|
State of Florida
|
Public Service Commission
Capital Circle Office Center
● 2540 Shumard Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
|
|
DATE:
|
May 20, 2026
|
|
TO:
|
Office of Commission Clerk (Teitzman)
|
|
FROM:
|
Division of Economics (Kunkler,
Wu, Barrett, Clark, Pope)
Division of
Accounting and Finance (Buys, DSa, Higgins)
Office of
the General Counsel (Bloom, Crawford)
|
|
RE:
|
Docket No.
20250143-EI – Petition for approval of 2025 nuclear decommissioning study, by
Florida Power & Light Company.
|
|
AGENDA:
|
06/02/26 – Regular Agenda – Proposed Agency Action – Interested
Persons May Participate
|
|
COMMISSIONERS ASSIGNED:
|
All
Commissioners
|
|
PREHEARING OFFICER:
|
Payne
|
|
CRITICAL
DATES:
|
None
|
|
SPECIAL INSTRUCTIONS:
|
None
|
|
|
|
|
Case Background
On December 12,
2025, Florida Power & Light Company (FPL or the Company) filed its 2025
Nuclear Decommissioning Cost Study (2025 study or current study) for Turkey
Point Nuclear Generating Station (Turkey Point) Units 3 and 4 and St. Lucie
Nuclear Power Plant (St. Lucie) Units 1 and 2.
Rule 25-6.04365, Florida
Administrative Code (F.A.C.), requires that any utility under the Florida
Public Service Commission’s (Commission) jurisdiction that owns a nuclear
generating unit file a site-specific decommissioning cost study at least once
every five years. The purpose of periodic decommissioning reviews is to
recognize changes and developments affecting decommissioning cost estimates of
the Company’s nuclear units and to also consider factors such as improvements
in technology, regulatory changes that have transpired since the last
decommissioning study, and any relevant additional updates and information.
An explanation of the basic concepts surrounding a decommissioning
study follows.
Nuclear
Decommissioning
Decommissioning
involves the physical dismantling and removing of plant buildings, materials,
and equipment that are no longer used and useful, but remain following the
retirement of a nuclear generating unit. With respect to the funding of
decommissioning activities, the Nuclear Regulatory Commission’s (NRC) Rule, 10
C.F.R. Section 50.75, requires that licensees provide reasonable financial
assurance that funds will be available for decommissioning through prepayment
prior to the start of operation, an external sinking fund or a surety method,
insurance, or other guarantee method. An external sinking fund is defined as:
A fund
established and maintained by setting funds aside periodically in an account
segregated from licensee assets and outside the administrative 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 account, or Government fund, with payment by
certificate of deposit, deposit of Government or other securities.
FPL’s funding
program has historically provided for financial assurance through contributions
to its nuclear decommissioning trust (NDT) funds. As discussed later, the Company’s
currently authorized annual base rate decommissioning contribution (Accrual) is
set at zero dollars per year. Thus, financial assurance standards have
been satisfied solely by fund growth since 2005.
In 1989, the
Commission approved the external sinking funding method by Order No. 21928. In determining the annual provision for decommissioning,
the current cost estimate is escalated to the expected dates of actual
decommissioning. The escalation rate used is determined by using a combination
of general economic inflation rates and inflation rates for decommissioning
labor, transportation, and burial of nuclear waste. Once the escalated
decommissioning cost is known, a sinking fund annuity is calculated to
determine the annual annuity. This annual annuity plus the earnings on the nuclear
decommissioning trust (NDT) fund, net of taxes, will grow to the escalated cost
of decommissioning.
The primary
objective of a NDT fund is to have enough money on hand at the time of
decommissioning to meet all required expenses at the lowest possible cost to
utility ratepayers. No set of investment policies will meet this goal with
certainty. The management of the fund, therefore, must be concerned with both
the preservation of contributions and the purchasing power of the
contributions. To this end, the Commission, by Order No. 21928, required that
the fund’s assets earn a consistent positive real return over a market cycle. The imposed minimum fund earnings rate is
at least the rate of inflation measured by the Consumer Price Index (CPI) over
each five-year review period.
Considerations
for the treatment of spent fuel generated during the operation of FPL’s nuclear
units first appeared in FPL’s 1994 Nuclear Decommissioning Cost Study (1994
study). While the storage and disposal of spent
nuclear fuel (SNF) assemblies generated during plant operations were not
considered a decommissioning expense, the presence of SNF on-site does impact
the cost of decommissioning. Faced with the uncertainties of the Department of
Energy (DOE) meeting its 1998 deadline for the acceptance of SNF (see next
section below), the Commission recognized that SNF may have to remain on-site
long after decommissioning begins. For this reason, an allowance for on-site
dry storage costs was made in determining decommissioning accruals for each
nuclear unit.
The primary goal
in requiring an on-site dry storage allowance was to ensure that the funds
needed to fully decommission FPL’s nuclear units are available when the plants
retire, while being recovered from customers who received nuclear generated
energy. The Commission found that these costs should continue to be reviewed to
determine the prudence of their inclusion in decommissioning accruals. Staff
notes that FPL’s 2025 study does include provisions for on-site SNF management,
which are further discussed in Issue 1.
Uncertainty
Regarding DOE Obligations
The Nuclear Waste Policy Act of 1982
committed the DOE to accept and dispose of SNF and high-level radioactive waste
(HLRW). The acceptance and disposal of SNF and HLRW by the DOE was to begin by
January 31, 1998, as stipulated under its Standard Disposal Contract with waste
generators. With respect to a final SNF repository, the DOE submitted its
license application to the NRC on June 3, 2008, seeking authorization to
construct a storage facility located at Yucca Mountain, Nevada.
The NRC formally docketed DOE’s license
application for the Yucca Mountain Repository
on September 8, 2008, triggering a congressional deadline for the NRC to decide
whether to authorize construction. The review was suspended in 2011, prompting
legal action, and in 2013 the U.S. Court of Appeals ordered the NRC to resume
the review. The NRC later issued final Safety Evaluation Report volumes in 2015
and an Environmental Impact Statement supplement in 2016. However, due to continued political
opposition, lack of congressional funding, and limited federal support, the
licensing process has remained effectively stalled for nearly a decade.
Separate and apart from the Yucca Mountain license
application and NRC reviews, in January 2013, the DOE released
its “Strategy for Management and Disposal of Used Nuclear Fuel and High-Level
Radioactive Waste.” This serves as a statement of its policy regarding the
disposition of used nuclear fuel and HLRW.
Under this strategy, the DOE plans to make “demonstrable progress on the siting
and characterization of repository sites to facilitate the availability of a
geologic repository by 2048.”
Recently, the DOE has been pursuing a “consent-based siting” approach, in which
states must voluntarily agree to host nuclear waste sites, in exchange for
“federal support and help attracting investment towards developing nuclear
power plants.”
Staff understands
that the ultimate purpose of this policy direction and approach is to establish
a number of high-level nuclear waste sites specializing in specific classes of
waste. However, to date, no national or regional repositories have been
identified and fully licensed to receive commercial SNF or HLRW.
Due
to the DOE’s non-performance of terms contained in the Standard Disposal
Contract with FPL, litigation was brought by the Company against the federal
government. Ultimately, in 2009, FPL entered into a settlement agreement with
the federal government for damages incurred relating to SNF storage and
management.
As part of the settlement agreement, the Company receives annual payments to
cover the costs incurred for managing and storing SNF that it would otherwise
not have incurred if the original terms of its Standard Disposal Contract with
the DOE had been met. FPL is currently projecting that SNF management costs
incurred before years 2066 at Turkey Point and 2070 at St. Lucie, are eligible
for reimbursement, and the credits are included as part of this current study,
consistent with the Company’s 2020 Study. From 1997 through 2020, the federal
government has reimbursed FPL $352,811,616 for storing and managing SNF,
with FPL’s reimbursement requests for years 2021-2024 still pending.
