ML17164A520

Safety Evaluation Accepting Proposed Corporate Restructuring of Facility

ML17164A520
Person / Time
Site:	Susquehanna
Issue date:	12/29/1994
From:	Office of Nuclear Reactor Regulation
To:
Shared Package
ML17164A519	List: ML17164A518 ML17164A520
References
NUDOCS 9501110483
Download: ML17164A520 (6)

Text

gp8 AEgg (4

~o Cy I

0O IVl0 0

qO

++*++

UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON> D.C. 20555<001 SAFETY EVALUATION BY HE OFFICE OF NUCLEAR REACTOR REGULATION PROPOSED ORGANIZATIONAL AND FINANCIAL RESTRUCTURING PENNSYLVANIA POWER AND LIGHT COMPANY SUS UEHANNA STEAM ELECTRIC STATION UNITS 1

AND 2 DOCKET NUMB S 50-387 AND 50-388

1. 0 INTRODUCTION On July 25,

1994, Pennsylvania Power

& Light Company (PP&L), pursuant to 10 CFR 50.80, submitted to the Nuclear Regulatory Commission a letter describing a plan to implement a corporate restructuring to result in the creation of a new holding company, PP&L Resources, Inc. (Resources).

The overall objective to the change is to improve PP&L's competitive position in the energy market:y, and to increase the company's flexibility in its unregulated energy activities.

Currently, PP&L is a co-owner, operator and holder of the NRC operating licenses for the Susquehanna Steam Electric Station Units 1 and 2

(Enclosure 1).

After implementation of the proposed restructuring, Resources will be the owner of the outstanding common stock of PP&L and will also indirectly own, thr ough its ownership of PP&L, the license for the nuclear units.

However, PP&L will still be the licensee of record for these plants (Enclosure 2).

Approval for the restructuring is being sought from the Pennsylvania Public Utility Commission, the Securities and Exchange Commission, the Federal Energy Regulatory Commission, and the Nuclear Regulatory Commission.

2.0 ANTITRUST REVIEW

The corporate restructuring outlined by PP&L in its amendment request dated July 25,

1994, does not appear to present any opportunity for the new owner of the Susquehanna Steam Electric Station (Susquehanna) to exert any undue market power over other power systems in the geographic area served by the Susquehanna facility.

The new owner will be a holding company owned and controlled by the existing PP&L shareholders.

PP&L stated in its July 25, 1994 letter<'that "At, the time the restructuring becomes effective, Resources, a

Pennsylvania corporation, will become the sole holder of PP&L's common stock, and the current holders of PP&L's common stock will become holders of the common stock of Resources on a

share-for-share basis.

Therefore, immediately following the restructuring, the common stock of Resources will be owned by the previous holders of PP&L's common stock in the same proportions in which they held PP&L's common stock."

(

950SSSOi8S 94zm9tt PDR ADOCK 05000387 P

PDR

Therefore, the staff finds that the restructuring, as proposed, will not materially affect the operation or control of Susquehanna nor the bulk power services market(s) served by the Susquehanna facility.

3.0 AVAILABLE FUNDS The submittal states that the proposed restructuring will not reduce the funds available for PP8L to carry out activities under its operating licenses for its two nuclear plants.

Specifically

, the utility operations of PP&L will remain the primary source of revenue for PP&L and will constitute the majority of Resources'arning power.

The Federal Energy Regulatory Commission will still regulate PP&L's wholesale electric rates, and the Pennsylvania Public Utility Commission will also maintain jurisdiction over the licensee's retail electric rates.

In addition, the submittal states that the restructuring and any investments made by the new holding company in non-regulated activities "will not affect the ability to meet future capital requirements" for the Susquehanna units.

It further states that "no change in the amount of revenues or the ability to obtain the funds necessary to operate Susquehanna will result from the restructuring."

Based on the above information and discussions with the licensee, the staff finds that there will be no change in the amount of revenues, the source of funds, or PP&L's ability to obtain funds necessary to operate and decommission its nuclear plants as a result of the proposed restructuring.

4.0 MANAGEMENT OF PP&L UTILITY OPERATIONS PP8L stated in its application that the proposed restructuring will not change any responsibility for nuclear operations within PP&L and that holding company officer responsibilities will be primarily administrative and financial with no direct effect on the management of the Susquehanna units or PP&L.

