ML19338D727

Apprises NRC of Facts Re Proposed Temporary Transfer by Oh Edison Co of Ownership Interest in Facility.Ownership Interest Will Be Transferred to Const Trust Which Will Not Be Involved in Const & Operation Matters of Plant

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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.A - -. ,...=~.-- September 19, 1980 A.. .-

Mr. Harold R. Denton, Director Office of Nuclear Reactor. Regulation j A Nuclear' Regulatory Commission Washington, D.C. 20555 Q

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

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f Unit'No. 2 ("BVU2")' and in that connection is a licensee 8009'280 4 N 7 p

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, cMr. H231d ~ R."; Denton,1 Direct:r '

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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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.4G Mr.; Harold-R. Dent n?.Dir;ctor j .3 -- Srptember! 19, 1980 t s

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 I arrangements described will be received both from The Public.

Utilitiss' Commission;of Ohio and the-Pennsylvania Public t I

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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MrJ Harold ^ R. Denten, Dirccter -- .4 l- S2;ptcmb::;r 19,J1980;

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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 ^

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. Pre-v ~

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a. Mr. Harald R._Denton,. Direct r S:ptember 19 1980 t

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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: '

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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,

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f John H. Byington,'Jr.

cc: Mr. Edward Reese l Mr. Robert Wood -

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