End
of Life Materials and Supplies and Last Core of Nuclear Fuel
In the review of FPL’s 1998 Nuclear Decommissioning Cost Study
(1998 study), the Commission addressed, for the first time, recovery of nuclear
materials and supplies (M&S) costs, as well as the costs of
unburned nuclear fuel (Last Core) expected to remain at the end
of each generating unit’s life (EOL). The Commission found that these costs are
unique to a nuclear unit and are the direct result of unit shut down. However, the Commission also recognized
that these costs do not meet the intent of nuclear decommissioning because they
do not involve the removal of plant facilities. The Commission concluded that
the costs associated with EOL M&S inventories and Last Core should be
amortized over the remaining life spanof each unit. The Commission
found that amortizing EOL M&S and Last Core costs over the remaining life
span of each plant allocates the costs to customers receiving nuclear generated
power.
The Commission ordered that the amortization of costs associated
with EOL M&S inventories be accounted for as a debit (increase) to nuclear
maintenance expense with a corresponding credit to an unfunded Account 228
reserve. For costs associated with the Last Core, the Commission ordered that
the amortization should be recorded as a base rate fuel expense with a credit
to an unfunded Account 228 reserve. Finally, the Commission found
that the costs associated with EOL M&S and the Last Core should be
addressed in subsequent decommissioning studies so that the related annual
amortization expenses could be revised, if warranted. Staff notes FPL has
provided updates for its respective EOL M&S and Last Core costs in the current
study. These updated costs and amortizations are further discussed in Issues 3
and 4.
Recent
Decommissioning Orders Pertaining to FPL
By Order No. PSC-05-0902-S-EI, issued September 14, 2005, the
Commission approved a Settlement Agreement that suspended FPL’s then annual
nuclear decommissioning accrual. Per the terms of the
Stipulation and Settlement, FPL was to file a decommissioning study on or
before December 31, 2005, and the results of the study would have no impact on
customer rates for the term of the Settlement. FPL’s annual base rate nuclear
decommissioning accrual (which is exclusive of EOL M&S and Last Core
amortization expenses) has remained at zero dollars per year from 2005 forward.
FPL’s last decommissioning proceeding, in accordance with
Rule 25-6.04365, F.A.C., occurred in 2020. The Company’s cost analysis and
continuation of a zero annual accrual was approved by Order No.
PSC-2021-0232-PAA-EI (issued in Docket No. 20200257-EI).
FPL’s current study is similar to its 2020 Decommissioning Study (2020 study or
prior study) in terms of the general scope of decommissioning and plant
inventory levels.
The Commission is vested with jurisdiction over these
matters through several provisions of Chapter 366, Florida Statutes (F.S.),
including Sections 366.04, 366.05, and 366.06.
Discussion
of Issues
Issue 1:
What are the current total estimated costs to
decommission Florida Power & Light Company’s Turkey Point Nuclear Units 3
and 4, and St. Lucie Nuclear Units 1 and 2, valued in 2025 dollar terms?
Recommendation:
FPL’s total current estimated decommissioning
costs of $1,566,148,000, for Turkey Point Nuclear Units 3 and 4 and $1,904,787,000
for St. Lucie Nuclear Units 1 and 2, in 2025 dollars, are reasonable. (Kunkler)
Staff Analysis:
The purpose of FPL’s updated site-specific decommissioning
cost study is to recognize changes and developments affecting decommissioning
cost estimates of the Company’s nuclear units and to also consider such factors
as improvements in technology, regulatory changes that have transpired since
the last decommissioning study and review in 2020, and any relevant additional
updates and information.
Operating License
FPL’s Turkey Point began service in 1972 (Unit 3) and 1973
(Unit 4). St. Lucie began service in 1976 (Unit 1) and 1983 (Unit 2). All four
units were originally licensed by the NRC to operate for a maximum of forty
years, but have received subsequent license renewals from the NRC, allowing
continued operation. The most current license extension for Turkey Point Units
3 and 4 was approved by the NRC in December 2019,
while the most current license extension for St. Lucie Units 1 and 2 was
recently approved by the NRC in April of this year. The
current study reflects FPL’s 20-year license extensions for both units at the St. Lucie, shifting decommissioning later than assumed
in its 2020 study and thereby extending the period over which costs are
escalated and trust fund earnings accrue. For the purposes of the current
study, FPL assumes all units will operate through their respective license
expiration dates, which are as follows:
·
Turkey Point Unit 3 - July 19, 2052
·
Turkey Point Unit 4 - April 10, 2053
·
St. Lucie Unit 1 - March 1, 2056
·
St. Lucie Unit 2 - April 6, 2063
Decommissioning Methods
The NRC accepts the following three decommissioning
methods: prompt removal/dismantling (DECON), mothballing with delayed
dismantling (SAFSTOR), and entombment. Consistent with the 2020 study, the 2025
study continues to utilize a combination of DECON and SAFSTOR decommissioning
methods. FPL selected DECON for the Turkey Point units because this method
provides the lowest cost and employs those individuals familiar with the
nuclear facility to support the dismantling effort. Further, DECON eliminates a
potential long-term safety hazard and relieves the Company of the long-term
obligation and liability for continuing maintenance of the property. For the
St. Lucie units, due to the timing difference in operating license expiration
dates, a hybrid approach (SAFSTOR for Unit 1 followed by concurrent DECON of
both units) is utilized. This allows for a one-time mobilization of contractor
personnel and equipment by mothballing Unit 1 until the expiration of Unit 2’s
license.
The Company projects that SNF will remain at each plant
site after the majority of nuclear facilities have been removed. Staff notes
that in order for a nuclear plant to be considered fully decommissioned, no
on-site SNF may be present. Consistent with the Company’s 2020 study, the
current study includes the costs associated with interim storage of SNF, via Independent
Spent Fuel Storage Installations (ISFSIs), until the DOE is able to accept SNF
from the sites. The DOE is expected to make payments to FPL to cover SNF
management costs incurred by FPL prior to 2070 for St. Lucie and 2066 for
Turkey Point. FPL projects all SNF will be transferred from the on-site ISFSI
to the DOE by 2072 for Turkey Point and by 2082 for St. Lucie.
In addition, FPL is required to submit a License
Termination Plan (LTP) to the NRC toward the end of the decommissioning
process. Once the physical decommissioning process (including removal of SNF
and storage facilities) is complete, the NRC will determine if site remediation
has been performed in accordance with the LTP; and if envisioned by the LTP,
the site will be released by the NRC for unrestricted use.
Staff notes that FPL’s current decommissioning study assumes site remediation
to the level of unrestricted use. At this point, the nuclear license will be
terminated, thus concluding NRC oversight.
Decommissioning Cost Estimates
FPL commissioned EnergySolutions, LLC, to develop the
decommissioning cost estimates for its 2025 study. EnergySolutions utilized the
decommissioning cost model based on the fundamentals laid out in the Atomic
Industrial Forum/National Environmental Studies Project Report AIF/NESP-036,
“Guidelines for Producing Commercial Nuclear Power Plant Decommissioning Cost
Estimates,” and in accordance with NRC Regulatory Guide 1.202, “Standard Format
and Content of Decommissioning Cost Estimates for Nuclear Power Reactors.”
