ML20096H687

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Rev 3 to Mgt Plan for Extended Const Delay of WPPSS Units 4 & 5
ML20096H687
Person / Time
Site: 05000000, Washington Public Power Supply System, Satsop
Issue date: 10/14/1981
From:
WASHINGTON PUBLIC POWER SUPPLY SYSTEM
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Shared Package
ML20093C821 List: ... further results
References
CON-WPPSS-002, CON-WPPSS-2, FOIA-84-603 PROC-811124, NUDOCS 8409110488
Download: ML20096H687 (54)
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MANAGEMENT PLAN FOR EXTENDED CONSTRUCTION DELAY OF WNP-4/5 s

OCTOBER 14, 1981 Updated to Revision 3, November 24, 1981 8409110488 840924 PDR FOIA COMEN84-603 PDR

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CONTENTS 1.0 OVERVIEW.

1 2.0 FINANCIAL-4 3.0 LICENSE MAINTENANCE 9

4.0 ENGINEERING CONSIDERATIONS 13 5.0 QUALITY CONSIDERATIONS 17 6.0 DOCUMENTATION AND RECORDS 19 7.0 COMMERCIAL ACTIONS 23 8.0 PROGRAMMATIC ACTIONS 28 9.0 REQUIRED ACTIONS 29 10.0 MANAGEMENT OF THE EXTENDED CONSTRUCTION DELAY 33 APPENDIX A--BOARD OF DIRECTORS' RESOLUTION No.1187 AND RESCLUTION No. 1198 APPENDIX B--

WNP-4 and 6 FY-1982 AND 1983 BASELINE BUDGETANDCASHFLOWPREPARATI04 CRITERIA PHASE I AND II 9

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November 6, 1981 D

MANAGEMENT PLAN FOR

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EXTENDED CONSTRUCTION DELAY OF WNP-4/5 1.0 OVERVIEW

1.1 INTRODUCTION

This Management Plan is a description of the general policy and guidelines to be followed in bringing the WNP-4/5 Projects to an extended construction delay status.

The Supply System will use this plan as the basis for all management direction with respect to efforts on Projects 4 and 5.*

The extended construction delay status is to be executed within severely limited funding constraints while preserving the assets of the Projects for a two-year period.

The term commonly used to describe this extended construction delay is " mothball."

V 1.2 REASONS FOR THE DELAY 8ecause of the severe problems in financing the construction of Units 4 and 5 in parallel with the other three Supply System Projects, the Governors of Washington and Oregon appointed a special Blue Ribbon Panel of senior businessmen to evaluate the situation and provide their recommendations The recomended action, on September 18, 1981, was to place WNP-4 and 5 in a minimum cost status while preserving the assets for a period of at least two years beginning July 1,1981.

The Participants Comittee rep *csenting the 88 participants in WNP-4/5 approved a resolution on September 24,1981, supporti.ng these recomendations.

The Supply System Board of Directors directed implementation of those recomendations on September 25, 1981, in Resolution No.1187 (See Appendix A) and further directed preparation of an amended construction budget for fiscal years 1982 and 1983 reflecting the same 4

  • It is anticipated that an oversight role

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Comittee,100's and OSI's.

ill be provided by the Participants This plan will be amended at that time to reflect enefr, role.

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m October 14, 1981 1.3 CHANGES TO THE PLAN d

, Changes to this plan will ret fire approval of the Managing Director.

j 1.4 FUNDAMENTAL PP.INCIPLES GOVERNING WNP-4/5 EXTENDED CONS 1.4.1 Initiation The delay is to be initiated immediately and is to be based primarily co absolute minimization of all costs between now and July 1983.

1.4.2 tiaintenance of Assets The plant assets are to be maintained. This will include:

conducting preventive maintenance of critical equipment o

conducting minimum activities necessary to preserve the licenses o

maintaining sufficient and-accurate documentation on all quality, safety, o

and code-related materials and installations maintaining insurance coverage.

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1.4.3 Supply System Transformation

!!anagement actions will be taken to transform the Supply System and its contractors into an efficient / effective organization building three plants, not five.

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October 14, 1981

'a 1.4.4 Lead Unit Impacts f*Enagement actions will be designed to minimize the impact on Units 1 and 3 cost and schedule.

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n 1.5 PAHAGEMENT PRINCIPLES The management of the extended construction delay will be conducted by line management.

A task force has been assigned to assist in managing the efforts described in this plan. The functions of the task force are given in Section 10 of this report.

In managing the delay, maximum utilization will be made of existing procedures, reports and systems.

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Novemb2r 24, 1981 1

.3 2.0 FINANCIAL _

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2.1 GENERAL A

It is emphasized that funding of the WNP-4/5 mothballing wi exceed amount for the period July 1,1981 through June 30 e a not to present time, agreement has not been reached concerning the

, 1983. At the and specific timing of certain funding.

availability for the mothballing period is shown in Table 1A preliminary financia 1

major budget line item the preliminary estimated cash requirT

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ements.

2.2

. BUDGET AND CASH FLOW REOUIREMENTS i

The construction delay on WNP-4 and 5 necessitates an a 8

construction budget for all five projects.

mended 1982 Id budgets and related cash flows for WNP-1, 2 and 3 Amended 1982 FY-1982 and 1983 baseline budget and cash flow as o tli

, and the WNP-4/5 are to be prepared and submitted for action by the Board of Di u

ned in Appendix S V

January 1982.

rectors in 2.3 GENERAL BUDGET GUIDANCE e

2.3.1 Sccoe

,The scope of the mid-year review will include the following projects:

r all five all budget line items o

-o revised estimate at completion, based on actual cost th 1981 and estimate to completion for WNP-1, 2 and 3 rough September 4

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TABLE 1.

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s FINANCIAL BASELINE a

($ in Millions)

'Beginning Balance (Cash on Hand 7/1/81)

$ 59 Revenues

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Transfer of fuel assets (Actual 8/81)'

5 61 Cost-sharing adjustment 5

Reinvestment income 105 PP&L ownership share of WNP-5 23 Regional participation 150 Total Revenues 344 Cash Requirements WNP-4 Actuals 7/1/81 - 9/27/81

$ 69 Estimated 9/28/81 - 6/30/83 109

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Total

$178 WNP-5 Actuals 7/1/81 - 9/27/81

$ 66

-Estimated 9/28/81 - 6/30/83 159 Total

$225 WNP-4 and 5 Actuals 7/1/81 - 9/27/81

$135 Estimated 9/28/81 - 6/30/83 268 Total 403 4

Ending Balance (Cash on Hand 7/1/83)

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TABLE 2.

  • .s WNP-4/5 CASH REQUIREMENTS
  • 7/1/81 - 6/30/83

($ in Hillions. last working day of the month)

WNP-4 WNP-5 Actual ~

Es t imat ed Actual Estimated WNP-4/5 7/81-9/81 9/81-6/83

_ Total 7/81-9/81 9/81-6/83 __ Total 7/81-9/81 9/81-6/83 Total

$44.4 _

Actual Estimated Constr. Contracts

$ 59.8 _

$104.2

$37.0 _

$52.1

$ 89.1

$81.4 _

Prepurchased Equip.

7.6 7.0 14.6 17.5 67.2 84.7 25.1

74. 2 99.3

$111.9

$193.3_

Arch itect-Engincer 6.0 4.0 10.0 3.5 9.8 13.3 9.5 13.8 23.3 Constr. Manager 5.9 2.9 8.8 2.6 4.6 7.2 8.5 7.5 16.0 Owner's A&G 4.7 3.3 8.0 3.7 4.4 8.1 8.4 7.7 16.1 Owner's Constr.

.3 4.0 4.3 1.3 1.0 2.3 1.6 5.0 6.6 Subtotal

$68.9

$ 81.0

$149.9

$65.6 M1 1204.7

$134.5

$220.1

$354.6

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Nuclear Fuel

$. 2

$ 27.5

$ 27.7 TOTAL

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$ 20.0

$ 20.7

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$47.5 14M

$69.1

$108.5

$177.6*

$66.3

$159.1

$225.4*

$135.1

}267.6 j403d*

  • Not to exceed amount.

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November 24, 1981 o associated cash flow forecasts for WNP-4 and 5 only, special emphasis must be given to the cost estimates o

and related cash flow forecasts for fiscal years 1982 and 1983 based on slowdown / mothball directives.

