CY-11-024, Response to Request for Supplemental Information Related to the Request for Exemption from 10 C.F.R.50.38 and the Indirect License Transfer Related to Merger of Northeast Utilities and Nstar
| ML11235A723 | |
| Person / Time | |
|---|---|
| Site: | Haddam Neck, Yankee Rowe, Maine Yankee |
| Issue date: | 08/16/2011 |
| From: | Norton W Connecticut Yankee Atomic Power Co, Maine Yankee Atomic Power Co, Yankee Atomic Electric Co |
| To: | Document Control Desk, Office of Nuclear Material Safety and Safeguards |
| References | |
| BYR 2011-032, CY-11-024, OMY-11-147 | |
| Download: ML11235A723 (17) | |
Text
Maine Yankee Atomic Power Company Yankee Atomic Electric Company 321 Old Ferry Rpad 79 Yankee Road Wiscasset, ME 04578 Connecticut Yankee Atomic Power Company Rowe, MA 01367 362 Injun Hollow Road August 16, 2011 East Hampton, CT 06424 CY- 11-024 BYR 2011-032 OMY-1 1-147 U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington DC 20555
Reference:
a) License No. DPR-36 (Docket No. 50-309, 72-30)(MY) b) License No. DPR-61 (Docket No. 50-213, 72-39)(CY) c) License No. DPR-3 (Docket No. 50-29, 72-31) (YR) d) 10 C.F.R. Section 50.75 e) 10 C.F.R. Section 50.82 Re: Response to Request for Supplemental Information Related to the Request for Exemption from 10 C.F.R. 50.38 and the Indirect License Transfer Related to Merger of Northeast Utilities and NSTAR
Dear Sir or Madam:
Connecticut Yankee Atomic Power Company ("Connecticut Yankee"), Yankee Atomic Electric Company ("Yankee Rowe"), and Maine Yankee Atomic Power Company ("Maine Yankee"), on behalf of two of their owners, Northeast Utilities and NSTAR, with respect to the Indirect License Transfer, dated December 6, 2010, and on their own behalf with respect the Request for Exemption from 10 C.F.R. 50.38, dated May 16, 2011, hereby respond to the Nuclear Regulatory Commission ("NRC")'s Request for Supplemental Information Related to the Indirect License Transfer Related to Merger of Northeast Utilities and NSTAR, and the Request for Exemption from 10 C.F.R. 50.38, dated July 14, 2011.
If you have questions or require additional information, please contact me or Joe Fay at (207) 350-0300.
Sincerely, Wayne Norton CEO and President of Yankee Atomic and Connecticut Yankee Chief Nuclear Officer of Maine Yankee Enclosure 1: Response to RSI 67959512.3
ENCLOSURE 1 RESPONSE TO JULY 14, 2011 REQUEST FOR SUPPLEMENTAL INFORMATION RELATED TO INDIRECT LICENSE TRANSFER RELATED TO MERGER OF NORTHEAST UTILITIES AND NSTAR DB I/ 67959501.5
ENCLOSURE 1 RESPONSE TO JULY 14, 2011 REQUEST FOR SUPPLEMENTAL INFORMATION RELATED TO INDIRECT LICENSE TRANSFER RELATED TO MERGER OF NORTHEAST UTILITIES AND NSTAR Request 1:
Describe in sufficient detailfor the staff to make a determination,the financial arrangementsbetween NSTAR and Iberdrolaand Emera regardingthe purchase power agreement and renewable energy contractsfor Groton Wind, New England Wind, and Blue Sky East including, but not limited to, the terms of the financial arrangementsand how these commitments may impact indirectcontrol of the licensees by foreign entities.
Response
Pursuant to a variety of Massachusetts legislative and regulatory mandates, and in furtherance of a broader state energy policy on renewable power, NSTAR Electric Company, the regulated electric operating utility subsidiary of NSTAR, has conducted several public solicitations for renewable power (energy and capacity) from both domestic and foreign renewable power suppliers. As a result of bids received, NSTAR Electric has negotiated and entered into a number of power purchase contracts with the winning bidders. Such contracts range from short-term (less than one year) to longer term (up to 15 years).
