ML19345E312

Draft Amend 10 to 560629 Application for CP & Ol,Updating General Info Re Financial Qualifications.Suggested Form of Order Consenting to Creation of Lien Encl

ML19345E312
Person / Time
Site:	Yankee Rowe
Issue date:	11/24/1958
From:	YANKEE ATOMIC ELECTRIC CO.
To:
Shared Package
ML19345E311	List: ML19345E310 ML19345E312
References
NUDOCS 8101060809
Download: ML19345E312 (14)

Text

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DRAFT D. O.A.

11/2h/58

,O YANKEE ATOMIC ELECTRIC COMPANY 441 STUART STREET, BOSTON 16, MASSACHUSETTS December

, 1958 U. S. Atomic Energy Commission Washington 25, D. C.

Attention: Division of Licensing and Regulatien Dear Sirst AMENDMENT NO. 10 TO LICENSE APPLICATION DATED June 29,1956 (Docket No. 50-29) 1.

Pursuant to the Atomic Energy Act of 195h and the Commission 8 s Rules and Regulations issued thereunder, Yankee. Atomic Electric Company hereby supplements and amends its license application dated June 29, 1956, by supplying the infomation set forth on the following additional or superseding pages, which should be inserted as follows:

Superseded page New Pages dated dated 8/30/57 to 12/ /58 to be be removed from inserted in Cur-Current Application rent Application Part A - General Information 11 Financial ~ qualifications 11:1 11:1 -

Exhibits 11A -

llE (to be in-serted following section 11).

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This a:nendment is filed in response to paragraph D of Ccnstruc-tion Pemit No. CPPR-5 issued November h,1957, which, as amended by Amendment No. 2 issued October 28, 1958, provides a's follows:

"D.

Unless Yankee Atomic Electric Company submits by April 30, 1959 sufficient infomation relating to its financial resources to enable the Commission to make a finding that the Company has adequate financial resources to meet the requirements of the law and regulations, this permit shall expire; provided that the Commission may for good cause shown extend the time for the submission of such data."

Yankee believes that the information contained in this amen'dment com-plies with the foregoing requirements, and accordingly mquests the Commis-sion to enter its crder in this proceeding finding that Yankee has adequate financial resource's to meet the requirements of the Atomic Energy Act of 195h and the Commission's rules and regulations thereunder, and amending Construction Pemit No. CPPR-5 so as to delete therefrom the foregoing paragraph D.

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2-3 As set forth in the infomation filed herewith, Yankee pmposes to enter into an indenture of mortgage and deed of trust with Old Colony Trust Conpany, as trustee, to secure its proposed first nortgage bonds.

Anong other things, said indenture is interried to create a first mcrtgage lien on substantially all of Yankee's physical properties, including the nuclear reactor which constitutes a part of Yankee's proposed plant and which is the utilization facility to which this license application relates.

Pursuant to Section 18h of the Atonic Energy Act of 195h, the Commis-sion's consent is required for the creation of any mortgage, pledge or other lien upon any facility owned or to be acquired by a licensee. It is a condition of the obligations of the purchasers of Yankee's proposed first mortgage bonds that the Commission shall have consented to the creation of the lien of the foregoing indenture upon the licensed faci-lity upon tems satisfactory to the purchasers and their special counsel.

(See Section 6 A (h) of the Bond Purchase Agreements, Exhibit 11-A.)

Yankee is informed that an order of the Commission upon substantially the terms set forth in Attachment No.1 hereto will satisfy this require-ment. Accordingly, Yankee further requests that the Commission will enter its order in this proceeding consenting to the creation of the lien of the proposed indenture upon the licensed facility upon substantially the foregoing terms.

Respectfully submitted, YANKEE ATOMIC EIECTRIC COMPANY By Willian Webster, Pmaident Commonwealth of Massachusetts Suffolk, ss.

Decerber

, 1958 Then personally appeared before me William Webster, who, being duly l

sworn, did state that he is the President of Yankee Atomic Electric Com-pany, the applicant herein, that he is duly authorized to execute and j

file the foregoing amendment in the name and on behalf of Yankee Atomic Electric Company, and that the statements in said anendment are true to the best of his knowledge and belief.