Specific preparation criter.f a for this is provided in Appendix B.

For UNP-1 and 3 only, the amended 1982 construction budget estimates shall o

N assume that WNP-1 and 3 are single units and require identification of costs that would shift to the twin-unit (4/5) if restarted on July 1, 1983 consistent with the principle of equity, i.e., " cost allocated on the basis of proportion of respective ben.! fit."

2.3.2 Resconsibilities Responsibilities for preparation, review and approval of revised estimates remain the same as defined for the 1982 budget.

2.3.3 General Guidelines V

The overall estimating approach to be used for the mid-year budget review is from the standpoint of " variance" from the 1982 budget. Focus should be directed to impacts that have occurred subsequent to preparation of the 1982 budget.

For example:

Impacts resulting from the extended construction delay on WNP-4 and S.

o Changes authorized through Change Management action. These would not o

impact the bottom line of the budget, but would involve transfers from cont 1ngency to other budget line items (or vice versa).

Impacts resulting from implementation of Amendment No. I to " Policy o

Statement on Equitable Cost Sharing for Twin-Unit WPPSS Projects."

Such impacts are to be uniquely identified in the budget with actual costs incurred during the extended. construction delay being recorded as contingency assets or liabilities, as appropriate.

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November-24, 1981 1-

. Major estimating assump2i,ns to b9 used are as follows:

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For the purpose of estimating WNP-1 and 3 cost that would snift to the 3

o twin units (4/5) if restarted,-assume that the construction restart i

notification will be given on July 1,'1983 for WNP-4 and 5 without any advance notice.

Cost-sharing allocations will be made as specified in the Amendment No. 1 o

to " Equitable Cost Sharing for Twin-Unit WPPSS ' Projects."

o - Assumptions for inflation are to remain the same as those used in the 1982 budget.

Thes1982 budget will continue to be the baseline for performance measurement on WNP-1, 2 and 3.

The revised estimate and related cash flows for fiscal years 1982 and 1983 for WNP-4 and 5 will become the new baseline for these-M projects.

9 2.4 Recuired Action

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A list of specific required actions is given in Section 9.2.

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i Octob:r 14, 1981 y

3.0 LICENSE MAINTENANCE 4

3.1 DESCRIPTION

OF LICENSES 3.1.1 ~ License Requirements The Supply System currently possesses NRC construction permits fo r both WNP-4 and WNP-5.

NRC regulations do not require that any phase of construction o total project be complet' d e

on a specific schedule.- The only requirement relating to construction schedule is that construction be complet latest completion date specified in the construction permit.

The latest e

completion date may be extended by the NRC for " good cause."

10CFR50.55)

(42 USC, 2235; 3.1.2 License Extensions It has been common for NRC licensees to seek construction permit extend latest completion dates.

Such amendments are usually granted amendments to routinely.

" Good cause" for such amendments can be demonstrated beyond the licensee's control such as labor difficulties c ors requirements, and adverse economic conditions.

, changing regulatory 3.1.3 WNP-4/5 License Status A request to extend the latest completion date on;the WNP 4 pe 1987, was submitted recently to the NRC.

Under NRC Regulations, the rmit to June 1, construction permit will remain in effect pending NRC action on th (10CFR2.109).

The latest completion date specified in the WNP-5 permit e request July 1,i986.

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3;1.4 WNP-4/5 License Extensions

,While' the NRC Staff has the authority to require licensees to "sh I

permits should not be modified, suspended-or revoked in view of significant j

-new information (see 10CFR2.202), the issuance of-a "show 'cause" o because construction on WNP-4 'and WNP-5 isinterrupted is considered to be

unlikely, particularly in view of'the state of completion-of the projects and.

the -likelihood of eventual resumption of construction and project completion. -

Based. on precedents where other utilities ' have deferred construction Duke Power deferral of Cherokee Unit 1, 2 and 3), it 'is expected that the NRC Staff will view the information -regarding a deferral of construction on WNP-4 and WNP-5_'primarily as it relates to their own resource needs and review priorities.

3.1.5 NRC Overview of Delay c

The NRC Inspection and Enforcement staff will have a most direct intere the plans for, and activities associated with, preservation of the facility records and hardware.

It will be important to consider their concerns when formulating our plans.for deferral of WNP-4 and WNP,-5 construction them closely informed of our activities.

1 3.1.6

. Site Certification Agreements i

The licenses" issued by the Washington Energy Facility Site Evaluation i

I Council (EFSEC), known as the Site Certification. Agreements, do no dates for completion of construction.

Consequently, many of the points and 1

'activiti es discussed above vis-a-vis the NRC are not applicable.

However, in early October, EFSEC did express an interest in a full briefing on th i

of the' decision to defer WNP-4 and WNP-5 with an eye to possibly i

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.g October 14, 1981 various permits and licenses issued by the State or to changing EFSEC-required programs and activities.

Changes anticipated ~ would make permits and I'

activities mo're reflective of reduced construction / operation activities and of the possibly extended construction period.

During October,, Supply System staff will be analyzing the pertinent permits and programs to form the basis for Supply System proposals for appropriate changes or reductions.

t 3.2 ACTION PLAN FOR PRESERVING THE WNP-4/5 LICENSES 3.2.1 Notifications i

Informal notification of NRC management and staff was accomplished almost immediately upon completion of the Governors' Panel Report.

Mr.

R.H.

Engelken, Director of NRC Inspection & Enforcement, Region V, was' info Mr.~' R.L.

Ferguson, Supply System Managing Ofrector, in a meeting on September 17, 1981.

Mr.

Harold

Denton, Director of Kuclear Reactor Regulations (NRR), was informed by Dr. G.D. Bouchey, Deputy Director of S

& Secur ity, in a meeting on Septembe* 24, 1981.

In addition, various NRC inspectors have been informed of the situation at WNP-4 and WNP-S on a continuous basis.

Formal notification of both the NRC Staff (Bethesda) and Inspection and Enforcement (Region V) of the Supply System action regarding deferral of WNP and WNP-5 construction was accomplished by a letter to the Director, NRR copy distribution to the Director of Inspection and Enforcement, Region V.

No other formal submittals are considered necessary' at this time to maintain th WNP-4 and WNP-5 construction permits or to satisfy normal practices o the NRC informed of significant activities.

The EFSEC was notified of the construction October 5, 1981.

interruption by a letter dated 1r FINAL DRAFT-WORKING DOCUMENT i

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3.2.2 Licensing Applications 4

h Our current plan is to file applications for operatin December 1981 and for WNP-3/5 in April 1982 g licenses for WNP-1/4 in In reviewing these plans in view of the WNP 4/5 deferral, it is concluded that the applications in both cases should be submitted as origi operating

license,

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approach conserves manpower resources for both the Supply S nally planned.

This results in no added cost for the WNP-4/5 Projects ystem and the NRC, for public hearing on Projects 4 and 5 if const, and minimizes the nec plants are completed.

ruction is resumed and the j

There is no filing fee for the operating action would represent no additional cost to WNP-4/5 licenses ap A final consideration is whether or not to request N

a latest completion date on a further extension of the V.

WNP-5 construction permit. the pending WNP-4 construction permit or o latest completion date of June 1,1987The pending WNP-4 ame n the a

should be allowed to process the pending application as s construction delay period, the need for another exte u m tted.

After the I

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completion date will oe re-evaluated.

Similarly, necessary at this time to extend the latest completi no action is considered matter will be addressed at a later date.

on date for WNP-5 This 3.2.3 Required Action A list of specific required actions is given in S ection 9.2.

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October 14, 1981

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4.0 ENGINEERING CONSIDERATIONS Engineering guidance on activities to be conducted for the preservation of the assets in WNP-4/5 is provided in this section.

Final determinations are to be made by the Program Directors in consultation with the Iechnical Director.

Engineering planning and considerations for entering an extended construction delay range from complete preservation and completion of all necessary '.

functions to simply walking off and leaving the work as is.

The degree of preservation work is primarily a function of economics at the time of implementation.

As a minimum, safety, code or quality requirements will in themselves demand a certain level of preservation activity.

