ML20210S775

Forwards Electrical,Instrumentation & Control Sys Branch Sser Re PSAR Through Amend 35.Outstanding Issues Closed

ML20210S775
Person / Time
Site:	Satsop
Issue date:	05/11/1976
From:	Tedesco R Office of Nuclear Reactor Regulation
To:	Deyoung R Office of Nuclear Reactor Regulation
References
CON-WNP-1634 NUDOCS 8605290397
Download: ML20210S775 (7)

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Systems Safety Review Bronck Involved:q EI4CS Branch Description of Review:

Supplemental Safety Evaluation Report Requested Ceayletion Date:

May 7, 1976 Review Status:

Complete vo The enclosed Supplemental Safety Evaluation Report (SSER) was prepared by the DSS:PS, Electrical, Instrumentatism and Costuot tystems Breach.

This 1 san updates our previous Safety Evsination Bayert (SEIQ dated Pebruary 11, 1976.

4F The sections contained in this SSER are to be used as*dienst replace-amats for the serresponding set.elsepa==*=M ia the SER sederred to above. This segplemental zeport no21ests the results of'aur zwiew of the infor==tiam presented la the Fre14memawy Safety Analysis Report df r; [%g0AR) theung a-madmane 3g med eGames 381 of the outs 6 m4

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9 WASHINGTON PUBLIC POWER SUPPLY SYSTEM WPPSS NUCLEAR UNITS NO. 3 AND NO. S DOCKET NOS. 50-508 AND 53-509 SUPPLEMENTAL SAFETY EVALUATION REPORT 7.0 INSTRUMENTATION AND CONTROLS 7.1 General The Comnission's General Design Criteria (GDC), IEEE Standards including IEEE Criteria for Protection Systems for Nuclear Power Generating Stations (IEEE Std 279-1971), Interface Requirements resulting from the review of the Combustion Engineering Standard Safety Analysis Report (CESSAR), applicable Regulatory Guides for Water-Cooled Nuclear Power Reactors, and Electrical, Instrumentation and Control Systems Branch (EI6CSB) Positions noted in Table 7-1 of the Standard Review Plan (SRP) have been utilized as the bases for evaluating the adequacy of the Protection and Control Systems.

Specific documents employed in our review are listed in the Appendix to this Safety Evaluation Report (SER).

This SSER reflects the results of our review through Amendment 35 of the Preliminary Safety Analysis Report (PSAR) for the Washington Public Power Supply System (WPPSS) Nuclear Units Nos. 3 and 5 (hereafter referred to as Washington Nuclear Plant (WNP) Units 3 and 5, or WNP Units 3 or 5 respectively).

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2 7.1 The PSAR includes (both by reference and by physical incorporation) significant portions of CESSAR. These portions (identified in PSAR Table 1.1-2) pertain to the Combustion Engineering (G) design scope of supply for WNP Units 3 and 5.

The applicant has amended the PSAR to include information concerning these portions and additional applicable inforcation from CESSAR, up to and including GSSAR Amendment 44., Also, the applicant committed (during the early stages of our review) to adopt any resolution of problem areas resulting from the review of GSSAR which affect only G scope of supply, and to evaluate on a case-by-case basis these resolutions which affect the balance of plant scope of supply. In view of this commitment, our review concentrated on those areas of the design solely within the applicant's scope of supply.

7.2.2 Equipment Protection Trips i

Combustion Engineering (CE) identified the loss-of-load trip and its bypass, and high steam generator water level reactor trip functions as being required for equipment protection and not for plant safety.

CE also indicated that because no credit is taken for these functions in the safety analysis, these trips do not have to satisfy IEEE Std 279-1971. The staff advised Combustion Engineering that the introduction of any trip into the reactor trip system should be accom-plished in a manner that will not degrade the Reactor Protection 1

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7.2.2 System, and that we require that the loss-of-load trip and bypass, and the high steam generator water level trip be designed to satisfy IEEE Std 279-1971. Combustion Engineering has documented in the CESSAR that the high steam generator level trip will conform with this position and it is, therefore, acceptable.

With regard to the loss of load trip and bypass, CE agreed to design the portion of this trip within their scope to satisfy IEEE Std 279-1971 except for the seismic qualification of the channel sensors.

As the sensors will be located in the non-seismic Category I turbine area the loss of load trip bypass would not meet IEEE Std 279-1971 in totality. Concerning the loss-of-load trip bypass, CE was ad-vised that the proposed single bypass to inhibit the four trip channels would compromise the independence in the reactor trip system and that the design was unacceptable. Combustion Engineering was also informed that we would require that either (1) loss-of-load trip be deleted, or (2) the bypass feature be removed, or (3) an alternate design be submitted for our review which would maintain the inherent independence of the reactor trip system channels.

Combustion Engineering has subsequently elected to delete the loss-of-load trip and bypass. Since a portion of this trip was within the applicant's scope of supply for WNP Units 3 and 5, we advised the applicant orally of the above position. The applicant has sub-sequently documented, that this trip and bypass will be removed from the WNP Units 3 and 5 RTS design. We conclude that this design change is acceptable.

