ML20149N069
| ML20149N069 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 02/23/1988 |
| From: | Backus R BACKUS, MEYER & SOLOMON, SEACOAST ANTI-POLLUTION LEAGUE |
| To: | NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP) |
| References | |
| CON-#188-5699 OL-1, NUDOCS 8803010094 | |
| Download: ML20149N069 (32) | |
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UNITED STATES OF AMERICA UC"if Igj . , ' ' '.
NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING APPEAL BOARD Before Administrative Judges Alan s. Rosenthal, Chairman Thomas S. Moore Howard A. Wilber
)
IN THE MATTER OF ) Docket Nos.
) 50-443-01-1 PUBLIC SERVICE COMPANY OF ) 50-444-01-1 NEW HAMPSHIRE, ET AL. ) (On-Site
) Safety and Technical (Seabrook Station, Units 1 and 2) ) Issues)
)
)
SAPL RESPONSE TO APPEAL BOARD MEMORANDUM AND ORDER OF
' JANUARY 29, 1988 REGARDING FINANCIAL OUALIFICATION RULE Respectfully submitted, o
SEACOAST ANTI-POLLUTION LEAGUE Robert A. Backus Backus, Meyer & Solomon 116 Lowell Street l P.O. Box 516 Manchester, NH 03105 (603) 668-7272 l
February 23, 1988 l l
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l TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . 11 1
BACKGROUND . . . . . . . . . . . . . . . . . . .. . . . . .
. . . . + . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY
A. BANKRUPTCY PEC SE REQURES A FINANCIAL QUALIFICATION INQUIRY . . . . . . . . . . . 5 B. BANKRUPTCY-UNCERTAINTIES REQUIRE A FINANCIAL QUALIFICATION INQUIRY . . . . .. . . . . . 6 l
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I TABLE OF AUTHORITIES l Administrative Decisions ,
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70 NH PUC Reports,164 at 253 :
Statutes 10 CFR S2.758 . . . .. . . . . . .. . . . .. . . .. . . . .1 10 CFR 550.33(f) . . . . .. . . .. . .. . . . ... .. . .2 :
49 Fed. Reg. 35751, 35748 . . . . .... . . . . . . . . . 5 l 11 USC Sil29(a)(6) . . . . . . . ..... ... . . .. . . .7 .
RSA 107 B . . . . . . . . . . . . . .. . . .. . . . .. . .' 8 8
RSA 374:22-a II . . . . . . . . ..... . . . .. . . . . . ,
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING APPEAL BOARD Before Administrative Judges Alan s. Rosenthal, Chairman Thomas S. Moore Howard A. Wilber
)
IN THE MATTER OF ) Docket Nos. '
) 50-443-01-1 PUBLIC SERVICE COMPANY OF ) 50-444-01-1 NEW HAMPSHIRE, ET AL. ) (On-Site
) Safety and Technical (Seabrook Station, Units 1 and 2) ) Issues)
) February 23, 1988 .
)
SAPL RESPONSE TO APPEAL BOARD MEMORANDUM AND ORDER OF JANUARY 29, 1988 REGARDING FINANCIAL QUALIFICATION RULE BACKGROUND The Appeal Board has before it the issue of whether the ASLB erred in denying a waiver, pursuant to 10 C.F.R. 52.758, of the Commission's Regulations which preclude a financial qualification inquiry for regulated utility applicants for nuclear operating licenses.
This issue was raised by a petition filed on behalf of Town of,Hampton, New England Coalition on Nuclear Pollution, and Seacoast Anti-Pollution League (SAPL) on July 31, 1987. Argument was had before this board on December 8th.
The petitioners generally argue that the financial condition of the lead applicant, Public Service Company of New Hampshire a
(PSNH), as revealed in an SEC 8-K filing, was such that the purpose of the regulation sought to be waived had not been met.
That regulation,10 C.F.R. 550.33 (f), is based on the assumption that regulated legal monopolies would always have the necessary l financial quality to assure nuclear safety as a result of the
rate-setting process, thereby obviating the need for any NRC inquiry. Petitioners argued that this assumption is not borne out in this unique situation.
On January 26th, the New Hampshire Supreme Court unanimously upheld the state's anti-CWIP law as constitutional and held that it operated to bar the granting of a pending emergency rate increase sought by PSNH. Within 48 hours5.555556e-4 days <br />0.0133 hours <br />7.936508e-5 weeks <br />1.8264e-5 months <br />, on January 28th, PSNH filed a voluntary petition for bankruptcy in the District of New Hampshire, the first utility in modern history to take this step.
On the next day, this Board issued its Memorandum and Order ,
inviting further briefing on this issue. This brief will constitute the response on behalf of SAPL, Town of Hampton, and the New England Coalition on Nuclear Pollution.
S.UlitiABI It is SAPL's, and the other intervenors, position that the bankruptcy filing by PSNH, in and of itself, is sufficient to require a S2.758 waiver of the Commission's regulations which normally do not require an inquiry into the financial qualification of an applicant for a nuclear operating license.
The reason for this is that the Commission, in adopting S58.33(f), in its present form, assumed that the normal state or federal rate-setting process for regulated utilities would assure the necessary financial quality for such utilities to operate or decommission nuclear plants. In other words, the assumption underlying the rule was that the normal rate-setting process, in which the rate base times the rate of return plus operating expenses provides the basis for the allowed rates, would act as a surrogate for any NRC inquiry into the availability of funds. The -
Commission did not, in promulgating the revised rule, make any similar assumption about the bankruptcy process acting as a surrogate to assure the necessary funds. (Indeed, the Commission could not have made any such assumption, since the event in question, utility bankruptcy, had never previously occurred, at least during the history of nuclear regulation.)
Thus it is the intervenor's basic position that bankruptcy, per se, requiras a waiver to permit a financial qualification inquiry into the qualifications of the lead applicant for the Seabrook operating license.1/ and 1/ .
