ML20211P585

From kanterella
Jump to navigation Jump to search
Application for Order & Conforming Administrative Amends for Transfer of Licenses DPR-63 & NPF-69 to Amergen Energy Co, LLC
ML20211P585
Person / Time
Site: Nine Mile Point  Constellation icon.png
Issue date: 09/10/1999
From:
AFFILIATION NOT ASSIGNED, NEW YORK STATE ELECTRIC & GAS CORP., NIAGARA MOHAWK POWER CORP.
To:
Shared Package
ML20138D191 List:
References
NUDOCS 9909140045
Download: ML20211P585 (42)
v • d • e


Text

UNITED STATES OF AMERICA

,O V BEFORE THE NUCLEAR REGULATORY COMMISSION l

In the Matter of )

)

Niagara Mohawk Power Corporation, )

)

New York State Electric & Gas Corporation )

)

And ) Docket Nos. 50-220 & 50-410

)

AmerGen Energy Company, LLC ) i

)

(Nine Mile Point, Units 1 & 2) )

O APPLICATION FOR ORDER AND CONFORMING ADMINISTRATIVE AMENDMENTS FOR LICENSE TRANSFERS (NRC FACILITY OPERATING LICENSE NOS. DPR-63 & NPF-69) 1 ps i.wamo is a

9909140045 990910 PDR ADOCK 05000220 P PDR

APPLICATION FOR ORDER AND CONFORMING ADMINISTRATIVE AMENDMENTS FOR LICENSE TRANSFERS (V7 (NRC FACILITY OPERATING LICENSE NOS. DPR-63 & NPF-69)

TABLE OF CONTENTS i

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . ... .... . ... ....... 1 II. STATEMENT OF PURPOSE OF THE TRANSFER AND NATURE OF THE TRANSACTION MAKING THE TRANSFER NECESSARY OR DESIRABLE . ......3 III. GENERAL CORPORATE INFORMATION REGARDING AMERGEN ......... ... .... ..... ...... ... .....6 A. Name of Proposed New Licensee . . . . . . . . . . . . . . . . ...... ... .....6 B. Addres s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... ..6 C. Description of Business or Occupation . . . . . . . . . . . . . . . . . . .. .. .6 D. Organization and Management ......... ................ ........7 (q 1. State of Establishment and Place of Business . . . . . . . . . . . . . . . . . 7 v 2. Management Committee . . . . . . . . . . . . . . . . . . . . . . . . . .. . 7

3. Principal Executives and Officers . . . . . . . . . . . . . . . . . . . .....8 IV. FOREIGN PARTICIPATION IN AMERGEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 V. TECHNICAL QUALIFICATIONS OF AMERGEN . . . . . . . . . . . . . . . . . . . . . . . I1 VI. FINANCIAL QUALIFICATIONS OF AMERGEN . . . . . . . . . . . . . . . . . . . . . . . 15 A. Projected Operating Revenues and Operating Costs . . . . . . . . . . . . . . . . 15 B. Additional Sources of Funds . . . . .. . . . . . . . . . . . . . . ........ . . 17 C. Decommissioning Funding . . . .. .. .. .... .... . ... 22 VII. ANTITRUST CONSIDERATIONS . . .. .......................... . 25 VIII. RESTRICTED DATA AND CLASSIFIED NATIONAL SECURITY INFORMATI O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5 IX. ENVIRONMENTAL CONSIDERATIONS . . . . . . . . . .. ...... .......26 s

T l wA/122908315 i

X. ADDITIONAL INFORMATION REGARDING

  • SPECIFIC REGULATORY REQUIREMENTS, PLANS, PROGRAMS & PROCEDURES ..................... .........26 A. O ffsite Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 {

B. Ernergency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 C. Exclusion Area . . . . . . ... .. . ........... .... .........30 l1 D. S ec uri ty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1 E. Quality Assurance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 F. Final Safety Analysis Report . . . . . . . . . . .......... .......33 G. Trai n i n g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 H. Price-Anderson Indemnity and Nuclear Insurance . . . . . . . . . . . . . 33 I. Standard Contract for Disposal of Spent Nuclear Fuel . . . . . . . . . . 34 XI. OTHER REQUIRED REGULATORY APPROVALS . . . . . . . . . . . . . . . . . . . . . 34 Xil. E FFECTIVE D ATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6 XIII. CO NC L US I ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

(

l

\ isA/1229083.15

I IST OF ENCI OS_URES V Enclosure 1 Marked-up Pages of NMP 1 & 2 Licenses and Technical Specifications Reflecting Conforming Administrative License Amendments Associated With Proposed Transfer of Facilities to AmerGen Energy Company, LLC Enclosure 2 Safety Evaluation of Conforming Administrative License Amendments Associated With Proposed Transfer of NMP 1 & 2 Licenses to AmerGen Energy Company, LLC Enclosure 3 NMP 1 Asset Purchase Agreement By and Between Niagara Mohawk Power Corporation, as Seller, and AmerGen Energy Company, LLC, as Buyer, dated as of June 23,1999 (Non-Proprietary Version)

Enclosure 4 NMP 2 Asset Purchase Agreement By and Between Niagara Mohawk Power Corporation and New York State Electric & Gas Corporation, as Sellers, and AmerGen Energy Company, LLC, as Buyer, dated as of June 23,1999 (Non-Proprietary Version)

Enclosure 5 Organizational Chart Showing Post-Acquisition Management and Support Structure Enclosure 6 Projected Income Statement and Balance Sheet of AmerGen's x Anticipated Assets, Liabilities and Capital Structure at Closing (Non-Proprietary Version)

Enclosure 7 Power Purchase Agreements Enclosure 8 Additional Financial Assurances Available For NMP 2 Decommissioning (Non-Proprietary Version)

Enclosure 9 Form of AmerGen's Nuclear Decommissioning Master Trust Fund Agreement Enclosure 10 Calculation of NRC Formula Amount For Decommissioning Funding Financial Assurance For NMP 1 & 2 (10 CFR @ 50.75(c))

Enclosure 1I Projections of Earnings Credit on Decommissioning Funds Using 2%

Annual Real Rate of Retum (Non-Proprietary Version)

Enclocure 12 Affirmation of Gerald R. Rainey Enclosure 13 Affirmation ofJohn H. Mueller O

kj i#mma is iii f

Enclosure 14 Affirmation of Jeffrey K. Smith V Enclosure 15 10 CFR {2.790 Affidavit of Gerald R. Rainey ADDENDILil The following proprietary enclosures are bound separately in an Addendum to the Application:

Enclosure 3A NMP 1 Asset Purchase Agreement By and Between Niagara Mohawk Power Corporation, as Seller, and AmerGen Energy Company, LLC, as Buyer, dated as of June 23,1999 (Proprietary Version)

Enclosure 4A NMP 2 Asset Purchase Agreement By and Between Niagara Mohawk Power Corporation and New York State Electric & Gas Corporation, as Sellers, and AmerGen Energy Company, LLC, as Buyer, dated as of June 23,1999 (Proprietary Version)

Enclosure 6A Projected Income Statement and Balance Sheet of AmerGen's Anticipated Assets, Liabilities and Capital Structure at Closing (Proprietary Version) o Enclosure 8A Additional Financial Assurances Available For NMP 2

() Decommissioning (Proprietary Version)

Enclosure 11 A Projections of Earnings Credit on Decommissioning Funds Using 2%

Annual Real Rate of Return (Proprietary Version)

Q

( /

i.wmmus iv

F REFERENCES p

b The following documents are incomorated by reference into this Application:

1. Amed3en's Certificate of Formation and the AmerGen LLC Agreement (previously provided as Exhibit I to Appendix A of AmerGen and GPUN's Application for Approval of the TMI-l License Transfer, dated December 3,1998, in Docket No. 50-289 (TM1-1 Application)).
2. Annual Repoits For PECO Energy (1995,1996 & 1997); Annual Reports of British Energy plc. (1996/97 & 1997/98); Prospectus for British Energy plc. (1996) (previously provided as Enhibit 2 to Appendix A to the TMI-l Application).

3 1998 Annual Report of PECO Energy and 1998/1999 Annual Report of British Energy (Previously provided as Enclosure 4 to AmerGen and Illinois Power's Application for Approval of the CPS License Transfer, dated July 23,1999, in Docket No. 50-461).

