ML19289C798
| ML19289C798 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 12/27/1978 |
| From: | Boyd R Office of Nuclear Reactor Regulation |
| To: | Tallman W PUBLIC SERVICE CO. OF NEW HAMPSHIRE |
| References | |
| NUDOCS 7901250203 | |
| Download: ML19289C798 (53) | |
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An nj PUBLIC DOCU' D R C) 0 g V
UNITED STATES 3('
-' 4 NUCLEAR REGULATORY COMMtsSION
,3,..I hk WASHINGTON, D. C. 20555
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Docket Nos. 50-443 50-444 p:c (U"
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Public Service Company of New Hampshire p,
Mr. W. C. Tallman, President 1000 Elm Street Manchester, New Hampshire 03105 Q
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Dear Mr. Tallman:
SUBJECT:
AMENDMENTS TO CONSTRUCTION PERMITS FOR SEABROOK STATION, UNITS 1 AND 2 Your letter of May 15, 1978, supplemented by your letter of October 16, 1978, transmitted an application for amendments to the constructi.m permits for Seabrook Station, Units 1 and 2, to delete three participants, to add six participants, to decrease the percent ownership interest of three participants and to increase the percent ownership interest of three participants.
We have reviewed your application and have concluded that the six new participants, Town of Hudson, Massachusetts, Light and Power Department (0.05780 percent); Vermont Electric Cooperative, Inc. (0.41259 percent);
Massachusetts Municipal Wholesale Electric Company (5.59249 percent);
Maine Public Service Company (1.46056 percent); Bangor Hydro-Electric Company (0.37249 percent); and Taunton Municipal Lighting Plant (0.10034 percent) are financially qualified to assume their respective ownership interests in the Seabrook Station.
We have also concluded that Fitchburg Gas and Electric Company is financially qualified to increase its ownership interest to 0.60432 percent, Montaup Electric Company to 2.93531 percent, and New Bedford Gas & Electric Light Company to 4.37370 percent.
We have also concluded that the inclusion of these six new participants and the increased percent ownership interest for these threeoriginal participants does not involve a significant hazards consideration, does not constitute an unreasonable risk to the health and safety of the The public, and is not inimical to the common defense and security.
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fL Mr. W. C. Tallman bases for these conclusions are set forth in the enclosed Safety Evaluation.
We have also concluded that the amendments involve actions which are insignificant from the standpoint of environmental impact and pursuant to 10 CFR Section 51.5(d)(4) that an environmental impact statement or negative declaration, and environmental impact appraisal need not be prepared in connection with the issuance of these amendments.
Enclosed is Amendment No. I to CPPR-135 and Amendment No. I to CPPR-136 for the Seabrook Station, Units 1 and 2, which modify the construction permits.
Since our antitrust review for the transfer of ownership interests to Massachusetts hunicipal Wholesale Electric Company and to Maine Public Service Company has not been completed, those transfers are not authorized by these amendments.
Also enclosed is a copy of a related notice which has been forwarded to the Office of the Federal Register for publication.
Sincerely, f
oser'S. Bo
, Director Division of Project Manas. nt, Office of Nuclear Reactor Regulation
Enclosures:
1.
Amendment No. I to Construction Permit CPPr.-135 2.
Amendment No. I to Construction Permit CPPR-136 3.
Feaeral Register Notice 4.
Safety Evaluation Report cc: See next page
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Public Service Company
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ces:
John A. Ritscher, Esq.
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Ropes and Gray 225 Franklin Street c'[#"
Boston, Massachusetts 02110 b
f Ralph H. Wood, Esq.
General Counsel Public Service Company of New Hampshire 1000 Elm Street Manchester, New Hampshire 03105 Mr. John Haseltine, Project Manager Yankee Atomic Electric Company 20 Turnpike Road Westboro, Massachusetts 01581 Mr. Bruce B. Beckley, Project Manager Public Service Company of New Hampshire 1000 Elm Street Manchester, New Hampshire 03105 Robert A. Backus, Esq.
O'Neill, Backus, Spielman & Little 116 Lowell Street Manchester, New Hampshire 03105 Norman Ross, Esq.
30 Francis Street Brookline, Massachusetts 02146 Karin P. Sheldon, Esq.
Sheldon, Harmon and Roisman 1025 15th Street, N. W.
Washington, D. C. 20005 Laurie Burt, Esq.
Office of the Assistant Attorney General Environmental Protection Division One Ashburton Place Boston, Massachusetts 02111
.Public Service Company of New Hampshire cc (continued)
Samuel Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D. C.
20555 Alan S.
Rosenthal, Esq.
Atomic Safety and' Licensing Appeal Board U.S. Nuclear Regulatory Commission
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Washington, D. C.
20555 Dr. John H.
Buck Atomic Safety and Licensing Appeal Board U.S. Nuclear Regulatory Commission Washington, D.
C.
20555 Michael C.
Farrar, Esq.
Atomic Safety and Licensing Appeal Board U.S. Nuclear Regulatory Commission Washington, D. C.
20555 Ivan W.
Smith, Esq.
Atomic Safety and Licensing B.oard U.S. Nuclear Regulatory Commission Washington, D.
C.
20555 Dr. Frnest Salo, Professor Fisheries Research Institute - WH-10 College of Fisheries University of Washina'sn Seattle, Washington 06195 Dr. Marvin M. Mann Atomic Safety and Licensing Board U.S. Nuclear Regulatory Commission Washington, D.
C.
20555
a' ccs continued Attorney General State House Annex Concord, New Hampshire 03301 State House Annex Attn:
Assistant to the Director Office of Comprehensive Planning Concord, New Hampshire 03301 U.S. Environmental Protection Agency Attn:
EIS Coordinator Region I Office JFK Federal Building Boston, Massachusetts 62203 office of Selectman Town of Seabrook P. O. Box 456 Seabrook, New Hampshire 03874
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PUBLIC SERVICE COPPANY OF NEW HAfPSHIRE
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7 THE UNITED ILLUNINATING CUFPANY
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CENTRAL FAINE POWER CO PANY CENTRAL VERFOl4T PUBLIC SERVICE CORPORATION
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FITCHBURG GAS AND ELECTRIC LIGHT C0FPANY MONTAUP ELECTRIC COPPANY
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NEW BEDFORD GAS & EDISON LIGHT C0FPANY
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NEW ENGLAND POWER C0FPANY
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TOWN OF HUDSON, PASSACHUSriTTS, LIGHT AND POWER DEPARTPENT - ~ ~ ~ ~ ~
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VERH)(iT ELECTxiC C00PERAIlVE, INC.
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BANGOR HYORO-ELECTRIC COPPA'iY
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TAUNTON FUNICIPAL LIGHTING PLANT CCFNISSION
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THE CONNECTICUT LIGHT AND POWER COPPANY VERFONT ELECTRIC POWER C0FPANY, INC.
DOCKET NO. 50-443 SEABROOK STATION, UNIT 1 APENDFENT TO CONSTRUCTION PERMIT Amendment No. 1 Construction Permit No. CPPR-135 1.
The Nuclear Regulatory Comission (the Comission) having found that:
A. The application for amendment contained in letters, dated May 15, 1978 and October 16, 1978, complies with the standards and requires.ients of the Atomic Energy Act of 1954, as amended, and the Comission's rules and regulations set forth in 10 CFR Chapter I; B. The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; C. Each of the following is financially qualified to assume its ownership interest in the Seabrook Station, Unit 1, shown below:
Town of Hudson, Massachusetts, Light and Power Department 0.05780 Vermont Electric Cooperative, Inc.
0.41259
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-2 Bancor Hydro-Electric Copany 0.37249 Taunton Municipal Lighting Plant Comission 0.10034
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(Sum:
0.94322); _.
