ML20148B945

From kanterella
Jump to navigation Jump to search
SER Supporting Amend 1 to CPPR-117,verifying That North Carolina Municipal Power Agency Fully Qualified to Participate in Plant Ownership
ML20148B945
Person / Time
Site: Catawba Duke Energy icon.png
Issue date: 10/19/1978
From: Silver H, Varga S
Office of Nuclear Reactor Regulation
To:
Shared Package
ML20148B935 List:
References
NUDOCS 7811010055
Download: ML20148B945 (8)
v • d • e


Text

- .- - - - - - . - . . - --. .. . . - -- -- - -. . . -- - - . _

CCT 191973 I

Q -

SAFETY EVALUATION s

4 Suoporting Amendment No. 1 to CPPR-117 l'

Introduction _

i

On August 7, 1975,' Construction Permit CPPR-ll7 was issued to the Duke Power By its lett e j Company (Duke) for the Catawba Nuclear Station Unit 2 (Catawba-2).

of May 15, 1978, Duke transmitted an " Application for Amendment of. Construction Pennit No. CPPR-ll7 Adding Co-owners" by Duke and the North Carolina Municipal Power Agency.No.1 (NCMPA-1) requesting amendment of CPPR-il7 to include NCMP

! Information regarding NCMPA-1 and terms of the owner-as a co-owner of Catawba-2.

ship agreement are described' below.

The application states that Duke will retain exclusive responsibility for the l design, construction, and operation of Catawba-2, and l Thewill be solelyfurther application responsible for communications with the NRC related to Catawba-2.

i states that NCMPA-1 is.not owned, controlled, or dominated by an alien,. a foreign In the application, NCMPA agrees that corporation, or foreign government.it will not permit any individual to have a i

NRC has determined that such access will not endanger the common defense and security.

l In accordance with ALAB-459 (Marble Hill), February 16, 1978, which held that co-owners will also be deemed to be co-applicants, this application for amendment is construed to include NCMPA-1 as a co-applicant as well as a co-owner.

Analysis i

We have reviewed the application for Amendment No. I to CPPR-il7 and conclude that since Duke will retain full and complete responsibility for the design, construction, and operation of Catawba-2, addition of a co-owner would not involve a significant hazards consideration inasmuch as it does not involve an increase in the probability of an accident, an increase in the consequences of an accident, or a decrease in safety margins. We therefore conclude that j

i the activities authorized by this amendment would not constitute an unreason-able risk to the health and safety of the public.

l Since the application.for amendment states that NCMPA-1 is not owned, con

or dominated by an alien, a foreign corporation, or a foreign government, we conclude from our review that the activities authorized by this amendment wo not be inimical to the common defense and security.

l We have evaluated the financial qualifications of NCMPA-1 to participate with I Duke as co-owners of Catawba-2 as presented below.

i

' 7811C10o55

General The NRC regulations relating to the determination of an applicant's financial qualifications appear in Section 50.33(f) and Appendix C to 10 CFR Part 50.

These regulations state that there must be reasonable assurance that an applicant can obtain the necessary funds to cover the estimated construction costs of a proposed nuclear power plant and its related fuel cycle costs. This standard of reasonable assurance, however, must be viewed in light of the extended period of time from the start of construction to the date of commercial operation. The date for commercial operation of the proposed Catawba facility is estimated to be July 1983. Consequently, we must make certain basic assumptions in our financial analysis about future conditions. Our analysis of financial qualifications assumes that there will be rational regulatory policies with respect to the setting of rates and that viable capital markets will exist. The former assumption implies that rates will be set by the appropriate regulatory agencies to at least cover the cost of service,1ncluding the cost of capital. The latter assumption implies that capital will be available at some price. Given these fundamental assumptions, our evaluation is then focused on the reasonableness of the applicant's financial planning.

