ML18102B007
| ML18102B007 | |
| Person / Time | |
|---|---|
| Site: | Peach Bottom, Salem  |
| Issue date: | 04/30/1997 |
| From: | Franklin J ATLANTIC CITY ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML18102B006 | List: |
| References | |
| NUDOCS 9705020080 | |
| Download: ML18102B007 (14) | |
Text
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- April 30, 1997 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of Atlantic City Electric Company
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and Delmarva Power & Light Company
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Salem Nuclear Generating Station
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Units 1 and 2
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Peach Bottom Atomic Power Station
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Units 2 and 3
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Docket Nos. 50-272, 50-311, 50-277 and 50-278 APPLICATION FOR TRANSFER OF CONTROL REGARDING OPERATING LICENSES NOS. DPR-70 AND DPR-75 FOR THE SALEM NUCLEAR GENERATING STATION AND OPERATING LICENSES NOS. DPR-44 AND DPR-56 FOR THE PEACH BOTTOM ATOMIC POWER STATION INTRODUCTION AND BACKGROUND Atlantic City Electric Company t/a Atlantic Electric ("ACE"), Delmarva Power & Light Company ("DP&L"), Public Service Electric & Gas Company ("PSE&G") and PECO Energy Company ("PECO") are the holders of Facility Operating License No. DPR-70 dated August 13, 1976 ("Operating License DPR-70"). Operating License DPR-70 authorizes the holders to possess the Salem Nuclear Generating Station Unit 1 ("Salem Unit 1 ")and authorizes PSE&G to use and operate Salem Unit 1 in accordance with the procedures and limitations set forth in the Operating License.
ACE, DP&L, PSE&G and PECO are the holders of Facility Operating License No. DPR-75, dated May 20, 1981 ("Operating License DPR-75"). Operating License DPR-75 9705020080 970430 PDR ADOCK 05000272 p
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authorizes the holders to possess the Salem Nuclear Generating Station Unit 2 ("Salem Unit 2")
and authorizes PSE&G to use and operate Salem Unit 2 in accordance with the procedures and limitations set forth in the Operating License.
ACE, DP&L, PSE&G and PECO are the holders of Facility Operating License No. DPR-44, dated December 14, 1973 ("Operating License DPR-44"). Operating License No. DPR-44 authorizes the holders to possess the Peach Bottom Atomic Power Station Unit 2
("Peach Bottom Unit 2") and authorizes PECO to use and operate Peach Bottom Unit 2 in accordance with the procedures and limitations set forth in the Operating License.
ACE, DP&L, PSE&G and PECO are the holders of Facility Operating License No. DPR-56, dated July 2, 1974 ("Operating License DPR-56"). Operating License No. DPR-56 authorizes the holders to possess the Peach Bottom Atomic Power Station Unit 3 ("Peach Bottom Unit 3 ") and authorizes PECO to use and operate Peach Bottom Unit 3 in accordance with the procedures and limitations set forth in the Operating License.
The respective percentage ownership interests of ACE, DP&L and each of the other license holders in the licensed units hereinabove referred to are as follows:
Salem Unit 1-DPR-70 Salem Unit 2-DPR-75 Peach Bottom Unit 2-DPR-44 Peach Bottom Unit 3-DPR-56 ACE(%)
7.41 7.41 7.51 7.51 DP&L (%)
PSE&G(%)
PECO(%)
7.41 42.59 42.59 7.41 42.59 42.59 7.51 42.49 42.49 7.51 42.49 42.49 2
This Application is submitted in support of a request for the consent of the Nuclear Regulatory Commission ("NRC") in accordance with 10 C.F.R. §50.80 to the indirect transfers of control of interests in the above-captioned Operating Licenses which will occur as a result of a proposed merger of Atlantic Energy, Inc. ("AEI"), of which ACE is a wholly owned subsidiary, and DP&L (the "Merger"). The Merger will result in the indirect transfer of control of the interests held by ACE and DP&L as licensees, through the creation of a new holding company, Conectiv, Inc. ("Conectiv") to be formed through the Merger. A copy of the Joint Proxy Statement and Prospectus is filed with this Application as Exhibit A and includes, as an exhibit, "The Agreement and Plan of Merger, Dated as of August 9, 1996 as Amended and Restated as of December 26, 1996 by and among Delmarva Power & Light Company, Atlantic Energy, Inc.,
Conectiv, Inc. and DS Sub., Inc." (the "Merger Agreement").
