7. Discussion

During Phase 1 of this proceeding, it became clear that some important decommissioning cost information was difficult to find or assess, underlying assumptions between utilities were sometimes different or hard to identify, and various activities and costs were often not easily comparable. These factors contributed to a sense of frustration by the ALJ and parties over extraordinary time spent teasing out facts, and a realization that the current approach to cost estimates could lead to unnecessary confusion or delay. As the agency charged with approving collection of revenue to fund decommissioning, the Commission has a strong interest in assuring that the cost data is presented in a manner that is informative and comparable.

In addition, the Commission expressed its concern in D.10-07-047 that the amount of decommissioning funds accumulated by the utility trust funds in California is high when compared with other states. The idea of an independent panel of experts was formed during Phase 1 to explore the differences between cost estimates and their accuracy, in order to assure that sufficient, but not surplus, funding is provided by the utilities' ratepayers.

The Panel's undertaking was unique and of particular importance to the Commission at this time when SONGS is likely to follow Diablo Canyon in applying to the NRC for license renewal and 20 years of extended life. First, the Panel thoroughly examined the 2008 cost estimates for decommissioning SONGS, Diablo Canyon, and Palo Verde units to identify what was similar, what was different, and why it was different. They applied their vast professional experience to extract areas where decommissioning activities, costs, and assumptions could be similar between these units, and to offer advice about how to best develop certain costs. They found a key error that reduced the Palo Verde estimate by about half. The Panel also provided a sample format for utilities to include in their future NDCTP applications which would present important cost drivers in a summary form for easier review.

The Commission benefits from the Panel's broader observations about the common history at U.S. nuclear plants of unexpected contamination, emerging radiological issues, higher than estimated waste removal costs, limited disposal options, and varying standards for site restoration. The Panel members' extensive knowledge about past decommissioning activities and cost estimates at other U.S. nuclear plants provided a sound basis for selection of similar units for comparison of both decommissioning experience and estimated costs for future decommissioning activities.

We approve of the work plan and methods adopted by the Panel to develop the Final Report. The individual experts each took on specific tasks and professionally executed them. They amassed a great deal of data and met the challenges of sorting out comparable and incomparable bits to the extent possible. The utilities fully cooperated with the Panel and provided them with broad access to the nuclear plant sites and to experienced personnel for interviews. Moreover, the Panel presented a draft report, provided briefings to the Commission staff, parties, the ALJ, the public, and the assigned Commissioner, wrote a unanimous and public Final Report, and got the Final Report filed on time. We find that the $275,000 approved in D.10-07-047 for the Independent Panel's work was reasonable and well spent.

The overall goal of the Panel's work was to provide advice and recommendations for improving the accuracy, transparency, and comparability of the decommissioning cost estimates submitted by PG&E, SCE, and SDG&E every three years to the Commission for review. We think the Panel achieved some success in an area where significant uncertainty exists primarily due to site differences and the long time frame before decommissioning begins for the currently active units at SONGS, Diablo Canyon, and Palo Verde.

Accuracy is an illusive ideal in predicting future decommissioning. However, the first four of the Panel's recommendations will likely improve the accuracy of future cost estimates. First, the panel recommended that actual data be used, where appropriate, to replace or inform current estimates for certain activities. Second, involving plant security in the development of security assumptions and costs will yield a more reliable estimate, without disclosure of any confidential information. Third, we agree that encouraging the utilities to share decommissioning performance and cost data, though restrained by confidentiality or commercial concerns, could lead to more accurate estimates or efficient methods. Fourth, the utilities are encouraged to take advantage of opportunities to obtain site contamination or activation data, from ordinary monitoring or new testing done during plant modifications and maintenance activities. This data can be used to confirm or adjust volumetric assumptions about LLRW waste, a key cost driver. The utilities are prompted to stay current on industry activities regarding hard-to-detect nuclides including tritium and carbon 14.

All of these recommendations emphasize use of the most accurate information available, including from each other where it is appropriate. Since unexpected contamination is a common source of cost overruns, keeping current on industry response to contaminants, and increased on-site monitoring during operations may provide better estimates of actual LLRW volume onsite.