By statute, all such contracts for a term in excess of one year require approval by the Massachusetts Department of Public Utilities ("MDPU") before they can become effective. All such contracts are entered into by NSTAR Electric on behalf of its customers/ratepayers, and the amount of such contracts (i.e., the amounts paid to the suppliers by NSTAR Electric under such contracts) are recoverable by NSTAR Electric through its regulated rates for retail electric service, as approved by the MDPU.
Overall, NSTAR Electric Company and NSTAR Gas Company, the two operating utility subsidiaries of NSTAR, engage in energy supply procurements valued at approximately one billion dollars per year, depending on commodity prices, which fluctuate. Renewable power procurements are a relatively small fraction of that energy supply portfolio, as described below.
Table 1, captioned "NSTAR Electric Power Purchase Agreements with Foreign Entities,"
summarizes the significant (in excess of $% M per year) existing power purchase contracts between NSTAR Electric Company and foreign companies.
Foreign wind contracts amount to approximately 4.9% of NSTAR's approximately $750 M in annual electric energy purchases. This small fraction of NSTAR's electric energy expenses does not give rise to concern for foreign ownership, control or dominance.
Although not specifically requested in RSI- 1, Northeast Utilities subsidiary, Public Service Company of New Hampshire ("PSNH"), also has approximately $5 M in foreign wind DBI/ 67959501.5 I
agreements. Those contracts amount to approximately 0.3% of the $1.69 B annual bi-lateral electric energy purchases of the Northeast Utilities electric operating subsidiaries (The Connecticut Light and Power Company ("CL&P"), Western Massachusetts Electric Company
("WMECO") and PSNH). Foreign wind arrangements for Northeast Utilities and NSTAR combined amount to approximately 1.2% of the $2.44 B combined annual electric energy expenses. Accordingly, those contracts with foreign suppliers do not create concerns with respect to FOCD.
DB 1/ 67959501.5 2
Table 1 NSTAR Electric Power Purchase Agreements with Foreign Entities Size Annual Project Supplier Foreign country (MW) Product Duration Contract Cost Regulatory Status Maple Ridge II Atlantic Iberdrola (Spain) 30 Renewable 10 years from $7.8 million Approved Wind Project Renewables Energy Credits 2008 (Note 1) Projects II LLC and Energy Kibby Mountain - TransCanada TransCanada 30 Renewable 10 years from $10 million Approved Wind Power Marketing (Canada) Energy Credits 2010 (Note 1) and Energy Groton Wind Groton Wind Iberdrola (Spain) 48 Renewable 10 years from $11.2 million In review Energy Project LLC Energy Credits 2012 (in service (Note 2) and Energy date)
Hoosac Wind New England Iberdrola (Spain) 28.5 Renewable 10 years from $8.5 million In review (Note 2) Wind, LLC Energy Credits 2012 (in service and Energy date)
Bull Hill East Blue Sky East Emera (Canada) 32.4 Renewable 15 years from $9.2 million In review (Note 2) LLC Energy Credits, 2012 (in service Capacity and date)
Energy I I Notes: 1) Contract executed as a result of a competitive solicitation to implement an NSTAR Green Renewable product. Approved by MDPU in DPU 07-64 on April 30, 2008.
- 2) Contract executed as a result of a competitive solicitation in compliance with the requirements of the Act Relative to Green Communities (St. 2008, c. 169, § 83) and follows the Request for Proposal Process approved by the MDPU in D.P.U. 10-76. Currently under review by the MPDU in DPU 11-05/06/07.
DBI/67959501.5 3
Request 2:
Provide information relatedto any contractualor other agreements between Northeast Utilities,NSTAR, and anyforeign entities.
Response
Significant Impact Standard In a July 14, 2011 telephone call regarding the RSI, noting that each Company (consistent with other domestic companies in the electric utility industry) likely has numerous contracts with foreign entities the size of which would not be relevant to the NRC's review, the NRC Staff indicated that the request was limited to those contracts that could have a "significant impact on the Companies' financial performance."
In applying that standard, Northeast Utilities and NSTAR were guided by the Treasury Department's regulations related to the Committee on Foreign Investment in the United States
("CIFIUS"), at 31 CFR Part 800, and the requirements under the Department of Defense
("DoD"), National Industrial Security Program Operating Manual, DoD 5220.22-M, February 28, 2006 ("NISPOM"). The NISPOM attaches significance to whether the applicant derives five-percent (5%) or more of its total revenues or net income from a single foreign person, and whether the applicant derives, in aggregate, thirty-percent (30%) or more of the applicant's revenues or net income from foreign persons. Accordingly, Northeast Utilities and NSTAR have adopted those thresholds as guidance for identification of those contracts that could potentially have a "significant impact on the Companies' financial performance."
