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Performance and Accountability Report - Fiscal Year 2006 (NUREG-1542, Vol. 12)On this page: Download complete document The following links on this page are to documents in Adobe Portable Document Format (PDF). See our Plugins, Viewers, and Other Tools page for more information. For successful viewing of PDF documents on our site please be sure to use the latest version of Adobe.
Publication InformationTable of ContentsChapter 1: Management's Discussion and Analysis
Chapter 2: Program Performance
Chapter 3: Auditors' Reports and Financial Statements
Appendices
A Message from the ChairmanI am pleased to present the Nuclear Regulatory Commission’s Performance and Accountability Report for FY 2006. Ensuring the protection of public health and safety and the environment has always been and will continue to be the NRC’s primary goal. I am proud to report that the NRC has again achieved its safety and security performance goals. While we did not meet some of our openness, effectiveness, and management performance measures, we have developed approaches to improve results in the coming year. The Agency is continuing its successful regulatory oversight programs, including comprehensive safety inspections as well as force-on-force exercises to confirm licensees’ capabilities to provide adequate security. The NRC will also continue its program to renew the licenses of existing nuclear reactors following the necessary safety reviews. Projected new reactor licensing and other activities present significant challenges for the NRC, including the need to obtain additional resources to meet the increased workload, to hire and train several hundred new staff, to update the Agency’s regulatory review and construction inspection guidelines, and to expand the Agency’s infrastructure, including obtaining the necessary work space and implementing more innovative use of information technology, to accommodate this growth. I believe the Agency is on the right course to meet these challenges. This report provides information that demonstrates that NRC’s financial and performance data are reliable and complete and that the funds entrusted to us by the American public are well managed. The auditors have rendered an unqualified opinion on the Agency’s FY 2006 financial statements. The NRC has evaluated its internal controls, including those relating to financial reporting and its financial management systems as required by the Federal Managers Financial Integrity Act. There is reasonable assurance that the NRC is in compliance with the Act, with the exception of two material weaknesses related to implementation of the Federal Information Management Security Act: the lack of contingency plan testing for information systems and the lack of certification and accreditation of information systems. The Agency has also identified its Fee Billing System as being in substantial noncompliance with government wide financial system requirements and with the Federal Financial Management Improvement Act. The financial statement auditors identified a third material internal control weakness associated with quality assurance for the fee billing process. I have declared this to be a reportable condition based on the results of the Agency’s internal control assessment. We have developed corrective action plans and will continue to work to eliminate the material internal control weaknesses and the Federal Financial Management Improvement Act substantial noncompliance (See Chapter 1, Audit Results and Management Assurances). The NRC is committed to conducting its regulatory responsibilities to enable the use and management of radioactive materials and nuclear fuel for beneficial civilian purposes in a manner that protects public health and safety and the environment, promotes the security of our nation, and provides for regulatory actions that are open, effective, efficient, realistic and timely. The NRC looks forward to continuing its high-quality service to the American public in FY 2007 and beyond. Dale E. Klein | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ASSET SUMMARY (in millions) | ||
|---|---|---|
| FY 2006 | FY 2005 | |
| Fund Balance with Treasury | $281.7 | $220.7 |
| Accounts Receivable, Net | 75.2 | 64.0 |
| Property & Equipment, Net | 26.9 | 27.0 |
| Other | 2.3 | 2.0 |
| Total Assets | $386.1 | $313.7 |
The Fund Balance with Treasury represents the NRC’s largest asset of $281.7 million as of September 30, 2006, an increase of $61.0 million from the FY 2005 year-end balance. This balance accounts for approximately 73 percent of total assets and represents appropriated funds, collected license fees, and other funds maintained at the U.S. Treasury to pay current liabilities. The increase in Fund Balance with the U.S. Treasury is primarily due to an increase in new reactor licensing activities and homeland security related activities, and the impact of a $72.2 million increase in new budget authority offset by a $35.2 million increase in expenditures.
Account Receivable, Net, as of September 30, 2006, was $75.2 million and includes an offsetting allowance for doubtful accounts of $3.0 million. This is a 18 percent increase from the FY 2005 year-end Accounts Receivable, Net, balance of $64.0 million. This increase was primarily due to the increase in the hourly rates for materials and facilities inspection fees. Accounts Receivable Due from the Public was $71.3 million, representing 18 percent of total assets. The value of Property, Plant, and Equipment, Net, was $26.9 million, representing 7 percent of total assets. The majority of this balance represents information technology software and leasehold improvements.