The major decommissioning cost drivers in FPL’s 2025 study
are: program management (staffing/labor), insurance and regulatory fees, site
security, spent fuel management, waste packaging/transportation/disposal, site
characterization and license termination surveys, energy costs, decontamination
and removal-related activities, and low-level radioactive waste (LLRW) inspection
fees. The cost estimates incorporate site-specific plant systems and building
inventories, proprietary unit cost factors,
historical data, project execution strategies, waste volumes/classifications, estimated
man-hours, and local labor rates. Contingencies (typically 10–25%) and
jurisdictional factors (e.g., 95.89%) are applied as appropriate.
The total
estimated cost to decommission Turkey Point has increased by approximately 15.1
percent from the 2020 study. The total estimated costs to decommission St. Lucie
increased by 9.1 percent during the same timeframe. Tables 1-1 and 1-2 below
present the cost comparisons from 2020 to 2025 by major category of activity using
the selected methods of decommissioning. Staff notes that the two vintages of
cost figures shown below are unadjusted (nominal) and presented as they were in
the year of study, or 2020 dollars and 2025 dollars, respectively.
|
Table 1-1
|
|
Turkey Point Decommissioning
Cost Comparison 2020-2025
|
|
Plant Turkey Point
Units 3 and 4
|
2020 Study ($1000s)
|
2025 Study ($1000s)
|
Difference ($1000s)
|
Percent Difference (%)
|
|
|
License Termination
|
1,018,355
|
1,181,679
|
163,324
|
16.0
|
|
|
Spent Fuel Management
|
282,949
|
312,767
|
29,818
|
10.5
|
|
|
Site Restoration
|
59,888
|
71,702
|
11,814
|
19.7
|
|
|
Total*
|
1,361,192
|
1,566,148
|
204,956
|
15.1
|
|
Source: Order No.PSC-2021-0232-PAA-EI and FPL’s 2025
Decommissioning Study
*May not add due to rounding
|
Table 1-2
|
|
St. Lucie Decommissioning
Cost Comparison 2020-2025
|
|
Plant St. Lucie
Units 1 and 2
|
2020 Study ($1000s)
|
2025 Study ($1000s)
|
Difference ($1000s)
|
Percent Difference (%)
|
|
|
License Termination
|
1,254,740
|
1,400,996
|
146,256
|
11.7
|
|
|
Spent Fuel Management
|
427,313
|
432,431
|
5,118
|
1.2
|
|
|
Site Restoration
|
63,409
|
71,360
|
7,951
|
12.5
|
|
|
Total*
|
1,745,462
|
1,904,787
|
159,325
|
9.1
|
|
Source: FPL’s 2020 and 2025 Decommissioning Studies
*May not add due to rounding
On an
individual unit basis, the current estimated costs in 2025 dollars for the
decommissioning of FPL’s nuclear plants are as follows:
|
Table 1-3
|
|
Turkey Point/St. Lucie
Individual Nuclear Unit Cost
|
|
Nuclear Unit
|
Cost (2025 Dollars)
|
|
Turkey
Point Unit No. 3
|
$746,407,000
|
|
Turkey
Point Unit No. 4
|
$819,741,000
|
|
St.
Lucie Unit No. 1
|
$999,057,000
|
|
St.
Lucie Unit No. 2
|
$905,730,000
|
Staff notes
that due to St. Lucie Unit No. 2 being jointly-owned with the Orlando Utilities
Commission and Florida Municipal Power Agency (Joint Owners), FPL is responsible
for approximately 86.63 percent of the unit’s total decommissioning cost. The
Joint Owners fund the remaining amount. Staff further notes that the Joint
Owners maintain separate (from FPL) external sinking funds for satisfying both
their decommissioning cost obligations and the NRC’s financial assurance rule.
The funding level status of the Joint Owners’ NDTs as of October 31, 2025 are
sufficiently above the NRC’s required minimum.
As discussed above, all costs are ultimately classified as
those relating to the activities of license termination, spent fuel management,
or site restoration. However, these major cost classifications are comprised of
individual cost elements. Below, staff analyzes estimated cost variances
between FPL’s current and 2020 study by these individual elements.
The total estimated costs in the 2025 study reflect
increases relative to the total estimated costs in the 2020 study, primarily
due to escalation factors, as no major methodology or scope changes are noted. As
mentioned in the case background, the escalation factor utilized for each cost
category is determined by using a combination of general economic inflation
rates and inflation rates for decommissioning labor, transportation, and burial
of nuclear waste. Explanations and updates to each cost category are detailed
below.
Site Characterization and License Termination
Surveys
These costs are associated with baseline radiological
surveys, final site surveys, and verification surveys required for NRC license
termination and release of the property for unrestricted use. The 2025
estimates incorporate refined methodologies to optimize decontamination
efforts. Site characterization and license termination costs increased by
approximately $4.6 million, or 23.0 percent, for Turkey Point, and $4.6
million, or 22.3 percent for St. Lucie compared to the Company’s 2020 study
costs. These increases are due to escalation.
Corporate Support (Fixed Overhead)
This category includes costs associated with site
operation support. EnergySolutions states that these cost estimates are based
on the information provided by FPL in 2020 and escalated to 2025. Corporate
support costs increased by approximately $4.3 million, or 13.1 percent, for
Turkey Point, and $2.4 million, or 13.9 percent for St. Lucie compared to the
Company’s 2020 study costs.
Decontamination and Removal-Related Activities
Decontamination and removal costs primarily capture costs
related to the disassembly of plant components and the placement of those
components into a central area or zone for processing/disposal, controlled
removal of contaminated and activated concrete, remediation of any hazardous
waste, excavation of soil, and demolition of site structures. Removal costs
increased by approximately $66.9 million, or 27.3 percent, for Turkey Point,
and $55.0 million, or 21.7 percent for St. Lucie compared to the Company’s 2020
study costs. These increases are due to escalation.
Energy Costs
Energy costs reflect current assumptions for energy
sources during decommissioning activities. Energy costs increased by
approximately $0.3 million, or 3.3 percent, for Turkey Point, and $1.4 million,
or 12.7 percent for St. Lucie compared to the Company’s 2020 study costs. These
increases are due to escalation.
Florida Low-Level Radioactive Waste Inspection
Fee
This
category includes costs associated with Rule 64E-5.1508, F.A.C., which states:
“(6) Each generator of radioactive waste whose
shipment is inspected by the department’s representative will be billed
quarterly by the department a fee of $1.95 per cubic foot (0.02832 cubic meter)
of waste shipped or $150.00 per shipment inspected, whichever is greater.”
These costs have been adjusted for updated debris volumes
and regulatory fees. LLRW costs have increased by approximately $1.6 million,
or 29.2 percent, for Turkey Point, and $3.0 million, or 29.2 percent for St.
Lucie compared to the Company’s 2020 study costs. These increases are due to
escalation.
Insurance and Regulatory Fees
This cost
category includes Nuclear Liability Insurance Premiums (per unit), Nuclear
Property Insurance Premiums (site), NRC License Fees (per unit), and Emergency
Planning Fees (County and FEMA). Each of the aforementioned sub-categories’
cost estimates decreased from 2020 to 2025, with the exception of the Nuclear
Liability Insurance Premiums. The result is an overall cost decrease of
approximately $3.2 million (4.3 percent) for Turkey Point and $15.8 million
(15.5 percent) for St. Lucie compared to the Company’s 2020 study costs. The
larger decrease for St. Lucie is primarily driven by Period 5 of the
decommissioning process being shortened from 25 to 19 years.
Miscellaneous Equipment/Site Services
This cost category includes costs
associated with tooling and equipment needed to support decontamination and
dismantling activities. These costs have increased by approximately $1.1
million, or 11.6 percent for Turkey Point and by approximately $1.7 million, or
18.0 percent for St Lucie, compared to the 2020 Study costs. The primary driver
for the increases is escalation.
