ML20214G514
| ML20214G514 | |
| Person / Time | |
|---|---|
| Site: | Braidwood  |
| Issue date: | 05/19/1987 |
| From: | Gallo J, Thornton P COMMONWEALTH EDISON CO., ISHAM, LINCOLN & BEALE |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| CON-#287-3485 OL, NUDOCS 8705270088 | |
| Download: ML20214G514 (27) | |
Text
_ _ _ _ _ _ _ _ - _ _ _ _ _ _ _ _ . _ _ _ - _ _ _ - _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . . _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _ _
W e
' {j)405 - UNITED STATES OF AMERICA DOCKETED NUCLEAR REGULATORY COMMISSION USMC 17 MAY 19 R2:16 BEFORE THE ATOMIC SAFETY AND LICENSING BOARD-CFFICE ai Su.r;. k .
00CKETimi 4 SEhrn BR?MCH In the Matter of- )
)
COMMONWEALTH EDISON COMPANY ) Docket Nos. 50-456_,64,
) 50-457
)
(Braidwood Nuclear Station, )
Units 1 and 2) )
RESPONSE TO INTERVENORS' MOTION SEEKING TO REOPEN THE RECORD FOR THE ADMISSION OF A NEW-CONTENTION I. INTRODUCTION On the eve of a decision in this lengthy operating 4
license proceeding, Intervenors have filed a Motion styled " Motion to Admit Late-Filed Contention on Financial Qualifications."1 Intervenors support their late-filed contention with information provided in another docket;2 advance circumstances which they say satisfy the five-factor test of 10 CFR S 2.714; and argue that
- other Commission regulations barring such a contention do not l apply, but that if they do, their application should be waived under 10 CFR S 2.758. These arguments fail to address completely the legal criteria that govern such a motion.
1.
l l
1 Intervenors' Motion is dated May 6, 1987, but Applicant did not receive it until the afternoon of May 8, 1987.
l 2 See Exhibit B to the Motion, Intervenors' April 29, 1987 letter to NRC's Murley concerning Byron Station, Unit 2, NRC Docket No. 50-455.
l 8705270008 87051'9 gDR ADOCK 05000456 PDR [
3
~
.. g The-Atomic Safety and Licensing Board is without t
jurisdiction to consider the issue raised by Intervenors' late- ,.
filed contention because Commonwealth Edison Company (" Edison"),
the Applicant in the Braidwood operating license docket, has made no application in that docket to alter its status as-the sole d' 8
licensee. This circumstance is noted in Intervenors'. Motion,'but they do not address the underlying jurisdictional issue.
Intervenors do address the second relevant criterion: they argue.
that.the Board has jurisdiction to consider the financial qualification issues raised by their late-filed contention, and they assert that if the Board thinks otherwise, a waiver of the ,
rules barring such jurisdiction is warranted. Intervenors cannot stop there, however; because the Braidwood hearing record is closed, they must also satisfy the relevant legal test established by NRC jurisprudence for reopening a closed hearing record. This matter is also not addressed in the Motion. d Thus, Intervenors have addressed only one of the three
. legal principles that govern consideration of their Motion, and Edison urges that the Board reject their pleading for its incomplete analysis. The remainder of this Response evaluates the Motion in the context of the principles enunciated above,- in.the event the Board believes the Motion should be considered further.
^
II. BACKGROUND The financial qualification issues that Intervenors seek to raise are grounded on a settlement agreement reached by Edison
'i with the principal governmental bodies in Illinois regarding, among other things, the ratemaking treatment of Edison's three
-latest nuclear units, Byron 2 and the B'raidwood units. Under this agreement, embodied in a Memorandum of Understanding filed with the Illinois Commerce Commission'on February 3, 1987, Edison would transfer the three units to a wholly-owned-subsidiary. Several agreements between Edison and the subsidiary implement the Memorandum of Understanding.3 Under them, Edison would continue-to bear sole responsibility for completion, operation, maintenance and decommissioning of the units. For the first five years of the agreement, Edison would take the entire output of the units, paying the subsidiary a fee of.$660 million a year plus fuel costs. After thatitime, the Memorandum of Understanding allows
.the Illinois Commerce Commission to direct Edison to choose one of
, several options: either to continue taking the output of one or more of the. units, or simply to buy energy from the units as l needed at market prices, or to grant a rate increase and defer 4
f'f .this decision. To the extent that Edison no-longer takes the-l output of the units, the generating subsidiary will be free to sell the energy on the open market. The rates of the subsidiary will be regulated by the Federal Energy Regulatory Commission i
L -("FERC"), not by the Illinois Commerce Commission.
