ML19323H927

Requests & Interrogatories Re Financial Qualifications Including Request for Insp & Copying,First Set of Interrogatories Directed to Applicant & Request for Documents Directed to Nrc.W/Certificate of Svc & Article

ML19323H927
Person / Time
Site:	Allens Creek File:Houston Lighting and Power Company icon.png
Issue date:	05/09/1980
From:	Baker B AFFILIATION NOT ASSIGNED
To:	HOUSTON LIGHTING & POWER CO., NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD)
References
NUDOCS 8006170286
Download: ML19323H927 (9)

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a pocEEED g, USHBG UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION C-Ugj i 21980  :- >

eWT -11 V 0 BEFORE THE ATOMIC SAFETY AND LICENSING BOAR D tch p

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In the Matter of DOCKET NUMBER Houston Lighting & Power Company 8 50-466 (Allen's Creek Nuclear Generating  %

Station, Unit 1)  %

FINANCIAL QUALIFICATIONS CONTENTION l

l Consolidation of Baker Contention 1, Cumings Contention 1-and PIRG Additional Contention 32 (Financial Qualifil cations)

Page 1 l l

Request for Access to Material in Possession of Applicant Page 1 l Request for Access to " South Texas Nuclear Project, Quality Assurance and Quality Control, Management Assessment Survey for Brown & Root, Inc. (Jan 1980)" Page 2 i First Set of Interrogatories to Applicant: FQ-1 Page 3 Request for Documents of NRC Page 7 CERTIFICATE OF SERVICE I hereby certify ths.t copies of these documents have been sent to the first following class, on oragencies before May or individuals 9 , 1980. by deposit in the U.S. Mail, Atomic Safety and. Licensing Board Panel J'. Gregory Copeland; Esq., of counsel for Applicant Richard Lowerre, Esq., Asst. Attorney General for the State of Texas Ste hen M. Sohinki, Esc., Counsel for NRC Staff Doc eting and Service section, Office of the Secretary, NRC Stephen A. Doggetti Es q., counsel for Intervenor Cumings James' Scott Jr, E,s,q., counsel for Intervenor TexPIRG

' Dated: Signed:

k p l980 k Bryan Baker, -

for the Intervenors . _ .

8 0 06170 Q6(,

1 Consolidation of Baker Contention 1, Cumings 1, and PIRG Additional Contention 32 (Financial Qualifications)

The Licensing Board ordered (Mar 10, 1980) the consolidation of PIRG Additional Contention 32, Baker Contention 1, and Cumings Contention 1. Intervenor Bryan Baker, Steve Doggett as counsel

$ for Intervenor Elinore Cumings, and James Scott and Clarence Johnson as representatives of Intervenor TexPIRG met and agreed

,that Intervenor Baker will conduct discovery, etc. , for the con-solidated contention.

These contentions concern Applicant's financial qualifications

- to safely construct and operate the proposed facility. Pending a

. uniform labelling of contentions by the Board, I will simply refer ,

to the consolidated contention as the Financial Qualifications Contention.

Request for Access to Material in Possession of Applicant Intervenors request that the Appli' cant make available for study and copying the following documents:

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1) Transcript of Applicant's rate-hike hearing before the Texas Public Utilities Commission (PUC).

2) All documents submitted by Applicant and other parties in connection with rate-hike application. , j Coun.Sel for Applicant, J. Gregory Copeland, has told Intervenor Baker in a telephone conversation that he does not foresee sny

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2 objection to this request, and I feel sure that we can work o'ut infornmily the details of access to the documents.

Eequest for Access to " South Texas Nuclear Project, Quality Assur-ance and Quality Control, Management Assessment Survey for Brown and Root, Inc. (Jan 1980)"

This document is covered by the Board's Protective Order of Apr 18, 1980. This document was protected even though the Board i " explicitly decline (d) to find that Applicant, upon the behalf of Brown & Root, Inc., or Brown & Root itself, has met the burden of

l. showing that the document in question and the commercial informa-tion contained therein are confidential in character and entitled to protection. . . ." (Order of Apr 18, 1980, p.2)

In general, Licensing Boards are required to consider an Applicant's financial qualifications because of a fear that finan-cial difficulties o.1 the part of a licensee might lead to a compro-

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mise of the public safety. In the case of a construr: tion permit it is especially important to establish that a potential licensee will not become financially " strapped" during the lengthy and ex-pensive construction of the facility and, under such stress, make decisions to " cut corners" in the safe construction of the facility.

l We maintain that evidence of such behavior on the part of an applicant is of obvious relevance to financial qualifications con-tantions.

This Applicant, as previously notea by Intervenors, has run

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3 into problems on its South Texas Nuclear Project (STNP) which have led so far to a four-year construction delay and a tripling of estimated final construction cost. In addition, thera have been numerous allegations of substandard construction, improper inspec-tions and documentation, and lack of proper management at the STNP site. It should be one goal of this financial qualifications in-quiry to determine what connection there may be between Applicant's financial difficulties at STNP and possible safety deficiencies at that facility.

