ML20098H123
| ML20098H123 | |
| Person / Time | |
|---|---|
| Site: | 05000000, Washington Public Power Supply System |
| Issue date: | 12/05/1977 |
| From: | Perko J WASHINGTON PUBLIC POWER SUPPLY SYSTEM |
| To: | |
| Shared Package | |
| ML20093C821 | List:
|
| References | |
| CON-WPPSS-013, CON-WPPSS-13, FOIA-84-603 NUDOCS 8409110517 | |
| Download: ML20098H123 (10) | |
Text
'{
e UNITED STATES OF AMERICA-NUCLEAR REGULATORY COMMISSION In the Matter of
)
g
)
WASHINGTON PUBLIC POWER
).
Docket No. 50-513 SUPPLY SYSTEM
).<.
)
(Nuclear Project No. 4)
)
(
AFFIDAVIT OF JAMES D. PERKO REGARDING FINANCIAL QUALIFICATIONS UPDATE A.
Background
I The evidentiary hearings;on radiological health and safety issues for.WPPSS Nuclear Project No.1 ("WNP-1") and No. 4 (WNP-4") were conducted on November 11-13, 1975 at which time the Applicant requested that consideration 0
of its financial qualifications to construct WNP-4 be deferred. Accordingly, the Atomic Safety and Licensing Board (" Board") in its initial decision authorizing a construction permit for WNP-1, deferred consideration of the
(
finanfbal qualifications issue for WNP-4, and the issuance of a construction permit for WNP-4 was d21ayed pending disposition of the financial qualifications issue. 2 NRC 922, 927-928, 943, n. 28 (December 22,1975).
(
On July 9,1976, the Applicant infonned the Board that it was in a position to demonstrate that it was financially qualified to construct WNP-4.
(
The Board received evidence relating to, inter alia, the financial qualifications matter in the form of affidavit by James T. Bobo (Applicant's Exhibit 42). On August 27, 1976, the Applicant and the NRC Staff submitted joint proposed '
f V
r findings of fact and conclusions of law relating to, inter alia, the issue of financial qualifications for WNP-4.
s;
(
B409110517 840824 PDR FOIA COHEN 84-603 PDR l
.('
w--
Pag 2 21 g
By Memorandum and Order dated September 7,1976, the Board noted that it had received evidence on the issue of financial _ qualification for WNP-4.. However, the Board'also noted that issuance of the construction pennit..
for WNP-4 had been further delayed pending resolution of other issues, i.e.,
matters relating ~ to the environmental effects of spent fuel reprocessing and waste management (10 CFR, Part 51, Table S-3), ECCS evaluation models, and seismic design. criteria.
It appears that these remaining issues are now or will shortly be resolved.
In the interim, certain matters have, occurred which render it prudent to update the record in th,is proceeding with respect L
to the Applicant's financial qualifications to construct WNP-4. For example, the Applicant has engaged in additional financing activities for its projects which further demonstrate its ability to raise construction capital.
In additior,
(-
the estimate of the total cost of WNP-4 has been updated.
In these circumstances, it seems appropriate to update the record with respect to the financial quali-fications matter.
(.
B.
Applicant's Financial Qualifications My name is James D. Perko, I am the Assistant Director for Finance and Administration, and the Treasurer of the Washington Public Power Supply
(
System.. I previously testified in this proceeding at Tr. following p. 670.
Mr. James T. Bobo's related Affidavit is in the record as Applicant's Exhibit 42.
I am executing this affidavit to summarize and update the information in our i
license application and the record in this proceeding regarding the Applicant's financial qualifications in terms of NRC Regulations (10 CFR 550.33(f)), i.e.,
that the Applicant possesses, ar has reasonable assurance of obtaining, the funds necessary_ to cover estimated construction costs and related fuel cycle costs for WNP-4.
i f
I k
- ~
-.m
Page 3 g
WPPSS is a municipal corporation and joint op: rating agency of
.the State of Washington, organized in January 1957, pursuant to the laws of Washington.
It is composed of 19 utility districts and three cities, each of which operates an electrical distribution system within the State of Washington.
It is empowered to acquire, construct and operate facilities for the generation and transmission of electrical power and energy but does
(
not ergage in the distribution of electric energy at retail.
