ML20040A344

Mgt Plan for Extended Const Delay

ML20040A344
Person / Time
Site:	Satsop, Washington Public Power Supply System
Issue date:	10/14/1981
From:	WASHINGTON PUBLIC POWER SUPPLY SYSTEM
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ML20040A342	List: ML20040A341 ML20040A344
References
NUDOCS 8201200792
Download: ML20040A344 (56)

Text

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i MANAGEMENT PLAN FOR EXTENDED CONSTRUCTION DELAY OF WNP-4/5 1

i OCTOBER 14, 1981 (Revision Package, dated October 27, 1981, Included) i

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8201200792 811223 PDR ADOCK 05000509 A

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CONTENTS 1.0 OVERVIEW l

2.0 FINANCIAL 4

3.0 LICENSE MAINTENANCE 9

4.0 ENGINEERING CONSIDERATIONS 13 5.0 QUALITY CONSIDERATIONS 17 6.0 DOCUMENTATION AND RECORDS 19 7.0 COMMERCIAL ACTIONS 23 8.0 PROGRAMMATIC ACTIONS 28 9.0 REQUIRED ACTIONS 29 10.0 MANAGEMENT OF THE EXTENDED CONSTRUCTION DELAY 33 APPENDIX A--BOARD OF DIRECTORS' RESOLUTION No. 1187 AND RESOLUTION No. 1198 APPENDIX B--

WNP-4 and 5 FY-1982 AND 1983 BASELINE BUDGET AND CASH FLOW PREPARATION CRITERIA PHASE I AND II O

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PR!AGEMENT PLAN FOR EXTENDED CONSTRUCTION DELAY OF WNP-4/5 1.0 OVERVIEW l.1 INTRODUCTION i

This Management Plan is a description of the general policy and guidelines to be followed in bringing the WNP-4/5 Projects to an extended construction delay The Supply System will use this plan as the basis for all management status.

direction with respect to efforts on Projects 4 and 5.*

The extended construction delay status is to be executed within severely limited funding constraints wnile preserving the assets of the Projects for a two-year period.

The term commonly used to describe this extended construction delay is " mothball."

1.2 REASONS FOR THE DELAY Because of the severe problems in financing the construction of Units 4 and 5 in parallel with the other three Supply System Projects, the Governors of Washington and Oregon appointed a special Blue Ribbon Panel of senior businessmen to evaluate the situation and provide their recommendations.

The recomended action, on September 18, 1981, was to place WNP-4 and 5 in a minimum cost status while preserving the assets for a period of at least two years beginning July 1, 1981.

The Participants Comittee representing the 88 participants in WNP-4/5 approved a resolution on September 24,

1981, supporting these recomendations.

The Supply System Board of Directors directed implementation of those recomendations on September 25, 1981, in Resolution No.1187 (See Appendix A) and further directed preparation of an amended construction budget for fiscal. years 1982 and 1983 reflecting the same.

• It is anticipated that an oversight role will be provided by the Participants

/G Comittee, IOU's and OSI's. This plan will be amended at that time to reflect k.)

tne1r role.

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October 14, 1981 i.

1.3 CHANGES TO THE PLAN 4

Changes to this plan will require approval of the Managing Director.

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1.4 FUNDAMENTAL PP.INCIPLES GOVERNING WHP-4/5 EXTENDED CONSTRUCTION DELAY I

l 1.4.1 Initiation l

The delay is to be initiated immediately and is to be based primarily on l

absolute minimization of all costs between now and July 1983.

1.4.2

!!aintenance of Assets l

The plant assets are to be maintained. This will include:

o conducting preventive maintenance of critical equipment

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$ V o conducting minimum activities necessary to preserve the licenses i

naintaining sufficient and accurate documentation on all quality, safety, o

d and code-related materials and installations r

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o maintaining insurance coverage.

l 1.4.3 Supply System Transformation 1

l l'anagement actions will be taken to transform the Supply System and i ts contractors into an efficient / effective organization building three plants, not five.

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j 1.4.4 Lead Unit Impacts 1

1 tianagement actions will be designed to minimize the impact on Units 1 and 3

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cost and schedule.

i 1.5 PAHAGEf'ENT PRINCIPLES 1

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The management of the extended construction delay will be conducted by line j

management.

A task force has been assigned to assist in managing the efforts described in this plan.

The functions of the task force are given in Section 10 of this report.

In managing the delay, maximum utilization will be made of j

existing procedures, reports and systems.

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2.0 FINANCIAL O

2.1 GENERAL It is emphasized that funding of the WNP-4/5 mothballing will be a not to exceed amount for the period July 1,1981 through June 30, 1983.

At the present time, agreement has not been reached concerning the availability and specific timing of certain funding. A preliminary financial baseline for the mothballing period is shown in Table 1.

Table 2 summarizes by major budget line item the preliminary estimated cash requirements.

2.2 BUDGET AND CASH FLOW REQUIREMENTS The construction delay on WNP-4 and 5 necessitates an amended 1982 construction budget for all five projects.

Amended 1982 construction I

budgets and related cash flows for WNP-1, 2 and 3, and the WNP-4/5 FY-1982 and 1983 baseline budget and cash flow as outlined in Appendix B are to be prepared and submitted for action by the Board of Directors in O.

January 1982.

2.3 GENERAL BUDGET GUIDANCE 2.3.1 Scope The scope of the mid-year review will include the following for all five projects:

o all budget line itcas o revised estimate at completion, based on actual cost through September 1981 and estimate to completion for WNP-1, 2 and.3.

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FINANCIAL BASELINE

($ in Millions)

Beginning Balance (Cash on Hand 7/1/81)

$ 59 Revenues Transfer of fuel assets (Actual 8/81)

$ 61 Cost-sharing adjustment 5

Reinvestment income 105 PP&L ownership share of WNP-5 23 Regional participation 150 Total Revenues 344 Cash Requirements WNP-4 Actuals.7/1/81 - 9/27/81 5 69 Estimated 9/28/81 - 6/30/83 109 Total

$178 WNP-5 Actuals 7/1/81 - 9/27/81

$ 66 Estimated 9/28/81 - 6/30/83 159 Total

$225 WNP-4 and 5 Actuals 7/1/81 - 9/27/81

$135 Estimated 9/28/81 - 6/30/83 268 Total 403 Ending Balance (Cash on Hand 7/1/83) 5

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October 14, 19 TABLE 2.

i WNP-4/5 CASH REQUIREMENTS

• 7/1/81 - 6/30/83

($ in Millions, last working day of the month)

WNP-4 WNP-5 WNP-4/5 Actual Estimated Actual Estimated

_ Actual Estimated 7/81-9/81 9/81-6/83 Total 7/81-9/81 9/81-6/83 lotal 7/81-9/81 9/81-6/83 Total Constr. Contracts

$44.4

$ 59.8

$104.2

$37.0

$52.1

$ 89.1

$81.4

$111.9

$193.3 i

Prepurchased Equip.

7.6 7.0 14.6 17.5 67.2 84.7 25.1 74.2 99.3 Architect-Engineer 6.0 4.0 10.0 3.5 9.8 13.3 9.5 13.8 23.3 Constr. Mariager 5.9 2.9 8.8 2.6 4.6 7.2 8.5 7.5 16.0 Owner's A&G 4.7 3.3 8.0 3.7 4.4 8.1 8.4 7.7 16.1 Owner's Constr.

.3 4.0 4.3 1.3 1.0 2.3 1.6 5.0 6.6 Subtotal

$68.9

$ 81.0

$149.9

$65.6

$139.1

$204.7

$134.5

$220.1

$354.6 Nuclear Fuel

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$ 27.5

$ 27.7

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$ 20.0

$ 20.7

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$ 47.5

$ 48.4 TOTAL

$69.1

$108.5

$177.6*

$66.3

$159.1

$225.4*

$135.4

$267.6

$403.0*

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• Not to exceed amount.

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November 24, 1981 o associated cash flow forecasts o for WNP-4 and 5 only, special emphasis must be given to the cost estimates and related cash flow forecasts for fiscal years 1982 and 1983 based on slowdown / mothball directives.

