the DOE. However, at this time we can make no assurance that the litigation against DOE will be successful. Spent fuel assumptions will be re-evaluated in light of any subsequent developments when the Company files its next report on decommissioning trust fund adequacy. Under procedures currently in place the next report will be filed by March 31, 27. te64-kmh 12

140 KURT M. HAAS DIRECT TESTIMONY Q. How was the cost of low-level radioactive waste disposal determined for the Palisades study? A. The cost is addressed by Mr. LaGuardia, who is providing testimony in this case. Q. Have the costs of removal and disposal of non-radioactive materials and structures been included in the decommissioning cost estimate for the Palisades Plant? A. Yes. As in prior estimates, Consumers Energy directed TLG to include these costs in the decommissioning cost estimate for Palisades. Although it acknowledges the incurrence of such costs, the NRC has not included costs of removal and disposal of non-radioactive structures and materials beyond that necessary for license termination in the NRC s definition of decommissioning because such costs are not necessarily incurred to remove radioactive structures or materials. However, in order to return sites to their pre-plant condition these costs must be incurred. Further, if these costs are not incurred, the sites of nuclear plants would be aesthetically unpleasing and could pose potential safety hazards. In particular, the removal of radioactive material will necessarily cause structural damage to adjacent structures and leave depressions in the surrounding soil. In addition certain State of Michigan requirements prohibit the abandonment in place of structural elements containing exposed rebar without long term surveillance programs that would add long term care costs to the site. Inclusion of costs to remove and dispose of non-radioactive materials and structures is, therefore, reasonable and gives a more accurate estimate of the total costs associated with decommissioning. Q. Were energy rates furnished to TLG for the Palisades decommissioning study? A. Yes. The energy cost rate used was $.45 per Kwh for electricity. te64-kmh 13

141 KURT M. HAAS DIRECT TESTIMONY Q. What measures does Consumers Energy anticipate will be used to control costs of decommissioning? A. The Company at present plans to act as the Decommissioning Operations Contractor (DOC) from the planning stages through execution to the final restoration of the site. As the DOC, Consumers Energy will exercise control over all contractors and subcontractors engaged in decommissioning activities at Palisades, consistent with current and future Company policies and procedures and management direction on competitive bidding and contract administration. Current company policies require competitive bidding for purchases of materials or services over $1,, except for emergencies or when only vendor can supply the goods or service. When competitive bidding procedures are not used, the Company documents the reasons why these procedures were not used. During the competitive bidding process, the qualifications of each contractor and sub-contractor will be reviewed to determine if they have the resources and expertise to complete the work on which they are bidding. Consumers Energy plans to utilize proven project management and controls techniques and state-of-the-art systems to control decommissioning costs including detailed, resource loaded schedules, integrated with budget and cost control systems. Periodic management reviews of cost, schedule and trend analyses will provide early identification of potential problem areas and enable timely corrective measures. Q. Does this conclude your direct testimony? A. Yes. te64-kmh 14

142 S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION In the Matter of the Application of ) CONSUMERS ENERGY COMPANY ) for Adjustment of its Surcharges for ) Case No. U-1415 Nuclear Power Plant Decommissioning ) for the Palisades Nuclear Plant ) ) EXHIBITS OF KURT M. HAAS ON BEHALF OF CONSUMERS ENERGY COMPANY June, 24

143 CaseNo.: U-1415 Exhibit: A-- WH-1) Witness: KMHaas Date: June 24 Palisades Nuclear Plant Page: 1of1 Decommissioning Timeline Shutdown 3/211 9/212 v v Preparation for Safe Storage I Begin Fuel Shipments to DOE 21 3 Safe Storage 3/225 v Spent Fuel Pool Empty 5/219 9 / v I v Preparation for Dismantlement Dismantlement 1/23 OW232 v 1 7/249 Site Restoration I v ISFSl Operation and Dismantlement I I Not drawn to scale ISFSI Empty 12/248