,, Although this innovative rate treatment of the nuclear units is of great importance to Edison's ratepayers and its 3 . We understand that the Memorandum of Understanding and implementing agreements have been furnished to the Licensing Board as Exhibit D to Intervenors' Motion, although the copy served on 7
us did not contain this exhibit.
t
I l
~*
4_
shareholders, it will have no effect on the operation of the l plants. Under its_ Construction and Operating Agreement with the subsidiary, Edison commits to complete construction of the units in accordance with the applicable Construction Permits and to operate and maintain them in accordance with the applicable Operating Licenses. On April 16, 1987, Edison applied for an amendment to the Byron 2 operating license, permitting it to add the subsidiary as co-licensee. .It has not yet filed such an application with regard to Braidwood, but will do so after an initial decision is issued. In view of the Construction and Operating Agreement, addition of the generating subsidiary as co-licensee of.the plants will.have no practical regulatory consequences for the Nuclear Regulatory Commission. Moreover, under its Financing Agreement with the subsidiary, Edison commits to make available to the subsidiary any funds necessary for safe construction, operation, maintenance, shutdown or decommissioning of the units. This obligation is not merely a matter between Edison and the subsidiary. In its application for the amendment j to the Byron operating license, Edison acknowledges that in l
accordance with its obligations as co-licensee under the
- Commission's regulations, it has committed to providing the l .
l necessary financial resources to operate, maintain and l
l decommission the unit safely.
l^
t i
l
,, III. ARGUMENT A. The Licensing Board Lacks Jurisdiction to Admit Intervenors'. Proposed Contention Based on the Notice of Hearina in This Docket.
Intervenors' Motion is premised on Edison's application to amend the Byron operating license to add the subsidiary as co-licensee of Byron, Unit 2.4 Intervenors have opposed the amendment on the ground that it raises questions about the financial qualification'of either Edison or its~ generating subsidiary to operate the unit safely.5 They now attempt to inject this issue into the Braidwood operating license proceeding-pending before this Board. Edison has taken no action, however, that would confer on this Board any jurisdiction to consider this issue.
The application for an operating license for Braidwood
. Station remains unchanged since it was filed on November 30, 1978.
Commonwealth Edison Company is the sole applicant for a full-power operating license, and if the NRC Staff is authorized to issue such a license, Applicant will be the sole licensee. The notice of proposed action which was issued pursuant to 10 CFR S 2.105 reflects these facts. This Board's jurisdiction is limited by that notice 6 and it does not encompass the issue being raised by 4 A copy of this application was furnished to the Board as a part of the Motion.
5 See n. 2 suora.
6 Duke Power Company (Catawba Nuclear Station, Units 1 and 2),
-ALAB-739, 22 NRC 785, 790-92 (1985).
i V Intervenors, y11., the effect of the February 3, 1987 Memorandum of Understanding on the financial qualification of Applicant and its wholly-owned subsidiary.7 The fact that Edison will apply at some future time for an amendment to the Braidwood operating licenses similar to the amendment it seeks for Byron 2 does not now confer such jurisdiction. The Motion should be rejected for lack of subject matter jurisdiction.
B. The Licensing Board Lacks Jurisdiction to Admit Intervenors' Proposed Contention Based on the Rule Barring Consideration of Financial Qualifications, and No Exemotion From the Rule Should Be Granted.
- 1. . Consideration of Financial Qualifications Is Barred by Rule.
Section 2.104 (c) (4) bars consideration by a licensing board in an operating license proceeding for a commercial nuclear power plant of an electric utility applicant's financial qualifications.8 Thus, even if the Board did not lack jurisdiction for the reason stated above, it would still be precluded from admitting Intervenors' proposed contention.
Intervenors attempt to evade this rule by arguing that neither Applicant nor its wholly-owned subsidiary is an electric utility within the meaning of 10 CFR 5 50.2 and therefore the rule barring 7 See 43 Egd. Rec. 58659, December 15, 1978 (Notice of Opportunity for Hearing) and 44 fed. Egg. 5732, January 29, 1979 (Establishment of Atomic Safety and Licensing Board To Preside in Proceeding).
8 In addition to 10 CFR 5 2.104 (c) (4) , the rule barring consideration of an electric utility applicant's financial qualifications is also reflected in 10 CFR 55 50.33 (f), 50.40(b) and 50.57(a)(4).
D 3.;
e:
consideration of financial qualifications does not apply in this Case.
