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Performance and Accountability Report - Fiscal Year 2001 (NUREG-1542, Vol. 7)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. Table of ContentsMessage from the ChairmanNRC Principles of Good Financial Management Message from the Chief Financial Officer Chapter II: Management’s Discussion and Analysis
Chapter III: Program Performance
Chapter IV: Corporate Management and Support
Chapter V: Auditors’ Reports and Financial Statements
Publication InformationThe NRC’s MissionThe U.S. Nuclear Regulatory Commission regulates the Nation’s civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of the public health and safety, to promote the common defense and security, and to protect the environment.
This report presents the agency’s success in meeting its annual performance goals, describes our important accomplishments, the actions we have taken to address our management challenges, and our financial condition during the past fiscal year. Taken in its entirety, this report gives the agency’s stakeholders an opportunity to assess how the agency serves the American public and how it manages the funds entrusted to it. Message from the ChairmanI am pleased to present the Nuclear Regulatory Commission’s Performance and Accountability Report for Fiscal Year 2001. I am proud to report that we have again achieved all of our safety performance goals. This report also provides financial information, including audited financial statements, which show the prudent management of the funds entrusted to us by the American public. As with other U.S. infrastructure, the tragic events of September 11th have affected security considerations at nuclear reactors and other commercial nuclear facilities. We are responding to these events by enhancing security in the near term and reevaluating how security can best be provided for the long term. We are confident that, in cooperation with the Office of Homeland Security and other agencies, we will succeed in this effort to protect the U. S. from future attacks. We have at the same time continued to build on the progress we have made over the past decade to improve nuclear safety. Our oversight of the industry is achieving its objective of promoting safety without stifling the output of energy needed by our Nation, as evidenced by our success in meeting our performance targets. As we look forward, we will continue to conduct an efficient regulatory program that allows the Nation to use nuclear materials for civilian purposes with adequate protection of the public health and safety and the environment. To this end, we have adopted the President’s charge to improve management, performance and results. Moreover, I believe we are well positioned to respond to future industry needs. Demand for electric power and improving economic fundamentals for nuclear power generation have renewed interest in nuclear power as a viable energy source. As a result, licensees are applying to renew their operating licenses for existing plants and are considering new reactor designs and new plant construction. We are responding by adding staff where necessary and reallocating our resources where possible. We at the U.S. Nuclear Regulatory Commission look forward to continuing to provide high quality service to the American people. Richard A. Meserve
NRC Principles of Good Financial ManagementThose who handle public resources have a special responsibility to safeguard the resources entrusted to them and to use them properly. Poor financial management by NRC can undermine the confidence that we are effectively accomplishing our health and safety mission. NRC managers must ensure that public funds are used for authorized purposes only and that they are used economically, efficiently, and within established limits. Toward these ends, the NRC uses the following Principles of Good Financial Management. PLANNING. Good financial management begins with good planning. NRC’s strategic planning should be based on sound assumptions and accurate information and should provide the foundation for the entire fiscal process. Resource requests must be consistent with program goals, guidance, and planning assumptions, and must consider current financial status. Plans should be developed for commitment and obligation of funds based on program needs, procurement lead times, and the need for continuity of funding. CONTROL. Good financial management requires good financial control. Appropriate effective cost controls throughout the financial management process ensure adequate accounting of funds expended, prevent over-obligation of funds and inappropriate expenditures, identify early instances where funds should be reallocated, and produce valuable information for the planning process. COMMUNICATION. Good financial management requires good communication among those involved in the financial management process. Complete, accurate, and timely financial information must be readily available, and financial implications must be considered in decision making. Financial systems should be integrated and meet both agency and office data needs. New information and ideas must be shared throughout the organization. COST EFFECTIVENESS. Good financial management balances expenditures and results. Managers at all levels must ensure that NRC gets what it pays for and that the results are what NRC needs to accomplish its mission. Ongoing projects should be evaluated to ensure results justify continued funding. Appropriate precautions ensure that waste is avoided. To ensure maximum utility of available resources, funds should be obligated as early as practicable during the fiscal year, and excess funds should be deobligated as soon as practical after project completion. EVALUATION. Good financial management requires periodic evaluation of performance against meaningful financial and program performance measures. Such performance assessment should evaluate planned versus actual program results as well as the comparison of program costs with program accomplishments. PERSONNEL. Good financial management is the product of competent and motivated people. Those who are given financial management responsibility must have integrity, dedication, and be well trained and qualified. They must have authority commensurate with their responsibility, and they must be recognized when they achieve superior performance.
Message From the Chief Financial OfficerI am pleased to present the U.S. Nuclear Regulatory Commission’s financial statements for FY 2001 as an integral part of the agency’s FY 2001 Performance and Accountability Report. I am proud to report that our independent auditor has rendered an unqualified opinion on our financial statements for the eighth consecutive year. This opinion attests to the fact that NRC’s financial statements are fairly presented, and demonstrates discipline and accountability in the execution of our responsibilities as stewards of the American taxpayers’ dollars. As of September 30, 2001, the financial condition of the NRC is sound with respect to having sufficient funds to meet its mission and having sufficient control of these funds to ensure our budget authority is not exceeded. We successfully established and collected approximately $455 million in fees paid by NRC licensees, or approximately 100 percent of the agency’s budget that is subject to fees. Our yearend delinquent debt was only $2.1 million or less than one-half of one percent of the fees collected. Payments to commercial vendors were made on-time 95 percent of the time, and 99 percent of our payments were made electronically. During FY 2001, NRC produced unaudited, interim financial statements for the first time. We plan to produce unaudited, quarterly financial statements during FY 2002. During FY 2001, corrective actions were completed for four reportable conditions and closed by the auditors. The reportable conditions concerned management controls over the NRC’s fee development process, streamlining the financial statement preparation process, documentation of debt collection activities, and compliance with the Debt Collection Improvement Act. In November 2001, the agency replaced its human resources, time and attendance, and payroll systems with a new integrated financial and human resources management and cost accounting system. This allows the agency to accumulate more useful labor costs and use a single entry system to collect information for payroll, fee billing, human resources, and cost accounting purposes. In addition to preparing financial statements and successfully undergoing the rigors of an independent audit, the agency used its management control program to examine the adequacy of our efforts to protect against waste, fraud, and mismanagement. Our annual assessment revealed some areas that require strengthening. In the financial management area, our efforts to comply with Statements of Federal Financial Accounting Standards, Nos. 4 and 10, relating to managerial cost accounting and accounting for internal use software were incomplete. Building on previous efforts, we have developed and are implementing appropriate remediation plans to correct the deficiencies during FY 2002. For the current fiscal year, our focus is to provide timely, reliable and useful data to our stakeholders, and using this data to improve our decision making. As such, I anticipate a very productive year and look forward to reporting our successes next year. Jesse L. Funches
-------------------------------------------------------------------------------- Chapter I: IntroductionThe NRC’s mission is to regulate the Nation’s civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of public health and safety, to promote the common defense and security, and to protect the environment. In undertaking its mission, the NRC oversees nuclear power plants, non-power reactors, nuclear fuel-cycle facilities, transportation and disposal of nuclear waste, and the industrial and medical uses of nuclear materials. The use of nuclear materials provides many benefits, chief among them the generation of electrical energy and saving lives through medical procedures. It is the NRC’s mission to ensure the safe use of these materials. Our strategic and performance goals emphasize the priority we place on safety - safety is paramount. To be an effective regulator, we also consider the effects our decisions have on the public and the industries we regulate. We have added three additional performance goals to address this area:
New ChallengesOne of our most important new challenges came at the end of the fiscal year; on September 11, 2001. The terrorist attacks which occurred that day require us to reevaluate our safeguard measures involving nuclear power and materials. Security against sabotage has always been an important part of our licensing and safeguards inspection activities. However, the attack on September 11 has changed the threat profile we face. As a result, we have begun to review our security requirements for both reactor and other NRC licensees as well as NRC facilities and staff. We are reevaluating our goals, measures, strategies, and activities to account for this new threat to America.
