ML19256A535
| ML19256A535 | |
| Person / Time | |
|---|---|
| Site: | River Bend  |
| Issue date: | 12/27/1978 |
| From: | Harold Denton Office of Nuclear Reactor Regulation |
| To: | Irving S PUBLIC LAW UTILITIES GROUP |
| Shared Package | |
| ML19256A536 | List: |
| References | |
| NUDOCS 7901080390 | |
| Download: ML19256A535 (2) | |
Text
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UNITED STATES
- j NUCLEAR REGULATORY COMMISSION 4
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WASHINGTON, D. C. 20555 O Elif f December.27, 1978 Mr. Stephen M. Irving, Director One American Place Suite 1601 Public Law Utilities Group Baton Rouge, LA 70825
Dear Mr. Irving:
In our letter of September 1,1978, we advised you that we were considering whether to undertake a re-review of the financial qualifications of Gulf States Utilities Company to construct the River Bend Station, Units 1 and 2.
In response to our September 1,1978 request, Gulf States Utilities Company submitted information relating to the comprehensive analysis it undertook of its nuclear construction program and other financial information.
The following summarizes the results of our review of this information.
Gulf States Utilities Company has indicated that it is delaying the completion date of River Bend Station, Unit No. I to 1984, while the completion date of Unit No. 2 will not be set until the end of 1980.
These changes may allow the utility to take advantage of more favorable financial markets and enable it to carry out negotiations with other power suppliers to purchase an interest in the River Bend facility.
These construction delays are thus considered prudent managerial decisions, Additionally, the financial data used in the Safety Evaluation Report g> related to the construction permit was compared with current financial data and industry averages. We considered several factors: Gulf States Utilities Company has maintained its high grade "AA" bond rating by both major rating services (Standard and Poor's Corporation and Moody's Investors Service, Inc.), while keeping its interest coverage ratio at a 2.5 times level, which is in excess of its indenture requirement.
Its debt level has also been kept below 50%, which is desirable. The company's rate of return on connon equity (an important measure of profitability) is 11.5%. All factors we reviewed reflect a favorable comparison with either the industry average or the data in our Safety Evaluation Report.
Gulf States Utilities Company also provided us with information regarding a trust agreement that involves the financing of certain steam turbine /
generator equipment. We regard this arrangement as evidence of the company's financia' flexibility and of its ability to utilize innovative and alternative fincncing techniques.
790108 W 6
Mr. Stephen M. Irving Based on the foregoing information, we have concluded that it will not be necessary to undertake a re-review of the financial qualifications of Gulf States Utilities Company to construct the River Bend Station, Units 1 and 2.
- our letter of November 9,1978 noted that the information which we requested from Gulf States Utilities has not appeared in the Public Docuaent Room and asked what steps we are taking to obtain it. At this time we have only received one copy of the reply dated October 16, 1978 and have requested additional copies from Gulf States Utilities so that proper distribution may be made. A copy will be placed in the local Public Document Room upon receipt.
Again, thank you for your interest in this matter. We will continue to monitor the financial status of Gulf States Utilities Company. Should any significant changes occur, the staff will once again assess the applicant's financial qualifications guided by the " reasonable assurance" standard of 10 CFR Part 50.33(f).
Sincerely,
/
Harold R. D nton, Director l
Office of Nuclear Reactor Reg n
.