Specific preparation criteria for this is provided in Appendix B.

o For WNP-1 and 3 only, the amended 1982 construction budget estimates shall assume that WNP-1 and 3 ai single units and require identification of costs that would shift to the twin-unit (4/5) if restarted on July 1, 1983 consistent with the principle of equity, i.e., " cost allocated on the basis of proportion of respective benefit."

2.3.2 Responsibilities Responsibilities for preparation, review and approval of revised estimates remain the same as defined for the 1982 budget.

2.3.3 General Guidelines The overall estimating approach to be used for the mid-year budget review is from the standpoint of " variance" from the 1982 budget.

Focus should be directed to impacts that have occurred subsequent to preparation of the 1982 budget.

For example:

o Impacts resulLing from the extended construction delay on WNP-4 and 5.

o Changes authorized through Change Management action.

These would not impact the bottom line of the budget, but would involve transfers from contingency to other budget line items (or vice versa).

o Impacts resulting from implementation of Amendment No.1 to " Policy Statement on Equitable Cost Sharing for Twin-Unit WPPSS Projects."

Such impacts are to be uniquely identified in the budget with actual l

costs incurred during the extended construction delay being recorded as contingency assets or liabilities, as appropriate.

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Major estimating assumptions to be used are as follows:

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o For the purpose of estimating WNP-1 and 3 cost that would shift to the j

twin units (4/5) if restarted, assume that the construction restart i

j notification will be given on July 1, 1983 for WNP-4 and 5 without any i

advance notice.

I o Cost-sharing allocations will be made as specified in the Amendment No. 1 1

j to " Equitable Cost Sharing for Twin-Unit WPPSS Projects."

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- o' Assumptions for inflation are to remain the same as those used in the i

1982 budget.

i The 1982 budget will continue to be the baseline for performance measurement i

on WNP-1, 2 and 3.

The revised estimate and related cash flows for fiscal i

years 1982 and 1983 for WNP-4 and 5 will become the new baseline for these 4

projects.

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2.4 Required Action i O i

A list of specific required actions is given in Section 9.2.

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October 14, 1981 3.0 LICENSE MAINTENANCE

3.1 DESCRIPTION

OF LICENSES 3.1.1 License Requirements The Supply System currently possesses NRC construction permits for both WNP-4 and WNP-5. NRC regulations do not require that any phase of construction of a total project be completed on a specific schedule.

The only requirement relating to construction schedule is that construction be completed by the latest completion date specified in the construction permit.

The latest completion date may be extended by the NRC for " good cause."

(42 USC, 2235; 10CFR50.55) 3.1.2 License Extensions It has been common for NRC licensees to seek construction permit amendments to extend latest completion dates.

Such amendments are usually granted routinely.

" Good cause" for such amendments can be demonstrated by factors beyond the licensee's control such as labor difficulties, changing regulatory requirements, and adverse economic conditions.

3.1.3 WhP-4/5 License Status A request to extend the latest completion date on the WNP-4 permit to June 1, 1987, was submitted recently to the NRC.

Under NRC Regulations, the construction permit will remain in effect pending NRC action on the request (10CFR2.109).

The latest completion date specified in the WNP-5 permit is July 1, 1986.

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3.1.4 WNP-4/5 License Extensions While the NRC Staff has the authority to require licensees to "show cause" wliy permits should not be modified, suspended or revoked in view of significant information (see 10CFR2.202), the issuance of a "show cause" order solely new because construction on WNP-4 and WNP-5 is interrupted is considered to be unlikely, particularly in view of the state of completion of the projects and the likelihood of eventual resumption of construction and project completion.

Based on precedents where other utilities have deferred construction (e.g.,

Duke Power deferral of Cherokee Unit 1, 2 and 3), it is expected that the NRC Staff will view the information regarding a deferral of construction on WNP-4 and WNP-5 primarily as it relates to their own resource needs and review priorities.

3.1.5 NRC Overview of Delay The NRC Inspection and Enforcement staff will have a most direct interest in

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the plans for, and activities associated with, preservation of the facility

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records and hardware.

It will be important to consider their concerns when formulating our plans for deferral of WNP-4 and WNP-5 construction and to keep them closely informed of our activities.

3.1.6 Site Certification Agreements The " licenses" issued by the Washington Energy Facility Site Evaluatien Council (EFSEC), known as the Site Certification Agreements, do not specify dates for completion of construction.

Consequently, many of the points and activities discussed above vis-a-vis the NRC are not applicable.

However, in early Octooer, EFSEC did express an interest in a full briefing on the impact of the decision to defer WNP-4 and WNP-5 with an eye to possibly changing the 10

October 14, 1981 i

various permits and licenses issued by the State or to changing EFSEC-required programs and activities.

Changes anticipated would make permits and activities more reflective of reduced construction / operation activities and of the possibly extended construction period.

During October, Supply System staff will be analyzing the pertinent permits cid programs to form the basis for Supply System proposals for appropriate changes or reductions.

3.2 ACTION PLAN FOR PRESERVING THE WNP-4/5 LICENSES 3.2.1 Notifications Informal notification of NRC management and staff was accomplished almost immediately upon completion of the Governors' Panel Report.

Mr.

R.H.

Engelken, Director of NRC Inspecticn & Enforcement, Region V, was informed by Mr.

R.L.

Ferguson, Supply System Managing Director, in a meeting on September 17, 1981.

Mr.

Harold

Denton, Director of Nuclear Reactor Regulations (NRR), was informed by Dr. G.D. Bouchey, Deputy Director of Safety

& Security, in a meeting on September 24, 1981.

In addition, various NRC inspectors have been informed of the situation at WNP-4 and WNP-5 on a continuous basis.

Formal notification of both the NRC Staff (Bethesda) and Inspection and Enforcement (Region V) of the Supply System action regarding deferral of WNP-4 and WNP-5 construction was accomplished by a letter to the Director, NRR, with copy distribution to the Director of Inspection and Enforcement, Region V.

No other formal submittals are considered necessary at this time to maintain the WNP-4 and WNP-5 construction permits or to satisfy normal practices of keeping the NRC informed of significant activities.

The EFSEC was notified of the construction interruption by a letter dated i

October 5, 1981.

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V 3.2.2 Licensing Acolications Our current plan is to file applications for operating licenses for WNP-1/4 in Decemoer 1981 and for WNP-3/5 in April 1982.

In reviewing these plans in view of the WNP-4/5 deferral, it is concluded that the operating license applications in both cases should be submitted as originally planned.

This approach conserves manpower resources for both the Supply System and the NRC, l

results in no added cost for the WNP-4/5 Projects, and minimizes the necessity l

for public hearing on Projects 4 and 5 if construction is resumed and the plants are completed.

There is no filing fee for the operating licenses applications; thus, this action would represent no additional cost to WNP-4/5.

A final consideration is whether or not to request a further extension of the latest completinn date on the pending WNP-4 construction permit or on the O-WNP-5 construction permit. The pending WNP-4 amendment application requests a latest completion date of June 1,1987.

It has been concluded that the NRC should be allowed to process the pending application as submitted.

After the construction delay period, the need for another extension of the latest completion date will be re-evaluated.

Similarly, no action is considered necessary at this time to extend the latest completion date for WNP-5.

This matter will be addressed at a later date.

3.2.3 Required Action A list of specific required actions is given in Section 9.2.

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4.0 ENGINEERING CONSIDERATIONS Engineering guidance on activities to be conducted for the preservation of the assets in WNP 4/5 is provided in this section.

Final determinations are to be made by the Progran Directors in consultation with the Technical Director.

Engineering planning and considerations for entering an extended construction delay range from complete preservation and completion of all necessary functions to simply walking off and leaving the work as is.

The degree of preservation work is primarily a function of economics at the time of implementation.

As a minimum, safety, code or quality requirements will in themselves demand a certain level of preservation activity.

