ML20011A786

Forwards Ja Ritsher ,Commonwealth of Ma Dept of Public Utils 810410 Decision & 810723 Rept for Antitrust Review

ML20011A786
Person / Time
Site:	Seabrook
Issue date:	10/30/1981
From:	Shapar H NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD)
To:	Will Smith JUSTICE, DEPT. OF
References
ISSUANCES-OL, NUDOCS 8111030184
Download: ML20011A786 (2)

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October 30, 1981 e(p[fg The lionorable liillian French Smith

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Attorney General

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<T h U.S. Department of Justice

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Attention: Robert Fabrikant, Esq.

NOV0219816 ~-

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Acting Chief. Energy Section

.....cann issmasam Antitrust Division

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U.S. Department of Justice liashington, DC 20530 k

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In the liatter of Public Service Company of flew flanpshire Seabrook Station, Units 1 and 2 tiRC Docket tios. 50-443A and 50-444A

Dear !!r. Attorney General:

I an enclosing an October 8,1981 letter to the Comission fron counsel on bt'alf of all the current participants in the captionca facility, requesting the Conuission to approve the transfer of ownership shares fron the flew Bedford Gas and Edison Light Conpany to the Canal Electric Conpany.

The ' leu Bedford Gas and Edison Light Coopany and the Canal Electric Conpany are wholly-owned subsidiaries of Applicant flew England Gas and Electric Association.

Canal owns and operates a 572 till fossil fuel electric generating unit known as Canal Unit I located at Sandwich, !!assachusetts.

Canal, also owns a 50-percent interest and operates a 584 ful fossil fuel electric generating unit located on the sane Sandwich, !!assachusetts site.

The principal business of Canal is the generation and sale of electric power to other electric companies.

Since Canal has riectric generating capacity of approxinately 064 iM, it is only required to subnit the antitrust inforration set forth in para-graph 9 of Appendix L to 10 C.F.R. Part 50.

That infornation has been furnished and is transnitted herewith.

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\\ The material requested by the Attorney General for antitrust review is being transmitted to afford you an opportunity to render such advice to the Comission as you determine to be appropriate in regard to the findings to be made by the Comission pursuant to Section 105(c) of the Atomic Energy Act of 1954, as amended.

Sincerely, Orighta1 Signed by Thomas F. Engelhardt Howard K. Shapar Executive Legal Director Enclosure Information Requested by the Attorney General for Antitrust Review a

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Directorate of Licensing Office of Regulation k7b --l-@-N Washington, D.

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20045 CV Attention:

Director Re:

Public Service Ccmpany of New Hampshire (Docket Nos. 50 443 & 50-444)

Supplement No. 1 to Amendment 42

Dear Sir:

On behalf of the Applicants in the above dockets and in response to the letters dated June 2, 1981 and September 1, 1981 from Mr. Argil Toalston, Acting Chief of the Utility Finance Branch, with respect to information required for antitrust review in connection with the proposed license transfer between two ccmpanies within a single holding company system, I am enclosing herewith 25 copies of the response of Canal Electric Company, the transferee, to the question in paragraph 9 of Section II of Appendix L, as re-quired by 10 C.F.R. 5 50.33a(2).

Also enclosed are 25 copies each of the orders approving the proposed transfer by the Mast 0husetts Department of Public Utilities and the New Hampshire Public Utilities Commission.

These orders consti-tute the only regulatory approvals, other than the Commission's,'.

which are required for the transaction.

Very truly yours, j

Jo.

A. Ritsher

{Tf JAR:vml Enclosures

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Certificate of Service List 9110200265 811008 PDR ADOCbO3QOO443 G

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4 CERTIFICATE OF SERVICE I, John A. Ritsher, one of the attorneys for the applicants herein, hereby certify that on October 8, 1981 I made service of the within document by mailing copies thereof, postage prepaid, first class or airmail, to:

Alan S. Rosenthal, Chairman Ellyn R. Weiss, Esquire Atomic Safety and Licensing Appeal Harmon & Weiss Soard Suite 506 U.S. Nuclesr Regulatory Commission 1725 I Street, N.W.