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4 7.3.5 Other Interface Requirements lhe interface requirements that the balance-of-plant design must satisfy (for the ESF systems) as noted or indicated in Section 7.3.5 of the CESSAR SER are:

1.

The power connections to the motor-operated valves located in the redundant high pressure hot leg injection lines shall be made to satisfy the single failure criterion. This requirement shall be satisfied both while providing the capability of achieving hot leg injection and while preventing the initiation of hot leg injection flow during the short term cooling period (established in the accident analysis) immediately following a loss-of-coolant accident.

2.

The power connections to the isolation valves in the safety injection and spray pump recirculation lines to the refueling water tank shall be made to satisfy the single failure criterion.

This requirement shall be satisfied both while providing for recirculation flow when required and while preventing liquid from the containment sump to enter the refueling water tank during l

the recirculation mode of operation following a loss-of-coolant accident.

3.

Each source of auxiliary alternating current and standby onsite power shall be physically and electrically independent as re-l l

quired by General Design Criterion 17.

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The balance-of-plant design shall satisfy all the interface acceptance criteria listed for the engineered safety feature systems as identified in Table 7-1 for the CESSAR SER.

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S 7.3.S We have reviewed the ESF systems for WNP Units 3 and S with respect to the above interface requirements and conclude that the proposed design conforms to these requirements and is therefore acceptable.

We will review the details of this aspect of the design requirements during the operating license review.

7.4.2 Interface Requirements The interface requirements that the balance-of-plant design must satisfy (for the systems required for safe shutdown) as noted or indicated in Section 7,4.2 of the CESSAR SER are:

1.

The power connections to the shutdown cooling system suction line motor-operated valves shall be made to satisfy the single failure criterion. This requirement shall be satisfied both while providing the capability of achieving cold shutdown from the control room and while preventing overpressurization of the shutdown cooling system.

2.

Provisions shall be made to accomplish residual heat removal through the atmospheric dump valves from the control room.

3.

The balance-of-plant design shall satisfy all the interface acceptance criteria listed for the systems required for safe shutdown as identified in Table 7-1 of the CESSAR SER.

We have reviewed the balance-of-plant design provided for WNP Unit 3 and WNP Unit S with respect to the above interface requirements and conclude that the design conforms to these requirements and is therefore acceptable.

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7.4.2 We will review the details concerning tY.s aspect of the design during the operating license review, r

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D exx Reading File FIN Reading File gp 10 $6 Subject File Illskovholt, PM:ADQA0 NNeltz, IN:QAO: FIN JCPetersen, PM:QAO: FIN Docket Nos. SIN 50-508 M and S1N 50-509 Richard C. DeYoung, Assistant Director for Light Water Reactors, PM KA9ilNCITIN PUBLIC IViER SLTPLY SYSTIP, ET AL: WPPSS NUCLEAR PFilIECT UNIT NOS. 3 N.13 5 EncloscJ is an analysis prepared by Jin C. Petersen, of c;y staff, regarding the financial qualifications of hashington Public Power Supply Systen and its associated participants to design and constnict the subject facility. Tne analysis is intended for inclusion in a Supple::ent to the Staff's Safety Evaluaticn keport.

Original Sirned by.

DonaH J. 8.':ovholt Donald J. Skovholt Assistant Director for Quality Assurance and Operations Pivision of Project Managerent

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FINANCIAL QUALIFICATI(NS I.

IN110 DUCTION Section 50.33(f) and Appendix C'of 10 CFR Part 50 are the Constission's regulations which relate to financial data and infomation nquired to establish financial qualifications for applicants for facility con-struction pemits. In accordance with these regulations, the applicants, Washingtat Public Power Supply System (WPPSS), Pacific Power 6 Light Company, Portland General Electric Company, Puget Sound Power 6 Light Company and he Washington Water Power Coupany, submitted financial infomation with their application, as well as providing additional financial infomation in response to a Iequest by the Staff. WPPSS and the four investor-owned utilities are the applicants for hPPSS Nuclear Project No. 3 (WNP-3). WPPSS and Pacific Power 6 Light Conpany are the applicants for hPPSS Nuclear Project No. 5 (WNP-5). Their respective percentages of tmdivided ownership interest in each unit are listed below.

Ownership interests Glit 3 Unit 5 WPPSS 70%

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Pacific Power 6 Light Company 10%

10%

Portland General Electric Conpany 10%

l Puget Sotmd Power 6 Light Company 5%

De Washington Water Power Capany 5%

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• he following analysis stanarizes our review of the application and the additional information and addresses the qualificaties of each applicant to finance its undivided interest in the costs of designing and constmeting the init(s) in which it is a participant.

II. CDNSTRUCTION 0)ST ESTIMATES Re applicants have submitted construction cost estimates for the facility as follows:

WNP-3 and 5 (dollars in millions) i Nuclear Production plant costs........

