ML20069D002

Informs Board & Parties of Recent Developments Re WNP-3 Project

ML20069D002
Person / Time
Site:	05000580
Issue date:	05/17/1994
From:	Reynolds N WASHINGTON PUBLIC POWER SUPPLY SYSTEM, WINSTON & STRAWN
To:	Foster R, Margulies M, Shon F Atomic Safety and Licensing Board Panel
References
CON-#294-15075 OL, NUDOCS 9406020181
Download: ML20069D002 (9)

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/6675 WENSTON & STPuMhWETED USHRC CAEDERICK H WINSTON (18531886) 1400 L STREET, N W. CHICAGO OFFICE SILAS H STRAWN (1891-1946) WASHINGTON, DC 20005 3502 35 WEST MCKER DRIVE "94 tiAY 19 P2 :32 c"T,,'r,J aa' 1202) 371 5700 FACSIMILE (202) 3715950 C f f l 2 f ~ [ ~ tf ]I.*.,f rs WAT R Etf NICHOLAS S. REYNOLDS ~~' " " " " " " ' " " "

(202) 371 5717 D C '"' ' ~- T V' (212) wasm May 17, 1994 l

Morton Margulies, Esq. Adm. Judge Frederick J. Shon Chairman, Atomic Safety Atomic Safety and Licensing and Licensing Board Board U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, D.C. 20555 Washington, D.C. 20555 Adm. Judge Richard F. Foster Atomic Safety and Licensing Board U.S. Nuclear Regulatory Commission Wasnington, D.C. 20555 Re: Washington Public Power Supply System (WPPSS Nuclear Project No. 3)

Docket No. 50-580-OL Gentlemen:

In 1983 we informed the Licensing Board in this proceeding that construction of the WPPSS Nuclear Project No. 3

("WNP-3") would be deferred indefinitely.I' Since 1984, this proceeding has been held in abeyance in view of the construction deferral.F In accordance with our obligation to keep the Licensing Board apprised of new information potentially relevant 1/ E2g letter from N.S. Reynolds to Licensing Board, dated July 12, 1983, transmitting a letter from G.C. Sorensen, Washington Public Power Supply System, to Harold R. Denton, Office of Nuclear Reactor Regulation.

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As a result of a Stipulation entered by the parties on August 17, 1983 and a Memorandum and Order dated September 27, 1983, several contentions had previously been admitted for litigation in this proceeding.

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k WINSTON & STRAWN I Atomic Safety and Licensing Board i l

l May 17, 1994 '

Page 2 j to this proceeding,2/ this letter. informs the Board and parties of recent developments regarding the WNP-3 project.

On May 13, 1994, the Board of Directors of the  !

Washington Public Power System (" Supply System") -- the WNP-3 construction permittee and operating license applicant.-- voted to formally terminate the WNP-3 project in its current conception. Copies'of the Board resolution and press release are attached. This vote was consistent with a recommendation by the Bonneville Power Administration ("BPA") to the Supply System Board in January 1994 that the agreements related to the WNP-3 )

project (as well as the WNP-1 project) between the Supply System '

and BPA be terminated. (The project was to be constructed under agreements with BPA.)

While the Supply System action will result in termination of the' contracts between the Supply System and BPA for the project, neither the Supply System nor BPA contemplates  !

t immediate termination of the NRC construction permit or I

withdrawal of the pending operating license application (the

! subject of this proceeding). In addition, the vote will have no immediate effect on the Supply. System's continued maintenance of WNP-3 in deferred status consistent with the NRC's " Policy l

' Statement on Deferred Plants" (52 Fed. Reg. 38,077 (1987)). BPA has agreed to assure funding for WNP-3 (and WNP-1) to continue the current project preservation programs and to maintain all state and federal permits and licenses in effect at least through January 13, 1995. During this time, the-Supply System plans to continue to study alternatives for completion, use or disposition of the project.

Because the Supply System intends to continue preserving WNP-3 and to study alternatives for the future of the project, no action is requested of the Licensing Board at this time. We will, of course, keep the Board apprised of any further developments on this matter.

