ML20043B965
| ML20043B965 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 05/16/1990 |
| From: | Office of Nuclear Reactor Regulation |
| To: | |
| Shared Package | |
| ML20043B964 | List: |
| References | |
| NUDOCS 9006010113 | |
| Download: ML20043B965 (59) | |
Text
'
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/-
. OFFICIAL TRANSCRIFT OF PROCEEDINGS
'I 1;
i
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]:
Agency:
U;S. Nuclear Regulatory Comm1ssion.
Office of Nuclear-Reactor' Regulation
Title:
. TO ALLOR SALE-LEASEBACK OF A PORTION OF UNITED MEETING ON PROPOSED OPERATINGJLICENSE' AMENDMENT ILLUMINATING' COMPANY'S SHARE--INESEABROOK'NUCEAR 1
POWER STATION Docket No.
50-443
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l
- \\
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i LOCATION:
Rockville, Maryland i
DATE:
Wednesday, May. 16,.1990'
_ PAGES:
_.1 - 38
~
9 i
ANN RILEY & ASSOCIATES, LTD.
1612 K St. N.W, Suite 300
('t c
Washington, D.C. 20006-(202) 293-3950 Yoh h{
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La o.
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-1 UNITED STATES OF'AMERICAL F,
2 NUCLEAR ' REGULATORY COMMISSION 3
OFFICE OF NUCLEAR; REACTOR REGULATION' 1
4 5
'----~
^
6 In the Matter of:i I'
7 J
-8 MEETING ON' PROPOSED OPERATING _
Docket No. 50-443~
-9 LICENSE AMENDMENT TO ALLOW-10.
SALE-LEASEBACK OF A PORTION 11 OF UNITED ILLUMINATING-COMi'ANY'S ll2 SHARE IN SEABROOK NUCLEAR POWER-13 STATION 14
^----*-
15 16 Wednesday, May--16', 1990:
17
- NRC= Headquarters Building
~
One White Flint Plaza-
-18 11555 RockvilleJPike" 19 20 Rockville, Marylands 21 22 The above-entitledtmeeting convened',' pursuant to:
23 notice, at 9:45 a.m.
24-25 q
t 1
{
of
.s.
~2' 1
PRESENT ;
q 2
3-For the Nuclear Regulatory Commission:
4
~ Victor'Nerses,.NRR 5'
Eric Leeds, NRR 4
6
' Richard H. Wessman, NRR
-7 Edwin Reis, OGC ik 8
William Lambe,'NRR 9
Bob Wood, NRR 1
1 10
-l 11 For UnitedfIlluminating Company:-
]
12 Robert L. Fiscus, United l Illuminating Company.
13 R. Jeb DeLoach, New Hampshire?. Yankee 14 Terry Harpster, New Hampshire Yankee 3
1 15 Jack <Hollihan, Morgan Stanley.
16 John 1A. Ritsher, Ropes & Gray 17 Robert'E. Sweeney, New Hampshire Yankee, j
18 Bethesda Licensing; Office 19
- Charles J. Pepe, United-Illuminating Company
.20 Linda.L. Randell,-Wiggin & Dana 1
~ 21 1
22 Also Present:
23 R..M.
Kacich, Northeast' Utilities 24 N.
S. Reynolds, Bishop, Cook, Purcell & Reynolds
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25 l
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3-L i
1 PROCEEDINGS'
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2
[9:45 a.m.)
l 3
MR.. LEEDS:
Good morning..My name is Eric Leeds.'
4 We're here to conduct an open meeting.between the' Staff 1and:
a E
5 Public Service'of New Hampshire to discuss their proposalfto.
Ir
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L 6
allow United-Illuminating to enter into an arrangement for-L 7
the sale and leaseback of a portion of their~ interest.in 8
Seabrook to certain equity investors.
9.
As is the case in1many'Seabrook meetings, this.
10 meeting ~is being transcribed.
Copies of the transcript will s
11 be available to interested _ parties. 'Because this meeting'is' 12 being. transcribed, please identify yourselves when you're
- l 13 speaking.
0 14 To begin the; meeting, I'll' turn over'the podium to 15 Jeb DeLoach of Public-Service.-
i 16 MR. DeLOACH:
Thank you 1 Aery much'. 'Again, Jeb 17 DeLoach, executive director of engineering ~and licensing for-18 New Hampshire Yankee.
19 We are pleased-to be here today to discuss the 20.
proposed license amendment-to the Seabrook license to allow 21 sale and leaseback of United Illuminating's share inLthe l
22 Seabrook Unit 1 power plant.
I have prepared a' handout, 23 which we've distributed around.
I believe.everybody has 24 one.
If anybody doesn't'have one, let me.know.
We also 25 have slides, and I'd like to-go through a slide
'C a-3
-4 s
1 presentation.. Iflyou"thinkfit gets a little< noisy, I.think
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f l
2 we can back off the slides-and just go-through-the handout.
3
[ Slide.)
M l
l L'
4 (Pause.)
q 5
.(Slide.)
y 6.-
MR. DeLOACH:
The second page of-the handout'just-7 has, again, the name and company-and title.of;the parties f
I i
8L
-making the presentation here-today or responding.to'
, f; 9
questions.
- t 10 (Slide.)
11 MR. DeLOACH:
The' third-page indicates the:.. agenda.-
[q k
12 Again,.I was going to do the introduction.
-Mr. Robert q
13 Fiscus, who.is the executive vice: president and-chief 14 financial officer for UI will discuss =the: background the--
15 purpose.for this.particular sale-leaseback. arrangement.
'I
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l 16
.will then do a no-significant-hazards evaluation.
Mr. John I
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17 Ritsher, from the law firm of Ropes:&l Gray, Willitalk about i
18 the precedent for the sale-leaseback transaction and' anti-i trust considerations.
Finally,~Mr. John Hollihan:from the 19 t
20
. company of Morgan Stanley, with Mr. Charles Pepe, director A
I 21 of.inance from United Illuminating,.will discuss these l
22 financial arrangements.
We'.ll then ocnclude the 23 presentation and answer any questions that you may have..
24 With that, I'd like to turn-this presentation over
~2 5 to Mr. Fiscus to discuss the.. sale-leaseback financing s
v s.
o 9.
E 5
s
-1 arrhagement.
2 (Slide.)
r-3 MR. FISCUS:
I have-a series of several charts, 4
which start with this one,,which~is.the third one in, I 5
think.
What I'd like to do.is to go over several aspects ofs 6
this sale-leaseback' financing,oincluding the' background, the 7
benefits, the approvals that we: require'to do11t, and tho' f
8 time schedule that is attendant?to-it.
9
[ Slide.)