Using economics as a basis, four classes of equipment / materials / structures can be defined:

o that which will be preserved at all costs o that which will receive minimal attention and is assumed at a risk to be suitable for service later o that which can be sold or used elsewhere

.c that which is simply left as is.

The equipment / structure / materials that are encompassed by e6ch of these classes can only be determined by an item by item evaluation by technically knowledgeable persons, with final decisions made by the Directors responsible for managing the extended construction delay within a defined funding level.

4.1 EQUIPMENT TO BE PRESERVED AT ALL COSTS For that equipment / material / structures required to be preserved, the following considerations must be evaluated:

o Preservation and storage should be in accordance with manufacturer's,

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recommendations, applicable design requirements and/or ANSI N45.2.2.

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October 14, 1981

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l Complete surveillance and record keeping functions must be maintained 1

o throughout the mothballing period.

The condition of the equipment must periodically be verified and all protective measures maintained intact.

All records including drawings, purchasing / manufacturing documents, code o

data reports or partial code data reports, qualification documentation, construction deficiency reports and any other applicable documents must *.

be completed to the extent possible and must be prope ly filed with the responsible party.

Constructiun drawing revisions, completed engineering directives and an o

accurate status record of work completed must be identified and filed with the responsible party.

o Concrete coating systems that are partially installed should be considered for completion.

o Unit 5 exposed rebar and structural steel which must be preserved should be sandblasted and coated with two coats of zinc-rich paint. Loose reba'r should be stored in laydown.irea under cover.

Unit 4 exposed rebar and structural steel should be lef t as is with sandblasting prior to usage, if required.

If more economic than sandblasting and coating, concrete encasement should be completed.

4.2 MINIMUNATTENTIONWITHRISK For equipment /materf al/ structures determined to require minimum attention, the following considerations must be evaluated:

o Preservation and storage should be in accordance with manufacturer's recommendations, applicable design requirements, and/or ANSI N4 5.2.2,.

However, these requirements may be modified based on the degree of exposure for a particular piece of ' equipment.

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Minimal surveillance should be established to assure protective measures o

remain adequate, i.e., heaters operable, covers intact, etc.

o -All records, including drawings, purchasing / manufacturing., documents, code data reports or partial code data reports, qualification documentation and any other applicable documents must be completed to the extent possible and filed with the responsible party.

o Construction drawings, revisions and completed engineering directives should be identified and filed with the responsible party when practical.

4.3 ALTERNATE USAGE When cost effective, an attempt should be made to sell, trade or use the excess material / equipment in accordance with appropriate business practices.

Engineering should identify those items which may be disposed of.

4.4 LEFT AS IS Those items identified as more costly to maintain for the mothballing period than to replace should receive no attention.

Those items that cannot be used elsewhere and have a specified shelf-life of insufficient length to warrant preservation, should receive no attention.

Alternatively, items in this category might be sold as scrap.

4.5 ECONOMIC CONSIDERATION Preservation of certain specialty, nonsafety-related items should be given close consideration.

Examples of high-dollar specialty items are the turbine and generator.

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.f October 14, 1981 4.6 REQUIRED ACTION

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N The Program Directors, in consultation with the Technical Director,. shall j

' define all equipment / structures / materials to be preserved gjven the economi

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considerations discussed in this plan.

These items are to be identified by F

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' October 23 so that specific connercial direction may be given to appropriate construction contractors and equipment vendors.

s Nonconformances relating to hardware, structures, and documentation should be dispositioned and verified.

(If nonconformances can be closed out ' at the contractors expense, they should be closed out.)

At a minimum, unresolved I

nonconformances should be recorded and their status noted for future a 9

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,4 5.0 QUALITY CONSIDERATIONS f

Planning fo'r the WNP-4/5 extended construction delay must Assurance program considerations that are necessary to preserve permits and to protect plant equipment and facilities so as not t and resumption of construction after the delay.

o preclude a l

5.1 REGULATORY REQUIREMENTS s

The regulatory requirements that must be met to preserve Projects 4 and 5 are given in the following subsections.

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5.1.1 Quality Assurance Program The Design a7d Construction Quality Assurance Program must b modified as necessary to cover the extended construction delay e continued and 5.1.2 Preservation and Storage Recuirements a

As discussed in Section 4 Engineering Considerations in stora:e should be maintained in accordance with manufacturer's

, equipment received and recomendations and/or applicable design requirements and or approved alternatives.

Implementation of s

Quality Assurance through site surveillances.the preventiv y

5.1.3 Procedures / Instructions Surveillance procedures shall be required to verify that th materials, components and structures (including partially completed structures) will 'be adequately preserved during the period 1

construction.

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October 14, 1981 5.1.4 Records Documentation for work performed, including maintenance and qualification records, must be reviewed, accepted, maintained, and stored in a permanent record storage facility to which the Supply System has assured access.

The status of construction _ tests and inspections performed prior to sJspension'.

of work must also be documented, reviewed and stored in a permanent records facility accessible by the Owner.

5.1.5 American Society of Mechanical Engineers (ASME)

Contrar. tors who have performed but not completed ASME Code work should prepare a partial data report and have it signed by their Authorized Nuclear Inspector.

The report should describe exactly what work has been performed.

Also, all quality assurance documentation should be turned over for review and acceptance prior to contractor demobilization.

Preservation and storage requirements should be established and implemented for ASME material being stored.

Also, materials / items being stored should be well identified with identification tags that will withstand the environmental conditions where placed.

5.2 REQUIRED ACTION s

The WNP-4/5 Program Directors are responsible for developing the specific implementation plan to meet these requirements.

These plans are to be defined, documented and a copy provided to Corporate Quality Assurance by October 30, 1981, in order to meet the commitment to brief the NRC on November 18, 1981.

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October 14, 1981

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6.0 DOCUMENTATION AND RECORDS This section describes the requirements for records and documents needed to preserve the assets of WNP-4/5.

Records / documentation are a necessary part of the total construction effort.

Insurance of proper documentation must be accomplished at minimum cost.

6.1 PRESENT STATUS OF 00CUMENTATION--WNP-4 The status of records for WNP-4 is as follows:

o Engineering / Design records are in UE & C custody.

QA Class I construction records are in Bechtel and contracter custody, o

ASME Division 2 construction records are in UE & C and contractor custody, o

Quality Class II and G construction records are in contractor custody.

o o QA Class I equipment vendor records are in Bechtel and prepur:hased equipment contractor custody, f

Class II and G equipment vendor records are in Bechtel or prepurchased o

equipment contractor custody.

o Supply System contractors records are in ~ Supply System custody (fuel racks,.securitysystem,spareparts, simulator,etc.).

Supply System-generated records are in Supply System custody.

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October 14, 1981 4

6.2 PRESENT STATUS OF DOCUMENTATION--WNP-5 The status of the records for WNP-5 is as follows:

Engineering / Design records are in Ebasco custody.

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QA Class I construction records are in Ebasco and contractor custody.

o Class II and G construction records are in contractor custody.

o o QA Class I equipment vendor records are in Ebasco and prepurchased equipment contractor custody.

Class II and G equipment vendor records are in contractor custody.

o Supply System contractors' records are in Supply System custody (fuel o

racks, security system, simulator, spare parts, etc.).

Supply System-generated records are in Supply System custody.

o 6.3 RECORDS REQUIREMENTS In order to preserve the assets of the projects, all records must be retained as described in the following subsections.

6.3.1 Architect / Engineer and Construction Managsr The AE and/or CM shall retain all quality records currently in his custody, and should obtain custody of those quality records in the custody of the contractors.

The guiding philosophy shall be that the AE or CM have custody of the records rather than the contractor.

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-6.3.2 Supply System i

The Supply System should retain all quality records-currently in our custo I

for those' contracts administered within the Supply System (e.g.,-' fuel racks,

security system, etc.).

In' addition, the Supply System should-obtain custody e

of-those quality records that pertain ; solely to.WNP-4/5 for contracts administered by the Supply System.

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6.3.3 Contractors

-As discussed above, most contractors should present their records to the AE or j.

CM as determined by the Program Director.

However,,for selected contractors (for example, the NSSS contractor) where the contractor has not yet turned

'over quality records to the AE/CM or the Supply System, the Program Director may elect to leave those records in the custody of the contractor.

In this case, the contractor shall provide a list of those records required to support-o his work 'and shall describe how and where the records will be F

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The Supply System will verify the adequacy of those records by audit / surveillance.

