ML17299A991
| ML17299A991 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 02/05/1986 |
| From: | Van Brunt E ARIZONA PUBLIC SERVICE CO. (FORMERLY ARIZONA NUCLEAR |
| To: | |
| Shared Package | |
| ML17299A990 | List: |
| References | |
| NUDOCS 8602070169 | |
| Download: ML17299A991 (14) | |
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the matter of ARIZONA PUBLIC SERVICE COMPANY, et al.<
DOCKET NO STN 50-528 (Palo Verde Nuclear Generating Station, Unit 1)
SUPPLEMENTAL APPLICATION IN RESPECT OF SALE AND LEASEBACK FINANCING TRANSACTIONS BY PUBLIC SERVICE COMPANY OF NEW MEXICO February 5, 1986 8602070i69 860205 PDR ADOCK 05000528 P PDR
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P TABLE OF CONTENTS Section 1. BACKGROUND ~..... ~........ 1 Section 2. RELIEF REQUESTED ............ 4 Section 3. DESCRIPTION OF THE PROPOSED I
TRANSACT 0NS ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5 Section 4. SCHEDULE OF THE PROPOSED TRANSACTIONS ' ~ ~ ~
~ ~ ~ ~ ~ ~ ~ ~ 6 Section 5. SUPPORTING INFORMATION .. ~ ~ ~ ~ ~ ~ ~ ~ 7 Section 6. BASIS FOR RELIEF REQUESTED ~ .. ~ ~ ~ . 9 Section 7. FOREIGN OWNERSHIP CONSIDERATIONS . ~ ~ ~ 10
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the matter of ARIZONA PUBLIC SERVICE DOCKET NO STN 50-528 COMPANY, et al.,
(Palo Verde Nuclear Generating Station, Unit 1)
SUPPLEMENTAL APPLICATION IN RESPECT OF SALE AND LEASEBACK FINANCING TRANSACTIONS BY PUBLIC SERVICE COMPANY OP NEW MEXICO Arizona Public Service Company (APS), as Project Manager and Operating Agent of Palo Verde Nuclear Generating Station (PVNGS)
Units 1, 2 and 3, submits this Supplemental Application in Respect of Sale and Leaseback Financing Transactions by Public Service Company of New Mexico, with respect to PVNGS Unit 1 (Unit 1), on behalf of Public Service Company of New Mexico (PNM), a licensee under Facility Operating License No. NPF-41 (the Unit 1 License) .
- 1. Background On October 18, 1985, APS filed, on behalf of PNM, an Application in Respect of a Sale and Leaseback Financing Transaction by Public Service Company of New Mexico (the Original Application).
Accompanying the Original Application was the Memorandum in Support
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of the Application in Respect of a Sale and Leaseback Financing Transaction by Public Service Company of New Mexico, dated October 18, 1985 (the Memorandum; terms used in this'Supplemental Application and not otherwise defined herein have the respective meanings as set forth in the Original Application) . On November 4, 1985, PNM, through its attorneys, submitted a brief to the Commission addressing issues raised by the Atomic Safety and Licensing Appeal Board's deci-sion in the Marble Hill matter.'n November 5, 1985, the Commission published in the Federal Register'otice of the Application< which gave notice of a proposed no significant hazards determination, solicited comments and provided the opportunity for interested par-ties to request a hearing. On November 20, 1985, the Staff issued its Policy Paper SECY-85-367 making a recommendation concerning the transactions described in the Original Application. Under cover of a letter from Mudge Rose Guthrie Alexander & Ferdon, Special Counsel to PNM, dated November 21, 1985, PNM submitted its response to the Staff's Request for Additional Information. On December 12, 1985, the Commission issued its Order in respect of the Original Application (the Order) approving the proposed sale and leaseback transactions and authorizing the amendment of the Unit 1 License, subject to certain stated conditions. On December 26, 1985, the Staff issued, in accordance with the Order, Amendment No. 3 to the Unit 1 License (Amendment No. 3). The Commission's related
- 1. 7 NRC 179 (1978) ~
- 2. 50 Fed. Reg. 45955-7 (1985) .
evaluation of Amendment No. 3 is contained in a Safety Evaluation dated December 26, 1985. Notice of the issuance of Amendment No. 3 was published in the Federal Register on January 15< 1986.'n December 31, 1985, as permitted by Amendment No. 3, PNM sold and leased back in the aggregate approximately 7.367% undivided ownership interest in Unit 1 and approximately 2.456% undivided ownership interest in certain related PVNGS common facilities. Under cover of a letter dated January 29, 1986, addressed to the Director of Nuclear Reactor Regulation, Attention of Mr. George W. Knighton, the documents executed in connection with the December 31, 1985 transactions were filed. If the additional sale and leaseback trans-actions described he'rein are approved and consummated, PNM will have disposed of 100% of its interest in Unit 1 and 33 1/3% of its inter-est in certain related PVNGS common facilities.