Using economics as a basis, four classes of equipment / materials / structures can be defined:

0 that which will be preserved at all costs that which will receive minimal attention and is assumed at a risk to be o

suitable for service later O

o that which can be sold or used elsewhere o that which is simoly left as is.

The equipment / structure / materials that are encompassed by each of these classes can only be determined by an item by item evaluation by technically knowledgeable persons, with final decisions made by the Directors responsible for managing the extended construction delay within a defined funding level.

4.1 EQUIPMENT TO BE PRESERVED AT ALL COSTS l

l For that equipment / material / structures required to be preserved, the following I

considerations must be evaluated:

o Preservation and storage should be in accordance with manufacturer's recommendations, applicable design requirements and/or ANSI N45.2.2.

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October 14, 1981 o Complete surveillance and record keeping functions must be maintained throughout the mothballing period.

The condition of the equipment must periodically be verified and all protective measures maintained intact.

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All records including drawings, purchasing / manufacturing documents, code o

data reports or partial code data reports, qualification documentation, construction deficiency reports and any other applicable documents must j

be completed to the extent possible and must be properly filed with the responsible party.

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Construction drawing revisions, completed engineering directives and an o

accurate status record of work completed must be identified and filed with the responsible party.

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o Concrete coating systems that are partially installed should be considered for completion.

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o Unit 5 exposed rebar and structural steel which must be preserved should be sandblasted and coated with two coats of zinc-rich paint.

Loose rebar should be stored in laydown area under cover.

Unit 4 exposed rebar and i

structural steel should be lef t as is with sandblasting prior to usage, if required.

If more economic than sandblasting and coating, concrete I

encasement should be completed.

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I 4.2 MINIMUM ATTENTION WITH RISK For equipment / material / structures determined to require minimum attention, the following considerations must be evaluated:

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o Preservation and storage should be in accordance with manufacturer's recommendations, applicable design requirements, and/or ANSI N45.2.2.

However, these requirements may be modified based on the degree of exposure for a particular piece of equipment.

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Minimal surveillance should be established to assure protective measures o

j remain adequate, i.e., heaters operable, covers intact, etc.

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All *ecords, including drawings, purchasing / manufacturing documents, code data reports or partial code data reports, qualification documentation 1

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possible and filed with the responsible party.

j o Construction drawings, revisions and completed engineering directives should be identified and filed with the responsible party when practical.

4.3 ALTERNATE USAGE When cost effective, an attempt should be made to sell, trade or use the excess material / equipment in accordance with appropriate business practices.

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Engineering should identify those items which may be disposed of.

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i 4.4 LEFT AS IS Those items identified as more costly to maintain for the mothballing period than to replace should receive no attention.

Those items that cannot be used elsewhere and have a specified shelf-life of insufficient length to warrant preservation, should receive no attention.

Alternatively, items in this category might be sold as scrap.

4.5 ECONOMIC CONSIDERATION Preservation of certain specialty, nonsafety-related items should be given close consideration.

Examples of high-dollar specialty items are the turbine and generator.

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4.6 REQUIRED ACTION The Program Directors, in consultation with the Technical Director, shall define all equipment / structures / materials to be preserved given the economic considerations discussed in this plan.

These items are to be identified by 4

October 23 so that specific comercial direction may be given to appropriate construction contractors and equipment vendors.

Nonconformances relating to hardware, structures, and documentation should be dispositioned and verified.

(If nonconformances can be closed out at the contractors expense, they should be closed out.)

At a minimum, unresolved nonconformances should be recorded and their status noted for future action.

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O 5.0 QUALITY CONSIDERATIONS Planning for the WNP-4/5 extended construction delay must address Quality Assurance program considerations that are necessary to preserve licenses and permits and to protect plant equipment and facilities so as not to preclude a resumption of construction after the delay.

5.1 REGULATORY REQUIREMENTS The regulatory requirements that must be met to preserve the assets in Projects 4 and 5 are given in the following subsections.

5.1.1 Quality Assurance Program 1

The Design and Construction Quality Assurance Program must be continued and modified as necessary to cover the extended construction delay.

5.1.2 Preservation and Storage Requirements As discussed in Section 4, Engineering Considerations, equipment received and in storage should be maintained in accordance with manufacturer's recomendations and/or applicable design requirements and standards, or approved alternatives.

Implementation of the preventive maintenance program shall be verified by Quality Assurance through site surveillances.

1 5.1.3 Procedures / Instructions Surveillance procedures shall be required to verify that the quality of l

materials, components and structures (including partially completed l-structures) will be adequately preserved during the period of suspended construction.

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i 5.1.4 Records Documentation for work performed, including maintenance and qualification j

records, must be reviewed, accepted, maintained, and stored in a pennanent record storage facility to which the Supply System has assured access.

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The status of construction tests and inspections performed prior to suspension of work must also be documented, reviewed and stored in a perma 1ent records

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facility accessible by the Owner.

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5.1.5 American Society of Mechanical Engineers (ASME)

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1 Contractors who have performed but not completed ASME Code. work should prepare a partial data report and have it signed by the i >.- Authorized Nuclear Inspector.

The report should describe exactly what werk has been performed.

Also, all quality assurance documentation should be tu"ned over for review and acceptance prior to contractor demobilization.

Preservation and storage requirements should be established and implemented l

for ASME material being stored.

Also, materials / items being stored should be I

well identified with identification tags that wi?I withstand the environmental conditions where placed.

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5.2 REQUIRED ACTION 1

The WNP-4/5 Program Director.s are responsible for developing the specific j

implementation plan to meet these requfrements.

These plans are to be defined, documented and a copy provided to Corporate Quality Assurance by I

October 30, 1981, in order to meet the ccaimitment to brief the NRC on Nove%er j

18, 1981.

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6.0 DOCUMENTATION AND RECORDS This section describes the requirements for records and documents needed to preserve the assets of WNP-4/5. Records / documentation are a necessary part of the total construction effort.

Insurance of proper documentation must be accomplished at minimum cost.

6.1 PRESENT STATUS OF 00CUMENTATION--WNP-4 The status of records for WNP-4 is as follows:

Engineering / Design records are in UE & C custody.

o QA Class I construction records are in Bechtel and contractor custody.

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't ASME Division 2 construction records are in UE & C and contractor custody.

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o Quality Class II and G construction records are in contractor custody.

o QA Class I equipment vendor records are in Bechtel and prepurchased l

equipment contractor custody.

Class II and G equipment vendor records are in Bechtel or prepurchased o

equipment contractor custody.

o Supply System contractors records are in Supply System custody (f el racks, security system, spare parts, simulator, etc.).

Supply System-generated records are in Supply System custody.

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i 6.2 PRESENT STATUS OF DOCUMENTATION--WNP-5 The status of the records for WNP-5 is as follows:

Engineering / Design records are in Ebasco custody.

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QA Class I construction records are in Ebasco and contractor custody.

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o Class II and G construction records are in contractor custody.

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l o QA Class I equipment vendor records are in Ebasco and prepurchased equipment contractor custody.

Class II and G equipment vendor records are in contractor custody.

o o Supply System contractors' records are in Supply System custody (fuel racks, security system, simulator, spare parts, etc.).

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Supply System-generated records are in Supply System custody.

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6.3 RECORDS REQUIREMENTS In order to preserve the assets of the projects, all records must be retained as described in the following subsections.

6.3.1 Architect / Engineer and Construction Manager The AE and/or CM shall retain all quality records currently in his custody, and should obtain custody of those quality records in the custody of the

.I contractors.

The guiding philosophy shall be that the AE or CM have custody i

of the records rather than the contractor.

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October 14, 1981 6.3.2 Supply System The Supply System should retain all quality records currently in our custody for those contracts administered within the Supply System (e.g., fuel racks, security system, etc.).

In addition, the Supply System should obtain custody of those quality records that pertain solely to WNP-4/5 for contracts administered by the Supply System.

6.3.3 Contractors As discussed above, most contractors should present their records to the AE or CM as determined by the Program Director.

