ML20235V292
| ML20235V292 | |
| Person / Time | |
|---|---|
| Site: | Shoreham File:Long Island Lighting Company icon.png |
| Issue date: | 03/01/1989 |
| From: | Youngdahl R LONG ISLAND LIGHTING CO. |
| To: | Carr K, Roberts T, Zech L NRC COMMISSION (OCM) |
| References | |
| CON-#189-8214 CLI-88-09, CLI-88-9, OL-3, OL-5, NUDOCS 8903100124 | |
| Download: ML20235V292 (13) | |
Text
- 5MT NUMBER O
nan ua.uc. @:gz-z=ces oc-3 4,g LONG ISLAND LIGHTING CONIMIEY EXECUTIVE OFFICES.175 EAST OLD COUNTRY ROAD ' HICKSVILLE. NEW YORK 11801
'89 WR -2 P4 :12 March 1, 1989 1
RUSSELL C. YOUNCDAHL a
PRESifM[NT AND CHIEF OPEst ATING OFFICER Lando W. Zech, Jr., Chainnan Ccmnissioner Tlunas M. Roberts Ccanissioner Kenneth M. Carr Cm missioner Kenneth C. Rogers Ccmnissioner James R. Curtiss U.S. Nuclear Regulatory Ccmnission One White Flint North 11555 Rockville Pike Rockville, Maryland 20852 Long Island Lighting Ccmpany (Shoreham Nuclear Power Station, Unit 1)
NBC Docket No. 50-322-OL Gentlemen:
On February 28, 1989, LIICO entered into an agreenent with New York State regarding the Shoreham Nuclear Power Station. A copy of this agreenent is attached. The agreenent is similar in most respects to one entered into with the State in June of 1988. The nest recent agreement is subject to a number of conditions, and the Ccmpany cannot predict whether those conditions will be fulfilled or whether, as with the earlier agreement, one or more of them will not be fulfilled.
The attached agreenent obligates the ccrupany not to actually operate the plant before April 15, 1989. We believe that this ti2ne frame is consistent with an expeditious decision and licensing schedule.
The Ccrupany is dedicated to resolving the lengthy controversy which has surrounded Shoreham, either by operating the plant as expeditiously as possible or by implementation of the recent agreenent. The energy needs of Long Island grow more critical with the passage of time. For that reason, even as the current agreenent awaits actions by New York State, LIICO remains ccmnitted to licensing Shoreham at the earliest nunent the Ccmnission's process will permit. LIICO is aggressively pursuing the expedited proceedings on the 1988 exercise (see CLI-88-9), for which a maxinum of twenty-one days of hearings is scheduled to begin on March 27. LIICO also urges the Ccmnission to act expeditiously on the sanctions issues which were argued to it on February 21. We believe that this course of action serves the public interest and will best protect the integrity of the licensing process.
Sincere 8903100124 890301 PDR ADOCK 05000322 a
x aA Attachment 3So3
3 SETTLEMENT AGREEMENT - LILCO ISSUES i
Dated February 28, 1989 i
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.i SETTLEMENT AGREEMENT -- LILCO ISSUES i
The undersigned. parties agree that the princi-ples, terms and conditions set forth herein! represent a just and reasonable settlement of outstanding issues related to the Long island Lighting Company (LILCO).
By this settlement-agreement, LILCO intends to transfer Shoreham to the Long Island Power Authority _(LIPA), and the parties intend that LILCO be returned to investment-grade financial condition as an investor-owned electric and gas corporation and that administrative and court litigation concerning Shoreham and other issues be termi-nated and the settlement of the related RICO and Brookha-ven litigations to which the State is not a party be facilitated.
The parties agree that this settlement shall be presented to the Public Service Commission of the State of New York (PSC) for its approval.
The par-ties believe that the settlement agreement, taken as a whole, constitutes a prudent course of action for resolv-ing these issues.
Accordingly, the parties agree to the following principles, terms and conditions:
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I 1.
When this agreement becomes effective, LILCO shall transfer Shoreham assets to LIPA for $1.00.*
LIPA shall close Shoreham and contract for its decommis-sioning with the New. York Power Authority (NYPA).
The transfer of Shoreham assets to LIPA shall be made pursu-ant'to the Asset Transfer Agreement, dated as of June 16, 1988, between LILCO and LIPA as amended to reflect that the Settlement Agreement referred to therein shall be this Settlement Agreement and as further amended by mutu-al agreement of the parties hereto to reflect any further revisions contemplated by this Settlement Agreement or required by the passage of time.
