ML20136C734

Informs of Recent Discussions Concerning Possibility of Resolving NRC Staff Remaining Concerns Re Util

ML20136C734
Person / Time
Site:	Farley
Issue date:	01/14/1988
From:	Vogtle J ALABAMA POWER CO.
To:	Vogler B NRC OFFICE OF THE GENERAL COUNSEL (OGC)
Shared Package
ML20136C725	List: ML20136C721 ML20136C734
References
NUDOCS 9703120168
Download: ML20136C734 (3)

Text

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) January 14,1988 l

Benjamin H. Vogler, Es ~

j Office of Executive Lega Director j U.S. Nuclear Regulatory Commission

! One White Flint North 4

t 11555 Rockville Pike Rockville, MD 20852 l 5

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Re: Alabama Power Company '

Joseph M. Farley Nuclear Plant, Units 1 and 2 l l Docket Nos. 50-348A,50-364A Deat Mr. Vogler:

e j This confirms our recent discussions concerning the possibility of resolving the NRC Staff's remaining concerns in the above-captioned matter.

Alabama Power Company ("APCO") has offered to sell an undivided ownership interest in inc' Joseph M. Farley Plant, Units 1 and 2 (" Plant-Farley") to Alabama Electric Cooperative ("AEC"). In a Notice of Violation

(" Notice") dated June 16, 1986, the Director, Nuclear Reactor Regulation a

asserted that APCO's offer did not comply fully with its obligations under the i antitrust license conditions for Plant Farley. In its " Response of APCO to Notice of Violation", submitted to the NRC Staff on August 27,1986, APCO modified its initial offer, which consists of a comprehensive Purchase and Ownership Agreement, Operating Agreement, and Nuclear Fuel Agreement, submitted to the NRC Staff in APCO's " Memorandum in Response to Request of AEC, Inc. for Enforcement Action" on October 15, 1984. APCO believes that, with the exceptions described below, its modified offer is in compliance with the Director's reading of the license conditions.

Based on discussions with the Staff, we understand that the Staff's current position is that APCO's modified offer of sale complies with its obligations under the license conditions, with the following two exceptions:

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, Benjamin H. Vogler, Esq.

- January 14,1988 Page 2 (1) The Staff objects to APCO's proposal to adjust the AFUDC recorded on its books for Plant Farley to reflect the average cost of debt issued during the construction period, and (2) the Staff objects to APCO's proposal that

{ AEC's member distribution utilities guarantee AEC's payment obligations under the participation agreements. The Staff has expressed concern that the

) guarantee proposal advanced by APCO may unreasonably interfere with the l ability of AEC's member utilities to finance their capital expenditures with l loans from the United States Rural Electrification Administration ("REA") and i

the National Rural Electric Cooperative Finance Corporation ("CFC").

j APCO believes that it has complied in every respect with its obligations

under the license conditions. Nonetheless, it is in APCO's interest to resolve its differences with the Staff without the expense and delay of a hearing.

l Accordingly, APCO submits the following settlement proposal, which is not to j be construed as a waiver or admission as to any matter:

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1. APCO would modify its offer to AEC so that the AFUDC component of the sales price offered by APCO consists of the AFUDC recorded on APCO's books for Plant Farley, in accordance with the FERC's Uniform System

of Accounts. This would reduce the total sales price by approximately nine million dollars, as compared with APCO's previous offer.'

l 2. APCO would be permitted to insist upon guarantees from AEC's

! members as a condition to the sale to AEC. However, the form of guarantee Not all of this reduction is directly attributable to the change in the AFUDC component. Reduction of the total sales price also results in a reduction in the tax liability incurred by APCO in connection with the sale.

It also should be noted that the nine million dollar number is based on calculations for a June 30, 1983, closing date. The actual sale sales price will

. be calculated as of the closing date.

J

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2 -- ~xn a -- s - -..n- s a ..a - .x - - -n.u Benjamin H. Vogler, Esq.

January 14,1988 Page 3 1

contained in APCO's existing offer would be modified to provide tl$at a

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guarantor's obligations to APCO under the guarantee would be subordinate to all of the guarantor's debt obligations to either or both of the REA and CFC.

3. APCO would formally transmit a new offer to AEC in conformance with items 1 and 2 above. The offer, by its terms, would remain open to AEC for ninety (90) days after the date of transmittal and would provide for closing no later than September 1,1988.

4. Upon APCO's compliance with items 1 through 3 above, the Notice of Violation would be withdrawn and this enforcement proceeding would be dismissed.

The foregoing represents a very substantial offer on the part of APCO to compromise its- position in order to meet the concerns of the Staff. It is APCO's hope that you will find this proposal to be an acceptable basis for resolving this matter.

Sincerely, ALABAMA POWER COMPANY By I Ab~ 25 Jess!S. V tle  !

Exdcutive hice President l/ and Counsel a

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