6.3.4 All Other Records All other records not currently in the possession 'of ' the AE/CM/ Supply 5

that can be obtained at no additional cost should be obtained.

Other records should be obtained only for components that are not accessible : due to construction (e.g., embeded piping, underground piping or electrical work, etc.).

In this case, marked-up drawings and records are adequate.

6.4 RECORDS GENERATED DURING CONSTRUCTION DELAY i

. Records generated during the extended construction delay should be re I

- follows:

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Preventive maintenance records shall o

i be retained by the organization '

responsible for the maintenance.

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4 Records for equipment received during the construction delay should be o

g-retained by the CM organization.

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4-1 6.5 REQUIRED ACTION A list of specific actions required is given in Section 9.2 F

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,-nns,-,v-<,-v

October 27, 1981 7.0 COMMERCIAL ACTIONS

.e i

7 7.1 GENERAL

)

The guidance' and requirements specified in this section are necessary to ensure proper overall planning, support budget formulation and cash flow D

forecasting and control. The total effort will require some time to complete.

However, it is emphasized that the 4/5 Program Directors and the Director of Business Programs are to implement immediately those contractual actions that reduce the continuing commitment of funds to a minimum.

Attention should be given to the largest dollar irrpacts.

7.2 SPECIFIC ACTIONS

!i 7.2.1 Prepurchase The' Projects are to suspend all WNP-4/5 work on all contracts except for those contracts where the Project is reasonably certain that such suspension will result in greater near-term costs than continuance of work.

t The WNP-4/5 Program Directors and Director of Business Programs shall review all contracts and develop their initial plan for resolving each contract by October 28, 1981.

A copy of this plan will be provided to the task force.

Data shall reflect the following:

o Priority listing of contracts based on estimate of potential coau.

Immediate evaluations are to be conducted on large dollar-value exposure contracts.

23 -

FINAL DRAFT-WORKING DOCUMENT

Octob;r 14, 1981

.z o Intended Action--

r a.

Suspension of WNP-4/5 work b.

Termination of WNP-4/5 work c.

Partial suspension of WNP-4/5 work d.

Continue work to completion o Consideration of disposing of equipment, material on hand or raw materials in vendors' shops.

Such disposal must recognize existing bond covenants; additional guidance on this will be provided.

Minimization of impact on WNP-1/3 as a result of the WNP-4/5 actions.

o Consideration of engineering quality and documentation requirements.

o Estimated cost / cash flows for WNP-4/5 by specific contract for October, o

November and December 1981.

o Estimate of cost / cash impact on WNP-1/3 as a result of the WNP-4/5 actions recommended.

Cost / cash impact to be followed by contract for October, November and December 1981.

The Program Directors and Director of Business Programs shall ~ prepare individual contract negotiation plans as required to support their comercial action plan.

Based on these negotiation plans, the projected cost / cash flow should be reviewed and adjusted.

An overall negotiation schedule should also be prepared, based on the priorities established abcve, by November 13, 1981.

Negotiations should begin in accordance with this schedule.

Upon completion of individual negotiations, the cost / cash flow projects should be adjusted, if necessary, and the task force should be advised of any changes.

Necessary contractual documents should be executed in accordance with established comercial procedures.

O 24 i

FINAL DRAFT-WORKING DOCUMENT E

y g,

..--,.,,,,---,,y,.,--......,,,------.,---.--,,-,----nn,-,

--n-----,-

-r-~-

October 14, 1981 4

7.2.2 Construction The action plans for construction are the same as for prepurchase, recognizing that some of the actions have already taken place.

7.2.3 Headquarters Contracting Activities Service and prepurchase contracts that support, or are funded by WNP-4/5, and are managed by Headquarters will be given the same scrutiny and reports provided thereon as in the case of prepurchase contracts.

This will be accomplished by the Director of Business Programs who will coordinate actions with the others for whom the contracting services are being provided.

7.3 NUCLEAR FUEL The nuclear fuel contracts are under the technical control of the Technical Director.

The following actions are to be taken.

7.3.1 NSSS/ Fuel Initial core fuel is to be handled in the same manner as the NSSS portion of the contract.

7.3.2 Gardinier The contract with Gardinier is to be terminated.

Termination costs are to be i

l

.appropr ate y allocated between WNP-1, 4 and 5.

7.3.3 Western Nuclear Current plans are to purchase contractual connitments of uranium under the contract and immediately resell at the then-current market price.

e O

25 FINAL DRAFT-WORKING DOCUMENT

'L--

rq October 14, 193; 7.3 4

_ Department of Energy Separative work is currently scheduled to be deli for WNP-5 in September 1982.

vered to the Supply System services to other utilities are to be continued.The Supp 7.3.5 Kerr-McGee UF, Conversion Contract t

j This contract involves conversion of UF supplied by Gardinier to hF

  • Termination of the Gardinier contract eliminates th 4

6 ano it is therefore to be terminated.

e need for this contract 7.3.6 Kerr-McGeeUgConversionContract i

No cash flow Therefore, no action is to be taken.is expected to be i A

e 2-year period.

7.3.7 Reporting Responsibilities.

The Technical Director will continue close coo di Managing Director and will advise the task force nation of actions w r

will provide reports as required.

of any changes to plans and 7.4 ASSUMPTIONS For purposes of negotiations, the period of c o

on July 1, 1983.

onstruction delay will end Courses of action (i.e., termination, suspension o

continuance of the work) taken on specific contracts wil goals provided in Deputy Managing Director's memo of O e based on c o er 2, 1981.

26' -

s FINAL DRAFT-WORXING DOCUMENT I

8 0

C

r October 14, i

o For purposes of cost / cash flows for construction contracts, the cost-sharing formulas provided to the Projects during the week ending o

October 2, 1981, will be utilized.

7.5 REQUIRED ACTION Specific required actions are given in Section 9.2.

27 FINAL. DRAFT-WOR"ING DOCUMENT 9

9

r October 14, 1981 1

8.0 PROGRAMMATIC ACTIONS a

The Supply System is committed to becoming an efficient organization designed to build three nuclear plants as opposed to five.

This will require a number of programmatic actions including streamlining organizations and improving the overall manual-to-nonmanual ratios on the projects.

Several management '.

initiatives have been implemented in recent weeks.

The Program Directors are also to continue to pursue similar actions with respect to architect engineers, the construction managers and the construction contractors.

Thesc types of management initiatives must be implemented to minimize the impact of the extended construction delay on Projects 1 and 3.

In the same sense, all nongenerating facilities and other activities conducted by *.he Supply System not directly supporting the construction of Projects I and 3 should be evaluated' for deferral, suspension, or elimination.

Examples of such activities would be further work on improvement of roads and interchanges, office

space, temporary construction facilities, temporary construction utilities, etc.

The appropriate Ofrectors are to provide a brief listing of their intended further programmatic actions and timetables to the task force by October 30.

I t

e 2t f

FINAL DRAFT-WORKING DOCUMENT i

e k

o October 14, 1981 9.0 REQUIRED ACTIONS 9.1 ACTIONS TAKEN TO DATE

{

'j The following actions have alre'ady been necessary to implement the construction delay: initiated and will be Initiated reductions in nonmanual workforce.

o o Provided initial guidance on comercial actions.

was given on October 7, 1981.

Subsequent direction Developed necessary mid-year budget guidance to facilitate r o

FY82 budget.

o Initiated necessary early planning activities for the extended construction delay.

O Initiated actions to reduce construction activitie minimum.

!ssued temporary suspension notices to vendors of pre o

. detailed commercial guidance is to be developed.

o Initated a review of all service agreements to evaluate possible reallocation of shared costs or imediate suspension of the co reallocation cannot be accomplished and there are nu adve quality, licensing or preservation of assets.

n 9.2 PLANNED ACTIONS A consolidated list of actions is contained in Table 3 The due dates and' responsibleindividual(s)arealsoindicated.

29 '

[

FINAL DRAFT WORXING DOCUMENT a

o 0 0

November 24, 1981 TABLE 3.

WNP-4/5 MOTHBALL REQUIRED ACTIONS & REPORTING h-

- J FINANCE REQUIREMENTS Required Report Item Responsibility Date Issue general guidance Task Force 10/14/81 WNP-4/5 cash flow thru-Program Directors 10/31/81 Dec. 31, 1981 WNP-1/4, 3/5, Hqtrs.

