ML20055H734

Summary of 900724 Meeting W/Kansas City Power & Light Co (Kcpl) Re Kcpl 900723 Announcement of Tender Offer for All Outstanding Shares of Kansas Gas & Electric Co Common Stock

ML20055H734
Person / Time
Site:	Wolf Creek
Issue date:	07/25/1990
From:	Partlow J Office of Nuclear Reactor Regulation
To:	Office of Nuclear Reactor Regulation
References
NUDOCS 9007270205
Download: ML20055H734 (2)

Text

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. '. o July 25,1990

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• LICENSEE: WOLF CREEK NUCLEAR OPERATING CORPORATION FACILITY: WOLF CREEK GENERATING STATION  !

SUBJECT:

MEETING

SUMMARY

- PROPOSED MERGER OF OWNERS i

On July 24, 1990, representatives of the Kansas City Power and Light Company ,

l (KCPL) met with the staff to discuss KCPL's July 23 announcement of their '

tender offer for all outstanding shares of the Kansas Gas and Electric Company

(KG&E) common stock, KCPL and KG&E are joint owners of the Wolf Creek i Generating Station, which is operated by the Wolf Creek Nuclear Operating Company (WCNOC).

1 Mr. J. Michael Evans, Senior Vice President and Chief Operating Officer represented KCPL. He was accompanied by members of the Washington, DC-firm  ;

of Skadden, Arps, Slate, Meagher & Flom. Staff members in attendance were F. J. Miraglia and J. G. Partlow of the NRR staff and L. J. Chandler and J. Rutberg of the OGC staff.

1 The meeting was limited to discussions of KCPL's plans to execute the merger as discussed in the enclosed July 23, 1990 letter from Mr. Evans to Chairman Carr and T. E. Murley. During the discussion, Mr. Evans emphasized that the merger, if completed, will have no adverse effect upon the WCNOC, its personnel, and the continued safe operation of the Wolf Creek plant. Mr.

Evans indicated that a request for NRC license amendment to reflect the new .

ownership arrangement will be filed at an appropriate time.

Original signui of James G. Partlow l James G. Partlow Associate Director for Projects Office of Nuclear Reactor Regulation

Enclosure:

KCPL letter dated July 23, 1990 cc w/ enclosure:

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Jay Silberg, Esq. Mr. Gary Boyer, Plant Manager Shaw, Pittman, Potts & Trowbridge Wolf Creek Nuclear Operating Corporation  ;

1800 M Street, NW P. O. Box 411 '

Washington, D.C. 20036 , Burlington, Kantias 66839 Mr. Chris R. Rogers, P.E. Regional Administrator, Region IV  :

Manager, Electric Department U.S. Nuclear Regula w y Commission .

4 Public Service Commission (11 Ryan Plaza Grive, Suite 1000 P. O. Box 360 Arlington,'iexas 76011 Jefferson City, Missouri 65102 Mr. Otto Mayr.ard, Manager

, Regional Administrator, r.egion III Regulatory Services U.S. Nuclear Regulatory Commission Wolf Creek Nuclear Operating Corporation  ;

799 Roosevelt Road P. O. Box 411 Glen Ellyn, Illinois 60137 Burlington, Kansas 66839 ,

Senior Resident Inspector Mr. Bart D. Withers U. S. Nuclear Regulatory Commission President and Chief Executive Officer P. O. Box 311 Wolf Creek Nuclear Operating Corporation Burlington,, Kansas 66839 Post Office Box 411 Mr. Robert Elliot, Chief Engineer Utilities Division ,

Kansas Corporation Commission 4th Floor - State Office Building Topeka, Kansas 66612-1571 Office of the Governor .

