| (C) A demonstration of efforts to achieve optimum tax
efficiency as defined in subsection (o)(2)(C) of this section, including,
as applicable, maintenance of tax-exempt status or efforts to achieve
"qualified" status in accordance with Internal Revenue Code §468A
(or any successor thereto) with respect to the PGC's taxable PGC decommissioning
trusts.
(D) Confirmation that the federal Nuclear Regulatory
Commission either has made, or will make, a finding that there is
reasonable assurance of the financial qualifications of the PGC, as
required by federal regulations.
(E) Compliance with the state funding assurance obligation
set forth in subsection (k) of this section.
(3) The commission shall ensure that the amount of
annual decommissioning funding is consistent with the most recent
decommissioning cost study and funding analysis, and that the PGC
decommissioning trust is adequately funded. The PGC shall update its
state assurance obligation to reflect changes in the annual decommissioning
funding amount.
(i) Annual Decommissioning Funding Amount. The amount
of annual decommissioning funding for a PGC decommissioning trust
shall be an amount that, based on such factors as the balance of funds
in the decommissioning trust, anticipated escalation rates, and anticipated
after-tax return on funds in the decommissioning trust, will cover
the cost of decommissioning a nuclear generating unit at the end of
its operating license period. The amount shall be calculated based
on the most current reasonably available information, consistent with
the most recent decommissioning cost study, and divided by the remaining
years of the license or a shorter period of time at the election of
the PGC. The decommissioning cost study and funding analysis shall
include the information required by subsection (h)(2)(A) of this section.
The commission, on its own motion or on the motion of the commission
staff, may initiate a proceeding to review the PGC's trust balances
or the annual funding amount. The PGC shall provide any information
required to conduct the review in accordance with the commission's
procedural rules.
(j) Creditworthiness of PGC. For the purposes of the
initial application under this section, creditworthiness of the PGC
will be established primarily through satisfying the State Assurance
Obligation as provided for in subsection (k) of this section.
(k) State Assurance Obligation. A PGC using a commission
approved PGC decommissioning trust shall provide additional financial
assurances that funds will be available to satisfy 16 years of annual
decommissioning funding, based on the most recent annual decommissioning
funding amount approved by the commission (the state assurance obligation
amount). If the remaining funding contribution period is less than
16 years, the state assurance obligation will be based on the remaining
number of years of annual decommissioning funding. The state assurance
obligation amount will be the discounted value of annual decommissioning
funding for the relevant period up to 16 years. Any arrangement for
satisfying the state assurance obligation shall permit the trustee
of a decommissioning trust to demand payment by any company holding
funds or providing an assurance and require the company holding funds
or providing an assurance to remit funds to the trust, in accordance
with this section. The PGC shall include in its annual report a demonstration
of compliance with the requirements of this subsection. The state
assurance may be used to provide assurance required by state or federal
law for other similar purposes relating to the operation of the facility,
such as assurance for the funding to cover estimated operation costs,
provided that adequate terms are included to replenish the amounts
available under the assurance mechanism if funds are withdrawn for
any such other purpose. The state assurance obligation may be accomplished
by using one or more of the following methods at the election of the
PGC, in the form approved by the commission:
(1) A PGC may satisfy the state assurance obligation
by depositing the required amount of funds into an escrow account,
a government fund, a nuclear decommissioning trust subject to the
commission's investment standards set out in this title, or other
type of acceptable agreement with an entity whose operations are regulated
and examined by a federal or State agency.
(2) A PGC may satisfy the state assurance obligation
by obtaining a written guarantee or financial support agreement from
a direct or higher-tier parent corporation or a corporation with a
substantial business relationship with the PGC or by meeting the following
standards itself. The guarantee or financial support agreement must
be payable to the PGC decommissioning trust. The parent or supporting
corporation, or PGC must meet one of the following standards:
(A) The parent or supporting corporation, or PGC must
have:
(i) Tangible net worth of at least 10 times the state
assurance amount, excluding the net book value of the nuclear units
subject to the state assurance obligation;
(ii) Tangible net worth of at least $500 million;
(iii) Net working capital of at least 10 times the
annual decommissioning funding amount; and
(iv) Assets located in the United States amounting
to at least 90% of the total assets or at least 10 times the state
assurance amount.
(B) The parent or supporting corporation, or PGC must
be otherwise financially qualified, based upon a finding by the commission
that there is reasonable assurance that the parent or supporting corporation
will be able to meet its obligations under the guarantee or other
agreement.
(3) A PGC may satisfy the state assurance obligation
by providing an adequate surety, insurance, or other guarantee method
that meets the following minimum requirements:
(A) A guarantee that the state assurance obligation
will be paid to the PGC decommissioning trust upon any default by
the PGC in satisfying its annual funding obligation.
(B) A surety method may be in the form of a surety
bond, letter of credit, or line of credit. Any surety method or insurance
used to satisfy the state assurance obligation must contain the following
conditions:
(i) The surety method or insurance must be open-ended,
or, if written for a specified term, such as five years, must be renewed
automatically, unless 90 days or more prior to the renewal day the
issuer notifies the commission and the PGC of its intention not to
renew. The surety or insurance must also provide that the full face
amount will be paid to the PGC decommissioning trust automatically
prior to the expiration without proof of forfeiture if the PGC fails
to provide a replacement acceptable to the commission within 30 days
after receipt of notification of cancellation.
(ii) The issuer must have a minimum rating of A- by
Standard and Poor's Corporation, A3 by Moody's Investor's Service
or the equivalent rating from A.M. Best.
(iii) The surety or insurance must be payable to the
PGC decommissioning trust.
(4) A PGC may satisfy the state assurance obligation
using any other method acceptable to the commission considering the
relative risk factors and creditworthiness attributes of the applicant's
financial characteristics to minimize exposure of retail electric
customers to default by power generation companies.
(5) A PGC shall notify the commission within 10 days
of the date of any material change in its ability to meet its state
assurance obligation and provide a plan to cure any deficiency if
the material change results in a PGC's inability to meet the state
assurance obligation. Upon receipt of such notice, the commission
may initiate a formal proceeding to review the PGC's ability to meet
the state assurance obligation, or take any other action it deems
appropriate. The PGC shall provide any information required to conduct
the review in accordance with the commission's procedural rules.
(l) Annual Funding Obligation. A PGC using a PGC decommissioning
trust shall remit annually to the fund the most recent annual decommissioning
funding amount required by the commission. A PGC shall make periodic
payments according to a schedule submitted to the commission and shall
notify the trustee of the decommissioning trust and the commission
within 10 days of the date of any failure to make a scheduled payment.
The commission shall not consider a PGC to be in default of its annual
funding obligation unless it fails to remit the necessary amounts
within 60 days of notice of potential default. If a PGC is in default
of its annual funding obligation, it shall notify the trustee of the
decommissioning trust and the commission within 10 days of the date
of the default. If the PGC fails to cure its failure to make scheduled
payment within 60 days of the commission notice, the commission may
direct the trustee to request that any entity providing state assurance
remit annually to the fund the most recent annual decommissioning
funding amount required by the commission in accordance with the schedule
approved by the commission, including any payments that the PGC has
failed to make, until the PGC is not in default or until the assurance
is depleted. Cont'd... |