Estimates at ccmpletion &

Program Directors 12/14/81 cash flows complete WNP-1/4, 3/5, Hqtrs.

(WMP-1, 2 and 3)

WNP-4/5 cash flow thru 6/30/83 Board action of estimates Participants / Board 1/22/82 at completion and cash flow (all 5 projects) e COMMERICAL REQUIREMENTS

\\,/

Develop recommended actions Program Ofrectors 10'28/81

/

by contract WNP-1/4n /5, Hatrs.

3 Develop estimated cost / cash Program Directors 10/30/81 flows by contract thru WNP-1/4, 3/5, Hqtrs.

Dec., 1981

~

Develop estimated cost / cash Program Directors 11/16/81

' Impact on WNP-1/3 with WNP-1/4, 3/5s Hqtrs.

' Breakdown by contract Based on contractual action Program 01' rectors 11/9/81 selected, iss6e additional Ul:P-1/4, 3/5, Hqtrs.

i direction to the con-tractors Prepare overall negotiations Program Directors 11/13/81 schedule WNP-1/4, 3/5,,Hqtrs.

s

\\

30 I

N n

1-P' s

.j.

t I

October 27, 1981 (Continued)

COMMERCIAL REQUIREMENTS-d Report Item-Required Responsibility Gate.

Complete all negotiation plans Program Directors 1/31/82 WNP-1/4, 3/5, Hqtrs.

Prepare &' execute contract modifications Program Directors WNP-1/4, 3/5, Hqtrs As required to main-tain integrity of the l

financial baseline LICENSING REQUIREMENTS i

Informal notification of NRC managementent Licensing Complete Notification letter to EFSEC Licensing Complete 9

Notification letter to NRR &

k NRC, Region V Licensing Complete Assessment of need for modi-fication to EFSEC permits Licensing 10/30/81 Briefing of NRC, Region V, on plans for WNP-4/5 Con-Quality Assurance 11/18/81 struction deferral Briefing of EFSEC on WNP-4/5 construction deferral Licensing 11/15/81 s

Submittal of WNP-l/4 OL application Licensing 12/81 Submittal of WNP-3/5 OL application Licensing 4/82 31 '.

FINAL DRAFT-WORKING DOCUMENT htj

. r.

October 27, 1981 (Continued)

ENGINEERING REQUIREMENTS Required Report Item Responsibility Date Define all equipment / structures / Program Directors 12/14/81 materials to be preserved WNP-1/4, 3/5, Hqtrs.

QUALITY ASSURANCE REQUIREMENTS Develop specific actions with Program Directors 10/30/81 an implementation plan WNP-1/4, 3/5, Hqtrs, to meet the referenced requirements DOCUMENTATION AND RECORDS REQUIREMENTS Identify all records-related Program Directors, As needed for actions which may have WNP-1/4, 3/5, Hqtrs.

negotiations commercial impact Identify location & status of Program Directors As needed for all relevant records WNP-1/4, 3/5, Hqtrs, negotiations PROGRAMMATIC REQUIREMENTS Evaluate & identify all non-Program Directors 10/30/81 generating facilities &

WNP-1/4, 3/5, Hqtrs, other activities to be deferred, sus-pended or eleminated.

4 32 FINAL DRAFT-WORKING DOCUMENT 5

..w-

e, October-14, 1981 s

10.0 MANAGEMENT OF THE EXTENDED CONSTRUCTION DELAY The principles for manageme'nt of the construction delay are presented ite Section 1.5 and will be based primarily on implementation by.line management with assistance and. support by the task force.

10.1 LINE MANAGEMENT RESPONSIBILITIES s

i Management of the extended construction ' delay is the direct responsibility of the line managers of the. Supply SysteEi.

Each Director will be responsible for accompli,hing those activities within his area of responsibility on the N

defined schedule and within budget.

The integrity of the overall financial baseline defined in Nection 2.0 must be maintained and is the collective responsibility o,f every director.

10.2 TASK FORCE RESPONSIBILITIES The tEsk force is to provide assistance to line management in developing and simplementing actions and is to provide a 'consolidateo performance evaluation.

t The task force will report to the Deputy Managing Director on all matters related to the extended construction delay.

The functions of the task force will be as follows:

1 s

3

\\

develop and publish a consolidated Monthly Performance Report o

5 analyze impact of external influences on th~e ability to perform against o

the defined baseline

~

o identify any requirements or additional initiatives for executing the delay that may have been overlocked assist the Managing Direcior/ Deputy in. review of program actions against o

the plan 33' FINAL DRAFT-WORKING DOCUMENT e

October 14,' 1981 4

assist line management where' and when necessary in the implementation of

.o the extended construction delay review the experience of other nuclear utilities in extended delays on o

their plants o -review Supply System performance on accomplishing require'd tasks o review total expenditures versus baseline and funds availability to identify possible variance trends or. overruns i

o identify and analyze potential areas for further savings o update this plan as necessa y.

i 10.3 REPORTING GUIDELINES 10.3.1 Rolling Cash Flow Reports The Supply System is using a 12-week rolling cash flow forecast and variance reporting system to monitor cash flow during the construction delay.

The 12-week rolling cash flow report will replace the current 8-week rolling cash flow report beginning November 2, 1981.

The following information is to be provided weekly through June 30, 1983:

1 1

o updated 12-week forecast 4

o explanations and reasons for variance of actuals explanations and reasons of forecast revisions for the common periods for o

both past forecast and the approved budget' baseline; these variance and J

e n

34 FINAL DRAFT-WORKING DOCUMENT

.a

October 14, 1981 revision explanations will address, at, the minimum, whether the reason t

for the variances or revisions were due to a bad estimate, incorrect timing (if the variance is 'due to incorrect timing, a revised estimate of when the payment will occur and why should be included), o'r an omission.

This information is to be submitted each Monday by 4:00 p.m.

beginning November 2,1981, to J. J. Read, Manager, Project Budgets.

Project Budgets will consolidate all data, provide sumary analysis and report results by the following day.

A sample of an 8-week forecast is given in Table 4 and a sample of a construction fund cash summary report is shown in Table 5.

10.3.3 Responsib'ilities Required forecast inputs and related responsibilities are as follows:

Item Input Responsibility Construction Contracts DR Cseh/RN Williams Equipment Contraces DR Cseh/RN Williams Architect-Engineer DR Cseh/RN Williams Construction Management DR Cseh/RN Williams Owners A&G SW Stave Owners Construction Cost MJ Simmons Nuclear Fuel WG Jolly i

Reinvestment Income KJ Kreamer i

4 J

l 35' FINAL DRAFT-WORKING DOCUMENT i

r,

,,y

'.v-yw,-,

r,.,

w---er

--- -,, - - - -e wv

-e -v w w w - -

mt~v---

-v--w- * * -* - -- - - -

TAllLE 4.

WASil1NGT0ri PUBLIC POWER SUPPLY SYS1 Ell 10-14 81 8-UEEK ROLLING CA511 FLOW FORECAsi fluCtiAR PROJECTS N05. 4 Afio 5

($ in Thousands)

SEPIi10ER OC10 BEN

.,_, r40VEMBER WE 9/13 *WE 9/20

  • WE 9/27
  • WE 10/4 WE 10/11 WE 10/lu WE 10/25 WE 11/1 WE 11/8 util/15 WE 11/22 WE 11/29 Begleming Balance

$60,841

$51,044

$43,480 129,364

$25,035

$18,713

.518,517

$10,002

$ 1,661

$(?,465) 5 (4,770) $(13,559)

Recel

~Tue,p_t_s E

l Tr nsfer Intere,st Transfer IG7 122 477 78 55 5,426 37 IU 1,957 E

Private (bner

__ _ 89 4 288 671 209 342 422 457 849 367 178 425 330 N

Total Receipts 1,1,061

$._ _ 410

$ 1,148 287 397

$ 5,848 494_

[ 867 5 2,324 178 5_

425 330 Disburseawnts **

f WreP-4 f5 Construction

$ 842

$ 3,522

$ 2,207

$ 1,377 923 966 500 500 600 i' 500 5 1,000

$ 1,000

  1. M Equipment 421 154 2,124 265 371 853 225 210 300 200 200 200
  • 2 AE/CM 1,108 2,470 960 2,713 880 2.660

' Owners A&G & Constr.