The NRC’s liabilities were $173.5 million as of September 30, 2006. The accompanying table shows an increase in Total Liabilities of $17.3 million from the FY 2005 year-end balance of $156.2 million. This increase is primarily due to the liability that relates to future collections, which will be paid to the U.S. Treasury. Other Liabilities include $75.0 million for recoveries from unbilled accounts receivable, $36.0 million for accrued annual leave, and $13.8 million for accrued salaries to employees. Of the Agency’s liabilities, $45.3 million were not covered by budgetary resources, which is a slight increase over the balance as of September 30, 2005. These liabilities not covered by budgetary resources include unfunded pension expenses, accrued annual leave, and future workers’ compensation. It should be noted that the Federal budget process does not recognize the cost of future benefits for today’s employees until they are actually paid.
| LIABILITIES SUMMARY (in millions) | ||
|---|---|---|
| FY 2006 | FY 2005 | |
| Accounts Payable | $31.2 | $29.0 |
| Federal Employee Benefits | 7.4 | 8.4 |
| Other Liabilities | 134.9 | 118.8 |
| Total Liabilities | $173.5 | $156.2 |
The difference between Total Assets and Total Liabilities, Net Position, was $212.6 million as of September 30, 2006. This is an increase of $55.1 million from the FY 2005 year-end balance. Net Position is comprised of two sections: Unexpended Appropriations and Cumulative Results of Operations. Unexpended Appropriations is the amount of authority granted by Congress that has not been expended. The increase of Unexpended Appropriations of $22.9 million is primarily due to the increase in Fund Balance with Treasury as a result of new reactor licensing activities and homeland security activities. The increase is also due to the change in the accounting treatment for the Nuclear Waste Fund (NWF) transfer in FY 2006 that is now classified to Cumulative Results of Operations. In FY 2005, the NWF transfer was reported as Unexpended Appropriations. Cumulative Results of Operations represent net results of operations since the NRC’s inception. The increase of $32.2 million is mainly due to the change in the accounting treatment of the NWF transfer.
| NET POSITION SUMMARY (in millions) | ||
|---|---|---|
| FY 2006 | FY 2005 | |
| Unexpended Appropriations | $193.7 | $170.8 |
| Cumulative Results of Operations | 18.9 | (13.3) |
| Total Net Position | $212.6 | $157.5 |
Analysis of the Statement of Net Cost
The Statement of Net Cost presents the net cost of NRC’s two programs as identified in the NRC Annual Performance Plan. The purpose of this statement is to link program performance to program cost. The NRC’s net cost of operations for the year ended September 30, 2006, was $80.6 million, which is a decrease of $52.4 million over the FY 2005 net cost of $133.0 million. Net cost by program is shown in the accompanying table. Gross costs increased primarily due to new reactor licensing and homeland security activities. Earned Revenue increased primarily due to the increase in appropriations for NRC activities, of which the NRC is required to collect 90 percent through fee billing.
| NET COST OF OPERATIONS (in millions) | ||
|---|---|---|
| FY 2005 | FY 2004 | |
| Nuclear Reactor Safety | $(50.4) | $0.5 |
| Nuclear Materials & Waste Safety | 131.0 | 132.5 |
| Net Cost of Operations | $80.6 | $133.0 |
Total exchange revenue for the year ended September 30, 2006, was $640.1 million, which is an increase of $90.1 million from the exchange revenue of $550.0 million for the year ended September 30, 2005. Exchange revenue is derived from fees for reactor and materials licensing, inspections, and other services assessed in accordance with 10 CFR Parts 170 and 171.
Analysis of Statement of Changes in Net Position
The Statement of Changes in Net Position reports the change in net position during the reporting period. Net position is affected by changes in its two components—Cumulative Results of Operations and Unexpended Appropriations. The increase in Net Position of $55.1 million from FY 2005 to FY 2006 is due primarily from the net change in Cumulative Results of Operations. This increase of $32.3 million is primarily due to higher fees collected for FY 2006. When fees are collected they are transferred to the U.S. Treasury offsetting Appropriations Used, resulting in a higher Cumulative Results of Operations. During FY 2006, NRC changed the accounting treatment of the Nuclear Waste Fund transfer. The Nuclear Waste Fund transfer is now classified in Cumulative Results of Operations under Transfers-in/out without reimbursement and in FY 2005 it was classified to Unexpended Appropriations.
Analysis of the Statement of Budgetary Resources
The Statement of Budgetary Resources reports the source and status of budgetary resources during the period. It presents the relationship between budget authority and budget outlays, and the reconciliation of obligations to total outlays. For FY 2006, NRC had Total Budgetary Resources available of $809.0 million, the majority of which was derived from new budget authority. This represents a 12 percent increase over FY 2005 budgetary resources available of $722.9 million. This increase is primarily due to new reactor licensing and homeland security activities.
For FY 2006, the Status of Budgetary Resources reported Obligations incurred of $734.8 million, or 91 percent of funds available increased compared to FY 2005 obligations of $665.5 million, at 92 percent of funds available due to the increase of appropriations received for new reactor licensing and homeland security activities. Gross outlays for FY 2006 were $686.6 million, which represents a $35.2 million increase from FY 2005 total outlays of $651.4 million due to the increase in new reactor licensing and homeland security activities.
