ML21347A081

Draft Regulatory Guide DG-1348, Revision 1 (RG 1.159 Rev 3), Assuring the Availability of Funds for Decommissioning Production or Utilization Facilities

ML21347A081
Person / Time
Issue date:	02/28/2022
From:	Trent Wertz NRC/NMSS/DREFS/FAB
To:
O'Donnell E
Shared Package
ML17348B484	List: ML17348B485 ML21347A081
References
RG-1.158, Rev 3 DG-1348
Download: ML21347A081 (62)

Text

U.S. NUCLEAR REGULATORY COMMISSION DRAFT REGULATORY GUIDE DG-1348 Revision 1

Proposed Revision 3 to Regulatory Guide RG 1.159

Issue Date: February 2022 Technical Lead: Trent Wertz ASSURING THE AVAILABILITY OF FUNDS FOR DECOMMISSIONING PRODUCTION OR UTILIZATION FACILITIES

A. INTRODUCTION

Purpose

This document provides guidance to applicants and licensees of production or utilization facilities concerning methods acceptable to the staff of the U.S. Nuclear Regulatory Commission (NRC) for complying with the requirements in Title 10 of the Code of Federal Regulations (10 CFR) regarding funds for decommissioning. It also provides guidance on the con tent and form of the financial assurance mechanisms in those rules. For the purposes of this guidance, power reactors are utilization facilities in which the primary purpose is to produce electricity for commercial sale and non-power production or utilization facilities are production or utilization facilities in which the primary purpose is not to produce electricity for commercial sale.

Applicability

This Regulatory Guide (RG) applies to applicants and licensees subject to 10 CFR Part 50, Domestic Licensing of Production and Utilization Facilities, (Ref. 1), and 10 CFR Part 52, Licenses, Certifications, and Approvals for Nuclear Power Plants (Ref. 2).

Applicable Regulations

• 10 CFR 50.33, Contents of appli cations; general information, contains general requirements for production and utilization facility license applications. Under the requirements, each applicant must describe how reasonable assurance will be provided that fu nds will be available to decommission its facility. 10 CFR 52.77, Contents of applications; general information, contains similar requirements for nuclear power reactor license applications under 10 CFR Part 52.

This RG is being issued in draft form to involve the public in the development of regulatory guidance in this area. It has not received final staff review or approval and does not r epresent an NRC final staff po sition. Public comments are being solicited on this DG and its associated regulatory analysis. Comments should be accompanied by appropriate supporting data. Comments may be submitted through the Fede ral rulemaking Web site, http://www.regulations.gov, by searching for draft regulatory guide DG-1348. Alternativel y, comments may be submitted to Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, ATTN: Rulemakings and Adjudication s Staff.

Comments must be submitted by the date indicated in the Federal Register notice.

Electronic copies of this DG, previous versions of DGs, and oth er recently issued guides are available through the NRCs public Web site under the Regulatory Guides document collection of the NRC Library at https://nrcweb.nrc.gov/reading-rm/doc-collections/reg-guides/. The DG is also available through the NRCs Agencywide Documents Access and Management System (ADAMS) at http://www.nrc.gov/reading-rm/adams.html,

under Accession No. ML21347A081. The r egulatory analysis is associated with a rulemaking and may be found in ADAMS under Acces sion No.

ML22019A132.

• 10 CFR 50.75 Reporting and recordkeeping for decommissioning p lanning, establishes requirements regarding how each licensee will provide reasonabl e assurance that funds will be available to decommission its facility. The requirements addres s the amount of funds that must be provided, including updates, the methods to be used for assurin g funds, and provisions contained in trust agreements for safeguarding decommissioning funds.

• 10 CFR 50.82 Termination of license, describes the actions th at production and utilization facility licensees must take to apply for termination of a lice nse. It includes provisions for spending decommissioning funds collected under 10 CFR 50.75 and requires a site specific projected cost of managing irradiated fuel associated with the facility. 10 CFR 52.110 Termination of license, contains similar requirements for nuc lear power reactors licensed under 10 CFR Part 52.

• Appendix A to 10 CFR Part 30 Criteria Relating to Use of Finan cial Tests and Parent Company Guarantees for Providing Reasonable Assurance of Funds for Deco mmissioning, establishes criteria for byproduct material applicants or licensees to pass the financial test for decommissioning funds and for obtaining parent company guarante es.

Related Guidance

• NUREG-1307, Report on Waste Buri al Charges: Changes in Decommissioning Waste Disposal Costs at Low-level Waste Burial Facilities (Ref. 3), provides information that can be used in cost estimates for low-level radioactive waste disposal.

• NUREG-1713, Standard Review Plan for Decommissioning Cost Esti mates for Nuclear Power Reactors (Ref. 4), provides guidance to the NRC staff for revi ewing decommissioning cost estimates for nuclear power reactors.

• NUREG/CR-1756, Technology, Safety, and Costs of Decommissionin g Reference Nuclear Research and Test Reactors (Ref. 5), provides a methodology th at can be applied to estimating decommissioning costs of nuclear research and test reactors.

• Regulatory Guide 1.202, Standard Format and Content of Decommi ssioning Cost Estimates for Nuclear Power Reactors (Ref. 6), provides applicants a standar d format and content that can be used in submittals of decommissioning cost estimates for nuclea r power reactors.

• NUREG-1537, Parts 1 and 2, Guidelines for Preparing and Review ing Applications for the Licensing of Non-Power Reactors (Ref. 7), provides guidance fo r applicants preparing decommissioning cost estimates for non-power reactors and the NRC staff in its review of this information.

• Final Interim Staff Guidance Augmenting NUREG-1537, Parts 1 and 2, Guidelines for Preparing and Reviewing Applications for the Licensing of Non-P ower Reactors for Licensing Radioisotope Production Facilities and Aqueous Homogeneous Reac tors (Ref. 8), provides guidance for applicants preparing decommissioning cost estimates for radioisotope production facilities and aqueous homogeneous reactors and the NRC staff i n its review of this information.

DG-1348 Revision 1, Page 2 Purpose of Regulatory Guides

The NRC issues RGs to describe to the public methods that the staff considers acceptable for use in implementing specific parts of the agencys regulations, to explain techniques that the staff uses in evaluating specific problems or postulated events, and to provi de guidance to applicants. Regulatory guides are not substitutes for regulations and compliance with them is not required. Methods and solutions that differ from those set forth in RGs will be deeme d acceptable if they provide a basis for the findings required for the issuance or continuance of a permit o r license by the Commission.

Paperwork Reduction Act

This RG provides voluntary guidance for implementing mandatory information collections covered by 10 CFR 50 and 10 CFR 52 that are subject to the Pape rwork Reduction Act of 1995 (44 U.S.C. 3501 et. seq.). These information collections were approved by the Office of Management and Budget (OMB), under control num bers 3150-0017, 3150-0011, and 3 150-0151 respectively. Send comments regarding this information collection to the FOIA, Lib rary, and Information Collections Branch, (T6-A10M), U.S. Nuclear Regulatory Commission, Washingt on, DC 20555-0001, or by e-mail to Infocollects.Resource@nrc.gov, and to the OMB reviewer at OMB Office of Information and Regulatory Affairs, NEOB-10202 (3150-0017, 3150-0011, and 3150-0151), Offi ce of Management and Budget, Washington, DC 20503.

Public Protection Notification

The NRC may not conduct or sponsor, and a person is not require d to respond to, a collection of information unless the document re questing or requiring the col lection displays a currently valid OMB control number

DG-1348 Revision 1, Page 3 TABLE OF CONTENTS Page

A. INTRODUCTION........................................................................................................................... 1

B. DISCUSSION.................................................................................................................................. 6

Reason for Revision..6

Discussion.6

Amount of Funds for Decommissioning.......................................................................................... 6

Methods of Financial Assurance...................................................................................................... 8

C. STAFF REGULATORY GUIDANCE.......................................................................................... 11

1. Amount of Funds for Decommissioning........................................................................... 11

1.1 Funding Requirements for the Decommissioning Report/Initial Amounts............................................................................................................... 11

1.2 Adjustments to Certification Amounts................................................................ 12

1.3 Decommissioning Cost Estimates....................................................................... 12

1.4 Adjustments to Cost Estimates............................................................................ 12

2. Methods of Financial Assurance....................................................................................... 14

2.1 Guidance Applicable to All Methods of Financial Assurance............................. 14

2.2 Prepayment and External Sinking Fund.............................................................. 16

2.3 Guarantee Methods.............................................................................................. 21

2.4 Standby Trust....................................................................................................... 21

2.5 Governmental Statement of Intent....................................................................... 22

2.6 Triennial Reports................................................................................................. 22

2.7 License Termination Plan.................................................................................... 23

2.8 Procedures for Prematurely or Previously Shutdown Reactors........................... 24

D. IMPLEMENTATION.................................................................................................................... 24

GLOSSARY OF FINANCIAL TERMS..................................................................................................... 26

REFERENCES.......................................................................................................................................... 28

DG-1348 Revision 1, Page 4 APPENDIX A: EXAMPLES OF FINANCIAL ASSURANCE INSTRUMENTS................................. A-1

A-1 Example of Escrow Agreement...................................................................... A-2

A-1.1 Example of Certificate of Events.................................................................... A-7

A-1.2 Example of Certificate of Resolution............................................................. A-8

A-2 Examples of Certificates of Deposit............................................................... A-9

A-2.1 Example of Negotiable Certificate of Deposit................................................ A-9

A-2.2 Example of Nonnegotiable Ce rtificate of Deposit........................................ A-10

A-3 Examples of Trust Fund and Standby Trust Agreements............................. A-11

A-3.1 Example of Trust Fund Agreement.............................................................. A-11

A-3.2 Example of Standby Trust Agreement......................................................... A-17

A-3.2.1 Example of Certificate of Events.................................................................. A-18

A-3.2.2 Example of Certificate of Resolution........................................................... A-19

A-3.3 Example of Acknowledgment...................................................................... A-20

A-4 Example of Payment Surety Bond................................................................ A-21

A-5 Example of Irrevocable Standby Letter of Credit......................................... A-24

A-6 Examples of Documents Recommended To Support Corporate Guarantee...................................................................................................... A-26

A-6.1 Example of Letter from Chief Financial Officer.......................................... A-26

A-6.2 Financial Test: Alternative I........................................................................ A-27

A-6.3 Financial Test: Alternative II....................................................................... A-28

A-6.4 Example of Auditors Special Report by Certified Public Accountant.................................................................................................... A-29

A-6.4.1 Example of Schedule Reconciling Amounts Contained in CFOs Letter................................................................................................. A-30

A-6.5 Example of Parent Company Guarantee....................................................... A-31

DG-1348 Revision 1, Page 5 B. DISCUSSION

Reason for Revision:

This revision of RG 1.159 (Revision 3) was issued as part of a rulemaking to amend the Commissions regulations relating to decommissioning for nuclea r power reactors. The rulemaking, titled Regulatory Improvements for Pr oduction and Utilization Facilities Transitioning to Decommissioning (RIN No: 3150-AJ59; NRC Docket ID: NRC-2015-0070), amended 10 CFR 50.75 and several other regulations to provide for a more efficient process for transit ioning to decommissioning, reduce the need for exemptions from existing regulations and license amendment requests, and address other decommissioning issues identified by the NRC staff that could streamline and improve the overall decommissioning process. This revision of the RG provides guida nce on the rulemakings modification of the reporting period for power reactors licensed under Part 50 or Part 52 on the status of decommissioning funds from biennial to triennial. Additionally, this revision o f the RG clarifies the guidance for non-power production or utilization facilities and fuel reprocessing plan ts.

Discussion

According to 10 CFR 50.2, Defi nitions, 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 of the property under restricted conditions and termination of the license. A s used in this context, facility refers to the contaminated components (or noncontaminated components required to be dismantled to obt ain access to contaminated components) of the site, buildings and conten ts, and equipment associated w ith all NRC-licensed activities within the scope of 10 CFR 50.75.

There are three primary methods of decommissioning:

DECON is the method in which the equi pment, structures, and portions of a facility and site containing radioactive contaminants are removed or decontaminat ed to a level that permits the property to be released for use, in accordance with the NRCs definition of decommission, shortly after cessation of operations.

SAFSTOR is the method in which the nuclear facility is placed and main tained in a condition that allows it to be safely stored and subsequently decontamina ted (deferred decontamination) to a level that permits the property to be released for use in accordance with the NRCs definition of decommission.

ENTOMB is the method in which radioactive contaminants are encased in a structurally long-lived material, such as concrete. The entombed structure is app ropriately maintained, and continued surveillance is carried out, until the radioactivity decays to a level permitting release of the property for use in accordance with the NRCs definition of decommission.

So that a lack of funds does not result in delays in, or improp er conduct of, decommissioning that may adversely affect public health and safety, the NRCs regula tions require that applicants and licensees provide reasonable assurance that adequate funds will be available at the end of operation to decommission the facility. To provide this reasonable assurance, the regulations require that two factors be considered; namely, the amount of funds needed to decommissi on the facility and the method used to provide financial assurance for the funds.

DG-1348 Revision 1, Page 6 Amount of Funds for Decommissioning

Estimating the minimum amount of funds needed for decommissioning is important to prevent funding shortfalls that could a dversely affect public health and safety. Requirements for establishing the minimum funding amounts for decommissioning are set out in 10 C FR 50.33(k), 10 CFR 50.75, 10 CFR 50.82(a)(4), 10 CFR 50.82(a)(8), 10 CFR 50.82(a)(9), 10 CFR 50.82(b)(3), 10 CFR 50.82(b)(4),

10 CFR 52.110(d)(1), 10 CFR 52.110(h), and 10 CFR 52.110(i). Th ese include the following:

(1) An initial certification amount ( or, for non-power production o r utilization facility licensees, a site-specific decommissioning cost estimate), established at the operating license stage, is required under 10 CFR 50.75(b) and 10 CFR 50.75(c)(1).

(2) Adjustments to the certificati on amount (or site-specific decom missioning cost estimate) are required over the operating life and storage period, if any, of the facility. Specifically, 10 CFR 50.75(b) requires each power reactor licensee to adjust the ini tial certification amount annually by use of the equation in 10 CFR 50.75(c)(2) (non-power production or utilization facility licensees submit per 10 CFR 50.75(d)(1)), w hich provides for escalation factors for labor, energy, and waste burial. In addition, 10 CFR 50.75(f) requires each power reactor licensee to submit, about 5 years prior to the projected end of operation (about 2 years pr ior for non-power production or utilization facility licensees under 10 CFR 50.75(f)(4)), a pre liminary site-specific decommissioning cost estimate that includes an up-to-date assessment of the major factors that could affect the cost to decommission.

(3) A post-shutdown decommissioning activities report (PSDAR) must be submitted by the power reactor licensee to the NRC, with a copy to the affected states. This must be done prior to or within 2 years following permanent cessation of operations. The PSDAR must contain a description of the planned decommissioning activities along wit h a schedule for their accomplishment, a discussion whether the environmental impacts associated with site-specific decommissioning activities will be bounded by appropriate feder ally issued environmental review documents, a description of any decommissioning activities whos e environmental impacts will not be so bounded and will be evaluated prior to the performanc e of the activities, and a site-specific decommissioning cost estimate, including the projected cost of managing irradiated fuel (10 CFR 50.82(a)(4)(i) and 10 CFR 52.110(d)(1)). A non-power pr oduction or utilization facility or fuel reprocessing plant licensee must make application for license termination within 2 years following permanent cessation of operations, accompanied or preceded by a proposed decommissioning plan (10 CFR 50.82(b)(1)).

(4) A site-specific decommissioning cost estimate must be submitted to the NRC prior to the power reactor licensee using any funds in excess of those described i n 10 CFR 50.82(a)(8)(ii) or 10 CFR 52.110(h)(2). In addition, the licensee must submit such a cost estimate within 2 years following permanent cessation of operations, if not already submitted (10 CFR 50.82(a)(8)(iii)).

(5) A power reactor licensee is required by 10 CFR 50.82(a)(9)(ii)(F) or 10 CFR 52.110(i)(2)(vi) to provide [a]n updated site-specific estimate of remaining decom missioning costs as part of a license termination plan. In addition, 10 CFR 50.82(a)(9)(i) an d 10 CFR 52.110(i)(1) require a licensee to submit its plan at least 2 years before the date of termination of the license. A non-power production or utilization facility or fuel reprocessing p lant licensee is required by 10 CFR 50.82(b)(4)(iv) to provide [a]n updated cost estimate for the chosen alternative for decommissioning as part of a proposed decommissioning plan.