There have been a number of significant changes in the electrical power generation industry which have also had a significant impact on the Commission and its regulatory programs. The economic deregulation of the electricity-generation industry has resulted in a consolidation and restructuring of nuclear power assets. In addition, the development of a competitive market for electric power supplies has increased financial pressures on NRC licensees to improve efficiencies and improve operating performance. Our challenge is to allow for innovation and improvements by operators in utilizing their power generation facilities while ensuring that safety is not compromised and the focus on safety remains at the forefront of nuclear power. In addition, there is renewed interest in building and operating nuclear power plants. The growth in demand for electric power, improved economic fundamentals for nuclear power generation, and concerns about the supply of energy from other sources and their environmental impact have renewed interest in the viability of nuclear energy. The President cited nuclear power as a vital component of America’s energy portfolio. As a result, we have seen energy companies renewing their licenses beyond their original 40 year terms, inquiring about potential investments in new reactor design and construction, and submitting applications to increase the power generating capacity of plants currently in operation. The NRC is responding to these changes in the industry. One of our key strategies is the development and implementation of probabilistic risk models and tools to measure plant performance and focus our attention, and licensee action, on those activities which are the most safety significant. These tools have been integrated into a new reactor oversight process. The new reactor oversight process is built around plant performance indicators to objectively measure plant safety. These risk analysis tools allow the industry and the NRC to efficiently and effectively evaluate plant performance and make adjustments where necessary to ensure that safety is maintained. Our vision is to have a regulatory process focused on safety, that is internally consistent, is easy for licensees and the public to understand and practical for the NRC staff to implement. We have reviewed reactor license renewals on a timely basis. We have also
prepared ourselves in the event that the Department of Energy submits an application
for a construction authorization for a high-level nuclear waste geologic repository
in Yucca Mountain, Nevada. Another key issue facing the Commission is the challenge of maintaining our human capital, especially the core technical skills and knowledge of NRC staff. Those that we regulate depend on the NRC to have the ability to develop technically sound, risk-informed rules, to make sound licensing decisions without undue delay, and to conduct fair and meaningful oversight of licensee operations. The public depends on our ability to reach independent judgments on safety. To carry out these capabilities we must have top quality engineers and scientists. While the current NRC staff is highly qualified and technically proficient, we are faced with an aging demographic profile among our engineers and scientists. To address this challenge, we are developing a human capital management plan to ensure we maintain our human capital. Of course, we continue to operate the regulatory programs which have been so successful in carrying out our mission. This can be seen by the fact that we have achieved all of our safety goals since we began reporting them in 1997 as part of the Government Performance and Results Act. NRC ProgramsThe NRC has aligned its programs into four operating arenas to sharpen our focus on the discrete areas covered by our regulatory mission. These are: Nuclear Reactor Safety arena, Nuclear Materials Safety arena, Nuclear Waste Safety arena, and International Nuclear Safety Support arena. NRC also has a corporate management and support function which includes information technology, financial management, human resources and policy development that provide essential resources and capabilities to accomplish our operational missions. Our total budget was $487.3 million in FY 2001. The NRC is a fee-based agency which gets over 90 percent of its funding from fees paid by the industry. The following charts show the distribution of our resources among the four safety arenas and the management and support arena. Readers are encouraged to visit our web site at www.nrc.gov to learn more about who we are and what we do to serve the American people. The NRC brought down its web site in early October 2001, in response to the events of September 11, 2001. A thorough review of all material previously on the web site is being conducted to ensure that information that might be of clear benefit to a terrorist is not made available. The site is being brought back incrementally as this review is being completed. The expectation is that the vast preponderance of information previously available will be available in the coming months. Pie Chart - Budget Authority by Program Pie Chart - Distribution of Employees by Program
Chapter II: Management’s Discussion and Analysis*About the NRCThe NRC was established by the U.S. Congress on January 19, 1975, as an independent Federal Government agency to regulate various commercial and institutional uses of nuclear energy. The agency has assumed the Atomic Energy Commission’s regulatory function to develop and regulate nuclear activities. The NRC’s purpose is defined by the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, as amended. These Acts provide the foundation for regulating the nation’s civilian use of nuclear materials. To fulfill the NRC’s responsibility to protect the public health and safety, the agency performs three principal regulatory functions: (1) establish standards and regulations, (2) issue licenses for nuclear facilities and users of nuclear materials, and (3) inspect facilities and other uses of nuclear materials to ensure compliance with regulatory requirements. These regulatory functions relate to both nuclear power plants and other uses of nuclear materials, such as nuclear medicine, academic activities, research work, and industrial applications. OrganizationThe top leadership of the NRC consists of a five member Commission. The President nominates members to serve 5 year terms with the consent of the U.S. Senate and designates one member as Chairman. The Chairman serves as the principal executive officer and official spokesman for the Commission. The chief operating officer is the Executive Director for Operations who carries out the program policies and decisions made by the Commission. Approximately 2,800 staff members carried out the agency’s mission for FYs 2001 and 2000 utilizing a budget of approximately $487.3 million for FY 2001 and $469.9 million for FY 2000. The NRC recovered the majority of its budget from license fees. The NRC’s headquarters is located in Rockville, Maryland. Four regional offices are located in King of Prussia, Pennsylvania; Atlanta, Georgia; Lisle, Illinois; and Arlington, Texas; and a technical training center in Chattanooga, Tennessee. The NRC also has resident inspector offices at each commercial nuclear power plant. An organization chart for the NRC is located in Appendix C. Program Performance HighlightsThe Government Performance and Results Act (GPRA) requires Federal agencies to provide an annual performance plan to Congress, setting goals with measurable target levels of performance. The NRC evaluates its program performance by using a structured strategic planning process. As such, NRC has organized its strategic goals, performance goals, and strategies for achieving its mission into four strategic arenas. Our highest priority is safety, and our strategic goals focus on the achievement of this priority.
