ML20205J601

Safety Evaluation Accepting Proposed Merger of Calenergy Co, Inc & Midamerican Holdings Co for Quad Cities Nuclear Power Station,Units 1 & 2

ML20205J601
Person / Time
Site:	Quad Cities
Issue date:	04/07/1999
From:	NRC (Affiliation Not Assigned)
To:
Shared Package
ML20205J573	List: ML20205J569 ML20205J583 ML20205J593 ML20205J597 ML20205J601 ML20205J608
References
FOIA-99-134 NUDOCS 9904120100
Download: ML20205J601 (3)

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D SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION PROPOSED MERGER OF CALENERGY COMPANY. INE AND MIDAMERICAN ENERGY HOLDINGS COMPANY OUAD CITIES NUCLEAR POWER STATION. UNITS 1 AND 2 DOCKETS NOS. 50-254 AND 50-265

1.0 BACKGROUND

Under a petition made by Mr. David L Sokol, Chairman and Chief Executive Officer of Cai ..nergy Company, Inc., and Mr. Stanley J Bright, Chairman, President and Chief Executive Officer of MidAmerican Energy Company, and supported by a letter from Mr. R M Krich, Vice President-Regulatory Services, Commonwealth Edison Company, an application for indirect transfer of control of Quad Cities Nuclear Power Station Units 1 and 2 (Quad Cities) was made on September 10,1998. MidAmerican Energy Company (MidAmerican), a wholly owned subsidiary of MidAmerican Energy Holdings Company (MEHC), is a twenty five percent (25%) owner, non-operator, of Quad Cities. Commonwealth Edison (Comed) owns the remaining seventy five percent (75%) share of Qurd Cities and is the licensed operator of the facility.

By Agreement and Plan of Merger dated as of August 11,1998 (Merger Agreement), CalEnergy Company Inc. (CalEnergy) agreed to acquire MidAmerican Energy Holdings Company, the parent company of MidAmerican Energy Company for cash and debt assumption. A wholly owned subsidiary of CalEnergy will merge with and into MHC, resulting in CalEnergy becoming the parent company of MEHC. MidAmerican Energy Company, an electric utility as defined in i 10 CFR 9 50.2, will remain as the NRC licensee as a wholly owned subsidiary of CalEnergy, j with MEHC as an intermediary holding company. However, CalEnergy will reincorporate and change its name to MidAmerican Energy Holdings Company (MHC).  ;

2.0 FINANCIAL AND TECHNICAL QUAllFICATIONS On the basis of the information submitted in the~ application, the staff finds that there will be no near-term substantive change in the financial ability of MHC (CalEnergy) to contribute appropriately to the operations and decommissioning of Quad Cities as a result of the proposed merger. Miamerican Energy Company 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 Faderal Energy Pegulatory Coramission, the Illinois Commerce Commission, the Iowa Utilities Board, and the 9904120100 990407

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South Dakota Public Utilities Commission. Thus, pursuant to 10 CFR @ 50.33(f) MidAmeric;n, as an electric utility, is exempt from further financial qualifications review.

However, in view of the NRC's concem that restructuring can lead to a diminution of assets necessary for the safe operation and decommissioning of a licensee's nuclear power plant, the NRC has sought to obtain commitments from its licensees that initiate restructuring actions not to transfer significant assets from the licensee without notifying the NRC. MidAmerican has 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 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 consolidated net utility plant, as recorded on MidAmerican's book of account. I See Application of CalEnergy Company and MidAmerican Energy Company for Indirect Transfer of Control to the NRC, dated September 10,1998. This commitment, incorporated as a condition to the NRC's consent to the indirect license transfer to the extent effected by the proposed merger and restructuring, will assist the NRC in assuring that MidAmerican will continue to maintain adequate resources to contribute to the safe operation and decommissioning of Quad Cities.

With respect to technical qualifications, the proposed merger will not effect any change in the technical qualifications of 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 MidAmerica are not proposing any change to either the required organization or personnel responsible for operation of the Quad Cities l Nuclear Power Station, Units 1 & 2.

3.0 ANTITRUST REVIEW

There are no antitrust considerations attached to MidAmerican's NRC License, nor have  ;

antitrust matters been included in the NRC staff's prior findings for MidAmerican's 1995-96 l merger and related transactions. Information for antitrust review purposes is not required as Quad Cities is a " grand fathered" plant, for antitrust review purposes, pursuant to 99104(b) and 105 of the Atomic Energy Act of 1954, as amended.

i Section 105 of the Atomic Energy Act of 1954, as amended (the Act), requires the NRC to 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 & 2 were licensed under Section 104(b) and, as a result, is not subject to an antitrust review by the staff in connection with the application regarding the proposed merger with CalEnergy.