Analysis of the Statement of Financing
The Statement of Financing is designed to provide the bridge between accrual-based (financial accounting) information in the Statement of Net Cost and obligation-based (budgetary accounting) information in the Statement of Budgetary Resources by reporting the differences and reconciling the two statements. This reconciliation ensures that the proprietary and budgetary accounts in the financial management system are in balance. The Statement of Financing takes Budgetary Obligations of $734.8 million and reconciles to the Net Cost of Operations of $80.6 million by deducting non-budgetary resources, costs not requiring resources, and financing sources yet to be provided.
This section contains information concerning Management Assurances, Prompt Payment Act, Debt Collection Improvement Act, Biennial Review of User Fees, Inspector General Act, and Other key legal and regulatory requirements.
INTEGRITY ACT STATEMENT FOR FY 2006 The U.S. Nuclear Regulatory Commission’s (NRC) management is responsible for establishing and maintaining effective internal controls and financial management systems that meet the objectives of the Federal Managers’ Financial Integrity Act (FMFIA). The NRC is able to provide a qualified statement of assurance that the internal controls and financial management systems meet the objectives of FMFIA, with the exception of two material weaknesses and one non-conformance noted herein. The NRC conducted its assessment of the effectiveness of internal control over the effectiveness and efficiency of operations and compliance with applicable laws and regulations in accordance with OMB Circular A-123, Management’s Responsibility for Internal Control. Based on the results of this evaluation, the NRC identified two material weaknesses and one non-conformance in its internal control over the effectiveness and efficiency of operations and compliance with applicable laws and regulations as of September 30, 2006. Other than these exceptions, the internal controls were operating effectively, and no other material weaknesses were found in the design or operation of the internal controls. In addition, the NRC conducted its assessment of the effectiveness of internal control over financial reporting, which includes safeguarding of assets and compliance with applicable laws and regulations, in accordance with the requirements of Appendix A of OMB Circular A-123. Based on the results of this evaluation, the NRC can provide reasonable assurance that its internal control over financial reporting as of June 30, 2006, was operating effectively, and no material weaknesses were found in the design or operation of the internal control over financial reporting. Dale E. Klein |
Federal Managers’ Financial Integrity Act
The Federal Managers’ Financial Integrity Act (Integrity Act) mandates that agencies establish controls that reasonably ensure that (i) obligations and costs comply with applicable law; (ii) assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and (iii) revenues and expenditures are properly recorded and accounted for. This Act encompasses program, operational, and administrative areas, as well as accounting and financial management. It also requires the Chairman to provide an assurance statement on the adequacy of internal controls and conformance of financial systems withgovernmentwide standards.
Management Control Review Program
Managers throughout the NRC are responsible for implementing effective controls in their areas of responsibilities. Each office director and regional administrator prepares an annual assurance statement, which identifies any control weaknesses that require the attention of the NRC’s Executive Committee on Internal Control (ECIC). These statements are based on various sources including management knowledge gained from the daily operation of Agency programs and reviews, management reviews, program evaluations, audits of financial statements, reviews of financial systems, annual performance plans, Inspector General and Government Accountability Office (GAO) reports, and reports and other information provided by the Congressional committees of jurisdiction.
The NRC’s ECIC comprises senior executives from the offices of the Chief Financial Officer and Executive Director of Operations, with the General Counsel and Inspector General participating as advisors. The ECIC met and reviewed the assurance statements provided by the offices and regions. The ECIC then informed the Chairman as to whether the NRC had any internal control deficiencies serious enough to be reported as a material weakness or material noncompliance.
The NRC’s ongoing internal control program requires, among other things, that internal control deficiencies be integrated into the offices’ and regions’ annual operating plans. The operating plan process provides for periodic updates and ensures that key issues receive senior management attention. The internal control information in these plans, combined with the individual assurance statements discussed previously, provide the framework for monitoring and improving the Agency’s internal controls on an ongoing basis.
FY 2006 Integrity Act Results
The NRC evaluated its internal control systems for the fiscal year ending September 30, 2006. The NRC is able to provide a qualified statement of assurance that the internal controls and financial management systems meet the objectives of the Integrity Act, with the exception of two material weaknesses and one nonconformance.
Material Weaknesses
The Office of the Inspector General (IG) performed an independent evaluation of the NRC’s implementation of the Federal Information Security Management Act (FISMA) for FY 2006. The following two significant deficiencies were identified in the NRC’s information system security program:
As a result of this evaluation, the NRC identified these two findings as material weaknesses under the provisions of the Integrity Act. The NRC will implement the following corrective actions to resolve these material weaknesses:
OMB Circular A-123, Management’s Responsibility for Internal Control, Including Appendix A, Internal Control over Financial Reporting
The Office of Management and Budget revised Circular A-123, stressing the added importance of internal control in light of the new requirements for publicly traded companies contained in the Sarbanes-Oxley Act of 2002. The Circular defines and strengthens management’s responsibility for internal control in Federal agencies. The revised Circular includes updated internal control standards and a new section, Appendix A, which requires Federal agencies to implement procedures for assessing the effectiveness of internal control over financial reporting. Federal agency heads are required to sign a separate statement of assurance for internal control over financial reporting as of June 30, 2006. This statement is a subset of the overall Integrity Act statement of assurance.