10 MR. FISCUS:
On'the next chart,_.what we've done 11 here is to itemize three aspects ~that relate to the~
12-background of this-transaction'.
13
-Just by~way of'steppingfbackDa' bout a year, we ha'd 14 as a company been concerned for someztime about settling the 15 retail rate. treatment of our investment in Seabrook.
We.
16 have'a 17.5 percent interest in~the project.. We had-an 17 investment of over $1 billion for that 17'5. percent,.and.we 18 had been living for some years with the' uncertainty :of how 6
19 that investment was going.to be treated 1for retail rate' 20 purposes.
Last year, in the spring of the year,.we startedi L
21 to enter into some serious discussions.w'ith~a number of 22 state of ficials in Connecticut to tryf tol get the rate-23 treatment of that investment settled.
Weufinally ended up.
24 with an agreement in July of last year, which was approved' 25 by the connecticut-Department of Public Utility Control on
.c 26 l
1 August _23 of last year, that' specified! the retail rate
[
. 2_
treatment of that investment.
3 There are a couple aspects of the_ agreement, 4
including the rate increases that were attendant to it,zthat 5
had to=be taken up by the_DPUC at : later date.
Those rate 5 increases'were subsequently decided finally by the DPUC in 7
January of this year..The rate--treatment that.we've got:now:
really' involves 1an investment base of $640_million, a'littlel l
-8 9
over $3,000 a kilowatt for the investment that we: have in 10 the Seabrook plant.
T h
11 MR. REIS: (What'was your; investment?
12 MR. FISCUS:
It was aboutE$1.'2 billion.
13 The rate' increase that we had applied for over a' 1
14 three-year period, from.1990 to'1992, to startxto really 15 phase most of that investment into rates, was 111 percent 16 over three years.
There was a bottom' range specified in'the l
l-1 L
17 agreement, which was 6 percent.
The-_DPUCiended up allowing-
}
h 18 us a 9 percent increase over three years.
That was in i
L L
19 January of this year.
20 As a result of-those negotiations, and theLwhole i
21
-rate-setting process, we knew-that we would be facing a 22 financing constraint, as a result of the settlement of our 23 investment base.
l-l 24
( Slide.')
25 MR. FISCUS:
If you'll turn to-the next chart, H
.4 i
l
~n
'7-1 you'll~see what'I-want.to talk about', because this really 2'
relates to how we deci'ded to try to pursue the_ sale-3 leaseback transaction in the first-place.
{
4 We have a trust indenture which' covers practically-5 all the borrowings that we make, both_long-and short-term.
6 It was a trust indenture that'was written in 1948, when we 7
as.a company first had to borrow, and really is geared to-8 accounting rules _that were in' place at that time, so 9
sometimes it's a little difficult to interpret to today's l
10 circumstances, but we try to-do that'as well as welcan.
d 11 Anyway, we knew that whe'n Seabrook~came into-
]
i 12 operation we would-experience a problem with the interest 13 coverage test under this trust indenture ratio.- What that j
14 test says is that your earnings, as calculated under the 15 accounting rules in 1948, must be_at_least-two times;your 0
16 interest charges before you can-increase your-borrowings,,
j 1
17 both long-and short-term, so it's an incurrence test, as a
18 opposed to a maintenance test.
We knew that when Seabrook 19 went into operation we would experience,a, problem with the 20 earnings coverage under..this test, becuuse the earnings 21 would drop, because we-had -been counting in the earnings of 1
1; 22 the company all these years allowance for fundsused during 1
23 construction, of which-there was a substantial amount 24 attached to the Seabrook investment.
I 25 Once we start to get the plant out of the a
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1, s.
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1 construction phase, that AFUDC drops out of.the
.l
.2 calculations, the earnings coverage falls below the two-3 times level.
The question rually,was the duration of the:
4 financing: constraint..By'the way, this is something that
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5 we've-disclosed to the world for the last,'I think,. year or 6-so in all'.of our publicly filed d'ocuments, so the investment 7'
community-and the financial community isLeompletely and-well' 8
aware of this problem that would develop.
3
-i 9
Anyway, when we settled ourfinvestment' recovery'in
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10-
.Seabrook, we knew that we would e'xperience'this problem'.-
l 11 When we finally got the rate case' settled,:in January ~of, 12 this year, we were able to.more precisely figure'out-the.
13 duration of the problem.
As'you can see here, it lasts from-14 four and'a half to:five years.
The coverage startsito go i
15 below the two-times level in.the middle of this year.
16 When we got that rate decision'in. January, we-
]i 17 began to seriously study our options:for dealing w'ith it.
1 18 This looks like a >ig problem,-and it'is-a.problein, but it's F
19 not a problem that doesn't have..a solution'.
In fact, there 20 are several kinds of solutions, f
21 There are really two basic things that can be l
22 done.
One is that you can prefinance your way through this' l
-23 problem by, in effect, borrowing before the problem occurs 24 at a level which is sufficient to carry you through the 25 period that the problem will last.
That sort of process has q
_~.__
-- O
,'v s'
I some hazards attached to it, because if you're trying to 1
2 figure out what your financing needs are for the next four 3
or five years,Lyou can't always guess exactly-what those 1
4 things are going to be.
5 The other way ofLaddressing the problem is to, in-6 fact, develop a solution that raises the coverage ratio 1
7 above its required two-times level.
There areitwo basic I
8 ways you can do that.
'one 'is to have an equity Lsecurity i
9 offering that would pay-down a sufficient amount of" debt to'
~
10 raise your coverage? ratio, or you.can do-a; transaction which 11 takes some of the-assets that:are covered by the trust 12 indenture and:in effect places themtunder another indenture.:
1 13 That's what this sale-leaseback transaction.does.
~j i
14 I'll talk about what our evaluation;of-those 15 options in a couple of minutes.
16 (Slide.]
l i
17 MR. FISCUS:
In'the next chart,'the solution that i
18 we've chosen, obviously, is to do the sale-leaseback i
19 transaction.
'There are several benefits =to that. 'First of 4
20 all, it resolves the financing constraint.
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'l 21
[ Slide.]
i"
.22 MR. FISCUS:
If you can see, on the,very-next d
23 page, this is another chart that, again, shows that trust E!
24 indenture ratio with the.same operating plan line as on the 25 previous chart but also shows on this chart the effect of-i l
=
10;
=1 thetax: sale-leasebackkason.that-indentureratio. _The 2
reason is raises the coverage ratio-above the required two-3 times 11evel is because we'are proposing to do a'. transaction-4' b s is at a level of $250 million, which'is about 39 j
5 percent of our. investment in-Seabrook..It is a transaction' 6
that has to-be done at the appraised market value of the' 1
7 investment; we. expect that :that appraised' market value ort a.
per-kilowatt basis is going to be approximately.the same ausL 8
1 9
the book value, so we.really-assumed the sale would be at j
H 10 market value, which-is equivalent to book value.:
11 MR. NERSES:
. Question.
