ML20217F434
| ML20217F434 | |
| Person / Time | |
|---|---|
| Site: | Nine Mile Point  |
| Issue date: | 03/19/1998 |
| From: | NRC (Affiliation Not Assigned) |
| To: | |
| Shared Package | |
| ML20217F419 | List: |
| References | |
| NUDOCS 9803310412 | |
| Download: ML20217F434 (3) | |
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UNITED STATES E
NUCLEAR REGULATORY COMMISSION
- f WASHINGTON, D.C. 20555 0001
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SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION RELATED TO PROPOSED RESTRUCTURING-NEW YORK STATE ELECTRIC & GAS CORPORATION NINE MILE POINT NUCLEAR STATION. UNIT NO. 2 DOCKET NO. 50-410
1.0 INTRODUCTION
Under cover of a letter dated September 18,1997, from its counsel, New York State Electric &
Gas Corporation (NYSEG) submitted an application for consent by the U.S. Nuclear Regulatory Commission (NRC or Commission), pursuant to 10 CFR 50.80, regarding a proposed restructuring action that would result in the indirect transfer of the operating license for Nine Mile Point Nuclear Station, Unit No. 2 (NMP2), to the extent it is held by NYSEG. NYSEG is licensed by the NRC to own and possess an 18-percent interest in NMP2 The restructuring action would result in the creation of a holding company as a New York State corporation, to be named later, of which NYSEG would become a wholly owned subsidiary.
The restructuring action is in accordance with an " Agreement Conceming the Competitive Rate and Restructuring Plan of New York State Electric & Gas Corporation"(Settlement Agreement).
The Settlement Agreement was executed October 9,1997, by NYSEG, the staff of the State of New York Public Service Commission (NYPSC), the New York State Department of Economic Development, the New York Power Authority, the National Association of Energy Services Companies and the Joint Supporters, a coalition of energy service companies, and forwarded to the NRC under cover of supplemental letters to the application, dated October 20 and 27,1997.
Under cover of a letter dated January 6,1998, counsel for NYSEG forwarded copies of an order by the Federal Energy Regulatory Commission authorizing the corporate restructuring, subject to certain specified conditions, and finding that the proposed restructuring will not adversely affect competition or have an anticompetitive effect. Similarly, under counsel's cover letter dated
. February 9,1998, NYSEG forwarded copies of the order which was issued and effective January 27,1998, by NYPSC, adopting the terms of the Settlement Agreement, subject to certain modifications and conditions generally involving retail rate matters, and clarifying that NYSEG will have a reasonable opportunity to recover all prudently incurred NMP2 costs, subject to the duty of the NYPSC to set just and reasonable rates.
i The application ;ndicates that under the restructuring, the holders of NYSEG common stock will become the holders of common stock of the parent holding company on a share-by-share basis.
After the restructuring, NYSEG will continue to exist as an " electric utility" as defined in 10 CFR 50.2, providing the same electric utility services it provided immediately preceding the restructuring. NYSEG would continue to be a licensee of NMP2, and no direct transfer of the operating license orinterests in the station would result from the proposed restructuring. The transaction would not involve any change to either the management organization or technical personnel of Niagara Mohawk Power Corporation (NMPC), which has exclusive responsibility under the operating license for operating and maintaining NMP2 an j which is not involved in the proposed restructuring.
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2 Pursuant to 10 CFR 50.80, the Commission may~ approve the transfer of the control of a license,
'after notice to interested persons. Such action is contingent upon the Commission's "
- determination that the holder of the license following the transfer is qualified to hold the license,.
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' and that the transfer is otherwise consistent with applicable provisions of law,' regulations, and
. orders of the Commission.
2.0 FINANCIAL QUALIFICATIONS ANALYSIS
The application for consent states that the proposed restructuring will have no impact on the funds available for NYSEG to carry out activities under the operating license. The Federal Energy Regulatory Commission will still regulate NYSEG's wholesele electric rates, and NYPSC
. will also maintain jurisdiction over NYSEG's retail electric rates. In addition, the application for
- consent states that the restructuring will have no effect on NYSEG's capital structura or capital icosts and will not result in any change in NYSEG's wholesale or retail rates. Moreover, there will
- be.no change in NYSEG's source of funds for operating its utility facilities, including operating costs and eventual decommissioning costs for NMP2.