Program Management
Program
management represents the largest single cost category of the overall decommissioning
cost estimate for Turkey Point and the second largest cost category for St.
Lucie. The program management cost element primarily captures costs relating to
the staffing (both plant personnel and contractors) and organization during the
decommissioning process. This includes overall project oversight as well as
management of day-to-day activities. Program management costs increased by approximately
$40.3 million, or 9.7 percent, for Turkey Point, and decreased by approximately
$29.9 million, or 5.9 percent, for St. Lucie compared to the Company’s 2020 study
costs. The primary driver for the increase for Turkey Point is escalation while
the primary cause for the decrease for St. Lucie is Period 5 of the
decommissioning process being shortened from 25 to 19 years.
Property Taxes
The 2025 study assumes property taxes will be paid post
shutdown and will be carried until the ISFSI demolition is complete. Property
taxes estimates have increased by approximately $12,000, or 1.8 percent, for
Turkey Point, and decreased by approximately $1.5 million, or 43.9 percent, for
St. Lucie compared to the Company’s 2020 study costs. The large decrease for
St. Lucie is attributable to Period 5 of the decommissioning process being
shortened from 25 to 19 years, as well as FPL’s projected annual taxes being
lower in 2025 than in 2020.
Security
This cost category reflects costs associated with
security during the decommissioning process. These costs reflect reduced
staffing needs once SNF is removed from the spent fuel pools and transferred to
dry cask storage at the ISFSI. Security expenses decrease significantly once
the majority of the radiological inventory is removed from the reactor
buildings and associated structures, allowing for a transition to a less intensive
security posture (e.g., reduced guard force and perimeter monitoring
requirements). This reduction is consistent with the 2020 Study’s approach but
has been updated for current license periods and projected SNF transfer
schedules. In the 2025 study estimates, security costs are front-loaded during
active decommissioning phases and then taper off substantially post-ISFSI
loading, reflecting NRC security regulations that scale with remaining
radiological hazards. The updates incorporate refined timelines based on
extended operating licenses, resulting in escalation-driven increases. Security
costs overall increased for both units (approximately $12.0 million, or 11.4
percent for Turkey Point and $23.8 million, or 16.0 percent for St. Lucie) compared
to the Company’s 2020 study costs.
Spent Fuel Management (Direct Expenditures)
This
category includes costs for wet pool cooling and maintenance prior to fuel
transfer, loading and transfer of SNF to dry cask storage at the ISFSI, ongoing
ISFSI operations and maintenance (including monitoring, security, and
environmental controls), and eventual retrieval and shipment when the DOE takes
title and removes the spent fuel.
Direct expenditures are projected
based on adjusted ISFSI storage periods, which vary by unit depending on DOE
acceptance assumptions. The 2025 study reflects current projections for SNF
removal timelines (e.g., DOE pickups begin in 2035 from Turkey Point, complete by
2072; DOE pickups begin in 2037 from St. Lucie, complete by 2082). Spent
Fuel Management costs have increased by approximately $12.0 million, or 13.4
percent for Turkey Point and by approximately $5.1 million, or 3.6 percent for
St Lucie, compared to the Company’s 2020 study cost estimates. The primary
driver for the increases is escalation.
Spent Fuel Pool Isolation
This category includes costs
associated with isolating the spent fuel pools from the adjacent power block
buildings so that decontamination and dismantlement can proceed in adjacent
power block buildings without impacting spent fuel storage and fuel transfer
activities. Spent Fuel Pool Isolation costs have increased by approximately
$3.4 million, or 14.0 percent for Turkey Point and by approximately $3.4
million, or 14.6 percent for St Lucie, compared to the 2020 study costs. The
primary driver for the increases is escalation.
Waste Packaging, Transportation, and Disposal
(Class A, B, and C)
This cost
category includes the costs to package, transport, and dispose of LLRW. LLRW is
the contaminated and activated material generated during a nuclear reactor
decontamination and dismantling process and is further classified based on
levels of radioactivity (lowest-to-highest) as either Class A, B, C, or Greater
than Class C (GTCC). The majority of LLRW assumed for disposal in FPL’s
analysis, in terms of both volume and mass, is Class A waste.
This cost category represents the largest single cost category for St. Lucie,
and second largest for Turkey Point.
For LLRW
disposal cost estimation and planning purposes, FPL has a Life of Plant
Agreement with EnergySolutions to
dispose of Class A nuclear waste at EnergySolutions’ facility in Clive, Utah.
EnergySolutions’ facility in Clive does not have a license to dispose of Class
B or C radioactive waste, which is more highly radioactive than Class A. On
November 10, 2011, Waste Control Specialists (WCS) opened the Texas Low-Level
Radioactive Waste Disposal Compact Facility in Andrews County, Texas. This
facility is licensed to dispose of Class A, B, and C LLRW. For purposes of the current study, Classes B and C
waste are assumed to be shipped and disposed of at the WCS facility.
The total
estimated cost of Waste Packaging, Transportation & Disposal (Class
A, B, & C) increased by $51.2
million, or 18.1 percent for Turkey Point, and $92.5 million, or 21.0 percent
for St. Lucie, compared to the Company’s 2020 study costs. These
increases are due to escalation.
Waste Packaging, Transportation, and Disposal –
Greater-than-Class C
This cost category includes the costs to
package, transport, and dispose of GTCC waste. Staff notes that a facility does
not exist that accepts the disposal of such waste. The total estimated cost of Waste
Packaging, Transportation & Disposal increased by $9.6 million, or 25.3 percent for Turkey Point, and $13.7
million, or 25.3 percent for St. Lucie compared to the Company’s 2020 study
costs. These increases are also due to escalation.
Contingency Allowances:
The practice of budgeting a cost
contingency allowance is common in large-scale construction and demolition
projects. Such project cost estimates generally include a baseline cost
estimate, which is formulated based on ideal conditions, and a contingency allowance.
A contingency allowance is a specific provision for unforeseeable elements and
associated costs within the defined project scope. For large, complex, and
long-running projects such as nuclear plant decommissioning, unforeseeable
events are likely to occur; therefore, a contingency allowance is necessary.
For each of FPL’s four nuclear units,
EnergySolutions applied contingency
allowances (typically ranging from 10–25%) to each specific decommissioning activity on a
line item basis to produce a contingency value (in dollars). These specific
line item contingency allowances are based on guidelines developed by the
Atomic Industrial Forum (now Nuclear Energy Institute) in its report
"Guidelines for Producing Commercial Nuclear Power Plant Decommissioning
Cost Estimates,” AIF/NESP-036. Dividing the sum of the line item contingency
values by the total decommissioning costs (excluding contingencies) for each
unit respectively, results in the proposed weighted average contingency factors
for the 2025 study. The weighted average contingency factors for all four
nuclear units are displayed in the table below:
|
Table
1-4
|
|
Weighted
Average Contingency Factors
|
|
Nuclear Unit
|
Contingency
|
|
Turkey Point Unit 3
|
16.66%
|
|
Turkey Point Unit 4
|
17.07%
|
|
St. Lucie Unit 1
|
16.72%
|
|
St. Lucie Unit 2
|
17.07%
|
Source: FPL’s 2025 Decommissioning Study
Staff
believes the contingency provisions presented in FPL’s 2025 study, which are
based on industry standards and guidelines, as discussed above, are reasonable.
