ML092730137

Safety Evaluation by the Office of Nuclear Reactor Regulation Corporate Restructuring Conversion of Companies and Stock Split-Off by Entergy Nuclear Operations, Inc and Subsidiaries

ML092730137
Person / Time
Site:	Palisades, Indian Point, Pilgrim, Vermont Yankee, Big Rock Point, FitzPatrick
Issue date:	10/09/2009
From:	Robert Carlson NRC/NRR/DPR/PFPB
To:	Nancy Salgado Plant Licensing Branch 1
Szabo, A L, NRR/DPR, 415-1985
References
Download: ML092730137 (6)

Text

October 9, 2009 MEMORANDUM TO: Nancy L. Salgado, Chief Plant Licensing Branch I-1 Division of Operating Reactor Licensing Office of Nuclear Reactor Regulation FROM: Robert D. Carlson, Chief /RA/

Financial, Policy and Rulemaking Branch Division of Policy and Rulemaking Office of Nuclear Reactor Regulation

SUBJECT:

SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION CORPORATE RESTRUCTURING, CONVERSION OF COMPANIES AND STOCK SPLIT-OFF BY ENTERGY NUCLEAR OPERATIONS, INC AND SUBSIDIARIES PILGRIM NUCLEAR POWER STATION INDIAN POINT NUCLEAR GENERATING, UNITS 1, 2 & 3 JAMES A.

FITZPATRICK NUCLEAR POWER PLANT VERMONT YANKEE NUCLEAR POWER STATION PALISADES NUCLEAR PLANT BIG ROCK POINT DOCKET NOS. 50-293,50-003, 50-247, 50-286, 72-51, 50-333, 72-59, 50-255, 72-7, 50-155, 72-43 Enclosed is the subject Safety Evaluation in response to the request to evaluate the proposed threshold determination of the licenses named above. This completes PFPBs review effort under the responsible TAC numbers.

Docket No. 50-293,50-003, 50-247, 50-286, 72-51, 50-333, 72-59, 50-255, 72-7, 50-155, 72-43

Enclosure:

As stated CONTACT: Aaron L. Szabo, NRR/DPR 301-415-1985

ML092730137 OFFICE NRR/DPR/PFPB NRR/DPR/PFPB NRR/DPR NRR/DPR/PFPB: BC NAME ASzabo MDusaniwskyj TFredrichs RCarlson DATE 9/30/09 9/30/09 10/8/09 10/9/09 SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION CORPORATE RESTRUCTURING, CONVERSION OF COMPANIES AND STOCK SPLIT-OFF BY ENTERGY NUCLEAR OPERATIONS, INC AND SUBSIDIARIES PILGRIM NUCLEAR POWER STATION INDIAN POINT NUCLEAR GENERATING, UNITS 1, 2 & 3 JAMES A. FITZPATRICK NUCLEAR POWER PLANT VERMONT YANKEE NUCLEAR POWER STATION PALISADES NUCLEAR PLANT BIG ROCK POINT DOCKET NOS. 50-293,50-003, 50-247, 50-286, 72-51, 50-333, 72-59, 50-255, 72-7, 50-155, 72-43

1.0 INTRODUCTION

In a letter dated August 18, 2009, Entergy Nuclear Operations, Inc. (ENO), acting on behalf of itself and Entergy Nuclear Generation Company, Entergy Nuclear Fitzpatrick, LLC, Entergy Nuclear Vermont Yankee, LLC, Entergy Nuclear Indian Point 2, LLC, Entergy Nuclear Indian Point 3, LLC, and Entergy Nuclear Palisades, LLC (together, Applicants) who are the licensees of Pilgrim Nuclear Power Station; Indian Point Nuclear Generating Units 1, 2 and 3; James A.

