ML20082K535

Forwards Supplemental Testimony of VP Wright & Supplemental Response of IE Canner to Data Request IEC-1 of Ofc of Consumer Advocate Set 1 for Filing

ML20082K535
Person / Time
Site:	Seabrook
Issue date:	08/21/1991
From:	Haffer E SHEEHAN, PHINNEY, BASS & GREEN, P.A.
To:	Smukler L NEW HAMPSHIRE, STATE OF
References
NDFC-91-1, NUDOCS 9108300109
Download: ML20082K535 (8)

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• SHELHAN PHINNEY B Ass +

CartN nn,smu AWXhnw O I. August 21, 1991 g +

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'AT TORNO S AT LEN K00 Etu sm n VIA HAND DELIVERY P O. Box 3'01 MAsansua New HAursmn 03105-3701 Larry Smukler, Chairman FA\ miur4C1 Nuclear Decommissioning

%y309 Financing Committee N.H. Public Utilities Commission 1 Hanoa Puu 8 Old Suncock Road Sent 3:3 Concord, New Hampshire 03301 Ponsuccni

.uw HAursmu RGt HDFC 91-1

'. 3601 38 %

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Dear Mr. Jmukler:

1. "IU Enclcsed for filing are t he Supplemental Testimony of Mr. Wright and the Supplemental Response of Mr. Canner to date a request IEC-1 of OCA Set 1.

Sinee you s, .

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, f 'i f .dward A./Haf fer J EAH/kdb Enclosures CC w/ enc: Service List Office of State Treasurer Office of State Library 27.0000 40D? ,

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• OVESTIONS AND ANSWERS RELATIVE TO THE DECOMMISSIONING OF THE SEABROOK NUCLEAR PLANT O. Have you read the Direct Testimony of John S. Rohrbach, Witness for the State of New Hampshiro Office of the Consumer Advocate?

A. Yes O. Would you provide your understanding of how Mr. Rohrbach determined that 5 96 percent should be the assumod value for overall decommissioning cost escalation?

A. Yes. Apparently Mr. Rohrbach used the same calcuiation as I did or' page 2 of my testimony of May 19 except he used 14.51% instead of 6% as the median for waste burial.

O. Do you have any comments on Mr. Rohrt>ach's calculation.

A. Yes, Mr. Rohrbach would have us start escalating burial costs at 14.51% starting today with what he indicates is the 1989 base rate at Beatty of $30.11 per cubic foot. (OCA Test p31, line 35). This is evidenced by his cornment (OCA Testimony p32, line 19) that 15 years from now, in the year 2006, the tip fee would thus be $229 por cubic foot.

$30.11 x (1.1451)'5 = $229 The Committee should be clear that NHY has tried to incorpcrate some of the uncertainties related to burial costs in the development of the base burial cost assumed in the Seabrook decommissio,iing estimate. That base burial cost is $139 per cubic foot.

In fact, at the compounded rate of 6% per annum which I have suggested in my testimony, the 'tip fee

• In 2006 would be $333. The $30 figure compounded at 14 51% per annum does not exceed the $139 figuro corapounded at 6% per annum until 18 years out.

O. Do you still believe that 4.25% is a reasonable projection of cost escalation for decommissioning?

A. Yes I do hereby solemnly swear and affirm that the above are answers O i ven by me, Vincent P. Wright, Senior Consulting Econoralst, Stone & Webster Engineering Corporation, to questions asked in connection with the direct testimony of John S. Rohrbach, witness for the State of New Hampshire Office of the Consumer Advocate.

? Yrnf Vincent P. Wright L

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gfV COMMONWEALTH OF MASSACHUSETTS Suffolk, ss Subscribed and swom to before me this 20th day of Au. ust 1991.

///gi/ b '% ,lk )

Alber~t 5.~Kreponitsky, Notiry Vublic My commission expires March 7,1997

4.

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THE STATE OF NEW HAMPSHIRE  !

NUCl. EAR DECOMMISSIONING FINANCING COMMITTEE Re Seabrook Decornissioningt Fund Docket No. HDFC-91-1 i t

SUPPLEMENTARY RESPONSE OF IRVING E. CANNER TO i DATA REQi!EST IEC-10F THE OFFICE OF CONSUMD: ADVOCATE (OCA) SET 1 b

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. OCA SET 1 IEC-1 IIAVE THERE BEEN ANY PAYMENT PRO 11LEMS ANTICIPATED DUE TO THE

{ BANERUPTCIES OF THE NEW Il[MPSHII;E ELECTRIC COOPERATIVE, EUA POWER OR PSNHf PLEASE EXPLAIN.

I- SUPPLEMENTARY The response to this data request dated June 28,1991 indicated RESPONSE: that New Hampthire Electric Cooperative (NHEC) was deficient by $1,224 in their obligations :o the decommissioning fund.

i That deficiency has now been paid and New !!ampshire Yankee

(N!!Y) is not aware of any. futures difficulties that NHEC may incur in satisfying, in full, their future funding obligations to the Decommissioning Haster Fund, i

l Vith respect to EUA Power Corport tion bankruptcy proceedings, i pinase see the attached letter NHY issued to the Nuclear i Regulatory Commisoion (NRC) on A1 gust 15,1991. It forwarded 4

to the NRC a Form 10.Q dated Augutit 13, 1991 filed by EUA Power

) with the Security Exchange Conctission (SEC). The Form 10-Q states that EUA Power has advisad the Bankruptcy Court that f it will not be able to meet its monthly payment obligations to the Seabrook project beginnirg September 1.1991 and that it has not determined what part, if any, of it s August payment will be made. Subsequent to the EUA Power filing to the SEC, they made a partial payment of (300,000 to the project.