Conclusion
Staff believes the 2025 study, in estimating current
decommissioning costs for Turkey Point and St. Lucie as discussed above,
appropriately recognize and reflect the changes and developments affecting
decommissioning cost estimates of the Company’s nuclear units. Thus, based on
information contained in FPL’s 2025 study and FPL’s responses to staff’s data
requests, staff believes that FPL’s total current estimated decommissioning costs
of $1,566,148,000 for Turkey Point Nuclear Units 3 and 4 and $1,904,787,000 for
St. Lucie Nuclear Units 1 and 2, in 2025 dollars, are reasonable.
Issue 2: What
are the appropriate annual accruals, in equal dollar amounts, necessary to
recover the future decommissioning costs of Florida Power & Light Company’s
St. Lucie Nuclear Units 1 and 2, and Turkey Point Nuclear Units 3 and 4?
Recommendation:
Staff recommends the appropriate jurisdictional
accrual amounts necessary to recover future decommissioning costs over the
remaining life of each nuclear power plant remain at the currently-authorized
zero dollars per year as last approved by Order No. PSC-2021-0232-PAA-EI. (D’Sa)
Staff Analysis:
The
purpose of this issue is to determine the appropriate annual accrual amounts to
be charged to customers for satisfying the future cost of decommissioning FPL’s
nuclear power plants. As mentioned in staff’s recommendation statement, the
currently authorized overall annual decommissioning accrual is set to zero
dollars per year (suspended) as last approved by Order No.
PSC-2021-0232-PAA-EI.
Staff notes the annual decommissioning accrual has been continuously suspended
since September of 2005.
In general,
to determine the annual accrual, the cost of decommissioning is first estimated
in current dollars and then escalated to its future value using specific cost
escalation assumptions. The question becomes how much revenue needs to be
collected from current customers in equal monthly payments, earning at a given
rate, to equal the future value of decommissioning costs. The determination of
the annual accrual then resembles an annuity calculation. The specific cost
escalation rates and the assumed funds earning rate are discussed in greater
detail later in this issue. However, in considering current or “on hand”
funding levels, the very need for an annual decommissioning accrual is
determined by a similar process. To determine the need for an annual
decommissioning accrual, the assumed funds earnings rate is used to develop the
present value of the future funding requirement. A comparison is then made
between the present value of the future funding requirement and the current funds
on hand including certain assumed future tax implications. The results of this
analysis will be the present value of the net funding requirement (which
includes the scenario/result of no current additional customer funding being
required). These updated calculations reflect a revised operating license which
is valid for an additional 20 years.
The results
of the annual accrual analysis presented with FPL’s 2025 study indicates that
no new customer funding (positive annual accrual for nuclear plant decommissioning)
is required at this time. Staff notes that unless ordered otherwise, the
continued adequacy of FPL’s decommissioning accrual will be reviewed by the
Commission at least once every five years as required by Rule 25-6.04365(3),
F.A.C.
Current Cost of
Decommissioning
As discussed in detail in Issue
1, the current overall system decommissioning cost estimates included in FPL’s
2025 study are shown in Table 2-1. The estimated costs are as of December 31,
2025.
Table 2-1
Current Decommissioning
Cost Estimates by Plant
|
Nuclear Unit
|
Estimated Decommissioning Costs
(2025 Dollars)
|
|
St. Lucie Unit No. 1
|
$999,057,000
|
|
St. Lucie Unit No. 2
|
$905,730,000
|
|
Turkey Point Unit No. 3
|
$746,407,000
|
|
Turkey Point Unit No. 4
|
$819,741,000
|
|
Total
|
$3,470,934,000
|
Source:
FPL’s 2025 Decommissioning Study, Support Schedule G.
Cost Escalation Rates
Specific cost escalation rates
are used to convert the current estimated decommissioning cost to the future
decommissioning cost for each nuclear unit. The current decommissioning cost
estimates are delineated into five summary cost categories. These categories
are: labor, equipment/materials, transportation, low-level radioactive waste
disposal, and other. The current decommissioning cost estimates are escalated
to future values at the respective license termination dates for each nuclear
unit using separate inflation forecasts applicable to the forelisted cost
categories. With the exception of burial rates, FPL relied upon “The U.S.
Economy, The 30-Year Outlook, November 2025,” published by Global Insight as
the source for its specific escalation forecasts. FPL’s escalation rate for
burial is based on Company-specific data. Staff notes the estimated burial
costs contained in the 2025 study are assumed to escalate at an annual rate of
2.0 percent. The specific year-by-year escalation rates for all cost categories
are shown on page one of Schedule G (for both St. Lucie and Turkey Point) of
the 2025 Study.
The methodology used by FPL in
the 2025 study to determine the assumed average escalation rates is consistent
with the methodology used in its prior or 2020 study. The plant-specific
average annual escalation rates used in the 2020 Study and the 2025 Study to
convert the current decommissioning costs to the future decommissioning costs
for each nuclear unit are shown in Table 2-2 below:
|
Table 2-2
|
|
Average
Annual Escalation Rate Comparison
|
|
Nuclear Unit
|
2020 Study
|
2025 Study
|
|
St. Lucie Unit No. 1
|
3.15%
|
3.99%
|
|
St. Lucie Unit No. 2
|
3.19%
|
4.24%
|
|
Turkey Point Unit No. 3
|
3.15%
|
4.03%
|
|
Turkey Point Unit No. 4
|
3.13%
|
3.97%
|
Source:
FPL’s 2020 and 2025 Decommissioning Studies, Support Schedule G.
Future Cost of
Decommissioning
The estimates of the total future
cost to decommission each nuclear unit are based on the current costs to
decommission, operating license termination and release dates, and the specific
cost escalation rates. The estimated future costs to decommission each nuclear
unit at their respective assumed license release dates are listed in Table 2-3.
Staff notes the cost figures listed below are on a system basis and net of the
estimated DOE reimbursements for costs incurred related to the on-site storage
of SNF as previously discussed in Issue 1.
|
Table 2-3
|
|
Future
Cost of Decommissioning
|
|
Nuclear Unit
|
Future Net Decommissioning Costs
(Nominal)
|
|
St. Lucie Unit No. 1
|
$3,651,292,335
|
|
St. Lucie Unit No. 2
|
$3,969,821,968
|
|
Turkey Point Unit No. 3
|
$2,128,079,245
|
|
Turkey Point Unit No. 4
|
$2,459,406,869
|
|
Total
|
$12,208,600,417
|
Source: FPL’s 2025
Decommissioning Study, Support Schedule G.
Current Funding
The NRC requires that licensees
provide reasonable financial assurance that funds will be available for
decommissioning through one of three methods: (a) prepayment prior to the start
of operation, (b) an external sinking fund, or (c) surety, insurance or other guarantee
method.
The Company provides for financial assurance for plant decommissioning through
its NDT funds which are held in trust with The Bank of New York Mellon
Corporation (BNY Mellon) as trustee. This financial provisioning and trust
arrangement constitutes an external sinking fund. An external sinking fund is
defined as a: “fund established and maintained by setting funds aside
periodically in an account segregated from licensee assets and outside the
licensee’s administrative control in which the total amount of funds would be
sufficient to pay decommissioning cost at the time termination of operation is
expected.”