DG-1348 Revision 1, Page 7 The regulations in 10 CFR 50.75 (b) require each power reactor applicant and licensee to provide certification of financial assurance. The regulations in 10 CFR 50.75(d) require each non-power production or utilization facility applicant and licensee to su bmit a decommissioning report as required by 10 CFR 50.33(k). The specific information noted in paragraphs 2 through 5 above must also be provided at the appropriate time. The cer tification amounts in 10 CFR 50.75(c)(1) act as threshold review levels for power reactor licensees. While not necessarily representing the actual cost of decommissioning for specific power reactors, these certification amounts provide as surance that licensees are able to demonstrate adequate financial responsibility, in that the bulk of the funds necessary for a safe decommissioning are being considered and planned for early in t he life of the facility, thus providing adequate assurance that the facility will not become a risk to public health and safety when it is decommissioned. To estimate increases in the cost of decommissioning over the operating life of the facility, 10 CFR 50.75(c)(2) contains a formula to account for inflation that has occurred in the labor, energy, and waste burial components of decommissioning costs.

As indicated in 10 CFR 50.75(d), each non-power production or u tilization facility applicant and licensee is to submit a cost estimate for decommissioning its f acility. This initial cost estimate is not an exact accounting of the actual cost of decommissioning but is i ntended to provide an approximation of what decommissioning the reactor will cost at the proposed time of decommissioning. This estimate may be based on information from the literature (e.g., generic stud ies, licensee models, experience). Pacific Northwest Laboratory has made a detailed cost estimate of the conceptual decommissioning for research and test reactors in NUREG/CR-1756 and Addendum 1, issued July 1983, that can be used as a basis, for regulatory purposes, for developi ng estimates of the costs of decommissioning.

Use of the certification approach is the first step in providin g reasonable assurance that funds will be available to decommission the facility. Another step is that, 5 years prior to the expected end of operations, licensees are required to submit (or for a non-powe r production or utilization facility, to update 2 years prior to the expected end of operations) a preli minary site-specific decommissioning cost estimate that includes an up-to-date assessment of the major factors that could affect the cost to decommission and the plans for adjusting levels of funds. For a prematurely shutdown reactor, this step may involve the licensee submittal of a site-specific decommissioning cost estimate under 10 CFR 50.82(a)(4)(i) or 10 CFR 50.82(a)(8)(iii). Also, in acco rdance with 10 CFR 50.82(c) or 10 CFR 52.110(l), for licensees that shut down their reactors prematur ely, the collection period for any shortfall of funds will be determined on a case-by-case basis upon applicati on by the licensee, taking into account the specific financial situation of each licensee. As required by 10 CFR 50.75(f), this estimated amount of decommissioning funds is to be based on a then-current assessment of major factors that could affect decommissioning costs and is to include relevant, up-to-date information. The third step is a licensee evaluation of its planned decommissioning activities, the sched ule for their completion, and an update to its estimated costs to decommission the facility. This step wou ld include development and submittal of a PSDAR, a site-specific decommissioning cost estimate, and an irradiated fuel management plan.

Together, these steps provide reasonable assurance that the NRC s objective will be metnamely, at the time of permanent end of operati ons, sufficient funds are available to decommission the reactor in a manner that protects public health and safety.

Methods of Financial Assurance

The NRC regulations in 10 CFR 50.75(e) specify the general requ irements for methods that are considered acceptable for providing reasonable assurance of the availability of funds for decommissioning nuclear facilities. These methods and how they are evaluated are discussed in detail in the supplementary information to the NRC rulemaking action that established the requirements (General Requirements for Decommissioning Nuclear Facilities (53 FR 240 18, dated June 27, 1988; 61 FR 39301, dated July 29, 1996; and 62 FR 39091, dated July 2 1, 1997)), the actions that amended the

DG-1348 Revision 1, Page 8 requirements (Financial Assurance Requirements for Decommissioning Nuclear Power Reactors (63 FR 50465, dated September 22, 1998) and Decommissioning Tr ust Provisions (67 FR 78332, dated December 24, 2002)), and in NUREG-0586, Supplement 1, Generic Environmental Impact Statement on Decommissioning of Nuclear Facilities, issued November 2002. T hese documents present a rationale for the acceptability of methods for p roviding financial assurance. The supplementary information accompanying the final decommissioning rule indicates that, alt hough some methods for providing funding assurance now may not be available, they would be allow ed in the event that they become available. This guide addresses the more feasible alternatives in greater detail. Licensees are, of course, free to use any acceptable method as it becomes available.

According to 10 CFR 50.75(e)(1), the following methods are acce ptable for facilities to provide financial assurance (see the glossary of these terms in Appendi x A of this RG):

• PrepaymentThe deposit preceding the start of operation, or the transfer of a license pursuant to 10 CFR 50.80, Transfer of licenses, or 10 CFR 52.105, Tra nsfer of combined license, into an account segregated from license e assets and outside the administrative control of the licensee and its subsidiaries or affiliates of cash or liquid assets, su ch that the amount of funds would be sufficient to pay decommissioning costs at the time permanent termination of operations is expected. Prepayment may be in the form of a trust, escrow acco unt, government fund, certificate of deposit, deposit of government securities, or other payment acceptable to the NRC.

• External Sinking FundA fund established and maintained by setting funds aside perio dically, in an account segregated from licensee assets and outside the a dministrative control of the licensee and its subsidiaries or affiliates, in which the total amount of funds would be sufficient to pay decommissioning costs at the time permanent termination of operations is expected. An external sinking fund may be in the form of a trust, escrow acc ount, government fund, certificate of deposit, deposit of government securities, or other payment acceptable to the NRC.

• Guarantee MethodCan be in the form of surety bonds, letters of credit, or insu rance. Parent company guarantees may be used when a financial test specified in Appendix A, Criteria Relating to Use of Financial Tests and Parent Company Guarantee s for Providing Reasonable Assurance of Funds for Decommissioning, to 10 CFR Part 30, Ru les of General Applicability to Domestic Licensing of Byproduct Material, is used.

• Statement of IntentA Statement of Intent by a gove rnment agency, if applicable, i ndicating that funds for decommissioning will be obtained when necessary.

• Contractual ObligationsObligations on the part of a licensees customers, the total amount of which, over the duration of the contracts, will provide the licensees total share of uncollected funds to be needed for decommissioning pursuant to 10 CFR 50.75 (c) and (f), or 10 CFR 50.82, or 10 CFR 52.110.

• Other MechanismsRefers to any other mechanism, or combination of mechanisms, t hat provide assurance of decommissioning funding equivalent to that provided by the mechanisms listed above.

Consideration of International Standards

The International Atomic Energy Agency (IAEA) works with member states and other partners to promote the safe, secure, and peaceful use of nuclear technologies. The IAEA develops Safety Requirements and Safety Guides for protecting people and the en vironment from harmful effects of

DG-1348 Revision 1, Page 9 ionizing radiation. This system of safety fundamentals, safety requirements, safety guides, and other relevant reports, reflects an international perspective on what constitutes a high level of safety. To inform its development of this RG, the NRC considered IAEA Safety Requ irements and Safety Guides pursuant to the Commissions International Policy Statement (Ref. 9) and Management Directive and Handbook 6.6, Regulatory Guides (Ref. 10). The following IAEA Safety R equirements and Guides were considered in the update of this RG:

• IAEA Safety Standards, General Safety Requirement (GSR) Part 6, Decommissioning of Facilities (Ref. 11)

• IAEA Safety Standards, Safety Guide WS-G-2.1 Decommissioning o f Nuclear Power Plants and Research Reactors (Ref. 12)

DG-1348 Revision 1, Page 10 C. STAFF REGULATORY GUIDANCE

This section describes methods of implementing the general requ irements for financial assurance for decommissioning for production or utilization facility lice nsees and applicants who must comply with 10 CFR Part 50 or 10 CFR Part 52.

Regulatory Position C.1 provides guidance to applicants and lic ensees on establishing the amount of funds necessary for decommissioning as required by the regul ations. Regulatory Position C.2 provides guidance on methods acceptable to the NRC for assuring funds.

1. Amount of Funds for Decommissioning

1.1 Funding Requirements for the Decommissioning Report/Initial Amo unts

1.1.1 Power Reactor Applicants and Licensees

For power reactor applicants and licensees, the initial certifi cation amount of funds for decommissioning is based on the formulas in 10 CFR 50.75(c)(1) and (2) and represents the minimum funding level that applicants and licensees must meet.

At its discretion, a power reactor applicant or licensee may submit a certification based either on the formulas provided in 10 CFR 50.75(c)(1) and (2) or, when a higher funding level is desired, on a site-specific decommissioning cost estimate that is equal to or greater than that calculated in the formulas in 10 CFR 50.75(c)(1) and (2). A site-specific decommissioning cos t estimate may include non-NRC-required costs, but such costs should be identified. If such a combined submittal is used, licensees should ensure that the NRC-required cost estimate for decommissioning costs is equal to or greater than the amount stated in the formulas in 10 CFR 50.75(c)(1) and (2). Fo r certification amounts below the amount stated in the formulas in 10 CFR 50.75(c)(1) and (2), licensees must submit an exemption request containing the details as outlined in Regulatory Position C.1.3.

The purpose of the decommissioning report required under 10 CFR 50.33(k) and described in 10 CFR 50.75(b) and (c), is to provide reasonable assurance tha t licensees have a viable plan to accumulate funds in the certification amount, adjusted for infl ation, by the projected time of permanent cessation of operations. Each licensee should submit a statemen t indicating the certification amount and inflation adjustment appropriate for its reactor or reactors, t ogether with a photocopy or confirmed copy of the instrument being used to provide assurance of decommissi oning funding as required by 10 CFR 50.75(b)(5). If an external sinking fund is being used, the pro posed amount of annual (or more frequent) payments should be provided.

1.1.2 Non-power Production or Utilization Facility and Fuel Reprocessing Plant Applicants and Licensees

For non-power production or utili zation facility and fuel reprocessing plant applicants and licensees, the amount of funds is to be based on a cost estimate for decommissioning the facility and submitted to the NRC in a report required by 10 CFR 50.33(k). The cost estimate for decommissioning the facility need not be an exact accounting of the actual cost of decommissioning but rather an estimate of the costs for decommissioning. NUREG/CR-1756 may be used, as applicable, by applicants or licensees for initial cost estimates, with suitable adjustments to account for the site-specific differences as discussed in Regulatory Positions C.1.4.2 and C.1.4.3. The leve l of detail necessary to support the cost estimate is discussed in Regulatory Position C.1.3.

DG-1348 Revision 1, Page 11 1.2 Adjustments to Certification Amounts

For power reactor applicants and licensees, certification amoun ts described in Regulatory Position C.1.1 are to be adjusted annually, based on 10 CFR 50. 75(b) and (c)(2), and should be available for NRC inspection, as requested. The adjustment factors in 10 CFR 50.75(c)(2) are 0.65L+0.13E+0.22B, where L, E, and B are escalation factors for labor, energy, and waste burial costs respectively. Although these adjustments are to be made annually, they need not be sub mitted to the NRC. Applicants and licensees should use the latest available version of NUREG-1307 for timely examples of determining adjustments to certified amounts.

Because this formula does not provide for estimates of future i nflation but only of inflation that has already occurred, licensees should recalculate the certification amount each year using the previous years data, as described in 10 CFR 50.75(c)(2). This recalculation is for certification purposes only and does not affect estimated future inflation that a licensee may calculate to establish amortization or collection schedules for rate-making or other purposes.

Applicants and licensees who have prepared a site-specific deco mmissioning cost estimate should also annually prepare adjustment s to the cost estimate, but the se adjustments need not be submitted to the NRC (see Regulatory Position C.1.4).

Updated calculations based on the formulas in 10 CFR 50.75(c) o r on site-specific decommissioning cost estimates, as appropriate, for power reactor licensees are to be submitted every 3 years (and in certain cases annually) to the NRC as part of the report required in 10 CFR 50.75(f)(1).

1.3 Decommissioning Cost Estimates

For power reactor licensees, five decommissioning cost estimate s are required to be developed and submitted for NRC review:

(1) initial estimate that may be calculated according to 10 CFR 50.75(c), or that may be site-specific and at least equal to the decommissioning cost from 10 CFR 50.7 5(c);

(2) preliminary site-specific decommissioning cost estimate at or about 5 years before the projected end of operations, in accordance with 10 CFR 50.75(f)(2);

(3) site-specific decommissioning cost estimate contained in th e PSDAR, in accordance with 10 CFR 50.82(a)(4)(i) or 10 CFR 52.110(d)(1);

(4) site-specific decommissioning cost estimate within 2 years following permanent cessation of operations, if not already submitte d, in accordance with 10 CFR 50.82(a)(8)(iii) or 10 CFR 52.110(h)(3); and

(5) updated site-specific estimate of remaining decommissioning costs contained in the license termination plan, in accordance with 10 CFR 50.82(a)(9)(ii)(F) or 10 CFR 52.110(i)(2)(vi).

The NRC guidance providing details on content and format for th e reporting of these cost estimates is in RG 1.202 and in NUREG-1713.

Additionally, after submitting its site-specific decommissionin g cost estimate contained in the PSDAR, and until the licensee has co mpleted its final radiation survey and demonstrated that residual radioactivity has been reduced to a level that permits termination of its license, the licensee must annually

DG-1348 Revision 1, Page 12 submit to the NRC, by March 31, a financial assurance status re port, in accordance with 10 CFR 50.82(a)(8)(v) or 10 CFR 52.110(h)(5).

In general, decommissioning cost estimates are provided by major activity and major decommissioning phase or period. The cost estimate must account for the entire decommissioning work scope but not for items that are outside the definition of deco mmission in 10 CFR 50.2. Examples of activities outside the definition of decommission include, but are not limited to, (1) spent fuel management, (2) the design and/or construction of an independen t spent fuel storage installation (ISFSI),

(3) activities that are not directly related to supporting long -term storage of the facility, and (4) any other activities not directly related to radiological decontamination of the facility or site.

Cost estimates should provide costs for each of the following ( or similar) major activities and phases, with a level of detail appropriate to the type of cost estimate:

(1) major radioactive component removalreactor vessel and inte rnals, steam generators, pressurizers, large-bore reactor coolant system piping, and oth er large components that are radioactive to a comparable degree;

(2) radiological decontamination and decommissioningremoval of remaining radioactive plant systems, including radiological decontamination;

(3) management and support (undist ributed costs)expenses such as labor costs of utility support staff and decommissioning contract or staff, energy costs, regulatory costs, small tools, insurance, and others;

(4) waste packaging/shippingp lacing waste in packages and shipping to waste vendors or burial site;

(5) waste burial or waste vendorwaste burial charges, includin g waste vendors processing fees; and

(6) contingencyallowance for unexpected costs.

Cost estimates should also include the assumptions, references, and bases for unit costs used in developing the estimates, as well as a description of how the cost estimate accounts for inflation. The cost estimate should be provided in current-year dollars. Escalation of the waste disposition costs is considered separately from the general inflation rate applicable to labor, material, and energy costs. Regulatory Position C.1.2 discusses escalation factors.

1.4 Adjustments to Decommissioning Cost Estimates

In order to maintain adequate funds until completion of decommi ssioning, funding provisions should contain procedures for the periodic review and adjustmen t of the initial estimate and subsequent amounts set aside, during both operation and any storage period s, based on the factors below.