The current status is that EUA P)wer has meet its obligations to the decommissioning fund for f.ugust 1991 and an arrangement has been proposed with other Seabrook Joint owners, subject to Bankruptcy Court approval, to assure adequate funding of its share of project costs thereafter.

PSNH continues to satisfy. In full, their funding obligations to the project.

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f51d(E. CANNER

, STATE OF NEV HAMPbHIRE Rockingham, so. August 1991 Then personally appeared before me, the above-samed Irving E. Canner, being duly sworn, did state that he is the Controller for the New Hampshire Yankee Division of Public Service Company of New Hampshire, that he is duly authorized to execute and file the foregoing information in the name and on the behalf of New Hampshire Yankee Division of the Public Se rvice Company and that the statements therein are true to the best of his knowledge and belief.

jsw d 9AnG Pho/9/

Tracy A.feCredico.'Ifotary Public' My Commlesion Expirest October 3, 1995 A

TOTfL P. 0-1

• f SNew Hampshire Ted C. Folgenbaum President end

( Chief tietutive OMcer NYN. 91126 August 15, 1991 United States Nuclear Regulatory Commission Washington, D.C. 2055S Attention: Document Control Desk Reference; Facility Operating License No. NPF-86, Docket No. 50 443

Subject:

EU A Power Gentlement in compilance with our undertaking to keep the Commission informed with respect to the bankruptcy proceeding relating to EUA Power Corporation ('EUA Power'), one of the licensees named in the above license, we enc!cse herewith a copy of the Quarterly Report on Form 10-0, dated August 13, 1991, for the period ended June 30,1991, which was filed by EUA Power with the Securities and Exchange Commission, On page 6 of this Repert under the bending 'Seabrook Joint Ownership Agreement', EUA Power alludes to the fact that it has advised the Bankruptcy Court that, beginning September 1,1991, it will not be able to meet its roonthly payments to the Seabrook Project and that it has not determined what part, if any, of its August payment will be made. We have been orally advised by EUA Power that it will be making a partial payment in August and that an arrangement has been worked out with other Seabrook Joint Owners, subject to Bankruptcy Ciart approval, to assure adequate funding of 4s share of Project costs thereafter, We will continue to keep you advised of any developments as they occur.

Very truly yours, NEW HAMPSHIRE YANKEE, as agent for the Seabrook Joint Owners By: .

Ted C. Felgen)/aum, President Enclosure TCF:JBH/ tad D ~~~

l g9 New Hampshire Yonkee Division of Public Service Company el New Hampshire P.O. Box 300

• Seabrook, NH 03874

• Telephone (603) 474 9521

6 'n f'  ; .

August 15, 1991 United Slates Nuclear Commission Page two

. Attention: Document Control Dr.sk cc: Mr. Thomas T. Martin Regional Administrator United States Nuc! car Regulatory Commission Region 1 475 Allendale Ro* d King of Prussia, PA 19406 Mr. Gordon E. Edison, Sr. Project Manager Project Directorate 13 Divisico of Reactor Projects U.S. Nuclear Regulatory Commission Washington, DC 20555 i i

Mr. Noel Dudley ,.

NRC Senior Resident Jaspector P.O. Box 1149 Seabrook, N!! 03874 h

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SECURMES AND EXCHANGE COMMISSION Washi::gton, D.C. ^.0549 (Muk cae')

(X) QUARTERLY RF. PORT PURSUANT TO bECTION 13 OR 15(d) OF EXCRANGE ACT OF 1934

!=e30,1991 For the qsuterly pericd coded ,,,,

OR

() TRANSTTION REPC RT PURSUANT To SECT 1oM 13 OR 15(d) CF TH EXCHANGE ACT OF 1934

. to Fc.r the trualtion period from _

Com:::issine FUe Nereber 33-10971t,

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EUA POWER' CORPORATION

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(Enct t.tix ofstt stuti ss o;yiGsd la its chut:r) 02-0396811 New Wmrshire _

(f.R.S. En:picpr (State or oductjtt:isdicdx of 1&idkadce No.)

. lxcrporadce or crsh;i: sax)

Forty Surkptret, P.O. Ecx 376 03105 MzWa, New ifampr,hiru (Zip Code)

- ' (Addicss ofprincipal execu: irs otSca) 1 (617) 357 9590 Regidant's telepbono number inclutar, arts com Indicata by chect.I::n.rkwhether the regist:sst (1) has Aled all reports re:pired to b fUed by Section 13 or 15(d) of tbo Securitics Exchu:ge Act of 1934 during the preceding 12 nyxths (or for such shorter perica that the registract was res:!:ed to file such reports), ux! G) has been subject to .

fill::g supirements for the past 90 days.

, YES X NO .

Indicate the number of sb2res oc:nudi:ig of cach of the issuer's citznes of com:nec stech as of the latest practiesl date. .

'* ontmuli-z rs Iniv 31.1991 '

Class _

la,000 shura Commco Sbares, $.01 par vaine

A- . - - . . . -

PAPT 1 rtrmrmuu. a.u w, .m. . ..

3ters b ., S .arr M ita ts m 18 EASTERN U1TLmES ASSOCIATES j

I CONSOLIDATED CONDENSED BALANCE SHEET f* '

(In Tbwsards)

(Unendited) hme 30, %cember 31, 1991 1990 ASSETS 974,335 3 915,13%

Udlity Plant in Senica 244,645 241_,12s Le.ss:

Accu:sulatalProvisim for Depreciatim and AtwrMm 744,010 729,690 NetUdllty Plant b Senice 19,9CO 6,t09 Comtructice Work b Progress 749,650 _ 75,0,819 0 Net UtillryPlant Current Assets: 12,C93 15,176 Cash and Tez::pertry Cah Investments 9,572 4,431

. Notes RcedvaMe ci,941 - 70,529 *

• Accounts ReceivaW, Net 13,171 18,175 Materials and Supplies 15,076_ 16',529

• Other currc .1 Assets '

122,859 124,540 .