$2,380.1 Transmission, distribution and general plant costs.....

35.7

%aclear fuel inventory cost for first core.................

134.8 Total

$2,550.6 he applicants' estimated cost for the nuclear production plant has been conpared with costs estimated by the 00NCEM computer costing i

model. He Oak Ridge National Laboratory, which does the CDNCEM l

computer work for the Staff states that " estimates produced by the 1

CONCEPT code are not intended as substitutes for detailed engineering cost estimates, but were prepared as a rough check on the applicants' estimate." Re 00NCEM costing model projected the cost of the nuclear production plant to be $1,942.0 r.tillion. Discussions with ORNL and WPPSS indicate that extraordinary stmetural requirements for the i

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. mits (which are not assteed by the CONCEPT model) accotalt for a significant portion of the difference between the two estimates. In additiet, the mits will have a smaller proportion of <=mnri use facilities than is assined by the CONCEPT model. 'Ihe Staff has can-cluded that it is reasatable to use the applicants' estimate for purposes of this analysis because it represents the more detailed engineering cost study for this specific project.

III. PARTICIPAVIS AND FINANCING PIANS A.

Washington Public Power Supply System (hPPSS)

WPPSS is a municipal corporation and a joint operating agency of the State of Washington. It is composed of 18 operating public utility districts of the State of Washington and the cities of Richland, Seattle and Tacoma, Washington. WPPSS has statutory authority te acquire, construct and operate plants and facilities for the genera-tion and transmission of electric power. It has complev d two electric generating projects: the 27.5 megawatt Packwood Hydroelectric Project i

and the 860 megawatt Hanford Steam Electric Project. In uldition to I

NNP-3 and 5. WPPSS has under construction or in advance planning, three I

additional nuclear units, namely NNP-1, 2, and 4. WPPSS does not j

engage in the distribution of power to retail customers, but is reimbursed for the cost of each project, including debt service, by I

the participants therein. Also, it is not tmder the jurisdiction of of any regulatory agency having control over its rates and services of'the existing and proposed projects.

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4 The respective financial. obligations between WPPSS and the above-named Investor-owned companies are covered in the Omership Agreement. S'uch agreement provides that each party shall be responsible for pmviding its ownership share of the costs of construction and operation, and will be entitled to its ownership share of the tmits' electrical capability. Under the Ownership Agn at, the investor-owned utilities have designated WPPSS to act as their agent to construct, operate and maintain the project.

WPPSS will finance its 70 percent ownership in hNP-3 and its 90 percent ownership in hKP-5 through the issuance of its revenue notes and its long-term revenue bonds. These securities are issued fmm time to time as construction funds are required. WPPSS engages in " project financing" and thus each of its security issues is related to a specific construction pmject. Its recent revenue bond offerings have been rated Aaa, the highest rating, by N ody's and by Standard and Poor's.

WPPSS issued $150 million of revenue bonds in December 1975 to finance construction of hNP-3 and an additional $100 million in April 1976.

It issued $100 million of revenue bonds in July 1975 in partial support of preliminaty work on NNP-5. An additional revenue bcmd issuance is I

planned during 1976 in support of WNP-5.

As noted above, hPPSS is not a retail distributor of electric power.

Its 70 percent share in the capacity of NNP-3 and its 90 percent share

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in the capacity of hNP-5 will be sold to approximately 100 consumer-owned l

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. utilities in the Pacific Northwest. 'Ihe Net Billing Agreements pmvide the contractual arrangements whereby the participants are obligated to make payments to WPPSS for their pro-rata shares of project costs whether or not the project is coupleted, operable or operating, and notwithstanding interruption or curtailment of output. Thus, the satisfaction of project costs is not solely depen-dent on actual project revenues, but is insured on a broad base through other revenue-producing assets of the participants. Each participant has covenanted that it will establish, maintain and collect rates or charges for power, energy and other services furnished through its electric utility properties which shall be adequate to provide revenues sufficient to make the required payments to WPPSS. 'Ihe afore-mentioned contractual arrangements and the underlying revenue-producing capability provide the security for the servicing of NPPSS revenue bonds and notes.

B.

Pacific Power S Light Company (PPSL)

PP4L is an investor-owned ciectric utility operating in six states in the West and the Pacific Northwest. It serves approximately 540,000 residential, consnercial, and industrial customers as well as selling power at wholesale to consuner-owned utilities. PPGL's operating revenues increased fran $254.2 million for the 12 mcnths ended February 28,1975, to $309.4 million for the 12 months ended February 29, 1976, and not income increased from $56.1 million to

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. $72.7 million over the same period. Invested capital at December 31, 1975 amanted to $1,542.6 million and consisted of 53.5% leg-tem debt,10.2% preferred stock and 36.3% common equity. Se capany's first mortgage bonds are rated "Baa" by R.ody's and "A " by Standard and Poor's.

