ML20079N408
| ML20079N408 | |
| Person / Time | |
|---|---|
| Site: | Byron  |
| Issue date: | 01/24/1984 |
| From: | Heumann R COMMONWEALTH EDISON CO. |
| To: | |
| Shared Package | |
| ML20079N384 | List: |
| References | |
| ISSUANCES-OL, NUDOCS 8401300210 | |
| Download: ML20079N408 (11) | |
Text
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County of Cook State of Illinois UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING APPEAL BOARD In the Matter of
)
Docket Nos. STN 50-454 OL
)
STN 50-455 OL COMMONWEALTH EDISON COMPANY
)
)
(Byron Nuclear Power Station,
)
Units 1 and 2)
)
AFFIDAVIT OF RALPH L. HEUMANN My name is Ralph L. Heumann.
I am a Vice President of Commonwealth Edison Company.
My business address is One First National Plaza, Post Office Box 767, Chicago, Illinois 60690.
I attended Northwestern University with a major in Accountancy and am a Certified Public Accountant in Illinois.
Following military service, I was employed by American Paper Goods Company in February, 1946, as a cost accountant.
In August, 1950, I was employed by Commonwealth Edison Company as a Staff Auditor.
Except for relatively brief assignments as Industrial Relations Representative in 1954 and as Area Manager of the Company's North Shore Area in 1963-1964, I have been engaged continuously in accounting and financial activities of the Company.
From 1959 to 1963, I was Assistant Comptroller, and from 1964 to 1968, I was 8401300210 840124 PDR ADOCK 05000454 O
. Manager of Accounting.
I was elected Comptroller on November 7, 1968 and Vice President on January 25, 1982.
My responsibilities include general management of the Company's accounting and budgeting activities and the determination and implementation of accounting policies in accordance with Illinois and federal Uniform Systems of Accounts and generally accepted accounting principles.
Purpose of Affidavit The purpose of this affidavit is to explain the costs of delay in the startup and operation of Byron Unit 1 as a part of the Commonwealth Edison power generating system.
As stated in the affidavit of Cordell Reed, if a license were available, fuel loading could begin between February 15, 1984, and March 15, 1584.
As explained by Mr.
Reed, however, in response to the adverse Licensing Board decision the Company will have to defer fuel loading as long as possible in the final construction and start-up sequence.
The monthly costs described herein refer to delays in the licensing beyond the July 1 date given in Mr. Reed's affidavit.
The principal costs affected by a delay are Allowance for Funds Used During Construction ("AFUDC") which continues i
. until the unit is officially considered to be in service, /
1 continuing overhead and standby costs, and additional fuel and purchased power costs.
Another cost of great concern to investors is the drop in the value of the Company's securities in the financial markets arising from uncertainties and the loss of confidence in the Company's ability to recover its original investment, together with a fair return on amounts already spent to construct the unit.
AFUDC AFUDC represents the cost of the funds invested in Construction Work in Progress from the time the money is spent until the unit is considered to be in service.
The formula is prescribed by the Federal Energy Regulatory Commission and approved by the Illinois Commerce Commission.
It consists of the after-tax 2/ interest cost of borrowed funds, the preferred dividend cost of preferred equity funds, and a fair return on common equity funds as previously de-termined by the Illinois Commerce Commission in a rate pro-ceeding.
The weighted average annual rate for AFUDC is 1/
"In service" as used herein is an accounting concept Indicating that output of the unit has reached a significant level on a consistent basis for a reasonable period of time.
At this point, AFUDC is discontinued and depreciation pro-visions are commenced.
2/
Interest costs are deductible for income tax purposes when incurred even if capitalized and considered to be a cost of construction.
1
,e
,7
,r
. currently 10.13% but it will vary slightly from month to month with changes in the proportions and costs of funds from the various sources.
The Company's investment in Byron Unit 1 will average about $2,000 million in 1984.
Thus, AFUDC will amount to about S17 million (10.13% x $2,000 million) 12 for each month of delay until the unit is in service.
This cost should be added to the cost of the unit and be recovered by depreciation charges included in revenue allowances over the life of the unit.
Such depreciation, plus a fair return on the unrecovered balance of the original investment, should be passed on to customers as a part of the cost of electricity produced by the plant.
Overhead and Standby Costs Byron Unit 1 is staffed with a number of engineers, technicians, operating and maintenance personnel for loading fuel, pre-operational and post-startup testing.
These costs are currently running at the rate of about S5 million per month.
When a unit is considered to be in service, such costs will continue and will be capitalized and added to the cost of the plant.