TotalCurrect Assets ,.

Deferita Debits: 3,67 0 . 4,509 -

Ex:rsordinary Prope:ty Losses 218,953 214,572 -

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OtherDefentd' Debits andNon-Cunent Aucts ~-:

222,623' 219,081 TotalDefmtd Debits and Noc-Currtet Asscts '

1,C95,132 $ 1,094,140 Total Aasets

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LIAMLITTES AND CAPITALIZATION - .

Capitalization: 22,983 $ 31,754 3

, Conunm Shares SS Ps: Valm t 152,508 ,- 236,232

, ,Othn Paid-In Capital (Nue C) 0,307) g,290)

Ce=am 5harc Expense Retafaed Emings (since June 30,1991 qwf-reergte.ization pg,313) inwhich.a deficit of $S0,034,506 was cifminated, No6s C) o_

- 233,184 315,706

- ToulCommm Equity 15,150 15,150 Nm-PWmah Prefened S,tock '

34,530. ,

34,530 RedeemaW Pkfened Stoct 441,310 443,595_

Img-Term Dck (Less Current Maturities)

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725,374' $09,611

' Teal Capit2hzation

- Cuneat Liabil&s: 2,322 1,67 0 Curient Mam:itics of Long-TermDebt 43,07 1 '

73,761

. McAes Pay:W 650, 650' Preferred. Stock S'mking Fml 38,536 ,

30,916 Acemats Payable 2,806 .'

397 Taxes Accmd 21,000 ,

37,521

. Liablility for EUA Power Ob11g2tions 12,173 13,434 .

. 'Intetut Accrsed . 31,470 _ 30,624 _,.

Other Carrent Liabilities . 174,450 - 167,0511

. TotalCurrentliabilities .

Accumulated Deferred Taxes, Deferred Credits sad 195,303 196,321 Other Neo-Cumet Liabilities _

Committnents and Coutlagencies (Note D) 1,093,131 $ 1,173,053

. 3

.TotalLiabilities and Capitalizatico .

see m,r:og wecs w coxouea exse.ma F.mcia aa. menu. '

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EUA POWER CORPOR.ATION

,4 CO@ENSED STATLMENT OF INCOME (Dder in Poeser,sion) ,

(In busanda)

(ue.uatoa) .

Wee Mooths En&d S'a Moctbs E:4 June 30 Jute 30, .

.M M M n F't* B) (Nots D) 0 $ _12.G 3 $ o

, Qpersting Revvimes

$ 4.948 3_ -

Operating Expemes: 6,2 64 3 15 . 12,830 $53 Operatim 87 1 1,539 MainLunce 2,125 .

4,361 bepreclatim sad Decc=m!ssiocing 596 '..

'463 Taxu - other Tw1ocoa* (2,308) . (2,37S) .

- hcotne (Qredin (2,869) (8,776)

-Defentd (Credit)

_ -583 , (4,436) 3,058 .(4,12Q 14 389 (B,213)

Totti (3,110) 4,121 ],,N 8,223 Operating (Less) beetne 164 235 . 196 4M Other bcome and (Deductions)- Net _

4,356I (1,500)' t,625 .

(2,946)_

(Loca)1tcorne Befcre hterest Chuges -

Interat Charges:

hterest cc Ims-Term Debl (contrutant btersst Expe=se for the three macth and six. mocth padeds '

ended Juaa 30,1991 ns $12,600,884 and $25,147,669,

• 12,232 1,204 24,465 respectively, Note B) .. , '

Other interest Exp.se (Contractual hterest Expene '

for the tbte centh sul six. tomth periods ended 3,une 30,1991 was $215,760 sod $897,221, respectiYe}7, 643 509 , 1:106 Note 3) '

o 12,875 8,7131 ' 25.571 Total bteyest Charges (Credit) , ~

(10,213) (16,946)

(2,946) '(8,519)

• (Losa) ARet htettriCharges 3,943 3,894 7,886 7,G3 Prefened Dividend Requirements '

S (6,889).$ (12.413) $ (18,099) $ _(2_4,63_9,)_ ,

Net (Less) .,.

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See accoc:ptcying voces to ccadensed !! uncial sukmca:s.

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• EUA POWER CollPORATION l

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CONDENSED STATEMENT OF CASH FLOWS I ,. (Dshtor la Possess {m)

(b Thounnas)

- (uuudited)

Six Menths Erded ,

Iuce 30,

___ 1991_ 1990 ,

gushted)

CAPI FLOW FROM OPERATING ACTIVTTIES: .

(Note B) 3 (10,213) 5 (16,946)

(Imss) After hterest Charges Adfattosus to Recorcile (1.tss) After hterut Chriges .

b Net Csh Providad fnxn Operatics Activities: 977 4,3gg Depreciatm and AmortirAtlon 4,3 54 Amer:itation of Nucler Fml (134) '

Investment Tax Credit - Net (2,169) (1,776)

Deferred Taxes (68)

Allowance for Funds UseiDvios CastrutiW 10,000 ... '

Decommissioning Fund 5,$20 (1,213)

Other - Ne.t 11,023 0 53)

Changs'in Oper&g Assets and L! abilities

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Net Cash Provided Prem (thed b) Opendeg Activides 3,337 (9.396)_ .

INVESTMENTIN PLANT: '

(2,6tq (10,245)

Coestrtetion Expenlitures ~ ~ ~ (10,248)

G,68,5) .

