ML20238C378

Responds to 870817 Request for Clarification Re Ability of Util to Provide Financial Coverage for Facility Activities. Permanent Shutdown Scenario Considered to Be Hypothetical Situation Which Will Never Occur

ML20238C378
Person / Time
Site:	Seabrook
Issue date:	09/03/1987
From:	Harrison R PUBLIC SERVICE CO. OF NEW HAMPSHIRE
To:	NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM)
References
CON-#487-4449 NYN-87104, OL-1, NUDOCS 8709100069
Download: ML20238C378 (12)

Text

N,a Robert J. Harrison President and Chief Executivo omcer .

NYN-87104 c Public Sen4ce of New Hampshire .

September 3, 1987 United States Nuclear Regulatory Commission Washington,.DC 20555 Attention: Document Control Desk

. References a) Facility Operating License NPF-56  ;

Docket No. 50-443 b) USNRC Letter dated August 17,.1987 "Recent Filings by Public Service Company of New Hampshire Before the Securities and Exchange Commission" B. A. Boger to R. J. Harrison Re: Request for Financial Information Gentlemen: j In Reference (b), the NRC requested clarification as to the ability l of Public Service Company of New Hampshire (PSNH) to provide financial coveraga for certain activities at Seabrook Station. )

1 At the outset, PSNH reaffirms its intention to continue its participation in Seabrook Station and to successfully. complete the licensing process in the most expeditious manner in order to permit Seabrook Station to commence operation. Toward that end, PSNH remains firmly . committed to providing its share of all necessary support, financial and otherwise, to ensure safe low power testing and to maintain the Seabrook Station in a safe condition following that testing.

While PSNH's most recent Form 8-K Report, dated -July 22, 1987, underscored the severe financial difficulties being experienced by PSNH as the result of several factors, including primarily the costly licensing delay i for Seabrook Station, it also outlined the affirmative financial plans which PSNH intended to pursue to counter those difficulties. Since then PSNH has continued to work toward the implementation of those plans. First, on August 5, 1987, PSNH filed a petition with the New Hampshire Public Utilities 8709100069 870903 PDR ADOCK 05000443, p/)i v

P PDR-.'

iOOOElmSt.,P,0 Box 330. Manchester,NHO3105 Telephone (603)669-4000 TWX7102207595

'kI l

Public Service of New HompeNro Page 2 United States Nuclear Regulatory Commission September 3, 1987 Commission (NHPUC) for an emergency rate relief increase of approximately

$71,000,000 annually. The NHPUC has set hearings on that petition for October 5-9, 1987, De earliest dates possible after compliance with its regulatory procedures. Second, pursuant to a PSNH request submitted with the petition, the NHPUC on August 11, 1987, transferred a question of law to the New Hampshire Supreme Court, concerning the application of NH Statuta RSA 378:30-a, the so-called anti-CWIP law, to the Company's investment in the Seabrook Station under the extreme financial circumstances currently being experienced by PSNH. On September 2, 1987, that Court issued an order directing the NHPUC to make, on an expedited basis, certain findings of fact.

regarding the Company's cash requirements to meet its interest payments, debt maturities, and customer service expansion needs for the remainder of 1987.

The Court indicated that upon receipt of the NHPUC findings it would move promptly to consider the constitutional issues of applicability of the anti-CWIP law to PSNH. Third, PSNH has instituted a program of cash conservation which is designed to substantially reduce its capital and operating expenditures, thereby enabling PSNH to extend its current available cash resources. Fourth, PSNH will, in the near future, formally file with the Securities and Exchange Commission and with the NHPUC a detailed program for restructuring certain of is indebtedness. This program is designed to substantially reduce PSNH's need for external financing and lessen the burden of interest and maturity payments on its debt, which has become difficult and costly due to the lengthy Seabrook Station licensing delays.

Further, the permanent shutdown scenario described in your letter is considered to be a hypothetical situation that will never occur, irrespective of PSNH's financial status. Detailed responses to your questions, which are set forth in the attachment to this letter, have been prepared to the best of our ability based on the assumptions indicated.