With respect to the second criterion, the aggregate 30% test, the two companies' revenues are driven predominantly by regulated electric and gas sales, and regulated returns on distribution and transmission rate base. Because of their large numbers of customers, the two companies are unable to assess whether and which foreign owned customers contribute to the companies' revenue. With approximately 3 million customers of the combined companies, some likely are foreign owned. As noted below, neither company identified any single contract rising to the 5%
standard. Because no single entity contributes 5% or more, and because the combined companies serve approximately 3 million customers, the NRC can have confidence that the aggregated foreign ownership does not give rise to concerns regarding foreign ownership, control or domination ("FOCD").
Northeast Utilities' Annual Report is available at:
http://www.nu.com/investors/reports/default.asp.
NSTAR's Annual Report is available at:
http://phx.corporate-ir.net/phoenix.zhtmi?c=92689&p=irol-reportsannual.
Attachments A and B provide for Northeast Utilities and NSTAR, respectively, the following information:
DB 1/67959501.5 4
" Those contracts with any single foreign person, or known subsidiary of a foreign parent that, in aggregate, amount to 5 % or more of the Company's total revenues.I o Northeast Utilities' total revenues in 2010 were $4.9 Billion, 5% of which is $245 M.
Northeast Utilities identified no contracts or other agreements with any single foreign owned entity approaching this dollar threshold.
o NSTAR's total revenues in 2010 were $2.9 B, 5% of which is $145 M. NSTAR identified one contract with a value above this level. As noted in Attachment B, NSTAR Gas Company purchases gas and receives gas portfolio management services from BG Energy Merchants, whose parent company is located in the UK. The substantial majority of the value of this one-year contract reflects the value of the gas provided. The gas supplied under the contract is competitively procured in the open market.
" The ten (10) largest individual contracts or other agreements with foreign entities or known subsidiaries of a foreign parent. Although not specifically called for by RSI-2 because they do not reach the significant impact threshold set out above, Northeast Utilities and NSTAR have identified their largest contractual or other arrangements with foreign entities. None of these agreements implicates FOCD issues.
" Foreign-owned holders of long-term debt (corporate bonds) and short-term credit (revolvers).
o Each Company issues long-term secured notes. Corporate bonds are widely held.
For Northeast Utilities, foreign-owned holders of more than $5 M in long-term debt account for $327 M of the $4.4 B outstanding, or 7.5%. For NSTAR, foreign-owned holders of more than $5 M in long-term debt account for $11.9 M of the $1.25 B outstanding, or 0.95%.
o Each Company also has access to short-term credit facilities. In each case, credit agreements allocate the debt among a syndicate of banks, including foreign-owned banks. Northeast Utilities has access to $900 M in credit of which it has accessed
$189.4 M. Of that, $77.9 M is allocated among five foreign-owned banks. Similarly, NSTAR has access to short-term credit of $ 650 M, of which it has accessed none.
Two foreign-owned banks participate in that syndicate.
Search for Potentially Responsive Information Northeast Utilities and NSTAR undertook similar, parallel processes to identify significant contracts and other arrangements with foreign entities responsive to the RSI. Although the two companies perform many similar functions, some organizational differences exist. Each Company inquired of the following functions at the parent and affiliate levels to identify potentially responsive information regarding significant contracts or similar arrangements with foreign entities or entities subject to foreign contro!:
- Purchasing - procurement of goods and services; In response to RAI 1, NU and NSTAR discussed the Transmission Service Agreement ("TSA") between Northern Pass Transmission (a joint venture company owned 75% by a wholly owned subsidiary of Northeast Utilities and 25% owned by an NSTAR wholly owned subsidiary) and an affiliate of Canadian company Hydro-Quebec. This agreement is not repeated in this RSI response.