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3 l 4.0 FOREIGN OWNERSHIP. CONTROL OR DOMINATION l

The basic premise of this merger between CalEnergy and MidAmerican is the acquisition of MidAmerican by CalEnergy through the stock purchase of MidAmerican by CalEnergy.

Therefore the present stock holders of MidAmerican will not necessarily be the future stock holders of MicAmerican after the merger.

The applicants state in their application that Ca! Energy 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 willit 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 fnign corpcration or foreign govemment, nor is it presently so dominated or controlled. Neither Carinergy nor MidAmerican is acting as agent or representative of any other person in filing this application.

5.0 CONCLUSION

S In view of the foregoing, the staff concludes that the proposed merger between a subsidiary of CalEnergy and MidAmerican Energy Holdings Company, resulting in CalEnergy becoming a parent company of MHC and MHC (as a new entity) will become the parent company of MidAmerican Energy Company, will not adversely affect the financial or technical qualifications of MidAmerican Energy Company with respect to the operation and decommissioning of the Quad Cities Nuclear Power Station Units 1 & 2. Also, there do not appear to be any problematic antitrust or foreign ownership considerations related to the Quad Cities license that would result from the proposed merger. Thus the proposed merger will not affect the qualifications of MidAmericM is a holder of the license, and the indirect transfer of control of the license, 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: M A Dusaniwskyj Date: I C:WLADsTuFFCD-cme.WPo f

August 27,1998 MEMORANDUM TO: Stuart A. Richards, Director Project Directorate 111-2 Div;sion of Reactor Projects lil/IV, NRR FROM: Robert M. Pulsifer, Project Manager /s/

Project Directorate 111-2 Division of Reactor Projects lil/IV, NRR

SUBJECT:

FORTHCOMING MEETING BETWEEN CALENERGY COMPANY, MIDAMERICAN ENERGY COMPANY, COMMONWEALTH EDISON COMPANY AND THE NRC STAFF DATE & TIME: Wednesday, September 9,1998 1:00 p.m. - 2:30 p.m.

LOCATION: U.S. Nuclear Regulatory Commission Two White Flint North, Room O-1 F5 PURPOSE: To discuss the proposed merger of MidAmerican Energy Holdings Company (25 percent ownership of Quad Cities) and CalEnergy Company, Inc., and the requirements of 10 CFR 50.80 for a license transfer.

PARTICIPANTS *- NRC Commonwealth Edison Company R. Pulsifer, NRR R. Krich S. Hom, OGC R. Rybak R. Wood, NRR R, Architzel, NRR CalEnerav Co./MidAmerican Enerav Co.

S. McArthur R.Lessy J. Rasmussen, Jr.

Docket Nos. 50-254,50-265 cc: See next page 1

• Meetings between NRC technical staff and applicants or licensees are open for interested I members of the public, petitioners, intervenors, or other parties to attend as observers

. pursuant to " Commission Policy Statement on Staff Meetings Open to the Public" i 59 Federal Reaister 48340,9/20/94. '

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AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.

ATTORNEYS AT LAW emussr.A.s A mtoistrato UMrTED UASIL.fTY PAMmeRsMip cAues INCL.uoiwo rROrtssioNAL. CORPORATIOMs

, 1333 NEW HAMPSHIRE AVENUE, N.W.

m metra SUITE 400 Moscow WASHINGTON. D.C. 20036

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""'N" troza ea7 4ooo 8*" 'O rAx trozs ee7 4ase www alungump.com warrER 5 E Mall ADDRESS Riessy@akingump.com Roy P. Lzssy, ,Jm.

(202)687 4500 September 16,1998 VIA MESSENGER U.S. Nuclear Regulatory Commission Mention: Document Control Desk One White Flint North 11555 Rockville Pike Rockville, Maryland 20852-2738 Re: Quad Cities Nuclear Power Station Units 1 and 2 Facility Operating License Nos. DPR-29 and DPR-30 NRC Docket Nos. 50-254 and 50-265 Ladies and Gentlemen:

in response to the request of the Project Manager, Mr. Robert M. Pulsifer to Mr. Mark E.

Wagner of Comed, attached herewith are ten (10) copies each of the Annual Reporu for Mid-American Energy Holdings Company and CalEnergy Company, Inc. for the years 1995,1996, and 1997.

If there are any questions relative to the above or if additional information in required, please contact the undersigned or Mr. Bob Rybak of Comed.

Very truly ours, Roy P. Lessy, Jr.

Merrill L. Kramer, P.C.

AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.

(202) 887-4500 Counsel for CalEnergy Company , Inc. and MidAmerican Energy Company Cc: Robert Pulsifer, NRR, Mail Stop 13 D1 Michael Dusaniwskyj, NRR, Mail Stop 0-11 F1 Bob Rybak, ComErl

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