144 CaseNo.: u-1415n ~ Exhibit: A- (KMH-2) witness: KMZas Department of Energy Date: June 24 Washington, DC 2585 Page: 1 of3 CERTIFIED MAIL RETURN RECEIPT REQUESTED h4r. Al Williams Consumers Power Company 2778 Blue Star Memorial Highway Covert,M 4943 Consumers Power Company Contract DE-CROl-83NE373 Dear h4r. Williams: June 3,1997 This letter follows up on my letter to you dated December 17,1996, in w hl ch I informed you of the Department's anticipated delay in beginning spent nuclear fuel disposal by January 31, 1998, and on the responses from contract holders to the Department's request for comments on how best to accommodate the delay. The Department has reviewed the comments received, and I am attaching to this letter a summary of those comments and the Department's responses to them. The purpose of this letter is to advise you how the Department intends to proceed in light of the anticipated delay. The Department has determined that two different provisions of the Standard Contract are applicable in the present circumstance: Article M - Delays, and Article XV - Amendments. Article M deals specifically with how the parties are to p r d in the event either the Bepwtment or the contract holder experiences a delay in its ability to deliver, accept or transport spent fuel or high level waste in accomance wirh an appiidk a&duis. A&& X"; ICW+.-- the "uncertainties necessarily attendant upon long-term contracts" and provides a means by which the parties can mutually ape to amend the contract "as the paaies may deem to be necessary or proper to reflect their respective interests." While the Department believes the Article IX remedy governs the presently anticipated delay, we also recognize that the delay may create particular hardships for certain contract holders. Accordingly, in addition to proceeding under the Delays clause, we are inviting any interested contract holder to propose to the Department, in accordance with Article XV, particularized contract amendments that may assist it in dealing with hardships it may experience as a result of the Department's delay in accepting its spent fuel on the contract holder's presently scheduled delivery date. I

145 I' Article,,IX - Delays CaseNo.: U-1415 Date: June 24 Page: 2of3. A number of the contract holders submitted comments in response to the Department's December 17,1996 letter indicating that they believe the Department's delay in accepting spent fuel was avoidaple and that an adjustment of fee or other compensation would therefore be appropriate. The Department's draft Program Plan indicates that, if Yucca Mountain is determined to be suitable and licensable for disposal of spent fuel and high level waste, it would be available for disposal activities in 21. Furthermore, the Department has indicated that, if it receives authorization from the Nuclear Regulatory Commission to begin construction of a repository at Yucca Mountain in accordance with the time schedule in the draft Program Plan, with Commission approval, the Department could commence spent fuel acceptance at the repository in 27. I have preliminarily determined that this delay was unavoidable. (A copy of that preliminary determination is attached.) Because of the difference of views regarding whether or not the delay was avoidable, I have determined that a dispute exists within the meaning of Article XVI-Disputes, regarding whether or not the Department's anticipated delay was avoidable. Therefore, I am hereby providing you with 6 days within which to respond t my preliminary determination by submitting a written statement, supported by any releva& d B cumentation, setting forth the factual and legal basis for any contention that the delay was avoidable. After considering any such submissions, I will issue a final determination that will be appealable to the Board of Contract Appeals as described in Article XVI. If you wish to contest my preliminary determination that the Department's delay bi beginning disposal of spent fuel was unavoidable, please submit on or before August 4,1997, written statements and documentation supporting your position to the following address: US. Department of Energy Ofice of Headquarters Procurement Services Am: Ms. Beth Tomasoni, HR Independence Awxiw, S.Fi. Washington, D.C Article XV - Amendments While the Department believes that the delay at issue was unavoidable, and that the Department is therefore not obligated to provide a financial remedy for the delay, as noted above, we recognize that such delay may have resulted in hardship to certain contract holders. Therefore, the Department is prepared to address individual contract holders' spent fuel storage concerns through negotiation of amendments to individual contracts. Specifically, the Department is willing to consider amendments to individual contracts that would mitigate the impacts of the delay particular contract holders will experience in the acceptance of their spent fuel. Possible amendments could include, for example, compensation for onsite storage costs... I -2-

146 If you are interested in proposing amendments to your contract, pleas^ contact Mr. David Zabransky at (22) to schedule a meeting for the purpose of discussing such amendments. Sincerely, Attachments Beth A. Tomasoni Contracting Officer Office of Headquarters Procurement Services cc: Michael G. Moms (w/o attachment) CaseNo.: U-1415 Exhibit: A, (KMH-2) Witness: KMHaas Date: June 24 Page: 3f3-3-

147 Case No.: U-1415 Exhibit: A, (KMH-3) Witness: KMHaas Date: June 24 Page: 1of1 DRAFT RFP # DE-RP1-98RW32 REGION 3 * DOW CHEMICAL in Midland, Michigan has a TRlGA reactor. No fuel has been discharged as of Future plans are not known. C App. 1-5