Atomic Show #232 – Against the Tide by RADM Dave Oliver

Though it has been more than 30 years since Admiral Rickover finally retired from his position as the head of Naval Reactors, his legacy lives on in the people he directly trained and in the people that those initial Navy nukes trained and led.

A new book titled Against the Tide: Rickover’s Leadership Principles and the Rise of the Nuclear Navy, by Dave Oliver provides another look at what others can learn from Rickover’s successes and failures.

RADM Dave Oliver graduated from the Naval Academy in 1963 and entered the US Navy nuclear submarine program near the peak of its rapid build up from no nuclear powered submarines in 1954 to more than 140 nuclear submarines by the end of the 1980s.

Though he was not assigned to Admiral Rickover’s staff, he had more than his share of direct contact with the “Kindly Old Gentleman” and is able to share a number of unique experiences that provide insight into Rickover’s techniques for inspiring, cajoling or forcing people to work hard and perform well.

One of the assignments that brought him closer to the Admiral than many of his contemporaries was his tour as the Engineer Officer on the USS Nautilus, the first nuclear powered submarine. By the time Oliver was assigned to the job, the Nautilus was showing her age and the fact that she was a first of a kind.

Sometimes Rickover’s way of doing business made him a lot of enemies, sometimes it made him a hero in the eyes of the people who controlled the purse strings in Congress and in the White House. Unfortunately, some of the people who served in the Nuclear Navy took drastic actions when they decided they could no longer take the stress of trying to meet Rickover’s standards or work ethic.

In the book and during our discussion, Oliver relates a tragic story about one of his best friends.

To learn more about RADM Dave Oliver and find out what other books he has published, please visit DaveOliverBooks.com.

I hope you enjoy the show.

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Should NRC spend time and money simplifying transition to decommissioning?

In the past three years, five nuclear reactors in the United States have permanently ceased operations and are in the process of transitioning to a decommissioning status. There is not a well defined process for making that transition and for applying appropriate, risk-informed regulations. As a consequence of that situation, the owner of each plant must submit exemption requests to the NRC to be reviewed and approved before they can implement the cost saving measures of reducing certain staffing requirements or emergency planning commitments.

The owners of the plants that have stopped operating have asked the regulator and apparently their congressional representatives to develop a new rule making that will codify and streamline the process and reduce the number of specific license exemptions that need to be filed, reviewed and approved.

On December 3, 2014 the Nuclear Energy Institute, the trade organization that represents the interests of nuclear power plant vendors and plant operators, submitted a letter to the NRC expressing its support and interest in the rule making process. Here is the concluding paragraph of that letter.

In summary, the industry believes that an integrated rulemaking that incorporates the lessons learned from the current decommissioning transition activities and addresses the regulatory requirements associated with the transition from operating to decommissioned status would provide the most efficient and effective regulatory framework. Prior to commencing that rulemaking effort, the NRC should focus on the effective review of current decommissioning transition licensing actions.

January 9, 2015 Platts article titled New US NRC chairman says structure, safety, regulation among priorities for 2015 reported that the Commission approved a staff proposal to initiate the process of “reviewing NRC’s approach to regulation of power reactors undergoing decommissioning.” Stephen Burns, the Chairman of the Commission, indicated that he has heard from both Congress and the industry that they believe it might be the right time to take a hard look at the process.

I disagree. This is the wrong time to spend time and money making it simpler to decommission nuclear power plants. One way to encourage licensees to keep operating is to make sure that they understand that there are complexities and costs associated with shutting down the plant before it has reached the end of its effective operating life.

The NRC commissioners have repeatedly told Congress that their budgets are tight and that they must prioritize their work in order to accomplish the most important tasks in the most efficient manner possible given the staffing constraints under which they are working.

Despite the description of tight budgets, the annual fee for an operating license has increased from $4.5 million in 2010 to $5.2 million in 2014. The hourly rate for professional staff hours has increased from $257 in 2010 to $279 in 2014. I fully expect that those fees will increase again next year, largely as a result of the decrease in the number of plants that are assessed for the fee.

A nuclear plant licensee who has transitioned from an operating license to one that is a “possession-only” license is no longer part of the pool of clients that must pay $5.3 million per year. Instead, their rate is just $224,000, which about half of the price of a single professional staff hour full time equivalent (FTE). Since there are more reactors now being decommissioned and contributing to the pool that pays for regulators that specialize in decommissioning, that fee has decreased from $231,000 per year in 2013.

When plants that are in the decommissioning process file license exemptions as they reach various stages of the transition, there is an identifiable customer that the NRC can bill for the staff hours that must be expended to review those exemption requests. Those individually accountable records can also be used in the NRC’s annual budget submission to justify a corresponding manpower resource request.

In contrast, the resources expended to perform the significant amount of work required for a more generalized rule making — especially one that will attract contentious hearings and most likely at least several different litigation processes — are no longer specific to an individual customer. They cannot be billed; they are charged to the general revenue account with the costs spread across all licensees. Those costs will increase the annual license fee and probably increase the professional staff hour rate.

To make sure that my informed guess on how the accounting would work was correct, I contacted the NRC. Here is the relevant part of an email conversation with David McIntyre, a Public Affairs Officer at the NRC.

McIntyre: The costs of any rulemaking are not “fee recoverable,” as in charged to specific licensees, the way inspections or license amendment reviews might be. They are built into the overall fee structure.

Adams: I need to make sure I understand.

The cost of the rule making is NOT charged to a specific licensee, but it IS charged to all license holders and applicants as part of their annual license fee or hourly staff hour cost fees? It is NOT paid out of the 10% of the NRC budget that is not recovered by license fees.

Please correct if I have it wrong.

McIntyre: Correct. That is my understanding.

That means that companies that continue to operate their nuclear plants would pay an increased annual license fee for work specifically aimed at simplifying the process of shutting down and tearing apart plants. Though they might benefit from simplified processes someday, most operating plants will not be shut down for at least two more decades. No one who understands finance should want to pay now for something that will provide no benefits for the next 20 or more years.

In the case of those nuclear plants that are still operated under the rate regulated, integrated monopoly utility model, the cost associated with producing a new decommissioning rule would be passed directly to ratepayers that will not be benefiting from the extra cost.

The entities that will benefit more immediately from the rule making are companies that have decided to shrink the financial pool from which regulatory costs are provided and have reduced their annual contributions by a factor of 25 to about half of an FTE.

If there is s staff hour rate increase to cover a rule simplifying the process of transitioning from an operating plant to one in decommissioning would be doubly unfair to applicants for new design certifications, construction and operating licenses or early site permits.

Not only would the effort expended to create useful rules for existing plants be inapplicable to plants with substantially different designs that might not decommission for another six or more decades, but the staff resources expended for the effort would be unavailable for high priority reviews like those that have already been requested for smaller or non-light water reactors.

Any available time that NRC staff has should be expended in reviewing ways to make its process of reviewing new applications and operating existing plants more effective, providing for safety at a lower, more predictable cost. It should not be spent making it easier for profit making companies to destroy assets that were initially purchased with ratepayer money to provide reliable, ultra low pollution, fossil-fuel free electricity.

PS – I hope this helps people to understand that I am not a “nuclear industry advocate.” I am a nuclear technology advocate who wants to see the use of nuclear energy grow. The carrying costs for decommissioned plant owners is very low on my priority list. I’d care more about them if their plants were still operating and providing a vital product.

Additional Reading

Here is the Federal Register Notice explaining the annual fee computations for FY 2014. It will be interesting to see what it says in FY 2015 about decommissioning rule costs.

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