4 Letter Agreements of PECO Energy and British Energy to Provide Funding to AmerGen with Respect to TMI-1, dated December 3,1998 and November 5,1998, respectively (previously provided as Exhibit 8 to the TMI-l Application).

5 Supplemental Agreements of PECO Energy and British Energy to Provide Funding to AmerGen dated July 22,1999 and July 22,1999, respectively (previously provided as n Enclosure 8 to the CPS Application).

CN 1 w122m3.15 Y l

L INTRODUCTION (7

V This is ajoint application requesting the consent of the Nuclear Regulatory Commission (NRC) to the transfer of the NRC operating licenses for two nuclear power plants located at the same site near Oswego, New York.1' First, AmerGen Energy Company, LLC (AmerGen) and Niagara Mohawk Power Corporation (NMPC) request that the NRC issue an order consenting to the transfer of Facility Operating License No. DPR-63 for Nine Mile Point Unit 1 (NMP 1) to AmerGen. Second, AmerGen, New York State Electric & Gas Corporation (h"(SEG), and NMPC request that the NRC issue an order consenting to the transfer of NMPC's and NYSEG's possessory interests in Facility Operating License No. NPF-69 for Nine Mile Point Unit 2 (NMP 2) to AmerGen. Third, AmerGen and NMPC, acting on its own behalf and as agent for the other co-owners of NMP 2, request that the NRC's order for NMP 2 consent to the transfer of NMPC's operating authority under Facility Operating License No.

(pj NPF-69 for NMP 2 to AmerGen. j NRC is being asked to consent to this transfer and authorize AmerGen to possess, use, and operate NMP 1 & 2 under essentially the same conditions and authorizations included in the existing NRC licenses for NMPC and NYSEG for these units. No physical changes will be made to either NMP unit as a result of this transfer, and there will be no significa51 change in the day-to-day operations of either unit. NRC is also asked to approve certain conforming administrative amendments to the NMP 1 & 2 licenses to reflect the proposed transfers. A ,

I mark-up of the NMP Licenses and Technical Specifications showing the conforming 1/ Representations and statements conceming AmerGen,its Members, or British Energy, and as to matters occurring on or after the Closing Date in this Application, including attachments, addenda and references, are solely those of AmerGen.

h 1-mA/122%83 15 $

r l

l amendments are presented in Enclosure 1. A Safety Evaluation of the conforming

'O V amendments to' assure that they do no more than reflect the proposed transfer is provided in Enclosure 2.

NMP1 NMP 1 is an approximately 615 MWe nuclear power plant consisting of a General Electric (GE) Boiling Water Reactor (BWR), a GE steam turbine, and other associated I

equipment located on Lake Ontario, in Scriba, New York, approximately 6 miles nonheast of Oswego, New York and approximately 35 miles nonh of Syracuse, New York. NRC Facility Operating License No. DPR-63 for NMP 1 was issued on August 22,1969, and will expire on August 22,2009. NMPC is the sole owner and operator of NMP 1.

NMP2 NMP 2 is an approximately 1,144 MWe nuclear power plant consisting of a GE BWR, D

j V GE steam turbine, and other associated equipment. NMP 2 is located at the same site as l

l NMP 1. NRC Facility Operating License No. NPF-69 for NMP 2 was issued on October 31, i 1986, and will expire on October 31,2026. NMPC holds a 41% undivided ownership interest in NMP 2 and is the licensed operator of NMP 2. NYSEG holds an undivided 18% ownership interest in NMP 2. Long Island Lighting Company (LILCO), Rochester Gas and Electric Corporation (RG&E), and Central Hudson Gas & Electric Company (CH) own 18%,14% and l

9% undivided ownership interests, respectively, in NMP 2. l Following the proposed transfers, AmerGen will become the licensed operator of both  !

NMP Units, the sole owner of NMP 1, and a 59% undivided owner of NMP 2. In addition, l

t tunmaa.a 2 l

LILCO, RG&E, and CH will retain their respective undivided ownership interests in NMP 2. #

AmerGen will also assume NMPC's role as operator of NMP 2 under the operating agreement among the NMP 2 owners. AmerGen may assume additional ownership interests in NMP 2 and, ifit does, it will request prior NRC approval of any such transfer of such interests.

The two NMP units are located adjacent to the site of the James A. FitzPatrick Nuclear Power Plant which is owned and operated by the New York Power Authority (NYPA).

AmerGen will assure continued coordination of certain joint activities with NYPA. such as in the area of emergency planning.

)

II. STATEMENT OF PURPOSE OF THE TRANSFER AND NATURE OF THE TRANSACTION MAKING THE TRANSFER NECESSARY OR DESIRABLE I In connection with the ongoing restructuring of the electric utility industry throughout the United States and in the State of New York in particular, NMPC and NYSEG have decided e- to substantially withdraw from the energy generation business, including nuclear generation, Y]J and sell their respective interests in the NMP Units. On June 23,1999 NMPC and AmerGen executed the NMP 1 Asset Purchase Agreement (NMP 1 Agreement), and NMPC, NYSEG, r.ad AmerGen executed the NMP 2 Asset Purchase Agreement (NMP 2 Agreement). Under these Agreements, (NMP Agreements), NMPC and NYSEG will transfer their respective ownership and operating interests in NMP 1 & 2 to AmerGen. The NMP 1 Agreement and the NMP 2 Agreement are included as Enclosures 3A and 4A, respectively, which are separately 2/ Under the Basic Agreement dated September 22,1975 for NMP 2,in connection with the sale ofinterests in that Unit, the other NMP 2 owners have a right of first refusal to match the terms of the AmerGen offer to NMPC and NYSEG under certain conditions.

Any such rights of first refusal of the other co-owners to acquire the interests of NMPC and NYSEG will have been waived or otherwise expired prior to the completion of the transaction.

i 1*nmou is 3 O}

L

l

^

bound in a proprietary Addendum to this Application. (AmerGen requests that Enclosures 3A

( '\

C/ and 4A be withheld from public disclosure pursuant to 10 CFR { 9.17(a)(4) and the policy reDected in 10 CFR 2:790, since they contain confidential commercial or financial information, as described in the 10 CFR & 2.790 Affidavit of Gerald R. Rainey (2.790 Affidavit) provided as Enclosure 15. Redacted versions of the NMP Agreements, suitable for public disclosure, are provided as Enclosures 3 and 4.) The NMP Agreements incorporate numerous schedules and ancillary agreements totaling hundreds of pages that are not being provided with this application; copies of this information can be made available upon request.

The panies also executed, or will execute, certain ancillary agreements in connection with the NMP Agreements including Interconnection Agreements and Power Purchase Agreements.

In accordance with the NMP Agreements, the closing of the transactions will take place on the Closing Date, as defined in the NMP Agreements, once all conditions precedent are G

Q satisfied and all required regulatory approvals are obtained. On and after the Closing Date, the following events will occur pursuant to the NMP Agreements, the Interconnection Agreements, and the Power Purchase Agreements:

(a) AmerGen will assume NMPC's and NYSEG's right, title, and interest in and to NMP 1 & 2 except as specified in the NMP Agreements -- including buildings, equipment, spare parts, fixtures, inventory,' documents, records, assignable contracts, new, used and spent nuclear fuel, other NRC licensed materials at the NMP Units and other propeny necessary for their operation and maintenance --

and assume NMPC's and NYSEG's responsibility for the operation, maintenance, and eventual decommissioning of both Units; O nwuma a 4

(b) AmerGen will offer employment to substantially all NMPC employees working O

O at the NMP 1 & 2 site, and assume the existing Intemational Brotherhood of Electrical Workers (IBEW) Collective Bargaining Agreement for the transferred union employees; (c)- AmerGen will have the right to contract for any necessary transmission service under NMPC's Open Access Transmission Tariff, or its successor (NYlSO Tariff) and will have contracted for back-up power to the site consistent with NRC requirements; (d) NMPC will purchase 95% of the capacity and energy from NMP 1 from AmerGen, from the Closing Date until the fiflh anniversary of the Closing Date; (e) NMPC and NYSEG collectively will purchase 56.05% of the total capacity and energy from NMP 2 from AmerGen, from the Closing Date until the third anniversary of the Closing Date, representing 95% of the output associated with the 59% ownership interest in NMP 2 conveyed to AmerGen by NMPC and NYSEG; and (f) NMPC will have made or will make additional cash deposits to the i decommissioning trust funds for NMP 1, and NMPC and NYSEG will have made or will make additional cash deposits to the decommissioning trust funds for NMP 2. AmerGen anticipates that the fair market value of the fund for Unit 1, after transfer, will meet NRC's financial assurance requirements for decommissioning funding. AmerGen anticipates that the fair market value of the fund for Unit 2, after transfer, plus the additional financial assurances mmma a 5 i

1 l

discussed in this Application, will meet NRC's financial assurance requirements n

C) for decommissioning funding.