Fitzpatrick Nuclear Power Plant; Vermont Yankee Nuclear Power Station; Palisades Nuclear Plant; and the Big Rock Point Independent Spent Fuel Storage Installations (ISFSI), requested the Nuclear Regulatory Commission (NRC) make a threshold determination regarding several changes it planned to make to a corporate restructing approved in a license transfer in 2008.

However, the order has not yet been implemented. The planned changes involve changes to the corporate restructuring and a stock split-off. Entergy requested the NRC to determine that the proposed changes do not involve any license transfer not already approved in the 2008 Order.

2.0 BACKGROUND

On July 28, 2008, the NRC consented to the indirect license transfer by ENO (ML081080352) for Pilgrim Nuclear Power Station, Indian Point Nuclear Generating, Units 1, 2 and 3, James A.

Fitzpatrick Nuclear Power Plant, Vermont Yankee Nuclear Power Station, Palisades Nuclear Plant, and Big Rock Point ISFSI (together, Plants), which allowed ENO to create a new ENCLOSURE

company, Enexus Energy Corporation (Enexus), for the Plants. On July 24, 2009, Entergy was granted a 6 month extension for the indirect transfer. As of the date of this Safety Evaluation, ENO has not implemented the transfer order approved by the NRC on July 28, 2008.

3.0 EVALUATION The NRC staff reviewed the conversion of companies to LLCs, stock split-off, and the proposed changes to the corporate restructuring approved in the 2008 transfer order involved any license transfer not already approved. The regulation at 10 CFR 50.80(a) states:

No license for a production or utilization facility (including, but not limited to, permits under this part and part 52 of this chapter, and licenses under parts 50 and 52 of this chapter), or any right thereunder, shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of the license to any person, unless the Commission gives its consent in writing.

ENO submitted a revised corporate structure in the August 18, 2009, submittal, which has the following proposed affects to their corporate structure: (1) Enexus Nuclear Pilgrim, LLC, a limited liability company organized under the laws of the Commonwealth of Massachusetts, immediately after the transfer, on the day of closing, will convert into a Massachusetts limited liability company, by operation of law; (2) Entergy EquaGen, Inc., will convert itself from being a Delaware corporation to become a Delaware limited liability company, named Entergy EquaGen Holdings, LLC and Enexus Nuclear Holding Company will make the same filing as Entergy EquaGen, Inc. to become Enexus Nuclear Holding Company, LLC, both by operation of law; (3) Enexus Nuclear Holding Company #1, Enexus Nuclear Holding Company #3, LLC, and Enexus Nuclear Vermont Investment Company, LLC will be eliminated from the corporate structure as intermediary holding companies; and (4) Enexus EquaGen, LLC will be renamed Enexus EquaGen Holdings, LLC.

Regarding to changes (1) and (2) above, the conversion of companies to limited liability companies, by operation of law, is where the corporation will become a limited liability company without dissolving or creating a company. These actions do not involve the dissolution of the company or the transfer of ownership and, thus, are not considered a transfers of control under 10 CFR 50.80. Regarding change (3) above, the removal of intermediary companies has not been considered a transfer, direct or indirect, under 10 CFR 50.80 on the grounds that the indirect control exercised by the parent company is not affected. Regarding change (4) above, the renaming of the proposed new parent company has no affect on the control of the licensee.

ENO also submitted a revision to the implementation of the previously approved transaction.

ENO stated that 19.9% of Enexus shares will be split-off from Enexus into a separate trust. One day after the spin-off creates Enexus, the split-off 19.9% of Enexus shares will be transferred by Entergy to a trust. The trust will hold the shares for the benefit of Entergy and its shareholders.

The shares retained by the trust are expected to be offered for exchange of Entergy shares of common stock within a period of up to 18 months after the spin-off. The 19.9% split-off of stock to a trust does not create a transfer of ownership, as the beneficiaries of the trust are the same owners approved in the 2008 transfer order and, within a period up to 18 months, the shares will be offered for exchange for Entergy shares of common stock.

