ML19324B296

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Forwards Supplemental Info Re Antitrust Considerations in Support of Louisiana Power & Light,Sys Energy Resources,Inc & Arkansas Power & Light 890815 Proposed License Amends, Designating Entergy Operations,Inc as Licensed Operator
ML19324B296
Person / Time
Site: Waterford Entergy icon.png
Issue date: 10/27/1989
From: Burski R
LOUISIANA POWER & LIGHT CO.
To:
NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
A, W3P89-2121, NUDOCS 8911060004
Download: ML19324B296 (9)
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P O W E R & L. I G H T

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4 October 27,,1989 U.S. Nuclear Regulatory Commission  ;

ATTNt Document Control Desk  !

Washington, D.C. 20555 H  ;

Subject:

Waterford SES Unit 3 )

e Docket No. 50-382.  ;

> License No. NPF-38 l L ProptrJed Amendment to the Operating License -  :

Supplettental Inf ormation l

Gentlement i On August 15, 1989 Louietana Power & Light Company (LP6L), System Energy  ;

t Resources, Inc. (System Energy), and Arkansas Power & Light Company (AP&L) submitted to the Nuclear Regulatory Commission proposed license amendments j

'to designate Entergy Operations, Inc. (E01) as the licensed operator for  :

Waterford Steam Electric Station, Unit 3 (Waterford 3), Grand Culf Nuclear  !

l Station (Grand Gulf) Unit 1, and Arkansas Nuclear One (ANO) Units 1 and 2 I respectively.. The proposed amendments are intended to establish a new l company, to be called E01, as the system-wide nuclear operating company.

In response to discussions with NRC staff at meetings on October 12 and 19, >

l 1989, LP&L has determined that some supplemental information relating to I antitrust considerations, should be provided to the NRC. That information  ;

L is included in Attachments 1 through 3. j Should you have any questions concerning this information, please call, f i

Very truly yours, I

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R.F. Purski  !

Manager g

'[ R gg. Nuclear Safety and Regulatory Affairs ,i s RFB/pi p((

, hN j gg Attachmento j .

Lct Messrs. R.D. Martin, NRC Region IV l/

.fd F.J. liebdon Il D.L. Wigginton  ;

E.L. Blake p

W.M. Stevenson NRC Resident Inspectors Office ,

g "AN EOUAL OPPOfiTUNITY EMPLOYER"

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<c Attachment to W3P89-2121 Page 1 of 6 SUPPLEMENTAL INFORMATION ANTITRUST i t I.. DESCRIPTION OF ENTERGY CORPORATION j Entergy Corporation, formerly named Middle South Utilities, Inc.,

,. includes retail operating companies (called System Operating ,

L Companies), a nuclear generating company, and several subsidiaries F representing various support and service functions. There are four System Operating Companies with service areas that. cover portions of a four state area. The System Operating Companies are Arkansas Power 6 [

, Light Company (AP6L), toutstana Power & Light Company (LP6L), 'l Mississippi' Power & Light Company (MP&L), and New Orleans Public ,

' Service Inc. (N0 PSI). l

v The nuclear generation company is System Energy Resources, Inc.

(System Energy) and is responsible for management and operation of  ;

i l Grand Gulf Nuclear Station. In addition to its management and operations role, System Energy retains its 90% ownership and leasehold  ;

interest in Grand Gulf Unit 1. South Mississippi Electric Power Association (SMEPA) which is not affiliated with Entergy Corporation ,

owns the remaining portion of Grand Gulf.

.l L Entergy's three other subsidiary companies are Entergy Services, Inc.

(ES1); System Fuels, Inc. (SFI), and Electec. Inc. ESI is the system f service company, providing various technical, administrative, and {

corporate services. SF1 is a fuels subsidiary owned by the four [

! System Operating Companies - AP6L, LP&L, MP6L and NOPSI. Electec,  !

h Inc. markets the commercial capabilities, expertise, and resources of l the system companies. j An' organization chart for the current Entergy Corporation is provided l as Attachment 3. l

! 11. REASONS FOR PROPOSED CHANGE FROM SYSTEM ENERGY TO E01 AS THE OPERATOR  !

h OF THE NUCLEAR UNITS f

On July 1, 1988 LP&L and AP6L filed separate applications with the f NRC to amend the operating licenses for the Waterford 3 and Arkansas

)

Nuclear On3 (ANO) facilities in order for System Energy to assume j operating responsibility for those facilities. Within the next  ;

several months thereafter, other filings were made with state l regulators and the Securities and Exchange Commission for approval of f this proposed transaction. l f

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'- Attachment to W3F89-2121 Page 2 of 6 As a result of meetings with the consultants and attorneya for the Louisiana Public Service Commission (LPSC) and with the staff of the g Arkansas Public Service Commission (APSC). it became apparent that  !