1/ There is attached hereto, as Annex A, a copy of the Bankruptcy Petition filed by and on behalf of PSNH. The Appeal Board should note that the filing includes the New Hampshire Yankee Division as an "AKA." In other words, although joint owners had intended to set up New Hampshire Yankee as an independent operating entity, apart from Public Service, it is clear that New Hampshire Yankee is not a separate entity, and is included in the bankruptcy proceedings.
2/ The petition in question deals with PSNH. However, the Appeal Board should be aware that various other ownership interests in the project are in dire financial straits. Vermont Electric Co-op has been in default on its Seabrook obligations for more than a year, and the Washington Electric Co-op, of East Montpelier, Vermont, has just announced it will be defaulting in the next payment. In addition, the Eastern Maine Cooperative, which is a participant through its participation with one the KMWEC's power sale contracts, has filed for bankruptcy reorganization. Other owners, including some with much more substantial interests, have recently been placed on credit watch by Moody's Investors Services. See attached newspaper accounts. They include EUA power, which will default in May, New England Electric System, Commonwealth Electric, and United Illuminating.
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Alternatively, it is SAPL's position that bankruptcy requires a financial qualification inquiry because, on the basis of the findings by the NH PUC and testimony of PSNH's own officials, there is no reasonable assurance that the necessary funds to safely operate, or to decommission, the facility will be ,
forthcoming.
In view of this uncertainty, acknowledged by the applicant's own officials, the NRC can do only one of two things: (a) either suspend all licensing activity pending definitive rulings by the Bankruptcy Court on the issue of whether, and in what amount,'
project funding shall be authorized or (b) conduct a financial inquiry into the probable outcome of the bankruptcy proceedings, with the assistance of bankruptcy law and regulatory finance experts, f
Finally, there can be no escaping the need for a financial qualification inquiry on the ground that 64.4 percent is owned by other entities. None of these other entities have had any legal obligation to assume PSNH's share of the project, and none has' been found qualified to sustain any greater percentage of the project than it now holds. See Footnote 2 puera.
! In addition, more than 50 percent of the project is held by utilities either in default, or about to go into default, and about 80 percent is held by utilities either in default or ,
being considered for credit watch. See Footnote 2, supra, and ,
attached newspaper accounts.
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A. BANKRUPTCY PER SE REQUIRES A FINANCIAL QUALIFICATION INQUIRY As has been previously argued, the Commission in adopting the current financial qualification rule, eliminating inquiry into the financial qualification of regulated utilities seeking operating
, license, expressly rejected as a rational for its action the notion that financial qualification was unimportant to safety.
Indeed, it stated, "The commission is not relying on this premise for its current rule." 49 Ped. Rec. 35751 (September 12, 1984) .
Rather, the rational for the rule was that case by case adjudication of financial qualification "is unnecessary due to the ability of such utilities to recover, to a sufficient degree, all or a portion of the cost of construction and sufficient costs of safe operation throuch the rate-makina process." (Emphasis added). Id. at 35748.
That rate-setting process may no longer be available to PSNH.
Jurisdiction over PSNH as debtor in possession is now vested in the U. S. Bankruptcy Court, which may or may not attempt itself to exercise rate-setting authority.1/
o 3/ The intervenors believe it highly unlikely that the bankruptcy judge would attempt to exercise rate-setting authority.
The bankruptcy, by itself, therefore establishes the prima facie case necessary for a waiver pursuant 10 C.F.R. S2.758.
This is so because the purpose of the rule eliminating the inquiry was to avoid case by case adjudication vhere the rate-setting process can act as a surrogate for the confidence that case by case adjudication could provide to reasonably assure a nuclear operating license applicant has the necessary financial quality.
That assurance does not exist in the case of a bankrupt utility. ,
B. BANKRUPTCY UNCERTAINTIES REOUIRE A FINANCIAL QUALIFICATION INOUIRY Even should this Appeal Board decide bankrupty per se 4
does not establish a prima facie case for a waiver of the current financial qualification rule, there is still a sufficient showing, in the case of Public Service, for a waiver of the regulation in order to permit a financial qualification inquiry.
10 C.F.R. 550.33 (f) as in force and applied since 1956 has required applicants for nuclear operating licenses to have "reasonable assurance" that they can obtain the necessary funds to carry out the permitted activities. The Commission's 1984 rule did not change this requirement. Rather, it only obviated the need for an inquiry for applicants for operating license which are "electric utilities."
In exempting electric utilities seeking an operating license from financial review, the Commission certainly could not have considered an electric utility operating under the jurisdiction of a
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the Bankruptcy Court to be included. Not only was there no basis in its experience to include such an entity as one whose financial quality could be assumed through the rate-setting process, but in fact, the bankruptcy of a utility applicant raises such major !
l uncertainties that, absent definitive decisions, no assurance of financial quality can be reasonably assured. j i
These uncertainties include the following:
- 1. Does the Bankruptcy Court in fact have rate-setting i power at all? (Most scholars think not. See 11 U.S.C. l 51129(a)(6)). -
- 2. Is the expenditure of funds of a bankrupt utility to j pursue an application for nuclear operating license within the ordinary course of business, or does it need court approval? j 1
- 3. Will a Bankruptcy Court require, or encourage, the sale !
1 of certain assets to further a plan of reorganization? If so, )
would the Court first encourage the sale of such non-revenue producing assets as the bankrupt's interest in an unlicensed and 4 1 perhaps an unlicensable nuclear plant? .
- 4. If the Bankruptcy Court felt that the early sale of unproductive assets was the most conducive way to an early plan of redrganization, would it continue to authorize use of the debtor's ,
cash resources to support licensing activity, as opposed to merely j 4 protecting and maintaining the facility? l i
- 5. If nuclear fuel is reduced in value as a salable asset i when irradiated, will the Bankruptcy Court approve a request to initiate low power operations, if such an operation is not "in the
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ordinary course of business"? l 4
- 6. Since all costs of radiological emergency response
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.1 planning for the state of New 3ampshire are billed to the Seabrook applicants, af ter approval of the N.B. PUC (see RSA Chapter 107-B) will the cost be authorized by the Bankrupcty Court to be paid by the debtor?