Washington, D.C.

20555 Washington, D.C.

20006 Dr. John H. Buck Robert A. Backus, Esquire Atomic Safety and Licensing Appeal O'Neill Backus Spielman-

'Soard 116 Lowell Street U.S. Nuclear Regulatory Commission Manchester, New Hampshire 03105 Washington, D.C.

20555 Stuart K. Becker, Esquire Dr. W. Reed Johnson Maxine I. Lipeles, Esquire Atemic Safety and Licensing Appeal Assistant Attorneys General Board Environmental Protection Division U.S. Nuclear Regulatory Commission Department of the Attorney General Washington, D.C.

20555 Commonwealth of Massachusetts One Ashburton Place - 19th Floor

. Ms. Elizabeth H. Weinhold Boston, Massachusetts 02108 3 Godfrey Avenue Hampton, New Hampshire 03842 Roy P. Lessy, Jr., Esquire Office of the Executive Legal Atomic Safety and Licensing Botrd Directer Panel U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory. Commission Washington, D.C.

20555 Washington, D.C.

20555 Office of the Attorney General 208 State House Annex Concord, New Hampshire 03301 O

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Response of Canal Electric Company to

" Required Information" (Section II) under Appendix L to 10 CFR Part 50 Question 9:

List,and provide the mailing address for non-affiliated electric utility systems with peak 1 cads smaller than applicant's which serve either at wholesale or at retail adjacent to areas served by the applicant.

Provide a geographic one line diagram of applicant's generating and transmission facilities (in-pluding subtransmission), indicating the location of adjacent systems and as to such systems indicate (if available) their load, their annual load growth, their generating capacity, their largest thermal generating unit size, and their minimum reserve criteria.

Response

Peak Annual Generating Load Growth Cacacity Middleborough Gas and 19 Mw 3%

0 Electric Dept.

Town Hall, Nickersen Ave.

Middleborough, MA 02346 See attached geographic diagram of the system's generating and transmission facilities and Canal's one line diagram.

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" Required Information" (Section II) under Appendix L to 10 CFR Part"50 Question 9:

List,and provide the mailing address for non-affiliated electric utility systems with peak loads smaller than applicant's which serve either at wholesale or at retail adjacent to areas served by the applicant.

Provide a geographic one line diagram of. applicant's generating and transmission facilities (in-cluding subtransmission), indicating the location of adjacent systems and as to such systems indicate (if available) their load, their annual load growth, their generating capacity, their largest thermal generating unit size, and their minimum reserve criteria.

Response

Peak Annual' Generating-Load Growth-Cacacity Middleborough Gas and 19 Mw 3%

0 Electric Dept.

Town Hall, Nickerson Ave.

Middleborough, MA 02346 See attached geographic diagram of the system's generating and transmission facilities and Canal's one line diagram.

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t Jcint application of Canal Electric Cc=pany and New Bedford Gas and Edison Light Company under G.L. c. 16t, SS 97 and 101, for e,

approval by the Department of Public Utilities of the purchase by Canal Electric Cc=pany and sale by New Bedford Gas ~and Edison Light Company of certain property and a determination that the terms thereof are consistent with the public interest.

A??EARANCE3:

Michael F. Donlan, Esq.

May, 311odeau, Dendis, & Landergan 293 Washington Street Boston, Massachusetts 02108 FOR:

CANAL ELECTRIC COMPANY and e

COMMONWEALTH ELECTRIC COMPANY (FORMERLY NEW BEDFORD GAS-AND.-

1 EDISON LIGHT COMPANY)

Francis X. Bellotti, Attorney General-by:

Robert L. Dewees, Esq.

Assistant Attorney General One Ashburton Place Ecston, Massachusetts 02108 FOR:

THE DEPA?.TMENT OF THE ATTORNEY GENERA *,

Canal Electric Ccmpany (" Canal") and Commenwealth Electric Ccapany, formerly named New Bedford Gas and Edisen Light Company

("Commenwealth Electric") (hereinafter jointly referred te as

" Petitioners") subject to the provisions of G.L.

c'.