Net Cash (Used in) hvestmect Activities DASH FidW FROMTINANCING ACTIVITIES:

!=~e: 2,300 Preferred Sto:k

, (453)

(49) '

Tsunch BExpemes 1,17 0 17,195 Netbetersain Sbott-Term der -

712 19,446 Net Cash Provided From Fmancing Activities 3J63 (198) ^

Netheresse (Decrease)in cash . ,

Cash andTemporary CashluYcSt Wt2 St 16 208 Bed =dn5 of Period .

Cash andTemporaq Cuhhvestments at Eod of Period ,

3 3,379

-- $. 10 Cash M daring the period for: S 316 $ 24,465 hierest - $. , G,200) $ (5,700) '

hcocco Taxes (Refund) .

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See accoc:pnyi::g notes to coadcased Scrocul s: net.nm.

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. . n% IGE CORPOPATION 1017.S 'IO 03NDESEFDMNCIAL TS' ATams

'Ihe accccpanying Notes should be read in conjunction with the Notes to Finan-cial Statements appearing in the M Power Corporatica (eta Fewar or the Cccp."ny) 1990 Annual Report on Fcrm 10-K snd the March 31, 1991 DIA Pcw: Fom 10-9 the acca:panying une.:dited ccndensed Note A -finsacial In the state:amts opinion ofpresent the Ca:pany, fairly the financial position of the Ccc sny as of June 30, 1991 and December 31, 1990, and the results of operat' ions for the three and six tenths ended June 30, 1991 cnd cash flows for the six nenths ended June 30,1991 and 1990.

On Tebruary 28,1991, n1 Pcwer filed a voluntary petitien in the United States Bankruptcy Cort for the District of Ecw F2rpshire (Eck:vptcy Cort) for protection under Chapter 11 of the Federal Bankreatcy Code (Er.kruptcy Code) . On &rch 29,1991 EM Peer snncunced tnt it had provided an ivpaiment reserve in 1990 against its investrent' in Seabrock Unit 1 (Unit 1). Tne Cec'ocy restated its fi .ancial statenants with, respect to the cmcunt of A'llcwance for Funds Used During Ccnstruction -

recorded during the first three qua.rterc of 1990, reicing such crcent to

. zero. (See Other h :ters under Note B - Comnittets cd Ccatingencies).

Nota B - Ccemitments and Centins;encies:

BAERUPICY FPI)CE' DING

- As a. result of its February 28, 1991 Chapter 11 filing, n% Pcwcr is wd cperating' its business as a debtcr-in-possessien cd will endeaver to develop cr st.y ort a plan of reo. anization *.ich wculd enable it to i cerge frcm bar , tcy en a financia.ly viable basis (althouah tr.agerent of the Cetocy canact predict tha timing er likelihced cf de9aloping such a plan). 'On July 2,1991, the Eckruptcy Ccur: terrdnated EUA Pcwer's

.. exclusivity period with respect to filing su::h plc. The officially

a: pointed Benchiders Cdttee, representing the holders of the Series E Secured Notes and Series C Sec=ed Notes has indicated that it ray file a plan of reorganiration which wuld conver: the Series B cnd Series C

. Secured Notes into substatially all of the ec,uity of the Ccapany, UA

. Fewer cannot predict *ethar such a plan, if filed, vcald be confirand by

,'the Bankruptcy Ccurt.

. Under Chapter 11, cemg claims against EUA Pcuer in existence prior to the filing of are stayed theEm thile petitlen Pcwr centhues rer reliefbusiness under the federalasbekruptcy cperaticas lar$

debtor-in-pos l session. hese claics are reflected in the June 30, 1991, balance sheet i as , liabilities subject to ccmpranise." Additic .al ch (Liabilities i

subject to cceprec:ise) ray anse subsequent to the filirs date resalting frco rej,ecticn of executory contracts, including leases, and frcm the decemination by the Ecnkn:ptcy Court .(crr rceed to by parties in

' I interest) of alicwed ,,clairs *or centinge.cies and other disputed ,

canunts. Enforcerent or claims secured by ce::ain of ER Fewer's assets (secured claims) also are stayed, althat.

have the right to ccve the court fer relicf m [A :he t're strf.

holders of such clairs secured .

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' Note.B - Cocmitrents ed Contingencies -- (Contimed) l claims are secured by an interest in certain seabrook

• e.ssets of EUA Power, principally realty and personalty,

'n% Power has advised the Bankxuptcy Cou.:t th'at beginning Septecter 1, 1991 it will not be abic to imet its umthly payants representine its "

share of Seabrook costs. n!A Power hhs' not deterrined whether it vi11 be able to pay all or any part of tre share of Seabrock August 1991 costs.

EE Power s ability to pay cocts depends on whether it can cell its share

• of Seabrook's output t.t prices adequate to pay its cash costs or s#nather

• it con arrange for debtor-in-possession financing. On July 25 1991, Unit 1 vas shot' dora for a refueling period thich ic c:pected ,to last -

approximately 65 days. Since ER Power vill not generate cny revenues during the refueling period, it does not expect to pay my of its shcre of Seabrcok . costs for the balmce of the refueling period unless it is able . to secure, debtor-in-possession finmcing. U R Power, certain Seabrook Joint Owners rnd representatives of the Official Coctittee representing holders of EUA Pcwcr's Secured Notes are atte=nting to *

- arrange debtor-in-possessicn financing to enable E% Tower "to fr.d '

Sorking capital reqcireents cnd operat3rkipc:ce.ses including its Atreemnt (JOA) . hrj.

cbligations under the Seabrook Joint o cers financing facility cight require the approval c! the Securities smd I:<chmge Cccmission (SEC) under the Public Utility F.ciding .Cocncny Act of 1935 (the Holding Cccprm Act) and V6ald be subject to the itproval cf

- the Bankruptcy Court. Tnere is no assurance c satisfacterf' financing c:rangeent will be agreed upon und approved. .