Based on the information provided by the Applicants above, the NRC staff finds that the removal of intermediary companies, conversion of companies to limited liability companies, by operation of law, and the 19.9% split-off of stock to a trust does not involve any license transfer not already approved in the 2008 transfer order. Accordingly, prior NRC consent is not required to make the changes indentified in the August 18, 2009, submittal. Nonetheless, the NRC staff analyzed the effect of the transactions on the Applicants financial qualifications, decommissioning funding assurance, technical qualifications, and status with respect to any foreign control or domination to determine that the transfer order approved on July 28, 2008, was not materially affected by the above stated changes.

3.1 Financial Qualifications The Applicants stated that the proposed transactions will have the following affects:

(1) reduction of initial long term bonds from $4.5 billion to $3.5 billion and (2) increase of initial unrestricted cash balances at Enexus from $250 million to $750 million.

The changes identified by the Applicants above are consistent with the NRC staffs earlier finding in the 2008 Order that Enexus is financially qualified.

3.2 Decommissioning Funding Assurance The Applicants currently provide decommissioning funding assurance for the Plants through the allowable funding mechanisms outlined in 10 CFR 50.75(e). In a separate proceeding, pursuant to the 2009 Biennial Decommissioning Report submitted by Entergy to the NRC on March 30, 2009, the NRC staff reviewed the financial assurance for decommissioning provided by the Plants. Based on its review, the NRC staff projected a potential shortfall at the time of permanent termination of operations in the decommissioning funding assurance provided for Indian Point Nuclear Generating Plant Unit 2, Vermont Yankee Nuclear Power Station, and Palisades Nuclear Plant. The staff will resolve the shortfalls in a separate proceeding, pursuant to the Decommissioning Funding Status Plan submitted by Entergy to the NRC on August 13, 2009.

The decision criterion applied to an indirect license transfer is whether the transfer will affect the licensees existing financial qualifications. The NRC staff finds the proposed changes submitted by the Applicant on August 18, 2009, will not affect the amounts of the potential shortfalls in decommissioning funding assurance for the above-listed units.

3.3 Management and Technical Qualifications The NRC staff is aware of nothing to indicate that there have been, or will be in the future, any material effects on the manner in which the Plants are operated and in the identity, organization, management and technical qualification of the Applicants as the Plants licensees resulting from the corporate restructuring, conversion of companies and stock split-off.

3.4 Foreign Ownership, Control, or Domination Section 103d of the Atomic Energy Act prohibits the Commission from issuing a license for a nuclear power plant to any corporation or other entity if the Commission knows or has reason to believe it is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government.

The NRC staff did not find that the Applicants will be owned, controlled, or dominated by any alien, foreign corporation, or foreign government, within the meaning of the Atomic Energy Act of 1954, as amended, by reason of the proposed restructuring, as provided in the NRC safety evaluation, dated July 28, 2008. As a result, the NRC staff does not know or have reason to believe that, as a result of the corporate restructuring, conversion of companies or stock split-off to a trust, the Applicants or any companies within the corporate structure will be owned, controlled, or dominated by a foreign person or entity.

4.0 CONCLUSION

S In view of the foregoing, the NRC staff concludes that the conversion of companies to LLCs, stock split-off, and the proposed changes to the previously approved corporate restructuring, as described by the Applicants, does not involve any license transfer not already approved in the transfer order issues in July 28, 2008, and extended for 6 months on July 24, 2009.

Accordingly, prior NRC consent is not required to make the changes indentified in the August 18, 2009, submittal. From its threshold review, the NRC staff concludes that the corporate restructuring, conversion of companies and stock split-off will not affect the qualifications of the Applicants as the holder of licenses of the Plants, and that corporate restructuring, conversion of companies and stock split-off otherwise appear to be consistent with applicable provisions of law, regulations and orders issued by the Commission.

Principal Contributor: Aaron L. Szabo, NRR/DPR Date: October 9, 2009