The goal of the first arena, Nuclear Reactor Safety, is to ensure that civilian nuclear power reactors, as well as non-power reactors, are operated in a manner that adequately protects public health and safety and the environment. The NRC regulates 104 civilian nuclear power reactors and 36 non-power reactors. During FYs 2001 and 2000, the NRC met all five of the strategic goal measures for this arena. For the past year, the NRC met or exceeded all established schedules for license renewal activities. This is significant given the interest by our licensees whose licenses need to be renewed to continue operations. To date, the NRC has approved 64 requests from licensees to increase the electrical generating capacity of their nuclear reactor power plants (power uprates). Approval of uprates has resulted in an electrical generating capacity gain equivalent to approximately two large nuclear power plants. The goal of the second strategic arena, Nuclear Materials Safety, is to ensure that NRC-regulated activities associated with the use of source, byproduct, and special nuclear materials are conducted in a manner that protects the public health and safety, the environment, and promotes the common defense and security. This arena includes regulatory oversight for 47 fuel facilities, including eight major fuel cycle facilities and two gaseous diffusion plants. It also includes oversight of more than 20,000 specific licenses regulated by the NRC and the Agreement States. During FYs 2001 and 2000, the NRC met all five of its strategic goal measures for this arena. In addition to achieving our strategic goal measures, it is noteworthy to describe the NRC’s progress in reviewing an application to construct a mixed oxide fuel fabrication facility at the Department of Energy’s Savannah River site near Aiken, South Carolina. The proposed use of mixed oxide fuel is part of the national non-proliferation effort to dispose of surplus weapons grade plutonium by utilizing it in existing commercial light water reactors. The NRC performed an acceptance review of the application and announced an opportunity for a hearing. Also, three public meetings were conducted at various locations near the proposed site to obtain public opinion on the scope of the proposed environmental impact statement for the license application review. The goal of the third strategic arena, Nuclear Waste Safety, is to prevent adverse impacts from radioactive waste to current and future public health and safety, the environment, and to promote the common defense and security. The Nuclear Waste Safety arena encompasses regulatory activities associated with the decommissioning of nuclear reactors and other facilities, storage of spent nuclear fuel, transportation of radioactive materials, and disposal of radioactive waste. For FYs 2001 and 2000, the NRC met all four of its strategic goal measures for this arena. One of the NRC’s major accomplishments in the high-level waste program in FY 2001 was the approval of the final regulations for 10 Code of Federal Regulations (CFR) Part 63, providing site-specific criteria for use in a possible licensing decision on a potential waste repository at Yucca Mountain, Nevada. The NRC also reviewed the U.S. Department of Energy’s (DOE) Supplemental Draft Environmental Impact Statement for the Yucca Mountain repository. The agency continued technical exchanges with DOE on key licensing issues pertaining to the potential high-level waste repository and also to resolve DOE sub-issues and NRC concerns. Also during FY 2001, the NRC completed the review of the Trojan Nuclear Plant License Termination Plan. This was a multi-year effort resulting in the first NRC approval of a License Termination Plan submitted in accordance with the NRC’s reactor regulation. The NRC also completed its evaluation of previously terminated licenses to determine if the facilities had been adequately decontaminated prior to license termination. The goal of the fourth strategic arena, International Nuclear Safety Support, is to support U.S. interests abroad in the safe and secure use of nuclear materials and in nuclear non-proliferation. This arena encompasses international nuclear policy formulation, export-import licensing for nuclear materials and equipment, treaty implementation, nuclear proliferation deterrence, international safety assistance, and safeguards support and assistance. All three measures established for this arena were met in FYs 2001 and 2000. During FY 2001, the NRC completed action on a proposed export of highly enriched uranium to Canada for use as target material for medical isotope production. The agency also played a key role in defining criteria for international agreements on exclusion, clearance, and exemption of contaminated and radioactive materials, and for release of commodities for unrestricted use. The NRC also conducted bilateral assistance activities for nuclear safety and safeguards with Russia, Ukraine, Armenia, Kazakhstan, and countries of Central and Eastern Europe in close coordination with the Departments of State and Energy. Of particular note, the NRC participated in the safe shutdown and decommissioning of the BN-350 sodium-cooled fast breeder reactor near Aktau, Kazakhstan; the closure of the Chernobyl nuclear power plant in Ukraine; and proposals to limit Russia’s long-term production of weapons-grade plutonium. The NRC negotiated with appropriate foreign counterparts four bilateral exchange agreements in FY 2001 to ensure an effective framework for the NRC’s international exchanges is in place. Financial PerformanceAs of September 30, 2001, and 2000, the financial condition of the NRC was sound with sufficient funds to meet program needs and adequate control of these funds in place to ensure NRC obligations do not exceed budget authority. The NRC prepared its financial statements in accordance with the accounting standards codified in the Statements of Federal Financial Accounting Standards (SFFAS) and Office of Management and Budget (OMB) Bulletin No. 97-01, Form and Content of Agency Financial Statements, as amended, and applicable sections of OMB Bulletin No. 01-09. Audit Results The NRC received an unqualified audit opinion on its FY 2001 financial statements. This was the eighth consecutive year the NRC received an unqualified opinion. For FY 2001, the auditors identified two material internal control weaknesses: incomplete implementation of SFFAS Number 10 (SFFAS 10), Accounting for Internal Use Software, and, SFFAS Number 4 (SFFAS 4), Managerial Cost Accounting Concepts and Standards for the Federal Government. These two weaknesses were also identified as being non-compliant with the Federal Financial Management Improvement Act (FFMIA) of 1996. In FY 2000, the auditors also identified management controls over license fee development as a material weakness. Because improved quality control procedures over fee development were instituted during FY 2001, the auditors closed the finding. The auditors also identified two new reportable conditions for FY 2001 concerning contract close-out processing procedures and compliance with computer software accountability. In addition, nine reportable conditions were carried over from FY 2000. Four of these nine reportable conditions remained open at the end of FY 2001. These four include the incomplete implementation of managerial cost accounting, lack of a tested business continuity plan for the core accounting system, inadequate controls over the verification of small entity status for fee assessment, and development of the hourly rate for fees. The lack of a tested business continuity plan for the core accounting system was also identified as being non-compliant with FFMIA. The agency has taken action on these audit findings and expects to fully implement corrective action during FY 2002. Financial Statement Highlights The NRC’s financial statements summarize the financial activity and financial position of the agency. The financial statements, footnotes, and the balance of the required supplementary information, appear in a subsequent section of this report. Analysis of the principal statements follows: Analysis of the Balance Sheet The NRC’s assets were approximately $236.9 million as of September 30, 2001. This is an increase of $11 million from the end of FY 2000, and is mainly due to an increase in Accounts Receivable resulting from mail delays and the late receipt of payments from licensees due to the September 11, 2001, terrorist attack on America. The assets reported in NRC’s Balance Sheet are summarized in the accompanying table.
The Fund Balance with Treasury represents the NRC’s largest asset of $140.5 million as of September 30, 2001, an increase of $1.8 million from the FY 2000 yearend balance. This balance accounts for approximately 60 percent of total assets and represents appropriated funds, collection of license fees, and other funds maintained at the U.S. Treasury to pay current liabilities. Accounts Receivable, Net, as of September 30, 2001 was $51.4 million and includes an offsetting allowance for doubtful accounts of $3.1 million. This is a 17 percent increase over the FY 2000 yearend Accounts Receivable, Net, balance of $44.0 million. Accounts Receivable Due from the Public is $48.9 million, representing 21 percent of total assets. The value of Property, Plant, and Equipment, Net, was $43.8 million, representing 18 percent of total assets. The majority of the balance is comprised of nuclear reactor simulators, leasehold improvements, and computer hardware and software. The Property, Plant and Equipment line item reflects the adoption of capitalizing the full costs of developing internal use software, as required by SSFAS 10, Accounting for Internal Use Software, implemented on October 1, 2000. The NRC’s liabilities were $143.4 million as of September 30, 2001. The accompanying table shows an increase in total liabilities of $13.6 million from the FY 2000 yearend balance of $129.8 million. This is mainly due to an increase of $7.4 million in the liability to the U.S. Treasury for assessed license fees, which, when collected, are used to offset NRC’s appropriations. Of the agency’s liabilities, $39.3 million were not covered by budgetary resources, which represents a $3.7 million increase over the balance as of September 30, 2000. Liabilities not covered by budgetary resources are unfunded pension expenses, accrued annual leave, and future workers’ compensation. The Federal budget process does not recognize the cost of future benefits for today’s employees. Instead, the Federal budget process recognizes those costs in future years when they are actually paid.
The difference between total assets and total liabilities, net position, was $93.5 million as of September 30, 2001. This is a decrease of $2.6 million from the FY 2000 yearend balance. The decrease is mainly the result of a $3.7 million increase in future funding requirements needed to pay for accrued unfunded expenses. Unexpended appropriations is the amount of authority granted by Congress that has not been expended. Cumulative results of operations represent net results of operations since the NRC’s inception.