PP6L plans to finance its ten percent portion of the WNP-3 and EP-5 design and constmctim costs as part of its overall construction program. The funds will be provided from a combination of internally-generated sources (including retained eamings, depreciation and deferred taxes) and from the issuance of securities including long-tem debt, preferred stock and comon stock. Interim funding requirements will be met with short-term borrowing. In response to a staff request, the company has submitted a sources of funds statement (or financing plan) with underlying assumptions for its system-wide construction expenditures for the period 1976 through 1982, the estimated earliest year for completion of EP-5. De financing plan and assumptions are attached as Exhibits A-1 and A-2, respectively.

PP4L is subject to regulatory jurisdiction by state comissions in i

Oregon, Idaho, Washington, California, Rintana and Wyoming. Since Deced>er 31, 1974, PPSL has been granted seven rate increases in five of the jurisdictions totalling $55.9 million on an annualized basis.

De allowed rates of return on common equity ranged from 11.25 percent f

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to 13.5 percent. The company has four rate increases pending which request an average 15.0 percent return on common equity a d a total annual revenue increase of $35.0 million.

C.

Portland General Electric Company (PGE)

PGE is an investor-owned electric utility operating in northwest Oregon. It serves approximately 390,000 nsidential and industrial customers as well as selling power at wholesale to other utilities.

PGE's operating revenues increased from $146.8 million for the 12 months ended January 31, 1975, to $184.8 million for the 12 months ended January 31, 1976, and net income increased from $30.3 million to $51.2 million over the same period. Invested capital at December 31, 1975 amounted to $837.4 million and consisted of 53.1 percent long-tem debt,13.0 percent preferred stock and 33.9 percent comon equity. The conpany's first mortgage bonds are' rated "Baa" by Wody's and "BBB" by Standard and Poor's.

PGE plans to finance its ten percent portion of the WNP-3 design and i

construction costs as part of its overall construction program. 'Ihe l

fmds will be provided from a cambination of intemally-generated sources (including retained eamings, depreciation and deferred taxes) and from the issuance of securities including long-tem debt, preferred stock and camon stock. Interim funding requirements will be met with short-tem borrowing. In response to a staff request, the company I

has submitted a sources of funds statement (or financing plan) with

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taiderlying asstaptions for its system-wide construction expenditures for the period 1976 through 1981, the estimated earliest year for completion of INP-3. h financing plan and asstanptions are attached as Exhibits B-1 and B-2, respectively.

PGE is subject to the regulatory jurisdiction of the Public Utility Cmunission M Oregon. W company's most recent retail rate action, effective September 26, 1975, was a 24.7 percent increase amounting to

$39.6 million on an annual basis. A 13.3 percent rate of return on comunon equity was allowed in the case. PGE has requested a further 20 percent increase amounting to $42.2 million on an annual basis. A j

13.3 percent rate of return on common equity has been requested.

D.

Puget Sound Power 6 Light Company (PSP 6L)

PSP 4L is an investor-owned electric utility operating in northem and central Washington State. It serves approximately 410,000 residential, l

convercial and industrial customers. PSP 6L's operating revenues increased from $149.7 million for the 12 months ended March 31, 1975, to $169.6 million for the 12 months ended March 31, 1976, and net l

income increased from $19.6 million to $24.7 million over the same l

period. Invested capital at December 31, 1975 amounted to $622.9 i

I million and consisted of 57.8 percent long-tenn debt,10.7 percent preferred stock and 31.5 percent coninon equity. The company's first mortgage bonds are rated "Baa" by hdy's and "BBB by Standard and Poor's.

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W PSP 4L plans to finance its five percent portion of the EP-3 design and constructior. costs as part of its overall construction program.

'Ihe funds will be provided from a combination of internally-generated sources (including retained earnings, depreciation and deferred taxes) and from the issuance of securities including long-tem debt, preferred stock and comon stock.

Interim funding requirements will be met with short-tern borrowing. In response to a staff request, the company has I

submitted a sources of funds statement (or financing plan) with under-lying assumptions for its system-wide construction expenditures for the period 1976 through 1981, the estimated earliest year for comple-0 tion of hNP-3. 'Ihe financing plan und assumptions are attached as Exhibits C-1 and C-2, respectively.

PSP 4L is subject to regulatory jurisdiction by the Washington Utilities and Transportation Comission. Its most recent rate increase amounted to $22.9 million or 19.9 percent on an annual basis and was effective November 1,1974. The company has filed an additional $36.5 million rate increase request which would allow a 13.0 percent rate of retum on i

comon equity.

I E.

'Ihe Washington Water Power Company (hWP)

WP is an investor-owned electric and gas utility operating in the States t

of Washington and Idaho.

It serves approximately 190,000 residential, comercini, and industrial customers as well as selling power at whole-sale to constsner-owned utilities. WP's operating revenues increased k

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fue $117.4 million for the 12 months ended March 31, 1975 to $142.5 million for the 12 months ended March 31, 1976, and ret income increased from $14.6 million to $19.1 million over the same period. Innsted capital at December 31, 1975 amounted to $409.7 million and consisted of 63.2 percent long-tem debt and 36.8 per=nt common equity. The company's first mortgage bonds are rated "A" by Moody's and Standard and Poor's.