My previous testimony and Mr. Bobo's affidavit contained in the
(
record for this proceeding set forth detailed discussions of the sources of construction funds for WNP-4 and the concept pursuant to which WNP-4 will be financed.
In summary, permanent financing of WNP-4 will be effected through
('
issuance of long-term debt securities of the revenue bond type. The Applicant is authorized (RCW 43.52.3411) to " issue revenue bonds or warrants payable from the revenues of the utility properties operated by it."
The bonds
(
of the Supply System are negotiable instruments and legal securities for deposits of public monies, and are legal investments for trustees and other fiduciaries and for savings and loan associations, banks and insurance c.c..apanies.
(
As discussed in my previous testimony, and Mr. Bobo's Affidavit, WNP-4 and the Applicant's owner interests (90%) in WNP No. 5 (WNP-5) will be financed I
as one system pursuant to the project financing approach employed by the Applicant to finance its projects. Pursuant to that approach, the Applicant's Board of Directors has adopted a resolution for WNP-4 and WNP-5 for tne plan I
'and system and for the issuance of revenue bonds in amounts totalling $365 million.
I k
4 Pag] 4 Bonds for WNP-4 and WNP-5 are rated A-1 by Moody's Investor Services, Inc., and A and A+ by Standard and Poor's Corporation.
Information ' pertinent to the sale,
of these and other Supply System bonds may be found on the attached table 4,
entitled " Construction Projects Financing Activities".
a
(
The securities for WNP-4 and WNP-5 will be secured by contractual commitments between the Applicant and 88 public and cooperative utilities (the " Participants") E o purchase the entire electrical capability of t
(
WNP-4 and the Applicant's share (90%) of the capability of WNP-5. A detailed description of the legal obligations of the Participants is described in Mr. Bobo's previous affidavit (Applicant's Exhibit 42) and in my testimony
(~
in this proceeding (Tr. following p. 670).
In sum, the first level of security for repayment of bonds is the revenue to be derived from operation of the project. The second level of security is that the Participants are
(
obligated to make payments whether or not the project is completed, operable or operating, and notwithstanding interruption or curtailment of output. Thus,.
the source of funds for payment of project costs is not dependent on actual project revenues, bu't is " insured" on a broad base through the obligation of the 88 public and cooperative entities. Assurances that such obligations can be met is provided *n that the Participants covenant to increase rates to the
(
level necessary to meet their obligations to the Applicant.
The Applicant's successful record of financing generating projects I
was also discussed in my previous testimony and Mr. Bobo's affidavit.
y These 88 Participants consist of 21 municipalities, 24 districts and 43 electric cooperatives located principally in Washington, Oregon, Idaho i
and Montana.
Page 5
- A table sumarizing the Applicant's financing activities current as of June'15, 1976 was attached to Mr. Bobo's Affidavit (Applic' ant's Exhibit 42).
't That table reflected that the Applicant as of June 15, 1976 has successfully sold ~ securities in the amount of $1.362 billion. As noted previously' in the instant affidavit, the Applicant has successfully sold additional t.
securities since June 16, 1976. Accordingly, a revised table is attached hereto reflecting that as of November 16, 1977, th'e Applicant has successfully sold $2.46 billion in securities.
4 The estimated total cost for WNP-4 has been increased to $1,869,982,000 (current as of November 23,1977). This updated estimated can be broken down as follows: E L
(a) Total nuclear production plant costs
$1,650,806,000 E (b) Transmission and general plant costs 25,232,000 (c) Nuclear fuel inventory cost S 193,944,000 Total Estimated Cost
$1,869,982,000 I
Siting, fuel cycle costs, payments to vendors and preliminary construction expenditures through October 31, 1977 for WNP-4 and WNP-5 are
$124,183,000 and $76,183,000, respectively. Current estimates for WNP-4 I
and WNP-5 expenditures (including fuel and owners' costs) are as follows:
2f Attached is a table entitled, " Plant Capital Investment Summary", which provides a further breakdown of the plant costs in the format requested by I.
the staff for the WNP-3/5 project.
~3] Including net interest during construction, owners' costs, and allowances for escalation and contingencies.
4j Nuclear fuel will be purchased rather than leased.