The NRC’s Chief Financial Officer established a Senior Assessment Team (SAT), consisting of senior managers from the Office of the Chief Information Officer, the Office of Information Services, Human Resources, and the Office of Administration to ensure that the assessment of internal control over financial reporting was carried out in a thorough, effective, and timely manner. The scope of financial reports and materiality values were determined. Nine financial reporting processes were determined to be key contributors to the Agency’s financial statement balances. A testing plan was developed, and all key controls were tested to establish a baseline for the year of implementation. The Senior Assessment Team analyzed the test results and found no material weaknesses. The team shared these results at their annual briefing. Based on the results of this evaluation, the NRC can provide reasonable assurance that its internal control over financial reporting was operating effectively as of June 30, 2006, and that no material weaknesses were found in the design or operation of the internal controls over financial reporting.
With respect to the fee billing process, the deficiency was recognized as a material weakness by the auditors in the FY 2006 financial statement audit. This deficiency is associated with intensive manual processes, lack of comprehensive quality assurance procedures, and fee billing feeder processes (see Chapter 3, Auditors’ Report).
The SAT concluded that the fee billing process does not rise to the level of a material weakness to be reported externally. The SAT reached this conclusion based on the low level of risk associated with the annual fee billings which comprise approximately 71 percent of fee billing revenue and the additional internal controls implemented for the annual fee and fee for service billing processes in FY 2006. For example, the new quality assurance review process demonstrated that errors were low in number and dollar value, and a statistical sampling test of annual fee billings, for small material licensees also demonstrated that the error rate and dollar value were minimal. In addition, an internal control assessment conducted in FY 2006 specifically identified this weakness as a reportable condition.
Nonconformance
The NRC’s financial management systems substantially conform to governmentwide requirements, except for the Fee Billing System. The issues related to the Fee Billing System include intensive manual processes and the lack of comprehensive quality assurance procedures.
During FY 2006, the NRC implemented a remediation plan for the fee billing system. The plan detailed the NRC’s approach for overcoming the deficiencies that resulted in the finding of nonconformance. The plan included an assessment of the feasibility of bringing the fee billing system into substantial compliance, as well as the schedule to replace it with a compliant system. The Fee Systems Replacement Project is scheduled to be completed by FY 2009.
Federal Financial Management Improvement Act
The Federal Financial Management Improvement Act (Improvement Act) requires each Agency to implement and maintain systems that comply substantially with (i) Federal financial management system requirements, (ii) applicable Federal accounting standards, and (iii) the standard general ledger at the transaction level. The Improvement Act requires the Chairman to determine whether the Agency’s financial management systems comply with the Improvement Act and to develop remediation plans for systems that do not comply.
FY 2006 Improvement Act Results
As of September 30, 2006, the NRC evaluated its financial systems to determine if they complied with applicable Federal requirements and accounting standards required by the Improvement Act. The following eight systems were evaluated—the Federal Financial System, Federal Personnel and Payroll System, Human Resources Management System, Cost Accounting System, Advice of Allotments/Financial Plan System, Capitalized Property
System, Fee Billing System, and Controller Resource Database System.
The Chairman determined that, as of September 30, 2006, the NRC financial management systems were in substantial compliance with the Improvement Act, except for the Fee Billing System, which is in substantial noncompliance because it does not meet Governmentwide standards as defined by the Financial System Integration Office (FSIO), formerly known as the Joint Financial Management Improvement Program (JFMIP). In making his determination, the Chairman considered all the information available to him, including the report from the NRC Executive Committee on Internal Control on the effectiveness of internal controls, Office of the Inspector General audit reports, and the results of the Agency’s financial management systems reviews. He also relied on the Department of the Interior National Business Center’s (DOI-NBC) annual reasonable assurance statement in which they concluded that, for FY 2006, the financial systems the NRC cross-services with them, are in substantial compliance with Federal financial management systems requirements.
The Prompt Payment Act requires Federal agencies to make timely payments to vendors for supplies and services, to pay interest penalties when payments are made after the due date, and to take cash discounts when they are economically justified. From FY 2005 to FY 2006, the NRC paid 8,860 invoices that were subject to the Prompt Payment Act. The NRC percentage of on-time payments subject to the Prompt Payment Act for FY 2006 is 95 percent (see Figure 9). The amount of interest penalties incurred during FY 2006 was $4,874 which is a decrease from FY 2005’s amount of $8,850.