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Amencment No.10 to License Applicatien (Docket No. $0-29)

SUGGESTED FORM OF ORDER CONSENTING TO TE CRtATION OF A LIEN ON TE LICENSED FACILITY (a) For the purpose provided in Section 18h of the Act, the Commission consents to the creation by Yankee of a mortgage, pledge or lien on the facility by means of an indenture of mortgage and deed of trust to Old Colony Trust Company of Boston, Massachusetts, as trustee, to secure its first mort-gage bonds, provided:

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That the rights of any creditor so secured may be exer-cised only in compliance with and subject to the same n quirements and restrictions as would apply to the li-censee pursuant to the provisions of the license, the Atomic Energy Act of 195h, as a ended, and regulations issued by the Commission p

. ant to said Act; and

11. That no creditor so secured may take possession of the facility pursuant to the provisions of this paragraph prior to either the issuance of a license from the Commission authorizing such possession or the transfer of this license.

(b)

Any creditor so secured may apply to the Cc= mission for the transfer of this license to a named transferee. Such application should contain so much of the information with respect to the identity of the proposed transferee and the technical, financial and other qualifications of the proposed transferee as would be required if the application were for an initial license. Such application should include also a statement

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2-of the purposes for which the transfer is requested, the nature of the transaction necessitating or making desirable the transfer of the license, such additional information as may be required by regulations or orders of the Comission, and an agreement to limit access to Restrict-ed Data pursuant to Section 1h5 of the Atomic Energy Act of 195h, as amended. The Commission may require that the application be accompanied either by a written consent from the existing licensee or by a certified copy of an order or judgment of a court of competent jurisdiction or other evidence satisfactory to the Commission attesting to the right of the party named in the application (subject to the licensing requirements of the Atomic Energy Act of 195h, at amended, and regulations and orders of the Commission) to possess and to operate the facility.

(c) After appropriate notice to interested persons including the existing licensee, and observance of such procedures as may be required by the Act or regulations or orders of the Commission, the Cem.ission will approve an application for the transfer of this license, if the Com.ission determines 1.

That the proposed transferee is qualified to be the holder of the license; and

11. That transfer of the license is otherwise consistent with applicable provisions of law, rel;ulations, and orders issued by the Commission pursuant thereto.

(d)

Nothing contained in paragraphs to of this Order shall be deemed to constitute consent by the Commission to the creation of'any mortgage, pledge or other lien on any special nuclear material l

or to be deemed to affect the means of acquiring, or the priority of, any tax lien or other lien provided by law.

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i t As used in this paragraph # " license" includes this construction pemit and any operating license or licenses which may be is5ued by the' Cocaission upon the completion of the construction of the facility. Also as used in this paragraph # " creditor" includes the trustee under or other holder of any mortgage, pledge or lien on the facility made to secure any creditor, any trustee or receiver of the facility, subject to any mortgage, pledge or lien, appointed by a court of competent jurisdiction in an action brought for the benefit of any creditor secured by such mortgage, pledge or lien, any purchaser of such facility at the sale thereof upon foreclosure of such mortgage, pledge or lien or upon exercise of any power of sale contained therein, or any assignee of any such purchaser.

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t Attachmsnt No. 1 YAfD'EE ATOMIC ELECTRIC COMPAhT Amendment No.10 to License Applicatien (Docket No. 50-29)

SUGGESTED FORM OF ORDER CONSENTING TO THE CREATION OF A LIEN ON THE LICENSED FACILITY (a) For the purpose provided in Section 18h of the Act, the Commission consents to the creation by Yankee of a mortgage, pledge or lien on the facility by means of an indenture of mortgage and deed of trust to Old Colony Trust Company of Boston, Massachusetts, as trustee, to secure its first mort-gage bonds, provided:

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i. That the rights of any creditor so secured'may be exer-cised only in compliance with and subject to the same requirements and restrictions as would apply to the li-censee pursuant to the provisions of the license, the Atomic Energy Act of 195h, as amended, and regulations issued by the Commission pursuant to said Act; and

11. That no creditor so secured may take possession of the facility pursuant to the provisions of this paragraph prior to either the issuance of a license from the Commission authorizing such possession or the transfer of this license.