Conectiv will be a registered holding company under the Public Utility Holding Company Act of 1935 ("PUHCA"), and will become the sole owner of all issued and outstanding shares of common stock of ACE and DP&L. Both ACE and DP&L will be direct subsidiaries of Conectiv. The additional direct subsidiaries of Conectiv will include a service company and a company(ies) engaged in non-utility activities.
As a result of the Merger, ACE and DP&L expect to achieve cost savings and efficiencies, principally through the elimination of duplicative activities, increased scale and improved purchasing power, reducing the operating costs of ACE and DP&L to the benefit of their customers, shareholders and the communities they serve. By roughly doubling the market capitalization of Conectiv, compared to that of the individual companies (ACE and DP&L), the 3
Merger should also improve both the overall credit quality of the merged company and the liquidity of its securities. Conectiv' s ability to fund continued growth at lower costs will enhance the financial resources of DP&L and ACE to possess their respective interests in the applicable nuclear generating plants.
The Merger will have no adverse effect on either the technical management or operation of the Peach Bottom or Salem nuclear generating plants. In each instance, PSE&G or PECO --
neither of which is involved in the Merger -- will remain responsible for the operation and maintenance of the respective plants for which they currently have operating responsibility.
Therefore, the Merger cannot affect the technical qualifications of the responsible operating entities.
The Operating Licenses for the units which are subject of this Application were issued pursuant to Section 104(b) of the Atomic Energy Act. Consequently, the NRC has no antitrust jurisdiction with respect to those units. Notwithstanding the lack of jurisdiction by the NRC, the antitrust implications of the proposed Merger, and the competitive aspects thereof, will be considered by other federal agencies reviewing the Merger, including the Federal Energy Regulatory Commission ("FERC"), the Securities and Exchange Commission ("SEC"), the U.S.
Department of Justice ("DOJ") and the Federal Trade Commission ("FTC").
Part I below sets forth the information required by 10 C.F.R. §50.80 with respect to the proposed transfers. Part II discusses the effective date for the license transfers.
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PART I. - INFORMATION FOR TRANSFERS OF CONTROL A.
General Information Regarding Organization and Management of the Merged Company At the effective time of the Merger, the Merger Agreement contemplates that the members of the Board of Directors ofDP&L will be entitled to nominate ten (10) members to serve on the Board of Directors of Conectiv, and the AEI Board will be entitled to nominate eight (8) members. The Conectiv Board will be divided into three (3) classes so that each class, to the extent possible, has the same proportion of directors nominated by each of the DP&L and AEI Boards. The Merger Agreement further provides that at the consummation of the Merger, Howard E. Cosgrove (Chairman of the Board, President and Chief Executive Officer ofDP&L) will be the Chief Executive Office and Chairman of the Board of Conectiv. Jerrold L. Jacobs (Chairman and Chief Executive Officer of AEI) will retire from active employment with AEI after the consummation of the Merger and will serve as Vice Chairman of the Board of Conectiv until the second anniversary of the consummation of the Merger.
B.
General Information Concerning Atlantic City Electric Company t/a Atlantic Electric
- 1.
Name and Address Atlantic City Electric Company t/a Atlantic Electric 6801 Black Horse Pike Egg Harbor Township, New Jersey 08234-4130 5
- 2.
Description of Business ACE is a wholly owned subsidiary of AEI, an exempt holding company under PUHCA, whose stock is publicly held. Following the Merger, ACE will be a wholly owned subsidiary of Conectiv. Its purpose will remain the same as it is now, which is to engage principally in the generation, transmission, distribution and sale of electric energy in the southern portion of the State of New Jersey to residential, commercial and industrial customers for their own use, and in New Jersey and elsewhere to wholesale customers for resale.
- 3.
Organization and Management ACE is - and after the Merger will remain - a corporation organized and existing under the laws of the State of New Jersey. All of ACE's directors and principal officers are citizens of the United States. All of the directors and principal officers of AEI are also citizens of the United States.