The staff therefore concludes that there will be no management or organizational changes as a result of the restructuring with regard to responsibility and operation of the Susquehanna

site, and that the Senior Vice President Nuclear and his subordinate managers will retain the responsibility of the nuclear operations of the site.

Based on the continuity of management described

above, the staff finds that the proposed restructuring will not adversely affect the management of PP&L's nuclear plants.

5. 0 FOREIGN OWNERSHIP CONTROL OR DOMINATION The licensee indicated in its submittal that after restructuring is implemented, Resources, a Pennsylvania corporation, will be the sole holder of PP8L's common stock, and the present holders of PP&L's common stock will become the holders of Resource's common stock on a share-for-share basis.

Thus, previous holders of PP&L common stock will own Resources common stock in the same proportion as PP&L common stock was held.

Currently, only

.36 percent of the total outstanding shares of PP&L are held in foreign accounts.

Based on the above discussion, the staff finds that the proposed restructuring will not result in PP8L being owned, controlled, or dominated by foreign interests.

6. 0 FINANCIAL UAL IFICATIONS ANALYSIS PP&L is the operator and 90 percent owner of the two-unit Susquehanna nuclear station.

PP&L earned net income of over

$348 million on oper ating revenues of approximately

$2.7 billion in 1993.

PP8L achieved similar results in 1992 and 1991.

PP8L's common stockholder equity exceeded

$2.4 billion.

This represented approximately 42.4 percent of total capitalization as compared to 48.7 percent capitalization from long-term debt.

Such a capitalization ratio indicates reasonable financial health in that PP&L is not obligated to make overly burdensome interest payments on its debt.

Similarly, PP&L's "times-interest-earned" ratio is a healthy 3.5, which indicates that it has an adequate cushion of pre-tax earnings to pay interest obligations.

PP&L had total plant assets net of depreciation in 1993 of nearly

$ 7 billion.

PP8L's latest rating in Value Line (June 17,

1994, p.187) indicates healthy "B++"

financial strength.

Similarly, the most recent rating by Moody's in its Public Utilit News Re orts (April 12, 1994) of PP8L's long-term bonds was "A2", which is a good rating indicating sound investment quality and protection for long-term bond investors.

In summary, PP8L is financially sound.

The proposed restructuring should not adversely affect PP&L's financial health, but rather should improve PP&L s ability to maintain its financial health in an increasingly competitive environment.

In its application to the NRC dated July 25,

1994, PP&L has indicated its commitment to "inform the Director,

NRR, 60 days prior to a transfer (excluding grants of security interests or liens) from PP&L to [PP&L]

Resources of facilities for the production, transmission or distribution of electric energy having a depreciated book value exceeding one percent (1X) of PP&L's consolidated net utility plant, as recorded on PP&L's books of account."

The staff believes this commitment, together with PP&L's recent and projected strong financial performance, provides reasonable assurance that PP8L will continue to maintain adequate resources to operate and decommission its Susquehanna facility safely.

Therefore, the staff concludes that PP&L's proposed restructuring will not adversely affect its financial qualifications with respect to the Susquehanna facility.

7. 0 CONCLUSION Based on the above determinations, the staff concludes:

1.

that the proposed action will not affect the qualifications of PP&L as the holder of the licenses for Susquehanna Steam Electric Station Units 1

and 2 and; 2.

that the proposed action is otherwise consistent with the applicable provisions of the law, regulations, and other requirements issued by the Commission pursuant thereto.

Principal Contributors:

W.

Lambe R.

Wood C. Poslusny Date:

December 29, 1994

En"losure 1

CURRENT CORPORATE STRUCTURE Pennsylvania Power &Light Company (HR&D,Financial, Nuclear, SP&E, Division Operations)

PP&L Resources lnc.

Pennsylvania Coal Resources Corporation interstate Energy Company Realty Company ofPennsylvania CEP Group lno.

Safe Harbor Water Power Corporation Pennsylvania Mines Corporation.

Power Markets Development Company Rushton Mlnlng Company Greene Macr Coal Cluny Lady Jane CN4r4s, Ine.

Enclosure 2

HOLDING COMPANYSTRUCTURE PP8 L Resources, Inc.

Power Markets Development Company CEP Group, lno.