Since the Chapter 11 filing, througi June 30, 1991, the ccenanr re m s.d no reorganiranion egenses. For the urn pericd, intert'st 'incem en tecnorary cash investants r:cuated to appronrately twenty-nine thecsand dollars. . ,

J Since the Chapter 11 filing on Febntary 28,1991, r0A Pcver has r.ct recorded interest egense. Additional centractcal interest c:ocnse for reported herein veuld have ruhr',ted to the periods since the filing being $17.3 tillion, respectively, fer the approximately S12.9 nillien cnd seccad quarter and six ncn:hs ended June 30,1991.

SEABRCOK INiT 1 Background;

' ER Power has a 12.11 cwnership interest in the Seabrook Dnit 1 (Unit 1) nucicar generating plcat located in Seabrcok, Ear:pshire which ccmnenced cccmercial operation en AuSust 19, 1?90.New . For the first six

enths of 1991, Unit i h2d operated en avera,$e et approxhrately 87.2% of ,

.its total capacity. .

. Licensing- .

Still pending at Deceber 31, 1990 before the United States Ccurt of Appeal's and the Nuclear er of Pagulatcry issues and Ccunissicn appe.als GGC) to relating cnd operation its adjudicatory of Unit boards were a nu:

1, which, if adversely decided, could have 1:pceted the continued

o=r ..

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':14dte3 i Cocmitzoents and contin 5cncies -- (Continued)

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• ! effectiveness of its operating license. On Januny 25, 1991, the Coart of Appeals rejected a challenBe to the NRC issuance of the full , power

- operating license for Unit 1. %e Massachusetts Attorney General has filed a petition for a writ of certiorari sith the United States Suprem Court, asking the court to review the Court of Appeals decision. ne tiRC has filed a tootion o70 sin 8 Supre::n court review. he Supre::e Court is expected to -act on mather or not to review the decision in October of 1991.

In May, 1991, - the Inspector General of the 1GC md a Congressional

• oversight ccmuittee conducted an investigation of thit 1 weld pachges. The ne NRC questioned the qcality of the radiographs of sik velds.

congressional overnight eccz:dttee is also investigating whethee; the NRC had an adequate bi is for issuing an operating license for Unit 1 ed i Wether the NRC's o frsight of thit 1 has been adequate, ne final' issue. pending before an IEC adjudicatory board involves the adequacy of the Seabrcok cargency responso progre. EUA Power cannot  ;

predict the course or outccrae of any of these proceedings but dces not #

believe that any is likely to have a perunent adverse icpect on the Unit -

,1 cperating license. ' '

Uncertbnties 72garding ibcicar PimtsI .

Seabrook Joint Ownars are subject to the risk that one of thei.r nuier ,.

may be- unable or unwilling to finance its shee of ten project's costs, thus . jeopardizing conti:re.ed operation of the project. On Pelnuary 28, 1991, EUA Powr, a 12.1% owner of the Seabrock project, filed for rotection under Chapter 11 of the Bankruptcy Code. On May 6,1991, tw 1szpshire Electric Cooperative, Inc a 2.21 c.mcr of the Seabrook that it' had diled for Chapter 11 bank:uptcy -

project, snnounced y of New

,xotectico. _ On May 17, 1991, the Public Service h:pshire, which has a 35.6% interest in Seabrook md sich md file.1 for protection frem its creditors under Chapter 11 in Jaa .try 1988, cccrged frcm bankruptcy. Ein ?cwr emnet predict the ul :ste out. car.c or

- effects of any of these benkruptcy proceedings. , ,

Seabrook Joint Owndrship Agree: tents .

ElR Power is required under the JOA to pay its share of Unit 1

. expenditures includirs m*.thout limitation operations and maintensnee expenses, construction md nucicar fuel expendite:es and decccud.ssioning costs, regardless of Unit l's cperations. Under certain circu:nstances, ld- a failure by EUA yowr to nake its mnthly ps

adversely affect its entitle &nt in. eleUnit Power1.hasycents

. advisedunder tha

• th Bankruptcy Ccurt that begi: ming Septeder 1,1991 it will not ba ableIUA to-reet its enthly payments- representing its share of Saabrook costs.

all or kny part Power has not dete: mined Wether it will'be able to pay's ability to pay of its share of Seabrock August.1991 costs. EUA Pcwr cests . depends, on

• ether it can sell. its share of Seabrook's outputfor can arrange at prices adequace to pay its cash On costs or25, Wether 1991,itUdit I was shut dcun-L debtor-in-possession financing. July ,

for a refueling period Wich is expected to last eppmnimately 65 days. -

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See 3 - Cod.t:nents cod Contingeneses -- (Continued)

Since EUA Pcver will not generate any revenues exing the refueling

• it does not expect to pay any of its sbae of Seabrc& costs for '

period,lsnee the ba of the refueling period unless it is chle to hecure debtor-in-possession financing. The Cecpany's ability to pay costs subsequent to this outage depends on its ability to sell its share of Seabred's outpot at prices sufficient to cover its cash costs or its ability to secure debter-in-possession financing. (Sec knkruptcy Proceeding above). .

