APS 2012 Annual Report Download - page 33

9
agency’s actions. The D.C. Circuit found that the NRC’s evaluation of the environmental risks from
spent nuclear fuel was deficient, and therefore remanded the 2010 Waste Confidence Decision update
for further action consistent with NEPA.
On September 6, 2012, the NRC Commissioners issued a directive to the NRC staff to proceed
directly with development of a generic environmental impact statement to support an updated Waste
Confidence Decision. The Commission also directed the staff to establish a schedule to publish a final
rule and environmental impact study within 24 months of September 6, 2012. Timely resolution of the
remand by the Court of Appeals could have an adverse impact on certain NRC licensing actions.
Palo Verde has sufficient capacity at its on-site independent spent fuel storage installation
(“ISFSI”) to store all of the nuclear fuel that will be irradiated during the initial operating license
period, which ends in December 2027. Additionally, Palo Verde has sufficient capacity at its on-site
ISFSI to store a portion of the fuel that will be irradiated during the period of extended operation,
which ends in November 2047. If uncertainties regarding the United States government’s obligation to
accept and store spent fuel are not favorably resolved, APS will evaluate alternative storage solutions
that may obviate the need to expand the ISFSI to accommodate all of the fuel that will be irradiated
during the period of extended operation.
Nuclear Decommissioning Costs – APS currently relies on an external sinking fund mechanism
to meet the NRC financial assurance requirements for decommissioning its interests in Palo Verde
Units 1, 2 and 3. The decommissioning costs of Palo Verde Units 1, 2 and 3 are currently included in
APS’s ACC jurisdictional rates. Decommissioning costs are recoverable through a non-bypassable
system benefits charge (paid by all retail customers taking service from the APS system). See Note 22
for additional information about APS’s nuclear decommissioning trusts.
Palo Verde Liability and Insurance Matters – See “Palo Verde Nuclear Generating Station –
Nuclear Insurance” in Note 11 for a discussion of the insurance maintained by the Palo Verde
participants, including APS, for Palo Verde.
Impact of Earthquake and Tsunami in Japan on Nuclear Energy Industry – On March 11,
2011, an earthquake measuring 9.0 on the Richter Scale occurred off the coast of Japan. After the
earthquake, the first of a series of seven tsunamis arrived at the Fukushima Daiichi Nuclear Power
Station. As a result, the Fukushima Daiichi station experienced considerable damage.
Following the earthquake and tsunamis, the NRC established a task force (the “Near-Term
Task Force”) to conduct a systematic and methodical review of NRC processes and regulations to
determine whether the agency should make additional improvements to its regulatory system. On
March 12, 2012, the NRC issued the first regulatory requirements based on the recommendations of
the Near Term Task Force. With respect to Palo Verde, the NRC issued two orders requiring safety
enhancements regarding: (1) mitigation strategies to respond to extreme natural events resulting in the
loss of power at plants; and (2) enhancement of spent fuel pool instrumentation.
The NRC has issued a series of interim staff guidance documents regarding implementation of
these requirements. Due to the developing nature of these requirements, we cannot predict the
financial or operational impacts on Palo Verde or APS; however, Palo Verde continues to comply with
regulatory requirements and related reporting to the NRC as specified in the March 12, 2012, and
interim staff guidance documents.