State of Kansas Topeka, Kansas 66612 Attorney General 1st Floor - The Statehouse Topeka, Kansas 66612 Chairman, Coffey County Commission Coffey County Courthouse Burlington,' Kansas 63839 Mr. Gerald Allen Public Health Physicist <

- Bureau of Air Quality & Radiation Control Division of Environment Kansas Department of Health and Environment -

Forbes Field Building 321 Topeka, Kansas 66620 ,

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Enc 1Nure KANSAS CITY POWER & LIGHT COMPANY-

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KANSAS CITY, MISSOURI 64141 9679

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l July 23, 1990 i

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The Honorable Kenneth A. Carr-Chairman United States Nuclear Regulatory Commission-One White; Flint North ,

j" 11555 Rockvi11e Pike ~

Rockville, Maryland 20852 kr. Thomas E. Murley

-Director-Office of Nuclear-Reactor Rep'.lation United States Nuclear Regulatory Commission-l One White Flint North ,

11555 Rockville Pike- '

Rockville, Maryland.20852 '

Re Wolf Creek Go.wrating Station, Docket ~No. 50-442, Liosase No. NPF-42'

Dear Mascrs. Carr and.Murley:

6 . Light This letter is written to infora you that. Kansas : City Power-company- ("KCPL") has. today. commenced.a cash. tender offor (the " Offer")'to purchase all outstanding.' shares -of 'each -

class of' the common and~ preferred: stock of ~ Kansas-Gas and.

21ectric Company ("KGEE").- The attached documents, filed today, with the Securities and Exchange Federal Enetgy Regulatory C6amission: ("SEC") ? and - the detail .the offor' and' the proposed merger CommissionL ("FERC"). describe in Lbetween KCPL and ,t KGEE. - Also, in .accordance with . Kansas'=

-Acquisitions Act, .we have: today requested Control 1 Share '

KGEE to call a cpecial i

meeting' c,f stockholders so;that KG&E's. stockholders may-1 cuthorize us to vote'all shares we acquire in the tender offer.

Following -consummation cf that offer, KCPL intends to-merge KC&E

- with KCPL (the " Merger) . ECPL would be the surviving entity-- of

'the Merger.

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'1 The Honorable Kenneth A. Carr l Mr. Thomas E. Murley .-

! July 23, 1990 1 Page'2

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At present, KCPL owns an undivided 47% interest in the Wolf I CreekJ Generating Station -(" Wolf Crock")', located near. '{

Burlington,LKansas. KG&E also owns an andivided 47% intoresti J in the facility.: The remaining 6t is owned by Kansas Electric

' Power Cooperative, Inc. ("XEPCoh). Each- of the three owners holds a " possession only" . license.: In 1986, the joint owners created the Wolf Creek Nuclear Operating ^ Corporation. ("WCNOC"),

which..is licensed by the Nuclear-Regulatory Commission ~("KRC")

to' control the physical. opera. tion _of Wolf' Creek. The Loperating company .is_ _ owned by KCPL=, KG&E and.EEPCo'in the same proportion es_their-ownership 1 interests in Wolf-Creek.

We believe that a merger of.KCPL and KG&E is fan._ outstanding

.ctrategic - business fit that offers. substantia 1' advantages to oll constituencies served by both utilities.- We believe: it " -

will create a more competitive and1 efficient, company which will-benefit customers through a commitment- to stable- rates, and?

reliable, responsive service. .Together the _ companies -will_ ,

cerve over 650,000 customers. in western Missouri' and ' eastern and southeastern Kansas.

The' companies. already share' common

. facilities-including joint ownership of, Wolf-. Creek and . Unit' 1 at the. Lacygnc Generating. Station in Linn Countyp Kansas. We-believe a merger would; minimize lthe .need' - f or ' future ' capital- ,

expenditures for generating capacity.to meet customer electric-needs=in the near. future which, along withs other1 cost;. savings, 4 will enable .us to freeze retail:and wholesale for resale rates- I for both KCPL and'KG&E' customers through January 1,fl993.. l As the attached SEC Land- FERCL filings indicate, LKCPL .is casking. -to complete the Merger. simultaneously with;/the b coquisition:of shares pursuantito the offer. Inl thisL~ regard;