Improper payments continue to be at low risk for the Agency. The NRC continues to evaluate its internal controls to guard against improper payments and monitors and reports on improper payments within its programs. At the present time, NRC’s inventory of functional payment areas consists of commercial vendor, interagency, and travel payments. The DOI-NBC is responsible for monitoring and reporting on any improper payroll-related payments since they are the system of record for payroll disbursements. The NRC will continue to perform annual risk assessments for each of these areas. Based on the FY 2006 risk assessments, the number and amount of improper payments fall below external reporting requirement established by Office of Management and Budget guidance on what is considered to be a significant risk.
The Debt Collection Improvement Act enhances the ability of the Federal Government to service and collect debts. The Agency’s goal is to maintain the delinquent debt owed to the NRC, at year end, to less than one percent of its annual billings. The NRC continues to meet this goal and at the end of FY 2006 delinquent debt was $0.5 million (see Figure 10). The NRC continues to pursue the collection of delinquent debt and refers all eligible delinquent debt over 180 days to the U.S. Treasury for collection.
The Chief Financial Officers Act requires agencies to conduct a biennial review of fees, royalties, rents, and other charges imposed by agencies and make revisions to cover program and administrative costs incurred. Each year, the NRC revises the hourly rates for license and inspection fees and adjusts the annual fees to meet the fee collection requirements of the Omnibus Budget Reconciliation Act of 1990, as amended. The most recent changes to the license, inspection, and annual fees are described in the Federal Register (71 FR 30722, May 30, 2006).
The NRC also revised the fees and charges for the Materials Access Authorization Program and Information Access Authorization Program to more appropriately recognize actual costs. The Agency concluded that other types of fees did not warrant revisions at this time.
The Agency has established and continues to maintain an excellent record in resolving and implementing open audit recommendations presented in reports from the Office of the Inspector General. Section 5(b) of the Inspector General Act requires agencies to report on final actions taken on audit recommendations. Appendix B includes this information, as well as data concerning disallowed costs determined through contract audits conducted by the Defense Contract Audit Agency.
This chapter presents information on the NRC’s performance in achieving its mission and goals during FY 2006. The Agency’s mission is to ensure the safety and security of the American public, and the environment, in the use of byproduct, source, and special nuclear materials. To fulfill this mission, the NRC established five goals: Safety, Security, Openness, Effectiveness, and Management which are contained in the Agency’s FY 2004-FY 2009 Strategic Plan. For each goal, strategic outcome(s) define success in attaining the goal. In addition, a set of performance measures is associated with each goal that not only indicates NRC effectiveness in achieving the goal, but also establishes the basis for NRC performance management.
This chapter also describes NRC achievements in accomplishing its goals. The safety goal key achievements are discussed within Nuclear Reactor Licensing, Nuclear Reactor Inspection, Fuel Facilities, Nuclear Material Users, High-Level Waste Repository, Decommissioning and Low-Level Waste, and Spent Fuel Storage and Transportation.
The Agency’s success in achieving its Security, Openness, Effectiveness, and Management goals is also described. In addition, the Agency’s progress in “getting to the green” for the five management initiatives identified in the President’s Management Agenda is described. Moreover, this chapter presents information on data sources, data quality, and the completeness and reliability of performance data. This discussion focuses primarily on NRC methods for collecting and analyzing data, ensuring data security, and improving the Agency’s performance measures and the quality of its data during the current reporting period. The performance measures reported in this chapter reflect measures in the NRC FY 2006 Performance Budget.
Safety Goal: Ensure Protection of Public Health and Safety and the Environment
Strategic Outcomes
The NRC has five strategic outcomes associated with the Safety goal that determine whether the Agency has achieved its aim to ensure protection of public health and safety as well as the environment:
1“Nuclear reactor accidents” are defined in the NRC Severe Accident Policy Statement as those events that result in substantial damage to the reactor fuel, whether or not serious offsite consequences occur.
2“Significant radiation exposures” are defined as those that result in unintended permanent functional
damage to an organ or a physiological system as determined by a physician in accordance with Abnormal
Occurrence Criterion I.A.3.3Releases that have the potential to cause “adverse impact” are those that exceed the limits for reporting
abnormal occurrences as given by Abnormal Occurrence Criterion 1.B.1.
Results: In FY 2006, the NRC achieved all of its Safety goal strategic outcomes.
