ML20033C438
| ML20033C438 | |
| Person / Time | |
|---|---|
| Site: | Brunswick  |
| Issue date: | 11/02/1981 |
| From: | NRC OFFICE OF STATE PROGRAMS (OSP) |
| To: | |
| Shared Package | |
| ML20033C429 | List: |
| References | |
| NUDOCS 8112030214 | |
| Download: ML20033C438 (9) | |
Text
.2 sWi%g q
y, UNITED STATES y ), e,(
p,
~ NUCLEAR REGULATORY COMMISSION
- p '
_E WASHWCTON, D. C. 20655
- k, '
i
,%m j
ANALYSIS OF FINANCIAL QUALIFICATIONS BY THE OFFICE OF STATE PROGRAMS SUPPCRTING AMENDMENT NO. 42 TO FACILITY LICENSE N0. OPR-71 AND AMENDMENT NO. 65 TO FACILITY LICENSE N0. OPR-62 CAROLINA POWER & LIGHT COMPANY BRUNSWICK STEAM ELECTRIC PLANT, UNIT NOS. 1 AND 2 DOCKET NOS. 50-325 AND 50-324
-Financial Qualifications of the Transferee The NRC regulations relating to the detennination of an applicant's financial qualifications are in Section 50.33(N and Appendix C to 10 CFR Part 50. 'These regulations state that there must be reasonable assurance that an applicant can obtain the necessary funds to cover the esti ated construction costs of a proposed nuclear plant and its related fuel cycle costs. U1timately, this means that an applicant must demonstrate a reasonable financing plan in light of relevant circumstances. This standard of reasonable assurance, however, must be viewed in light of the period of time from the purchase of ownership interest to the date of comercial operation.
In the case'of_ Brunswick Steam Electric Plant, Unit Nos.1 and 2 (the facility), the two units are completed in con-struction and are presently owned and operated by Carolina Power & Light Company (CP&L). Consequently, we must make certain basic assumptions in our financial analysis about future conditions for ana.ysis of the financing of partial ownership, operation, and ultimate decomissioning by-the proposed transferee. Our analysis of the proposed trarsferee's financial qualifications requires that we validly assume that there will 8112030214 8 PDR ADOCK 05 4
P
- n.
2 2-be rational regulatory policies with respect to the setting of rates for the recovery of-operation and deconinissioning expenses and that viable-capital-markets will exist. The fonner assumption implies that rates will be. set to at least cover the costs of service, including the costs of capital necessary for purchase of North Carolina Power Agency Number 3's-(The Power Agency) proposed 18.7 percent undivided ownership interest in the facility. The latter assumption implies that capital will be available to The Power Agency at some price to allow acquisition of partial ownership interest in the facility. Given these fundamental assumptions, our evaluation is then focused on the reasonableness of the
-proposed transferee's financial plans, in light of relevant circumstances, to participate.in its proposed share of the estimated operating and deconmissioning costs of the facility.
The following analysis summarizes our review of the information submitted by.CP&L and addresses the financial qualifications of The Power Agency to finance their proposed proportionate share of the costs associated with the ownership, operation, and decommissioning of the facility.
Cost Estimates and Amount of Ownership Interests Proposed for Transfer The most recent cost information for the proposed 18.7 percent partial ownership transfers of the facility are stated in the financial-information 1
submitted under CP&L's September 3,1981 license amendment request.
This i
cost is $244.3 million.
i
-The timing of payments to meet the above costs for acquisition of The Power Agency's 18.7 percent proposed ownership interest assumes that 33 percent of the closing will' occur on January 1, 1982, 36 percent will
i.
- s l
1 occur on-July -1,1982, and the final 31 percent will be consumated on December 1,1982.
Estimated Operating Costs of Facility For the purpose of estimating the facility's operating cost,. the year 1981 was adopted by CP&L as the first year of comercial operation.
Estimates of the total annual cost of operating the facility for each of the first five years are presented below. All operating cost estimates are based on a combined peak net electrical capacity of 1580 megawatts.
