ML20198J036
| ML20198J036 | |
| Person / Time | |
|---|---|
| Site: | Salem  |
| Issue date: | 12/18/1997 |
| From: | NRC (Affiliation Not Assigned) |
| To: | |
| Shared Package | |
| ML20198J034 | List: |
| References | |
| NUDOCS 9801140028 | |
| Download: ML20198J036 (3) | |
Text
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maarog g-t UNITED STATES 3
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NUCLEAR REGULATORY COMMISSION WASHINGTON. o.C. 20e46-0001
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SAFETY EVALUATION BY THE OFFICE OF NUCLEAR llEACTOR REGULATIQH PROPOSED MERGER OF ATLANTIC ENERGY. INC. AND DELMARVA POWER AND LIGHT COMPANY SALEM NUCLEAR GENERATIhG STATION. UNITS 1 AND 2 DOCKET NOS. 50-272 AND 50-311
1.0 BACKGROUND
Under con r of a letter dated April 30, 1997, as supplemented by a letter dated November 7,1997, from John H. O'Neill, Jr., of Shaw, Pittman, rotts &
Trowbridge, Atlantic City Electric Company (ACE) and Delmarva Power & Light Company (DP&L) submitted an application for approval under 10 CFR 50.80, in connection with a proposed merger between Atlantic Energy, Inc. (AEI), which is the parent holding company of ACE, and DP&L. A new holding company will result from this merger named Conectiv, Inc. (Conectiv).
Under the merger agreement, all of AEI's subsidiaries (including ACE) and DP&L will become wholly owned subsidiaries of Conectiv, and AEI will cease to exist.
Current holders of AEI and DP&L common stock would become holders of Conectiv common s
stock pursuant to a formula stipulated in the merger agreement.
ACE is a 7.41-percent owner of Unit 1 of the Salem Nuclear Generating Station, a two-unit facility, and DP&L is a 7.41-percent owner of Unit 1.
Public Service Electric & Gas Company (PSE&G) owns 42.59 percent of Unit I and Philadelphia Electric Company (PECO) owns the remaining 42.59 percent.
Each of these four utilities owns the same respective percentages of Unit 2 of Salem. The proposed merger does not involve PSE&G, which is the licensed operator of Salem, or PECO. The proposed merger will result in the is direct transfer of control of the interests held by ACE and DP&L in the Salem station 4
operating licenses to the proposed new holding company, Conectiv.
Accordingly, under the previsions of 10 CFR 50.80, Commission approval is required.
In the application for kpproval dated April 30, 1997, the applicants state on page 10:
The purpose of the proposed Merger is to achieve benefits for the
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shareholders, customers and communities served by ACE and DP&L that would otherwise not be achievable if they were to remain as separate companies. The expected savings related to the Herger are approximately $500 million over the next ten years (1998 to 9801140028 971218 PDR ADOCK 05000272 P
2007). The savings wili come principally from elimination of duplicative activities, increased scale, improved purchasing power, improved operating efficiencies, lower capital costs and, to the' extent practicable, by combining the companies' work forces.
2.0 FINANCIAL AND TECHNICAL QUALIFICATIONS On the basis of information submitted in the applic. tion, the staff finds that there will b no near-t em substantive change in the financial ability of ACE and DP&L to contribute appropriately to the operations and decomissioning of the Salem facility as a result of the proposed merger.
Each of ACE knd DP&L is, and would remain after the merger, an " electric utility" as defined in 10 CFR 50.2, engaged in the generation and distribution of electricity, the cos,t of which is recovered through rates established by the New Jersey Board of Public Utilities and the Federal Energy Regulatory Commission, in the case of ACE, and the Delewsrs Public Service Comission, the Maryland Public Service Comission, the State Corporation Comission of Virginia, and the Federal Energy Regulatory Comission, in the case of DP&L. Thus, pursuhnt to 10 CFR 50.S3(f), ACE and DP&L, as electric utilities, are exempt from further financial qualificat Mns review.
However, in view of jhe NRC's concern that restructuring can lead to a diminution of assets necessary for the safe operation and decomissioning of a licensec's nuclear power plant, the NRC has sought to obtain commitments fro:n its licensees that initiate restructuring actions not to transfer significant assets from the licensee without notifying the NRC. ACE and DP&L have agreed:
to provide the Director of the Office of Nuclear Reactor Regulation a copy of any application, at the time it is filed, to transfer (excluding grants of a security interest or liens) from such licensee to its proposed parent, or to any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding ten percent (10%) of such licensee's consolidated nC.
utility plant, as recorded on the licensee's books of account.
See letter from John ti. O'Neill, Jr., of Shaw, Pittman, Potts & Trowbridge to the NRC dated November 7, 1997.
This comitment, incorporated as a condition to the NRC's consent to the indirect license transfers to the extent effected by the proposed merger and restructuring, will assist the NRC in assuring that ACE and DP&L will continue to maintain adequate resources to contribute to the safe operation and decommissioning of the Salem facility.
With respect to technical qualifications, the proposed merger will not effect any change in the technical c,ualf fications of the licensed operator, PSE&G, and will not effect any change in the responsibilities and obligations of PSE8G or any other licensee as set forth in the licenses.
, 3.0 ANTITRUST The antitrust provisions of the Atomic Energy Act in Section 105 of the Act require the Commission to conduct an antitrust review in connection with an application for a license to construct or operate a utilization or production facility under Section 103 of the Act.
Salem Units 1 ar.d 2 were licensed under Section 104b and, as a result, are not subject to an antitrust review by the staff in connection with the application regarding the proposed merger.
4.0 FOREIGN OWNEkSHIP The application states that for ACE and DP&L, after the proposed merger, neither ACE nor DP&L will "be owned, controlled or dominated by any alien, foreign corporation or foreign government." Also, it states that nefther ACE nor DPf,L is " acting as an agent or representative of any other person in this c
request for consent to the Indirect transfer of control of the license."
'(See pages 6 and 7 of the a) plication dated April 30,1997.) The staff does not know or have reason to >elieve that ACE or DP&L will be owned, controlled, or dominated by any alien, foreign corporation, or foreign government as a result of the proposed merger.
5.0 CONCLUSION
S In view nf the foregoing, the staff concludes that the proposed merger of AEI and DP&L resulting in the formation of a new 1.u ding company, Conectiv, will not adversely affect the financial or technical qualifications of ACE or DP&L l
with respect to the operation and decommissioning of Units 1 and 2 of the Salsm facility. Also, there do not appear to be any problematic antitrust or e
foreign ownership considerations related to the Salem Units 1 and 2 licenses that would result from the proposed merger. Thus, the proposed merger will not affect the qualifications of ACE or DP&L as holders of the licenses, and the transfer of control of the licenses, to the extent effected by the proposed merger, is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission. Accordingly, with the condition discussed above relating to significant asset transfers, the NRC should approve the application regarding the proposed merger.
Principal Contributor:
A. McKeigney Date: December 18, 1997
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