ML20199D246

Supplemental Affidavit of Js Robinson.* Affidavit of Js Robinson Providing Info Re Financial Results of Baycorp Holding Ltd & Baycorp Subsidiary,Great Bay Power Corp. with Certificate of Svc

ML20199D246
Person / Time
Site:	Seabrook
Issue date:	01/19/1999
From:	Jay Robinson NEW ENGLAND POWER CO.
To:
Shared Package
ML20199D235	List: ML20199D231 ML20199D246
References
LA, NUDOCS 9901200045
Download: ML20199D246 (16)

Text

_ _ _ . . _ _ _ _ . _. _ _. _ ._ _ _ _ . _ _ _ _ _ _ _.. _ _ _ . _ _ _ . _ _ _ _ . _ _

c i '

l . .

c_ _ UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION i

l In the Matter of )

)

North Atlantic Energy Service Corporation ) Docket No. 50-433

- and Montaup Electric Company )

) (License No. NPR-86)

. (Seabrook Station, Unit No.1 ) ,

) l l

SUPPLEMENTAL AFFIDAVIT OF JAMES S. ROBINSON James S. Robin:on, being duly sworn, states as follows:

1. I am Vice President and Director of Generation Investments of New England l

l Power Company ("NEP"), the wholesale electric generation and transmission subsidiary of New l

England Electric System, a public utility holding company.

2. I made an affidavit that was appended to the Motion of NEP for Leave to l - Intervene and Petition for Summary Relief or, in the Alternative, for a Hearing in the above- l captioned proceeding. I submit this supplemental affidavit to provide information concerning the l

financial results of BayCorp Hoiding, Ltd. ("BayCorp") and its subsidiary, Great Bay Power l

l ' Corporation (" Great Bay"). BayCorp is the corporate parent of Little Bay Power Corporation

("Little Bay"), the proposed transferee of Montaup Electric Company's interest in Seabrook Station, Unit No.1. Like Little Bay, Great Bay's sole asset is its Seabrook interest. Great Bay's

, re nt financial results and its statements regarding its future prospects thus shed light on the

competitiveness of Seabrook's power under recent market conditions. All of the financial i

. information and statements I discuss were taken from public filings made by BayCorp and/or f

i. Great Bay at the Securities and Exchange Commission.

J W

9901200045 990119 PDR /. DOCK 05000443 O ppg y

l:

3. Fpr.the period January 1,1995 through September 30,1998, operating revenues of BayCorp / Great Bay have totaled approximately $102 million. During the same period, operating expenses totaled approximately $128 million, resulting in a net operating loss of approximately $26 million. For the same period, BayCorp/ Great Bay experienced a net loss of approximately $19 million '

4. As of December 31,1996, BayCorp/ Great Bay had liquid assets (cash, cash equivalents and short-term investments) totaling approximately $29 million. As of September 30, 1998, the balance was approximately $13 million, which is a $15 million reduction or 54%

reduction since December 31,1996.2

5. For the period January 1,1998 through September 30.1998, operating revenues of BayCorp/ Great Bay have totaled approximately $21 million. During the same period, operating expenses totaled approximately $27 million, resulting in a net operating loss of approximately $6 million. For the same period, BayCorp/ Great Bay experienced a net loss of approximately $6 million.)

6. As of December 31,1997, BayCorp/ Great Bay had liquid assets (cash, cash equivalents and short-term investments) totaling approximately $19 million. As of September 30, 1998, the balance was approximately $13 million, which is a $6 million reduction or 30%

' As reported in Forms 10K and 10Q filed for the relevant periods by BayCorp Holdings, Ltd. / Great Bay Power Corp. with the Securities and Exchange Commission. A table showing the information reported in these documents are included in Exhibit 1.

2 Ibid.

'3 As reported in Form 10Q for the period ending September 30,1998 filed by BayCorp Holdings, Ltd. with the Securitie; and Exchange Commission.