Analysis of the Statement of Net Cost The Statement of Net Cost presents the net cost of NRC’s four strategic arenas as identified in the NRC Annual Performance Plan. The statement allows for linking program performance under GPRA reporting to the cost of programs. The NRC’s net cost of operations for the year ended September 30, 2001, was $50.6 million, which is an increase of $2.9 million over the FY 2000 net cost of $47.7 million. Net costs by strategic arena are shown in the accompanying table.
Total exchange revenue for the year ended September 30, 2001, was $464.0 million, which is an increase of $1 million over the exchange revenue of $463.0 million for the year ended September 30, 2000. Exchange revenue is derived from license fees and fees for inspections and other services, assessed in accordance with 10 CFR Parts 170 and 171. The net cost of operations is expected to increase in the future due to changes in the statutory fee collection requirements and the addition of non-fee funds appropriated for new homeland security activities. The requirement to recover approximately 100 percent of the agency’s new budget authority by assessing fees, less amounts appropriated for the Nuclear Waste Fund and the General Fund, was reduced to 98 percent in FY 2001 and will continue to decrease two percent each year until FY 2005, for a total reduction of 10 percent. Analysis of Statement of Changes in Net Position The Statement of Changes in Net Position reports the net results of operations of $2.4 million as the difference between the NRC’s financing sources from other than exchange revenue of $48.2 million and the net cost of operations of $50.6 million. At the end of FY 2001, appropriations used represented $31.0 million, or 64 percent, of the total financing sources from other than exchange revenue. This represents a $4.9 million increase from the FY 2000 yearend appropriations used balance of $26.1 million. The NRC’s decrease in Net Position of $2.6 million from FY 2000 to FY 2001 represents the net results of operations of $2.4 million and the decrease in unexpended appropriations of $0.2 million. Analysis of the Statement of Budgetary Resources The Statement of Budgetary Resources shows the sources of budgetary resources available and the status at the end of the period. It presents the relationship between budget authority and budget outlays, and reconciles obligations to total outlays. For FY 2001, NRC had budgetary resources available of $532.2 million. The majority of which was derived from budget authority. This represents a three percent increase over FY 2000 budgetary resources available of $515.9 million. For FY 2001, the status of budgetary resources showed obligations of $503.3 million, or 95 percent of funds available. This is comparable to FY 2000 obligations of $485.5 million, or 94 percent of funds available. Total outlays for FY 2001 were $487.0 million, which represents a $3.1 million increase from FY 2000 total outlays of $483.9 million. 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 $503.3 million and reconciles to the net cost of operations of $50.6 million by deducting non-budgetary resources, costs not requiring resources, and financing sources yet to be provided. Financial Condition of the NRCSources of FundsThe NRC has two appropriations: NRC Salaries and Expenses Appropriation and the Office of the Inspector General Appropriation. Funds for both appropriations are available until expended. The NRC’s total new FY 2001 budget authority was $487.2 million, $481.7 million for the Salaries and Expenses Appropriation and $5.5 million for the Office of the Inspector General Appropriation. This represents an overall increase in new budget authority of $17.3 million over FY 2000, $16.8 million for the Salaries and Expenses Appropriation, and $0.5 million for the Office of the Inspector General Appropriation. Additional funds available to obligate in FY 2001 were $32.6 million from prior-year appropriations, $2.5 million from prior-year reimbursable work, $4.8 million from current and prior-year transfer of funds from other Federal agencies, and $5.1 million for new reimbursable work to be performed for others. The sum of all funds available to obligate for FY 2001 was $532.2 million, which is a $16.3 million increase over the FY 2000 amount of $515.9 million. Consistent with the requirements of the Omnibus Budget Reconciliation Act
of 1990, as amended, the NRC collected and offset approximately 98 percent
of its new budget authority in FY 2001 and approximately 100 percent of its
new budget authority in FY 2000, excluding funds derived from the Nuclear
Waste Fund, General Fund, and other offsetting receipts. Uses of Funds by Function As previously stated, the total budgetary resources available for use by the NRC in FY 2001 was $532.2 million. Of that amount, the NRC incurred obligations of $503.3 million, which was an increase of $17.8 million over FY 2000. Approximately 58 percent of obligations were used for salaries and benefits. The remaining 42 percent was used to obtain technical assistance for the NRC’s principal regulatory programs, to conduct confirmatory safety research, to cover operating expenses, (e.g., building rentals, transportation, printing, security services, supplies, office automation, training), staff travel, and reimbursable work. (See Figure 2.) The unobligated budget authority available at the end of FY 2001 was $28.9 million which is a slight decrease over the FY 2000 amount of $30.4 million. Of the $28.9 million in budget authority that was not obligated in FY 2001, $0.6 million of transferred funds expired at the end of the fiscal year, $4.5 million was for reimbursable work, and $23.8 million in budget authority is available to fund critical needs in FY 2002. Prompt Payment 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 2000 to FY 2001, the NRC had an increase of 508 invoices (from 8,237 to 8,745) that were paid and subject to the Prompt Payment Act. For FY 2001, the NRC made 95 percent of its payments on-time that were subject to the Prompt Payment Act. The amount of interest penalties incurred during FY 2001 were $3,151 which reflects a 51 percent decrease over the FY 2000 amount of $6,400. In addition, the agency made over 99 percent of its vendor payments electronically. (See Figure 3.) Debt Collection The Debt Collection Improvement Act of 1996 was enacted to enhance 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 yearend at less than one percent of its annual billings. The NRC continues to meet its goal and has kept delinquent debt at less than one percent for the past 5 years. Delinquent debt at the end of FY 2001 was $2.4 million. This is an increase of $0.9 million over FY 2000; however, it reflects a decrease in the number of outstanding receivables from 254 to 208. The increase in outstanding receivables is due to one licensee filing for bankruptcy ($0.5 million) and a delay in the receipt of some payments because of the disruption to certain financial networks caused by the September 11, 2001, terrorist attack on America. The NRC continues to aggressively pursue the collection of delinquent debt and continues to meet the requirement that all eligible delinquent debt over 180 days is referred to the U.S. Treasury for collection. (See Figure 4.) Systems, Controls and Legal ComplianceThe Federal Managers’ Financial Integrity Act of 1982 (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. The act requires the Chairman to provide an assurance statement on the adequacy of management controls and conformance of financial systems with Government-wide standards.
