ML19113A103
| ML19113A103 | |
| Person / Time | |
|---|---|
| Site: | Maine Yankee |
| Issue date: | 04/23/2019 |
| From: | Matthews T Morgan, Morgan, Lewis & Bockius, LLP |
| To: | Document Control Desk, Office of Nuclear Material Safety and Safeguards |
| References | |
| Download: ML19113A103 (7) | |
Text
DB1/ 103446750.6 Timothy P. Matthews Partner
+1.202.739.5527 timothy.matthews@morganlewis.com Morgan, Lewis & Bockius LLP 1111 Pennsylvania Avenue, NW Washington, DC 20004
+1.202.739.3000 United States
+1.202.739.3001 April 23, 2019 U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, D.C. 20555
Reference:
License No. DPR-36 (Docket No. 50-309, 72-30) (Maine Yankee)
Subject:
Request for NRC Threshold Determination that NRC Consent is Not Required in Connection with Acquisition of Emera Maine by ENMAX Corporation
Dear Sir or Madam:
Emera Maine (Emera Maine) and ENMAX Corporation (ENMAX) (together, the Requesting Parties) hereby notify the Nuclear Regulatory Commission (NRC) of the pending acquisition of Emera Maine by a newly formed subsidiary of ENMAX (the Proposed Transaction). Emera Maine is a 12% minority co-owner of Maine Yankee Atomic Power Company (Maine Yankee), the sole licensee of the above-referenced Independent Spent Fuel Storage Installation (ISFSI). As discussed below, the Proposed Transaction will not result in a direct or indirect change of control over Maine Yankee, the ISFSI or the NRC license for the ISFSI. Accordingly, the Requesting Parties request that the NRC issue a Threshold Determination that NRC consent is not required for the consummation of the Proposed Transaction. The Requesting Parties further request that the NRC issue the Threshold Determination expeditiously, but in any case no later than August 30, 2019.
Transaction Overview On March 24, 2019, Emera Inc. (Emera), the ultimate publicly traded parent of Emera Maine, and ENMAX, through their respective affiliates, entered into a purchase and sale agreement (PSA) to effect the Proposed Transaction. The Proposed Transaction reflects ENMAXs strategy to grow through the expansion of its regulated utility business in North America, leveraging ENMAXs established expertise in the provision of regulated transmission and distribution electricity services. The Proposed Transaction is subject to certain conditions and obtaining regulatory approvals and clearances, including those of the Maine Public Utilities
DB1/ 103446750.6 Page 2 April 23, 2019 Commission (MPUC), the U.S. Federal Energy Regulatory Commission (FERC), the Federal Trade Commission (FTC) pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, and the Committee on Foreign Investment in the United States (CFIUS). The Proposed Transaction is anticipated to close in the fourth quarter of 2019.
About ENMAX ENMAX is headquartered in Calgary, Alberta, Canada, and a wholly owned corporate subsidiary of the City of Calgary. Through its subsidiaries, ENMAX generates, transmits, distributes and sells electricity to residential, small business and large commercial customers with approximately $5.6 billion CAD in assets and revenues of $2.4 billion CAD in 2018. ENMAX operates through two main business segments, ENMAX Competitive Energy and ENMAX Power. ENMAX Competitive Energy includes the competitive generation and sale of electricity.
ENMAX Power owns and operates electric transmission and distribution infrastructure. Through its subsidiaries, ENMAX offers a range of innovative energy solutions to over 669,000 customers across Alberta including electricity, natural gas, renewable energy and other services.
Maine Yankee Ownership and Governance Maine Yankee holds a possession-only license from the NRC for an ISFSI located in Wiscasset, Maine. Maine Yankee is the direct owner and operator and is the sole NRC licensee for the facility. The nuclear electric generating plant formerly located at the site has been fully decommissioned, with such decommissioning completed in 2005.
Maine Yankee is governed by its Board of Directors. Each shareholder of Maine Yankee owning up to a 15% interest is entitled to appoint one (1) member of the Board, and shareholders owning an interest of 15% or more are entitled to appoint up to three (3) members of the Board.
More specifically, Article V of Maine Yankee's Amended and Restated By-laws, adopted June 13, 2006, and effective July 1, 2006, includes the following provision:
The number of directors shall consist of such number of directors as are appointed by the shareholders in accordance with this Article V. Each shareholder shall be entitled to appoint to the Board of Directors as provided in this Article V, (a) one (1) director, in the case of a shareholder holding less than fifteen percent (15%) of the outstanding shares of common stock of the Corporation, or (b) up to three (3) directors, at such shareholder's option, in the case of a shareholder holding fifteen percent (15%) or more of the outstanding shares of common stock of the Corporation.
The ownership and number of authorized directors of each Maine Yankee shareholder is as shown in Table 1, below.
DB1/ 103446750.6 Page 3 April 23, 2019 Table 1 Participant Ownership Percentage Authorized Directors Emera Maine 12 1
Central Maine Power Company 38 3
New England Power Company 24 3
The Connecticut Light & Power Company 12 1
NSTAR Electric Company 7
1 Public Service Company of New Hampshire 5
1 Green Mountain Power Corporation 2
1 Denotes wholly owned subsidiary of Eversource Energy.
Discussion Pursuant to the PSA, a wholly owned indirect special purpose subsidiary of ENMAX, 3456, Inc.,
agreed to acquire 100% of Emera US Holdings Inc.s interests in BHE Holdings Inc., the immediate parent company of Emera Maine. Appendices A and B depict simplified organizational diagrams of the ownership of Maine Yankee prior to and following the Proposed Transaction, respectively. Following the acquisition, Emera Maine1 will remain a 12% minority co-owner of Maine Yankee and will continue to be authorized to appoint one member of the Maine Yankee Board. At present, Emera and ENMAX expect that the current director of Maine Yankee appointed by Emera Maine will remain as the director appointee of Emera Maine following consummation of the Proposed Transaction.
