ML17297B423

Amend 3 to Licenses CPPR-141,CPPR-142 & CPPR-143,adding M-S-R Public Power Agency as co-owner of Facilities

ML17297B423
Person / Time
Site:	Palo Verde
Issue date:	03/26/1982
From:	Eisenhut D Office of Nuclear Reactor Regulation
To:
Shared Package
ML17297B424	List: ML17297B423 ML17297B425 ML20054A796
References
NUDOCS 8204160149
Download: ML17297B423 (40)

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UNITEDSTATES NUCLEAR REGULATORY COMMISSION WASH1NGTON, D. C. 20555 ARIZONA PUBLIC SERVICE COMPANY SALT RIVER PROJ O'POWER DISTRICT SOUTH PB C-PANY 0

DOCKET'NO. STN 50-528 PALO VERDE NUCLEAR GENERATING STATION, UNIT 1

AMENDMENT TO CONSTRUCTION PERMIT Amendment No.

3 Construction Permit No.:

CPPR-141 1.

The Nuclear Regulatory Commission (the Commission) having found that:

A.

The application for amendment filed by Arizona Public Service

Company, on behalf of itself and the Salt River Project Agricultural Improvement and Power District, El Paso Electric Company, Southern California Edison

Company, and Public Service Company of New Mexico, in a letter dated November 6, 1981, for the purpose of adding M-S-R Public Power Agency as a co-owner of the Palo Verde Nuclear Generating Station, Unit 1, complies with the standards and requirements of the Atomic Energy Act of 1954, as

amended, and the Commission' regulations set forth in 10 CFR Chapter I:

B.

M-S-R Public Power Agency is qualified to finance its proposed 3.95 percent undivided ownership interest in the facility.

C.

The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; and D.

Issuance of this amendment will not result in any environmental impacts not previously considered.

2.

Accordingly, Construction Permit No. CPPR-141 is amended to reflect a change in ownership of the facility as follows:

All references to "applicants" shall include M-S-R Public Power Agency.

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This amendment is effective as of the date of issuance.

FOR THE NUCLEAR REGULATORY COMMISSION pate of Issuance:

t1arch 26, 1,982 arr 1

. Eisen ut, Pirector Division of Licensing Office of Nuclear Reactor Regulation

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ARIZONA PUBI IC SERVICE COYiPANY S LT" IYEII OJIR1&IB~ll~

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STH 50-528 PALO VERDE NUCLEAR GFNERATING STATION, UNIT 1

AMENDMENT TO CONSTRUCTION PERMIT Amendment No.

3 Construction Permit No.:

CPPR-141 1.

The fluclear Regulatory Comnission (the Co>mission) having found that:

A.

The application for amendment filed by Arizona Public Service

Company, on b'ehalf of itself and the Salt River Project Agricultural Improvement and Power District, El Paso Electric Company, Southern California Edison

Company, and Public Service Company of Hew Mexico, in a

--letter'dated November 6, 1981, for the purpose of adding th-S-R Public Power Agency as a co-owner of the Palo-Verde Nuclear Generating Station, Unit 1, complies with the standards

'and requirements of the Atomic Energy Act of 1954, as

amended, and the Comniss'ion'-s.regulations set forth in 10 CFR Chapter I:

B.

M-S-R Public Power Agency is qualified to finance its proposed 3.95 percent undivided ownership interest in the facility.

C.

The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; and D.

Issuance of this amendment will not result in any environmental impacts not previously considered.

2.

Accordingly, Construction Permit No. CPPR-141 is amended to reflect a change in ownership of the facility as follows:

All references to applicants" shall include N-S-R Public Power Agency.

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This amendment is effective as of the date of issuance.

FOR THE NUCLEAR REGULATORY CONIIISSION Date of Issuance:

March 26, 1982 Original signelbPQ gsrrGll G. EisenhQC Darrell G. Eisenhut, Director Oivision of Licensing Office of Nuclear Reactor Regulation OFFICE SURNAME$

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UNITED STATES NUCLEAR R/GULATORYCOMMISSION WASHINGTON, D. C. 20555 ARIZONA'-PUBLIC "SERVICE COMPANY SALT RIVER PROJ D

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DOCKET NO.