DBI/67959501.5 5
" Treasury - short and long term financing arrangements;
" Wholesale Power - procuring power supply to support the operating companies default or standard offer service customers, including long term renewable power contracts, and transmission capacity reassignments;
" Fuel Purchasing & Supply - procuring fuel supply for generation assets;
" Revenue Services - managing transmission support expense obligations and payments;
- Transmission Interconnections & Services - managing generator requests to interconnect with transmission;
- Investor Relations - managing shareholder relations; and
- Other Unregulated Business.
Both Companies applied the same search criteria. Each searched initially for contracts above an arbitrarily selected value of $5 M. For multi-year contracts, the search included contracts with
$5 M or more obligation remaining and a spend rate of $5 M per year. Applying those search criteria in each of the functional areas above, each Company identified its largest contractual or other arrangements with foreign persons, or known subsidiaries of foreign persons. The 10 largest contracts for each Company are provided in Attachments A and B. For NSTAR the renewable energy credit and wind energy contracts discussed in RSI-1 also are included in this set.
Conclusion As shown in Attachments A and B, Northeast Utilities' and NSTAR's significant foreign contracts do not indicate the existence of foreign ownership, control, or domination ("FOCD").
As noted above, Northeast Utilities has no contractual or other arrangement valued at more than 5% of its annual revenue. NSTAR identified one such contract, the value of which predominantly reflects competitively bid commodity supply arrangements. Each company earns the bulk of its revenue through regulated services to numerous customers in regulated wholesale and retail markets. Combined, the Companies serve over 3 million customers. Accordingly, the NRC has reasonable assurance that aggregated foreign ownership does not give rise to FOCD concerns.
As demonstrated further in Attachments A and B, each Company's largest contracts or other arrangements with foreign persons or subsidiaries of foreign parents, are small relative to company, and become smaller still in comparison to the size and expected revenue of the combined company, post merger.
Northeast Utilities and NSTAR carry long-term and short-term debt typical of companies of their size in the public utility industry. Foreign financial institutions participate in the highly-competitive U.S. financial sector. As shown in Attachments A and B, foreign-owned financial institutions participate in the short- and long-term debt arrangements of these two companies at levels and under arrangements which do not give rise to FOCD concerns.
For all of these reasons, NRC has reasonable assurance that neither Northeast Utilities, nor NSTAR are subject to FOCD, and that the same conclusion may be reached for the combined company.
DBI/ 67959501.5 6
Attachment A Northeast Utilities Significant Foreign Contracts The following are the most significant foreign contracts or agreements using the significant impact threshold criteria set out above.
" Standard Offer or Default Service Power Purchase Agreements- The Northeast Utilities electric operating companies purchase power and related products from wholesale power companies to serve the operating companies' standard offer or default service customers in Connecticut and Massachusetts. These contracts are, by state regulation, competitively bid and are reviewed and approved by the state regulators with economic oversight authority. The amounts paid by the operating companies under such contracts are "passed through" to the electric operating company customers or ratepayers.
There are substantial credit requirements imposed on entities providing such service to militate against any potential financial exposure to the electric operating companies and their customers. One contractpotentially meets the significantthreshold.
Counter Party Foreign Product/Service Term/Duration Value Country Macquarie Australia Electrical Power 1/1/10 - 12/31/10 $18 M Energy
" Transmission Capacity Reassignment Agreements- The Northeast Utilities electric operating companies have contractual access rights to capacity over transmission lines owned by National Grid subsidiaries, and they may contractually reassign their rights to use some or all of the transmission capacity over those lines. These arrangements and transactions are regulated by the Federal Energy Regulatory Commission ("FERC").
One contractpotentially meets the significant threshold.
Counter Party Foreign Product/Service Term/Duration Revenue Country Hydro-Quebec Canada Transmission (Multi-year) $13 M Capacity Rights 2011 Term
- Transmission Financial Support Agreements- The Northeast Utilities electric operating companies pay their respective contractual share of transmission operation and maintenance and service costs for existing transmission lines owned by National Grid subsidiaries. These are the same transmission lines discussed in the preceding section, over which the Northeast Utilities companies have contractual access rights to capacity.
Counter Party Foreign Product/Service Term/Duration Value Country National Grid UK Transmission (Multi-year $19 M Maintenance Through 2020) 2011 Term DBI/ 67959501.5 A-1
" Fuel Purchase Contracts- PSNH purchases, among other things, coal, natural gas and fuel oil to power its regulated fleet of fossil fueled generation facilities in New Hampshire. The amounts paid by PSNH under such contracts are "passed through" to PSNH customers and are subject to review by the New Hampshire Public Utilities Commission.