Sincergly, f

i Nichola . nolds Counse f r Ap311 cant cc: Service List 2/

Eqe, e.a. , Duke Power Co. (William B. McGuire Nuclear Station, Units 1 and 2), ALAB-143, 6 AEC 623, 625 (1973).

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I i- '! 3OARD OF DIRECTORS RESOLUTION NO 127; Ef 3{.

4 A RESOLUTION TERMINATING NUCLEAR PROJECT NO.1 l:

3 I I- On January 7,1994, the Bonnevtlle Power Administrator recommenced to the Board of

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Directors of the Supply System that Washington Public Power Supply System Nucicar Project B

g No.1 (WNP 1) be termmated on tne basis that the project is not capable of producing energy

[ 10 conststent with Prtident Utility Practice, as that term is defined in the WNP-1 Project Agreement i

11 and the WNP-1 Met Billing Agreements, and the Administrator has sinM that time formally 12 made such a determination, and The Managing Director reports that, on April 29,1982, by Fmarntive Board Resolution

.14-No. 71, the Managing Director was directed and authorized to implement an immediata =rW 15 construction delay of WNP-1 and that WNP-1 has been in a state of extended construction delay 37 since that time, and la The Managing Dlroctor further reports that WNP 1 is approximately 65% complete and 18 that the Construction Permit for WNP-1 has been extended and remaica in eftbet until June 1, -

20 2001,and ,

21 l l 1he Managing Director further reports that the WNP-1 Nct Billing Agreemeents provide 22 that they shall tenninate on the date that the Project Agreement terminates and the WNP-1 24 Project Agreement provides that the project shall terminate when the Bonneville Power 25 Administrator and the Supply System determine that the project is not capabis of pd'Ag 1 26 energy consistent with Prudent Utility Practice, and 27 28 29 30 31 l 32 l 1 l

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":e Manarmg Director mruter resorts inst tne donnevHle Power Administrator has f offeren to enter 2r::o an agreement witn the Supply System to assure conunued funding to 3l l maintain WNP.1 in accortiance with the existing preservation program and to maintain all state l

. and federallicenses and permits until January 13.1995, and i a l 1 g l The Manacmg Director further repons that a Declaration of Nonsignificance based on 7 l an environmental assessment pursuant to the State Environmental Policy Act has been submitted.

8I which concludes that termination will not have a significant adverse impact on the environment; NOW, TIIEREFORE the Board of Directors of the Washington Public Power Supply 10 System hereby finds and determines (1) that WNP.1 is not capable of producing energy 11 consistent with Prudent Utility Practice, and that WNP-1 should be terminated within the 13 mening of and pursuant to the provisions of the Project Agreement and the Nct Billing 14 Agreements, and (2) that the Bonneville Power Administrator has offemi to ages to asserc  !

15 funding to continue the existing preservation programs, including the maintenans of all state is and federal licenses and permsts, until January 13,1995, or such other date that may be anusually 17 agreed upon by Donneville and the Supply System, and (3) that termination of WNP 1 will not 18 have any signincant adverse impact on the environment.

20 Based upon the foregoing findings, the Board of Directors resolves:

21 IT IS RESOLVED that WNP 1 is hereby terminated, and -l 22 23 24 25 BOARD OF DIRECTORS 2e 27 28 29 30 31 32 '

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1 7 IS FUR *11iER RESOLVED th:1ine Boaro of Directors recommenos to the Executive -

Boato that (; p oceed with termmation acuvities as defined in the Net Billing Agreements and ,

3 the Ptolect AgTeement, includine but not limited to the preparation of a termination plan, sale f

3 j of fuel, tctminsuon of existing construction contracts, marketing of the project in whole or in 5l pan, n.no testornnon of the crotect sites to the level recuired by the appropriate regulatory-7 l agencies, and 8

l ITIS FURTITER RESOLVED that the Board of Directors recommends to the Executive 3 i Board that the Suppiy System en:er mto an agreement with the Bonneville Power Administrator lo to provide cxmtinued funding ict tne extsting preservation programs, including the maintenance 11 12 of all federal and state licenses and permits until January 13, 1995, or such other date as may 13 be mutually agreed upon by Bonneville and the Supply System.