Operating costs include all costs associated with operation and maintenance including nuclear fuel burnup and capital costs.
Brunswick 1 and 2 Year Estimated Annual-Operating Costs l
(Dollars in Millions) 1981-
$ 145.9 1982
$ 217.3 1983
$ 179.6 1984 5 150.2 1985
$ 155.4 Estimated Costs to Decommission the Facility CP&L has proposed that upon the expiration of the facility's useful l
life, it will entomb it in a safe storage mode for a period of 30 years after which it will be completely dismantled. CP&L estimated that costs ~
necessary to decomission the facility would be $125.4 million.for Unit No. I and $167.9 million for Unit No. 2 under the entombment / deferred dismantlement mode for the entire facility. These costs are estimated on a present value basis in 1980 dollars and are estimated to total
.$293.3 million for the entire facility. The estimated costs to' decommission
.c
, Unit No. I are expected ~ to be less than Unit No. 2 since Unit No. 2 will be entombed first and decommissioning of the common systems for both units will be performed in conjunction with Unit No. 2.
In addition, the monitoring and surveillance equipment for this comon facility will be installed with the Unit No. 2 effort. Therefore, the entombment of Unit No. I will require less equipment and effort since the comon systems for entombment will have already been installed with the Unit No. 2 effort.
Under contract with the NRC, the Pacific Northwest Laboratory operated by Battelle Memorial Instit, te issued its report " Technology, Safety, and Costs of Decommissioning a Reference Boiling Water Reactor Power Station" -NUREG/CR-0672 (June 1980).
In this report the Pacific Northwest Laboratory _(PNL) estimated the costs of decommissioning a large (1155 MWe) boiling water reactor power station under various types of decommissioning methods.
For the immediate dismantlement method of deconsnissioning, PNL estimated that total costs would be $66.67 million in 1978 dollars for a one unit facility, or $133.34 million for two units. As CP&L's estimate allows for a higher contingency factor, it is more conservative to adopt it herein in determining CP&L's ability to finance such amounts.
Description of Business of Proposed Co-0wner The Power Agency is a public body corporate and politic and an instrumentality of the State of North Carolina, incorporated under North Carolina statutes-in December 1976.. The Power Agency was created to plan, develop, construct, and operate generation and transmission facilities. The
t'
- S
.5-Power Agency has been granted all of the powers necessary or convenient to carry out such purposes. 'In this respect, The Power Agency has proposed.to enter into contracts with thirty-six political subdivision participants (Participants), under which The Power Agency is to be the sole and exclusive bulk power supplier for each such Participant in excess of any allotment of federal power from Southeastern Power Administration or of the output of any resource such political subdivision may develop and install pursuant to provisions of the Supplemental Power-Sales Agreement in effect between Power Agency and Participant. Each Participant is obligated-to take or pay for its entitlement share of power from any l
owned project, such as the facility. The tenns of said contracts are for the life of the project or so long as any of Power Agency's bonds issued to finance the project are outstanding, but not exceeding 50 years.
Source of Funds to Power Agency to Acquire Partial Ownership Interest in the Facility, Operate It Upon Completion, and Ultimately Decommission It Like other facilities that it has acquired or will acquire, The Power
- Agency's ownership interest acquisition in the project will be financed through issuance of tax exempt revenue bonds.
Under the Power Coordination Agreement and the Operating and Fuel Agreement between Power Agency and CP&L, The Power Agency covenants to set rat 2s adequate to cover all its costs.
No regulatory approvals are am.
~~
s C
required by Power Agency in setti.7g rates to its Participants. The Participants, as municipalities of the State of North Carolina, have authority to establish.their own retail rates for service to-their customers. The State of North Carolina covenants and agrees that so
_long as any bonds. of Power Agency are outstanding and unpaid, the State will not limit or alter the' rights of-any Participant or of Power Agency to establish,-maintain, revise, charge and collect electric rates to fulfill the terms of any agreement for the project.
The obligations of each Participant to make payments to Power Agency under the Project Power Sales Agreement will be an expense of itt Electric System, and the Participant will not be required to make payments to Power Agency except from revenues of its Electric System.