(b)

Any creditor so secured may apply to the Commission for the transfer of this license to a named transferee. Such application should contain so much of the information with respect to the identity of the proposed transferee and the technical, financial and other gi alifications of the proposed transferee as would be required if the application were for an initial license. Such application should include also a statement

2 of the purposes for which the transfer is requested, the nature of the transaction necessitating or making desirable the transfer of the license, such additional info :ation as cay be required by regulations or orders of the Ccmission, and an agreement to limit access to Restrict-ed Data pursuant to Section lh5 of the Atomic Energy Act of 195h, as a= ended. The Cc==issien may require that the application be acco=panied either by a written consent from the existing licensee or by a certified copy of an order or judgment of a court of cc:petent jurisdiction or other evidence satisfactory to the Commission a testing to the right of the party named in the application (subject to the licensing requirements of tha Atcaio Energy Act of 195h, as amended, and regulations and orders of the Commission) to possess and to operate the facility.

(c) After appropriate notice to interested persons including the

. existing licensee, and observance of such procedures as may be required by the Act or regulations or orders of the Co ission, the Ccm.issien will approve an application for the transfer of this license, if the Co=.ission determines 1

That the proposed transferee is qualified to be the holder of the license; and

11. That transfer of the license is otherwise consistent with applicable provisions of law, :wgulations, and orders issued by the Coc=ission pursuant thereto.

(d)

Nothing contained in paragraphs to of this Order shall be deemed to constitute consent by the Cc==ission to the creation of ary mortgage, pledge or other lien on any special nuclear caterial or to be deemed to affect the means of acquiring, or the priority of, any tax lien er other lien provided by law.

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t 3-As used 'in this paragrcph # " license" includes this construction pemit and any operating license or licenses which may be issued by the Commission upon the completion of the constntetion of the facility. Also as used in this paragraph # " creditor" includes the trustee under or other holder of any mortgage, pledge or lien on the facility made to secure any creditor, any trustee or receiver of the facility, subject to any mortgage, pledge or lien, appointed by a court of competent jurisdiction in an action brought for the benefit of any creditor secured by such mortgage, pledge or lien, any purchaser of such facility at the sale thereof upon foreclosure of such mortgage, pledge or lien or upon exercise of any power of sale contained therein, or any assignee of any such purchaser.

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r 1181 12/ /58 11 FINANCIAL QUALIFICATIONS Construction costs Based on current estimates of construction costs, Yankee's total capital requirements are estimated to be $37,000,000, exclusive of the costs of the preliminary research and development program which is being carried out with Commission assistance under AEC Contract No. AT(30-3)-222 under the Power Demonstration Reactor Program. As indicated below, this estimate includes all costs of constructing the plant and placing it in initial operation, including, among other things, an allowance for the purchase of the initial core and an additional allowance for cash working capital of approximately

$1,500,000.

This estimate of Yankee's total capital requirements was first made in 1957, based on a detailed estimate of construction costs prepared for Yankee by its joint contractors, Westinghouse Electric Corporation and Stone & Webster Engineering Corporation, as of July 1,1957.

(see testimony of Yankee's presi-dent, William Webster, in this docket on October 8,1957.) Construction Permit No. CPPR-5 was issued by the Commission on November h,1957, ard major on-site construction work commenced in the spring of 1958. As of September 1, 1958, construction expenditures and cornitments for the purchase of equipment aggre-gated $23,100,000. The earlier estimate of Yankee's total capital requirements has been reviewed in the light of costs experienced to date. While variations in cost have been experienced with respect to individual items, it is believed that the original ostimate of $37,000,000 continues to be realistic.

The details of this estimate are as follows:

3182 12/./55 Estimated cost of construction L million)

Costs and co= itnents to 9/1/58 8 23.1 Estimated cost to ccuplete 19 3 Easic constructica cost h2.h Site acquisition

.2 Contingencies and escalation 3.9 h6.5 Interest during Construction 3.0 Allcwance for Yankee administration, R & D, preliminary operation (after credit for power revenues during construction period) 2.h 51.9 Initial core 3.6 Allowance fer working capital 1.5 8 57.0 Yarlee proposes to finance its estinated capital requirements as fellows:

First nortgage bonds

$20,000,000 Unsecured bank borrowings 17,000,000 Capital stock 20.000,000 857,000,000 Yankee has entered into bond purchase agree =ents, each dated December 1955, for the sale of $20,000,000 of its first mortgage bends to ten insurance cc=panies, as set forth below. The bonds will bear interest at the rate of 55 per annum, will be stated to matum Janua:71,1982, and will be retired through the operation of a 100% sinking fund commencing 5 years following the plant co=pletion date. The borxis will be issued under and secured by an indenture

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1183 12/ /58 which will create a first lien on the plant and a pledge of Yankee's interest in certain material contracts. These contracts include AEC Contract No.