The table below lists the performance measures and targets for the FY 2006 Safety goal, as stated in the FY 2006 Performance Budget. The NRC met all of its FY 2006 Safety goal performance measure targets.
| FY 2006 Safety Goal Performance Measures | |||||||
| MEASURE | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | |
| 1. | Number of new conditions evaluated as red by the Reactor Oversight Process is ≤3. | New Metric in FY 2005 | 0 | 0 | |||
| 2. | Number of significant accident sequence precursors of a nuclear reactor accident is zero. | 0 | 1 | 0 | 0 | 0 | 0 |
| 3. | Number of operating reactors with integrated performance that entered the Manual Chapter 0350 process, or the multiple/repetitive degraded cornerstone column or the unacceptable performance column of the Reactor Oversight Program Action Matrix, with no performance exceeding Abnormal Occurrence Criterion I.D.4 is ≤4. |
New Metric in FY 2005 | 0 | 0 | |||
| 4. | Number of significant adverse trends in industry safety performance with no trend exceeding the Abnormal Occurrence Criterion I.D.4 is ≤1. | 0 | 0 | 0 | 0 | 0 | 0 |
| 5. | Number of events with radiation exposures to the public and occupational workers that exceed Abnormal Occurrence Criterion I.A is: | ||||||
| Reactors: 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Materials: ≤6 | 0 | 0 | 0 | 0 | 1 | 0 | |
| Waste: 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| 6. | Number of radiological releases to the environment that exceed applicable regulatory limits is: | ||||||
| Reactor: ≤3 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Materials: ≤5 | 0 | 4 | 0 | 1 | 0 | 0 | |
| Waste: 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Analysis of Results
1. Reactor Oversight Process red conditions: The NRC reactor inspection program monitors nuclear power plant performance in three broad areas: reactor safety, radiation safety, and security. Plant performance is analyzed based on a large number of performance indicators and inspection findings. These indicators and findings are categorized into one of four categories: green, white, yellow, or red with red being the category of highest significance. Red indicates a significant reduction in the safety of a nuclear power plant. In FY 2006, there were no red performance indicators or inspection findings.
2. Reactor significant precursors: The second measure tracks significant precursor events determined by the likelihood of an event adversely impacting safety. A significant precursor is an event that had a probability of 1 in 1,000 (or greater) of leading to substantial damage to the reactor fuel. No significant precursors occurred in FY 2006.
3. Reactor performance: The conditions in this measure indicate whether the NRC identifies significant issues in a plant during inspections conducted under the reactor oversight program. If any of the conditions in this measure are met, the NRC will take action to ensure that plant safety is improved. In FY 2006, no reactors meet the conditions in this measure.
4. Reactor safety trends: This measure tracks trends for several key indicators of the nuclear industry safety performance. These indicators provide insights into major areas of reactor performance, including reactor safety, radiation safety, and physical protection. Statistical analysis techniques are applied to each indicator to calculate its long-term trend. These trends represent industry averages rather than individual plant performance. In FY 2006, no statistically significant adverse trends have been documented in any of the indicators. This performance measure is the broadest indicator of nuclear power plant performance and shows that the nuclear industry, under the NRC oversight, continues to maintain overall safety of nuclear power plants.
5. Nuclear material radiation exposures: This measure tracks the number of radiation exposures to the public and occupational workers that exceed Abnormal Occurrence Criterion I.A, which is defined as those events that produce unintended permanent functional damage to an organ or a physiological system, as determined by a physician. This measure tracks both nuclear reactors and other nuclear material users, such as hospitals and industrial users. In FY 2006, no radiation exposures have exceeded Abnormal Occurrence Criterion I.A. Ensuring that nuclear materials cause no harm to human health constitutes an important measure of the success of both the NRC and the industry in the safe use of nuclear materials.
6. Nuclear material releases to the environment: This measure is an indicator of the effectiveness of the NRC’s nuclear material environmental programs which is defined through compliance with the applicable regulatory limits in 10 CFR Part 20. The dose constraints and concentration limits in 10 CFR are protective of human health and the environment. In FY 2006, the industry has had no nuclear material releases to the environment that exceed regulatory limits.
The Nuclear Reactor Safety Program ensures that civilian nuclear power reactors and test and research reactors are licensed and operated in a manner that adequately protects public health and safety and the environment while safeguarding special nuclear materials used in reactors. Safety at nuclear power plants has improved substantially over the past 20 years (see following for long-term trends in safety indicators).This improvement in the safety performance of nuclear power plants results from the combined efforts of the nuclear industry and the NRC.
Long Term TrendsThe NRC measures the long-term effectiveness of its Nuclear Reactor Safety program activities using several industry-level performance indicators, some of which are addressed in the following pages. These indicators show significant improvement in the long-term trends for safety performance of nuclear power plants since 1988, the baseline year for the statistical analyses. Plant operating experience data have yielded a steady stream of improvements in the reliability of plant systems and components, plant operating procedures, training of power plant operators, and regulatory oversight. For ease of viewing, all the charts in this section display data since 1993. The industry safety indicators are derived through engineering and scientific analyses by the NRC’s Office of Nuclear Reactor Regulation and Office of Nuclear Regulatory Research. The analyses of some events for FY 2005 and FY 2006 are still ongoing. The performance indicator results are subject to minor variations as licensees submit revisions to the source data and may differ slightly from data reported in previous years as a result of refinements in data quality. The results of these analyses are reported annually to both the Commission and to Congress. The Industry’s Safety Performance Record
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The NRC completed 1,659 reactor licensing actions during the year (see Figure 11), above the target of 1,500 licensing actions. At the end of FY 2006, 97.6 percent of the inventory was less than one year old and 99.9 percent of the actions were completed within two years. The targets were 96 percent and 100 percent respectively. The licensing action inventory age goal of 100 percent and less than two years old was not met because of the complexity of the staff’s review of Columbia Generating Station’s Alternate Source Term amendment request. Technical issues associated with the review, including continued efforts to resolve differing staff opinions, allowed this licensing action to exceed two years of age on September 30, 2006. The staff intends to devote resources to resolve these issues and complete the review by the end of October, 2006. (see Figure 12).