LILCO agrees that it i
will not operate Shoreham pursuant to any authorization to operate Shoreham that may be or has been granted by the Nuclear Regulatory Commission, provided that all approvals except shareowners approval are received by April 15, 1989.
If all approvals, except shareowner approval, are received by April 15, 1989, LILCO will not operate Shoreham unless this agreement is disapproved by 4
The parties agree that for approval of this settle-ment agreement to become effective, the PSC must approve the Asset Transfer Agreement between LILCO and LIPA pursuant to Public Service Law, Section 70.
The PSC agrees to review the annual decommissioning budgets identified in Section 5.3 of the Asset Transfer Agreement.
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shareowners.
LILCO will use its best efforts to conduct its shareowners meeting by June 15, 1989.
4 2.
It is noted that over the opposition of the l
Governor, as conveyed by the Executive Director of the Consumer Protection Board, the"PSC on February 18, 1989 approved a temporary' rate increase of 5.4 percent'for a rate year ending March 1, 1990.
The parties to this
-agreement anticipate that the PSC shall ensure that fu-ture impacts on subsequent rates are minimized to the maximum extent practicable and shall promptly determine just and reasonable rates for LILCO.
3.
The parties herein that are also parties to the litigation currently pending before the United States Court of Appeals for the Second Circuit, entitled LILCO
- v. Cuomo, et al., agree to stipulate to a discontinuance of the litigation based upon this agreement as soon as practical.
The related LILCO motion for attorneys' fees pending before the United States District Court
-(N.D.N.Y.) will be withdrawn with prejudice.
The settle-ment shall be with prejudice, except that the withdrawal of LILCO's appeal shall be without prejudice and may be reinstated in the event LIPA attempts to acquire an i
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i interest in LILCO by any means, including tender offer, I
merger offer, condemnation or proxy contest.
The parties to the LILCO appeal shall consent to any motion by LILCO to preserve its right to prosecute such appeal consistent with the above conditions.
The settlement of this liti-gation shall be contingent upon the effectiveness of this agreement.
4.
The parties herein that are also parties to the litigation pending before the Appellate Division of
- New York State Supreme Court (3rd Dept.),. entitled LILCO PSC (and three other proceedings), agree to stipulate v.
to a discontinuance of the litigation and to submit this agreement and-the PSC's decision on this agreement for approval and enforcement, if necessary, as soon as prac-tical to the Supreme Court in settlement of the litiga-tion.
The settlement of this litigation shall be contin-gent upon the effectiveness of this agreement.
5.
The parties herein that are also parties to the two actions recently decided (1) by the Appellate Division of the New' York State Supreme Court (2d Dept.)
entitled LILCO et ano. v. Mack et al., and (2) by the Supreme Court (Nassau County) entitled LILCO et ano. v.
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LIPA,'et al., agree to submit this agreement to the Su-preme' Court for approval and enforcement, if necessary, in settlement of the two actions as soon as practical.
LILCO has or will shortly serve a notice.of appeal from the orders in the two actions, but will not otherwise prosecute the appeal except as set forth below.
The settlement of the two actions shall be vith prejudice except that LILCO shall retain the right to prosecute its appeal challenging the constitutionality of the LIPA Act and the indemnification of LIPA trustees and officers in the event LIPA attempts to acquire an interest in'LILCO by any means including tender offer, merger offer, con-demnation or proxy contest.
LIPA hereby stipulates that by entering into this settlement agreement LILCO has not' prejudiced any rights it might otherwise have to prose-cute such appeals in the event LIPA attempts to acquire an interest in LILCO as referred to in the preceding sentence.
The settlement of the litigation shall be contingent on the effectiveness of this agreement.
6.
Upon the effectiveness of this agreement, the following administrative proceedings shall be termi-nated:
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Case 29029 - Petition of the CPB under PSL S 66(20) concerning LILCO's excess earnings.
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Cases 28204, 28704 - Petitions of LILCO under PSL i 107 to fund its investment in Bokum Resources Corp. (BRC), except that prior PSC authorizations of expenditures in these cases shall remain in effect, un-less terminated or extended by the PSC.