The current projected NDT
balances and the estimated present values of funding requirements on a
jurisdictional basis are shown in Table 2-4 below. Staff notes that generally
for the purposes of an annual decommissioning accrual, a fund balance greater
than or equal to the estimated present value of the future funding requirement
at the date of study indicates the current funding level is sufficient, and
that no new customer money is presently required.
|
Table 2-4
|
|
Current
Total Fund Balances and Estimated Present Values of Future Funding
Requirements
|
|
Nuclear Unit
|
Projected Fund Balance
at 12/31/2025
(Jurisdictional)
|
Estimated Present Value of Future Funding
Requirements
at 12/31/2025
(Jurisdictional)
|
|
St. Lucie Unit No. 1
|
$1,061,140,942
|
$510,940,366
|
|
St. Lucie Unit No. 2
|
$874,978,943
|
$459,681,158
|
|
Turkey Point Unit No. 3
|
$894,485,866
|
$429,731,079
|
|
Turkey Point Unit No. 4
|
$1,006,407,832
|
$487,531,728
|
|
Total
|
$3,837,013,583
|
$1,887,884,331
|
Source: FPL’s 2025
Decommissioning Study, Support Schedule G.
Funding Period
The funding period is the period
over which revenues are collected from customers for purposes of
decommissioning the nuclear units. Plant-specific funding periods are assumed
to expire on the last day of the month preceding the month in which the plant’s
operating license is due to expire. The operating license expiration dates for
the nuclear units are listed in Table 2-5 below:
|
Table 2-5
|
|
Current NRC Operating License
Expiration Dates
|
|
Nuclear Unit
|
Expiration Date
|
|
St. Lucie Unit No. 1
|
March 1, 2056
|
|
St. Lucie Unit No. 2
|
April 6, 2063
|
|
Turkey Point Unit No. 3
|
July 19, 2052
|
|
Turkey Point Unit No. 4
|
April 10, 2053
|
Source: FPL’s 2025
Decommissioning Study, Section 2.
Years of Fund
Expenditures
The years in which the
accumulated NDT funds will be expended for purposes of plant decommissioning
are listed in Table 2-6 below:
|
Table
2-6
|
|
Years of Fund Expenditures
|
|
Nuclear Unit
|
Period
|
|
St. Lucie Unit No. 1
|
2056-2083
|
|
St. Lucie Unit No. 2
|
2063-2083
|
|
Turkey Point Unit No. 3
|
2052-2073
|
|
Turkey Point Unit No. 4
|
2053-2073
|
Source: FPL’s 2025
Decommissioning Study, Support Schedule G.
Fund Earnings Rate
The fundamental purpose of the
Commission’s review of a decommissioning study is to ensure there will be
adequate funding on hand at the time the nuclear unit is decommissioned. An
assumed fund earnings rate is integral to this process. The assumed fund
earnings rate should be conservative enough to avoid a situation whereby future
customers are burdened by inadequate funding for decommissioning. However, an
assumed fund earnings rate that is too conservative inappropriately burdens
current customers with expenses to be incurred in the future. As such, a
certain amount of judgment is necessary to determine a fair balance between
generations of customers.
The annual accrual amount moves
inversely to the fund earnings rate. In other words, the higher the assumed
fund earnings rate, the lower the annual accrual and vice versa. In its 2020
Study, FPL used an assumed fund earnings rate of 4.5 percent, which is applicable
to all four of its NDT funds. This
assumption is based on a projected real long-term, after tax and net of fees,
earnings rate of 2.0 percent plus an estimated long term average inflation rate
of 2.5%.
This is the same approach FPL used in its approved 2020
Study where the assumed earnings rate is compared to the CPI to assure that the
overall return remains above CPI.
The assumed fund earnings rate of 4.5 percent, as compared to a CPI of 2.0
percent reflects the projection of continued adequacy of the funds. This
projection assumes an investment strategy of establishing a conservative mix of
assets to achieve long-term growth of principal coupled with an attempt to
minimize downside volatility. Asset mix policy as of December 31, 2025 was 50 percent
equity/growth assets and 50 percent income-oriented assets.
As demonstrated by the range of
earnings displayed in Table 2-7, the total fund returns have experienced some
volatility from period to period. However, since fund inception, the NDT has returned
an overall level of 7.2 percent. Given the projected long-term CPI of 2.0
percent, and the actual returns since inception, staff believes FPL’s estimated
fund earnings rate of 4.5 percent is reasonable for the purposes of determining
the appropriate annual accrual amounts.
|
Table
2-7
|
|
Period
NDT Time-Weighted Returns
|
|
Period
|
Fund Return
|
CPI
|
Spread
|
|
1-Year
|
11.70%
|
2.70%
|
9.00%
|
|
2-Year
|
12.30%
|
2.70%
|
9.60%
|
|
3-Year
|
13.70%
|
3.00%
|
10.70%
|
|
5-Year
|
7.70%
|
4.50%
|
3.20%
|
|
10-Year
|
8.50%
|
3.20%
|
5.30%
|
|
Since Fund Inception
|
7.20%
|
2.80%
|
4.40%
|
Source:
FPL’s Responses to Staff’s First Data Request, No. 1.
Given the parameters discussed
above, the funding analysis indicates the current funding position as of
December 31, 2025, is more than sufficient to satisfy the present value of
future nuclear plant decommissioning cost requirements and that no new customer
monies are required at this time.
Minimum Fund Earnings
Rate
Separate from the issue of the
assumed fund earnings rate is the matter of whether the Commission should
impose a minimum fund earnings rate. In Order No. 21928, the Commission
determined that a minimum fund earnings rate equivalent to the level of
inflation over each five-year review period would be appropriate.[38] The
Commission reaffirmed this approach in FPL’s 1994 and 1998 Studies. In those
orders the Commission stated:
Rather than attempting
to set a prospective minimum fund earnings rate which may or may not be
reasonable under future economic conditions, we will require that the companies
set aside funds sufficient to meet the Commission’s best estimate of the
decommissioning liability and require the companies to maintain the purchasing
power as well as the principal amount of these contributions. The companies’
investment performance will be evaluated along with all other decommissioning
activities every five years. If it is found that the companies’ investment
earnings, net of taxes and all other administrative costs charged to the trust
fund, did not meet or exceed the CPI average for the period, then we will
consider ordering the utility to cover this shortfall with additional monies to
keep the trust fund whole with respect to inflation. We therefore find a
minimum fund earnings rate equivalent to the level of inflation over each
five-year review period would be appropriate.
FPL believes a minimum funds
earnings rate should not be imposed and the current approach, as approved by
the Commission, should remain in effect.
The Company explained that economic and financial market conditions can vary
widely over time and are difficult, if not impossible, to predict. FPL also
indicated that it is reasonable that the Company be accountable for taking
appropriate steps intended to preserve the principal value and the purchasing
power of contributions collected from its customers. Staff concurs with FPL and
believes this approach is reasonable and recommends that it remain in effect,
that is no minimum earnings rate be imposed at this time.
Conclusion
The current annual expense
requirements to satisfy the estimated future nuclear decommissioning costs
presented in the 2025 study support a zero accrual as of December 31, 2025.
Based on the current estimated cost to decommission each nuclear unit, the
assumed escalation rates to derive future cost values, current funding levels,
and the assumed fund earnings rate of 4.5 percent, staff believes the continued
suspension of any decommissioning accruals is reasonable. Thus, staff
recommends the appropriate jurisdictional accrual amounts necessary to recover
future decommissioning costs over the remaining life of each nuclear power
plant remain at the currently-authorized zero dollars per year as last approved
by Order No. PSC-2021-0232-PAA-EI.
Issue 3:
Should the amortization expense associated with the
unrecovered value of End-of-Life Materials and Supplies inventories that will
exist at the nuclear site following shut down be revised?
Recommendation:
Yes. Staff recommends that the annual amortization
expense estimate associated with EOL M&S inventories for FPL of $2.130
million (system), based on the proposed date of January 1, 2030, is reasonable.