Duke has submitted financial information in support of its application. The following analysis summarizes our review of the information, and gives the qualifications of the applicant to finance its share of the costs of the ,

design and construction of the proposed Catawba facility. I Construction Cost Estimates The most recent cost estimates for the Catawba facility are provided in Duke's letter of September 11, 1978. The cost estimates are summarized as follows:

(Millions of dollars)

Total nuclear production plant costs $1,346.4 Transmission, distribution, and general plant costs 31.0 Nuclear Fuel inventory for the first core 180.7 Total $1,558.1 We have compared the cost of the proposed nuclear production plant estimated above with the cost projected by the costing model (CONCEPT) developed by the Department of Energy. This analytical model projected the cost of the

Catawba facility to be $1,818.0 million, compared with Duke's estimate of l

$1,558.1 million. The CONCEPT estimates are based on industry-wide costs and take into account items of overhead and other costs that are generally found in the construction of a facility. Duke designs and constructs all of I its own facilities, thereby eliminating many of the items of overhead incurred by other utilities. This accounts for Duke's costs being significantly lower than the CONCEPT estimates. Since the CONCEPT model is used here primarily l as a rough check of the cost estimate made by an applicant and is not intended to be a substitute for detailed engineering cost estimates, we conclude that it is reasonable to use Duke's estimate in our financial analysis.

Source of Construction Funds The ownership, costs, and electrical output of Catawba Nuclear Station Unit 2 will be shared according to the following percentages:

1

Duke Power Company 25%

North Carolina Municipal Power Agency-1 75%

The percent allocation is based on the proposed purchase agreement, which will be executed at the time that the amendment to the construction permit is approved by NRC. Additionally, under the terms of this agreement, NCMPA-1 will own 37.5% of the support facilities in the Catawba Nuclear Station. Duke will continue to have exclusive responsibility for the design, construction, 4

operation, maintenance, and disposal of the entire facility and will act as agent for the other owners in these matters.

Financial Aanalysis NCMPA-1 is a corporate entity and an instrumentality of the Statri of North Carolina, incorporated under North Carolina statutes on January 19, 1976.

It was created to plan, develop, construct, and operate generation and trans- I mission facilities and has been granted the necessary powers to carry out such ,

purposes. Figure 1 and Table 1 set forth the service area and the member municipalities that make up the Agency.

NCMPA-1 has entered into a Purchase and Ownership Participation Agreement, l which transfers a 75% ownership interest in the Catawba Nuclear Facility Unit 2 to the Agency. Under the terms of this agreement, a 37.5% ownership interest in the support facilities for the entire Catawba Nuclear Generating Station will also be transferred to NCMPA-1. At closing, NCMPA-1 will pay  ;

Duke for its ownership share of the total costs of materials and construction completed to date. In addition, Duke will be reimbursed for fees as profit for its design, licensing, and construction expense. After closing and until l the commercial operation of Catawba Nuclear Station, Unit 2, NCMPA-1, on a monthly basis, will pay to Duke an amount equal to 75% of additional costs l incurred for Catawba Nuclear Station, Unit 2, plus 37.5% of the support facilities l for the entire station. l l

w _ _ . - _ _ _ _ _ _ _ _ - - _ _ _ _ _ _ _ _ _ _ _ - - _ _ _ _ _ _ _ _ - - -

1 MCMPA-1 intends to issue and sell its electric revenue bonds in amounts sufficient to finance its ownership interest in the Catawba Nuclear Station Unit 2. Initial startup expense is being provided by member participants, subject to reimbursement out of the proceeds of the bond issue. Table 2 sets l forth the timing of the bond issue and schedule of payments to be made. i NCMPA-1 will issue a total of $848 million of its revenue bonds to finance  !

its participation in this project.

The State of North Carolina by law has agreed that it will not limit or alter the rights of any participant of the power agency to establish rates l to fulfill the terms of any agreement for the Catawba Project so long as any bonds of the power agency are outstanding and unpaid. The power sales contracts between NCMPA-1 and its participants provide that rates charged by NCMPA-1 shall be designed (and adjusted when necessary) to cover all costs 1 of operation, including amounts required to pay debt service and provide for the eventual retirement of its bonds. Revenues of NCMPA-1 under the power sales contract will be pledged as security for the bonds. The contracts further provide that each participant must take or pay for its entitlement share of power from the Catawba Nuclear Station Unit 2.

Bonds of NCMPA-1 for financing the project will be approved and sold by the Local Government Commission of the State of North Carolina. The Commission supervises and approves all aspects of the fiscal control and debt issuance process for local governments, including the issuance and sale of bonds.