However, for selected contractors (for example, the NSSS contractor) where the contractor has not yet turned over quality records to the AE/CM or the Supply System, the Program Director may elect to leave those records in the custody of the contractor.

In this case, the contractor shall provide a list of' those records required to support his work and shall describe how and where the records will be stored.

The Supply System will verify the adequacy of those records by audit / surveillance.

6.3.4 All Other Records All other records not currently in the possession of the AE/CM/ Supply System that can be obtained at no additional cost should be obtained.

Other records should be obtained only for components that are not accessible due to construction (e.g., embeded piping, underground piping or electrical work, etc.).

In this case, marked-up drawings and records are adequate.

6.4 RECOROS GENERATED OURING CONSTRUCTION DELAY Records generated during the extended construction delay should be retained as follows:

1 o Preventive maintenance records shall be retained by the organization responsible for the maintenance.

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October 14. 1981 Records for equipment received during the construction delay should be o

retained by the CM organizaticn.

6.5 REQUIRED ACTION A list of specific actions required is given in Section 9.2 l

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7.0 COMMERCIAL ACTIONS 7.1 GENERAL The guidance and requirements specified in this section are necessary to ensure proper overall planning, support budget formulation and cash flow

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forecasting and control.

The total effort will require some time to complete.

1 However, it is emphasized that the 4/5 Program Directors and the Director of j

Business Programs are to implement immediately those contractual actions that i

reduce the continuing commitment of funds to a minimum.

Attention should be j

given to the largest dollar impacts.

7.2 SPECIFIC ACTIONS

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7.2.1 Prepurchase The Projects are to suspend all WNP-4/5 work on all contracts except for those contracts where the Project is reasonably certain that such suspension will result in greater near-term costs than continuance of work.

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The WNP-4/5 Program Directors and Director of Business Programs shall review l

all contracts and develop their initial plan for resolving each contract by j

October 28, 1981.

A copy of this plan will be provided to the task force.

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Data shall reflect the following:

j o Priority listing of contracts based on estimate of potential costs.

Imediate evaluations are to be conducted on large dollar-value exposure i

contracts.

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o Intended Action--

a.

Suspension of WNP-4/5 work b.

Termination of WNP-4/5 work c.

Partial :..z pension of WNP-4/5 work d.

Continue work to completion o Consideration of disposing of equipment, material on hand or raw materials in vendors' shops.

Such disposal must recognize existing bond covenants; additional guidance on this will be provided, Minimization of impact on WNP-1/3 as a result of the WNP-4/5 actions.

o Consideration of engineering quality and documentation requirements.

o Estimated cost / cash flows for WNP-4/5 by specific contract for October, o

November and December 1981.

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o Estimate of cost / cash impact on WNP-1/3 as a result of the WNP-4/5 actions recormlended.

Cost / cash impact to be followed by contract for October, November and December 1981.

The Program Directors and Director of Business Programs shall prepare individual contract negotiation plans as required to support their comercial action plan'.

Based on these negotiation plans, the projected cost / cash flow should be reviewed and adjusted.

An overall negotiation schedule should also be prepared, based on the priorities established above, by November 13, 1981.

Negotiations should begin in accordance with this schedule.

Upon completion of individual negotiations, the cost / cash flow projects should be adjusted, if necessary, and the task force should be advised of any changes.

Necessary contractual documents should be executed in accordance with established comercial procedures.

24 m

October 14, 1981 7.2.2 Construction The action plans for construction are the same as for prepurchase, recognizing that some of the actions have already taken place.

7.2.3 Headquarters Contracting Activities Service and prepurchase contracts that support, or are funded by WNP-4/5, and are managed by Headquarters will be given the same scrutiny and reports provided thereon as in the case of prepurchase contracts.

This will be accomplished by the Director of Business Pr: grams who will coordinate actions with the others for whom the contracting services are being provided.

7.3 NUCLEAR FUEL The nuclear fuel contracts are under the technical control of the Technical Director. The following actions are to be taken.

7.3.1 NSSS/ Fuel Initial core fuel is to be handled in the same manner as the NSSS portion of the contract.

7.3.2 Gardinier The contract with Gardinier is to be terminated.

Termination costs are to be appropriately allocated between WNP-1, 4 and 5.

7.3.3 Western Nuclear Current plans are to purchase contractual commitments of uranium under the contract and imediately resell at the then-current market price.

25 O

Octob r 14, 1981 7.3.4 Department of Energy Separative work is currently scheduled to be delivered to the Supply System for WNP-5 in September 1982.

The Supply System's initiatives to sell these services to other utilities are to be continued.

7.3.5 Kerr-McGee UF, Conversion Contract This contract involves conversion of UF supplied by Gardinier to UF

• 4 6

Termination of the Gardinier contract eliminates the need for this contract and it is therefcre to oe terminated.

7.3.6 Kerr-McGeeUgConversionContract No cash flow is expected to be incurred by WNP-4/5 over the 2-year period.

Therefore, no action is to be taken.

7.3.7 Reporting Responsibilities The Technical Director will continue close coordination of actions with the Managing Director and will advise the task force of any changes to plans and will provide reports as required.

7.4 ASSulPTIONS For purposes of negotiations, the period of construction delay will end o

on July 1, 1983.

Courses of action (i.e., termination, suspension, partial suspension and o

continuance of the work) taken on specific contracts will be based on goals provided in Deputy Managing Director's memo of October 2,1981.

26 O

October 14, 1981 o For purposes of cost / cash flows for construction contracts, the cost-sharing formulas provided to the Projects during the week ending October 2, 1981, will be utilized.

i 7.5 REQUIRED ACTION Specific required actions are given in Section 9.2.

O 27 O

t l

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October 14, 1981 O

8.0 PROGRAMMATIC ACTIONS The Supply System is committed to becoming an efficient organization designed to build three nuclear plants as opposed to five.

This will require a number of programmatic actions including streamlining organizations and improving the overall manual-to-nonmanual ratios on the projects.

Several management initiatives have been implemented in recent weeks.

The Program Directors are also to continue to pursue similar actions with respect to architect engineers, the construction managers and the construction contractors.

These types of management initiatives must be implemented to minimize the impact of the extended construction delay on Projects 1 and 3.

In the same sense, all nongenerating facilities and other activities conducted by the Supply System not directly supporting the construction of Projects 1 and 3 should be evaluated for deferral, suspension, or elimination.

Examples of such activities would be further work on improvement of roads and interchanges, office

space, temporary construction facilities, temporary construction utilities, etc.

The appropriate Directors are to provide a brief listing of their intended further programmatic actions and timetables to the task force by October 30.

l 28 O

October 14, 1981 9.0 REQUIRED ACTIONS 9.1 ACTIONS TAKEN TO DATE The following actions have already been initiated and will be continued as necessary to implement the construction delay:

o Initiated reductions in nonmanual workforce.

o Provided initial guidance on commercial actions.

Subsequent direction was given on October 7, 1981.

Developed necessary mid-year budget guidance to facilitate revision of o

FY82 budget, o Initiated necessary early planning activities r

the extended construction delay.

i o Initiated actions to reduce construction activities to an absolute minimum.

i Issued temporary suspension notices to vendors of prepurchased equipment; j

o detailed comercial guidance is to be develtped.

1 o Initated a review of all service agreements to evaluate poisNYe

)

reallocation of shared costs or immediate suspension of the contract if reallocation cannot be accomplished and there are no adverse impacts on quality, licensing or preservation of assets.

i 9.2 PLANNED ACTIONS A consolidated list of actions is contained in Table 3.

The due dates and responsible individual (s) are also indicated.

29

November 24, 1981 i

TABLE 3.

WNP-4/5 MOTHBALL REQUIRED ACTIONS & REPORTING FINANCE REQUIREMENTS Required Report Item Responsibility Date Issue general guidance Task Force 10/14/81 WNP-4/5 cash flow thru Program Directors 10/31/81 Dec. 31, 1981 WNP-1/4, 3/5, Hqtrs.

Estimates at completion &

Program Directors 12/14/81 cash flows conplete WNP-1/4, 3/5, Hqtrs.