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Case 29301 - Petition of the CPB concerning LILCO's expenditures in response to Hurricane Gloria.
The parties agree that all claims and conten-tions regarding the prudence or disallowance of LILCO expenditures related to the above referenced proceedings, unless otherwise expressly accounted for in this' settle-ment agreement, are withdrawn with prejudice when the settlement becomes effective.
7.
The parties intend that the execution of this agreement will facilitate the settlement of the related so-called RICO litigation and the Brookhaven tax certiorari proceeding.
LILCO agrees to use its best efforts in good faith to resolve these matters.
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The parties acknowledge that the rate ap-provals contemplated by paragraph 2 will require public hearings.
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LILCO will cooperate in obtaining any.regu-i latory approval required to effectuate this agreement and the transactions that it contemplates including the transfer of Shoreham to LIPA, the decommissioning of the Shoreham plant as promptly as possible, and, pending such decommissioning, the maintenance of the Shoreham plant at least-cost.
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LILCO agrees to implement in a timely and complete manner the management audit recommendations from two completed or ongoing management audits directed by the PSC.
First, LILCO agrees to implement the recommen-dations contained in the " Comprehensive Management Audit Report--Long Island Lighting Company," performed by Ar-thur Young & Co., dated August 1987, excluding recommen-dations concerning Shoreham nuclear operations, as di-rected by the PSC.
In addition, LILCO shall assign top priority to the 51 non-Shoreham recommendations contained in Section I (Executive Summary) of such report.
- Second, LILCO shall cooperate in the completion of, and, unless 7
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otherwise authorized by the PSC, implement'all recommen-dations to be contained in the final report of "An Opera-i tional Audit Report on Long Island Lighting Company's j
Energy Conservation and Load Management Program," dated June 1988 and prepared by the Office of Utility Efficien-cy & Productivity of the Department of Public Service.
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l In particular, LILCO agrees that senior management will direct and carefully monitor its energy conservation and load management program, including establishment of goals and objectives, program and project development, and project management implementation, performance and as-sessment.
11.
The Memorandum of Understanding Concerning Proposed Agreements on Power Supply on Long Island be-tween the New York Power Authority (NYPA) and LILCO is incorporated by reference.
The parties request that the PSC expressly agree that, within three months of submis-l sion, i t shall review and act on any agreement for the effectuation of a project referred to in the Memorandum submitted for the purpose of obtaining PSC approval of LILCO's commitments to make payments to NYPA for such project.
The parties agree to take steps necessary to implement the Memorandum.
In particular, New York State 8
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i agrees to make available a sufficient amount of the State IDB volume cap to finance the projects covered in para-
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~ graph III'of the Memorandum.
In addition, LILCO vill-i consult with and seek the advice of LIPA in developing a comprehensive least cost power supply plan.
LILCO wil'1 also consult with LIPA'in formulating its requests to the
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New York Power Authority (NYPA) for gas turbines, base Lload facilities and allocations of transmission facili-ties, pursuant to the Memorandum of Understanding Con-cerning Proposed Agreements on Power Supply on Long Is-land between NYPA and LILCO.
LIPA's consent to NYPA's construction of the facilities contemplated in the Memo-randum is hereby conferred.
12.
It is specifically understood and agreed that this settlement agreement represents a negotiated agreement, and except as otherwise expressly provided for herein, is intended to be binding only as to the matters specifically addressed herein.
No party shall be deemed to have approved, agreed to or consented to any principle or methodology underlying or supposed to underlie the agreement herein, except as otherwise expressly stated.
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Consistent with applicable law the parties agree to support an allocation to LILCO of a minimum of
$100,000,000 per year of the New York State IDB cap for a minimum of 5 years.
1 14.
This agreement will become effective only upon:
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approval of this agreement and the Asset Transfer Agreement, as amended, by the PSC without modi-fication; B.
approval by the board of directors of LILCO; C.
approval by a majority of the shareholders of LILCO; D.
approval of this settlement by the LIPA trustees; and E.
approval of this settlement by the NYPA trustees.
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e The above approvals are those necessary for the settlement agreement to become effective, as referred to in paragraphs 1, 3, 4, 5 and 6 above.
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This agreement may be executed in several l
counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
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The following parties accept this agree-ment Long Island Light Eglompany New York State By:
Russell C. Youngdahl By:
Governor Mario M. Cuomo President Dated:
February 28, 1989
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