CNRO-2013-00011, Notice Regarding Renewal of Lease
| ML13338A139 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 12/03/2013 |
| From: | Mccann J Entergy Nuclear Operations, Entergy Operations |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| CNRO-2013-00011, GNRO-2013-00092 | |
| Download: ML13338A139 (10) | |
Text
Entergy Operations, Inc.
Entergy Nuclear Operations, Inc.
440 Hamilton Avenue White Plains, New York 10601 Tel 914 272 3370 John F. McCann Vice President* Nuclear Safety, Emergency Planning and Licensing December 03, 2013 CNR0-2013-00011 GNR0-2013-00092 Director, Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Rockville, MD 20852
SUBJECT:
Notice Regarding Renewal of Lease Grand Gulf Nuclear Station Docket No. 50-416
Dear Sir or Madam:
The purpose of this letter is to notify the Nuclear Regulatory Commission ("NRC") of the renewal of the existing lease pursuant to a sale and leaseback transaction previously approved by a license amendment issued in the above-referenced docket. The renewal term will commence on July 15, 2015 and end on July 15, 2036.
On October 19, 1988, System Energy Resources, Inc. ("SERI"), the operating licensee at the time, requested from the NRC a license amendment for the Grand Gulf Nuclear Station, Unit 1
("GGNS-1"). On December 19, 1988, the NRC issued Amendment No. 54 to the GGNS-1 Operating License No. NPF-29, authorizing SERI to transfer up to 15.0 percent of its 90.0 percent undivided ownership interest in GGNS-1 by way of a sale and leaseback financing transaction involving one or more passive "owner participants" or equity investors. In accordance with License Condition 2.8(7)(a) added to the license at that time, the equity investors are prohibited from exercising either direct or indirect control over GGNS-1, power or energy produced from the station, or the GGNS-1 licensees. The License Condition included in the license amendment acknowledged that "the term of the lease is for approximately 26 years subject to a right of renewal." (Emphasis Added.} The transaction was authorized subject to the requirements of 10 CFR 50.81.
In letters dated October 31, 1988 and November 11, 1988, SERI identified the initial equity investor in the transaction as Public Service Resources Corporation ("PSRC"). In an additional submittal on December 14, 1988, additional equity investors were identified. The sale and leaseback transactions occurred on December 28, 1988 with two equity investors, PSRC and Lease Management Realty Corporation IV. RCMC I, Inc. is the successor in interest to PSRC.
License Condition 2.B.(7)(b) in the GGNS-1 license requires prior notice of any material changes to the terms and conditions of the sale and leaseback arrangements. In this instance,
CNR0-2013-00011 GNR0-2013-00092 Page 2 of 2 the lease for which RCMC I, Inc. is the equity investor will be renewed and extended in accordance with the existing terms and conditions, which permit the renewal of the term of the lease. Although such a renewal was contemplated in the original transaction approved by the NRC and the License Condition, this notice is being provided prior to the renewal of the lease.
A copy of the draft renewal document (the "Lease Renewal Instrument No.1") is enclosed. The parties expect to execute this renewal in the near future, and the renewal term of the lease will commence July 15, 2015. No regulatory action is necessary in response to this notification.
This letter contains no new regulatory commitments .
If you require additional information concerning this license transfer request, please contact Mr. Bryan Ford, Senior Manager, Nuclear Safety and Licensing, at (601) 368-5516 .