III. GENERAL CORPORATE INFORMATION REGARDING AMERGEN A. Name of Proposed New I.lcensee AmerGen Energy Company, LLC.

B. Address AmerGen's corporate b;adquarters is located at 965 Chesterbrook Blvd., Wayne, PA 19087.

C. Description of Business or Occupation AmerGen is a limited liability company formed to acquire and operate nuclear power plants in the United States. The NRC recently consented to the transfer of ownership and operating responsibility for Three Mile Island, Unit I (TMI-1) to AmerGen. See GPU O

Q Nuclear, Inc., (Three Mile Island, Unit No.1), Order Approving Transfer of License And Conforming Amendment,64 FR 19202 (April 19,1999)(TMI-1 Order). AmerGen's principal .

offices are located in Wayne, Pennsylvania. AmerGen is organized under the laws of the State of Delaware pursuant to the Limited Liability Company Agreement of AmerGen dated as of August 18,1997, as amended (LLC Agreement), among PECO Energy Company (PECO Energy), a Pennsylvania corporation, British Energy plc (British Energy), a Scottish corporation, and British Energy Inc. (BE Inc.), a Delaware corporation which is a wholly owned subsidiary of British Energy. British Energy is a party to the LLC Agreement, but only PECO Energy and BE Inc, are Members of AmerGen; each holds a 50% ownership interest in AmerGen. Copies of the Certificate of Formation of AmerGen and the AmerGen A mmmea 6 Q

l I

l

n LLC Agreement, as amended, have previously been provided to NRC (see Reference 1) and s are incorporated herein by reference.

Both PECO En:rgy and British Energy have more than twenty years of nuclear operating experience. PECO Energy is the licensed operator of four nuclear reactors at the i

Limerick and Peach Bottom nuclear generating stations and is a member of the Institute of Nuclear Power Operations (INPO). PECO Energy also owns 100% of the Limerick units, j l

42.49% of the Peach Bottom units, and 42.59% of the two nuclear units at the Salem nuclear  !

generating station. British Energy is the owner and operator of filleen nuclear reactors at eight nuclear operating sites in the United Kingdom and panicipates in the World Association of I Nuclear Operators (WANO). Copies of the 1995,1996,1997 and 1998 Annual Reports of PECO Energy and 1996 Prospectus and 1996/97,1997/98 and 1998/99 Annual Reports of British Energy have previously been provided to the NRC (see References 2 and 3) and are O

V incorporated herein by reference.

D. Organirntion and Management

1. State of Establishment and Place of Business AmerGen is a limited liability company established in the State of Delaware.

AmerGen's principal place of business is in the Commonwealth of Pennsylvania

2. Management Committee The business and affairs of AmerGen are managed by or under the direction of a Management Committee, currently consisting of six Representatives, three of whom are U.S.

citizens, who are appointed by, and serve at the discretion of, the PECO Energy Member Group, and three of whom are appointed by, and serve at the discretion of, the BE Inc. Member owmma a 7 v

3 I

l l

Group. The names, addresses and citizenship of the Management Committee Representatives (O )' are as follows:

l Name Address Citizenship !

PECO Energy Michael J. Egan 2301 Market Street U.S.

Member Group Philadelphia, PA 19101 Gerald R. Rainey 965 Chesterbrook Blvd, U.S.

Wayne, PA 19087 Drew B. Fetters 965 Chesterbrook Blvd, U.S.

Wayne, PA 19087 BE Inc. Member Dr. Robin Jeffrey, FEng Suite 1000 U.K.

Group - 69 Yonge Street Toronto, Ontario M5E IK3 Canada Duncan Hawthome 965 Chesterbrook Blvd, U.K.

Wayne, PA 19087 David Gilchrist Suite 1000 U.K.

69 Yonge Street (3 Toronto, Ontario M5E 1K3 V Canada In addition to the six voting fsepresentatives, Dickinson M. Smith, the Vice-Chairman of AmerGen, and a U.S. citizen, is a non-voting Representative on the Management Committee.

3. Principal Executives and Officers The Chairman of the Management Committee, Michael J. Egan is a U.S. citizen, who is appointed by, and may only be removed by the PECO Energy Member Group. Mr. Egan chairs the meetings of the Committee and has the " casting" or deciding vote on "all Safety issues," broadly defined in Section 1.7 of the LLC Agreement and which include all issues I

[ 1 4 /1229003 15 8 N,)

I

within thejurisdiction of the NRC, i.e., all matters involving nuclear safety and common n v defense and security.

The AmerGen Chief Executive Officer (CEO), Gerald R. Rainey, is a U.S. citizen, who is elected by the Management Committee, and is the senior executive responsible for AmerGen's day-to-day operations. The CEO is authorized to employ and retain other officers, subject to the approval of the Management Committee. Mr. Rainey also sen'es as AmerGen's Chief Nuclear Officer (CNO). The CEO and CNO, if someone other than the CEO, will always be U.S. citizens. The names, titles, addresses, and citizenship of the principal executives and officers of AmerGen are as follows:

Nan?e Title Address Citizenship Michael J. Egan Chairman, 2301 Market Street U.S.

Management Philadelphia,PA 19101 Committee Dickinson M. Smith Vice Chairman, 965 Chesterbrook Blvd, U.S.

Management Wayne, PA 19087 Committee Gerald R. Rainey CEO, CNO 965 Chesterbrook Blvd, U.S.

Wayne,PA 19087 Dr. Robin Jeffrey, FEng President Suite 1000 U.K.

69 Yonge Street Toronto, Ontario M5E 1K3 Canada Drew B. Fetters Vice President 965 Chesterbrook Blvd, U.S.

Wayne,PA 19087 .

Duncan Hawthorne Vice President 965 Chesterbrook Blvd, U.K.

Wayne,PA 19087 )

Paul E. Heviland Vice President 2301 Market Street Philadelphia, PA 19101 U.S.

)

l l

J e

t 1 hA/1229063.15 ' h 1

,m Edward J. Cullen, Jr. Secretary 2301 Market Street U.S.

) Philadelphia, PA 19101 IV. FOREIGN PARTICIPATION IN AMERGEN The NRC recently concluded that the transfer of an NRC operating license for a commercial nuclear power plant to AmerGen is consistent with the restrictions on foreign ownership and control in the Atomic Energy Act of 1954, as amended (the Act). See TMI-l Order,64 FR 19202 (April 19,1999); Safety Evaluation by the Office ofNRR, Transfer of Facility Operating Licensefrom GPUN, Inc., et al to AmerGen, (Three Mile Island, Unit No.

1), Docket No. 50-289 (April 12,1999)(TMI-1 Safety Evaluation). In the TMI-l Safety Evaluation, the NRC Staff took into account the nature and extent of foreign participation in AmerGen and concluded that AmerGen is not subject to foreign ownership, control, or domination within the meaning of the Act or NRC's regulations, and that the transfer of the i (v ) TMI-l license to AmerGen would not be inimical to the common defense and security. There has been no material change in the nature and extent of the level of foreign participation in AmerGen since the issuance of the TMI-l Safety Evaluation. #

In approving the transfer of the TMI-l operating license from GPU Nuclear, Inc. to AmerGen, the NRC Staffimposed four license conditions to ensure that AmerGen will not be subject to foreign ownership, control, or domination. AmerGen proposes similar license conditions in connection with the proposed transfers of the NMP 1 & 2 licenses. The four license conditions imposed by the NRC Staff on AmerGen for the TMI-l transfer, and which 3/ In the TMI-l license transfer case, the Commission construed the terms of Section 104d of the Act, which applies to the transfer of the NMP 1 license. Section 103d of the Act, which is virtually identical to Section 104d, also applies here with respect to the transfer of the NMP 2 license.

