ML20198S684
| ML20198S684 | |
| Person / Time | |
|---|---|
| Site: | Quad Cities  |
| Issue date: | 12/22/1998 |
| From: | NRC (Affiliation Not Assigned) |
| To: | |
| Shared Package | |
| ML20198S646 | List: |
| References | |
| NUDOCS 9901110391 | |
| Download: ML20198S684 (3) | |
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UNITED STATES
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NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 3000HOM
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SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION RELATED TO THE PROPOSED MERGER OF CALENERGY COMPANY INC.
AND MIDAMERICAN ENERGY HOLDINGS COMPANY
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QUAD CITIES NUCLEAR POWER STATION. UNITS 1 AND 2 DOCKETS NOS. 50-254 AND 50-265
1.0 BACKGROUND
CalEnergy Company, Inc., and MidAmerican Energy Company, by themselves and through Commonwealth Edison Company, submitted under enver of letters dated September 10,1998, an application for approval of the indirect transfer of the licenses for the Quad Cities Nuclear Power Station, Units 1 and 2 (Quad Cities). The application was supplemented by letters dated September 16 and November 20,1998, and enclosures thereto. MidAmer;can Energy Company (MidAmerican), a wholly owned subsidiary of MidAmerican Energy Holdings Company (MEHC), is a twenty five percent (25%) non-operating owner of Quad CPies.
Commonwealth Edison Company (Comed) owns the remaining seventy five percent (75%)
share of Quad Cities and is the licensed operator of the facility.
Under an Agreement and Plan of Merger dated as of August 11,1998 (Merger Agreement),
CalEnergy Company, Inc. (Ca! Energy) will incorporate as an Iowa corporat;on, and essentially acquire MEHC for cash, resulting in CalEnergy becoming the parent company of MEHC.
MidAmerican, an electric utility as defined in 10 CFR $ 50.2, will remain as the NRC licensee as an indirect wholly-owned subsidiary of CalEnergy, with MEHC as an intermediary holding company. CalEnergy v 11 be renamed MidAmerican Energy Holdings Company. The subsidiary MEHC will change its name at a future date. The application seeks Commission approval, under 10 CFR 50.80, of the indirect transfer of the licenses for Quad Cities, to the extent held by MidAmerican, that would result from consummation of the proposed merger between CalEnergy and MEHC.
2.0 FINANCIAL ANDTECHNICAL QUALIFICATIONS On the basis of the information submitted in the application, including supplements thereto, the staff finds that there will be no near-term substantive change in the financial ability of MidAmerican to contribute appropriately to the operations and decommissioning of Quad Cities as a result of the proposed merger. MidAmerican is, and would remain after the merger, an
' electric utility" as defined in 10 CFR $ 50.2, engaged in the generation, transmission and distribution of electricity and will remain subject to the rate regulatory authority of the Federal Energy Regulatory Commission, the Illinois Commerce Commission, the Iowa Utilities Board, and the South Dakota Public Utilities Commission, according to the application. Thus, pursuant 9901110391 981222 DR p
ADOCK 05000254 PDR
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- 2-a to 10 CFR $ 50.33(f) MidAmerican, as an electric utility, is exempt from further financial qualifications review.
e However, in view of the NRC's concem that restructuring actions can lead to a diminution of assets necessary for the safe operation and decommissioning of a licensee's nuclear power i
plant, it is the NRC's practice to condition license transfer approvals upon a requirement that a licensee nct transfer significant assets from the licensee without first notifying the NRC. This requirement assists the NRC in assuring that the licensee will continue to maintain adequate resources to contribute to the cafe operation and decommissioning of its facilities, in this 1
regard, MidAmerican has agreed to:
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I 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 MidAmerican to its proposed parent, or any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding ten percent (10%) of MidAmerican's consolidated not utility plant, as recorded on MidAmerican's books 'f 5-. ant.