The Federal Financial Management Improvement Act of 1996 (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 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. Management ControlsA committee of senior agency executives reviewed individual assurance statements prepared by NRC office directors and regional administrators that identified weaknesses and warranted the attention of the executive committee. This committee was comprised of senior executives from Offices of the Chief Financial Officer and the Executive Director of Operations, with the General Counsel and the Inspector General as advisors. These statements were based on various sources:
The NRC’s ongoing management control program requires, among other things, that management control deficiencies are integrated into offices’ and regions’ annual operating plans. The operating plan process has provisions for periodic updates and for attention from senior managers. The management control information in these plans, combined with the individual assurance statements discussed previously, provides the framework for monitoring and improving the agency’s management controls on an ongoing basis. It also advises the Chairman of any management control deficiencies serious enough to report as a material weakness or material non-compliance. The NRC evaluated its management control systems for the fiscal year ending September 30, 2001. This evaluation provided reasonable assurance that the agency’s management controls achieved their intended objectives. As a result, management concluded that the NRC did not have any material weaknesses in its programmatic or administrative activities. However, the NRC’s implementation of accounting for internal use software (SFFAS 10) and managerial cost accounting (SFFAS 4) were identified as significant weaknesses that merit the attention of senior management. Governmentwide requirements for accounting for internal use software (SFFAS 10) became effective on October 1, 2000. The NRC did not have an adequate system to track labor hours, and staff did not comply with agencywide implementation guidance. In FY 2002, the NRC will implement a new time and labor reporting system in order to resolve the system weakness. In addition, the NRC will continue to monitor the reporting of labor time for internal use software development projects to ensure compliance with established agency procedures and SFFAS 10. The incomplete implementation of managerial cost accounting was reported as a significant weakness last year and continues to receive the close attention of senior management. Progress has been made over the past year to implement managerial cost accounting. During FY 2001, quarterly cost reports were developed and provided to agency managers as an initial step to implement cost accounting. Cost accounting software was configured to reflect how the agency plans to report direct costs and allocate its indirect costs. Consistent with the remediation plan, the agency expects to fully implement managerial cost accounting and achieve full compliance with SFFAS 4 during FY 2002. Financial Management Systems The NRC has five financial systems: the Federal Financial System (FFS), Capitalized Property System, License Fee Bill Generator System, Allotment/Financial Plan System, and a Budget Formulation System. For FYs 2001 and 2000, the NRC also had a mixed system - the Payroll/Personnel System. The NRC evaluated its financial management systems to determine if they comply with Governmentwide standards, as required by the Integrity Act (Section 4), and with applicable Federal requirements and accounting standards required by the Improvement Act. This evaluation disclosed that NRC’s major financial management systems are in compliance with the Integrity Act. However, the Chairman also determined that the NRC had three instances of substantial non-compliance with the Improvement Act. Reporting for internal use software development represents an instance of substantial non-compliance because the process did not comply with Federal financial management systems requirements and with the standard general ledger at the transaction level. The NRC expects to implement remediation actions required by the Improvement Act during the first quarter of FY 2002. The NRC’s financial management systems complied substantially with Federal financial management systems requirements and the standard general ledger at the transaction level, but did not comply substantially with applicable Federal standards due to the lack of implementation of SFFAS 4, managerial cost accounting. As discussed previously, the agency continues to address the implementation of SFFAS 4 and expects to complete implementation during FY 2002. The third instance of substantial non-compliance with the Improvement Act relates to FFS business continuity testing. The FFS is the core accounting system that the NRC uses through an interagency agreement with the Department of the Treasury (Treasury). This system is reviewed annually by Treasury’s Financial Management Service (FMS) for its client agencies that utilize the system. FMS performed a vulnerability assessment that disclosed no material or nonmaterial weaknesses. However, FMS has not tested its business continuity plan for FFS because they plan to terminate the cross-servicing agreement at the end of FY 2002. The NRC expects to complete the transition of its cross-servicing of the core accounting system to the National Business Center of the Department of the Interior during FY 2002. Biennial Review of User FeesThe Chief Financial Officers Act of 1990 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. During FY 2000 and FY 2001, the NRC reviewed each type of fee subject to the biennial review requirement. 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. The most recent changes to the license, inspection, and annual fees are described in the Federal Register (66 FR 32452, June 14, 2001). The following fees and charges were also revised to more appropriately recognize actual costs: fees for public use of the auditorium, administrative charges imposed on delinquent debt (10 CFR 15.37(f)), fees for search and review time to respond to Freedom of Information Act and Privacy Act requests, and license and inspection fees based on average number of hours. Reviews of other types of fees concluded that fee revisions were not warranted at this time. Management Decisions and Final Actions on OIG Audit Recommendations The agency has established and continues to maintain an excellent record in resolving and implementing open audit recommendations presented in Office of the Inspector General (OIG) reports. Section 5(b) of the Inspector General Act of 1978, as amended, requires agencies to report on final actions taken on OIG audit recommendations. This information as well as data concerning disallowed costs determined through contract audits conducted by the Defense Contract Audit Agency can be found in Appendix B.
* Management’s Discussion and Analysis is a high-level overview of the Nuclear Regulatory Commission. It consists of five sections: About the NRC, describes the agency’s mission and organizational structure; Program Performance, discusses the agency’s success in achieving its strategic goals; Financial Performance, provides highlights of the financial statements and NRC’s financial position; Financial Condition of the NRC, provides an overview of sources and uses of funds, prompt payment, and debt collection; and Systems, Controls, and Legal Compliance, describes the agency’s internal control environment, contains the Chairman’s statement regarding the agency’s compliance with the Federal Managers’ Financial Integrity Act of 1982, and the results of the Chairman’s determination regarding the agency’s compliance with the Federal Financial Management Improvement Act of 1996.
Chapter III: Program PerformanceMeasuring and Reporting Our PerformanceThis report presents information on our performance during FY 2001. Our discussion is centered around each of the four operating arenas: Nuclear Reactor Safety, Nuclear Materials Safety, Nuclear Waste Safety, and International Nuclear Safety Support. We also have a section devoted to our achievements and challenges in Corporate Management and Support. We discuss our implementation of initiatives in support of the President’s Management Agenda under Corporate Management and Support. In each arena discussion we provide a brief overview of our key programs, discuss our key accomplishments, present our performance results, provide budget information for the arena, and summarize the results of our program evaluations completed in FY 2001. Our Performance Measurement SystemThe NRC has adopted a performance measurement system which has strategic goals and strategic goal measures, as well as performance goals and performance goal measures. The strategic goals represent the mission of the agency and reflect the overall outcomes to be achieved. NRC performance goals are the key contributors to achieving the strategic goals and focus on outcomes. The performance measures indicate how effectively the NRC is achieving its performance goals and establish the basis for performance management. Not achieving a performance measure may not result in missing our strategic goal, but it would signal NRC managers that their programs need to be reevaluated to determine the cause of the failure. The measures also establish how far and how fast the agency will move in the direction established by the performance goals. New Performance Measures for FY 2001The NRC added three new performance goals for each arena for FY 2001: (1) increase public confidence, While the goal of maintaining safety remains paramount to the Commission, these three additional performance goals focus on the impact our regulatory processes and decisions have on our stakeholders. Thus, the Commission must ensure that stakeholders’ interests and concerns are considered and addressed. These three new performance goals have some performance measures that are still being developed, and in some cases have milestones. Increasing Public Confidence Maintaining and building trust and confidence that the NRC is carrying out its mission is an important goal of the agency. The NRC strives to ensure that our stakeholders are provided with clear and accurate information about our regulatory programs. We also ensure that stakeholders have the opportunity to participate in our regulatory processes. Making NRC Activities and Decisions More Effective, Efficient, and Realistic The costs of most NRC activities and decisions contribute to our licensee’s costs and are ultimately borne by the public. The electric industry is in a transition from a rate-regulated to a more market-based business environment. The NRC must keep its regulatory costs reasonable and predictable. Reducing Unnecessary Burden on Stakeholders Reducing unnecessary regulatory burden will enable more efficient use of both licensee and NRC resources. During the past thirty years a vast amount of technical knowledge and operational experience has been accumulated on the safe operation of nuclear plants. This knowledge allows the NRC to refine and enhance its regulatory programs and technical requirements to reduce unnecessary regulatory burden while assuring the maintenance of safety. For example, recent risk-informed initiatives for inspection and testing provide the basis for reallocating resources from lower risk-significant systems to higher risk-significant systems and components.
