ML20217Q985
| ML20217Q985 | |
| Person / Time | |
|---|---|
| Site: | Duane Arnold  |
| Issue date: | 08/28/1997 |
| From: | NRC (Affiliation Not Assigned) |
| To: | |
| Shared Package | |
| ML20217Q979 | List: |
| References | |
| NUDOCS 9709040052 | |
| Download: ML20217Q985 (3) | |
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NUCLEAR REGULATORY COMMISSION
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WASHINGTON, D.C. 30646 4001 SAFETY EVALUATIO*J BY THE OFFICE OF NUCLEAR REACTOR REGULATION RELATED TO THE INDIRECT TRANSFER OF CONTROL OF LICENSE NO. DPR-49 FOR THE DUANE ARNOLD ENERGY CENTER DOCKET NO. 50 331
1.0 BACKGROUND
On September 27,1996, IES Utilities Inc. (lESU) submitted an application for approval under 10 CFR 50.80 regardirg a merger between IES Industries Inc. (lESl), parent of IESU, WPL Holdings, Inc. (WPLH), and Interstate Power Company (IPC). IESU, now a wholly owned subsidiary of IESI, will become a wholly owned subsidiary of WPLH as a result of the merger. IESU is the operator and a 70 percent owner of the Duane Arnold Energy Canter (DAEC), a single-unit nuclear power facility, and will remain such after the proposed merger is completed. The proposed merger will be accomplished by the merger of IESI with and into WPLH IPC wi!! merge into a newly created subsidiary of WPLH, WPLH will then change its name to Interstate Energy Corporation (IEC). Upon consummation of the restructuring, current stockholders of IESI and IPC would become stockholders of IEC in l
addition to current WPLH stockholders pursuant to a formula stipulated in the merger l
agreement.
l In a letter to stockholders dated July 23,1996, IESI indicated that WPLH, IESI, and IPC believe that the merger offers significant strategic and financial benefits, including the following: (1) maintenance of competitive rates that willimprove the combined entity's ability to meet the challenges of the increasingly competitive environment in the utility 4
industry; (2) reduced operating costs resulting from integration of corporate and administrative functions; (3) reduced electric production costs through the joint dispatch of systems; (4) greater purchasing power for goods and services; (5) more efficient pursuit of diversification into nonutility areas; (6) increased customer diversity and geographic diversity of service territories; and (7) expanded management resources and the ability to select leadership from a larger and more diverse management pool. (See IESU letter of September 27,1996, with attached IESI letter to stockholders, p. 9.)
2.0 FINANCIAL AND TECHNICAL QUALIFICATIONS On the basis of information provided in IESU's application, the staff finds that there will be no near term substantive change in IESU's financial ability to contribute appropriately to the operations and decommissioning of the DAEC facility as a result of the proposed merger. IESU also would remain an " electric utility" as defined in 10 CFR 50.2, engaged in the generation, transmission, and distribution of electric energy for wholesale and retail sale, the cost of which is recovered through rates established by the lowa Utilities Board and the Federal Energy Regulatory Commission. Thus, pursuant to 10 CFR 50.33(f), IESU is exempt from further financial qualifications review as an electric utility.
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-However, in view of the NRC's concern that restructuring can lead to a diminution of the assets necessary for the safe operation and decommissioning of a licensee's nuclear power-l plant, the NRC has sought to obtain commitments from its licensees that initiate restructuring actions not to transfer significant assets from the licensee without notifying the NRC. IESU has agreed -
to provide the Director of Nuclear Reactor Regulation a copy of its application to any regulatory agency, at the time it is filed, to transfer (excluding grants of a security interest or liens) from IES[U) to interstate (Energy Corporation) or any other corporate affiliate, facilities for the production, transmission or distribution of electric energy having a.
depreciated book value exceeding ten percent (10%) of the consolidated net utility plant on IES[Ul's books of account. (See IESU letter of September 27, 1996, Exhibit A, pp. 7 8.)
The staff believes that this commitment, modified to clarify the abbreviations used'in this evaluation, as a condition to the NRC's approval of the application regarding the proposed merger, will enable the NRC to ensure that IESU will continue to maintain adequate resources to contribute to the safe operation and decommissioning of the DAEC facility.
With respect to technical qualifications, IESU will continue to be the licensed operator of the facility. The technical qualifications cf IESU will be unchanged by the merger.
3.0 ANTITRUST Section 105c of the Atomic Energy Act of 1954, as amended (the Act), requires the Commission to conduct an antitrust review in connection with an application for a license to construct or operate a utilization or production facility under section 103 of the Act, 1
Here, although WPLH, to be renamed IEC, may become the holding company for IESU as a result of the merger, and thus may indirectly acquire control of the license for DAEC, IESU's application does not indicate that IEC will be performing 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 i
"significant changes" determination.- Furtherrnore,-the DAEC facility was licensed before 1970 under Section 104b of the Act, not Section 103. An antitrust review by the staff in regard to the proposed merger, accordingly, is not applicable.
' 4.0 FOREIGN OWNERSHIP
'IESU states in its application, "Following the proposed business combination and transfer,.
. Interstate [ Energy Corporation) will not be owned, controlled,- or dominated by any alien,
' foreign corporation, or foreign government. [lES] Industries is not acting as an agent or representative of any other person in this request for a license transfer." (See IESU letter of September 27,-1996, Exhibit A, p. 6.) The NRC staff does not know or have reason to believe IESU will be owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government as a result of the proposed merger.
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5.0 CONCLUSION
S In view of the foregoing, the ' staff concludes that the proposed restructuring of IESU's parent company, IESI, through a merger with WPLH and IPC, will not adversely affect IESU's financial or technical qualifications with respect to the operation and
. decommissioning of the DAEC facility. : Also, there do not appear to be any problematic.
Lantitrust or foreign ownership issues requiring further consideration related to the DAEC -
license t. hat would result from the proposed merger. Thus, the proposed merger will not affect the qualifications of IESU as holder of the license, and the transfer of control of the
- license, to the extent effected by the proposed merger, is otherwise consistent with --
applicable provisions of law, regulations, and orders issued by_the Commission.:
- Accordingly, the NRC should approve the application regarding the proposed merger.
- Principal Contributors: R. Wood M. Davis Date:: August 28,-1997-j q
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