'KCPL 'is seeking to obtain'thatnecessary regulatory! approvals,as cupeditiously: as rossible. The Merger :vil10 require- the 1

cyproval of. the Federal =' Energy Regulatory Commissionk and say. '

b -require the approval of the State Corporation Commission 'of the

] State. of- Kansas and the Public Service commission of the State jy of Missouri.-

- KCPL is cognizant of the authority of .the NRC - overL the-

' -transfer: of. control of NPC licenses;, Indeed, as the' attached filings indicate, the authority for 'KCPL to: draw 'upon its-

financing source. for-_ECPL'sL Offor is : contingent upon:;thei '

[ receipt of NRC approval of-the. tranafer of ' control- of : KG&E's;

! .andt WCNOC's- licenses. KG&E currently: holds " possession only" j . licenses under'10,C.F.R. Part 50, as w il as Parts 30,. 40- and 4

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i p -- The Honorable Kenneth A. Carr Mr. Thomas E. Murley ,

July.23,-.1990 Page 3

70. As the licensed operatorJ of the- f acility, WCNOC holds -

licenses under 10 C.F.R. Parts 50, 30, 40 and 70 giving- it-physical control of' the operation of the plant. Because KCPL and KG&E are both already NRC licensees for Wolf Creek,- the proposed transaction essentially. will- result only- in :the i transfer of ownership between existing licensees, KCPL-will not exert any control over KG&E or, any; activities under KG&E's NRC license or'any increased-control over WCNOC:or i' any activities under WCNOC's. licenses; until' after KCPL- has received the-- NRC's approval of the1 transfer'of control of those licenses. KCPL will film a formal request for PULC consent to.

the- transfer L of . control of the' Wolf Crmak licenses in the form of a1 request for amendment of- those.. licenses, as soon as appropriate,. KCPL' intends- to. keep the NRC fully advised of~

developments relating to the Offer-and p"oposad:: Merger, and Lto continue to supply- the NRC- --with copies of.all.other publicly Ovailable documents concerning;the Tender offer. 1In--addition, i 1 Leonard Rawicz,- of.Skadden, Arps, Slate,.Meagher & Flon, KCPL's1 special counsel regarding- the - Offer : ;and ' : the filings,-will be available to provide information necessary . NRC on a- current 1 basis concerning all relevant developments and to ' provide

-onswers to questions as they may arise. 'If you or :yourL staff-

'have any such questions, please do not hesitate to call Mr.

-Ravicz at (202) 371-7001. j Our review of the applicableLlaw- and regulations,; together' With NRC practice, indicates that review of applicationsDfor? 1 transfer main of control of licenses: involves consideration oft three factors (1) whether .the ~ applicant is under : foreign domination or. control; (2) the . applicant's z financial

under; qualifications; .and .(3).whether'_the -applicant's. activities the. transferred licenses would continue to.be: conducted

.7 in compliance with;the NRC's-rules and ~

regulations as1 well as'.

the ' requirements ' of- those . licenses., License trrnster may'also be: subject to1 antitrust; review: and a ' determination that' the proposed . transfer' will have no significant' environmental impact.. For -your infornation, we- address these ,and -other i related matters-briefly below.

1. Foreign Domination and control There is no grounds for concern that RCPL and' R06E are o r'

.will- be 'under foreign ownership, ' domination or control after the proposed ~ Merger. The ownership- and contr:31 of both, KCFL and KG&E already have- been reviewed and apsreved by the NRC.

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-. q The Honorable Kenneth A. Carr Mr. Thoman E. Murley July 23,-1990 i Page 4 1 l

Under the terms of.the proposed Merger,. ownership and control of. KG&E will be transferred.to~KCPL; however, the ownership and control of KCPL will notschange.  ;

2 '. Financial Oualifications i .