AT(30-3)-222, the construction contract with Westinghouse Electric Corporation and Stone & Webster Engineering Corporation, the contract with Westinghouse Electric Corporation for the fabrication of the initial core, and stockholder agreements, research agreements and power contracts with Yankee's utility stockholders. The bonds will be purchased as followsr The Equitable Life Assurance Society of the United States

$6,000,000 Aetna Life Insurance Company 2,500,000 John Hancock Mutual Life Insurance Company 2,500,000 The Northwestern Mutual Life Insurance company 2,000,000 The Travelers Insurance Company 2,000,000 Connecticut General Life Insurance Company 1,500,000 The Conne,ticut Mutual Life Insurance Company 1,000,000 New England Mutual Life. Insurance Company 1,000,000 Phoenix Mutual Life Insurance Company 1,000,000 National Life Insurance Company 500.000

$20,000,000 A copy of the form of bond purchase agreement entered into with each of the foregoing insurance cc=panies, to which is attached a copy of the proposed indenture of mortgage and deed of trust to Old Colony Trust Company, as trustee, is filed as Exhibit 11A.

Yankee has entered into a bank credit agreement dated December,1958 with The First National Bank of Boston, which provides for unsecured borrowings up to an aggregate amount of $17,000,000. Each borrowing will be evidenced by Yankee's unsecured note bearing interest at the rate of h-3/h5 per annum, pay-able in quarterly installments during the first six years following the plant completion date. A copy of the bank credit agreement is filed as Exhibit 113.

As therein indicated, The First National Bank of Boston will be joined by a

11:14 12//58 group of participating banks in making the loans to Yankee under the bank credit agreerent.

Each of Yankee's utility stockholders has entered into a stockholder agreement with Yankee dated December

,1958, which provides for the purchase by the stockholder of its stock percentage of additional issues of Yankee's capital stock prior to the plant completion date. A copy of the fom of stockholder agreement entered into with each stockholder company is filed an Exhibit 110. The stockholder companies and their respective stock percentages are as follows:

Stock Percentage New England Power Company 30.0%

The Connecticut Light and Power Company 15.0 Boston Edison Company 9.5 Central Maine Power Company 9.5 The Hartford Electric Light Company 95 Western Massachusetts Electric Company 7.0 Public Service Company of New Hampshire 7.0 Montaup Electric Company h.5 Cadoridge Electric Light Company 2.5 New Bedford Gas and Edison Light Company 2.0 Central Verment Public Service Corporation 3.5 100.0%

Yankee's presently outstanding stock aggregates $8,000,000 which has been purchased at par by the stockholder companies in the stock percentages shown above. Regulatory applications are now pending for approval of an additional issue of $5,000,000 of common stock, scheduled for January 1959.

Additional regulatory applications are currently being filed for approval of a further issue of $7,000,000 of common stock, presently scheduled for April 1959. Upon completion of these issues, Yankee's utility stockolders will have invested a tot '. of $20,000,000 in Yankee's common stock. t

