ML20132F837

Informs Commission of Staff Intent to Issue Exemption Re Decommissioning Funding Assurance for Limited Time to Great Bay Power Co

ML20132F837
Person / Time
Site:	Seabrook
Issue date:	12/19/1996
From:	Taylor J NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
To:
References
SECY-96-260, SECY-96-260-R, NUDOCS 9612260110
Download: ML20132F837 (16)

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CM December 19, 1996 SECY-96-260 EDE: The Commissioners fBDf!: James M. Taylor Executive Director for Operations

SUBJECT:

ISSUANCE OF TEMPORARY EXEMPTION FROM 10 CFR 50.75(e)(2) TO GREAT BAY POWER COMPANY PURPOSE:

To inform the Commission of the staff's intent to issue an exemption regarding decommissioning funding assurance for a limited time to the Great Bay Power Company, a 12.1324-percent owner of the Seabrook Nuclear Power Station, Unit 1, in view of Great Bay's status as a non-electric utility, so that the NRC may approve the indirect transfer of control of Great Bay's interest in the operating license to allow the formation of a holding company.

DISCUSSION:

In an application dated May 8,1996, the North Atlantic Energy Service Corporation, for itself and as agent for the joint owners of Seabrook station, sought to obtain NRC's approval under 10 CFR 50.80 of a proposal by Great Bay to reorganize by creating a holding company over Great Bay such that Great Bay would be a wholly owned subsidiary of the holding company. Although the formation of the holding company, in and of itself, is neither unusual nor suggestive of unique safety concerns, the application contained information that indicated that Great Bay may not be an electric utility, irrespective of the proposed reorganization. Great Bay was established in 1994 as a successor to EUA Power Corporation, which had filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Great Bay is a non-operating, 12.1324-percent co-owner of Seabrook and sells its proportionate share (about 140 MWe) of the power from Seabrook on the wholesale electricity market. Great Bay's stated SECY NOTE: TO BE MADE PUBLICLY AVAILABLE WHEN THE FINAL SRM IS MADE AVAILABLE. ()} L Contacts: Robert S. Wood, NRR 415-1255 i g

2tj()[Jgl Albert W. De Agazio, NRR x 415-1443 g Q g g g p g p\g SECY NOTE: IN THE ABSENCll 0F INSTRUCTIO5S TO THE CONTRARY, SECY WILL NOTIFY THE STAFF ON TUESDAY, JANUARY 7. 1997. THAT THE COMMISSION, BY NEGATIVE CONSENT, ASSENTSTOTHEAjTIONPROPOSEDINTHISPAPER.

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2 intant has purchasers.geenGreatto sellbelieves Bay wholesale power that the through Federal Energy long-term power Regulatory contracts with Commission (FERC) has ultimate regulatory authority to review rates for these cpntracts 4 and, thus, Great Bay meets the NRC's definition of electric utfifty When the NRC staff approved the plan for Great Bay's emergence from bankruptcy in 1993, it did not explicitly address the issue of whether Great Bay met the

definition of electric utfifty. The staff, however, believed that Great Bay

would continue to be an electric utility based upon its status as such before 2 bankruptcy and upon the expectation that the reorganized entity would be successful in obtaining long-term contracts for the sale of most of its share Further, the staff believed that reorganization of power from Seabrook.

under the auspices of the bankruptcy court would improve substantially Great

. Bay's financial condition.

Notwithstanding the staff's earlier actions with respect to Great Bay's

' emerow from bankruptcy, the staff now believes that Great Bay does not meet the V

nition of electric utfifty. Great Bay has successfully entered into only one long-term contract, which is for 10 MWe. Great Bay sells its remaining 130-MWe share of Seabrook power on the spot wholesale market, which, by definition, is subject to market-set rates. The staff believes that although FERC may exercise general regulatory oversight over spot market rates, such rates cannot be considered as " rates established by...a separate regulatory authority" (emphasis added). Thus, notwithstanding Great Bay's i assertions to the contrary, Great Bay does not appear to be an electric  ;

utility under the NRC's definition of that term.