("') i#mma is 10 O

AmerGen agrees to accept in connection with the proposed transfers of the NMP 1 & 2 l licenses are:

1. The Limited Liability Compaq Agreement dated August 18,1997, may not be i modified in any material respect concerning decision-making authority over  !

" safety issues" as defined therein without the prior written consent of the Director, Office of Nuclear Reactor Regulation.

2. At least half of the members of AmerGen's Management Committee shall be appointed by a non-foreign member group, all of which appointees shall be U.S.

citizens.

3. The Chief Executive Ofiicer (CEO), Chief Nuclear Officer (CNO) (if someone other than the CEO), and Chairman of the Management Committee of AmerGen shall be U.S. Citizens. These individuals shall have the responsibility and exclusive authority to ensure, and shall ensure, that the business and l activities of AmerGen with respect to the TMI-l license are at all times conducted in a manner consistent with the protection of the public health and 1 safety and common defense and security of the United States.
4. AmerGen shall cause to be transmitted to the Director, Office of Nuclear Reactor Regulation, within 30 days of filing with the U.S. Securities and Exchange Commission any Schedules 13D or 13G filed pursuant to the O Securities and Exchange Act of 1934 that disclose beneficial ownership of a registered class of PECO Energy stock.

V. TECHNICAL QUALIFICATIONS OF AMERGEN The technical qualifications of AmerGen to carry out its responsibilities under Facility Operating Licenses DPR-63 & NPF-69, as transferred and amended, will meet or exceed the existing technical qualifications of the current licensees. The NRC Staff previously detennined that "AmerGen has an acceptable corporate-level management" and "is technically qualified to operate a nuclear power plant." TMI-l Safety Evaluation, at 21. #

  1. Subsequent to NRC's approval of the TMI-l transfer, AmerGen's former CEO, Dickinson M. Smith, became Vice-Chairman of the Management Committee, and AmerGen's CNO, Gerald R. Rainey, assumed the duties of CEO. In addition, Paul E.

1 (continued...)

ommu n 11 l

l l

When the proposed transfer of the NMP 1 & 2 licenses and amendments become

,O 1

t I lV effective, AmerGen will acquire sole ownership of NMP 1, and a 59% ownership interest in NMP 2. AmerGen will' assume responsibility for, and control over, the operation and mamtenance of NMP 1 & 2. NMPC's existing nuclear organization at NMP 1 & 2 will be 1

transferred to AmerGen. In addition, substantially all of NMPC's nuclear managers and employees at NMP 1 & 2 will become AmerGen employees as of that date. AmerGen will recognize the union which currently represents employees at NMP 1 & 2. The overriding philosophy that will govern AmerGen's management of NMP 1 & 2 will be to assure that AmerGen manages, operates, and maintains these Units in accordance with the conditions and requirements established by the NTC.

The plant staff, including senior managers, will be essentially unchanged. However, as is common for the management and staff at operating nuclear power plants, individuals l n b routinely transfer to other positions within the same company, retire, resign or transfer to l

positions at other sites. Thus, it is to be expected that additional experienced personnel may join the site organization during the period leading up to and after the license transfer. Prior to the transfer, decisions regarding such changes will be made by NMPC, and following the transfer, such decisions will be made by AmerGen. Any such personnel will meet all existing i qualifications requirements in accordance with the NMP licenses and technical specifications.

If AmerGen determines that a senior management position is to be filled with a new individual from outside the existing NMP organization contemporaneously with the license transfer, 1

N(... continued)

Haviland became a Vice President of AmerGen with responsibilities relating to the negotiation of agreements for the acquisition of additional nuclear power plants.

f'i i#mme is 12 o

t.

I'

,. AmerGen will inform the NRC in advance of any such change and provide the NRC with a t \

'~J resume for any such individual in advance of the effective date of any such change.

Enclosure 5 is an organizational chart for NMP 1 & 2 illustrating the management structure and reporting relationships at NMP 1 & 2. As shown in this chart, the reporting relationships for the principal AmerGen executive officers and managers who will be involved in the management of NMP 1 & 2 are as follows:

The CEO and CNO of AmerGen will report to the Chairman of the Management Committee and will be responsible for the safe, reliable, and economic operation and maintenance of NMP 1 & 2.

The Senior Vice President, NMP, will report to the AmerGen CNO and have direct, on-site responsibility for the safe, reliable, and economic operation and maintenance of NMP1&2.

(,!

  • The Chairman - Safety Review and Audit Board (SRAB) will report to the AmerGen CNO and will be responsible for providing an independent review and audit function for NMP 1 & 2.

The existing NMPC technical support organizations for NMP 1 & 2, as described in I

Chapter 13 of NMP 1 & 2's FSARs, are currently assigned to NMP Units 1 & 2 and will )

continue to perform their functions on behalf of AmerGen. The functions, responsibilities and reporting relationships of these organizations, especially as they relate to activities important to the safe operation of NMP 1 & 2, will continue to be clear and unambiguous, and the i

per, mee of these organizations will be essentially unaffected by the transfer. Engineering i i

(% 1 d/1229083.15 13 i

1 l

support for NMP 1 & 2 is currently provided by a dedicated engineering organization that is an lI V integral part of the site organization that will be transferred to AmerGen.

As detailed in Section 2.1 of the NMP Agreements, NMPC will transfer to AmerGen the assets related to NMP 1 & 2 that AmerGen will need to maintain and operate the unit l

consistent with NRC requirements. Section 2.1 provides an extensive listing of assets in addition to plant and equipment that will be transferred, such as books, operating records, operating, safety and maintenance manuals, engineering design plans, documents, blueprints and as-built plans, specifications, procedures and similar items. With respect to the many operating records and other documents described in Section 2.l(g) of the NMP Agreements, the NMP Agreements specifically note that all such materials will be transferred "wherever located." Section 2.2 of the NMP Agreements set fonh those assets specifically excluded from transfer to AmerGen including certain switchyard facilities and related transmission and l l

' (A) distribution assets.

]

The records which the NRC requires a licensee to maintain are already located and maintained at NMP 1 & 2. Nevertheless, AmerGen will ensure that it acquires custody or  ;

control of any additional important documents that may currently be located at NMPC's Syracuse, New York offices or other off-site locations. Funher, any necessary contracts with the Architect Engineer, Nuclear Steam Supply System (NSSS) supplier, and other major vendors, will be assigned to AmerGen, as allowed by the contracts, or appropriate other contracts will be obtained by AmerGen on a timely basis. Other contracts and contractor

[ relationships relating to NMP 1 & 2 also will be assigned or transferred to AmerGen.

l See Sections 2.3 and 4.15 of the NMP Agreements.

O memo a 14 V

l l VI. FINANCIAL QUALIFICATIONS OF AMERGEN While AmerGen has maintained that it qualifies as an " electric utility" within the meaning of 10 CFR @ 50.2, the NRC recently concluded othenvise in connection with the i

TMI l license transfer. In any event, AmerGen meets the financial qualification requirements for a "non-electric utility" licensee pursuant to 10 CFR 50.33(f), as the N~RC recently dete:Tnined in its Order and Safety Evaluation approving the transfer of TMI-l to AmerGen.

1 As shown below, AmerGen is also financially qualified to own and operate NMP 1 & 2.

A. Protected Operatina Revenues and Operatina Costs AmerGen possesses, or has reasonable assurance of obtaining, the funds necessary to l

cover estimated operating costs for the period of the license in accordance with 10 CFR

{ 50.33(f)(2) and the Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance (NUREG-1577, Rev.1)(Standard N

Review Plan). AmerGen has prepared Projected Income Statements for the operation of NMP 1 & 2 for the five-year period from January 1,2000 until December 31,2004. In accordance with the Standard Review Plan, these Projected Ira.ome Statements provide the total estimated annual operating costs for NMi' 1, and 59% of the total estimated annual operating costs for NMP 2. The Projected Income Statements indicate that the source of funds to cover these operating costs will be operating revenues. The remaining 41% of the NMP 2 operating costs will continue to be borne by the other co-owners of NMP 2 based on their respective ownership interests. The Projected Income Statementa include schedules which provide infonnation regarding various projections for plant operations, market price, fuel expenses, anticipated capital additions, and depreciation. Copies of the Projected Income Statements are l

4 - 1 W122908315 15 l

[

F contained in Enclosure 6A. (AmerGen requests that Enclosure 6A be withheld from public L disclosure, as described in the Section 2.790 Affidavit provided in Enclosure 15. Redacted versions of the Projected income Statements, suitable for public disclosure, are contained in Enclosure 6.)

