ML20199D231

Response of New England Power Co to Answers of Montaup Electric Co & Little Bay Power Corp.* Nep Requests That Nep Be Afforded Opportunity to File Appropriate Rule Challenge with Commission Pursuant to 10CFR2.1329

ML20199D231
Person / Time
Site:	Seabrook
Issue date:	01/19/1999
From:	Berlin E, Sherman J NEW ENGLAND POWER CO., SWIDLER & BERLIN
To:	NRC COMMISSION (OCM)
Shared Package
ML20199D235	List: ML20199D231 ML20199D246
References
CON-#199-19910 LA, NUDOCS 9901200039
Download: ML20199D231 (8)

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UNITED STATES OF AMERICA DOCKEIED USNRC l

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NUCLEAR REGULATORY COMMISSION W JAN 19 P2 53 L

In the Matter of

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J North Atlantic Energy Service Corporation and

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DocketN&l50-443:

MFF Montaup Electric Company

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(License No. NPF-86)

(Seabrook Station, Unit No.1)

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RESPONSE OF NEW ENGLAND POWER COMPANY TO THE ANSWERS OF MONTAUP ELECTRIC COMPANY AND LITTLE BAY POWER CORPORATION New England Power Company ("NEP") is perplexed by the Answer submitted by Montaup l

Electric Company ("Montaup") to NEP's request for intervention and for either summary relief or for a hearing. Montaup presumes that NEP's grievance is limited to the fact that Montaup has chosen to prepay its share of decommissioning and to rely on earnings within the fund to result in the accumulation of an adequate amount.

That is not at all NEP's concern. Indeed, NEP did not question at all Montaup's projection of earnings on the amount to be prepaid. Instead, NEP questioned the assumption that the estimate of decommissioning costs, for a unit that has 27 years remaining on its license, will remain static' and, alternatively, that the unit will, in New England's highly competitive power supply market, remain competitive for that entire period. Premature termination, the norm for nuclear units in l

l Decommissioning estimates have not remained static, a fact which cannot be ignored when judging whether a " reasonable assurance" has been prmided.

9901200039 990119 PCR ADOCK 05000443 g3 l

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l ta New England even before the advent of competitive pressures from independent developers of l

1-efficient generation, would have the decommissioning contribution ofMontaup deficient even if the cost estimate remains static. Moreover, absent a hearing, or the condition we propose, the l

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Commission has no basis upon which to find that Little Bay will be able to meet the responsibilities imposed on a licensee for capital and operational expenditures required for safe operation.

l NEP is equally perplexed, albeit for different reasons, by the opposition submitted on behalf of Little Bay Power Corporation ("Little Bay"). In that opposition, Little Bay essentially advances three themes: (1) that NEP seeks collaterally and impermissibly to attack Commission regulations; l

(2) that NEP has failed to raise, by affidavit, material facts; and, perhaps most perplexing of all (3) that NEP lacks standing.

As to standing, surely it cannot seriously be maintained that a co-licensee lacks standing to question whether an applicant who seeks authorization toj oin as a licensee has the requisite financial qualification. Who, after all, has more at stake? The inability of a licensee to meet its responsibilities for the unit's safe operation and decommissioning uniquely would impact its co-licensee. Moreover, these co-licensees are best situated to scrutinize an applicant's financial qualifications to discharge its responsibilities and thereby to contribute to and facilitate the review that the Commission is obliged to undertake.

Little B ay's argument that NEP lacks standing misconstmes both NRC andjudicial case law on the requisite "injary in fact" for standing to intervene. NEP's request supported by affidavit, i

alleges a concrete injury that is far from speculative. There is no requirement that the injury be l

" imminent," as Little Bay suggests, and the case cited by Little Bay does not require this. Under Little Bay's theory, citizens residing in the immediate vicinity of a nuclear power plant could never

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be accorded standing at the constmetion permit stage based on radiological injury. Indeed,' case law is clear that it is not even necessary to show that injury will inevitably occur. Gulf States Utilities co.. et al. (River Bend Station. Unit 1). LBP-94-3,39 NRC 31, gEd, CLI-94-10,40 NRC 43 (1994).

Surely the injury here is no more speculative than that found sufficient in Ouivera Minine comoany (Ambrosia Lake Facility. Grants New Mexico). CLI-98-11,48 NRC 1 (1998). Indeed, NEP'S case is virtually "on all fours" with Gulf States Utilities Comoany. et al. (River Bend Station. Unit 1).

CLI-94-10,40 NRC 43 (1994) (" Gulf States"). In Gulf States. the Commission rejected the argument that an injury similar to that alleged here was too speculative and granted standing to a non-operating co-owner to challenge a license transfer. The notice of hearing opportunity, cited on page 11 ofLittle Bay's answer reflects little more than a pro forma NRC Staffadministrative action.