2-e L

. l l

reduction since December 31,1997.*

7. BayCorp/ Great Bay itself has identified potential financial risks associated with its l

investment in the Seabrook Project. BayCorp made the following statements on this subject in )

i Exhibit 99.1 to the Form 10Q that it filed with the Securities and Exchange Commission for the i l

period ending September 30,1998 (excerpts from this document are included as Exhibit 2):

a. "BayCorp's principal asset is its equity interest in Great Bay. Great Bay owns a single principal asset, a 12.1% joint interest in the Seabrook Nuclear Power Project in Seabrook, New Hampshire. Accordingly, BavCorn's results of i

l ooerations are com.oletely deoendent u.oon the successful and continued c.oeration of the Seabrook Project. In oarticular. if the Seabrook Proiect exoeriences unscheduled outages of significant duration. Great Bav's results of ooerations will be materially adverselv affected."(Emphasis added) l b. "BavCoro has never renorted an onerating profit for any year since its I

l incorooration. The Company's business strategy is to seek purchasers for its share i

l l of the Seabrook Project electricity output at prices, either in the short-term market i i  !

i or pursuant to medium or long-term contracts, significantly in excess of the prices i

t

currently available in the short-term wholesale electricity market. Sales at current 1

~

short-term rates do not result in sufficient revenue to enable BavCoro to meet its cash reauirements for operations, maintenance and capital related costs. Great I.

L Bay's ability to obtain such higher prices will depend on regional, national and worldwide energy supply and demand factors that are beyond the control of Great

• Ibid.

l -

3-l

.~, ,-- - -,m. . . . - - ..a , - -rr-- -- , ---. w-- .

e Bay There can be no assurance that Great Bay ever will be able to sell oower at prices that will enable it to meet its cash reauirements."(Emphasis added)

c. "As of December 31,1997, BayCorp had approximately $19.1 million in cash and cash equivalents and short-term investments. . . . If the Seabrook Project operated at a capacity factor below historical levels, or if expenses associated with the ownership or operation of the Seabrook Project, including without limitation decommissioning costs, are materially higher than anticipated, or if the prices at which Great Bay is able to sell its share of the Seabrook Project electricity do not increase at the rates and within the time expected by Great Bay, Great Bay or

[BayCorp] would be required to raise additional capital, either through a debt financing or an equity financing, to meet ongoing cash requirements. There is no assurance that Great Bay or [BavCoro] would be able to raise such capital or that the terms on which any additional capital is available would be accentable."

(Emphasis added)

d. "Certain costs and expenses of operating the Seabrook Project or owning an interest therein, such as certain insurance and decommissioning costs, are subject to increase or retroactive adjustment based on factors beyond the control of BayCorp or Great Bay. The cost of disposing of Unit 2 of the Seabrook Project is not known at this time. These various costs and exoenses may adverselv affect BayCoro and Great Bay. oossibly materially." (Emphasis added)

8. In the same document, BayCorp/ Great Bay also identified potential risks associated with the adequacy of Great Bay's future revenues from the wholesale power market:

I l

a. "In the past, wholesale sellers of electric power, which typically were regulated i

~

l electric utilities, frequently entered into medium or long-term power sale contracts l providing for prices in excess of the prices available in the short-term market, which includes contracts of one year or less in duration. In recent years. increased comnetition in the wholesale electric nower market. reduced crowth in the demand i

for electricity. Iow prices in the short-term market and the uncertainty associated with deregniation of the industry have reduced the willingness of wholesale oower purchasers to enter into medium or long-term contracts and have reduced the prices obtainable from such contracts." (Emphasis added)

. l

b. " Great Bay sells its share of Seabrook Project electricity primarily into the i

1 Northeast United States wholesale electricity market. There are a large number of I suppliers to this market and comnetition is intense. A primary source of competition comes from traditional utilities, many of which presently have excess l

capacity. In add a hm, non-utility wholesale generators of electricity, such as IPPs, QFs and EWGs, as well as power marketers and brokers, actively sell electricity in i this market. Great Bay may face increased competition. primarily based on price.

from all sources in the future." (Emphasis added)

9. BayCorp/ Great Bay also acknowledged in that document the potential risk of a premature shutdown of Seabrook Unit 1:

" Substantial controversy has existed for some time concerning nuclear generating plants and over the years such opposition has led to construction delays, cost overruns, licensing delays, demonstrations and other difficulties. The Seabrook 1

-r, ~ . , _ . . . _ - -

. _ _ . . . _ _ . . . . _ . . = _ ._________..-__ _.._ _____.._ _ _ _ . . . . . _ _ - . _ .

