ML20140H804

Forwards Proprietary Response to NRC 3 Inquiries Re Suppl to Great Bay Power Corp Petition for Partial Reconsideration of Exemption Order to Submit Requested Cost Data & to Request in Alternative,Further Explanation. Encl Withheld

ML20140H804
Person / Time
Site:	Seabrook
Issue date:	06/16/1997
From:	Charnoff G SHAW, PITTMAN, POTTS & TROWBRIDGE
To:	De Agazio A NRC
Shared Package
ML19317C377	List: ML20140H804
References
NUDOCS 9706180468
Download: ML20140H804 (4)

Text

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l GIRAW CM P, PC, i June 16,1997 l l I I

1 Mr. Albert W. De Agazio l Project Manager Nuclear Regulatory Commission OWFN, Room 1412D 14 C7 l Rockville, MD Re: Great Bay Power Corporation  ;

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Dear Mr. De Agazio:

On June 4,1997, Great Bay Power Corporation filed a " Supplement to Great Bay ,

Power Corporation's Petition for Partial Reconsideration of Exemption Order to Submit j Requested Cost Data and to Request, in the Alternative, a Further Exemption" with the NRC.

After a preliminary review, the NRC staff responded with three inquiries:

a) What is the meaning of the term " Decommissioning Accretion Expense" as it

. appears on the financial submittal of BayCorp Holdings, Ltd., the parent corporation of Great Bay? l b) Why were the actual results for the final quarter of 1996 less than those projected in Great Bay's forecast dated October 10,19967 g'

c) Why are the financial projections proffered by Great Bay considered i l

conservative and attainable?

Great Bay respectfully responds to these inquiries in Attachment "A" hereto. ~l jtaMSL

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SHAW, PITTMAN, PoTTS & TROWBRif)GE A PART9sPRSMIP thCLUOllee PROPtssionat CORPOR Af toNF Mr. Albert W. De Agazio June 16,1997 PageT.

We trust this additional information will enable the staff to either promptly determine that Great Bay is an " electric utility" as defined in 10 CFR Q 50.2 or to grant the extended ,

exemption requested, "in the alternative" by Great Bay.

R pectfully, 5

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CMW Gera harnoff Counsel for Great Bay Power Corpora ion Enclosures -

cc: Frank Getman Ted Feigenbaum (without Exhibit "A")

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, Attachment "A"

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1) What is the meaning of the term " Decommissioning Accretion Expense" as it appears on the financial submittal of BayCorp Holdings, Ltd., the parent corporation of Great Bay?

Qcommiuionincr Accretion Funenee Descrintion l

l Unlike any other utility in the nation, Great Bay already complies with the new j proposed FASB rules for accounting for decommissioning. Great Bay currently l- recognizes the entire present value ofits future decommissioning liability on its l balance sheet. This figure was $53.2 million as of 12/31/96. Since it is a present value number, this liability must grow to reflect the passage of time until the actual time of decommissioning in 2026. Accordingly, Great Bay " accretes" a portion ofits decommissioning liability each year. This accretion is a non-cash charge which recomizes the Company's decommissioning liability in current year dollars over the license life of the plant. The accretion expense, however, does not reflect the actual growth of the funds in the decommissioning trust fund. The accretion expense is an accounting accrual and not a reporting of the actual funds , .

i deposited by the Company in the trust fund dur%g the period. While it is true that the Decommissioning Liability and Decomrnbsioning Trust Fund asset on the Company's balance sheet will equal one anotter at the end of the license life, the Decommissioning Liability grows at a steady e.walation rate whereas the Trust Fund grows geometrically due to compounding. The Decommissioning Trust Fund line item on the Company's balance sheet is a "real" number which reflects the actual dollar amount in the fund. By 2026, the current Decommissioning Trust Fund of approximately $6.7 million will " catch-up," due to the annual contributions to the Trust Fund and compounding over time, and equal the Decommissioning Liability, which will have increased due to the annual accretion i expense. Contributions to the Decommissioning Trust Fund are not shown as an

" expense," but rather a use of cash on the Company's cash flow statement.

2) Why were the actual results for the final quarter of 1996 less than that projected on Great Bay's forecast dated October 10,19%7 The largest single reason for the differential between the October 10,1996 projection ar.d actual fourth quarter results was due to an acceleration of the 1997 ,

scheduled r: fueling outage from August 1997 to May 1997 due to reliability concerns of the New England Power Pool and the potential lack of generating capacity durmg the peak summer season. As a result, the outage expense accrual l

and the nuclear fuel amortization were increased by $519,000.00 in the final quarter of 1996. Other factors contributing to the difference between the October projection and the actual higher costs were the NRC's { 50.54 (f) requirement for j

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i design basis documentation, which was not in the Seabrook budget as of October >

1996, certain Seabrook year-end material write-offs, and a catch-up in billings by vendors. .

3) Why are the financial projections proffered by Great Bay considered conservative  !

and attainable? .

Exhibit "A" to this Attachment is a table' showing Wholesale Price Projections by .  :

various parties for calendar years 1998-2001. Included are the Low, Base and  !

High projections submitted for the New Hampshire Public Utilities Commission ,

on January 3,1997 by LaCupra Associates. The LaCapra projections are based on '

l an analysis of the least cost combination of NEPOOL generating sources, by hour.

l LaCapra identified the highest-cost generating unit that is chosen to operate by the  !

Pool in each hour in the forecast years. That unit's variable cost was defined by l

LaCapra as the " hourly energy clearing price." By definition, any unit with a ,

variable cost below the '" energy clearing price" can successfully market its generated electricity. The variable costs at Seabrook are significantly below all of ,

the projections in Exhibit "A"; accordingly, Exhibit "A" demonstrates that Great Bay's wholesale price projections used in constructing the projections in Exhibit I  ;

to Great Bay's " Supplement to Great Bay Power Corporation's Petition for Partial - i Reconsideration of Exemption Order to Submit Requested Cost Data and to Request, in the Alternative, a Further Exemption" are conservative and can be  ;

realized.

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w I ' The infonnation in Exhibit "A" pertinent to Great Bay is identical to some of the I sensitive, confidential, commercial and financial information contained in the unredacted version of Exhibit I to Great Bay's June 4,1997 Supplement for which Great Bay requested proprietary withholding from public disclosure, and Great Bay's request for such withholding dated June 3, l 1997 is equally applicable to it. l t

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