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D. Each of the following is financially qualified to ircrease its percent ownership interest in the Seabrook Station, Unit 1, shown below:
Fitchburg Gas and Electric Light Company -
to 0.60467 from 0.1716 Montaup Electric Company -
to 2.93903 f rom ' 'l_.9064 New Bedford Gas & Edison Light Company -
to 4.37635 from 1.3339 (Sum: to 7.92005 from 3.4319);
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E. After the transfer of ownership interests is co[npleted, the percent ownership interest (shown below) for each of the following will be equal to or less than its original percent ownership interest (shown in parentheses) in the Seabrook Station, Unit 1.
(The percent ownership interests shown in 1.C, 1.0, and 1.E add up to one hundred percent.)
Public Service Company of New Hampshire -
50.0000 (50.0000)
The United Illuminating Company -
20.0000 (20.0000)
New England Power Company 10.08160 (10.1103)
Central Maine Power Company'-
2.54676 (2.5505)
Central Vermont Public Service Corporation -
1.59447 (1.7971)
The Connecticut Light and Power Company -
6.91364 (11.9776)
Green Mountain Power Corporation -
0.00000 (0.0000)
Vermont Electric Power Company,Inc. -
0.00026 (0.1326)
[ Sum: 91.13673 (96.5681)];
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F. Prior public notice of this amendment is not required since the amendment does not involve a significant hazards consideration.
2.
Accordir. gly, Construction Permit No. CPPR-135 is amended to refle,
a change in the ownership of the facility by deleting Green Mountain Power Corporation as an owner, by adding Town of Hudson, Massachusetts, Light and Power Department; Vermont Electric Cooperative, Inc. ; Bangor Hydro-Electric Company; and Taunton Municipal Lighting Plant Commission as owners, and by transferring ownership interests as follows:
A. The following paragraph (3.F.) is added to the construction permit:
3.F.
The following percent ownership interests may be transferred from Transferors to Transferees:
To:
Town of Hudson, Massachusetts, Light and Power Department 0.05780 From:
Central Maine Power Company 0.00374 Central Vermont Public Service Corporation 0.00263 The Connecticut Light and Power Company 0.01752 Fitchburg Gas & Electric Light Company 0.00025 Montaup Electric Company 0.00279 New Bedford Gas & Edison Light Company 0.00198 New England Power Company 0.02870 Vermont Electric Power Company, Inc.
0.00019 0.05780 To:
Vermont Electric Cooperative, Inc.
0.41259 From:
Central Vermont Public Service Corporation 0.20000 The Connecticut Light and Power Company 0.08044 Vermont Electric Power Company, Inc.
0.13215 0.41259 To:
Bangor Hydro-Electric Company 0.37249 From:
The Connecticut Light and Power Company 0.37249 I
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PUBLIC SERVICE COMPANY OF NEW HAPPSHIRE s
THE UNITED ILLUMINATING COPPANY CENTRAL NAINE POWER COPPANY CENTRAL VERMONT PUBLIC SERVICE CORPORATION N'
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FITCHBURG GAS AND ELECTRIC LIGHT C0hPANY MONTAUP ELECTRIC C0t<PANY
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NEW BEDFORD GAS & EDISON LIGHT COPPANY
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NEW ENGLAND POWER COPPANY TOWN OF HUDSON, MASSACHUSETTS, LIGHT AND POWER DEPARTMENT
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VERh0NT ELECTRIC COOPERATIVE, INC.
BANGUR HYDRO-ELECTRIC C0FPANY TAUNTON MUNICIPAL LIGHTING PLANT CONMISSION THE CONNECTICUT LIGHT AND POWER C0FPANY
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VERNONT ELECTRIC POWER COMPANY, INC.
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DOCKET N0. 50-444 SEABROOK STATION, UNIT 2 AhENDFINT TO CONSTRUCTION PERMH Amendment No. 1 Construction Permit No. CPPR-136 1.
The Nuclear Regulatory Conmission (the Commission) having found that:
A. The application for amendment contained in letters, dated May 15, 1978 and October 16, 1978, complies with the standards and requirements of the Atomic Energy Act of 1954, as amended, and the Commission's rules 'and regulations set forth in 10 CFR Chapter I; B. The issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public; C. Each of the following is financially qualified to assume its ownership interest in the Seabrook Station, Unit 2, shown below:
Town of Hudson, Massachusetts, Light and Power Department 0.05780 Vermont Electric Cooperative, Inc.
0.41259
4 To:
Taunton Municipal Lighting Plant Conrission 0.10034 From:
The Connecticut Light and Power Company 0.10034 To:
Pontaup Electric Company 1.03542 From:
The Connecticut Light and Power Company 1.03542 To:
New Bedford Gas and Edison Light Company
- 3. 02M3 Fran:
The Cor.necticut Light and Power Company 3.02443 To:
Fitchburg Gas and Electric Light Company 0.43332 From:
The Connecticut Light and Power Company 0.43332 B. In all references in Construction Permit No. CPPR-135 to " applicants" exclude:
Green Mountain Power Corporation and include:
Town of Hudson, Massachusetts, Light and Power Department Vermont Electric Cooperative, 'Inc.
Bangor Hydro-Electric' Company Taunton Municipal Lighting Plant Connission 3.
This amendment is effective as of the date of issuance.
FOR THE NUCLEAR REGULATORY COMMISSION
/
09 r S. Bo d, Director q
Oivision of Project Management.
Office of Nuclear Reactor Regulation
- Date of Issuance:
DEC 2 7 197B
l Bangor Hydro-Electric Company 0.37249 Taunton Municipal Lighting Plant Commission 0.10034
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0.94322);
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D. Each of the following is financially qualified to increase its
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percent ownership interest in the Seabrook Station, Unit 2,
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shown below.
Fitchburg Gas and Electric Light Company -
to 0.60467 from 0.1716~
Montaup Electric Company -
to 2.93903 from 1.9064 New Bedford Gas & Edison Light Company -
to 4.37635 from 1.3539 (Sum: to 7.92005 from 3.4319);
E. After the transfer of ownership interests is completed, the percent ownership interest (shown below) for each of the following will be equal to or less than its original percent ownership interest (shown in parentheses) in the Seabrook Station, Unit 2.
(The percent ownership interests shown in 1.C,1.0, and 1.E add up to one hundred percent.)
Public Service Company of New Hampshire -
50.0000 (50.0000)
The United Illuminating Company -
20.0000 (20.0000)
New England Power Company,
10.08160 (10.1103)
Central Maine Power Company -
2.54676 (2.5505)
Central Vermont Public Service Corporation -
1.59447 (1.7971)
The Connecticut Light and Power Company -
6.91364 (11.9776)
Green Mountain Power Corporation -
U.00000 (0.0000)
Vermont Electric Power Company,Inc. -
0.00026 (0.1326)
[ Sum: 91.13673 (96.5681)];
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. F. Prior public notice of this amendment is not required since the amendment does not involve a significant hazards consiceration.
2.
Accordingly, Construction Permit No. CPPR-136 is amended to reflect a change in the ownership of the facility by deleting Green Mountain Power Corporation as an owner, by adding Town of Hudson, Massachusetts, Light and Power Department; Vermont Electric Cooperative, Inc. ; Bangor Hydro-Electric Company; and Taunton Municipal Lighting Plant Commission as owners, and by transferring ownership interests as follows:
A. The following paragraph (3.F.) is added to the construction permit:
3.F.