Counter Party Foreign Product/Service Term/Duration Value Country Emera Energy Canada Fuel Supply 2010 $18 M
" Yankee Gas Services Company Gas Supply Agreements- Yankee Gas, the regulated gas operating subsidiary of Northeast Utilities, spent approximately $196 M in the 12 month period ending June 30, 2011, on fuel procurement, which is a combination of multi-year pipeline transportation contracts and gas supply agreements. Of this total amount, approximately $69 M or about 35% was with several different foreign-owned entities. The amount of money Yankee Gas spends on fuel procurement changes substantially as there are numerous parties in the market. Yankee Gas typically issues RFP's and/or assesses the open market as is needed to meet its customers' fuel requirements. The amounts paid by Yankee Gas under such contracts are "passed through" to Yankee Gas' customers and are subject to review by the Connecticut Department of Public Utility Control.
Counter Party Foreign Product/Service Term/Duration Value Country Macquarie Australia Gas July '10 -June '11 $17.3 M Shell Energy Netherlands Gas July '10 - June '11 $21.9 M Tenaska Canada Gas July '10 - June '11 $16.4 M Marketing Total Gas & UK Gas July '10-June '11 $13.1 M Power Equipment and Services Procurement Agreements- Northeast Utilities Service Company ("NUSCO") purchases goods and services on behalf of the Northeast Utilities operating companies. Purchases in 2010 amounted to $1.1 B; materials accounted for 25% of this spend and services 75%.
NUSCO creates Master Service Agreements, multi-year contracts, and blanket orders to promote healthy, long-term relationships with suppliers and to minimize risk. These contracts do not represent firm commitments to purchase equipment or services. Rather, they create a contractual framework for doing business with a vendor on an "as needed" basis. Approximately 60% of NUSCO Purchasing's total spend is attributed to these types of long-term contracts.
Procurement agreements are, for the most part, competitively bid to multiple and diverse suppliers and providers and generally do not obligate the Northeast Utilities companies to DBI/67959501.5 A-2
procure any equipment or services exclusively from any one supplier or provider. The amounts of such procurements are generally recovered under various rate tariffs governed by state and federal regulators. Such contracts are, by their very nature, transaction-specific and once equipment is manufactured and installed or services provided, and are paid for, the contractual obligations (with the exception of provisions such as warranty obligations) terminate. With the competitiveness of the equipment and services markets and the availability of alternative suppliers and providers (both domestic and foreign),
such procurements do not lend themselves to potential ownership, domination or control of the Northeast Utilities companies.
NUSCO has approximately 74 open contracts or purchase orders with four foreign-based suppliers, with $5 M or more obligation "left to spend" over the lives of these contracts.
The total remaining multiyear obligation under these contracts with the four foreign suppliers amounts to $96 M. Even if due in a single year, that represents approximately 8.7% of the approximately $1.1 B annual spend. This level does not give rise to concern regarding FOCD. Again, the amounts of such procurements are recovered from the Northeast Utilities operating companies' customers or from the New England region's customers under formula rate tariffs.
Counter Party Foreign Product/Service Term/Duration Value Country (Remaining Total Obligation)
Siemens Energy Germany Transmission Master $46.7 M Line, Circuit Breakers, Control Equipment, Equipment Maintenance Alstrom Grid/ France Distribution Master $28.5 M AREVA T&D Controls Software and Maintenance, Substation Equipment, Disconnect Switches, Transformer Maintenance Services Guidant Group UK Managed Staffing Master $14 M Services DBi/ 67959501.5 A-3
Long-Term Debt Arrangements (Bonds)- Northeast Utilities' long-term debt obligations total approximately $4.4 B, and are spread among numerous bond and senior note holders. Of the long-term debt obligations, approximately $327 M, or 7.46%, was held by ten separate foreign owned entities in amounts greater than $5 Million.
