ML19210D926
| ML19210D926 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 11/16/1979 |
| From: | Harold Denton Office of Nuclear Reactor Regulation |
| To: | |
| Shared Package | |
| ML19210D923 | List: |
| References | |
| DD-79-20, NUDOCS 7911280551 | |
| Download: ML19210D926 (22) | |
Text
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DC-79-20 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION OFFICE OF NUCLEAR REACTOR REGULATION HAROLD R. DENTON, DIRECTOR In the Matter of
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PUBLIC SERVICE COMPAN'i 6F
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Dockes Nos. 50-443 ) 10 CFR 2.206 NEW HAMPSHIRE, et al.
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50-444 )
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(Seabrook Station, Units 1
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Construction Permit Nos. CPPR-135 and 2)
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CPPR-136 DIRECTOR'S DECISION UNDER 10 CFR 2.206 By petition dated March 12, 1979, the Seacoast Anti-Po11utfor League (SAPL) requested that the Director of Nuclear Reactor legulation (NRR) issue an order to show cause why construction permit Nos. CPPR-135 and CPPR-136 for the Seabrook Station should not be suspended or revoked.
SAPL bases its request on its assertions that:
1)
There is a conceded lack of financial qualifications on the part of the lead applicant, Public Service Company of New Hampshire (PSNH or the Company); and 4
2)
There is a lack of financial qualifications review of other companies whose participation is being sought by PSNH at t i time
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7911280
. Notice of receipt of SAPL's petition was published in the Federal Reaister 44 Fed. Reg. 20827 (April 6, 1979).
On July 30, 1979, the New England Coalition on Nuclear Pollution (NECNP) filed a memorandum joining in support of SAPL's petition.
NECNP also alleged that, in light of changed circumstances, "there is no basis for the Commission's finding that it has ' reasonable assurance' that PSNH is financially qualified." SAPL's petition and NECNP's supporting memorandum have been considered under 10 CFR 2.206 of the Commission's regulations.M In order to evaluate SAPL's petition and as part of its own review of PSNH's financial qualifications, the NRR Staff on March 21, 1979 requested pursuant to 10 CFR 50.54(f) and Section IV of Appendix C to 10 CFR Part 50 that PSNH provide the staff additional information concerning the ability of PSNH to finance its share of the construction of Seabrook.
PSNH answered this request on April 19, 1979.
Since making its original request, the NRR Staff has sought additional information from PSNH.2_/
Under the authority of Section 182(a) of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2232(a), the Commission promulgated 10 CFR 50.33(f) and Appendix C to Part 50, its regulations covering financial qualifications requirements for production and utilization facility applicants and licensees.
1435
?26 M
In letters dated May 4, 1979 and October 2, 1979, SAPL provided additional argument and information in support of its request to suspend the construc-tion permits.
In a letter dated March 2G, 1979, the Commonwealth of Massachusetts Attorney General's Office urged the Staff to reinvestigate the financial qualifications of PSNH to build Seabrook.
M The Staff requested additional information from PSNH in letters dated May 23, July 17 and September 25, 1979.
PSNH responded to the Staff's requests in letters dated April 27 June 22, August 6, 8, 13, 15, 16 and 20, September 6, 12, 17 and 27, and October 10 and 16, 1979.
. As SAPL and NECNP correctly note, the criteria for a determination as to an applicant's or licensee's financial qualifications to undertake or continue a licensed activity are found in the Commission's decision in Public Service Company of New Hampshire, et al. (Seabrook Station, Units 1 and 2), 7 NRC 1 (1978)
(hereinafter cited as Seabrook). ! The United States Court of Appeals for the First Circuit affirmed the Commission's decision in New England Coalition on Nuclear Pollution v. NRC, 582 F.2d 87 (1st Cir.1978).
The Commission's decision essentially upheld the Staff's application / of the substantive 4
5 in standards contained in 10 CFR 50.33(f) and Appendix C to 10 CFR Part 50 the Seabrook construction permit proceeding.
The Commission had interpreted
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The Staff acknowledges the Commission's request in Seabrook, at 23, that the Staff and the licensee report to the Commission regarding (1) rate orders of the New Hampshire Public Utilities Commission and any resultant changes in PSNH's financial planning, and (2) disposition of the Seabrook ownership interests of Connecticut Light and Power Company (CLP) and United Illuminating Company (UI).
