ML20072Q096

Forwards Response to Inquiry Re Commitment to Supply Nuclear Fuel to American Electric Power Co.Contractual Commitments Complex & Only Indirectly Related.Commitments Have No Relationship to Project & Do Not Result in Net Revenues

ML20072Q096
Person / Time
Site:	Zimmer
Issue date:	03/23/1983
From:	Neylan A TORREY PINES TECHNOLOGY
To:	Venneman J CINCINNATI GAS & ELECTRIC CO.
References
TPT:CG&E-003, TPT:CG&E-3, NUDOCS 8304040459
Download: ML20072Q096 (2)

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TORREY PINES TECHNOLOGY E l~ / * ,

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icephone: (619) 455-2654 . ..tg{p

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Harch 23, 1983 'h -

Project 21374 * 'C.:

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TPT:CG&E-003 ,

Mr. J. Venneman Cincinnati Gas and Electric Company 139 East Fourth Street Cincinnati, Ohio 45202

Reference:

Letter, A. J. Neylan to W. H. Dickhoner, TPT:CG&E-001, March 18, 1983

Dear Mr. Venneman:

In your telephone follow-up to our letter (Ref.) you noted tha t Columbus and Southern Ohio Electric Company is a subsidiary of American Electric Power Company (AEP) and you asked about GA T e ch nolostie s ' commitment to supply nunlaar fuel to AEP.

Our response is enclosed. You will note that the contractual commitments are complex and are only indirectly related to AEP.

The commitments have no relationship to the Zimmer Project nor did they result in net revenues to GA.

Sincerel ,

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• A.J. Neylan Project Manager Enclosure Copy w/ Encl.

,'3'T 7 O U GIFit Mr. W. H. Dickhoner - CG&E d r. J. G. Keppler - NRC

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TPT:CGsE-003  !

- 1 I&M CONTRACT HISTORY In 1973, the predecessor of General Atomic .

Company (GAC), through various assignments, became obligated under a long-term contract to supply uranium, enrichment services and nuclear fuel to Indiana &

Michigan Electric Company (IEM), a subsidiary of American {

Electric Power Company. That contract was originally made between United Nuclear Corporation (UNC) and I&M in

. 1967. In connection with this assumption of supply obligations to I&M, UNC in 1973 agreed to supply to GAC ~

the uranium required under the contract. In 1975, after

. the market prices for uranium and enrichment had increased substantially, UNC stopped its deliveries of

. uranium 'and litigation involving GAC,- UNC 'and IEM was - -

initiated in New Mexico. In'5978, the New Mexico court excused UNC from delivering uranium to GAC, but ordered '

GAC to supply uranium, enrichment and fabrication to I&M and to pay substantial money damages to IEM. GAC appealed from the decision but, in October 1981, GAC and I&M entered into a settlement ag'reement under which GAC agreed to perform the remaining portions of the contract

, but was excused from any obligation to pay money damages.

Performance under the contract by GAC and its successor company, GA Technologies Inc. , was completed in 1982 and the remaining obligation for uranium deliveries was transferred to Gulf Oil Corporation. GAC's losses under the I&M contract were enormous: , total costs were $185 million; total revenues were $90 million and GAC's total net losses were $95 million.

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