ML19345E833
| ML19345E833 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 02/02/1981 |
| From: | Dieckamp H METROPOLITAN EDISON CO. |
| To: | |
| Shared Package | |
| ML19345E827 | List: |
| References | |
| CLI-80-5, ISSUANCES-SP, NUDOCS 8102060232 | |
| Download: ML19345E833 (21) | |
Text
A O
LIC 2/2/81 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of
)
)
METROPOLITAN EDISON COMPANY
)
Docket No. 50-289 SP
)
(Restart)
(Three Mile Island Nuclear
)
Station, Unit No. 1)
)
l LICENSEE'S TESTIMONY OF l
HERMAN DIECKAMP IN RESPONSE TO CLI-80-5, ISSUE 6 (TECHNICAL / FINANCIAL INTERFACE) l l
l 8102060$3 A
OUTLINE This testimony, by Herman Dieckamp, President of General Public Utilities (GPU) and the GPU Service Corporation, acting President of Metropolitan Edison Company, and Chairman of GPU Nuclear Corporation, responds to CLI-80-5, Issue 6.
In that issue, the Commission asks whether the relationship between Met Ed's corporate finance and technical departments is such as to prevent financial considerations from having an improper impact upon technical decisions.
Mr. Dieckamp answers this question in the affirmative, in light of the fact that GPU/ Met Ed has a history of devoting significant financial resources to its nuclear operations, performance has continued in the post accident period of financial stricture, GPU/ Met Ed has in place procedures for budgetary development and review by nuclear operating personnel and approval by knowledgeable personnel, the senior management personnel have extensive nuclear experi-ence and awareness of the special needs and' obligations of nuclear power, and the senior management personnel have established mechanisms for visibility into performance and indicators of resource limitations.
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My name is Herman Dieckamp.
I am president of General Public Utilities (GPU) and the GPU Service Corporation.
GPU is the parent corporation of GPU Service and of the operating utility companies that are the owners of Three Mile Island Unit 1.
I am a director of GPU and each of its subsidiaries, GPU Service Corporation, Jersey Central Power & Light (25% owner),
Pennsylvania Electric Company (25% owner), and Metropolitan Edison Company (operator and 50% owner).
Since August 1979, I have been the acting president of Metropolitan Edison Company and I am the chairman of GPU Nuclear Corporation, another wholly-owned subsidiary of GPU, which has recently been formed to operate the GPU nuclear facilities when the necessary regulatory approvals have been obtained.
I graduated from the University of Illinois in 1950 with a Bachelor of Science degree in Engineering Physics.
From 1950 to 1973 I worked in nuclear research and development and the management thereof with the Atomics International division of
(
Rockwell International.
I joined GPU in 1973 and assumed most 1
of my current positions by 1974.
I am appearing in this proceeding to respond to the following issue in the NRC's Order of March 6, 1980:
Whether the relationship between Met Ed's corporate finance and technical departments is such as to prevent financial considerations from having an improper impact upon technical deci-l sions.
Safe operation of nuclear facilities is very demanding of resources.
Experience continues to show expanding requirements
! l r
which result in increased manning levels, increases in total operations and maintenance budgets, and additional capital for plant modifications.
The rapid escalation in the price of oil has resulted in a large differential in cost between nuclear fuel and replacement power which in our case is either oil derived or priced in relation to oil.
The overall economic incentives therefore are to provide the resources necessary to ensure operability of the nuclear facilities.
Since operability and safety are directly linked through reliability and through regulation, the economic incantives are supportive of safety, not necessarily competitive as the Commission issue may be read to suggest.
In any event, safety takes precedence over economics by virture of the overriding requirement to protect the health and safety of the workers and the public, to satisfy regulatory requirements, and to constrain operation within the limits of the technical specifications.
It is the obligation of management to reinforce the preeminence of safety not only through the allocation of resources but also by its practices and policies.
It is Lae purpose of this testimony to:
a)
Identify the resource application by GPU Companies to l
nuclear operations in relationship to industry practice baued on those data that are available; b)
Review the allocation of resources between nuclear and other customer service needs within the GPU system;.
c)
Identify a GPU nuclear budget development, management review, and approval process; and d)
Identify a mechanism for management visibility that permits direct communication of potential safety /fi-nancial conflicts to those with the responsibility 1
and authority to respond.