The= required level'ofatwo 12 goes back, you say, to the accounting principles cur 'whatever.
13' it was back-in the-1940s.
Was that'an accepted' level?
14 MR.-FISCUS:
.Yes, j
15 MR. NERSES:
It was.
'l 16 MR.~ FISCUS:
Yes. 1The DPUC approvesLall of.our-l 17 financings,. including-the original financing that that' 18 indenture was based on.
1 19 MR. FISCUS:
Okay.
1
-20 MR. WESSMAN:
Let me follow up.on Victor's' 21 question.
Is that a standard that is.still applied today
.l 22 under current accounting rules?
j 23' MR. FISCUS:
Well, we really use current i
24 accounting rules, but we have to adapt them to what the 25 interpretation of those current accounting rules.would.have-i
4 s
1.
been in 1948.- The' chart of accounts in 1948 pertains to the 2
calculation of the earnings under:this earnings coverage 3
ratio.
Really, there aren't that'many-differences from what i
4 it ould be if you used-a chart of-accounts that's'in 5
existence today.
In most cases the two are very similar to-6 one another.
3 1
7 MR. WESSMAN:
Okay.
8 MR. HERSES:
Thank you.
9 MR. FISCUS:
Anyway, this sale-leaseback i
10 transaction, as you can see, raises the coverage ratio atL 11 the time the transaction is-done to about;2.7 times the:
i' 12 interest charges, and it remains, I think,.at least?as high 13 as L2.3 times the interest charges throughout the, period:
14 that's shown on this chart, so we're able'to go about our 15 financing business in a normal'way, because:We're not 16 constrained by~a below-coverage ratio any more.
17 MR. REIS:
So I understand the transaction:
..I.
18 haven't seen-the agreements.in the_ papers; I notice:that it 19 continues past the point where you have. double coverage, 200
~
20 percent coverage.
21 MR. FISCUS:- Yes.
i 22 MR. REIS:
Is there any provision in your 23:
agreements to buy back-at that point?
~ i 24 MR. TISCUS:
There are purchase options in the 25 sale-leaseback papers.
I'think the first one is at the ten-
.t Y
n
L 1
-year time' frame, i'
It'spastthispebiodwhere i
2 MR. REIS:
I see.
3-you're below two times.
!1 4
MR. FISCUS:
Yes. -We'really could not, for;all1 5
practical purposes, buy back the investment in less than ten 6
years, anyway, becauseLit's a-tax-driven transaction, Land' 7
the tax depreciation life on Seabrookt is ten years,Jso the l
lessor would not N to have us buy it back before that, and 8
-v i
9 we, as a matter of fact, wouldn't want to, because it would'
- l q
E 10 be too expensive.for us.
1
-.i
'll (Slide.)
~{
12 MR. FISCUS:- There are!some other' benefits to this 13 transaction. :What we really do here'is.take the entire ~
14 proceeds of $250 millionLand we buy back1other, debts.that:we 15 have outstanding, higher-cost debts.
In.the process' of i
16 doing this what you might call refinancing, weireally reduce.
-l l
17 our interest charges.
=i
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18 That serves - to improve the > financial condition of '
19 the company, because it has,a real--effect on reducing the 4
20 costs that we incur.on account of. interest-charges;Eit!
21~
improves the earnings per share during this period when our f
22 rates are set, through 1992.
23 Once we go back_on the: regular, ketai1= rate-making 24 process, in 1993, as now contemplated, it would reduce the 25 retail rate increases that would otherwise be' required i
't
1 j [. /,"
13 1
beyond that time.
2 It also improves the, credit quality of"the 3
company.
It improves it because we improve our financing 4
flexibility; we're not bothered *by the financing constraint
-5 that I talked about earlier.
Also, we've reduced cur.
\\
6-interest charges. ~Both those things tend'to improve the 7
credit quality of the company.
8 Those are really'the reasons:that we centered on 9
this sa being the best alternative to go forward with.- Wer 10 really.didn't start out with the icit that we wantedLto do a 11~
sale-leaseback transaction.
We st-ced out-with thetidea:
- i 12 that we knew we had a financing constraint that we wanted to i
13 resolve; we analyzed all the ways of doing thatiland we i
14 finally decided that this particular-transaction;did the.
]
i 15 best job of solving the problem that we had before us.
16 (Slide.]
'l
'i 17 MR. FISCUS:
Onsthe nextJchart I've listed the 18 approvals that we require. -Obviously your agency, the 19 Nuclear Regulatory Commission, is one'of those.
The next j
l 20 one is the Connecticut DPUC, and the New Hampshire _PUC, and
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21 finally we need some amendments to the Seabrook jointo l
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22 ownership agreement.
23 For the Connecticut DPUC, we had a hearing'last' 4 - Li 24 week.
We had another late-file hearing on Monday of this 25 week, and there's a.further late-file hearing r eduled on y
s 5
,Y q
i b-I
1.
14-1-
Wednesday, the'23rd of;May. -DPUC will issue its-decision on 2
June 8.
There's a 45-day appeal.' period that has-to run its 3
course after that decision is made before:we could have a 4-
- closing. _ Under that schedule, I believe-we could have a 5-
-closing one day after that 45-day period expires,:which j
6 would be about July'24,,if I calculate correctly.
7 The New Hampshire PUC --
Oh, excuse'me..
l 8
For the Connecticut DPUC, we think that things'aref 9
going Very smoothly and don't really, expect lto.have any_
j 10 problems with their decision.
.11 The New-Hampshire'PUC has to:alsoJgive.us its.
12 approval, and usually what happens in these cases is that-i 13 the New Hampshire people would depend ~upon -- orarely upon 14 the Connecticut approval to make.their decision, so,we.
l 1
i expect that once Conn'cticut makes a. decision, the-New 15 e
L 16 Hampshire PUC decision'will follow along. shortly thereafter.
1
. i 17 As far as the Seabrook joint ownership agreement 18 changes are concerned, we need two reallyl technical. changes.
19 One is to reflect a sale and. leaseback transaction as one of l
20 the permitted financings under the: agreement; it's not now 21 listed as a permitted financing. 'We-also need to make-a 22 change that would allow us to sell only Seabrook Unit 1, 1
23 rather than both Seabrook units.
The way the agreement is 24 constructed right now, if you sell an ownership interest in 25 one unit, you have to sell the-same ownership-interest in i
'l
15 1
both units.