If the' Memorandum of Understanding is approved,-
LApplicant will remain,_as provided'in section 50.2,_an entity that generates or' distributes electricity and which recovers the cost-of this electricity through' rates established by1 separate regulatory authority,'the Illinois commerce commission. Moreover,
_the' wholly-owned subsidiary contemplated by the Memorandum of Understanding clearly will be a " generation facility" as that term is used-in section 50.2, and it will also recover the cost of electricity through rates _ established by separate regulatory authority. In this case, the $660 million annual payments Ldiscussed in Mr. Rifakes' affidavit (attached hereto as Exhibit A)
~and-the rates to be charged for electricity after the first five years will be governed by rate schedules approved by and subject to the jurisdiction of the FERC. (See Memorandum of Understanding, 1 1.) Thus, both Applicant and its subsidiary meet
-the definition of an electric utility and both qualify under 10 CFR 5 2.104 (c) for the regulatory proscription of Board inquiry into their financial qualifications.
- - 2. No Exemotion From This Rule Should Be Granted.
We cannot stop here in our analysis, however, since Intervenors request a waiver of these proscriptive regulations under 10 CFR S 2.758. Section 2.758 allows a licensing board to
! certify to the commission the question whether an exemption from Commission regulations should be granted in a particular case.
- 1. -
Before doing so, however, the licensing board must find that the i.
- l. -
.; _g_
( movant'has.made a crima' facie showing that speical circumstances .
exist which demonstrate that application of the regulation in this case would not serve the purposes.for which the regulation was adopted. Intervenors argue that the Licensing Board should certify to the Commission the question whether an exemption from
.the. rule barring consideration of the' Applicant's financial qualifications ~4hould be granted here. The Board should not certify this issste, however, because Intervenors have not made the necessary prima facie showing.
The purpose of the rule barring consideration of the applicant's financial qualifications in an operating license proceeding is to avoid duplicative litigation of this issue, when the Commission has already assured itself on a generic basis that electric utilities can recover, through the ratemaking process, sufficient revenues to enable them to operate their nuclear units safely.- In promulgating the rule the Commission stated that case-by-case review was " unnecessary due to the ability of such utilities to recover, to a sufficient degree, all or a nortion of the costs of construction and sufficient costs of safe-operation through the ratemaking process." 49 End. Eng. 35748 (emphasis supplied). Therefore, in order to make a crima facie showing that the rule should be waived in this case, Intervenors must show that
! the Commission's general assurance would be misplaced here. They fall short of the mark in this regard. They point out that during the first 5 years the $660 million annual capacity payments Edison i will make to the subsidiary will constitute less than full cost i
I
--9--
c.:
recovery, because they will not provide for a return on equity.
(Motion,' Exhibit.B,.p. 2.)9 This argument is similar to ones that were made by commenters-in the Commission's rulemaking proceeding, objecting to
-the elimination of the financial qualifications rule. The-Commission pointed out to these objectors that it-was not concernedLwith assuring an electric utility.a fixed level of' profitability. Rather, the Commission's " concern is that reasonable and prudent _ costs of safely maintaining and operating nuclear plants will be allowed to be.recoverd through rates. This concern does not extend to any level of profit or rate of return-beyond those operating expenses." 49 End. Eng. 35749. The Commission emphasized that under the old rule its only concern was to-assure that a utility "had sufficient total revenues to operate a facility." 49 Egd. Egg. 35750 (emphasis in original). 'Thus, the fact that the ratemaking process does not provide a recovery of all costs'is insufficient to show that a plant deserves individual litigation of financial qualifications issues.
Intervenors would have to show that neither the subsidiary nor Edison will have sufficient revenues to operate Braidwood safely.
9 Intervenors also point out that after the first 5 years, if the units are in the marketplace, FERC can regulate the subsidiary's rates but can not assure that customers will buy the subsidiary's power. (14., p. 3.) This argument is merely a distraction. It is of course true that no regulatory commission can ever guarantee that customers will be available to buy power at the prices the commission sets. That was not the point of the Commission's rulemaking concerning financial qualifications. The Commission rather was concerned that the cognizant regulatory autorities would not allow the utility the opportunity to earn
-sufficient revenues to operate and maintain the~ facility safely. l 49 End. Egg. 35749. Intervenors have made no such showing on this score.
g .-.