If Great Bay is no longer an electric utility, it must meet the existing financial qualifications review requirements of 10 CFR 50.33(f)(2) in connection with a 10 CFR 50.80 application. In reviewing Great Bay's current financial statements submitted with its application of May 8, 1996, to form a holding company, and supplemental projections through 1998 submitted on ,

, October 18, 1996, the staff has concluded that Great Bay appears to meet these i i I l l ' Great Bay is an exempt wholesale generator (EWG) as defined in the Energy Policy Act of 1992 (the act). As defined in the act, an EWG is a

corporate person engaged exclusively in the business of owning or operating facilities used for the generation of electricity and selling such energy at wholesale.

2 In 10 CFR 50.2, " Electric utfifty means any entity that generates or distributes electricity and which recovers the cost of this electricity, either directly or indirectly, through rates established by the entity itself or by a separate regulatory authority. Investor-owned utilities, including generation or distribution subsidiaries, public utility districts, municipalities, rural electric cooperatives, and State and Federal agencies, including associations of any of the foregoing, are included within the

meaning of ' electric utility.'"

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J requirements.3 Great Bay has projected operating income and cash flow on the

basis of what appear to be reasonable projections of the spot market price of

power from Seabrook for the foreseeable future. Great Bay indicates that these projections would be the same with or without formation of the proposed holding company. Thus, Great Bay has demonstrated that it " possesses or has reasonable assurance of obtaining the funds necessary to cover estimated a operation costs for. the period of the license" (10 CFR 50.33(f)(2)).

, However, pursuant to 10 CFR 50.75(e)(2), as a non-electric utility, Great Bay

[ is required to provide additional assurance for decomissioning its proportionate share of Seabrook (e.g., a surety bond or p letter of credit for its unfunded balance of expected decomissioning costs).

In its submittal, Great Bay indicates that the current value of its share of '

the Seabrook decomissioning liability in 1995 dollars is approximately 350.2 million. As of December 31, 1995, its accumulated decomissioning reserve was approximately $5.1 million plus $10 million in decomissioning costs that is

• guaranteed by Eastern Utility Associates, Great Bay's former corporate parent.

.Thus, the unfunded balance of decomissioning costs is $35.1 million. Great Bay's submittal indicates that the projected cash flow at the end of the current fiscal year would be sufficient to cover most of this amount. -

3 l Great Bay requested a meeting with the NRC staff, which was held on j September 30, 1996, to discuss the status of Great Bay's holding company 4

application and to advise the staff of the importance to Great Bay's longer ,

term financial health of the timely approval of Great Bay's request to form a ~

holding company. Great Bay indicated that prompt approval of formation of a holding company would allow Great Bay access to additional electricity markets

under New Hampshire law, thus potentially improving its financial position.

l- Although Great Bay disputes the NRC staff's interpretation that Great Bay is 4

not an electric utility, it asked that the NRC defer that decision until after i ,

3 The standard in 10 CFR 50.33(f)(2) is designed for operating license  !

(OL) applicants and not for post-OL reviews. Thus, this section requires that i "the applicant shall submit estimates for...the first five years of operation

! of the facility. The applicant shall also indicate the source (s) of funds to l cover these costs." Given Seabrook's established operating history and

, associated costs that are now a matter of record, the staff has concluded that Great Bay has complied with the essential requirement of the existing standard, which is to demonstrate reasonable assurance of obtaining its share of Seabrook's operating costs.

! 'The staff believes that Great Bay does not meet existing NRC regulations for decommissioning funding assurance in that it does not have a surety bond

or an acceptable equivalent instrument in place. When the NRC issued an j advance notice of proposed rulemaking on the impact of electric utility

restructuring on nuclear plant safety (61 FR 15427, April 8, 1996), it discussed possible means of strengthening the Comission's regulations in this

, area, including modifying the definition of " electric utility." However, with

' respect to Great Bay, this action does not depend on any changes to the Comission's regulations.