PSNH's submittals to the Staff and this decision respond to the Commission's request.
As noted in footnote 9, infra, the Staff approved the transfer of CLP's ownership interest to other utilities in Amendment No.1 to Construction Permit Nos. CPPR-135 and 136 (December 27, 1978).
The Safety Evaluation Report attached to that amendment addressed the transferees' financial qualifications.
In addition, the Staff is currently reviewing the licensee's application for amendments to the construction permits that would authorize a transfer of portions of PSNH's and UI's ownership interests to other utilities.
Upon completion of its review, the Staff will issue a Safety Evaluation Report addressing the financial qualifications of the proposed transferees.
Any transfer of ownership interest requires a demonstration that a transferee is financially qualified to assume the interest.
14$5
?27 See Seabrook, at 17.
5/
The evolution of the present regulations is discussed in Seabrook, at 9-11.
the reasonable assurance requirements of 10 CFR 50.33(f) to be a demonstration of a reasonable financing plan in light of relevant circumstances.6/
In applying the Commission's decision in Seabrook to the requests of SAPL and NECNP that I issue an order to the licensees and thereby initiate a show cause proceeding to suspend or revoke the construction permits, much of the language in that prior decision in this docket was found directly applicable to the present facts underlying this matter.
The controlling standards are dis-cussed, infra, as the relevant facts are explortd.
This current review of PSNH represents an encore to the most searching analysis ever performed of an applicant's financial qualifications in the history of commercial power reactor licensing.2# Now that the former applicants are licensees holding construction permits for Seabrook, I have the task of deter-mining whether PSNH remains financially qualified to proceed with its construction.
The lengthy trail of requests, correspondence and other records submitted by SAPL, NECNP, PSNH, and the NRC Staff has served to create a substantial end comprehensive basis upon which to make a determination in this equally complex sequel.
In determining whether PSNH has the requisite financial
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Seabrook, at 18.
1 Seabrook, at 12.
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. qualifications in accord with the mandate of Seabrook, thorough inquiry has been made by the NRC Staff of the relevant financial picture and outlook of PSNH.
Key distinctions exist between the current review and its predecessor which led to the Commission's decision.
In the earlier review, the primary focus (as to the construction expenditures of Seabrook and its concomitant financing plan) was on future projections in light of relevant circumstances.
As the Commission noted,
"[A] ' reasonable assurance' does not mean a demonstration of near certainty that an applicant will never be pressed for funds in the course of construc-tion.
It does mean that the applicant must have a reasonable financing plan in the light of relevant circumstances."
"fA] utility cannot provide more than a reasonable assurance that funds will be available through the course of a multiyear cor.struction project.
The number of variables - such as interest rates, the state of the stock and bond markets, the regulatory climate and the cost of fuel - that operate over the period required to construct a nuclear power plant make financial forecasting over a ten year period uncertain." Seabrook, at 18 and 19.
In this respect, the financial qualifications review of an applicant for a construction permit is predominantly forward looking in nature.
Even after consideration of the fundamental underlying assumptions to a financial plan -
i a viable capital narket, and for regulated utilities, the continuation of a rational regulatory environment - one can only view a financial plan to be one
,ossible way oy which a company's projected capital requirements, including those resulting from the construction of a facility, might reasonably be obtained.
The inherent dynamics of both a company's individual finances and the state of the economy as a whole (and particularly its effect upon the electric utility industry) lead one to reasonably expect that a company's financial plans will change over time to accommodate required adjustments.
These changes include revisions to the sources of funds, type of security issues (both publicly issued and privately placed), and the timing and amounts of its financing.
This is where " relevant circumstances" (as discussed by the Commission in Seabrook) come into play, in that they allow the company to depart from the proposed financial plan when reasonable, to conform to changing conditions.
In contrast to the situation prevailing at the time of the former Seabrook review, the licensees are now actively involved in the construction of the facility.
Since construction cannot take place without its requisite funding, the licensees have concurrently been engaged in the process of the facility's financing.
Since we are here dealing with present conditions, there is very little difficulty in assessing the state of the stock and bond markets, both generally for the electric utility industry, and for PSNH in particular, and in determining the present status of a company's regulatory environment with reasonable confidence.
