ML20116C462
| ML20116C462 | |
| Person / Time | |
|---|---|
| Site: | Quad Cities  |
| Issue date: | 07/29/1996 |
| From: | NRC (Affiliation Not Assigned) |
| To: | |
| Shared Package | |
| ML20116C455 | List: |
| References | |
| NUDOCS 9607310197 | |
| Download: ML20116C462 (3) | |
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$t UNITED STATES g
j NUCLEAR REGULATORY COMMISSION o
f WASHINGTON, D.C. 20eeHepi s...../
SAFETY EVALUATION BY THE @FICE OF NUCLEAR REACTOR REGULATION RELATED TO PROPOSED ORGANIZATIONAL AM) FINANCIAL RESTRUCTURING MIDAMERICAN ENERGY COMPANY i
OUAD CITIES NUCLEAR POWER STATION. UNITS 1 AND 2 DOCKET NOS. 50-254 AND 50-265
1.0 INTRODUCTION
By letter dated April 4, 1996, MidAmerican Energy Company (MEC or the licensee) submitted an application pursuant to 10 CFR 50.80 for approval of the indirect transfer of licenses to the extent affected by a corporate restructuring and establishment of a holding company. MEC proposes to restructure itself by establishing a holding company, MidAmerican Energy Holdings Company (MEHC), which would become the parent corporation to and sole i
owner of MEC. MEC weild continue to remain a 25-percent minority owner and possession-only licerisee of the Quad Cities Nuclear Power Station, Units 1 and 2.
MEC would remain an " electric utility" as defined in 10 CFR 50.2, engaged in the generation, transmission, and distribution of electric energy for wholesale and retail sale. Upcn consummation of the restructuring, common stockholders of MEC would receive one share of stock in MEHC in exchange for each share of MEC stock held. No direct transfer of the operating licenses or interest in the units will result from the restructuring.
MEC indicates that the reason for the sale is --
"'...to create an organizational structure that will have greater flexibility for MidAmerican and enhanced capability to address the changes associated with operating in a more competitive market place.
Such changes include changing customer demands and expectations, competition from non-traditional energy suppliers and expanding energy markets. MidAmerican also believes that a holding company structure will permit it and its affiliates to better respond to new growth opportunities while maintaining the strength of MidAmerican's utility operations."
[ Prospectus dated March 18, 1996, page 28, attached to MEC's application dated April 4, 1996.]
Pursuant to 10 CFR 50.80, no license for a production or utilization facility, or any right thereunder, shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of the license to any person, unless the ENCLOSURE 2 9607310197 960729 PDR ADOCK 05000254 P
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,. Comission gives its consent in writing.
The Commission may approve the indirect transfer of a license, through transfer of control of the license, after notice to interested persons (61 FR 30263).
Such action is contingent upon the Commission's determination that the proposed transferee is qualified to be the holder of the license and the transfer of such contr)1 is otherwise consistent with the applicable provisions of law, regulations, and orders of the Commission.
An Environmental Assessment was published in the Federal Register on July 29, 1996 (61 FR 39481) in which the staff found that there were no radiological nor non-radiological environmental impacts resulting from the proposed action.
2.0 MANAGEMENT OF MEC UTILITY OPERATION MEC stated in its letter that the proposed reorganization will have no effect on the management of MEC's utility operations. The holding company structure retains the utility as a discrete and wholly separate entity that will function in tha same fashion as it did before restructuring. MEC's management will continue to make its own decisions with regard to utility planning, operation, financial requirements, purchasing, and sales.
On the basis of the continuity of management described herein, the staff finds that the proposed restructuring will not adversely affect MEC's mana5ement of the nuclear plants.
3.0 FOREIGN OWNERSHIP. CONTROL. OR DOMINATION The licensee stated in its letter of April 4,1996, that on the date of the restructuring, MEHC will become the sole holder of MEC outstanding common stock, and the current holders of MEC comon stock will become holders of the comon stock of MEHC on a share-for-share basis.
Therefore, following the restructuring, the common stock of MEHC will be owned by the previous holders of MEC common stock in the same proportion in which they held MEC common stock. The licensee states that the planned restructuring will not result in ownership, control, or domination of MidAmerican by a foreign corporation or a foreign government, nor is it presently so dominated or controlled.
On the basis of this discussion, the staff finds that the proposed restructuring will not result in MEC's being owned, controlled, or dominated by a foreign government.
4.0 FINANCIAL QUALIFICATION ANALYSIS MEC indicates that it will remain an " electric utility" as defined in 10 CFR 50.2.
That is, MEC will continue to be engaged in the generation, transmission, and distribution of electricity and will remain subject to the rate regulatory authority of the Illinois Commerce Comission, the Iowa Utilities Board, and the federal Energy Regulatory Commission.
(MECletter dated April 4,1996, page 2.] On the basis of the.information submitted in MEC's application, the staff finds that there will be no near-term substantive
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change in MEC's financial ability to contribute appropriately to the operations and decommissioning of the Quad Cities units as a result of the proposed restructuring. Thus, pursuant to 10 CFR 50.33(f), MEC is exempt from further tinarecial qualifications review as an electric utility.
However, in view of the NRC's concern that restructuring' can lead to a diminution of the assets necessary for the safe operation and decommissioning l
of a licensee's nuclear power plant, the NRC has conditioned in its Order Approving Indirect Transfer of Licensees, dated July 29, 1996, that MEC inform the Commission in the following manner:
MEC will provide the Director of the Office of Nuclear Reactor l
Regulation a copy of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from MEC to its proposed parent or to any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding one percent (1%) of MEC's consolidated net utility plant, as recorded on MEC's books of account.
The staff believes that this requirerent, as a condition to the NRC's consent to the proposed restructuring, will enable the NRC to ensure that MEC will continue to maintain adequate resources to safely operate and decommission its share of the Quad Cities Nuclear Power Station, Units 1 and 2.
In view of the foregoing information, the staff concludes that MEC's proposed restructuring will not adversely affect its financial qualifications with l
respect to the Quad Cities units and that the proposed restructuring should be i
approved.
5.0 CONCLUSJQti On the basis of these determinations, the staff concludes that the proposed corporate restructuring and establishment of a holding company --
(1) will not reduce funds available to MEC to conduct activities under its licenses; l
(2) will not adversely affect the management of the MEC utility operations; (3) will not result in MEC's becoming owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government; (4) will not affect the financial qualifications of MEC as holder of the licenses of Quad Cities Nuclear Power Station, Units 1 and 2, with j
respect to its 25-percent ownership interest; and l
(5) is otherwise consistent with the applicable provisions of the law, regulations, and orders issued by the Commission pursuant thereto.
i Principal Contributors:
R. Wood f
R. Pulsifer Dated: July 29,1996 0
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