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l it reached a decision on the holding company application. (Great Bay did not

request.an exemption from any NRC requirements.)

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. The staff is, of course, particularly interested in Great Bay's longer term financial viability with respect to Great Bay's share of operating and 2 decommissioning costs of Seabrook. The staff believes that Great Bay's ,

l financial viability will not be diminished but instead likely will be enhanced i by approval of the formation of a holding company. Paradoxically, disapproval ,

of or delaying action on Great Bay's request would limit Great Bay's financial j

opsortunities, which ultimately could have an adverse effect on protecting-pu)1ic health and safety. Further, by conditioning the approval of the formation of the holding company on a condition not to transfer any significant assets to the holding company (i.e., more than 10 percent of Great

, Bay's total assets) without prior notification to the NRC, the staff's

. historical concerns about a holding company's ability to transfer assets from 0 a licensee subsidiary would be mitigated. By approving the holding company

now, the staff believes that Great Bay could improve its financial strength to

meet both the financial qualifications and the decomissioning ending rules.

l Great Bay, if deemed not to be an electric utility, currently does not meet E .the requirements of 10 CFR 50.75 in that it does not have a surety bond or i other surety method in place for decommissioning funding assurance. To allow

the staff to act, without further delay, upon Great Bay's request for approval l j- of the indirect transfer of the license to the extent held by Great Bay,

! resulting from the formation of the holding company, the granting of which request may result in an improvement of Great Bay's financial qualifications, I i and at the same time to afford Great Bay a reasonable opportunity to implement l a suitable decomissioning funding assurance method for non-electric

utilities, the staff has concluded that Great Bay should be granted a 6-month

exemption from compliance with the provisions in the NRC's regulations L pertaining,to decomissioning funding assurance for non-electric utility j licensees As previously discussed, Great Bay meets the financial qualifications review

standards of 10 CFR 50.33(f)(2) and would thus meet the one-time financial qualifications review for transfers of licenses under 10 CFR 50.80 applicable i to non-electric utilities. If, within 6 months, Great Bay continues to be unable to demonstrate that it is an electric utility as defined in 10 CFR 50.2, it would then be required to obtain a surety bond or other allowable decomissioning funding assurance mechanism for non-electric utility licensees.

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The staff believes that the circumstances outlined above support issuance of J the attached draft exemption under the NRC's criteria in 10 CFR 50.12

5 i It should be noted that although Great Bay has in place a $10 million guarantee from Eastern Utility Associates, under 10 CFR 50.75(e)(2)(iii), a parent company guarantee may not be combined with other financial methods to satisfy decomissioning funding requirements.

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1. Under 10 CFR 50.12(a)(1), the exemption would be authorized by law. It would not present an undue risk to public health and safety because Great Bay's financial health would be no worse, and may improca, upon approval of transfer of control and formation of the holding company, shich would be possible if the exemption was granted. The exemption would be consistent with the comon defense and security.

2. Special circumstances are present under 10 CFR 50.12(a)(2)(ii) and (v).

Under criterion (11), application of the regulations in these particular circumstances is not necessary to achieve the underlying purpose of the rule.

The underlying purpose of the rule is to ensure that funds are available for decomissioning at the end of the license term, or in the event of premature shutdown. Here, Great Bay's projected 1996 cash position is nearly sufficient to cover the unfunded decomissioning costs, and its cash position is not likely to deteriorate substantially during the period of the exemption. Under criterion (v), the exemption would provide only temporary relief from the applicable regulation (s). Further, the licensee has made a good faith effort to comply with 10 CFR 50.75 by making payments into an external sinking fund  ;

on the basis of its good faith belief that it remains an " electric utility,"

which arguably is defensible, even though not acceptable to the NRC staff.

Coordination:

The Office of the General Counsel has no legal objection to this paper and the attached draft exemption.