Counter Party Foreign Product/Service Term/Duration Value Country John Hancock Canada Bonds Multi-year $108.6 M Aviva Life & UK Bonds Multi-year $58 M Annuity Allianz Life Ins. Germany Bonds Multi-year $58 M Great West Life Canada Bonds Multi-year $38 M
& Annuity Transamerica Netherlands Bonds Multi-year $27 M Life Ins. Co.
AXA Equitable France Bonds Multi-year $12.1 M Life PPM America UK Bonds Multi-year $10 M Reliastar Life Netherlands Bonds Multi-year $5.5 M U.S. Business of Canada Bonds Multi-year $5 M Crown Life U.S. Business of Canada Bonds Multi-year $5 M Canada Life Ins.
Co.
Total Material $327.3 M Foreign Holders Total Bonds $4,398 M Outstanding (6/30/11)
% Held by 7.46%
Material Foreign Owned Entities Short-Term Credit Arrangements (Revolvers)- The Northeast Utilities companies have access to $900 M in short-term funds under two Revolving Credit Agreements:
There is a Northeast Utilities parent-level borrowing agreement of up to $500 M; and a Northeast Utilities operating company level borrowing agreement of up to $400 M. The two agreements set forth an allocation among twelve banks. Five of the twelve banks are foreign owned; these banks are allocated approximately 41% of the short-term credit obligations.
DB 1/ 67959501.5 A-4
Counter Party Foreign Product/Service Term/Duration Value $M Country Allocation Borrowed (3/3/11)
Union Bank, Japan Short Term Multiyear 87.5 18.4 N.A. Credit Barclay's UK Short Term Multiyear 87.5 18.4 Capital Credit Credit Suisse Switzerland Short Term Multiyear 65.0 13.7 AG Credit UBS Loan Switzerland Short Term Multiyear 65.0 13.7 Finance LLC Credit T.D. Bank, N.A. Canada Short Term Multiyear 65.0 13.7 Credit Total (All Short Term 900 189.4 Banks) Credit Total (Material Short Term 370 77.9 Foreign Credit Holdings
% Foreign Short Term 41.1% 41.1%
Placed Credit DBi/ 67959501.5 A-5
Attachment B NSTAR Significant Foreign Contracts The following are the most significant foreign contracts or agreements of the NSTAR companies using the significance threshold criteria set out above.
" Gas Supply/Portfolio Management Agreement- NSTAR Gas Company purchases gas supply from multiple suppliers under various arrangements. NSTAR Gas has entered into a gas portfolio management agreement by which BG Energy Merchants provides portfolio managing services and supplies gas to NSTAR Gas. NSTAR Gas pays for gas and receives payments from BG Energy Merchants for portfolio management services.
NSTAR competitively bids its gas procurements and is under no long-term obligation to use BG Energy Merchants as its portfolio manager. The amounts paid by NSTAR Gas under such contracts are "passed through" to NSTAR Gas' customers and are subject to review by the MDPU.
Counter Party Foreign Product/Service Term/Duration Value Country BG Energy UK Portfolio Mgmt. 1 year $225 M Merchants & Gas Supply Macquarie Cook Australia Gas Supply 5 Yrs. $9.2 M Energy Ends 11/30/11
" Transmission Capacity Reassignment Agreements- The NSTAR electric operating companies have contractual access rights to capacity over transmission lines owned by National Grid subsidiaries and they may contractually reassign their rights to use some or all of the transmission capacity over those lines. These arrangements and transactions are regulated by the Federal Energy Regulatory Commission ("FERC"). One contract potentially meets the significant threshold.
Counter Party Foreign Product/Service Term/Duration Revenue Country Hydro-Quebec Canada Transmission (Multi-year) $7 M Capacity Rights (2011)
" Transmission Financial Support Agreements- The NSTAR electric operating companies pay their respective contractual share of transmission operation and maintenance and service costs for existing transmission lines owned by National Grid subsidiaries. These are the same transmission lines discussed in the preceding section, over which the NSTAR companies have contractual access rights to capacity.
Counter Party Foreign Product/Service Term/Duration Value Country National Grid UK Transmission Multi-year $9.8 M Maintenance (Through 2020) (2011)
DB 1/67959501.5 B-1
- Equipment and Services Procurement Agreements- The total 2010 spend of NSTAR's purchasing function was $341 M. Of that total, materials amounted to approximately 28% and services amounted to approximately 72%. NSTAR creates master service agreements, multi-year contracts, and blanket orders to promote healthy, long-term relationships with suppliers and minimize risk. These contracts do not represent firm commitments to purchase equipment or services. Rather they create a contractual framework for doing business with the vendor on an "as needed" basis.