L r .

Project was the subject of significant public controversy during its construction I

and licensing and remains controversial. An increase in public concerns regarding the Seabrook Project or nuclear power in general could adversely affect the operating license of Seabrook Unit 1. While Great Bay cannot predict the ultimate

effect of such controversv. it is nossible that it could result in a oremature

' shutdown of the unit." (Emphasis added.)

10. BayCorp/ Great Bay also identified in that document the potential risk that the l.

I ultimate cost of decommissioning Seabrook Unit I may exceed amounts set aside in  ;

l decommissioning trust funds:

"While the owners of the Seabrook Project are accumulating a trust fund to defray decommissioning costs, these costs could substantially exceed the value of the I

trust fund. and the owners (including Great Bav) would remain liable for the i

excess. Moreover, the amount that is required to be deposited in the trust fund is i subject to periodic review and adjustment by an independent commission of the State of New Hampshire, which could result in material increases in such amounts." (Emphasis added)

11. BayCorp also explained in that document that under New Hampshire law, other co-owners of Seabrook Unit I may be required to fund a portion of Great Bay's decommissioning obligation. and that this obligation served as the basis of the NRC staff's determination that Great Bay complies with the decommissioning funding assurance requirements under NRC regulations:

"In June 1998, the New Hampshire State legislature enacted legislation that provides that in the event of a default by Great Bay on its payments to the

, . - - - , -.7,...

l

'd.ecommissioning fund, the other Seabrook icint owners would be obligated to pay their proportional share of such default. As a result of the enactment of this I legislation, the NRC notified Great Bay in July 1998 of the staff's determination l

that Great Bay complies with the decommissioning funding assurance requirements  ;

1 under NRC regulations." (Emphasis added) l l

Signed under pains and penalties of perjury, this 19* day of January,1999.

b . \ is %4 l James S. Robinson l

l l

i i

I

i James S. Robinson Supplemental Affidavit Exhibit 1 Excerpts from filings by BayCorp Holdings, Ltd. And or Great Bay Power Corporation at the Securities and Exchange Commission' 1

l 1

-($ Thousands)- - -----

1995 1996 1997 19982 Cumulative Operating Revenues $25,524 $30,324 $26,642 $20,500 $101,990 Operating Expenses 32,381 32,563 36,880 26,747 128,571 i

OperatingIncome (Loss) (7,857) (2,239) (10,238) (6,247) (26,581) l l Net Income (Loss) (6,059) 4,100 (11,215) (6,195) (19,369)

---

($ Thousands) --

I

!. I2/31/96 12/31/97 9/30/98 Liquid Asset Balances $28,775 $19,092 $13,343 i

l 8

Information for 1995,1996, and 1997 are from the 1997 Form 10-K. Information for 1998 is from September 30,1998 Form 10-Q.

I 2

As of September 30,1998.

1 1

I

James S. Robinson Supplemental Affidavit Exhibit 2 Exhibit 99.1 to BayCorp Holdings, Ltd. SEC Fonn 10-Q for Period September 30,1998 CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS' This Annual Report on Form 10-K contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words " believes," " anticipates,"

" plans," " expects," " intends" and similar expressions are intended to identify forward-looking statements. There are a number ofimportant factors that could cause the results of BayCorp and/or Great Bay to differ materially from those indicated by such forward-looking statements.

These factors include, without limitation, those set forth below and elsewhere in this Annual

- Report.

Ownershio of a Sinale Asset. BayCorp's principal asset is it equity interest in Great Bay.

Great Bay owns a single principal asset, a 12.1% joint interest in the Seabrook Nuclear Power Project in Seabrook, New Hampshire. Accordingly, BayCorp's results of operations are completely dependent upon the successful and continued operation of the Seabrook Project. In particular, if the Seabrook Project experiences unscheduled outages of significant duration, Great Bay's results of operations will be materially adversely affected.