Pennsylvania Power &, Light Company (HMD, Financial, Nuclear, SP8 E, Division Operations)

Pennsylvanta Coal Resouroes Corporation interstate Energy Company Realty Company ot Pennsylvania Sate Harbor VIAderPower Corporation Pennsylvania lllnas Corporation

Rushton, Illnlng Company Ozone HS Coal Con@any

Q. (Given~,--~;:-,;

Federal Re9>>elec/ veb.59; Ne

~ 125.) Monday; Fep>>ember 12.199>>95)>>et>>bee'.

96669~e"',g)>>~

~>>t'ai~~

Act ub. L.92-463), notice fs hereby';;:--.

ez given at meetings ofthe Fe'deral' Prevai 'ng Rate Advisory, Committee~~>,

willbe eld on~

Tbursda September 22, 1994;

'z'~'..

Thursday October 6. 1994 Thursday.

tabor 20; 1994'".*

Thursday; ovember 3; 1994

Thursday, ovelnber 17, 1994~

Thursday, D ember 12 1994

-.., ~ ,.j Thursday, D ember 15,.1994 The meeti gs willstart at 10:45'a.m:.,

and will'be h ld in Room 5A06A; Offi

'ofPersonnel anagement Building,'900.E

Street, Wee Washington, DC.-';

Tho Federal revailing Rate Advi ory"-"

Committeeisc 'osedofaChai anq..

five'ropresentati es from labor u ons",

holding exclusiv bargaining rig ts for',

Federal blu~olf employees, d five)=

representatives Federal a 'ies;.;,'..:-

Entitlement tome bershipo the' Committee is provi ed-for i U;S.C; 5'348.

~ The Committee's ima responsibility is to re iew haPrevailfng; Rate, System and othe tters pertinent:..

~

to'establishing prevail rates.under

~

subchapter IV,Chapter 3, 5 U.S.C., as'--

amended;and from ti to time advise" the Office ofPersonn anagement:

.- Thesescheduled eet gswillstart >-

in opening session 'th th lab'or and'"

management repre entati s'attending."

'uring, the meeti g either e labor:

members or the.

anageme t members; may caucus sep ately with the~'hairman to d ise strategy nd formulate po tions. Premat disclosure of e mattersdis ssed-fn<

e, thesecaucu es would unacce fably.-

impair the ilityoftheCom ittee to

-'eacha co sensus on thematt being,",..

considere and would disrupt.

substant'ly the disposition of ts busines

. Therefore, these caucu os willi be clo d to the public.because o a.

dete nationmadebytheDirect r of)

~

the 0 ice ofPersonnel. Managemo t'.

unde the provisions ofsection 10

) of; the deral Advisory Committee A (Pu

. L 92463) and 5 U.S.C.

55 (c)(9)(B)IThese caucuses may;.

Commissio.Washington, DC 20423; and (2) Jane H.

ilbert, Assistant General Cou sel, Wisconsih Centra Ltd.,P.O. Bo 50 2, Rosemont, IL 60017-5062.

FOR FURTHER I 0

MATIONCONTA Joseph H. Det ar (202) 927-566.y "

[TDDfor hearin,impaired: (202) 27-'.

5721.)

- SUPPLEMENTARY I FORM

.Additional info ation

~ 'he Commission's ecis a copy ofthe full cisi or pickup in pars fr Concepts, Inc., Roo 2

Commerce Commis 'o Washington; DC 20 3.

(202) 289-4357/435;

[

the%earing impaire is through TDDservice.: (

Decided: August 29.

9 By the Commission,

'ice Chaimiari Phillips, Simmons and Morgan,.

Vernon A. KVilllams,

'cting Seaatar7.

IFR Doc. 94-22465 File 9-94: 6:45 amf-SILUNO COOK 703$4IW NUCLEAR REGUL)ATORYF COMMISSION'

[Docket Nos. 50-387 and 50-388)'5 ',

Pennsylvania Power 8'Light Company, Allegheny Electric Cooperative, Inc.;-

Susquehanna Steam Electric Station;-,,

Units 1 and 2'otice is hereby given that the United States Nuclear Regulatory Commission, (the Commissioh) is considoring.--

- approval under 10 CFR 50.80 ofthe; proposed corpomte restructuring of

~

" Pennsylvania Power.&. LightCompany~;

(PP&L), tho co-.owner and licensee of the..