The Projected Income Statements show that the anticipated revenues from sales of capacity and energy from NMP 1 & 2 provide reasonable anurance of an adequate source of funds to meet AmerGen's share of the operating expenses of those Units during the five-year period from 2000 through 2004. For NMP 1, from 2000 through 2004, the income from 95%

of the capacity and energy sales from NMP 1 will come from a Power Purchase Agreement with NMPC. For NMP 2, from 2000 through 2002, the income from 95% of the capacity and energy sales from AmerGen's 59% interest in NMP 2 will come from Power Purchase Agreements with NMPC and NYSEG. Copies of these Power Purchase Agreements are enclosed as Enclosure 7. The remaining 5% of the capacity and energy during the periods of the Power Purchase Agreements for each Unit will be sold at market-based rates, as will all capacity and energy after the respective Power Purchase Agreements expire.

The Projected Income Statement for NMP 2 is unaffected by certain revenue sharing ,

arrangements between AmerGen and NMPC and NYSEG, forms of which are located in Exhibit F to the NMP 2 Agreement. Revenue sharing will occur only in the event that the market prices of electricity are higher than the market prices assumed in the Projected Income 1

Statement and thus, under such circumstances, /unerGen's revenues would be higher than projected. Under these sharing arrangements, for the ten years after the expiration of the three- l i

l year Power Purchase Agreements relating to NMP 2, NMPC and NYSEG may share in a iwirmo.a 16

(

portion of AmerGen's power sales revenues for electricity generated at NMP 2 depending upon

C

+

the actual market price of this electricity. These arrangements are not affected by NMP 2's operating expenses and do not induce economic performance incentives or other similar arrangements.

Moreover, as described below, PECO Energy and British Energy are making certain financial commitments to AmerGen to provide funds to cover operating expenses as necessary to maintain the safety of NMP 1 & 2 (and other nuclear power plants owned by AmerGen) during any periods in whicl' revenues from capacity and energy sales might not cover the operating expenses. PECO Energy and British Energy made simila commitments to provide funds to cover operating expenses as necessary to maintain the safety of TMI-l and the Clinton Power Station (CPS).

B. Additional Sources of Funds

) AmerGen is providing a projected opening balance sheet showing its anticipated assets, liabilities and capital structure relating to NMP as of the Closing Date. This financial statement is also contained in Enclosure 6A. (As noted previously, AmerGen requests that Enclosure 6A be withheld from public disclosure as described in the Section 2.790 Affidavit attached as Enclosure 15. A redacted version of this statement, suitable for public disclosure, is provided as Enclosure 6). AmerGen expects that by the Closing Date its Members will make capital contributions sufficient to cover the Purchase Price (as defined in section 3.2 of the NMP 18 2 Agreements). AmerGen's revenues from the sale of electricity from NMP and its other plants will provide AmerGen with working capital on an ongoing basis.

/~'j immm is 17 V

\ .- .

Significantly, PECO Energy and British Energy entered into certain additional financial (V) arrangements that provide further assurance that AmerGen will have sufficient funds available to meet its operating expenses. PECO Energy and British Energy have each entered into letter '

agreements dated December 3,1998 (PECO Energy) and November 5,1998 (British Energy) with AmerGen in which they committed, subject to the temis of their respective agreements, to provide their share of funds to AmerGen to assure that AmerGen will have sufficient funds available to meet its operating expenses for TMI-1. Copies of these two letter agreements (Funding Agreements) were previously provided to the NRC and are incorporated herein by reference. See Reference 4. Under the terms of the Funding Agreements, AmerGen has access to up to 565 million. I i l

PECO Energy and British Energy have supplemented the original Funding Agreements to increase the total amount of funds that will be made available to AmerGen to 5110 million C

()\ and to make the Funding Agreements applicable to all plants owned and operated by l AmerGen. Copies of these two supplemental letter agreements (Supplemental Agreements) were previously provided to NRC and are incorporated by reference. See Reference 5.

Pursuant to the terms of the Supplemental Agreements, PECO Energy and British Energy each will provide funding to AmerGen at any time that the Management Committee of AmerGen determines that, in order to protect the public health and safety and/or to comply with NRC requirements, such funds are necessary to meet the ongoing operating expenses for any nuclear power plant owned and operated by AmerGen, including NMP 1 & 2, or such funds are necessary to safely maintain any such plant, including NMP 1 & 2; provided, however, that the liability to provide funding under each agreement shall not exceed the lesser of(x) fifty percent 18

(]

v twnua is

F (50%) of the total funding required by AmerGen from time-to-time pursuant to the letter agreements, or (y) the aggregate amount of 555 million cumulatively over the life of the agreements. Pursuant to these agreements, AmerGen will be able to draw upon financial resources of up to $110 million, if such funds are necessary to meet its expenses and/or to meet its obligations to safely maintain any of the nuclear power plants owned and operated by

' AmerGen. These Supplemental Agreements become effective upon the transfer of any nuclear reactor to AmerGen.-

The Supplemental Agreements provide reasonable assurance that AmerGen will have sufficient funds available to pay its operations and maintenance expenses during a simultaneous six-month outage of both NMP Units? AmerGen considers such an extended outage to be the bounding six-month outage for purposes of NRC's guidance in its Standard Review Plan on the subject of financial qualifications, because a simultaneous outage of both NMP Units would be more costly than an outage at any nuclear reactor site that AmerGen has entered into a definitive' agreement to acquire. This approach is conservative, because

- AmerGen contemplates operating multiple reactors at several different sites. Revenues would, therefore, be available from operations at these other sites to fund operating and maintenance expenses during an extended outage of both NMP Units.

The Supplemental Agreements will remain in effect and remain irrevocable until such

' time as either: (1) AmerGen has submitted to the NRC a written certification meeting the requirements of 10 CFR (( 50.4(b)(8) and (9) that the fuel has been permanently removed 5/' Based upon the conservative operating cost projections for the years 2000 through 2004, the average operating cost over a six-month period for NMP 1 & 2 is approximately $110 million.

iwumea 19

from all of the reactors owned by AmerGen,i.e., after AmerGen has determined to permanently cease operatico t at all ofits reactors, or (2) the NRC has given its prior written consent to the discontintiance of the funding arrangements contemplated by the Supplemental Agreements. These funding arrangements are subject to the understanding that PECO Energy or British Energy shall have the right to demand that AmerGen permanently cease operations at any plant rather than use funds available under these agreements for continued operations; provided that, in such event, AmerGen shall nevertheless have the right to continue to obtain the funds necessary to assure the safe and orderly shutdown of any such plant and to continue the safe maintenance of any such plant until AmerGen can certify to the NRC that the fuel has been permanently removed from the reactor vessel.

I The financial ability of PECO Energy to meet its obligations under the foregoing funding arrangement with AmerGen is amply demonstrated in the fm' ancial statemeros provided in its 1995,1996,1997, and 1998 Annual Reports. See References 2 and 3. The financial ability of British Energy to meet its obligations under the foregoing funding anangement with AmerGen is amply demonstrated in the financial statements provided in its 1996 Prospectus and 1996/97,1997/98, and 1998/99 Annual Reports. See References 2 and 3.

AmerGen will have sufficient funds for the safe operation of NMP 1 & 2 even if AmerGen needs to operate NMP 1 & 2 at a loss over a significant period of time. All or some portion of AmerGen's camings will be available for distribution to PECO Energy and British Energy in years in which it has operating surpluses, and AmerGen will be able to use any carryover surpluses or obtain Mditional funds from PECO Energy and British Energy in years in which it needs to do so. AmerGen's acquisition of additional nuclear assets in the United i..u m m 3 a 20

=-

States should assist AmerGen in moderating year-to-year fluctuations in its ability to distribute camings and/or requirements for additional contributions.