1.4.1 Inflation

The effect of inflation on the estimated decommissioning cost should be determined. For licensees subject to the certification requirements of 10 CFR 5 0.75(b), the certification amount should be adjusted annually, using the formula in 10 CFR 50.75(c)(2) (see Regulatory Position C.1.2). For licensees using site-specific decommissioning cost estimates (i.e., non-power production or utilization

DG-1348 Revision 1, Page 13 facility licensees, power reactor licensees not covered by 10 CFR 50.75(c) or exercising their option to submit a site-specific decommissioning cost estimate, or for licensees submitting preliminary or proposed decommissioning plans pursuant to 10 CFR 50.75(f) and 10 CFR 50.82(a)), new cost-estimate studies should be conducted periodi cally to determine whether the estimate reflects cost changes from inflation or other factors. In no case, however, should site-sp ecific decommissioning cost estimates be lower than the formula amounts in 10 CFR 50.75(c). As an altern ative to performing new site-specific decommissioning cost estimates, licensees may use standard measures of price indexing, such as the annual Consumer Price Index publis hed by U.S. Department of Lab or Bureau of Labor Statistics, or the inflation factor derived from the Implicit Price Deflator for t he Gross National Product as published in the Survey of Current Business, by the U.S. Department of Commerce, or in Economic Indicators, by the Council of Economic Advisors. The licensee may also use the factors indicated in Regulatory Position C.1.2 for escalating the principal components of the c ost estimate. Estimates of future inflation should bear a reasonable relationship to recent (i.e., within 10 years) economic performance or other relevant economic conditions and factors. The licensee should d ocument the bases for all estimates of past and future inflation.

1.4.2 Technological and Status Changes

For site-specific decommissioning cost estimates, the effect of technological changes or changes in plant status (e.g., whether t he plant has been shut down for an extended period) on the cost estimate should be determined. This coul d include reasonably determined recent developments in decontamination, waste processing and disposal, or cutting equi pment and other technology; updated information about the facility conditions, such as larger level s of contamination than anticipated; updated waste disposal conditions; update d residual radioactivity limits; and experience gained from the actual decommissioning of similar facilities.

1.4.3 Frequency of Adjustment

Adjustment to the certification amount and site-specific decommissioning cost estimates should be made at least once a year for the effects described in Regul atory Position C.1.4.1. Adjustment to site-specific decommissioning cost estimates for the effects described in Regulatory Position C.1.4.2 should be made according to the amount of change experienced, as appro priate, but in no event, less than once every 5 years. Regulatory Position C.2.1.5 addresses adjustments to funding levels to account for adjustments to the certificati on amount or site-specific decomm issioning cost estimates.

2. Methods of Financial Assurance

Methods to provide reasonable financial assurance for funds to decommission are in 10 CFR 50.75. The following sections provide specific guidance to licensees for complying with the various methods specified in 10 CFR 50.75.

2.1 Guidance Applicable to All Methods of Financial Assurance

2.1.1 If more than one licensee owns a facility, the method should pr ovide a clear indication of the funding provisions made by each li censee or agent acting for a licensee. Multiple licensees may, at their discretion, pool decommissioning funds for a jointly-o wned facility or facilities, as long as the contribution of each licensee and each facility is separately identifiable within the methods being used. Decommissioning funding plans may be submitted eith er jointly or separately by co-licensees. However, each licensee should ensure the accuracy of its share of the total NRC-required amount being certified plus periodic adjustments.

DG-1348 Revision 1, Page 14 2.1.2 The applicant or licensee should indicate that the method used provides, or will provide, at the projected cessation of operations, an amount at least equal to the estimated or certified decommissioning cost for the facility, when earnings are taken into account, as permitted by 10 CFR 50.75(e)(1)(i) and (ii). If a licensee uses a combinatio n of different methods for assuring decommissioning funds, the combined total of the methods being used should equal the certification amount, plus adjustments projected to be needed. At its discretion, a licensee may use an assurance method to provide funds for the adjusted certi fication amount plus non-NRC-required decommissioning costs, as long as each portion can be identified.

2.1.3 The applicant or licensee should provide evidence that the parties signing the financial instrument (for the applicant or licensee) are authorized to represent the organization in the transaction.

2.1.4 The applicant or licensee should provide evidence that the financial instrument is either a confirmed copy or a photocopy of the original instrument.

2.1.5 A licensee is required by 10 CFR 50.75(b)(1) to provide assurance that at any time during the life of the facility, through termina tion of the license, adequate funds will be available to complete decommissioning (see 61 FR 39278). Pursuant to 10 CFR 50.75(b)( 2), the minimum amount of financial assurance required for decommissioning must be adjusted annually, using a rate at least equal to that stated in 10 CFR 50.75(c)(2). The licensee should calculate the amount of the adjustment as of December 31 of each year. If the amount of fin ancial assurance provided by the licensee does not equal or exceed the minimum required amount o f financial assurance recalculated on December 31, then the licensee must adjust the amount of financial assurance it provides, such that it meets or exceeds the required amount.

Each of the methods of financial assurance should be adjustable to take into account variations in earnings and adjustments in the amount of funds being set aside for decommissioning both during operation and during storage periods, if any (see Regulatory Position C.1.4). Adjustments to the annual amount of funds being set aside may be made to coincide with rate cases considered by a licensees public utility commission (PUC) or by the Federal En ergy Regulatory Commission (FERC). Adjustments also may be made to reflect the schedule of ruling amounts established by the Internal Revenue Service under Section 468A of the Inter nal Revenue Code for a qualified1 Nuclear Decommissioning Reserve Fund. However, the sum of the adjusted ruling amount in a qualified account plus the target amount in a nonqu alified account should at least equal the amount indicated in 10 CFR 50.75(c). For licensees th at are no longer rate-regulated or do not have access to a non-by-passable charge, in every case, needed adjustments to the amount of funds set aside should be made at least once every 3 years, in conjunction with the triennial report. Therefore, shortfalls identified in a triennial report must be corrected by the time the next triennial report is due.

A licensee that may rely exclusively on an external sinking fun d to provide financial assurance under the circumstances defined in 10 CFR 50.75(e)(ii)(A) or (B ) (that is, where the total cost of decommissioning is provided through rates established by cost-o f-service ratemaking or non-by-passable charges) may make a good-faith effort to obtain rate r elief to cover its shortfall. A licensee meeting these criteria should inform its rate regulato r by March 31 of each year when a shortfall in financial assurance has occurred as of December 31 of the preceding year. The information should include the NRC minimum financial assurance requirement, the actual amount of the licensees decommissioning financial assurance, a nd the amount of additional cost

1 The NRC uses the terms qualified and nonqualified as defined by the Internal Revenue Service in Section 468A of its Code.

DG-1348 Revision 1, Page 15 recovery needed to meet the NRC amount. The licensee should req uest its rate regulator to consider scheduling a review of decommissioning cost recovery within a year. A copy of the information and request should be included in the licensees decommissioning fund status report in the years that the report is required. The licensee is expec ted to make adjustments to the amount of funds set aside as necessary to meet the minimum requ irement of 10 CFR 50.75(c), but in every case, within 5 years.

However, under the provisions of 10 CFR 50.75(e)(2), the NRC re serves the right to review, as needed, the rate of accumulation of decommissioning funds and, either independently or in cooperation with the FERC and the licensees state PUC, take ad ditional actions as appropriate on a case-by-case basis, including modification of the licensees schedule for the accumulation of funds.

2.1.6 The licensee should maintain continuity in the funding method a s follows:

2.1.6.1 If the licensee decides to change the funding method during the life of the facility or during the storage period, the licensee should notify the Document Control Desk as specified in 10 CFR 50.4, Written communications, or 10 CFR 52.3, Written commun ications, as appropriate, of this change at least 30 working days in advance of its effective date. Significant modifications to a funding method should also be submitted to the Document Contr ol Desk as specified in 10 CFR 50.4 or 10 CFR 52.3, as appropria te, at least 30 working days prior to the proposed effective date of the amendment, providing the text of the amendment and a sta tement of the reason for the amendment.

2.1.6.2 If ownership or operating responsibility for a facility is tran sferred, the existing financial assurance method is to be maintained until such transfer is app roved by the NRC pursuant to 10 CFR 50.80 or 10 CFR 52.105, and the transfer has been effect ed. (Sale-leaseback agreements do not require new or amended fi nancial assurance mechanisms unless so provided by such agreements.)

2.1.6.3 An acceptable assurance method is to be maintained until the 10 CFR Part 50 or 10 CFR Part 52 license is terminated.

2.1.7 A licensee may use a single account to commingle its NRC-requir ed radiological decommissioning funds with its non-radiological decommissioning funds (e.g., site restoration),

as long as the licensee is able to identify and provide an accounting for the NRC-required radiological decommissioning funds that are contained within it s single account.

2.2 Prepayment and External Sinking Fund

These funding methods should have the following characteristics:

2.2.1 An applicant or licensee using an escrow account, a certificate of deposit, or a trust agreement to satisfy 10 CFR 50.75(c) may use the examples of these methods i n Appendices A-1, A-2, and A-3 of this guide. These sample forms have been provided for general guidance.

Specific provisions may not be applicable to particular license es and may be modified as a licensees specific situation warrants. The NRC expects that all prepayment or external sinking fund mechanisms will, at a minimum, satisfy the following condi tions: (a) the instrument will meet the requirements of state law for that instrument, (b) it will provide for the segregation of decommissioning funds from the li censees other assets, (c) it will ensure that the funds are outside the administrative cont rol of the licensee, (d) it will ensure that special care is taken to

DG-1348 Revision 1, Page 16 safeguard the funds from invest ment risks, and (e) it will prov ide safeguards against improper payments from the funds.

The conditions stipulated in 10 CFR 50.75(e)(1)(i) and (ii), th at a prepayment account or an external sinking fund, respectively, be segregated from licens ee assets, are intended to ensure that the integrity of decommissioning funds will be maintained, especially with respect to protection from creditors in a bankruptcy situation, and to ens ure continuity of funding during license transfers. A case-by-case reasonableness standard will be applied to licensee compliance with this provision. Key indicators of segregation i nclude separation of the funds from the other assets of the licensee, through a transfer to an independent custodian or manager, and separate accounting. The phrase segregation from licensee assets does not require that the fund be placed in an entity, such as a grantor trust, that is e stablished as a separate tax-paying entity. Licensees should be aware, however, that such a trust w ill provide greater protection in bankruptcy than the escrow or certificate of deposit.

2.2.2 The following key provisions should be included in the trust in strument (or, when relevant, in the escrow or government fund agreement) to ensure that it is accep table to the NRC:

2.2.2.1 The trust agreement should state the purpose of the trust, and the nuclear facility must be identified. An acceptable statement of purpose is the statement required for a trust agreement to qualify as a Nuclear Decommissioning Reserve Fund under Section 468A of the Internal Revenue Code.

2.2.2.2 The trust agreement should specify that the trust fund is estab lished for the benefit of the licensee of the facility and/or the NRC, but only to the extent, in the case of the NRC, that the provisions of 31 U.S.C. 3302(b) would not be applicable. More than one lic ensee may be identified. A single trust agreement may establish two or more Nuclear Decommissioning Funds when a nuclear power plant is owned by two or more licensees.

2.2.2.3 The trust agreement should specify the obligations of the trust ee and, if applicable, the investment manager with respect to investments, specifically for nonelectr ic utilities, as described below under Regulatory Position C.2.2.3.

2.2.2.4 The trust agreement should specify the circumstances under whic h payments will be made from the trust. It must provide that no disbursements or payments ma y be made from the trust by the trustee, other than for payment of ordinary administrative expe nses (examples of ordinary administrative expenses are set out in the Internal Revenue Cod e, Section 468A) or withdrawals pursuant to 10 CFR 50.82(a)(8) or 10 CFR 52.110(h)(1), until th e licensee has first given the NRC 30 working days prior writte n notice, and that no disbursem ents or payments from the trust may be made if the licensee receives prior written notice of ob jection from the Director, Office of Nuclear Reactor Regulation, or the Director, Office of Nuclear Material Safety and Safeguards, as appropriate. As noted in 10 CFR 50.82(a)(8)(ii) or 10 CFR 52.11 0(h)(2), 3 percent of the generic amount specified in 10 CFR 50.75 may be used for decommissionin g planning, and such amounts may be expended during the operating life of a plant without an y requirement for written notice to be made. Also, licensees who ha ve submitted the certifications required under 10 CFR 50.82(a)(1) or 10 CFR 52.110(a) and commencing 90 days a fter the NRC receives the PSDAR may use an additional 20 percent without any requirements for notice to be made. After decommissioning has begun, no fu rther notification need be made to the NRC unless otherwise required. See Regulatory Guide 1.184, Decommissioning of Nucle ar Power Reactors, for additional guidance on the appropriate use of decommissioning f unds.

DG-1348 Revision 1, Page 17 2.2.2.5 For nonelectric-utility licensees, the trust agreement must specify that amendments to the trust must be executed in writing, and that the agreement cannot be amended in any material respect without 30 working days prior written notification from the lic ensee to the Document Control Desk as specified in 10 CFR 50.4 or 10 CFR 52.3, as appropriate. The trust agreement of an electric utility licensee must follow the requirements for trus t amendments as specified in the trusts themselves or in the re quisite state regulations.

2.2.2.6 The NRC defines material modifications to include, but not be limited to, actions such as:

change of trustee; change to any key provision of the trust, pa rticularly including the investment provisions; change of the provisions related to withdrawals fro m the trust; changes related to the beneficiary; changes related to the duration or term of the tru st; changes that could affect the ability of the trust agreement to provide reasonable assurance of decommissioning funds; and changes to the terms of providing information to the NRC. Modif ications that are not material include, for example, changes in fee structures paid to a trust ee; changes in arbitration provisions between the trustee and the licensee; changes in investment adv isor or investment manager, if applicable; and changes in invest ments, provided the changes co mply with other aspects of the regulations.

2.2.3 The trust agreement should specify that the trustees obligatio ns, or obligations of one or more investment managers, with respect to investments, include: (1) day-to-day management of the trust, guided by general investment instructions provided by th e licensee or the licensees designated investment manager; (2) the obligation of the trustee and/or investment manager to ensure that trust investments are made pursuant to an applicable standard of care, whether in investing or otherwise, required by state or federal law or reg ulation, or in the absence of such standard, a prudent investor standard as set forth in 18 CFR 35.32(a)(3) or any successor regulation; and (3) the obligation of the trustee and/or invest ment manager, if applicable, to avoid specifically prohibited investments, as described below.

2.2.3.1 The requirement that the trust should not be under the adminis trative control of the licensee will be met if day-to-day investment decisions are made by the trustee or investment manager and not by the licensee. Licensees may exercise general management oversight of trust fund investments to the extent allowe d under state trust law. The NR C staff recognizes that licensees have legitimate interests and responsibilities in ensuring appr opriate investment strategies for these funds and monitoring the progress of investments, and lic ensees may issue investment guidelines to a trustee or invest ment manager. However, licensees should avoid active day-to-day management of these funds. In this regard, if a trustee is unable to act as an investment manager, use of a professional investment manager may be necessary. A licensee or its affiliate may act as an investment manager in the case of passive fund management of trust funds, where management is limited to invest ments tracking market indices. F or example, a licensee may maintain a fund that purchases and sells equities in order to t rack the Standard & Poors 500 Index. Such passive funds may m ake direct investments in se curities or obligations of the licensee for the trust (or its affiliates) or of other reactor licensees (or their affiliates), provided that such investments are consis tent with the requirements to track the applicable index and are consistent with NRC restrictions and other regulatory requireme nts.

2.2.3.2 For nonelectric-utility licensees, the trust agreement must pro hibit investments in securities or other obligations of the licensee (the grantor) or any other owner or operator of any nuclear power reactor as well as their affiliates, subsidiaries, successors, or assigns. An affiliate is any company that controls, is controlled by, or is under common control wit h the licensee or any other owner or operator of the facility. A subsidiary is any company that is o wned or controlled directly or indirectly by the licensee or any other owner or operator of th e facility. A successor or assign is a

DG-1348 Revision 1, Page 18 company that has acquired possessory rights to the licensee, the facility, or any other owner or operator of the facility. The trust agreement also must prohibi t investments in a mutual fund in which at least 50 percent of the fund is invested in the securities of a licensee or parent company whose subsidiary is an owner or operator of a foreign or domestic nuclear power plant.

2.2.3.3 For nonelectric-utility licensees, indirect ownership of securi ties or other obligations of any owners or operators of nuclear power plants through investments in securities tied to market indices or through mutual funds in which less than 50 percent o f the fund is invested in the securities of a licensee or parent company whose subsidiary is an owner or operator of a foreign or domestic nuclear power plant i s allowed, provided that no mo re than 10 percent of the total value of the grantors trust assets may be indirectly invested in the securities of any entity owning or operating one or more nuclear power plants.

2.2.3.4 Investments selected with the approval of, or guidance from, th e state PUC with jurisdiction over the licensee, or from the FERC, would be acceptable to the NRC staff.