History of Losses: Imolementation of Business Strateav. BayCorp has never reported an operating profit for any year since its incorporation. The Company's business strategy is to seek purchasers for its share of the Seabrook Project electricity output at prices, either in the short-term market or pursuant to medium or long-term contracts, significantly in excess of the prices currently available in the short-term ~ holesale electricity market. Sales at current short-term rates do not result in sufficient Svenue to enable BayCorp to meet its cash requirements for operations, maintenance and capital related costs. Great Bay's ability to obtain such higher prices will depend on regional, national and worldwide energy supply and demand factors that are beyond the control of Great Bay. There can be no assurance that Great Bay ever 3

BayCorp's Form 10-Q for the period endmg September 30,1998 contained the following language:

"Certain Factors hat May Affect Future Results, set out on pages 18-22 of the Company's Annual Report on Form 10-K for the period ended December 31,1997, except for the risk factor therein captioned " Year 2000," which is replaced in its entirety by the disclosure in this Form 10-Q for the period ended September 30,1998 under the caption " Management's Discussion and Analysis of Financial Conditions and Results of Operations-Year 2000 Issues." he Company's Annual Report on Form 10-K for the period ended December 31,1997 shall not be deemed to be filed except to the extent that portions thereof are expressly incorporated by reference herein."

l

l James S. Robinson

- Supplemental Aflidavit l Exhibit 2 l will be able to sell power at prices that will enable it to meet its cash requirements.

l Liouidity Needs. As of December 31,1997, BayCorp had approximately $19.1 million in cash and cash equivalents and short-term investments. The Company believes that such cash, l

together with the anticipated proceeds from the sale of electricity by Great Bay, will be sufficient to enable the Company to meet its cash requirements until the prices at which Great Bay can sell its electricity increase sufficiently to enable the Company to cover its annual cash I requirements. However, if the Seabrook Project operated at a capacity factor below historical levels, or if expenses associated with the ownership or operation of the Seabrook Project,

{

including without limitation decommissioning costs, are materially higher than anticipated, or if I the prices at which Great Bay is able to sell its share of the Seabrook Project electricity do not increase at the rates and within the time expected by Great Bay, Great Bay or the Company would be required to raise additional capital, either through a debt financing or an equity financing, to meet ongoing cash requirements. There is no assurance that Great Bay or the Company would be able to raise such capital or that the terms on which any additional capital is available would be acceptable. If additional funds are raised by issuing equity securities, dilution l to then existing stockholders will result.

Channes in Power Sale Contract Terms Available in Wholesale Power Market. In the l past, wholesale sellers of electric power, which typically were regulated electric utilities, frequently entered into medium or long-term power sale contracts providing for prices in excess of the prices available in the short-term market, which includes contracts of one year or less in duration. In recent years, increased competition in the wholesale electric power market, reduced growth in the demand for electricity, low prices in the short-term market and the uncertainty associated with deregulation of the industry have reduced the willingness of wholesale power purchasers to enter into medium or lortg-term contracts and have reduced the prices obtainable from such contracts.

Risks in Connection with Joint Ownershio of Seabrook Project. Great Bay is required under the Agreement for Joint Ownership, Constmetion and Operation of New Hampshire Nuclear Units dated May 1,1973, as amended, by and among Great Bay and the other 10 utility companies that are owners of the Seabrook Project (the "JOA"), to pay its share of Seabrook Unit I and Seabrook Unit 2 expenses, including without limitation operations and maintenance expenses, construction and nuclear fuel expenditures and decommissioning costs, regardless of l Seabrook Unit l's operations. Under certain circumstances, a failure by Great Bay to make its monthly payments under the JOA entitles certain otherjoint owners of the Seabrook Project to purchase Great Bay's interest in the Seabrook Project for 75% of the then fair market value thereof.

2 i

l

James S. Robinson  !

J- Supplemental Affidavit Exhibit 2 In addition, the failure to make monthly payments under the JOA by owners of the Seabrook Project other than Great Bay may have a material adverse effect on Great Bay by requiring Great Bay to pay a greater proportion of the Seabrook Project expenses in order to preserve the value ofits share of the Seabrook Project. In the past, cenain of the owners of the Seabrook Project other than Great Bay have not made their full respective payments. The electric utility industry is undergoing significant changes as competition and deregulation are introduced into the marketplace. Some utilities, including certain Participants, have indicated in state regulatory proceedings that they may be forced to seek bankruptcy protection if regulators, as part of the industry restructuring, do not allow for full recovery of stranded costs. If a Participant other than Great Bay filed for bankruptcy and that Participant was unable to pay its share of Seabrook Project expenses, Great Bay might be required to pay a greater portion of Seabrook l Project expenses. In the past, the filing of bankmptcy by a Participant has not resulted in a failure to pay Seabrook Project expenses or an increase in the percentage of expenses paid by other Participants.