Conclusion Based on our analysis, we have concluded that the financing plan of NCMPA-1 provides reasonable assurance that funds can be obtained to finance its share of the Catawba Nuclear Station Unit 2. We have determined that the North Carolina Municipal Power Agency-1 is financially qualified to participate in the design and construction of the Catawba Nuclear Station Unit 2 in the ratio of their percentage of participation as set forth above. This conclusion is based on the determination that NCMPA-1 has reasonable assurance of obtaining the required capital funds through its revenue bonding method of financing.

Because of the lengthy future period involved, our conclusion necessarily assumes that viable capital markets will exist. This implies that capital will be available at some price. Furthermore, NCMPA-1 and its participants have the authority delegated to them by the State of North Carolina to charge rates required to fulfill the terms of agreements supporting the Catawba Project.

We will require as a condition of the amendment, submittal as soon as possible of: (1) copies of the executed Purchase and Ownership Agreement for Catawba Unit 2, (2) copies of the executed Power Sales Agreements between the parti-cipants and the North Carolina Power Agency-1, (3) evidence that the Local Government Commission has approved the issuance and sale of bonds supporting the Ownership and Purchase Agreement.

SAFETY CONCLUSIONS For reasons stated in the above analysis, we conclude that activities authorized a

by this amendment (1) do not involve a significant hazards consideration; (2) would not constitute an unreasonable risk to the health and safety of the public; and (3) are not inimical to the comon defense and security.

Based on our evaluation of financial information provided in the application for the amendment as sumarized in the above analysis, we conclude that there ,

is reasonable assurance that NCMPA-1 is financially qualified to participate in the ownership of Catawba-2.

e l

. 1- -

Harley[iver,ProjectManager

' Light i er Reactors Branch No. 4 Di ision of Project Management pA l/l

'a'r a

' Light Water Reactors. Branch No. 4 Division of Project Management Attachments (3) i i

~

OCT 101973 1

i 1

FIGURE 1 *~

M CMBERS OF NORTil CAROLINA MUNICIPAL -

POWER AGEllCY NUM11ER 1 .

s a

+w~ __

~

i 8

A t ,

\  :

' }3 C

' ' k

..~... . . , . . . -,

s ,...... .,, ,,, ..i , R'y v, ,. ,

gi .

.- _ . i e"~^ s u 1

) ".g .5 ,,2:'v!c.., /

i f-

, -19 y

J f' m

11 V d >t '

.u g

sU M EMilEltS OF NOllTil C AROl.IN A MllNICIPAL '

POWEll AGENCY NilM11ER 1 1 - AL11EM AR LE 11 - LANDIS 2 - 110STIC ,12 - LEXINGTON j 3 - CIIERItYV!LLE 13 - LINCOLNTON 4 - CONCOllD 14 - M AIDEN 5 - COtttJELIUS IS - MONitOE PRIV ATE POW ER COM PANY SERVICE AR EAS (---)

6 - D1t EXEl. 16 - MOltG ANTON 7 - G ASTONI A A - DUKE POWER COMPANY 17 - NEWTON 8 - Gil ANITE FALLS 18 - PitJEVILLE 8 - CAltOLINA POWER & LIGIIT COMPANY 9 - filCII POINT 19 - SilELi1Y C - VlltGINI A ELECTRIC & POWER COMPANY 10 - 11UNTERSVILLE  ?.0 - STATESVILLE _

  • TABLE 1 EXHIBIT A PARTICIPANTS AND PARTICIPANTS' SHARES Participant's Preliminary
  • Share Ci'ty of Albemarle Town of Bostic - -

7.7000%

City of Cherryville -

.0880 City of Concord 1.5987 Town of Cornelius 8.7413 Town of Drexel .3667 City of Gastonia .5133 Town of Granite Falls 17.3360 City'of High Point ' .9240 Town of Huntersville 19.1987 Town of Landis .6307 .

City of Lexington 1.1440 City of Lincolnton 13.0973 Town of Maiden -

1.6280 City of Monroe .

1.3053 '

City of Morganton 10.1640 City of Newton 6.8200 Town of Pineville. 2.1413 City of Shelby .5427 City of Statesville 6.0720 9.9880 Total '

110.0000 9

e 0

0 e

/

_9, .