Recomendation:

That the Comission:

Note that it is the staff's intention to issue the attached exemption, thereby l enabling the staff to grant Great Bay's request for approval of the indirect transfer of control of Great Bay's interest in the operating license to permit I the formation of a holding company. The staff will issue the exemption and an l order approving the indirect transfer of control to North Atlantic Energy

Service Corporation, as agent for Great Bay, within 10 working days from the l date of this paper unless instructed otherwise by the Comission.  !

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, i a

ecutive Director 3 for Operations

Attachment:

Draft Exemption DISTRIBUTION:

Commissioners OCA  !

OGC REGIONS I OCAA EDO OIG SECY f OPA 1

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._ fWo 4 G UNITED STATES

- *3 j- NUCLEAR REGULATORY COMMISSION 2 WASHINGTON, D.C. 20555 4001

• • • • • go Mr. Ted C. Feigenbaum Executive Vice President and Chief Nuclear Officer Northeast Utilities Service Company c/o Mr. Terry L. Harpster Director - Nuclear Licensing Services P.O. Box 128 Waterford, CT 06385

SUBJECT:

TEMPORARY EXEMPTION FROM CERTAIN REQUIREMENTS OF 10 CFR 50.75:

REPORTING AND RECORDKEEPING FOR DECOMMISSIONING PLANNING - SEABROOK STATION, UNIT I (TAC NO. M95476)

Dear Mr. Feigenbaum:

4 By letter dated May 8,1996, North Atlantic Energy Service Corporation (North

, Atlantic) requested approval for the indirect transfer of control cf Great Bay Power Corporation's (Great Bay) interest in the Seabrook Station, Unit 1. The indirect transfer would result from a proposed corporate restructuring of Great Bay that would result in the creation of a holding company named Great Bay Holdings Corporation of which Great Bay would become a wholly-owned subsidiary. The staff has not completed action on that request because it appears that Great Bay does not meet the definition of electric utility as provided in 10 CFR 50.2. As a non-electric utility, Great Bay must meet the requirements of 10 CFR 50.75(e)(2) for additional assurance for decommissioning funding. Currently, Great Bay does not meet these requirements.

It is our understanding that the proposed holding company, if approved, could seek business opportunities in electricity markets that Great Bay is prohibited from entering because of its status as an exempt wholesale generator. Thus, delaying action on Great Bay's request limits Great Bay's

, financial opportunities, which ultimately could have an adverse effect on protecting public health and safety. Therefore, so that the staff may act upon the May 8, 1996, request without further delay, the enclosed temporary i exemption from the requirements of 10 CFR 50.75(e)(2) has been issued. The exemption is effective for a period of 6 months from the date of issue. We find that granting the temporary Exemption from the requirements of 10 CFR 50.75(e)(2) is authorized by law, will not present an undue risk to public health and safety, is consistent with the common defense and security, ,

and meets the special circumstances described in 10 CFR 50.12. l l

Mr. Ted C. Feigenbaum A copy of the Exemption is enclosed. The Exemption has been forwarded to the Office of the Federal Register for publication. '

Sincerely, Albert W. De Agazio, Sr. Project Manager Project Directorate I-1 Division of Reactor Projects - I/II Office of Nuclear Reactor Regulation Docket No. 50-443 Serial No. SEA-96-011

Enclosure:

Exemption cc w/encls: See next page i

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l 4 T. Feigenbaum Seabrook Station, Unit No. 1 Northeast Utilities Service Company ,

cc:

Lillian M. Cuoco, Esq. Mr. Jack Dolan Senior Nuclear Counsel Federal Emergency Management Agency Northeast Utilities' Service Company Region I P.O. Box 270 J.W. McCormack P.O. &

Hartford, CT 06037 Courthouse Building, Room 442

Boston, MA 02109 Mr. Peter Brann Assistant Attorney General Mr. David Rodham, Director State House, Station #6 ATTN

James Muckerheide Augusta, ME 04333 Massachusetts Civil Defense Agency 400 Worcester Road Resident Inspector P.O. Box 1496 U.S. Nuclear Regulatory Commission Framingham, MA 01701-0317 Seabrook Nuclear Power Station P.O. Box 1149 Jeffrey Howard, Attorney General Seabrook, NH 03874 G. Dana Bisbee, Deputy Attorney General Jane Spector 33 Capitol Street Federal Energy Regulatory Commission Concord, NH 03301 825 North Capital Street, N.E.