154, as

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N amended, filed a j oint petition on December 2u, 1930, re pesting the Department of Fublic CH'i-des ("DqEent") approve the p:rchase that by Canal and the sale by C:2menwealth ElC._ic cf certain premg. ard recuesti g.

that the Depar :nent make various findigs and crders related thereto.

tn.e 4e ~._2.4nz was held with respect to the' Joint Petition w

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t on February 24, 1981.s - after publication of appropriate notice by

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,At that hearing appearances were filed by counse

[A the Department.

The for Petitioners and~for the Actorney General as intervenor.

Attorney General filed several information requests to which the t

l Petitioners responded.

Further, the Attorney General cross-examined

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.l the Petitioners l witness and has not subsequently expressed any

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i; There were no other opposition to,the proposed transaction.

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sions of opposition to t?e

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. appearances fi; d nor any ot er expres t

rel'ief sought i.S the joint petition.

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The* Petitioners jointly filed with the Department on

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February'l@, 1981, prepared written testimony cf one witness, financial information and other together with supcyrting data, documentary materials relative to the Petitioners and the (prop'osed transacti' ens (Exh. CAN-1).

The witness, Mr. Earl G.

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C h e n e y, D i r e c t o r 'd, a d ? i n a n c i a l V i c e P r e s i d e n t o f b o t h C a n a l r

and Commonwealth Eldctric, also testified orally at the public At theitecu'est of the Attorney General, various additional hearing.

i informational exhibi'ts were prepared by the Petitioners and made of the evid'nce of'the proceedings.

The testimony and e

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so adduced provide sufficient grounds for making the findings exhibits necessary to tha disposition of the joint petitien as hereinafter set L

forth.

Botp companins are wholly-owned subsidiaries of New England

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p Gas and Electric Association ("NEGEA").

Canal owns and operates a i

i known as Canal Unit No. 1 t

..:572 MW fossil fuel electric generating un t h<'

+1ocated c$ pandwich, Massachusetts, and owns a 50 percent interest in,

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and operates, a 58h MW fossil fuel electric generating unit known.as Canal Unit No. 2, located on the same sight.

Canal is a supplier of wholesale electric,,ower to Commonwealth Electric and to Cambridge Electric Light Company (" Cambridge"'.

(Cambridge is likewise a subsidiary of NEGEA.)

The principal business of Canalds ^he --

generation and sale of electric power to other electric companies.

The principal business of Commonwealth Electric is the generation, purchc.se at wholesale, distribution and sale at rsta11 of electric power to consumers in forty cities and towns in southeastern Massachusetts.

The subject property of this proceeding is the interest owned by Commonwealth Electric in two nuclear generating units known as Seabrook Units Nos.1 and 2 (the "Seabrook Units")

which are under construction in Seabrook, New Hampshire.

Under an Agreement for Joint Ownership, Construction and Operation of New Hampshire Nuclear Units, dated May 1, 1973, as amended (the "Seabrook Agreement") which relates to the ownership, construction and operation of the Seabrook Units, Co=monwealth Electric currently owns a 1 3h92 7 ww.t interest in the Seabrook Units, representinc generating :

capacity of approximately 31 MW.

In addition, Commonwealth Electric has agreed, under the terms of the Seventh Amendment to the Seabrook Agreement, dated April 18, 1979 (the " Seventh Amendment"), to acquire an additional 2.1739 percent interest in the Seabrook Units from the lead participant, Public Service Company of New Hampshire ("?SNH"), reprenenting generating capacity cf l

approximately 50 MW.

The Seventh Amendment provides ist the transfer of the additional ownership interest to Commonwealth O

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D.P.U. 518

• Paga Four Electric (as well as addi+%al transfers to other par *J.ec, over an " Adjustment Period", as defined therein.

The Sesanth Amendment :entemplates that Commonwealth Electric and other purchasing participants will assume the obligations of PSNH under the Seabrook Agreement during I

i the Adjustment Period in proportion ratable to the respective C

interests being transferred.