1,000 83 1,010 1,040 1,000 1,000.

1.100 Nuclear Fuel o

h Financing 25 i

Total WNP-4

$ 3,396 L3,759

$ 7,811

$ 1,642

$ 3,294

$ 1,819 5 4,438 710

$ 2,780 700 5 4.960

$ 1,200 h

WNP-5 7 instruction

$ 3,806

$ 3,740

$ 4.184 365

$ 964

$ 3,049

$ 2.469

$ 1,439

$ 1,880

$ 1,460 682 5 1,800 C

Equipsernt 2,588 420 1,407 239 1,212 1.099 1,266 1,706 913 98

~472 1.100 AE/CM 222 54 473 2,361 225 60 36 5,066 75 225 2.300 400 800 287

- 800 800 Owners A84 & Constr.

818 1,389 9

800 1

Nuclear feel 3

1 224 17 2

25 i

Financing Total WNP-$

[7.462

$ 4,215

$ 7.453

$ 2.974 5 3,425

$ 4,225 5 4,571

$ 8.498

$ 3.670

$i,783

$ 4,254

$ 3,300 1

a Total Distnersements

$10,858

$ 7.974

}15.264

$ 4.616

$ 6,719

$ 6.044

$ 9,009

$ 9,208

$ 6.450

$ 2,483

$ 9,214

$ 4,500 Inding Balance

$51,044

$4 3,480

$29,364

$25,035

$18,713

.$18,517

$10,002

$ 1,661

$(2.4651 $(4,770) $11119) 1117.729)

  • Actuals

" Based on existing cost sharing guidelines arid methods, O

TABLE 5.

. x.. L

_ a 4

WASHINGTON PUBLIC POWER SUPPLY SYSTEM CONSTRUCTION FUND CASH SUl41ARY O

HUCLEAR PROJECTS HOS. 4 AND 5 10-lk-81 WEEK ENDING 10/4/81

($ in Thousands) t ACTUAL FORECAST VARIANCE Beginning Balance _

VARIANCE EXPLANATION

$29,364 R_eceipts

_$29,364 interest Income Private Owner 78 75 3

209 E

Total Receipts 295 (86) 287__

370_

$ (83)

Disbursements a

g WNP-4 a

Construction 4

Equipment

$ 1,377

$ 1,377 L

AE/Cil 265 267 Ri" Owners A&G & Constr.

(2) l Nuclear Fuel Financing a

i o

.g Tota'l WNP-4

$ 1 642 h

WNP-S

_$ 1 644

$ (2)

Construction Equipment 365 348

$ 17 AE/CH

'239 s

239 Owners A&G A Constr.

2,361 2,361 Huclear Fuel 9

Financing 9

Total WNP-5

$ 2,974

$_2,948

$ 26 Total Disbursements

_$ 4,616 Ending Balance

_$ 4,592

_$ 24

$25,035_

$25,142

$(107)

L i

t i

t 4

e e

./.

APPENDIX A i,

BOARD OF DIRECTORS' RESOLUTION NO. 1187 AND RESOLUTION NO. 1198 h

6 i

2 3

BOARD OF DIRECTORS t'

4 RESOLUTION HO.

1198 3

a 5

j A RESOLUTION DELEGATING CERTAIN RESPONSIBILITY AND AUT!!ORITY TO 6

~

T!!E MANAGING DIRECTOR MITII RESPECT TO AN_ EXTENDED CONSTRUCTION DELAY OF 7

WASIIING'.ON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECTS NOS. 4 AND 5 8

9 The Supply System, the Participants in Nuclear Projects 39 Nos. 4 and 5, the co-owner of Nuclear Project No.

5, certain investor-owned utilities and certain industrial custom gg Donneville Power Administration have agreed upon the basic 12 l

13 el m nts of a plan for an extended construction delay for 14 Nuclear Projects Nos. 4 and 5; and It.is necessary and desirable that the extended con-J 15 16 struction delay be implemented in a timely and efficient 17 manner; and The Board of Directors is authorized by statute to 18 delegate to the Managing Director such authority as the 19 t'

B ard shall determine; NOW, 20 T!!EREFORE,

i i I'

21 IT IS RESOLVED:

22 1.

The Managinq Director is authorized and directed to implement an extended construction delay of Nuclear 23 24 Projects Nos.

t i 4 and 5 until June 30, 1983 for the 1

25 purp s of preserving the Projects as a potential 26 regional en rgy r source at i,

the least possible cost, s

27 is 23 i

cg p

a

.h j. i.

1 g.;,,

(a)

The authority-to exercise all contractual' 2

1 rights f

of.the Supply System pursuant to contracts with 3'-

construction contractors,' suppliers, archit

'l L

.f.

4 ects and construction managers, 5

including without limitation the authority to execute chang 6

es deleting work and to terminate contract 1

7 s-within provisions, and a

8 (b)

The authority to~ negotiate and execute 9

changes in any and all such contracts.

10 2.

The Managing Director is authorized a d di I

11 n

to develop, rected together with other interested parties 12 and groups,. including the Participants in P 13 rojects Nos.

1, 3, 4 and 5, the co-owners of Projects Nos.

34 and 5, 3

Bonneville Power Administrationthe Partici-15 pdnts ' Committ :e, the Participants' Review Board, the 16 owners' Committee and the industrial custo 17 of

{

B nneville Power Administration

, an efficient adminis-18 trative procedure..to obtain such co ncurrence as may be 39 necessary or advisable in actions which h l

i 20 1

e proposes to take for the purpose of implementing the extended 21 construction delay of Nuclear. Projects N

.l

'}

bL.

22 os. 4 and 5.

3.

This authorization and delegation of t

p 1

23 will be subject to contractual arra authority e-ngements to be

'?

24>

entered into pursuant to the Memorandum of U

}

nder-

)

25 standing dated October 14, 1981 providing for over-

,}

sight by the participants, direct ser i 26 udk v ce industries

~

and investor-owned utilities.

h 23 29 1

i

,n

\\\\

\\

I.

t e

~..,. - -

, - -,, - + - -,,. <,

1 4.

Policy dir ction in the implementation of this e.

0 2

resolution shall be transferred to the Executive 3

Board upon its formation in accordance with Chapter 4

3, Laws of 1981 (First Extraordinary Session).

5-5.

The Managing Director is authorized to redelegate 6

his authority to his subordinates to the extent that 7

he deems advisable.

g ADOPTED by the Board of Directors of Washington Public 9

Power Supply System this 23rd day of October, 1981.

W J-0 1

President 12 ATTEST:

13 14 l

d-

)Bere by 15 16 17 18 APPROVED AS TO FORM 19 AND LEGALITY:

20 g/

21 6

[

Counsel /

22 23 24 25 26 27

~

28 29 30

. % [, 1 BOARD OF DIRECTORS.

1 2'

RESOLUT10ft fl0. 1187 s

A RESOLUTI0il DIRECTING THE MANAGING DIRECTOR TO IMPLEMENT THE RECOMMENDATIONS OF THE GOVERNORS' a

PANEL AND THE PARTICIPAliTS' COMMITTEE AND

~

FURTHER DIRECTIflG IMPLEMENTATION OF THE STEPS s

TO PRESERVE THE ASSETS OF WASINGTON PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECTS 4 AND'S 6

7 The llanaging Director reports that on September 18, 1981 the pan'el a

created by the Governors of the states of Washington and Oregon to study 9

_ the economic consequences to the region of the alternatives available 10 for Nuclear Projects Nos. 4 and 5 (the Projects) recommended that,the Projects should not be terminated at this time but should by keot in a' preservation mode for two to two and one-half years to allow Bonneville 12 13 and the Regional Council to determine whether the Projects are needed in the region. The panel further recommended that: (i) the public and 15 private utilities, including the Participants, together with the direct 16 service industrial customer (DSI's), should equitably share.in the 17 regional effort to preserve the Projects, which was estimated to require -

8 direct costs of approximately $150 million to $180 million and (ii) the 8

Participants should agree to pay 100". of the interest during construction i

20 on the Projects, and 21 The Managing Director further reports that on September 24, 1981 the 22 Participants' Comittee adopted a resolution concurring in the recommend.