Procurement agreements are, for the most part, competitively bid to multiple and diverse suppliers and providers and generally do not obligate the NSTAR companies to procure any equipment or services exclusively from any one supplier or provider. The amounts of such procurements are generally recovered under various rate tariffs governed by state and federal regulators. Such contracts are, by their very nature, transaction-specific and once equipment is manufactured and installed or services provided, and are paid for, the contractual obligations (with the exception of provisions such as warranty obligations) terminate. With the competitiveness of the equipment and services markets and the availability of alternative suppliers and providers (both domestic and foreign), such procurements do not lend themselves to potential ownership, domination or control of the NSTAR companies.
NSTAR has open contracts or purchase orders with two foreign-based suppliers, reaching the significance criteria. The remaining obligation under these contracts with the two foreign suppliers amounts to a total $15.3 M. Of the approximately $341 M annual spend, that represents less than 4.5%. This level does not give rise to concern regarding FOCD. Again, the amounts of such procurements are recovered from the NSTAR operating companies' customers or from the New England region's customers under formula rate tariffs. Significant procurement agreements include:
Counter Party Foreign Product/Service Term/Duration Value Country HICO Korea Substation Master $8.6 M Transformers and (2010)
Reactors ABB Sweden Circuit Breakers Master $6.7 M (2010)
DB1I/ 67959501.5 B-2
Renewable Energy Credit and Renewable Energy Agreements- As required by MDPU, NSTAR Electric entered into contracts for Renewable Energy Credits and Energy. As noted in response to RSI- 1, NSTAR Electric competitively bid these contracts to multiple suppliers. Five of those contracts, noted in response to RSI-1 are also responsive to this RSI-2. The amounts paid by NSTAR Gas under such contracts are "passed through" to NSTAR Gas' customers and are subject to review by the MDPU.
Foreign Annual Counterparty Country Product/Service Term/Duration Contract Value Atlantic Spain Renewable 10 years from 2008 $7.8 M Renewables Energy Credits Projects II LLC and Energy (Iberdrola)
TransCanada Canada Renewable 10 years from 2010 $10 M Power Marketing Energy Credits (TransCanada) and Energy Groton Wind Spain Renewable 10 years from 2012 $11.2 M LLC Energy Credits (in service date)
(Iberdrola) and Energy New England Spain Renewable 10 years from 2012 $8.5 M Wind, LLC Energy Credits (in service date)
(Iberdrola) and Energy Blue Sky East Canada Renewable 15 years from 2012 $9.2 M LLC Energy Credits, (in service date)
(Emera) Capacity and Energy Long-Term Debt Arrangements- NSTAR's debt obligations total approximately $1.25 B and are spread among numerous note holders. Of the long-term debt obligations, approximately $11.9 M, or 0.95%, was held in an amount greater than $5 M by one foreign-owned entity.
Counter Party Foreign Product/Service Term/Duration Value Country Fiere Sceptre Canada Bonds Multi-year $11.9 M Total Material $11.9 M Foreign Holders Total Bonds $1,250 M Outstanding (All Holders)
% Held by 0.95%
Material Foreign Owned Entities DB 1/67959501.5 B-3
Short-Term Credit Arrang-ements (Revolvers)- The NSTAR companies have access to $625 M in short-term funds under revolving credit agreements. There is an NSTAR parent-level borrowing agreement of up to $175 M, and an NSTAR operating company agreement up to $ 450 M. The two agreements allocate the credit among 11 banks, 2 of which are foreign owned. These foreign banks are allocated 16% of the short-term credit facility. NSTAR has no amounts outstanding under these facilities.
Counter Party Foreign Product/Service Term/Duration Value ($M)
Country Allocation Borrowed RBS Citizens UK Short Term Mature 50 0 Bank Credit 12/31/2012 Bank of Tokyo - Japan Short Term Mature 50 0 Mitsubishi Trust Credit 12/31/2012 Co.
Total 650 0 (All Banks)
Total (Material 100 0 Foreign Holders)
% Foreign 0 Placed DBI/ 67959501.5 B-4