STN 50-529 PALO VERDE NUCLEAR GENERATING STATION; UNIT 2 AMENDMENT TO 'CONSTRUCTION PERMIT Amendment No.

3 Construction Permit No.:

CPPR-142 1.

The Nuclear Regulatory Comission (the Commission) having found that:

A.

The application for amendment filed by Arizona Public Service

Company, on behalf of itself and the Salt River Project Agricultural Improvement and Power District, El Paso Electric Company, Southern California Edison

Company, and Public Service Company of New Mexico, in a letter dated November 6, 1981, for the purpose of adding M-S-R Public Power Agency as a co-owner of the Palo Verde'Nuclear Generating Station, Unit 2, complies with the standards and requirements of the Atomic Energy Act of 1954, as

amended, and the Commission' regulations set forth in 10 CFR Chapter I:

B.

M-S-R Public Pomr Agency is qualified to finance its proposed

3. 95 percent undivided ownership interest in the facility.

C.

The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; and D.

Issuance of this amendment will not result in any environmental impacts not previously considered.

2.

Accordingly, Construction Permit No. CPPR-142 is amended to reflect a change in ownership of the facility as follows:

All references to "applicants" shall include M-S-R Public Power Agency.

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This amendment is effective as of the date of issuance.

FOR THE NUCLEAR REGULATORY COMMISSION pate of Issuance:

Harch 26, 1982 Darre 1

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ARIZONA PUBLIC SERVICE COY&ANY SALT RIVER PROJK~RTCKYUR~PROVDKH~)lD POMER DISTRICT SOUTH O'ANY PUHCE SERVI 0

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STN 50-529 PALO VERDE NUCLEAR GENERATING STATION, UNIT 2 AMENDMENT TO CONSTRUCTION PERMIT Amendment No.

3 Construction Permit No.:

CPPR-142 1.

The Nuclear Regulatory Comaission (the Comnission) having found that:

The application for amendment filed by Arizona Public Service

Company, on behalf of itself and the Salt River Project Agricultural Improvement and Poser District, El Paso Electric Company, Southern California Edison

Company, and Public Service Company of Wew Mexico, in a letter dated November 6, 1981, for the purpose of adding M-S-R Public Power Agency as a co-owner of the Palo Verde Nuclear Generating Station, Unit 2, complies with the standards and requirements of the

'tomic Energy Act of 1954, as

amended, and the Commission' regulations set forth in 10 CFR Chapter I:

B.

M-S-R Public Pow r Agency is qualified to finance its proposed 3.95 percent undivided ownership interest in the facility.

C.

The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; and D.

Issuance of this amendment will not result in any environmental impacts not previously considered.

2.

According1y, Construction Permit No, CPPR-142 is amended to reflect a chan)e in ownership of the facility as follows:

n All references to "applicants" shall include M-S-R Public Power Agency.

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This amendment is effective as of the date of issuance.

FOR THE NUCLEAR REGULATORY COi)HISSION Date of Issuance:

March 26, 1982 0 '<<naZ,~

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UNITEDSTATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D. C. 20555 ARIZONA

- PUBLIC SERVICE =COMPANY SALT RIVER PROJ D

POWER DISTRICT SOUTH PANY 0

DOCKET=NO.

STN 50-530 PALO VERDE NUCLEAR GENERATING STATION; 'UNIT 3 AMENDMENT"TO CONSTRUCTION PERMIT Amendment No.

3 Construction Permit No.:

CPPR-143 1.

The Nuclear Regulatory ComIission {the Comnission) having found that:

A.

The application for amendment filed by Arizona Public Service

Company, on behalf of itself and the Salt River Project Agricultural Improvement and Power District, El Paso Electric Company, Southern California Edison

Company, and Public Service Company of New Mexico, in a letter dated November 6, 1981, for the purpose of adding M-S-R Public Power Agency as a co-owner of the Palo Verde Nuclear Generating Station, Unit 3, complies with the standards and requirements of the Atomic Energy Act of 1954, as

amended, and the Comssion' regulations set forth in 10 CFR Chapter I:

B.