The following percent ownership interests may be transferred from Transferors to Tran;ferees:
To:
Town of Hudson, Massachusetts, Light and Power Department 0.05780 From:
Central Maine Power Company 0.00374 Central Vermont Public Service Corporation 0.00263 The Connecticut Light and Power Company 0.01752 Fitchburg Gas & Electric Light Cor..pany 0.00025 Montaup Electric Company 0.00279 New Bedford Gas i Edison Light Companj 0.00198 New England Power Company 0.0Z870 Vermont Electric Power Company, Inc.
0.00019 O.05780 To:
Vermont Electric Cooperative, Inc.
0.41259 From:
Central Vermont Public Service Corporation 0,20000 The Connecticut Light and Power Company 0.08044 Vernont Electric Power Company, Inc.
0.13215 0.41259 To:
Bangor Hydro-Electric Company 0.37249 Fron:
The Connecticut Light and Power Company 0.37249
1 To:
Taunton Municipal Lighting Plant Coamission 0.10034 From:
The Connecticut Light and Power Company 0.10034
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To:
Montaup Electric Company
-1.03542 From:
The Connecticut Light and Power Company 1.03542 To:
New Bedford Gas and Edison Light Company 3.02e43 From:
The~ Connecticut Light and Power Company 3.02443 To:
Fitchburg Gas and Electric Light Company 0.43332 From:
The Connecticut Light and Power Company 0.43332 B. In all references in Construction Permit No. CPPR-136 to " applicants" exclude:
Green Mountain Power Corporation and include:
Town of Hudson, Massachusetts, Light and Power Department Vermont Electric Cooperative, Inc.
Bangor Hydro-Electric Company Taunton Municipal Lighting Plant Commission 3.
This amendment is effective as of the date of issuance.
FOR CLEAR REGULATORY COMMISSION Ti
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s r S. Boy, Director Division of Project Manageme Office of Nuclear Reactor Re ulation Date of Issuance:
" DEC 2 7 578
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Y UNITED STATES fiUCLEAR RELULATORY C0t..t.lSSION 7-DOCKET N05. 50-443 AfiD 50-444 f2 di u 5 K
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PUBLIC SERVICE C0FPANY OF fiEW HAFPSHIRE, ET AL s
NOTICE OF ISSUANCE OF AMENDMEftT TO CONSTRUCT 10f PERE!
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Notice is hereby given that the U.S. Nuclear Regulatcry Couaission (the Conmission) has issued An.endu.ent No. I to Construction Pennit No. CPPR-135 and Amendment No. I to Construction Pennit flo. CPPR-136 issued to the Public Service Company of New Hampshire, The United illuminating Company, Central Maine Power Coinpany, Lentral Vermont Public Service Corporation, The Connecticut Light and Power Company, Fitchburg Gas and Electric Light Conipany, kontaup Electric Company, flew Beaforo Gas & Ecison Light Cor.;pany, New Englano Power Company, Green Mountain Power Corporation, and Vermont Electric Power Company, Inc. The amendments reflect changes in ownership and transfer of shares of the Seabrook Station, Units 1 and 2 (the facility),
located in Rockingham County, New Han.pshire. The amendu.ents are effective as of their date of issuar.ce.
These amer.dments provide for the deletion of the Green Mountain Power Corporation, Inc., and the addition of Town of Hudson, Massachusetts, Light and Power Department; Venaont Electric Cooperative, Inc.; Gangor Hydro-Electric Ccmpany; ans Taunton Municipal Lighting Plant as applicants for all licenses previously requested, and the transfer of partial ownership shares as noted in the construction pennit amendments for these applicants and for eight other continuing applicants.
The application for the amendments complies with the stander-ds anc requirements of the Atomic Energy Act or 1954, as amenacd (the Act),
and the Coninission's rules and regulations.
The Coranission has made
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appropriate findings as required by the Act and the Consaission's rules and regulations in 10 CFR Chapter I, which are set forth in the amendments.
For further details with respect to this action, see (1) the application for amendments contained in Public Service Caiapany of New Hampshire's letters, dated May
'5, 1978, and October 16, 1978; (2) Amendment No. I to Construction Permit No. CPPR-135; (3) Amendment No. I to Construction Permit No. CPPR-136; and (4) the Comission's letter to Public Service Company of New Hampshire and the related Safety Evaluation attached thereto.
All of these items are available for public inspection at the Con:aission's Public Document Room,1717 H Street, Nil, Washington, DC and at the Exeter Public Library, Front Street, Exeter, New Hampshire 03833.
A copy of items (2) and (3) may be obtained upon request addressed to the U.S. Nuclear Regulatory Comission, Washington, DC 20555, Attention:
Director, Division of Project Management.
Dated at Bethesda, Maryland this 27th day of December 1978.
FOR THE NUCLEAR REGULATORY C0t;tilSSION Nt.
Stevenh.sarga, C ief Light Llater React Branch 4 Division of Project Management
RELATED CCI'u'.E3PONDENCE 9H \\V c,
Q SAFETY EVALUATION
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57u SUPPORTING AMENDMENT N0. 1 M
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U CONSTRUCTION PERMIT NOS. CPPR-135 and CPPR-136 SEABROOK STATION, UNITS 1 AND 2 Introduction On July 7,1976, Construction Permit Nos. CPPR-135 and CPPR-136 were issued to the joint-owners of the Seabrook Station, Units 1 and 2.
The respective ownership interests of each of the co-holders of the above construction permits are shown in column I of Table I.
By letter dated May 15, 1978, an amendment to the permits was requested, whereby owners' hip interests in the facility are proposed to be rearranged among several of the existing participants and interests would be assumed by six new proposed joint-owners.
In response to our October 4,1978 request, additional financial information was furnished by the applicants under letters dated October 16, 1978 and October 31, 1978. Additionally, in their October 16, 1978 submittal, the ar911 cants revised their application for amendment to the constructio'n permits. The effect of this revision is a minor reassignment of ownership interest among the participants.
The proposed respective ownership interests of each of the participants are shown in Column III of Table I.
The amount of the respective net increase in ownership interests for each of the participants as a result of this amendment will be as shown in Column II of Table I. For those participants not seeking increases in ownership interests, the proposed ov.nership interests under the requested amendment will be equal to or lower than the previously approved ownership interests.
' TABLE 1 Seabrook Station, Units 1 and 2 Percent Ownership Interest (I)
(II)
- (I II ' ' -
Amount of Participant Previous Increase P roposed - --- - -
Public Service Company of New 50.00000
- - - - - - 50.00000 Hampshire 20.00000 The United Illuminating Company 20.00000 2.54178 Central Maine Power Company 2.55050 Central Vermont Public Service 1.59096 Corporation 1.79710 The Connecticut Light & Power Company 11.97760 Fitchburg Gas and Electric Light Company 0.17160 0.43272 0.60432 Green Mountain Power Corporation Montaup Electric Company 1.90640 1.02891 2.93531 New Bedford Gas and Edison Light Company 1.35390 3.01980 4.37370 9.95766 New England Power Company 10.11030 Vermont Electric Power Company 0.13260 Town of Hudson Light and Power 0.05780 0.05780 Department Vermont Electric Cooperative, 0.41259 0.41259 Incorporated Massachusetts Municipal Wholesale 5.59249 5.59249*
Electric Company 1.46056 1.46056*
Maine Public Service Company 0.37249 0.37249 Bangor Hydro-Electric Company Taunton Municipal Lighting Plant' 0.10034 0.10034 100.00000 100.00000 A copy of " Agreement to Transfer Ownership Shares" dated September 26, 1978, was enclosed with the letter of October 16, 1978 from Public Service Company of New Henpshire.