SEtam00K INIT 2_

E% Power also has a 12.11 Cvnership interest in Sea. brook Unit 2 (Unit 2). On Nove::ber 6,1986, the joint sners of Seabrcok, recognizing that Unit 2 had been erncelled, voted to dispose of the Unit. Plans regettding disposition of Unit 2 are EUA new Tower under is consideration, but have not been unable, therefore, to esti= ate the finalized and approved.

costs for which it veuld be responsible in ccnnection with the ly charges are required to be paid by EUA disposition of Unit 2. Month Powr with respect to Unit 2 in order to preserve and protect its ,

cccponents and.various warrenties. '

O M PATTERS _ .

ucounting Changes:

In 1990, EUA Power adopted Tinancial Acccunting Stdard Ib. 96 (TAS 96)

"AcccGnting for Inecre Taxes". As a result, acce::ultted deferred tsxes include cppromately $6.8 cillion related to deferred taxes established at rates higher than the current statutc~-y rate. EUA Pcwer has deferred recc5nition of these mats in incere pending the cutccen of sitning icng-term power sales contracts md the ultimate determination a's to vbetbar this em:nt will be retunded to custccers.

On May 1,1991 EUA Pcwer cnnounced that it wuld restate ira fim cial

- statcoents with respect to the carmnt of A11cwnee for Funds Used During Const:uction (AFUDC) recorded in 1988 and 1989 in excess of the non-cash interest expense cnd all AFUDC reccrded in the first three quhrters of 1990, This acticn by EUA Pcwcr followed the receipt by Eastern Utilities Associates 'EUA) ( of a let cr frem Coopers & lycrand, the independent '

coditors for EUA and EUA Pcwer, in which Coopers & Lybrand stated 'Vc have concluded that the financial stateents for the years ended Decccber 31,1988 cnd 1989 shcuid be restated for the errunt of AREC recorded in the inecce staterent in excess of the non-cash . interest ex;ense and, accordingly, our previously issued opinicas on such financial statemnts' may no longer be relied upon." Tne As financial staterrrrts included herein a result of such restatment, EUA

.have been restated accordingly.

Fower deferred approY. irately $73,390,000 of AFUDC-debt with respect to the periods in question. -

SEC Reviews .

The SEC is conducting a review of EUA Power's Annual Pqort on Tcrnn 10-Ts

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i for the year ended Deceber 31, 1989 and subsecuenc Qaarterly P,cports en 1 .

=

' Note I 5 - Comit=ents and Contingencies -- (Continu d)

Fem 10-Q.

The staff of the Division cf corporation Finance has raised certain questions principally regarding the acccuating for the ,

capitalized financfre costs related to EUA Fower's investemt in Seabtrok Unic 1 and the aflect which recording cuch cramts had on reported earnings for 1990,1989 and 1988. EUA Pcwer has been advised that the ratter has been transferred to SEC's Divisica of Inforce:mnt and tlut they are cenaceting an infomal review. EUA Fower has responded to the

• {

inquiries of that division.

On May 15,1991 EUA Power restated its financial staterents with respect to the a:munt of AYUDC recorded in 1988 and 1989 in excess of the '

rcn-cash interest expense and all AFUDC reccrded in the first three i cuarters of 1990 as a result of a letter received by EUA frca Coopers & '

Such resthtetent l'ybrand, the independent auditor for EUA and EUA Pover.

was intended to address several issues raised by the SEC. F.owever, EUA Powr cannot predict the outeceu of the SEC's review. The SEC could recuire. that EUA Power further restate its firincini state:hnts for the .

yeirs ended Eeceber 31,1990,1989 cr 1988 or for eny quarterly period '

during such years. Manage ent cannot predict whether such a further restatecent, if cny. Would result in a caterial chrnge to aroents  !

i reflected in its 1990 Balance Sheet or the etrulative reported inecce and f losses for the three year period then ended,

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IUA Power believes its restated financial staterants. have be'en prepare'd ',

in accordance with generally accepted acce.:nting principles cnd present - '

fairly the finsncial position cad results of cperations of EUA Pcwer.  ?

t Ite:n 2. Managemnt's Discussion and Analysis of Financial Ccadition and Pesults ,

- cr operanons -

Results of Operation _ . .

The financial statemnts for the first three qs.rters of 1990 have been  :

restated frca a:n:x:nts previcusly (reported relating to the a:: cunt of allowance funds used d:.tring construction AFUDC) 1990.

)

Seabrcok Unit 1 (Unit 1) ccc::enced ccc=:ercial operation on August 19, 1990, '

EUA Pcwer consequently there are no results of operaticas prior to this date.

re arted a net loss, before preferred d:.vidend require =ent, of approxdrately $2.9 million and $10.2 million for second quarter and six tenths ended Je 30, 1991,

• resyeceively, cocpared with a net 1 css of approxirately SB.5 dilion and $16,9 dilion (as restated) for the saan periods in 1990. The pfincipal reason for the i net loss in both periods of 1991 relates to short-tern per sales of EUA Power's  ;

entitle::nnt from Unit 1-at prices substantially below actual operations,

• unintenance and capital-ralated costs. Begfr:m.ng Febn:ary 28, 1991, the date EUA EUA Fwer

• Power filed for protection under Chapter 11 of the Bankruptcy Code, The net loss for both '

ceased to accrue interest on all its debt securities.

f periode of 1990 is 'primarily due 15, to theand 1993 accrual of interest the 17-1/21 seriesexpense c Securedon the dee wates 17-1/21 Series B Secured Notes due May Novmber 15,1992 (together, the Notes) and the deferral of AILDC - Debt.

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1

. . Af a result c2 the Chapter 11 filing, ElA Power is nw operat.ina its business

. ' as 5 debtor-in-poss:;ssion, ER Power intends to continua its markating cfforts

' which have consisted of both direct negotiations with utilities and participation in generation bidding processes, aw Power recognizes that the recent chmges in

. the long-ter:n power supply tsrxet, the continued deterioration of econmic conditions in the 1brtheast and the new and untested bidding requirements for pow.r contracts being inglenented by vcricus state utility ecnuissions are affecting its ability to enter inro long-tenn sales contracts.

Operating Pavenues .