f -lo-
~
Intervenors make two attempts at this. They first speculate that the subsidiary may have insufficient funds to operate the units. As Mr. Rifakes' affidavit explains, however, ,
under any reasonable' projection this is simply not true. Even'if
-current projections of the costs of operating and maintaining the units'are_ grossly understated, the subsidiary will still have sufficient ~ income to cover these expenses. Moreover, this
-unlikely contingency is irrelevant in view of Edison's obligation, under the Financing Agreement with the subsidiary and as-licensee under the commission's regulations, to make available the funds necessary to operate the units safely. Intevenors then opine that Edison may be unable to comply with these obligations because that would involve a " subsidy," which would be prohibited by the Memorandum of Understanding. This argument is without merit. As 1hr. . Rifakes' affidavit explains, the Memorandum of Understanding does provide yhat Edison will allocate costs and resources of operating the nuclear units so as to ensure that no subsidy flows to the subsidiary. This provision,.however, is for the benefit of the ratepayers. It simply means'that Edison's ratepayers will not be charged for the costs of operating units that are not in Edison's rate base. Edison's shareholders, on the other hand, are free to preserve their proprietary interest in the subsidiary by providing the funds necessary to operate the units safely in accordance with the Financing Agreement.
Intervenors advance a similar argument premised on Illinois law. They assert that because the subsidiary is an affiliated interest, Edison would be precluded under Illinois law
from making l'oans or contributions to it without sufficient assurance of being paid back. This argument is wrong for the same-reason as the previous one. It is true that the Illinois Public Utilities Act makes transactions between a utility and an-affiliated interest subject to approval by the Illinois Commerce Commission. Ill. Rev. Stat., ch. 111 2/3, par. 7-101. The Commission will not approve such transactions unless they are in the public interest. Again, however, the purpose of this Statute is merely to protect the ratepayers, and payments not chargeable to them'are not contrary to the public interest.
Thus, Intervenors have shown no basis on which to grant an exemption from the rule barring consideration of the applicant's financial qualifications from an operating license proceeding.
C. Intervenors Must Meet the Standards for Reopening the Record, as Well as the Standards for Admission of a Late-Filed Contention.
Even if the Licensing Board were to decide that the issue Intervenors seek to raise were within the scope of this l
proceeding that that Intervenors had made a prima facie showing that an exemption should be granted from the rule barring consideration of financial qualifications, the Board should still l not certify this issue to the Commission. Even if the financial l
l qualification rule should not be applied in this case, Intervenor's contention cannot be admitted under well-established Commission precedent. The record in this proceeding closed on December 17, 1986. (Order Admitting Applicant's Exhibit 188 and
1 i I Closing Record.) Applicant's main brief was filed on January 6, 1987,-and the final brief of any party was filed on February 18, 1987. This being.the case, Commission precedent specifies quite clearly the additional criteria that Intervenors' Motion must meet.
'A party who seeks-to add a new contention after the record has closed must satisfy both the standards for reopening the record established by case law and the standard for admitting a late-filed contention set forth in 10 CFR 5 2.714(a). Pacific Gas and Electric Co. (Diablo Canyon Nuclear-Power Plant, Units 1 and 2), CLI-82-39, 16 NRC 1712, 1714-15 (1982), citina Pacific Gas and' Electric Co. (Diablo Canyon Nuclear Power Plant, Units 1 and
'2), CLI-81-5, 13 NRC 361 (1981); Louisiana Power & Licht Co.
(Waterford Steam Electric Station, Unit 2), ALAB-812, 22 NRC 5, 14 (1985); Houston Lichtina and Power Co. (South Texas Project, Units 1 and 2), LBP-85-42, 22 NRC 795, 798 (1985) ; Lona Island Lichtina Co. (Shoreham Nuclear Power Station, Unit 1), LBP-83-30, 17 NRC 1132, 1136 (1983). The standards for reopening the record must be met notwithstanding that the licensing board's initial decision has not yet issued. Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit 2), ALAB-730, 17 NRC 1057 (1983); South Texas Proiect, suora; Shoreham, suora.
Thus, in seeking to have a new contention admitted after the record has been closed, Intervenors must make a significantly higher threshold showing than they would if their late-filed contention had been submitted before the close of the record.
"The burden of satisfying all these requirements is heavy indeed."
Louisiana Power & Licht Co.. (Waterford Steam Electric Station,
-Unit 2),'ALAB-812, 22 NRC 5 14 (1985). Long-standing Commission precedent has set three criteria that a movant must satisfy to justify reopening the record. The movant must show that the issue he seeks to raise is (1) timely presented; (2) addressed to a significant safety or environmental issue; and (3) susceptible of altering the result previously reached. Metropolitan Edison Co.