, 7. If the debtor's interest in Seabrook is to be sold, can a sale be authorized in light of RSA 374:22-a II, and if so wou3d that buyer be found financially qualified?f/
- 8. If such a buyer were to purchase the debtor's interest, and if it sought to operate the facility as a nuclear plant, rather than undertaking a conversion, would it then seek to market the power on the basis of wholesale rates and would this assure financial quality within the meaning of SSO.33(f)?
This is by no means an exhaustive list of relevant questions.
Moreover, most of these of questions have been raised by the debtor itself or by the New Hampshire Public Utilities Commission.
In sworn testimony before the N.B. PUC, the utilities financial vice president, Charles Bayless, had this to say about bankruptcy:
Commissioner Iacopino: Well, of course implicit in that aspumption is that somehow service to customers is going to be interrupted as a result of that bankruptcy.
The Witness: Service to customers interrupted? You know, there is a short term and a long term. I don't think in a j f/ RSA 374:22-a II provides "no permission or approval under j this section shall be obtained by a foreign electric utility as i defined in RSA 374-a:I in connection with its participation in electric power facility as defined in said section where the electric utility having the largest financial interest therein and the utility or utilities having primory responsibilty for the construction or operation of the freility are domestic electtic utilities as defined in said section or obtain such permission."
(Emphasis supplied).
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bankruptcy that service to the customer on the short run, nobody is going to see a thing. You are not going to see anything in the I very, very short run, for a couple, three or four months and then ;
the fights are going to start. And they are going to be huge fights among all the creditors. And the question really boils down to things like: Can they sell the plant?
Can they force a sale of completed plant? You know, Me,rrimack, Schiller, the Maine Yankees. I think the Maine Yankees are the clearest case because they are not in New Hampshire. But even uncompleted plant in a normal bankruptcy even the unsecured creditors probably could order them sold or get the judge, the bankruptcy Judge to sell them. And it is not a certainty, nothing is in bankruptcy, as I have certainly learned. But the unsecured creditors would realize that is the only hope they had of getting anything out of this whole operation is either the Commissien granting extraordinary rate relief or their getting the plant sold. And they would try to present it in that way to tell the judge either the Commission raises rates or you have to sell the plant. I don't know what the Judge is going to do, nobody can sit here and tell you because that has never happened. But there are just so many ramifications of going bankrupt and there are so many ramifications of not going. And I think when I say you should consider imprudent investment, I do so only in light of the extreme circumstances and the consequences that may result.
(Testimony before the New Hampshire Public Utilities Commission on February 6,1985, by Charles Bayless.) (Pertinent portions of Mr.
Bayless' testimony are attached hereto as Annex B) .
Relying in part on this testimony, the New Hampshire PUC I itself has found that bankruptcy would involve major uncertainties I for the Seabrook project. The Commission's decision, in Docket DP 84-200, included the following:
"Major Seabrook issues would probably include:
2 whether Seabrook should be completed or abandoned, whether Seabrook joint ownership agreement is an executory contract which may be rejected; and whether Seabrook as an unfinished project should be sold by PSNH pursuant to Section 363 of the Bankruptcy Code."
(Citations to record omitted.]
1 Additional issues could also include the price for a 35 percent interest in an unfinished nuclear J
plant and whether capital can be raised to
' construct alternate generating sources at
- affordable costs.
70 NH PUC Reports,164 at 253 ( April 18,1985) .
.p.
This applicant should not now be permitted to contend that l i its banktuptcy does not create a need for a hearing to resolve the l uncertainties of bankruptcy, when in sworn testimony, adopted by '
its regulator, it has tsken the positjon that bankruptcy creates major ancertainties. ;
Finally, there is attached hereto hs Annex C portions of the l l
transcripts of an aiguient of a motion before the U. S. Bankruptcy Court held on February 12, 1988. This transcript concerns argument on a notion sought pursuant to Bankruptcy Rule 2004 by which one cf the c::re ditors of the debtor in possession, PSNH, sought v.ida-ranging discovery over the status of payments to the Seabrook fun 3. As will be sten from reviewing these transcript ;
3 excerpts., it is evident that the parties present realize that the ,
issue of continuing Seabrook licensing, by continuing to fund the ;
. project at the rate of 4.4 Million Dollars a month, was a major 5
1 issue that needed to be resolved. In the view of the foregoing, the Appeal Board must now acknowledge that an inquiry into the financial qualification, and indeed authority, vf the lead l l applicant, now under the jurisdiction of the Bankruptcy Court as l l debtor in possession, is mandatory. l
) Respectfully submitted, '
SEACOAST ANTI-POLLUTION LEAGUE 2 By Its Attorneys, BACKUS, MEYER & SOLOMON
/ ff
- By
Robert'A. Backus, Esquire 116 Iowell Street
) P.O. Box 516 i Manchester, NH 03105 I (603) 668-7272 4
February 7)I,1988
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1 i February 23, 1988 o
I hereby certify that copies of the foregoing response have 4
1 been mailed, postage prepaid to the attached service list.
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Robett"A. Backus, Esquire
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Energynaily=mt Thursday, February 4,1988 5.'olume 16 Number 23 j NRC Board Prohibits Low Power Start-up More Bad News For Seabrookav ;o.w v:caus tv The Musachusetts Atter.sey General asked the 1.icens.
ins Board to put Seabrook's low power license on ho;d l
2 Owners of the Seabrook power plant lost another after Newburyport dismanded and removed emergency round on Wednesday in their struggle to license the rotification si ms ind polei that were to be used in the embattled 5L1 billion nuclear unit. In a 24 page cue of a Seabrook emergency. Newburyport is within the decision, two admi:Ustrathe judges with the Nuclear ten mile Sestrook plurne eyesure pathwey emergency !