Fuel inventory cost includes first core cost of $119,464,000 and first reload cost of $74,480,000.
i e
i
=
f i Page '_6 WNP-4' WNP-5 Year Expenditures Expenditures Thru 1977
$183,543,000
$113,101,000 e
1978 172,256,000 110,709,000 1979 276,875,000 164,438,000
.1980 246,415,000 312,894,000 1981 344,.. 3,000 293,908,000 1982 303,279,000 304,315,000 1983 236,897,000 261.508,000 1984
.-81,856,000 179,454,000 1985 16,385,000 62,766,000 1986' 8,023.000
-18,948.000 1987 6,977,000 Financing of UNP-4 and WNP-5 will be continued by the issuani:e of approximately $3,334,000,000 of; tax exempt revenue bonds in series from i
time to time during the period of construction. The Applicant plans to issue these bonds in the following approximate amounts and on the following schedules:
1-Date of Issue Amount 1978
$400,000,000 1979 600,000,000 I
1980 600,000,000 1981 600,000,000 1982 600,000,000 1983 400,000,000 1984 134,000,000" l
I should note that the NRC Staff has previously reviewed and approved the-financial qualifications of WPPSS to design and construct nuclear generating facilities.
(
In my testimony received into evidence in the NRC' licensing proceeding
_ involving WPPSS Nuclear Projects No. 3 ("WNP-3") and No. 5 ("WNP-5"), I updated f
the cost of the various nuclear projects of WPPSS, including WNP-4. The cost estimate ~ set forth in my testimony there for WNP-4 was $1,715,339,000, and the cost estimate for WNP-5 was $1,909,626,000 (NRC Docket Nos. STN 50-508, STN 50-509; Tr. following p. 598, at pp.11 and 19 respectively). 6/
1 9
5/ WPPSS 907. share of WNP-5 6/ Mr. Bobo's prior affidavit (Applicant's Exhibit 42) contained an estimate of
.I the total cost of WNP-4 (current as of May 31,1976) of $1.095 billion.
b
! ago 7 P
As noted, WNP-4 and WNP-5 are being financed by the Applicant as dne system. Thus, the project financing approach used'for other WPPSS j
projects has been followed for WNP-4 and WNP-5, and Staff approval of WPPSS' financial qualifications to design unu construct WNP-5 carries the implication
. that WPPSS is financially qualified to design and construct WNP-4.
The Staff reviewed the general project approach of financing by WPPSS in the Staff's overall review of financia,1 qualifications for WNP-3 and WNP-5. The Staff's revi.2w of financial qualifications in that proceeding included a review of the financing of WNP-5 (recognizing that WNP-4 and WNP-5 are financed as a single project) based upon the cost estimates for WNP-4 and WNP-5 presented in my testimony in that proceeding. The Staff concluded that WPPSS was financially qualified to design and construct its share of WNP-3 (70%) and WNP-5 (90%). The Staff noted in its review that I
' WPPSS' ability to finance its capital expenditures is well established by its issuance to date of billions of dollars in highly rated revenue bonds and notes." (NRC Docket Nos. STN 50-508, STN 50-509; Staff Exhibits 16 and 21).
'(
As noted, I updated the estimates of total costs for WNP-3 and WNP-5, which were increased due in part to delays in licensing for those facilities. The I
estimated costs for WNP-3 and WNP-5 increased from $2.550 billion to approxi-mately $3.2 billion. With respect to these cost increases,' the Staff in its review noted that WPPSS would be responsible for the bulk of the increase, I
and that the impact of the cost increase on the annual construction budget of WPPSS was "relatively insignificant" (Id., Staff Exhibit 21).
.i f
.t
Pag 2 8 Likewise, the increase in the cost estimate for WNP-4 which I have provided
(
in the instant affidavit from $1,715,339,000 (as presented in the WNP-3 and WNP-5 docket) to $1,869,982,000 rept',fants an increase of $154,643,v00 or 8.3%
of the cost estimate for WNP-4 provided to and reviewed by the Staff in the WNP-3 and WNP-5 proceeding.' The impact of this cost increase on the annual construction budget of WPPSS also is relatively insignificant.