Nuclear Reactor SafetyPrevent radiation-related deaths and illnesses, promote the common defense and security, and protect the environment in the use of civilian nuclear reactors. OverviewThe focus of the Nuclear Reactor Safety Arena is to ensure that civilian nuclear power reactors, as well as non-power reactors, are operating in a manner that adequately protects public health and safety and the environment and that safeguards special nuclear material used in reactors. The NRC regulates 104 civilian nuclear power reactors and 36 non-power reactors. Research and test (non-power) reactors are nuclear reactors whose primary function is to safely conduct research and development. Almost every field of science; including physics, chemistry and biology, use these reactors. Reasonable assurance of adequate protection of the public health and safety is, as a general matter, defined by the Commission’s health and safety regulations themselves. That is, unless otherwise provided, there is reasonable assurance of adequate protection of public health and safety when the applicant or licensee demonstrates compliance with the Commission’s regulations. The regulations were established using defense-in-depth principles and conservative practices that provide an additional margin of safety. The collective efforts of the NRC and the nuclear industry are needed to maintain safety. The NRC licensees have the responsibility to safely design, construct, and operate civilian nuclear reactors. Regulatory oversight of licensee safety is the responsibility of the NRC. Thus, safe performance reflects the results of the collective efforts of the NRC and the nuclear industry. Ensuring the Safe Operation of Nuclear ReactorsThe NRC ensures the safe operation of nuclear reactors by licensing nuclear power plants and their operators, providing oversight of plant operating performance, maintaining an emergency response program, establishing clear health and safety regulations to follow, and conducting research to resolve safety issues and provide support for developing technical regulations. The Nuclear Reactor Safety Arena consists of several programs which work together to achieve our safety goal. The licensing of nuclear plants requires that licensees follow regulations specifying how plants are to be designed, constructed and operated safely. It provides the basis for safe operations. The NRC provides independent oversight of the plants through its reactor oversight process to verify that they are being operated safely in accordance with NRC rules and regulations. If violations are found, enforcement actions may be taken. The emergency response program ensures that public safety measures are in place in the event an accident occurs. The research program analyzes data from operations and independently undertakes studies which provide the basis for maintaining the safety of nuclear power plants. The following sections describe our safety programs in greater detail. Licensing The reactor licensing program ensures that operating nuclear power plants maintain adequate levels of protection of public health and safety in the operation of the plant throughout its life. This includes assurances that facilities are adequately designed, properly constructed, correctly maintained and that trained and qualified operating and technical support personnel can prevent or cope with accidents and other threats to public health and safety. NRC licensing activities include: the review of license applications and changes to existing licenses, examining and licensing reactor operators; reviewing reactor events for safety significance; and improving our safety regulations and guidance. We met or exceeded established measures for completing nuclear power plant licensing-related actions. The NRC staff completed 1,617 licensing actions in FY 2001 (see graph). We have improved our timeliness in responding to license requests since 1997. In 1997, 72 percent of licensee actions were handled within one year or less. In FY 2001, we completed 97 percent of licensing actions within one year (see graph). Included in the licensing actions are responses to licensee requests to change or amend their licenses in areas such as license transfers, power uprates, initiatives involving risk-informed regulation, and voluntary conversions of plant technical specifications to an improved standard format. Licensees have been applying for and implementing power uprates since the 1970s as a way to increase the power output of their plants. The NRC has been conducting power uprate reviews since then and, as of October 1, 2001, has completed 64 such reviews. Approximately 7600 MWt (2530 MWe) or an equivalent of about two large nuclear power plant units has been gained through implementation of power uprates at existing plants. In FY 2001, the NRC completed reviews for power uprates at 16 units. These resulted in an increase in electrical generating capacity of about 450 megawatts. Power uprate reviews are complex. Areas covered in power uprate reviews include reactor core and fuel performance, reactor coolant system, containment performance, emergency core cooling systems performance, loss of coolant accidents, special events, limiting operational transients, radiological consequences, system and component capabilities, instrumentation and controls, electrical power and environmental qualification, human performance and operator response. The NRC engaged in significant financial review activities for nuclear power reactors as a result of a number of States taking steps toward deregulation of the power market, the unbundling of services, and general industry consolidation. The cases involved such issues as the sale of a passive owner’s minority share and the creation of a separate holding company. The NRC has established an ambitious six-month target for completing license transfer actions and has met that target in all cases. With increasing interest on the part of the nuclear industry in future reactors, the NRC has assigned staff to work on new reactor licensing activities, including pre-application reviews for the AP 1000 advanced reactor design and the pebble bed modular reactor. License Renewal The Reactor License Renewal program establishes the technical and regulatory requirements for renewal of power plant licenses. Reactor operating licenses were originally issued for 40 years and are allowed to be renewed for an additional 20 years. The review process for renewal applications provides continued assurance that the level of safety provided by an applicant’s current licensing bases is maintained for the period of extended operation. When reviewing a license renewal application, the NRC performs a comprehensive review that focuses on passive structures and components of the plants that are subject to the effects of aging, with the purpose of ensuring safety for the duration of the extended license. Our license renewal review program is proceeding aggressively: three plants, totaling six units, have received renewed licenses, as of the end of FY 2001; and seven plants, totaling fourteen units were under review at the end of FY 2001 (see graph). We expect that almost all of the plants in the U.S. will ultimately apply to renew their licenses. The NRC met or exceeded all established schedules for license renewal activities in FY 2001. The renewed license for Arkansas Nuclear One, Unit 1, was issued in June 2001. Reactor Inspection and Performance Assessment Program The NRC provides oversight of plants through its reactor oversight process (ROP) to verify that they are being operated safely in accordance with NRC rules and regulations. The NRC has full authority to take whatever action is necessary to protect public health and safety and may demand immediate licensee actions, up to and including a plant shutdown. The ROP uses both inspection findings and performance indicators (PIs) to assess the performance of each plant within a regulatory framework of seven cornerstones to safety. The ROP recognizes that issues of very low safety significance inevitably occur and licensees are expected to effectively address these issues. The NRC performs a baseline level of inspections at each plant. The NRC may perform supplemental inspections and take additional actions as necessary to ensure significant issues are addressed. The NRC communicates the results of its oversight process by placing plant-specific inspection findings and PI information, as well as industry-level indicators on the NRC’s web site. This information has not been available since late September 2001. We expect it to be posted on the NRC’s web site shortly. The NRC also conducts public meetings with licensees to discuss the results of the ROP assessments.