[ h

.. .. ~,,. . . .n .e . . , >.

3. ";' T.

n,

~.

~. .

. .e .

..~.,. .

..~....

.e~..

~

8. .; opa ..n. .. ~ ,-

~ -

. .e.

.e - ~ ~ .,. .e ...e .e .. -- __ .,e. .

.s 4. - - -

I e

=. .s

  • M *, * .

.s -

y3 -- - -

+

i i_

= ..... . .. . .... . .... . ....

2a. . . .... . .... . 2 d =

4 s

un .

E

.. . . . . ... .... . .. ..e...

g . . . . . ,.. .

-.  : -. e, .

e an.. . .. - - -

r 6 5

.)

~.. l

$ I . .e e. e . ei .e . .

lee w .g y

.e.

. es .

p...

c.

.e.~

.. ~ e.,

w' r.

.e pl .

. - -e e. ,*

e . c. c. e.s p. c .e ~.

f. . 9 i

-4 j .,...3 es. ..p.

-..~ f... . g. . . . si ,

V ,a..

. .e. a. . j C

- . e. .

e e

1P w . e,

-- .,e --

.e *. -*. e. d e 4 i

1

-; .A a .k -

i.I C mZ I 20 .

ma 87 g6 E. . . .e ~ .

>o -*

    • ~.aa **
c. .

~.

a.

~

~

. ~,

. *. ~. .*.

. =.

. ..--i-

  • - a
e. . .

=~

~

.e. * * *e-. -

ei i

ao.. =.e. ..e.. ~ .

p y b.

E g .g

  • ,,,,,== .e. .e. .

. . . v. e. . . ~ . .~w es. .

e

. as. ~. z.

e' m g ai

.- P.. .o .e. .

P .e .e .e e. - . .s e Q

1 3. Isa *

    • l

.it E e in

. W m f5 .E ;;.

.m .,. . . . . e ,. --- .. ...

yi  ; 9. .

s. .

. ,. . . . . .. e.

. . .. . e. m~~. . . ...

.e , .e ~ ..

m. l
v. -.

.,,, .=.p . .. . e J . . . . .

e m#.

. . .. e. e. e. . . . .ea. e e. e.

l

<c

.. .e .e =me - e ** . .. . . . cc .

- - + c LZ

~ . --- e .---+

c.

e

. . 1 m i= *)* ** l G <.

Z N 3 "" .

3C y <z g, < 3.,

.i1

  • O8.? ,-

, c. .*...* .. .

c. e .

n.

a. m.

)

C'Q ] '.'*

  • .***.s. . . . .

9 , w ,

. . e. e. <n.

.;C. '** my .e .e e.

s O-

.v 9a ;' wI "'

uw i I

> c.

= . ~r

.m  : .... .

, o ..

z m - . . ~

- .a . m. .

1 -

=u-.

~ ~ - ~ ~

=,

. ~

E 5 S a m 4 > m s a e 1 3.: g .

a ~. ,. .

- ~ - ~ . . . - . - ~. ~. . --- -. .. - -

- .a .~ . .. .... ..,..e.. .

u.-

.~s, -

m o.

In. .ki D C

~

W

2 a w - -

., . ~.

. ~. ~. .

4:1
4.:1:. . : 4:1 .: 4: :1 .: 4:1

. e . . .

a.

m

= n 4:

c m

=

. 2..:..

. ,. o ... 2._

. ~.., 2. ..

~. .-. e

. .e , _ .- , ,-

m . -

. o. : ... a.. ...

., . . = . = . , . .- > . . .

,,44<<- 5 .a..z.

g =

1, . .

a . . . . .

,3 o J : <3 J' ,. 1,34 1

,s< ty a

,  ; , 5 ,5.i ,. < ,3o: a ,3 41 ,3 d J : o 1g a =

g,, =, .

8

,** C >

  • -~... a. $

,, P. *

  • L .

5 2 <

1i  : --meme  ; b.

gg .n, i.,

-.e .

.m.--

.e

.ee .e .e

~-

.ee .m e ..e. .~ e.

. e.~~ . - . - .,,,l JU _ _ _ _ _ _ - . _ - _ - ,

Retrieved from "https://kanterella.com/w/index.php?title=ML20148B945&oldid=2849383"