The report entitled " South Texas Nuclear Project, Quality.

1ssurance and Quality Control, Management Assessment Survey for Brown & Root, Inc. (Jan 1980)" is likely to have a bearing on this question, and I therefore request that Financial Qualifications Intervenors be allowed to examine it.

First Set of Interrogatories to Applicant: FQ-1

. I will use the following system to designate these and future FQ Interrogatories, unless the Board prefers otherwise. All inter-regatories in this submittal shall be designated FQ-1, in the next submittal FQ-2, etc. The first interrogatory in this submittal

'i will be FQ-1.1, the second in this submittal FQ-1.2, etc.

FQ-1 Interregatory 1

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(a) ADMIT or DENY: Houston Lighting & Power Company,took the following position before the Texas PUC in Docket 2676 as indicated

k FQ-1.1 (a) . . . by its Brief to the Ex==4ner (p.74) filed Oct,29,.

1979:

"If HL&P's revenue needs are not recognized today through adequate and timely rate relief, HL&P may be forced to defer construction at a time when additional generating capacity is most needed."

(b) The R quest for Admission stated above cites a quote from p.74 of the Brief to the Examiner in PUC Docket 2676. Explain l what " construction" is referred to in the clause "HL&P may be forced to defer construction"?

Interrogatory 2 l

(a) What is the most current estimate of the final construc-tion cost of ACNGS?

(b) When was this estimate made? By whom?

(c) This most current estimate will be based upon certain assumptions regarding future conditions. What are the assumptions i

l with regard to:

i (i) Construction schedule (year of start-year of completion)

(ii) Average annual rate of inflation l (iii) Percentage of Construction Works In Progress (CWIP) l expected to be allowed in the rate base (average over aan-

! struction period) l' (iv). Cost of Capitalization (interest rates expected to prevail over financing period) i Interrogatory 3 As pointed out in Baker 1 (Sep 18,1979), the Applicant's chief financial officer has taken the position before the PUC that "100%

inclusion (of CWIP in the rate base) is required to . . . enable the Company to achieve its financial integrity requirements." The rate increase requested by Applicant in 1979 is still being appealed

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5 FQ-1 3 . . . before the PUC, but the probable outcome is that something less than 50% of CWIP will be allowed in the rate base.

f (a) Does Applicant acknowledge that a 506 level of CWIP in the rate base would constitute a severe threat to its " financial integrity"?

(b) Does Applicant have any contingency plan by which construc-tion of ACNGS might comfortably be financed in the event that sub-stantial amounts of CWIP funds are eliminated from the rate base?

(c) Does Applicant have any construction-financing scenario in mind which differs substantially from that outlined in Sec. 20 of the SER? If so, how does it differ?

Interrogatorv .i Since the accident at.Three Mile Island, a number of questions have arisen concerning (generally) a licenzee's responsibility to main-tain a non-productive facility and to finance its safe cleanup.

Regarding the case at hand:

(a) What is-the estimated cost, for maintenance and cleanup of the facility, purchase of replacement power, and payment of any

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damage-claims, in the event of the maximum credible accident (maxi-mum in terms of cost) at ACNGS?

(b) What plan does Applicant have to pay such costs, or to insure itself against them?

Interrogatory 5 ,

.The Department..of Energy (DOE) has placed upon utilities which generate radioactive waste the burden of paying for the storage and presumed eventual disposal of spent fuel (high-level waste).

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6 FQ-1.5 (a) What does lpplicant currently assume to be the total cost-of safe storage and disposal of one year's component cf spent fuel from ACNGS?

(b) What is the bas'is for this estimate of waste disposal costa?

(c) What is the degree of certainty of this estimate?

(d) How does Applicant propose to finance this disposal?

(e) Some scenarios for high-level waste disposal call for the monitoring and possible mnM pulation of wastes for periods - u-dreds of years. What assurance does Applicant have that it will remain financially responsible for such a long period of time?

Interrogatorv 6 In its most recent rate-hike application, Applicant stated that the final construction cost of its South Texas Nuclear Project was esti-mated to be 1.6 billion dollars. Three months after the initial filing, HI&P vice-president George Oprea Jr testified that the best estimate was actually 2.7 billion dollars and that the project was four years behind schedule. (Additional Material in Support of Contentions of Bryan L. Baker, Sep 29, 1979: EIHIBIT "HI&P offi-cial says nuclear plant cost to be $2.7 billion", Houston Post 9/29/79 Page 1A)

(a) Have these figures changed significantly in the past eight months? If so, how?

(b) How do these cost overruns and constrtretion delays at STNP affect the financing plan for ACNGS construction?

Interrogatorv-7 According to the attached EXHIBIT, based on the report of an NRC task force investigating Applicant's STNP, "the project's quality

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FQ-l'.7 . . . assurance mana6er last Jan. A gave a lecture that ' repeat-edly overemphasized . . . minimizing project i:ost and maintaining the construction schedule. '" - . . , .