The Department has previously reviewed the terms and proposed operation of the Seventh Amendment in the course of the proceedings in

).P.U. 20055, and in the Order of October 30, 1980, approved the accuisition of the additional 2.1739 gcc i:Farest in the Se n M I: nits by Commonwealth Electric; this approval, however, was conditioned, as follows:

subject, however, to the condition that (Commonwealth Electric Company) transfer said interest in the Seabrook project to Canal Electric Company at such time as (Commonwealth Electric) may aquire said interest. See D.P.U.

20055, p. 297; The evidence in this proceeding reasonably de=0nstrates the proposed transfer should be mutually beneficial to both that Petitioners and the rate payers.

For example, the transfer will substantially reduce both the present amounts of Commonwealth Electric's short.-term borrowings an'. the interim and long-term financing which would otherwise be required.

This lessening of capital requirements pressure should be favorably reflected in Commonwealth Electric's cost of capital and its revenue requirements.

Moreover, Canal has no significant current construction requirements, has substantial internally generated funds, has the ability to include AFUCC in its bondable asset base, and has greater flex bility than Commonwealth Electric with

b.P.U. 518 Pago Five respect to both the size and timing of its permanent financings.

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s All of these factors should allow Canal to realize a lower cost 1

of capital in financing the NEGEA system interest in the Scabrook Units.

The purchase and sale of Commonwealth Electric's interest in il l

the Seabrook Units are the subject of a formal written agreement between Commonwealth Electric and Canal (Exh. C AN-3 ).

This agree-sets forth the rights and obligations of each c? the Petitioners ment and adequately addresses the requirements of G. L. c.16% gg c7 and i

101.

Evidence of requisite actions by the stockholders of the.

respective Petitioners was submitted cnd received into the record (Exh. NS-1, CAN-2 ).

As described in the Joint Petition and the exhibite, the transaction will consist of a transfer by Commonwealth Electric to Canal of Commonwealth Electric's present 1.34927 percent interest in the:

Seabrook Units as well as its executbry rights,. under the Seventh-te aquire an additional 2.1739 percent in*mest in the Units.

Amendment, t

The consideration to be provided by Canal and to be received is as by Co=monwealth Electric for such transfer and assignment i

follows: (i) in the case of the existing 1.34927 4 r A ownership interest, a lump sum cash payment in an amount equal to Commonwealth Electric's investmen: uncer the Seabrook Agreement as stated in (ii)

Commonwealta Electric's books of account upon said-transfer; the ass==cien the r2!itional 2.1739 pr_ Ai awnership interest, in the case of by Canal of Comn.cnwealth Electric's obligation under the Seventh Amendment during the Adjustment Period.

Said transfer to Canal will

D.P.O. 518 Pcgo Six include property of a value exceeding $200,000 and exceeding 10 percent of the value of the net utility plant of each Petitioner.

After review and consideration of the evidence, the Department is of the opinion that the proposed transactions are consistent.with the public interest.

We take note of the f act that, in compliance with our statutes and particularly G.L. c..let, j 99, the aggregate amount of the capital stock and the aggregate amount of the debt of the Petitioners respectively, shall not be increased, by reason of the sale and purchase and contemplated transaction.

Accordingly, after due notice, public hearing, investigation and consideration by the Department, it is DETERMINED:

That the proposed sale by Commonwealth Electric Company and the purchase by Canal Electric Company of the existing ownership interest and the executory interest of Commonwelath Electric Company in the Seabrook Units is consistent with the public interest; and it is ORDERED:

That the aforesaid purchase and sale on the terms, for the consideration and subject to the conditions set forth and described herein and in the Transfer Agreement between such Petitioner:

in the form or substantially the form submitted to the Department, are hereby approved; and it is FURTHER ORDERED: That Commonwealth Electric Company and Canal Electric Company are hereby authorized to take and implement such other actions as may be necessary or appropriate in accordance with the foregcing and not inconsistent herewith, for the purpcse of making an orderly and expeditious consummation of the aforesaif

D.P.U.