(WNP-1, 2 and 3)

WNP-4/5 cash flow thru 6/30/83 Board action of estimates Participants / Board 1/22/82 at completion and cash flow (all 5 projects)

COMMERICAL REQUIREMENTS Develop recommended actions Program Directors 10/28/81 by contract WNP-1/4, 3/5, Hqtrs.

I l

Develop estimated cost / cash Program Directors 10/30/81 I

flows by contract thru WNP-1/4, 3/5, Hqtrs.

Dec., 1981 Develop estimated cost / cash Program Directors 11/16/81 Impact on WNP-1/3 with WNP-1/4,3/5,Hqtrs.

Breakdown by contract Based on contractual action Program Directors 11/9/81 selected, issue additional UNP-1/4, 3/5, Hqtrs.

direction to the con-tractors Prepare overall negotiations Program Directors 11/13/81 schedule WNP-1/4, 3/5, Hqtrs.

30

' O

October 27, 1981

! O (Continued)

COMMERCIAL REQUIREMENTS l-Required Reoort Item Responsibility Date Complete all negotiation plans Program Directors 1/31/82 WNP-1/4, 3/5, Hqtrs.

Prepare & execute contract Program Directors As required to main-modifications WNP-1/4, 3/5, Hqtrs tain integrity of the financial baseline LICENSING REQUIREMENTS Informal notification of NRC Licensing Complete managementent Notification letter to EFSEC Licensing Complete Notification letter to NRR &

Licensing Complete NRC, Region V Assessment of need for modi-Licensing 10/30/81 fication to EFSEC permits Briefing of NRC, Region V, on Quality Assurance 11/18/81 plans for WNP-4/5 Con-struction deferral Briefing of EFSEC on WNP-4/5 Licensing 11/15/81 construction deferral Submittal of WNP-1/4 OL Licensing 12/81 application C_-T Submittal of WNP-3/5 OL Licensing 4/82 application l

31 m.]

l l

l m

-- --. - - - - +

,,-,e,--

=

October 27, 1981 O

(Continued)

ENGINEERING REQUIREMENTS I

Required Recort Iten Responsibility Date j

Define all equipment / structures / Program Directors 12/14/81 materials to be preserved WNP-l/4, 3/5, Hqtrs.

4 QUALITY ASSURANCE REQUIREMENTS Develop specific actions with Program Directors 10/30/81 an implementation plan WNP-1/4, 3/5, Hqtrs.

to meet the referenced requirements DOCUMENTATION AND RECORDS REQUIREMENTS Identify all records-related Program Directors As needed for actions which may have WNP-1/4, 3/5, Hqtrs, negotiations commercial impact Identify location & status of Program Directors As needed for

/"',%

all relevant records WNP-1/4, 3/5, Hqtrs, negotiations

(/

PROGRAMMATIC REQUIREMENTS Evaluate & identify all non-Program Directors 10/30/81 generating facilities &

WNP-1/4, 3/5, Hgtrs.

Other activities to be deferred, sus-pended or eleminated.

av 4

p 32 v

=

\\

l October 14, 1981 10.0 MANAGEMENT OF THE EXTENDED CONSTRUCTION DELAY l

l The principles for management of the construction delay are presented in Section 1.5 and will be based primarily on implementation by line management with assistance and support by the task force.

10.1 LINE MANAGEMENT RESPONSIBILITIES Management of the extended construction delay is the direct responsibility of the line managers of the Supply System.

Each Director will be responsible for accomplishing those activities within his area of responsibility on the defined schedule and within budget.

The integrity of the overall financial baseline defined in Section 2.0 must be maintained and is the collective responsibility of every director.

10.2 TASK FORCE RESPONSIBILITIES The task force is to provide assistance to line management in developing and L

implementing actions and is to provide a consolidated performance evaluation.

The task force will report to the Deputy Managing Director on all matters related to the extended construction delay.

The functions of the task force will be as fallows:

develop and publish a consolidated Monthly Performance Report o

analyze impact of external influences on the ability to perform against o

the defined baseline o identify any requirements or additional initiatives for executing the delay that may have been overlooked assist the Managing Director / Deputy in review of program actions against o

the plan 33 O

l i

. = _

October 14, 1981 f

assist line management where and when necessary in the implementation of l

o the extended construction delay i

review the experience of other nuclear utilities in extended delays on o

their plants review Supply System performance on accomplishing required tasks o

o review total expenditures versus baseline and funds availability to identify possible variance trends or overruns identify and analyze potential areas for further savings o

o update this plan as necessary.

10.3 REPORTING GUIDELINES i

)

10.3.1 Rolling Cash Flow Reports l

l The Supply System is using a 12-week rolling cash flow forecast and variance l

reporting system to monitor cash flow during the construction delay.

The l

12-week rolling cash flow report will replace the current 8-week rolling cash flow report beginning November 2, 1981.

The following information is to be provided weekly through June 30, 1983:

o updated 12-week forecast explanations and reasons far variance of actuals o

explanations and reasons of forecast revisions for the conrnon periods for I

o both past forecast and the approved budget baseline; these variance And 34

O

October 14, 1981 i

revision explanations will address, at the minimum, whether the reason for the variances or revisions were due to a bad estimate, incorrect timing (if the variance is due to incorrect timing, a revised estimate of when the payment will occur and why should be included), or an omission.

This information is to be submitted each Monday by 4:00 p.m.

beginning November 2, 1981, to J. J. Read, Manager, Project Budgets.

Project Budgets will consolidate all data, provide summary analysis and report results by the following day.

A sample of an 8-week forecast is given in Table 4 and a sample of a construction fund cash summary report is shown in Table 5.

10.3.3 Responsib'ilities Required forecast inputs and related responsibilities are as follows:

Item Input Responsibility Construction Contracts OR Cseh/RN Williams Equipment Contraces OR Cseh/RN Williams Architect-Engineer DR Cseh/RN Williams Construction Management DR Cseh/RN Williams Owners A&G SW Stave Owners Construction Cost MJ Simmons Nuclear Fuel, WG Jolly Reinvestment Income KJ Kreamer 1

a I

35 J

J

O O

O.

TAI:tf 4.

WASlHNGION Put.L IC POWER SUPI'tY SYSIttl 14-14-HI 11-WEEK llott LNG Caul fl0W FCRICASI tiUCL t AR Plutif CIS #405. 4 Af4D 5

($ in thousands)

SEPilltf R 0t 1086 R NoviMut R

• WL 9/13 *WE 9/20

• Wt 9/27

• WE 10/4 WE 10/II WE 10/10 WL 10/25 WE 11/4 WE 11/11 Wtil/lb WE 11/22 WE 11/29 l!L,84,1

$51,044 143,480

}H,3f64, 125,035

[13,]I3

} l8,5_l]

}l0,002 B 63 t(/,4h5) @!]o) }(13,559) tisginn1113 Balance O

Receip~ts T eI fransfer 5 -

Interest Transfer 167 122 477 78 55 5.426 37 lu 1,957 Private ihner 894 2h8 67) 209 342 422 457 114 9 367

Illi, 425 330 Total Receipts L1,0R

$ 410

$ 1,148

$ 2117

[ 397 1 5,84,11

$ 494

[_ _ p67 M 3/4 i

1 711 i

425 333 Olsbursements * *

~0 APT 4 Coiis'truction 5 842

$ 3.522

$ 2.207

$ 1,377

$ 923

$ 966 5 500

$ 500

$ 600 i

500

$ 1.000

$ l.000 Equilment 421 154 2,124 265 371 853 225 210 300 200 200 200 AE/CM l.108 2,470 960 2.113 880 2.660 Owners A&G & Constr.

1.000 83 1.010 1,040 1,000 I,000 1.100 Nuclear fuel Financing 25 Total WNP-4

} 3,396 L3. 759 17,8i

$ i,642 1_3,294

}_i_,8i9 5 4,438 7i0

} (,73a0

}.