M-S-R Public Power Agency is qualified to finance its proposed

3. 95 percent undivided ownership interest in the facility.

C.

The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; and D.. Issuance of this amendment will not result in. any environmental impacts not previously considered.

2.

Accordingly, Construction Permit No. CPPR-143 is amended to reflect a change in ownership of the facility as follows:

All references to "applicants" shall include M-S-R Public Power Agency.

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This amendment is effective as of the date of issuance.

FOR THE NUCLEAR REGULATORY COMMISSION Date of Issuance:

March 26, 1982 rr

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STN 5O-530 PALO VERDE NUCLEAR GENERATING STATION, UNIT 3 AMENDtKNT TO CONSTRUCTION PERl)IT Amendment No.

3 Construction Permit No.:

CPPR-143 1.

The Nuclear Regulatory Comnission (the Comnission) having found that:

A.

The application for amendment filed by Arizona Public Service

Company, on behalf of itself and the Salt River Project Agricultural Improvement and Power District, El Paso Electric Company, Southern California Edison C(hipany, and Public Service Company of New t1exico, in a letter dated November 6, 1981, for the purpose of adding N-S-R Public Power Agency as a co-owner of the Palo Verde Nuclear Generating Station, Unit 3, complies with the standards and requirements of the Atomic Energy Act of 1954, as

amended, and the Comission' regulations set forth in 10 CFR Chapter I:

B.

tl-S-R Public Po>er Agency is qualified to finance its proposed 3.95 percent undivided ownership interest in the facility.

C.

The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; and D.

Issuance of this amendment will not result in any environmental impacts not 'previously considered.

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Accordingly, Construction Permit No. CPPR-143 is amended to reflect a change in ownership of the facility as folio>>s:

All ref~erences to "applicants" shall include N-S-R Public Power Agency.

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This anendment is effective as of the date of issuance.

FOR THE NUCLEAR REGULATORY CO'.)MISSION Date of Issuance:

March 26, 1982 OPX8~22&l c1$~

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'afety Evaluation Palo Verde Nuclear Generating Station, Units 1, 2 and 3

INTRODUCTION By letter dated November 6, 1981, Arizona Public Service Company (APS ), as Project Manager and Operating Agent of the Palo Verde Nuclear Generating Station, Units 1, 2 and 3 (PVNGS), submitted a request for amendments to the Construction Permits (CPPR-141, CPPR-142, and CPPR-143) for PVHGS, to add a co-owner and to secure approval of a transfer in ownership percentages to the proposed co-owner.

This request involves a transfer of a 3.95 percent undivided o'wnership share in PVNGS from El Paso Electric Company's 15.80 percent ownership interest to the M-S-R Public Power Agency (M-S-R) as a

.tenant in common with the other PVNGS participants (includes the Salt River Project Agricultural Improvement and Power District, Southern California Edison Company and Public Service of New Mexico).

In support of the request, APS submitted financial information about M-S-R, the proposed transferee.

The purpose of this Safety Evaluation is to present the results of the staff's analysis of the proposed addition of.M-S-R as a co-owner to PVNGS.

Since the members of M-S-R own in total less than 200 MMe in electrical gener ating capacity, an. antitrust review was not performed nor required, as permitted by 10 CFR Part 50.33a.

Also, since

APS, as Project Manager and Operating Agent, will retain exclusive responsibility for the design and cohstruction of PVNGS, the only issue which required an evaluation is the proposed co-owner' (M-S-R) financial qualifications to assume a 3.95 percent share of PVNGS.

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ANALYSIS Financial (}uglification-Regulations and Analysis Assumptions The NRC regulations relating to the determination of an applicant's financial qualifications are Section 50.33(f) and. Appendix C to 10 CFR Part 50.

These I'egulations state that there must be reasonable assurance that an applicant can obtain the necessary funds to cover the estimated construction cost of a proposed nuclear plant and its related fuel cycle costs.