.2 MR. REIS:
Perhaps you said and I didn't'follows-3 Are you proposing a sale and leaseback for-all'of your I
4 interest'in Unit 1, or just part of your interest in Unit 17 5
MR. FISCUS:
It's about 39 percent of our interest 6'
in Unit 1.
,4 1
7 MR. REIS:
Thirty-nine-percent..And do you also 8
propose to sell some of your interest to Northenst 1
9
' Utilities?
10 MR. FISCUS:
No.
11 MR. REIS:
I had read something"in the paper'about t
a -:
~12 that.
13' MR. FISCUS:
No.
If that wasLin:the newspaper, it d
-i 14 was mistaken.
.j i
15 MR. REIS:
Okay.
I have a clear recollection of l
.. {
16 reading it, to bring that'up to 50 percentiof the interest 1
17 in Seabrook.
18' MR. FISCUS:
.I. don't think we've talked to.
19 Northeast Utilities about buying any of our-Seabrook 20 interest in at least the last 10 years.
21 MR. REIS:
I don't know where I got that idea; 22 maybe it was.one of the other owners.
23 MR. HARPSTER:
You're confusing this with a 24 transmission access agreement.
3 25 MR. REIS:
Is that what it is?-
j
E
.1 L
1 MR. FISCUS:
We did-negotiate and sign a 2
transmission agreement with4 Northeast Utilities that A
3-actually resolved a proceeding that we were both involved in 4
before the Federal Energy Regulatory Commission.
1 J
5 MR. NERSES: - It was-on that basis that they_ traded j
6-off_ support to Northeast Utilities as being the manager.
7 MR. REIS:
Okay.
8 MR.-FISCUS:.
Now,-theLtwo-things are really 9
independent in our mind.
10 MR. NERSES:
I understandL l
1 11' MR. FISCUS:
There are-at least some people that' i
12 are ressing some difference:of._ opinion.over that, but I i
13 can tell you for a fact -- and I waslinvolved in the i
1 14 decisions at our own corporation' about negotiat ing these-j 15 arrangements, both with-respect'to Northeast' Utilities' ei 16
'being the managing agent our transmission arrangenents --
m 17 in our mind, and the way we approachedLthey internally,
- (
18 they were entirely separate matters.
Itso happened that' 19 the negotiations were concluded at about the same time, so
~i 20 I'll concede it certainly had to look like they were very j
21 closely linked.
3 22 MR. WESSMAN:
Bob,,let me pursue a scheduling 23 question with you here.
You talked about'your decision day.
24 and your potential closing date of July'24.
I guess that
)
25 becomes the earliest possible.. forecast date for which our j
t I.
a
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17-l 1
licensing action has to be completed to alicw you to executs.
lt the transaction; is'that how you see it?L F
3 MR.-FISCUS:
Yes'.
4 MR. WESSMAN:
Okay."
'Now, you would expect the New Hampshire PUC.to act 15
-some time during this 45-day appeal' period.
Would there:be an appeal period tied to the New Hampshire' PUC decisionfthat, 7.
8 might force this closing date to' change <beyond July 24?
i 9
MR.,FISCUS: _There is'a 30-day appeal, period,-as;I 10 understand it,.on the New Hampshire decision.- We'would-a q
11 expect them to make a decision.within:15 days of;the' time
~
-12.
that the DPUC in Connecticut.makes its; decision, so:that'the, 13 appealiperiods would expire, if not contemporaneouslyp at' 14 about the same time.
15 MR. WESSMAN:' And you all'will keepLus informedias 16 these decision processes come to. pass, then, because that 17' obviously helps us set the schedule which1we?should. seek to 18 consider as we get down to the l'icensingidecision.
19 MR. FISCUS:. Yes.
20 MR. DeLOACH:
Yes.
Once the Connecticut and.New3 j
.1 21 Hampshire PUCs reach;their decisions, aus well as the joint -
3 l
v
'22 ownership agreement, we will communicate those to'you..
-23 MR. WESSMAN:
Okay.
1 i
24
[ Slide.)
25 MR. FISCUS:
The' final chart that I wanted to talk' l
l e
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j n.'
18-1 1
about deals with the time. schedule, which is-exactly the.
2 question that we were just' discussing.
There are really two 3
aspects to this, I think.
The sale-leaseback transaction is-4 a tax-drive transaction, and what the. tax' guidelines say is 5
that the-transaction, in ordertto maximize the~use of-tax 6
benefits -- and that reall'y in this case involves tax 7
depreciation for.Seabrook Unit,1.-- the transaction must-be
[
i 8
completed within 90 days of the commercial operation date' 9
for tax purposes.
10 MR; NERSES:
Can I ask one from that.
You're
~
11 stating, within-90 days of the commercial operation'.
12 MR. FISCUS:
For tax purposes'..
.i 13 MR. NERSES:.For tax purposes.
Clarification onL l
- {
14-that:
I thought that one of the. things that we were j
.i 15 concerned about was that, oncefthe plant wenton the grid, q
. hen we're' speaking.on 16 that was not commercial operation.
W 17 commercial operation, I've got to clarifyfwhat we mean by 18 commercial operation,:versus what you folks mean.
19 Commercial operation for our purposes is, after you've done' 20 the full power-ascension program, you're ready to-run, and
.I 4
21 then declared the plant's commercially operated.
That's a 4
22 much longer period of time. -That's what I mean by i
23 commercial operation.
~
24 What are you' referring to?
25 MR. FISCUS:
I'was going to comment on that.
i
19 1=
MR. NERSES:
Okay.
2 MR. FISCUS: -The IRS,J.unfortunately, doesn't very 3
precisely define what the commercial operation date is for 4
tax purposes, and so what we must do is to look'at the-5 earliest date that could be construed as-the' commercial date 6
for tax purposes under the IRS guidelines, and.that date 7
would be the' time when.we synchronize with the transmission ~
8 grid and the unit stays synchronized for at-least-a few d
. {J 9
hours.
In other words, it's-not a case of synchronizing :for 15-
~
10 ten minutes, if this4possible in engineering terms ~--'I'm 11
-not sure that it is,-but.if you synchronize for ten minutes' 12 and you came back down, that1would not be'a-tax in-service 13
'date, but if you stayed synchronized for two days, that 14 would be, I think, or a could-be construed to have been 15 a tax: commercial operatio_n date.. That's really what we have 16 to look at.
17 As I. understand it,-under the current schedule for 18 the unit, we could reach that point as early.as: the first 19 week in June, June 2 or 3, as I understand it.
That looks 20-like the' earliest date that we could have a commercial.
21 operation date for tax purposes right now.
I 22 MR. REIS:
So your turbine problems are on 23 schedule to be cleared up.
24 MR. DeLOACH:
Yes.