100

$ 4,960

$ i,200 WNP-5 Construction 5 3.806

$ 3.740

$ 4,184 365

$ 964

$ 3,049

$ 2,469

$ l.4 39

$ l.fiHO 1 1.460 682

$ l.800 Equipment 2.588 420 1.407 239 1,212 1,099 1,266 1,706 913 98 472 1.100 AE/CM 222 54 473 2,351 225 60 36 5,066 75 225 2.300 400 Owners A&G & Constr.

818 1.389 9

800 110 0 287 800 800 Nuclear fuel 3

1 224 17 2

l Financin9 25 Total WNP-5 5 7,4b2

$ 4,215

$ 7,453

$ 2,974 5 3,425

} 4,2_25_

}_4_,5]l

[,8498 1 3,670 L1_m113 5 4.254 5 3.300 2

t Tuldt Disburseeients

$10,858

$ 7,974

$15,264

$ 4.616 1_6_dl9_

}_6,04_4,

},_ LOO 9_

LL208_

}_6,4_50

$ 2,483

$ 9,214 $ 4,500 Isi.!!a lialance IM_iO44_

143:4.fl0

}29,364

_}25,035

}l8,113

.}l8,517,

}l0,002_

Ll_,661_

((2.%5) l(4.710) ${l3.hM) 1(}2.722) dl

• Actuals

• • Based on existing cost sharing 9uldelines and niethods.

TABL WASillNGT0tt PUBLIC POWER SUPPLY SYSTEll 10 14-81 CONSTRUCT 10tl FullD CASil SUMilARY llVCLEAR PROJECTS 1105. 4 AND 5 WEEK EllDING 10/4/81

($ in lhousands) t ACTUAL FORECAST VARIAf[Ch.

VARIANCE EXPLANATION Beginning Balance

$29,364

$29,364 Receipts Interest income 78 75 3

Private Owner 209 295 (86)

Total Receipts 287 370

$ (83)

Disbursements WNP-4 Construction

$ 1,377

$ 1,377 Equipment 265 267 (2)

AE/Cil w

l Owners A&G & Constr.

N Nuclear fuel Financing Total WNP-4

$ 1,642

$ 1,644

$ (2)

WNP-5 Construction 365 348

$ 17 Equipment 2'19 239 AE/CH 2,361 2,361 Owners A&G & Constr.

9 9

Huclear fuel Financing Total WNP-5

$ 2,974

$ 2,948

$ 26 Total Disbursements

$ 4,616

$ 4,592

$ 24 Ending Balance

$25,035

$25,142

$(107)

l t

i I

t h

l APPENDIX A r

I BOARD OF DIRECTORS' t

RESOLUTION N0. 1187 AND l

1 RESOLUTION NO. 1198 l

B l

-~w--

APPENDIX A i

BOARD OF DIRECTORS 2

RESOLUTION NO. 1187 7]

A RESOLUTION DIRECTING THE MANAGING DIRECTOR TO 3

IMPLEMENT THE REC 0f 71ENDATIONS OF THE GOVERtiORS' 4

PANEL AND THE PARTICIPAllTS' CCMMITTEE AND FURTHER DIRECTING IMPLEMENTATION OF THE STEPS s

TO PRESERVE THE ASSETS OF WASINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECTS 4 AND 5 6

7 The Managing Director reports that on September 18, 1981 the pan'el a

treated by the Governors of the states of Washington and Oregon to study 3

the economic consequences to the region of the alternatives available to for Nuclear Projects Nos. 4 and 5 (the Projects) recommended that.the 21 Projects should not be terminated at this time but should by keot in 12 a preservation mode for two to two and one-half years to allow Sonneville 13 and the Regional Council to determine whether the Projects are needed in the region.

The panel further recommended that: (i) the public and 15 private utilities, including the Participants, together with the direct V

'6 i

service indus trial customer (DSI's), should equitably share.in the I

17 regional effort to preserve the Projects, which was estimated to require -

ta direct costs of approximately $150 million to $180 million and (ii) the 19 Participants should agree to pay 100*.' of the interest during construction 20 on the Projects, and 21 The Managing Director further reports that on September 24,1981 the -

22 Participants' Committee adopted a resolution concurring in the recommend-23 ations of the Governors' Panel and recommending that the Supply System 2'

imediately implement the steps required to preserve the assus of the 2s-Projects until June 30, 1983 at the least cost possible, and preoare and 28 propose for approval by the Board of Directors and the Participants'

'\\

27 Committee an amended Construction Budget for Fiscal Years 1982 and j

28 q

1983 reflecting the same; NOW, THEREFORE, 29 IT IS RESOLVED that the Managing Director shall immediately implement 30 the steos required to preserve the assets of the Projects until June 30, 1983 31 i

p

.i 1

at the least cost possible, and prepare and propose for approval by the Board of Directors and Participants' Committee an amended Construction 2

i Budget for Fiscal Years 1982 and 1983 reflecting the same.

3 1

4 ADOPTED by the Board of Directors of Washington Public Power Supoly 5

l System this 25th day of September,1981.

i

.i 6

j e

Au; a

President 1

i, j

i ATTEST:

,o 4

%0 4W L

Secretary 13 4

14 lO 16 l

i 17 1

18 19 1

l 20 21 l

22 APPROVED AS TO FORM AfiD LEGALITY:

23

/

j 24 p

[

C< o m.

x j]

2s f

r Counsel 26

)

j

.)

27

!O I

29 i

31 j

l

___._______.m.

j g

2 3

BOARD OF DIRECTORS l

I 4

RESOLUTION NO.

1198 J

5 A RESOLUTION DELEGATING CERTAIN RESPONSIBILITY AND AUT!IORITY TO 6

T!!E MANAGING DIRECTOR NITII RESPECT TO AN EXTENDED CONSTRUCTION DELAY OF

^;

WAS!!INGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECTS NOS. 4 AND 5 S

9 The Supply System, the Participants in Nuclear Projects j

Nos. 4 and 3, the co-owner of Nuclear Project No.

5, certain 10 investor-owned utilities and certain industrial customers of gg B nneville P w r Administration have agreed upon the basic 12 13 el m nts of a plan for an extended construction delay for

4 Nuclear Projects Nos. 4 and 5; and 15 It.is necessary and desirable that the extended con-

{

g 16 struction delay be implemented in a timely and efficient g7 manner; and 18 j

The Board of Directors is authorized by statute to delegate to the Managing Director such authority as the gg i

i B

rd shall determine; NOW, TIIEREFORE, 20 t

3g IT IS RESOLVED:

i 33 1.

The Managing Director is authorized and directed to implement an extended construction delay of Nuclear i

23 l

24 Projects Nos. 4 and 5 until June 30, 1983 for the 25 purp se of preserving the Projects as a potential 26 regional energy resource at the least possible cost.

i 27 23 s

v

I i

1 (a)

The authority to exercise all contractual rights 2

of the Supply System pursuant to contractc with 3

construction concractors, suppliers, architects 4

and construction managers, it.cluding without i

5 limitation the authority to execute changes 6

deleting work and to terminato contracts within 7

l provisions, and 3

(b)

The authority to negotiate and execute changes 1

1 9

i in any and all such contracts.

t 10 2.

The Managing Director is authorized and directed 11 to develop, together with other interested parties i

12 and groups, including the Participants in Projects 13 Nos.

1, 3,

4 and 5, the co-owners of Projects Nos. 3 14 and 5, Bonneville Power Administration, the Partici-15 pants' Committee, the Participants' Review Board, the i

16 Owners' Committee and the industrial customers of 17 B nneville Power Administration, an efficient adminis-18 tracive procedure..to obtain such concurrence as may be 19 necessary or advisable in actions which he proposes to 20 take for the purpose of implementing the extended i

21 construction delay of Nuclear Projects Nos. 4 and 5.

22 l

3.

This authorization and delegation af authority 23 will be subject to contractual arrangements to be 24 entered into pursuant to the Memorandum of Under-standing dated October 14, 1981 providing for over-25 sight by the participants, direct service industries

'6

+

i and investor-owned utilities.

23

+

i 29

,n

ll I

4.

