ML20083Q352

Motion for Leave to File Supplemental Contention Re Financial Qualification of Applicant to Construct & Operate Facility.Certificate of Svc Encl

ML20083Q352
Person / Time
Site:	Callaway
Issue date:	04/18/1984
From:	Green L GREEN, HENNINGS & HENRY, JOINT INTERVENORS - CALLAWAY
To:	NRC
Shared Package
ML20083Q355	List: ML20083Q352 ML20083Q367
References
OL, NUDOCS 8404230046
Download: ML20083Q352 (5)

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• ph COLMETED l"NRC UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

'84 APR 20 A10:34 In the Matter of } 7CE OF 3ECMTe -

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UNION ELECTRIC COMPANY ) Docket No. STN 50-489-T

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(Callaway Plant, Unit 1) )

JOINT INTERVENORS' MOTION FOR LEAVE TO FILE SUPPLEMENTAL CONTENTION Come now Joint Intervenors, Coalition for the Environment, S t. Louis Region; Missourians For Safe Energy; and Crawdad Alliance, and request leave to file their Supplemental Conten-tion, copy of which is a ttached hereto and hereby made a part hereof. As grounds for this motion Joint Intervenors state:

1. From March 24, 1982 until the present time, Joint Inter-

, venors have been precluded from filing this Supplemental Conten-tion by virtue of the Nuclear Regula tory Commission's rule purporting to exempt public utilities from the requirement that they demonstrate their financial qualifications to operate and decommission their plants as a condition of receiving an oper-ating license. 47 Fed. Reg.13750, March 31, 1982. That rule was recently held invalid by the United States Court of Appeals for the District of Columbia Circuit in New England Coalition on Nuclear Pollution v. Nuclear Regulatory Commission, No. 82-1581 (Feb. 7, 1984). The court's decision effectively reinstates the original rule respecting financial qualifications.

2. During the period when Joint'Intervenors were precluded 8404230046 840418 PDR ADOCK 05000483 hO G PDR _

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l by the rule of March 24, 1982 from litigating the issue of financial qualifications, numerous circumstances have occurred, raising serious doubts as to the financial qualifications of the applicant. It now appears that the issue of the financial qualifications of the applicant is a critical issue in this proceeding. The Joint Intervenors can assist in presenting the relevant evidence, and due process of law requires that the Joint Intervenors be heard on this critical issue.

Among the circumstances which have occurred in that period, which materialiy and dramatically change the situa tion which existed on March 24, 1982, are the following:

A. On Augus t 18, 1982 the applicant announced an increase in the estimated cost of cons truction of the plan t, from $2.1 billion to $2.85 billion, more than 33%, and a delay of approxi-mately a year in comple tion of the plant. These new deve lop-ments changed the financial condition of the company from unhea1 thy to precarious.

B. In response to that announcement, Moody's lowered its ratings on the company's first mortgage bonds to Baa-2 from Baa-1, and lowered its ratings on the company's unsecured pollution control revenue bonds to Baa-3 from Baa-2. Standard & Poor lowered its ra tings on UE's first mortgage bonds and pollution control bonds to BBB , the lowest rating before speculative bonds, and lowered its ratings on the company's preferred stock to BB+ from BBB . Moody's said the cost increase will require the utility to raise nearly all its capital in the stock and credit markets through 1984. See Wall S treet Journal, p. 36, 2

co l.1, Augus t 19, 1982.

C. In the year 1983 investor confidence in utilities with heavy participation in nuclear construction (including the ap-plicant) eroded rapidly. The stock price of such utilities plunged 27% relative to the price of stock of utilities with no nuclear construction. Studness, The Marke t's Stratification of Electric Utility Stocks, Public Utilities Fortnightly, January 19, 1984, p. 43. As of January 1, 1984, the price of Union Electric's stock was 22% below the book value per share. E.F.

Ilut ton Equity Research Review of Electric Utilities, February, 1984. It thus was clear that investors generally were treating Union Electric stock as the stock of a company in the least favorable group of electric utilities, those with heavy partici-pation in nuclear construction.

i D. A survey of 75 utilities by Salomon Brothers, printed in the December 5,1983 issue of Forbes, rated Union Electric as one of only five with an earnings quality grade as low as D.

E. Since that time, investor confidence in that least favorable group of utilities has eroded more swiftly. The cancellation of Zimmer and Marble Hill, the default on Nine Mile Point, the delays at Shoreham and Limerick-2, the denial of an operating license at Byron, and the belt-tightening at Long Island Lighting and reduction of dividends at Consumers Power have rated headlines in the financial press. Standard & Poor's /

Outlook of March 28, 1984 lists Union Electric as one of those utilities in the third tier, "with nuclear exposure and prob-3

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i lems." In mid-April, 1984, the price of UE's stock was more than 25% below book value. St. Louis Business Journal, April

16-22, 1984, p. 19. Because Union Electric is dependent upon j the sale of stock and bonds to meet its cash flow requirements for 1984, and probably at least one or.two, or more, years thereafter, this erosion of investor confidence will inevitably i

have a substantial impact on the financial ability of the com-i pany to operate the plant safe ly.

F. In brief, since March 24, 1982, Union Electric has  !

l changed from a weak, struggling company to a shaky, speculative l

investment, with very serious cash flow problems.

WHEREFORE, Joint Intervenors request that they be permitted to file the attached Supplemental Contention at this time, and

] that the Contention be set for evidentiary hearing in St. Louis, 4

Missouri, and that the operating license be denied. ,

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3 'IRPrWGrefn (Mo. Bar # 14547) i .

Green, Hennings & Henry 314 N. Broadway, Suite 1830 i

St. Louis, Missouri 63102 231-4181

Attorneys for Joint Intervenors I

i April 18, 1984 f

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E DL r.E TEri U;%nc UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION T4 AN 20 #0:34 In the Matter of )

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UNION ELECTRIC COMPANY ) Docket No. STN I0I M OD '

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(Callaway Plant, Unit 1) )

CERTIFICATE OF SERVICE on I[hpY11hergby l SP" certify that

, 1984copies of the foregoing by deposit in the Unitedwere served States mail f i'r s t class, postage prepaid, addressed to the persons listed below.

Alan S. Rosenthal, Chairman Robert Perlis, Esq.

Atomic Safety and Licensing Office of the Executive Legal Director Appeal Board Nuclear Regulatory Commission Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.C. 20555 Gary J. Edles James P. Gleason, Esq.

Atomic Safety and Licensing Chairman Appeal Board Panel Atomic Safety and Licensing Board Nuclear Regulatory Commission 513 Gilmoure Drive Washington, D.C. 20555 Silver Spring, Maryland 20901 Dr. Reginald L. Gotchy Mr. Glenn O. Bright Atomic Safety and Licensing Atomic Safety and Licensing Board Appeal Board Panel Nuclear Regulatory Commission Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.C. 20555 Thomas A. Baxter, Esq. Dr. Jerry R. Kline Shaw, Pittman, Potts Atomic Safety and Licensing Board

& Trowbridge Nuclear Regulatory Commission 1800 M Street, N.W. Washington, D.C. 20555 Washington, D.C. 20036 Docketing and Service Section Office of the Secretary Office of the Secretary Nuclear Regulatory Commission Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.C. 20555

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