Susquehanna Steam Electric Station;. "

Units 1 and 2 (Susquehanna).

By letter..

dated July 25, 1994, Robert G. Byram,'-

..'enior Vice President-.Nuclear. ofPP&L.

informed. the Commission that the Board ofDirectors has ~rltnseIL'a" corporate r9Ef~ctur[ng'plan to be'.

presented.at the annual meeting of sTiareholders scheduled forApril26; 1995. Ifa majority ofthe shareholders' approve the plan, PP&Lwillbecome a- '.

wholly-owned subsidiary ofa new holding company named PP&L'"

'esources, Inc. (Resources). PP&L "

would remain as holder oftho licenses for the aforementioned facilities. Ifthe'.

plan is approved,.th'e coihmon stock oE-PP&Lwillbe converted on a share-for--

share basis into common stockof the>>

holding,company,.and there willbe no>>

effect upon the management, operation, I and financing ofthe PP&L nuclear facilities...

Pursuant to10CFR50.80.the.

'ommission may approve the transfer of control of a license, after notice to-interested persons. Such "action is contingent upon the Commission's determination that the holder ofthe license and the transfer ofsuch control:

is otherwise consistent with applfcabfeu'.

provisions oflaw;.regulations, and.

~

orders 'ofthe Commission..

ATION

[s con ined-in ion. T purchase on, w ite to, call:,

om:D nomic

229, nterstate'Bu ding;.

Te ephoner As stance for a

ilable'

2) 927-5721;)'

a an Mcbonald d Commissioners N ON THE;::

ITIES.

NATIONALFO ARTS ANDTH UN ATI EH MA Notice of Meetin Pursuant to Federal Advis L.92-463), as given that a m Council on th September 22, 6:00 p.m. in R Hanks Center Avenue, NW.

This meeti public on a s topicofdisc s

planning fo t Intereste p

meeting as bs nbservers i li ttend thi me formati ab

'heri Chri a)(2) ofthe.,

toe Act (Pub.

'tice is hereby h National,',-

e held on

~

0:30 a.m. to at he Nancy--:

ns lvania'n DC 20506.

pe to the ble asis. The be ng-range se ion 10 o,Comm a

ended e tingoft e

rts will 994 from om 527, 1100 Pen Washingt g willbe o ace availa sion will he agency.

ersons ma ervers. S mited. Ify eting or out it, pie stie ojthe y at end this eatin spacefor ou an to wish rther "--

Dated at Rockvillo, Maryland. this 1st day de ending on the issues involved,',.

ofSeptember 1994.. 'o stitutea'substantialportion ofthe

'ohan C Thadani, ting.,

~

ActingDirector, project Directorate l-2, Anriually.the Committee publishes Division ofReactor prajects-I/Ii. Office% ', f r the Office ofpersonnel Managemen; Nuclear Reactor Regulation.

t e President; and Congress a

[FR Doc. 94-22483 Filed 9-9-94; 6:45 am)

-. corn rehensive re ort to pay issues ase ontact.

Pub ic Affairs e at 202/682-5570.

au need special ac a disability, plea

'Special Consti Endowment fo aania Avenue, corn dations socon cf the,

tuoncies, r the Arts, 1-100 NW;,

p.

discussed, concluded recommondations.-

eILUIIOcoos 755>>b41W con'forming,to 49 CFR.1152.28(a)(2)-

'Washington, DC 20506, 2027 2-.5532l OFFICE OF PERSONNEL'=*.)I.'b ~g>>.'i"; ",.

must be filed by 0'ctbber 3> 1994,,an'd:..-

TTY 20 2-.5496, at.le seven (7).-,

~

JVIANAGEMENT:-.

petitions to r'copen must be filed by

days prior to e meo

'c'tobor' 1994'*

."'ypnno M, Sabflle,

'ederal Prevailing, Rate Advfsary".~>>,:.9' Send pleadings referring t, pirecion Officeaf nef lions, National mmittee; Open Committee Meetfn~

6 DOCketN

~ A~02(sub-N02X)tO:(

Enda~entfor ISA~.:

0, -'

f ~ -.---

Office of e Secretary; Case Control'FR Doc. 94 2396 Filed 9-9-94; 8:4 l

10 the Federal A'dvisory Committee"-'-..-.

Branch, In rstate Cominerce SILUIio a 7557&&4

'