Additional Fuel and Purchased Power Costs The incremental cost of fuel for electricity generated by Byron Unit 1 is expected to be substantially less than the cost from alternative sources if the unit is not available.
The amount of the difference is computed by
O
. 3/
a computer program called PROMOD.-
This program simulates the manner in which the company's load is assigned to various.
sources of energy on an economic loading basis and measures the cost of fuel and purchased power for any given set of circumstances.
Economic loading is the selection of energy sources which, for every combination of load level and avail-able capacity that occurs during any given time period, pro-duces the lowest overall fuel and purchased power cost.
PROMOD computations, with various degrees of availability of Byron Unit 1, provide a reasonable estimate of the added energy costs resulting unavailability or reduced availability of the unit.
Whatever the startup date, the unit is expected to have very low outputs at first with increasing loads as operational testing is completed.
The cost of a delay is the sum of the day-to-day differences in energy costs for the period from the startup date if there were no delay until the unit reaches its normal level of output with a delay.
Based on computations as described above, Commonwealth Edison estimates that the additional costs of fuel and purchased power will average about $16 million for every month of delay in the startup date of the unit.
Under the Company's currently effective fuel adjustment clause, these charges 3/
PROMOD is a commercially available program developed by Energy Management Associates, Inc., 100 Northereek, Suite SJ0, Atlanta, Georgia 30327.
It is widely used in the electric utility industry.
are passed on to customers as an additional cost of electricity.
Market Values of Securities The denial of an operating license to Commonwealth Edison occurred at a time when there was a low level of confidence in the financial stability of all electric utilities building nuclear plants.
The announcement caused serious con-cerns in the financial market.
The market value of the Company's common stock dropped from the closing price of $27 on January 12, 1984, the day before the Licensing Board's decision, to a low point of $21.50 during January 16.
A drop of $5.50 per share, applied to 167 million outstanding shares, is a reduction of more than $900 million in the overall market value of the Company's common stock.
The market value has re-covered since its lowest point and it closed at $23.25 on January 20,-S3.75 lower than the closing price on January 12.
The trend of market value in the future will depend, in part, on the market's perception of when the licensing problems will be resolved and when the Company's $2 billion investment will become a productive asset.
During the week of January 16, 1984, the average daily trading volume of Commonwealth Edison common stock was i
almost 2.5 million shares.
This compares with a normal average trading volume of about 350,000 shares.
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- As a result of the denial of an operating license for Byron Unit 1, Standard and Poors and Duff and Phelps have issued reports stating that there is a negative developing event, which could effect the quality rating of all of the Company's publicly held debt and preferred and preference equity securities.
If the quality ratings are lowered, the market values of outstanding securities are likely to be re-duced and the interest or preferred dividend costs of any new securities are likely to be higher than they would otherwise be.
The statements in this affidavit are true and correct to the best of my knowledge and belief.
RalphJL. Heumann Vice President Commonwealth Edison Company Subscribed and sworn to before me this 24th day of January, 1984.
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Notar/ Public My Commistion Eypire: Jcauary 14,198Z
A DOLKETEb"U""#Y 24 ' 1904 USNRC UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION y Jm( 27 NO34 ATOMIC SAFETY AND LICENSING APPEAL BOARD OFFICE OF SECRLIA~
00CKETINu & SEPV!Il BRANCH In the Matter of
)
Docket Nos. STN 50-454 OL
)
STN 50-455 OL COMMONWEALTH EDISON COMPANY
)
)
(Byron Nuclear Power Station,
)
Units 1 and 2)
)
CERTIFICATE OF SERVICE I,
Philip P.
Steptoe, one of the attorneys for Commonwealth Edison Company, hereby certify that copies of the attached " Notice.of Appearance"
" Notice of Withdrawal of Appearance",
and " Commonwealth Edison Company's Motion For Expedited Consideration" were served upon all persons shown in the attached service list by deposit in the United States mail, first class, or by Federal Express or messenger, where indicated, this 24th day of January, 1984.
0( wou Philip P.
StepEocI Subscribed and sworn to before me this 24th day of January, 1984.
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MLiLLA tn Notary Public My Commission Expires km: r/14103Z
SERVICE LIST Ivan W.
Smith, Chairman
- Mr. Richard J.
Rawson Administrative Judge Ms. Mitzi A. Young Atomic Safety and Licensing Board Office of the Executive Legal U.S.
Nuclear Regulatory Commission Director Washington, D.
C.