(Three Mile Island Nuclear Station, Unit 1) , - ALAB-774, 19 NRC 1350, 1355 (1984); Louisiana Power & Licht Co. (Waterford Steam Electric Station, Unit 3), ALAB-753 18 NRC 1321, 1324 (1983);
Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit 2),
ALAB-730, 17 NRC 1057, 1065, n.7 (1983); Houston Lichtina and Power Co. (South Texas Project, Units 1 and 2), LBP-85-42, 22 NRC 795, 798 (1985).
The first of these three criteria -- that the issue for which reopening is sought be timely raised -- is essentially the same as the first of the five factors that govern the admissibility of a late-filed contention. A " party seeking to reopen must show that the issue it now seeks to raise could not have been raised earlier." Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit 2), ALAB-730, 17 NRC 1057, 1065 (1983),
citino Vermont Yankee Nuclear Power Coro. (Vermont Yankee Nuclear Power Station) , ALAB-138, 6 AEC 520, 523 (1973) (emphasis in original).
The second and third criteria for reopening the record, however, are far more stringent that the standards for the admission of a late-filed contention. Under the second criterion
the issue presented'aust be a grave one to justify reopening the record. "A board need not grant a motion to reopen which raises
= matters:which, even though timely presented, are not of ' major :
significance to plant safety.'" Vermont Yankee Nuclear Power Corp. (Vermont Yankee Nuclear Power Station) , ALAB-138, 6 AEC 520, 523 (1973). Under the third criterion, Intervenors must demonstrate that the information they seek to add to the record might alter the-result previously reached.
Furthermore, the existence of an issue which could alter the. result of the proceeding may not rest on bare allegation, as it may for a late-filed contention submitted before the record closes. "We emphasize that bare allegation or simple submission of new contentions is not sufficient. Only significant new evidence requires reopening." - Pacific Gas and Electric Co.
(Diablo Canyon. Nuclear Power Plant, Units 1 and 2), CLI-81-5, 13 l NRC 3 61, 363 (1981). The Appeal Board has elaborated on the requirement that a movant present actual evidence, not merely a new contention:
- At a minimum . . . the new material in support of a motion to reopen must be set forth with a degree of particularity in excess of the basis and specificity requirements contained in 10 CFR 5 2.714(b) for admissible contentions. Such supporting information
. must be more than mere' allegations; it must be l tantamount to evidence. And, if such evidence is to l
affect materially the previous decision (as required by ,
the commission), it must possess the attributes set i
- forth in 10 CFR S 2.743(c) defining admissible evidence
! for adjudicatory proceedings. Specifically, the new
! evidence supporting the motion must be " relevant,
( material, and reliable."
l l Pacific Gas and Electric Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2) , ALAB-775, 19 NRC 1361, 1366-67 (1984). The Appeal
. _ ~ , _ . _ . _ _ .- . , _ . _ _ _ _ . . .
- Board commented further: "In other words, only facts raising a~
f 4
significant safety issue, not conjecture or speculation, can support a reopening motion. The facts must be relevant to the proposition they_ support, and probative of the safety issue 5
presented. General statements are of no value." 19 NRC~at 1367 n . 18 . - This evidentiary standard applies to motions for reopening
. that_ raise a previously uncontested issue, as well as those that seek-to reopen an issue already-litigated. See Louisiana Power &
4 Licht Co. (Waterford Steam Electric Station, Unit 2),'ALAB-812, 22 NRC 5, 14 (1985).10 D. Intervenors Cannot Possibly Meet the Standards-for Reopening the Record; Their Contention Would Have Been Inadmissible Even if Timelv Filed.
- Intervenors have not even purported to satisfy the
- criteria for reopening the record, and their motion should be denied on that ground alone. The movant bears the burden of I demonstrating that he meets applicable criteria. Nonetheless, JApplicant will show that Intervenors could not meet any of the 1
three criteria.
l 10 The Appeal. Board has elsewhere summarized this evidentiary burden'as follows:
In other words, to justify the granting of a motion to reopen i the moving papers must be strong enough, in the light of any opposing filings, to avoid summary disposition. Thus, even though a matter is timely raised and involves significant safety considerations, no reopening of the evidentiary i hearing will be required if the affidavits submitted in j response to the motion demonstrate that the apparently significant safety issue does not exist, has been resolved, or for some other reason will have no effect upon the outcome i of the licensing proceeding.
4_ Vermont Yankee Nuclear Power Coro. (Vermont Yankee Nuclear Power Station) , ALAB-138, 6 AEC 520 (1973).
-a+.... -m- ,,,,-.,,,,-,,-,,-.--gYiNr vT ww vve- -v r- --wyr'. er e + ityw ---* r:r w t-m e w -s t-w weer+w we m s-e- t ---..-...cv-~w---.- = , - ,- - . - - - =- - +w
( ,
- 1. Timelv Filina.