The amortization of EOL M&S as estimated for that date is $0.483 million
higher than the currently authorized accrual amount. Any changes to the current
EOL M&S accruals should be addressed in FPL’s next rate case. (Pope,
Barrett)
Staff Analysis:
The EOL M&S inventories of a nuclear-powered
electrical plant consist of spare replacement parts and supplies that are
required to ensure safe and reliable operations of the nuclear plant. These inventories are unique and will have
little value other than scrap when the associated nuclear units are
decommissioned. Recognizing that a level of EOL M&S inventories will remain
at the final shut down of each nuclear plant and therefore equates to an
unrecovered cost, the Commission authorized FPL to amortize the cost of EOL
M&S inventories over the remaining life span of each nuclear plant in order
to ratably allocate the costs to those receiving the benefit of the nuclear generated
power.[42] For
administrative ease, the Commission further required FPL to address the
amortization status of EOL M&S inventories in the Company’s subsequent
updated nuclear decommissioning cost studies so the related annual amortization
expense could be revised, if necessary.
In accordance with Order No. PSC-02-0055-PAA-EI, effective May
2002, FPL began recording the annual amortization expense associated with the
EOL M&S inventories as a debit to nuclear maintenance expense with a credit
to an unfunded Account 228 reserve. FPL’s current level of annual amortization
expense was required in its 2020 Study and approved by the Commission by Order
PSC-2021-0232-PAA-EI. Because the Commission previously found that the recovery
of the costs associated with the EOL M&S inventories should be considered
as a base rate component,[43] it
ordered that changes in amortization of the EOL M&S inventory-related
expenses shall be considered in conjunction with changes in other base rate
costs and revenue requirement determinations at the time of a base rate
proceeding. Consequently, FPL’s currently-authorized annual amortization
determined in its 2020 Study became effective in July 2021, consistent with the
Stipulation and Settlement Agreement approved by the Commission in FPL’s 2025
base rate case.[44]
In a decommissioning study, a Company’s required EOL
M&S-related annual amortization is determined by dividing the remaining net
unrecovered cost associated with the EOL M&S inventories by the remaining
amortization period. The remaining net unrecovered cost is the difference
between the estimated cost of EOL M&S inventories and the actual reserve
balance accrued at a point in time. The remaining amortization period is
usually assumed to be from the considered point in time to the end of operating
license of the last nuclear unit at a nuclear site.
In its study, FPL estimated the remaining net unrecovered cost
associated with the EOL M&S inventories, as of January 1, 2026, to be
$65.934 million, with approximately $36.330 million at St. Lucie[45]
and $29.604 million at Turkey Point. These amounts reflect increases in
the estimated Adjusted Ending Inventory Value at the end of the license
compared to the 2020 Study, including an approximate $20 million increase for
St. Lucie Unit 2 and a $14 million increase for Turkey Point Unit 4.
The overall increase of approximately $22 million in the estimated
Adjusted Ending Inventory Value for St. Lucie is primarily attributable to the
subsequent 20-year license extensions for Units 1 and 2, which require FPL to
maintain higher inventory balances over a longer period and delay the onset of
the inventory ramp-down phase. For Turkey Point, the $12.6 million increase in
the estimated Adjusted Ending Inventory Value is primarily due to updated inflation
factors applied over the study period, as well as a lower assumed inventory
turnover rate of 18.24 percent in the 2025 study compared to 26.34 percent in
the 2020 study.[46]
On February 28, 2025, FPL filed a Petition for Base Rate Increase
and Rate Unification.[47]
After filing its Rate Case petition, the Company updated its analysis
associated with the EOL M&S inventories in the instant docket in order to
align with the proposed effective date identified in FPL’s Rate Case, January
1, 2026. The Commission recently established base rates through 2029 via
settlement, with EOL M&S accruals continuing based on the results of the
prior study.[48]
Accordingly, the 2025 study results for EOL M&S, as projected forward to
January 1, 2030, reflect the estimated remaining amounts to be recovered and
the revised annual amortization amounts as presented in Table 3-1 below.
|
Table 3-1
|
|
|
|
EOL M&S - Associated
Amortization Expenses ($1000s)
|
|
|
|
Plant Site/ Unit
|
(a)
EOL M&S Inventories as of 1/1/2030 (FPL ownership share)
|
(b)
Reserve Balance as of 1/1/2030
|
(c) = (a) – (b)
Remaining Amounts to be Recovered
|
(d)
Current Annual Amortization (2020 Study)
|
(e)
Revised Annual Amortization (as of 1/1/2030)
|
(f)
= (e) – (d)
Change
in Annual Amortization[49]
|
|
|
|
|
|
|
|
SL2*
|
50,047
|
17,656
|
32,391
|
985
|
973
|
(12)
|
|
|
|
TP4**
|
54,428
|
27,470
|
26,958
|
662
|
1,157
|
495
|
|
|
|
Total
|
104,475
|
45,126
|
60,934
|
1,647
|
2,130
|
483
|
|
|
|
*St. Lucie 2 is the last unit to be
decommissioned at the St. Lucie nuclear site.
**Turkey Point 4 is the last unit to be
decommissioned at the Turkey Point nuclear site.
Data Source: FPL's response to
Staff's Second Data Request, Nos. 2 (SL) and 9 (TP); FPL 2025 Decommissioning
Study, Assumptions and Schedule E; and Order No. PSC-2021-0232-PAA-EI.
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on the information contained in FPL’s 2025 study and
associated data request responses as well as prior Commission orders, staff
believes that the revised estimated amortization amounts presented in Table 3-1
are reasonable. FPL proposed that any change in amortization accruals relating
to EOL M&S inventories should be addressed in FPL's next base rate
proceeding.[50]
Staff concurs with FPL that the EOL M&S accruals currently in effect should
remain in effect, and that EOL M&S changes in accruals, if any, should be
addressed in FPL’s next rate case.
Conclusion
Staff recommends that the annual
amortization expense estimate associated with EOL M&S inventories for FPL
of $2.130 million (system), based on the proposed date of January 1, 2030, is
reasonable. The amortization of EOL M&S as estimated for that date is
$0.483 million higher than the currently authorized accrual amount. Any changes
to the current EOL M&S accruals should be addressed in FPL’s next rate
case.
Issue 4:
Should the amortization expense associated with the
cost of the Last Core of nuclear fuel be revised?
Recommendation:
Yes. Staff recommends
that the Commission recognize the revised estimate of annual amortization
expense associated with the cost of the Last Core of nuclear fuel at FPL
nuclear units of $17.886 million (system), based on the assumed accrual date of
January 1, 2030. The revised amortization represents an increase of
approximately $14.322 million from the authorized amortization in the 2020 study.
Staff also recommends that the updated estimates should be addressed in FPL’s
next base rate proceeding, and the appropriate changes in accruals, if any,
should be made at that time. (Clark, Barrett)
Staff Analysis:
Last Core is defined as
the unburned nuclear fuel that will remain in the fuel assemblies at the end of
the last operating cycle of each nuclear unit when it ceases operation.
Recognizing that the Last Core is associated with the final shut down of a
nuclear unit and therefore equates to an unrecovered cost at the end of each
unit's life, the Commission authorized FPL to amortize the cost of the Last Core
over the remaining life span of each nuclear unit in order to ratably allocate
the costs to those receiving the benefit of the nuclear generated power.
For administrative ease, the Commission also required FPL to address the
amortization status of the Last Core expense in the Company’s subsequent
updated nuclear decommissioning cost studies so the related annual amortization
expense could be revised, if necessary.
In accordance with Order No.