Reactor Incident Response Reactor incident response activities are conducted to ensure that safety-significant operational events involving nuclear power reactors are investigated in a timely, systematic, and technically sound manner. In addition, information is obtained on the causes of the events so that the NRC can make timely and effective corrective actions. Emergency response activities are also conducted to ensure NRC is prepared to carry out its role in a radiological emergency. This includes maintaining an emergency telecommunications system, Emergency Response Data System, and an Operations Center Information Management System. Our Emergency Response Performance Index is an overall measure of the degree to which the agency believes it is ready to respond to an emergency situation (see graph). This index stood at 100 percent in FY 2001. Safety Research Our research program conducts independent experiments and analysis, develops the technical basis to support realistic safety decisions, and prepares the agency for the future by evaluating safety issues involving current and new designs and technologies. The reactor safety research program issued 41 research products that responded to high- and medium-priority needs of the Commission in FY 2001. These products include regulatory guides, technical reports, assessments, and research studies. The research program includes the following key areas: Risk Analysis Work is underway to apply risk assessment methods and analysis to improve NRC’s regulations. In FY2001, work was completed supporting a recommendation to modify the current regulations for emergency core cooling systems. In addition, risk assessment methods are used to analyze operational data and events to help focus NRC attention on the most important activities. Fuel and Thermal-Hydraulic Research NRC is conducting studies of fuel behavior with advanced cladding and at high burn up. Confirmatory experimental work ensures that safety is maintained as the industry seeks the economies of advanced fuel designs and high utilization (burn up). The experimental program along with analytic methods under development will establish new safety limits for energy deposition and clad oxidation during postulated accidents. Much of the work is co-funded with the international community and with industry, hence achieving significant efficiencies. NRC has an extensive thermal-hydraulic program of model development and validation. The application of these models provides the technical basis for risk informing the regulations, and addressing safety issues. Analysis of hydrogen generation during a severe accident using NRC developed severe accident models provides the technical basis for risk informing combustible gas requirements, while analysis of small and large break loss of coolant accidents provides the basis for ongoing work to risk inform the Emergency Core Cooling System Rule (10 CFR 50.46). Structural Integrity Research The ability of structures, components and systems to withstand normal operational loads, design basis loads, and accidental loads including natural hazards, such as seismic events, tornados, and floods, is important to safe nuclear power plant operation. Several current projects relate to the evaluation of aging and environmental effects on plant components and structures as these effects degrade the material and strength properties and may reduce the available safety margins. These projects include evaluations of methods for non-destructive examination to identify potential degradations, methods for conditional assessment, degradation mechanisms, methods to evaluate performance of degraded components, and methods to repair and mitigate the potential unsafe conditions. This research has been a key factor in developing regulatory strategies to address the aging effects, including cracking of steam generator tubes, piping systems, and the reactor pressure vessel head penetrations. These programs, performed in conjunction with international collaborative programs, leverage the limited NRC resources, and provide data for verification of analytical methods and realistic assessment of the structural capacity for use in risk assessments. New Reactors With increasing interest on the part of the nuclear industry in future reactors, research activities have been initiated to respond to requests for pre-application interactions on advanced light water reactor designs and the pebble bed modular reactor and another high temperature gas-cooled reactor. This has involved activities to identify the safety issues and research needs for the advanced designs, and development of the necessary infrastructure (e.g., computer codes) to support the licensing reviews. Performance ResultsThe ultimate test of our programs in the nuclear reactor safety arena is the continued safe operation of nuclear power plants. In addition to monitoring the performance of individual plants, the NRC compiles data on overall performance using several industry-level performance indicators, some of which are included below. These indicators show significant improvement in performance over the past decade. Industry Safety Performance Record Several industry indicators of safety performance show significant improvement over the past 13 years. One such indicator is significant operating events. Significant events are those events that meet specific criteria, such as degradation of important safety equipment. The NRC staff reviews operating events and assesses their safety significance. The number of significant events has declined steadily over the past decade (see graph). The total radiation dose received by workers at nuclear plants is an indicator of the effectiveness of personnel radiation exposure controls. Worker radiation dose has been reduced significantly over the past decade (see graph). In addition, there have been no deaths or injuries from radiation exposure during that time, or at any time in the history of the U.S. commercial nuclear power industry. Safety systems mitigate off-normal events by providing reactor core cooling and water addition. Actuations of safety systems that are monitored include certain emergency core cooling and emergency electrical power systems. Actuations can result from issues such as testing errors or actual demands. The number of safety system actuations has declined over the past decade (see graph). A scram is a basic reactor protection safety function that shuts down the reactor by inserting control rods into the reactor core. Scrams can result from events that range from relatively minor incidents to precursors of accidents. The number of unplanned scrams has declined steadily over the past decade (see graph). The NRC staff assesses the risk significance of events at plants. A precursor event is an event that has a probability of greater than 1 in a million or greater of leading to substantial damage to the reactor fuel. The occurrence rate of precursor events during the 1993-2000 period has generally been declining (see graph). A “significant” precursor event has a probability of 1 in a thousand or greater of leading to substantial damage to the reactor fuel. No “significant” precursor events have been identified since 1996. Safety system failures are any events or conditions that could prevent the fulfillment of the safety function of the safety systems. The number of safety system failures has also declined over the past decade (see graph). These improvements in safety have occurred at a time when nuclear power generation has increased significantly, increasing 43 percent from 527,000 gigawatt hours in 1988 to 754,000 gigawatt hours in 2000 (see graph). The average annual capacity factor has increased from 65 percent in 1988 to 88 percent in 2000 (see graph). The NRC’s Role in Improving SafetyThe improvement in the safety record of nuclear power plants has been a result of the combined efforts of licensees and the NRC. Both licensees and the NRC have gained experience in the operation and maintenance of nuclear power facilities. Licensees have the primary role in maintaining safety. They are expected to design and operate nuclear power plants in a manner that provides adequate protection of public health and safety. The NRC oversees plant operating performance, and will not allow licensees to operate their plants if safety performance falls below acceptable levels. Experience in plant operations and feedback from 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. Strategic and Performance Goals and Measures
The first measure tracks nuclear reactor accidents. Nuclear reactor accidents are those which result in substantial damage to the reactor fuel. The second and third measure indicate whether radiation-related deaths and illness are being prevented. The fourth measure tracks the security at nuclear reactor facilities against deliberate acts of sabotage. Radiation that is produced in the process of generating power from nuclear materials can also potentially harm the environment if not properly controlled. The fifth measure tracks releases to the environment that have an adverse impact. All of the targets for these measures have been met since 1997. Performance GoalsIn addition to our strategic goals, the NRC has four performance goals and measures for the nuclear reactor safety arena. The performance goals are:
Performance Goal Results
The first measure tracks the trends of several key indicators of industry safety performance. The indicators provide insights on major areas of reactor performance, including reactor safety, radiation safety, and physical protection. Statistical analysis techniques are applied to each indicator to determine its long-term trend. Any indicator that shows degrading safety performance will result in not meeting our target for this measure. To date, there have been no statistically significant adverse trends in any of the indicators. The FY 2001 data is preliminary. The second measure tracks significant precursor events. A “significant” precursor event is defined as an event that has a probability of 1/1000 or greater of leading to substantial damage to the reactor fuel. No precursor events have been identified since 1996. The FY 2001 data is preliminary. The third measure tracks individual radiation over-exposures within any nuclear power plant. Radiation levels are tracked carefully within the plant, and this measure focuses on instances in which an individual is exposed to radiation levels which exceed set limits. Any exposures below these limits would not be expected to harm an individual. There have been no instances of radiation exposures that exceed regulatory limits since 1997. The FY 2001 data is preliminary. In addition to ensuring the safe operation within nuclear plants, the fourth measure tracks our performance goal to ensure that the environment is not harmed by radioactive releases from the generation of nuclear power. These releases can be in the water that is used for cooling within the plant or through vents to the atmosphere. Radioactivity releases to the environment are tracked using set regulatory limits. Any releases below these limits would not be expected to harm an individual or the environment. There have been no releases of nuclear material into the environment that exceed regulatory limits since 1997. The FY 2001 data is preliminary. For the fifth measure, NRC regulations are designed to promote physical security of nuclear plants. Any breakdowns of security are reported and an information assessment team is dispatched to investigate the incident. Since 1997, there have been no breakdowns of physical security that significantly weaken protection against sabotage, theft, or diversion of special nuclear materials.