On the turbine status:
The 25 detuning activity has been completed as of today.
A liquid l
i
~
~
,r 8
e
+
20. penetrant examination is going on.
The modifications to the 2
bucket covers will'be completed today, and'the. turbine we're 3
expecting to be starting to be put back_together by noon 4
tomorrow, and then we'll begin the process of resuming-5 testing, bringing the plant up through its variouscmodes of 6
operation, conducting.the resonant-test again and the 7
torsional test', just to verify thatLthe corrective action is 8
completed, and then to synchronize on<the grid and continue
}
9 with our test program.
I 10
.MR. REIS:
Okay.
4 11 MR. FISCUS:
What w'e would like to dog -- and we've 1
12 said the same thing to-the DPUC'in Connecticut, which:I; 1
13
-think is why they'did move our schedule up, that.is,.
~
14 earlier, by five days, from the previously published-15 schedule, so I think that our message is reaching _them -- is i
16 get this transaction closed.as quickly as we can, beforetthe
- 3 1
17 90-day window expires.
If we had the tax commercial 18 operation date in early June, we'd need;to have.a closing by I
19 early September.
i 20 We would very much like to have it done by early y
21 August if we could, and the reason is that the delay _is 1
22 really costing us money.
Because of that financing 23 constraint that I talked about earlier -- the interest i
24 coverage ratio goes below the required two-times level to 25 increase borrowing in the middle of this year -- as a
?
\\
..=
l' contingency.against the idea that this sale-leaseback 2
transaction might never close, we have to do a pre-3 borrowing..Probably what we're going,to do is borrow about 4
$150 million, of which we have a need for $75 million'right T
5 now; we have short-term-borrowings that are about $75 6-million at the moment, so we would:have $75 million excess,.
7 and we have te pay the bank'sLinterest on that, and then we 8
turn around and invest it, so we; incur a' negative arbitrage 9
cost on it.
We would'like to avoidLthat, to the~ extent that 10 we can.
1 i
11 We have really told everyone thatswe would like to-12 nove this along as quickly as we.possibly can, to:getJit' 13 closed, to make it more economic for-us.
=
i l
14 MR.'REIS:
Can you say who thel lessor is' going to 15 be at this point?
]
16 MR. FISCUS:
We havel-two possibilities r,ight now.
4 4
l 17 I think we can tell you' tomorrow.
The two possibilities
'18 right now are Citibank and Chase =Manhatt'an.
We have y
19 actually decided who it's going to be,=but we haven't 1
20 informed the lessor' yet, so I don't think'it would be-proper
-1 21 to tell you yet.
a 22 (Laughter.)
23 MR. REIS:
That's our interest,-from the point-of' 24 view of whether it is another utility, and all sorts of
-25 things.
i l
'l i
.l *
~:
1 MR. FISCUS:
We can for.sure tell'you tomorrow, t
2-MR.' REIS:
The other question'I have'is, what, if i
3 any,. agreements are there to assure.us that-they have no say-4 in the operation -- being that they're a bank and not,a 5
utility with knowledge of ever running a nuclear-plant, or a-
]
- i 6
utility at all -- and that United Illuminating would have-
~i 7
the same freedom, except from selling it again,~beforeiand-8 after as far as the plant and operation-.of the: plant'and
q 9
their vote on the joint operators' committee,-and so forth?
10 MR. FISCUS:
-I can-. answer that.from a' general 11 perspective, and John or' Jack can comment more specifically.
12 I think that the general answer iszthat the lessor really; I
13 does not-way to be construedJas a utility.- The last thing i
i 14 they want to'do is operate a nuclear. plant.or be responsible-
[
l 15 for. operating one, so there is really no_-desire to'have that-16 happen, and the papers all track-that.
1 17 I think maybe John would like to comment more 18-specifically, or could.
19 MR. RITSHER::. Yes.
20 The leaseback from the owner-trustee-to-the-q 21 utility is going to delegate all of the responsibility forc 22 the operation of the plant and the. expenses-and everything 23 else back to the utility, and it's going to contain a 24 covenant that, as long as the utility-is paying rent, the 25 lessor agrees it will not interfere with the quiet enjoyment U
1 of the facility.
It will' expressly do that.
a i
2 MR. REIS:, I:take it it tracks the_ precedents for-3 this type of agreement, Public Service of.New Mexico, and U
4_
those~ agreements.
5 MR. RITSHER:
That's right..
6 MR. HOLLIIIAN:
This is Jack Hollihan speaking.
7'
'The' documentation for.this transaction is actually 3
i 8
being marked off of the Waterford 3, Louisiana Power & Light =
]
~
l I 9-
. transaction in'1989, which in term was marked'up,off of'the 10
'88 agreement'.
If you looked'at the-old-one,-it's_the1same
'l
~\\
11-one'here,~and-you'll see the_same provisions.
12-MR. REIS:. Okay.
Recapitulate ourferrors..
13 (Laughter.)
14 MR. HOLLIHAN:
Even the typos.
l 15 (Laughter.)
16 MR.- FISCUS:
That really finishes 1the.part of-the i
1 17 presentation.that I wanted-to make.- The can move on to the-18 next item on the agenda if you don't have any further i
19 questions at this stage.
20 (Slide.)
21 MR. DeLOACH:
This.is Jeb DeLoach again, from.New 22-Hampshire Yankee.
I wanted to go1through the-no-23 significant-hazards evaluation that wefve conducted.
We 24 actually transmitted this in a supplement to our license i
25 amendment application in our letter dated April ~26.
p i
i l
.c.
4 e
24 1
Just to hit'all the highlights::.We concluded, in 1
l 2-the no-significant-hazards test that's covered by 10 c.F.R.
3-50.92, that this license transaction in-fact would represent I
4 no significant hazards and therefore no risk to the public 5-health and' safety.
-i 6
Addressing *:ch one:.We'believe thatIthe proposed
>{
7 amendment'Would not involve a-significant increase in the 4
8 probability or consequences of an accident previously2 1
9 evaluated; that the amendment does not involve'any' change;to jj 10 the physical facility, any safety' system, limiting
-l 11 conditions for operations, or safety' limits,.and no changes-q q
12 to the facility technical. specifications or its operation, j
4-13 We also believe that.this change would.not create.
1 14 the possibility of a new or different kind of accidentDfrom j
i 15 any accident previously evaluated.
Again,faccordingly, the-1 1
16 current plant safety analysis remainsLeompl'ete;-the analysis i
17 covered by the safety analysis reportois unchanged, and this-1 18 particular license-amendment has'no effect on.that, j
.i 19 Also, this particular license amendment would not j
20 involve a significant reduction in the margin of safety.
As l!