, both the LPSC and the APSC preferred that any consolidation of the nuclear operations of the Middle South Electric System (System) be '

, accomplished and managed by a company separate and apart from System Energy. Concern had been expressed at these meetings that since System Energy was subject to regulation by the Federal Energy Regulatory Commission (FERC) consolidation of nuclear operations l under System Energy might bring the proposed operating agreements  ;

bortween the individual nuclear operating companies and System Energy l under the jurisdiction of the FERC. Additionally, concern was [

expressed over perceived difficulties relating to System Energy being i able to clearly and precisely account for costs if incurred as the owner and operator of Grand Gulf on the one hand and as the operator. .

on behalf of LP6L and AP6L. of Waterford 3 and ANO on the other.

Because of these concerns, it was decided to change the proposed  ;

nuclear consolidation by creating a new company, to be called Entergy  :

Operations. Inc. (E01), to operate Waterford 3. ANO and Grand Gulf i Unit 1. This proposed organization is described in Attachment 3.

Since E0I would not be regulated by the FERC. no filings would be made ,

with the PERC for approval of the nuclear consolidation, and questions regarding the jurisdiction of the FERC over the opertting agreements [

should not arise. Furthermore, accounting for cost should be simpler  !

since, unlike what would have been the case with System Energy E01 '

would only operate the three nuclear facilities, and its accounting  :

system would be limited to its undertakings as the operator. j III. ANTITRUST CONSIDERATIONS Under the proposed license amendments, the entity licensed "to  ;

possess, use and operate" Grand Gulf Unit I will be changed from j System Energy to E01. This change reflects E01's assumption of  :

operating responsibility for -- but not ownership of -- the facility.  !

Similarly. E01 will be designated as the entity responsible for  ;

designing and constructing Grand Gulf Unit 2. System Energy and SMEPA l will remain owners of the two units and therefore will remain licensed j "to possess" Grand Gulf Unit 1. The antitrust conditions on both j licenses will remain applicable to MP6L and System Energy.  ;

Similarly, under the proposed license amendments, the entity licensed i "to possess, use and operate" Waterford 3 will be changed from LP&L to l E01.- This change reflects E01's assumption of operating i responsibility for -- but not ownership of -- the facility. LP6L will  !

remain the owner of the unit and therefore will remain licensed "to .

I possess" Waterford 3. The antitrust conditions on the license will remain applicable to LP&L.

l There are no antitrust license conditions applicable to either AP6L or l

p ANO Units 1 and 2.

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Attachment to W3P89-2121 Page 3 of 6 Operating Agreements between AP6L and E01, LP6L and E01 and System Energy and E01 stipulate that E01 shall operate the nuclear facilities as agent f or the owners. Under these proposed operating agreements.

the owners of the nuclear facilities will retain significant oversight and control over costs and operations. However, E01, as the agent-operator of the units, will have sole authority to make decisions relating to public health and safety. In no event, however, will E01 ovn, control or be entitled to power or energy from the .

nuclear facilities. Moreover, the proposed nuclear consolidation will not change or impact the way the System makes and impicaents decisions regarding bulk power sales or purchases or the marketing of power.

Decisions as to buying and selling bulk power are made on a system-wide, coordinated basis under an agreemenet among AP6L, LP6L, '

MP6L, NOPSI and ESI, called the Dystem Agreement. The System Agreement is administered by a committee called the Operating Committee made up of representatives from each of the companies who  :

are parties to the System Agreement. The System Agreement provides, >

among other things, for coordination on a system-vide basis of i construction and operation of generation and transmission facilities, of bulk power purchases and sales, and of energy dispatch.

Furthermore, under agency agreements among the same parties that are parties to the System Agreement, ESI acts as agent for LP&L AP6L, MP6L and NOPSI (jointly referred to as the System Operating Companies) to contract in their name and on their behalf to sell and purchase bulk power. Although the Operating Committee makes decisions pursuant to the System Agreement regarding the sale and marketing of bulk power, and ESI, at the direction of the Operating Committee makes most sales and purchases of bulk power in the System, as agent for the System Operating Companies, the contracts for the sale of power are in -

the names of and are the legal responsibility of the appropriate System Operating Companies. Therefore, contracts, for instance, for sale of power within the service areas of a System Operating Company, are made between that System Operating Company. either directly or by its agent, ESI, and the entity purchasing power or energy. The System Operating Companies are the responsible contracting parties because '

the System Operating Companies are the entities that own and control the power. Moreover, because the System Operating Companies own or have been allocated all power produced by Waterford 3 ANO and Crand Gulf, E01, as agent / operator of the units, could not make decisions 3 affecting the operation of the nuclear units independent of the owners, unless such decisions are required for operational or safety considerations.