Each Participant will covenant in the Project Power Sales Agraement that it will fix and charge rates for electric service supplied from its Electric System sufficient to meet all of its obligations under the Project Power Sales Agreement and to pay any and all other amounts payable from such revenues including cost of operation and of any general obligation bonds issued by the Participant to finance its electric system.
Pursuant to the Project Agreements between CP&L and Power Agency, The Power Agency will pay its proportionate share of all _ costs associated with the. cancellation, reti nent or decommissioning of the facility.
~ The Purchase, Construction and Ownership Agreement requires The Power
4
-7
. Agency to bear its share-of. the costs of cancellation or decomissioning of any Unit which.is retired or decommissioned after the-date of Comercial Operation of such Unit. These comitments extend for whatever period of time is necessary to complete the cancellation, retirement or decomissioning..
process so that no further expenditure of funds is required.
The Power Agency will include in its Monthly Project Power Costs to be charged to its Participants pursuant to the Initial Project Power Sales Agreements amounts sufficient to enable Power Agency to meet its comitment to bear its share of the costs of cancellation, retirement or decommissioning of the facility. Ecch Participant agrees in the Initial Project Power Sales Agreement to pay its Participant's share of such Monthly Project Power Costs. Such costs are defined as including all costs incurred by Power Agency resulting from the retirement or decommissioning of the Initial Project, and the providing of reserves for such purposes. The Initial Project Power Sales Agreement imposes an unconditional "take or pay" comitment, thereby obligating each Participant to pay its Participant's Share of Monthly Project Power Costs whether or not the Joint Facilities are completed, operable, operating, or retired or decommissioned and notwithstanding the suspension, interruption, interference, reduction or curtailment of the output of the Joint Facilities, or the power and energy contracted for, ir whole or in part, for any reason whatsoever.
The Power Agency will establish a reserve for such costs in the Decomissioning Fund established pursuant to the Bond Resolution proposed to be adopted by Power Agency's Board of Comissioners for the facility.
1
~b 6 ~
_ Financial Qualifications Conclusion In accordance with the regulations cited herein an applicant must demonstrate that it has reasonable assurance of obtaining the necessary funds to cover the estimated costs of the activities contemplated under the license. ! Based upon the preceding-analyses of its proposed financing plans, we conclude that the North Carolina Power Agency Number 3 has reasonable financing plans in light of relevant circumstances-to acquire, operate, and permanently shutdown, if necessary, and maintain the facility in a safe condition to the extent of 'its 18.7 percent ownership interest.
Accordingly, we conclude that the-North Carolina Power Agency Number 3 has financing plans that provide a reasonable assurance that funds can be obtained to finance its proposed respective undivided ownership interest shares in the facility. As a result, we have determined that The Power Agency is financially qualified to participate in facility to the extent of its 18.7 percent proposed ownership interest. This conclusion is based upon our determination that The Power Agency's proposed plan to fund its 18.7 percent ownership interest in the facility from proceeds derived from the issuance of its revenue bonds constitutes a reasonable financing plan in light of relevant circumstan;es.
Furthermore, we have determined that Power Agency has reasonable assurance under 10 CFR 50.33(f) of obtainirg the necessary funds to cover the estimated operating costs of the facility.
In this respect, the Power Agency has demonstrated that it has available resources sufficient to l
.i '
cover estimated costs for-each of the first five years of operation.plus
~
h i
t e est mated costs of permanent shut down and maintenance of the facility
~
in a safeLcondition as required by 10 CFR Part 50,. Appendix C(I)(B). - As a consequence of-this, we find that The Power Agency is financially qualified to acquire, operate, and safely decommission the facility to
- the extent-of a 18.7 percent undivided ownership interest. In summary, our conclusion is based'upon the status as a public utility, its unilateral ability to establish rates with its Participants, the requirement that it recover operating and decommissioning expenses and the legal requirements present in the various agreements between CP&L, The Power Agency, and 4
Participants to the Power Agency.
, -