ML19344A149

Requests Investigation of Financial Status of Util

ML19344A149
Person / Time
Site:	Palisades, Midland
Issue date:	05/20/1974
From:	Cherry M CHERRY, M.M./CHERRY, FLYNN & KANTER
To:	Muntzing L US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 8008060436
Download: ML19344A149 (3)

Text

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.,c '* ,%. LAW OFFICES JENNER & BLOCK I

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AREA COOC 312 May 20, 1974 I

. i Ma. L.-Manning Muntzing -

Director of Regulation

-U. S.' Atomic Energy Commission Washington, D. C.

20545

Dear Mr. Muntzing:

, As you no doubt are aware, the Atomic Energy Commis-sion Regulations require that a utility have initially and then on a continued basis sufficient financial qualifications to make sure that the. construction or operation of nuclear power plants is not compromised in any manner by. the lack of adequate funds.

The ~ Atomic Energy Commission, to my knowl' edge, has never published specific regulations or even guidelines to set l forth exactly .what are acceptable financial qualifications.

I do know, however, that because of the difficulties facing Consolidated Edison of New York, the Regulatory Staff is under-taking an informal review of the continued financial capability '

of Consolidated Edison..

This letter is to request a similar investigation

with respect to Consumers Power Company of Jackson, Michigan.

4 As. you know, Consumers Power Company is having considerable difficulty, from a financial standpoint, in connection with its Palisades facility and this fact has been aggravated by the absence of. any relief in that regard from the Michigan Public Service Commission. In addition, the costs of the Midland-facil-ity have- escalated to the point where the present cost of Midland is somewhere between 300% and 400% more than the original cost.

On top of all of '_this, the trading price of Consumers ' stock has dropped drastically, and Consumers has suffered the occurrence of an 'almost equivalent amount of earnings and dividends, there-by calling-into question whether soon, like Consolidated Edison, Consumers may be forced to decrease or even eliminate any divi-dend. 'I might also point out'that Consumers has announced that

., : th'e cost per -share of the failure of Palisades to operate -is

, approximately 244 per quarter.- This situation will no doubt be aggravated by the recent action on April 25, 1974 by the

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Mr..L. Manning Muntzing

May 20, 1974

-Page Two Compliance. Division, Region III, indicating yet further delays in the start-up of Palisades.

Most recently Consumers has cancelled a stock sale of more than 2.5 million shares of its common stock which was

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supposed to provide Consumers with funds to continue their construction budget. -In fact, the Preliminary Prospectus'

'- dated April 11,1974 in connection'with that offer indicated that part of the funds sought would belused for the continuation of the~ construction at Midland. Now that that stock offering has been cancelled, . there is some question as to whether sufficient funds'are.available to complete Midland while also having funds

. t,o account'for the drastic losses at Palisades._ Additionally, given the present climate confronting utility offerings, there is some question whether any renewal of this stock offering could in fact be' accomplished. Thus, I understand, on informa-tion and belief, that Consumers credit. rating has, or is about to be, lowered adding to consumers problems.

Obviously, ' neither I nor my clients who have actively participated in the Midland and Palisades- licensing . hearings have ' access to the . kind of information necessary to make an adequate-analysis of. Consumers financial circumstances. How-ever, your office does have the authority _ to request such in-formation and, under the circumstances, the obligation to do so.

I have chosen to proceed by way of. requesting informal administrative review of Consumers finances rather than filing a formal-petition, in-order to accomplish the desired result with the least amount ~of effort. It may be that an investigation-by'you would show that. Consumers is not-in serious financial problems. On. the other hand, it may be that such an investiga-tion .would' lay bare that Consumers financial position is in

. serious jeopardy and that some ' consideration- must be given to that fact - regarding .its privilege to continue to operate Pali-sades'or to build. Midland. We believe that it is prudent to

.begin such investigation now and are accordingly making this request.

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Mr.'L. Manning Muntzing May'.20, ~1974 Page Three' i.

'I am available. to assist you in any way I can. I trust I'will receive as prompt'a response to this letter as you have given Mr. Roisman's request concerning Consolidated Edison. ,

Since ely, t

MMC:I L

Myro M. Cherry ad Attorney for Saginaw Val Nuclear cc: Secretary, AEC Study Grou and

.Mr. A.-H. Aymond, Business nd Professional Chairman of the Board People r the Public Consumers Power Company Interes 1

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I REFERRED TO DATE IS NOTIFICATION TO THE JCAE LGiseusse f/astian 5/23/74 Cys:

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DIRECTOR OF REGULATION Form HQ.32 (173)

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