2.2.4 The escrow account, certificate of deposit, or trust agreement must comply with applicable state law for such instruments.

2.2.5 The financial assurance instrument, signed by individuals authorized to act for the appropriate parties, should be maintained in the licensees records and be available for inspection until termination of the 10 CFR Part 50 or 10 CFR Part 52 license. If feasible, licensees should maintain records or duplicates onsite.

2.2.6 The trustee of a fund should be an entity that has the authorit y to act as a trustee and whose trust operations are regulated or examined by a state or federal agen cy or, if a government fund is being used, the appropriate state or federal government agency. The word national in the title of a financial institution signals that the institution is federal ly regulated, as do the initials N.A., or the words National Association, or a national banking associ ation. The examinations department of the appropriate d istrict office of the U.S. Office of the Comptroller of the Currency can provide information about whether the institution has trust powers. The word State in the title of a financial institution signals that the institution i s State-regulated. The examinations department of the applicable sta te banking authority can provid e information about whether the institution has trust powers. Domestic branches of foreign bank s may be either federally regulated or state-regulated.

2.2.7 A trust agreement should include a clause in which the trustee accepts the responsibility of trusteeship.

2.2.8 Annual deposits in an external sinking fund, including projecte d earnings, should attempt to approximate the total amount remaining to be accumulated, divid ed by the remaining years of the license, as determined by the initial and updated certification amount specified in 10 CFR 50.75(c)(1) and (2) or in a site-specific decommissionin g cost estimate.

2.2.8.1 During plant operation, arithmetic precision is not required fo r fund accumulation rates. If, during the course of collecting funds, a licensee has accumulated significantly greater decommissioning funds than anticipated, it may reduce its remaining contributio ns commensurately. Likewise, if a licensee is significantly behind in collections, increased cont ributions should be used to make up the deficit. However, licensees should avoid undue reliance on contributions weighted in constant dollars toward the end of proj ected facility operating life. Additionally, the NRC staff considers reliance on an estimated tax deduction for decommissioning expe nses, at the time such expenses

DG-1348 Revision 1, Page 19 are incurred, to be a form of internal reserve and thus not all owed under 10 CFR 50.75(e). If sufficient rate relief by a state PUC or FERC is ultimately not obtained, the licensees stockholders will be expected to cover decommissioning costs th rough reduced return on equity.

Projected rates of earnings on an external sinking fund during plant operation should reasonably approximate the historical real rate of earnings (i.e., after i nflation and taxes) obtained by a given type of investment.

2.2.8.2 For decommissioning funds that are prepaid or in external sinki ng fund accounts, the regulations in 10 CFR 50.75(e)(i) and (ii) a llow a credit for projected earnings of up to a 2-percent annual real rate of return (i.e., nominal rate less inflation and taxe s) from the time of the future funds collection as a factor in calculating the total amount of funds that would be sufficient to pay decommissioning costs. This allowed credit may be greater than 2 percent if a licensee is subject to a rate-setting authority that will provide the total amount of funds necessary for decommissioning and the authority has specifically presumed a higher rate. The period of time for which the credit may be taken is determined by whether the generic formula amount or a site-specific decommissioning cost estimate with a specified safe-storage period is used as the basis for estimating decommissioning costs, as discussed below.

2.2.8.3 For licensees that use the generic formula amount for decommiss ioning cost estimates during the period of plant operation, this credit may be taken for the remaining years left on the operating license, and an additional pro rata credit may be taken into the presumed immediate dismantlement period (i.e., the first 7 years after shutdown), as long as such credit reflects the expected cash flow of expenditur es during this period. If the NRC has approved license renewal for a plant, the licensee may take the credit during the extend ed license period.

2.2.8.4 A licensee that uses a site-specific decommissioning cost estimate may take the allowed credit through the projected decommissioning period, provided that the site-specific decommissioning cost estimate is based on a period of safe storage that is specifically described in the estimate.

This decommissioning period includ es the period of safe storage, final dismantlement, and license termination. The allowed credit during the period of safe stora ge must reflect any withdrawals from decommissioning funds during this period, such as withdraw als to pay for annual costs to maintain the facility in a safe storage condition.

2.2.8.5 When a licensee adjusts the cost estimate for decommissioning annually, pursuant to 10 CFR 50.75(b)(2), the adjusted estimate less amounts already accumulated should form the basis of future collections, which can take into account the allowed credit. Funds already accumulated, plus scheduled fund contributions, in the case of those licensees authorized to utilize external sinking funds, plus projected earnings on thes e funds, should be sufficient to pay decommissioning costs at the time termination of operation is e xpected, allowing for extending the real rate of return credit into the decommissioning period, as noted above.

2.2.8.6 Actual earnings on existing funds may be used to calculate the need for future funds. However, pursuant to 10 CFR 50.75(f)(2)-(3), when a power reactor licensee is within 5 years or when a non-power production or utilization facility licensee is within 2 years of the projected end of operations and submits its preliminary site-specific decommissioning cost estimate, the licensee may take up to a 2-percent earnings credit (or a higher credit, if specifically presumed by a rate-setting authority) over a storage period, as long as the storag e period and its cost implications for total decommissioning costs are specifically addressed in the preliminary site-specific decommissioning cost estimate.

DG-1348 Revision 1, Page 20 2.2.8.7 Licensees who operate multiple modular reactors at a single sit e may take credit for earnings in such a manner that the assumptions for earnings credit track th e cash flows for decommissioning expenses for each module.

2.3 Guarantee Methods

Guarantee methods include suret y bonds, letters of credit, and insurance. Acceptable guarantee methods should have the following characteristics:

2.3.1 An applicant or licensee that uses a surety bond, letter of credit, or parent guarantee may use the sample wording for these methods contained in Appendices A-4, A-5, and A-6, respectively.

These sample forms have been p rovided for illustrative purposes. Specific provisions may not be applicable to particular licensees and may be modified as a lic ensees specific situation warrants.

However, each licensee should be sure that the instrument being used conforms to applicable state law.

2.3.2 The following documents should be maintained in the licensees records and be available for inspection by the NRC:

(1) for surety bonds, an originally signed duplicate or confirm ed copy of the surety bond, signed by individuals authorized to act for the licensee and the surety c ompany;

(2) for letters of credit, an originally signed duplicate or co nfirmed copy of the letter of credit, signed by individuals authorized to act for the licensee and the finan cial institution;

(3) for insurance, an original or copy of the insurance policy together with a certificate by insurers issuing the policy stating that the copy is a true copy of the currently effective policy issued to the licensee; and

(4) a standby trust fund to receive funds if the surety, letter of credit, or insurance is drawn upon.

2.3.3 The following should be considered for financial institutions u sed as guarantors:

(1) For surety bonds, the surety company must be listed by the U.S. Department of the Treasury in the most recent edition of Circu lar 570 and have a coverage limit sufficient to cover the cost estimates for which assurance is sought. Circular 570 is publis hed annually about July 1 and is updated in the Federal Register.

(2) For letters of credit, the issuing institution must be an e ntity that has the authority to issue a letter of credit, and whose letter of c redit operations are regulated and examined by a federal or state agency.

(3) For insurance, the insurance company must be licensed by state regulatory authorities to transact business as an insurer in one or more states.

2.4 Standby Trust

2.4.1 Under the decommissioning regulations, a licensee or applicant using a surety bond, letter of credit, or insurance must establish a standby trust fund to r eceive funds from the other financial instruments, if necessary. Under this arrangement, the benefici ary may draw on the funds held in the instruments listed and deposit them directly into the stand by trust for use as required for

DG-1348 Revision 1, Page 21 decommissioning. In addition to the instruments listed, applica nts or licensees using parent company guarantees, certificates of deposit, or government securities should establish a standby trust.

2.4.2 An applicant or licensee establishing a standby trust is directed to the sample wording for the instrument contained in Appendix A-3.2.

2.4.3 Appropriate documentation regard ing the standby trust should be maintained in the licensees records as indicated in Regulatory Position C.2.2.5.

2.5 Governmental Statement of Intent

A government licensee or applicant, as designated in 10 CFR 50. 75(e), can submit a statement of intent that contains a cost estimate for decommissioning and in dicates that funds for decommissioning will be obtained when necessary. Federal licensees are the only government licensees allowed to use a statement of intent for power reactors. As defined in 10 CFR 50.2, Federal licensee means any NRC licensee, the obligations of which are guaranteed by and suppor ted by the full faith and credit of the United States Government. Non-power production or utilization facility licensees using a statement of intent may be federal, state, or local government entities. The statement of intent should contain the following:

(1) identification of the facility or facilities for which it p rovides the financial assurance and the corresponding decommissioning costs,

(2) an indication that funds for decommissioning will be reques ted and obtained sufficiently in advance of decommissioning to prevent delay of required activit ies, and

(3) evidence of the authority of the official of the government entity to sign the statement of intent and evidence that the licensees decommissioning obligation is supported by the full faith and credit of the U.S. Government, or as applicable, the state or l ocal government.

A signed copy of the statement of intent that funds will be obt ained when necessary should be maintained in the licensees records and be available for inspection.

2.6 Triennial Reports

2.6.1 Pursuant to 10 CFR 50.75(f)(1), each power reactor licensee shall report, on a calendar-year basis, to the NRC by March 31, 2021, and at least once every 3 years thereafter on the status of its decommissioning funding provided by the financial assurance methods described in 10 CFR 50.75(e)(1) for each reactor or part of a reactor that it owns. However, each holder of a combined license under 10 CFR Part 52 need not begin reporting until the date that the Commission has made the finding under 10 CFR 52.103(g). The inf ormation in this report must include, at a minimum: (1) an estimate of the amount of decomm issioning funds to be required, pursuant to 10 CFR 50.75(b) and (c), or a site-specific decommi ssioning cost estimate, if greater than the amount in 10 CFR 50.75(c), as appropriate (or for a reactor that is neither a BWR or a PWR); (2) the amount accumulated to the end of the cal endar year preceding the date of the report to meet 10 CFR 50.75 requirements; (3) a sch edule of the annual amounts remaining to be collected; (4) the assumptions used regarding rates of escalation in decommissioning costs, rates of earnings on decommissioning fun ds, and rates of other factors used in funding projections; (5) any contracts upon which the l icensee is relying, pursuant to 10 CFR 50.75(e)(1)(v); and (6) any modifications to a licensee s current method of providing

DG-1348 Revision 1, Page 22 financial assurance occurring since the last submitted report, including any material modifications to decommissioning trust agreements. Once a power reactor licensee has determined that it is within 5 years of permanent cessation of operations, it shall submit this report annually. Licensees of plants involved in mergers or acq uisitions are also required to submit this report annually until the NRC has approved the merger or acquisition pursuant to 10 CFR 50.80 or 10 CFR 52.105. For such licensees, this report may be submitted as part of the license transfer application, provided that it contains the inf ormation described above. The NRC staff interprets this provision to require licensees to rev ert to a triennial reporting cycle upon completion of the merger or acquisition.

2.6.2 As long as the information described above is included in the r eport, no specific reporting format is required. The licensee should state with respect to any repo rting item whether the item is not applicable, if appropriate. As part of the report, licensees do not need to submit a complete listing of all investments, although it is helpful to indicate broad ca tegories of investments as a percent of the total trust portfolio (e.g., equities equal 20 percent o f the total value of the trust, federal government bonds and notes equal 50 percent of the total value of the trust, etc.). In addition, each licensee should indicate the assurance mechanism being used as a source of revenues for the external sinking fund (e.g., tr aditional cost-of-service ratemaking, a non-bypassable charge, long-term contracts that the NRC has found to be acceptable pur suant to 10 CFR 50.75(e)(1)(v)). 2 If the assumed real earnings rate on an external sinking fund e xceeds 2 percent, each licensee should indicate the specific rate ruling or decision by its rat e regulator that documents the earnings rate being used, as provided in 10 CFR 50.75(e)(1)(i) or (ii). If a licensee is using an assurance mechanism other than an external sinking fund, it sho uld include adjustments to the assurance mechanisms (e.g., a surety bond or letter of credit) as part of the report to account for any escalation since the previous report.

2.7 License Termination Plan

The regulation in 10 CFR 50.82(a)(9) requires that all power re actor licensees that commenced operation must submit an application for termination of license, which must be accompanied or preceded by a license termination plan. The license termination plan mus t include an updated site-specific estimate of remaining decommissioning costs and identification of source s of funds for license termination, spent fuel management, and ISFSI deco mmissioning, as applicable, as described in detail in RG 1.179, Standard Format and Content of License Termination Plans for N uclear Power Reactors (Ref. 13), and NUREG-1700, Standard Review Plan for Evaluating Nuclear Power Reactor License Termination Plans (Ref. 14). The regulation in 10 CFR 50.82(b) requires th at, for non-power production or utilization facilities and fuel reprocessing plants, a licensee that permanently ceases operations must make application for license termination within 2 years following pe rmanent cessation of operations, and in no case later than 1 year prior to expiration of the operating license. Each application for termination of a license must be accompanied or preceded by a proposed decommissioning plan, which must include an updated cost estimate for the chosen alternative for decommissioning, comparison of that estimate with present funds set aside for decommissioning, and plan for assur ing the availability of adequate funds for completion of decommissioning, as described in detail in NUREG-1537 and NUREG/CR-1756.

2 To the extent that power reactor licensees have received rate regulatory approval to use market-based rates for a significant portion of their nuclear-related revenues (i.e., greater than 20 percent), the NRC will not consider them to be subject to traditional cost-of-service rate regulation for that portion of their rates.

DG-1348 Revision 1, Page 23 2.8 Procedures for Prematurely or P reviously Shutdown Reactors

The funding requirements of 10 CFR 50.75, 10 CFR 50.82, and 10 CFR 52.110 apply to 10 CFR Part 50 or 10 CFR Part 52 facilities, including those that were shut down prior to the effective date in the rule, because these facilities possess a 10 CFR Part 50 or 10 CFR Part 52 license, albeit potentially modified. For a facility that has permanently ceased operation before the expiration of its license, in accordance with the provisions of 10 CFR 50.82(c), the collection period for any shortfall of funds will be determined upon application by the licensee, on a case-by-case basis taking into account the specific financial situation of each licensee.

Each licensee should provide the following:

2.8.1 information on how reasonable assurance will be provided that f unds will be available to decommission the facility;

2.8.2 information on the amount of f unds necessary for decommissioning, as required by 10 CFR 50.75(f) (i.e., a site-specific decommissioning cost est imate that includes provisions for adjusting the estimate should be submitted based on Regulatory Position C.1); and

2.8.3 information on the method of fin ancial assurance to be used, as required by 10 CFR 50.75(e).

That is, funds needed to complete decommissioning are to be pla ced in an account segregated from licensee assets and outside the licensees administrative control, or a surety method or funding statement of intent shoul d be maintained based on Regulatory Position C.2.

DG-1348 Revision 1, Page 24 D. IMPLEMENTATION

The NRC staff may use this regulatory guide as a reference in its regulatory processes, such as licensing, inspection, or enforcement. However, the NRC staff does not intend to use the guidance in this regulatory guide to support NRC staff actions in a manner that would const itute backfitting as that term is defined in 10 CFR 50.109, Backfitting, and 10 CFR 72.62, Backfitting, and as described in NRC Management Directive 8.4, Management of Backfitting, Forward Fitting, Issue Finality, and Information Requests, (Ref. 15), nor does the NRC staff intend to use the guidance to affect the issue finality of an approval under 10 CFR Part 52, Licenses, C ertifications, and Approvals for Nuclear Power Plants.

DG-1348 Revision 1, Page 25 GLOSSARY OF FINANCIAL TERMS

certificate of deposit (CD)A banks, or other financial institutions, written acknowledg ment of the receipt and deposit of a sum of money by the licensee or applic ant and its promise of repayment.

