ML19320C990
| ML19320C990 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 07/14/1980 |
| From: | Herbein J METROPOLITAN EDISON CO. |
| To: | Saltzman J Office of Nuclear Reactor Regulation |
| References | |
| TLL-332, NUDOCS 8007180404 | |
| Download: ML19320C990 (6) | |
Text
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Metropolitan Edison Company Post Office Box 480 g
Middletown, Pennsylvania 17057.
717 9444041 Writer's Direct Dial Number July 14, 1980 TLL 332 Utility Finance Branch Attn:
J. Saltzman, Chief Office of Nuclear Reactor Regulation U. S. Nuclecr Regulatory Commission Washington, D.C.
20555
Dear Sir:
Three Mile Island Nuclear Station, Units I and II (IMI-l and TMI-2)
Operating License Nos. DPR-50 and DPR-73 Docket Nos. 50-289 and 50-320 Financial Protection Requirements This letter is in response to your letter of June 13, 1980 requesting additional
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material with respect to the compliance with the financial protection provisions of the Atomic Energy Act for Three Mile Island Unit 11, With respect to the insurance available from the pools, you requested a copy of the endorsement proposed by the pools.
By letter of June 12, 1980, Mr. John L. Quattrocchi of ASI forwarded the proposed endorsement to you for your consideration.
This had apparently not arrived when you wrote to us.
I am enclosing a copy of that letter and the proposed endorsement in the event you did not receive your copy.
With respect to your comment as to the pools' having limited this endorsement so as to apply only where a new accident at TMI-II were declared to be an
" extraordinary nuclear occurrence" (ENO), we would, of course, pref er that the endorsement not be so limited.
For reasons we will describe, however, we do believe this endorsement, even with the limitation, meets the statutory criteria by providing the maximum insurance available at reasonable cost and on reasonable terms from private sources.
If TMI-II were to be permitted to continue to be licensed with the liability insurance provided by the pools, the only way in which the limitation could become significant is if there were to be another nuclear accident at TMI-II which, when combined with the effects of the March 28, 1980 accident, resulted in liability which exceeded S140 million.
In that event, in our view, the secondary financial protection layer would come into play at this $140 million level. The licensees would simply contribute to their share of the damages at a lower amount than would be the case if the accident had occurred at some other site which did not have this limitation.
If, then, both the primary and secondary protection layers were to be exceeded, the potential governmental We believe this discussion to be particularly relevant to /V100Y The total protection for the public indemnity would make up the $20 million.
would be unchanged.
3 the statement in your letter of June 13 that the endorsement "could be viewed
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800718040Y
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J. Saltzman TLL 332 as providing the public with less protection at Unit II than at any other reactor in the country...".
It is relevant to the consideration of the e'. 'orsement that TMI-II is not now operating and will not be operating for the foreseeable future. The Commission could review the availability of additional coverage in the future when the unit is again ready for operation.
It would be possible for the Commission to require the licensee to provide a bank instrument, such as a letter of credit, or to segregate $20 million of its existing credit to provide protection in the event of a non-ENO for which liability exceeds $140 million.
In the case of the GPU Companies, this would be exceedingly burdensome and, perhaps, impossible to accomplish. As the Commission knows from material submitted to it, the GPU Companies have a limited amount of credit available in the form of a Revolving Credit Agreement under which there is a limit for the GPU System and sublimits applicable to each of the three operating companies (which are the joint owners / licensees to TMI-II).
That credit is necessary to support the engoing utility activities of the Companies, so as to be able to contint- 0; provide safe and adequate ne, continuing to support the service to their customers, while, at the so clean-up activities at TMI-II.
While the Comp.. ties are in a significantly better cash position as a result of rate orders received in the spring of this year and have better prospects with respect to their cash position, the Companies continue to be limited with respect to the availability of credit and will be limited in their access to long term capital markets.
It is unlikely that the Companies could both segregate and reserve $20 million of credit and know that they could continue their necessary utility and clean-up activities with an adequate margin of bank credit available.
If the companies were, for instance, to attempt to segregate some of their limited credit for this purpose at this time, it could impact their ability to continue to protect the public health and safety through their clean-up activities at TMI-II.
