ML11213A271
| ML11213A271 | |
| Person / Time | |
|---|---|
| Site: | Oconee, Mcguire, Catawba, McGuire  |
| Issue date: | 11/14/2011 |
| From: | Stang J Plant Licensing Branch II |
| To: | Jamil D Duke Energy Carolinas |
| Stang J, NRR/DORL/2-1, 415-1345 | |
| References | |
| TAC ME6126, TAC ME6127, TAC ME6128, TAC ME6129, TAC ME6130, TAC ME6131, TAC ME6132 | |
| Download: ML11213A271 (8) | |
Text
UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001 November 14, 2011 Mr. Dhiaa M. Jamil Group Executive, Chief Generation Officer and Chief Nuclear Officer Duke Energy Carolinas, LLC P.O. Box 1006 - EC03XM Charlotte, NC 28201-1006
SUBJECT:
CATAWBA NUCLEAR STATION, UNITS 1 AND 2, MCGUIRE NUCLEAR STATION, UNITS 1 AND 2, OCONEE NUCLEAR STATION, UNITS 1, 2, AND 3, AND OCONEE INDEPENDENT SPENT FUEL STORAGE INSTALLATION REGARDING REVIEW AND APPROVAL OF A THRESHOLD AGREEMENT OF NONJURISDICTION (TAC NOS. ME6126, ME6127, CATAWBA; ME6128, ME6129, MCGUIRE; ME6130, ME6131, AND ME6132, OCONEE)
Dear Mr. Jamil:
The U.S. Nuclear Regulatory Commission (NRC) at your request has reviewed the proposed transaction between Progress Energy, Inc., and Duke Energy Corporation (Duke Energy) to determine whether the transaction includes transfers of the operating licenses for Catawba Nuclear Station, Units 1 and 2, McGuire Nuclear Station, Units 1 and 2, Oconee Nuclear Station, Units 1 2, and 3 and Oconee Independent Spent Fuel Storage Installation.
The NRC staff finds that Duke Energy has provided an adequate basis to make a threshold determination that the proposed merger of Duke Energy and Progress Energy, Inc., will not constitute a direct or indirect transfer of the NRC Licenses held by Duke Energy through its subsidiary Duke Carolinas, LLC, or any rights thereunder, and thus Duke Energy does not require the NRC's approval under Section 184 of the Atomic Energy Act, as amended, Title 10 of the Code of Federal Regulations (10 CFR), Part 50, Section 50.80 and Part 72, Section 72.50 in connection with the proposed merger between Progress Energy, Inc., and Duke Energy.
D. Jamil
- 2 A copy of the related Safety Evaluation is also enclosed. If you have any questions, please call me at 301-415-1345.
Sincerely, o n Stang, Senior oject Manager ant Licensing Branch 11-1 Division of Operating Reactor Licensing Office of Nuclear Reactor Regulation Docket Nos. 50-413,50-414,50-369,50-370, 50-269,50-270,50-287, and 72-004
Enclosure:
Safety Evaluation cc w/encl: Distribution via Listserv
UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001 SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION RELATED TO REQUEST FOR A THRESHOLD DETERMINATION DUKE ENERGY CAROLINAS, LLC CATAWBA NUCLEAR STATION, UNITS 1 AND 2 DOCKET NOS. 50-413 AND 50-414 MCGUIRE NUCLEAR STATION, UNITS 1 AND 2 DOCKET NOS. 50-369 AND 50-370 OCONEE NUCLEAR STATION, UNITS 1, 2, AND 3 DOCKET NOS. 50-269, 50-270, AND 50-287
1.0 INTRODUCTION
By application dated March 30, 2011 (Agencywide Documents Access and Management System (ADAMS), Accession No. ML11110A031), Carolina Power & Light Company (CP&L) on behalf of itself now doing business as Progress Energy Carolinas, Inc., and Florida Power Corporation (FPC), now doing business as Progress Energy Florida, Inc., requested that the Nuclear Regulatory Commission (NRC) pursuant to Title 10 ofthe Code ofFederal Regulations (10 CFR),
Part 50, Section 50.80, "Transfer of licenses," and Part 72, Section 72.50, "Transfer of license,"
and also pursuant to Section 184 of the Atomic Energy Act of 1954, as amended, consent to the proposed indirect operating license transfers 1, that will result from the merger of Duke Energy Corporation (Duke Energy) and Progress Energy.