Room 8105 Mr. D. B. Miller, Jr.

. Washington, DC 20426 Senior Vice President ,

Nuclear Safety and Oversight I Town of Exeter Northeast Utilities Service Company  !

10 Front Street P.O. Box 270 )

Exeter, NH 03823 Hartford, CT 06141-0270 Mr. George L. Iverson, Director Mr. E. A. DeBarba New Hampshire Office of Emergency Vice President - Nuclear Technical Management Services State Office Park South Northeast Utilities Service Company

! 107 Pleasant Street P.O. Box 128 <

l Concord, NH 03301 Waterford, CT 06385

~

Regional Administrator, Region I Mr. F. C. Rothen U.S. Nuclear Regulatory Commission Vice President - Nuclear Work Services 475 Allendale Road Northeast Utilities Service Company King of Prussia, PA 19406 P.O. Box 128 Waterford, CT 06385 Office of the Attorney General One Ashburton Place 20th Floor Mr. A. M. Callendrello Boston, MA 02108 Licensing Manager - Seabrook Station North Atlantic Energy Service Corp.

Board of Selectmen P.O. Box 300 Town of Amesbury_ Seabrook, NH 03874 l Town Hall Amesbury, MA 01913

P I

T. Feigenbaum Seabrook Station, Unit No. 1 Northeast Utilities Service Company )

l' cc:

I Mr..S. E. Scace, Vice President i Nuclear Reengineering Implementation Northeast Utilities Service Company P.O. Box 128 Waterford, CT 06385 Mr. W. A. DiProfio Nuclear Unit Director Seabrook Station North Atlantic Energy Service Corporation P.O. Box 300 Seabrook, NJ 03874

. Mr. Frank W. Getman, Jr.

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Cocheco Falls M111 works 100 Main Street, Suite 201 Dover, NH 03820 Mr. B. D. Kenyon President - Nuclear Group Northeast Utilities Service Group P.O. Box 128 Waterford, CT 06385 a

Mr. B. L. Drawbridge Executive Director Services &

Senior Site Officer ~

North Atlantic Energy Service Corp.

.Seabrook, NH 03874 4

,1

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I 7590-01  :

UNITED STATES OF AMERICA  ;

NUCLEAR REGULATORY COMMISSION In the Matter of )

)

NORTH ATLANTIC ENERGY SERVICE ) Docket No. 50-443 CORPORATION AND GREAT BAY POWER ) (License No. NPF-86) '

CORPORATION )

)

(Seabrook Station, Unit No. 1) )

EXEMPTION I.

North Atlantic Energy Service Corporation (North Atlantic or the  :

licensee) is a holder'of Facility Operating License No. NPF-86, which i authorizes operation of Seabrook Station, Unit No.1 (the facility or Seabrook), at a steady-state reactor power level not in excess of 3411 megawatts thermal. The facility is a pressurized water reactor located at the licensee's site in Rockingham County, New Hampshire. The ..ase provides l among other things, that it is subject to all rules, regulations, and orders of the U.S. Nuclear Regulatory Commission (the Commission or NRC) now or hereafter in effect.

II.

Great Bay Power Corporation (Great Bay) was established in 1994 as a  ;

. successor to EUA Power Corporation, which had filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Great Bay is a non-operating, 12.1324 percent co-owner of Seabrook and sells its proportionate share of power from l l

Seabrook on the wholesale electricity market. Great Bay is an exempt  :

wholesale generator as defined in the-Energy Policy Act of 1992.

