ML19199A680
| ML19199A680 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 11/20/1976 |
| From: | Skovholt D Office of Nuclear Reactor Regulation |
| To: | Varga S Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 7905070261 | |
| Download: ML19199A680 (6) | |
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NRR Reading File TMNoonan FIN Reading File Docket No. 50-320 Subject File DJSkovholt JCPetersen MEMORANDUM FOR: Steven A. Yarga, Chief, Light Water Reactors Branch No. 4, DPti FRCM:
Donald J. Skovholt, Assistant Director for Quality Assurance and Operations, DPit
SUBJECT:
METRCPOLITAN EDISON COMPANY, JERSEY CENTRAL PCHER AND LIGHT COMPANY, PENNSYLVANIA ELECTRIC COMPANY:
THREE MILE ISLAND NUCLEAR STATION, UNIT NO. 2 Enclosed is an analysis prepared by Tom Noonan of my staff regarding Metropolitan Edison Company's, Jersey Central Power and Light Company's, and Pennsylvania Electric Company's financial qualifications to operate and, if r.ecessary, shut down and safely maintain the subject facility.
The analysis is intended for ir.clusion in a Supplement to the SER.
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Donald J. Skovholt Assistant Director for Quality Assurance and Operations Division of Project Management
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FINANCIAL CUALIFICAT10NS Introduction The Nuclear Regulatory Comission's regulations relating to the detemina-tion of an applicant's financial qualifications for a facility operating license appear in Paragraph 50.33(f) and Appendix C to 10 CFR Part 50.
In accordance with these regulations, Metropolitan Edison Company (Met Ed),
Jersey Central Power & Light Company (JCP& ), and Pennsylvania Electric L
Company (Penelec) supplied operating and shutdown cost estimates for the Three Mile Island Nuclear Station, Unit No.
2, as well as providing ad-ditional fi incial infomation.
The follcwing analysis sumarizes cur review of this financial infomation and addresses each applicant's finan-cial qualifications to operate and, if necessary, to pemanently shut down and safely maistTin the subject facility.
Metropolitan Edison Company, Jersey Central Pcwer & Light Comp?ny, and Pennsylvania Electric Ccmpany, each of which is a wholly-owned subsidiary of
- eral Public Utilities Corporation, supply electricity to approximately 1.5 million customers over a 24,000 square mile service area in Pennsylvania and New Jersey. Recent financial infomation for each of the applicants, for the 12 months ended June 30, 1976, is presented in Table I.
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. TABLE I Met Ed JCP&L Penelec Revenues (millions)
$ 259.J
$ 444.4
$ 330.0 Net Income (millions)
$ 48.0 5 53.8
$ 50.7 Total Capitalization (millions)
$ 979.4
$1,367.0
$1,095.9 Band Rating (Moody's /S & P's)
A/A Baa/BBB+
A/BBB Met Ed will receive a 50% share in the output from the Three Mile Island 2 facility, with JCP&L and Penelec each receiving a one-quarter interest in the plant's output.
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Estimated Oceratina and Shutdown Costs For the purpose of estimating the unit's annual cost, the ap;'licant assumed January 1978 as the startup date for commercial operation of the facility.
Met Ed's, JCP&L's, and Penelec's estima+.e of the total annual cost of operating the unit during each of the first five years of operation is presented in Table II. The unit costs (mills per k'dh) are based on a net electrical capac-ity of 9C6 MWe.
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. Table II Plant Operating Cost Estimate Mills /
Capacity (thousar.Js )
kWh 1978 65%
$ '62,865 31.6 1979 56%
162,072 36.5 1980 64%
161,106 31.7 1981 67%
158,460 29.8 1982 71%
157,764 23.0 In estimating the costs of permanently shutting down the facility, the ap-plicants considered three alternatives: dismantling, entombment, and mothballing. Dismantling the unit, which involves removing all fuel as-semblies, radioactive fluids and waste, and other materials having radio-active activities above unrestricted activity levels, is estimated to cost approximately 5117 million.
Expenditures for entombment are projected to be $45 million initially, with an annual surveillance expense of $68,000 ther.>fter.
Entombment consists of sealing all remaining highly radio-active comp]nents within a biologically secure structure after having removed all fuel assemblies and radioactive fluids and waste. The estimated expense of putting the Three Mile Island 2 facility in a state of protective storage, or mothballing the unit, is $6.8 million, with an additional expenditure of
$200,010 annually for radiation monitorin'g, environmental surveillance, and appropriate security procedures. All decommissioning costs are stated in 1975 dollars.
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4-Source of Funds Met Ed, JCP&L, and Penelec expect to cover all operating expenses, including taxes, and interest payments through revenues generated from their system-wide sales of electricity. The applicants have consistently exhibited the ability to cover all operating expenses as evidenced by the revenue to expense ratic presented in Table III.
The Staff assumes that shutdcwn and subsequent maintenance costs will either be expensed-in the year incurred or amortized over a period of years, depending on the rate-ma.ing policy of the regulatory authorities.
Table III Ratio of Operating Revenue to Ooeratina and Interest Excenses Met Ed JCp&L Penelec 1975 1.24 1.15 1.19 1974 1.26 1.21 1.19 1973 1.26 1.23 1.24 1972 1.26 1.27 1.20 1971 1.22 1.21 1.23 1966-1970 1.19 1.23 1.27 (average)
During 1975, Met Ed, JCP&L, and Penelec sold electricity for an average unit price (mfils/kWh) of 37.3, 39.9, and 32.4 respectively. Even cu
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' Vthout applying a growth factor to these icH5 prices, they are still significantly above the 1978 estie,a:
iit cost of genecating electricity frca the Three Mile Island 2 facility (Table II).
Conclusion In accordance with the regulations cited above, thare must be reason-able assurance that the applicants can obtain the recessary funds to cover the estimated costs of the activities contemplated under the license. Ecsed on our analysis, we have concluded that Metrn olitan Edison Company, Jersey Central Power and Light Company, and Pennsyl-vania Electric Company satisfy this reasonable cssurance standard and, therefore, are ficancially qualified to operate and, if necessary, shut down and safely maintain the Three Mile Island Nuclear Station Unit No. 2.
Cur conclusion is supported by the following factors as discussed above:
(1) the applicants' ability to earn revenues sufficient to cover all operating expenses, including interest payments and taxes; and (2) the projected output of lower unit cost electricity from this facility, as compared with the utilities' present average price of electricity.
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