5 These factors all directly impact on a licensee's ability to finance the construction of a nuclear facility.
Accordingly, even though the dynamics of 1435
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. finance prevail at any point in time and must therefore be given due consid-eration, the thrust of this review is oriented towards the Company's present financial resources.
In addressing the reasonableness of its financing plan, we must first determine what the relevant circumstances are.
The relevant circumstances here are the relationship of the financial plan's underlying assumptions to the combined effect of external conditions and the company's internal financial limitations.
The Staff recognizes that these factors and not the Commission's previous determination are the appropriate bases upon which to make a finding on financial qualifications.
The Staff believes that this approach satisfies the dictum of the First Circuit of the United States Court of Appeals that "the NRC is not bound by this [the NRC's previous]
decision should circumstances change in the future or should predictions not be borne out."
NECNP vs. NRC, 582 F.2d 87, 93 n.9 (1978).
It is in this context that the asserted lack of financial qualifications of PSNH to construct Seabrook as stated in the requests for an order to show cause has been reviewed.
The crucial concern at this time is the ability of PSNH to obtain sufficient funds to meet its share of the construction expenditures of Seabrook. While PSNH has filed a request dated May 16, 1979 for an amendment to its construc-tion permit to allow the transfer of up to 22 percentage points of its ownership to other utilities, review of both that application and the present record r
shows that PSNH intends to carry its existing 50 percent interest in Seabrook until such time as all requisite regulatory approvals are obtained.
At that time, its financing requirements are proposed to be reduced through a deferred payment arrangement from the proposed transfert f Since no transfer of ownership interest in a licensed facility can take place until the financial qualifications of the transferees at e evaluated and found acceptable by the Commission,8/ this decision focuses on the ability of PSNH to finance its present 50 percent ownership share of Seabrook.
All of the minority co-licensees have been approved to own their present respective levels of interest in Seabrook on the basis of their previous affirmative demonstration of financial qualificatinc.3.E The Staff is not aware of any material adverse change in any of the minority licensees' financing of their respective shares of the Seabrook construction costs.
Moreover, neither SAPL nor NECNP suggest that any one of the existing minority co-licensees intends to breach its obligation under the Joint Ownership Agreement to continue financial participation in the Seabrook project.
The Staff is presently reviewing the
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Seabrook, at 22, citing Section 184 of the Atomic Energy Act, as amended, 42 U.S.C. 2234; 10 CFR 50.80.
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Safety Evaluation Report supporting Amendment No.1 to Construction Permit Nos. CPPR-135 and 136 (December 27, 1976).
This approved Connecticut Light and Power Company's request to transfer its former 11.9776 percent ownership interest in the Seabrook Facility, inter alia, based upon the favorable demonstration of financial qualifications by the transferees.
Order in Massachusetts DPU 19738 and DPU 19743 (June 28, 1979), enclosed with NECNP's July 30, 1979 petition, consolidates and defers decision on the State approval of certain transferee's purchase of this interest.
This decision and order essentially requests additional information of the transferees in the meeting of their burden of proof, and has apparently not affected the present financing of the facility.
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?32 application for amendment to the construction permits to transfer up to 22 percentage points of PSNH's ownership interest.
By letter dated October 16, 1979, PSNH notified the Staff that such proposed transfer may be reduced to 12 percentage points and that an extension to the Unit 2 completion date is being contemplated.' However, PSNH intends to reoffer the 10 percentage point differ-ence and may ultimately transfer up to 22 percentage points of its interest as originally planned.
The Staff will address any such changed circumstances in its forthcoming Safety Evaluation Report (SER) on the requested transfer.
The SER will address the financial qualifications of each of the transferees to assume its respective requested increase in ownership interest in the Seabrook facility.
As will be shown later, because ample funds are apparently available_
to maintain the plant's cunstruction, the safety considerations of the proposed transfer are not immediate in time and will be addressed in the SER on the proposed amendment.
Many of the allegations here center at the question of PSNH's financial diffi-culty.
SAPL points to testimony of the Company's officers which essentially states the Company's impending difficulty in financing the plant's construction absent adequate and timely rate relief. 10/ SAPL furthermore alleges that these statements on the part of the Company constitute an admission that it is not financially qualified.
NECNP focuses upon various statements that the i
3 Company has inc:uded in its filings with the Securities and Exchange Commission.
Letters dated March 12, 1979 and October 2, 1979.