If you need any further information or clarification, please contact me.

Sincerely, Robert J. Harrison RJH:LD Attach.

l cc: ASLB Service List '

4 4 M h% d ** N' Page 3 United States NJclear Regulatory Commission September 3, 1987 l

Mr. Bruce A. Boger, Assistant Director for Region I Reactors Division of Reactor Projects I/II '

U. S. Nuclear Regulatory Commission Washington, DC 20555 Mr. Victor Nerses, Acting Director PWR Project Directorate I-3 Division of Projects I/II J. S. Nuclear Regulatory Commission Washington, DC 20555 .

Mr. William J. Russell Regional Administrator U. S. Nuclear Regulatory Commission Region I 631 Park Avenue King of Prussia, PA 19406 ]

i Mr. Antone C. Cerne  !

NRC Senior Resident Inspector Seabrook Station feabrook, NH 03874 l

y Diana Curren,-Esquire. Peter S. Mathews, Mayor

.Hiraon & Weiss City Hall-2001 S Street, NW ~ Newburyport, MA 01950

!  : Suite 430' Washington, OC 20009 Judith H. Mizner Silvergate, certner, Baker, Sherwin E. Turk,! Esquire . Fine, Good & Mirner Office of the Executive Legal Director 88 Broad Street U.S. Nuclear Regulatory Commission - Boston, KA 02L10 Tenth Floor Washington, DC 20555 Calvin A. Canney City Manager Robert A. Backus, Esquire - City Hall 116 Lowell Street 126 Daniel Street P.O. Box 516: . .

Portsmouth, NH 03801 Manchester, NH 03105 Stephen E. Merrill, Esquire Philip Ahrens' Esquire Attorney General Assistant Attorney General George Dana Bisbee, Esquire Office of The Attorney General Assistant Attorney General State House-Station #6 Of fice of the Attorney General Augusta KE 04333 25 Capitol Street Concord, NH 03301-6397 Mrs. Sandra Cavutts, . Chairman Board of Selectmen Mr. J. P. Nadeau RFD 1. Box 1154 Selectmen's Office Rensington', NH 03827 10 Central Road Rye, NH 03870 Carol S.,Sneider, Esquire Assistant Attorney General. Mr. Angie Machiros, Chairman Office of the Attorney General Board of Selectmen One Ashburton Place, 19th Floor Town of Newbury Boston, MA 02108. Newbury, MA 01950 Senator Cordon J. Humphrey Mr. William S. Lord United States Senate Board of Selectmen Washington,-DC 20510 Town Hall - Friend Street Attention: Tom Burack Amesbury, KA 01913 Richard A. Esope. Esquire Senator Cordon J. Humphrey Hampe and McNicholas- 1 Eagle Square, Suite 507 35 P'eesant Street Concord, NH 03301 Conet . NH 03301 Attention: Herb Boynton Thoma. F. Powers, III H. Joseph Flynn, Esquire Town' Manager Office of General' Counsel Town of Exeter Federal Emergency Management Agency 10 Front Street 500 C Street, SW Exeter, NH 03833 Washington,'DC 20472 Brentwood Board of Selectmen Paul McEachern, Esquire RFD Dalton Road Matthew T. Brockg Esquire Brentwood, NH 03833 Shaines & McEachern 25 Maplewood Avenue Cary W. Holmes, Esquire P.O. Box 360 Holmes & Ells Portsmouth, NH 03801

.47 Winnacunnet Road Hampton, NH 03842 Robert Carrigg Town Office Mr. Edward A. Thoman Atlantic Avenue FEMA, Region.1 North Hampton, NH 03862 442 John W. McCormack Post Office and Courthouse Boston, KA 02109

?

1

,,)'

/.Y . * / '

4,,, [t

/ *

,. Adminiit'ratf.ve Judge Helen Hoyt , Chairperson

'i/L 4tomid Safety and Licensing Board Panel 3

'l U.S.!' Nuclear . Regulatory Ccmmission Washington, DC '20555 i

, Adrainistrative Judge Sheldon J. Wolfe, Chairman '

Atomic Safet.y and Licensing Board Panel U.S. Nuclear- Regulatory . Commisslon Washington,' DC 20$55

)

i Dr. Emmeth A. Lt ebke j Atomic Saf ety and Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, DC 20555 l

Dr. Jerry Harbotr, y /.

