ML20136D559

Safety Evaluation Approving Merger Between Util & Enron Corp

ML20136D559
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	03/06/1997
From:	NRC (Affiliation Not Assigned)
To:
Shared Package
ML20136D540	List: ML20136D534 ML20136D548 ML20136D559 ML20136D576
References
NUDOCS 9703120402
Download: ML20136D559 (3)

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UNITED STATES j

g NUCLEAR REGULATORY COMMISSION 1 i f WASHINGTON, D.C. 20066 4 001 4

! SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION PROPOSED ORGANIZATIONAL RESTRUCTURING OF PORTLAND GENERAL CORPORATION PARENT HOLDING COMPANY FOR .

i i PORTLAND GENERAL ELECTRIC COMPANY 4

DOCKET NO. 50-344 1

TROJAN NUCLEAR PLANT l

4 1. BACKGROUND i

j' Portland General Electric Company (PGE or the licensee), is a 67.5-percent l owner and possessor of license NPF-1 for the Trojan Nuclear Plant (TNP). PGE has requested, by letter dated August 20, 1996, supplemented by letters dated

! October 16, 1996, and October 30, 1996, approval by the NRC to the extent necessary regarding a merger between its parent company, Portland General Corporation (PGC), and the Enron Corporation (Enron), an integrated natural l gas company. PGE is a wholly owned subsidiary of PGC. The TNP has been i permanently shut down since November 1992. The NRC approved the TNP

decommissioning plan, including decommissioning funding assurance provisions, on April 15, 1996.

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As indicated in PGE's' letter of August 20, 1996, the merger between Enron and PGC would be accomplished by:

(i) the re-incorporation of Enron as an Oregon corporation through the

. merger of Enron with and into a wholly owned Enron subsidiary, New Falcon Corporation (subsequently renamed Enron Oregon Corporation, but l

designated " Merger Company" in PGE's letter of August 20,1996]...,as a result of which shareholders of Enron will become shareholders of j the Merger Company, and (ii) the subsequent merger of PGC with and into the Merger Company, as a result of which the shareholders of PGC will become shareholders of the Merger Company. Shares of stock in Enron and in PGC would be converted into shares of the Merger Company on a one-for-one basis, and the shares of the Merger Company will be listed and traded on the New York Stock Exchange. The merger will not affect PGE's status as a regulated public electric utility in the State of Oregon. The planned merger of PGE's parent company, PGC, with the Merger Company should improve the overall financial strength and stability of PGE's parent company after the merger.

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5 i i The basis of the NRC's review of this merger is 10 CFR 50.80(a), which states, l "No licensee 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 i of control of the license to any person, unless'the Comission shall give its 4

consent in writing."

II. FINANCIAL QUALIFICATIONS

! On the basis of the information in PGE's application, the staff finds that t

there will be no near-term substantive change in PGE's financial ability to continue funding its share of TNP's decommissioning costs as a result of the

proposed merger. PGE also would remain an " electric utility" as defined by i

the NRC in 10 CFR 50.2, engaged in the generation, transmission, and distribution of electric energy for wholesale and retail sale, subject to the

, rate regulation of the Oregon Public Utility Commission. Thus, pursuant to

10 CFR 50.33(f), PGE is exempt from further financial qualifications review as an electric utility.

! However, in view of the NRC's concern that restructuring can lead to a diminution of assets necessary for the safe operation and decommissioning of a i licensee's nuclear power plants, the NRC has sought to obtain commitments from

its licensees that initiate restructuring actions, including mergers in which

parent companies are established or substantially changed, and has imposed conditions upon the approval of such actions, not to transfer significant

assets from the licensee to an affiliated company without notifying the NRC.

Because TNP has been permanently shut down, the NRC staff has concluded that such a condition may reasonably be modified to expire at the completion of all

major decommissioning activities as defined in 10 CFR 50.2, or the completion 1 of the funding of PGE's external trust fund in an amount sufficient to pay

PGE's share of site radiological decommissioning costs as estimated in the j Post-Shutdown Decommissioning Activities Report (PSDAR).