14 ADOFTED by the Board of Directors of Washington Public Power Supply System this 16 13th day of May,1994.

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3, / ' pident 20 ATTEST: APPROVED AS TO PORM AND LEGALTTY:

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CounW 24 25 I

26 RESOLITTION NO.1272 3 27 28 29 30 31 32

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IOARD OF DIRECTORS  ;

2 l RESOLUTION NO.1273 3

4 A RESOLUTION REQUESTING TIIE WNP-3 OWNERS 1 COM MITTEE TO DECLARE THE END OF NUCLEAR PROJECT NO. 3 AND TERMINATING NUCLEAR g PROJECT NO. 3 1

7 'l i On January 7, 994, the Bonneville Power Administrator rcx:ommended to the Baani of l s

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3 Directors of the Supply Synem inat Washington Public Power Supply System Nuclear Project .

10 No. 3 (WNP-3) be termmated on the basis that the project is not capable of producing electricity 11- consistent with Prudent Utility Practice, as that term is defined in the WNP-3 Ownership -

12 Agreement and the WNP-3 Net Billing Agreements, and the Administrator haa since that time r 13 l

formally made such a determination, and l 14

! The Managing Director reports that, on July 8,1983, by Executive Board Resolution l 15 No.152, the Managing Director was directed and authorized to implement an immediate j 17 extended construction delay of WNP-3 and that WNP-3 has been in a state of entanded 18 construcuan delay since that time, and 19 1he Managing Director further reports that WNP-3 is approximately 75% complets and that the Construction Permit for WNP-3 has been extended and remains in effect until July 1999, 21 and 22 I g The Managing Director further reports that the WNP-3 Project Agreernent provides that l- 24 it shall terminate when the WNP 3 Net Billing Agreements terminate and that the WNP-3 Net 25 Billing Agreements provide that they shall terminate on the date of written notice by the Supply 26 System that the Project Owners have invoked the End of Project procedure in the WNP-3 l Ownership Agreement, which procedure provide for the end of the project when the Project can i 28 l no longer be made capable of producing electricity consistent with Prudent Utility Practice, and i 29 l

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'ne Manaemg Director ru-tner recorts tnat tne Bonneville Power AdministratoT ha$

l offemo to enter into an agreement with the Suppiy System to assure continued funding to 3l l

! maintain WNP-3 in accorcance with the existing preservanort pmgram and to maintain all state l 4I i ano federal licenses and permus until January 13,1995, and 5l 5j 'The Managmg Director farther reports that a Declaration of Nonsignincar.cc based on t 7 an trivaronmental assessment pursuant to the State Environmental Policy Act has been submitted, 8

which concludes that termination will not have a significant adverse impact on the environment:

NOW, THEREFORE. the Board of Directors of the Washington Public Power Supply to System hereny finds and determmes (1) that WNP 3 is not capable of producing electricity 11 consistent with Prudent Utility Practice, and that WNP-3 should be terminated within the l 13 meaning of and pursuant to the provisions of the Ownership Agreement, the Project Agnement 14 and the Net Dilling Agreements (2) that the Bonneville Power Administrator has offered to l

15 l agrtx: to assure fundirig to continue the existing prescevation programs, including the maintenance of all state and federal licenses and permits, until January 13,1995, or such other 17 I date that may be mutually agreed upon by Bonneville and the Supply System, and (3) that 9e

, termination of WNP-3 will not have any significant adverse impact on the envltonment.

19 l 20 Based upon the foregolng findings, the Board of Directors resolves:

21 IT IS RESOLVED that the Supply System repr

sentative to the WNP-3 Owners 22 Committee is hereby requested to propose to the Committee that the End of Project provisions 33 of the Ownership Agreement be invoked, and that, upon the vote of the Committee to termtnate 24 the Project, WNP-3 is hereby terminated and ended, and 35 a6 37 28 BOARD OF DIRECTORS RESOLUTION NO.1273 - 2 29 30 31 32 m , - ..