Intervenors make a specious attempt to show that they have good cause for filing their Motion at this time,'but their arguments will not bear scrutiny. The Memorandum of Understanding that gives rise to Intervenors' claims was filed with the Illinois Commerce Commission on February 3, 1987, over three~ months before Intervenors' Motion. It was based on a lengthy series of negotiations among many parties, including Intervenors' counsel, BPI. Intervenors assert that they deliberately waited until Edison applied for an amendment to the Byron operating license on April 16, 1987, because until that time the precise way in which Edison would seek to have the NRC recognize the settlement agreement was not clear. This argument is disingenuous. The speculations that Intervenors have presented to the Commissien are based on the terms of the Memorandum of Understanding, not on the precise form of the amendment to the Byron operating license for which Edison is seeking Commission approval. Thus, Intervenors have inexcusably delayed filing.
their contention for at least two months, until the time that an initial decision is about to issue in this operating licensing proceeding. They have thereby maximized the likelihood of causing disruption and further delay in the issuance of a Braidwood operating license. Good cause does not exist for filing the Motion late.
- 2. Sionificant Safety Issue.
Intervenors' speculations about adverse financial consequences at some indefinite time in the future simply cannot l
t
. c be parlayed into an issue of " major significance to plant safety."
.Even when the Commissions's regulations required case-by-case determination'of an applicant's. financial qualifications, the rule was not predicated on a finding that financial qualifications were related to safety. Commenting on the regulation in Public Service Co. of New Hampshire (Seabrook Station, Units 1 and 2), CLI-78-1, 7'NRC 1,-18 (1978), the Commission noted that no facts in the rulemaking record either supported or negated a link between financial qualifications and safety. The Commission observed that
"[i]n the absence of any demonstrated direct connection between financial qualifications and safety in the utility industry" it was left with the speculative claims of the parties in the case before it. Id.
Indeed, the lack of a direct connection between financial qualifications and safe operation is one underpinning of the rule barring litigation of financial qualifications in an operating license proceeding. In abrogating the rule which
. allowed litigation of this issue, the Commission did not find that there could never be a connection between lack of financial qualification and plant safety. The Commission observed, however, that "(a] financial disability is not a safety hazard par 33 because the licensee can, and under the commission's regulations would be obliged to, simply cease operations if necessary funds to operate safely were not available." 49 End. Eng. 45749 (Sept. 12, 1984). At most, the Commission concluded, the old rule must have been based on the AEC's hypothesis that a utility in financially straitened circumstances would be tempted to take " shortcuts" with
- plant safety. Intervenors' suggestion that Edison and/or the subsidiary will get into financial difficulties and be tempted to take such " shortcuts" is obviously unavailing to raise a significant issue about the safety of Braidwood Station. "[0]nly facts raising a significant safety issue, not conjecture or speculation, can support a reopening motion." Pacific Gas'and Electric Co. (Diablo Canyon Nulcear Power Plant, Units 1 and 2),-
ALAB-775, 19 NRC 1361, 1367 n. 18 (1984).
3.- Alterina the Result Previousiv Reached As stated above, Intervenors must demonstrate that the information they seek to add to the record might alter the result previously reached. This criterion also applies in the present case even though an initial decision has not yet been issued. In Houston Lichtina and Power Co. (South Texas Project, Units 1 and 2), LBP-85-42, 22 NRC 795, 798 (1985), the licensing board recognized that when a decision has not yet been rendered, the new issue cannot literally alter a result previously reached.
- Nonetheless, the board concluded that in considering the l materiality or significance of the information the movant sought i
to add to the record, it was appropriate for the board to consider whether it could alter the result that would be reached in its l
l absence. As shown supra, Intervenors' arguments are based only on lawyer argument and the speculation that the Applicant may be inclined in the future to take shortcuts in the operation of Braidwood, thereby jeopardizing safety. This supposition does not f rise to the quality of evidence needed to alter the result in this I
case.
- ~
_19_
V. CONCLUSION Intervenors' Motion should be rejected because: (i) it is grossly incomplete in its analyses of the issues; (ii) the Board lacks jurisdiction under the notice of hearing in this proceeding; (iii) the Board lacks jurisdiction under the Commission's regulations concerning financial qualifications, and a prima facie showing justifying waiver under 10 CFR 5 2.758 has not been demonstrated; and (iv) the Intervenors have not met the criteria for reopening a closed hearing record.