s 11d
[ JAMES D. PERKO Subscribed and sworn,before me this SetL day ofi b,,d u, 1977 W dw b-cWbft.c t #~v
( -
Notary Public in and fbr the State of GU.tuds.',, $ w a
(
(
O t
l
(
l
l WASilINGT0ft PUBLIC POWER SUPPLY SYSTEM 00ftSTP.UCTI0ft PROJECTS FINANCING ACTIVITIES November 16, 1977 PROCEEDS
. EFFECTIVE PROJECT TYPE RATir!G SALE 0 ATE MATURITY PAR RECEIVED INT. RATE WNP 1 Bonds Aaa:AAA 09/18/75 07/01/2017
$ 175,000,000
$173,257,213 7.7275 l
Bonds Aaa:AAA 02/04/76 07/01/2017 180,000,000 180,325,601 6.83734, l
Bonds Aaa:AAA 08/31/76 07/01/2017 180,000,000 179,715,169 6.3699 i
Bonds Aaa:AAA 11/09/77 07/01/2017 180,000,000 180.506,326 5.497826 W N'P 2*
Bonds A-1:Aa 06/26/73 07/01/2012 150,000,000 149,861,616 5.650 Bonds A-1:AA 07/23/74 07/01/2012 60,000,000 79,864,055 7.2085 l
Bonds AA:AA 11/26/74 07/01/2012 125,000,000 124,45P,992 7.6667-Bonds Aaa:AAA 03/06/75 07/01/2012 125,000,000 126,81?. 477 6.7097 i
Bonds Aaa:AAA 06/03/76 07/01/2012 120,000,000 119,321,710 6.6350 i
Bonds Aaa:AAA 11/18/76 07/01/2012 200,000,000 200,212,911 5.8650 l
WNP 3 Bonds Aaa:AAA 12/03/75 07/01/2018 150,000,000 147,876,742 7.867599 Bonds Aaa:AAA 04/13/76 07/01/2018 100,000,000 99,515,830-6.481385 Bonds Aaa:AAA 07/12/77 07/01/2018 230,.Q00,000 229,249,445 5.7133 GErlERATING FACILITIES Bonds A-1:A 07/24/75 06/01/1981 100,000,000 99,419,902 i7.04099 (flos. 4/5)
Bonds A-1:A+
02/23/77 07/01/2015 145,000,000 144,496,314 5.9333 Bonds A-1:At 05/24/77 07/01/2012 90,000,000
-89,752,542 6.318143 Bonds A-1:A+
09/13/77 07/01/2018 130,000,000 130,017,405 5.963475 j
$2,460,000,000
- All outstanding bonds are rated AAA by both rating agencies.
i l
~
_NQVEM3ER. 1977 PLANT CAPI"AL INVESTMENT SUf1 MARY BASIC OATA Name of plant WNP-4 Cost basis p
Net capacity 1,250 MW(e)
Reactor type PWR(8&W)
Location Richland, Was igton Type of Cooling Design & Construction Period ural raft t-Month, year NSSS order placed 7/74 cooling towers Month, year of commercial operation 6/84 Mechanical draft Length of work week 40' hours cooling towers X
Interest' rate, interest Other (describe) during construction 7.75% simple COST
SUMMARY
~
Account Number Account Title Total Cost (Thousand dollars)
DIRECT COSTS 20 Land and l and rights................... $ PHYSICAL PLANT 21 Structures and site facilities......... $
157,292 22 Reactor plant equipment................
160,625 23 Turbine plant eouipment................
136,259 24 Electric plant equipment...............
68,871 25 Misc. plant equipment..................
33,081 Subtotal..................... $
556,128 Spare parts allowance..................
4.492 Contingency allowance..................
146.427 Subtota1......................
707.047 INDIRECT COSTS 91 Construction facilities, equipment, and services.............................
19,588 92 Engineering and const. mg't, services..
76,936 93 Other costs............................
426,630 (1) 3' 94 Interest during cons truction...........
499,617 Subtota1...................... $ 1,022,771 Start of construction cost.............
t un Escalation during construction (
% yr. )130,463 (2)
Total plant capital investment (5
/ KW)l,869,982 (1) Includes $119,464 and $74,480 for initial core and reload nuclear fuel requirements, respectively.
(2) Labor escalation 08%, simple; material escalation 0 8%, simple, ct r
t et w
-ei.----m
.wwe.e g
+,=y w
_-4
-e e
p y
gi eiy-e p,
--