NYSEG is, and under the restructuring action, will continue to be an " electric utility" as defined by
' NRC regulations,10 CFR 50.2, that " generates [and] distributes electricity and... recovers the cost of this electricity...through rates established by...itself or by a separate regulatory authority."
- Pursuant to 10 CFR 50.33(f), NYSEG, as an electric utility, is exempt from further financial qualifications review; However, in view of the NRC's concem that a merger or restructuring could lead to a diminution of assets necessary for the safe operation and eventual decommissioning of a licensee's nuclear power plant, it is NRC practice to condition approvals of transfers of control of licenses involving mergers and restructuring actions upon a requirement that the subject licensee not transfer significant assets to an affiliate without first notifying the
- NRC. NYSEG addresses this NRC concem in the application for consent (pages 1718) by providing the following statement:
NYSEG agrees to inform the Director, Nuclear Reactor Regulation,60 days prior to a transfer (excluding grants of security interests or liens) during any twelve month period
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' from NYSEG to HoldCo [the holding company), or any direct or indirect subsidiary of HoldCo, of facilities for the production, transmission or distribution of electric energy (other than the transfer of the Coal-fired Generation Assets...) having a depreciated book -
-value exceeding ten percent (10%) of NYSEG's consolidated not utility plant, as recorded
--on NYSEG's books of account.
i The foregoing incorporated as a condition to the NRC's approval of the indirect license transfer application, will assist the NRC in assuring that NYSEG will continue to maintain adequate resources to contribute to the safe operation and decommissioning of the facility.
- Based on the above information, the NRC staff finds that NYSEG will remain financially qualified to hold the license for NMP2 following the proposed restructuring action.
q 3.0 TECHNICAL' QUALIFICATIONS iAs stated earlier, NMPC, the licensed' operator of the facility, is not involved in the proposed
' fostructuring action and thus will undergo no changes regarding its technical qualifications, as a
, result of the proposed restructuring action.l e
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, NYSEG stated in its application that the holding company structure will retain NYSEG as a discrete and separate entity. No responsibility for nuclear operations within NYSEG will be changed by the restructuring action. Officer responsibihties at the holding company level will be primarily administrative and financial in nature and will not involve operational matters relating to NMP2. After the proposed holding company formation, NYSEG will continue to actively participate in the oversight and non-operational decision making with respect to NMP2.
4.0 ANTITRUST Section 105c of the Atomic Energy Act of 1954, as amended (the Act), which provides for antitrust reviews to be conducted by the NRC, applies to an application for a license to construct or operate a facility under Section 103 of the Act. Although the proposed restructuring action creates a holding company of an NMP2 licensee, i.e., the be; ding company may indirectly acquire control of the license, the holding company will not be perfor.ning activities for which a license is needed.
Since approval of the application would not involve the issuance of a license, the procedures under Section 105c do not apply, including the making of any "significant changes" determination. Accordingly, no antitrust review is necessary in connection with this application.
5.0 FOREIGN OWNERSHIP. CONTROL. OR DOMINATION NYSEG indicated in its application for consent that after the restructuring is implemented, the holding company will become the sole holder of NYSEG outstanding common stock, and that the current holders of NYSEG's common stock will become holders of the common stock of the holding company on a share-for share basis. Thus, the previous holders of NYSEG common stock will own the holding company's common sbd S the same proportion as NYSEG common stock was held. Shares of NYSEG's common stock held in foreign accounts currently represent less than 1 percent of the total outstanding shares of NYSEG.
The NRC staff does not know or have reason to believe that the proposed acquisition will result in NYSEG being owned, controlled, or dominated by foreign interests.
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6.0 ENVIRONMENTAL CONSIDERATION
Pursuant to 10 CFR 51.21 and 51.35, an environmental assessment and finding of no significant impact was published in the Federal Reoister on January 16,1998 (63 FR 2701).
7.0 CONCLUSION
S In view of the foregoing, the staff concludes that the proposed action will not adversely affect the financial qualifications of NYSEG with respect to the operation and decommissioning of NMP2.
Also, there do not appear to be any problematic antitrust or foreign ownership considerations related to the NMP2 license that would result from the restructuring. Thus, the proposed restructuring action will not affect the qualifications of NYSEG as a holder of the license for NMP2, and the transfer of control of the license, to the extent effected by the proposed
-restructuring, is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission. Accordingly, with the condition discussed above relating to significant asset transfers, the proposed action should be approved.
Principal Contributors: M. Dusaniwskyj D. Hood Date: Ihrch 19, 1998
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