20555 U.S. Nuclear Regulatory Commission 7735 Old Georgetown Road Dr. A. Dixon Callihan Bethesda, Md. 20814 Administrative Judge Room 9604 Union Carbide Corporation P.
O.
Box Y Atomic Safety and Licensing Oak Ridge, Tennessee 37830 Board Panel U.S. Nuclear Regulatory Commissior Dr. Richard F. Cole Washington, D.
C.
20555 Administrative Judge Atomic Safety and Licensing Board Atomic Safety and Licensing U.S.
Nuclear Regulatory Commission Appeal Board Panel Washington, D.
C.
20555 U.S.
Nuclear Regulatory Commissiom Washington, D.
C.
20555 Joseph Gallo, Esq.
Isham, Lincoln & Beale Docketing & Service Section Suite 840 Office of the Secretary 1120 Connecticut Avenuc, NW U.S.
Nuclear Regulatory Commission Washington, D.
C.
20036 Washington, D.
C.
20555 Region III David C.
Thomas, Esq.
U.S. Nuclear Regulatory Commission 77 S. Wacker Drive Office of Inspection & Enforcement Chicago, Illinois 60606 799 Roosevelt Road Glen Ellyn, Illinois 60137
- Christine W.
Kohl Administrative Judge Ms. Betty Johnson Atomic Safety and Licensing 1907 Stratfctd Lane Appeal Board Rockford, Illinois 61107 U.S.
Nuclear Regulatory Commission 4350 East-West Highway Ms. Diane Chavez Bethesda, Md.
20814 SAFE 3rd floor - call 492 7663 326 N.
Avon Street Rockford, Illinois 61103
- Dr.
Reginald L. Gotchy Administrative Judge Dr. Bruce von Zellen AtomicSafety and Licensing Appeal Department of Biological Sciences Board Northern Illinois University U.S.
Nuclear Regulatory Commission DeKalb, Illinois 60115 4350 East-West Highway Bethesda, Md.
20814
- Douglass W.
- Cassel, Jr.,
Esq.
3rd floor - call 492 7663 Jane M.
Whicher, Esq.
BPI
- Alan S.
Rosenthal, Chairman 109 N.
Dearborn St.; Suite 1300 Atomic Safety and Licensing Chicago, Illinois 60603 Appeal Board U.S.
Nuclear Regulatory Commission Ms. Patricia Morrison 4350 East-West Highway 5568 Thunderidge Drive Bethesda, Md.
20814 Rockford, Illinois 61107 3rd floor - call 492 7663
- service by Federal Express or messenger
F January 2 4,0L},gp' UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION
'84 JAN 27 A10:33 ATOMIC SAFETY AND LICENSING APPEAL BOARD Off L OF SELMt. R 00CKEilNG & SEiiVh !
BRANCH In the Matter of
)
Docket Nos. STN 50-454 OL
)
STN 50-455 OL COMMONWEALTH EDISON COMPANY
)
)
(Byron Nuclear Power Station,
)
Units 1 and 2)
)
NOTICE OF APPEARANCE Notice is hereby given that the undersigned attorney herewith enters an appearance on behalf of Commonwealth Edison Company in the captioned matter.
In accordance with 52.713 of the Commission's Rules of Practice, the following information is provided:
Name Philip P.
Steptoe Address:
Isham, Lincoln & Beale Three First National Plaza Suite 5100 Chicago, Illinois 60603 Telephone:
312/558-7500 Admission:
Supreme Court of Illinois Supreme Court of Virginia United States District Co or the Norther t it fI ino s.
DATED:
January 24, 1984 I
/
T t.JphL uu 1 Phfbip P.
St bptoe'
/l
'~~
January 2 4, 1984
- SYh?
UNITED STATES OF AMERICA JAN 27 g0:34 NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING APPEAL BOARQlFritg j ),cfn3 In the Matter of
)
Docket Nos. STN 50-454 OL
)
STN 50-455 OL COMMONWEALTH EDISON COMPANY
)
)
(Byron Nuclear Power Station,
)
Units 1 and 2)
)
NOTICE OF WITHDRAWAL OF APPEARANCE Notice is hereby given that M. Gwen Herrin, Robert G.
Fitzgibbons, Jr.,
and Paul Murphy have withdrawn their appearances on behalf of Applicant in this proceeding.
Re u
su.itted, L ugar n
a PhilipP.ptoptog' up Isham, Lincoln & Beale 3 First National Plaza Chicago, Illinois 60602 (312) 558 7500 Dated: January 24, 1984
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