In the letter of May 15, 1978, the applicants state that
- Since our antitrust review for the transfer of ownership interests to to Massachhusetts Municipal Wholesale Electric Company and to Maine Public Service Company has not been completed, those transfers are not authorized by these amendments. Other owners have retained increased shares as detailed in the amendment to arrive at total ownership of 100 percent pending antitrust approval of transfer to these two companies.
the transfers requested will in no way affect the ownership share of, or the operation and control of the project by Public Service Company of New Hampshire, the lead participant, nor in any way affect the design of the facility. This is consistent with the License Application docketed on July 9,1973, which states "All participants will execute a Joint Ownership, Construction, and Operating Agreement which specifically delegates to the Public Service Company of New Hampshire the sole responsibility for the design and construction of the Units and for operation and maintenance of the Units." Supporting information encf ored with the letter of May 15, 1978, includes (1) a statement by the Town of Hudson, Massachusetts, Light and Power Department that all the members of the Municipal Light Board and the manager are citizens of the United States and that Hudson Light and Power Department is a municipal utility owned and operated by the Town of Hudson, Massachexetts, (2) a statement by the Massachusetts Municipal Wholesale Electric Company that all the directors and principal officers of MMWEC are citizens of the United States of America and that MMWEC is a political subdivision of the Commonwealth of Massachusetts and is controlled by U.S. citizens, (3) a separate statement by each of Vermont Electric Cooperative, Inc.,
Maine Public Service Company, Bangor Hydro-Electric Company, and the Taunton Municipal Lighting Plant Commission that it is not owned, controlled, or dominated by an alien, foreign corporation, or a foreign government.
In their May 15, 1978 letter, Public Service Compaq/ of New Hampshire, who is author 1 zed by " Appointment of Agent and Signature of Applicant" forms (copies provided as Attachment 17 to the May 15, 1978 letter) to act as the agent for each, states that the Transferee-Applicants agree that they will not permit any individual to have access to Restricted Dat: until the Nuclear Regulatory Com?.ission has determined that such access will not endanger the common and defense and security.
General Analysis We have reviewed the application for Amendment No.1 to Construction Permits Nos. CPPR-135 and CPPR-136 and conclude that since Public Service Company of New Hampshire will retain full responsibility for the design, construction, and operation of Seabrook Station, Units 1 and 2, the proposed transfers of ownership interests would not involve a significant hazards consideration inasmuch as the transfers do not involve an increase in the probability of an accident, an increase in the consequences of an accident, or a decrease in safety margins. We therefore conclude that the activities authorized by these amendments would not constitute an unreasonable risk to the heal ;h and safety of the public.
. Since the application for amendments states or der,nstrates that each of the six new participants is not owned, controlled, or dominated by an alien, foreign corporation, or a foreign government, and each of the applicants has agreed in writing to corr'y with the requirements of 10 CFR 50.37 regarding the limiting of access to restricted data, we conclude from our review that the activities autnorized by tha e amendments would not be inimical to the common defense and security.
We have evaluated the financial qualifications of the new parti-cipants and participants with a proposed increased percent ownership, except for New England Power Company, as presented below. Since the proposed increased ownership by New England Power Company (9.95766 percent) is now less than contemplated by our evaluation in Supplement No. 4 to the Safety Evaluation Report (8.9430 plus 1.1673 = 10.1103 percent) further review of the financial qualifications of New England Power Company is not necessary.
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Financial Analysis Introduction The Commission's regulations which relate to finaccial data and information
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required to establish financial qualifications for an applicant for a facility construction permit are Section 50.33(f) of 10 CFR Part 50 and Appendix C to 10 CFR Part 50.
In accordance with these requirements, we evaluate whether there is reasonable assurance that an applicant can obtain the necessary funds to cover its portion of the estimated construction and related fuel cycle costs for the proposed facility. Herein, we evaluate the financial qualifications of each of the applicants having increased or new interests in the Seabrook Station, Units 1 and 2, as a result of the amendments to the construction permit. Our evaluation of the fii.ancial qualifications cf each of these applicants included consideration of the Commission's recent decision Public Service Company of New Hampshire, et al.,
7 NRC 1, at 18 (1978), (Seabrook Station, Units 1 and 2), which states
"... the applicant must have a reasonable financing plan in light of relevant circumstances".
Consistent with the above requirements, we require that investor-owned utility applicants submit pro-forma statements of sources and uses of funds with under-lyti g assumptions, and that non-investor-owned utility applicants submit alter-native financial data and information.
In general terms, pro-forma statements of sources and uses of funds are best described as financial plans. From the use of funds viewpoint, a financiai plan shows total year-to-year construction
fund requirements projected throughout the period of construction for a subject nuclear facility.
Total construction fund requirements for any given year re-present the sum of all planned construction expenditures, for all facilities under construction during that period, including the subject facility.
At.the same time, a financial plan also shows sources of funds or, stated simply, where the required capital is coming from. Generally, sources of funds for a public utility consist of short-term borrowings, internal cash generation, and proceeds from additional sales of long-term debt, preferred stock, and common equity securities. From this perspective, and in consideration of important underlying assumptions to the financing plan, we determine the impact of such financing upon significant financial parameters.
In this respect, the reason-ableness of an applicant's financial projections is determined.
This reasonable assurance standard, however, must be viewed in light of the ex-tended period of time from the start of construction to full commercial operation.
Consequently, one must necessarily make certain assumptions of future conditions.
Two fundamental assumptions which have been incorporated in the analysis of the applicar.ts' projected financing are that there will be r.:'ional regulatory poli-:ies in the setting of rates for utility service (for the investor-owned utility applicants) and that viable capital marke;s will exist. The former assumption implies that rates will be set to at least cover the cost of service, including the cost of capital; the latter assumption implies that capital will be available at some cost.
- Rate of Return on Comon Equity Of all factors considered during the review of an investor-owned utility applicant's financial projections in determination of its financial qualiff-cations, the assumptions of its projected rates of return on comon equity during the period of construction are most significant. Rate of return on comon equ'ty is best described as earnings stated as a percentage of all the stockholders' equity accounts, such as capital stock, premiums, and retained earnings in a corporation. This is derived by first deducting from gross operating revenues the company's operation and maintenance expenses, depreciat, interest charges, taxes, and preferred dividends. This computation results in net income available to the comon stockholder, the " bottom line" of a company's operations. Dividing this by the total of investment dollars provided by the company's comon stockholders and accumulated retained earnings results in per-unit return on comon equity. Restated on a percentage basis, this translates into the rate of return on comon equity.
Of all investors providing capital (i.e., proceeds of long-and short-term debt, preferred stock, and comon stock) to a company, shareholders of comon stock bear the highest risk. While capital costs attributable to a company by debt and preferred stock are fixed by contract, and must be paid at the agreed rate, those dollars earned on comon equity represent whatever remains after payment of all other charges and expenses. By reason of its inherent risk, since holders of a company's common sto-k bear the lowest priority of
- payment to all o.5er obligations of that company, rate of return on comon equity represents the best indicator of a company's profitability.
Profitability i_s important in that it affects both interest coverage and the price of' a company's securities, which bear upon the company's ability to successfully market its securities and maintain the formation of a reasonable capital structure.
Since the investor-owned applicants are public utilities afforded monopoly status in their respective areas of service, they are subject to regulation.
Accordingly, their rates of return are set by the regulatory agencies having jurisdiction over them through the rates they charge. However, unlike utility base rates, which are fixed, the rate of return on comon equity is only allowed to be earned and is not guaranteed. While the concept of a fair rate of return on property used and useful in public utility service is deeply ingrained in public utility regulatory law and economics, there still exists no absolute certainty as to a utility's future earnings. Resultantly, one is required to consider its current level of profitability, and other relevant circumstances in assessing the reasonableness of a projected return on comon equity.
We have reviewed the respective rates of return on comon equity for each of the investor-owned applicants having increased or new joint-ownership interests in the Seabrook Station, Units 1 and 2.
An individual summary financial analysis is provided within for each of these applicants which addresses the applicant's respective rates of return on comon equity in combination with other facets of its finances.
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, Internal Cash Generation In the meeting of an applicant's year-by-year construction expenditures, the first item considered is the level of internal cash generation. This is because internal cash generation reduces the level of external financing required. By reason of certain non-cash expenses (primarily depreciation and deferred income taxes) and the portion of retained earnings not attributable to allowance fer funds used during construction, a company may internally generate funds. To show an example in a simplified fashion, a company is allowed depreciation of its assets. These areounts are reflected on the company's income statement as an expense. However, since these funds are not disbursed, the company may use them for its own needs. These dollars represent funds which the company can apply to its capital requirements, thereby reducing its need for externally obtained funds. Another example is when a company earns a profit, it shares that profit with its stockholders in two ways.
First, it takes somc af its net income and distributes that portion to its shareholders in th'. form of dividends. After its dividends have been disbursed, the company keeps the. balance of its net income and adds this amount to its retained earnings account. Again, this represents addit' anal funds available to a company for its capital needs.
As an incidental point, although the allowance for funds used during i on-struction portion of earnings is not an immediate source of cash to a company, investors do recognize it as a future source of cash, since when it is ultimately placed into rate base (property used and useful in public utility service), it generates funds through both earnings and depreciation.
a s
. At the same time, retained earnings also benefit the shareholders in that these amounts increase the worth of their investment and further enable the company to grow. The overall level of a company's internal cash gener-ation is likewise of significance to shareholders in that it provides cash coverage to dividends. This is especially important to investors of public utilities common stocks, who generally own such securities because of their high yield characteristics. By a utility continuing to generate a sufficient amount of cash flow, its shareholders of connon stock have a higher confidence in the payment of future dividends. This is beneficial to the company as, in part, it continues to maintain the attractiveness of its equity securities.
In each of the individual summary financial analyses of the applicants having increased or new joint-ownership interests in the Seabrook Station, Units 1 and 2, internal cash generation is reviewed both on a current and projected basis.
Interest Coverage In order to meet its capital requirements during the construction of the Seabrook Station, Units 1 and 2, the applicants will, from time to time, enter the market for the sale of its long-term debt securities. These securities are mortgage bonds which are secured with a lien on the assets of the issuer.
In order to protect the assets mortgaged under a company's debt, a trust indenture agreement is made between the company and the bondholders.
Indentures of such mortgage bonds contain provisions which, in addition to protecting the assets mortgaged, also cover the interest due to the bondholders.
At the same time, to provide an adequate level of earnings cushion over and above the company's interest requirements, there generally exists in such mortgage and trust deed indentures ?n interest coverage test.
Inextricably
.related to earnings and interest charges, this provision precludes _the company from issuing additional debt should there not be satisfactory earnings coverage over.its interest obligations. Because of its significance, the interest coverage ratio is a major criterion used by the financial community in making credit decisions with respect to a company's debt.
In each of the individual summary financial analyses of the applicants having increased or new joint-ownership interests in the Seabrook Station, Units 1 and 2, interest coverage is further reviewed on both historical and projected bases.
Capital Structure In order for a company to conduct a viable financing plan and preserve the attractiveness of its securities, it must maintain a reasonably balanced capital structure. The term capi,tal structure refers to the composition of a company's 'apitalization, that is, the proportion of debt, equity and c
preferred stock which constitute capitalization. Capital structure is an important consideration in corporate financial analysis in that it shows how much equity capital is available to protect the senior obligations, or in other words, how much the owners are using their own capital or relying on outsiders' money.
By maintaining a reasonable and well-balanced capital structure, latitude will exist in a comi iy's options of financing. This will help achieve borrowing reserve, allowing flexibility both in the timing and selection of securities to be. issued to meet capital requirements. Mo:+ importantly.under these
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circumstances, its securities will maintain their attractiveness to investors by virtue of their lower risk, since capital structure affects interest coverage.
Generally speaking, investor-owned electt ;c utilities have historicclly had capital structures composed of between 50 to 60 percent long-term debt,10 to 15 percent preferred stock, and 30 to 40 percent common ecuity. These ranges of capital structure are considered reasonable by the financial connunity in that they maintain a sufficient amount of equity capital protection to its senior security holders maintaining, from this viewpoint, the attractiveness of its securities.
In each of the individual summary financial analyses of the applicants having increased or new joint-ownership interests in the Seabrook Station, Units 1 and 2, capital structure is further reviewed on both historical and projected bases.
. INDIVICUAL
SUMMARY
FINANCIAL ANALYSES Fitchburg Gas and Electric Light Company The Fitchburg Gas and Electric Light Company provides electric ~and-gas service to several comunities in North Central Massachusetts.
Its operating revenues increased from $22.3 million in 1976 to $25.9 million in 1977, while for the same years net income increased from $1.2 million to $1.3 million.
Invested capital at December 31, 1977 amounted to $32.0 million and consisted of 53.6 percent long-term debt, 13.2 percent pre-ferred stock, and 33.2 percent common equity. This capital structure compares favorably with the previously stated historical range of the electric utility industry. Concurrently, it provides a sufficient amount of equity capital protection to the holders of the company's senior obligations, thereby contributing to its financial integrity.
During 1977, this applicant earned a 9.4 percent rate of return on average common equity, compared with 8.9 percent realized in 1976. Its long-term interest and total interest charges in 1977 were covered by pretax earnings 2.6 times and 2.4 times, respectively, versus coverages of 2.9 times and 2.5 times realized in 1976. These levels of long-term interest coverage compare favorably with the Company's indenture requirement that its earnings be at least twice its interest charges, including interest associated with a new debt offering before it may issue additional debt. The Fitchburg Gas and Electric Light Company's long-term bonds are rated "Baa" by Moody's and "BBB" by Standard and Poor's.
The Fitchburg Gas and Electric Light Company plans to finance its 0.60432 percent joint-ownership interest in Scabrook Station, Units 1 and 2, through the use of internally-generated cash and short-term borrowings which will subsequently be refinanced with proceeds from issuances of new equity or debt securities.
In this respect, its sources of funds in 1977 totaled
$4.8 million and were derived from $1.7 million of internally-generated cash and $3.1 million from preferred stock, notes payable, and other scurces.
Internally-generated cash financed 38.7 percent of its total construction expenditures for 1977.
At our request the Fitchburg Gas and Electric Light Company supplied a profacted sources of funds statement for the 1978-1984 period, with under-lying assumptions, demonstrating how it might raise the requisite funds to constrcct the Seabrook Station, Units 1 and 2.
Internally-generated cash over this period is projected to be 31.6 percent of total construction expenditures and will cover 116.4 percent of its expected outlays of Seabrook Station, Units 1 and 2. This projected level of internal cash generation is reasonable in light of its historical experience. Moreover, this projected financing will result in a capital structure within the historical range of the electric utility industry while maintaining a level of interest coverage on a year-by-year basis during the period of the facility's construction equal to or above its indenture requirements. Although interest coverages are projected to decline near cor.pletion of the facility, we believe that the financial community will discount those levels as being an obviously temporary phenomenon, in that holders of long-term securities
. place the greatest amount of emphasis on the long-term financial picture.
In light of the above, our review of the financial projections of the Fitchburg Gas and Electric Light Company leads us to conclude that they are within the zone of reasonableness, and that they constitute a reasonable financing plan. Accordingly, we conclude that the Fitchburg Gas and Electric Light Company is financially qualified to design and construct the facility to the extent of its ownership share. This conclusion is predicated upon our determination that there is reasonable assurance that it can raise the funds necessary to cover its 0.60432 percent share of the estimated costs to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle costs.