518 Page Seven l

purchase ar.d sale; this authorization is conditioned, however, upon petitioners' subsequent notification of the Department in s

wriuing of such other actions as may be taken; and it is l

FURTHER ORDERED:

That at such time as the aforesaid purchase I

and sale are finally consummated, Petitioners shall file wi2 the t

B Department two copies of the documents representing the final purchase and sale amount together with the same number of copies of the final and adjusting entries of each account in Petitioners' books of account which are affected by said purchase and sale.

By Order of the Department, Doris R.

Pote Chairman b M.

mmN JoON. Bonsall Commissioner 6W George,R. Sprague Commissioner A true co y-I Atte

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Christopher C. Rich Secretary 9 9

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Appeci ac to mattero of itw from any final dOcicicn, ordcr or ruling of tho Commiccion may be takcn to ths Supreme Judicial Court by an aggrieved party in interest by the filing of a written petition praying that the order of the Commission be modified or set aside in whole or in part.

Such petition for appeal shall be filed with the Secretary of the Commission within twenty days after the date of service of the decision, order or ruling of the Commission, or within such further time as the Ccamission may allow upon request filed prior to the expiration of the twenty days after the date of service of said decision, order or ruling.

(Sec.

5, Chapter 25, G.L.,

Ter.

Ed. as most recently amended by Chapter 485 of the Acts of 1971).

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DF 81-114-6205 NEW BEDFORD GAS AND EDISON LIGHT COMPANY J

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Authorization to Transfer 0mer. hip Interest

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In Seabrook Station

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l for the Applicant, Sulloway Hollis & Soden, By Appearances:

Margarc H. Nelson, squire.

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d REPORT 4

21, 1981, By this unopposed petition filed with the Comi tsion April d), a Massachusetts j New Bedford Cas and Edison Light Company (New Bedf or f public service corporation known in Massachusetts as Commonwe i

in the Company, seeks authority to sell and transfer its ownership interest to the Canal Electric Company, a 14assachusetts a

1 Seabrook Nucicar Power Plant to notice duly given in accordance with Pursuant public service corporation.

1981, a hearing was begun on the matter

,the Commission's Order dated April 30,

18. 1981 and continued on June 24. 1981.

the of fices of the Comission on May r at is a nuclear generacing station i!

The Seabrook Nuclear Power Plant h which is being constructed in Scabrook, New Hacpshire, by th Y

i l Company of New Hampshire (PS :H) as a domestic electric utility com s

/ association with a number of nonresident eleccric utilitics, including l

if to the provisions of RSA 374: 30.

il Bedford, pursuant At the hearing, New Bedford's witness, Carl C. Cheney testified

$ that New Bedford currently has a 1.3 927 percent undivided joint owne interent in the Scabrock units. representing a capacity of approximat In addition, New Bedford has agreed under cne term of the Seventh M.W.

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'sAncndment to the Seabrook Agreemune dated as of April 18, 1979, as amended, j

'l to acquite an additional interest in the Scabrook units from the lead s

i parti,cipant, PSN!!. Such acquisition is to become effective at the same time The similar transfers are effected by PSNH to other Scabrook participants.

2.17390 percent, representing i

)creentage amount of this additional interest is I

d a capacity of approximately 50 M.W.

f New Bedford proposes to transfer both its original and additional

.I I wnership interests, totalling 3.52317 percent or 81 M.W., to the Canal

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to an agreement to transfer ownership shares which

'Ill Electric Company, pursuant

'! was marked as an exhibit. Canal Electric Company and New Bedford are both formerly known as The subsidiary corporations of Commonwealth Energ,y System, New England Gas & Electric Association, a Massachusetts trust.

Mr. Cheney testified that the transfer of New Bedford's ownership f

to Car.al would f acilitate a more cf ficient interest in the Scabrook project and economical teorganization of Con. anwealth k.nerc,y System's subsidiary corporations by establishini; Canal as the wholessic generating subsidiary Canal will thereby substantially for the System's retail cicetric subsidiaries.

" increase its generating capacity and expand the diversity of its sources.

I Such a transfer also sids planning on a systu::>ide basis, as is appropriate u for Commonwealth Energy System's group of associated utilities.