By letter dated March 31,2011 (ADAMS Accession No. ML110940178), Duke Energy submitted a letter to the NRC requesting that the NRC make a determination that the merger of Duke Energy and Progress Energy will not constitute a direct or indirect transfer of the Duke licenses and provide the NRC with a basis to make a threshold determination that the proposed merger of Duke Energy and Progress Energy will not constitute a direct or indirect transfer of the NRC licenses held by Duke Energy through its subsidiary Duke Energy Carolinas, LLC (Duke). By letter dated May 2,2011 (ADAMS Accession No. ML11124A134), Duke provided clarifying information that did not change the nature of the application.
1 Progress Energy licenses include five reactor licenses and three ISFSI licenses, and one material license.
Enclosure
-2 2.0 BACKGOUND On January 8,2011, Duke Energy, the parent corporation of Duke, executed an Agreement and Plan of Merger by and among Duke Energy, Diamond Acquisition Corporation and Progress Energy, Inc. (Progress Energy) (the Merger Agreement). A copy of the Merger Agreement was included with this request as Enclosure 1 of the March 31, 2011, submittal. Pursuant to the Merger Agreement, Progress Energy will become a wholly owned direct subsidiary of Duke Energy. Duke is the owner and operating licensee of Oconee Nuclear Station, Units 1, 2 and 3 (Oconee) and McGuire Nuclear Station, Units 1 and 2 (McGuire). Duke has a 38.49 percent ownership interest in Catawba Nuclear Station, Unit 1 (Catawba Unit 1) and does not have any ownership interest in Catawba Nuclear Station, Unit 2 (Catawba Unit 2). Duke is the operating licensee of Catawba Nuclear Station, Units 1 and 2 (Catawba). Duke also holds a specific license for the Oconee Independent Spent Fuel Storage Installation (ISFSI) (collectively Duke Licenses).
Duke submitted the March 31, 2011, letter on its own behalf, and on behalf of Duke Energy, with the knowledge and consent of Progress Energy. Its purpose, as stated, was to provide the NRC with an adequate basis to make a threshold determination that the proposed merger of Duke Energy and Progress Energy will not constitute a direct or indirect transfer of the Duke Licenses or any rights thereunder.
DUKE ENERGY CORPORATION (DUKE ENERGY)
According to Duke's request, Duke Energy is a diversified energy company with both regulated and unregulated utility operations, organized and existing under the laws of the State of Delaware, with approximately $14 billion in annual revenues. Duke Energy supplies, delivers and processes energy for customers in the United States and selected international markets. Duke Energy's regulated utility operations own approximately 27,000 megawatts of generating capacity and serve approximately four million customers located in five states in the Southeast and Midwest, representing a population of twelve million people. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States. Headquartered in Charlotte, North Carolina, Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK.
The request states that the business of Duke Energy is conducted by its board of directors and executive officers. All members of Duke Energy's board of directors and all of its principal officers are citizens of the United States. Their names and addresses are listed in Attachment 3 of the enclosure of the March 31, 2011, letter. According to the request, Duke Energy is not owned, controlled or dominated by an alien, foreign corporation or foreign government.
Following the proposed transaction, the common stock of Duke Energy will be widely held and publicly traded. Duke Energy will not be owned, controlled or dominated by an alien, foreign corporation or foreign government. After the merger, the Duke Energy board of directors will consist of eleven members from the existing Duke Energy board and seven members from the Progress Energy board who were designated by Progress Energy after execution of the Merger Agreement. The new Executive Chairman will be Jim Rogers currently the CEO for Duke Energy, and the new President and CEO will be Bill Johnson currently the Progress Energy Chairman, President, and CEO. The designated members of the Duke Energy post-merger board of
- 3 directors and the agreed-upon management team are listed in Attachment 3 of the enclosure of the March 31, 2011, letter. All are U.S. citizens.