PNM proposes to enter into additional sale and leaseback financing transactions relating to all or a portion of PNM's remain-ing interest in Unit 1 of approximately 0125 million (such interest, representing PNM's remaining 2.833% (approximate) undivided ownership interest in Unit 1 and up to a .944% (approximate) undivided owner-ship interest in certain related PVNGS common facilities and real property rights, being herein called the Remaining Unit 1 Interest).
PNM presently expects to consummate two further sale and leaseback transactions with respect to the Remaining Unit 1 Interest: one 'for a $ 75 million portion of the Remaining Unit 1 Interest to be
- 3. 51 Ped. Reg. 1883 (1986) .
consummated with a third-party Equity Investor not affiliated with PNM (the Third-Party Equity Investor) 'nd one for a $ 50 million por-tion of the Remaining Unit 1 Interest to be consummated with an affiliate of PNM (the PNM Affiliate). The portions to be purchased by such Equity Investors have not been definitively fixed. The con-templated transaction with the PNM Affiliate would not be consummated if transactions with Third-Party Equity Investors are consummated for the full Remaining Unit 1 Interest or, in the alternative, the trans-action with the PNM Affiliate may be consummated for up to the Remaining Unit 1 Interest if the contemplated transaction with the Third-Party Equity Investor is not consummated.
- 2. Relief Requested The relief requested by this Supplemental Application is the issuance of a further amendment to the Unit 1 License by adding at the end of paragraph 2.B(6) thereof (as added by Amendment No. 3) the following sentence:
"PNM may also enter into one or more sale and lease-back transactions relating to a portion of its ownership share in Palo Verde Unit 1 with certain institutional investor(s) on or before August 31, 1986 as described in the Supplemental Application dated February 5, 1986. This paragraph 2.B(6) shall be applicable to each such transac-tion as may be consummated."
- 4. It is possible that transactions with more than one Third-Party Equity- Investor will be consummated in an aggregate amount up to the Remaining Unit 1 Interest; consequently, references herein to the Third-Party Equity Investor should be read to include the plural of that term, as appropriate.
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- 3. Description of the Proposed Transactions The structure of the proposed transactions will be substan-tially identical to that employed for the December 31, 1985 transactions. Although certain terms of the proposed transactions may vary from the terms of the earlier transactions, overall the pro-posed transactions will be similar in all material respects to such earlier transactions. In particular, PNM will retain the full power and authority, to the exclusion of the Owner Trustees and Equity Investors, to exercise all the rights and perform all the duties and responsibilities under the Arizona Nuclear Power Project Participation Agreement, and APS will remain responsible to the Commission for the proper operation and maintenance of Unit l.
With respect to the transaction proposed to be consummated with the Third-Party Equity Investor, the description of the December 31, 1985 transactions with independent third-party Equity Investors provided in the Original Application (updated and supple-mented by PNM's letter of January 29, 1986) is applicable. With respect to the transaction proposed to be consummated with the PNM Affiliate, the transaction will have essentially the same terms and conditions as the December 31, 1985 transactions consummated with independent third-party Equity Investors except that certain provi-sions of certain agreements (for example< covenants governing mergers by PNM) may be suspended or otherwise modified for so long as the PNM Affiliate is the Equity Investor in such, transaction. The provisions that may be suspended or otherwise modified will not be, either
singly or in the aggregate< material to the Original Application< the supporting documents or the decision of the Commission.
- 4. Schedule of the Proposed Transactions PNM presently expects to refinance with public debt the interim bank financing used in connection with the consummation of the December 31, 1985 transactions. Such refinancing is now sched-uled to occur on or about April 2< 1986> absent unexpected changes in market or other financing conditions. Consummation of the proposed sale and leaseback transaction with the Third-Party Equity Investor would be greatly facilitated if the debt portion of such transaction could be financed concurrently with the contemplated public debt refinancing. Moreover, such timing would, among other benefits, result in substantial savings in related transaction costs and more favorable marketing opportunities for .the public debt.
Other than approvals already obtained, the only regulatory or other approvals necessary to consummate the proposed transaction with the Third-Party Equity Investor'are:
(i) the determination by the ANPP Administrative Committee required by Section 15.6 of the ANPP Participation Agreement; and (ii) the amendment to the Unit 1 License requested in this Supplemental Application.
The ANPP Administrative Committee is expected to act in due course, either at a regularly convened meeting or a meeting conve'ned specifically for that purpose. The timing of the amendment to the
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Unit 1 License requested by this Supplemental Application is, therefore, the primary scheduling consideration.
It is thus highly desirable that PNM be in a position to consummate the proposed sale and leaseback transaction with the Third-Party Equity Investor not later than March 25, 1986, the date on which binding commitments are expected to be entered into for the public debt to be sold on or about April 2, 1986. To achieve this schedule it will be necessary that:
(a) notice of receipt of this Supplemental Application and a proposed no significant hazards determination be published in the Federal Register not later than February 15, 1986; and (b) the requested amendment to the Unit 1 License be issued and become effective not later than March 24, 1986.