Regulatory Commission's Atomic Safety and Licent planning gone. i Seabrook's owners had afgued that the loss of the j sing Appeal Board reopened proceedings concerning Newburyport sirens would hase no effect on safety. i emergency planning for the City o( Newbur> Tort in About 60 percent of the usa of the city could be covered Musachusetts. Until the case is relitigatijd, which by sirens in nei hboring Musachusetti communities, '
may take months, Seabrook operators will not be they said, and a kelicopter carrying acoustical packages I able to put into effect the 5 percent low. power capable of delivering both siren and voice warnings license authorized by the NRC last March, wculd de:J with the rest of the population. A back up "Suitable meuures for early public notification are mobile :) stem on the ground would be used if the not mere'y an essentia1 ingredient of emergency planning helicopter wu not available, j but, u we!), an absolute precondition to the authonia. In the legal fight with the Attorney General, the tion of low. power operation," the jcdges write. "Conse. Seabrook c*ners accused the Commonwealth of l euently, had the 1.icensing Boud been informed that the Musachusetu of "systematically ntting out to destroy sirens relied upon by [the plant owners) to provide early the Ituplace, fully adequate early notification system" notification in Musschusetu wtre nolenger ava: Istle to and argued that the Attorney Ce.. tral'1 Arg'ments should fulfill that function the [1.leensing Board] would be dismissed because the state h4d act c.ut to purposefully not-indeed e:uld net-have autherued [lo.. power) disable the nucleu plant. But'.tt Seabrook lawyers may optration.' Jl'"ontinued QA nest papel
-Gas Gets Credit- Asset Sales May Not Hait Kow
%'e?!I M/u"'..e .
meridwide hu be:ined toevert oil Of Angolan 4r.ude To The U.S.
The sale this week by C05iori and Texaco of part of their Angola l
f9NnSo the sin Arnoco corpericon chirman nt iu%
crude production hoMucts to foreign oil companies may not necessari-ly redu:e the large amount of U.S. crude imports from Angola. AGIP, i
metire Morren. TN settea tres the [ttilaA cil colcaty which beu.v,hta 93.pe.rcant share izuhe major on to su nu been p nschtr Cabinda offshore development, rnay find an outlet for its 27,EO bar.
socceeb6e in the f.'.5. and Europe. rels/ day in new Angolan crude through East Cout oil distributor l Ne,* $ Ye'MQp% Steuart Petroleum, in which it holds a substantiaJ stake. AGlP of-ficials in New York could not comment on their strategy for the
-in tme pur lo s.ari. e.o to ltree reanos two ha'e b.=* ecanrted Angola crude but noted they have an aggressive downstreen posture itomrfoilIe tate .t i.f ochins u." M orre, saks.wm1TMs in the U S*
has se,,e av Pam KNs hundred Laovuod Wrrvis per day Conservative groups in the U.S.
of ou. g% su sko earned I have long demanced a hah to U.S. for the near fature to hele, it "meet foe les cruce imports from Angela and a debt retiremenu nest.g*t to seteral enero mes. The fuefeceoesie4 pullout of U.S. companies P0f"8 CDI'**S ,,asd other cor.
for 15 pertsst of lotaj ecuamsdos operating in the southern African Chevt en. w hich had put its la 1946 verso 10 pertest le Im. country. Both Chevron ar.d Texaco Cabinda anets on the tiock a year w,orld=W. naturnJ saa cousna'P* 14y that their actions were not ago and rtttived buis from sestral dos o,p as sann pe M hea ts- o!lt!cally rnotivated but designed to compan.cs, Settled on AGlP u the i
e oil ,a a e: past b . elp their balance sheets, especially buyer in Jul), with the approval,0f
,ws , y .rt, 6d . in the cue of Teuco with its the Ango'.a goverr. ment. Negotta-
"Althoug h gnet strWes he ,, Pennioil. Chapter 11 problems. tions continued through January, bees maae se nadies ud st2 des Tenaco CEO James W. Kinricai The sales price is esumated at
- stat m l u resserets, trewedosa said that his cornpany's move su afound $200 million. Cabinda pro-
' pote s risalas to be esplodied." one of severaj uset sales planned reent%,g on ne,r p,;er
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""#37 I'heo 4. IS!! THE ENERGY DAIL) 3,P SEABROOK Wemn;eom rated "Sxa - w -> < S~ u-u the se: unties at its 'speculatise' grade since 1952 have pushed their argument too enthun,aui: ally. In their and has downgraded them twice in the put > car' '
decision, the Li:ensing Board judges wnte: At the same time, the rating agency review fer possible downgrade the ratings four utilities ofla:ed "The (Seabrock owners offer this bit of rheton,:t
'What the Ccmmonwealth,)its agen:les and with ;0liti:1!
dire:tsub.
or indirect ownership interest in the Seabrod /
I disisiens have done to Seatteok is indatinguishable from giant.>The stem.utilities in:lude Eastern Commonwealth tJtilities Asso:iates, Enern New England 1
E the a: tion of a proate individual whe somehow gains ac.
cess to a nu: lear power plant and deliberately renders a trle System and United Illuminating Company. Meeggs s1Jd that it is esamining the negatise impheations of safety system inoperame.' PSNH's bankrupt:y on the financial position and fleu
"%'e eJn readily appre:iate the frustration of the ap. Ibility of these utihties.
plicants engendered by the re:ent turn of esents respe:. John Spei! man, an assistant vice president at the New ting their early notifi:ation system. But that frustration YO!k rating agen:y, noted that PSSH's share of meniniv cannot serse to justify entirely unfounded charges that. mamtenan;e expenses for Seabrook is $t6 milhen. "It among other things, would cast a sosereign state and its remains to be seen," he said, "if a bankruptcy ceun agencies and political subdisisions in a role equiva!ent to that played by one w ho enters a nu: lear plant illi:itly and hudge will n' low these matntenan:e payments to b then engages in a mest serious form of federal criminal gisen 6,e magnitude of PSNH's insestment in Seabrcok I miseenduct. That the appheants' charges are utterly (approumately 71 percent of total assets) and the : m.