1435 133 NECNP believes that these statements place the Company in violation of the NRC's requirement that the Company be financially qualified to construct the licensed facility.
PSNH, on the other '1and, submits that it can conservatively plan for its financial needs and is, therefore, financially qualified. While such statements may be relevant to reachirg a determination as to PSNH's financial qualifications, they cannot be addressed strictly within a vacuum.
Our requirements are that the applicant or licensee must show a reasonable assurance of obtaining the necessary funds to pursue the activity for which approval is sought. E This is accomplished by demonstrating a reasonable financing plan in light of relevant circumstances.12/
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In reviewing the financing plan of an applicant or licensee to determine its reasonableness, it is to be recognized that:
" Anticipated difficulties in raising funds are relevant to tha reasonable assurance determination, but a showing of some potential difficulty would not necessarily preclude that determination, all other relevant factors being taken into account." Seabrook, at 21.
Consistent with this, the Commission does not require that an applicant's or licensee's financial outlook be rosy.
In accordance with the partinent regu-lations, the Commission requires only that the licensee demonstrate reasonable assurance of obtaining the necessary funds, even if this is at a high cost.
i N
E Seabrook, at 18.
1435 ?34 The petitioners specifically argue that PSNH 1acks the requisite financial qualifications because of the likelihood of impending exhaustion of PSNH's bank credits.
This argument is amplified by the claim that there is little prospect of the Company obtaining the necessary financing through banks or investors.
Although this situation may have been seemingly ominous at one time due to regulatory uncertainty in ratemaking processes affecting the
- Company, it appears that a series of intervening events have rendered the concerns moot (as discussed below).
This review has afforded an opportunity to observe a financing plan in action.
It is first appropriate to address the Company's plan and then to evaluate the outcome.
This will allow an evaluation of the financing plan under new circumstances in light of the contentions of i.
financial difficulty.
In response to the Staff's request of May 23, 1979, the Company has provided a statement of its " Pro-Forma Sources of Funds" which constitutes a financing plan.13/ As stated earlier, this projection is not a commitment by the Company to finance the facility's construction as projected, but should be one possible way by which the funds may reasonably be obtained.
Analysis of the plan shows that during 1979 PSNH intends to externally finance $225 million to meet its
$162 million of expenditures attributable to its share of Seabrook construction and $63 million required for other capital needs.
Of the $225 million,
$79 million was projected to be obtained through the sale of its common stock.
The Company also projected $25 million to be obtained through the issuance of E
Submittal of June 22, 1979.
1435
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its preferred stock.
Finally, the Company states in its plan the expectation of receiving $93 million from long-term debt and $28 million from increasing its notes payable (short-term debt).
Other documents filed by the Company also indicate that the combination of both a General and Refunding Bond issuance and a nuclear fuel financing arrangement are intended to provide long-term debt proceeds. E As these financing arrangements result in obli-gations having repayment periods in excess of one year, they are appropriately classified as long-term debt.
Since the filing of SAPL's petition, one noteworthy intervening event from the near-term perspective is that PSNH has achieved an expansion of its short-term credit arrangements from approximately $98.1 million to $120.35 million. This '
is a result of both obtaining the necessary regulatory approval 15/ to effect a credit expansion and the willingness of banks to assume it.
From the viewpoint of the required time for repayment of the credit, the seven commercial banks participating in the line of credit have recently agreed to extend the credit maturity date frem October 15, 1979 to July 1, 1980.
In addition, the same group of commercial banks has extended to the Company a $25 million term credit due January 3, 1980. E These actions demonstrate a continuing capabi-lity of the Company to obtain short-term credit.
As stated later in this decision, recent events in the Company's long-term financing and rate 1
E#
Submittal of August 9, 1979.
--15/
NHPUC DF-79-53, Order No. 13,555 (March 29, 1979) submitted under PSNH letter of September 17, 1979.
E PSNH Preliminary Prospectus dated September 6,1979, submitted under PSNH letter of September 12, 1979.
1435 236-
. regulation have apparently provided sufficient assurance to the banks to allow this capability continued existence.
Furthermore, there are no present indications that this assnrance will not continue to exist.
Even more importantly, the Company has not relied solely on its short-term credit arrangement to finance its external capital requireaents for the con-struction of the facility.
This has resulted from the Company periodically revolving outstanding balances in its short-term credit through proceeds derived from four successful public security issuances.