These data along with the management process demonstrate that financial considerations have and will support nuclear opera-tions and will not improperly impact technical (safety) decisions.
Before proceeding with the indicated testimony it should be noted that whereas this proceeding and this question was brought on by the accident at TMI-2, the many investigations of that accident, namely, the President's Commission on the Accident At Three Mile Island (Kemeny), the NRC's Special Inquiry Group (Rogovin) and the Subcommittee on Nuclear Regulation for the Senate Committee on Environment and Public Works (Hart), resulted in no conclusion that identified inadequate financial resource availability as a cause of or l
l contributor to the accident.
Our past and our current attempts to evaluate resource application to the nuclear plants of the GPU system in re-lationship to industry practice results in the following con-clusions:
a)
The manpower levels at the GPU plants are among the highest in the industry, and.
b)
GPU practice appears to favor in-house manpower over outside contractor support.
These conclusions are based upon limited data with real infirmities that must be noted.
The principal sources of data are:
a)
The FERC Form 1 reports that provide overall operating and maintenance expenditures by plant; b)
Industry manpower surveys sponsored by the EEI; and c)
Informal communications.
These data suffer from reporting time delays and are subject to many uncertainties, including:
a)
Accounting practices which allocate costs to O&M or capital with only the O&M portion readily available.
b)
Large year to year variations associated with 1
refueling cycles and major maintenance requirements.
c)
Differing assignments of manpower or cost within the FERC code of accounts, e.g. plant vs. home office staff or direct charges vs. overhead, and d)
Differing practices on in-house labor vs. contract services.
The available data, within the limits of its uncertainties, can however provide insight into GPU practices on resource appli-cation to nuclear operacions in comparison with the industry.
Because of the integrated management of the GPU system, we believe it is pertinent to ~ook at Oyster Creek, a 600 MW BWR owned by Jersey Central, and TMI.
Table 1 and Figure 1 summarize manning levels at PWR plants including TMI-l (TMI-2 is omitted because of the short duration of comparable operation).
Table 2 and Figure 2 summarize the manning levels at BWR plants including Oyster Creek.
These data for PWR and BWR plants clearly indicate the fact that GPU has provided manpower at the highest end of industry practice.
Table 3 summarizes O&M expenditures (does not include capitalized plant modifications) for PWR plants including TMI-1.
Table 4 summarizes O&M expenditures at BWR plants including Oyster Creek.
The data, from FERC Form 1, cover 1977, 1978, and 1979.
These data clearly indicate highes than average spending at the GPU plants in 1977 and 1978.
The 1979 GPU levels were impacted by the accident.
The dominant effect at Oyster Creek during 1979 was the absence of a refueling or major maintenance outage during that year.
In 1980 when Oyster Creek was down for an extended period for refueling and major maintenance, C&M expenditures were about $36 million or more than $20 million over 1979, a year w?thout such outage.
At TMI-1, 1979 O&M expenditures were reduced by the fact that the plant was shut down for the entire year, but 1980 expenditures were $40 million including the cost of those " lessons learned" that were charged to C&M.
The relationship between in-house and out of house contributions to total C&M spending can be somewhat illuminated
~.
by the data presentation in Figure 3 for PWR's and Figure 4 for BWR's.
In these figures each plant is plotted in accordance with manpower cost on the abscissa and other O&M cost on the ordinate.
A uniform cost per man year is assumed for all plants and other C&M cost is determined by subtracting manpower cost from total reported O&M.
Lines of constant total O&M are also plotted.
The wide variations in total expenditure as well as distribution between inahouse and out of house expenditure is evident from these figures.
It is further evident from this display of the data that the GPU companies follow a practice of devoting a larger share to in-house manpower than the industry in general.
This result is more than a fiscal preference.
It rather reflects a belief that there is benefit from the familiarity, continuity of experience, dedication, and loyalty that derive from a strong in-house staff.
The GPU Corporation and its operating utility subsidiary companies have a responsibility to provide an economic and reliable supply of electrical energy to about one-half the land area of New Jersey and Pennsylvania, which includes about 4 million people.
The GPU nuclear plants not only are a sign'ifi-cant source of the total energy delivered, about 25-30% from Oyster Creek and TMI-1, but also are a significant responsi-bility in terms of public safety.
The corporation is faced with the management obligation to appropriately allocate l
l resources to meet these multiple responsibilities.