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Mr. Cheney further testified that in addition to the administrative

't l'.,and organi:scional benefits, the transfer of the Seabrook ownership interest 4

. to Canal would also have significant financial benefits. New Bedford's indenture does not include construction work in progress as bondable property.

.t Therefore, shore-term credit lines would be strained and the timing of e

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financing would be required at the ti:ne of the commercial operation permanent l

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,.- s!-114-6205i clininating all flexibility in the timing of of a new generating unit.

Ih The transfer will improve substantially the quality of New t{financings.

i In addition, New Bedford will receive immediately the Bedford's earnings.

cash equivalent to the amount the amount invested to date which will enable t

! it to pay of f the corresponding bank borrowings. The benefits of New Bedford's

'r lower cost of capital would be passed on by New Bedford to its custcmers.

According to Mr. Cheney, Canal has a modern indenture which includes construction work in progress as bondable property. Therefore, Canal has much

'l, greater flexibility in the size and timing of its permanent financings. The

major financial services would also be likely to be understanding tcward l Cansi's needs in accepting high levels of capitalized interest during the construction period, which would be substantially reduced upun the commercial

!operationoftheSeabrookunit. On a long-ter= basis, Canal will grow signifienntly in terms of asset base and capitalization, thereby improving its financial capability.

Mr. Cheney introduced a number of exhibits which depicted the income statements, balance sheets and sources of funds used for construction for f

both New Bedford and Canal for the year ending December 31, 1980.

In order to demonstrate the ef fect of the transfer on Canal and New Bedford, the i financial statements were proformed to reflect the transfer of the beabrook i

project using the investment in that project as of December 31,1980 as the i cost basis of the transfer. These exhibits demonstrate that New Bedford's cash requirements for construction will be significantly reduced by the i

transfer of its interest in the Seabrook project to Canal.

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r 81-114-6205 il f,1 Mr. Cheney was of the opinion that Canal Electric Company was an i mppropriate owner of New Bedford's Seabrook interests based on Canal's ability to obtain better financing and a judgment as to its potential for long-tcem growth. He testified that Canal would be able to fulfill its j

obligatform under the Seabrook agreement.

i Mr. Cheney further stated that New Bedford and Canal have already i:! obtained appr* oval f rom the Massachusetts Department of Public Utilities

., for the trans fer. An application to the same effect has been filed with the i Nuclear Regulatory Commission, but approval has not yet been received.

I There was no testimony or other evidence to the contrary.

e Based upon the foregoing testimony, as well as the entire record in i this proceeding, the Commission finds that the transfer of New Bedford's ownership interest in the $cabrook project to the Canal Electric Company, as it will e proposed in the Appliention, would he for the uublic good, in that 1

eaable Commonwealth Energy System to complete a reorganization pinn of its subsidiary corporations which will result in more efficient and economical N service and that it is just and reasonable in sccordance with the provisions

.h of RSA 374:30 as well as all other applicable provisions of New Hamp. hire s

s law that said transf ers should be approved. Our Order will issue accordingly.

!, Concurring:

July 23,1981 g

i J. Michael I.ovo Paul R. McQuade '

Francis J. Riordan COMMISSIONERS L

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DF 81-114-6205 t

l NEW BEDFORD CAS AND EDISON LIC11T COMPANY i

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15.006 Upon consideration of the foregoing Report which is made a part I

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hereof; it is s

t ORDERED, that the Application of Ncv Bedford Cas and Edison Light

• Company, a Massachusetts public service corporation to transfer a 3.52317 percent ownership interest in the Seabrook units to the Canal Electric Company, is hereby approved; and it is

i FURTl!ER ORDERED, that the said transfer from the New Bedford Cas a

and Edison Light Company to the Canal Electric Company upon the terms proposed

't.; are hereby authorized in accordance with the authority vested in this l Connission under RSA 374:30.

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By order of the Public Utilitics Consnission of New !!ampshire this

a. tvanty-tMrd day of July, l' 81.

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I-l Dec' sip By:

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' //.'Micnae16 ve' Paul R. McQuade Francis J. Riordan l

4 COMMISSIONERS Attested,3y: #

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! Vincent' J /iacopino i Exec ~utive Director and Secretary

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