(a) Is this report substantially t w e? ,,

(b) What steps are contemplated to prevent the development of such an attitude on the part of QC.and QA personnel at ACNGS7 Request for Documents of NRC Intervenors request that the NRC Staff provide the following materials from other dockets:

7912040481--Memo in support of Seacoast Anti-Pollution League request for show cause order re. suspension of construction permit. DOCKET #50-643 24 pages.

7911280551--Denying Intervenor Seacoast Anti-Pollution League request for show cause. DOCKET #50-443 20 pages Report of NRC Task Force on construction and inspection irregular-ities at South Texas Nuclear Project (See EIHIBIT: Page 8 of this submittal. I know of this report, issued on or about May_1, 1980, only from newspaper accounts.)

This statement of consolidation, first set of interrogatories, and three requests for documents a~re submitted by the Financial Qualifications Intervenors.

DATE: .FOR THE INTERVENORS

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deficiencks in any construction aircady i Envireement Wrlier , , T AND IN INTERVIEWS of more than. supervisors failed to back them up la completed. the NRC team sakt harass.100 workers, 21 of whom gave sworn

'I Iter an inspector questioned a con- ment, threats and intimklation of Ilrown statements, the NRC turned up repeated such disputes. Several asserted they were also warned by. Ilrown & Root y (

e pour at the South Texas Nuclear & Root quality control people were r6 cent instances of threats and hullying supervisors against taking complaints to g ,

ject last fall, a general foreman " common knowledge" around the con- -a problem that has evad,cd solutloq by .the NRC. M struction stte.

onto the scene and warned the lilAP and Drown & Root since 1977. De NRC said one concrete foreman

• laspector: "These comittions have gone we *.al-One quality control inspector said he :was notorious for breaking regulations 1a gYou long-haired hipple , get your lenged by IRAP and B&R," the investi- questioned a concrete pour last fa!! while when inspectors' backs were turned, and 4

---together or I'll kick your ." gators said,"to the point that the quality . atop a 64 foot concrete wall. !!c said a he later started Ignoring procedures as 91 a conference on another concrete. of be work at the South Texas Pro}cet could construction man warned him: inspectors affected." give us any trouble. We'll thrcw you off

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hgblem, the same general foreman . - This same foreman, the NItC reported, the wall and you can pick the skk "

threatened to "come across the table" at

@other inspector. EVEN WillLE TilEIR Investigation was responsible for'95 percent of the A quality control supervisor said he . critical pours on the inner wall c,! the y anese are just two of many instances was h progess, the NRC team said, the was threatened with bodily Isarm at least 09 reactor containment buildings. e Odetailed in a Nuclear Regulatory Com- project's quality assurance manager last three times in the past two years:

igQssion report - of threats and harass- Jan. 4 gave a lecture that " repeatedly AS ANOTilER GALMIE of the prob-ment F

heaped on quality control inspec- overemphasized . . . mtnlmizing project ,

E A construction man threatened to 'lem,,the NRC team stud:ed employee N Icis by construction personnel at the $2.7 cost and maintaining the construction hit him with a shovel, picking it up and turnover on two quattty control Inspec-schedule."

h(lilon nuclear project. walking toward him. "I picked up some (lon teams during a 14morth period of

• • • The quality assurance chief strongly rebar to defend myself," the supervisor 1979.

!! Tile REPORT catalogued the findings emphasized that decisions by quality said laconically, "and we finally resolv- ,

W p massive 1,100 hour0.00116 days <br />0.0278 hours <br />1.653439e-4 weeks <br />3.805e-5 months <br /> investigation by control Inspectors were subject to chal- ed the problem." Twenty 4wo d 2 gens on one tcant lenge and reversal, the NRC said.  ;

a*six-man NRC team of problems at the were either fired, transferred or quit dur . -

constmetion site near Bay City. Apparently, the NRC commented, the 3 h same constmedon man, InfuS E 9' pmrsday, the investigation led to a quality assurance management did not ated because his work had not passed in. deP8 te I' h !!

$100,000 penalty against flous-

{e u, a gan spection in another rim-In, " told me that r, ors were replaced.

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q gy c , ne would be waiting for me in the park-higt t four 111 y ture spectors to assum constmcuon d a safe W MNC The NRC team commented that such

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w. The investigators in their report con- Plant. ##

E "A construction civil engineer took " 7 linded the root of the problem appears The NRC team said it substantiated a swing at me on one occasion and as a p ge7* g D be a " lack of detailed involvement" (nstances where construction personnel' result he was transferred to another area .

.IllAP in the construction of the nu-c ' project by Brown & Root Inc. got quality control supervisors to over- by Brown & Itoot."

rule the decisions of inspectors in the It was also observed the high turnover

.tends to reduce the quality of construc- g*

While they reported finding no major field. tion and ackis significantly to training re-Many inspectors complained that their .;quirements and costs.

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