. (a)' Facility Ocaration i- A ' description of KCPL's financial  : qualifications,

, including .the _ financing of'the proposed: acquisition ofsKG&E by

'[ KCPL, is-provided as. a _part of the enclosedL SEC' and FERC filings. As -described therein,- both -KCPL and KG&E are, and i

ofter the Merger KCPL will remain,. a regulated utility within l- the meaning of_ 10 'C.F.R. . $50.33(f) and Wolf Creek is a i utilization facility within the - meaning lof 10 C.F.R. $50.22.-

As a . result the: financial qualif! cations-of KCPL to' operate the-facility will not change significa.cly as a1 tresult of: transfer of' the operating. license. Nonetheless, .any. additional  ;

information that the NRC may require will be. provided 'upon i request. and will,_ oof course, -be provided.when an application I

for.an. amendment of the NRC license?is applied for.

(b) Financial Assurance of Decommissionino Costs-KCPL will comply with- the requirements of 10 C.F.R.

$50.75, and intends toi maintain and ' fulfill' the financing commitments' made in the . report submitted -pursuant sto that regulation.- 4

3. *achnical cualifications

. KCPL- and KG&E. currently' hold " possession'only"Elicenses-for.

o Wolf Creek, and-.the transfer of . control resulting Lfron= the L Merge r> and the amendments,Lto the' existing' licenses tooreflect the: transfer of ownership to KCPL willihave no directi effect ;on the! technical ~ operations of the facility. Physica11controluand cperation of. Wolf Creek \, rests; with WCNOC,, the operating company, which holds :the operating license. Because KCPL and I. KG&E each own an undivided '474 : interest in WCNOC, l control' of-l WCNOC will .be transfcrred. as 'a, result. of the: Merger. RCPL intends!to maintain'all of the current. officers,. annagement,-

employees and operations and procedures r.,f WCNOC. .Alloexisting-labor agreements and employment contracts will be honored, -and no' layoffs aret anticipated.as a result of!the proposed Merger.

Wolf-Creek will continue.to be operated:undar.the -terms of' the cxisting licenses. by the same employees, including management Y

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-The Honorable Kenneth A. Carr Mr. Thomas E.' Murley- -

1 July.23, 1990 Page 5 l i

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q personnel currently employed. for that- purpose' by' WCNOC. In l

'ddition, KCPL does not plan to' make any -changes in the '

organizational structure -~of--WCNOC or the-staffing the NRC has. '

l"- -previously approved for Wolf-Creek.

As noted Labove , . XCPL will not in any ' event obtain a' majority ownershipiof.WCNOC.until after KCPL' has. received- the - <

NRC's approval of;the transfer of control"of'these-licenses.

4. Antitrust Matters e

In connection. with the attached FERC filingm, KCPL has.made~

commitments to FERC relating to the provision of wheeling and l .other services, assuming .that the proposed' Merger is approved E within 'the- time frame-_ set. forth in those.~ filings. .These~

F commitments go beyond those that _ currently. attach to the NRC: '

licenses ' held' by KCPLfand KG&E and will. provide ample:. assurance that .the : proposed Merger.'will not create or maintain. a cituation inconsistent with -the antitrust laws. Should tne L FERC decide to hold Jan--evidentiary hearing on- the:~ proposed Merger, the FERC will- examine .the' effects- of the Merger;on

[ competition in the region and will; imposec any _ conditions that it' finds to be required te mitigate against any adverso effects on competition. In addition, the ' antitrust: license conditiez.4-that~ currently _ attach to KCPL's and'KG&E's NRC licenses'wlli be' ,

retained'and continue-to apply to_KCPL after the Merger..

5. Environmental Issues Because the proposed Merger wil1~ result only in a change in ownership of the facility, and. because' no cchange ?in the.

cperation of the facility. is iproposed, .the' proposed. Merger raises no significant environtental issue for'NRC-reviaW.