. without warrant is manifest..,
pany's nee: to preserve its c nsiderable insestment. Esen "The short of the matter is that the less of the sirens 'I * **"Y.was band by me cou 8 (or, as appli: ants would have it, the destruction of their shan of ggoing payrnents, Moedy,Ms I believes.that tne from
' ' fully adequate early netifi:ation system') did act stem dan wou~ h paid by other j0;nt owners in.
frem some un! awful or untoward act on the part of the tuntd in potMdng their own investmenu. But sa:h Commonwealth or its agencies or relitical subdisisions paymenu au not rewd undu th tums of the jemt Rather,it came about u a result of belated obedience to owners agreement and would rernain yoluntary."
the la* of that jurisdi: tion." Spellman w ent on to say that the rating agency belion Meanwhile on W,ednesday, Moedy,i Investors Senke that PSNH's bankrupt:y in:reun the risk of delay er confi=ed the ratina of approumately, $3.2 bilhon of cancellation of Seabrook "This hu impli:ations " he Pube: Servi:e of New Hampshire se: unties in the wW pointed eut,"for all of the joint owners, most of dhem of the ecmpany s bankr.gt:y filing on January 25. have invested heavily in the plant."
ANGOLA go tme: esm ute cre, APPA Renews Call On Deferred Taxes Public power companies on %'ednesday rea.twed their efferts to pet-suade insutor. owned utilit!es to pay back swiftly excess deferred tues.
n' w h had "
e$$d About 510 billien out of 536 billien in tues collected from consumers Eo 2$"he bar$ensstagnant a ca), reseat and placed in 'leferred tu aucunts are no longer due to the Treuury I % 195* to in be:ause of changes brought about by the 198,6 Tu Reform A:t, Nh'h$ Ec dnesten retainsl'"Uent )9.2 Amencan Public Power Assxiguon officials in Washingten said, per:ent share m lne dese1c., r...ent, h investor.cwr.ed utilities are obliged to pay ba k excess
,e5 tues os u the !!fe of a plant. APPA hu supported bills umed at allo *-
th r he state 0.a g ing regul.ators to instruct the utilities to pay ba:k the eacess tues mu;h he!:is the remaining $1 ptt: tnt. more :luickly. APPA mechts will sote on a pohcy resolution backing The etal automatically rnakes swift repayment at their annua.1 conference in Seattle on June 2L In 1 ACIP a major player in Arge!a seearate resolution, APPA's legislative and resolutions committee urs- 1 with a total 195: ;todu: tion in the ed the fede:2.1 gesernment to stop restricting the ability of state and 1 country es;t:te: to ee about.10,0C0 local gosernmenu to issue tu exempt finan:ing necessafy to presidt b/d, a::ording to ges erntnent buic public senices and maintain the ristionalinfrastructure, ~
estimates. Tnis makes it a solid fourth behind Senangel *ita 1988 ea:h. Texaco's share will dr:p to 20 spired a:tions by the U.S. Congrest. i prod;,:ti:n Of about !!0,C00 b/d. percent and Sonangel wl!! retain its Bes! des Chevron and Texa:e, the ,
Chesten with about ICO. COO b/d 2$ percent share. The block is being only other major U.S. pla)er in l and Elf *-ith about 41,0C0 b/d The ee, eloped after a series of fines in Angola is conoco. Mebil sold a!!!ti !
!!alian company hu a 50 per:ent the mid.19 t os, its total output Angola assets to a Japanne At p l share of B c:k 1. just south of thould rise frem the current 25,0C0 led by Mitsubishi in 1936. Chevren ,
has taken the lead in arguirg that Cabinda, whi:n has pre:uced some b/d to 10.000 b/d by the end of the small finds and it ti a, 30 percent year. Both Total and Brugtre hase U.S. oil company presence in partner with Conoco in Blxk 4 only the small Bio:k 2 output irt Angola helps American pch;), ;
which is stillin an early exploration Angola but are eagerly seeking more especially if the mesement toward (
phue, leases, peace indicated by the recent CuDan Tesaco is expe:ted to earn about troop pull out propetal materiahres
$100 million from the sale of a 20 The uset sales have been wel:om- and a bridge to the custins Cstfn-percent hciding in offshore Ble:k 2 ed by the Angolan gesern:nent which ment is netded. Last May Cheyon to Tctal and Brupetro. Each com- hu wanted to reduce the tmcunt of sha.rcholders rejected eserwhhng- i pany will get a 10 percent stake, its crude that was subject to poten- ly a proposa.1 that the compa"y l raising their holdings to 2*,5 percent tial interference by nght wing in. withdraw totally from Antcla- !
i fDTJt . d-M 9%g 2022981800 P.05 O '32 _
.M LNITED STATES BAN 10t'JPICY COURT POR 'INE DISTRICT OT
' NDI HAMPSHIRE
)
In re 4
) ,
FUBLIC SERVICE COMPNU OF ND4 HAMPSHIRE, aNa ) Chapter 11 Case "Public Service of New Harpshire" ) No. 88-
)
" FSMi" "New Ha..pshire Yankee" )
)
Debtor
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Debtor's E:ployer Tax Ident.'fication No. )
02-0181050 )
)
. !3 43J h5 9
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1
- .'1 VOLtATARY PCITIO:I .
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'dO$ *
$0
- 1. Petitlener's z. ailing address, in:luding ccrmty, is 20$0E}r.
Street, F.an:hester, Hillsborough County. Hrs Harpshire 03105.
- 2. Petitioner's place of krasiness has been, and the principal assets of the petitioner have been, within this distiret for the preceding 180 j days.
- 3. Petitioner is gaalified to file this petition and is entitled to the benefits of Title 11, United States Code, as a voluntary debtor.
- 4. Petitioner intends to file a plan pursuant to Chapter 11 of Title 11. United States code.
P
2 p '/ ,
- 5. Exhibit "A" is attached to and made part of this petition.
WHDETCRI, Petitioner prays for relief in accordance with Chapter 11 cf Title 11, United states Code.
.hMO<()./)gSW, T A
D. Pierre G. Camerca, Jr. f*
Vice President and Ger.eral Counsel Public service Ccepany of New Ha::pshire 1000 Elm Street Manchester, New Hanpshire 03105 (603) 669-4000 .
R hartin L. Gross Charles T. Sheridan, Jr.
R. Carl Anderson John M. Sullivan Sulloway Hollis & seden Nine Capitol Street P. O. Box 1256 Concord, New H epshire 03301 (603) 224-2341 bA crarles P~.' Norr.andin '('
Ropes & Gray A 225 Franklin Street Boston, Massachusetts 02110 (617) 423-5100 2, Robert J. Harrison, President of Public service Co:pany of New Ha.pshire, the Petitioner named in the foregoing petition, declare under penalty of perjury that the foregoing is true and correct.
Executed en January 28, 1988.
m
_ Robert J.'Farrisen I
5166
- v. l
.- ASSEX D ;
a 1
suggesting, are you, that the Commission should allow g
3 any imerudent investments, are you?
f3*
THE WITNESS. Oh, no.
- Cott!ISSIOSER IACOPINO. And you r f.
f.,[ c. f are not suggesting that the oublic good insome way s
; g-.c .I y pc g
z could be considered that the consequences of an e
.4> e imprudent investment would senehow be justitied or (a *
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sorehow would justify the granting of that imprudent e investment, are you? t I k THE WITNESS. I r.ight be. And I t j ! normally ry answer would be, r.:. i ? You should not E '
. allcw i=:ruden investments.
t i Eut if the ccre.ission O h e d i were to find that, lets assure that all of feabrook : e
+- h
$ was ircrudent, just to take sure that we would go y
o e
! bankrupt. And under that
( , g * ..c a n a ri o , the ef fects cf e f the bankruttev would be worse
- - '- a - +ka af'n t 15 t
> ,i C t l allcaing some irprudent investrent.
I, D t Then althouch I - l
& es i. . < f generally believe that imprudent investments should not :
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- s be found to be included in the rate base, then I think #
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O the cerr.issicn would have to censider that- vou have l C d to consider all of the facts that are before you, l l CC".".ISSIOSER IACOPINO. Well, of l i course implicit in that assum,::icn is that somehow service to customers is coin to be interrupted as a ; 1, -i W I
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result of that bankruptcy. p -f. sy 4 ; d THE WITNESS. Service to custerers 2 o .1,
; interrupted? You know, there is a short term and
- i.
- I l a long term. I don't think in a bankruptcy that I l
!, 9 service to the custoner on the short run, nobody i
- i
- is going to see a thing. You are not going to see
- j. ! anything in the very very short run, for a couple,
, t .
4 . fj three or four months and then the fights are going to 4 t -
, f. start. And the.v are c.oing to be huge fights among j < I.
I
* ! all the creditors. And the cuestion really boils a .
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i I p dcwn to things like: Can they sell the plant? t t t ,. Can the*v force a sale of ecm:leted j 5 i , '. I plant? Y:u kn:w, Merrimack, Schiller, the Maine e 1 W E j. Yankees. I think the Maine Yankees are the clearest U i "se because they are not in New Harpshire. But e$ven 6 t e ' uncompleted plant in a normal bankruptcy even the unsecured u o ! o , crediters pr:bably could order ther sold er get the z Q
.i u d c e , the bankructcy Judge to sell ther. And it is n0: a certainty, nothing is an a cankrupt:y, as I l'
g - "c t
; ") E i
have certainly learned. But the unsecurec creditors
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> would reali:e that is the only hope they had cf getting L
w y" r anything cut of this whole operatien is either the V E ,. C =ission granting extra crdinary rate relief er I i
,, t
! they're getting the plant sold. And they would try to
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, __ .. , . _ _ 14 I
I - I a , l T l 5168 t d 1 Y,, l j ', s present it in that way to tell the judge either the q i 4. Commission rasies rates or you have to sell the I 1 l [ 3. plant. I don't know what the Judge is goinc to do, I
?. 4 ,
O nobody can sit here and tell you because that has
'.o-As j l never hapoened.
@.' : I But there are just a so manv m.n .s I
1 y {f*
+ :h V
W ramifications of going bankrupt and there are nany ramification of not going. And I think when I sav1 I . f.'.. fy '.- you should consider imprude..t investment, I do I i < .
.;. > l, -
4 l' t so only in the light cf the 0::rer:e circumstances i . 1 l and the consequences may result. a d E j . CO:2::S SIC::I.7 IACOPI::0. I w;uld f f < E hope sc. I would hope you w ,uld say it reluctantly,
- e. .
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- y. - L.. , T. . . . .. . . :. : : .
4 I do, very relue:antly. d r j $ I C0y.' !SS: ::I.: IACOPI:0. That is all, f I i ' ) u ' . j ; o e [Q (Ey Mr. Eckhaus) In cross exa..ination yesterday and t { i k V t t ) *
! I forget which of the panel indicated it, it mav have l l
f e j. I ' u g l been several men.bers with ri?trd to uncertainties
- , - < [
# 2 and the impact of uncertainties on the ce.. . c '. +. ' . s ,i . r I' J f L g
- $ - g financing. Keuld you agree that if this Corr.ission I
- j e '
were to make a determinati:.- as to a cos: cao fer - 1 O e Seabrook that it would ha te ar impact on the financing 1
.o I , ,
i cost in this croceedinc.? j ; ; I ] lA I think it depends en wha the cost cap is. Cer ainlu. l j f" i { i
- t t if the Corr.issicn were :: crier, I am not sugc.estinc l l
1 1 l l i l ' 1
.. . . . . . . . . . ....... L . . . . . . . . . . . . . . . . .. . _ . . . ....:' .
A!NEX C i
' UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW HAMPSHIRE
. e e ...***.***e e * .
In re:
- PUBLIC SERVICE CCMPANY
- Chapter 11 Case OF NEW HAMPSHIP2, a/k/a
- No. 68-00043 "Public Service of
- New Hampshire" *
"PSNH"
- i "New Har.Pshire Yankee"
- l l
Debter.
- e DW I
%/
***.**********e e i
HEARING IN P2: DEBTOR"S MOTION FOR ORDER AUTHORIZING ASSUMPTION OF EXECUTORY CONTPACT FOR LEASE OF EQUIPPZNT. l MOTION FOR EXAMINATION OF DEBTOR UNDER BANKRUPTCY RULE 2004, i The above hearing was held before the Hencrable James E. Yacos, 275 Chestnut Street, Manchester, New Hampshire, on Friday, February 12, 1988, co.=encing at 10:20 a.m. l l 1 l l SAMUEI. S. GRAY Court Reporting Semees )
Certified Shorthard Reporter !
30 Highland Avenue Derry, New Hampshire 434 5547 1.i e
a 1 18 ) 1 slerted to the f act that Public Service Cempany filed a l l
; 2 Chapter 11 petition'they sent something akin to a detault l 3 letter to Public Service Company, and we quickly educated ;
4, them as to the bankruptcy law and they were pleased with ) . 5 the proposed order. i ll 6 JUDGE YACOS: Was the ground the filing of
- 1 7 the case? l 1
8 MR. MARCUS: Yes. 0 l 9 i JUDGE YAcos: All right. I will enter this ! J 10 proposed order as an order of the Court approving the i 11 assumption with the deletion of the reference to the :
- 12 upgrade. l 2
/ l
- 13 MR. MARCUS
- Thank you. !
i 14 JUDGE YACOS: You will service ccpies of i ) 15 these orders en the parties? 16 MR. MARCUS: Yes, your Honor. , i e I 1' . JUDGE YACOS: Anybody that requests a copy ! f 18 here today, let the attorney know and you can have a copy , 19 We will move on to the other I for your file. All right. ; 20 motion, the motion for the .2004 examination. That's your , i : 21 motion? i
, I'-
22 MR. ROSS: My name is Jonathan Ross. I I 23 represent First Tidelity. It's our motion, your Honor. We l i 1 4 I I i a I i ! i
r 19 I appear on behalf of the trustee of the third mortgage bonds 2 under certain indentures and seek an order from the co We understand that the 3 to permit a '2004 examination. 4, Debtor --- Can you people in the back JUDGE YACOS: 5 We have an Can you hear in the back there? 6 hear counsel? electronic system now and we're going to have an amplifier 7 , We have an air conditioning noise in the courtrocm 8 system. Pletse speak but I don't think it is operational yet. 9 l 10 louder so that everyone can hear you. MR. ROSS: Perhaps if I move to the side. 11 is We understand, your F.onor, that the Debtor is paying or 12 going to pay interest to the first and second level secu 4 13 14 creditors, and we represent the third level of secured 15 creditors in this action. ' The Debtor has seemed to represent,that it 16 has money enough to pTy either its contribution to the 17 to our bond).olders, and it 18 Seabrook project or interes+ t 19 appears that the Debtor has made the choice to make the j We are watching the potential for 20 Seabroek payment. 21 collateral to be diminished, and we feel that the trustee 22 has a duty to all of its' bondholders to inquire into that subject. The trustee believes that the third mortgage bond 23 f
20 I holders should.be paid interest in lieu of the payments
. and we need the ability 2
being made on the Seabrook project, 3 to inquire of the Debtor under oath'to examine those issues 4 and to avoid the PR blitz that comes both frcm the Debtor 5 and others interested in the Seabrook project. We stand here representing First Fidelity 6 filed by 7 as a trustee and the references in the affidavit 8 the Debtor to CUC are irrelevant to the trustee's duty to'
! that we are not 9
inquire and I will represent to.the Court 10 acting under instruction by anyone but the trustee here. 11 We are looking to the Court ultimately to make judgments 12 about whether or not the payments to the Seabrook project 13 are in the ordinary course of business or are in the best 14 interest of the Debtor and the State, and we need to e 15
' develop information to pres ent to the Court soon so that th We feel that the order 16 Court can make that determination.
17 that we proposed that was delivered here yesterday morning limits issues and provides a reasonable ~ schedule to 18 ! The response from the l 19 accomplish what we have asked for. 20 Debtor has been a stonewall, no intprest in discussing The only response is that they're 21 a schedule or issues. 22 not willing to do anything. The next payment we understand on the-23 l 1
! )
/ 21-f March, Seabrook project would be due in the first week o 1 nable 2 and we would like to move forward with some reaso We would suggest, your Honor, in light of the dispatch.
3 the extent objections served on us by the Debtor, that to 4, asked for that the Debtor enn identify documents that we 5 ily accessible, that are in the public domain and read 6 l ce where they f that reference to such documents and the p a 7 us as an are readily accessible would be acceptable to 8 j 9 9 alternative to production. f Are there any documents you're JUDGE YACOS: i 10 interested in that are not in the public domain? 11 MR. ROSS: We don' t know because we don' t 12 Honor, 13 know all of the documents that the Debtor has, your 14 and we would have to --- How many public agencies does
. JUDGE YACOS:
15 16 the Debtor have to file 'with? Many, many of whom are here, MR. ROSS: 17 it us
.18 but the issues that we have asked the Court to perm ific, and in i ' 19 to inquire into we think are reasonably spec 20 order to find these documents - -
They report to the SCC as well JUDGE YACOS: 21 22 as to state regulatory agencies? Those MR. ROSS: We have those documents. 23 t g . I p 1 i . -. en , .n .
+= * '-
st 24 . [ l Service's business is to provide electric power to g customers. Seabrook is not doing that right now, and it is 2 3 important to inquire into the likelihood of Seabrook 4, producing and for the Court to determine whether th.ese 5 payments are in the ordinary course of the Debtor's 6 business and whether they're in the Debtor's best interest. 7 Seabrook at this point is either a capital expense or a 8 venture capital. We don't know which and to determine 9 whether interim payments should be made we feel we'have'to 10 get this additional information to protect our bondholders. We also want to find out, as I said, whether 11 12 there are other resources availabfe and what impact they f 13 might have on that project if the Court suspended those 14 payments and allowe? the interest payments to third 15 mortgage bondholders. So, we would ask the court to l
)
l 16 grant our motion. JUDGE YACOS: What was the last point? 17 , 18 MR. ROSS: We feel that we need to find out impact 19 whether suspension of the payments to Seabrook, what that would have on the project. We believe, but don't know 20 21 and wish to discover, whether other owners have a reserve 22 or have the capacity to continue to maintain the project 23 while the Debtor in possession uses its cash flow to pay 1 l
. ~
25 1 interest to the third mortgage bondholders. 4 2 JUDGE YACOS: All right. Do you have any 3 other main points to make? MR. ROSS: No, your Honor. Thank you. 4 JUDGE YACOS: All right. There is an [ 6 objection by the Debtor and I will hear them first and then 7 anybody else. MR. STILLMAN: For the record my na e is 8 Robert Stillman for Public Service Company. I think First 9 10 Fidelity has made clear its argument on what's really going This isn't really about discovery. It's 11 on in this motion. 12 about an attempt by one group of creditors, the third i 13 mortgage bondholders, to start out this proceeding by 14 coming ahead of all others and in particular the unsecured 15 l creditors and the equity holders of this company. 16 First Fidelity says that it wants to make 17 discovery in order to find out what should be done about 18 Seabrook, and specifically the interim, whether it makes 19 sense for the Court to suspend payments for maintenance 1 20 and upkeep that is needed to keep Seabrook in compliance l 1 21 with its ongoing commitment to the NRC requirements with l 22 routine upkeep and maintenance, meeting payroll for 23 approximately 800 employees of Public Service of New 1 I 1 1 l
.a. ,
,./ \
i 26 l 1
. 1 Hampshire Yankee Division, who are charged with the
. 1 2 responsiblity for-maintaining this plant, which is familiar 3 to all concerned, the principal asset of the Debtor. 4 Public Service agrees that discovery about 5 Seabrook, because it is a critical issue in this case, will 6 be appropriate at the proper. time and in an orderly fashion. 7 our disagreement is withholding discovery now for the 8 purported purpose of either deciding Seabrook's fate at 9 the outset of this case or temporarily suspending routine , 10 upkeep and maintenance payments. Either motion would be 11 brought inappropriately at this time and, therefore, there ; 12 is no need at this time to respond to tha very evasive l 13 and burdensome discovery request put forth by First Fidelity ) 1 14 since any motion they could bring is premature. 15 .I think your Honor is aware that a Creditors ) l 16 Co=mittee was appointed only this Wednesday, that'it is in l 17 the process of being organized, has not selected permanent i 18 counsel, hasn't decided yet whether it will seek to retain 19 financial analysts or advisors to assist it in determining ) 20 what is in the best interest of the creditors generally 21 with respect to Seabrook. First Fidelity has already made 22 clear itself and some of its bondholders have made clear 23 what they think ought to be done. They want to cut Seabrook
- N NM
.. . n .~.
,7
.- 27
. 1 off so that it doesn't in any way-affect their narrow s
2 interest. That may be their view and they're entitled to 3 press that view, but it doesn't mean that they should press 4 that view by burdening.the Debtor with discovery now where the Creditors Committe has'n't had a chance to figure out 5 6 what information it needs or to figure out whether it 7 can sit down with Public Service and informally share any 8 information that all of the creditors need. In fact, as 9 your Honor knows the world didn't come into existence 10 on January Twenty-eighth, and Public Service has been 11 in informal contact with the shareholders, excuse me, the 12 bondholders group', CUC, that claims to control the largest 13 block of third mortgage bonds. There has been an informal 1 14 exchange of views. I don't know that anything would be 15 served by formal discovery --- 16 . JUDGE YAcos: You say that it's premature and, 17 not appropriate at this time. Now that suggests that at l 18 ' some other time it is relevant to develop these facts. When 19 do you think that other time is going to come? 20 MR. STILLMAN: Your Honor, my proposal would 21 be let's get counsel appointed for the Creditors Committee. 22 Let's sit down with the creditors Committee and see what 23 they need and let's work out a schedule that makes sense.
..e-+-.s.+4 --#- , ._
1
' l l
37 1 Court to make a specific order about the 2004 proceeding 2 today. Thank you. 3 JUDGE YACOS: All right. I am prepared to I rule. I will state my reasons into the record. The writter 5 order will just incorporate them by reference. , l 6 I am sympathetic to Movant's position that ! 7 they don't want to wait too long to develop an evidentiary 8 record, and I am sympathetic to their suggestion,'and I 9 think it is shared by the Debtor'to some extent and the 10 Committee, but this is a key issue in the case and will 11 require the development of an evidentiary record regardless 12 of what happens in the reor.ganization process so that the 1 13 negotiations can go forward in a meaningful fashion and ; 1 14 unnecessary delays can be avoided. I 15 We have coming up on the Twenty-sixth of 16 February a status conference hearing on which I will hear 17 suggestions from the various parties as to procedures in 18 this case, and one of the ideas I will put on the table at
/
that hearing for reaction is some mechanism to have an l 20 ongoing buildup of an evidentiary record fairly soon'after 21 the first meeting of the Creditors to develop facts that 2'- are going to be pertinent to some of the key questions that 23 the Court'is going to have to face at some stage in this I
7 38 e 1 case rather than_having to wait for the parties to negotiate without an evidentiary record being built. That 2 3 is not very succinct expression of it and I hope to be 4 a little more to the point on the Twenty-sixth. 5 So, I am sympathetic to your wanting to 6 move this into an evidentiary mode very early, but I do 7 think it's premature in the sense that the Committee should 8 be fully organized, the first meeting of the creditors 9 should have been held, which is scheduled March Eighth, 10 and from our standpoint you can spend the time reading 11 each and every financial record in the public domain so 12 that if you file a new motion to be heard before this 13 Court again you can say we have studied it all and we 14 still don't know one, two, three, four, five, which we 15 need to have discovery of. That process will eliminate , 16 a burden on the Debtor, will focus on what really needs to 17 be disclosed in testimony, and hopefully that will be fair l l 18 to both sides --- I shouldn't use the word "both", --- to l i l 19 "all" sides in.this case. So, for those reasons 20 I am going to enter an order thar finds that this motion is premature and it is denied without prejudice. That will 21 22 be the disposition today. I do encourage those of you who 23 are interested to attend the Twenty-sixth hearing and I 4 I}}