, Atomic S9fet'y. and 1.icensing. Boara . Panel i U.S. Nuclert Regu<atory Commission i' # Washington,. DC 23553 * .

/ ,7

• t-Administrative 'udge Guct,' ave A. Linenberger, Jr.

L - D, Atomic ' Safety' and Licen ing Board Panel ,

U.S. Nuclear Regulatory Commission '

l

."l1 Washington, DC 20555 ,r l

< l

,o*f

,)'. ,r i

g )

• I i

Y 1

1 1

i l

l r

I

. 1 2

L Enclosure to NYN-87104 kf ~"

NRC Cuestion 1:

olense provide detailed estimates of (a) the total cost  ;

l.

to operate Seabrook Unit No. 1 at low power only (up to five ,

percent power); and (b) the total cost to r'.rmanently shut down the facility after low power operation only and to ,.

maintain it in a safe condition. Also provide an estimate of the cost to store or dispose of the irradiated fuel assuming low power operation only. Describe in detail the -

1 assumptions underlying the estimates. Include assumptions ....-

as to power level, duration of operation, method of fuel disposal or storage and method of permanent shutdown and i

safe maintenance.

L Response to NRC Question la:  ;. .-

The current operating budget for Seabrook Station  : .-

l averages $10 million per month. In conjunction with the ,-

performance of low power testing, certain incremental costs i

I beyond the current operating budget will be incurred. These . . . ,

costs, which cover all required manpower, material and electrical power for preparatory work, heatup and actual performance of low power testing, are estimated to be '

E-

$3,658,000, which will be incurred over a three month - -

period. A further breakdown is included in Table 1.

PSNH's share of this cost is 35.56942%, as defined in the Joint Owners' Agreement, or approximately $1,301,000.

In addition to the above costs, there will be increased ' -

costs incurred for premiums on insurance coverage for . , ,

Seabrook Station associated with the receipt of the low - .,

power license and upon completion of low power testing. It is expected that this cost for insu-:nce will increase by approximately $2,785,000 per annum, or which $1,565,000 will be paid upon receipt of the Jow power license and $1,220,000 will be paid, in installments, following completion of the -

testing. PSNH's share of these increased premiums, aggregating approximately $991,000, would be payable at the times indicated above.  ;

Response to NRC Question 1b: 4 .

Seabrook Station's low power testing program calls for ..

five to six days of intermittent testing at between 1/100th -

of 1% power and 1/10th of 1% power followed by two days of intermittent testing at 2% power and one-half day of L. n '

intermittent testing at 3% power. These tests will result  ?- . '

in a fuel burn-up of approximately 1 equivalent to 1-1/2

I effective full power hours and will occur over a period of {

three weeks.

Upan completion of the testing. program, the unit would be cooled down and maintained in a cold shutdown (Mode 5) condition, Depending on the licensing status at that time, certain systems could be placed in a lay-up condition to afford maximum protection of plant equipment. The costs associated with these efforts are included in the normal operating budget of $10-11 million per month.

If the unit was permanently shut down at some point following low power testing, the fuel would be moved to the spent fuel storage pool. In addition, the reactor coolant systems, decay heat removal systems and associated auxiliaries would be decontaminated, as necessary, following this short duration of low power testing. These systems would be cleaned by flushing the systems, hydrolysing, and/or localized chemical cleaning. This cleaning process would be repeated as necessary until contamination levels have been reduced below required control limits. The radiological controlled area would then be limited to the Fuel Storage Building and associated auxiliaries. The operating costs during this phase are not expected to exceed the normal budget of $10-11 million per month.

In the unlikely event of a decision to permanently shut down the unit, the Joint Owners would seek 'o sell or transfer ownership of the fuel to others such that the fuel could be removed from the site. It is estimated that it would take 2-3 years before the fuel could be removed from the site.