The sale and leaseback transaction involving the PNM Affiliate as the Equity Investor will require special approval of the New Mexico Public Service Commission in addition to the approvals required in items (i) and (ii) above. Current schedules contemplate a closing of such a transaction on or before June 2, 1986.
- 5. Supporting Information The general information respecting applicant PNM required by 10 CFR 50.33(a) through (d) was provided in Exhibit A attached to the Original Application, and was later updated and supplemented in PNM's response to the Staff's November 7, 1985, Request for
-Additional Information (as such response was updated by PNM's letter
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to the Commission of January 29, 1986). Through the date of this Supplemental Application, there has been no other material change in the general information so provided. Such information will be fully updated in connection with the application to be filed shortly with respect to PVNGS Unit 2.
It is currently expected that the Third-Party Equity Investor will participate in the Remaining Unit 1 Interest to the extent of $ 75 million (approximately $ 57.75 to $ 60 million of which will be financed by debt) and that the PNM Affiliate will participate in the Remaining Unit 1 Interest to the extent of $ 50 million (approximately $ 35 to $ 45 million of which will be initially financed by debt). The actual participations are subject to change. Any changes will be reflected in supplemental information to be supplied to the Commission. As with the transactions consummated on December 31, 1985, the source of funds for equity investments is not relevant, since the purchase price for the Remaining Unit 1 Interest will be paid in full to PNM upon consummation and the'quity Investors will have no further funding obligation to PNM.
Financial statements for the PNM Affiliate are reflected as part of the consolidated financial statements of PNM previously made available to the Commission. Supplemental information concerning the Third-Party Equity Investor will be submitted to the Commission as it becomes available. It should be emphasized that neither the Third-Party Equity Investor nor the PNM Affiliate will, as a result of their respective interests in Unit 1, have any liability for payment of operation and decommissioning costs and capital improvements of
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-Unit 1. PNM alone is responsible for paying all taxes, insurance premiums, operating and maintenance costs (including, without limita-tion, fuel expenditures), decommissioning costs, capital improvement costs, and all other similar costs associated with the Facilities (including all obligations as a Participant under the ANPP Participation Agreement).
- 6. Basis for Relief Requested As set forth above in Section 3, the transactions described in this Supplemental Application are similar in all significant respects to the transactions consummated by PNM on December 31, 1985. In addition, the relief requested in this Supplemental Application by APS, on behalf of PNM, is the same relief (based upon similar facts) as was authorized by the Commission in its Order of December 12, 1985. Indeed, the Order of the Commission is sufficient for the issuance of the further license amendment sought by this Supplemental Application without recourse to the Commission for fur-ther action', since that Order authorized sale and leaseback transac-tions by PNM with respect to Unit 1 without limitation as to number or date of consummation.'t is respectfully submitted that the Staff's action in response to this Supplemental Application should be governed by the Commission's Order of December 12, 1985 and the response of the Staff thereto.
- 5. The date restriction which prompts this Supplemental Application was incorporated into the Unit 1 License by Amendment No. 3 thereto.
- 7. Foreign Ownership Considerations A presently identif ied possible Third-Party Equity Investo r, who may acqui re a 1. 7% undivided interest in Unit 1, is a corporation formed under the laws of a State of the United States and is an indirect subsidiary of a United Kingdom corporation, a majority of the stock of which United Kingdom corporation is believed to be held outside the United States of America by non-U.S. citizens.
Such Equity Investor is, therefore, probably "owned",
"controlled" and "dominated" by a foreign corporation within the meaning of Section 103d of the Atomic Energy Act. In Policy Paper SECY-85-367, the Staff took the position that, if 'a licensing requirement were not imposed on the Equity Investors, then the prohi-bition of Section 103d need not be addressed.'n its Order of December 12, 1985, the Commission concurred in the "no license" position. It is respectfully submitted, therefore, that possible foreign control of the presently identified possible Third-Party Equity Investor should not prohibit the license amendment requested by this Supplemental Application. This conclusion is only reinforced by the fact that the proposed transactions, like the December 31, 1985 transactions, do not subject PNM to the will of the- Equity Investors or otherwise give the Equity Investors the power to direct PNM's actions with respect to Unit l.
- 6. Policy Paper SECY-85-367, pp. 9-10< fn. 7.
WHEREPOREi APS requests on behalf of PNM that the Commission grant the relief requested in Section 2 hereof or in such other form and/or subject to conditions in addition to those stated in such Section as the Commission may deem appropriate.
Respectfully submitted, ARIZONA PUBLIC SERVICE COMPANY Edwin E. Van Brunt, Jr.
Executive Vice President-ANPP Dated: February 5, 1986 6091. 50. 2898. 01: 6
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
I, Edwin E. Van Brunt, Jr., represent that I. am the Executive Vice President-ANPP, that the foregoing document has been signed by me on behalf of Arizona Public Service Company with full authority to do so, that I have read such document and know its con-tents, and that to the best of my knowledge and belief, tate-ments made therein are true.
r Edwin E. Van Brunt, Jr.
Sworn before me this 5th day of February, 1986 Notary Public 6091. 50. 2898. 01: 6