When using a CD to demonstrate financial assurance for decommis sioning, the licensee deposits, with a bank or other financial institution, funds sufficient to cover the certification amount or site-specific cost of decommissioning the licensed facility and receives a CD.

contractual obligations Defined in 10 CFR 50.75(e)(1).

decommissioning financial assuranceThe system of regulation used by the NRC to ensure that funds are available when needed for decommissioning. The term also refers to the total amount of assurance provided using one or more of the methods specified in 10 CFR 50.75(e). A licensee is required to provide financial assurance at all times during the life of the facility, through termination of the license, tha t adequate funds will be availab le to complete decommissioning.

escrow accountAn account containing funds depo sited by the licensee or applicant and held by a bank or other financial institution. An escrow account differs from similar accounts in that the licensee or applicant provides funds that are held by the escrow until t he happening of a contingency or the performance of a condition, such as commencement of decommi ssioning, and then the funds are released to the grantor or the grantors designee or, if appropriate, placed in the standby trust.

external sinking fundA fund, established and maintained by setting funds aside peri odically in an account segregated from licensee assets and outside the adminis trative control of the licensee and its subsidiaries or affiliates, in which the total amount of fu nds would be sufficient to pay decommissioning costs at the time permanent termination of oper ations is expected. An external sinking fund may be in the form of a trust, escrow account, gov ernment fund, CD, deposit of government securities, or other payment acceptable to the NRC.

financial testAn accounting ratio requirement, net worth requirement, bond r ating requirement, or similar requirement or combination of requirements that measure s the financial strength of a firm providing financial assurance. T he financial test is used by a firm that provides a guarantee to a licensee, to show its own financial strength and its ability to support the guarantee. This mechanism is unavailable to electric-utility (power-reactor) licensees. (See Appendix A, Criteria Relating to Use of Financial Tests and Parent Company Guarantee s for Providing Reasonable Assurance of Funds for Decommissioning, to 10 CFR Part 30, Ru les of General Applicability to Domestic Licensing of Byproduct Material.)

insuranceInsurance, in this case, would b e similar to surety bonding, as discussed below, in that it would guarantee that decommissioning costs will be paid to a tr ustee, should the licensee default.

letter of creditA binding agreement by which the issuing party, such as a bank or other financial institution, agrees on behalf of the applicant or licensee (the account party) to pay a governmental or government-approved authority (the beneficiary) in the event of any default by the licensee in the performance of decommissioning.

line of creditAn arrangement of the licensee with a lender (a bank or other financial institution) in which the lender agrees to provide funds required for decommissioning of the licensees facility.

The maximum amount of credit stat ed in the contract between the applicant or licensee and the lender must be at least sufficient to equal the certified or es timated cost of decommissioning.

DG-1348 Revision 1, Page 26 parent company guaranteeA promise by one party (the guarantor) to pay specified debts or perform specified obligations of another party (the principal) in the e vent that the principal fails to satisfy the debts or obligations. Specifically, to satisfy the decommis sioning regulations, an applicants or licensees parent corporation guarantees providing specified dollar amounts to fund performance of decommissioning in the event of the licensees default. A parent company guarantee can only be used if the parent company passes a finan cial test. (See Appendix A to 10 CFR Part 30.)

prepaymentThe deposit preceding the start of operation, or the transfer of a license pursuant to 10 CFR 50.80 or 10 CFR 52.105 into an account segregated from l icensee assets and outside the administrative control of the licensee and its subsidiaries or affiliates of cash or liquid assets, such that the amount of funds would be sufficient to pay decommissio ning costs at the time permanent termination of operations is exp ected. Prepayment may be in the form of a trust, escrow account, government fund, CD, deposit of government securities, or other payment acceptable to the NRC.

shortfallThe difference between the am ount of financial assurance provi ded by the licensee and the amount of financial assurance re quired, when the amount provide d is less than the amount required.

standby trust fundA trust fund (see below) set up to receive funds from a surety, letter of credit, insurance, or guarantee when pay ment is made from them, to ensu re that the funds remain available for decommissioning.

surety bondA guarantee that decommissioning costs will be paid, should th e licensee default. The surety bond is a contract that the licensee or applicant (the principal) enters into with a qualified surety company (the surety) to assure the Commission or state r egulatory agency that the licensee will fulfill its decommissioning obligations. In the event of t he licensees default, the surety guarantees that decommissioning costs will be paid.

trust fundA three-party agreement whereb y the licensee or applicant, called the grantor or trustor, transfers assets to a trustee, such as a bank, other financial institution, or governmental authority, to hold on behalf of the benefic iary (e.g., a state agency, or the NRC). The assets may be at least equal to the cost of decommissioning (prepayment) or may build up over time, such that the amount of funds should be sufficient to pay decommissioning cos ts (external sinking fund).

DG-1348 Revision 1, Page 27 REFERENCES3

1. U.S. Code of Federal Regulations (CFR), Domestic Licensing of Production and Utilization Facilities, Part 50, Chapter I, Title 10, Energy 4.

2. CFR, Licenses, Certifications, and Approvals for Nuclear Power Plants, Part 52, Chapter I, Title 10, Energy.

3. U.S. Nuclear Regulatory Commission, (NRC), NUREG-1307, Report on Waste Burial Charges, Washington, DC.

4. NRC, NUREG-1713, Standard Review Plan for Decommissioning Cost Estimates for Nuclear Power Reactors, Washington, DC.

5. NRC, NUREG/CR-1756, Technology, Safety, and Costs of Decommiss ioning Reference Nuclear Research and Test Reactors, July 1983, Washington, DC.

6. NRC, Regulatory Guide 1.202, Sta ndard Format and Content of De commissioning Cost Estimates for Nuclear Power Reactors, Washington, DC.

7. NRC, NUREG 1537, Parts 1 and 2, Guidelines for Preparing and R eviewing Applications for the Licensing of Non-Power Reactors, February 1996, Washington, DC.

8. NRC, Final ISG Augmenting NUREG-1537, Parts 1 and 2, Guideline s for Preparing and Reviewing Applications for the Licensing of Non-Power Reactors, for Licensing Radioisotope Production Facilities and Aqueous Homogeneous Reactors, dated October 2012, Washington, DC.

9. NRC, Nuclear Regulatory Commiss ion International Policy Statement, Federal Register, Vol. 79, No. 132, July 10, 2014, pp. 39415-39418.

10. NRC, Management Directive (MD) 6.6, Regulatory Guides, Washing ton, DC, May 2, 2016 (ADAMS Accession No. ML18073A170).

11. International Atomic Energy Agency (IAEA) Safety Standards, General Safety Requirement (GSR) Part 6, Decommissioning of Facilities5.

12. IAEA Safety Standards Safety Guide WS-G-2.1 Decommissioning of Nuclear Power Plants and Research Reactors.

3 Publicly available NRC published documents are available electronically through the NRC Library under Document Collections on the NRCs public Web site at: http://www.nrc.gov/reading-rm/doc-collections/. The documents can also be viewed on-line or printed for a fee in the NRCs Public Document Room (PDR) at 11555 Rockville Pike, Rockville, MD; the mailing address is USNRC PDR, Washington, DC 20555; telephone (301) 415-4737 or (800) 397-4209; fax (301) 415-3548; and e-mail pdr.resource@nrc.gov.

4 The Code of Federal Regulations may be obtained electronicall y from the U.S. Government Printing Office at:

http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR

5 Copies of International Atomic Energy Agency (IAEA) documents may be obtained through their Web site:

https://www.iaea.org/ or by writing the International Atomic Energy Agency, P.O. Box 100 Wagramer Strasse 5, A-1400 Vienna, Austria.

DG-1348 Revision 1, Page 28

13. NRC, Regulatory Guide 1.179, Sta ndard Format and Content of Li cense Termination Plans for Nuclear Power Reactors, Washington, DC.

14. NRC, NUREG-1700, Standard Revie w Plan for Evaluating Nuclear Power Reactor License Termination Plans, Washington, DC.

15. NRC, Management Directive 8.4, Management of Facility-Specific Backfitting and Information Collection, Washington, DC.

DG-1348 Revision 1, Page 29 APPENDIX A

EXAMPLES OF FINANCIAL ASSURANCE INSTRUMENTS

The following formats for finan cial assurance instruments provide examples of language and provisions for compliance with financial assurance requirements for decommissioning for some of the mechanisms allowed in the U.S. Nuclear Regulatory Commissions (NRCs) regulations. Although the specific language is not required by decommissioning regulation s, except for certain provisions, applicants and licensees will find that its use will simplify the submittal process. Licensees may add, delete, or modify sample provisions as their circumstances warrant. However, licensees should ensure that the financial assurance instruments being used are valid under applicable state law and comply with the NRCs decommissioning regulations in Title 10, Section 50.33 an d Section 52.77, Contents of Applications; General Information, of the Code of Federal Regulations (10 CFR 50.33 and 10 CFR 52.77); 10 CFR 50.75, Reporting and recordkeeping for decommis sioning planning; and 10 CFR 50.82 and 10 CFR 52.110, Termination of license.

DG-1348 Revision 1, Appendix A, Page A-1 APPENDIX A-1

EXAMPLE OF ESCROW AGREEMENT

ESCROW NUMBER ___________

Paragraph 1. Establishment of Escrow Account

It is agreed between the parties that [insert name of licensee], licensee, has elected to establish an escrow account with [insert name, address, and position of escr ow agent] to provide financial assurance for decommissioning of the facility(ies) in the amounts shown b elow:

[For each facility for which financial assurance is provided by the escrow Agreement, list facility name, address, and license and/or docket number, corre sponding estimated or certified decommissioning costs, and indicate amount of financi al assurance provided by the escrow account.]

Paragraph 2. Description of Property in Escrow Account

It is hereby acknowledged by the parties that [list the assets that have been delivered to the escrow agent and indicate the value of each item] has (have) be en delivered to escrow and will remain in the escrow account created by this Agreement until one of the t wo conditions stated in paragraph 3 of this Agreement has been satisfied.

[Insert name of licensee] warrants to and agrees with [insert name of escrow agent] that, unless otherwise expressly set forth in this Agreement, there is no se curity interest in the property in the escrow account or any part thereof; no financing statement under the U niform Commercial Code is on file in any jurisdiction claiming a security interest in or describing (whe ther specifically or generally) the escrow account or any part thereof; and the escrow agent shall have no responsibility at any time to ascertain whether or not any security interest exists or to file any fina ncing statement under the Uniform Commercial Code with respect to the escrow account or any part thereof.

Paragraph 3. Conditions of Escrow Agreement

The property described in paragr aph 2 above will remain in the escrow account created by this Agreement until one of the two following conditions has been sa tisfied: (1) the decommissioning activities required by 10 CFR Part 50 have been authorized purs uant to paragraph 4 or completed, the license has been terminated, the facility site is available for use for public or private purpose, pursuant to NRC regulations, or the escrow account has been terminated by n otice, in writing, from [insert name of licensee]; or (2) the escrow agent, [insert name of the escrow agent], has been notified by the [insert NRC or name of the state regulatory agency], in writing, that the l icensee, [name of licensee], has defaulted on the agreed obligation to carry out the decommissioning for the above listed facility(ies).

Paragraph 4. Disbursement of Property in Escrow Account

The [insert name of escrow agent] shall make payments from the escrow account upon the presentation of a certificate duly executed by the Secretary or appropriate Officer of the [insert name of licensee] attesting to the occurrence of the events, and in the form set forth in the attached Specimen Certificate, and upon presentation of a certification attesting to the following conditions:

(1) that decommissioning is proceeding pursuant to an NRC-noticed or NRC-approved plan, and

DG-1348 Revision 1, Appendix A, Page A-2 (2) that the funds withdrawn will be expended for activities undertaken pursuant to that plan.

Or upon [insert name of escrow agent] receiving written notific ation of licensee default from the

[insert NRC or state regulatory agency], [insert name of escrow agent] shall make payments from the escrow account as the [insert NRC or name of state regulatory a gency] shall direct, in writing, to provide for the payment of the costs of the required decommissioning ac tivities covered by this Agreement. The escrow agent shall reimburse the licensee or other persons as s pecified by the [insert NRC or State regulatory agency] from the escrow account for expenses for req uired activities in such amounts as the

[insert NRC or name of the state regulatory agency] shall direct in writing. In addition, the escrow agent shall refund to [insert name of licensee] such amounts as the [insert NRC or the name of the state regulatory agency] specifies, in writing. Upon refund, such fun ds shall no longer constitute part of the escrow account as described in paragraph 2 above.

Except for withdrawals being made pursuant to 10 CFR 50.82(a)(8 ) or 10 CFR 52.110(h)(1), or for payments of ordinary administrative costs (including taxes) and other incidental expenses of the fund (including legal, accounting, actuarial, and trustee expenses) in connection with the operation of the fund, no disbursement or payment may be made from the trust, escrow a ccount, government fund, or other account used to segregate and mana ge the funds until written no tice of the intention to make a disbursement or payment has been submitted to the Document Cont rol Desk as specified in 10 CFR 50.4 or 10 CFR 52.3, as applicable, at least 30 working days prior to the date of the intended disbursement or payment. The disbursement or payment from the trust, escrow acc ount, government fund, or other account may be made following the 30-day notice period if the p erson responsible for managing the trust, escrow account, government fund, or other account does not rece ive written notice of objection from the Director, Office of Nuclear Reactor Regulation, Director, Office of New Reactors, or the Director, Office of Nuclear Material Safety and Safeguards, as applicable, withi n the notice period. Disbursements or payments from the trust, escrow account, government fund, or ot her account used to segregate and manage the funds, other than for payment of ordinary administra tive costs (including taxes) and other incidental expenses of the fund (including legal, accounting, a ctuarial, and trustee expenses) in connection with the operation of the fund, are restricted to decommissioni ng expenses or transfer to another financial assurance method acceptable under 10 CFR 50.75(e) until final d ecommissioning has been completed.

After decommissioning has begun and withdrawals from the decomm issioning fund are made pursuant to 10 CFR 50.82(a)(8) or 10 CFR 52.110(h)(1), no further notificat ion need be made to the NRC.

Paragraph 5. Irrevocability

It is also agreed between the parties that this escrow is revoc able upon delivery to [insert name of escrow agent], the escrow agent, only on the occurrence of one of the conditions described in paragraph 3 above or by transfer of the funds held in escrow to another fin ancial assurance mechanism permitted under 10 CFR 50.75(e).

Paragraph 6. Powers of the Escrow Agent

The only powers and duties of the escrow agent shall be to hold the escrow property and to invest and dispose of it in accordance with the terms of this Agreement.

Escrow Account Management

The escrow agent shall invest and reinvest the principal and income of the escrow account and keep the escrow account invested as a single fund, without dist inction between principal and income, in accordance with general investment policies and guidelines, whi ch the [insert name of licensee] may communicate in writing to the escrow agent from time to time, subject, however, to the provisions of the

DG-1348 Revision 1, Appendix A, Page A-3 escrow account; the escrow agent shall discharge its duties wit h respect to the escrow account solely in the interest of [insert name of licensee] decommissioning obligation and with the care, skill, prudence, and diligence, under the circumstances then prevailing, that pe rsons of prudence, acting in like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims; except that:

(a) Securities or other obligations of the licensee, or any other o wner or operator of any nuclear power reactor, or any of their affiliates, subsidiaries, succes sors, or assigns, as defined in the Investment Company Act of 1940, as amended (15 U. S. C. 80A-2(a)), or in a mutual fund in which at least 50 percent of the fund is invested in the securities of an NRC licensee of a nuclear power plant or parent company whose subsidiary is an owner or o perator of a foreign or domestic nuclear power plant, shall not be acquired or held. Investments tied to market indices or other nonnuclear-sector collective, commingled, or mutual funds (i.e., a mutual fund in which less than 50 percent of the fund is invested in the securities of a licensee or a parent company whose subsidiary is an owner or operator of a foreign or domestic nuc lear power plant) may be acquired or held, provided, however, that no more than 10 percent of tru st assets may be indirectly invested in securities of any en tity owning or operating one or more nuclear power plants.

(b) For a reasonable time, not to exceed ___ days, the escrow agent is authorized to hold uninvested cash, awaiting investment or distribution, without liability fo r the payment of interest thereon.

The licensee, its affiliates, and its subsidiaries are prohibit ed from being engaged as investment manager for the funds or from giving day-to-day management dire ction of the funds investments or direction on individual investments by the funds, except in the case of passive fund management of trust funds where such management is limited to investments-tracking market indices.

Express Power of the Escrow Agent

Without in any way limiting the powers and discretion conferred upon the escrow agent by other provisions of this Agreement or by law, the escrow agent is expressly authorized and empowered:

(a) to register any securities held in the escrow account in its ow n name and to hold any security in bearer form or in book entry, or to deposit or arrange for the deposit of any securities issued by the U.S. Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the escrow agent shall at all times show that all such securities are part of the escrow account;

(b) to deposit any cash in the escrow account in interest-bearing a ccounts or savings certificates;

(c) to pay taxes, from the account, of any kind that may be assessed or levied against the escrow account and all brokerage commissions incurred by the escrow account.