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.~rIS FURTHER RESOLVED that tne Boara of Directors recommenos to the Execuuve

^t Boara that it proceen wnh termmation acuvities as ceiinea in the Net Billing Agttements and 3I

! the Project Agreement. including but not limited to the preparation of a termination plan, sale 4l of fuel, termmanon of existing construction contructs, marxeting of the project in whole or in

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3 j part, and restoranon ut the croyect sites to the levej required by the appropriate regulatory 7 Agencies, and B

IT IS FURTIIER RESOLVED that the Board of Directors recommends to the Executive 9i '

Board that the Supply System enter into an agreement with the Bonneville Powtr Administrator 10 to provide continuca fundmg (cr the existing preservation programs, including the maintenance 11 g of all federal and state licens:s and permits until January 13.1995, or such other dans as may 13 be mutually agreed upon by Bonneville and the Supply System.

14 ADOPTED by the Board of Directors of Washington Public Power Supply System ths 15 13th day of May,1994.

16 bA 18 / dent I8 ATTEST. APPROVED AS 'IO FORM 20 AND E m :

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FOR IA1 MEDIATE RELEASE--May 13. 1994 l Susan Senner, Public Affairs Officer Release No. 94-26 t Page 1 of 2 Mary II. Ace, Informauon Specialist SUPPLY SYSTEM BOARD OF DIRECTORS VOTES TO TERMINATE WNP-1 AND -

RICHLAND-After 75 rmnutes of discussion and comments, the Washington Public Power Suopiy System Boara of Directors at a meeting here today voted in favor of terminating the Supply System's partially complete nuclear projects, WNP-1 and -3.

In a nine to four vote, Board members agreed to terminate certain provisions of contracts between the supply System and the Bonneville Power Admmistration (BPA) for the two proje and abandon the possibility of the Supply System compiering either of the projects as commercial nuclear power plants for BPA. The termination resolutions contain a provision for BPA to enter into an agreement with the Supply System to continue to preserve the plants until at Icast Jan.

13, 1995, or a date mutually agreed upon by the Supply System and the BPA, to allow for exploration of new missions for the plants.

While termination signifies the end of certain contractual and finan::ial agreements associated with the projects, the Supply System's ability to continue net billing for ongoing debt service and termination costs from BPA will not be affected. Supply System and Bonneville 01ficials stressed that this decision to terminate will not change Bonnevillo's obligation to pay all futuru debt service on the bonds issued for the projects.

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1 Page 2 of 2 Today's action by the Board of Directors was prompted by BPA, which reponed to the l Board in January 1994, that the need for new clectrical generating msources the size of WNP-1 and -3, which require large capital investments to complete, is unlikely. ' Die generating. .

capacitica of WNP-1 and -3 are 1.250 and 1,240 net megawatta, mspectively.. l BPA Administrator Randy Hardy has agreed to continue funding preservation of the projects until January 1995. It is anticipated that by January 1995, the federal govemment may -

have made prelhninary decisions concerning disposition of U.S. weapons grade plutonium'that may affect Supply System projects. i The Supply System announced in January 1994, a proposed concept involving the Departmem of Energy and the use of WNP-1 and the Supply System's operating Plant 2 to dispose of the nation's plutonium stockpiles by fissioning surplus weapons ~ plutonium in these .I reactors.

With ternunation, the Supply Sysicm has several options to maximize any p***hl l returns on the projects, including seillDg the projects intact to an independent power gud ,

i disposing of project equipment through an asset sales program, or mstarting the pmjects under a new set of agreements with another customer, such as the Department of Energy.

Construction of WNP-1 near Richland, WA, was halted in Aprl! 1982, when the pmject wan 65-percent complete. Construction of the 75 percent complete WNP-3 near Elma, WA, was stopped in July 1983. In recent years, combined preservation costs for both projects has been

$10.5 million a year.

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For additionalinformation: (509) 372-5659 J

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