In normal times an electric utility must strive for cost effectiveness l
1..
and efficiency in its expense spending so as to maintain a level of earnings to support the external financings necessary to fund the construction of new facilities.
In the case of the GPU companies, in this immediate post accident environment and until financial help has been restored, access to external sources of capital is nil and as a result all spending, expense and construction, must be constrained to within that available from operations, i.e. revenues from customers.
Table 5 shows the financial resources, O&M expenses plus capital improvements, applied to Oyster Creek and to TMI-l in the time period 1976 through 1980 actual and 1981 budget.
From 1976 through 1979 these expenditures average about S58 mil-lion / year for the two plants combined.
In 1980 and budgeted for 1981, the period since the accident, the expenditures are more than double the prior level.
The quantity is a result of a major extended outage and significant plant modifications at Oyster Creek and responding to the " lessons learned" items for both O&M and capital at TMI-1.
The spending is low in 1979 because Oyster Creek did not have a refueling or maintenance outage and TMI-1 was not operating and available resources were diverted to TMI-2.
Also shown on Table 5 is the fraction of GPU financial resources devoted to these two nuclear plants as a percent of all GPU expenditures exclusive of fuel and new plant construction.
Fuel is not subject to management discre-tion and new plant construction is eliminated in order to more appropriately reflect those ongoing and more continuous demands for available resources.
TMI-2 expenditures have not been included since prior to 1979 it was in the category of new plant and since the accident the expenditures have been largely covered by insurance.
In 1981 the budgeted expenditures at TMI-2 which are not covered by insurance are under $20 million.
Another indicator of management allocation of resources is manpower.
Figure 5 shows GPU system employee levels for the ceriod 1979-1980 actual and 1981 budget, and breaks down the split between employees devoted to nuclear activities and to all other applications.
It is readily apparent that even though the accident induced strictures have resulted in curtailment of manning in non-nuclear activities, the manpower available for the nuclear plants, in this case including TMI-2, has sharply increased.
While these statistics of themselves do not prove funding adequacy, they do provide clear evidence that management, even in times of financial stress, has preferentially recognized the demands of our nuclear obligations and has shifted available i
resources toward those obligations.
Further, the comparisons with available industry data, despite the uncertainties in those data, provides clear evidence that the GPU management is l
providing financial resr.__ s that are at the high end of l
I industry practice.
Because of the large financial resource demands of the nuclear operations, the budgeting process has been a subject of continuing development and attention.
In the consolidated !
nuclear organization described by Mr. Arnold in his testimony, budget preparation and assessment of performance against planning are a key element of the Administration Division.
The role of the fiscal management group in that Division is to f acilitate good planning and to coordinate the associated budget activities.
However, each element of the organization in accordance with its assigned responsibilities is also responsible to identify the work effort and the physical modifications necessary for safe operations.
This resulting task list is then the basis for manpower requirements, mate-rials or contractor support to operations and estimates for the cost of plant modifications.
These composite requirements are reviewed by the management of the Nuclear Group (the Nuclear Corporation in the future) to ensure completeness, priority, and adequacy of the planning.
With the resulting definition of required manpower, materials, and plant modifications the Nuclear Group seeks authorization from the plant owners for the l
financial resources necessary to support safe operations.
In the past the budgetary requirements of the nuclear plants were reviewed by the operating utility management and the GPU corporate management to ensure compatibility with the overall corporate objectives and constraints.
The nuclear l
plant budgets, both OEM and capital, were approved by the l
l boards of directors of the plants' ow.41ng companies.
As we have moved toward the concept of the GPU Nuclear Corporation, we have vested in its board of directors the l
responsibility to:
l -
a)
Review operating performance b)
Approve major policies c)
Select management and d)
Approve budgets Prior to the formal regulatory approvals of GPU Nuclear, the designated board members function as a Nuclear Management Oversight Committee with the same effective responsibilities.
The membership of the GPU Nuclear Corporation Board and/or the Nuclear Management Oversight Committee are:
W.
G.
Kuhns - Chairman GPU, GPU Service, JCPL, Met Ed and Penelec R.
C. Arnold - President GPU Nuclear Corporation P.
R. Clark - Exec. V.P.
GPU Nuclear Corporation Dr. S.
Bartnoff - President JCPL W.