AmerGen does not anticipate that it will ever need to draw upon the commitments provided by PECO Energy and British Energy in the Supplemental Agreements. AmerGen anticipates that both PECO Energy and British Energy will make adequate contributions to AmerGen, on an ongoing basis, necessary to assure AmerGen's ability to fund the ongoing operation and maintenance of all ofits nuclear power plants, as well as to fund other acquisitions. AmerGen expects that these funds will be provided even in the unlikely event AmerGen were ever to operate a nuclear plant at a loss over a significant period of time, as hypothesized above.

However, in the extraordinary circumstance that AmerGen is forced to draw upon the Supplemental Agreements-which would require specific findings in a vote of the AmerGen i

Management Committee-AmerGen will exercise care to assure that it either maintains funds, or holds in reserve the right to draw upon funds, sufficient to assure that AmerGen would be able to fund the transition to a safe shutdown of all ofits operating units. AmerGen will inform the NRC in writing at any time that it draws upon the Supplemental Agreements. NRC obviously has the authority to require that adequate funds will remain available to fund the transition to safe shutdown, f 5 ,ld a question arise regarding the availability of adequate funds for such purpose.

Finally, AmerGen will take no action to cause PECO Energy or British Energy to void, cancel, or diminish the financial commitments to AmerGen. Neither will AmerGen cause l PECO Energy or British Energy to fail to perform or impair their performance under tim vwuman 21

i commitments, or remove or interfere with AmerGen's ability to draw upon the commitments. '

O.

Further, AmerGen shall infonn the Director, Office of Nuclear Reactor Regulation, in writing, at such time that it draws upon the commitments for any ofits nuclear power plants.

\

The commitments of PECO Energy and British Energy provide reasonable assurance l that AmerGen will have funds sufficient to pay the fixed costs of an outage lasting six months, as suggested in the guidance provided in the Standard Review Plan. Moreover, the Projected  ;

Income Statements and AmerGen's openin'g balance sheet showing its anticipated assets, liabilities, and capital structure as of the Closing Date, provide further assurance that AmerGen is financially qualified to own and operate NMP 1 & 2.

C. Deco ==l==la=Ing Funding AmerGen's financial qualifications to own and operate NMP 1 & 2 are further demonstrated by the fact that, as explained below, AmerGen has made arrangements with NMPC and NYSEG to ensure that the decommissioning trust fund for NMP 1 will be fully prepaid, and the fund for NMP 2 will be essentially prepaid with additional financial assurances being provided to make up any shortfall. A detailed description of these additional financial assurances is contained in Enclosure 8A. (AmerGen requests that Enclosure 8A be withheld from public disclosure, as described in the Section 2.790 Affidavit provided in Enclosure 15. A redacted version of this enclosure, suitable for public disclosure, is contained in Enclosure 8). When earnings on the decommissioning trust funds are credited at a two percent annual real rate of return from the time of the collection of the funds through the expiration date of the current NRC license for each unit, the amount available on the expiration date of the current NRC license for each unit (from the trust funds and the additional financial j

[ 14n229eu is 22

I assurances) will be sufficient to cover the NRC minimum projected costs associated with the 10 CFR { 50.75(b) and (c) radiological decontamination and decommissioning of 100% of NMP 1 and 59% of NMP 2. The other co-owners of NMP 2 will remain responsible for providing their respective shares of the financial assurance of decommissioning funding totalling 41% of the projected decommissioning costs associated with NMP 2.

On or prior to the Closing Date, NMPC will make additional cash deposits to the NMP 1 decommissioning trust funds, and NMPC and NYSEG will make additional cash deposits to the NMP 2 decommissioning trust funds. The actual amount of the cash deposits will depend upon certain tax mlings. On the Closing Date, the NMP decommissioning tmst funds will be transferred to AmerGen, and AmerGen will deposit the funds in an external fund segregated from AmerGen's assets and outside its administrative control in accordance with the requirements of 10 CFR { 50.75(e)(1)(i). Mellon Bank, NA will be the trustee and will manage investment of the funds in accordance with applicable requirements.

AmerGen's Nuclear Decommissioning Master Trust Fund Agreement will be in a form which is acceptable to the NRC and will provide, in addition to any other clauses, that:

(a) Investments in the securities of AmerGen, PECO Energy, British Energy, their affiliates, subsidiaries or associates, or their successors and assigns shall be prohibited; (b) Except for investments tied to market indices or other non-nuclear sector mutual funds, investments in any entity owning one or more nuc% power plants shall be prohibited; and (c) The Director, Oflice of Nuclear Reactor Regulation, shall be given 30 days prior written notice of any material amendment to the trust agreement (s). A copy of the form of AmerGen's Nuclear Decommissioning Master Trust Fund Agreement is provided as Enclosure 9.

twmmm 23 1

1 L

AmerGen has calculated the NRC formula amount for the radiological decommissioning of NMP 1 & 2, pursuant to 10 CFR Q 50.75(c), NRC Regulatory Guide 1.159, and NUREG-1307, Rev. 8. A work sheet showing the calculations is provided in Enclosure 10. Based upon these calculations, the NRC formula amount for NMP 1 is

$328.1 million and the NRC formula amount for a 59% interest in NMP 2 is $216.6 million. j After crediting earnings on the minimum after-tax value of the NMP decommissioning funds at ,

I a two percent annual real rate of return from the time of the collection of the funds through the projected expiration date of the respective NMP 1 & 2 licenses, the amounts in the funds after they are transferred to AmerGen at Closing will exceed the required NRC fonnula amount for i

NMP 1 and provide financial assurance for essentially all of the NRC formula amount for NMP 2. The amount in the NMP 2 decommissioning trust fund, plus the additional funding available for NMP 2 decommissioning under the financial assurances described in Enclosure 8A, will exceed the NRC formula amount for NMP 2. This is demonstrated in Enclosure i1 A.

(AmerGen requests that Enclosure 11 A be withheld from public disclosure, in accordance with the Section 2.790 Affidavit provided in Enclosure 15. Redacted versions of the Projections of Earnings Credit on Decommissioning Funds Using 2% Annual Real Rate of Return for NMP 1 and NMP 2, suitable for public disclosure, are contained in Enclosure 11.)

AmerGen believes that the funding mechanisms described above and in Enclosure 8A satisfy the requirements set forth in 10 CFR 50.75(e)(1). As the NRC recently confirmed in several recent license transfer proceedings, a transferee is only required to demonstrate that it )

has sufficient funds to cover its pro rata share of the projected decommissioning costs associated with its ownership interest based upon the radiologicai &com aissioning cost ommu a 24

estimatwaiculated using the NRC formula in 10 CFR Q 50.75(c). See In re North Atlantic

,O V Energy Service Corp. (Seabrook Station, Unit 1), CLI-99-06 (March 5,1999); Boston Edison Co (Pilgrim Nuclear Power Station, Unit No.1), Order Approving Transfer of Licenses And Conforming Amendments,64 FR 24426 (May 6,1999).

VII. ANTITRUST CONSIDERATIONS In accordance with the Commission's recent decision in Kansas Gas and Electric Company (Wolf Creek Generating Station, Unit 1) CLI-99-19,49 NRC _ (1999), antitrust reviews ofpost-operating license transfer applications are not required under the Act. For this reason, and because NMP 1 was licensed under Section 104b, and neither the NMP 1 nor the NMP 2 license contains any antitrust conditions, the NRC need not consider any antitrust issues in connection with this application.

VIII. RESTRICTED DATA AND CLASSIFIED NATIONAL SECURITY INFORMATION This application does not contain any Restricted Data or classified National Security Information, and AmerGen does not expect that any licensed activities at NMP 1 & 2 will involve any such information. However, in the event that such information does become involved, AmerGen agrees that it will (1) appropriately safeguard such information and (2) not permit any individual to have access to such information unless, and until, (a) the Office of l Personnel Management (OPM) has investigated the character, associations and loyalty of any such individual, (b) OPM has reported to the NRC on the result of such an investigation, and (c) the NRC has determined that permitting such person to have access to such information will not endanger the common defense and security of the United States.

umana 25

IX. ENVIRONMENTAL CONSIDERATIONS >

/~'

V) The NMP 1 & 2 license transfer application and accompanying administrative amendments are exempt from environmental review because they fall within the categorical exclusion appearing at 10 CFR Q 51.22(c)(21) for which neither an Environmental Assessment nor an Environmental Impact Statement is required. Moreover, the proposed license transfers do not involve any amendments to the licenses or other changes that would directly affect the actual operation of NMP 1 & 2 in any substantive way. The proposed transfers and amendments to the licenses do not involve an increase in the amounts, or a change in the types,

)

of any radiological effluents that may be allowed to be released off-site. Further, no increase i

in the individual or cumulative occupational radiation exposure is expected, and the proposed transfers and license changes have no environmental impact.