21 indicated before, this'does not involved any change to the 22 facility, its operation, maintenance, or management, and
.i 23 therefore represents no change and no reduction'of the 24 margin of safety.
25 Therefore, based upon that, we've concluded that-
.ii a
1
~ this' amendment complies with.the standards contained in 10 2
JC.F.R. 50.92(c) and does not-involve a significant hazards-3 consideration.
4 With that, I'd like to --
-5 MR. WESSMAN:
Jeb, I think Eric told you1 yesterday-6 that the Staff has made a similar review of material that.
7 you had' transmitted to us and has reached a:similar~
8 conclusion.
We will send that to;the-Federal Register at 9
the end of this week, and it will then get: published in the-10 Federal Register next week, and'of course there-is then'the 11 normal 30-day period for this public notice'and opportunity.
12 for an interested party to: intervene, or whatever.. At this; 13 point the Staff has agreed with and made thecsame conclusion 14 as you all have, regarding the no-significant-hazards.
15 MR. DeLOACH:.Thank.you,. Dick.
16 I'd'likesto transfer;our~ presentation;over to Mr.
17 Ritsher, who will again - briefly.cpr to ' the~ precedent forethis.
18 type of transaction and the anti-trust considerations that 19 we've reached here..
20 MR. RITSHER:
I just wanted.to elaborate:briefly 21 on.the' material that's in the license application relating' 22 to the precedents and the anti-trust issue.
23 The concept of a sale and leaseback has been a 24 financing vehicle that's familiar in corporate finance for a 25 long time.
It only first began to be introduced into.the d
)
26 1
nuclear arena in the '70s, in connection-with fuel leasings, 2
at that time.
Then, in 1985, for.the first time, the 4-3 Commission was presented with the potential' of a sale and
-- ]
i 4
leaseback of an interest in an actual; facility...This posed' 5-some novel problems that the Staff and:the' Commission had to a
1 6
deal with.
7 The major one that they were concerned about.
8 initially was this conceptiof whether.or not the owner-
-i 9
-trustee had to itself'become a licensee because?it' owned an 10 interest.
The analysis that was in the Staff's policy-11 statement that was put'out=in '85' conclude'd'that,~since'the -
12 documentation only put bare legalititle in the-owner-j
-l 13 trustee'and all of th'e other aspects'of ownershipLand i
14 operation were left with the utility, it would not.be 15 necessary to license the owner-trustee, but.it would lue a
~
16 essential to put provisions =into the. license authorizing the 17 utility to enter into thisntransaction and:then to put-18 restrictions on the transaction that assured that the owner-j i
19 trustee would have no control over either the facility or 1
20 the power that was generated from the~ facility,,or thel l
21 licensee or licensees, as the case might be.-
]
22 The Commission also determinedithat it wanted to 23 get prior notice of any possible changes in this underlying i
24 documentation, so that it would keep on top of it.
25 over the series of precedents that followed Palo i
c l
27 1
Verde, you gradually refined the way you wanted this 2
presented, until the Waterford transaction last year, and 3
our application does request for those same restrictions to 4
be imposed, parallel to what was done on Waterford and Grand 5
Gulf.
6 The second issue that is of interest to the 7
Commission is the financial-qualifications issue.
Here you 8
need assurance that the same or comparable cash flow that 9
iou analyzed at the time the utility was initially give a 10 construction permit is still going to be backing the 11 situation.
Again, the documentation that we have is a not 12 lease, which imposes all of the obligations for any. costs 13 relating to the operation of the facility and,=more 14 importantly, to the decommissioning of the facility, upon 15 the utility, so it's the same cash flow that is supporting s
16 this transaction that you analyzed initially, wayLback in 17
'73.
18 Finally, the otrir issue that is of importance to
]
19 you and where the Commission-has responsibilities, is the 20 anti-trust question.
At the time of the construction 21 permit, you, with the Department of Justice, did review the 22 anti-trust aspects of this facility, and, again, the fact 23 that the owner-trustee is not another utility and does not I
24 have any control over the power and energy,-provides the f
25 assurance that we are not tampering with the wholesale power 4
l
'l
28' l
1 1
market in.New England, because the power will remained owned 2
by United Illuminating, and they will continue to control 3
that.
4 I think --
I know that this transaction parallels f
5 in every respect the precedents as they've developed between p
6 Palo Verde and Waterford.
7
'MR. NERSES:
I have a question.
I'm curious.
I 8
don't think I remember reading anything that will cover l
9 this, but if I did, the language certainly didn't stick to f
(
10 my mind.
When you spoke previously on the covenants, you
- l yehf5-
[
11 made some comment that the lessor meets its mege.
12 MR. RITSHER:
Right.
13 MR. NERSES:
What happens if the_ person doesn't 14 meet them?
15 MR. RITSHER:
Well, if the lessee eaches its 16
. obligations under the lease, the' lessor has remedies-against L
Mhk 17
.Wre party, which include going._and suing it_for the rent or, 18 ultimately, trying to regain possession of.the asset that.
19 has been leased.
However, it is clear that if they have to 20 go as far as that last step, we are then back in front of 21 you, because that is a transaction that will require prior _
22 licensing.
~
o 23 MR. NERSES:
And that language'is in there?
I 24 MR. RITSHER:
That is in the documents and will be l
25-explicit in the opinions that are given in connection with' l
I e+
+
e,,~w m--
m a
m ew e
w
l l
o 29 l
1 1
the closings.
j 6
1 2
MR. NERSES:
Thank you.
3 MR.. DeLOACH:
Thank you, Vic.
i i
L 4
Next we'd like.to have Mr 'Ho111han, who's a i-i 5
principal with the company of Morgan Stanley, to discuss 6
these financial arrangements and to. answer any questions you 7
may have.
I 8
(Slide.)
l 9
MR. HOLLIHAN:
If we can turn to the first page of E
10 the box charts, which outlines the structure of the j
11-transaction.
12 The structure being used-on this transaction is 13 the standard form of leveraged lease financing. structure, 14 and it's the same one as has been used in all of the prior 15 utility -- both nuclear and, for that' matter, fossil --
s 16 sale-leasebacks of portions of a-generating plant.
Going
[
17 through it, the funding for the purchase and the'sals-1
^
18 leaseback is provided by institutional owner-participants, 19 sometimes misnomered as equity in'the business.
In this-
.j 20 case, they "ill be providing approximately 15 percent of the v
21 purchase price, which is a similar percentage to that which
(
i 22 you saw in Waterford 3 and Grand Gulf.
j 23 The owner-participants are all institutional i
24 entities, as opposed to private individuals, or_something 25 like that..The balance of the funds are provided by.
f I
}
.=
30
.1 institutional lenders.