John F. McCann Vice President- Nuclear Safety, Emergency Planning and Licensing Enclosure cc: Director of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington , D.C. 20555 U.S. Nuclear Regulatory Commission NRC Project Manager for Grand Gulf Nuclear Station Washington , DC 20555 U.S. Nuclear Regulatory Commission Office of General Counsel Washington, DC 20555
ENCLOSURE LEASE RENEWAL INSTRUMENT N0.1
CNR0-2013-00011 GNR0-2013-00092 Enclosure Page 1 of 7 LEASE RENEWAL INSTRUMENT NO. 1 This Lease Renewal Instrument No. 1 dated as of December 04, 2013 (this "Instrument") is between the Lessee and the Owner Participant. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in (i) the Lease (as defined in Recital A below), including, without limitation, Appendix A to the Lease, (ii) the Instrument dated as of May 29, 2013 (as heretofore amended, the "Suspension Instrument")
between the Lessee and the Owner Participant, or (iii) the Instrument dated as of April18, 2013 (the "Protocol Instrument") between the Lessee and the Owner Participant In the event of a conflict among such Appendix A, the Suspension Instrument and the Protocol Instrument, the definition specified in the most recently dated of such instruments shall control.
WHEREAS:
A. System Energy Resources, Inc. is the lessee (the "Lessee") under the Facility Lease No. 1 dated as of December 1, 1988 (as amended, the "Lease"), with U.S. Bank National Association, as successor in interest to Meridian Trust Company, and Mildred F. Smith, as successor in interest to Stephen M. Carta, not in their individual capacities, but solely as owner trustee (collectively, the "Owner Trustee") under Trust Agreement No. 1, dated as of December 1, 1988, with the RCMC I, Inc. as successor in interest to Public Service Resources Corporation (the "Owner Participant"), and the Owner Trustee is the lessor (the "Lessor") under the Lease (with the Lessee and the Owner Participant being referred to herein as the "Transaction Parties").
B. Section 13(e) of the Lease provides, in relevant part, that not later than January 15, 2013 (two years and six months prior to July 15, 2015, the expiration date of the Basic Lease Term), the Lessee and the Owner Participant shall agree on certain Fair Market Sales Values and Fair Market Rental Value relating to the Undivided Interest, and that if they are unable to agree upon such values by such time, such values shall be determined by the Appraisal Procedure.
C. The Lessee and the Owner Participant attempted to reach mutual agreement on such values, but were unable to do so by January 15, 2013. On January 15, 2013, the Lessee commenced the Appraisal Procedure.
D. Pursuant to the Protocol Instrument, the Lessee and the Owner Participant agreed to certain protocols and supplemental procedures in connection with the conduct of the Appraisal procedure.
E. Pursuant to the Suspension Instrument, the Appraisal Procedure has been suspended while the Lessee and the Owner Participant attempted to reach a definitive agreement on the terms of a purchase of the Undivided Interest or the renewal of the Lease.
F. The Lessee and the Lessor have had continued discussions concerning various options including the Lessee renewing the Lease for a renewal term (the "Selected Renewal Term"), and have mutually agreed (subject to the provisions of this Instrument) that:
(i) the Fair Market Rental Value for the Selected Renewal Term commencing July 15, 2015 and ending July 15, 2036 is $6,875,000 for each semi-annual period ending on a Basic Rent Payment Date; and,
CNR0-2013-00011 GNR0-2013-00092 Enclosure Page 2 of 7 (ii) for purposes of determining the Casualty Values through the Selected Renewal Term, the Fair Market Sales Value is (x) $195,000,000.00 as of the commencement of the Selected Renewal Term, and (y) $39,000,000.00 as of July 15, 2036.
NOW, THEREFORE, in consideration of the premises and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
- 1. Lease Renewal.
(a) Pursuant to Section 12(b) and Section 13(a) of the Lease, the Lessee hereby renews the Lease for the Selected Renewal Term with the following terms (collectively, the "Selected Renewal Term Provisions"):
(i) The Selected Renewal Term would commence on July 15, 2015 and end on July 15, 2036; (ii) The amount of Basic Rent payable on each Basic Rent Payment Date in the Renewal Term, commencing with the Basic Rent Payment Date on January 15, 2016 and ending with the Basic Rent Payment Date on July 15, 2036, shall be $6,875,000; and (iii) Casualty Value as of July 15, 2015 shall remain unchanged with Casualty Values as of subsequent Basic Rent Payment Dates during the Renewal Term amortizing ratably from $195,000,000 as of the commencement of the Renewal Term in semi-annual steps to $39,000,000.00 as of July 15, 2036.