On February 28,1997, the NHPUC issued an order requiring stranded cost recovery to be based on the average market price of electricity in New England, rather than alternative regulatory accounting methods that are more favorable to the Participants. On March 10,1997,

, one of the Participants, Northeast Utilities (along with three ofits subsidiaries), received a temporary restraining order from the U.S. District Court for the District of Rhode Island. This temporary restraining order stayed the NHPUC's February 28,1997 order to the extent that the order established a rate methodology that is not designed to recover the cost of providing service and would require Northeast Utilities and certain ofits affiliates to write-off any regulatory assets. If this stay or a similar court action does not remain in effect and Northeast Utilities is unable to pay its share of Seabrook Project expenses, Great Bay might be required to pay a greater portion of Seabrook Project expenses.

The Seabrook Project is owned by Great Bay and the other owners thereof as tenants in l common, with the various owners holding varying ownership shares. This means that Great bay, l which owns only a 12.1% interest, does not have control of the management of the Seabrook l Project. As a result, decisions may be made affecting the Seabrook Project notwithstanding Great Bay's opposition.

Certain costs and expenses of operating the Seabrook Project or owning an interest j therein, such as certain insurance and decommissioning costs, are subject to increase or retroactive adjustment based on factors beyond the control of BayCorp or Great Bay. The cost of disposing of Unit 2 of the Seabrook Project is not known at this time. These various costs and expenses may adversely affect BayCorp and Great Bay, possibly materially.

3 i

l

4 James S. Robinson Supplemental Aflidavit Exhibit 2 Extensive Government Regulation. The Seabrook Project is subject to extensive regulation by federal and state agencies. In particular, the Seabrook Project and Great Bay as part owner of a licensed nuclear facility, are subject to the broad jurisdiction of the NRC, which is empowered to authorize the siting, construction and operation of nuclear reactors after consideration of public health and safety, environmental and antitmst matters. Great Bay is also l subject to thejurisdiction of the FERC and, as a result, is required to file with FERC all contracts for the sale of electricity. FERC has the authority to suspend the rates at which Great Bay proposes to sell power, to allow such rates to go into effect subject to refund and to modify a proposed or existing rate if FERC determines that such rate is not "just and reasonable." FERC's jurisdiction also includes among other things the sale lease merger consolidation or other disposition of facilities, interconnection of certain facilities, accounts, service and property l records. Compliance with the various requirements of the NRC and FERC is expensive.

Noncompliance with NRC requirements may result, among other things, in a shutdown of the Seabrook Project.

The NRC has promulgated a broad range of regulations affecting all aspects of the design, construction and operation of a nuclear facility, such as the Seabrook Projtct, including performance of nuclear safety systems, fire protection, emergency response planning and notification systems, insurance and quality assurance. The NRC retains authority to mcdify, suspend or withdraw operating licenses, such as the license pursuant to which the Seabrook project operates, at any time that conditions warrant. For example, the NRC might order Seabrook Unit I shut down (i) if flaws were discovered in the constmetion or operation of Seabrook Unit 1, (ii)if problems developed with respect to other nuclear generating plants of a design and construction similar to Unit 1, or (iii) if accidents at other nuclear facilities suggested that nuclear generating plants generally were less safe than previously believed.

Great Bay is also subject to the New Hampshire public utility law and regulations of the NHPUC that afTect, among other things, the issuance of securities, transfer of utility property and contacts with afliliates as well as the sale, lease, merger, consolidation or other disposition of facilities. The NHPUC does not regulate wholesale electricity rates.