X. ADDITIONAL INFORMATION REGARDING SPECIFIC REGULATORY q REQUIREMENTS, PLANS, PROGRAMS & PROCEDURES U A. Offsite Power l

In compliance with the design basis for NMP1 and General Design Criterion (GDC) 17 with respect to NMP 2, NMPC provides off-site power to NMP 1 & 2 over transmission facilities owned by NMPC and the other co-tenants, and operated by NMPC. Functionally, NMPC's interconnection with NMP Units 1 and 2 will not change as a result of the proposed license transfers. On or before the closing, NMPC will have entered into two Interconnection Agreements with AmerGen pursuant to which NMPC will continue to provide NMP 1 & 2 with interconnection services until the end of the operating life of the NMP Units. The i'

/~T - iwirmuis 26 U

Interconnection Agreements will enable AmerGen to have access to the transmission facilities '

subject to the operational control of NMPC and the New York Power Pool (NYPP)?

' NYPP is a cooperative association consisting of the major electric utilities operating in i f

the State of New York. NYPP is a " tight" power pool through which its members agree to coordinate their operations by operating their systems in parallel, by consulting on design, use and construction of capacity, by coordinating repair outages and by providing support to each other in meeting generating capacity and energy transmission needs. NYPP has a centralized computer system that monitors the availab' le, capacity on the system and the demand for energy of all other NYPP members to determine which sources of capacity should be used to provide 1 economical energy to meet customer demand reliably. As a member of NYPP, NMPC's generating assets are centrally dispatched through NYPP procedures.

Under the current NYPP structure,# each member utility owns and controls its separate transmission system. Access to those systems is available through each utility's open access j 1

1 i

6/ On January 31,1997, eight member systems of the NYPP submitted for Federal Energy Regulatory Commission (FERC) approval an application for authorization to establish an independent system operator (ISO). The eight member systems include NMPC and ,

NYSEG. By order issued on June 30,1998, FERC authorized the establishment of the New York Independent System Operator (NYISO). Central Hudson Gas & Electric Corp., et al.,83 FERC 161,352 (1998), reh 'g,87 FERC 161,135 (1999). On February 5,1999, the NYPP member systems filed with FERC requesting authorization to transfer control over certain' transmission facilities to the NYISO. FERC authorized the requested transfer on April 30,1999. _ 87 FERC 161,135. The NYISO is currently scheduled to start service prior to the transfer of NMP 1 & 2.

~ 2/ . The IWPP dispatches all generation within the New York control area volumcily placed on dispatch to minimize total production (energy) costs, while considering

. transmission system conditions and the flow of power into and out of New York and has certain emergency authority over all generators. The individual utility control areas are integrated to each other through NYPP.

- mmuis 27

I transmission tariff. NYPP dispatches generation through the ntate using the security (V constrained dispatch program that resets each generator's output every five minutes. NYPP operators also know the' status of all major generating units in the state. The NYPP operators i communicate on a regalar basis with their counterpans at the various utilities, including NMPC system operators at NMPC's Energy Control Center.

When the NYISO becomes operational, it will assume responsibility for the control area operations previously performed by the NYPP and will exercise operational control over the transmission facilities of the member systems, including NMPC transmission facilities.

The Interconnection Agreements-through access to the transmission facilities subject to the operational control of NMPC and the NYPP-will provide adequate assurance that:

(1) NMP 1 & 2 will be provided with a continued source of off-site power; and (2) the anangements for controlling operation, maintenance, repair, and other activities with respect to

(

Q} the NMP 1 & 2 switching stations, the transmission lines and the switchyard, will assure NMP 1 & 2 a reliable source of off-site power. The offsite power for NMP 1 is the subject of the Nine Mile Point One Emergency Supply Agreement (designated as the "Bennetts Bridge Agreement" because it deals with electricity generated at the Bennetts Bridge Hydropower station). NMPC's interests, rights and obligations under that agreement are being assigned to AmerGen. The obligations of NMPC under the Interconnection Agreements with AmerGen, the Bennetts Bridge Agreement, and AmerGen's access to offsite power through NYPP and

)

NYISO, will assure that reliable offsite power for NMP 1 & 2 will continue to be maintained

{

l after license transfer.

f; iwmmus 28 D

1 1

1

B. Emergency Planning V Upon consummation of the transfer, AmerGen will assume authority and responsibility for functions necessary to fulfill the emergency planning requirements specified in 10 CFR

@ 50.47(b) and Part 50, Appendix E. Any changes made to the existing NMP 1 & 2 emergency plan developed and implemented by the current licensees will be made in accordance with 10 CFR 50.54(q). AmerGen anticipates that no changes will be made that will result in a decrease in the effectiveness of the plan, and that the plan will continue to meet the standards of 10 CFR 50.47(b) and the requirements of Appendix E of Part 50. Any specific emergency plan changes will be submitted to the NRC within 30 days after the changes are made, pursuant to 10 CFR Q 50.54(q) and Appendix E,Section V. If NMPC or AmerGen identify any proposed changes that would decrease the effectiveness of the approved emergency plan, application to the NRC will be made and such proposed changes will not be implemented until o

) approved by the .NRC. Determinations as to whether any proposed change (s) would result in a decrease in effectiveness will be made in accordance with NMPC's currently approved plan, programs and procedures.

AmerGen anticipates that no substantive changes will be made to the existing emergency organization. Currently, NYPA owns and maintains the Emergency Operating i Facility and NMPC shares that facility. NYPA also owns the Joint News Center, which NMPC shares and maintains. AmerGen intends to continue the sharing of those facilities after the license transfer. In addition, AmerGen intends to continuejoint use with NYPA of miscellaneous equipment such as conununication systems and radiation monitoring equipment.

l 1

swumna 29

(

v

. Ownership of off-site emergency sirens will also be transferred to AmerGen, and any new or

existing easernents for the siren locations will be assigned to AmerGen.

Existing agreements for support from organizations and agencies not affiliated with

. NMPC will be assigned to AmerGen. NMPC and AmerGen plan to notify the parties to such agreements in advance of the transfer of the NMP 1 & 2 licenses to AmerGen and advise those parties of AmerGen's responsibility for management and operation of NMP 1 & 2, effective as of the Closing Date. In sum, the proposed license transfers will not impact compliance with the emergency planning requirements.

C. Exclusion Aren Upon the transfer of the licenses to AmerGen, AmerGen will have authority to determine and control all activities within the Exclusion Area for NMP 1 & 2, as defined in Section 5.1 of the Technical Specifications of the NMP 1 & 2 operating licenses, to the extent required by 10 CFR Part 100 including exclusion of personnel and propeny from the Exclusion Area.

Under the NMP Agreements, NMPC and NYSEG will transfer certain of their real propeny ownership interests within the Exclusion Area to AmerGen, but AmerGen is not I acquiring certain switchyard and other transmission assets owned by NMPC which are located within the Exclusion Area. AmerGen is also not acquiring certain real property within the current site boundary and within the Exclusion Area. However, AmerGen will have authority to determine and control all activities in the Exclusion Area, including exclusion of personnel and property from the area, to the extent necessary to comply with applicable NRC requirements. To the extent permitted by NRC requirements, AmerGen will, of course,

~

O -" '

)

\

exercise this control in such a fashion whereby NMPC's access to the switching station and p  ;

l Cl transmission facilities for proper operation and maintenance of the electric systems on NMP 1

& 2 will not be unduly restricted.