PSC-02-0055-PAA-EI, FPL began recording the annual amortization expense
associated with the Last Core as a debit to nuclear maintenance expense with a
credit to an unfunded Account 228 reserve. Similar to EOL M&S addressed in
Issue 3, FPL’s current level of annual amortization expense was required in its
2020 study and approved by the Commission by Order No. PSC-2021-0232-PAA-EI.
Because the Commission previously found that the recovery of the cost
associated with the Last Core should be considered as a base rate component, it
ordered that changes in amortization of the Last Core-related expense shall be
considered in conjunction with changes in other base rate costs and revenue
requirement determinations at the time of FPL’s base rate proceeding.
Consequently, FPL’s authorized annual amortization determined in its 2020 Study
became effective January 1, 2022.
In a decommissioning study, a company’s
required Last Core-related annual amortization is determined by dividing the
difference between the estimated EOL value of the Last Core of nuclear fuel and
the cumulative amortization balance at a point in time, by the remaining
amortization period which is usually assumed to be at the end of operating
license of the nuclear unit. FPL calculated the estimated EOL value of the Last
Core of nuclear fuel using the same methodology applied in prior decommissioning
studies. The EOL Last Core value reflects the aggregation of estimated
unamortized acquisition costs of each fuel batch prorated based on the
percentage of unburned fuel remaining at the conclusion of the final operating
cycle.,
In its 2025 study, FPL estimated the remaining net unrecovered cost associated
with Last Core at the St. Lucie and Turkey Point nuclear plants, as of December
31, 2025, was approximately $495.728 million.
Consistent with the approach
used with the EOL M&S balances in its 2025 study, FPL proposed that any
change in amortization accruals relating to the Last Core expense should be
addressed in FPL's next base rate proceeding. The approval of FPL’s 2025 rate case
petition resulted in the Company updating its analysis associated with Last
Core to align with FPL’s potential effective date for their next base rate
proceeding of January 1, 2030.
The updated analysis reflects that FPL’s estimate of remaining net unrecovered
cost associated with the Last Core, as of January 1, 2030, is approximately
$481.472 million. The resulting annual amortization expense is estimated to be
$17.886 million, an increase of $14.322 million annually from the current
level. FPL indicated this estimate reflects the increase in the market-based
prices of nuclear fuel purchases since its prior 2020 Study.
Details of the estimated Last Core-related costs, reserve balances, remaining
amounts to be recovered, and annual amortization amounts, as of January 1,
2030, are presented in Table 4-1 below:
|
Table 4-1
|
|
Last Core -
Associated Amortization Expenses ($1000s)
|
|
|
(a)
|
(b)
|
(c) = (a) -
(b)
|
(d)
|
(e)
|
(f) = (e) -
(d)
|
|
Plant Site / Unit
|
Last Core Costs as of 1/1/2030 (FPL Ownership share)
|
Reserve Balance as of 1/1/2030
|
Remaining Amounts to be Recovered
|
Current Annual Amortization (2020 Study)
|
Revised Annual Amortization (as of 1/1/2030)
|
Change in Annual Amortization
|
|
SL1
|
231,500
|
51,115
|
180,385
|
919
|
6,883
|
5,964
|
|
SL2
|
197,800
|
42,955
|
154,845
|
953
|
4,651
|
3,698
|
|
TP3
|
98,300
|
47,129
|
51,171
|
803
|
2,270
|
1,467
|
|
TP4
|
138,100
|
43,029
|
95,071
|
889
|
4,082
|
3,193
|
|
Total
|
665,700
|
184,228
|
481,472
|
3,564
|
17,886
|
14,322
|
|
Data Source: FPL's Response to Staff's Second Data Request, Nos.
21, 25.
|
Based on the review of information contained in FPL’s 2025
study and associated data request responses as well as prior Commission orders,
staff believes that the updated values for Last Core amortization presented in
Table 4-1 are reasonable. In addition, staff concurs with FPL that the Last
Core amortization amounts currently in effect should remain in effect, and that
Last Core amortization amount changes should be addressed in FPL’s next rate
case.
Conclusion
The amortization expense
associated with the cost of the Last Core of nuclear fuel should be revisited
in FPL’s next base rate proceeding, and the current annual amortization expense
from the 2020 Study should remain in effect. Based on the proposed date of
January 1, 2030, staff recommends that the Commission approve FPL’s revised
estimate of annual amortization expense associated with the cost of the Last
Core of $17.886 million (system) for FPL’s 2025 study. The revised amortization
represents an increase of approximately $14.322 million from the authorized
amortization in the 2020 Study.
Issue 5:
What should the effective date be for adjusting the
annual decommissioning accrual amounts for FPL’s St. Lucie Nuclear Units 1 and
2, Turkey Point Nuclear Units 3 and 4, amortization of nuclear EOL M&S
inventories, and amortization of the costs associated with the Last Core?
Recommendation:
If the staff recommendations in Issues 1 and 2 are
approved, there is no change to the current approved zero decommissioning
accrual. Therefore, an effective date for adjusting the annual decommissioning
accrual is moot. If the staff recommendations in Issues 3 and 4 are approved, any
revisions to the annual amortization amounts relating to EOL M&S
inventories (Issue 3) and the Last Core (Issue 4) should be effective at the
time revised base rates in FPL’s next rate case are approved. (Kunkler)
Staff Analysis:
In FPL’s 2020 Study, the Commission found
that FPL’s currently-approved zero annual decommissioning accrual did not
warrant revision at that time. A review of FPL’s 2025 study indicates that
decommissioning base cost estimates have increased since 2020. However, assumptions
relating to escalation rates and trust fund earnings, as discussed in Issue 2,
suggest that FPL’s currently approved zero annual decommissioning accrual does
not require revision at this time.
As previously discussed in Issues 3 and 4, staff
recommends that revisions to the amortization of nuclear EOL M&S
inventories and amortization of the costs associated with the Last Core should
be revisited at FPL’s next base rate proceeding. This is in accordance with the
Commission decision in the 1998 study review that the amortization expenses
associated with the Last Core and EOL M&S should be considered base rate
obligations. The
effective date of annual amortization amounts should thus be effective at the
time revised base rates in FPL’s next rate case are approved.
Conclusion
If the staff recommendations in Issues 1 and 2 are
approved, there should be no change to the currently-approved zero annual
decommissioning accrual. Therefore, the Commission need not establish an
effective date at this time. If the staff recommendations in Issues 3 and 4 are
approved, any revisions to annual amortization amounts relating to EOL M&S
inventories and the Last Core should be effective at the time revised base
rates are approved in FPL’s next base rate proceeding.
Issue 6:
When should Florida Power & Light Company file
its next nuclear decommissioning study?
Recommendation:
FPL’s next decommissioning cost study for the Turkey
Point Nuclear Generating Station and the St. Lucie Nuclear Power Plant should
be filed no later than December 12, 2030. (Kunkler)
Staff Analysis:
Rule 25-6.04365, F.A.C., requires a utility that
owns a nuclear generating plant under Commission jurisdiction to file a
site-specific nuclear decommissioning cost study update at least once every
five years from the submission date of the previous study unless otherwise
required by the Commission. Given that FPL’s current study was filed on
December 12, 2025, its next study should be filed no later than December 12,
2030.
Conclusion
FPL’s next decommissioning cost study for Turkey Point and
St. Lucie should be filed no later than December 12, 2030.
Issue 7:
Should this docket be closed?
Recommendation:
If
no protest to this proposed agency action is filed by a substantially affected
person within 21 days of the issuance of the order, a consummating order should
be issued and the docket should be closed. (Bloom, Crawford)
Staff Analysis:
If
no protest to this proposed agency action is filed by a substantially affected person
within 21 days of the issuance of the order, a consummating order should be
issued and the docket should be closed.