DUKE ENERGY CAROLINA, LLC (DUKE)
Duke is a direct wholly owned subsidiary of Duke Energy.
Duke is the owner and operating licensee of Oconee Units 1, 2, and 3, and McGuire Units 1 and 2.
Duke has a 38.49 percent ownership interest in Catawba Unit 1 and does not have any ownership interest in Catawba Unit 2. Duke is the operating licensee of Catawba Units 1 and 2. Duke also holds a specific license of the Oconee ISFSI.
The use of the term "Duke Licenses" herein refers to the following facilities:
Catawba Unit 1 Renewed Facility Operating License No NPF-35 Catawba Unit 2 Renewed Facility Operating License No NPF-52 McGuire Unit 1 Renewed Facility Operating License No NPF-9 McGuire Unit 2 Renewed Facility Operating License No NPF-17 Oconee Unit 1 Renewed Facility Operating License No DPR-38 Oconee Unit 2 Renewed Facility Operating License No DPR-47 Oconee Unit 3 Renewed Facility Operating License No DPR-55 Oconee ISFSI License No SNM-2503 According to the request, the proposed merger between Progress Energy and Duke Energy will not affect the relationship between Duke Energy and Duke. Duke will remain a wholly owned direct subsidiary of Duke Energy. Progress Energy will become a wholly owned subsidiary of Duke energy. No change to Duke Energy's existing corporate ownership structure will occur as a result of the proposed merger and Duke will continue to hold the NRC Licenses. Duke will continue to be responsible for the safe and economic operation of the Duke Licensed Facilities.
No physical changes to the plants will be made as a result of the proposed merger. Nor will any significant changes to the day-to-day operations of the Duke Licenses be made as a result of the proposed merger between Progress Energy and Duke Energy. Operations will continue to be in accordance with the terms and conditions of the present licenses and in accordance with the current licensing bases.
Duke will continue to be a utility regulated by the Federal Energy Regulatory Commission, the North Carolina Utilities Commission and the Public Service Commission of South Carolina. As such, Duke will continue to be financially qualified to operate, maintain and decommission the Duke Licenses.
The nature of the proposed merger between Progress Energy and Duke Energy constitutes a horizontal merger that will not insert another layer of management or subsidiaries between Duke Energy and Duke. The corporate structure and relationship between Duke Energy and Duke before the proposed merger between Progress Energy and Duke Energy will be the same after the proposed merger.
-4 The NRC staff has performed a threshold review to determine whether the proposed restructuring will result in.a direct or indirect transfer of the licenses held by Duke, thereby requiring NRC's approval pursuant to 10 CFR 50.80 which implements Section 184 of the Act for Part 50 licenses.
On the basis of this review, the NRC staff has concluded that the implementation of the merger agreement will not result in a transfer, direct or indirect, of the Duke license as held by Duke, requiring NRC's approval. Consequently, the NRC staff believes that the license transfer provisions of 10 CFR 50.80 are not applicable to this situation. Nevertheless, the staff has reviewed several aspects of the transactions as indicated below.
3.0 FINANCIAL QUALIFICATIONS After the proposed transaction, Duke will continue to generate and distribute electricity and recover the cost of this electricity through rates authorized by the North Carolina Utilities Commission, the Public Service Commission of South Carolina and the Federal Energy Regulatory Commission. Therefore, Duke will continue to meet the definition of "electric utility" set forth in 10 CFR 50.2. Accordingly, its financial qualifications are presumed by 10 CFR 50.33(f) and no further specific demonstration of financial qualifications is required.
Because Duke will remain an electric utility after the proposed transaction, the NRC staff finds that no further financial qualifications review is needed.