Paragraph 7. Annual Valuation

After delivery has been made into this escrow account, the escr ow agent shall [monthly, quarterly, annually] furnish to the licensee a statement confirming the value of the escrow account. Any securities in the account shall be valued at market value within a reasonable time before issuance of such statement. The failure of the licensee to object in writing to the escrow agent within 90 days after the statement has been furnished to the licensee shall constitute a conclusively binding assent by the licensee, barring the licensee from asserting any claim or liability agai nst the escrow agent with respect to the matters disclosed in the statement.

DG-1348 Revision 1, Appendix A, Page A-4 Paragraph 8. Successor Escrow Agent

Upon 90 days prior notice to the licensee, [insert name of lice nsee], the escrow agent may resign; upon 90 days notice to the escrow agent, the licensee, [insert name of licensee], may replace the escrow agent, provided that such resignation or replacement is not eff ective until the escrow agent has appointed a successor escrow agent and this successor accepts the appointment, or another financial assurance instrument has been secured, pur suant to paragraph 5. The successor escrow agent shall have the same powers and duties as those conf erred upon the escrow agent unde r this Agreement. Upon the successors acceptance of the appointment, the escrow agent shall assign, t ransfer, and pay over to the successor the funds and properties then constituting the escrow account. If, for any reason, the licensee cannot or does not act in the event of the resignation of the escrow agent, the escrow agent may apply to a court of competent jurisdiction for the appointment of a successor, or f or instructions. The successor escrow agent shall specify the date on which it assumes administration of the escrow account in a writing sent to the licensee and the current escrow agent by certified mail 10 days before the change becomes effective. Any expense incurred by the escrow agent as a result of any of the acts contemplated by this paragraph shall be paid as provided in paragraph 10 of this Agreement.

Paragraph 9. Instructions to the Escrow Agent

All orders, requests, and instructions from the licensee to the escrow agent shall be in writing, signed by such persons as are signatories to this Agreement, or such other designees as the licensee may designate in writing. All orders, r equests, and instructions from the [insert the NRC or the name of the state regulatory agency] shall be in writing, signed by the des ignees of the [insert the NRC or the name of the state regulatory agency]. The escrow agent shall be fully protected in acting in accordance with such orders, requests, and instructions. The escrow agent shall have the right to assume, in the absence of written notice to the contrary, t hat no event constituting a change or a termination of the authority of any person to act on behalf of the licensee or [insert the NRC or t he name of the state regulatory agency]

under this Agreement has occurred. The escrow agent shall have no duty to act in the absence of such orders, requests, and instructions from the licensee and/or [insert the NRC or the name of the state regulatory agency], except as provided in this Agreement.

Paragraph 10. Compensation and Expenses of the Escrow Agent

The fee of the escrow agent for its services in establishing th e escrow account shall be $_____,

payable at the time of the execution of this Agreement, to be b orne by [insert the name of the licensee],

licensee.

Expenses of the escrow agent for the administration of the escrow account, the compensation of the escrow agent for services subsequent to the establishing of the escrow account to the extent not paid directly by the licensee, and all other proper charges and disb ursements shall be paid from the escrow account.

Paragraph 11. Amendment to This Agreement

This Agreement may be amended by an instrument in writing execu ted by the licensee and the escrow agent. However, this Agreement may not be amended in any material respect without written notification to the Document Control Desk as specified in 10 CF R 50.4 or 10 CFR 52.3, as applicable, at least 30 working days prior to the proposed effective date of t he amendment. The escrow account may not be amended if the person respons ible for managing that account receives written notice of objection from the Director of either the Office of Nuclear Reactor Regulation, the Office of New Reactors, or the Office of Nuclear Material Safety and Safeguards, as applicable, withi n the notice period.

DG-1348 Revision 1, Appendix A, Page A-5 Paragraph 12. Termination

This Agreement can be terminated by written notice of termination to the escrow agent, signed by

[insert the name of licensee], licensee, and by the [insert the NRC or the name of the State regulatory agency] alone, if the licensee has ceased to exist.

Paragraph 13. Interpretation

This escrow Agreement constitutes the entire agreement between [insert the name of licensee]

and [insert the name of the escrow agent]. The escrow agent shall not be bound by any other agreement or contract entered into by [insert name of licensee], and the onl y document that may be referenced in case of ambiguity in this escrow Agreement is the licensing agreemen t between [insert name of licensee] and the United States Nuclear Regulatory Commission, or its successor.

Paragraph 14. Acceptance of Appo intment by Escrow Agent

[Insert name, address, and position of escrow agent] does hereby acknowledge its appointment by

[insert name of licensee], the licensee, to serve as escrow agent for the escrow account created under this Agreement, and agrees to carry out its obligations and duties as stated in this escrow Agreement.

Paragraph 15. Severability

If any part of this Agreement is invalid, it shall not affect t he remaining provisions, which remain valid and enforceable.

Paragraph 16. Effectiveness

This Agreement shall not become effective (and the escrow agent shall have no responsibility hereunder except to return the escrow property to the [insert n ame of licensee]) until the escrow agent shall have received the follow ing and shall have advised [inser t name of licensee] in writing that the same are in form and substance satisfactory to the escrow agent:

Certified resolution of its Board of Directors authorizing the making and performance of this Agreement;

Certificate as to the names and specimen signatures of its offi cers or representatives authorized to sign this Agreement and notices, instructions, and other commun ications hereunder.

[Signatures and positions of the designees of the licensee and the escrow agent.]

[Insert name of escrow agent] [Insert name of licensee]

By ____________________________ By _________________________

Name _________________________ Name _______________________

Title ___________________________ Title ________________________

Date

Witness by Notary Public

DG-1348 Revision 1, Appendix A, Page A-6 APPENDIX A-1.1

EXAMPLE OF CERTIFICATE OF EVENTS

[Insert name and address of escrow agent]

Attention: Escrow Division

Gentlemen:

In accordance with the terms of the Agreement with you dated __ ______, I, ____________,

[Authorized Officer] of [insert name of licensee], hereby certify that the following events have occurred:

1. [Insert name of licensee] has be gun the decommissioning of its facilities located at [insert location of facility] (hereinafter called the decommissioning).

2. Ninety days after the plans and procedures for the commencement and conduct of the decommissioning have been either noticed in the Federal Register by the United States Nuclear Regulatory Commission (NRC), or its successor (copy of notice attached), or in the case of a license termination plan, approved by the NRC, or its successor (copy of approval attached).

3. The Board of Directors of [insert name of licensee] has adopted the attached resolution authorizing the commencing of the decommissioning.

[Authorized Officer] of [insert name of licensee]

Date

DG-1348 Revision 1, Appendix A, Page A-7 APPENDIX A-1.2

EXAMPLE OF CERTIFICATE OF RESOLUTION

I, ______________________, do hereby certify that I am [Authori zed Officer] of [insert name of licensee], a [insert state of incorporation] corporation, and t hat the resolution listed below was duly adopted at a meeting of this Corporations Board of Directors o n ______________________, 20__.

IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of this Corporation this _____ day of _____________, 20__.

[Authorized Officer] of

[insert name of licensee]

RESOLVED, that this Board of Directors hereby authorizes the Pr esident or such other employee of the Company as he may designate [insert name, as appropriate, to enter into an escrow agreement, or to commence decommissioning activities at (name of facility)] with the [insert name of escrow agent],

in accordance with the terms and conditions described to this B oard of Directors at this meeting and with such other terms and conditions as the President shall have approved with and upon the advice of Counsel.

DG-1348 Revision 1, Appendix A, Page A-8 APPENDIX A-2

EXAMPLES OF CERTIFICATES OF DEPOSIT

APPENDIX A-2.1

EXAMPLE OF NEGOTIABLE CERTIF ICATE OF DEPOSIT PAYABLE AT THE EXPIRATION OF A SPECIFIED TIME

CERTIFICATE OF DEPOSIT

(Financial Institution)

Place ________________________________________ No. _______________

(Date)

[Insert name of licensee or applicant] has deposited not subjec t to check ______ dollars ($ )

payable to the order of the holder in current funds not less th an 30 days after date, upon surrender of this certificate properly endorsed, with interest at the rate of percent per annum from date to maturity only. The rate of interest payable hereunder is subject to chan ge by the bank to such extent as may be necessary to comply with requirements of the Federal Reserve Board, made from time to time pursuant to the Federal Reserve Act.

These funds are deposited for the purpose of providing financia l assurance for the cost of decommissioning activities, as required under Title 10, Part 50, of the Code of Federal Regulations.

Accordingly, this certificate will be renewed automatically unless written notice of (1) the default of the

[insert name of licensee or applicant] on these obligations, (2 ) the termination of the facility license, or (3) the substitution of another financial assurance mechanism is received from [the name of licensee or applicant].

Cashier or Officer

Note:

The negotiable Certificate of Deposit should be in the possessi on of the trustee of the concurrently created standby trust or the escrow agent of an escrow account.

The certificate should be for a limited time period, such as 1 to 5 years, so that the face value can be adjusted.

DG-1348 Revision 1, Appendix A, Page A-9 APPENDIX A-2.2

EXAMPLE OF NONNEGOTIABLE CERTIFICATE OF DEPOSIT PAYABLE ON A CERTAIN DATE

CERTIFICATE OF DEPOSIT

(Financial Institution)

Certificate of Deposit _________________________, 20__

[Insert name of licensee or applicant] has deposited in the fin ancial institution the sum of

_______________ dollars ($ ________), payable to [state regulat ory agency (if the agency can hold special funds under applicable state law), trustee of standby t rust, or escrow agent] _________________

months after date, with interest thereon at the rate of _____ p ercent per annum from date, upon presentation of this certificate properly endorsed. These funds are deposited for the purpose of providing financial assurance for the cost of decommissioning activities as required under Title 10, Part 50, of the Code of Federal Regulations. Accordingly, this certificate will be renewed automatically u nless written notice of (1) the default of the [insert name of licensee or applicant] on these obligations, (2) the termination of the facility license, or (3) the substitution of another financial assurance mechanism is received from [the name of the licensee or applicant].

Cashier or Officer

Note: The certificate should be for a limited time period, such as 1 to 5 years, so that the face value can be adjusted.

DG-1348 Revision 1, Appendix A, Page A-10 APPENDIX A-3

EXAMPLES OF TRUST FU ND AND STANDBY TRUST AGREEMENTS

APPENDIX A-3.1

EXAMPLE OF TRUST FUND AGREEMENT

TRUST AGREEMENT, the Agreement is entered into as of [date] by and between [name of NRC licensee], a [name of state] [insert corporation, partnership, association, or proprietorship],

herein referred to as the Grantor, and [name and address of a n appropriate state or federal government agency or an entity that has the authority to act as trustee and whose trust operations are regulated or examined by a state or federal agency], the Trustee.

WHEREAS, the U.S. Nuclear Regulatory Commission (NRC), an agenc y of the U.S.

Government, pursuant to the Atomi c Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, has promulgated regulations in Title 10, Part 50, of the Code of Federal Regulations (10 CFR Part 50). These regulations, applicable to the Grantor, require that a holder of, or an applicant for, a license issued pursuant to 10 CFR Part 50 provide assurance that funds will be available when needed for required decommissioning activities.

WHEREAS, the Grantor has elected to use a trust fund to provide [insert all or part] of such financial assurance for the facilities identified herein and al so provide such additional decommissioning funds, not required by the NRC, as the Grantor may elect;

WHEREAS, the Grantor, acting through its duly authorized office rs, has selected the Trustee to be the trustee under this Agreement, and the Trustee is willing to act as trustee,

NOW, THEREFORE, the Grantor and the Trustee agree as follows:

Section 1. Definitions. As used in this Agreement:

(a) The term Grantor means the NRC licensee who enters into this Agreement and any successors or assigns of the Grantor.

(b) The term Trustee means the trustee who enters into this Agree ment and any successor Trustee.

Section 2. Costs of Decommissioning. This Agreement pertains to the costs of decommissioning the facility identified in License Number [insert license number], issued pursuant to 10 CFR Part 50.

Section 3. Establishment of Fund. The Grantor and Trustee hereb y establish a Trust Fund (the Fund) for the benefit of [insert the Grantor or other appropriate beneficiary such as a state agency or the NRC, but only to the extent the provisions of 31 U.S.C. 3302(b) would no t be applicable]. The Grantor and the Trustee intend that no third party shall have access to the Fund except as provided herein. [Modification of this provision to cover sale-leaseback agreements should be made contingent upon continued dedication of the trust to provide funds for decommissioning.]

DG-1348 Revision 1, Appendix A, Page A-11 Section 4. Payments Constituting the Fund. Payments made to the Trustee for the Fund shall consist of cash, securities, or other liquid assets acceptable to the Trustee. The Fund is established initially as consisting of property acceptable to the Trustee. Such property and any other property subsequently transferred to the Trustee are referred to as the Fund, toget her with all earnings and profits thereon, less any payments or distributions m ade by the Trustee pursuant to this Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided.

Section 5. Payment for Required Activities Specified in the Pla n. The Trustee shall make payments from the Fund to the Grantor or to a decommissioning contractor of t he Grantor, as the Grantor may designate, upon presentation to the Trustee of the following:

(a) a certificate duly executed by the [Authorized Officer] of the Grantor, attesting to the occurrence of the events, and in the form set forth in the attached Specim en Certificate (see certificate following standby trust), and

(b) a certificate attesting to the following conditions: (1) that decommissioning is proceeding pursuant to an NRC-noticed plan, a nd (2) that the funds withdrawn will be expended for activities undertaken pursuant to that plan.

Notwithstanding the foregoing, ex cept for payments for administrative costs (including taxes) and other incidental expenses of the Fund (including legal, accounting, actuarial, and Trustee expenses) in connection with the operation of t he Fund, no disbursements or payments from the Fund shall be made:

(1) unless 30 working days prior w ritten notice of such disbursement or payment has been made to the NRC or (2) if the Trustee receives written notice of an objecti on from the NRCs Director of the Office of Nuclear Reactor Regulation, the Director of the Office of New R eactors, or the Director of the Office of Nuclear Material Safety and Safeguards, as applicable. Except that the foregoing shall not apply if the Grantor is making a withdrawal pursuant to 10 CFR 50.82(a)(8).

In the event of the Grantors default or inability to direct decommissioning activities, the Trustee shall: (1) make payments from the Fund as the NRC or state age ncy shall direct, in writing, to provide for the payment of the costs of re quired activities covered by this Agreement; (2) make disbursements to the Grantor or other persons as specified by the NRC, or state agency, from the Fund for expenditures for required activities in such amount s as the NRC, or state agency, shall direct in writing; and (3) refund to the Grantor such amounts remain ing after the license has been terminated or as the NRC or state agency specifies in writing. Upon refund, such funds shall no longer c onstitute part of the Fund as defined herein.

Section 6. Trust Management. The Trustee shall invest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinctio n between principal and income, in accordance with general investment policies and guidelines, whi ch the Grantor may communicate in writing to the Trustee from time to time, subject, however, to the provisions of this section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Tr ustee shall discharge its duties with respect to the Fund in the best interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing, which persons of prude nce, acting in a like capacity and familiar with such matters, would use in t he conduct of an enterprise of a like character and with like aims; except that:

(a) Securities or other obligations of the Grantor, or any other ow ner or operator of any nuclear power reactor, or any of their affiliates, subsidiaries, succes sors, or assigns, as defined in the Investment Company Act of 1940, as amended (15 U.S.C. 80A-2(a)), or in a mutual fund in which at least 50 percent of the Fund is invested in the securi ties of an NRC licensee of a nuclear power plant, or a parent company whose subsidiary is an owner or operator of a foreign or

DG-1348 Revision 1, Appendix A, Page A-12 domestic nuclear power plant, sha ll not be acquired or held. In vestments tied to market indices or other nonnuclear-sector collective, commingled, or mutual funds (i.e., a mutual fund in which less than 50 percent of the Fund is invested in the securities of a licensee or a parent company whose subsidiary is an owner or operator of a foreign or domestic nuc lear power plant) may be acquired or held, provided, however, that no more than 10 percent of tru st assets may be indirectly invested in securities of any en tity owning or operating one or more nuclear power plants.