Policy direction in the implementation of this 2

resolution shall be transferred to the Executive 3

Board upon its formation in accordance with Chapter 4

3, Laws of 1981 (First Extraordinary Session).

5 3.

The Manacing Director is authorized to redelegate i

6 his authority to his subordinates to the e.vtent that i

he deems advisable.

7

~

8 ADCPTED by the Board of Directors of Washincton Putlic 9

Power Supply System this 23rd day of October, 1981.

/

^

s

/

s 11 v^

President i

12 ATTEST:

13 14

/S.

CN

) 35My is 16 i

17 l

l 13 l

APPROVED AS TO FORM gg AND LEGALITY:

0 21 j

[

Counsel (

22 23 l

24 25 s

26 27 t29 23 30 y

0 t

O APPENDIX B WNP-4 AND 5 FY-1982 AND 1983 BASELINE BUDGET AND CASH FLOW PREPARATION CRITERIA PHASE I AND II OCTOBER 8, 1981 1

I

WNP-4 AND 5 FY-1982 AND 1983 BASELINE BUDGET AND CASH FLOW PREPARATION CRITERIA O

PHASE I AND II TABLE OF CONTENTS Page I. INTRODUCTION 1

II. OBJECTIVE l

III. DEFINITIONS 1

IV. BUDGET SCHEDULE 1

V. DIVISION OF RESPONSIBILITY 2

VI. SCOPE OF BUDGET A.

Prepurchased and Construction Contracts 2

B.

AE, CM and A&G Cost 2

C.

Owner Construction Cost 2

D.

Nuclear Fuel Cost 2

E.

Qualifications and Assumptions 3

VII. SPECIAL CONSIDERATIONS A.

Cost Sharing 3

B.

Contingency 3

C.

Sales Tax 3

D.

Escalation 3

E.

Controlled Information 3

F.

Summarization 3

G.

Cost Flow and Cash Flow 3

l ATTACHMENT 1 - Definitions l

ATTACHMENT 2 - Responsibilities l

ATTACHMENT 3 - Format I

ATTACHMENT 4 - Schedule October 8, 1981 Project Budgets i

O

3 WNP-4 AND 5

)

FY-1982 AND 1983 BASELINE BUDGET AND CASH FLOW i

PREPARAT"0N CRITERIA - PHASE I AND II I.

INTRODUCTION 4

i This is the corporate criteria for preparation, review and approval of the FY-1982 and 1983 baseline budget for WNP-4 and 5.

The baseline budget for each of the two nuclear power plant mothballing cost will be prepared in two phases.

Phase I will cover the time frame from July 1, 1981 through December 31, 1981.

Phase II will cover from January 1,1982 through June 30, 1983.

2 This document is the instruction for both Phase I and Phase II and i

includes general guidelines for the following major segments of the budget:

I i

l e Prepurchased Equipment Contracts e Construction Contracts e Architect-Engineer Services e Construction Management Services s Administrative and General Costs e Owner Construction Cost e Nuclear Fuel Contracts e Reinvestment Income i ()

II. OBJECTIVE I

An accurate assessment of the projects' forecasted cost during the period of July 1,1981 through June 30, 1983. These projected costs will be the j

baseline budget against which cost will be tracked and monitored in i

accordance with the " Tracking Plan for Monitoring Mothballing Cost j'

Against Budget Baseline".

It will also be the basis for cash planning to assure funding availability by the participating parties.

)

{

III. DEFINITIONS Selected terms used in this instruction are defined in Attachment 1 of this instruction.

a j

IV. BUDGET SCHEDULE The milestone activities associated with the WNP-4 and 5 FY-1982 and 1983 baseline budget and cash flow preparation, review and approval are shown on.

All dates indicated on Attachment 4 must be strictly adhered to.

,o i

I 1

)

1 v-

WNP-4 and 5 FY-1982 and 1983 Baseline Budget and Cash Flow Preparation Criteria - Phase I and II Page 2 O

V.

DIVISION OF RESPONSIBILITY Responsibilities for major baseline budgeting preparation and coordina-tion functions are defined on Attachment 2.

VI. SCOPE OF BUDGET Phase I cash (July 1981 through December 1981) shall be submitted in the format and as a minimum the following is required:

A.

Prepurchase equipment contracts and construction contracts will be identified by contract number, contract description and contractor's name. Cost for each contract as a minimum require-ment shall be identified by the following (selected terms defined in Attachment 1):

(1)

Baseline Scope (Included in 1982 Budget Baseline)

(a) Work Invoiced (b) Work Not Invoiced (c) Existing (Old) Claims (2) Mothballing Scope (Excluded from 1982 Budget Baseline O-and a Result of Mothballing)

(a) Maintenance (b)

Demobilization (c)

Suspension (d) Termination B.

Budgeted Architect-Engineer, Construction Management, Administrative and General costs will follow the guidelines as outlined in Amend-ment No. I to " Policy Statement on Equitable Cost Sharing for Twin-Unit WPPSS Projects" dated September 28, 1981.

C.

Owner Construction cost will be identified by contract number or item (i.e., spare parts would be the cost of all spare part contracts and purchase orders), contract description and contractor.

Cost for each category shall be identified (as a minimum) in the same detail as Secticn A abgye.

D.

Nuclear Fuel cost will be identified by contract number, contract description and contractor's name.

Cost for each contract will be identified (as a minimum) by the following:

(1) Baseline Scope (Included in 1982 Baseline Budget)

(2) Mothballing Scope (Excluded from 1982 Baseline Budget and a Result of Mothballing)

O

-e.-

, -- --+

i WNP-4 and 5 FY 1982 and 1983 Baseline l

Budget and Cash Flow Preparation November 6, 1981 Criteria - Phase I and II i

Page 3 1

E.

Qualifications and Assumptions - All major qualifications or l

assumptions that apply to the baseline budget are to be I

documented. A sufficient level of detail 15 necessary to provide a good basis for future changes to the budget.

q Phase Il cash (January 1982 through June 1983) shall be submitted (as a minimum) in the same detail and in a fonnat similar to Attachment 3 for i

the 18-month period.

4 1

VII. SPECIAL CONSIDERATIONS 1

A.

Cost sharing will be based on Amendment No. I to the " Policy

}

Statement on Equitable Cost Sharing for Twin-Unit Projects" dated September 28, 1981.

I 8.

Contingency shall not be considered or provided for in the i

preparation of the WNP-4 and 5 FY-1982 and 1983 baseline budget and cash flow.

C.

Sales tax shall be considered, calculated and included in all cost i

for prepurchased equipment contracts, construction contracts, owner construction cost and nuclear fuel contracts. The tax rates are 5.2% for WNP-4 and 5.3% for WNP-5.

D.

Escalation shall be considered, calculated and included in all cost for prepurchased equipment contracts, construction contracts, owner construction cost and nuclear fuel contracts. The escalation rates shall be calculated in accordance with the "1982 Project Construction Budget Preparation Criteria - Phase I",,Section VII, 1

Subsection E.

1 E.

The WNP-4 and 5 FY-1982 and 1983 baseline budget and cash flow shall be sunenarized by major budget segments (i.e., prepurchased equipment contracts, construction contracts, etc.) by month from 1

July 1, 1981 through December 31, 1981 and January 1, 1982 through June 30, 1983 for Phase II.

F.

Cost flow detail must be developed initially by individual contracts on an incremental cost basis rather than a cash basis.

j; Cost flow details for each contract shall be then converted to a

" cash" basis and reported on Attachment 3.

Actual cash from July 1, 1981 through September 27, 1981 may be a bottom lined per month for each contract scope (baseline scope and mothball scope) and doesn't require the detail breakdown as identified in Section VI of this instruction. The base date for cash flow projections shall be September 27, 1981.

!O 1

A 'ACHMENT 1

[Page1of2)

DEFINITIONS O

A.

BASELINE SCOPE (FY-1982 BASELINE BUDGET) 1.