Respectfully submitted, tiJtpk "Og Two of the Attorneys for Commonwealth Edison Company l ,
l l ISHAM, LINCOLN & BEALE 1150 Connecticut Ave., N.W.
Suite 1100 l
Washington, D.C. 20036 j (202) 833-9730 l
l ISHAM, LINCOLN & BEALE i Three First National Plaza Suite 5200 j Chicago, Illinois 60602 l (312) 558-7500 l
1
u, .
4 y-lr p.e-R - ,
F. .g gy 6'
f~
t
?
i-t 4
r 4
?
O i
a 1
EXHIBIT "A" 9
f
.I l
5' f
- n. , E - ,
l; . <
ISTA' E OFXILLINOIS : )
^
- , ') SS Y.
. COUNTYTOF zCOOK l ).
Q -
- ).
, , AFFIDAVIT OF GEORGE P. RIFAKES ID I1am a V' ice President.of Commonwealth-Edison-Company. .I am-familiar with the Merorandum-of Understanding executed among1 Edison,-the. Governor of'the State of' Illinois, the Attorney General of the State.of Illinois, the' States' AttorneyfforLCook. County and other. parties, which prov' ides, among other things,'for the creation of.a wholly-owned
' generatingcsubsidiary of Commonwealth Edison Company. This subsidiary would-take ownership of Byron Unit 1 and Braidwood
' Units liand'2. ILam also familiar with the agreements between' Edison and the subsidiary implementing the Memorandum s
aof Understanding,-including the: Power Supply Agreement, the Construction and Operating Agreement and the Financing Agreement.
- 2. I have read the Motion to Admit Late-Filed
' Contention on Financial Qualifications filed by.Intervenors Rorem, et. al.:in the Braidwood operating license proceeding.
l (Docket Nos. 50-456 and 50-457) , including the April 29,
[ 1987' letter from Douglass Cassel, Rorem's counsel, to n . Thomas Murley, the Director of Nuclear Reactor Regulation, Mr. Cassel makes' various representations to the effect f
that neither Edison nor its generating subsidiary will
!: be' financially-qualified to operate Byron 2 and the Braidwood i-j units safely. These statements have no basis in fact.
e l They are based on erroneous interpretations of the documents i
i l-I~
l'
e.
,A v'
referred.to~in paragraph 1 and of the underlying facts.
- 3. At page 2 of his letter to Mr. Murley, Cassel' opines _that the $660 million a year that Edison will pay the subsidiary for reservation of capacity during the period 1987-1992 rmur not be sufficient to enable the subsidiary to meet its operation and maintenance costs.
He refers to a' statement that I made on deposition-that this amount was intended only to cover the subsidiary's depreciation costs, projected O&M costs and return on debt, without providing for a return on equity. He concludes that if O&M costs exceed projections, the subsidiary's income'will not enable it to meet its operating costs.
The statement that I made on deposition is accurate, but HMr. Cassel's conclusion does not follow. Bear,in mind that depreciation is a non-cash charge. Depreciation on the-three units will amount to $270 million a year, on average, over the five-year period. The cash available to pay O&M costs will be about $390 million annually. O&M expenses for the three units, by contrast, are projected to total $120 million a year, on average, over the five-year period. While it is possible for O&M projections to be exceeded, it is inconceivable that they will be exceeded to such an extent that the subsidiary will lack sufficient income to cover them.
- 4. Furthermore, in the unlikely event that the subsidiary's income were not sufficient to meet the costs of operating and maintaining the units, there would
l
still be no problem. This contingency has already been provided for in the Financing Agreement between Edison and the subsidiary. Edison commits to make available to the subsidiary during the life of the Units, any funds necessary for the safe construction, operation, maintenance, shutdown, or decommissioning of the units. However, Edison has no obligation to continue funding the operation of the Units if it is commercially uneconomic to do so. This commitment is reflected in the application that Edison has made for an amendment to the Byron operating license, seeking to add the subsidiary as a co-licensee of Byron Unit 2. Edison will remain a licensee of the unit, and in accordance with its obligations as licensee under the Commission's regulations commits to provide the necessary financial resources to operate, maintain and decommission the facility safely.
- 5. At pages 2-3 of his letter to Mr. Murley, Cassel appears to imply that Edison would be precluded from honoring its obligation to provide funds necessary to operate the units safely by a provision of the Memorandum of Understanding that ensures Edison will not " subsidize" the subsidiary. Any such implication is false. There is no conflict between the Memorandum of Understanding and Edison's obligation under the Financing Agreement.