(b) For a reasonable time, not to exceed ___ days, the Trustee is authorized to hold uninvested cash, awaiting investment or distribution, without liability for the payment of interest thereon.

(c) Any person directing investments made in the trusts shall adhere to the [applicable State-specific investment standard and/or the] prudent investor standard as specified in 18 CFR 35.32(a)(3) of the Federal Energy Regulatory Commission regulations or any suc cessor regulation thereto (the Prudent Investor Standard); and

(d) The Grantor, its affiliates, and its subsidiaries are prohibite d from acting as investment manager for the funds or from giving day-to-day management direction of the funds investments or direction on individual investments by the funds except that th e Grantor, or an affiliate or subsidiary, may act as an investment manager in the case of passive fund management of trust funds where management is limited to investment-tracking market indices.

Section 7. Commingling and Investment. The Trustee is expressly authorized in its discretion:

(a) to transfer, from time to time, any or all of the assets of the Fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participating therein; and

(b) to purchase shares in any investment company registered under t he Investment Company Act of 1940 (15 U.S.C. 80A-1 et seq.), including one that may be creat ed, managed, or underwritten, or to which investment advice is rendered, or the shares of which are sold by the Trustee. The Trustee may vote such shares in its discretion.

Section 8. Express Powers of Trustee. Without in any way limiti ng the powers and discretion conferred upon the Trustee by the other provisions of this Agreement or b y law, the Trustee is expressly authorized and empowered:

(a) to sell, exchange, convey, transfer, or otherwise dispose of an y property held by it, by public or private sale, as necessary, for prudent management of the Fund;

(b) to make, execute, acknowledge, and deliver any and all document s of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted;

(c) to register any securities held in the Fund in its own name, or in the name of a nominee, and to hold any security in bearer form or in book entry, or to combin e certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, to reinvest interest and dividend payments and funds from matured and redeemed instruments, to file proper forms concerning securities held in the Fund in a t imely fashion with appropriate government agencies, or to depos it or arrange for the deposit o f such securities in a qualified central depository, even though, when so deposited, such securities may be merged and held in

DG-1348 Revision 1, Appendix A, Page A-13 bulk in the name of the nominee or such depository with other s ecurities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the U.S. Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that a ll such securities are part of the Fund;

(d) to deposit any cash in the Fund in interest-bearing accounts ma intained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee; and

(e) to compromise or otherwise adjust all claims in favor of or aga inst the Fund.

Section 9. Taxes and Expenses. All taxes of any kind that may b e assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund may be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the T rustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee, may be paid from the Fund.

Section 10. Annual Valuation. After payment has been made into this Trust Fund, the Trustee shall

[monthly, quarterly, annually] furnish to the Grantor a stateme nt confirming the value of the Trust. Any securities in the Fund shall be valued at market value within a reasonable time of such statement. The failure of the Grantor to object in writing to the Trustee with in __ days after the statement has been furnished to the Grantor shall constitute a conclusively bindin g assent by the Grantor, barring the Grantor from asserting any claim or liability against the Trustee with respect to the matters disclosed in the statement.

Section 11. Advice of Counsel. The Trustee may, from time to ti me, consult with counsel, who may be counsel to the Grantor, with respect to any question arising as to the construction of this Agreement or any action to be taken hereunder. The Trustee shall be fully pr otected, to the extent permitted by law, in acting on the advice of counsel.

Section 12. Trustee Compensation. The Trustee shall be entitled to reasonable compensation for its services, as agreed upon in writing from time to time with the Grantor.

Section 13. Successor Trustee. Upon ____ days notice to the Gr antor, the Trustee may resign; upon ____

days notice to the Trustee, the Grantor may replace the Truste e; but such resignation or replacement shall not be effective until the Granto r has either appointed a successor Trustee and this successor accepts the appointment, or implements another financial assurance mechanis m specified in 10 CFR 50.75(e). The successor Trustee shall have the same powers and duties as thos e conferred upon the Trustee hereunder.

Upon the successor Trustees acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor Trustee the funds and properties then con stituting the Fund. If, for any reason, the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a succes sor Trustee or for instructions. The successor Trustee shall specify the date on which it assumes administration of the Trust in a writing sent to the Grantor and the present Trustee by certified mail ___ da ys before such change becomes effective.

Any expenses incurred by the Trustee as a result of any of the acts contemplated by this section shall be paid as provided in Section 9.

Section 14. Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are signatories to this Agreement or such other designees as the Grantor may designate in writing. The Trustee shall be full y protected in acting without inquiry in

DG-1348 Revision 1, Appendix A, Page A-14 accordance with the Grantors orders, requests, and instructions. If the NRC or state agency issues orders, requests, or instructions to the Trustee in the event of Grantor default, these shall be in writing, signed by the NRC, state agency, or their designees, and the Trustee shall act and shall be fully protected in acting, in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event co nstituting a change or a termination of the authority of any person to act on behalf of the Grantor, the NR C, or state agency, hereunder, has occurred.

The Trustee shall have no duty to act in the absence of such or ders, requests, and instructions from the Grantor and/or the NRC, or state agency, except as provided for herein.

Section 15. Amendment of Agreemen t. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and, if applicable, the NRC or state agency, or by the Trustee and the NRC or state agency, if the Grantor ceases to exist. Notwit hstanding any provision herein to the contrary, this Agreement cannot be modified in any material res pect without first providing 30 working days prior written notice to the NRCs Director of the Office o f Nuclear Reactor Regulation, the Director of the Office of New Reactors, or the Director of the Office of Nuclear Material Safety and Safeguards, as applicable. This Agreement may not be amended if the Trustee re ceives written notice of objection from the Director, Office of Nuclear Reactor Regulation, the Directo r, Office of New Reactors, or the Director, Office of Nuclear Materials Safety and Safeguards, as applicable, within the notice period.

Section 16. Termination. This trust agreement shall continue un til terminated at the written agreement of the Grantor, the Trustee, and, i f applicable, the NRC or state agency, or by the Trustee and the NRC or state agency if the Grantor ceases to exist. Upon termination o f the Trust, all remaining Trust property, less final Trust administration expenses, shall be delivered to the Grantor or its successor, or transferred to another financial assurance mechanism specified in 10 CFR 50.75 (e), as appropriate.

Section 17. Immunity and Indemnification. The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this Trust, or in carrying out any directions by the Grantor, the NRC, or state agency, issued in accordance with this Agreement.

The Trustee shall be indemnified and saved harmless by the Gran tor or from the Fund, or both, from and against any personal liability to which the Trustee may be subj ected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense, in the event the Grantor fails to provide such defense.

Section 18. Choice of Law. This Ag reement shall be administered, construed, and enforced according to the laws of the State of [insert name of State].

Section 19. Interpretation and Se verability. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descri ptive headings for each section of this Agreement shall not affect the interpretation or the legal effi cacy of this Agreement. If any part of this Agreement is invalid, it shall not affect the remaining provisi ons, which will remain valid and enforceable.

DG-1348 Revision 1, Appendix A, Page A-15 IN WITNESS WHEREOF the parties have caused this Agreement to be executed by the respective officers duly authorized and the incorporate seals to be hereunto affixed and attested as of the date first written above.

ATTEST: [Insert name of licensee (Grantor)]

[Signature of representative of Grantor]

[Title]

[Title]

[Seal]

[Insert name of Trustee]

[Signature of representative of Trustee]

[Title]

ATTEST:

[Title]

Seal]

DG-1348 Revision 1, Appendix A, Page A-16 APPENDIX A-3.2

EXAMPLE OF STANDBY TRUST AGREEMENT

TRUST AGREEMENT, the Agreement entered into as of [date] by and between [name of NRC licensee], a [name of State] [insert corporation, partnership, association, or proprietorship],

herein referred to as the Grantor, and [name and address of a n appropriate state or federal government agency or an entity that has the authority to act as trustee and whose trust operations are regulated or examined by a state or federal agency], the Trustee.

WHEREAS, the U.S. Nuclear Regulatory Commission (NRC), an agenc y of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, has pr omulgated regulations in Titl e 10 of the Code of Federal Regulations (10 CFR), Part 50, and 10 CFR Part 52. These regulations, appli cable to the Grantor, require that a holder of, or an applicant for, a 10 CFR Part 50 or 10 CFR Part 52 lic ense provide assurance that funds will be available when needed for required decommissioning activities.

WHEREAS, the Grantor has elected to use a [insert letter of credit, line of credit, surety bond, insurance policy, parent guarantee, certificate(s) of deposit, or deposit of government securities] to provide [insert all or part] of such financ ial assurance for the facilities identified herein; and

WHEREAS, when payment is made unde r a [insert letter of credit, line of credit, surety bond, insurance policy, certificate(s) of deposit, deposit of government securities, or parent guarantee], this Standby Trust shall be used for the receipt of such payment; and

WHEREAS, the Grantor, acting through its duly authorized office rs, has selected the Trustee to be the trustee under this Agreement, and the Trustee is willing to act as trustee,

NOW, THEREFORE, the Grantor and the Trustee agree as follows:

[The remainder of the recommended wording for the Standby Trust Agreement is as indicated in A-3.1 for the Trust Fund Agreement except that the words Stand by Trust Fund should be substituted in Section 3 and Section 10 in place of the words Trust Fund.]

DG-1348 Revision 1, Appendix A, Page A-17 APPENDIX A-3.2.1

EXAMPLE OF CERTIFICATE OF EVENTS

[Insert name and address of Trustee]

Attention: Trust Division

Gentlemen:

In accordance with the terms of the Agreement with you dated __ _______, I, ______________,

[Authorized Officer] of [insert name of licensee], hereby certify that the following events have occurred:

1. [Insert name of licensee] has be gun the decommissioning of its facility located at [insert location of facility] (hereinafter called the decommissioning).

2. The plans and procedures for th e commencement and conduct of th e decommissioning have been noticed and approved by the U.S. Nuclear Regulatory C ommission, or its successor, on ________________ (c opy of approval attached).

3. The Board of Directors of [insert name of licensee] has adopted the attached resolution authorizing the commencement of the decommissioning.

[Authorized Officer] of [insert name of licensee]

Date

DG-1348 Revision 1, Appendix A, Page A-18 APPENDIX A-3.2.2

EXAMPLE OF CERTIFICATE OF RESOLUTION

I, _____________, do hereby certify that I am [Authorized Offic er] of [insert name of licensee], a

[insert State of incorporation) corporation, and that the resol ution listed below was duly adopted at a meeting of this Corporations Board of Directors on ___________ _, 20 __.

IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of this Corporation this ____ day of _____________, 20 __.

[Authorized Officer]

RESOLVED, that this Board of Directors hereby authorizes the Pr esident, or such other employee of the Company as he may designate, to commence decomm issioning activities at [insert name of facility], in accordance with the terms and conditions descr ibed to this Board of Directors at this meeting and with such other terms and conditions as the President shall approve with and upon the advice of Counsel.

DG-1348 Revision 1, Appendix A, Page A-19 APPENDIX A-3.3

EXAMPLE OF ACKNOWLEDGMENT

ACKNOWLEDGMENT

[The following is an example of the acknowledgment that should accompany the trust Agreement for a standby trust fund or trust fund.]

STATE OF ___________

To Wit _________

CITY OF __________

On this ______ day of _________, before me, a notary public in and for the city and State aforesaid, personally appeared ___________, and she/he did depo se and say that she/he is the [title], of

[financial institution], Trustee, which executed the above instrument, that she/he knows the seal of said association; that the seal affixed to such instrument is such corporate seal; that it was so affixed by order of the association; and that she/he signed her/his name thereto by like order.

[Signature of notary public]

My Commission Expires: ________________________

[Date]

DG-1348 Revision 1, Appendix A, Page A-20 APPENDIX A-4

EXAMPLE OF PAYMENT SURETY BOND

PAYMENT SURETY BOND

Date bond executed: _________________________

Effective date: _______________________

Principal: [legal name and business address of licensee or applicant]

Type of organization: [insert proprietorship, joint venture, partnership or corporation]

State of incorporation: ___________________ (if applicable)

NRC license number, name and address of facility, and amount(s) for decommissioning activity guaranteed by this bond: _____________________

Surety(ies) [name(s) and business address(es)]

Type of organization: [insert proprietorship, joint venture, partnership or corporation]

State of incorporation: __________________ (if applicable)

Suretys qualification in jurisdiction where licensed facility( ies) is (are) located

Suretys bond number: _________________

Total penal sum of bond: $________________

Know all persons by these presents, That we, the Principal and Surety(ies) hereto, are firmly bound to the

[insert U.S. Nuclear Regulatory Commission (hereinafter called NRC) or the name of the state agency] in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Sureties are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum join tly and severally only for the purpose of allowing a joint action or acti ons against any or all of us, an d for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payme nt of such sum only as is set forth opposite the name of such Surety; but if no limit of liability is indica ted, the limit of liability shall be the full amount of the penal sum.

WHEREAS, the NRC, an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, has promulg ated regulations in Title 10 of the Code of Federal Regulations (10 CFR), Part 50, and 10 CFR Part 52 applicable to the Princip al, which require that a license holder or an applicant for a license pro vide financial assurance that funds will be available when needed for facility decommissioning;

NOW, THEREFORE, the conditions of the obligation are such that if the Principal shall faithfully, before the beginning of decommissioni ng of each facility identified above, fund the standby trust fund in the amount(s) identified above for the facility;

DG-1348 Revision 1, Appendix A, Page A-21 Or, if the Principal shall fund the standby trust fund in such amount(s) after an order to begin facility decommissioning is issued by [insert the NRC or the name of the state agency], or a U.S. district court or other court of competent jurisdiction;

Or, if the Principal shall provide alternative financial assurance and obtain the written approval of the

[insert NRC or the name of the state agency] of such assurance, within 30 days after the date a notice of cancellation from the Surety(ies) is received by both the Principal and the [insert NRC or the name of the state agency], then this obligation shall be null and void; otherwise it is to remain in full force and effect.

The Surety(ies) shall become liable on this bond obligation onl y when the Principal has failed to fulfill the conditions described above. Upo n notification by the [insert NRC or the name of the state agency]

that the Principal has failed to perform as guaranteed by this bond, the Surety(ies) shall place funds in the amount guaranteed for the facility(ies) into the standby trust fund.

The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amou nt in the aggregate to the penal sum of the bond, but in no event shall the obligation of the Surety(ie s) hereunder exceed the amount of said penal sum.

The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal and to the [insert NRC or the name of the state agency] provi ded, however, that cancellation shall not occur during the 90 days, beginning on the date of receipt of the notice of cancellation by both the Principal and the [insert NRC or the name of the state agency], as evidenced by the return receipts.

The Principal may terminate this bond by sending written notice to the [insert NRC or name of state agency] and to Surety(ies) 90 days prior to the proposed date o f termination, provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond from the [insert NRC or the name of the state agency ].

The Principal and Surety(ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new amount, provided that the penal sum does not increase by more than 20 percent in any one year.

In Witness Whereof, the Principal and Surety(ies) have executed this financial guarantee bond and have affixed their seals on the date set forth above.

The persons whose signatures appear below hereby certify that t hey are authorized to execute this surety bond on behalf of the Principal and Surety(ies).

Principal

[Signature(s)]

[Name(s)]

[Title(s)]

[Corporate seal]

Corporate Surety(ies)

DG-1348 Revision 1, Appendix A, Page A-22

[Name and address]

State of incorporation: _________________

Liability limit: $_________________

[Signature(s)]

[Name(s) and title(s)]

[Corporate seal]

[For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety(ies) above.]

Bond premium: $_______________

DG-1348 Revision 1, Appendix A, Page A-23 APPENDIX A-5

EXAMPLE OF IRREVOCABLE STANDBY LETTER OF CREDIT

STANDBY LETTER OF CREDIT NO. [INSERT NO.]

This Credit Expires [ insert date ]

Issued To: [Insert U.S. Nuclear Regulatory Commission; Washingt on, DC 20555, or name and address of appropriate state agency.]

Dear Sir or Madam:

We hereby establish our Standby Letter of Credit No. __________ _______ in your favor, at the request and for the account of [applicants name and address], up to th e aggregate amount of [in words],

U.S. dollars $___________ available upon presentation of:

(1) your sight draft, bearing reference to this Letter of Cred it No.__________, and

(2) your signed statement reading as follows: I certify that the amount of the draft is payable pursuant to regulations issued under authority of __________________.