With respect to the activities unrelated to plant operation that occur in the Exclusion Area identified in Section 5.1 of the Technical Specifications for each Unit, such as boating on )

Lake Ontario and other recreationel activities, there will be no change. AmerGen will assume I

i responsibility for the Emergency Plan as discussed above, j 1

D. Security j Upon the transfer of the licenses to AmerGen, AmerGen will assume authority and

)

responsibility for the functions necessary to fulfill the security planning requirements specified l l

I in 10 CFR Part 73. Any changes made to the existing NRC-approved physical security, guard training and qualification, and safeguards contingency plans developed and implemented by b) the current licensees will be made in accordance with 10 CFR Q 50.54(p). AmerGen anticipates that no changes will be made as a result of the licenses transfer that will result in a decrease in the effectiveness of the plans, and that the plans will continue to meet the standards of 10 CFR Part 73, Appendix C. Any specific security plan changes will be submitted to the NRC within two months after the changes are made, pursuant to 10 CFR { 50.54(p)(2). If AmerGen or NMPC identify any proposed changes that would decrease the effectiveness of the approved security plans, application to the Commission will be made, and such proposed changes will not be implemented until approved by the Commission. Determinations as to whether any proposed change (s) would result in a decrease in effectiveness will be made in accordance with NMPC's currently approved security plan, programs and procedures.

wmmea 31 f~)

V

i AmerGen anticipates that no substantive changes will be made to the existing security organization as a result of the transfer of the licenses to AmerGen. Existing agreements for support from organizations and agencies not affiliated with NMPC will be assigned to AmerGen. NMPC and AmerGen plan to notify the parties to such agreements in advance of the transfer of the NMP 1 & 2 licenses to AmerGen, and advise those parties of AmerGen's l

responsibility for management and operation of NMP 1 & 2. In sum, the proposed license j transfer will not affect compliance with physical security requirements.

E. O==mv b==rance Proer== I Upon the transfer of the licenses to AmerGen, AmerGen will assume authority and responsibility for the functions necessary to fulfill the quality assurance (QA) requirements of

)

10 CFR Part 50, Appendix B. Any changes made to the existing NMP 1 & 2 Quality  ;

Assurance Plan developed and implemented by the current licensees will be made in accordance with 10 CFR @ 50.54(a). AmerGen anticipates that no changes will be made as a result of the transfer of the licenses that will result in a reduction in the commitments in the QA Plan descriptions previously accepted by the NRC. If AmerGen identifies any changes to the QA Plan that would result in a reduction in commitments, application to the Commission will be made, and such proposed changes will not be implemented until approved by the Commission. Determinations as to whether any proposed change (s) would result in a

~reduction in commitments will be made in accordance with NMPC's currently approved plan, programs and procedures.

AmerGen anticipates no substantive changes will be made to the existing QA organization as a result of the transfer of the licenses to AmerGen. j O - " - " '

F. Final Safety Analysis Renort

(> With the exception of areas discussed in this application, the proposed license transfers and confonning administrative amendments will not change or invalidate information presently appearing in the NMP 1 & 2 FSARs, and all licensing basis commitments will remain in effect. Changes necessary to accommodate the proposed transfers and conforming administrative license amendments will be incorporated into the FS ARs, in accordance with 10 CFR Q 50.71(e), following NRC approval of these requests for consent to license transfer.

G. Training The Nuclear Learning Center will be transferred to AmerGen and all or substantially all NMP staff currently working at this facility will be offered employment with AmerGen. The transfer of the NMP 1 & 2 operating licenses to AmerGen will not affect compliance with the operator re-qualification program requirements of 10 CFR @ 50.54 and related sections, or maintenance of the INPO accreditation for NMP licensed and non-licensed operator training.

Upon transfer of the licenses to AmerGen, AmerGen will assume ultimate responsibility for implementation of present training programs. Changes to the programs to reflect the transfers will not decrease the scope of the approved operator re-qualification program without the specific authorization of the NRC in accordance with 10 CFR @ 50.54(i).

H. Price-Anderson Indemnity and Nuclear Insurance In accordance with 10 CFR { 140.92, Art. IV.2, AmerGen, NMPC and NYSEG request NRC approval of the assignment and transfer of the interests of NMPC and NYSEG in the Price Anderson indemnity agreement for NMP 1 & 2 to AmerGen upon consent to the proposed license transfer. AmerGen's Projected Income Statements and financial O -"

9 _ _ _ _ _ _ _ . -

y arrangements with PECO Energy and British Energy provide adequate assurance that AmerGen will be able to pay a total retrospective premium of $10 million for NMP 1 and 55.9 million (its 59% share of a $10 million retrospective premium) for NMP 2, pursuant to 10 CFR 140.21(e)-(f). Prior to the license transfers, AmerGen will obtain all required nuclear property damage insurance pursuant to 10 CFR Q 50.54(w) and nuclear energy liability insurance pursuant to Section 170 of the Act and 10 CFR Part 140.

I. Standard Contract for Disposal of Spent Nuclear Fuel On and after the Closing Date, AmerGen will assume title to and responsibility for storage and disposal of spent nuclear fuel at NMP 1 & 2. NMPC and NYSEG will assign, and AmerGen will assume, NMPC's and NYSEG's rights and obligations under the Standard Contract with the Department of Energy, except that NMPC and NYSEG will remain liable for any fees that may be imposed for electricity generated and sold prior to the Closing Date.

A Q XI. OTHER REQUIRED REGULATORY APPROVALS The proposed sale of NMP 1 & 2 to AmerGen is subject to the approval of FERC and the New York State Public Service Commission (NYPSC). On July 23,1999, AmerGen, NMPC and NYSEG requested FERC approval for the sale ofjurisdictional assets pursuant to Section 203 of the Federal Power Act (FPA), and acceptance of the Interconnection Agreements and Power Purchase Agreements under Section 205 of the FPA. AmerGen already has FERC authorization under Section 205 of the FPA to sell electric generating capacity and energy at wholesale and market-based rates. AmerGen will notify FERC of the change in its status associated with its purchase of NMP 1 & 2. AmerGen also will file an application with FERC for Exempt Wholesale Generator (EWG) status under Section 32 of the Public Utility

/ l-d/1229083 15 34 j i

1

Holding Company Act of 1935, as amended, in connection with its ownership and operation of NMP 1 & 2. A certification relating to this EWG status will need to be obtained from the NYPSC.

AmerGen, NMPC and NYSEG also will file any notifications with the Federal Trade Commission and the Department of Justice that are required under the Hart Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), and applicable rules and regulations. Any additional information required will be supplied with a goal towards the termination or expiration of the HSR Act waiting period at the earliest possible date after the date of filing.

AmerGen, NMPC and NYSEG believe that certain rulings by the IRS and/or certain legislative changes to the Internal Revenue Code or changes in IRS regulations will be necessary to assure that the accumulated qualified and non-qualified NMP 1 & 2 decommissioning trust funds may be transferred from NMPC and NYSEG to AmerGen in a tax-efficient manner. These matters are discussed in greater detail in Sections 4.21-4.22 of the NMP Agreements. AmerGen, NMPC and NYSEG intend to seek all approvals or changes necessary for the transfer of the funds to AmerGen in a tax-efficient manner. However, these changes or rulings only will affect the amount of decommissioning funds transferred to AmerGen. NMPC and NYSEG will not retain ownership of any NMP Decommissioning Trust Funds after the Closing Date.

iwumuis 35

r l l

l XII. EFFECTIVE DATE b) AmerGen, NMPC and NYSEG request that the NRC review this Application on a I schedule that will permit the issuance of NRC consent to the license transfers, and approval of !

l the conforming administrative license amendments, as promptly as possible, and in any event before January 15,2000. AmerGen, NMPC and NYSEG also request that NRC's consent to j the transfer of NMP 1 & 2 to AmerGen immediately be effective upon issuance of the NRC's Order, and that it grant consent for the transfer to take place at any time through September 1, 2000, or such later date as may be permitted by the NRC. It is also requested that any needed l

license or technical changes be made effective on the Closing Date which shall occur prior to l September 1,2000.

XIII. CONCLUSION Based upon the forgoing infonnation, AmerGen, NMPC, and NYSEG, as their interests

] apply, respectfully request that the NRC issue an Order approving (1) the transfer of Facility Operating License No. DPR-63 for NMP 1 from NMPC to AmerGen, and (2) the transfer of NMPC and NYSEG's interests in Facility Operating License No. NPF-69 for NMP 2 to l AmerGen, and the associated Conforming Administrative License Amendments. l l

\

-/

l mA/122908315 36 L)

Retrieved from "https://kanterella.com/w/index.php?title=ML20211P585&oldid=3295657"