Evaluations of nuclear facility power uprate applications represent one of the more important types of licensing activities and are a means for facilities to increase the power output of their plants. The NRC reviews focus on the potential impacts of the proposed power uprate on overall plant safety. The review of a power uprate application ensures that risks associated with increasing a plant’s power output are fully addressed and that plant operation at the increased power level is safe. Power uprates increased the Nation’s electrical generating capacity by approximately 429 Megawatts electric (MWe) in FY 2006.
Another important area involves the preparations for conducting licensing reviews for a new generation of nuclear reactors. Licensing activities for new reactors ensure that these reactors will meet NRC safety requirements and that a stable and predictable regulatory process is in place so that the Agency can evaluate future license applications without imposing undue regulatory burden on nuclear power generating companies. The NRC is undertaking these preparatory activities in response to the nuclear industry’s increased interest in constructing new reactors as a result of the Energy Policy Act of 2005 and ongoing U.S. Department of Energy efforts to share the costs of new reactor licensing projects. The first applications to construct and operate new nuclear power reactors are expected to be filed as soon as 2007, with several more in FY 2008 and FY 2009. The current number of expected Combined License applications for the period FY 2007 through FY 2009 has increased to a total of 20. The NRC proposed revisions to the regulation governing early site permits, design certifications, and combined licenses to improve the effectiveness and efficiency of the licensing processes for new reactor applications.
New Reactor Designs
The NRC has been actively reviewing new nuclear reactor designs. On December 30, 2005, the Commission voted unanimously to certify a fourth power plant design, the Westinghouse AP1000 standard plant design. In addition, General Electric has submitted an application for the Economic Simplified Boiling-Water Reactor design. In a letter dated December 1, 2005, the staff informed General Electric that their application is sufficiently complete and that it was formally accepted as a docketed application for design certification.
By certifying nuclear reactor designs, the NRC resolves safety issues in a design certification rulemaking. When an applicant submits an application for construction of a new nuclear power plant using one of these designs that has been certified by the Commission, the license application review can proceed more efficiently in a manner that ensures safety while minimizing unnecessary regulatory burden and delays.
In addition to working on domestic issues for new reactor construction, the NRC has been a leader in cooperating with other national nuclear regulatory authorities to address advanced reactor oversight. The NRC is leading a multinational effort called the Multinational Design Evaluation Program to more efficiently review new reactor designs. The goal of this effort is to make all new reactor reviews more safety-focused. NRC representatives are communicating closely with representatives from the Finnish and French regulatory authorities about the EPR designs that are being constructed in Finland and planned for licensing in France and the United States. A longer-term multinational effort is being
undertaken under the auspices of the Office of Economic Cooperation and Development’s Nuclear Energy Agency in attempt to harmonize regulatory approaches to facilitate more efficient reviews of Generation IV reactors.
Early Site Permits
The NRC is currently reviewing early site permit applications for the Clinton, North Anna, Grand Gulf, and Vogtle nuclear power plant sites. The Agency issued the Clinton environmental impact statement on July 28, 2006, and the Grand Gulf environmental impact statement on April 7, 2006. The staff issued the associated safety evaluation report for the Grand Gulf site on April 24, 2006, the Clinton site on May 1, 2006, and the North Anna site on August 15, 2006. Early site permits address site safety issues, environmental protection issues, and plans for coping with emergencies independent of the review of a specific nuclear plant design.
In addition to working on domestic issues for new reactor construction, the NRC has been a leader in cooperating with other national nuclear regulatory authorities to address advanced reactor oversight. The NRC has proposed an initiative, the multinational design approval program, that will allow several regulatory authorities to share expertise and resources in reviewing new and future reactor designs.
Reactor operating licenses for nuclear reactors are granted for 40 years and can be renewed for as long as an additional 20 years. The review process for renewal applications is designed to assess whether a reactor can continue to be operated safely during the extended period of operation.
To renew a license, the utility must demonstrate that the effects of aging will not adversely affect structures or components important to safety during the renewal period.