These security issu-ances were projected by the Company in its financing plan submitted to the Staff on June 22, 1979.
In January 1979, PSNH obtained $40 million in proceeds from the issuance of 2 million new shares of its common stock in the primary market.17/ On May 15, 1979, $30 million was raised by the Company from the issuance of 1.2 million shares of its preferred stock,15 thereby obtaining
$5 million more than originally anticipated.
Similarly, on July 12, 1979, an additional 2 million shares of its common stock were issued in the public securities market,,hereby obtaining an additional $38 million in proceeds.19/
Combined with the $40 million January offering, the July common stock issuance virtually achieved the Company's prior expectations as stated in its financing plan.
3 11/
Id., at 10.
lE/
Id., at 10.
lE/
Id., at 10.
P435 ?37
. To meet its external capital requirements during the balance of the year, the Company proposed to issue an additional $50 million dollars in General and Refunding Bonds and to complete negotiation on $25 million of notes to be secured upon the Company's ownership of ni. clear fuel. E! The bond issue was slated for September and the note issuance to be secured on nuclear fuel has been deferred from its originally intended June completion.
The General and Refunding indenture (the trustee agreement established between bondholders and the issuer) requires a minimum of two times coverage by net earnings of the annual interest requirements associated with its long-term debt.
The Company shows 3.44 times coverage as of April 30, 1979.
This being the most restric-tive element in the Company's ability to i* sue General and Refunding Bonds, the inder?.ure coverage allows the Company to issue $145 million under present circumstances, an amount well in excess of the $50 million of bonds originally projected to be issued. E From the viewpoint of marketability, these bonds were placed on the public market on September 20,1979.E On the next day it was reported that, "Public Service Co. of New Hampshire's $60 million of 12%
bonds sold out at a price of 100."E This was $10 million more taan initially E
Contrary to SAPL's suggestion (October 2, 1979 letter at p. 5), the Company's sale of notes to be secured by a lien on nuclear fuel does not involve the issue of a "significant hazards consideration" under Section 189(a) of the Atomic Energy Act or 10 CFR 50.91, because the creation of such 7
liens does not require a license amendment.
See 10 CFR 70.44.
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Schedule enclosed under PSNH letter of August 13, 1979.
The Wall Street Journal, Bon Markets [ Column], p. 37, September 20, 1979.
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The Wall Street Journal, dond Markets [ Column], p. 33, September 21, 1979.
1435 138'
. projected, as noted earlier.
In assessing the degree of difficulty this applicant has encountered in financing the facility, we believe it is valid to state that any difficulties which may have been encountered have been effec-tively dealt ith in light of the Company's several successful security issuances and extension and expansion of its short-term credit.
PSNH originally anticipated that it would complete a nuclear fuel financing arrangement with an institutional investor in June.
Although the Company did not successfully complete these negotiations; it is currently in negotiation with three other institutional investors for a similar arrangement.
In light of the Company's new circumstances, as discussed in this d: cision, the Staff knows of no reasons why PSNH will not complete a nuclear fuel financing arrangement.
However, the Staif again recognizes that the Company is not bound by the Commission's regulations to finance the facility's construction exactly as projected.
Because of the Staff's concern o',er PSNH's financial qualifications, the Staff exceeded the minimum depth of review imposed by the regulations 2Y by requir-ing substantial additional information from PSNH.
The Commission's previous opinion of PSNH's financial qualifications in Seabrook stated that "the reason-able assurance concept embodied in the regulation is more flexible than many of the Commission's safety criteria." N Because of the inherent difficulty 3
in resolving what the state of this Company's finances is in relation E See 10 CFR Part 50, Appendix C, " General Informatf d } } } } g.
E! Seabrook, at 9 and 10.
. to the " reasonable assurance" requirement, we have assumed a conservative approach by exacting Jetailed financial information pursuant to our authority under Section IV cf Appendix C to 10 CFR 50 and Section 50.54(f) of 10 CFR 50.
We have reyJired projections of considerable specificity and detail, thereby permitting a basis for evaluating item-by-item the reasonableness of the Company's financing plan.
As discussed above, PSNH has substantially realized its financial projections through the present time and has thus demonstrated a reasonable assurance of obtaining the requisite funds.
Normally, as stated earlier, our determination of a Company's financial qualifications rests f.edominantly upon its projections.