23 ations of 'the Governors' Panel and recommending that the Supply System-24 immediately implement the steps required to preserve the assets of the 25 Projects until June 30, 1983 at the least cost possible, and prepare and as propose for approval by the Board of Directors and the Participants' l

27 ~

Committee an amended Construction Budget for Fiscal Years 1982 and 2s 1983 reflecting the same; NOW, THEREFORE, 29 IT IS RESOLVED that the Managing Director shall immediately imp'lement l

30 th'e steps required to preserve the assets of the Project' until June 30, 1983 31

,----n.

,1 -

.at the least cost possible, and prepare and propose for approval by the 2

Board of Directors and Participants' Committee an amended Construction 3

Budget for Fiscal Years 1982 and 1983 reflecting the same.

4 ADOPTED by the Board of Directors of Washington Public Power Supply 5

System this 25th day of September,1981.

6 7

_gg a

President 9

to ATTEST:

'k b

Secretark 13 14 15 16 17 18 19 20 21 22 APPROVED AS TO FORM AND LEGALITY:

23 n

l 24

~

/

_ _ r-n Counsel i

N 27 28 30 31

+

w c

x

't APPENDIX B-WNP-4 AND 5 FY-1982 AND 1983 BASELINE BUDGET AND CASH FLOW PREPARATION CRITERIA PHASE I AND II.

1 3

1 J

l 4

4 1

OCTOBER 8, 1981 i

J~

?-

.i 4

4 i

4 4

j*

l'

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i O

i l

I f

(..

4

..-,n..-,-,-

t e

WNP-4 AND 5 FY-1982 AND 1983 BASELINE BUDGET-AND' CASH FLOW PREPARATION CRITERIA PHASE I AND II-TABLE OF CONTENTS Page 2

l I. INTRODUCTION.

II. OBJECTIVE 1

III. DEFINITIONS-1

'IV. BUDGET SCHEDULE 1

V. DIVISION OF RESPONSIBILITY 2

VI. SCOPE OF BUDGET A.

Prepurchased and Construction Contracts 2

B.

AE, CM and A&G Cost 2

C.

Owner Construction Cost 2

D.

Nuclear Fuel Cost 2

E.

Qualifications and Assumptions 3

VII. SPECIAL CONSIDERATIONS A.

Cost Sharing 3

B.

Contingency 3

C.

Sales Tax 3

D.

Escalation 3

E.

Controlled Information 3

i F.

Summarization 3

G.

Cost Flow and Cash Flow 3

ATTACHMENT 1 - Definitions ATTACHMENT 2 - Responsibilities ATTACHMENT 3 - Format ATTACHMENT 4.

Schedule 1

October 8,1981 Project Budgets l

[. ',

WNP-4 AND 5 FY-1982 AND 1983 BASELINE BUDGET AND CASH FLOW PREPARATION CRITERIA - PHASE I AND II I.

INTRODUCTION This is the corporate criteria for preparation, review and approval of the FY-1982 and 1983 baseline budget for WNP-4 and 5.

The' baseline budget for each of the two nuclear power plant mothballing cost will be prepared in two phases.

Phase I will cover the time frame from July 1, 1981 through December 31, 1981.

Phase II will cover from January 1, 1982 through June 30, 1983.

s This document is the instruction for.both Phase I and Phase II and includes general guidelines for the following major segments of the budget:

o Prepurchased Equipment Contracts e Construction Contracts e Architect-Engineer Services e Construction Management Services e Administrative and General Costs e Owner Construction Cost e Nuclear Fuel Contracts e Reinvestment Income II. OBJECTIVE An accurate assessment of the projects' forecasted cost during the period of July 1,1981 through June 30, 1983. These projected costs will be the baseline budget against which cost will be tracked and monitored in accordance with the " Tracking Plan for Monitoring Mothballing Cost Against Budget Baseline".

It will also be the basis for cash planning to assure funding availability by the participating parties.

III. DEFINITIONS Selected terms used in this instruction are defined in Attachment 1 of this instruction.

IV. BUDGET SCHEDULE The milestone activities associated with the WNP-4 and 5 FY-1982 and 1983 baseline budget and cash flow preparation, review and approval are shown on.

All dates indicated on Attachment 4 must be strictly adhered to.

e

'O

i.?

[

Cribria--P5a~e'lndY-

  • y..'..

s Page 2 j-

- V.

DIVISION OF RESPONSIBILITY d

tion functions are defined on Attachment 2. Respo r na-VI. _ SCOPE OF BUDGET

, format and as a minimum.the l

e n the A.

be identified by contract number, contract d contractor's name.

Cost for each contract as a minimum require-ment shall be identified by the following (selected terms defin inAttachment1):

2 (1)

Baseline Scope (Included in 1982 Budget Baseline)

(a) Work Invoiced j

(b) Work Not Invoiced (c) Existing (Old) Claims (2)

Mothballing Scope (Excluded from 1982 Budget Baseline and a Result of Mothballing)

(a) Maintenance (b) Demobilization (c) Suspension (d)

Termination B.

Budgeted Architect-Engineer, Construction Management ment No.1 to " Policy Statement on Equi

, Administrative Unit WPPSS Projects" dated September n-28, 1981 w n-C.

Owner Construction cost will be identified by contract num item (i.e., spare parts would be the co.' ; of all spare pa t er or and purchase orders), contract description and contractor r contracts each category shall be identified (as a minimum) in the Cost for as Section A above.

ea D.

Nuclear Fuel cost will be identified by contract number description and contractor's name. ' Cost for each contract

, contract identified (as a minimum) by the following:

will be (1) BaselineScope(Includedin1982BaselineBudget)

(2) Mothballing Scope (Excluded from 1982 Baseline Budge a Result of Mothballing)

I f

WNP-4 and 5 FY 1982 and 1983 Baseline Budget and Cash Flow Preparation Criteria - Phase I and II' November 6, 1981 Page 3

.V' E.

Qualifications and Assumptions - All major qualifications or assumptions that apply to the baseline budget are to-be documented.

good basis for future changes to the budget.A sufficient lev Phase II cash (January 198P through June 1983) shall be submitted (as a minimum) in the same detail and in a fonnat similar to Attach the 18-month period.

VII. _SPECIAL CONSIDERATIONS A.

Cost sharing will be based on Amendment No. 'l to the " Policy Statement on Equitable Cost Sharing for Twin-Unit Projects" dated September 28, 1981.

B.

Contingency shall not be considered or provided for in the preparation of the WNP-4 and 5 FY-1982 and 1983 baseline budget a cash flow.

C.

for prepurchased equipment contracts, construc construction cost and nuclear fuel contracts.

V

, owner 5.27. for WNP-4 and 5.3% for WNP-5.

The tax rates are D.

for prepurchased equipment contracts, constru construction cost and nuclear fuel contracts.

, owner shall be calculated in accordance with the "1982 ProjectThe escalation Construction Budget Preparation Criteria - Phase I",

Section VII Subsection E.

E.

The WNP-4 ard 5 FY-1982 and 1983 baseline budget and cash flo shall be summarized by major budget segments (i.e., prepurchas equipmeat contracts, construction contracts, etc.

July 1, 1981 through December and Jenuary) by month from 31, 1981 June 30, 1983 for Phase II.

1, 1982 through F.

Cost flow detail must be developed initially by individual centracts on an incremental cost basis rather than a ca Cost flow details for each contract shall be then co

" cash" basis and reported on Attachment 3.

July 1, 1981 through September Actual cash from 27, 1981 month for each contract scope (baseline scope and mothball s and doesn't require the detail breakdown as identified in Section VI of this instruction.

j The base date for cash flow projections shall be September 27, 1981.

O L

AliALHMENI I y

(Page 1 of 2)

.f'-

DEFINITIONS A.-

BASELINE SCOPE (FY-1982 BASELINE BUDGET) q 1._

Work Invoiced Includes all cost for work completed and invoiced including but not limited to direct manual labor cost, support or distributable manual labor cost, labor special cost, nonmanual labor cost, material cost, construction, equipment usage cost, overhead cost, escalation, sales taxes, etc..for any work, services, equipment or material (that is included in t.he FY-1982 baseline budget scope) that has been invoiced for payment by the Supply System.