It hardly : astitutes a Commission adjudication, binding on the parties, that would deprive NEP of any standing.

As to the supposed failure of NEP to raise material issues of fact, NEP, by affidavit, has pointed out critical facts that should be obvious to Little Bay: that nuclear units in New England have not operated for their full license terms and the planned entry of an enormous amount of efficient new generation that will put enormous pressure on the continued economic viability of existing generation. NEP has also pointed out that it has not been uncommon to have to revise upward decommissioning cost estimates.

Little Bay's response avoids even joining issue, let alone meeting the burden of persuasion that is its responsibility. As to the possibility that the current decommissioning estimate may prove inadequate, Little Bay points to the obligation to update estimates and suggests that if necessary it will add to the amount that Montaup now proposes to prefund. But how will Little Bay meet its,

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9 obligation for any decommissioning deficiency, particularly ifit is necessary to terminate operations at Seabrook prematurely? Little Bay, after all, will be a single-asset corporation without any revenue-producing asset other than Seabrook. Little Bay's only response is to point to license l

extensions sought for two other units operating in different parts of the country without at all l

suggesting that the economic circumstances confronted by those units at all parallels the' situation in New England. This failure is all the more surprising since Little Bay is quick to castigate NEP for its alleged failure to offer factual support. NEP in fact has done so. It has pointed out the facts germane to New England, and Little B ay offers nothing pertinent by way ofrefutation. In particular, it has offered nothing to support its entreaty that the Commission have faith that Seabrook will be l

cost-competitive throughout the term of its operating license. The experience of Little Bay's afYiliate, which has consistently failed to turn a profit on its investment in Seabrook, hardly supports Little Bay's rosy view of the future.2 Neither in the application nor in its Answer does Little Bay offer any factual support for its position. Again, the burden rests with Little Bay, not with NEP.

NEP's specification ofissues clearly satisfies the NRC requirements for specificity and basis. It is not required that petitioner prove his case at the contention stage. What is required instead is a " minimal showing that material facts are in dispute thereby demonstrating that an inquiry in depth is appropriate." Gulf States at 51, citing 54 Fed. Reg. 33168 (Aug. I 1,1984)(preamble to 10C.F.R. { 2.714 (revised contention rule)). See also Yankee Atomic Electric Comoany (Yankee Nuclear Power Station 1 CLI-96-7,43 NRC 235,249 (1996). NEP has clearly metthis burden. At 2The appended Supplemental Affidavit of James S. Robinson relates the statements of Little Bay's affiliate, and its financial results, as reficcted in filings with the S ecurities and Exchange Commission. Commission consideration of this supplemental affidavit is appropriate. Houston Lighting & Power CoJ Allens Creek Nuclear Generating Station.

Unit 1), ALAB-565,10 NRC 521,524-35 (1979).,

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L best, Little Bay's discussion of NEP'S request and the associated affidavit amount to an

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impermissible invitation to the Commission to decide the case on the merits at the contention state on the basis that NEP, rather than Montaup or Little Bay, bears the ultimate burden of proving t

I reasonable assurance of safety. 54 Fed. Reg. 33168 (Aug. I1,1989).

This brings us to Montaup and Little Bay's final, and prevalent theme: that NEP is seeking collaterally to attack Commission regulations. NEP has done no such thing. In its intervention, NEP recognized that prefunding ofdecommissioning and five-year expense and revenue projections are permissible for non-utility licensees. What is impermissible is for Little Bay to take refuge behind those mies in lieu ofa bona fide presentation offinancial qualification. First, we doubt seriously that the Commission intended five-year projections to suffice for a new single-asset licensee, whose l

license extends more than 20 years beyond the projection period, and who is operating in a deregulated market where new entrants are and will be competing aggressively for load.' Second, the Commission surely did not intend any five-year projection, however speculative, to suffice, and l

to stand as a shield precluding probing inquiry. Taken to its logical conclusion, Little Bay's t

t argument would shut-offinquiry even ifupon the gentlest probing the projections were shown to be specious. The Commission cannotjudge the validity of Little Bay's projections until they are shared l

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$The finding required is that the applicant be financially qualified "for the period of the license." The requirement that data be submitted for five years does not limit the scope of the finding. Moreover the regulation recognizes that newly formed entities may need to submit more information.10 CFR 150.33(f). The Standard Review Plan and prior decision involving Great Bay, cited on pages 20-21 of Little Bay's answer, do not constitute full adjudicatory decisions which are binding on NEP or the Conunission, notwithstanding any informal approval of them.

Seg,s1 orter County Chapter of Isaak Walton League of America v. AEC,533 F.2d 1011 (7* Cir.1976)fu.b_lic e

P Service Company of New Hampshire (Seabrook Station. Units 1 and 21, ALAB-875,26 NRC 251,260-261 (1987);

Washington Public Power Supply System (WPPSS Nuclearcroiects Nos. 3 and 5), ALAB-485,7 NRC 986,988 (1978).