Here, PSNH has supplied such projections which, notwithstanding the assertions of financial difficulty, have ultimately been fulfilled.
We know of no more convincing way of demonstrating a reasonable assurance that funds will be obtained.
Moreover, no other factor can be more relevant than a company's attainment of its financial plan, especially in light of seemingly ominous and unpredictable circumstance..
For ihase reasons and others as stated herein, the Staff has concluded that the Company's financ-ing plan is reasonable, ano that it has thus demonstrated its financial qualifications.
An additional point stated by SAPL in its May 4, 1979 letter is that PSNH's financing plan "contains certain predictions of company income before interest charges during the years 1980 through 1985.
These ' income before interest i
charges' figures are uniformly higher than those ever before presented in other Sources of Funds projections." SAPL then alleges that this data is optimistic and unreasonable.
After reviewing the initial sources of funds 1435
?40-statement, the Staff requested that the Company provide additional details of its financing in a more comprehensive format.
This was provided by PSNH in W
its second response to the NRC staff. E A later submittal by PSNH directly answered the Staff's question regarding the amount of increases projected in the Company's future net income.
The Staff's analysis of this data shows that the projected increases in income are due largely to the inclusion therein of increasing amounts of Allowance for Funds Used During Construction (AFUDC) starting in 1980.
This accounting technique is widely used in the utility industry and is the accepted alternative to setting rates based upon the inclusion of Construction Work in Progress (CWIP) in rate base.
From the standpoint of financial reporting, AFUDC is properly included in net income on a utility's statement of sourcer and uses of funds.
The information provided by PSNH indicates that the Company will discontinue basing its rates upon the inclusion of CWIP in rate base starting with 1980 and will begin to accrue correspending AFUDC dollars to plant under construction.
This plan is consistent wi'.h New Hampshire Statute RSA 378:30a which disallows the setting of rates based upon inclusion of CWIP in rate base.28/ In accordance 7
E Dated June 22, 1979.
PSNH response dated August 8, 1979 to Question 4 of NRC Staff's request for additional financial inform tion dated July 17, 1979.
E See Report to NHPUC DR 79-107, Order No. 13,799, at 8, submitted under letter by PSNH's counsel dated September 17, 1979.
with this, from 1980 on, AFUDC will be generated on PSNH's investment in Seabrook.
Because PSNH will have an increasing investment in plant under construction as the Seabrook project proceeds, it will include larger amounts of AFUDC in income.
Accordingly, there is no reason to believe that PSNH's net income projections are optimistic or unreasonable as claimed in the peti-tions.
Instead, the Staff has concluded that both the amounts projected and the accounting treatment afforded to the projections are reasonable.
SAPL moreover contends that "it is not reasonable to assume that the NHPUC will permit rate increases in the near future which will equal or exceed the level of the present revenues attributable to the inclusion of CWIP in rate base."E From the viewpoint of affecting the facility's financing, SAPL's statement challenges a fundamental underlying assumption of the plan -
existence of a rational regulatory environment.
The Staff recognizes that this assumption is essential to PSNH's financing plan.
However, neither SAPL nor NECNP present any evidence in the petitions to suggest that the New Hampshire Public Utilities Commission (NHPUC) will not allow the Company a return to its equity owners commensurate with returns earned on investments in other enterprises having corresponding risks in order to assure confidence in PSNH's financial integrity.
Moreover, the Staff is not aware of any reason to believe that the NHPUC will not enable the Company to maintain its credit and to attract capital as required by longstanding decisions of the U.S. Supreme Court 30/ and as i
1435 142 E#
SAPL Letter dated May 4, 1979, at 2.
E FPC v. Hope Natural Gas Comoany, 320 U.S. 591 (1944), Bluefield Water Works and Improvement Co. v. Public Service Commission, 262 U.S. 679 (1923).
_ followed by New Hampshire State Law. E Indeed, in its Report to Order No. 13,799 in DR 79-107 dated August 29, 1979, the NHPUC established PSNH's existing rates (which had been formerly based upon CWIP in the rate base) as temporary rates for the duration of the investigation and hearings associated with PSNH's most recent rate increase petition.