2.

Work Not Invoiced Includes all cost for work completed or future work, as defined above in " work invoiced", for services, equipment or material (that is included in the FY-1982 baseline budget scope) that has been or will be performed in the future and that has not been invoiced for payment by the Supply System (i.e., final demobilization of completed contracts).

3.

Old Claims The projected cost settlement of all contractor identified claims and potential claims which have not yet been submitted by contractors (but are included in the FY-1982 baseline budget scope) exclusive of any claims relating to the construction slowdown and/or the subsequent mothballing.

B.

MOTHBALLING SCOPE (NOT INCLUDED IN FY-1982 BASELINE BUDGET) 1.

Maintenance Includes all cost for work associated with securing the in-place commodities, placing material and equipment into storage, monitoring and securing the facilities, maintenance ~and preservation of materials, equipment, facilities, documentation and warranties (that are exclusive of the FY-1982 baseline budget) solely related to the construction slowdown and/or the subsequent mothballing.

2.

Demobilization Includes all cost for work operations associated with moving off the job site upon notification of termination or suspension including dismantling and removal from site of construction equipment, facilities, personnel, and restoration of the site as required.

Demob.-

ilization is defined here as the " Interrupt Demobilization" and not the " Bid Demobilization" (that is included in the FY-1982 baseline budget).

Remobilization is to be considered after June 30, 1983.

- i' '

(Page2of5)

.1 3.

Suspension of Contract The projected cost settlement of all contractor identified claims and-potential claims resulting from the suspension of work associated with the mothballing (if any).

Cost shall include as a minimum all a

1

. considerations (if any) for nonrecoverable overhead cost, extended overhead cost and other potential claimed cost (not included in the FY-1982 baseline budget) solely as a result of the co'nstruction slowdown s

and/or the subsequent mothballing.

4.

Termination of Contract Includes all projected cost settlements as defined above in " suspension" for contractor identified claims and potential claims resulting from the

" termination of contract" associated with the mothballing (if any).

Termination cost shall also include as a minimum all consideration (if any) for cancellation charges and/or restocking charges for existing orders and other potential claim cost (not included in the FY-1982 baseline budget) which are solely as a result of the construction slowdown and/or the subsequent mothballing.

h a

e i i

.n.,

,,,,,,,,n,

...c,-..,..,.--,,-,n,.

7..

1 ATTACHMENT 2' a

,?.-

WNP-4 AND 5 (P).= Primary Responsibility *.

-1982 AND 1983 BASELINE (I) = Input

'7 PREPARATION RESPONSIBILITIES ())

BUDG i

\\

Major Rudget S'egment WNP-4 WNP-5 i

i Prepurchased Equipment Contracts (P) UE&C Ebasco (I) SS. Business Staff /Bechtel SS Business Staff I

Construction Contracts (P) Bechtel Ebasco (I) SS Business Staff SS Business Staff i

(I) Contractors Contractors Architect-Engineer Services (P) SS Business Staff (2)

SS Business Staff (2)

Construction Manager Services (P) SS Business Staff

'SS Business Staff (2)

Supply System Construction Costs (P) See Note 3 below.

See Note 3 below.

4 Owner's A&G Costs (P) SS Dept. Managers (2)

SS Dept. Managers (2) i Nucidar Fuel (P) SS Fuel Supply Manager SS Fuel Supply Manager Reinvestment Income (P) SS Treasurer SS Treasurer Notes:

(1) This table is only provided to identify budget preparation responsibilities.

Its purpose is not to define approval responsibilities.

(2) In strict accordance with Amendment Nt., 1 to " Policy Statement on Equitable Cost Sharing for Twin-Unit WPPSS Projects".

(3) Responsibilities the same as provided in the "1982 Project Construction Budget Preparation Criteria - Phase II".

ATTACHMENT 3 J

e. t,

a WNP-PHASE I Date:

MOTHBALLING BASELINE BUDGET Sheet of Revision:

AND CASH FLOW FORECAST

. Contract No.

Contractor:

, Contract

Description:

FY-1982 Activities

  • JUL
  • AUG

Baseline Scope

. Work Invoiced

. Work Not Invoiced

.01d C1 aims Total Baseline MothballingScope\\

. Maintenance

. Demobilization

. Suspension

. Termination

,e Total flothballing TOTAL SCOPE

  • Actuals Assumptions:

Budget Approval Sign-offs Contiract Budget Accountability Date

  • Program Director Date O

f 9

.n,.

-,,,,,,,,,, - - +

, -,, ~ -., - -,.. - -,,. -,,,,,

ATTACHMENT 4 s

- e,.,

, QQ L

WNP-4 AND 5 FY-1982 AND 1983 BASELINE BUDGET AND CASH FLOW MILESTONE ACTIVITIES SCHEDULE s

Activities Milestone Dates Issue Draft Corporate Criteria 10/7/81 Issue Final Corporate Criteria 10/14/81 Phase I Budget Submitted to Headquarters 10/31 /81 Phase I Budget Review by Managing Director 11/2/81 i

Phase II Budget Reviewed by Managing Director 12/14/81 e

1 9

e e

i 8

.,,,r-4w 4-..--

,--..-c.,,-

o s

4,l o

.:?(

% Sr e.

TA8LE 4.

WASHINGTON PU8LIC POWER SUPPLY SYSTEM 10-14-81 8-WEEK ROLLING CASH FLOW FORECAST NUCLEAR PROJECTS NOS. 4 AND 5

($ in Thousands)

SEPTEMBER OCTOBER NOVEMBER

  • WE 9/13 *WE 9/20
  • WE 9/27
  • WE 10/4 WE 10/11 WE 10/10 WE 10/25 WE 11/1 WE 11/8 WE11/15 WE 11/22 WE 11/29 8eginnine talance

$60,841

$51,044

$4 3,480

$29,364

$25,035

$18,713

$18,517

$10,002

$ 1,661

$(2,465)

E (4,770) $(13,559)

Rece* pts Tu'eTTransfer 5

5 Interest Transfer 167 122 477 78 55 5,426 37 18 1.957 E

Private thsner 894 288 671 259 342 422 457 849 367 178 425 330 N

Total Receipts 5 1,061

$ 410

$ 1,148

$ 287 5

397

$ 5,848 494 867 5 2.324 5

178 6

425 330 E

2*

01sburs ements **

9 WNP-4 Constructlen 842

$ 3.522

$ 2.207

$ 1.377

$' 923

$ 966 500 500 600 500 5

R M Equipeent 421 154 2.124 265 371 853 225 210 300 200

~1.000

$ 1,000 200 200 1

  • J AE/CM 1.108 2.470 960 2.713 880 2.660 i

Owners A&E & Constr.

1.000 83 1.010 1.040 1.000 1.000 1.100 3

Nuclear Feel g

Financing 25 1

4 Total Isr 4

$ 3,396

$ 3,759

$ 7,811

$ 1,642

$ 3,294

$ 1,819

$ 4,438 710

$ 2,780 700 5 4,960

$ 1,200 WNP-5 ConstrWiten 1 3.806

$ 3.740

$ 4.184 365

$ 964

$ 3.049

$ 2.465

$ 1.439

$ 1.880

$ 1.460 5

682

$ 1.800 EquipdGI 2.588 420 1.407 239 1.212 1.099 1.266 1.706 913 98 472 1.100 AE/CM 222 54 473 2.361 225 60 36 5.066 75 225 2.300 400 Owners 8 Constr.

818 1.389 9

800 800 287 800 800 Nuclear 3

1 224 17 2

Financgg 25 Total W -6 5 7.462

$ 4,215

$ 7.453

$ 2.974

$ 3.425

$ 4,225 5 4,571 5 8,498

$ 3,670

$ 1,783, $ 4.254

$ 3,300 Total Dimersements

$10,858

$ 7.974

$15.264

$ 4.616

$ 6,719

$ 6.044

$ 9,009

$ 9.208

$ 6,450

$ 2.483

$ 9,214

$ 4,500 Ending Balanse

$51,044

$4 3,480

$20,364

$25.035

$18,713

$18,517

$10,002

$ 1,661

$(2.465) $(4,770) 5(13.559) $(17.7291 i

  • Actuals l

" Based on existing cost sharing 9uldelines and methods.

~

~

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