WP plans to finance its five percent portion of the NNP-3 design and construction costs as part of its overall construction pngram. The funds will be provided from a combination of intemally-generated sources (including retained earnings and depreciatian) and from the issuance of securities including long-tem debt, preferred stock and common stock. Interim ftmding requirements will be met with short-tem borrowing. In response to a staff request, the company has submitted a sources of funds statement (or financin2 P an) with underlying l

asstaptions for its system-wide construction expenditures for the period 1976 through 1981, the estimated earliest ye.ar for completion of hNP-3. The financing plan and assusptions are a.tached as Exhibits I

D-1 and D-2, nspectively, i

l WP is subject to regulatory jurisdiction by the Washington Utilities and Transportation Comission and the Idaho Public Utilities Comission.

In August 1975, the Washingtet Conmission authorized electric and gas

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increases totalling $3.6 million an an amual basis and allowed a 12.75 percent return on comon equity. Also in August 1975, the Idaho Comission authorized electric and gas increases totalling $1.2 million on an annual basis and allowed a 12.75 percent return on comon equity.

'Ihm cagany had no rate requests pending as of January 31, 1976.

IV. CENCLUSION Based on the preceding analysis including our evaluation of the reasonableness of the financing plans and underlying assumptions, we have concluded that Washington Public Power Supply System, Pacific Power 4 Light Conpany, Portland General Electric Company, Puget Soted Power 4 Light Company, and 'Ihe Washington Water Power Company are financially qualified to design and construct WPPSS Nuclear Project thit Nos. 3 and 5 in proportion to their respective undivided owner-ship interests as indicated in Section I, above. Our conclusion is based on the determination that the applicants have reasonable assurance of obtaining the funds necessary to complete the design and construction activities including related fuel cycle costs. It is i

also based on the basic asstanptions of raticmal regulatory environment t

and viable capital markets due to the lengthy future period involved i

and the expected heavy dependence on extemal financing.

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Applfcant _ PACIFIC POWER & UGiff CT@ANY Muclear P,lant wNP llo. 3 4 5,

i Source of Funds for System-Wide Construction Expenditures During Period of Construction of Subject liuclear Power Plant (miT1 ions of dollars)

Construction Years of Subject fluclear Power Plant Security issues and 19 76 1977 1978 1979 1930 19 81 19 82 other funds 3

120 3

140 3

80 3

70 3

100_ 5 140_

Cocrnon stock 5

50 40 20 30 40 Preferred stock 40 4

Long-term debt 95 140 200 180 Ife-155 207 (18) flotes payable (17) 17 (7)

Contributions from e

parent-nct Other funds 119 8

Total 237 285 187 ano 292 28s 1R7 Internal funds h

I het income 82 97 123 1h5 162 17h 188 y

i Preferred dividends 11 16 19 23 26 29 32 y

.Less:

Common dividends 51~

57 68 80 89 95-11 o e*

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Retained earnings 18 24 36 42 47 50 52

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Dcierred taxes 3

2 2

2 3

3 3

Invest. tax cred.

(deferred) 2 9

1 3__

10 12 15 Deprcciation & amort.

40 46 48 52 62 70 85 Less: AFDC 23 22 43 55 53 65 80 Total 40 59 44 44 69 70 75 TOTAL FUNDS

$_2mF $__3hh,_ $__h?L $Jh,IL- $J01, $

355_ $

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Constructico Expenditures

• Nuclear power plants-5 54 166 171 178 185 175 190 Other 223 156 265 1m>

126 183 293 Total Const. Exp's.

$_1T,Z $ _3P2_ $23L $_3%._ $._311_.._ $J_$,,

$,___hD3__

Subject nuclear plant $

,11_ $ _ 18_ $

31 _ $

26 _

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12 3

(Exclusive of AFDC (allowance for funds used during construction) i

ENHIBIT A-2 I

PACIFIC POWER AND LIGHT COMPANY INPUT ASSUMPTIONS FOR SOURCES OF

' FUNDS STATEMENTS FOR WPPSS NUCLEAR PROJECT NO. 3 6 5 1.

Capitalization goals of 52% Debt,10% Preferred Stock and 385 Common Equity; 2.

Rates of 94% on long-term debt and preferred stock; 3.

Short-term interest rates at 89%;

4.

Over-all rate of return up to 9.83%;

5.

Price / earnings ratio of 10; 6.

Dividend payout ratio of approximately 65%, and 7.

Coverages sufficient to maintain current bond ratings.

8.

Preferred Stock Coverage requirement and its method of calculation as contained in the " Restated Articles of Incorporation," Article III (17) (c) (Attached).