The New Hampshire Commission recognir.ed therein that:
"It is sufficient to state that at this early point of investigation that based on information routinely filed with the Commission, PSNH is entitled to an overall rate of return higher than what was allowed in the last proceeding." Report to NHPUC Order No. 13,799 in OR 79-107, p. 19 (August 29, 1979) (PSNH Submittal dated September 17, 1979).
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This, coupled with other factors (see ibid.), has led the New Hampshire Public '
Utilities Commission to reevaluate the entire revenue level of PSNH so as to comply with its statutory mandate of setting just and reasonable rates.
Moreover, in its Report to its Fourth Supplemental Order No. 13,829 dated September 24, 1979 in DF 79-100-6205,E tha NHPUC reiterated its historical support for the completion of Seabrook and recognized the interrelationship between the size of ownership interest the Company could retain and "projec-tions as to needed revenue" in the forthcoming rate case.
This situation leads the Staff to conclude that the underlying assumption to the financing plan of a rational regulatory environment is indeed valid.
Accordingly, the 7
b i
New England Tel. & Tel. Co. v. State, 113 N.H. 92, 302 A.2d 814 (1973);
New England Tel. & Tel. Co. v. State, 104 N.H. 229, 183 A.2d 237 (1962);
Chicocee Mfg. Co. v. Public Serv. Co.
98 N.H. 5, 93 A.2d 820 (1953).
See N.H. Rev. Stat. 9378:7.
See also ALAB-422, 6 NRC 33, 77-78 (1977).
32/
Enclosure to PSNH's letter of September 27, 1979.
1435
~?43 Staff finds that there is no merit to the argument that there is little prospect that the NHPUC will provide the Company with needed rate increases.
Furthe rmore,
a rational regulatory environment, coupled with both a viable capital market (the other underlying assumption) and PSNH's reasonable financing plan serves to demonstrate the Company's financial qualifications.
The Staff acknowledges, as the Commission stated in Seabrook:
"...an applicant could face so much difficulty in obtaining funds that the likelihood of its being able to finance the plant would fall below the level of reasonable assurance." 7 NRC at 21.
For the reasons stated nerein, notably (1) PSNH's demonstrably reasonable financing plan, and (2) support historically provided by the NHPUC for con-struction of the facility, the Staff has determined that such is not the case here.
PSNH has provided a reasonable plan for financing its continuing 50 percent interest in Seabrook.
Therefore, in accordance with 10 CFR 50.33(f) and Appendix C of 10 CFR 50, PSNH has demonstrated that it has reasonable assurance of obtaining the funds to finance the licensed activities.
In reaching this conclusion, the Staff has taken into account P5NH's current efforts to transfer a portion of its ownership interest to certain other utilities.
The Staff is currently reviewing an application for that transfer and will issue a Safety Evaluation Report (which will accompany any approval of such transfer) addressing the financial qualifications of those utilities to assume their respective requested amounts of ownership interest in the facility.
1435
!4h Consequently, I conclude that PSNH is financially qualified to the extent of its 50 percent ownership intr, rest to design and construct Seabrook Unit Nos. I and 2, including related initial fuel cycle costs, under the provisions of the above regulations.
Accordingly, based on the foregoing discussion and the previsions of 10 CFR 2.206, I have determined not to issue an Order to Show Cause to PSNH concerning its financial qualifications.
The requests of both the Seacoast Anti-Pollution League and the New England Coalition on Nuclear Pollution are hereby denied. W A copy of this decision will be placed in the Commission's Public Document Room at 1717 H Street, N.W., Washington, D.C.
20555 and the Local Public Library, Front Street, Exeter, New Hampshire.
Add'tionally, a copy of this decision will be filed with the Secretary for the Commission's review in accordance with 10 CFR 2.206(c) of the Commission's regulations.
33/ This decision does not dispose of matters raised in SAPL's petition of May 2, 1979 and the remaining matters in NECNP's petition concerning consider _
ation of Class 9 accidents and feasibility of evacuation of the area beyond the Low Population Zone.
These matters are still before the Staff for appropriate action under 10 CFR 2.206.
1 i
$h As provided in 10 CFR 2.205(c) of the Commission's regulations, this decision will constitute the final action of the Commission 20 days after the date of issuance, unless the Commission on its own motion institutes the review of this decision within that time.
Harold R. Denton, Director Office of Nuclear Reactor Regulation Dated At Bethesda, Maryland This //oM Day of November 1979 1435 M6
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