J 1:5 12//5B In the event of any overrun of Yankee's presently estinated capital re-quirements, the stockholder agreements provide for the purchase of additional common stock by Yankee's utility stockholders in such amount as may be necess-ary to complete constmetion of the plant after giving effect to any additional senior financing that may be obtained. The issuance of the foregoing securities by Yankee, and in certain instances the acquisition of additional shares of Yankee's common stock by its utility stockholders, are subject to prior approval by the Massachusetts De..tment of Public Utilities and by the Securities and Exchange Ccamission under the Public Utility Holding Company Act of 1935. Such approvals have been obtained from time to time with respect to Yankee's outstanding common stock. Appropriate t applications are curantly being nled with respect to the proposed first nortgage bonds, the unsecured notes evidencing the proposed bank borrowings, and the issuance and acquisition of additional shares of common stock.. Operating costs Funds to meet Yankee's operating costs after plant completion date will be provided by payments to be made by the stockholder companies under power contracts and research contracts substantially in the fom filed as Exhibits llD and 11E. Since Yankee's operating costs cannot readily be estimated in advance, these contracts provide for payments which, in the aggregate, will equal Yankee's total operating expensss, including depreciation at the rate of 5% per annum and an annual return on investment equal to 5% of the net plant rate base. It is anticipated that the power contracts and msearch contracts will be executed after receipt of any necessary regulatory approvals l l t

[ ( \\ 1186 12//58 by the Massachusetts Department of Public Utilities and the Securities and Exchange Cc :ission under the Public Utility Holding Company Act of 1935. Appropriate applications for such approvals are currently being filed. The power contracts will be subject to the rate jurisdiction of the Massachusetts Department of Public Utilities and of the Federal Power Commission under Part II of the Federal Power Act. Accountability for special nuclear material Payments under the proposed power and research contracts between Yankee and the stockholder companies will include amounts to provide for all elements of fuel expense, including among other things, charges for burn-up and for re-processing spent cores. In addition, Yankee proposes to obtain property damage insurance under the standard form of policy issued by the Nuclear Energy Property Insurance Association, which will provide coverage against any extraordinary loss or damage to special nuclear material while in Yankee's possession or in transit to or from the plant. Public liability insurance Yankee proposes to obtain public liability insurance under the standard form of policy issued by the Nuclear Energy Liability Insurance Association in the full amount required by section 170 of the Atomic Energy Act, and will in cddition enter into an indemnity agreement with the Commission pursuant to the section 170 of the Act and the Commission's Regulations, Part lh0.

-Jef n. u _. Syjp/]5 q 4 YANKEE ATOMIC ELECTRIC COMPANY g r 'l/9 /t c ( 441 $1UART STRELT BOSTON 16 MASSACHUSET11 JM v y December 8,1958

0. S. Atomic hiergy Coc:nis cen Washington 25, D.,

C. Attenticn: Division of Licenccg aM Regulation Dear Sirs LMDMY,tf! NO.10 TO LICHiSE APPLICATI0E DEED Jteta 29,19% (Dccket No. 50-29) Purst: ant to the At(saic Energy Act of 1954 and tbo Ccosniasion's Rales and Regulatlocs lenuad chareualer, Yankae Atoimio Elvosriv J.c.paty hereby supplacients and saanda its License Application data Ju:, 29, 19 %, 'c7 acyclyin6 T,La iurers.xt on eat forth on the following uM. tic.c.d er egerswir_g pat,es h.ica swC.c be luserted as follows: Superseded or Deleted i.a Fa,p a dr.t ed Pages as dated 12/1/50 % be to be Reinoved fraa Icserted in Part B - Teennical Inferuauca Currect Application Ourrect, Axlicatica (. 'i Prelixinery Hazania B3 (7/1/58) 3:3 Stamary R.p.crt 208:9 (7/1/58) m0e9 2cB:11 301:24 (2/27/57) 301:24 301:25 e. ~ 'J, Very tntly yours, Q, 'f< 9 \\- e' j_ g-s y' l \\. .iy \\'9 1 \\ < ( l [ f, o . \\L[ ( A ..s.. ,s c? Rog/r J. \\;3;,s Vice-resi but 's//. RICiITd f', y Ends. Coene:nvealth of Nassachaseno D ownber 6, 1958 Suffo2.h, ss. Then personally appeeM before me Egger J. Oc+, vin, his.g duly owrn, did state u.at he is a l' ice President of Iaakee Aumio Il.otdo Ccrapany, the applicant hertic, that he is duly authorised te.24ctta and fs.le the forvgoirg imendmans le the na:aa and on behalf or kn;ee Atccia Electric Company, cr d that tha sta.teesects in said Amesm:n are true to the bast of his rev14dge a.t:a balist. Lesn ue - y 'lotary Puc.iu go 1111 o sN Z. c..,-.-., o. I a i. a LJ i t-J}}