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o Attachment to *

[?

' W3P89-2121 ,

Page 4 of 6

!' ' Specifically as to Grand Gulf, under an agreement called the Unit f Pcwer Sales Agreement, all of System Energy's power and energy from  :

i Grand Gulf Unit 1 han been allocated to the system Operating Companies, and this power and energy, for all purposes, is owned and .

controlled by the System Operating Compar4,es. Accordingly System -j s" Energy has no rights in any power and energy from Grand Gulf Unit 1 and has no control over the sale by the System Operating Companiet of  ;

their allocated share of power and energy from the unit. Since System p Energy has no rights in or control over power and energy from Grand [

Gulf Unit 1 E01, as System Energy's agent to operate the unit.

likewise could have no rights in or control over power and energy from  ;

[ Grand Gulf Unit 1.

I' E01, will operate the System's nuclear units as agent for the owners. _

For this and other reasons stated above, the antitrust oblige ions of  ;

t. the owners of the nuclear facilities (and in the case of Grr _ Gulf, HP&L), under applicable facility operating licenses and .he Atomic [

i Energy Act, will not be affected by the proposed consolidation. i L Turthermore, under NRC's statutory antitrust enforcement authority, if. j

! existing antitrust license conditions are not met, the NRC is -

empowered to take enforcement action against the licensees subject to those conditions, regardless of whether the action complained of is that of the licensee or its agent, E01. Moreover, it is legally  !

unnecessary to make E01 subject to the antitrust conditions to enforce  !

licensees' commitments in this area. A licensees' docketed  ;

commitments with respect to antitrust considerations are enforceable by the NRC if those commitments have been determined by the Staff to t be a necessary consideration in its licensing decision. It need not l impose the commitments in license conditions. l t

in sum, the proposed license amendments do not propose to change in any way any existing antitruet license conditions, the licensees  !

subject to those license conditions, or the entities entitled to i benefit from the power produced from the nuclear facilities. ';

Furthermote, in the future, a licensee, both as e practical and legal mattet, would not be free to unilaterally change, reduce or eliminate l existing antitrust license conditions or antitrust review commitments  !

without the potential for an NRC enforcement action. Therefore, the i amendments need not include new antitrust conditions applicable to E01. .

(See also letter dated October 26, 1989, from Joseph B. Knotts. l counsel to System Energy and AP&L. to Joseph Rutberg, Office of General Counsel NRC).  ;

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Attachment to W3P89-2121 Page 5 of 6 r i

IV. ENTERGY CORPORATION COMMITTEE FUNCTIONS ,

Three Entergy Corporation system-wide committees are described below:

1. The System Executive Management Group (SEMG) is the principal advisory body to the Chairman of Entergy Corporation. SEMG includes a Chairman and seven Senior Vice Presidents. The group reviews issues which have system-wide implications. By policy, all decisions that impact more than one Entergy Company are made from a system-wide perspective. SEMG members include: -
  • Edwin Lupberger, Chairman and President of Entergy ,

Corporation, is also Chairman of System Energy, ESI Electec, and System Puels and will be Chairman of E01. ,

James M. Cain, Senior Vice President - System Executive j Louisiana Divieion of Entergy Corporation and ESI and is Chairman and CEO of LP&L and President and CEO of NOPSI.

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  • William Cavanaugh, III Senior Vice President - System ,

Executive Nuclear, of Entergy Corporation and ESI and is  ;

President and CEO of System Energy. Will be President and CEO of E01, y

  • John L. Cowan, Senior Vice President - System Executive Finance, of Entergy Corporation and ESI and is Chief Financial  !

Officer of Entergy Corporation.  ;

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  • Jerry G. Jackson, Senior Vice President - System Executive l Legal and External Affairs, of Entergy Corporation and ESI. .l Jack L. King, Senior Vice President - System Executive Operations, of Entergy Corporation and ESI and Chairman t of the Operating Committee. l t

Jerry L. Maulden, Senior Vice President - System Executive  !

Arkansas, Mississippi, and Missouri Division, of Entergy i Corporation and ESI and is Chairman and CEO of AP6L and MP&L.

  • Donald E. Meiners Senior Vice President - System Executive Services Division, of Entergy Corporation and is President and  !

CEO of ESI.  ;

2. The Nuclear Management Committee (NMC) assists in formulating and L implementing policies, action and strategies for Entergy's  !

nuclear program to attain and maintain "Best in the Industry" l 1evel of performance. NMC uses the team approach to identify ,

l areas for improvement. W. Cavanaugh, III is permanent Chairman.  ;

Members include Senior Nuclear Executives from AP&L, LP6L, System '

Energy, representative from ESI and Consultants.

