ML19338D727
| ML19338D727 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley |
| Issue date: | 09/19/1980 |
| From: | Byington J WINTHROP, STIMSON, PUTNAM & ROBERTS |
| To: | Harold Denton Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 8009230699 | |
| Download: ML19338D727 (5) | |
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September 19, 1980
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Mr. Harold R. Denton, Director Office of Nuclear Reactor. Regulation A
Nuclear' Regulatory Commission j
Q Washington, D.C.
20555
Dear Mr. Denton:
Pursuant to a conversation that I have had with Mr. Edward Reese of your legal staff, I am writing to apprise you of certain facts concerning a proposed temporary transfer by Ohio Edison Company (the " Company")
of its ownership interest in a nuclear generating plant presently under construction (Beaver Valley Unit No. 2) and to request an indication from you that application to,.and approval by, the Commission in connection with the
. proposed transfer will not be necessary.
The Company presently has a 41.88% undivided ownership interest as-tenant in common in Beaver Valley f
Unit'No. 2 ("BVU2")' and in that connection is a licensee
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under the: construction permitLissued by the Commission with respect to the plant'.(Construction Permit No. CPPR-105).
'The other co-tenants consist of The Cleveland Electric-Illuminating Company, Duquesne' Light Company and The Toledo Edison Company..-Duquesne Light Company,for~itself and as agent for the other companies, is constructing BVU2 and will operate it wb'.4 couctruction is completed.
Conse-quently,'although'the Company will be entitled ~to 41.88%
of the output of BVU2:and is responsible for '41.88% of the costs of construction and operation, it does not and will n6t have primary responsibility for either construction or operation.of the plant.
In connection with~ financing the cost of its in-terest:in.BVU2, the Company intends to enter into prbject-financing arrangements designed to provide up to $500,000,000 for this-purpose.
Under these arrangements a Trust (the
" Construction Trust") will be formed to borrow money from banks and/or from the issuance of commercial paper.
Repay-ment of all such borrowings.will be the responsibility.of the' Company. and such repayments must either be ma'de no later than the: time construction of BVU2 is completed'or'overa
- four -year period thereaf ter.
Under the arrangements, the lenders'are to have a~ security interest in the' Company's
.interestiin. BVU2 until they.are repaid.
Since at the pre-sent: time the Company's interest in BVU2 is subject to the N
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- lien of:itscFirst Mortgage Indenture and.since-that Indenture' has an after. acquired' property clause that subjects property of the~ Company-to that lien the moment the Company acquires
.i it, tMe Company proposes : to' obtain a release from1the Trus-w.
tee under its.First Mortgage Indenture'of its ownership in-terest.in'BVU2 and'to transfer that ownership interest-to' the Construction-Trust.which will hold. title to the property for-the. benefit of the lenders as the plant is constructed and thereafter until the lenders are' repaid.
When such lenders;are' repaid, the ownership interest in BVU2 will automatically return to and vest in the Company.. As previ-ously stated, Duquesne Light Company is the constructing and' operating company.with respect to BVU2 so that the. Con-
'struction' Trust will not be involved in matters involving the. actual construction or operation of the plant.
Author-izations with respect to the company's. involvement in the arrangements described will be received both from The Public.
Utilitiss' Commission;of Ohio and the-Pennsylvania Public t
Utility. Commission.
Since the purpose of the transfer of title to BVU2 is to accommodate a' financing structure ~and since title will automatically return to the-Company when the fin'ancial. reason for the 4"ansfer-ceases to exist (i.e., maintenance of a
- securityLinterest ir r.o longer necessary), it would seem that formal.' approval-by the Commission of the transfer is no more
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necessary;he'reithanLany; situation in which a licensee grants
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a securityiinterest in production or: utilization facility.
(SeezSectionL50,81 ofHthegCommission's regulations,. Title
'10 of'the Codeiof FederalLRegulations.)~
.It is our understandingzthat there is precedent for the resultithat' we. suggest. in the case of' Long Island s
. Lighting' Company's shorehaml Plant.
This plant is being
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constructed under> financial-arrangements similar to those
. contemplated here and we are told that LILCO received a letter fromIMr.JRoger Boyd as Director.of the Division of Project Management to the effect that specific authoriza-tion of LILCO's transfer of title to the Shoreham Plant to a trust-similar to the Construction Trust was not necessary.
Mr. Boyd's letter was evidently based in part on the'~ fact that!LILCO would receive regulatory approval for its parti-cipation-in thel arrangements and the fact that the transferee
' trust would_notlhave any actual involvement in the design or construction-of.:the plant, both of.which conditions exist in the present case.
-We: are most anxious to resolve this question' of the
.need or lack thereof for Commission approval for the transfer of~the Company's. interest in'BVU2 to the. Construction Trust as outlined'above.
Because of-the need to line up the bank credit, commitment ~ fees are currently. accruing even though-
'much remains to be-done before everything is in place.
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{, f 2j Mr. Harald R._Denton,. Direct r S:ptember 19 1980 a.
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sent plans, call for the closing to be held on November 1, s
1980.
With this in mind-we would like to request, and express our appreciation for, as much priority as you can possibly give to -our request. _ Along those lines Company:
.5 personnel ~and/or I would be happy to meet with you or mem-bers.of your,, staff to discuss this matter whenever and wherever you-sequest.
In addition, you or members of your staff'shouldifeel free to call me collect at any time at (212) 943-0700.
Sincerely, N
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f John H. Byington,'Jr.
cc:
Mr. Edward Reese l
Mr. Robert Wood l
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