ML19324B578

Provides Supplemental Info Re Antitrust to 890815 Proposed Amend to License NPF-29,establishing New Company,To Be Called Entergy Operations,Inc (Eoi),As sys-wide Nuclear Operating Company

ML19324B578
Person / Time
Site:	Grand Gulf
Issue date:	10/27/1989
From:	Cottle W SYSTEM ENERGY RESOURCES, INC.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
Shared Package
ML19324B579	List: ML19324B578 ML19324B580
References
AECM-89-0199, AECM-89-199, NUDOCS 8911070126
Download: ML19324B578 (8)

Text

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'A n a O w :m;ra U.S. Nuclear Regulatory Commission Mail Stav. ion pl-137 Washington, D.C. 20555 Mtention: Document Control Desk ,

i Gentlemen .

SUBJECT:

Grand Gulf Nuclear Station Unit 1 Docket No. 50-416 ,

License No NPF-29  !

Entergy Operations, 3no.  :

proposed Amendment to the Operating License (PCOL-89/07) - Supplemental l Informetion  ;

AECM+8k/0199 ,

On August 15, 1969, Gyet om Energy Ret.ourcon, Inc. (Sysam Mr.crgy) . I Arkan8Gs Power k Light Company (ApEL), and Louisiane pcw6r & Light Company ,

c (LPIL) submitted to the Nuclear Regulatory Com.niccion proposed licenso amendraents to designate Entergy Operations, Inc. (E01) as the liceased operator for Grand Gulf Ncclear Station (Grand Gulf) Unit 1, Arkansas N1 clear ,

One (ANO) Units I and 2, and Waterford Steam Electric Station, Unit 3 l (Waterford 3), respectively. The proposed amendments are intended to  ;

establish a new company, to be called EDI, as the system-wide nuclear  !

operating company.

In response to discussions with NRC staff at meetings on October 12 and 19, 1989, System Enotgy has determined that some supplomontal information ,

relating to antitrust considerations should be provided to the NRC. That i informat. ion ir included in Attachrrients 2 through 4. i In accordance with the provisions of 10CFR50.4, the signed original of ,

this submittal is enclosed and the appropriate copies will be distributed. -

The August 15, 1989 amendment application provides the background and technical justification to support the requested operating license amendment.  ;

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s AECM-89/0199 c Page 2 The Plant Safety Review Comittee has reviewed and approved this additional 1

, information. The Safety Review Comittee reviewed the original application.

Yours truly, c o f""""" G3 sus;-

WTC:tkm Attachments 1. Affirmation per 10CFR50.30

< 2. Supplemental Information - Antitrust

3. Entergy Corporation - Current Organization

4. Entergy Corporation - Proposed Organization cct Mr. D. C. Hintz-(w/a)

Mr. T. H. Cloninger (w/a)

Mr. J. G. Cesare (w/o)

Mr. R. B. McGehee (w/a)

Mr. N. S. Reynclos (w/a)

{

7 Mr. H. L. Thomas-(w/a) l Mr. H. O. Christencen (w/aB  :

1 Mr. Stewart D. Ebneter (w/a) .

i . Regional Administrator  !

RO U.S. Nuclear Regulat(ry Commissic7

, Segion II

!, 101 Marietta St. , N.'A. , Buite 2900 l

Atlanta, Georgia 30323 ,

Mr. L. L. Kintner, Project Manager (w/a)  ;

Office of Nuclear Reactor Regulation U.S. Nuclear.kegulatory Comission

-Mail Stop 14B20 washington, D.C. 20555 ,

I Mr. Dennis M. Crutchfield

• Associate Director for Special Projects Office of Nuclear Reactor Regulation  ;

U.S. Nuclear Regulatory Comission i

. Mail Stop 7D24 Washington, D.C. 20555  ;

Mr. David L. Wigginton, Project Manager l Project Directorate - IV .

Division of Reactor Projects - III, IV, V, '

and Special Projects j Office of Nuclear Reactor Regulation l U.S. Nuclear Regulatory Comission i Mail Stop 13DIB f

Washington, D.C. 20555 i r

Dr. Alton B. Cobb (w/a)

State Health Officer I State Board of Health  !

P.O. Box 1700 Jackson, Mississippi 39205 i l l i  !

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A9102001/SNLICFLR - 2 [

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f BEFORE THE r

f UNITED STATES NUCLEAR REGULATORY COMMISSION I

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LICENSE NO. NPF-29

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! DOCKET NO. 50-416

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i IN Tl;E MATTER OP

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I MIS 31.%STPPI POWER & LIGHT LCMIANY L and S'.' STEM ENERGY KESOUT. CPS, INC.

and SOUTH MISSI'.lSIPPI ELECTRIC kohT.R ASSOCIATION M FIRMAQO,y I, W. T. Cottle, being duly sworu, state that I nm Vice President, Nuclear Operations of System Energy Resources, 2nc.; that on behalf of System Energy Resources, Inc., and bouth Mississippi Electric Power Association I am auttnrized by System Energy Resources, Inc. to sign and file with the Nuclear Regulatory Commission, this application for amendment of the Operating License of the Grand Gult Nuclear Station; that I signed this application as Vice

[ President, Nuclear Operations of System Energy Resources, Inc.; and that the statements made and the matters set forth therein are true and correct to the best of my knowledge, information and belief, p f A .. -.

W. T. Cottle STATE OF MISSISSIPPI COUNTY OF CLAIBORNE SUBSCRIBED AND SWORN TO before me, a Notary Public, in and for the County and State above named, this J 7!Il_,, day of 6>*/w

, 1989.

(SEAL)

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'g Notary Publigf My commission expires:

ah & Afo/99/

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Att:chment 2 to AECM-89/0199

, Page 1  ;

SUPPLEMENTAL INFORMATION P ANTITRUST l I l

[ I. DESCRIPTION OF ENTERGY CORPORATION Entergy Corporation, formerly named Middle South Utilities, Inc., includes l

retail operating companies (called System Operating Companies), a nuclear

L generating company, and several subsidiaries representing various support  !

! and service functions. There are four System Operatiig Companies with  !

service areas that cover portions of a four state area. The System l F Operating Companies are Arkansas Power & Light Conpany ( AP&L), Louisiana i l Power & Light Company (LP&L), Mississippi Power & Light Company (MP&L), ,

j and New Orleans Public Servica Inc. (NOPSI).

The nucloor generation company is System Energy Res.curces, Inc. (System Energy) and is respons!.ble for management and operation of Grand 0.nf I Huclear Station. In ar'dition to its management and operations role, t Syrtma Luergy retains its 9% ownership and lasruhold interest in Grand Gulf Unit 1. South Mississippi Electric Power Association (SMTPA) which i f

is not affiliated with Entergy Corporation owns the remaining porticu of Grand Gulf. ,

Enter 9y's.three other subsidiary contpaales are Entergy Services, Inc. .

(EU), System Puels, 2nc. (SFI), and Electoc, Inc. ESI is the system service company, providing various technical, administrative, and j corporate services. SFI is a fuels subsidiary owned by the four System i Operating Companies - AP&L, LP&L, MP&L and NOPSI. Electoc, Inc. markets [

the commercial capabilities, expertise, and resources of the system t companies.

An organisation chart for the current Entergy Corporation is provided as j Attachment 3. ,

II. REASONS FOR PROPOSED CHANGE FROM SYSTEM ENERGY TO E01 AS THE OPERATOR OF [

THE NUCLEAR UNITS On July 1, 1988, LP&L and AP&L filed separate applications with the NRC i to amend the operating licenses for the Waterford 3 and Arkansas Nuclear [

One (ANO) facilities in order for System Energy to assume operating  !

responsibility for those facilities. Within the next several months l thereafter, other filings were made with state regulators and the  !

Securities and Exchange Commission for approval of this proposed [

transaction.

l As a result of meetings with the consultants and attorneys for the i Louisiana Public Service Comr:1ssion (LPSC) and with the staf f of the  !

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 meetirgs that since System Energy was subject

' i l to regulation by the Federal Energy Regulatory Commission (FERC),

consolidation of nuclear operations under System Energy might bring the '

proposed operating agreements between the individual nuclear operating A9102001/SNLICFLR - 6 e  !

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companies and System Energy under the jurisdiction of the FERC.

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Additionally, concern was expressed over perceived difficu) ties relating-to System Energy being able to clearly and precisely account for costs it y incurred as the' owner and operator of Grand Gulf on the one hand and as tho' operator, on behalf of LP&L and AP&L, of Waterford 3 and ANO on the other.- ,

L .Because of these concerns, it was' decided to change the proposed nuclear .

consolidation by creating a new company, to be called Entergy Operations,

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" Inc. (E01), te operate Waterford 3, ANO and Grand Gulf Unit 1. This f(L '-

7' proposed organization is described in Attachment 4. Since E01 would not be renulated by the FERC, no filings would be made with the FERC for

! approval of the nuclear consolidation, and questions regarding the jurisdiction of the FERC over the operating agreements should not arise.

t -Furthermore, accounting for costs 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.

I III. ANTITRUST CONSIDERATIONS l L

Under the proposed license amendments, the entity licensed "to possess, use and operate" Grand Gulf Unit I will be changed from System Energy to E01. This change reflects EOI'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 will remain owners of the two units

.and therefore will remain licensed "to possess" Grand Gulf Unit 1. The antitrust conditions on both licenses will remain applicable to MP&L and System Energy.

Similarly, under the proposed license amendments, the entity licensed "to possess, use and operate" Waterford 3 will be changed from LP%L to E01.

., This change reflects E0I's assumption of operating responsibility for --

but not ownership of -- the facility. LP&L will remain the owner of the unit and therefore will remain licensed "to 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 AP&L or ANO Units 1 and 2.

a Operating Agreements between AP&L and E01, LP&L and EOI, and System  !

Energy and E01 stipulate that EOI shall cperate the nuclear facilities as {

agent for the owners. Under these proposed operating agreements, the l owners of the nuclear facilities will retain significant oversight and i control over corts and operations. Ilowever, E0I, as the agent-operator 1 of the units, will have solo authority to make decisions relating to  :

public health and safety. In no event, however, will E0I own, control or be entitled to power or energy from the nuclear facilities. Moreover, L

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

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f i Attcchment 2 to AECM-89/0199 L

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1 l Decisions as to buying and selling bulk power are made on a system-wide,

! coordinated basis under an agreement among AP&L, Lp&L, MP&L, NOPSI and l

ESI, called the System Agreement. The System Agreement is administered y 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-wide basis of construction and operation of generation and transmissich facilities, of bulk power purchases and sales, and of energy dispatch.

Furthermore, under agency agreements among the same parties that are i parties to the System Agreement, ESI acts as agent for LP&L, AP&L, MP&L,

.and NOPSI (jointly referred to as the System Operating Companies) to i

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, I

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 Companias. Therefore, cont: N for instance, for sale of power within the service area of a System -ating Company, are made between that i 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 Grand Gulf, EOI, as agent / operator l of the units, could not make decisions affecting the operation of the '"

j nuclear units independent of the owners, unless such decisions are required for opeJational or safety considerations.

Specifically as to Grand Gulf, under an agreement called the Unit Power Sales Agreement, all of System Energy's power and energy from Grand Gulf Unit I has been allocated to the System operating Companies, and this power and energy, for all purposes, is owned and concrolled by the System Operating companies. Accordingly, System Cnergy has no rights in any power and energy from Grand Gulf Unit 1 and has no control over the sale  ;

l by the System Operating Companies of thei allocated share of power and i energy from the unit. Since System Energy has no rights in or control I over power and energy from Grand Gulf Unit 1, EDI, 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. j l

i l' E0I, will operate the System's nuclear units as agent for the owners.

l- For this and other reasons stated above, the antitrust obligations of the l

owners of the nuclear facilities (and in the case of Grand Gulf, MP&L),

b under applicable facility operating licenses and the Atomic Energy Act, will not be affected by the proposed consolidation. Purthermore, under NRC's statutory antitrust enforcement authority, if 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, EOI. Moreover, it is legally unnecessary to make E0I subject to the antitrust conditions to enforce licensees' commitments in this area, i

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@, Att:chment 2 to AECM-89/0199 '

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p n licensees' docketed commitments with respect to antitrust

, considerations are enforceable by the NRC if those commitments have been b, determined by the Staff to be a necessary consideration in its licensing ,

decision. It need not impose the commitments in license conditions.-

In sum, the proposed license amendments do not propose to change in any  :

way any existing antitrust license conditions, the licensees subject to l those license conditions, or the entities entitled to benefit from the power produced from the nuclear facilities. Furthermore, in the future,

, a licensee, both as a practical and legal matter, would not be free to unilaterally change, reduce or eliminate existing antitrust license conditions or antitrust review commitments without the potential for an >

HRC enforcement action. Therefore, the amendmento need not include new antitrust conditions applicable to E01.

(See also letter dated October 26, 1989, from Joseph B. Knotts, counsel to System Energy and AP&L, to Joseph Rutberg, Office of General Counsel, 4

NRC).

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:

o Edwin Lupberger, Chairman and President of Entergy Corporation, '

.is also Chairman of System Energy, ESI, Electec, and System Fuels and will be Chairman of EOI.

o James M. Cain, Senior Vice President - System Executive Louisiana Division of Entergy Corporation and ESI, Chairman and CEO of LP&L -

and President and CEO of NOPSI.

o 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 E0I.

o 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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' Attichment 2 to AECM-89/0199

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'o- Jerry D. Jackson, Senior Vice Presid.ent - System Executive Legal p[ and External Affairs, of Entergy Corporation and ESI.

E p o Jack L. King, Senior Vice President System Executive L

Operations, of Entergy Corporation and ESI and Chairman of the

!- Operating Comittee.

t

(. o Jerry L. Maulden, Senior Vice President - System Executive f Arkansas, Mississippi, and Missouri Division, of Entergy L. Corporation and ESI and is Chairman and CEO of AP&L and MP&L.

o Donald E. Meiners, Senior Vice President . System Executive b Services Division, of Entergy Corporation.and is President and l CEO of ESI.

L 2. The Nuclear Management Committee (NMC) assists in formulating and

[ implementing policies, action and strategies for Entergy's nuclear H program to attain and maintain "Best in the Industry" level of perfo mance. NMC uses the team approach to identify areas for improvement. W. Cavanaugh, III is permanent ~ Chairman. Me:abers include Senior Nuclear Executives from AP&L, LP&L, System Energy, representative from ESI and Consultants.

3. The Operating Committee (OC) administers the System Agreement, which establishes guidelines and rules for the sale, transmission, and dispatch of' power acrose the System. The OC 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.

V. ADDITIONAL INFORMATION SERI and EOI will be interrelated to the extent that the President and CEO of System Energy also will be the President and CEO of EOI. Certain

..her officers of System Energy will be officers of EOI.

VI. SCHEDULE l

Subject to the receipt of other necessary regulatory approvals, AP&L, ,

LP&L and System Energy have proposed issuance of the operating license j p amendments by December 31, 1989. All other necessary regulatory l approvals are anticipated before December 31, 1989. This schedule L supports the formation of EOI and transfer of nuclear organization P l employees from AP&L, LP&L and System Energy at the beginning of the corporation fiscal year on January 1, 1990.

AP&L, LP&L and System Energy all operate, and EOI will operate, on a calendar fiscal year. If consolidation is implemented later than January l 1, 1990, it could be more complicate,d and costly from an accounting, 1 budgeting and administrative (e.g., employee withholding tax) perspective.

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