(b) The Owner Participant agrees to the Selected Renewal Term Provisions.
© To further evidence such election, if requested by either the Lessee or the Owner Participant, a supplement to the Lease with the Selected Renewal Term Provisions and otherwise in form and substance reasonably satisfactory to the Lessee and the Owner Participant shall be prepared and executed and delivered by the Lessee and the Lessor (at the sole cost and expense of the Lessee).
- 2. Appraisal Procedure.
The Appraisal Procedure is hereby terminated without need for further notice or action by the transaction parties. The Lessee and the Owner Participant shall notify the appraisers selected for the Appraisal Procedure of such termination.
- 3. Fees and Expenses.
The Lessee will pay, as Supplemental Rent, in conformity with Sections 13(a) and 14(b) of the Participation Agreement, all reasonable fees, expenses, disbursements and costs (including reasonable legal, appraisal and other professional fees and expenses incurred by the Owner Participant and the Owner Trustee) in connection with the negotiation ofthis Instrument and the review undertaken by Owner Participant ofF ederal income tax aspects of the Selected Renewal Term Provisions (the "Owner Participant Review Process") and, if utilized, the supplement to the
CNR0-2013-00011 GNR0-2013-00092 Enclosure Page 3 of 7 Lease contemplated hereby, except that the Owner Participant or its Affiliates shall be solely responsible for any fees and expenses of Investment Management Advisors, LLC. Nothing in this Section 3 shall limit or abridge in any manner Lessee's undertakings with respect to fees and expenses set forth in the Suspension Instrument of the Protocol Instrument.
- 4. Instruction and Notice to Lessor.
By executing this Instrument, the Owner Participant hereby instructs the Lessor to be bound irrevocably, in its capacity as Owner Trustee and Lessor, to the terms set forth in this Instrument. The Lessee shall deliver a copy of this Instrument to the Lessor. which delivery shall serve to satisfY the notice requirements of Section 13 of the Lease for the renewal of the Lease for the Selected Renewal Term with the Selected Renewal Term Provisions.
- 5. Reservation of Rights.
The Lessee acknowledges and agrees that the Owner Participant, for itself and the Owner Trustee, have expressly reserved all of their respective rights and remedies under the Lease and the other Transaction Documents (without notice, except as otherwise expressly required under the Lease, any other Transaction Document or applicable law). No action taken or omitted to be taken by the Lessor or by the Owner Participant (including, without limitation, the execution or delivery of this Instrument by the Owner Participant or any ongoing discussions or negotiations, whether written or oral, that may take place between the Transaction Parties) shall:
(a) constitute a waiver of any Default or Event of Default under the Lease or any other Transaction Document, whether known or unknown, now existing or hereafter existing; (b) constitute a waiver or modification of any other term or provision of the Lease or any Transaction Document; or (c) otherwise prejudice or affect any rights and remedies that the Owner Participant or the Owner Trustee now have or may have in the future under or in connection with the Lease or any other Transaction Documents or in law or at equity, all of which rights and remedies the Owner Participant and the Owner Trustee hereby expressly reserve.
All of the other terms and provisions of the Lease and each other Transaction Document shall continue in full force and effect.
- 6. Compromise Process.
The Basic Rent during the Renewal Term has been agreed by the parties with each party utilizing certain assumptions and projections (which assumptions and projections may or may not be assumptions and projections used in common with the other party) concerning the Fair Market Sales Value or Fair Market Rental Value of the Undivided Interest.