. Montaup Electric Company All debt and equity securities of the Montaup Electric Company are owned by Blackstone Valley Electric Company, Brockton Edison Company, and Fall River Electric Light Company, which in turn are all wholly-owned subsidiaries of Eastern Utilities Associates. The Montaup Electric Company is the principal wholesale source of supply of electricity to the three Eastern Utilities Associates subsidiaries, which jointly service several towns and rural areas of Rhode Island and Massachusetts.
Its operating revenues rose from $120.1 million in 1976 to $131.4 million in 1977.
while for both years its net income was $5.9 million.
Invested ct.pital at December 31, 1977 amounted to $130.1 million and consisted of 50.4 percent long-term debt, 1.2 percent preferred stock, and 48.4 percent common equity. This capital structure compares favorably with the previously stated historical range of the electric utility industry. Concurrently, it provides a substantial amount of equity capital protection to the holders of the company's senior obligations, thereby contributing to its financial integrity.
During 1977, this applicant earned a 9.8 percent rate of return on average common equity, compared with 11.6 percent realized in 1976. Under the provisions of the Montaup Debenture Bonds, there are no restrictions of issue related either to interest coverages or bondable property additions.
As noted above, the outstanding securities of Montaup Electric Company are privately held by its parent companies and, therefore, are not rated. This
' relationship allows this applicant substantial flexibility in its financing by not having such restrictions upon the issuance of its debt, and by having a ready buyer awaiting the purchase of its securities.
The Montaup Electric Company plans to finance its 2.93531 percent joint-ownership interest in the Seabrook Station, Units 1 and 2, primarily by short-term bank borrowings which will be subsequently refinanced with proceeds re-ceived from the sale of its debentures and comon stock to the Brockton Edison Company. The Brockton Edison Company in turn will finance the acquisition of these securities through the sale of its long-term debt or preferred stock to the public or through the sale of common stock to its parent company, Eastern Utilities Associates.
In this respect, this applicant's sources of funds in 1977 totaled $22.6 million and were derived from $7.5 million of internally-generated cash, a $7.8 million increase in notes payable, and a $7.3 million increase in common stock.
Internally-generated : ash in 1977 financed 33.2 percent of total construction expenditures.
At our request, the Montaup Electric Company supplied a projected sources of funds statement for the 1978 - 1985 period, with uderlying assumptions, demonstrating how it might raise the requisite funds to design and construct the Seabrook Station, Units 1 and 2, to the extant of its joint-ownership share. Montaup Electric Company's internally-generated cash over this period is projected to be 3.4 percent of the total construction expend-itures and 13.3 percent of its expected nutlays for the Seabrook Station, Units 1 and 2.
This applicant's projected level of internal cash generation
has been reduced as a result of its projected common stock dividend payout ratio of slightly over 100 percent. This pqyout ratio has been determined necessary by the Company's management to support Brockton Edison Company's investment in the Montaup Electric Company. However, during the course of its financing of the Seabrook plant, its capital structure will improve to provide greater equity protection and, as indicated earlier, this applicant has access to the less restrictive financing ava4.lable as a result of its subsidiary relationship.
In light of the above, our review of the financial projections of the Montaup Electric Company leads us to conclude that they are within the zone of reasonableness, and that they constititute a reasonable financing plan.
Accordingly, we conclude that the Montaup Electric Company is financially qualified to design and construct the facility to the extent of its respective joint-ownership interest. This conclusion is predicated upon our determination that there is a reasonable assurance that it can raise the funds necessary to cover its 2.93531 percent share of the estimated costs to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle costs.
. New Bedford Gas and Edison Light Company The New Bedford Gas and Edison Light Company, a subsidiary of New England Gas and Electric Association, supplies electricity and gas to numerous communities in Southeastern Massachusetts.
Its operating revenues increased from $131.1 million in 1976 to $143.5 million in 1977, while for the same years net income increased from $5.8 million to $6.3 million.
Invested capital at December 31, 1977 amounted to
$126.7 million, ard consisted of 48.0 percent long-term debt and 52.0 percent common equity. This capital structure compares favorably with the previously stated historical range of the electric utility industry.
Concurrently, it provides a sufficient amount of equity capital protection to the holders of the company's senior obligations, thereby contributing to its financial integrity.
During both 1976 and 1977, this applicant earned a 9.25 percent rate of return on average common equity.
Its long-term interest and total interest charges in 1977 were covered by pretax earnings 3.4 times and 3.2 times, respectively, versus coverages of 3.3 times and 2.8 times in 1976.
These levels of long-term interest coverage compare favorably with the Company's trust indenture requirement that earnings be at least 2.5 times its interest charges, including interest charges attributable to a new issue, before new bonds may be issued. The New Bedford Gas and Edison Light Company's outstanding long-term bonds are rated "Aa" by Moody's and "A" by Standard and Poor's.
' New Bedford Gas and Edison Light Company plans to finance its 4.3737 percent joint-ownership interest in the Seabrook Station, Units 1 and 2, through the use of internally-generated cash and short-term borrowings which will be reffnanced with proceeds received from the sale of long-term debt or equity securities. Permanent financing will be on a 50/50 debt-equity ratio, basis since the New Bedford Gas and Edison Light Company's indenture of trust re-quires that debt capitalization not exceed equity capitalization. Although this provision will have the effect of further limiting the issuance of its debt securities, by exercise of its pre-emptive right, its parent company will purchase at least 99.98 percent of this applicant's new equity issues.
The effect of this relationship allows this applicant a ready buyer awaiting the purchase of its equity securities. Consequently, this will allow to the Montaup Electric Company a reasonable assurance of being able to match its long-term debt issuances with equity capital during the financing of its capital requirements, thereby maintaining its required 50/50 debt-equity ratio financing.
In 1977 its sources of funds totaled $6.1 million and were derived entirely from internally-generated cash, net of refunding requirements.
At our request, the New Bedford Gas and Edison Light Company supplied a projected sources of funds statement for the period of the Seabrook Station, Units 1 and 2 construction, with underlying assumptions, demonstrating how the requisite funds might be raised. The New Braford Gas and Edison Light Company's internally generated cash over this period is projected to be 36.7 percent of its total construction expenditures and 165.2 percent of
c These levels its expected outlays for the Seabrook Station, Units 1 and 2.
of projected internal cash generation are reasonable in light of this applicant's recent experience. Likewise, its interest-coverages projected during this period will exceed its indenture requirements, thereby maintaining -
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sufficient interest protection to holders of its long-term securities.
In light of the above, our review of the financial projections of the New Bedford Gas and Edison Light Company leads us to conclude that they are within the zone of reasonableness, and that they constitute a reasonable financing plan. Accordingly, we conclude that the New Bedford Gas and Edison Light Company is financially qualified to design and construct the facility to the extent of its joint-ownership interest. This conclusion is predicated upon our determination that there is a reasonable assurance that it can raise the funds necessary to cover its 4.3737 percent sF re of the estimated costs i
to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle costs.
+
Town of Hudson, Ma sachusetts, Licht and Power Department The Town of Hudson, Massachusetts, Light and Power haartment is a municipally-owned electric system supplying electricity to the Town of Hudson, Massachusetts.
Its operating revenues for the fiscal year ending Decerrber 31, 1977 were $4.8 million and its net utility plant was $4.8 million.
The Town of Hudson, Massachusetts, Light and Power Department plans to finance its 0.05780 percent joint-ownership interest in the Seabrook Station, Units 1 and 2, primarily through utilization of internally-generated funds.
Presently, it anticipaces that no bond financing will be necessary to meet its share of the expenditures required to construct the facility.