Recommendations 9 through 12 address the Commission's goal of transparency of decommissioning cost estimates. A significant result of the Panel's work was the discovery of a $300 million error in SCE's adjustments to the Palo Verde estimate. It took a lot of digging by the Panel and SCE to figure out that a double counting of waste volume had occurred, and it was discovered as a result of the Panel's inquiries rather than during Phase 1. Other SCE adjustments to the Palo Verde estimate for large component removal, contingency, and SNF were viewed as potentially reasonable but in need of continuing review. Therefore, the Panel recommended that the waste volume error be corrected in the next NDCTP, and all other Palo Verde adjustments be fully explained each NDCTP. The Panel's explanation of various contingencies, specifically the use of performance contingency by TLG and ABZ, shed light on contradictory information from Phase 1 and supported the recommendation that different contingency values may be appropriate for different sites.

The Panel also recommended that the Commission require SCE to quantify the increased cost associated with the site restoration the company believes is required under the terms of the Navy lease, even if this adds some cost to preparing the estimate. By a wide margin, this activity was the biggest cost difference between SONGS and all other comparison plants. The excess waste removal was estimated by the Panel to be about $1.3 billion of the 2008 SONGS cost estimate; however, the amount is not separately calculated by SCE in its cost estimate. The Commission and public would benefit from having a clearer picture of the direct and indirect costs of this contract condition, in part as an argument to the Navy to negotiate a site release standard more comparable to the NRC.

Lastly, Recommendations 5 through 8 address the Commission's goal of comparability between cost estimates. We recognize that each site will have some unique characteristics that impact the final cost estimate, but some costs and assumptions may be common. Other activities may be common but have site-specific differences which, if explained, help the Commission evaluate both estimates. For example, in Phase 1, SCE included labor termination costs pursuant to state law, but PG&E did not. If state law requires such payments then the law must apply to both SCE and PG&E, even if staffing requirements may differ. There are other areas identified by the Panel where the utilities could apply common assumptions, e.g., DOE performance (when it will remove SNF), state and federal requirements for site restoration, alternatives and pricing for LLRW burial.

The Panel also recommended that the utilities agree on a "Common Summary Format" (CSF) for use in the next NDCTP that includes key decommissioning cost estimate assumptions and results. We agree that use of a CSF to immediately provide key elements of a cost estimate, may lead to more public awareness of decommissioning activities and could even reduce the costs of future NDCTPs because of more efficient discovery and cross-examination.

The proposed assumptions for the CSF are those listed above, plus the extent of site and building contamination, and LLRW and hazardous waste anticipated to be present at the start of decommissioning. Recommended "results" for the CSF include a breakdown of manhours by craft and non-craft, total, and period; security labor hours, total, and by period; average craft, non-craft, and security labor rates; LLRW previously handled, packaged, and/or removed from site; clean waste handled and removed; and major "activity" and "period" costs that are comparable.

We agree with the Panel's recommendations but think a modest expansion would be of significant assistance to the Commission and public. First, in the 2012 NDCTP, the utilities shall agree to use the same year for expression of dollars, e.g., $2011. The list of estimate assumptions should include the type of contingency used and the rate applied, as well as how long SNF will stay in wet storage. The "results" should also identify the assumed LLRW disposal rates and escalation rate, and the escalation rate applied to labor costs. We agree that the utilities should work together to arrive at a CSF, but this is primarily a list of important items which all of the participating utilities should henceforth provide as an attachment to their NDCTP applications. The utilities may use the same form individually or provide a side-by-side comparison with each application. However, the lists must follow the same format to facilitate comparison.

In addition, we find that such an extract of key information is similarly useful in relation to the assumed trust fund performance. Therefore, we require the utilities to add to the CSF, the most recent year-end trust fund balances and assumed rates of return, along with the proposed revenue requirement by site.

We conclude that the Panel's recommendations are reasonable, useful, and will aid the Commission in exercising its jurisdictional oversight of assuring adequate funding for reasonable future decommissioning costs. Furthermore, use of a Common Summary format promises to be an important advancement in the review of decommissioning cost estimates and revenue requirements by both the Commission and the public. To the extent we have directed some additional information be included in the CSF, it will add more depth to the snapshot of each application with little extra effort by the utilities.

The Commission greatly appreciates the assistance of numerous personnel of PG&E and SCE, including responses to information requests, coordination of the site visits, and the availability for interview of dozens of people at the sites who contributed to the Panel's efforts and the Final Report.