For the period 1976-1983, the coverage of total interest and preferred dividends combined would be:

1976 1.85X 1980 1.90X 1977 1.86X 19,81 1.94X 1978 1.93X 1982 1.93X 1979 1.91X 1983 1.87X 4

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Applicant persland General Electrie co. Nuclear P,lant WFP88 himme Plant No. 3 i

Source of Funds for System-Wide Construction Expenditures During Period i

of Constructicn of Subject Huclear Power Plant (millions of dollars)

Construction Years of Subject Nuclear Power Plant s

and 19 76 19 77 19 78 19 79 19 Eo 19 81 19 19 19 n

Corraon stock 5

54 5

79 5

104 5

60 5

60 5

3 5

5 Preferred stock 25 38 38 (21-(2)

(2)

Long-term debt 106 t6 124 lb7 146 200 -

~

l Notes payable (40)

(4) 1 46 27

( 36)__

Contributions from parent-net Other funds 9

5 14 16 _

(15)

Total 154 204 281 -

309 216

___ 25_

165 _

t h

!,Internalfunds tiet income 53 Sh 89 101 115 127 m

Less:

j Preferred dividends 11

_ 13 17 20 20 20 _

_ y Co: tron dividends 27 1

u 41 k7 52 57 _

w l

Retained earnings

15. _

8 -

31 J4 43 50 _

~

Deferred taxes 6

9 _

.13 _ _

IB

_ 19-17 _

I Invest. tax cred.

{ deferred) 3 8

19 3

n 6

Ocorcciation & amort.

26 37_

ho _

hr 46 Sc _ _

Less: AFCC (15)

(22)

(36) _

_ (57)

__(56)

('ill Total 35 40 67 40 71 61 TOTAL FU E 1 % $J L $ 1 $_3k9

$_2t9

$ ] td] $

Construction E=penditures*

teuclear power plants 5_

4k

)

60 112

$ 172 3 155 177 g

g g

Other 1%

IC f36 ITf

. 134 E9 Total Const. Exp's.

$aen 3 pa g

Qig_ s, p.;9_ $

_ g 17 28 21 1

12 3_ $

Subject nuclear plant

$._ _13 _

• Exclusive of AFOC (allowance for fends used du-ing cer.struction) i

_~

DOIIBIT B-2 PORTLAND GENERAL ELECTRIC C0F NY

~ ~

INPUT ASSUMPTIONS FOR SOURCES OF FUNDS STATEMENTS FOR WPPSS NUCLEAR PROJECT NO. 3 Numerical Value Item

~

13.5%

Ratt of return on average common stock equity I*I 10.0%

Preferred stock dividend rate II Crowth rates t

7.44%

a.

kWh sales 16.48% *I I

b.

revenues 13.03%

c.

expenses 19.38%

d.

interest charges 14.54%

e.

net income fd) 1.00/1.00 on 2/29/76 Market / book ratio with respect to pro-1.21/1.00 on 12/31/85 jected connon stock offerings 62.7% (1976) to 44.1% (1985)I*I Common stock dividend payout ratio 53% debt Target capital structure 10% proferred stock 35% common stock.

1976 - 2.330 1981 - 2.352 Resultant SEC and indenture coverages 1977 - 2.250 1982 - 2.356

.over the period of constructionif) 1978 - 2.677 1983 - 2.247 1979 - 2.467 1984 - 2.337 1980 - 2.399 1985 - 2.199 10%

Long-tcrn debt interest rate 8%

(general)

Short-tcrn debt interest rate 8.5% (nuclear fuct)

[a] Applies to new issues.

Each element of revenue and expense is individually analyzed and fore-

[b]

casted so that no single growth ra'te is used in their development.

The values given sunmarizo the results of all of the detailed analy-ses for the period December 31, 1975 to Decer.ber 31, 1985 on an annually compounded rato of growth basis.

Includes forecasted rate of increase in average sales prico of 9.60%.

(c)

Remaining growth rato is caused by increased unit sales.

it is the product The market / book ratio is not an independent input; (d) of other forecasts and therefore varies over the range shown.

Varies over the range shown due to as.Jmed 6c/ycar annual dividend

-*e

[e]

increment.

December 31 covering earnings divided by December 31 annus11:cd fixed

[f]

charges.

O

Applicu t PU ET 50rN3 POUER & LICIT COMPAW Nuclear Plant WPPSS #3 - SATSOP t

i SOUFCE OF Ft:NDS FOR SYSTEM-WIDE CONSTRL'CTION EXPENCITURES DURING PERIOD

}

0F CONSTPUCTIO'l 0F SUBJECT NUCLEAR F0VER PLANT (Miilions of dollars) i Construction Years of Subject Nuclear Power Plant l

_I_976 1977 1973 1979 1980 1981 l

Security Isse-s and other funds l

coreon stock

$ 24.7

$ 28.7

$ 25.9

$ 47.9

$ 71.4

$ 87.2 l

Preferre d stock 22.0 25.0 35.0 45.0 40.0 0.0 l

i Lemg-term debt 40.0 L0.0 105.0 155.0 115 0 140.0 I

i t.ctes oeyable (short term)