C 6._ Accars to Restricted Dagg The' proposed Merger will.not.resultLin'any change in access to Restricted Data.

7.- No sinnificant Hazard 1 J Complete infornation to support.a-finding that the license amendments- to implement the. proposed Merger.wil1~not7 result in o'significant hazards 1 consideration will. be provided in the context 'of the application for license amendments.- The NRC has provided standards. for determining whether' a _- significant

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The Honorable Kenneth A. Carr  !

Mr.. Thomas E.,Murley July 23, 1990 Page 6 L l h j I

b hat'ards consideration = exists as stated in 10-C.F.Ri $50.92. Al

! proposed amendment to. an operating license .for a facility. l L involves no significant' hazards consideration if- operation of.

1 R the facility in accordance with a proposed amendment would.not

-(l) involve a significant increase in the probability or-consequences of an: accident -previously evaluated, (2) create the possibility'of a new;or different-kind of accident from any?

accident. previously ' evaluated', or >ga) involve a1significant

reduction in a margin of safety.

Under the terms of the proposed Merger,. the employees- of

-WCNOC engaged in the operation of- Wolf

• Creek will remain caployees of.. WCNOC. -The existing organizational structure of WCNOC will be . retained, including .all officers, ' man 3gement; personnel, licensed operators and c plcyees, and: the offeccive lines .of authority and communication:among the organizational unita involved in. the management, operating, -.and technical cupport of the facility will remain in place. _ As. a result,' 1 i

there'!will she no physical changes to the_ facility, and all ,

license requirements and-Jconditions, . including' the . Technical  !

Specifications, will : remain . unchanged. The existing quality assurance program,. security plan, and training- program wil1~ be  ;

. unaffected. No changes will be-made inlemergency plans, orLthe physical and_ personnel resources' -dedicated to< .Jiaplementingx -

-those plans. . Decisional'~ responsibilities related-to' accident recognition andL classification, mitigationi .and.

j. corrective-  ;

cctions, radiological assessmente and. protective. : action i

recommendations and' coordination with -state and local-l -cuthorities will remain unchanged. WCNOC' corporate -management

.will~ provide direction to-other non-nuclear KCPLifacilitiesiand personnel for support to Wolf' Creek. ..Therefore, thef: proposed .

l changes' will -not Lincrease the probability or consequences of otny accidents previously evaluated.- ,

.The. design and design basis of Wolf Creek remain: the .same.

Therefore, in' addressing the-' licensing basis events- and '

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cnalyzing plant response and consequences, 'the= current plant cafety " analyses remain unchanged. The Technical Specifications- )

will.not be;affacted'by>the proposed; license: amendments. -Plant j

-procedures will: be- unaffected. 'As such, the plant conditions.

- fort 1which tho' design basis' accident. analyses have; been.

performed . will . still-_ be valid ' . Therefore, .the:, license amendments to reflect'the proposed, Merger..-will_inot ' create' the- )

possibility of a new- or different kind of accident than previously' evaluated.

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. -The= Honorable.Kenneth A.'Carr

- Mr. Thomas E.:Murley.

._ July 23,-1990

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i since there will be'no' change to the physical- design or cperation'= of the: plant, there Evill- be no change to any of : the.

, plant safety margins that are established--for -and reflected in the Technical" specifications. The . license -amendments to reflect the proposed- Merger. therefore twill' not- involve a --

reduction in a margin,of safety. e For the reasons written ~above,.KCPL is convinced that the~

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proposed Merger will have no effect'on the- continued safe and i- officient management. and operation'of WCNOC. Please' contact us; i

L if you have any. questions-concerninglthe proposed Merger or- the' l onclosed materials.

Very.truly yours, a__: ._ -

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(- cca . ' Mr. Bart D. Withers ( .</o enclosures) t Mr. Kent R.. Brown (w/o enclosures) l Mr. Robert D. Martin- (w/o enclosures)

Mr. Charles W. -Terrill (w/o enclosures).

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