Following the proposed Merger, ACE will not be owned, controlled or dominated by an alien, foreign corporation or foreign government. ACE is not acting as an agent or representative of any other person in this request for consent to the indirect transfer of control of the licenses.
C.
General Information Concerning Delmarva Power & Light Company
- 1.
Name and Address Delmarva Power & Light Company 800 King Street P.O. Box231 6
Wilmington, Delaware 19899
- 2.
Description of Business Following the Merger, DP&L will be a wholly owned subsidiary of Conectiv. Its business operations will generally remain the same as they are now, i.e., engaging principally in the generation, transmission, distribution and sale of electric energy on the Delmarva peninsula in Delaware, Maryland and Virginia; and the distribution and sale of gas energy in New Castle County, Delaware. The sales will be to residential, commercial and industrial customers for their own use, and in Delaware, Maryland, Virginia and elsewhere, to wholesale customers for resale.
- 3.
Organization and Management DP&L is - and after the Merger will remain - a corporation organized and existing under the laws of the State of Delaware and the Commonwealth of Virginia. All ofDP&L's directors and principal officers are citizens of the United States. Following the proposed Merger, DP&L will not be owned, controlled or dominated by an alien, foreign corporation or foreign government. Moreover, DP&L is not acting as an agent or representative of any other person in this request for consent to the indirect transfer of control of the licenses.
D.
Technical Qualifications The proposed Merger involves no change to either the management organization or technical personnel of PSE&G, the entity responsible for operating and maintaining the Salem Nuclear Generating Station Units 1 and 2. PSE&G is not involved in the Merger. Therefore, the 7
technical qualifications of PSE&G to carry out its responsibilities under the Operating Licenses remain unchanged, and will not be adversely affected by the proposed Merger.
Likewise, the proposed Merger involves no change to either the management organization or technical personnel of PECO, the entity responsible for operating and maintaining the Peach Bottom Atomic Power Station Units 2 and 3. PECO is not involved in the Merger. Therefore, the technical qualifications of PECO to carry out its responsibilities under the Operating Licenses remain unchanged, and will not be adversely affected by the proposed Merger.
E.
Financial Qualifications ACE and DP&L are - and after the Merger will remain - electric utilities within the definition set out in 10 C.F.R. §50.2. Each company provides electric service on a retail and wholesale basis. DP&L also provides gas service on a retail and wholesale basis. After the proposed Merger, ACE will continue to generate and distribute electricity and recover the cost of the electricity through rates authorized by the New Jersey Board of Public Utilities ("NJBPU")
and by the FERC. Therefore, ACE will continue to meet the definition of an "electric utility" set forth in 10 C.F.R. §50.2.
After the proposed Merger, DP&L will also continue to generate and distribute electricity and recover the cost of this electricity through rates authorized by the Delaware Public Service Commission, the Maryland Public Service Commission, the State Corporation Commission of Virginia and the FERC. DP&L will therefore continue to meet the definition of an "electric utility" as set forth in the regulations.
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Thus, the financial qualifications of ACE and DP&L are presumed by 10 C.F.R.
§50.33(+/-), and no specific demonstration of financial qualifications is required.
F.
Decommissioning NRC regulations require information showing "reasonable assurance... that funds will be available to decommission the facility." 10 C.F.R. §50.33(k). ACE and DP&L have each filed decommissioning reports with the NRC under 10 C.F.R. §50.75(b) and are providing financial assurance for decommissioning their respective ownership interests in each of the above-captioned plants in accordance with those reports through external nuclear decommissioning trusts in which deposits are made at least annually. After the Merger, ACE and DP&L will remain responsible for the decommissioning liabilities associated with their respective ownership interests in the above-captioned nuclear generating plants, and will continue to fund their respective decommissioning trusts in accordance with NRC regulations.
G.
Antitrust Considerations Operating Licenses DPR-44, DPR-56, DPR-70 and DPR-75 were each issued under Section 104(b) of the Atomic Energy Act. As such, the units which are subject of this Application are not subject to antitrust review by the NRC. However, competitive aspects of the Merger, including antitrust considerations associated therewith, will be reviewed by other federal agencies including the FERC, the SEC, the DOJ and the FTC.
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H.