A. Verrochi - President Penelec I
B.
H. Cherry - V.P.
Planning GPU Service Corporation H.
Dieckamp - President GPU and GPU Service Corporation, Acting President Met Ed, and Chairman GPU Nuclear Corporation Collectively, these individuals have more than 125 years of experience with nuclear technology.
These same people, with the exception of Mr. Arnold and Mr. Clark, also have senior management responsibility for the GPU System and its operating utility companies.
As a result their determinations with respect to the financial resource requirements of the nuclear,
operations are directly coordinated with the overall financial constraints of the company and thus approvable by the boards of directors of the plants' owners.
In the course of reviewing the operating performance of the GPU nuclear activities the Board and/or the Nuclear Management Oversight Committee will visit the plants and will come into contact with a range of personnel such that operating concerns including the impact of any budgetary constraints can be brought to their direct attention.
It must be assumed that the.uclear operations will be expected to manage within some budgetary constraints.
It will be the responsibility of management to ensure that such constraints encourage discipline and productivity and do not impact safety.
In summary, a)
GPU/ Met Ed has a history of devoting significant financial resources to its nuclear operations, b) that performance has continued. in the post accident period of financial stricture, c)
GPU/ Met Ed has in place procedures for budgetary development and review by nuclear operating person-nel, and approval by knowledgeable personnel, d) the senior management personnel have extensive nuclear experience and awareness of the special needs and obligations of nuclear power, and e) the senior management personnel have established mechanisms for visibility into phrformance and indicators of resource limitations, and therefore the question "whether the relationship between Met Ed's corporate finance and technical departments is such as to prevent financial considerations from having an improper impact upon technical decisions" can be answered in the affirmative.
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TABLE 1 NUCLEAR PLANT STAFFING PWR STAFFING LIST Per Unit No. Of Staff NAME 12/77 12/79 1.
Fort Calhoun 93 134 2.
Kewaunee 96 119 3.
Connecticut Yankee 102 157 4.
Maine Yankee 102 119 5.
D. C. Cook 102 173 6.
Prairie Island 102 104 7.
Yankee Rowe 105 116 8.
St. Lucie 106 136 9.
Marble Hill 111 173 10.
Ginna 112 153 11.
Beaver Valley 121 126 12.
Salem 123 223 13.
Arkansas 124 183 14.
Surry 126 214 15.
Sequoyah 128 192 16.
J. M. Farley 131 316 17.
North Anna 134 159 18.
Calvert Cliffs 144 196 19.
Crystal River 145 293 20.
San Onofre 145 323 21.
Turkey Point 152 192 22.
Palisades 160 211 23.
Trojan 161 188 24.
H.
B. Robinson 162 318 25.
Rancho Seco 163 269
-26.
Three Mile Island 208 360 l
27.
Zion 211 199 i
NOTES:
1.
1977 and 1979. figures are.taken from an EEI Nuclear Plant Staffing Survey released 1/78 and 5/80.
i 2.
Plant totals include Security supervision only when information available.
Number of guards not-included
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in totals.
Figure 1 12/77 vs 12/79 PWR Nuclear Unit Staffing (Normalized to a per unit equivalent) l 360
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300 240 F
5
$180
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s 120 O
i234 s s 7 a s ia i 2 is 14 is is 17 is is 2a 2122 23 x4 2s 2s 27 l
l1979 Legend q977 1977 1979 TMI1 l
TABLE 2 NUCLEAR PLANT STAFFING BWR STAFFING LIST Per Unit No. Of Staff NAME 12/77 12/79 1.
Fitzpatrick 92 119 2.
Vermont Yankee 108 151 3.
Monticello 112 137 4.
Duane Arnold 118 135 5.
Cooper 124 135 6.
Brunswick 132 235 7.
Peach Bottom 145 244 8.
Brown's Ferry 148 168 9.
Jilgrim 178 153 10.
Dresden 181 189 11.
Quads Cities 195 170 12.
Hatch 202 257 13.
Oyster Creek 204 336 NOTES:
1.
1977 and 1979 figures are taken from EEI Nuclear Plant
~
Staffing Surveys released 1/78 and 5/80.
2.
Plant totals include Security supervision only when information available.
Number of guards not included in totals.