Risk of Nuclear Accident. Nuclear reactors have been used to generate electric power for more than 35 years and there are currently more than 100 nuclear reactors used for electric power generation in the United States. Although the safety record of these nuclear reactors in the United States generally has been very good, accidents and other unforeseen problems have occurred both in the United States and elsewhere, including the well-publicized incidents at Three Mile Island in Pennsylvania and Chernobyl in the former Soviet Union. The consequences of such an accident can be severe, including loss oflife and property damage, and the available insurance coverage may not be sufficient to pay all the damages incurred.

4

_. . ._ __ _____ _.~_.___ _ _ - __ _ _ . _ _ _ _ _ . _ _

l ,

James S. Robinson Supplemental Affidavit Exhibit 2 j l

Public Controversv Concerning Nuclear Power Plants. Substantial controversy has existed for some time concerning nuclear generating plants and over the years such opposition has led to construction delays, cost overmns, licensing delays, demonstrations and other  !

, difficulties. The Seabrook Project was the subject of significant public controversy during its j construction and licensing and remains controversial. An increase in public concerns regarding i the Seabrook Project or nuclear power in general could adversely affect the operating license of Seabrook Unit 1. While Great Bay cannot predict the ultimate effect of such controversy, it is possible that it could result in a premature shutdown of the unit.

i Waste Disoosal: Decommissioning Cost. There has been considerable public concern and regulatory attention focused upon the disposal oflow- and high-level nuclear waates produced at nuclear facilities and the ultimate decommissioning of such facilities. As to waste disposal concems, both the federal government and the State of New Hampshire are currently delinquent in the performance of their statutory c,bligations. See " Business -- Nuclear Waste Disposal." In April 1995, a privately owned facility in Utah was approved as a disposal facility for certain types of LLW. Additionally, the Barnwell, South Carolina disposal facility was l reopened in July 1995 to all states except North Carolina as a result oflegislation passed by the l South Carolina legislature. The Seabrook Project began shipping certain LLW to the Utah facility in December 1995. All LLW generated by the Seabrook Project that exceeds the j maximum radioactivity level of LLW accepted by the Utah facility is stored on-site at the Seabrook facility. Based on information provided by NAESCO, management believes that the l

on-site storage capacity for LLW generated by the Seabrook Project is adequate until at least 2006.

l l As to decommissioning, NRC regulations require that upon permanent shutdown of a nuclear facility, appropriate arrangements for full decontamination and decommissioning of the facility be made. These regulatioru require that during the operation of a facility, the owners of l

the facility must set aside sufficient funds to defray decommissioning costs. While the owners of the Seabrook Project are accumulating a trust fund to defray decommissioning costs, these costs.

could substantially exceed the value of the tmst fund, and the owners (including Great Bay) would remain liable for the excess. Moreover, the amount that is required to be deposited in the tmst fund is subject to periodic review and adjustment by an independent commission of the State of New Hampshire, which could result in material increases in such amounts.

l In January 1997, the NRC issued a temporary exemption to Great Bay from the obligation of Great Bay to comply with the NRC's regulations applicable to a non " electric utility" owner of an interest in a nuclear power. In the exemption, the NRC staff stated that it believes that Great Bay currently does not satisfy the NRC definition of" electric utility." If Great

' 5 4

f

-- , , -n , - -

1 1

James S. Robinson

'- Supplemental AfTidavit Exhibit 2 Bay is an " electric utility," then Great Bay may satisfy the NRC decommissioning requirements through its monthly payments into the decommissioning tmst fund. If Great Bay is not an

" electric utility," the NRC could require that Great Bay provide a st:rety bond or other allowable decommissioning funding mechanisms. On January 30,1998, Great Bay filed a petition with the NRC seeking a determination by the NRC that acceleration of decommissioning trust fund payments provides reasonable assurance of decommissioning funding under NRC regulations, or, in the alternative, merits the issuance by the NRC of a permanent exemption to Great Bay.

Failure to obtain relief may have a material adverse effect on Great Bay's business, financial l

condition, liquidity or results of operation. See " Business - Recent Developments."

Intense Competition. Great Bay sells its share of Seabrook Project electricity primarily into the Northeast United States wholesale electricity market. There are a large number of suppliers to this market and competition is intense. A primary source of competition comes from traditional utilities, many of which presently have excess capacity. In addition, non-utility wholesale generators of electricity, such as IPPs, QFs and EWGs, as well as power marketers and brokers, actively sell electricity in this market. Great Bay may face increased competition, primarily based on price, from all sources in the future.