Statement of Purposes for the Transfer and the Nature of the Transaction Necessitating or Making the License Transfer Desirable The purpose of the proposed Merger is to achieve benefits for the shareholders, customers and communities served by ACE and DP&L that would otherwise not be achievable if they were to remain as separate companies. The expected savings related to the Merger are approximately
$500 million over the next ten years (1998 to 2007). The savings will come principally from elimination of duplicative activities, increased scale, improved purchasing power, improved operating efficiencies, lower capital costs and, to the extent practicable, by combining the companies' work forces.
I.
Restricted Data This application does not contain any Restricted Data or other classified defense information, and it is not expected that any such data will become involved in the licensed activities. However, in the event such information should become involved, ACE and DP&L agree that they will safeguard such information and will not permit any person to have access to Restricted Data until the Office of Personnel Management (as successor to the Civil Service Commission) shall have made an investigation and reported to the NRC on the character, associations and loyalty of such person, and the NRC shall have determined that permitting such person to have access to Restricted Data will not endanger the common defense and security of the United States.
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J.
No Environmental Impact The Merger does not involve any change to the nuclear plant operations or equipment and does not change any environmental impact previously evaluated in the Final Environmental Statement of each of the subject plants. Accordingly, no environmental impact is associated with this Application or the consequences of the Merger.
PART II. -EFFECTIVE DATE The proposed Merger of AEI and DP&L is subject to the Hart-Scott-Rodino Antitrust Improvements Act of 197 6, as amended, and requires the approval of other federal regulatory authorities as described above. Transfer upon ACE's books and records of all of the issued and outstanding shares of its common stock which will result in the change of ownership or control of ACE is also subject to review and approval by the NJBPU. The transfer ofDP&L's stock will similarly be subject to review and approval by the Delaware Public Service Commission, the Virginia State Corporation Commission and, in limited fashion, by the Maryland Public Service Commission. The approval of the Pennsylvania Public Utilities Commission will also be requested with respect to the limited issue of transfer of jointly-owned production and transmission facilities located in that Commonwealth. Approval of the Merger has been obtained from the shareholders of both AEI and DP &L at a Special Meeting of Shareholders of each of the companies held for that purpose on January 30, 1997.
Until all such approvals have been obtained, the Merger cannot be consummated. AEI and DP&L intend to consummate the Merger as soon as practicable following receipt of all 11
necessary approvals. The projected closing date of the Merger is December 31, 1997. Therefore, the NRC is requested to review this Application on a schedule that will permit it to act on and provide its final consent to the proposed indirect transfers of control that would be effectuated by the Merger as promptly as possible, and in any event not later than September 30, 1997.
CONCLUSION For the foregoing reasons, the NRC is requested to consent to the indirect transfers of control of the interests held by ACE and DP&L in Operating Licenses Nos. DPR-70 and DPR-75 for the Salem Nuclear Generating Station Units and Operating Licenses Nos. DPR-44 and DPR-56 for the Peach Bottom Atomic Power Station Units that would result from the Merger.
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CERTIFICATION I, JAMES E. FRANKLIN II, being duly sworn, state that:
(1)
I am Senior Vice President, Secretary and General Counsel of Atlantic City Electric Company; (2)
I am duly authoriz.ed to execut.e and file this certification on behalf of Atlantic City Electric Company; and (3)
The statements set forth in the attached application are true and* correct to the best of my information, knowledge and belief.
SWORN and subscribed to before me this 30th day of Ap~ 1997.
PAULA MARGARltf JAt/IES NOTARY PUBLIC Of Ntw'JERSEY MY COMMISSION EXPIRES FEB. 23, 1998
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CERTIFICATION I, DALE G. STOODLEY, being duly sworn, state that:
(1)
I am Vice President and General Counsel of Delmarva Power & Light Company; (2)
I am duly authorized to execute and file this certification on behalf of Delmarva Power & Light Company; and (3)
The statements set forth in the attached application are true and correct to the best of my information, knowledge and belief.
SWORN and subscribed to before me this 29th day of April, 1997.
~/.~
JOSEPHINE S. GRAVES Notary Public -
State of Delaware My Commission Expires February 6, 1998
~)/6 ~-
DALE G. STOODLEY 1