Short-term sales for the secend quarter cad six unnths ended June 30, 1991 were cpprcxirately S4.9 million cad $12.7, respectively, ccepared to none in 1990. For the second quarter and six tenths ended Jun.e 30, 1991 actual operations, raintenance, interest end capital-related cests, excluding intetet,t expense since February 28, 1991, exceeded revenues frem short-term pcver sales by a ww.dmately $4.7 tillien and $15.5 cdllion, respectively, en a pre-tax basis.

EUA Towr continues to sell electricity at prices belcu cost. On July 25, 1991, thit 1 was shut' down for a 65 day scheduled refueling cutage. Dring this period, nw Power vill record no revenues. ,

w Operatiens E. eris_e_

Tuel Fxpense for the seccnd quarter and six inmths enced June 30, 1991 was .

$2.8 nillion and $6.0 millien, respectively, ccupared to none for the ces peric4s in 1990 and represents DJA Pever's encrtization cf fuel costs t.ssociated with 1 hit '

1 Seneration dering each respective 74riod. ,

Other operation and teinte .s .ce expense for the second garter hnd six cenths ended June 30,1991 was $4.9 tillica and $9.6 tillien, respectively, cn ine: case .

of $4.5 million and $8.9 millica, respectively, ever the sce periods in 1990. .

The increase represents ER Pcuer's share of operating costs of thit 1. 4

. Depreciation _

• Ihe Cot:nany be+

as of August'19,19Ian O. For therecording depreciation second quarter cnd six cenths ended expense .cn1991, Jund 30, its imestvent in V ER Power recorded $2.0 tillion and $4.1 million, respectively, in depreciatica.

Ib depreciatica expense was recorded for the six truths ended June 30,1990.

Interest Excense

- Interest expense on 1cng-tem debt for the secce.d garter and six renths ended June 30, 1991 decreased approximately $12.1 tillica and $16.3 million -

.respectively, as ccupared to the sane periods of 1990. Tna decrease is the result et the cessation of acertrmg interest expense as of Tebruary 28, 1991 as a result of the Cocpany's Chapter 11 fihng c:fset emehat by additional interest accrued frcm January 1,1991 through Tebruary 28, 1991 an the Ccc:pany's $21 million of

. Solid Waste Disposal Tacility Pevenue Bonds (Reve me Fmds), ' issued en Decaic .

28, 1990.

a

,g 4v FMGM.

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Flyumcial Condition _ cnd Liquidity.

- As a result of the bankruptcy filing, EIA Powr is in defat 0t tuder the t

Indenture pursusnt to which the Series B and Series C Secred Notes were issued and under the tem.s of the EcVenue fonds-

'Ibc cash resources of EGA Fewer are dependent upcn the price at sich it sells its share of electricity g(nerated by Unit 1 znd the cperating capacity cf Unit 1. At errent unrket prices, the cash generated by such electricity sales is EUA Pcwar is recuired under the less than EtR Power's co-going cash requirerents.

JOA to pay its share cf Unit 1 expenditures including withcut li:rltatica dperations and raintenance expenses, ccnst:uction and melear' fuel expenditures and deccanissicaing costs, regardless of Unit l's operatiens. Under certain ciremstances, a failure by EUA Pcuer to trde its tenthly payrnr.ts under the JOA could adversely affect its entitic:mnt in Unit 1. Ein icwr has advised the Bank:Jptcy Court that Doginnin$ 6eptWiber le 1991 it Vill not b able to LTet its tenthly p wuts repter.cnting its share of Seabrcok cos:s. EUA year has net detemined dether it will be tble to pay all or any part of its share of Seabrook Auzust 1991 costs. EUA 7cuer's cbility to . pay costs depads ca dether it can sell its share of Seabrcok's cut 72 at prices c&quate to pay its cash cests or whether it cm arrange for debter-in-possessica financing. Cn Jul.7 25,1991, Unit 1 was shut dcwn for a refueling period which is expected to last approfzar21y 65 days. Since EUA Power will net generate cny revenues 6=iv the rdueline pericd, it does not expect to F37 En'/ of its sh:.re of Seabrcck costs for the bilance of the refooling period unlets 'it is cble to secure debtor-in possersien fina , cine, Any financing facility might Tcquire the sporaval of the Securities cnd Ey.t Ocupcny Act) cnd would be subject to the auproval of the Ban' wtcy Ccurt. Tne c is no assurance a catisfactory fi .cncing crrangennt vill h greed upcn cd apy:oved.

The Cecrcnv files censolidated 7ederal inccc.e tex rerrns tegemer with E"A and other EUA ' affiliates. As a result of cuch consoli&ted fhings, certtin Federal ineca tax benefits available to the Ccenany have redaced the vederal inctne tax obligations of EUA and such cther EUA affiliates. Under a tu allocation agreetcnt b.arwen EUA cnd its subsidiaries, the C~:pany ray receive cash payernts frcc) EUA and such EUA c.t:iliates as cccpcasttic:i fer the use of such tak benefits. .

FAKI II - CTiFER DEORWTION ItE 1, Lezal Proceedinns See descriptions of knkn:ptcy, Seabrook Licensing and SIC proceedines . in ~

Note B - Canimmts and Ccatingencies - u:vder PAYT 1, Ite:a 1, ateve,

cem3. Defaults Uoon Senic

Seerities As a result of its Chapter 11 filing, EGA ?cwer is in default under the terns of the Indenture dated ro.wier 15, 19E6, as arended, pursuant to Wich EUA Fever's series B Secced rctes sad Series C Secured rctes were issued and u . der the terns of the Loan and Trust Agreement and latter of Credit snd Peir.drrsc:Ent Agreecnnt (LOC) dated Lecceter 1, .1990 and Decceber 21, 1990, respectively, 'I b e N o : c s supporting $21 million cf Solid Maste Disposal Ya'cility Revenue Bends.