The licensees are continuing to explore the insurance markets to attempt to provide a better protection for this purpose. One avenue which is being reviewed is to provide insurance for some or all of the secondcry financial protection inyer of $30 million. The Commission has already, by letter dated April 8, 1980, determined that the anticipated cash flow of Metropolitan Edison Company individually and General Public Utilities Corporation consolidated is satisfactory to meet the requirements of 10 CFR Section 140.21.
If insurance can be obtained for the secondary financial protection retrospective assessment, the Companies would view the cash flow, previously determined to be satisfactory to meet this obligation, as being available in the event it were necessary to deal with its uninsured liability for non-ENO liability at TMI-II in excess af
$140 million up to $160 million if the secondary financial protection provided by assessment of other licensees were not available for this purpose. We will continue to explore this possibility and will report to you on its progress.
In the light of the above discussion, and the materials submitted to you on May 30, 1980 advising as to the efforts of our insurance brokers, we believe the insurance policies proposed to be made available by the licensees from the pools provide the maximum protection to the public that is available froa pri ate i
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'J. Saltzman TLL 332 sources and. that no additional protection in - some other form is more appropriate.
In the light of the above, we believe the proposed policy should be accepted by the Ccanission to. meet the financial protection requirements of its regulations.
Sincerely, J. G. Herbein Vice President TMI-I
. JGH;DGM: hah Attachment
. cc:
R. W. Reid B. H. Grier D. Dilanni H. Silver J. T. Collins B. J. Snyder s
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THIS DOCUMENT CONTAINS
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P0OR QUAUTY PA0ES
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Mue::ct E=r71 U:E7 !==cnca NUCLGAR E dcacy up.mDTV i;dC:EANCE03CO:A7:Cik.
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ilESTORATIG:i Of LlilIT OF t.If.3ILITY Ei;0023Ei;IiiT h g j.@
(E::traordinary !!cclear Occurrence)
It is agrced that:
1.
On or about !! arch ED,1979 a mic1cer incid mt originat;dl.2rcinaft r called tha :: arch 23, 1979 incie. int) in cm.iaction uie d.a c.archip, cporation, L.tintenance or una cf tin Unit 2 r.ecicar P9;ctor U!OGiud-at the locatign dos 1(r.ated in hcm 3 of tha d::leraticas.
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2.
Paymento unda by tha ecmponics undar thi: policy rrith respect to tha March CO,1079 incid:r.t have raduc:.d by $1,7CLOOO tha liuit of th0 companics' liability stated in Itca 4 of tiu C;clarationc, as cmad:d.
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3.
The original limit of liability stated in Item 4 cn3 tha respectivo amanded limits of liability stated in Erbr::cn:nto 15, 20 and 31 are hereby restored to the ccounts shawa talou but only uith respa:t to obligations assumad or onpensec incurred Lacecco of badily injury or preparty damage caused by tha nucloar enerry ht:ard dua to au c::tra-ordinary necicar occurrence which happens 6uring the pariod frca th0 offe.ctiva dato of thl: ondersement to tha data of teraination o! tha p>1 icy end arising crit of the cworship, cporacion. L.aintenance or usa of cna cr more of tha two nuc1cor reactors cictated at tha ic:ation d2stcnated in Itca 3 of th0 declarations; provided hm:over, that cuch c:ttraordinary nuc1ccr occurr:nca is datorni.n:d by the L:ncicar K ruistory Cc licsion to be on "entraordinary nuclear occurrenco" pursucitt to tha provicions of its regulations and tha Atcaic Euercy Act of 10J4, as w.andad, and
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in effect on Hay 1. 1979:
Original limit stated in Itoa 4
$ 1,000,000 Limit stated in Endorsement 15 85,200,G00 Linit stated in Enforncmant 20 93,875,0C0 Limit starod in Endorse:. ant 31 103,5CO.Di:0 4.
