ML18057A241

Forwards Revised Application to Amend License DPR-20, Consisting of Revised Attachments 1 & 5 to 890227 Amend Request,Reflecting Transfer of Plant Ownership

ML18057A241
Person / Time
Site:	Palisades
Issue date:	05/24/1990
From:	Hoffman D CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.)
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
Shared Package
ML18057A242	List: ML18057A241 ML18057A243
References
TAC-72245, NUDOCS 9005310093
Download: ML18057A241 (2)

Text

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-Power-- - David P Hoffman Vice President

/POWERiNii Nuclear Operations MICHlliAN"S IPROliRESS General Offices: 1946 West Parnall Road, Jackson, Ml 49201 * (617) 788-0463 May 24, 1990 Nuclear Regulatory Commission Document Control Desk Washington, DC 20555 DOCKET 50-255 - LICENSE DPR PALISADES PLANT -

LICENSE CHANGE REQUEST - TRANSFER OF PALISADES PLANT OWNERSHIP (TAC NO 72245)

Consumers Power Company (CPC) letter dated February 27, 1989 requested that Ope~ating License DPR-20, be amended to reflect the transfer of ownership of the Palisades Plant from CPC *to Palisades Generating Company (PGC). Attachment 1 to that letter describes the proposed transfer of ownership and supported the conclusion that PGC is qualified to be the licensed owner and that the transfer will be consistent with applicable law, regulations and NRC orders;

'Attachment 2 contained the proposed changed license pages; Attachment 3 was a copy of the Asset Purchase Agreement between CPC and PGC; Attachment 4 was a copy of the Power Purchase Agreement as executed by CPC_ and PGC; and Attachment 5 contain~d a Statement of Estimated Sources -and Applications of Funds for the years of plant life* following the transfer.

CPC letter dated April 6, 1989 submitted minor corrections to our February 27,

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Enclosures 1, 2 and 3 to this letter contain revised versions of Attachments 1 and 5 to our February 27, 1989 letter as well as Amendment 1 to the Power Purchase Agreement provided as Attachment 4 to our February 27, 1989 letter.

The changes to the prior submittals are marked with hash marks in the right margin. Enclosure 3, Amendment 1 to the Power Purchase Agreement between CPC and PGC, does not include the PC computer diskette which contains the model for determining the capacity charges but does include Attachments 2 and 3 thereto, which are printouts showing the capacity charges calculated by the model under certain assumptions.

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Nuclear Regulatory Commission 2 Palisades Nuclear Plant License Change Request - Transfer of Ownership The revisions to the Attachments to the February 27, 1989 letter are necessary for several reasons. First, they reflect a change in the rates and method utilized to calculate depreciation prior to the closing date under the Power Purchase Agreement, which were in error. The error in the depreciation rates and method resulted in undervaluing the assumed book value of the plant at closing for purposes of calculating capacity charges. Amendment 1 to the Power Purchase Agreement (Enclosure 3) provides a method of calculating capacity charges to correct for the change in the assumed book value of the plant at closing and to thereby allow PGC to recover its investment. Second, the revisions are necessary because CPC will replace the Palisades steam generators before transferring ownership of the Palisades Plant to PGC. As a result, the purchase price, debt costs, and the estimates of the capital and O&M expenditures expected after closing have changed. Because of these changes, as shown in the revised pro forma statements of sources and applica-tions of funds (Enclosure 2), the rates under the Power Purchase Agreement no longer permit recovery of all costs if the plant achieves an average capacity factor of only 55%. They will, however, allow recovery of all costs plus some return on investment if the plant achieves an average capacity factor of 56%,

as shown in the new pro forma statement included for the 56% case.

As discussed with t_he NRC staff during the May 16, 1990 meeting at the NRC offices in White Flint, we would appreciate identification of any ~urther information that the NRC needs for its review of our Application. Our project plan would be furthered if the NRC would issue its conditional approval of this license change by September 30, 1990 and final approval by December 31, 1990.

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David P Hof~m~n~

Vice President

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CC Administrator, Region III, USNRC NRC Resident Inspector - Palisades Attachments OC1189-0026-NL02