The milestone for the first measure during FY 2001 was to conduct semi-annual evaluations of public meeting feedback forms. This milestone was met. The forms have been evaluated to determine their usefulness in assessing public confidence. NRC compiled and analyzed the results of all the feedback forms received from the public for the period March 31 to September 1, 2001. NRC has analyzed 182 public meeting feedback forms, representing 33 meetings. Trending information was included in the semi-annual evaluations. Most respondents (77 percent) indicated that they worked for an interest organization which includes: licensee, non-governmental organization, licensee contractor, law firms, local or state government, and community or citizens group. Seventy three percent of respondents were very familiar with the meeting topic prior to attending the meeting and 43 percent have attended more than five NRC meetings. Seventy five percent of the respondents were able to find all the supporting information they wanted prior to the meeting and 81percent indicated that attendees’ questions were answered clearly, completely, and candidly. The Commission will use the results of the pilot to make a final determination regarding further use of the forms. Holding public outreach meetings is a method to provide the public with information on NRC activities. For the second measure, all of the scheduled public outreach meetings were held and feedback from the public on revisions to the Reactor Oversight Process was analyzed. This feedback was very helpful and will be used as the Reactor Oversight Process is further improved. The third measure concerns the agency’s allegation program. This program provides a mechanism for workers in the industry and members of the general public to submit safety concerns directly to the NRC for evaluation and response. The NRC evaluates any concerns that are received by conducting inspections, investigations, or technical reviews. The individual that submitted the concerns is notified in writing of the results of the NRC’s evaluation. The FY 2001 milestone for this measure was to start distributing a survey to stakeholders who have brought safety and non-compliance regulatory allegation issues to the NRC’s attention. The purpose of the survey is to ascertain how NRC did in responding and addressing the allegers issues. The survey results are currently being analyzed. The fourth measure assesses the extent to which Directors’ decisions are being handled expeditiously. Any member of the public can submit a petition under 10 CFR 2.206, asking the NRC to take an enforcement action against a licensee. The Director’s Decision is the NRC’s acceptance or denial of the petitioner’s request. It is signed by the cognizant Office Director. Details on the process are in MD 8.11. Director’s Decisions were issued within an average of 120 days, which met our target.
The first measure focuses on progress in developing a coordinated approach to implementing risk-informed decisions throughout the agency’s regulatory processes. The milestones towards developing a risk-informed regulation implementation plan (RIP-IP) were completed on schedule. These included sending the RIP-IP to the Commission and briefing them on the contents (October-November 2000) and developing final criteria and milestones for Commission approval (August 2001). The second measure shows steps taken to improve our internal processes. This year we implemented two process improvements in the nuclear reactor safety arena: revisions to the reactor oversight process and revisions to the 10 CFR 2.206 petition process. Process improvements brought about by the revised reactor oversight process are discussed extensively in the program evaluation section of this chapter. The 10 CFR 2.206 petition process allows for written requests to be filed by any person to institute a proceeding to modify, suspend, or revoke a license or any other enforcement action. These process improvements enhance public communication, provide more avenues for stakeholder feedback, and improve clarity to the process. The third measure puts a target on license renewal reviews to ensure they are handled expeditiously while performing a comprehensive evaluation of the renewal application. Guidance documents were issued in FY 2001 to improve the effectiveness and efficiency of this process. We completed one license renewal in FY 2001. That renewal was completed within 17 months, well within the 30 month target. We plan to improve our license renewal process to use fewer resources and complete license reviews in 24 months.
The milestone to reduce unnecessary regulatory burden for FY 2001 was to develop a process for collecting data and identify activities that have the greatest impact on reducing unnecessary regulatory burden while maintaining safety. In FY 2001 we surveyed our licensees to identify specific types of unnecessary regulatory burden they encounter. We are now analyzing the concerns and suggestions offered by the licensees and stakeholders. Funding for Achieving Our Strategic and Performance GoalsThe reactor budget totaled $218.3 million in FY 2001. It was spent on six key programs (see chart). Each program provides a specific, and linked, role to ensure safety at nuclear power plants. For example, the licensing program sets the standards and procedures for operating nuclear power plants. The inspection and performance assessment program inspects the plants and collects information which ensures that licensing obligations are being followed and that the plant’s performance is within the required safety range. Program EvaluationThe reactor oversight process (ROP) provides an integrated assessment of licensee performance at each nuclear reactor site. The assessment is used to identify agency actions to ensure licensees address performance weaknesses. In FY 2000, the NRC revised its ROP to improve its objectivity, make it more understandable and predictable, and to increase the focus on aspects of plant performance which had the greatest impact on safe plant operation. The improved processes include a risk-informed inspection program, use of licensee-reported performance indicator information, and revised assessment and enforcement activities. The NRC conducted a program evaluation of the revised ROP during FY 2001 to evaluate the effectiveness of its first year of implementation. The evaluation’s objectives were to determine whether the revised ROP (1) improved the objectivity of the oversight so that subjective decisions and judgments are not central features of the process, (2) improved the clarity of the oversight so that NRC actions have a clear tie to licensee performance, and (3) risk-informed the process to focus NRC and licensee resources on performance having the greatest impact on safety. The staff collected internal and external stakeholder feedback and comments to evaluate the new process during its initial implementation. As part of this effort, objective measures and pre-determined criteria were used to evaluate its performance. Internal feedback and comments from NRC staff were obtained through periodic meetings between Headquarters and regional staff, regional and site visits by Headquarters staff, the use of a formal feedback process, and a staff survey. Feedback and comments from external stakeholders were solicited through monthly public meetings, a Lessons Learned Public Workshop held at the end of initial implementation, and a Federal Register notice. Finally, an Initial Implementation Evaluation Panel (IIEP) was established by the Agency in accordance with Federal Advisory Committees Act (FACA) requirements to serve as an advisory committee to the Agency. Internal stakeholders generally had a more positive view of the revised ROP following the first year of implementation than they had following a 6-month pilot program in 1999. They showed a marked increase in their understanding and acceptance of it. They felt that the process provided appropriate regulatory attention to licensees with performance problems and was an effective risk-informed approach to oversight. However, internal stakeholders did express several concerns. A majority indicated that the significance determination processes (SDPs) are not easy to use. Inspectors were concerned that the threshold was too high for documenting findings that could be precursors to more significant issues and were concerned about how cross-cutting issues are addressed in the ROP framework. A significant percentage of internal stakeholders continue to express concern regarding the ROP’s ability to provide appropriate identification of declining safety performance in a timely manner. In general, external stakeholders indicated that the ROP improved consistency, reduced unnecessary regulatory burden, and increased the predictability of Agency actions. The industry, and many public stakeholders, perceived the ROP as more objective and understandable, with an increase in regulatory focus on risk significance. Industry and public stakeholders also had numerous comments and concerns targeted at improving various parts of the ROP. For example, many felt that the characterization of safety significance by the SDPs was slow and complex to the point of being burdensome. The industry also strongly felt that inconsistencies and overlap in the safety system unavailability performance indicator definitions (e.g., between the ROP and Requirements for Monitoring the Effectiveness of Maintenance at Nuclear Power Plants) needed to be addressed. Feedback from public stakeholders was mixed. While some members of the public believed that the ROP was overall a more effective oversight process, others felt that the ROP was poorly focused, did not identify declining performers in a timely manner, and did not result in adequate assurance of safe reactor operation. These cementers view the new ROP as a step backwards. The IIEP reviewed the results and lessons learned for ROP initial implementation and concluded that the ROP is a notable improvement over the previous licensee performance assessment program. The IIEP determined that the ROP has made progress toward achieving the Agency’s four performance goals. The IIEP recommended that the staff take certain actions to ensure that it achieves the Agency performance goals in the long-term, and consider other actions to improve the process. Most of the IIEP conclusions and recommended actions were consistent with the staff’s evaluation of the results of initial implementation. In addition to utilizing feedback to provide insights regarding the efficacy of the ROP, the staff took advantage of situations encountered during initial implementation to identify lessons learned and improvement opportunities. As a result of specific lessons learned, adjustments to resource estimates and planning models were made and changes were made to strengthen inspection | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