(10.9) 12.0 18.5 15.4 12.7 12.I l

Centributior.s from parent-net l

Other fer.ds (pollution centrol) 2.3 Total 73.1 105.7 184.4 263.3 239.1

_2]Lj, 1

1 Internal funds Net income (adjusted) 30.0 46.8 52.4 76.2 99.1 112.2 g

Less:

i5 Preferred divideeds (6.8)

(8.8)

(10.6)

(13 9)

(17.8)

(19 3) i conx-cn dividends (15.3)

(18.0)

(23.6)

_(29.8)

(37.7)

(44.6)

H l

Retaince. earnings 7.9 20.0 18.2 32 5 43.6 48.3 Q

Deferred taxes I.7 1.8 1.4 1.0 2.0 3.8 Inrestment tax credTt (deferred) 7.3 6.0 6.4 10 3 8.5 8.3 Cepreciation and amortization 19.0 21.1 22.6 24.6 28.7 35.2 Less: AFDC (6.5)

(12.3)

(24.5)

(4's.4)

(59.0)

(68.6)

Total 29.4

_ 36.6 24.1

__24.0 23.8 27 0 TOTR Fl'NDS 30[.5 1141 4 pn8A 387d pj24 M6a

~

Construction Expenditures

• Nuclear power plants

$ 34.3

$ 67.5

$ 87.6

$156.2

$150.5

$170.0 cther 73.2 74.8 120.9 13I.1 112.4 93.3 Total Const. Expenditures pok5 1842 2 E084 38R 1.262 4

, 1.2.6.62 2

Su') Ject nuclear plant W

flj,

}JJ L IO_. 4

$ 73 3.I

• Exclusive cf AFDC (allcwance for funds used during constructien)

This source cf funds statement is based upon and quallfled by the assumptions described on the attached pages and has beca precared ar.d furnished at the request of the Nuclear Regulatory Commission.

it is not to be used in cconectica s.ith tha site or purchase of the Company's securities.

EXlIIDIT C-2 (p.ge 1)

)

PUGET SOUND POWER & LIGHT COMPANY

~

ASSUMPTIONS FOR SOURCE OF FUNDS FOR SYSTEM WIDE CONSTRUCTION 1976-1982 WPPSS #3 - SATSOP 4

1) Generally maintain a minimum of either a 13% return on averege common equity or first mortgage bond indenture coverage of 2.2 times interest.

2) Preferred dividend rate on new issue of 10%.

3) Growth rate in KWH sales to consumers 6%.

4)

Inflation factor of 7% compounded each year through 1982 for construction expenditures and certain operating and maintenance expenses. 5% inflation factor compounded each year used to forecast operation and maintenance of major generation plant.

5)

Interest rates used in forecast:

~

Notes payable (short term):

Bank loans 10%

Commercial paper 6%

Long term debt 10.25%

6) Target capital structure:

1976-1980 1981-1982 Notes payable (short term) 5%

5%

Long term debt 50%

50%

Preferred stock 13%.

10%

Common stock 32%

35%

7) Common stock price / earnings ratio of 7 times earnings.

8) Common divl 'end payout ratio averages 52%.

9) Maximum dilution of common stock does not exceed 15% in any s.lven year.

10), in line with the 1975 Tax Reduction Act (Sec. 402 of P.L. 94-12) the follow-Ing Investment tax credit assumptions are incorporated in the project *ons.

a.

Investment tag credit rate - 1976 at 10%; 1977 to 1982 at 4%.

b.

Investment tax credit taken en progress payments on Colstrip 3 and 4 Skagit Units I and 2, and Pebble Springs Units I and 2.

Applicable transition percentages for phasing in quellfled progress payment are 1976, 40%; 1977, 60%: 1978, 80%; and 100% af ter 1978.

c.

Limitation on use of Investment tax credit as a percent of tax liability is 100% for 1976 and is scaled down 10% each year until it reaches the 50% level in 1981.

II) AFDC rate adjusted periodically to reflect composite cost of capital, AFDC accruing f rom construction of major production plant is normalized in 1977 and subsequent years.

O e

s v r3 ~= ras

• v e

, e 9. g i

v - ~ - ~

e EXHIBIT C-2 (page 2)

I PUGET SOUND POWER 4 LIGif CCNPAhY

12) Schedule of Major Plant Construction Puget Power Projected Plant Ownership Share Completion Date Colstrip #2 - coal 50%

August 1976 Colstrip #3 - coal 25%

July 1980 Colstrip #4 - coal 25%

July 1981

. WPPSS #3 - nuclear 5%

March 1982 Skaglt #1 - nuclear 40%

July 1983 Pebble Springs #I - nuclear 20%

July 1985 Skaglt #2 - nuclear 40%

July 1986 Pebble Springs #2 - nuclear 20%

July 1988

13) Power Supply:

a.

System resources are based on an average of the 30 water years. included in the 1975 west group forecast.

b.

Purchased hydro power costs debt service requirements are as prescribed in the project owners official statement.

c.

Secondary (non-firm) sales are made either within or outside the North-west Power Pool, and are based on relative levels of surplus. Revenues derived f rom sales are primarily based on established BPA rates or other agreements as applicable.

d.