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. On May 8,1996, North Atlantic submitted to the NRC a request on behalf 4 of Great' Bay for Commission consent to the indirect transfer of control of Great Bay Power's interest in the Operating License. Additional information i

relating to this request was submitted on October 18 and December 9,1996.

3 Approval of the indirect transfer of control of Great Bay would allow Great-Bay, through the formation of several subsidiaries and a merger, to become a

. wholly owned subsidiary of a new holding company, Great Bay Holdings 4 Corporation. The indirect transfer of control of Great Bay's share of j . Seabrook is subject to NRC approval pursuant to 10 CFR 50.80.

In its May 8,1996, submittal, North Atlantic indicated that, after the '

indirect transfer of control to the new holding company, Great Bay would

remain an electric utility as defined by the NRC in 10 CFR 50.2. This j conclusion is based on Great Bay's intended approach to market its share of power from Seabrook (approximately 140 MWe) through the implementation of long-term contracts. Great Bay believes that the Federal Energy Regulatory Commission (FERC) would have the ultimate regulatory authority to review rates l

i for these contracts and, thus, Great Bay would meet the definition of

, " electric utility."

! When the NRC staff approved the plan for Great Bay's emergence from j- bankruptcy in 1993, it did not explicitly address the issue of whether Great Bay met the definition of " electric utility." The staff believed, however,

that Great Bay would continue to be an electric utility based upon its status as such prior to bankruptcy and upon the expectation that the reorganized entity would be successful with obtaining long-term contracts for the sale of f most of its share of power from Seabrook.

'Notwithstanding th'e staff's earlier actions with respect to Great Bay's emergence from bankruptcy, the staff now believes that Great Bay does not meet 4

J

the definition of " electric utility." Great Bay has successfully entered only one long-term contract, which is for 10 MWe. Great Bay sells its remaining 130 MWe share of Seabrook power on the spot wholesale market, which by definition is subject to market-set rates. The staff believes that, although FERC may exercise general regulatory oversight over spot market rates, such rates cannot be considered to be " rates established by...a separate regulatory authority" (emphasis added).

If Great Bay is no longer an electric utility, Great Bay is required to meet the existing financial qualifications review requirements of 10 CFR 50.33(f)(2). This section requires that "the applicant shall submit estimates for the first five years of operation of the facility. The applicant shall also indicate the source (s) of funds to cover these costs." Seabrook has an established operating history and associated costs that are now a matter of record. Based on a review of Great Bay's current financial statements submitted with its May 8,1996, submittal, and supplemental projections submitted on October 18, 1996, the staff has concluded that Great Bay has complied with the essential requirement of the existing standard, which is to demonstrate reasonable assurance of obtaining its share of Seabrook operating

costs. Great Bay has projected operating income and cash flow based on what appear to be reasonable projections of the spot market price of and demand for power from Seabrook for the foreseeable future. Great Bay indicates that these projections would be the same with or without formation of the proposed holding company. Thus, Great Bay has demonstrated that it possesses or has reasonable assurance of obtaining the funds necessary to cover estimated operation costs for the period of the license as required by 10 CFR 50.33(f)(2).

The requirements for indicating to the NRC how reasonable assurance will

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be provided that funds will be available for decomissioning are identified in 10 CFR 50.75, " Reporting and recordkeeping requirements for decomissioning planning." Acceptable methods for providing this assurance are described at j 10 CFR 50.75(e)(1) and the methods that may be used by non-electric utilities

are identified at 10 CFR 50.75(e)(2). If Great Bay is no longer an electric 4

utility, it does not meet the requirements of 10 CFR 50.75(e)(2) in that it does not have a surety bond or other surety method in place to provide

additional assurance for decomissioning funding. Great Bay, however, does

contribute to an external sinking fund, which alone would satisfy the-requirements of 10 CFR 50.75 if Great Bay in fact were an electric utility, as it asserts. Great Bay has stated that the current value of Great Bay's share of the decomissioning liability in 1995 dollars is approximately $50.2

million. As of December 31, 1995, its accumulated decomissioning reserve was approximately $5.1 million. Great Bay also has in place $10 million in