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with the intervenors (they have been filed on a confidential basis) and tested by those who know something about the dynamic New England bulk power marketplace.'

We, like Little Bay, are mindful of the Commission's desire to avoid time-consuming factual inquiries. We share that objective. But in the end, there must be a reasonable basis upon which to judge Little Bay financially qualified to assume Montaup's obligations for the safe operation and decommissioning of Seabrook. NEP offered a simple solution, one that would avoid the necessity of any factual inquiry at all. Little Bay cannot have it both ways; it cannot urge rejection of the l

l condition sought by NEP and insist that its financial qualifications need not be subjected to evidentiary review.

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'Moreover, it surely cannot be contended that NEP'sp.lig.faqig presentation questioning the assumption that Seabrook will remam in service for its full license term calls into question a Commission rule. 'Ihere is no generic rule requiring the assumption that plants will operate for the full term of their initial licenses. The decommissioning l

regulation,10 CFR150.75, as amended last year (63. Fed. Reg. 50465 (Sept. 22,1998), as clarified,63 Fed. Reg. 57236 l

(Oct. 27,1998)) requires that prepayment be sufficient to pay for the cost of safe decommissioning "at the time l

termination of operation is expected," and provides that credit may be taken for projected canungs on decommissioning l

funds "through the projected decommissioning period." Montaup mistates the regulation of page 4 ofits answer by l

claiming that the regulation contemplates a revenue projection until "the end of the license period." The actual language i

is " projected decommissioning period," a critical wording difference which is fatal to Montaup's (and Little Bay's) argument Little Bay's discussion of a 25% contingency in NUREG-1307 and of accelerated funding in the 1998 decommissioning fmancial assurance rulemaking adds nothing of relevance. First of all, it is elementary admmistrative law that proposed rules and NUREGs do not constitute rulemaking decisions; only final rules may do so. Little Bay cites to no fmal rulemaking conclusion that a 25% contingency would address premature shutdown as it might affect the prefunding option. Clearly, the 25% was intended as a contingency for increased decommissioning cost, not for premature shutdown. Noris there any fmal rulemaking fmding that periodic adjustments of cost estimates and reporting requirements themselves will account for premature shutdown. The actual conclusion on accelcrated funding in the 1998 fmal mie was that "the NRC does not consider accelerated fundmg to provide reasonable decommissioning financial assurance." 63 Fed. Reg. 50465, 50470 (Sept. 22,1998). From the preamble discussion, it is clear that the NRC was discussing and then rejecting accelerated funding as another possible funding option, not as an interp--tation of another option (prefunding). To be relevant to Montaup's and Little Bay's rule challenge argument, the 1998 fmal rulemaking would need to include a generic fmding, for the purpose ofimplementation of the prefundmg option, that plants would generally operate to the end of their license term. No such rulemaking finding is apparent, either here or l

in any other NRC rule, so the is no rulemaking fmding for NEP to challenge.1gg Public Service Conmany of New i-H.mrahire et al. (Seabrook Nuclear Powa Station. Units 1 and 2), CLI-88-10,28 NRC 573 (1988).

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i If, notwithstanding the above, the Commission should decide that some or all of NEP's i

request constitutes a collateral rule challenge, NEP respectfully requests that it be afforded the opportunity to file the appropriate mie challenge with the Commission pursuant to 10 CFR 2.1329, l

based on special circumstances. NEP cannot do so now, even on a contingency basis, because absent a Commission ruling onits intervention and hearing request, it cannot even speculate what particular mle might be challenged. In any event, by establishing a separate provision enabling "particpants" to file rule challenges (a counterpart to 10 CFR 2.758), with time periods and reply provisions l

which differ from those applicable to intervention requests, the Commission must have contemplated l

that mle challenges could be filed on a timely basis separate from the intervention request itself.

Accordingly, NEP should be accorded full party status, and the Commission either should now condition the transfer of Montaup's Seabrook ownership interest on the retention by Montaup of contingent responsibility for the fimancial obligations associated with the safe operation and l

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I decommissioning of the transferred ownership portion in the event of the default of Little Bay or, t

failing adoption of that condition, set for full hearing the issue ofwhether Little Bay reasonably can be assured of having the requisite financial qualifications safely to operate and decommission its ownership share of Seabrook.

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Respectfully submitted, c LU c o., (

2A Edward Berlin, Esq. '

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J. Phillip Jordan, Esq.

Mark R. Klupt, Esq.

SWIDLER BERLIN SHEREFF FRIEDMAN 3000 K Street, N.W., Suite 300 l

Washington, D.C. 20007 l

(202) 424-7504 John F. Sherman, Esq.

Associate General Counsel 1

NEW ENGLAND POWER COMPANY 25 Research Drive Westborough, MA 01582 (508)389-2971 January 19,1999 l

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