See Application of Ca! Energy Company and MidAmerican Energy Company for Indirect Transfer of Control at 1213. With the foregoing made a condition to the NRC's consent to the indirect license transfers, the NRC staff finds that MidAmerican will remain financially qualified to hold the facility licenses following the proposed merger.
With respect to technical qualifications, the proposed merger does not involve the licensed operator, Commonwealth Edison Company (Comed), and will not effect any change in the responsibilities and obligations of Comed or MidAmerican as set forth in the license. In ~
addition, Comed and MidAmer;can are not proposing any change to either the required organization or personnel responsible for operation of the Quad Cities Nuclear Power Station, Units 1 and 2. Since MidAmerican is not authorized to operate the facility, the proposed merger presents no technical qualifications issues.
Comments were received by telephone from a concemed individual which directed the staff's I
attention to the September 25,1998, proxy statement of MEHC, and to the pending law suit of Southem Califomia Edison vs. Coso Finance Partners in Califomia superior court, which involves subsidiaries of CalEnergy. After careful review of the proxy statement and a letter from CstEnergy's *ttomeys outlining the highlights of the law suit, staff finds that any current or potential financial repercussions with respect to these matters, in and of themselves, do not render MidAmerican financially unqualified to hold the licenses as a result of the proposed merger. The proxy statement did not contain any information that contradicted, or proved false, the information provided in the CalEnergy/MidAmerican application. These two items and other general concerns expressed by this individual may be of significance to a potential risk-adverse investor in Caltnergy, but do not alter the staff's finding of finaricial qualifications of MidAmerican.
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3.0 ANTITRUST REVIEW
Section 105 of the Atomic Energy Act of 1954, as amended (the Act), requires the NRC to
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conduct an antitrust review in connection with an application for a license to construct or operate a facility under Section 103. The Quad Cities Nuclear Power Station, Units 1 and 2, were licensed under Section 104(b) and, as a result, the application regarding the proposed l
merger with CalEnergy is not subject to an antitrust review by the staff.
4.0 FOREIGN OWNERSHIP. CONTROL OR DOMINATION The applicants state in their application that CalEnergy is a United States public company, traded on the New York Stock Exchange and is not now owned, controlled or dominated by an alien, a foreign corporation or a foreign govemment nor will it be so upon consummation of the merger. Furthermore, CalEnergy states in the application that the planned merger will not result in ownership, control, or domination of MidAmerican by a foreign corporation or foreign govemment, nor is MidAmerican presently so dominated or controlled. All current officers and directors of MidAmerican and MEHC are citizens of the United States. According to the i
application, only one proposed senior officer (President / Chief Operating Officer) of the merged l
CalEnergy is a foreign (Canadian) citizen. The proposed Chairman / Chief Executive Officer, Chief Financial Officer and General Counsel are all U.S. citizens. In addition, of the proposed board of CalEnergy following the merger, only two of fifteen members will be foreign (United Kingdom) citizens, according to the application. As stated above, the applicants have affirmeri that the merged Ca! Energy will not be owned, controlled, or dominated by foreign interests.
notwithstanding the immediately preceding description of the proposed limited involvement of non-U.S. citizens in the company.
The staff does not know or have reason to believe that MidAmerican will be owned, controlled, I
l or dominated by an alien, foreign corporation, or foreign govemment as a result of the proposed merger.
5.0 CONCLUSION
S in view of the foregoing, the staff concludes that the proposed merger between CalEnergy and MEHC, resulting in CalEnergy becoming the parent company of MEHC, and the indirect parent of MidAmerican, will not adversely affect the financial qualifications of MidAmerican with respect to the operation and decommissioning of the Quad Cities Nuclear Power Station, l
Units 1 and 2. Also, there do not appear to be any problematic antitrust or foreign ownership l
considerations related to the Quad Cities licenses that would result from the proposed merger.
i Thus, the proposed merger will not affect the qualifications of MidAmerican as a holder of the l
licenses, and the indirect transfer of control of the licenses, to the extent effected by the i
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.
l Principal Contributor: M A Dusaniwskyj Date: December 22, 1998 1
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