Risk Related to Holdina Company. In contrast with Great Bay, the activities of BayCorp will not be subject to the extensive govemment regulation related to public utilities and licensed nuclear facilities. Thus, BayCorp will not receive the benefit of the scrutiny by federal and state agencies that Great Bay receives. In addition, BayCorp may pursue activities with a greater business risk than those associated with a regulated entity such as Great Bay. Depending on the success of any new activities that BayCorp determines to pursue, it is possible that BayCorp's earnings per share and dividends, if any, might be lower than if BayCorp did not pursue such activities.

Year 2000. The Company has assessed the impact of the year 2000 issue on its computer systems and applications. The Company believes that there are no material year 2000 related costs to be incurred relative to its computer systems and applications. However, Great Bay's share of the costs of addressing year 2000 issues at the Seabrook Project is currently estimated at

$177,000, according to NAESCO. If NAESCO is unable to complete year 2000 compliance l

efforts in a timely manner or if year 2000 compliance costs exceed NAESCO's estimate, the Company's operations, financial condition and liquidity could be materially and adversely affected.

1 l

6 I

- ~ - _ . -

i Certific:te cf SIrvice l l

I hereby. certify that copies of the foregoing have been served upon the follniB erfMs {

by U.S. mail, fi6t class, and in accordance with the requirements of 10 CFR Q 2.712.0 N l 99 JAN 19 P2 53 l Office of Commission Appellate Administrative Judge y r- af Adjudication B. Paul Cotter, Jr9 Chairman J

U.S. Nuclear Regulatory Commission Atomic Safety andcOsing L . !ME l- Washington, D.C. 20555 Board Panel l Mail Stop - T-3 F23 Washington, D.C. 20555

(

Administrative Judge Administrative Judge Charles N. Kelber Linda W. Little l Atomic Safety and Licensing Board Panel ~ Atomic Safety and Licensing L Mail T-3 F23 Board Panel l Washington, D.C. 20555 5000 Hermitage Drive l Raleigh, NC 27612 ,

l Thomas G. Dignan, Jr., Esq. Barton Z. Cowan, Esq.

l Ropes & Gray Eckert Seamans Cherin & Mellott 600 Grant Street,44* Floor One Intemational Place l Boston, MA 02110-2624 Pittsburgh, PA 15219 Steven R. Hom, Esq. Robert A. Backus, Esq.

Office of the General Counsel Backus, Meyer, Solomon, Mail Stop 15 B18 Rood & Branch U.S. Nuclear Regulatory Commission P.O. Box 516 Washington, D.C. 20555 . Manchester, NH 03105 l

William J. Quinlan, Esq.

Lillian M. Cuoco, Esq. David A. Repka, Esq.

Senior Nuclear Counsel Winston & Strawn l Northeast Utilities Service Company 1400 L Street, N.W. i

! P.O. Box 270 Washington, D.C. 20005 Hartford, CT 06141 Mr. Robert S. Wood Mr. Woodbury P. Fogg, P.E.

Office of the Nuclear Reactor Regulation Director U.S. Nuclear Regulatory Commission New Hampshire Office of l

Washington, D.C. 20555 Emergency Management

! State Office Park South p 107 Pleasant Street Concord, NH 20037 4

. .- . . .. . . . _ . . . ~ . - - - - . - . - - - - -

l 1

l Mr. Gerald Charnoff Mr. Frank Getman, Jr.

Shaw, Pitman, Potts & Trowbridge Great Bay Power Corporation 2300 N Street N.W. 20 International Drive, Suite 301 )

Washington, D.C. -20037 Portsmouth, NH 03801-6809 '

i Mr. Kevin A. Kirby Vice President, Power Supply Eastern Utilities Associates 750 West Center Street

P.O. Box 543 West Bridgewater, MA 02379 1

l Dated at Washington, DC, this 19* day ofJanuary,1999.

A ku Mark R. Klupt, Esq. I Swidler Berlin Shereff Friedman, L.L.P. l l 3000 K Street, NW l

Suite 300 l Washington, DC 20007-5116 30412RI e