In a letter to the NRC dated October 16, 1996, PGE stated it would be willing

! to agree'to the following two conditions to the NRC's approval of PGE's j application:

(1) PGE will continue to fund its decommissioning trust funds in accordance

with the schedule stated in the decommissioning plan as approved by the 4 NRC.

i (2) Until such time as PGE has in place the financial assurance mechanism prior to the start of the DECON phase of decommissioning as provided in the Trojan Nuclear Plant Decommissioning Plan as approved by the NRC, PGE j will inform the Director, NRR, 60 days preceding a transfer (excluding i grants of security interests or liens) from PGE to its proposed parent or i to any other affiliated company of facilities for the production, i transmission, or distribution of electric energy having a depreciated

book value exceeding 10 percent of PGE's consolidated net utility plant, 2 as recorded in PGE's books of account. After PGE has the additional i financial assurance mechanism in place, it will no longer be required to l inform the Director, NRR, preceding any such transfer, as long as PGE l

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!. f continues to provide the financial assurance required by the

decommissioning plan approved by the NRC. Any such notice to the i Director, NRR, shall be exempt from public disclosure to the extent permitted by the NRC's regulations implementing the Freedom of Information Act.

i The staff finds that these conditions to the NRC's consent to the proposed restructuring will enable the NRC to ensure that PGE will continue to i

provide adequate funds for the safe decommissioning of TNP, provided that condition (2) is modified to expire at the completion of all major decomnissioning cctivities, or the completion of the funding of PGE's external decommissioning trust fund in an amount sufficient to pay PGE's share of site

radiological decommissioning costs as estimated in the PSDAR.

III. TECHNICAL QUALIFICATIONS i i PGE will continue to be the NRC licensee for TNP after the planned merger.

The requirements for technical qualifications for PGE personnel will not change, and the licensee has stated that the planned merger will not affect l the personnel assignments at the TNP site. Therefore, the technical l qualifications of the licensee will not be affected by the proposed merger. 1 IV. ANTITRUST TNP is permanently shut down and its owners no longer use TNP to provide electric power to the markets in which they participate. Thus, PGE no longer conducts the activities under the TNP operating license to which the antitrust provisions of Section 105 of the Atomic Energy Act of 1954, as amended, would apply. Thus, there do not appear to be antitrust issues which the NRC must consider in connection with the planned merger of PGC and Enron.

V. FOREIGN OWNERSHIP As PGE indicates in its letter of August 20, 1996:

...as of December 31, 1995, the shares of PGC's stock held by foreign accounts represents less than 2% of the total outstanding shares of PGC, and the shares of Enron's stock held by foreign accounts represent less than 5% of the total outstanding shares of Enron.... All of the current members of the Enron Board are U.S. citizens with the exception of John Wakeham, who is a citizen of the United Kingdom.

Thus, the staff has no reason to believe that PGE will be owned, controlled, or dominated by any alien, foreign corporation, or foreign government.

VI. ENVIRONMENTAL CONSIDERATIONS An environmental assessment and finding of no significant impact was published in the Federal Register on April 5, 1997, (62 FR 10094). On the basis of the environmental assessment it was determined that the proposed action will not have a significant effect on the quality of the human environment.

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VII. CONCLUSIONS In view of the foregoing, the staff concludes that PGE's proposed i restructuring of its parent company, PGC, through merger with Enron, will not adversely affect PGE's financial and technical qualifications with respect to

, the decommissioning of the TNP. Also, there do not appear to be any antitrust i

or foreign ownership considerations related to the TNP license that would result from PGC's merger with Enron. Thus, the proposed action will not affect the qualifications of PGE as a holder of the TNP' license, and the proposed action is otherwise consistent with applicable provisions of law,

. regulations, and orders issued by the Commission pursuant thereto, subject to the conditions noted in Section II above.

) Principal Contributor: R. Wood, PGEB i

Date

March 6, 1997 l

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