In this transaction, in all.
i 2.
probabil$ty they will be public'institut3onal lenders -- in i
L 3
other words, publicly underwritten bonds versus privately l
4 placed bonds -- again, the same situation as was used in r
5 LP&L and in SERI.
6
'MR. REIS:
There's no question of any foreign l
7 ownership of any of these that we will.have'to look at?. The 8
Atomic Energy Act specifically prohibits the foreign u
f 9
ownership of nuclear facilities, and the question is, in the.
1 10 placing of this, it reguires,another level of examination,
{
11 another consideration-if there-are foreign owners /and how L
12 they are insulated from control.
j-13 MR. HOLLIHAN Yes.
l l
14 MR. REIS:
When you're looking to place these 15 loana, and so forth, is there foreign own6rship involved?
l I
y 16 MR. HOLLIHAN:
I am not on the' fixed-income side, 1
l.
17 which handles the debt side of this, so-1 may be inaccurate 18 on this, but my understanding is that.the typical buyers of 19 the debt in these transactions are the institutions -- John 20 Mancock, Teachers -- more of the pension funds than that.
c 21 MR. REIS:
In some of the others there'was I
22 criginal mention of some foreign investors.
23 MR. RITSHER:
This is John Ritsher.again.
24 Ed, I think that question really relates more'to
+
25 who the owner-participants are going to be, beca"ne they are O
t
_4,.
31 1
the ones that will have a beneficial interest in the title, 2
and there we are talking just between two U.S. banks, chase 3
and Citibank, so I think that will resolve it.
4 MR. REIS:
Okay.
I hope so.
5 MR. HOLLIHAN:
In any event, the debt provides 6
approximately 85 percent of the purchase price.
The debt 7
funds are essentially marshalled by the lease indenture B
trustee and then transferred to the owner-trustee, who-9 combines tho 85 percent and theH15 percent and purchases the l.;
10 undivided interest from United Illuminating.
l 11 Now the title has gone to the owner-trustee for
)
12 the undivided interest portion, in exchange for the cash.
13 At the same time, the lease is entered into as between the i
14 owner-trustee as lessor and United Illuminating as less, and j
15 that lease and the first security interest on the asset 1
16 itself is assigned to the lease indenture trustee as-
]
17 security for the debtholders.
That's the standard form of 18 this transaction.
l 19
.(Slide.)
20 MR. HOLLIHAN: 'If you'll move to the next page, 21 we'll look at the flow of funds.
1 22 On a semi-annual basis, United Illuminating'is.
2?
making lease-rental payments, which go to the lease j
24 indenture trustee, who carves out of the lease rental, I
25 payments that are received that portion which services the H
.]
1 be
.,.n.
5
3 h
32 i
1 current portion of the debt and remits the balance, if any, 5
}
2 to the owner-trustee on behalf of.the owner-participant, who
-l 3
receives them as free cash.
4 If a purchase option is exercised by UI at the end j
t 5
of the lease term, since the debt in,these transactions is j
6 fully amortizing.by the end of the lease term, the full 7
amount of the purchase option payment flows to the owner-8 participant.
If United Illuminating exercises a purchase 9
option prior to the end of the lease term, where there's
-i 10 still a remaining debt balance, funds go the lease indenture
.[
11 trustee, the balance of the debt it paid off, and then the:
3 12 balance from there is remitted to the owner-trustee for the 13 owner-participants.
I 14 This, once again, is the sane format as has been-15 used in the others.
i 16 MR. LAMBE:
Is the, owner-trustee a' paper.
17 organization?
Do you have a name or a number to put in 18 there?
19 MR. HOLLIHAN:
Yes.
In the prior'trensactions, it 20 was Meridian Trust in one of them and a Louisiana bank in 21 the other.
That is, by and large, covered by local law and-l 1
l 22 rules as to who can properly be an owner-trustee in a l.
l 23 particular jurisdiction.
1 t
?
24 We have a request' filed that we be able to use,
-25 under New Hampshire law, Meridian Trust, because apparently
.]
-<e-t i
33 l
l' there's an unclear question,as to whether it's required to l
2 be a New Hampshire bank as an owner-trustee, so that issue l
3 isn't settled out yet.
4 In terms of indenture trustee, it would be one of 5
the typical indenture trustees, like Banker's Trust, or Bank 6
of New York, in that role.
7
[ Slide.)'
8 MR. HOLLIEAN:
Flipping-past the next box chart.to' 9
the next page of text, the terms of the sale-leaseback, sus I 10 said earlier, are substantially'similar to and patterned 11 after the most recent nuclear unit sale-leasebacks, those q
12 being the sale and leaseback by SERI'of an approximately 13
$500 million interest in Grand Gulf 1,.which was closed in 14 1988, and the approximately $353 million sale and leaseback 15 by Louisiana Power & Light of an undivided interest'in 16 Waterford 3 that was closed in 1989.
In both of those 17 transactions, we were involved as the equity placement 1agenti
~
i 18 and as lead underwriter'as to the debt, so we're quite well
~
19 acquainted with that, as well as with the Centerior sale-4 20 leaseback of an undivided ~ interest in Beaver Valley in 1987.
21 The terms are, really, identically patterned after those-two 22 transactions, particularly the(LP&L one.
23
[ Slide.)'
24 MR. HOLLIHAN:
Flipping to the next page -
and 25
_some of this has been covered by questions already -- the' 1
i 34 1
equity investors will provide approximately 15 percent of 2
the funds.
Here it will be, we expect, either Citicorp or 3
Chase.
By comparison, for the Grand Gulf 1 equity they were 4
PRC and Textron Financial.
The Waterford 3 equity was 5
Citicorp.
The debt portion of the lease, again, provided by 1
- 6 institutional lenders.
7 The loan is non-recourse to the equity.but secured i
by the leased asset and the lease with United Illuminating 8
9 and the rental payments they're under.
The loan amortizes 10 to zero by the end of the lease term. 'As mentioned earlier,.
11 it probably will be publicly issued, as occurred in Grand-1 l
12 Gulf and Waterford 3, rather than privately placed.
In l
13 terms of the terms, once again it's marking up from the.
j 1
14
. prior one.
15 MR. WESSMAN:
Who is pRC?
16 MR. HOLLIHAN:
PRC is the finance subsidiary of
^
17 Public Service Electric & Gas, headquartered in New Jersey.
r 18 PRC is a misnomer, because the actual purchaser was a 19 company 81 percent owned by PRC or some affiliate and 19
[
i 20 percent owned by the Deerpath Group, which.is a: company in 21 Chicago.
22 MR. WESSMAN:
It immediately jumped *, mind, the 23 People's Republic of China.
i 24 (Laughter.)