1

• 9n

{ . are solcly the obligations of EUA Pcwer end are not guaranteed by DJA or any othe' '

person. EUA Power's obligaticus under the LOC are guaranteed by U2A, I te:n 5 . Other Inforcation On my 2,1991 DE Power petitioned the Banbuptcy Coert for the' District of New Ik=pshire for an order autherizing the Ccep:my to expend funds for the wrpose of arcading its Registration Statenent (the Registration State: rent) unter the Securities Act of 1933 (the 1933 Act) to as to keep current the Registratien Statment for the benefit of certain holders of the Corpanf s Notes, and the Continemt Interest Certificates (CICs). On May 24, 1991, tne Emkruptcy Cc=t refused to grant the order thich D'A Fower sought, Since the Banhuptcy Ccurt did not enter the order, the Notes cad CICs crf not be transferred under the Ee;;istration Starcrent, md the Cctor.nv has instructed the State Street Ect, and Trust Capany (State Street), as' tiansfer agent for the Notes and CICs to require before prneessing a trzntftr of Ibtes cnd CICs a satisfactory opinion of counsel to the offect that tha tr:nsfer is exa ot frcm the registration require:rnts of the 1933 Act, n e Cetpsny is endecvering 'to develop procedures so that Fotes and CICs that are not restricted es to transfer under the 1933 Act ray be traded with a ininirun of femalitics. h Cem:iz.y also understands that Depor.itory Tnst Cccieny, (ICC), hs.s pieced restricticna en the' Notes and CICs on its tradin5 systen end it is possibic that the Ccu:ocny rzy request MC, er MC uny detemine, to transfer the 1btes cad CICs on iti tnding r,ystem to the appropriate UIC participents so that fuere trcasfers vould te processed by State Street. .

Item 6, Exhibits and Reports en Fern 8-K (a) Ixhibi.ts - None (b) Reports on Tonn 6-K on May 1,1991 EUA Faar filed a current report en Form 8-K, h item reported was Item 5 (Other Everts),

On May 29, 1991 EUA Tcur filed a current report on ,

Foca 8-K. '1he item rt.perted was Item 5 (other Events) . -

SIGRTUFES Pursuant to the. require:ents cf the Securities T2 change Act of 1934, the '

registrant has duly caused this report to be cisned en its behalf by the undersigned thereunto duly cuthori cd.

, EUA Tcw.r Corocration_ .

Date: Aurust

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13, 1991 Richard M. Bums Richard M. Ec::rs, Ca7tro11er (on behsif of the Mgistrant cnd as Chief Acc=nting Officer) 1 1

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TOTAL F.15

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SERVICE LIST _11-1  :

Senator Clesson J. Blaisdell- I Senate. Finance Committee  !

Room 120 - State House  !

Concord, NH 03301 'f I

Rep. Elizabeth Hager i Chrirman, Appropriations Comm. 'l Room 100 - State House .!

Concord, N.H. 03301 i i

Georgie Thoman I State Treasurer Room 121-- State House Annex Concord, NH .03301 I Harry H. Bird, M.D.

Commissioner j Health & Welfare Dept. (

Hazon Drive _'

concord, NH 03301  ;

Richard M. Flynn, Commissioner  !

Department of Safety [

James H. Hayes Bldg. )

Hazen Drive. .

j Concord, NH 03301  !

William F. Boyle 463 Now Zealand Road -

1; Seabrook NH 03874 i Mr. Robert W. Romer I N.H. Yankee Corporation  !

-Scabrook Station

• P.O. Box 300: i Seabrook NH 03874

}

Larry M. Smukler, chairman

'N.H.-Public Utilities Comm.

8 Old Suncook Road -

Concord. NH 03301 -:

6 Mr.-Winslow Melvin  ;

88 Pleasant Street '!

Concord,-NH' 03301

) s Alexander J. . Kalinski, Esquire f 1436 Elm. Street l P.O. Box 1136 Manchester, NH 03105 s i

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2-  !

4 t

Wynn Arnold,  !

Executive Director and Socrotary N.H. Public Utilities Comm.~ '

8 Old Suncook Road Concord, NH 03301 Audroy.Zibolman, Esquiro N.H. Public Utilities-Comm. .

8 Old Suncook Road {

Concord, NH 03302 t Michael Holmes, Esquiro [

Offico of Consumor Advocato 5 Public Utilities Commission  :,

8 Old Suncook Road  ;

Concord, NH 03301 l Harold T _Judd, Esquire j Assistant Attorney General r Attorney Gonoral's Office 25 Capitol Street f Concord, NH 03301-6397  !

L Robert A. Backus, Esquire

- 316 Lowell Street [

P.O. Box 516 -

Manchester, NH 03105 Robert Cushing, Jr.  !

395 Winnacunnet Road j l Hampton, NH 03842 5 L  !

Mary K. Metcalf . t Seabrook Anti-Pollution League I 5 Market Stroet '

Portsmouth, NH 03801-Campaign _for Ratopayors' Rights >

P.O. Box 563

- Concord, NH 03301 L Soabrook Selectmon's Office [

Seabrook Town Offico

• Scabrock NH 03874 '

Mr. John Crosier President l Business & Industry Association i 122 No. Main Street i Concord, NH 03301  ;

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.l ' ' ~3-

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r e -- Director of' Nuclear Reactor Regulation Nucicar Regulatory Comm._

Washington, DC 20555 Shelley Nelkens Box 164 Antrim, NH 03440

' Victoria Turner

1. 124 - Box 253 Bonnington, NH 03442 John G. Tuthill P.O. Box 38 Lomputer, NH 03606 f

I EAH 6783 ,CJS s

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