4.0 DECOMMISSIONING FUNDING
ASSURANCE According to the applicant, the proposed transaction will not impact the decommissioning funding assurance for the NRC licenses held by Duke. Information regarding the status of decommissioning funding for Oconee, McGuire, and Catawba as of December 31,2010, was reported to the NRC in accordance with 10 CFR 50.75(f)(1) on March 30, 2011 (ADAMS Accession No. ML110910058). Duke will continue to maintain its existing decommissioning trust funds segregated from its assets and outside its administrative control in accordance with the requirements of 10 CFR 50.75(e)(1). After the merger, Duke will remain responsible for the decommissioning liabilities associated with its ownership interests in Oconee, McGuire and Catawba. Duke will continue to fund its decommissioning trusts for the licensed facilities in accordance with 10 CFR 50.75. The NRC staff finds that the decommissioning funding assurance provided by the licensee will not be affected by the merger.
5.0 ANTITRUST REVIEW
The Atomic Energy Act of 1954, as amended, does not require or authorize antitrust reviews of post-operating license transfer applications (e.g., Kansas Gas and Electric Co., et a/. (Wolf Creek Generating Station, Unit 1), CLI-99-19, 49 NRC 441 (1999>>. The threshold review here determines that there is no transfer. Further, the application postdates the issuance of the operating licenses for the units under consideration in this safety evaluation and, therefore, no antitrust review is required or authorized.
- 5 6.0 FOREIGN OWNERSHIP, CONTROL, OR DOMINATION Sections 103d and 104d of the Atomic Energy Act of 1954, as amended, prohibit the NRC 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's regulation, 10 CFR 50.38, contains language to implement this prohibition.
Duke Energy stated in the application for a threshold determination that it will not be owned, controlled or dominated by an alien, foreign corporation or foreign government. The NRC staff finds no reason to conclude otherwise.
7.0 PRICE-ANDERSON AND NUCLEAR INSURANCE The proposed merger of Progress Energy by Duke Energy does not affect the existing Price-Anderson indemnity agreement for Oconee, McGuire, and Catawba, and does not affect the required nuclear property damage insurance pursuant to 10 CFR 50.54(w) and nuclear energy liability insurance pursuant to Section 170 of the Act and 10 CFR Part 140. Duke will maintain all required nuclear property damage insurance and nuclear energy liability insurance.
In addition, Duke's annual reporting in compliance with 10 CFR 140.21(e) provides reasonable assurance regarding their ongoing ability to pay their share of any annual retrospective premium.
The NRC staff finds no reason to conclude otherwise.
8.0 CONCLUSION
The information contained in the March 31, 2011, threshold determination request demonstrates that the proposed merger between Progress Energy and Duke Energy will not result in any change in the role of Duke as the licensed operator of the facilities, will not result in any change in the relationship between Duke Energy, the ultimate parent company of Duke, and Duke, a wholly owned direct subsidiary of Duke Energy, and will not result in any changes to Duke's financial qualifications, decommissioning funding assurance, anti-trust, and foreign ownership, domination or control issues. No physical changes will be made to the facilities and there will be no changes in day-to-day operations as a result of the proposed merger.
The NRC staff finds that Duke Energy has provided an adequate basis to make a threshold determination that the proposed merger of Duke Energy and Progress Energy will not constitute a direct or indirect transfer of the NRC licenses held by Duke Energy through its subsidiary Duke, or any rights thereunder, and thus Duke Energy does not require the NRC's approval under Section 184 of the Atomic Energy Act, as amended, 10 CFR 50.80 and 10 CFR 72.50 in connection with the proposed merger between Progress Energy and Duke Energy.
Principal Contributor: M. Dusaniwskyj Date: November 14, 2011
D. Jamil
- 2 A copy of the related Safety Evaluation is also enclosed. If you have any questions, please call me at 301-415-1345.
Sincerely, IRA!
John Stang, Senior Project Manager Plant Licensing Branch 11-1 Division of Operating Reactor licensing Office of Nuclear Reactor Regulation Docket Nos. 50-413,50-414,50-369,50-370, 50-269, 50-270, 50-287, and 72-004
Enclosure:
Safety Evaluation cc w/encl: Distribution via Listserv DISTRIBUTION:
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