, decomissioning costs guaranteed by Eastern Utility Associates, Great Bay's former corporate parent. However, Great Bay has not provided assurance as required under 10 CFR 50.75(e)(2). In its October 18, 1996, submittal, Great I

Bay indicated that the projected cash on hand at the end of the current fiscal r

, year would be sufficient to cover most of the $50.2 million that is not otherwise offset by the $5.1 million reserve and the $10 million guarantee.

i III Great Bay currently is a stand-alone entity; that is, it is not itself a subsidiary of another organization and it has no subsidiary organizations l

(other than those recently formed to effect the proposed corporate 1

reorganization). Great Bay has requested Comission approval of the indirect '

transfer of control of its interest in the Seabrook Operating License. This 4

approval would permit Great Bay to become a wholly owned subsidiary of a new entity, Great Bay Holdings Corporation. The current owners of Great Bay would exchange their equity interest in Great Bay for equity interest in the holding corporation; thus, the current owners would own Great Bay indirectly rather than directly. The Great Bay interest in the Seabrook Operating License would remain directly with Great Bay. Great Bay indicated that the proposed restructuring would protect Great Bay's status as a wholesale electric generator and allow management to develop opportunities in additional electricity markets through the holding company, thus, potentially improving Great Bay's financial position.

The staff is, of course, particularly interested in Great Bay's longer-term financial viability with respect to Great Bay's share of operation and decommissioning costs of Seabrook. The staff believes that Great Bay's .

i fin a cial viability will not be diminished but instead likely will be enhanced by the formation of the holding company. By approving the indirect transfer of control now, the staff believes that Great Bay could be in a stronger position to meet both the financial qualifications and decommissioning rules.

Thus, to allow the staff to act upon, without further delay, Great Bay's request for approval of indirect transfer of control of Great Bay, and at the same time afford Great Bay a reasonable opportunity to implement a sJitable decommissioning funding assurance method required of a non-electric utility, the staff is granting Great Bay a 6-month exemption from compliance with the provider.s 10 CFR 50.75(e)(2) pertaining to the additional surety arrangements for decommissioning funding assurance for non-electric utility licensees. If, within the effective period of this exemption, Great Bay has been unable to establish itself as an electric utility as defined in 10 CFR 50.2, Great Bay then must obtain a surety bond or other allowable decommissioning funding

assurance mechanism for non-electric utility licensees meeting all of the

! requirements of 10 CFR 50.75(e)(2).

The Commission has determined that pursuant to 10 CFR 50.12(a)(1), this exemption is authorized by law, will not present an undue risk to the public health and safety, and is consistent with the common defense and security.

The Commission further has determined that special circumstances as provided j in 10 CFR 50.12(a)(2)(ii) and 10 CFR 50.12(a)(2)(v) are present justifying the exemption. Under criterion (ii), special circumstances exist in that application of the regulation in this particular circumstance is not necessary, for the 6-month period, to achieve the underlying purpose of the rule, which is to ensure that funds are available for decommissioning at the end of the license term or in the event of premature shutdown. Here, Great Bay's projected 1996 cash position is nearly sufficient to cover the unfunded decommissioning costs, and its cash position is not likely deteriorate substantially during the period of the exemption.

Further, under criterion (v), special circumstances exist because the exemption provides only temporary relief from the applicable regulation (s),

and Great Bay has made a good faith effort to comply with 10 CFR 50.75 by making payment into an external sinking fund based on its good faith belief that it is an electric utility.

Pursuant to 10 CFR 51.32, the Commission has determined that granting this Exemption will not have a significant impact on the environment j (61 FR ).

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This Exemption is effective upon issuance and shall expire 6 months from

the date of issue.

FOR THE NUCLEAR REGULATORY COMMISSION i

4 Frank J. Miraglia, Acting Director Office of Nuclear Reactor Regulation

Dated at Rockville, Maryland, 4

this day of December 1996 2

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