Work Invoiced Includes all cost for work completed and invoiced including but not limited to direct manual labor cost, support or distributable manual labor cost, labor special cost, nonmanual labor cost, material cost, construction, equipment usage cost, overhead cost, escalation, sales taxes, etc. for any work, services, equipment or material (that is included in the FY-1982 baseline budget scope) that has been invoiced for payment by the Supply System.

2.

Work Not Invoiced Includes all cost for work completed or future work, as defined above in " work invoiced", for services, equipment or material (that is included in the FY-1992 baseline budget scope) that has been or will be performed in the future and that has not been invoiced for payment by the Supply System (i.e., final demobilization cf completed contracts).

3.

Old Claims N

The projected cost settlement of all contractor identified claims and potential claims which have not yet been submitted by contractors (but are included in the FY-1982 baseline budget scope) exclusive of any claims relating to the construction slowdown and/or the subsequent mothballing.

B.

MOTHBALLING SCOPE (NOT INCLUDED IN FY-1982 BASELINE BUDGET) 1.

Maintenance Includes all cost for work associated with securing the in-place comodities, placing material and equipment into storage, monitoring and securing the facilities, maintenance and preservation of materials, equipment, facilities, documentation and warranties (that are exclusive of the FY-1982 baseline budget) solely related to the construction slowdown and/or the subsequent mothballing.

2.

Demobilization Includes all cost for work operations associated.with moving off the job site upon notification of termination or suspension including r

dismantling and removal from site of construction equipment, facilities, personnel, and restoration of the site as required.

Demob-flization is defined here as the " Interrupt Demobilization" and not the " Bid Demobilization" (that is included in the FY-1982 baseline budget).

Remobilization is to be considered after June 30, 1983.

l l

j Definitions ATTACHMENT 1 (Page 2 of 2) 3.

Suspension of Contract The projected cost settlement of all contractor identified claims and potential claims resulting from the suspension of work associated with the mothballing (if any). Cost shall include as a minimum all considerations (if any) for nonrecoverable overhead cost, extended overhead cost and other potential claimed cost (not included in the.

FY-1982 baseline budget) solely as a result of the construction slowdown and/or the subsequent mothballing.

4.

Tennination of Contract Includes all projected cost settlements as defined above in " suspension" for contractor identified claims and potential claims resulting from the "tennination of contract" associated with the mothballing (if any).

Tennination cost shall also include as a minimum all consideration (if any) for cancellation charges and/or restocking charges for existing orders and other potential claim cost (not included in the FY-1982 baseline budget) which are solely as a result of the construction slowdown and/or the subsequent mothballing.

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O.

ATTACilMENT e

WNP-4 AND 5 (P) = Primary Responsibility FY-1982 AND 1983 BASELINE (I) = Input BUDGET PREPARATION RESPONSIBILITIES (j)

Major Budget Segment WNP-4 WNP-5 Prepurchased Equipment Contracts (P) UE&C Ebasco (I) SS Business Staff /Bechtel SS Business Staff Construction Contracts (P) Bechtel Ebasco (I) SS Business Staff SS Business Staff (I) Contractors Contractors Architect-Engineer Services (P) SS Business Staff (2)

SS Business Staff (2) b)

Construction Manager Services (P) SS Business Staff SS Business Staff Supply System Construction Costs (P) See Note 3 below.

See Note 3 below.

Owner's A&G Costs (P) SS Dept. Managers (2)

SS Dept. Managers I2)

Nuclear Fuel (P) SS Fuel Supply Manager SS Fuel Supply Manager Reinvestment Income (P) SS Treasurer SS Treasurer ibtes:

(1) This table is only provided to identify budget preparation responsibilities.

Its purpose is not to define approval responsibilities.

(2) In strict accordance with Amendment No. I to " Policy Statement on Equitable Cost Sharing for Twin-Unit WPPSS Projects".

(3) Responsibilities the same as provided in the "1982 Project Construction Budget Preparation Criteria - Phase II".

o ATTACHMENT 3 WNP-PHASFT O

Date:

MOTHBALLING BASELINE BUDGET Sheet of Revision:

AND CASH FLOW FORECAST Contract No.

Contractor:

Contract

Description:

FY-1982 Activities

• JUL

• AUG

• SEP OCT NOV DEC TOTAL Baseline Scope

. Work Invoiced

. Work Not Invoiced

.0ld Claims Total Baseline Mothballing Scope

. Maintenance

. Demobilization

." e on Total Mothballing TOTAL SCOPE

• Actuals Assumptions:

Budget Approval Sign-offs Contract Budget Accountability Date Program Director Date O

=

ATTACHMENT 4 l

O WNP-4 AND 5 FY-1982 AND 1983 BASELINE BUDGET At1D CASH FLOW MILESTONE ACTIVITIES SCHEDULE i

I l

Activities Milestone Dates Issue Draft Corporate Cniteria 10/7/81 1

Issue Final Corporate Criteria 10/14/81

{

Phase I Budget Submitted to Headquarters

.10/31 /81 Phase I Budget Review by Managing Director 11/2/81 Phase II Budget Reviewed by Managing Director 12/14/81 O

i O

gJ O..

• =

TABLE 4.

WASHihGION PUBLIC POWER SUPPLY SV51[Il 10-14-81 8-WEEK ROLLING CAtti FLOW f 0 RECAST NUCI[AR PROJECTS h05. 4 ANO 5

($ in thousands)

SEPTDEE R OCTO8E R NOVEMhfR

• WE 9/13 *W 9/20

• W 9/27

• W 10/4 W 10/11 WE 10/10 WL10/25 W 11/1 WE 11/8 Wil/IS WL 11/22 W 11/29 Beginning Salance

$60,841

$51,044 143,480

$?9,364

}25,035

}l8,713 118,517

$10,602

} 1 661 j(2.465)

E (4,770)

(13,559)

Receipts Gel Transfer 5 -

Interest Transfer 167 i22 477 78 55 5.426 37 18 1.957

,g Private bner 894 28h a.

671 209 342 422 457 849 367 178 425 m

Total Receipts

$ 1,061

$ 410

$ 1,148

$ 281 197

$ 5,848 5

494

$ 867

$ 2,324 178 5

425 330 2

Disbursements **

f TJid-4 6

Construction

$ 842

$ 3.522

$ 2.207

$ 1.377

$ 923 5 966

$ 500

$ 500

$ 600

$ 500

$ 1.000

$ 1.000 W

M, Equipment 421 154 2.124 265 371 853 225 210 300 200 200 200 AE/CM l.108 2.470 960 2.713 880 2,660 7'

A ners A&G & Constr.

1.000 83 1.010 1,040 1,000 1,000 1.100

=>

Nuclear fuel Financing 25 4

Total WNP-4

$ 3,396 5 3,759

$ 7,811

$ 1,642

$ 3,294

$ 1,819

$ 4,438 710

$ 2,780 700

$ 4.960

$ 1,200 WNP-5

~ M truction

$ 3.806 5 3.740

$ 4.184 365

$ 964

$ 3.049

$ 2.469

$ 1,439

$ l.880

$ 1.460 5

682

$ I.800 C

Equipment 2.588 420 1.407 239 1.212 1.099 1.266 1.706 913 98 472 1,100 AE/CM 222 54 413 2.361 225 60 36 5,066 75 225 2.300 400 Owners A&G & Constr.

818 1.389 9

800 800 287 800 800 Nuclear fuel 3

I 224 17 2

financing 25 Total WNP-5

$ 1,462

$ 4,215

$ 7.453

$ 2,974

$ 3.425

$ 4,225 5 4,571

$ 8,498 WM

$ 1,783

$ 4,254

$ 3,300 Total Disbursements

$10,858 5 7,974

$15,264 14.616

$ 6.719

$ 6.044

}y09

$ 9,208 Ud

$ 2.483 $ 9,214

$ 4,500 Ending Balance

15LO44,

$43,480

$29,364

}25.035 118,713

}l8,517

}l0,002

} 1,661

}{2.16) }&l10) ${13dM) }{l1,722)

• Actuals

• • Based on existing cost sharin9 guidelines and methods.

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