Ultimately, this means.that an applicant must demonstrate a reasonable financing plan in light of relevant circumstances.

This standard of reasonable assurance,

however, must be viewed in light of the period of time from the purchase of ownership interest to the date of commercial operation. 'he estimated date for..completion of PVNGS is 1983 for Unit 1, 1984 for Unit 2, and 1986 for Unit,3.

Consequently, the staff must make'ertain basic assumptions in its financial analysis about future conditions.

The analysis of the proposed transferee' financial qualifications requires the staff to validly assume that there will be rational'egulatory policies with respect to tHe setting of rates and that viable capital markets will exist.

The former assumption implies that rates will be set to at least cover the cost of service, including the cost of capital necessary for purchase of M-S-R' proposed 3.95 percent undivided ownership interest in PVNGS.

The latter assum'ption implies that capital will be avail. able to M-S-R.

at some price.

Given these fundamental assumptions, the evaluation is then focused on tHe reasonableness of the proposed transferee' financial plans, in light of relevant circumstances, to participate in its proposed share of the estimated construction costs of the facility.

The following analysis summarizes the review of the information submitted by the applicant and addresses the financial qualifications of M-S-R to finance its proposed proportionate share of the costs associated with the design and t

construction of PVNGS.

Cost Estimates'nd Amount of Ownership Interests.Proposed-for.Transfer The most recent cost information for the proposed ownership transfers of PVNGS is stated in the financial information submitted by APS's letter of application dated November 6, 1981..These costs and their timing are sumnarized as follows:

The amount of M-S-R will pay to El Paso Electric Company at the closing under the Assignment Agreement is estimated to be

$ 165 million.

Table 1 lists the amounts expected to be advanced by M-S-R to APS.

for construction cost progress payments after the close of the sale.

Table 1

ESTIMATE OF M-S-R EXPENDITURES 'TO YEAR (July 1 - June 30)

Acquisition of 3.95% Own-ership of PVNGS May 8 J une 1982 1982-83

-1983-84 1984-85 1985-86 1986-87

$3.121

'15.200

$ 8.844

$ 6.162

$2.337

$0.537 Sewage Eff1 uent

'ayments Preoper ation Staffing and Training

0. 004

0. 096 0.011 0.009 0.509 0.006 0.005 3.95'X Share of PVNGS Startup Costs 3.95% Share of Uranium Oxide Procurement, Conversion, Enrichment and Fabrication for PVNGS 2.012 1.610, 1.069 1.486

0. 091 Total 0.578 3.998 1.513 3.556 1.417

$3. 890

$21. 730

$11. 976

$ 10. 791

$5. 245

$0. 537 Description of Business of Proposed Transferee M-S-R is a:public entity created pursuant to Section 6500 et seq. of the California Government Code and the Joint Powers Agreement among its members dated as of April 29, 1980.

The members of M-S-R and the percentage participation in M-S-R of each member are as'follows:

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J Modesto Irrigation District - 83.33 percent, and City of Redding - 16.67 percent.

The Joint Exercise of Powers Act '(California Government Code Section 6500 ~et se.) provide's that public agencies may enter into joint exercise of powers agreements to exercise any power which is common to the contracting parties.

The Joint Powers Agreement which creates M-S-R authorizes it to finance, acquire, construct, maintain and operate one or more generation or transmission projects..

In that connection, M-S-R may acquire an interest in real and personal property, including generation plants or tr ansmisson

systems, for the purpose of delivering electrical power and energy.

M-S-R is also specifically authorized to sell. and deliver bonds in accordance with the provisions of the Joint Exercise of Powers Act for the purpose-of acquiring or constructing one or more projects and to issue'otes for such purposes.

M-S-R was created to finance various generation and transmission projects on behalf of its members.

It is not necessary that all the members participate in each project.

However; each member that desires to participate in a generation.

or transmission project to be undertaken by M-S-R will have the opportunity r

to participate in such. project.

Financing Plan - Source of Funds It is expected that all necessary funds for the acquisition by M-S-R of a 3.95 percent undivided interest in PVNGS will be obtained from revenue bonds.