Tha limits of liability.as described cheve and as restored to tha extant provided by this endorsuant, shall r.ot bJ cwulativa; arad cach payment made by the c mpanics after the effcetive data of this endorscrnt for any loss or expenso covered by the policy shall reduce by tha crcunt of such payment each of
.00:n
- . limits of lichility. regardless of which limit of liability applios with respect to tha bodily injury or property damage out of which such loss or expenso arises.
c'tutiva cate og h etnoorament June 1,1CO
, which forms a p::rt or posicy No NAU.
mus n.ws. wneato ru.m ttatreem11 ten Edison Cypi.'rsey Contr$1 Peter A Lir)ht Com ranv, and d
t w w to rennsy#wan u Q ectM c t,w,wnv om ci luu For the $sycribing %paniss on u.,,eu.ie N6tHmont No _ _43 ggyng,,ggn,gg gy n.J
HUCL2!'.? Ei Zr.3Y LIT.31LITY I;;3:rds;CE NUCLEf.R E :2r^V LIA0!L!7Y !! Cura:;02 ASOCCIM!Cil SUFFLEMEHTAL LIMIT Or LIT.0ILIT! EISORSEi:EfiT f f.calica' ia U.m'ar r,-'11n C-Af Sical)
Uhereas,there cro t.;o nuc1cer recctors at tha location designated in Item 3 of the decleraticns knct:n respsetively c: tha Unit 1 r.ccitar reretor and tha Unit 2 nuclear reactor; and e
Wharcas,tha limit of liability statad in Itua 4 of tha declarations of the policy.
as cmended by Endort:nents No.16, 20 and 31 opplies jointly and not severally to bodily injury and property dar.nge caused by tha nuclear enarcy horsrd and aricic]
out of tha ownership, operation, maintenance or und of both nuclear reactors, together with all of the premicco, land., Luildings and structures comprising tha iscility describ:d in Ittm 3 of the declarations of tha policy cnd all prcycrty and opersticas at tho. locations dos,ignated tharcin; and Wharcas,such limit of liability, as acendad, is reduced by each paymont cade by the companics for any loss or expense coverad by the policy, all as mors particularly provided by Candition 3 of tha policy and Endorsements No.15, 20 and 31; and Wherect.on or about March 23. 1979 a r.uclear incident originated,(horeinafter called the Msrch 20, 1979 incident),in connection with the ortnorship, oporation, maintenan:0 or use of the Unit 2 nuclear reactor; and Whercas, the companics are willing to supplcmont under certain conditicas cuch portion of such limit as may neu or in tha futura ha availablu with respect to i
l bodily injury or property damags caused by the nuclear energy hazard after giving affect to tha provisions of' Condition 3 and Endorsements No.' 15, 20 and 31.
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3 r:G, THER570RE, IT IS TC.5ED T"W:
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In tha ovent f.he pant or futuro pay:.:ents by the ccmpanies for to:s or expanse cavarod by tha policy enhaust th:r limit of liability stcted in Itc.v. 4 of tha dcclarations, as amandad by EndcEc=2nts 15, 20 cud 31. ar.d as restored by Endorcc.: ant 43, vith respcet only to oblications acc=ed or enpenses incurr:d because of hedily injury or property. dat: age caused during ths paried i'mlby 1,1970 to tha dato of termination of tha policy by the r.ucicar anergy hazard, tha liuii; of tha companice' liability 5 hall ha increased by $15.500,000; t.
i provided, however. that this increa o in tha limit ef'the ccmpanics'.,
li:bility shall not apply to bodily injury or preperty dcmage arising out
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of the ownership, operation, riaintc6$nce or usa of tha Unit 2 nuclear reactor unless such b*cdily ' injury or preparty damaga results frcm a nucicar incident which is datdrminod by the Guelcar Ragulatory Com:7.f asion to be an,."oxtraordinaiy nucicar occurr'once",
pursuant to the, provisions of its regulations and tha Atomic Energy Act of 1954, as amended, and in offect on !!ay 1,1979.
2.
Each payment medo by the companies after tha offectiva date of this endorsec.On0; shall reduce such limit of liability and each of t!3 ccmpanics' limits of liability, as restorod by Endorsement 43 by the amount of cuch paymant in'the manner provided in Condition 3.
Effective Dato of this Endorsement Jun'a 1,.1530s which foms a part of Policy Mo. f!F-220 12:01 A.t4. Standard Time
!stued to Matroon11 tan rdison Ccmany. Jersey rentral_ Power f. Lioht Ccepany, onJ _
rennsyivania islectric ccmpany l
Date of Issue For the SJb:cribing Cat: panics By:
Prestdent Endernmentfio.,41.
Countersic:ied by, i
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