Wheeling charges are based on:

1) Required capacity to move purchased pover to Puget's system.

11) 8PA established rates Other Information 1) 5.E.C. Fixed charge coverage:

1976 - 1.95. 1977 - 2.68, 1978 - 2 30, 1979 - 2 39, 1980 - 2 36, 1981 - 2 37, 1982 2 39.

2) Growth rate of revenue fran sales of electricity 17%, expenses 15%, Interest cost 21%, and net income 26%.

a se e

69

THIS INFORMATION IS NOT TO BE CONSIDERED A FORECAST,

~

WNP No. 3'

~

Applicant Washirigton Public Power Suppix. gear P.lant Participant The Washington Water Power Company (5%)

Source of Funds for System-Wide Construction Expenditures During Period of Construction of Subject Nuclear Power Plant (millions of dollars)

Construction Years of Subject Nuclear Power Plant (1)

Sccur ty s es and 19 76 19 77 19 78 19 79 19 80 1981 Common stock 5 12.0 5 5 23.0 5 24.0 5 15.0 5

15.0 Preferred stock 15.0 15.0 20.0 Long-term debt 30.0 30.0 _

62.1 __

40.0 60.0 30.0 Notes payable (7.u) 9.0 (9.0) 29.0 (29.0) -

Contributions from -0 parent-net Other funds (4.4) 4.6 (4.5) 2.5 J.9

(.5)

Total 30.6 58.6 86.3 95.8 _

69.9 44.2 Internal funds

. Net inccme 18.0 20.4 24.0 26.7 34.0 38.1 Comron dividends 11.4 13.2.

15.6 17.6 22.3 24.7 Less:

Preferred dividends 1.4 2.7 2.7 4.5 Retained earnings 6.6 _

7.2 7.0 6.4 9.0 8.9 Deferred taxes Invest. tax cred.

3.4 1.9 1.6 (deferred) 1.9 1.4 2.4 Depreciat*:'

• amort.

9.6 10.5 11.3 12.2 14.3 17.2

.4

.5

. Less: AFCC 1.8

.6

.3

.4 27.2 Total 16.3 19.7 20.4 21.6 24.8 TOTAL FUNDS

$, 46.9_ $

78.3

$__106.7

$_117.4 _ $ _ __94. 7 71.4_

Construction Expenditures (2)

Nuclear power plants 9.8 20.5

$ 34.1

$ 37.2

$ 35.7

~$

31.6 Other

' 37.1 57.8 72.6 80.2 59.0 39.8 71.4 Total Const. Exp's.

$J6_.9,, $

78.3_ $ 106L $,117.4

$_ 94.7 Subject nuclear plant $

5.7 8.2

$ 13.6

$ 10. 3 7.2 1.8

. Interest Coverage 2.1 27 2 2Y 7T

2. 4

2.4

~

2) Exclusive of AFDC (allowance for funds used during construction) 1)First five years (1976-1980) based on five year financial model data. Last two years projected manually on a consistent basis unT Tn nc :ctn tu enuurrTinft UTTU AMV CAIC OD DilDrHARP AP THF COMPal4Y'S RFCilRITIFS

o EXHIBIT D-2

)

THE WASHINGTON WATER POWER COMPANY

~

~

9 Assumptions for Source of Funds Statement (a) Rate of Return on Average Common Equity - 14.5-15.0%

(b) Preferred Stock Dividend Rate - 9%

(c) Growth Rates: Sales of general business kwhr are estimated to increase about 5% per year during the forecast period. As you know, kwhr sales to other utilities are subject to resource availability and market conditions and therefore are not trendable.

Electric and gas revenues included within the forecast 'are a result of the general business kwhr /there sale trends and include elements of rate relief which were programmed through-out the forecast as needed. The basis of rate relief was the debt / equity ratios and composite debt cost prevailing at that point in time and the return on common equity as previously mentioned.

Operating expenses subject to inflation were escalated at 10%

in 1976, decreasing to 7% in 1977 and finally to 6% for the balance of the forecast. Items such as power and gas purchased are generally regulated by contract and are not subject to escalation.

(d) Common stock price / earnings ratio or market / book ratio with respect to the projected common stock offerings: This forecast-assumes that market and book values of common stock are approximately equal, but on an increasing annual rate of about 5%. No price / earnings ratio.was used for projected common offerings.

(e) Common stock dividend payout ratio: a target of 65% was assumed.

(f) Target capital structure: a target goal of 60% debt, 30%

common equity and 10% preferred has been assumed.

(g) Interest coverage requirements: Our mort restrictive indenture

• requirement states that annual interest requirements must be at least twice any 12 consecutive months pre-tax gross earnings.

Considering the rate relief programmed in the forecast, our results have allowed us to exceed the two times interest coverage test under the indenture. We have not made an SEC coverage test.

(h) An interest rate of 9% was assumed on all projected mortgage bond issues. For short term bank loans, a rate of 7h% was utilized.

e

-. - --