E5-8204. In the Matter of Interstate Power and Light Company; Nuclear Management Company, LLC; (Duane Arnold Energy Center); Order Approving Transfer of License and Conforming Amendment

I. Interstate Power and Light Company (IPL), Nuclear Management Company, LLC (NMC) Central Iowa Power Cooperative, and Corn Belt Power Cooperative are holders of Facility Operating License No. DPR-49, which authorizes the possession, use and operation of Duane Arnold Energy Center (DAEC). NMC is licensed by the U.S. Nuclear Regulatory Commission (NRC, the Commission) to operate DAEC. The other licensees are authorized to possess DAEC. DAEC is located at Linn County, Iowa.

II. By letter dated August 1, 2005, NMC, IPL and FPL Energy Duane Arnold, LLC, (FPLE Duane Arnold), submitted an application requesting approval of the direct license transfer that would be necessary in connection with the IPL's proposed transfer to FPLE Duane Arnold, a subsidiary of FPL Energy, LLC (FPLE), IPL's 70-percent ownership interest in DAEC. The application also requested approval of the transfer of NMC's operating authority to FPLE Duane Arnold.

Supplemental information was provided by letters dated October 11, November 1, November 2, and November 28, (hereinafter, the August 1, 2005, and supplemental information will be referred to collectively as the application, unless otherwise noted). NMC also requested approval of a conforming license amendment that would reflect the proposed transfer of ownership of IPL's 70-percent interest in DAEC to FPLE Duane Arnold; and reflect the proposed transfer of operating authority to FPLE Duane Arnold. The amendment would delete the references to IPL and NMC in the license as appropriate, and replace them with references to FPLE Duane Arnold. No physical changes to the facility or operational changes were proposed in the application. After completion of the proposed transfers, FPLE Duane Arnold would be an owner (70-percent interest) and the operator of DAEC. The 30-percent ownership interest in DAEC, collectively held by Central Iowa Power Cooperative (CIPCO) and the Corn Belt Power Cooperative (Corn Belt), would be unchanged.

Approval of the transfer of the facility operating license and conforming license amendment is requested by NMC pursuant to Sections 50.80 and 50.90 of Title 10 of the Code of Federal Regulations (10 CFR). Notices of the request for approval and opportunity for a hearing were published in the Federal Register on September 20, 2005, (70 FR 55175). No comments were received. No requests for hearing or petitions for leave to intervene were received.

Pursuant to 10 CFR 50.80, no license, or any right thereunder, shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission shall give its consent in writing. Upon review of the information in the application and other information before the Commission, and relying upon the representations and agreements contained in the application, the NRC staff has determined that FPLE Duane Arnold is qualified to hold the license for DAEC to the extent previously held by IPL regarding its ownership interest, and is qualified to hold the operating authority under the license, and that the transfer of the license as proposed in the application is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission, subject to the conditions set forth below. The NRC staff has also found that the application for the proposed license amendment complies with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Commission's rules and regulations set forth in 10 CFR Chapter I; the facility will operate in conformity with the application, the provisions of the Act and the rules and regulations of the Commission; there is reasonable assurance that the activities authorized by the proposed license amendment can be conducted without endangering the health and safety of the public and that such activities will be conducted in compliance with the Commission's regulations; the issuance of the proposed license amendment will not be inimical to the common defense and security or to the health and safety of the public; and the issuance of the proposed amendment will be in accordance with 10 CFR Part 51 of the Commission's regulations and all applicable requirements have been satisfied.

The findings set forth above are supported by an NRC safety evaluation dated December 23, 2005.

III. Accordingly, pursuant to Sections 161b, 161i, 161o and 184 of the Act, 42 U.S.C. 2201(b), 2201(i), 2201(o) and 2234; and 10 CFR 50.80, it is hereby ordered that the transfer of the license, as described herein, to FPLE Duane Arnold is approved, subject to the following conditions:

(1) Prior to completion of the transfer of the license, FPLE Duane Arnold shall provide the Director of the Office of Nuclear Reactor Regulation satisfactory documentary evidence that it has obtained the appropriate amount of insurance required of licensees under 10 CFR Part 140 of the Commission's regulations.

(2) At the time of the closing of the transfer of the license from Interstate Power and Light Company (IPL) to FPLE Duane Arnold, IPL shall transfer to FPLE Duane Arnold IPL's decommissioning funds accumulated as of such time, with an aggregate minimum value of at least $186 million, and FPLE Duane Arnold shall deposit such funds in an external decommissioning trust fund established by FPLE Duane Arnold for DAEC. FPLE Duane Arnold shall take all necessary steps to ensure that this external trust fund is maintained in accordance with the requirements of this order approving the license transfer, NRC regulations, and consistent with the safety evaluation supporting this order. The trust agreement shall be in a form acceptable to the NRC.

(3) By the date of closing of the transfer of the 70 percent ownership interest in DAEC from IPL to FPLE Duane Arnold, FPLE Duane Arnold shall obtain a parent company guarantee from FPL Group Capital in an initial amount of at least $75 million (in 2005 dollars) to provide additional decommissioning funding assurance regarding such ownership interest, which guarantee must be in accordance with NRC regulations regarding such documents. Required funding levels shall be recalculated annually and, as necessary, FPLE Duane Arnold shall either obtain appropriate adjustments to the parent guarantee or otherwise provide any additional decommissioning funding assurance necessary for FPLE Duane Arnold to meet NRC requirements under 10 CFR 50.75.

(4) FPLE Duane Arnold shall take no action to cause FPL Group Capital, or its successors and assigns, to void, cancel, or modify its $50 million contingency commitment to FPLE Duane Arnold, as represented in the application, or cause it to fail to perform or impair its performance under the commitment, without the prior written consent from the NRC. An executed copy of the Support Agreement shall be submitted to the NRC no later than 30 days after completion of the license transfer. Also, FPLE Duane Arnold shall inform the NRC in writing any time that it draws upon the $50 million commitment.

It is further ordered that, consistent with 10 CFR 2.1315(b), a license amendment that makes changes, as indicated in Enclosure 2 to the cover letter forwarding this Order, to conform the license to reflect the subject license transfer is approved. The amendment shall be issued and made effective at the time the proposed license transfer is completed.

It is further ordered that FPLE Duane Arnold shall inform the Director of the Office of Nuclear Reactor Regulation in writing of the date of closing of the transfer of the IPL 70-percent interest in DAEC no later than 5 business days prior to closing. Should the transfer of the license not be completed by December 31, 2006, this Order shall become null and void, provided however, that upon written application and for good cause shown, such date may be extended by order.

This Order is effective upon issuance.

For further details with respect to this Order, see the initial application dated August 1, 2005, and supplemental letters dated October 11, November 1, November 2, and November 28, 2005, and the non-proprietary safety evaluation dated December 15, 2005, which is available for public inspection at the Commission's Public Document Room (PDR), located at One White Flint North, Public File Area 01 F21, 11555 Rockville Pike (first floor), Rockville, Maryland and accessible electronically from the Agencywide Documents Access and Management System (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, http://www.nrc.gov/​reading-rm/​adams.html. Persons who do not have access to ADAMS or who encounter problems in accessing the documents located in ADAMS, should contact the NRC PDR Reference staff by telephone at 1-800-397-4209, 301-415-4737, or by e-mail to [e-mail].

Dated at Rockville, Maryland, this 23rd day of December 2005.

For the Nuclear Regulatory Commission.

R. William Borchardt,

Acting Director, Office of Nuclear Reactor Regulation.