Review of its historical internal cash generation indicates that this applicant's projected levels of internal cash generation are reasonable.
However, if borrowing is required, principal and interest due from such obligations would be funded from current operating funds derived from the sale of energy. As all of its previous long-term debt has been redeemed, it has none outstanding at present. This constitutes 100 percent equity protection to its assets and allows for borrowing reserve.
The Town of Hudson, Massachusetts, Light and Power Department's rates are established ir.d changed under Massachusetts laws and require the municipality to charge rate 3 that are not less than the cost of operations. Since its rates are not subject to the approval of any regulatory authority, it has unilatert authority to set reasonable rates. The foregoing acts as a mechanism for the applicant to be able to maintain its financial integrity, internally generate
sufficient funds, and attract capital, when necessary, to cover its estinated construction expenditures during the facility's construction.
Based on the above information, we conclude that there is a reasonable assurance that the Town of Hudson, Massachusetts, Light and Power Departnent can raise the funds necessary to cover its 0.05780 percent share of the costs to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle coste-Accordingly, we have determined that the Town of Hudson, Massachusetts, Light and Power Departnent is financially qualified to design and construct the Seabrook Station, Units 1 and 2, to the extent of its joint-ownership interest.
D
s,
-2S-Vermont Electric Cooperative, Inc.
Vermont Electric Cooperative, Inc. is a member. owr.ad rural electric system serving Chittenden, Franklin, Lamoill and Orle counties in Vermont and Bernandston, -
Colvain, and Leyden counties in Massachusetts.
Its operating revenues for 1977
. were approximately $4.4 million and its net utility plant was $12.6 million.
Vermont Electric Cooperative, I1c. plans to finance its 0.41259 percent ownership share in the Seabrook Station, Units 1 and 2, from the proceeds of loans from the Rural Electrification Administration. The Rural Electrification Administration rpprovet a loan in the amount of $15.8 million in April of 1977 to finance joint-ownership interests by Vermont Electric Cooperative, Inc.
in various planned generation facilities, including a 0.20000 percent interest in the Seabrook Station, Units 1 and 2.
Additionally, the Vermont Electric Cooperative, Inc. has received a letter dated October 20, 1978 from the Rural Electrification Administration advising that an additional loan in the amount of $18.0 million is presently under review. The relevant portion of this letter strtes as follows:
" Based on the information in our files, we are in agreement with the approach being followed by VEC in meeting its future power supply needs. The most recent power requirements study ind.icates that this additional capacity can be fully utilized by VEC.
We contemplate favorable consideration of your request for financial a:sistance as set forth in your Septe;acer 22 letter, subject, however, to REA's favorable review of your supporting feasibility studies.
We understand these studies were received today, and that a meeting has been scheduled to discuss them with you next month."
26-A portion of the proceeds of this loan will be used by-this applicant to finai.ce -
its remaining 0.21259 percent interest in the Seabrook Station, Units 1 Security for the cooperative's long-term financing is the revenue derived and 2.
from the sale of electricity to each member's ultimate customers.
Based upon the preceding information, we conclude that Vermont Electric Cooperative, Inc. is financially qualified to design and construct the Seabrook Station, Units 1 and 2, to the extent of its joint-ownership interest. This conclusion is based on our determination that the Vermont Electric Cooperative, Inc. has demonstrated a reasonable assurance that is can raise the necessary funds to cover its 0.41259 percent share of the estimated costs to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle costs. Subsequent to issuance of this amendment, we require Vermont Electric Cooperative, Inc. to inform the NRC staff of any action by the Rural Electrification Administration on the pending $18.0 million loan request, including, but not limited to, submittal of copies of the Executed Rural Electrification loan commitment.-
[
Massachusetts Municipal Wholesale Electric Company The Massachusetts Municipal Wholesale Electric Company-is a public corporation and political subdivision of the Commonwealth of Massachusetts ard was established as a coordinating and planning agency for the develop-ment of its municipal members' bulk power supply contracts. As of December 31,
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1977, twenty-nine Massachusetts municipalities had the approval of their respective local political subdivisions authorizing membership in the Massachusetts Municipal Wholesale Electric Company.
To finance its 5.59249 percent joint-ownership interest in the Seabrook Station, Units 1 and 2, the Massachusetts Municipal Wholesale Electric Company will issue long-term debt in the form of revenue bonds. As of September 1978, this applicant had successfully issued $410.87 million of such bonds. The ratings of its bonds are listed by Moody's as Al and by Standard and Poor's as A+.
These bonds are 100 percent secured with "take or pay" life of unit Power Sales Agreements with its member-municipal electric systems. Since there is no agency exercising regulatory powers over it for power delivered, under the terms of the Power Sales Agreements, the Massachusetts Municipal Wholesale Electric Company has unilateral authority to charge rates necessary to cover all of its costs, including interest charges and debt repayment.
This acts as a mechanism for this applicant to maintain its financial integrity and attract the capital required to cover its estimated construction expenditures during the facility's construction.
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28-Based upon the preceding information, we conclude that the Massachusetts Municipal Wholesale Electric Company is financially qualified to design the Seabrook Station, Units 1 and 2, to the extent of its 5.59249 percent joint-ownership interest. This conclusion is predicated upon our determination that the Massachusetts Municipal Wholesale Electric Company has demonstrated a reasonable assurance that it can obtain the necessary funds to cover its share of the estimated costs to design and construct the facility, including related fuel cycle costs.
O 0
Maine Public Service Company The Maine Public Service Company provides electric service to over sixty communities in Northern Maine.
Its operating revenues increased from
$17.2 million in 1976 to $18.0 million in 1977, while for the same years net income increased from $1.8 million to $2.6 million. At December 31,
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1977 its invested capital amounted to $36.1 million and consisted of 51.1 percent long-term debt, 6.1 percent preferred stock, and 42.8 percent common equity.
This capital structure compares favorably with the previously stated historical range of the electric utility industry. Concurrently, it pro-vides a substantial amount of equity capital protection to the holders of the-Company's senior obligations, thereby contributing to its financial integrity.
During 1977, this applicant earned a 16.1 percent rate of return on average common equity, compared with 11.6 percent realized in 1976.
Its long-term and total interest charges in 1977 were covered by pretax earnings 4.14 and 4.13 times, respectively, versus coverages of 3.26 and 3.25 realized in 1976. This compares favorably with the Company's trust indenture requirenent that its earnings be at least twice its interest charges, including annual interest charges associated with a new debt offering, before it may issue additional debt. The Maine Public Service Company's outstanding bonds are rated "A" by Standard and Poor's and have not been rated by Moody's.
The Maine Public Service Company plans to finance its 1.46056 percent joint-ownership interest in the Seabrook Station, Units 1 and 2, through the use of internally-generated cash and short-term borrowings which will be
subsequently refinanced with proceeds received from issuances'of additional first mortgage bonds, debentures and common stock. Since this applicant does not project the issuance of preferred stock as part of its plan to finance -
its estimated construction expenditures during the construction of the Seabrook facility, it will rely instead upon long-term debt. In 1977 it financed $3.3-million which was derived from $2.6 million of internally-generated cash and
$0.7 million from changes in working capital and other sources. Internally-generated funds financed 78.8 percent of its total construction expenditures for 1977.
At our request, the Maine Public Service Company supplied a projected sources of funds statement for the construction period of the Seabrook Station, Units 1 and 2, with underlying assumptions, demonstrating how it might raise the requisite funds to construct the facility.
Internally-generated cash over this period is projected to be 43.4 percent of total construction expendi-tures and will cover 110.4 percent of its expected outlays of the Seabrook Station, Units 1 and 2.