The Memorandum of Understanding does provide that Edison will allocate costs and resources of operating the nuclear units so as to ensure that no subsidy flows to or from the subsidiary. This provision, however, is for the benefit 4
'/
of Edison's retail ratepayers. It simply means that Edison's ratepayers will be not charged for the costs of operating units that are not in Edison's rate base. Edison's shareholders, on the other hand, are free to provide the funds necessary to operate the units safely in accordance with the Financing Agreement. No subsidy is involved here because the shareholders would be preserving their proprietary .,
interest in the subsidiary. Similarly, Cassel argues that under Illinois law Edison would be precluded from making loans or contributions to the subsidiary, an affiliated interest, without sufficient assurance of being paid back.
This is the same as the " subsidy" argument. Restrictions on transactions between a utility and an affiliated interest under Illinois law merely protect the utility's ratepayers.
The law in no way restricts the funding of a subsidiary by the utility's shareholders.
- 6. In sum, Mr. Cassel's arguments are without basis. Under any reasonable outlook for the future, Edison's generating subsidiary will have adequate income to enable it to meet the expenses associated with operating and maintaining Byron 2 and the Braidwood units. Even in the unlikely event that its income is not sufficient for this purpose, however, Edison has committed to provide any funds necessary for the safe construction, operation, maintenance, shutdown or decommissioning of the units.
Mr. Cassel's arguments that there would be legal restrictions t
~
, 'on Edison's ability to comply with'this. obligation'have
'I no foundation..
Further affiant sayeth not.
r
[ /Lv R u ~INW ftf' f.S_
.' 'YJ7 .
W
._._,.,L..
..,e-o 'A 1 /
i- -- - ((%i4r.4T...bk,,.(3fk,
,e .a..:. . ---
e 1-J 4
1 4
1 f
e i
d
]
i .
~
I i
t i
I t
UNITED STATES CF AMERICA NUCLEAR REGULATORY COMMISSION i
C0CKEILD BEFORE THE ATOMIC SAFETY AND LICENSING BOARD U%RC 17 MAY 19 M2:16 In the Matter of:- )
) 0FFit.F. Ji im # r COMMONWEALTH EDISON COMPANY ) Docket Nos. 50-455KFTIN'4 a 9M
) 5 0 -4 5'/-@ A NC"
)
(Braidwood Nuclear Station, )
Units 1 and 2) )
CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 18th day of May, 1987, a copy of Commonwealth Edison Company's Response To Intervenors' Motion Seeking To Reopen The Record For The Admission Of A New Contention was sent by Federal Express or U. S. Mail for delivery to each of the parties on the attached service list.
Peter Thornton Attorney for COMMONWEALTH EDISON COMPANY 1
i I
L
~
SERVICE LIST Herbert Grossman, Esq. Mr. William L. Clements-Chairman Chief, Docketing and Services Administrative Law Judge United States Nuclear Regulatory Atomic Safety and Licensing Commission' Board office of the Secretary United States Nuclear Regulatory Washington, DC 20555 Commission Washington, DC 20555 Ms. Bridget Little Rorem 117 North Linden Street Dr. Richard F. Cole P.O. Box 208 Administrative Law Judge Essex, Illinois 60935 Atomic Safety and Licensing Board Robert Guild United States Nuclear Regulatory Douglass W. Cassel, Jr.
Commission- Timothy W. Wright, III Washington, DC 20555 BPI 109 North Dearborn Street Dr. A. Dixon.callihan Suite 1300 Administrative Law Judge Chicago, IL 60602 102 Oak Lane Oak Ridge, TN 37830 Charles Jones, Director Illinois Emergency Services Stuart Treby, Esq. and Disaster Agency Elaine I. Chan, Esq. 110 East Adams Office of the Executive Legal Springfield, IL 62705 Director United States Nuclear Regulatory William Little, Director Commission Braidwood Project Washington, DC 20555 Region III United States Nuclear Regulatory Atomic Safety and Licensing Commission Board Panel 799 Roosevelt Road United States Nuclear Regulatory Glen Ellyn, IL 60137 Commission Washington, DC 20555 Ms. Janica A.'Stevens United States Nuclear Regulatory Atomic Safety and Licensing Commission Appeal Board Panel 7920 Norfolk Avenue United States Nuclear Regulatory Phillips Building Commission Bethesda, MD 20014 Washington, DC 20555 (FOR ADDRESSEE ONLY)
George L. Edgar, Esq.
Thomas A. Schmutz, Esq.
Newman & Holtziner, P.C.,
1615 "L" Street, N.W.
Suite 1000 Washington, DC 20036