The following was assumed for calculating the costs to M-S-R:

Buy-in Date:

Bond Coupon Rate:

~ Bond Discount:

Reinvestment Rate:

Projected PVNGS Commercial Operation Dates:

5/1/82 12% Average 12'X Average Unit 1 - 5/1/83 Unit 2 - 5/1/84 Unit 3 - 5/1/86 Utilizing the above assumptions and "buy-in" costs as provided for the "Arizona Nuclear Power Project Assignment Agreement between El Paso Electric Company and M-S-R Public Power Agency," the total multiple bond issue amount is estimated to be

$300 million.

M-S-R currently contemplates financing this amount by issuing two separate series of bonds.

The bond issues are currently. estimated to be sized and timed as follows:

(1)

$200 million at or around May 1, 1982; and (2 ) $ 100 million around early 1983.

The security for such revenue bonds is provided by a Power Sales Contract between M-S-R and those of its members who enter into the Power Sales Contracts with M-S-R to acquire the right or entitlement to participate in the capacity and energy output'ssociated with M-S-R's ownership interest in PVNGS; Accordingly, M-S-R will enter into the Power I

Sales Cont'racts with the Modesto Irrigation District and the City of Redding and will sell 100 percent of the capacity and energy output associated with its ownership interest in PVNGS.

The total amounts payable by.the M-S-R members participating in PVNGS will be equivalent

. to M-S-R's debt service requirements and= its share of PVNGS's I

operating and maintenance costs.

Pursuant to the Power Sales Contract, the source of payments which would be utilized by the M-S-R member in paying its obligations to M-S-R would be limited to revenues which such member derives from the operation of its electric system.

M-. S-R is not aware of any legal restrictions on project or total financing ability at the present time.

Each member of M-S-R which enters into the Power Sales Contract would be obligated to share in the payment of M-S-R's debt service requirements-

'and operating and maintenance costs in proportion to such member 's entitlement of use in the electrical capacity and energy output of PVNGS.

The City Council or Board of Director s of each member city either establishes or approves the electrical rates which are charged to customers of the city's electrical utility.

In-general, the cities are

required by applicable charter provisions, bond covenants or policies of their city councils or boards to establish rates sufficient to recover revenues to pay for the costs of service of providing electrical service to their customers.

CONCLUSION Based upon the above analysis, the staff concludes that M-S-R has' financing plan that provides a reasonable assurance that funds can be obtained to finance its proposed 3'.95 percent undivided ownership interest share in PVNGS.

As a result, the staff has determined that M-S-R is financially qualified to par ticipate in the design and construction of PVNGS to the extent of a 3.95 percent undivided ownership interest as a tenant in common with the other participants.

This conclusion is based upon the staff's determination that M-S-R's proposed plan to fund its 3.95

.percent ownership interest in PVNGS from proceeds derived from the issuance of its revenue bonds constitutes a reasonable financing plan in light of relevant circumstances.

Accordingly, the. staff has determined the M-S-R has met the reasonable assurance requirement for obtaining the required capital. funding.

Consistent with

this, M-S-R possesses authority that permits it to set rates at such levels with its member municiplity participants. that will'nable it to repay its obligations.

As.a condition subsequent to these amendments,

however, the staff will require executed final copies of the Joint

'I Participation and Ownership Agreement and the Assignment Agreement for

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PVNGS.

These must necessarily be in substa'ntial conformity with the provisional agreement heretofore supplied.

As a further condition subsequent to these amendments, the staff will also require copies of M-S-R' official statement issued in conjunction with the first issuance of its bonds to finance the construction of its share of PVNGS.

On the basis of the above conclusion, the staff finds that the issuance of the.

E requested amendments. transferring ownership percentages from El Paso Electric'ompany to M-S-R will not be inimical to the common defense and security'r to the health and safety of the public.

The staff finds that the requested amendments do not involve a significant hazards consideration because this action will not involve any significant increase in. the probability or consequences of any accident, and this action will not involve any significant decrease in safety margin.

Date Issued:

March 26, 1982

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