This projected level of internal cash generation is not unreasonable in light of its historical experience. Moreover, this projected financing will result in a capital structure within the historical range of the electric utility industry (after adjusting for preferred stock, as noted above) while maintaining a level of interest coverage on a year-by-year basis during the period of the facility's construction in excess of its trust indenture requirements.
In light of the above, our review of the financial projections of the Maine Public Service Company leads us to conclude that they are within the zone of reasonableness, and that they constitute a reasonable financing plan. Accordingly, we conclude that the Maine Public Service Company is financially qualified to design and construct the facility to the extent of its joint-ownership interest. This conclusion is predicated upon our determination that there is reasonable assurance that it can raise the funds necessary to cover its 1.46056 percent share of the estimated costs to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle costs.
0 0
Bangor Hydro-Electric Company The Bangor Kydro-Electric Company provides electric service to several counties in Eastern Maine.
Its operating revenues increased from $31.3 million in 1976 to $38.3 million in 1977, while for the same years net income increased from $3.0 million to $4.1 million.
Invested capital at December 31, 1977 amounted to $52.3 million and consisted of 48.4 percent long-term debt,12.8 percent preferred stock, and 38.8 percent ccmmon equity.
This capital structure compares favorably with the previously stated historical range of the electrical utility industry. Concurrently, it provides a sufficient amount of equity capital protection to the holders of the Company's senior obligations, thereby contributing to its financial integrity.
During 1977, this applicant earned a 12.9 percent rate of return on average common equity, compared with 7.3 percent realized in 1976.
Its long-term and total interest charges in 1977 were covered by pre-tax earnings 3.2 times and 2.8 times, respectively, versus coverages of 1.9 times and 1.4 times in 1976. This applicant's recent long-term interest coverage compares favorably with.its trust indenture requirement that its earnings be at least twice its iterest charges, including annual interest charges associated with a new debt offering, before it may issue additional debt. The Bangor Hydro-Electric Comany's long-term bonds are rated "A" by both Moody's and by Standard and Poor's.
The Bangor Hydro-Electric Company plans to finance its 0.37249 percent joint-ownership interest in the Seabrook Station, Units 1 ond 2, through the use of internally-generated cash and short-term borrowings which will sub-sequently be refinanced with proceeds from issuances of new equity or debt
- " securities. In this respect, its sources of funds in 1977 totaled $7.2 million and were derived from $4.2 million of internally-generated cash and $3.0 million from issuances of notes payable to banks, issuances of common stock, and other sources.
Internally-generated funds financed 58.1 percent of its total construction expenditures for 1977.
At our request the Bangor Hydro-Electric Company supplied a projected sources of funds statement for the 1978 - 1984 period, with underlying assumptions, demonstrating how it might raise the requisite funds to construct the Seabrook Station, Units 1 and 2.
Internally-generated cash over this period is projected to be 15.3 percent of total construction expenditures and will cover 195.8 percent of its expected outlays of the Seabrook Station, Units 1 and 2.
This projected level of internal cash generation is not unreasonable in light of its historical experience.
Moreover, under its projected financing this applicant will result with a capital structure within the historical range.of the electric utility industry while maintaining a level of interest coverage on a year-by-year basis during the period of the f,acility's construction in excess of its indenture requirements.
In light of the above, our review of the financial projections of the Bangor Hydro-Electric Company leads us to conclude that they are within the zone of reasonableness, and that they constitute a reasonable financing plan.
Accordingly, we conclude that the Bangor Hydro-Electric Company
_g, is financially qualified to design and construct the facility to the extent of its joint ownership interest. This conclusion is predicated upon our determination that there is reasonable assurance that it can raise the funds necessary to cover its 0.37249 percent share of the estimated costs to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle costs.
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-3S-Taunton Municipal Lighting Plant Comission
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' The Taunton Municipal Lighting Plant Comission is a municipally-owned electric system supplying electricity to the Town of Taunton, Massachusetts..
Its operating revenues for the fiscal ysar ending December 31,1977 were $21.2 million and its net utility plant was $34.6 million.
The Taunton Municipal Lighting Plant Comission plans to finance its 0.10034 percent joint-ownership interest in the Seabrook Station, Units 1 and 2, solely through utilization of internally-generated funds.
In this respect, our review of its projected levels of internal cash generation to finance its construction expenditures during this facility's construction indicate that they are not unreasonable in light of its recant experience. The Town of Taunton had previously authorized the sale of $24.0 million of electric bonds to finance the construction of various electric facilities. Moody's Investors Service assigned an "A" rating to the outstanding bonds of this applicant.
The Taunton Municipal Lighting Plant Comission's rates are established and changed under Massachusetts laws and require the municipality to charge rates that are not less than the cost of operations. Since its. rates are not subject to the approval of any regulatory agency, it has unilateral authority to set reasonable rates. This acts as a mechanism for this applicant to maintain its financial integrity, thereby allowing it to internally generate sufficient funds to cover its projected construction expenditures during the facility's construction.
Based on the above information, we conclude that there is a reasonable _
assurance that the Taunton Municipal Lighting Plant Commission can raise the
- funds necessary to cover its 0.10034 percent share of the costs to design and construct the Seabrook Station, Units 1 and 2, including related fuel cycle costs. Accordingly, we have determined that the Taunton Municipal Lighting Plant Commission is financially qualified to design and construct the Seabrook Station, Units 1 and 2, to the extent of its joint-ownership interest.
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Conclusion
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Based upon the preceding analyses, we conclude that the Fitchburg Gas and Electric Light Ccxnpany, the Montaup Electric Company,' and the New Bedford Gas and Edison Light Company are financially qualified to increase their respective joint-ownership interests in the Seabrook Station, Units 1 and 2, as requested. Likewise, we conclude that the Town of Hudson, Massachusetts, Light and Power Department; the Vermont Electric Cooperative, Inc.; the Massachusetts Municipal Wholesale Electric Company; the Maine Public Service Company; the Bangor Hydro-Electric Company; and the Taunton Municipal Lighting Plant Comission are financially qualified to asstrae their respective ownership interests in the Seabrook Station, Units 1 and 2, as proposed in their requested amendment to the construction permits.
This conclusion is predicated upon our determination that each of these applicants has demon-strated a reasonable assurance of obtaining the funds necessary to support its respective share of the costs necessary in the design and construction of the Seabrook Station, Units 1 and 2, including nuclear fuel inventory for first core.
Our conclusion that the above applicants are financially qualified to design and construct the Seabrook Station, Units 1 and 2, to the extent of their respective ownership interests is based upon an assessment that their financing projections constitute reasonable financing plans. We do not consider these projections to be a forecast of what will necessarily occur. They need
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... only demonstrate one possible way by which its planned construction expenditures, including those resulting from construction of the subject facility, might reasonably be financed. We realistically expect that the financing plans will change over time to accommodate changing financial and economic conditions.
The proposed financing is in accord with general industry practices and the assumptions being used, although not susceptible to precise measurement against absolute criteria, are in line with what one might expect under the postulated conditions. Since the financing projections can be characterized as reasonable, we conclude that the reasonable assurance standard has been satisfied.
Suosequel:t to issuance of the amendment we require: Submittal to the NRC staff of (1) information of any action by the Rural Electrification Admin-istration on the Vermont Electric Cooperative, Inc. pending $18.0 million loan request, including, but not limited to, copies of the executed Rural Electrifi-cation Administration loan conmitment; (2) copies of the executed joint-ownership agreement among the fourteen participants; and (3) copies ci the orders approving these transfers of ownership issued by State regulatory agencies.
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Calvin W. Moon, Project Manager teven. Varga, ef Light Water Reactors Branch 4 Light Water React Branch 4 Division of Project Management Division of Project Management DEC 2 7197a