This letter of credit is issued in accordance with regulations issued under the authority of the U.S. Nuclear Regulatory Commission (NRC), an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. The NRC has promulgated regulations in Title 10 of the Code of Federal Regulations (10 CFR), Part 50, and 10 CFR Part 52, which require that a holder of, or an applicant for, a license issued under 10 CFR Part 50 or 10 CFR Part 52 provide assurance that funds will be available when needed for decommissioning.

This letter of credit is effective as of [date] and shall expire on [date at least 1 year later], but such expiration date shall be automatically extended for a period of [at least 1 year] on [date] and on each successive expiration date, unless, at least 90 days before the current expiration date, we notify both you and [licensees name], as shown on the signed return receipts. If [licensees name] is unable to secure alternative financial assurance to replace this letter of credi t within 30 days of notification of cancellation, the NRC may draw upon the full value of this letter of credit b efore cancellation to the extent the provisions of 31 U.S.C. 3302(b) would not be applicable. We sha ll give immediate notice to the applicant and the [insert NRC or name of state agency] of any notice re ceived or action filed alleging (1) the insolvency or bankruptcy of the financial institution or (2) any violations of regulatory requirements that could result in suspension or re vocation of the banks charter or license to do business. We also shall give immediate notice if we, for any reason, become unable to fulfil l our obligation under the letter of credit.

Whenever this letter of credit is drawn on, under, and in compl iance with the terms of this letter of credit, we shall duly honor such draft upon its presentation to us with in 30 days, and we shall deposit the amount of the draft directly into the standby trust fund of [licensees name], in accordance with your instructions.

DG-1348 Revision 1, Appendix A, Page A-24 Each draft must bear on its face the clause: Drawn under Lett er of Credit No. ______, dated

___________, and the total of this draft and all other drafts p reviously drawn under this letter of credit does not exceed [fill in amount].

[Signature(s) and title(s) of official(s) of issuing institutio n]

[Date]

This credit is subject to [insert the most recent edition of t he Uniform Customs and Practice for Documentary Credits, published by the International Chamber of Commerce, or the Uniform Commercial Code].

DG-1348 Revision 1, Appendix A, Page A-25 APPENDIX A-6

EXAMPLES OF DOCUMENTS RE COMMENDED TO SUPPORT CORPORATE GUARANTEE

APPENDIX A-6.1

EXAMPLE OF LETTER FROM C HIEF FINANCIAL OFFICER OF CORPORATE PARENT, INCLUDING COST ESTIMATES AND DATA FROM AUDITED FINANCIAL STATEMENTS

[Address to U. S. Nuclear Regulatory Commission or state regula tory agency]

I am the chief financial officer of [name and address of firm], a [insert proprietorship, joint venture, partnership, or corporation]. This letter is in support of this firms use of the financial test to demonstrate financial assurance, as specified in Title 10 of th e Code of Federal Regulations (10 CFR), Part 50, or 10 CFR Part 52.

[Complete the following paragraph regarding facility(ies) and a ssociated cost estimates. For each facility, include its license number, name, address, and current cost est imates for the specified activities.]

This firm guarantees, through the parent company guarantee submitted to demonstrate compliance under 10 CFR Part 50 or 10 CFR Part 52, the decommissioning of the fo llowing facility(ies) owned or operated by subsidiary(ies) of this firm. The current cost estimates or certified amounts for decommissioning, and the amounts being guaranteed, are shown for each facility:

Location of Current Cost Amount Being Name of Facility Facility Estimates Guaranteed

This firm [insert is required or is not required] to file a Form 10K with the U.S. Securities and Exchange Commission for the latest fiscal year.

This fiscal year of this firm ends on [month, day]. The figures for the following items marked with an asterisk are derived from this firms independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended [date].

[Insert completed Alternative I or Alternative II.]

I hereby certify that the content of this letter is true and correct to the best of my knowledge.

[Signature]

[Name]

[Title]

[Date]

DG-1348 Revision 1, Appendix A, Page A-26 APPENDIX A-6.2

FINANCIAL TEST: ALTERNATIVE I

1. Decommissioning cost estimates or guaranteed amount for faci lity [insert license number] (total of all cost estimates shown in paragraph above) $______

• 2. Total liabilities (if any portion of the cost estimates for decommissioning is included in total liabilities on your firms financial statemen ts, you may deduct the amount of that portion from this line and add that amount t o lines 3 and 4) $______

• 3. Tangible net worth** $______

• 4. Net worth $______

• 5. Current assets $______

• 6. Current liabilities $______

• 7. Net working capital (line 5 minus line 6) $______

• 8. The sum of net income plus depreciation, depletion, and amo rtization $______

• 9. Total assets in United States (required only if less than 90 percent of firms assets are located in the United States) $______

Yes No

10. Is line 3 at least $10 million? ____ ____

11. Is line 3 at least 6 times line 1? ____ ____

12. Is line 7 at least 6 times line 1? ____ ____

13. Are at least 90 percent of firms assets located in the United States? If not, complete line 14. ____ ____

14. Is line 9 at least 6 times line 1? ____ ____

Guarantor must meet two of the following three ratios:

15. Is line 2 divided by line 4 less than 2.0? ____ ____

16. Is line 8 divided by line 2 greater than 0.1? ____ ____

17. Is line 5 divided by line 6 greater than 1.5? ____ ____

• Denotes figures derived from financial statements.

• • Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.

DG-1348 Revision 1, Appendix A, Page A-27 APPENDIX A-6.3

FINANCIAL TEST: ALTERNATIVE II

1. Decommissioning cost estimates or guaranteed amount for faci lity [insert license number] (total cost of all cost estimates should be stated in paragraphs above) $______

2. Current bond rating of most recent unsecured issuance of thi s firm Rating __________

Name of rating service _______________________

3. Date of issuance of bond __________

4. Date of maturity of bond __________

• 5. Tangible net worth** (if any portion of estimates for decom missioning is included in total liabilities on your firms financial statemen ts, you may add the amount of that portion to this line) $______

• 6. Total assets in United States (required only if less than 90 percent of firms assets are located in the United States)

Yes No

7. Is line 5 at least $10 million? ____ ____

8. Is line 5 at least 6 times line 1? ____ ____

9. Are at least 90 percent of firms assets located in the United States? If not, complete line 10. ____ ____

10. Is line 6 at least 6 times line 1? ____ ____

11. Is the rating specified on line 2 BBB or better (if issued by Standard & Poors) or Baa or better (if issued by Moodys)? ____ ____

• Denotes figures derived from financial statements.

• • Tangible net worth is defined as net worth minus goodwill, patents, trademarks, and copyrights.

DG-1348 Revision 1, Appendix A, Page A-28 APPENDIX A-6.4

EXAMPLE OF AUDITORS SPECIAL REPORT BY CERTIFIED PUBLIC ACCOUNTANT

CONFIRMATION OF CHIEF FINANCIAL OFFICERS LETTER

We have examined the financial statements of [company name] for the year ended [date], and have issued our report thereon, dated [date]. Our examination was made in a ccordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary.

The [company name] has prepared documents to demonstrate its fi nancial responsibility under the NRCs financial assurance regulations, under Title 10, Part 50, of the Code of Federal Regulations. This letter is furnished to assist the licensee, [insert NRC license number and name], in complying with these regulations and should not be used for other purposes.

The attached schedule reconciles the specified information furn ished in the chief financial officers (CFOs) letter in response to the regulations with the company s financial statements. In connection therewith, we have

confirmed that the amounts in the column Per Financial Stateme nts agree with amounts contained in the companys financial statements for the year ended [date];

confirmed that the amount in the column Per CEOs Letter agrees with the letter prepared in response to the NRCs request;

confirmed that the amount in th e column Reconciling Items agr ees with analyses prepared by the company setting forth the indicated items; and

recomputed the totals and percentages.

Because the procedures in 1-4 above do not constitute a full ex amination made in accordance with generally accepted auditing standards, we do not express an opi nion on the manner in which the amounts were derived in the items refe rred to above. In connection with the procedures referred to above, no matters came to our attention th at cause us to believe that the chief financial officers letter and supporting information should be adjusted.

Signature

Date

DG-1348 Revision 1, Appendix A, Page A-29 APPENDIX A-6.4.1

EXAMPLE OF SCHEDULE RECONCILING AMOUNTS CONTAINED IN CFOS LETTER WITH AMOUNTS IN FINANCIAL STATEMENTS

This illustrates the form of schedule that is contemplated. Det ails and reconciling items will differ in specific situations.

XYZ COMPANY YEAR ENDED DECEMBER 31, 20XX

Per Per Financial Reconciling CFOs Line Number in CFOs Letter Statements Items Letter

Total current liabilities X Long-term debt X Deferred income taxes X XX

Accrued decommissioning costs included in current liabilities X

Total liabilities (less accrued decommissioning costs) X

Net worth X

Less: Cost in excess of value of tangible assets acquired X X

Accrued decommissioning costs included in current liabilities X

Tangible net worth (plus decommissioning costs) XX

(Balance of schedule is not illustrated.)

DG-1348 Revision 1, Appendix A, Page A-30 APPENDIX A-6.5

EXAMPLE OF PARENT COMPANY GUARANTEE

PARENT COMPANY GUARANTEE

Guarantee made this [date] by [name of guaranteeing entity], a [insert proprietorship, joint venture, partnership, or corporation ] organized under the laws of th e State of [insert name of State], herein referred to as Guarantor, to our subsidiary [licensee] of [business address], obligee.

Recitals

(1) The Guarantor has full authority and capacity to enter into this guarantee [if Guarantor is a corporation, add the following phrase under its bylaws, articles of incorporation, and the laws of the State of [insert Guarantors State of incorporation], its S tate of incorporation]. [If the Guarantor has a Board of Directors, insert the following: Gua rantor has approval from its Board of Directors to enter into this guarantee.]

(2) This guarantee is being issu ed so that [the licensee] will be in compliance with regulations issued by the U.S. Nuclear Regulatory Commission (NRC), an agency of t he U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Re organization Act of 1974. The NRC has promulgated regula tions in Title 10 of the Code of Federal Regulations (10 CFR), Part 50, and 10 CFR Part 52, which require that a hol der of, or an applicant for, a license issued pursuant to 10 CFR Part 50 provide assurance that funds will be available when needed for required decommissioning activities.

(3) This guarantee is issued to provide financial assurance for decommissioning activities for

[identify licensed facility(ies)] as required by 10 CFR Part 50 or 10 CFR Part 52, the decommissioning costs and guarantee amount for which are as fol lows: [insert amount of decommissioning cost guaranteed for each identified facility].

(4) The Guarantor meets or exceeds the following financial test criteria [insert statement indicating which financial test is being used] and agrees to notify [the l icensee] and the NRC of any changes in its ability to meet the criteria, in compliance with the not ification requirements as specified in 10 CFR Part 50 or 10 CFR Part 52.

The Guarantor meets one of the following two financial tests:

(a)(i) a current rating of its most recent bond issuance of AAA, AA, A, or BBB as issued by Standard and Poors, or Aaa, Aa, A, or Baa as rated by Moodys; and

(ii) tangible net worth is at least $10 million and at least 6 times the current decommissioning cost estimate or guarantee amount (or prescribed amount if a ce rtification is used); and

(iii) assets located in the United States amounting to at least 90 percent of its total assets or at least 6 times the current decommissioning cost or guarantee amount (or prescribed amount if certification is used). or

DG-1348 Revision 1, Appendix A, Page A-31 (b)(i) net working capital and tangible net worth each at least 6 times the current decommissioning cost estimates or guarantee amounts (or prescri bed amount if certification is used); and

(ii) assets located in the United States amounting to at least 90 percent of its total assets or at least 6 times the amount of the current decommissioning cost es timates or guarantee amounts (or prescribed amount if certification is used); and

(iii) meets two of the following three ratios: a ratio of tota l liabilities to net worth less than 2.0; a ratio of the sum of n et income plus depreciation, d epletion, and amortization to total liabilities that is greater than 0.1; and a ratio of curr ent assets to current liabilities that is greater than 1.5; and

(iv) tangible net worth of at least $10 million.

(5) The Guarantor has majority control of the voting stock for the following licensee(s) covered by this guarantee. (List for each licensee: name, address, the fa cility(ies) owned or operated by each licensee, and the corresponding license number(s).)

(6) Decommissioning activities, as used below, refers to the activities required by 10 CFR Part 50 or 10 CFR Part 52 for decommissioning the facility(ies) identif ied above.

(7) For value received from [licensees] (if the Guarantor is a corporation, add and pursuant to the authority conferred upon the Guarantor by (the unanimous resol ution of its directors or the majority vote of its shareholders), a certified copy of which is attached), the Guarantor guarantees that if the licensee fails to perform the required d ecommissioning activities, as required by License No. [insert license number], caused by lack of funds, the Guarantor shall

(a) provide all funds necessary, up to t he amount of this guarantee [in 20__ dollars and as adjusted for inflation], to carry out the required activities, or

(b) set up a trust fund in favor of [the licensee] in the amount of these current cost estimates or guarantee amount for these activities.

(8) The Guarantor agrees to submit revised financial statements, financial test data, and a special auditors report and reconciling schedule to the NRC annually within 90 days of the close of the parent Guarantors fiscal year.

(9) The Guarantor and the licen see agree that if the Guarantor fails to meet the financial test criteria at any time after this guarantee is established, the Guarantor and the licensee shall send, within 90 days of the end of the fiscal year in which the Guarantor fa ils to meet the financial test criteria, by certified mail, notice to the NRC. If [the licensee] fails t o provide alternative financial assurance, as specified in 10 CFR Part 50 or 10 CFR Part 52, as applicable, and obtain written approval of such assurance from th e NRC within 180 days of the end of such fiscal year, the Guarantor shall provide such a lternative financial assurance in the name of [licensee] or make full payment under the guarantee to a standby trust established by [licensee].

(10) Independent of any notification under paragraph 8 above, i f the NRC determines for any reason that the Guarantor no longer mee ts the financial test criteria or that it is disallowed from continuing as a Guarantor for the facility under License No. [insert license number], the Guarantor agrees that, within 90 days after being notified by the NRC of such determination, an

DG-1348 Revision 1, Appendix A, Page A-32 alternative financial assurance mechanism, as specified in 10 CFR Part 50 or 10 CFR Part 52, as applicable, shall be established by the Guarantor in the name o f [licensee] unless [licensee] has done so.

(11) The Guarantor, as well as its successors and assigns, shall remain bound jointly and severally under this guarantee, notwithstanding any or all of the followi ng: amendment or modification of license or NRC-approved decommissioning funding plan for that f acility, the extension or reduction of the time of perform ance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50 or 10 CFR Part 52.

(12) The Guarantor agrees that it will be liable for all litigation costs incurred by [the licensee] or the NRC in any successful effort to enforce the agreement against the Guarantor.

(13) The Guarantor agrees to remain bound under this guarantee for as long as [licensee] must comply with the applicable financial assurance requirements of 10 CFR Part 50 or 10 CFR Part 52, for the previously listed facility(ies), except that the Guarantor may cancel this guarantee by sending notice by certified mail to the NRC and to [licensee], such can cellation to become effective no earlier than 120 days after receipt of such notice by both the NRC and [licensee], as evidenced by the return receipts. If the licensee fails to provide alternative financial assurance as specified in 10 CFR Part 50 or 10 CFR Part 52, as applicable, and to obtain written approval of such assurance within 120 days after the sending of the above notice by the Guarantor, the Guarantor shall provide such alternative financial assurance.

(14) The Guarantor expressly waives notice of acceptance of thi s guarantee by the NRC or by

[licensee]. The Guarantor also expressly waives notice of amendments or modification of the decommissioning requirements and of amendments or modifications of the license.

(15) If the Guarantor files financial reports with the U.S. Sec urities and Exchange Commission, then it shall promptly submit them to the NRC during each year in which this guarantee is in effect.

I hereby certify that this guarantee is true and correct to the best of my knowledge.

Effective date: ________________________

[Name of Guarantor]

[Authorized signature for Guarantor]

[Name of person signing]

[Title of person signing]

Signature of witness or notary: ________________________

[Name of licensee]

[Authorized signature for licensee]

[Title of person signing]

Signature of witness or notary: ______________________

DG-1348 Revision 1, Appendix A, Page A-33