Such structures and components include the reactor vessel, piping, electrical cabling, containment structure, and steam generators. For some structures or components, additional action may be needed to ensure adequate margins of safety. Additionally, the potential impact on the environment due to the extended period of operation is assessed to verify that the impacts are not so great as to preclude license renewal.
The NRC has received applications to renew the licenses for 55 units at 32 sites and has renewed licenses for 44 units at 23 sites (see Figure 13). The NRC is currently reviewing applications to renew the licenses for eleven units at nine sites. The Agency expects that almost all of the licensees for currently licensed units will ultimately apply to renew their licenses.
Extensive implementation guidance was developed to standardize and improve the efficiency of the renewal process such that the time period for renewing a standard application is not unduly long. This guidance enables the Commission to minimize unnecessary regulatory burden for the applicant while ensuring that the plant can continue to operate safely. In the future, the NRC will update this guide as needed based on lessons learned and process improvements identified during renewal application reviews.
The NRC’s Reactor Oversight Process verifies that nuclear plants are being operated safely and in accordance with the NRC’s rules and regulations. The NRC has full authority to demand immediate licensee action for any conditions which result in excess risk to the public, including requiring a plant be shut down if necessary. Inspection findings and performance indicators are evaluated to assess the safety performance of each operating nuclear power plant. The NRC performs a rigorous program of inspections at each plant and may perform supplemental inspections and take additional actions to ensure that the plants address significant safety issues. The results of NRC inspection findings for each plant are available to the public on the NRC web site. The NRC also conducts public meetings with licensees to discuss the results of the NRC’s assessments of its safety performance.
When necessary, the NRC initiates investigation and enforcement activities to identify and appropriately respond to instances of willful noncompliance with NRC regulations. If necessary, fines and sanctions are applied to punish willful noncompliance or malfeasance.
In FY 2006, the Nation’s nuclear power plants were operated well within NRC safety requirements. The performance measures for the safety goal document that no plants were operating at unacceptable levels. In addition, the safety trend for nuclear plants as a whole showed no adverse trends. More than 99 percent of plant safety indicators were rated green in FY 2006.
The NRC continued to improve the Reactor Oversight Process in FY 2006. Agency assessments confirm that the Reactor Oversight Process has resulted in a more objective, risk-informed, and predictable regulatory process that focuses NRC and licensee resources on aspects of plant performance that have the greatest impact on safe plant operations.
Reactor Investigations and Enforcement
Compliance with NRC requirements plays an important role in giving the Agency confidence that safety is being maintained. NRC policy endeavors to deter noncompliance and to encourage prompt identification and timely, comprehensive corrections. Licensees, contractors, and their employees who do not achieve the high standard of compliance expected by the NRC are subject to enforcement sanctions. Each enforcement action depends on the circumstances of the case. However, in no case will the NRC permit licensees to continue to conduct licensed activities if they cannot achieve and maintain adequate levels of safety.
Emergency Preparedness and Incident Response
The NRC emergency preparedness and incident response activities are aimed at ensuring that the Agency is capable of responding effectively to events at its licensees’ sites and that adequate protective measures can and will be taken to mitigate plant damage and to minimize radiation doses to members of the public.
In FY 2006, the NRC conducted numerous outreach initiatives regarding the review of emergency preparedness regulations and guidance; improved the licensing infrastructure to support new reactor license applications; continued a comprehensive review of requirements led by the Department of Homeland Security (DHS); worked with the U.S. Department of Health and Human Services (HHS) to distribute potassium iodide to States that request it; continued upgrades to the Agency’s incident response center; and developed and implemented key lessons learned from Hurricane Katrina, a pandemic workshop, and other emergency response exercises.
During the 2005 hurricane season, the NRC and DHS effectively responded to hurricanes Katrina, Rita, and Wilma which had no significant impact on commercial nuclear power plant safety. After the storms, the NRC and DHS coordinated their review of licensee, State, and local emergency preparedness and response capabilities to allow timely restart of nuclear power facilities to support restoration of infrastructure while maintaining the protection of public health and safety. The NRC conducted a lessons learned review of the 2005 hurricane season and developed thirteen recommendations grouped in the areas of coordination and communications, roles and responsibilities, and supporting NRC employee needs. Those items necessary to be completed before the 2006 hurricane season were completed on schedule.
The Agency uses different types of exercises to test and demonstrate its incident response and emergency preparedness capabilities. In FY 2006, 12 formal scheduled exercises were conducted at licensee sites, five of which included full NRC participation. In addition, the NRC participated in two governmentwide interagency exercises. The NRC also conducts other improvement techniques such as tabletop drills and internal procedural exercises. In FY 2006, the NRC conducted two of these drills. The exercises provide training, test the Agency’s plans, procedures, and guidance documents, and test and evaluate the headquarters incident response facility and critical incident response communication capabilities. The NRC conducted an unannounced emergency response drill at NRC headquarters to validate response time and exercise command controls and communications during an event.
Following completion of each exercise, the NRC conducts a comprehensive review