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Attachment to l W3P89-2121  :

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Page 6 of 6-

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r- 3 ,. 'The Operating Committee (OC) administers the System Agreement,  !

p ~ which establishes guidelines and rules for the sale, j transmission, and dispatch of power across the Systen. The OC j also coordinates bulk power sales. Jack L. King is Chairman and  ;

members include Senior Management from AP&L .LP&L/NOPSI, MP&L and ,

ESI. l C q V.. ADDITIONAL INFORMATION j t.

l SEk1 and E01 will be interrelated to the extent'that the President and ,

CEO of System Energy also will be the President and CEO of E01. l Certain other' officers of System Energy will be officers of E01.

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L V1. SCHEDULE' >

. Subject to the roceipt of other necessary regulatory approvals, AP&L, .j U LLP&L and System Energy have proposed issosace of the operating license '

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amendments by December 31, 1989. All other necessary regulatory

. approvals are' anticipated before December 31, 1989. This schedule  ;

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supports the.. formation of E01 and transfer of nuclear organir.ation-

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employees from AP&L, LP&L and System Energy at the beginning of the corporation'fiscs.1 year on January 1, 1990.

'AP&L,'LP&L and System Energy all oper.te, and E01 will operate, on a calendar fiscal year. If consolidation is implemented later than January 1. 1990, it could 5>e more complicated and costly from an accounting, budgeting and administrative (e.g., employee withholding tax); perspective.

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1 s ENTERGY CORPORATION - CURRENT ,

ENTERGY CORPORATION '

er E. Lupberg&

Chairman President . ,

AP&L ** MP&L LP&L "* **

NOPSI SER!

~J. Moulden J. Moulden J. Cain J. Cain E. Lupberger Chairman & Chairmen & Chairman & President & - Chairman CEO CEO CEO CEO W. Cavanaugh l .. .... ... . . ...... 3.c 7 ..... ............ ....:..+............ . . . . . . . . . . . . . . . . . . .

President &

CEO ANO 1 & 2  ! WATERFORD 3 l

GGNS E. Lupberger ELECTEC Entergy Services, Inc Chairman E. Lupberger-E. Lupberger Chairman Choirman D. Me,iners President & CEO ENTERGY CORPORATION SR.VP-SYSTEM EXECUTIVE J. Cain - Lc,uisiona Div.* -

s 9 CoNNtteM9" - W. Cavanaugh - Nucisar* hommltt [

" )

v naugh - J. Cowan - inance J. King - Chairman ha[L APB LP&L J. Jackson - Legal &

External Affairs

  • MP&L LP NOPSI SERI J. - Operations

& Missouri .

D. Meiners - Services Div.

  • Senior Vic President - System Executive of ntergy Services, Inc.
    • Responsib for operatiohs and nucleor saf

...SFI is Wholly owned subsidary of AP&L MP&L,L &L and NOPSI. ATTACHMENT 2

q.

ENTERGY CORPORATION - PROPOSED 10-26-89 ENTERGY CORPORATION .

f er E. Lupberg&

Chairman President AP&L MP&L LP&L NOPSI SERI EOl **

J. Maulden J. Maulden J. C.cin J. Cain E. Lupberger E. Lupberger Chairman & Chairman & Chairman & President & - Chairman - Chairman CEO CEO CEO CEO W. Cavanaugh W. Cavanaugh l....... .............. .........................t...t............ .... ............ President & President &

i CEO CEO ANO 1 & 2 j ,

WATERFORD 3 i SFj GGNS , _ _ _ _ _ _ ,

g ANO 1 & 2 ,

E Lup ger Entergy Services, Inc ELECTEC I GGNS I E. Lupberger E. Lupberger- 1._ _ _ _ _ _ ;

Chairman Chairman r i WATERFORD 3 P"e[d 5t & CEO ENTERGY CORPORATION SR.VP-SYSTEM EXECUTIVE Nuclear Mgmt. J. Cain - Louisiana Div.* System Operating Committee W. C angugh-Nuc! r* Committee avonough - J.Cowa knance J. King - Chairman AP&L J. Jackson - Legal & MP&L LP&L .

External Affairs

  • LP&L/NOPSI SERI J. g,- Operations

& Missouri .

D. Meiners - Services Div.

  • Senior Vic President
    • Responsib.e.ty for operat. - System Executive of ntergy Services, Inc.

ili iohs and nuclear saf

...SFl is Wholly owned subsidary of AP&L,MP&L &L and NOPSI. ATTACHMENT 3

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