Nothing herein shall affect any previous agreements of the parties with respect to such compromise process (which shall include the negotiations that resulted in this Instrument) that all statements, whether oral or written, made, and written material provided, in the course thereof by either of the parties, their respective agents, employees, experts and attorneys shall remain confidential. Such statements and material
CNR0-2013-00011 GNR0-2013-00092 Enclosure Page 4 of 7 (i) remain subject to Federal Rule of Evidence 408 and any state counterpart rules or doctrine, are inadmissible and not discoverable for any purpose, including impeachment, in litigation between the parties or other litigation, and (ii) shall not be provided to any appraiser participating in an appraisal procedure being conducted under or pursuant to any Transaction Document. However, information that is otherwise (A) admissible or discoverable and/or (B) of a type or nature that an appraiser would request in order to complete its appraisal, shall not be rendered inadmissible, non-discoverable or unavailable to a requesting appraiser as a result of its presentation or use in the compromise process.
Notwithstanding the foregoing or any other agreement of the parties, nothing shall prohibit the disclosure of this Instrument.
- 7. Miscellaneous.
(a) This Instrument may be executed in any number of counterparts and by the Transaction Parties on separate counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute but one and the same instrument. This Instrument may be executed in duplicate with each Transaction Party signing one original and providing a facsimile (fax), scanned (e.g., PDF) or other digitized, electronic copy of the signature page to the other Transaction Parties. The Transaction Parties agree that the digitized, electronic signature shall be treated as if it were an original signature and no Transaction Party shall contest the validity of this Instrument based on the use of electronic signatures.
(b) This Instrument shall be governed by, and be construed in accordance with, the laws of the State ofNew York.
(c) Neither this Instrument nor any of the terms hereof may be amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the Transaction Party against which enforcement of such change is sought.
(d) The headings of the sections and paragraphs of this Instrument have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions of this Instrument.
(e) If any provision of this Instrument is held to be invalid, void, or unenforceable by any court of competent jurisdiction, that holding shall not affect the validity or enforceability of the remaining provisions of this Instrument.
(f) Section 1.2(f) of the Tax Indemnification Agreement is hereby amended, mutatis mutandis, to provide a representation and warranty of the same scope and effect as to material and information provided by, or on behalf of, the Lessee as requested by, or on behalf of, the Owner Participant in connection with the Owner Participant Review Process.
CNR0-2013-00011 GNR0-2013-00092 Enclosure Page 5 of 7 (g) All notices and communications required or permitted under this Instrument shall be in writing and may be delivered personally to a Transaction Party, may be delivered by facsimile or electronic mail, or by deposit with a reputable overnight delivery service. Notices shall be effective on the date delivered by personal delivery, facsimile, or electronic mail; or the next business day following deposit with a reputable overnight delivery service. Notices and communications shall be delivered to the Transaction Parties as follows :
CNR0-2013-00011 GNR0-2013-00092 Enclosure Page 6 of 7 RCMC I, Inc.:
RCMC I, Inc.
1308 Delaware Avenue, Suite 600 Wilmington, Delaware 19806 Attention of General Counsel and Secretary william. barbour@pseg.com With electronic copies (which copies shall not constitute notice) to:
Timothy.Pellegrin@pseg.com Shawnp.leyden@pseg.com Scott.jennings@pseg.com Lawrence. paparella@pseg.com System Energy Resources, Inc.:
System Energy Resources, Inc.
c/o Entergy Services, Inc.
639 Loyola Avenue New Orleans, LA 70113 Attn: Secretary dfalsta@entergy.com With electronic copies (which copies shall not constitute notice) to:
epeeble@entergy.com dborde@entergy .com dbalash@entergy.com jhood@morganlewis.com
/signature page follows/
CNR0-2013-00011 GNR0-2013-00092 Enclosure Page 7 of 7 IN WITNESS WHEREOF, the parties hereto have each caused this instrument duly to be executed by their respective signatories duly authorized as of the date set forth above.
SYSTEM ENERGY RESOURCES, INC.
By ___________________________
Name:
Title:
RCMC I, INC.
By: __________________________
Name: