ML20154B636
| ML20154B636 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 09/09/1988 |
| From: | Dean G MASSACHUSETTS, COMMONWEALTH OF |
| To: | NRC COMMISSION (OCM) |
| Shared Package | |
| ML20154B618 | List: |
| References | |
| OL-1, NUDOCS 8809140068 | |
| Download: ML20154B636 (81) | |
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O septeneer 9, 1933 UNITED STATES OF AMERICA NUCLEAR REGUuATORY COMMISSION O before the COMMISSION O
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In the Mattor of )
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PUBLIC SERVICE COMPANY OF ) Docket Hos. 50-443-OL-1
() NtW HAMPSHIRE, ET AL. ) 50-444-OL-1
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(Seabrook Station, Unit 1 ) (Onsite Emergency Planning and 2) ) and Safety Issues)
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O THIRD SUPPLEMENT TO O
MASSACHUSETTS ATTORNEY GENERAL JAMES M. SRANNON'S PETITION UNDER 10 C.F.R. 2.758 FOR A WAIVER OF OR AN EXCEPTION FROM THE PUBLIC UTILITY EXEMPTION FROM THE REQUIREMENT OF A DEMONSTRATION OF FINANCIAL QUALIFICATION O
JAMES M. SHANNON O ATTORNEY GENERAL COMMONWEALTH OF MASSACHUSETTS Steven A. Jonas George B. Dean
() Assistant Attorneys General Departme.nt of The Attorney General (ne Ashburton Place Boston, Massachusetts 02138 O
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D UNITED $!ATES OF AMERICA NUCLEAR REGULATORY COMMISSION before the COMMISSION D
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In the Matter of )
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PUBLIC SERVICE COMPANY OF ) Docket Mos. 50-443-OL-1 g NEW HAMPSHIRE, El AL. ) 50-444-OL-1 (Seabrook Station, Unit 1 ) (Onsite Emergency Planning and 2) ) and Safety Issues)
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O THIRD SUPPLEMENT TO MASSACHUSETTS ATTORNEY GENERAL JAMES M. SHANNON'S PETITION UNDER 10 C.F.R. 2.758 FOR A WAIVER OF OR AN EXCEPTION FROM THE PUBLIC UTILITY EXEMPTION FROM THE b REQUIREMENT OF A DEMONSTRATION OF FINANCIAL QUALIFICATION D
INTRODUCTION Presently before the Nuclear Regulatory Commission g (* Commission') pursuant to the certification of the Appeal Board in ALAB-895 is MASSACHUSETTS ATTORNEY GENERAL JAMES M. SHANNON'S PETITION UNDER 10 C.F.R. 2.75d FOR A WAIVER OF OR AN EXCEPTION g FROM THE PUBLIC UTILITY EXEMPTION FROM THE REQUIREMENT OF A DEMONSTRATION OF FINANCIAL QUALIFICATION. The Massachusetts Attorne'y General submits this Third Supplement to
, that Petition to bring to the Commission's attention new information that demonstrates the necessity of granting a wavier
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O of or exception fron the puolic utility exemption from tne requirenent of a demonstration of Cinancial qualification, i.e.,
new infornation that further demonstrates the inappropriateness of 3Fplying a 3eneric presunption that the rate process will assure that adequate funding will be available to cover the costs of safe low power operation and the permanent shut down of the Seabrook Nuclear Power Station.
BACKGROUND O
On March ', 1988, pursuant to an order of the Appeal Board dated January 29, 1988, James M. Shannon, Attorney General of the Commonwealth of Massachusetts ("the Attorney General *), petition 6d O i under Section 2.758(b) of the Commission's regulations for a wavier of or an exception from the public utility exemption from the Commission's requirement that a demonstration of financial qualification be sde prior to the issuance of a commercial nuclear power planL operating license.[1] In particular, the Attorney General requested a wavier of or exception from sections 2.104(c)(4), 50.33(f), and 50.57(a)(4) of the Commission's regulations to the extent necessary to require that the Applicants demonstrate, prior to low power operation, financial qualification to cover the costs of seabrook Unit l's operation for the period of the license and the costs to permanently shut it down and maintain it in a safe condition. In support of that petition, the i 1. MASSACHUSETTS ATTORNEY GENERAL JAMES M. SHANNON'S l PETITION UNDER 10 C.F.R. 2.758 FOR A WAIVER OF OR AN EXCEPTION l FROM THE PUBLIC UTILITY EXEMPTION FFOM THE REQUIREMENT OF A DEMONSTRATION OF FINANCIAL QUALIFICATION (hereinafter referenced lO as 'MassAG Pet').
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O Attorney Janeral naintained that the :2cstant s; present c .i g potential f'2 tare costs associated with fos power operation and testing of the Seabrook plant (MassAG Pet at 16 - 23), together with the cin<raptey related constraint 3 on the sysilability of g fanis to PSMH to cover those costs (14 at 24 - 32) and the present inability / unwillingness of the remaining joint applicants to commit to cover PSNH'a share of those present and fature costa
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15), demonstrated that it is more likely than not that adequate funding for the cos s of safe low power operation and permanently shutting down the Seabrook plant and maintaining ;
3 it in a safe condition would not be available during the pendency of the PSNH bankruptcy. !n the period subsequent to the filing of the Attorney General's Petition, additional information 3 became available which bore on the likelihood that adequate l
'unding would be available to assure the safe operation of the Sesbrook plant. This additional infornation led to the Attorney
) General filing two supplements to his original petition with the Appeal Board.
On July 6, 1988, the Appeal Board concluded on the basis of
[] the Attorney General's Petition as supplemented that 'the Attorney Gen 6ral's waiver petition present(ed] a prima facie case that the l
l applicants lack sufficient funds to operate Seabrook safely at low 1
[] power' and certified the petition to the Commission. Public Service Company of New Hampshire (Seabrook Nuclear Power Station, Units 1 and 2), ALAB-895, NRC (1988)(slip at 38).
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n !".e 99eiod Jub3equent to the certificat!On to the 10 2*i'*t ' D7 *h' ^9P'*1 3 d f *h' ^** '"'Y U'*1'* "***** "'
additional information has become available which bears on the likelihood that adequate funding will be available to asJure the g safe operation of the Seabrook plant. Specifically, recent proceedings in the Bankruptcy Court as well as information recently provided by Public Service to the Commission Staff g indicate that:
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- a. That Public Service itself believes that uncertainty l concerning the willingness or ability of itself and other O d i"* "" * **** "h'i' f1"*"*i'l P "*ibili*i'* * 'h' Seabrook project has jeopardized the confidence and morale of the existing staff at Seabrook Staticnr O b. That the solution proposed by Public Service to mitigate this weakening of confidence and morale was not approved by che Bankruptcy Courts g c. That therre is evidence that only the Bankruptcy Court, >
not the !Iew Hampshire Public Service Commission, can assure I that suf ficient funds will be available to Public Service to g cover the costs of safe low power operation and of permanently shutting down Seabrook Nuclear Power Stations :
- d. That the Applicants cannot now assure the availability l O f '""d* * * " "h* * *** f **f' I
- P **' P**i " ^^d l the only mechanism suggested to provide such assurance is an I unorthodox financing that is indicative of the financial O Pli9ht f the Applicants;
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- e. That the Applicants do not now have or 3Ppear to be g see<ing a mechanism to assure the availability of funds to cover the costs of permanently shutting down Seabrook Nuclear Power station in the circumstance that low power testing g occurs but a full power operating license is never granted.
To bring this important infornation to the Commission's attention, the Attorney General hereby supplements his March 7, 1998 Petition by statirg:
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THE PRTSENT UNCERTAINTY CONCERtlING THE FINANCIAL QUALIFICATION OF THE APPLICANTS HAS AND WILL CONTINUE TO HAVE A O DELETERIOUS EFFECT ON THE MORALE AND CONFIDENCE OF SEABROOK NUCLEAR POWER STATION PERSONNEL
- 1. On July 21, 1988, Public Service filed a ' Notice of O'
Intention To Enter Into Transaction out Of The ordinary course (New Hampshire Yankee Electric Core ion)' with the Bankruptcy Court which concerned the Applir 'ta.
c itempt to transfer O management and operational cont. + r the Seabrook Nuclear Power Station from Public Service to a separate corporation, the New Hampshire Yankee Electric Corporation ('N3YEC'). (See Third O Supplemental Appendix I!!; In re Public Service Company of New Hampshire, B.R. (September 2, 1988 Mem. Op. in BK898-l 00043)(slip at 1)).
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- 2. In support of approval of the proposed transaction outside of the ordinary course, Public Service submitted a sworn declaration of Robert J. Harrison, its president and chief executive officer, which recited, among other items, the following l
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3a benefits of tne propoJ11 to 'coth Public service and the Seabrook project sa a whole:
O 9.1 Instability in the willingness or ability of
?uelic Service and other Joint owners to meet their financial responsibilities to the Seabroot project jeopar11:es the confidence and norale of the existing staff at Seabrook O
S t a t i. o n . The existence of NHYEC as the longterm operator of Seabrook Station will likely improve that confidence and morale, retaining the loyalty of the existing personnel and attracting new employees as necessary.
9.2 The existence of NHYEC as a separate corporate entity will permit continuity of the direct management of the O Seabrook project, independent of changes in ownership of Seabrook or in the status of individual owners. Such continuity is important to perceptions of continued management dependability and prudence, g (Id. at 3).
- 3. Contrary to the expectation implicit in the August 31, 1988 response of public Service to the Staff's request for financial informacion (See Third Supplemental Appendix I: PSNH '
O i Response to NRC Request for Financial Information (August 31, [
1988), at 15-18), on September 2, 1988, the Bankruptcy Court denied approval of the proposed transaction which, among other
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purposes, was intended to alleviate a weakening of morale and 1
- confidence of Seabrook Nuclear power Station personnel as well as to instill a perception of managerial continuity and prudence.
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(See Third Supplemental Appendix I!!: In te Public Service Company of New Hampshire, B.R. (September 2, 1988 Mem. Op.
in BK888-00043)(Slip at 19-201).
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THERE IS STRONG EVIDENCE THAT THE 3ANKRUPTCY COURT, RATHER THAN T:iB RATE PROCESS, o~ WILL CONTROL THE AVAILABILITY OF FUNDS FOR SAPE LOW POWER OPERATION
- 4. Consolidated Utilities and Conmunications, Inc. I'CUC')
and Citicorp, holders of Public Service third nortgege bonds and active participants in the bankruptcy proceedings, have stated that they believe that the prior approval by the Bankruptcy Court 0 is '
ary for the initiation of Icw power operation. (See
'Thir pplemental Appendix II: Excerpts from Transcript, August 26, 1988, pp. 24-25).
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- 5. Although tht Bankruptcy Court has explicitly refrained from ruling on the questio low power operation (See Third Supplemental Appendix III: to re Public Service Company of New Q'~
Hampshire, B.R. [ September 2, 1988 Mem. Op. in BK888-00043][ Slip at 16 n. 8, 18 n. 10, and 20]), a colloquy between the Bench and counsel for Public Service during the hearing on the proposed transaction indicates that the issue is very much alive and that Public Service cannot assume that prior Bankruptcy Court is not necessary for low power testing:
O THE COURT: You feel that (it) would be in the ordinary course of business to turn on the power at Seabrook?
MR. WILLENBURG Your Honor, I think it might be. After all, generation of electricity is the business of this
- ) debtor, but I don't believe that that issue is before us now ...
(See Third Supplemental Appendix II: Excerpt's from Transcript, August 26, 1988, pp. 61-62).
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0 THERE IS STILL NO ASSURANCE THAT ADEQUATE FUNDS WILL BE AVAILABLE TO THE z) APPLICANTS TO OPERATE SEABROOK SAFELY OR PERMANENTLY SHUT IT DOWN
- 6. In its response to the request for financial information made by the NRC staff, Public Service indicated that replacement funds for those no longer provided by MMWEC had been secured for the period ending November 30, 1988 and that some unspecified form of contractual arrangement aith outside investors was under consideration which would provide additional funds to replace those not provide by MMWEC during the period from November 30, O 1988 through December 31, 19'9. (See THIRD SUPPLEMENTAL APPENDIX I: PSNH Response to NRC Request for Financial Information (August 31, 1988), 8-9),
b 7. Public Service's response did not, notwithstanding an i
explicit request for such, provide any information concerning the sources -- secured, planned or otherwise - "of funds for covering
... total costs of permanent shutdown of the facility und maitenance as a safe condition after a period of low power operations only." (Id. at 3-5).
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- 8. In the absense of any secondary secure source of funding for MMWEC's share of the costs of permanent shutdown following low power operation, the Applicants are obviously left with only the possibility of a law suit against an an already defaulting Joint Owner whose def ault and nonparticipation prior to low power operation would constitute a colorable defense to that claim: a far from reasonable, much less certain source of funds, r
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- 6 CONCLUSION NHER FORE, Att eney General James M. Shannon prays that the O
Commission:
(1) determine that the public utility exemption fram the (3 requirement of a demonstration of financial qualification should be waived or an exception granted with respect to the licensing of the Seabrook plant;
- 4) (2) stay the issuance or a license authorizing low power .
operation and testing pending the outcome of proceedings concerning a determination of whether the Applicants can
- g demonstrate that they possess the requisite financial qualifications to assure safe low power operation and a permanent ,
shut down of the Seabrook Nuclear Power Station in the event that
) a full power commercial operating license is not issued; (3) issue such other orders and grant such other relief as may be equitable and necessary to assure the public health and j) safety in light of the present extraordinary financial straights s of the Joint Applicants.
RESPECTFULLY SUBMITTED, z) JAMES M. SHANNON '
ATTORN Y.GE PP11 COM Ab .ASSA HUSETTS j - -
BY: < 5tev W uonas "
z) George B. Dean Assistant Attorneys General Department of The Attorney General One Ashburton Place Boston, Massachusetts 02138
'(3 DATED: September 9, 1988 9
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J SUPPLE!! ENTAL APPENDICES n"'
Third Supplemental Appendix I: PSNH Response to NRC Request for Financial Information (August 31, 1988).
Third Supplemental Appendix II: Excerpts from Transcript,
,0 August 26, 1988.
Third Supplemental Appendix III: In re Public Service Company of New Hampshire, B.R.
(September 2, 1787 Mem. Op. in BK488-00043)(slip).
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RECE!VED acce u sc ucn 3 1 1 I L]il 2. SEP 11988
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NUCLEAR SAFETY UN' " """" '"E" I
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August 31, 1988 U. S. Nuclear Regulatory Co:mnission Washington, D.C. 20555
) Attention: Document Control Desk Re f e rences s a) Facility Operating License NSF-56, Docket No. 50-443 b) USNRC letter dated August 1, 1988, "Financial Coverage for the Cost of Low Power Operation - Reque st 3 for Additional Information", B. Boger to R. J. Harrison c) USNRC letter dated August 17, 1987, "Racent Filings by Public Service Company of New Hampshire Before the Securities and Exchande Commission",
B. A. Boger to R. J. Harrison
- 3 d) PSNH letter dated September 3,1987, "Re: Request for Financial Information", NYN-87104 in Docket No. 50-443 Re: Request for Additional Information 3 Gentlemen:
In reference (b), the NRC requested clarification with regards to the applicants' ability to provide financial coverage for the cost of low power optration of Seabrook and the cost of any permanent shutdown of tho facility and maintenance in a safe condition following low power 3 operation.
Enclosed herewith are detailed responses to your questions which we have prepared to the best of our ability based upon the assumptions you specified or as indicated therein. Included with these responses are copies of the Joint Owners' interim financial statements and other G reports which you requested.
If you need any further information or clarification, please contact the undersigned, or Edward A. Brown, President and CEO c.. New Hampshire Yankee Divisio:4, e very truly yours, N I
. J. Harrison
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G RJH fe Enclosures cc ASLB Service List 1000 Elm St.. P O. Box 330,Monchester NH O3105 . Telephone (603)669 4000 . TWX 7102207595 3
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- O O sEnvrcE trsT Copies of the foregoing letter and enclosures 1 through 6 are being sent by federal express to the folicwing individuals
3 Alan S. Rosenthal, Chairman Howard A. Wilber Atomic Safety and Licensing Atomic Safety and Licensing Appeal Panel Appeal Panel U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission O
East West Towers Building East West Towers Building 4350 East West Highway 4350 East Wost Highway Bethesda, MD 20814 Bethesda, MD 20814 Thomas S. Moore Mr. Richard Donovan Atomic Safety and Licensing FEMA, Region I Appeal Panel 442 John W. McCormack Post O U.S. Nuclear Regulatory Office and Court House, Commission Post Office Square East West Towers Building Boston, MA 02109 l 4350 East West Highway Bethesda, MD 20814 O Administrative Judge Sheldon J. Robert Carrigg, Chairman Wolfe, Esquire, Chairman Board of Selectmen Atomic Safety and Licensing Town Office Board Panel Atlantic Avenue U.S. Nuclear Regulatory North Hampton, NH 03862 Commission O East West Towers Building 4350 East West Highway Bethesda, MD 20814 Administrative Judge Emmeth A. Diane Curran, Esquire Leebke Andrea C. Forster, Esquire O 4515 Willard Avenue Harmon & Weiss Chevy Chase, MD 20815 Suite 430 2001 S Street, N.W. !
Washington, DC 20009 Dr. Jerry Harbour Stephen E. Merrill, Esquire O Atomic Safety and Licensing Attorney General Board Panel George Dane. Bisbee, Esquire U.S. Nuclear Regulatory Assistant Attorney General Commission Office of the Attorney General East West Towers Building 25 Capitol Street 4350 East West !!ighway Concord, NH 03301-6397 O Bethesda, MD 20814 O
- O Sherwin E. Turk, Esquire Mr. J. P. Nadeau
.O ffi e f eneral Counsel Selectmen's Office U.S. Nuclear Regulatory 10 Central Road Commission Rye, NH 03870 One White Flint North, 15th Fl.
11555 Rockville Pike Rockville, MD 20852 O Robert A. Backus, Esquire Carol S. Sneider, Esquire Backus, Meyer & Solomon Assistant Attorney General '
116 Lowell Street Department of the Attorney P.O. Box 516 General Manchester, NH 03105 One Ashburton Place, 19th Fir.
Boston, MA 02108 Philip Ahrens, Esquire Mr. Calvin A. Canney Assistant Attorney General City Manager Department of the Attorney City Hall General 126 Daniel Street Augusta, ME 04333 Portsmouth, NH 03801 Paul McEachern, Esquire R. Scott Hill-Whilton, Esquire Matthew T. Brock, Esquire Lagoulis, Clark, Hill-Shaines & McEachern Whilton & McGuire 25 Maplewood Avenue 79 State Street P.O. Box 360 Newburyport, MA 01950 0 Portsmouth, NH 03801 Mrs. Sandra Gavutis Mr. Peter S. Matthews Chairman, Board of Selectmen Mayor RFD 1 - Box 1154 City Hall Route 107 Newburyport, MA 01950
.O xensington, NH 03827
- Senator Gordon J. Humphrey Mr. William S. Lord U.S. Senate Board of Selectmen Washington, DC 20510 Town Hall - Friend Street (Attn: Tom Burack) Amesbury, MA 01913
- Senator Gordon J. Humphrey One Eagle Square, Suite 507 Concord, NH 03301 (Attnt Herb Boynton)
O Mr. Thomas F. Powers, III Town Manager Town of Exeter 10 Front Street Exeter, NH 03833 0 O
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- O H. Joseph Flynn, Esquire Charles P. Graham, Esquire O office of General counsel Murphy and Graham Federal Emergency Management 33 Low Street Agency Newburyport, MA 01950 500 C Street, S.W.
Washington, DC 20472 Gary W. Holmes, Esquire O Holmes & Ells Richard A. Hampe, Esquire Hampe and McNicholas 47 Winnacunnet Road 35 Pleasant Street Hampton, NH 03841 Concord, NH 03301 l
Judith H. Mizner, Esquire 79 State Street, 2nd Floor O Newburyport, MA 01950
- Due to their bulk, enclosures 7 to 18 are only being sent to the NRC Staff. The documents are available in the public document room.
,0 i *U.S. First Class Mail O
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O Enclosure to NYN-99115 NRC ouestion 1:
O Please provide detailed estimates of (a) the total cost to operate Seabrook Unit No. 1 at los power only (up to five percent) ; and (b) the total cost to permanently shutdown the facility after low power operation only and to maintain it in a safe condition, should that become necessary. Also provide an estimate of the cost to store and to dispose of the O irradiated fuel assuming low power operation only. Describe in detail the assumptions underlying the estimates. Include assumptions as to power level, duration of operation, method of fuel storage and disposal and method of permanent shutdown and safe maintenance. In response to the above, the applicants (i.e., the Joint owners) should update their O response to the NRC letter dated August 17, 1987. This request for information is in addition to the reporting requirements of the NRC's decommissioning rule published in the Federal Recister on June 27, 1988, (53 FR 24018).
O Resconse to NRC Ouestion 1:
This question is substantially identical to Qusstion 1 as set forth in the NRC letter dated August 17, 1987 referrei O
to above and the information with respect to parts (a) and (b) of the question supplied in response to that question is still generally valid, except for the current funding ,
O forecast and the monthly expenditures following a permanent shut-down decision. See PSNH letter to NRC, dated September 3, 1987, in Docket No. 50-443. The current funding forecast O
for the period July - December, 1988 is provided in respcase to NRC Question No. 3 below. The current estimate of monthly expenditures after permanent shutadevn is $4.8 million O
including $1.9 million for property taxes.
In addition, the Project has developed the costs O
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unrestricted urs after the shipment of the fuel. After the normal decontamination process, only a limited number of components would require special disposal (other than the O
fuel). These components include the reactor vessel, the core internals, incere instrumentation and rod control assemblies.
The actual magnitude of the radioactivity external to the O
fuel would be low due to the component material and the limited power operation. Remote handling of the vessel and internals would not be required as these pieces of equipment O
would be classified as low level waste material.
The costs associated with the decontamination, removal, packing, shipping and burial of the rod control assemblies O and the incore detectors is $250,000.00. The costs to decontaminate, remove, pack, ship and bury the reactor vessel and internals, if necessary, would be $3.8 million.
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O NRC Ouestion 2:
O Please provide a detailed statement of the sources of funds for covering total costs of low power operations and total costs of permanent shutdown of the facility and maintenance as a safe condition after a period of low power operations only. Indicate the assumptions underlying the o projection of each source of funds.
Resconse to NRC Ouestion 2:
O Funding of Seabrook Project, for the total costs of both on-going operations and for any permanent shutdown of the facility, is the EI2 ralA, several responsibility of the O several utilities (the "Joint owners") which are participants under the Agreement for Joint ownership, Construction and operation of New Hampshire Nuclear Units, dated as of May 1, 1973, as amended (the "Joint ownership Agreement"). The ownership Shares of these utilities are shown in Attachment
- 1. Pursuant to the Joint ownership Agreement, the mechanics O of establishing the level of this funding involve quarterly approvals by the Joint owners collectively of itemized cash budgets for six months' periods on a revolving basis in O accordance with the procedures set forth therein. The funding level to meet the budget forecast is subsequently determined on a monthly basis by the Joint owners Executive O committee or the Joint owners. once a funding level has been established, each Joint owner provides its ownership Share of the budgeted operating expenses of the Seabrook Project.
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O Invoices are rendered as required and payments are due O
monthly. Each Joint Owner raises such funds as part of its normal financial sources.
It has been the policy of the Seabrook Project since the n
summer of 1984 to maintain a positive cash balance in the Project account from which its monthly obligations are paid.
This policy was designed to assure additional flexibility O
should fluctuations in conthly cash requirements or delays in receipt of Joint owner payments occur. The Project account, as supplemented by the Joint owner monthly payments, is the O
source for meeting Seabrook Station's cash operating requirements. At January 1, 1988 the Project account had a balance of approximately $21.8 million, or about two months' O
cash needs.
The implicit assumption underlying this discussion is that each Joint owner i~n the final analysis will perform its O
legal obligations as a party to the Joint Ownership Agreement and a licensee of the NRC. Experience has shown that routine performance of legal obligations by a Joint owner may be O
affected by other circumstances. Currently, two of the Joint owners are in default under the Joint ownership Agreement and one is in arrears. (See Responses to NRC Question 3, 4 and 5 O As indicated in these responses, for further details.)
drawings from the Project account and other contingency arrangements have been successfully implemented in those O
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these individual Joint owners. As indicated in the Res( use to NRC Question 4 belov, another contingency arrangement has been put in place to deal with the current MMWEC situation.
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Another Joint twner, despite being in bankruptcy proceedings, remains current on its obligations under the Joint Ownership Agreement. (See Response to NRC Question 6). However, it should be emphasized that in all instances of failure to comply with the terms of the Joint ownership Agreement the Joint Owners reserve their rights to seek legal redress and
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1 NRC Ouestion 3:
O Provide copies of the latest fundir.g forecast approved i by the joint owners. Also provide copies of the funding performance for the most recent six months.
O aesconse to unC Ouestion 3:
Enclosed herewith as Attachment 2 (2 pages) is the Fundino Forecast for Seabrook Station for the six months d(
period, July through December, 1988, as approved by the Joint Owners Executive Committee. This schedule provides a breakdown by major categories of the cash expenditures O
anticipated during each month of that period.
Enclosed herewith is Attachment 3 (1 page) is a schedule entitlwd "Uncollected Participant Funding Requests." This O
shows the status through August, 1988 of the two Jaint Owners I
which are presently in default on payment of their funding obligations under the Joint Ownership Agreement and one Joint O
Owner in arrears.
Enclosed herewith as Attachment 4 (3 pages) is a schedule entitled "Analysis of Funding Performance: Billings O
- v. Funding, Year to Date 1988." The first page of this schedule shows the total cillings by month and the total participant payments and supplementary advance paywents O
received by month. The discrepancy between total billings and total receipts was funded from the balance remaining in the Project account or supplementary advance payments (see O
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l Response to NRC Question 2). The second page of this schedule shows the detailed breakdown by Joint owner of the monthly participant payments. The third page of this schedule shows the detailed breakdown of the supplementary ,
advance payments by contributor and in May reflects the f
partial reimbursement of some of these advances by New '
Hampshire Electric Cooperative, Inc. which in that month O brought itself current again after a period of financial strictures.
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O NRC Ouestion 4:
O Provide a detailed statement of the joint owners' plan for covering the 11.6 percent share of Seabrook costs that is no longer being paid by Massachusetts Municipal Wholesale Electric company (MMWEC). Identify any new or prospective owner (s) or other participant (s) in the project and describe O in detail the arrangements for their participation and for covering the share of costs formerly paid by MMWEC. Describe how MMWEC's share of costs will be covered by the time low power operation is authorized. (For this purpose assume that low power authorization is received after September 1, 1988.)
O Resconse to NRC Ouestion 4:
On June 1, 1988 when MMWEC announced its .ntended "withdrawal from the Seabrook Station nuclear project", and that it would make no further payments to the Seabrook Project and that it would seek an agreement "to take MMWEC O
out of the project in a financially responsible manner", the Project account referred to above in Response to NRC Question 2 contained a positive balance in MMWEC's favor sufficient to
'O cover MMWEC's sharo of the anticipated billings for the month of June and part of July. On July 13, 1988, Northeast l Utilities ("NU"), the registared holding company parent of O The Connecticut Light and Power Company, one of the Joint owners, announced that it would advance sufficient funds in l lieu of the MMWEC obligation to partnit the Project to meet lO its obligation through August, 1988. On July 20, 1988
$2,249,000 was advanced to the Project by NU, which will cover MMWEC's share to September 9, 1988.
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On August 30, 1988 NU ar.nounced that it had concluded D
arrangements under which it will provide further funding "for the (MMWEC) portion of the Seabrook Nuclear Project that is subject to default" through November 30, 1988 (see Attachment D
5). This will permit the Project to "cover" the MMWEC share through that period.
The status of MMWEC's participation in the Project has O
been the subject of active negotiation for some time.
Kh'WEC's unilateral announcement on June 1 that it was ceasing further payments complicated these negotiations. As
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indicated, the short-term financial consequences of that announcement are being covered by NU's payments through l November 30, 1988. In addition, The United Illuminating O
Company has assembled investors who intend to cover the l longer-term consequences of the MMWEC default. These !
1 l investors will provide the Project up to $30 million of i additional funds as MMWEC's payments fall due between November 30, 1988 and December 31, 1989, which amount exceeds l MMWEC's share of the presently estimated Project billings O
during that period. The contracts to document this arrangement are in preparation and expected to be completed on or bafore September 15, 1988. A further response which h provides the requested details of these arrangements will be filed at that time.
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O NRC Ouestion 5:
please identify any other joint owner (s) that is in default (or that is expected to be in default in the next twelve months) or in arrears on its Seabrook payments.
Describe the circumstances of the default (or potential C) default) or the arrearage and indicate how the unpaid share is being (or will be) covered. Describe the plan for coverage of the share through low power operation up until issuance of a full power license. (For this purpose, assume a full power license is issued i the summer, 1989.)
O Resconse to NRC Ouestion 5:
As indicated in prior responses, there are currently two Joint Owners, other than MMWEC, which are in default or in arrears on their Seabrook payments:
As a result of severe financial difficulties, Vermont Electric Generation and Transmission Cooperative, Inc.
(VEG&T), the owner of a 0.41259% share, ceased funding its share of the project costs in February,1986 and through .
August, 1988 is in default for an aggregate of $2,445,811.
O VEG&T's share of the projected costs for the next twelve ,
months (through August, 1989) is estimated to be l approximately $663,000. The deficiency resulting from '
VEG&T's failure to pay has to date been covered by supplementary advance payments received from others (see page 3 of Attachment 4) and it is anticipated that this O
arrangement will continue during the next twelve months.
how Hampshire Electric Cooperative, Inc. (NH Coop), the owner of a 2.17391% share, is currently in arrears on its !
O I I
~
D Seabrook payr.ents for an aggregate of $196,925. This amount D
has been accumulating since February, 1986 as the result of an on-going dispute with respect to certain project costs for public information expenditures. During that same period NH D
Coop paid the balance of its billings which amounted to approximately $5.3 million. Negotiations are continuing between the Project and NH Corp to resolve the arrearage.
O These expenditures are being paid out of NH Coop's portion of the cash balance in the Project account remaining from earlier advance payments received from NH Coop.
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D NRC Ouestion 6:
D Describe the effect of bankruptcy on i sNH's ability to cover its share of Seabrook costs both currently and through a period of low power operation. Please summarize any pronouncements of the Bankruptcy Court that affect PSNH's ability to pay its total share of Seabrook costs both O currently and through low power operation up until issuance of a full power license. Indicate if PSNH is up-to-date on payment of its share of costs to the project and explain how PSNH expects to continue to be up-to-date on its payments through low pover operation up until issuance of a full power license. (For these purposes, assume a full power license is
[) issued in the summer 1989.)
l Reneense to NRC Ouestion 6:
[) The bankruptcy proceeding under Chapter 11 was initiated 1
l by PSNH on January 28, 1988. Since that date, PSNH has operated its business as debtor in possession. The pre-
[) commercial activities of Seabrook Station have continued without interruption. But for the delays in payment of PSNH's share of some propetition indebtedness, there has been O no delinquency in meeting the Project's payment obligations.
PSNH has met each Project bill on time and in full since the filing date and is currently up-to-date on its payrmnts
- ) due to the Project. PSNH expects to continue to meet its seabrook obligations through low power operation up until issuance of a full power license from the revenues generated h) by its on-going utility operations. PSNH's not revenues have, in fact, increased since the bankruptcy filing and are expected to be more than adequate to meet PSNH's share of the 9
O
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1 obligations enumerated in Responso to NRC Question 1 above, l Any effect the bankruptcy proceeding itself has had on PSNH's ability to cover its share of Seabrook costs has been
, posiuive, and it is anticipated that this will continue in the future, including during low power testing. Filing the br.nkruptcy petition in effect "froze" payment of many prepetition debts, thus keeping funds available to meet ,
Seabropk costs and the bankruptcy court will allow PSNH to emerge v' rom bankruptcy only under a plan which providns means to satisfy all PSNH obligations, including those related to seabrook, on a going forward basis. While it is possible that creditors or other parties involved in the proceeding may attempt to use the Bankruptcy court as a forum to assail continued funding or low power testing, such action would face substantial legal hurdles and determined resistance by PSNH and the other Joint owners. PSNH believes that such
- O action would have a low chance of success.
Actions and pronouncements of the Bankruptcy Court have ;
been consistently encouraging in this regard. For example,
'O as alluded to,above, on June 3 the court allowed PSNH to use l monies contributed propetition to pay its share of vendor costs and ordered the bank holding deposits of Project funds to release all such monies contributed by PSNH. On June 9, the court rejected the claim of certain creditors for payments during the bankruptcy that may, as a practical 0
O
O h matter, have impinged PSNH's ability to continue funding.
O Very early in the case, the cour_t rejected proposals for open-ended discovery and in-court evidentiary proceedings regarding Seabrook. In addition, the court has granted PSNH O
additional time to attempt to negotiate its way out of bankruptcy, thereby refusing to allow other parties the chance to force a reorganization that did not include
() t continued funding.
The Bankruptcy Court has also indicated that it does not see itself as the forum in which determinations about whether O
or when Seabrook should go forward should be made. At the June 9 hearing referred to above, the Court stated that "if Seabrook is lost, it is not lost because of uncertainties or O
attrition or myths or anything else relating to confusion about what is going on in the Bankruptcy Court, but it is lost because of those things that are the bailiwick of these O
other agencies that protect public health and safety. That, I think, is vital here." Transcript, June 9, 1988 pp. 143-144. Cf. Order Denying the Third Mortgagees' Motion ,
O for Adequate Protection, dated July 20, 1988, footnote on page 9, (see Attachment 6).
O l O
O
- O NRC Ouestion 7
O Describe the status of efforts to spin off New Hampshire Yankea Electric Corporation as an independent company.
Explain any efforts on responses to the above question if the reorganization were to be accomplished.
- () r Resconse to NRC Ouestion 7:
In the summer of 1984 the Joint owners decided to create
() a new corporate entity which would be owned by them and which would become their managing agent under the Joint ownership Agreement with responsibility for completing and operating lO Saabrook Station. Pending receipt of the regulatory approvals needed for such a restructuring, these functions of managing agent were to be, and have been, performed on an ,
~() interim casis by the establishment at that time of How Hampshire Yankee Division (NHYD) of Public Service Company of New Hampshire (PSNH). This interim function of NHYD and the i
.O subsequent transition to NHYEC was fully disclosed to the Commission at a meeting on August 9, 1984 and subsequently confirmed in writing. See "Summary of Management Meeting O between PSNH and NRC" issued by the NRC on August 16, 1984 in
~
Docket No. 50-443; and PSNH Letter to NRC, dated August 31, ,
l 1984, SBN-707 in Docket Nos. 50-443 and 50-444.
O As explained at that time, the purpose of the management l
restructuring is to create a management organization for !
Seabrook Station which is independent and not directly O 1 1
t O
O affected by the financial or political pressures affecting PSNH. A primary consideration is the transfer of all operating personnel from their present status as employees of PSNH to become employees of the new entity. The O
restructuring would in no way modify the existing financial support for the project as evidenced by the commitments of the Joint owners under the Joint ownership Agreement.
Implementation of this new structure was immediately started. A New Hampshire corporation, New Hampshire Yankee Electric Corporation (NHYEC), was organized for that purpose.
Regulatory approval for the organization of NHYEC and for the sale of its stock to the Joint owners in proportion to their j Ownership Shares of Seabrook Station was obtained from the New Hampshire Public Utilities Commission in October, 1984 and June, 1985, respectively. Proceedings for other required regulatory approvals were initiated before the Massachusetts Department of Public Utilities (Mass DPU) and the Securities and Exchtnge commission (SEC).
Since the Mass DPU has failed to date to take any action on the proceeding before it, the Joint owners have recently revised their approach. It is now contemplated that, after receipt of the requisite SEC approval, those Joint owners which are not subject to Mass DPU jurisdiction will acquire stock of NHYEC, permitting NHYEC to commence business operations and that the Massachusetts Joint Owners will O
O i subsequently acquire NHYEC stock if and when Massachusetts O
DPU approval is received. When NHYEC is authorized to conduct business, the Joint owners and NHYEC will file an operating license amendment application with the NRC for O
approval of the actual transition of responsibilities from NHYD to NYHEC. This license amendment would document that all functions now being performed by NHYD would be O
transferred to NHYEC. NHYEC would be designated as a licensee of Seabrook Station "technically qualified" to operate the unit. The personnel of NHYD would be transferred i O
to NHYEC, but their organizational structure would not.
change. The amendment would in no way alter the obligations, the ownership interests, or the assets of the existing twelve O
Joint owners as NRC licansees.
t On August 3, 1988 an amended application was filed with the SEC describing this revised approach and requesting SEC
.O approval of the NHYEC stock acquisition by those Joint Owners subject to the Public Utility Holding Company Act of 1935.
See SEC File No. 70-7214. A Notice of Intention relating to l O
the transaction was also filed by PSNH with the Bankruptcy Court. (See Response to NRC Question 6 above.) Timing of favorable SEC action is uncer,tain. The NRC filing would be O
expected to promptly follow after SEC approva, and requisite f action by the Court.
Implementation of the NHYEC reorganization of the O '
l i
,0 1
i
O project management would not have any impact upon the foregoing responses. The reorganization is a management i
consolidation and restructuring which is designed to improve l
,O efficiency and effective management control. It in no way l alters the underlying ownership interests and financial
(
obligations of the JJint Owners of Seabrook Station which are i set forth in the Joint ownership Agreement. That document remains the legally-binding contract which defines the rights .
and obligations of the parties thereto.
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m - - - - - - - , . . - - - . . - - - - .-._,-- ,- - - _ - - - - - - .
O gap _ouestion 8: '
O Provide the following for each joint owner:
- a. Copies of the most recent published, interim financial statements (and interim report to stockholders for the investor-owned utilities).
O b. Copies of the 1987 SEC Form 10-K, the most recent SEC Form 10-Q and the most recent SEC Form 8-X, for the joint owners that file these reports. "
)
Resconse to NRC Ouestion 8:
Enclosed herewith are the requested materials for each Joint Owner as follows:
O 1. Public Service Comear.v of New Hamoshire (Attachment 7):
- Quarterly Report to Shareowners, dated June 8, 1988 )
- Annual Report on Form 10-X for 1987 >
- Quarterly Report on Form 10-Q, for quarter ended June 30, 1988 O
- Current Report on Form 8-X, dated June 30, 1988 ,
- 2. The United Illuminatino comotDy (Attachment 8):
- Annual Report on Form 10-X for 1987 !
O - Quarterly Report on Form 10-Q, for quarter ended June 30, 1988
- 3. EffA Power Cornoration (Attachment ,-
- Annual Report on Form 10-X for 1987 e) - Quarterly Report on Form 10-Q, for quarter ended
't3ne 30, 1988 g.,se also Attachment 14 below.) !
- 4. Mammachusetta Municinal Wholesale Electric comegny (A".achment 10): ;
O - 1987 Annual Report f
- Financial Statements with Supplementary Information I
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O
) ,
- 5. New Encland Power Corgang (Attachment 11):
- Annual Report on Form 10-K for 1987
- Quarterly Report on Fora 10-Q, for quarter ended June 30, 1988
- Current Report on Form 8-K, dated June 6, 1988
- New England Electric System (NEES) Annual Report 3 on Form 10-K for 1987
- NEES Quarterly Report on Tcra 10-Q, for quarter ended June 30, 1988
- NEF.S Current Report on Form 8-X, dated June 6, 1988
- 6. The Connecticut Licht and Power Connany (Attachment 12):
- Annual Report on Form 10-K of Northeast Utilities (NU) and subsidiaries
- Quarterly Report on Form 10-Q, for quarter ended June 30, 1988 Current Report on Forn 8-K, dated June 22, 1988 j -
NU Quarterly Report on Form 10-Q, for quarter ended June 30, 1988 NU Current Report on Forn 8-K, dated June 22, 1988
- 7. Canal Electric comeany (Attachment 13):
j -
Annual Report on Form 10-X for 1987 Quarterly Report on Form 10-Q, for quarter ended June 30, 1988 Current Report on Form 8-K, dated March 30, 1988
- 8. Montaun Elaetric connany (Attachment 14):
E) -
Annual Report on Form 10-X for 1987 of Eastern Utilities Associates (EUA) 1987 Financial Supplement EUA Quarterly Report on Form 10-Q, for quarter ended June 30, 1988
- Annual Report on Form 10-K for 1987 of Eastern Edison 3 Company (IEC)
- EEC Quarterly Report on Form 10-Q, for quarter ended !
June 30, 1988 '
- Annual Report on Form 10-K for 1987 of Blackstone Valley Electric Company (BVEC)
- BVEC Quarterly Report on Form 10-Q for quarter h) ended June 30, 1988 (see also Attachment 9 above.)
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9.
New Hameshire Electric Coooerative. I n c ._
() (Attachment 15):
Financial and Statistical Report, REA Form 7, month ending December 31, 1987
- Financial and Statistical Report, REA Form 7, month ending June 30, 1988
- 10. Vermont Electric Generation and Transmission Coocarative, Inc. (Attachment 16): i i
- Operating Report - Financial, REA Form 12a, for month l ending December 31, 1987 amended
() - Financial and Statistical Report, REA Form 7, for month ending December 31, 1987, amended per 1987 audit statement ,
t
- Pinancial Statements, December 31, 1987 and 1986, dated March 4, 1988
- Financial Statements, December 31, 1987 and 1986, O dated March 4, 1988 with note dated March 16, 1988
- 11. Taunton Municioal Lichtina Plant (Attachment 17):
- Annual Report 1987
- Financial Statements and Auditor's F.eport, O De ember 31, 1987 and 1986
- Return of the city of Taunton to the Department of '
Public Utilities for 1987
- 12. Hudson Licht and Pov6r Department (Attachment 18):
0 - Return of the Town of Hudson Light and Pover Department to the Department of Public Utilities ,
for 1987 1 L
O O
O O
O Attachment 1 to NYN-88115 O
Seabrook Joint owners O
owner Ownershio Shares Public Service Company of New Hampshire 35.56942%
The United Illuminating Company 17.50000
() EUA Power Corporation 12.13240 Massachusetts Municipal Wholesale Electric Company 11.59340 New England Power Company 9.95766 The Connecticut Light and Power Company 4.05985
() Canal Electric Company 3.52317 Montaup Electric Company 2.89989 New Hampshire Electric Cooperative, Inc. 2.17391 Vermont Electric Generation and Transmission Cnoperative, Inc. 0.41259
() Taunton Municipal Lighting Plant 0.10034 Hudson Light and Power Department 0.07737 100.00000%
O O
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. --- . _ - _ - - _ - . _ - - _ - _ - _ - - . _ . _-. ____ - - ._a
p A::aen en: 2 :: ::r:- s e t : s (2 eages)
Seabrook Station Unit 1 And Common 3
Funding Forecast Six Months -
six Mentn Jul 88 Aug 88 Sep 88 Oct 88 Nov 58 Dec 58 TOTAL 3 FUNDING FORECAST PRE COMMERCIAL / CAPITAL (Excl. E Plan) 9.018.1 10.295.9 8.491.4 10.880.4' 9.038 0 20.241.9 67.965.7 EMERGENCY PLANNING &
3 COMMUNITY RELATIONS 2.565 6 2.701.1 1,699.1 1.840.7 2.029.6 2.3 0.7 13,176.8 OPERATIONS &
MAINTENANCE 27.3 29.7 25.9 27.1 33.1 25.1 168.2 NUCLEAR FUEL 18.0 1.0 1.0 18.0 1.0 1.0 40.0 D TOTAL 11.629.0 13.027.7 10,217.4 12,766.2 11,101.7 22.608.7 81,35o.7
($ Thousands) ,
j
- Note: $1.761 Million Addition for NHY Portion of PSNH Early Retirement Program.
3 To Be Paid in October 1988.
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N namo.s.,e vanw. ANANcat.atmoat dat 0**n wety ansess ;
Page 1 of 2 1
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O At** h'*nt 3 to N'l3-iilli -
i SEA 3 ROCK STAT:C,3 tlNCO!.:.ECTED PARTICIPANT TW3:NG RI0tJESTS (l)
.O ,
SEA 3RCCK ? ART!!!? ANT ARRIARS DEFAT lI.T T O TA*,
New Hampshire i O I:.ctric cooperative s 196,9:5,00 i s 196,9:5.:: :
Massachusetts Municipal W.olesale Electric Ccmpany sS,030.770.00 5.030.770.00 Vermont Electric Generation i O and Transmission cooperative. i Inc. 2,445,411.00 2,445,5;;.0:
f S 196.925.00 $7,476.583.00 $7.673.508.00 O [
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O NOTE '
(1) Outstanding balances represent funding requirements through August, 1988.
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i August IS, 1988 :
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g g ' 7 ~~ (_J () () U U U U U Attachment 4 to fiYN-88115 SEARR(M)K STATION ANALYSIS OF FUNDING PERFORMANCE: BILLINGS VS. FUNDINC YEAR TO DATE 1988 FUNDING ANALYSIS DISBURSING AGENT PARTICIPANT SUPPLEMENTARY MONTil BILLINGS PAYMENTS ADVANCE PAYMENTS To rAI.
(See Page 2) (See Page 3)
JANUARY $ 19,096,900.00 $ 18,602,958.00 $ 142,000.00 $ 18,144,953.00 FEBRUARY 12,363,900.00 12,044.*08.00 263,000.00 1~,307,108.90 MARCil 11,918,000.00 11,609,741.00 260,121.08 II,869,862.08 APRIL i1,565,300.00 11,266,164.00 647,000.00 11,913,164.00 MAY 12,122,400.00 13,223,342.00 <956,607.24) 12,266,134.1:2 JUNE 18,502,000.00 16,280,653.00 60,000.00 16,340,653.00 JULY 11,742,700.00 10.332,871.00 2,279,000.00 12,611,871.00 AUGUST 13,148,700.00 11,570,068.00 65,000.00 I i ,6 3 5, uc>8. uo TOTAL $110,459,900.00 $104,929,905.00 $2,759,513.84 $ 10 7,68 7, '. I 8. 84 August 18, 1988
, , . , . I ,, a :
SFAIRIK STATI(N RMJIE KIOLSMANL1, fleN EXtufflVE GD9UTHE B1111M3 (I)
YEMt 11) IMIE 1988 SABKIK PAKTICIPMir JAfflAltY FERNLIMtY MAIDI MillL M JtNC JII.Y Mn2Gr 'It PIE CANAL EIR'IRIC GDFAffr $ 672,816 $ 435,601 $ 419,891 $ 407,465 $ 427.093 $ 651,857 $ 413,715 $ 463,2',1 $ 1,tr#I UsetLTIGTT LIQfr Aft) RMt2 GDrafff 775,305 *ns:f56 483,853 469,5 % 492,151 751,153 47b,736 511,81/ 4,4W,d Elm MMJt QJItREIATIGf 2,316,913 1,500,038 1,445,940 1,403,149 1,470,739 2,2/',4,738 1,424,671 1,595,2'e3 11,401a MENDI LIQ (T Aft) FGAR IEFAKDE3ff 14,775 9,566 9,221 8,948 9,379 14,315 9,085 10,113 < rig MCSAcaErIS ftNICIPAL naamssair F2IIIRIC GDeAfff (2) 2,213,979 1,433,396 1,381,701 1, % 0,811 1,405,398 7, 7 r,, '
MNTAUP E2H'IRIC GDWWfr 553,789 358,539 345,609 335,381 351,536 536,538 % 0,525 381,298 3,20s,1 IGi rM2AN) RMR GDFAfff 1,901,604 1,231,155 1,186,754 1,151,633 1,207.107 1,8'.2,366 1,169,298 1,3tr>,~ts! Io,aris,;
- GW IWG"JHilE E2fffRIC GIFEMTIVE (3) 1,414,488 402,217 255,276 285,N.I 2, ril,C MmLIC SutV12 GDFAfff (F NW hAff.1IIIE 6,792,657 4,397,768 4,239,163 4,113,710 4,311,867 6,581,0 % 4,176,810 4 . 6 712, 9 18 H,1ws,q TALNILM NDitCIPAL ' amf1E MAffT 19,162 12,406 11,959 11,605 12,164 18,565 11,783 11,193 llo,q ts(11ED 11DMisIATIE GDraffr 3,341,958 2,163,683 2,085,650 2,023,928 2,121,420 3,237,850 2,0 % ,9 72 2,301,U/3 19,lus,(
VUMNT ElfrIRICAL G3eEATIGE AIE)
TRAfEMISSHM 0]DrpMIVE, IE. (4)
$18,602,958 $32,044,108 $11,609,741 $11,266,164 $13,223,%2 $16,2R),653 $10,112,871 $l1,57 _ ,
(1)
Ftnliru performance is listed for the munth fusded, actust receipt of gwynent ar=;; differ slightly.
(2) IMer ceawd fisdism as of .kse 1988.
(3)
(4) av Itampshire Electric Gmperative recommenced payments as of Key 1988 incisaling fismis to reiderse ctestrilutors for sun .t >Ien s.
Verasit Electric Ceneration ad Transmissicma Gmperative, Inc. ceased fasaling as of February 19H6.
Asy.unt 18, 1988 P.gy 1,4 Ci p
() j ^-
U () U U U U V U U SFAlHIK STATi(N FIDE)lM; IUtFleet4NLE H4M SUPPIDtNTARY NWAsCE PADENIS (1)
YEAR 10 DUE 1988 lia it QNIRIETIIM JMEMRT FEBIEIARY PMf01 lY MitII. PMY (2) .AsE JULY Alt 21Tr itf!N. In9 CANAL. EMCIRIC C79WiY $3,000.00 $5,000.00 $10,283.31 $5,0u0.00 $4,00.00 $2,000.u) $5,000.m $ y,,2HJ. H $1/U osotrrzmr uorr AfD IDAR oneWir 3,000.00 5,0u0.00 4,0u0.to 14.392.76 5,0 0.00 2.a c.00 5,000.(U 38.1u./6 14 7.-
useerriarr uotr Asm roeR assWff (3) 2,249,0u0.00 2,249,uu.to 2,249,0 EASIUti ITrIUTIES ASSOCIATES 56,000.00 118,30.00 103,575.65 2f>6,000.00 <445,500.00) 18,000.00 9,000.00 19,0u0.00 144,075.65 111,4 wu escuse nEclule sYsme 8,000.00 13,000.00 30,585.07 72,0u0.00 < 58,000.00) 12,0u0.00 6,000.00 13,um.00 % ,565.07 sw,2 IUIK.IC SERV 12 GDSWif (F sew unresuRE 27,000.00 21,o n.m vn,, c LN110 11HMINATIM; G70'ANr 45,000.00 122,000.00 111,677.05 309,000.00 <472,500.00) 21,000.00 11,000.00 23,000.00 1/0,171.tr> e, ss,e
$142,000.00 $263,000.00 $260,121.08 $647,000.00 $<956,607.24) $60,000.00 $2,279,0u0.u 3 0 Kin 3:
(1) Scieksle of psynent represents contriktions to offset Joint Omaers in default.
(2) Certain credits in May reflect New Memyshire Electric Cooperative reish-rsement to applicable cmtritutors.
(3) Contriktion m behalf of Quenecticut 1.idit mal Power Cyy is for psynents it is smaking in lieu of Peter .
A wast 18, 1988 l'. , - I
l At t a c ha'e n t 5 :: ":-;;';-
6m
) a O emm a Cm 3 Os amm 3 r~IY IME W.DWHim
~= . 3 )~,- ,*s t.' n .*.*tt,'
)
i
) -
l NCRTHEAST UTILITIES IN PACT ON SEASROOK COSTS D
HARTFORD, CCNN. -DJ- NORTHEAST UTILITIES SAID IT $1GNED AN AGREEMGNT WITH THREE OTHER NEW ENGLAND UTILIT!ES UNDER WHICH IT WILL PROVIDE THREE MONTHS OF FUNDING FOR THE PORT!CN OF THE SEABRC0K NUCLEAR PROJECT THAT IS SUBJECT 70 p DEFAULT.
THE UTIL ITY sAID !T WILL P!cx UP Ae0UT $5 MILLION IN SEABROCH COSTS, WHICH WILL FUND THC 5 HARE OF SEABROOK COSTS OF MASSACHUSETTS MUNICIPAL WHOLESALk ELECTRIC CO.
MASSACHUSETTS MUNICIPAL, WHICH OWNS 11.6 PC y OF SEABROOK, SAID EARLIER THIS YEAA IT WOULD NOT PROVIDE ADDITIONAL PAYMENTS FOR THE BEABROOK PROJECT.
AS PART OF THE AGREEMENT, c0MMONWEALTH ENERGY SYSTEMS, EASTERN UTIL! TIES ASSOCIATES AND NEW ENGLAND ELECTRIC SYSTEM WILL PURCHASE ABOUT p 275 NESAWOTTS A YEAR UVER FIVF. YEARS FROM NORTHEAST UTILITIES. THE UT ILITY SAID.
THE PU/ERS CN THE ELEr,TRICITY ARE SEABRC0K SHAREHOLDERS.
IN JULY, NORTHEAST SIGNED A SIMILAR AGREEMENT UNDER WHICH !T WILL PAY FOR sa MILLION y OF SF.ASR004 COSTS IN RETURN FOR THE PURCHASC OR ELEcrRICITY FROM NORTHEAST SY FOUR OTHER
'SEAWR02M 3HAREHOLDERS.
-g- 4. 25 PM EDT 24-30-888 B
G
O Attac.y ant 6 : :: y::- q ; q (6 pages)
V UNITED STATES BANKRUPTCY COURT O ,
DIStaICT Cr NEW HAMPSHIRE CHAPTER 11 PRCCEEDING OF PUBLIC SERVICE COMPANY
- i OF NEW HAMPSHIRE, CASE NO. 88-43.
3 0 :
l l Before: Honorable James E. Yacos
!i 3 :: Judge in Bankruptcy 4
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MOTION TO EXTEND PLAN EXCLUSIVITY PERIOD 5
)
a a
- 1 0 j Thursday,May19, 1988 VOLUME ONE '
ll Federal Building
- of 'IMO VOLUMES f ) 275 Chestnut Street (Morning Session) i Manchester, New Hampshire !
f o a : :
0 1 W
APPEARANCES W i
>=
$ i O u DEBTOR PSNH: RICHARD LEVIN, ESQUIRE O
$ DON WILLENBURG, ESQUIRE
", Stutman, Troister & Glatt y I 3699 Wilshire Blvd., Suite 900 -
O i Los Angeles, California 90010 Z
E '
9 THOMAS R. JONES, ESQUIRE
.ahill Gordon & Reindel U !
'O $ 1 80 Pine Street
- D :
g i New York, New York 10;63 l \ :
3 MARTIN L. GROSS, ESQUIRE I i
Og )
l Sulloway, Hollis a Sodan 9 Capitol Street
! Concord, New Hampshire 03301 A l i
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. . 1 realistic matter. It's not going to occur en ene g
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date. One thing I cannot do in this court, being 3
a one-man band, is conduct something like this in 4 a series of segmented hearings and hope to be able 5
to rule after the last segmented hearing.
6 If I'm going to go to that kind of 7
hearing, it's going to have to be set for a week b 8 or something, and I would have to be able to
. 9 completa that record and rule on it while I'm 10 still reasonably fresh on the facts. But my basic D '
11 reasoning here, tentatively, is that it's in
, 12 nobody's interest at this stage to divert 13 attention from an all out effort to get into a B
14 conceptual plan, get to a situation of record in 15 this case that it can assure all these other B 16 regulatory agencies that, but for safety and 17 health considerations, which is their bailiwick 18 from a reorganization standpoint and economic 19 sense, this entity is in a financially stable l 20 I situation or track toward that resolved, 21 reorganized company status.
G 22 So that if Seabrook is lost, it is not j 23 lost because of uncertainties or attrition or ,'
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myths or anything else relating to confusion about {
i
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) 2 l what's going on in the Bankruptcy Court, but it is 1
3 lost because of those things that are the 4 l bailiwick of these other agencies that protect
) 5 I public hea3th and safety. That, I think, is vital
{
6 here.
7 I think there is a window of
) ;
8 opportunity of about six months; that after which 9 this whole thing is going to start to unravel in a
) 10 l lot of directions, one of which will be this kind 11 of all-out evidentiary hearing on valuation.
12 As you all know, that is war. That is
) 13 i war. And I can take a menth off and I can try 14 that. We'll live or die with this backwoods 15 judgs's valuation, or what some appellant court 16 tells me, but you all know that isn't the way to 17 resolve reorganization if you can avoid it.
) 18 I think this matter really is 19 premature at this stage on what I've heard. I l
20 realize I may be cutting the equity cushion a J 21 little closer than hks been done in some other I
22 cases, but I don't think any of those other I
l 23 cases -- barring your showing me to the contrary, h t: i 1 ,
D
FILED v3ntD s ATES 1ANnUPT:Y COURT Jg{ gg jggg
) DISTRICT OT SEV HAMPSHIEE g3 3Agggy7Cygggg7 in ret PUBLIC SERVICE COMPANT OT NEW RAMPSHIRE, BKl88-00043
)
Debtor Chapter 11 ORDER DENTING TRE TRIRD MORTCACIIS' MOTICN 70R ADECUATI PROTICTION IN DIE FORM OF CURADT AND CONTINUING
) INTEREST PATMINTS UNDE.R THE THIRD MORTCA_GE BONDS Upon consideratio*: of the Motion dated May 3, 1988 by Tirst Tidslity, N.A., New Jersey ("Tirst Fidelity"), as trustee under the
)
Third hortssge Bond Indenture, dated Tebruary 15, 1986 as amended and suppiamented (the "Third Mortgage Ind.iture"), Citicorp. Consolidated Utilities & Cc1mmunications Inc. ("CUC"), and Amoskens Bank, as trustee
)
under the Pollution Control Revenue Bond Indenture, 1986 Series A (collectively, the "nird Mortgagees" or the "Movants") for an order
) requirit.g the above-captioned debtor (the "Debtor" or "PSWR") to afford adequate protection through the payment of interest on the nird Mortgese Bonds (as hereinaf ter defined) as and when such payzents are
) due, including any payments which have become due and have not been paid subsequent 'to the filing of the Chapter 11 case (the "Third Mortgages Motion" or the "Motion") and the responses and sonoranda in opposition
) by the Debtor, the Official Ccumittee of Unsecured Creditors (the "Creditors' Committee"), the Officisl Committee of Equity Security Holders (the "Equity Cousittes"), and upon the subnis sions of other
) parties in interest, and upon that certain stipulation among the Third j Hortgagees, the Debtor and the Creditors' Cossittee, approved by order 3
i l i
political issues swirling around the question of putting the plant into operation. B is "observational phenonenon" :odifying :he subject viewed me is not linited to quantun physics.
- 6. In view of the f oregoing determinations , the Court concludes
) that adequate protection in the fors of current interest payments is not now required and shall not now be granted. Also in view of the f oregoing determinations, the court need not, and does not, now decide d
) whether, as a matter of law, adequate protection is receired .f or an oversecured creditor only when the value of the collateral 4 deteriorating, and not as protection against the accrual of postpetition
) interest on oversecured debt. See, United Savings haeciation of Texas
- v. Timbers of Invood Fort et Associates. Ltd., 98 L. Ed.2d 740 (1988).
) Accordingly, it is hereby ORDERC). ADJUDGED AND DECREED:
A. Consistant with the findings of fact and conclusions of law
) heroin, the Motien is denied without prejudice to Movants' right to renew the Motion, pursuant to Amended Order Establishing Notice D
- This court has made it clear at various stages of this case that it will leave g ossental and nuhlit safety issues.
a ,
r@ tina to S e ab ro ok__t o the anstepriate reaulatory agencies _
having the expertise to deal with such satters but that it reserves all powers permitted it under the Bankruptcy Code to' 3 assure that questions relating to the financial condition and financial restrvsturing of the debtor remain for determination at an a proprinte point in the reorganization court, ne court therefore has serious concern that the relevant regulatory agencies be able to promptly come to a l determination of any safety and environmental issues relating to Seabrook without being distracted by a premature "valuation sideshow" in this court that can only serve to confuse the matters appropriate for determination by such agencies.
D 9
] l 1
l Procedure. entered Apri'. 19 1988, for a hearing no ear; .er p. n r
l]
, Tebruary 15, 1989.
B. As additional adequate protection, hovaver, the Court directs the Debtor to grant, and the Debtor hereby is deemed to grant, the Third 3 Hortgagees' ,a post getition security interest in and lien on Poit-petition Collateral (as defined in the Senior Debt Order), subject and subordinate to the interests of the holders of the Senior Secured D Borroving in such Collateral, upon terms and conditions comparable to those set forth in paragraph H of the Senior Debt Order.
C. In view of the foregoing disposition of the Motion, discovery, O which was contemplated by the Stipulation in anticipation of an evidentiary heat. . on the facts raised by the Motion, it onnecessary at this time, and paragraphs 2 through 6, inclusive. :t the Stipulation are 9 hereby vacated.
DONE and ODERE this 20th ?,ay of July, 1988 at Manchester, New Hampshire.
J 00cketed M.N. .IUL 2 0198 nar E. ncoS FANKRUPTCY KDGE DeP.or to Serve on Fuli 1.ist
.g i ca te/ that this H a true and accurate
';cpf of the recofes en f:te with The Nnittd Stes GarAvt:y Cou;1 i
o v .V Occuty C:.tk. U.S. Etnkruptcy Court Manchss:ct, N6w Hamsthite O
O to
~.
-- .m
- TIIIRD SUPPLEME:;rAL APPE:;DI), II -
1 UNITSO STATES BANKRUPTCY COURT O 2 DISTRICT OF NEN aAMPSHIRE J
4 O In res :
5
- Bankruptcy Case No.
Public Service Company : 83-00043 5 of New Hampshire :
O 7 3
9 Manchester, New Hampshire 0 10 August 26, 19a8 11 Friday, 1:00 P.M.
m_ 12
~
O 13 14 HEARING ON NOTICE OF INTENTION TO ENTER INTO TRANSACTIONS OUT OF THE ORDINARY COURSE 15 (NHYEC) (#1085 - 7/21/88) - DECLARATION OF ROBERT O J. HARRISON ( 81086 - 7/20/88) 16 17 BEFORE: The Honorable James E. Yacos, Bankruptcy Judge 1
13 20 0 RONALD J. MAYNARD & ASSOCIATES 31 General 3tenograpnic Stenographers ,
24 Senurman Dr., Derry, N.H. 03038 22 TELEPHONE: (603) 623-6906 or 432-7265 O
RONALD J. HAYWARD & ASSOCIATES O
a
}
1 that time that it was in the best interest. .
I' 2 Thank you.
3 PHE COURT: All right. Mr. Nade?
4 MR. WADE: Also supported.
5 THE COURT: You're supporting it, all i
6 right.
Your Honor, CUC and i 1 MR. WADE:
3 Citicorp filed a response suppor;tng enia 9 application, however, we did note that we had 10 arrived at an understanding with counsel for the il debtor that it will not in any way affect the 1- 12 jurisdiction of This Court over the debtor's .
L 13 Seabrook's related assets and, secondly, that it l l
14 will not in any way affect the possibility or 15 probability or as we would say necessity of i
15 having to bring any decision to do low-power 17 testing before This Court and if our response is !
t le in any way read to say that' the debtor agreed l t
19 that it was necessary to bring it to This Court, t 20 it is not meant to do so, we believe it is, eney [
21 nave not agreed to that but, on ene ocner nand, 22 on the understanding enat we nave been 9tven by l
\
\
i RONALD J. HAYWARD & ASSOCIATES ,
c
__ _ _ t
l 25
)
1 the deb *.or, we support the appitcation.
) 2 THE COURT: Ali rigne.
3 MR. KATUCKI: Your Honor, Cnris 4 Katucki from Goodwin, Procter &' Hoar representing 5 several utilities that are collectively known as J ene 50 Percent Joint owners wnich own 50 percent
) 7 interest in the Seabrook Project. We are here
.3 simply to express our aupport for the proposal 9 put forth by Public Service. I think our reasons
) 10 are set forth in the paper we have filed.
11 I would like to point out to Tne m_. 12 Court enat this is, in essence, only a managerial .
)
13 change and one that the joint owners can effect 14 under the Joint owners Agreement with a 51
) 15 percent approval of the joint owners, we 16 represent 50 percent interest, our paper 17 indicates that New Hampshire Co-op which owns
) 18 approximately 2 percent is'also in support of 19 moving managerial responsibility from tne 20 division to New Hampshire Yankee and so if we are J
21 waigning the various factors involved, I think 22 one to De considered is this is something the l
RONALD J. HAYWARD & ASSOCIATES
51 i r 1 and CRR Group, I think Mr. Wade with the enied 2 mortgage bond nolders and they're satisfied that 3 there 12 some kind of understanding enat low
) 4 power is not going to be precipitoua.
5 MR. WILLENSURG: Your Honor, I don't 5 think enac enere is an amorphous or concreteneaa
)
7 or understanding out there on an agreement. As a 3 matter of fact, I have attempend to avoid an
) 9 agreement on what positions what parties will 10 take if and when low-power testing is an issue 11 and the basic reason for that, Your Honor, 13
) _. 12 oecause low-power testing is not now an issue. -
13 This is a transaction which is not 14 logically related to low-power testing inasmuen 15 as we could make a decision to go for low-power 16 testing while Public Service was, while the
) 17 division rather was the operator at Seabrook or 18 we could make the decision to go to low-power 19 testing when NHYEC was the operator. In either 20 of those cases, Your tionor, it would be a use of l 21 saaeta of the estate.
l 22 THE COURT: You feel that would oe in I
D
es e. ..' 2
)
52
) '
1 the ordinary course of business to turn on che 2 power at Seabrook?
3 MR. W II.L E NB URG : Your Honor, I think
) '
4 te might be. After all, generation of 5 electricity is the business of cnis debtor, out !
) 5 don't believe that that issue is before us now 7 and if we're going to have a dispute about whose a authority is necessary or what standard are we
) 9 going to use in determining whether or not to go 10 to low-power testing, then let's do it when wu 11 nave in front of us a concrete license for e- 12 low-power testing, concrete facts whien support 13 decisions that are actually made and let's not j 14 discusa it here in the vacuum.
15 THE COURT: Mr. Wade has been around 16 and he apparently fssis that if this happens,
) 17 there is some way of protecting against la precipitous low-power testing that might be 19 contrary to the interest of this estate. I think 20 probably whatever ene power this Court has will 21 come f ro:n suon a Model 5 and is going to oe there 22 whether New Hampshire Puolic Service Yankee
)
)
23
) i Division is the manager or New Hampshire Yankee l
2 Company is the manager. I'm gonerally :tind of 3 leani.sg your way on enat for various reasons l 4 including the fact that all your economic 1
5 anterests are benind it. I still have a sense j 5 that I am not being shown a very strong reason 7 why to do it now. What does it have to do witn S now? What happena if it isn't done except in U 9 conjunction with the plan?
10 MR. ;f1LLEN3URG: Well, plenty, Yout 11 Honor, I enin4 the real question is not the less O ,
- 12 we delay, I think the interesting question, tha 13 question that tells us a little more, why didn't 3 14 it happen until now, the joint owners have been 15 planning this since 1984, they did not do this 16 until the middle of 1988 and, Your Honor, there's 3 17 a couple of reasons for that. First, and I think 18 the primary reason, is that it was decided that 19 certain eventa in the licensing process should be O
20 gotten past nefore this enange was implemented.
21 ife are now fairly down the licensing path and 22 3 this was the time when NRC considerations and NRC i
O
- Tti13D SUPPLEMESTAL APPCSCIX !!!
D l'NITED STATES BANKRUPTCY COURT -
] DISTRICT OF NEW HAMPSHIRE In ret ,
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, BXd88-00043 '
O Debtor ORDER ON NOTICE OF INIT.NTION DATED JULY _21,1988 This court on August 26, 1988 conducted a hearing upon the "Notice '
3 Of Intention To Enter Into Transaction Out of The Ordinary Course (New Ha=pshire Yankee Electric Corporation)" filed herein by the debtor-in possession on July 21, 1988. The court has set forth -
g separately its findinga and conclusions with regard to this matter, in its memorandus opinion entered this date, which are incorporated herein by reference, and accordingly it is g ORDERID that approval of the intended action and proposed "
transactions is hereby denied.
DONE and ORDERED this 2nd day of September, 1988 at Manchester.
I g New Hampshire.
N
' JArE5"E. TACOS i RANERUPTCY JWCE !
O Debtor to serve on full list l .
I l
O :
l 1
1 s\ ,
4-.s O Y
_ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ . _ _ _ _ _ _ . _ _ _ _ _ _ _ _ 0
)
UNITED STATES BANKRUPTCY COURT ,
) DISTRICT OF NEW HAffPSilIRC In re:
PUBLIC SERVICE COMPMiY OF NEW HMIPSHIRE, BKf88-000!.3
) De btor i t
(
MEMORANDUM OPINION RE PROPOSED RESTRUC7URING RELATING TO OPERATION OF SEASROOK NUCLEAR POWER GENERATING STATION D
On July 21, 1988 the debtor in this reorganization proceading filed a "Notice of Intention To Enter Into Transactions out Of The Ordinary Course (New Hanpshire Yankee Electric Corporation)" under which the D
' l debtor gave notice that it propossd to enter into several related l l
transactions undu which the management and operational control with :
regard to the Sesbrook nuclear plant would be tr.nsferred from a division of the debtor, i.e., the New Hampshire Yanken Division
("Division") of Public Service, to a separate corporation, i.e., the New l
l Hampshire Yadee Electric Corporation, which corporation hai been formed ,
in 1984 in contemplation of the ultimate transfer of those powers and l responsibilities to a separate corporation to be controlled by a board !
of directors representing each of the joint owners of the Seabrook
] plaat.g I
l De Notice of Intention succinctly summarises the existing l I r j situation regarding the Seabrook plant as follows:
O L
- 1. The debtor in this reorganization proc eet.ing , PSNH, holds a ,
36.57 percent share of the plant under the joint ownership )
g agrecsent.
\'
a ,
At present, Seabrook is owned by Public Service and ,
eleven other New England utilities (the "Joint Cvners").
) Among the Joint Owners, only Public Service is designated as "technically qualified" under the licenses and permits fron the United States Nuclear Regulatory Commission ("t1C")
refating to Seabrook (the "NRC 1.icenses"). Since 1984, the New Hampshire Yankee Division (the "Division") of Public Se rvice , as agent for certain purposes for all the Joint
) Owners, has conducted the day-to-day operations and manage =ent of Seabrook. The Joint Owners supervise the Division's activities both directly (as a group) and through an executive committee composed of representatives of certain Joint Cvners, ne Notice of Intention further summarises the proposed changes to
) be made in the existing situation as follows:
Under the proposed restructuring, the Division will be reconstituted as an independent corporation, the New Ha pshire Yankee Electric Co=pany ("NHYEC"), which will replace the
) Division as managing agent for the Seabrook project. NHYEC was formed by the Joint Owners for this purpose in 1984 NNYEC will employ those personnel the Division presently employs, so there will be no disruption of operations.
Various licenses and permits necessary to operate Seabrook Station will be amended to include NNYEC and to designate .
) NNYIC as the sole licensee "technically qualified" to operate i Seabrook Station. Finally, each Joint owner will be l represented on the NNYEC Board of Covernors by a i representative having a vote weighted in proportion to its ownership share and, when ';he restructuring is fully 5
implemented, each will own shares of NNYEC stock in the same r proportion.
t The proposed restructuring would be accomplished by the following
[ specific actional (1) Shareholder Agreement (2) Managing Agent Operating Agreements (3) Amendment of the Joint ownership Agreement; (4)
Issuance and purchase of stock in NN)EC; and (5) Split of Publi:
Service's employee pension plan and transfer of funds to an NHYEC esployee pension fund. However, the Notice of Intention covered only items 1 through 4 set forth above. It is contemplated that a subsequent notice and proposal would address the split of the employee pension plan
) and fund.
s n
O THE RFCORD DEFORE THE COURT ,
O No evidence was proffered by the debtor or any other party at the hearing held by this court on August 26, 1986 upon the proposed O restructurinC. The entire evidentiary record in support c' the restructuring is contained in e declaration of Robert J. Harrison, president and chief executive officer of PSSH, which was filed in O conjunction with the Notice of recention on July 21, 1988. Aftot a number of paragraphs susnarising the terms and details of the proposed i
restructuring, the declaration contains the following recitation of the O benefit 8 of the Proposal to "both Public Service and ths Seabrook project as a whole" as follows:
9.1 Instability in the willingness or ability of Public ice and other Joint owners to meet their financial responsibilities to the Seabrook project jeopardines the -
O confidence and morale of the existing staff at Seabrook Station. The existence of NNYEC as the longters operator of Seabrook Station will likely improve that confidence and morale, retaining the loyalty of the existing personnel and attracting new employees as necessary.
O 9.2 The existence of NWYEC as a separate corporate entity will permit continuity of the direct management of the Seabrook project, independent of changes in ownership of Seabrook or in the status of individual owners. Such coatinuity is important to perceptions of continued management O d* P**'* bili'T **d Pr"d*****
9.3. The existence of NWYEC as a corporate entity devoted solely to Seabrook Station will permit the Joint owners to isolate in NNYEC all activities directed to that and, thus segregating them from other utility business activities of the J'i** "**
O 9.4. Because NNYEC will be owned ,to rata by the Joint Owners, and because the Joint Owners wi;. ve a direct voice proportionate to their ownership shares through representation on the NNYEC Board of Governors, the Joint Owners will share certain Seabrook responsibilities to a greater degree than l lO under the present structure.
!O l
)
The declaration of Mr. !!arrison goes un further to sumart:e and
) cuncluded as to the "particular benefit to Public Service. ss distinct from the other Joint Owners" as follows:
10.1. The .ssumption of Seabrook manage =ent
) responsibilities by NHYEC would relieve Public Service and its Division of the primary ultimate responsibility for the safe operation of Seabrook Station and the imple=entatf on of its quality assurance programs. Assumption of these responsibilities by hTfEC the personnel of which now perform such operation and impiezentation, would place Public Service
) in a position on par with the other Joint Owners by making it responsible for operations in proportion to its evnership share.
10.2. Employment by hHYEC of the personnel curr6ntly e= ployed through the Division would reduce Public Service's
) personnel record keeping responsibilities, remove the pension and benefit obligations associated with those enployees, and reduce future risk of employment-related claims.
10.3. ne seabrook restructuring would permit Public Service greater flexibility in devising and implementing
) reorganisation proposals. We NRC Licenses currently contain .
l certain unique obligations and responsibilities relating to Seabrook management which attach only to Public Service. These I
are in addition to Public Service's pro rata ohligations as a Joint owner of Seabrook Station. Any change in the NRC Licenses requires specific NRC authorization, which could be
) time consuming if contested. Any reorganisation proposal which might contemplate a transfer of Public Service's license obligations or responsibilities could be delayed while such authorisation was contested. Therefore, it would be advantageous to Public Service and all parties interested in the pending Chapter 11 proceeding to separate and expedite
)
regulatory proceedings relating to the transfer of Seabrook management responsibilities so as to remove that issue from future' consideration of potential future reorganization proposals.
I Under the special action and notice procedural orders entered in this proceeding, any objections to the notice of intention filed July 21, 1988 were required to be filed on or before August 5 1988. An objection was filed the Attorney General for the Commonwealth of
)
Massachusetts. Objection was also filed by three citizen groups, i.e..
)
t
O the Campaign For Ratepayers Rights. The Seacoast Antipollution :.ea;w.
O and the Citizens within he Ten Mile Radius, hereinafter referred tu
(
l jointly as the "cititen groups" for convenience.
A response constituting a "non-objection" of sorts was filed by O Consolidated ceilities And Conaunications, Inc. ("CUC") and Citicorp, holders of third mortgage debenture bonds who have been active in these proceedings. This response notes that CUC and Citicorp do not object to O the Notice of Intention but recites further immediately af ter that statement:
Based upon various representations of PShH and its O professionals, it is the understanding of CUC and Citicorp that the creation by PShH and others of hmYIC:
(1) will not affect in any way the jurisdiction of this Court over PSNH's Seabrook-related assets; and O (2) will not affect in any way the necessity on the part .
f PShH to receive this Court's approval prior to operating Seabrook pursuant to a low power operating license granted by the Nuclear Regulatory Consission.
Based upon the above-sentioned represo.tations and O understan41ns. CUC and Citicorp do not object to the creation by PSNH and others of NMYEC.
Responses to the Notice of Intention supporting the proposed restructuring were filed by the official Unsecured Creditors' Committee 0 by the official Equity Holders' Committee by the State of New Hampshire, and by a group of utilities constituting owners of l approminately fif ty pe rcent of tha Seabrook nuclear project cessonly 1
.O ,,,,,,,4 ,, ,, ,3, .rtity-rercent Joint owners" group in these proceedings.
l
'O I 5 O
_ _ _ - - - _ _ _ _ _ -__- _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ - - __ _ _-___- n
D The objection by the Commonwealth of Massachusetts notes that
) whereas the State of New ifampshire in 1984 and 1985 approved the purchase of stock in hHYEC by PSNH.2 nhe Co==enwealth of Massachusetts has never granted that authorization, and in fact requests have been D .ending before the Massachusetts Department of Public Utilities since 1984 regarding the five Massachusetts utilities involved as joint owners of the Seabrook project. However, the terms of the proposed O restructuring before this court specifically obviate the need for the Massachusetts utilities to purchase hHYEC stock, in that the other joint owners have agreed to give the Massachusetts utilities pro rata
] representation on the board of governors of hHYEC based on their r ownership interest in the Seabrook project notwithstanding their interim non-stockholder status with regard to NHYEC.
l
] The Commonwealth objects further that the restructuring proposed by the debtor, in advance of a complete reorganization plan, should be i disapproved on the grounds that it is premature: l l
The proposal seeks to reorganise one division of PSNH and
! place it permanently and irrevocably in another corporate ,
l entity. It appears to be a pieceseal reorganisation of PShH l l submitted in advance of the complete reorganisation plan. The ,
consideration to PSNH for the assets to be transferred is !
g unclear, as is the impact on pre- and post petition creditors l ef the New Naapshire Yankee Division. PSNH was recently given :
an estematon of the time to submit a complete reorganization ;
plan until December 27, 1988. The present proposal by PSNH {
l could be evaluated more usefully by all parties and the court ;
in the context of the complete forthcoming reorganisation plan <
g being prepared by the company.
- 2. See Re New Hampshire Yankee Electric Corporation, 69 N.H.P.U.C. 590 (1984) (ordering inter alia that MfYEC is authorized to engage in business as a public utility solely for the purpose of managing the construction of Seabrook)1 Re New Hampshire Yankee '
g Electric Corporation, 70 N.H.P.U.C. 563 (1985) (ordering inter alta that NHYEC's authority be enlarged to include the purpose of managing the operation of Seabrook.
O The Cun.onwealth also argued that the record put forth by thp O debtor to support the propossi was insufficient:
'The grounds advauced for the proposal are largely speculative and conjectural. There is little record support for assertions that the PShH proposal provides the clained O benettes. For example, indications that this proposal "night enhance" certain aspects nf the licensing proceedings or "might realize" cost benefits provide little detail for the court or parties in evaluating the proposal. Beyond broad i assertiens, the proposal and affidavit filed by the Debtor I provide little information or support as to the need for this O reconstitution at this time. ,
The three citizen groups objected primarily out of a concern that l
[ the proposed restructuring would result in a loss of bankruptcy court Q jurisdiction to prevent icw power testing of the Seabrook plant, in ,
i advance of a determination that it is likely that PSNH's reorganization '
I plan will provide, and can guarantee, the ultimate full operation of l O Seabrook and production of electric power tros the plant on a commercial .'
( basis. The citizen groups note some interrelated economic questions and '
Nuclear Regulatory Commission procedures that could result very shortly O in presenting the question of whether low power ope:4 tion of Seabrook '
should be authorised f
r The NRC.... has a rule permitting low power operation of I
'O ""* l * * ' P l*** "P *
- 3 P' '***d power, even though (
radiological energet.cy plans for a tem-sile area around the i' reactors, requir.d for a full power operation, have not been i yet reviewed or approved. (10 CFR 50.47(d)) It is pursuant t
, to this regulation that the Shorehas nuclear plant, on Lons
- Island in New York, was permitted to comence low power lg operation in July of 1985, although it new seems unlikely that t this plant will ever produce consercial power. r The citizen groupJ point to the record of prior proceedings in this case indicating that radio active contamination of the Seabrook plant.
- O by introduction of nuclear fuel and low-power testing, followed by an ultimate decision vot to put Seabrook into commercial operation.
i O '
l
.1
) woulj eenvert the plant from an asset, having a pvsitive s.41vage v11w . <
to a substantial liability, due to the high costs of decentaminativa enJ '
disposal of radioactive sterials. Cne indication in that record is
) that the "swing" in value could be as high as $1.10 ni.iion dollars.
They also argue that contamination of the plant would preclude --- due to the costs involved ---
the opticn of converting the plant to
) non-nuclear fuel operation. -
n e cov heard several hours of oral argument f rcs all parties [
present at the . 3ust 26, 1988 hearing on the debtor's proposed action, ,
I 3 and took the matter under advisement to better review the record in this satter. Having reviewed that re.;ord, it is now necessary to censider the status of the parties objecting, the appropriate legal standard for [
the court s decision on such a satter, and the result to be obtained by I
]
I applying that standard to these facts. i THE STATUS OF THE OBJICTORS 3 . .,
I l
l i ne debtor and the official committees have objected to the 1
1 "standing" of the Commonwealth and the citti an groups to object to the intended action. While this objection was made in the pleadings, no l l
party at the August 26th hearias orally objected to the Commonwealth and l the citisen groups being
- heard" by the court. I have previously noted j 3 .
that "standing" has to do with the right to appeal an order in a reorgaatestion proceeding --- a far different matter than the question [
0 of status to be heat. during the course of a hearing in the t [
l 2a. The court does not accept that prior record as establiahing j g
the exact costs of decontamination and a subsequent clear.up f or '
present purposes, ntre is no serious question however that such ,
costs are very substantial, j i
S !
O ;
O O reorganization court as an en .ity having an arguable interest in a particular matter before the court under 5 1109 of the Bankruptcy Code.
See In re PSNH, 3. R. 15ern. Op., Court Document No. 952, p. 22)
O (sankr. n.H., June 22, 1988).
The resrganization court I beliove has sufficient . discretion to "hear" any entity at any bearing to the extent that the entity may be O able to provide an ata to the enurt in understanding the matter before it. Accordingly, whateur an appellate court might decide as to "standing" for appeal purposes, this court sees no reason not to gisan O
- om the objections of the C-rmwealth and the citizen groups such help as it may find in evaluatirs the matter for decision, inasmuch as said objectors did not attrayt ts deJsy or overburden these proceedings with O wztensive preseM ans not germane to the issue before court. .
The court is amara that t$a Commonwealth and the citizen groups are committed to blodking the aparr. tion of the Seabrook nuclear plant for o various noneconsede raasons relating to asserted environmental and safety dangers posed by the operation of the plant. The, debtor and the committees argue credibly that these objectors may be expected to oppose O
- 3. As noted at the hearing this court will look for the truth wherever it can find it. "'Even the devil may speak truth" --- as someone once said.
O O
O ,
O any decision in this reorganization case which has the prospect of a
o U advancing the day upon which Seabrook may become operational."
Nongtheless, the objectors do raise, regardless of motives, a
- considerable "economic" question posed by the intended action of the' O debtor, i.e., w.11 this action if spproved lead to 'the possibility of a diminution in the value of the assets of this estate by an unwise and premature activation of the nuclear chain reaction at the Seabrook plant O which will be beyond any effective control which this court arguably now cay have to under its present jurisdiction in these reorganizationf
/
proceedings? It is also relevant that at least one "economic" party in O these proceedings, i.e. , CUC and Citicorp, have echoed the same concern in their responsive pleading set forth above.
I f 4. Indeed, the objection by the citizen groups by implication lO indicates as much -
"We recognize that the Court has indicated that it does not want to make Seabrook licensing decisions on matters pertaining to public health and safety and hence might conclude this is not a matter within its area of concern.
O (s . Memorandum opinion on Plan Exclusivity Extension, page
- 38) However, the issues of public health and safety at i Seabrook are inextricably bound up with the financial and !
valuation issues that this Court must ~
decide. The interrelationship of health and safety i :'ues, and the necessity for the Court's continuing jurisdiction over New i (O Hampshire Yankee, may shortly come up in a very specific l contests whether or not low power operation of Seabrook l should be authorized." (Esphasis supplied] l The highlighted statement is erroneous to the extent that it implies that it would be relevant for this court to consider public O health and the safety issues as factors in the financial reorganization determinations necessary in this chapter 11 proceedios, other than to assure that the reorganized debtor is able to meet health and safety operational requirements prescribed by the appropriate public agencies. Cf. In re PSNH, _ July B.R. .
Men. Opin., C.P. No. 1066 (foonote, p.9) ( Bankr. N.H., 20 O
1 1988). Likewise, the province of the NRC in my judsent is to N idetermine whether those requirements are presently satisfied or ---
if not -- what additional assurances will be required of PSNH or V) any other party involved in the reorganization plan. It obviously is not a permitted function of the NRC to deny approvalt simply because PSNH is in reorganization. See, Bankruptcy Code, 5 525 O (11 U.s.C. s $25).
10 I - - - - - _ _ - - - - - _ -
'O Accordingly, I find and conclude that the Com:nonwea l th and t t.c citi:en groups have raised a pertinent question for consideration by the court on this matter and are not precluded f rom being "heard" in that O
sense. In so doing I have no need to express any opinion as to their general standing, if any, to 1ppeal any orders entered by this court during the course of these reorganization proceedir.gs. That is a matter O
appropriately left to the appellate courts.
THE LEGAL STANDARD O
The debtor seeks to portray the matter before the court as simply a catter of "business judgment" on a "business operational matter" as to O which the court should give its approval simply upon a surface showing of a "good faith business judgment" on the part of the debtor in making the decision to put forth the proposed restructuring. The debtor cites O in this regard the decision in In re Curlew Valley Associations, 14 B.R. -
506 (Bankr. Utah 1981). The court there actually expressed its j standard in terms of a business operational matter that "involves a O business judgment made in good faith, upen a reasonable basis, and !
within the scope of his (chapter 11 trustee's] authority under the Code." 14 B.R. at $13-514 (footnotes ositted) (esphasis added). It is, O fair to state that the court in curlew did exhibit considerable deference to the business judgment of the chapter 11 trustee as to the particular manner of his operation of the debtor's fers business in that case --
O to the extent of refusing to even hear the evidence proffered by the debtor who sought injunctive relief against the methods employed in the ;
i trustee's operation as being economically unwise. 14 B.R. at 508.
O what needs to 've noted about the curlev decision in the present f context, however, is that it was a case that clearly involved an activity j i
O 11 l
'O.
that was an'"ordinary course" matter involved in the business operation.,
'O i.e.. whether the trustec in operating the debtor's f arm should "bale" hay rather than "cube" the same.5 The present case before this court on the contrary involves a proposed restructuring of the debtor which
- O clearly h out of the ordinary course of the debtor's activity for j reorganization purposes. Accordingly, I refuse to accept the debtor's
- invitation to accept the Curlew decision as persuasive on the present O catter.6 l
- 5. The opinion in Curlew makes it clear that the court did not '
consider it necessary to its analysis that the business practice in question might be considered out of the ordinary course of th6 [
O debtor's business. 14 B.R. at 514, n. 13.
- 6. It may be noted that prior to the Curlew decision the "business !
judgment" standard for decisions by a bankruptcy court was applied '
almost exclusively in terms of a debtor's decision to accept or I O reject an executory contract under what is now I 365 of the .
Bankruptcy Code. As with so many other interesting twists and developments of legal doctrine, the deference to business judgment or discretion steamed from the decision of the U.S. Supreme Court in A Croup Of Institutional Investors v. Milwaukee Railway Co., 318 U.S. 523, 550-551 (1943), in which the "party" to whose discretion g deference was given, on a lease assumption / rejection issue, was the Interstate Commerce Commission, as an administrative agency given '
special powers with regard to railroad reorganizations under I 77 -
of the Bankruptcy Act of 1898. It is also noted that the cases cited by the debtor as following the Curlew decision for present purposes, In re Airlif t Intern.. Inc., 18 B.R. 787 (Bankr. S.D.
Fla.1982); Imbrisol Enterprises. Inc. v. Richmond Metal Finishers, '
O 756 r.24 1043, 1047 (4th Cir. 1985), cert. denied, 475 u.S.
Inc. !
I637,: In re Afco Enterprises. Inc. , 35 Bankr. 512 (Bankr. D. Utah
~
1983), actually did not involve the i 1107-1108 context, but rather the narrower question of lease assumption / rejections, in the first two cases cited, and a narrow question of surcharge against a secured creditor under i 506(c) of the Code, in the third case.
O None of these decisiens, other than the Curlew case, stand for the i broad proposition that a proposed action by the debtor out of the ;
ordinary course of its normal business operations must be approved by a bankruptcy court simply upon a surface showing of business ,
judgment, notwithstanding an arguably unwise impact upon the ,
reorganization process in the particular case.
O O
O in my judgment the labeling of a particular peuposed transxtiun occurring out of the ordinary course of a reorganization debtor's business, as simply a "business judgment" by the debtor, does not O insulate the proposed transaction from a more searching view as to its wisdom and reasonableness than was given the hay-harvesting transaction in the Curlew case which occurred in the ordinary course of the business 0 operation there involved.
I note that the Court of Appeals for the Fifth Circuit, !.n Richmond Leasir.e Company v. Capital Bank N.A., 762 F.2d 1303; 49 B.R. (222) (5th O Cir. 1985), while citing the Curlew case on the 5 36! point, in affirming an order approving an assumption of a lease proposed by a debtor in reorganization, expressed the appropriate standard in terms of a "valid
- O exercise of.... business judgment" [762 F.2d at 1308) and su=marized the extensive testimony taken by the court below with regard to the economic Jactors involved which indicated an enhancement of the debtor's estate.
O 762 F.2d at 1309.7 .
Moreover, while the court in Richmond Leasing also considered the business judgment standard to apply even in the context of $ $ 1107 and O 1108 - to the extent that the assumption of the lease there involved might be argued to represent "a true renegotiation" of the lease, the court in that context found it necessary to go further and consider lO whether the amended lease might be deemed to be a "Sub Rosa Plan Of Reorganization" before that attack upon tha proposed action was also considered to be insufficient. 762 F.2d at 1311-1312. See also, In re O Li nel Corporation, 722 r.2d 1063,1071 (2aa cir. 1983)(proposed sale transaction subject to "sound business judgment" standard which requires a showing of "a good business reason" other than appeasement of major Q creditors).
- 7. The court in Richmond Laasing also noted, in footnote 11, that it saw no essential difference between its "valid" or "proper" stanocro and tne "economic soundness" standard employed in Matter of Southern
.O Biotech, Inc. , 37 8.R. 318 (Bankr. M.D. Fla.1983).
13
- . _ _ _ _ _ _. - - ~.__, _ - - - - -. - - - -_- . _
)
Considering the particular business transaction here involved,
) 1.e., a restructuring of the very entity in reorganization, I believe that an appropriate standard for approval or disapproval of the transaction by the reorganization court is whether good cause has been
) shown to implement the transact'on of this stage 'of this proceeding i.e., does it have val.3 business reasons supporting it and does it =ake good senst in the ove.-all context of the reorganizatic s process? ,
l
) phrased negatively, the standard might be whether the proposed I transaction might improperly and indirectly lo:k the estate into any I
particular plan t. ode precaturely, and without the protection afforded by the procedures surrounding a disclosure statement and confirmation hearing, in a plan of reorganization.78 In my view it is simplistic to borrow from relatively simple assumption-rejection cases (or a hay-harvesting case) a broad, unitary .
i surface standard to be applied to the continuum of transactions that can be encompassed under the rubric of an "out-of-the-ordinary course" business transaction in a complex reorganization case. The degree of
)
scrutiny necessarily must be elastic -- becoming more strict and searching the nearer the transaction gets to the heart of the
)
- 74. I cannot believe that when Congress removed the court and a mandatory disinterested trustee from de plan formulation process in reorganization cases, in the 1978 Banaruptcy Code, with the more extensive disclosure statement requirements under 5 1125 as a
) necessary substitute for the former supervisory protections, Congress could have intended that this remaining safeguard could j easily be avoided by indirectica and use of the "business 7
operation" and "business judgment" labels.
l 14
)
)
reorganization plan process in terms of channeling that process toward
) any particular plan option.
THE PROPOSED TRANSACTION !
)
/ Without approval of the irtended action pending before the court f
- the debtor PS?m will remain the "technically qualified" utility entitled to operate the Seabrook nuclear plant when fully-authorized to do so by the NRC. PSNH would operate Seabrook itself, acting by one of its '
corporate divisions, and acting on behalf of itself and the other joint owners of this Seabrook project.
l l Under the proposed transaction the entity directly responsible for Seabrook operation would become a separate corporation not a debtor in
) these reorganization proceedings. The change in operational -
responsibilities woul A require NRC approval of the transfer of PS!M's license obligations and responsibilities to that extent to the new
) separate corporate entity. It would also require that the NHYEC entity also be determined to be a "technically qualified" party to operate the Seabrook project. If that approval is given, and NHYEC becomes the
) direct operator in centrol of the Stabrook nuclear plant, the question of its putting the plant into the low power testing mode when authorized by NRC arguably would not need to be brought to this court for approval'
) with regard to the timing and the effect of any such action upon the ongoing process of plan formulation.
It is not necessary for this court at this time to determine whether such a transfer of operational responsibilities for the Seabrook
, project would defeat subject-matter jurisdiction of this court, for 1
injunctive relief to prevent low power testing operation, if such 15
)
injunctive relief were determined to be appropriate on the facts and circumstances then existing. It also unnecessary for the court to determine whether in fact i t. has any such jurisdiction now. It .i s sufficient to note that the transfer of operational control to a separate,non-debtor corporate entity raises an additional question as to the existence of that subject-matter jurisuiction.
Since the debtor has been given an extensior' until December 27, 1988 of its exclusive period to file a plan of reorganization in this case, by my order of June 22, 1988, the "business judgment" of the
) debtor in advancing the NHYEC proposal at this time raises the obvious question as to what urgency there is to bring this matter before the court other than in conjunction with its plan of reorganization. If the matter is considered in the plan context then all ramifications of h l the transaction in terms of reorganization prospects could be evaluated l
in that specific context.
3 The debtor points to various improvements in morale of the o employees dealing with the Seabrook operation, from being part of a separate entity, and the relieving of the debtor from some costs and
) ovar-involvement in Seabrook operations as opposed to the other joint owners, as benefits from the proposed transaction. The debtor notco that "The joint owners will share under certain Seabrook 3 responsibilities to a greater degree than under the present structure."
However, the debtor and the other joint owners have operated under the 1
- 8. There is an unresolved question in these proceedings regarding the 3 power of the majority of the joint owners of the Seabrook project to direct actions with regard to the project contrary to the wishes of PSNH without first securing approval of this court for such I action. It would be highly inappropriate to unnecessarily precipitate a decision on that question before and if it is necessary to do so in these reorganization proceedings. That is the whole poist of the underlying rationale of chapter 11 to promote the prospects for a "consensual" plan of reorganization to eliminate needless and time consuming litigation contrary to the interest of l all involved.
3 16
present structure since 1984, with no apparent problems, and t here ,i s O nothing to indicate that a plan of reorganization could not be put forward even if the operation of Seabrook plant continues to be the i
direct responsibility of a corporate division of PSNH. It is difficult
{
l
'O for this court to believe that the improvements in' morale adverted to, and the savings of some undefined, unquantified costs to this debtor l
l between now and December, are of sufficient importance to justify approval of this transaction prior to the filing of the reorganization lO plan, if that were sole ground in support of the transaction.
The debtor adds however, that a particular benefit to PSNH itself lO would include, .s quoted above, the rather cryptic con =ent by Mr.
[
Harrison in his, declaration to the effect that:
l 1
l Acy change in the NRC Licenses requires specific NRC '
l l authorization, which could be time consuming if contested.
10 Any reorsanization proposal which mishe contemplate a transfer .
of Public Service's license obligations or responsibilities i
l could be delayed while such authorization was contested.
l Therafore, it would be advantageous to Public Service and all l parties interested in the pending Chapter il proceeding to separate and expedite regulatory proceedings relating to the lO i
t.zansfer of seabrook manasement responsibilities so as to remove that issue from future considerat'.on of potential future reorganization proposals.
Mr. Harrison was not called to testify at the hearing on August 26, O 1988. The debtor's action and senorandum with resard to this point sheds no further illumination upon this point and simply parrots the recitation by Mr. Harrison. Debtor's counsel did make it clear during O the course of the hearins that they do not asree with any implication from the CUC/ Citicorp statements that they concede that the question of initiating low-power testing at the Seabrook plant is a question which O
/
/
O 17
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . i
O wo.1d have to be brought before this court if the NHYEC transaction wre to go into effect.
The court is left with the conviction that it was not presented the O,
"whole story" with regard to the underlying reasons and anticipatad effects ,of the proposed transaction at the August 26, 1988 hearing. It would appear that the debtor and its counsel were operating under an O assumption that this court would .'pply mechanica11y'the surface-judgment approach employed in the Curlew decision. For the reasons stated above, however, I decline to use that approach to a matter of this importance O in the context of this reorganization case. It may well be that the debtor for good and sufficient tactical reasons does not wish to telegraph at this stage its game plan with regard to a plan of
'O reorganization. However that may be, the result is to leave this court in the quandary of trying to evaluate the proposed transaction without a full picture of its effects and ramifications.10 0 .
- 9. To be fair, the debtor's counsel also does not concede that that question necessarily has to be brought before this court in the '
existing situation.
- 10. The declaration of Mr. Harrison could be read as setting the stage O for one of the plan options set forth by the debtor in its exclusivity motion, i.e., creating a separate entity that ultimately could be made a "wholesaler" subject only to FERC regulation rather than the present state-based regulatory control of consumet rates. Cf.
Mississippi Power & Lisht Co. , v. Mississippi, U.S. 108 S.Ct. 2428 (June 24, 1988). The present transaction by itself O would not lead to that result, since the actions by the New Hampshire Public Utility Commission in 1984 and 1985, cited above, specifically precludes the new corpw. ate entity NHYEC from having authority to sell electricity. There was no request for that enlargement of authority in the applications then pending before the NHPUC. In its 1984 decision the PUC specifically noted that "New Hampshire O Yankee would not be involved in the application for races or the selling of power. New Hampshire Yankee would not sell Seabrook energy to PSNH on a wholesale basis." It could be that this possibility represents the real time urgency in submitting the proposed transaction to the court at this time, rather than the matter of low power testing, which waa the focus of discussion at the hearing, but the
'O fact in that the court simply has no basis for evaluating the i latter justification, if it exists, on the present record.
1 a
lO 18
O CONCLUSION -
0 It is a daunting task for any reorganization court to rule contra to a proposed action that is supported by all the major economic and I
regulatory interests directly involved in this case. Upon a better evidentiary record this court might well have been in a position to approve the intended action. However, on the present record I do not believe that the court has a sufficient basis and showing of good cause O
to approve the intended action at this stage of this case, in light of the substantial question as to possible loss of jurisdiction with regard to the low power testing matter discussed above. Debtor's counsel was O
given the opportunity by the court during the hearing to explain and amplify how denial of this approval might delay or impair the flexibility of the debtor in plan formulation. Counsel declined to take o up that invitation. Accordingly, I can only go upon the recitations '
made in the Harrison declaration and, as indicated, I find them insufficient on balance to justify approval of the proposed transaction.
O In reaching this conclusion I express no opinion as to the merits of any potential future controversary as to low-power testing or any related matter.
O should be added as the "understanding" between A word to CUC/ Citicorp and the debtor, to the effect that the debtor would not seek to use the approval of this transaction in any further hearing in O which jurisdiction of this court to prevent implementation of low power testing night be raised. While that understanding sight give some, comfort to CUC/ Citicorp, and perhaps to the committees, it does not give O any relevant comfort to this court as to preserving the existing jurisdictional situation. It is elementary that federal courts, being
- 11. sue Cf. In n tienel Corporation, supra, at 1071. i O 19 I
~
O courts of limited jurisdiction, may have their subject-matter jurisdiction challenged at any stage of the proceedings by any party, O
and by the court itself when the issue is apparent. See 20 Am. Jur. 2d COURTS.$ 95 (1965), citina Cainsville v. Brown-Crummer Invest. Co., 277 U.S. 54 ( ), Panhandle Eastern Pipe Line Co. v. Federal Power Coh, n
324 U.S. 635 ( ), Crubb v. Ohio Pub 1!c Utilities Com. , 281 U.S. 470
( ). Parties to proceedings in the federal court cannot "stipulate jurisdiction" if in fact there is no subject-matter jurisdiction in ihe O federal court as to a particular matter. Accordingly, while tempting, I do not believe that an attempt to "preserve jurisdiction" by some such understanding, or even a provision in this court's order approving the lO transaction, would be effectual.
A separate order in accordance with this opinion v'.1 be entered denying approval of the intended action under the debtot Notice of
~
!O Intention filed July 21, 1988. -
DATED at Manchester, New Hampshire this 2nd day of September,1988.
- M O "
Jg K E. YACOS BANKRUPTCY JUDGE
! Debtor to serve on full list O
'Q 4
O 1
'O 20 n
1.*
DO(KlifD UNITED STATES OF AMERICA " ' *' I NUCLEAR REGULATORY COMMISSION
'E6 EP 12 P2 :12
) 0FF a. -
, Ei.
In the Matter of ) 90Ch! T]
)
PUBLIC SERVICE COMPANY OF NEW ) Docket No.(s) 50-443/444-OL-1 HAMPSHIRE, ET AL. )
(Seabrook Station, Units 1 and 2) )
)
)
CERTIFICATE OF SERVICE I, George B. Dean, hereby certify that on September 9, 1988, I made service of the within MOTION OF MASSACHUSETTS ATTORNEY GENERAL FOR LEAVE TO FILE A DOCUMENT NOT AUTHORIZED BY THE COMMISSION'S RULES OF PRACTICE and THIRD SUPPLEMENT TO MASSACHUSETTS ATTORNEY GENERAL JAMES M.
SHANNON'S PETITION UNDER 10 C.F.R. 2.758 FOR A WAIVER OF OR AN EXCEPTION OF A DEMONSTRATION OF FINANCIAL QUALIFICATION, by first class mail, or by Federal Express as indicated by [*], or by hand delivery as indicated by [*a), to:
Lando W. Zech, Jr., Chairman Thomas M. Roberts, Commissioner U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission 1717 H Street 1717 H Street Washington, DC 20555 Washington, DC 20555 Kenneth C. Rogers, Commissioner Kenneth M. Carr, Commissioner U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission 1717 H Street 1717 H Street Washington, DC 20555 Washington, DC 20555 Alan S. Rosenthal, Chairman U.S. Nuclear Regulatory Commission 1717 H Street Washington, DC 20555
p 9
Thomas S. Moore Howard A. Wilber U.S. Nuclear Regulatory Commission U.S. Nucleat Regulatory Commission 1717 H. Street 1717 H. Street Washington, DC 20555 Washington, DC 20555 Sheldon J. Wolfe, Chairperson Ivan W. Smith, Chairman U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission 1717 H. Street 1717 H. Street Washington, DC 20555 Washington, DC 20555 Dr. Emmeth A. Luebke Dr Jerry Harbour 5500 Friendship Boulevard U.S. Nuclear Regulatory Commission Apartment 1923N 1717 H Street Chevy Chase, MD 20815 Washington, DC 20555 H. Joseph Flynn, Esq. Stephen E. Merrill Arsistant General Counsel Attorney General Office of General Counsel George Dana Bisbee, Esq.
Federal Emergency Management Agency Assistant Attorney General 500 C Street, S.W. 25 Capitol Street Washington, DC 20472 Concord, Nd 03301 Docketing and Service Paul A. Fritzsche, Esq.
U.S. Nuclear Regulatory Commission Office of the Public Advocate 1717 H. Street State House Station 112 Washington, DC 20555 Augusta, ME 04333 Roberta C. Peaver Diana P. Randall State Representative 70 Collins Street Town of Hampton Falls Seabrook, NH 03874 Drinkwater Road Hampton Falls, Nh 03844 Atomic Safety & Licensing Robert A. Backus, Esq.
Appeal Board Panel Backus, Meyer & Soloman U.S. Nuclear Regulatory Commission 116 Lowell Street 1717 H. Street P.O. Box 516 Washington, DC 20555 Manchester, NH 03106 Sherwin E. Turk, Esq. Judith H. Mizner, Esq.
Office of the Executive Legal Silvergate, Gertner, Baker Director Fine, Good & Mizner U.S. Nucler Regulatory Commission 88 Broad Street Tenth Floor Boston, MA 02110 7735 Old Georgetown Road Bethesda, MD 20814 I . J ',
Atomic Safety & Licensing Jane Doughty Board Panel Seacoast Anti-Pollution League U.S. Nuclear Regulatory Commission 5 Merket Street 1717 H. Street Portsmouth, NH 03801 Washington, DC 20555 Paul McEachern, Esq. J.P. Nadesu Matthew T. Brock, Esq. Board of Selectmen Shaines & McEachern '10 Central Road 25 Maplewood Avenue Rye, NH 03870 P.O. Box 360 Portsmouth, NH 03801 Sandra Gavutis, Chairperson Calvin A. Canney Board of Selectmen City Manager RFD 1, Box 1154 City Hall Route 107 126 Daniel Street E. Kingston, NH 03827 Portsmouth, NH 03801 Senator Gordon J. Humphrey Peter J. Matthews One Eagle Square, Suite 507 Mayor Concord, NH 03301 City Hal-1 (Atta: Herb Boynton) Newburyport, MA 01950 Donald E. Chick William Lord Town Manager Board of Selectmen Town of Exeter Town Hall 10 Front Street Friend' Street Exeter, NH 03833 Amesbury, MA 01913 Brentwood Board of Selectmen Gary W. Holmes, Esq.
RFD Dalton Road Holmes & Ellis Brentwood, NH 03833 47 Winnacunnet Road Hampton, NH 03841 Philip Ahrens, Esq. Diane Curran, Esq.
Assistant Attorney General Harmon & Weiss Department of the Attorney General Suite 430 State House Station #6 Washington, DC 20009 August, ME 04333 Thomas G. Dignan, Esq. Richard A. Hampe, Esq.
R.K. Gad III, Esq. Hampe & McNicholas Ropes & Gray 35 Pleasant Street 225 Franklin Street Concord, NH 03301 Boston, MA 02110 Beverly Hollingworth Edward A. Thomas 209 Winnacunnet Road Federal Emergency Management Hampton, NH 03842 Agency 442 J.W. McCormack (POCH)
Boston, MA 02109
P#$ ,
William Armstrong Michael Santosuosso, Chairman Civil Defense Director Board of Selectmen Town of Exeter Jewell Street, RFD 2 10 Front Street South Hampton, NH 03827 Exeter, NH 03833 Robert Carigg, Chairman Ann E. Goodman, Chairperson Board of Selectmen Board of Selectmen Town Office 13-15 Newmarket Road Atlantic Avenue Durham, NH 03824 North Hampton, NH 03862 Allen Lampert Charles P. Graham, Esq.
Civil Defense Director Murphy and Graham Town cf Brentwood 33 Low Street 20 Franklin Street Newburyport, MA 01950 Exeter, NH 03833 Gustave A. Linenberger, Jr.
Atomic Safety & Licensing Board U.S. Nuclear Regulatory Commission 717 H. Street Washington, DC 20814
deorge u. De n Assistant Attorney General Nuclear Safety Unit Dated: September 9, 1987
-4 -