The Proposed Transaction will not affect Emera Maines financial obligations with respect to Maine Yankee and the ISFSI. Nor will it affect Maine Yankees operation and maintenance of the ISFSI.
The Proposed Transaction does not involve the transfer of control, either direct or indirect, of the licensee (Maine Yankee) or the NRC license for the ISFSI. Accordingly, consistent with NRC precedent, NRC approval of the transaction should not be necessary. The NRC has concluded that transactions similar to the Proposed Transaction that involve only transfers of ownership of the minority shareholders of Maine Yankee do not trigger direct or indirect transfers of control for which NRC consent under Section 184 of the Atomic Energy Act and 10 CFR Section 50.80 are required.
For example, in 2000 the NRC issued a threshold determination that the acquisition of New England Electric System (NEES) by U.K. company National Grid Group plc, including NEES subsidiary New England Power Companys 24 % ownership of Maine Yankee, did not result in a 1 Emera Maine may be renamed following the Proposed Transaction.
DB1/ 103446750.6 Page 4 April 23, 2019 transfer of control over Maine Yankee.2 Similarly, in 2008, the NRC concluded that the acquisition by a subsidiary of Spanish parent Iberdrola, S.A. of ownership of Central Maine Power Company and its 38% interest in Maine Yankee did not require NRC prior written consent.3 Further, In 2010 the NRC concluded that the combination of the ownership of the 5% interest of Maine Yankee then held by Maine Public Service Company, together with the 7% interest then held by Bangor Hydro Electric Company under the common ownership of BHE Holdings Inc. (a subsidiary of Canadian company Emera) did not involve a transfer of control, direct or indirect, of the licenses held by Maine Yankee.4 And, in 2013, when BHE Holdings sought to merge those two subsidiaries, forming what is today Emera Maine, the NRC concluded that no prior written consent was required for that transaction either.5 The same 12% interest that was involved in the 2010 and 2013 transactions is now the subject of the immediate request. As a result, the same regulatory conclusion reached in 2010 and 2013 should apply to the Proposed Transaction which (i) involves only the transfer of upstream ownership of a Maine Yankee shareholder from one Canadian parent to another, and (ii) does not otherwise have an effect on the operations of Maine Yankee or the ISFSI operated by Maine Yankee pursuant to its NRC license.
Request Emera and ENMAX desire to consummate the Proposed Transaction as soon as all required regulatory approvals and rulings are received and/or waiting periods have expired. The Proposed Transaction is subject to approval or clearances by the MPUC, FERC, FTC and CFIUS. The Requesting Parties respectfully request a letter from the NRC staff confirming that there is no need to obtain NRC consent prior to August 30, 2019.
2 Letter from S. Collins (NRC) to P. Robinson (Hopkins & Sutter) re: Review of Direct and Indirect Transfer of Ownership Interests (Feb. 24, 2000) (ML003685187).
3 Letter from L. Chang (NRC) to C. McCarthy (Leboeuf, Lamb) re: Indirect Transfer of U.S. NRC License Nos.
DPR-3, SFGL-13, DPR-36, SFGL-14, DPR-61 and SFGL-16) (Feb. 21, 2008) (ML080140289). See also request to J. Dyer (NRC) (Aug. 7, 2007) (ML072210249).
4 Letter from J. Goshen (NRC) to J. Connell (Maine Yankee) re: Maine Yankee Application for NRC Consent to Indirect Transfer and accompanying Safety Evaluation Report (Oct. 26, 2010) (ML103000097).
5 Letter from J. Goshen (NRC) to J. Connell (Maine Yankee), re: Maine Yankee Atomic Power Company -
Threshold Determination of Indirect License Transfer Due to Proposed Merger of Maine Public Service Company and Bangor Hydro Electric Company and accompanying Safety Evaluation Report (Oct. 8, 2013) (ML13281A936).
See also, Letter from A. Domby (Troutman Sanders) to B. Mizuno (NRC) (May 6, 2013) (ML13180A027).
DB1/ 103446750.6 Page 5 April 23, 2019 If you have any questions or require additional information, please contact me.
Sincerely,
/Signed Electronically by Timothy P. Matthews/
Timothy P. Matthews cc:
Anita Ghosh Naber, Esq (NRC Office of General Counsel)
Robert W. Warnament, Esq (Counsel to Emera Maine)
Joe Fay, Esq (Counsel to Maine Yankee)
DB1/ 103446750.6 Page 6 April 23, 2019 Appendix A - Current Ownership Simplified Diagram Emera US Holdings Inc.
Delaware BHE Holdings Inc.
Delaware Emera Inc.
Nova Scotia Emera Maine Maine Maine Yankee (NRC Licensee) 12%
DB1/ 103446750.6 Page 7 April 23, 2019 Appendix B - Post Acquisition Ownership Simplified Diagram 2181206 Alberta Ltd.
Alberta BHE Holdings Inc.
Delaware ENMAX Corporation Alberta Emera Maine Maine Maine Yankee (NRC Licensee) 12%
ISFSI City of Calgary 3456, Inc.
Delaware Shading indicates entity acquired in the Proposed Transaction