~
i 25 MR. HOLLIHAN:
If;they heard that, they'd be k
7.
35 1
shocked.
2 (Slide.)
3 MR. HOLLIHAN:
Moving to the next page, the sale 4
will be at the operalsed fair market value of the undivided 5
interest, which appraisal is being done by a third party, in.
6 this case Stone & Webster, and the expectation is that the 7
determination of fair market value -- they're still 8
tinkering with it, but it's expected to be approximately 9
equal to book value.
10 The leasebacks will be, r.qain. of approximately 30 11 years.
lll 12 As mentioned earlier, United Illuminating will 13 have, as in the prior transactions, periodic purchase 14 options during the lease term, as well as purchase and-15 renewal rights at the end of the lease term.
16 In these documents, as in Grand Gulf-and in 17 Waterford 3, UI is responsible, come hell or high water, for 18 all decommissioning costs.
19 All operational control of the plant remains.with 20 the plant operator, and decisions as to additional capital 21 expenditure and so forth remain with UI and the other plant 22 owners under the operating agreements, and neither the 23 equity nor the debt can breach UI's quiet enjoyment.
24 For accounting - -- that being GAAP accounting
'25 purposes as well as regulatory purposes -.the lease is
a 36 1
being treated by United Illuminating as a financing.
That 2
is the same treatment as occurred in Grand Gulf and in
'3-Waterford 3.
4 (Pause.)
l 5
MR. DeLOACH:
Is that it?
r 6
MR. HOLLIHAN:
Yes.
7 (Slide.)
8 MR. DeLOACH:
This is'Jeb DeLoach again.
9 I'd just like to conclude our presentation and 10 point out, as we've indicated, that this transaction is 11 similar to previous transactions, based upon the original 12 Palo Verde decision that was addressed in the' policy paper, 13 SECY 85-367 and Commission decision CLI 85-17.
14 In accordance with the Commission decision, the 15 lessors are prohibited from exercising control, directly or 16 indirectly, ovct Seabrook station, and therefore this i
17 particular' transaction would be acceptable-under the Atomic 18 Energy Act and the Commission's regulations.
The lessor 19 does not exercise any control over..the facility, the power 20 or energy provided by the facility, or the licensees, and 21 the federal regulations of 10 C.F.R. 50.81 apply.
22 United Illuminating will retain full authority to 7
23 exercise and perform all of its obligations, rights, and 24 duties as a participant to the joint ownership for Seabrook 25 Station.
v r
.-..w
37 l
- h l
1 Neither the physical configuration, operation, i
2 management, nor maintenance of the facility are affected by 3
this license amendment, j
4 Lastly, because this has no impact upen the plant 5
operation, management and maintenance, and since UI l
6 maintains its *:esponsibility for paying taxes, insurance 7
premiums, OEM costs, decommissioning costs, and other I
8 obligations, this transaction does not involve the i
9 significant-hazards consideration or unresolved safety.
10 issues.
i 11 I thank you for your time, and we would be happy 3
l 12 to answer any further questions that you may have.
I 7
13 MR. WESSMAN:
I've got one I'd like to try, :if I 1
14 may.
Are you aware of any of the other joint _ owners.that 15 are likely to consider a similar transaction, such as this 16 sale and leaseback?
l 17 MR. De LOACH:
Mr. Wessman, we've asked the other 18 owners and, while I cannot speak for them here, the 19 indication at this' juncture is that we've got nosfeedback 20 that any other owner is intercated'in pursuing this at this 21 time.
22 MR. LEEDS:
If there are no.further questions, I
23 I'll conclude the meeting.
r 24 (No response.)
25 MR. LEEDS:
Thank you very much,
\\
4 m
o m
-.m.
38 j
1 MR. DeLOACH:
Thank you.
2 (Whereupon, at 10:35 a.m., the above-entitled 3
meating was concluded.)
4 5
6 7
+
0 9
10
.11 12 s <
13 14 1
l 15 f
16 17 18 19 s
20 21 0
22 2 ')
i 24 25 G
t
~ - -
e
.4
l f
r REPORTER'S CERTIFICATE t
This is to certify that-the attached proceed-ings before the United States Nuclear I
Regulatory Commission in the matter' oft NAME OF PROCEEDING:
Seabrook DOCKET NUMBER:
PLACE OF PROCEEDING:
Wedneday, May 16-1990 were held as herein appears, and that this is the original transcript' thereof for the file'of the United States Nuclear Regulatory Commission' taken by me and thereafter reduced to typewriting-v by me or under the-direction of the court report-ing company, and that the transcript is a'true and accurate record of the foregoing proceedings.
I nu A 11 MARK HANDY
[
Official Reporter.
Ann Riley 6 Associates, Ltd.
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OPERATING LICENSE AMENDMENTTO ALLOW SALE / LEASEBACKOF APORTION OF
~
UNI I tDILLUMINATING COMPANY'S: SHARE lN SEABROOK SEABROOKSTATION UNIT 1
~
MAY16,1990
i:h..
[
~
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i-i F
APPLICANT Al i t-NDEES i
NAME COMPANY TITLE 1
i, l
Robert L Fiscus United Illuminosing Co.
Ebeecutive Vice President and Chief Financial Ollicer l
L-Charles J. Pope United 15umineding Co.
~
Director of Financing 7
John P. HAihen, Ill Morgen Stanley & Co.,Inc.
Principsi j
p Unde L RandoE Wiggin & Dans Attomey L
John A. Riisher Ropes & Gray Attomey L
R. Job L d M.
New Hampshire Yanisse Ebeecullwe Director of Engineering and Ucensing u
listry L Harpeter New HampshireYanisse Director of Ucensing Services j
b Yankee l ^-
t l
f
~,...
.. - -... ~........ -.. - -. -. -. - -..
I b
I h
AGENDA i
k 1.
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Introduction - R. Jeb DeLoach 9
Background and Purpose - Robert L Fiscus j
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No Significant Hazards Evaluation - R. Jeb DeLoach l
9 Precedent and Anti-Trust Considerations - John A. Ritsher i
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Financial Arrangements - Charles J. Pepe
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- John R Hollihan 111 l
9 Conclusion - R.Jeb DeLoach 1
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i Terms of sale / leaseback are substantially similar to, and patterred i
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This transaction is similar to Ps!v Verde which has been addressed in SECY-85-367 and CLI-85-17 Lessors are prohibited from exercising control, directly or indirectly, over Seabrook Station 9
UI will retain full authority to exercise and perform all the rights and duties of a participant to the joint ownership
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Neither the physical configuration, o mration, management nor maintenance of the facility are aifected 3'
9 The transaction does not involve a "signifc~ ant hazards consideration" or unresolved safety issue New Hampshire-Yankee
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