Figure 2 12/77 vs 12/79 l
BWR Nuclear Unit Staffing Normalized to a per unit equivalent Oyster Creek
- 300 l
240 e
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180 S
0
- llll i
120 1
2 3
4 5
6 7
8 9
10 11 12 13 Units l
l1979 Legend l
g3977 1977 1979 OC
____._. _ _,._.z__
TABLE 3 O&M (EXCL. OF FUEL) COST COMPARISON TMI VS COMPARABLE POWER PLANTS O&M COSTS (EXCL. OF FUEL)
PRESSURIZED WATER REACTORS 1977 1978 1979 Yankee Rowe (1)
S 6,966,000 S
N/A S
N/A Maine Yankee (1) 8,418,000 10,817,049 9,972,030 Kewaunee (1) 10,924,000 N/A N/A Ginna (1)
N/A 9,818,030 N/A Connecticut Yankee (1) 9,448,000 N/A N/A Trojan (1)
N/A 15,203,662 16,958,080 Palisades (1) 6,569,000 N/A N/A Beaver Valley (1)
N/A 22,679,794 22,906,656 Rancho Seco (1) 14,000,000 N/A N/A Crystal River (1)
N/A 15,616,550 21,592,986 NB Robinson 42 (1)
N/A 14,354,986 15,141,921 San Onofre $1 (1)
N/A 14,545,421 11,668,114 Prairie Island (2)
N/A 14,214,534 15,345,534 St. Lucie (1) 7,528,000 N/A N/A Indian Point 2, 3 (2)
N/A 28,167,417
.32,643,223 Donald Cook (2) 10,012,000 N/A 27,244,731 l
Arkansas (1) 8,379,000 12,123,528 18,924,998 Turkey Point 3,4 (2) 15,108,000 N/A N/A Calvert Cliffs (2)
N/A 25,997,951 36,393,739 i
Zion (2)
N/A 20,384,598 27,042,700 Surry (2) 15,977,000 19,324,014 N/A Salem (2).
-N/A 22,310,690 42,507,873 l
Farley (1)
N/A 12,207,055 22,542,130 Oconee (3) 25,038,000 34,450,858 48,732,287 PWR-AVG. PER UNIT (Without TMI) 8,139,000 12,175,673 16,070,304 TMI Unit 1 13.285,000 17,955,546 16,536,244 l
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(-) Number Of Units l
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Figura 3 PWR Manning and O&M Cost Comparison - 1978
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10 15 O&M payroll costs ($ million)
(Manning level X $40,000 per person)
TABLE 4 O&M (EXCL. OF FUEL) COST COMPARISON OYSTER CREEK VS COMPARABLE POWER PLANTS O&M COSTS (EXCL. OF FUEL)
BOILING WATER REACTORS 1977 1978 1979 Duane Arnold (1)
S 7,508,000 S 8,323,906 S 9,530,111 Cooper (1) 10,218,000 N/A N/A Monticello (1) 9,136,482 10,584,926 Vermont Yankee (1) 9,775,000 11,190,721 14,208,114 Pilgrim (1) 15,320,000 14,186,320 18,385,545 Fitzpatrick (1) 17,383,000 N/A N/A Cuad Cities (2) 22,166,421 23,420,724 Brunswick (2) 26,632,679 34,206,425 Peach Bottem (2) 45,587,590 48,876,404 Browns Ferry (3) 19,305,000 N/A N/A Dresden (3)
N/A 33,932,133 44,578,605 BWR-AVG. PER UNIT (Without Oyster Creek) 9,938,625 13,166,866 15,676,220 OYSTER CREEK 14,300,000 15,896,984 13,055,292
( ) Number Of Units
Figura 4 BWR Manning and O&M Cost Comparison - 1978
-~~ Lines of Constant Total Line of Equalin-House /Outside 20
.wPEACH BOTTOM.
Resources Per Unit Costs
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5 10 15 O&M payroll costs ($ million)
(Manning level X $40,000 per person)
Figuro 5 GPU System Manning 13,000 12,000 TOTAL GPU SYSTEM 12.324 11.418 11,000 33,g,,
GPU NON-NUCLEAR 10,000 8.88 aza 8'" '
9,000 8,000 cm
.5 7,000 e
5 3
6,000 5,000 4,000 3,000 GPU NUCL 2,000
,4g, 1.925 1,000 1.231 0
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i 1979 1980 1981 Year e, -,.
,.n,.
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