In order to determine the actual salvage value of the fuel after the low power testing program, a market. analysis would have to be undertaken at that time together with a study of special costs for nandling and shipping the fuel. l Although the Joint Owners have not performed a rigorous j study of these costs, a review was performed in late 1986 j which indicated that the salvage value of the fuel would I approximately offset the costs of handling and transportation of the fuel to a third party resulting in no net cost to the Joint Owners for the disposal of the fuel.

Following a permanent shutdown of the unit and during I the transition period when the fuel remains on-site, certain personnei and program costs would be incurred to ensure the proper storage of the fuel in the on-site spent fuel storage j pool. These direct costs are estimated to be approximately l

$700,000 per month which includes costs for operations, maintenance, health physics, environmental monitoring, security and electric power.

l l

In addition, certain nuclear liability and nuclear l property insurance costs, estimated not to exceed $2.5 i

.million per year, can also.be expected to be incurred.

Finally, there are other miscellaneous costs which are not directly related to maintenance of the facility, including such items as taxes, legal, accounting, and other  !

administrative costs, which are not included in the $700,000 l monthly estimate provided above. While the amount of these

]

costs cannot be precisely estimated, they are not expected j to exceed the current level of such expenditures or I approximately $2.2 million per month, which includes $1.8 i millionlfor taxes. Therefore, the estimated total monthly operating cost for Seabrook Station while the fuel is being 3 stored on site in the fuel storage building is not expected j to exceed $3.1 million. )

l l

As indicated in response to question 1(a), all the above j monthly costs are for the entire unit. PSNH's share of i those potential costs would be in proportion to its ownership share (i.e., 35.56942%), or $1.1 million per j month.

]

l NRC Question 2:

Please provide a detailed statement of the source of funds for covering total costs of low power operation and f total costs of permanent shutdown of the facility and i maintenance in a safe condition after a period of low power operation only. Identify each of the sources as to when it will be available and estimated dollar amount. Indicate the assumptions underlying the projection of each source of funds. j Response to NRC Question 2:

The Seabrook Project is currently being funded by several utility companies (the " Joint Owners") which are participants under the Agreement for Joint Ownership, Construction and Operation of New Hampshire Nuclear Units, dated May 1, 1973, as amended (the " Joint Ownership i Agreement"). The Ownership Shares of these utilities are i shown in Table 2. Approval for funding is determined by the I Joint Owner Executive Committee or the Joint Owners collectively in accordanc2 with the procedures set forth in the Joint Ownership Agreement. Once a funding level has been established, each Joint Owner is obligated under the Joint Ownership Agreement to provide its Ownership Share of the operating expenses of the Seabrook Project. Invoices are rendered as required and payments are due monthly. Each Joint Owner raises such funds as part of its normal financial sources. The Seabrook Project maintains a positive cash balance to be available to meet its monthly

_ _ _ _ _ _ _ _ _ . . _ _ _ _ l

obligations andito provide additional flexibility should fluctuations in monthly caeh requirements occur. This D ' account balance,. supplemented.by the Joint Owner payments, l is the source for meeting Seabrook Station's: cash operating requirement.v.

NRC Question'3:

In'the' event that.Public Service Company of New Hampshire!(PSNE);were to enter bankruptcy proceedings how

.would,this affect'PSNH's ability to pay its share of lSeabrook's low power operating costs and the costs of permanently shutting the facility down and maintaining it in a safe condition? If PSNH were unable to pay its share of costs,'what are the sources and likelihood of availability ot$ funds to cover the PSNH's share? Please describe in detail?

1 Response to'NRC Question 3

~

The' initiation of bankruptcy proceedings for PSNH would not of itself affect the obligations of PSNH under the Joint Ownership Agreement to pay currently its share of

.Seabrook's low-power operating costs and to pay ultimately its share.of the costs of permanently shutting down the facility'and maintaining it in a safe condition. To the extent.that such obligations'are contained in executory contracts a debtor with bankruptcy court approval has a right.to reject or affirm such contracts. However, because of.the magnitude of PSNH's investment in Seabrook Station (approximately 69% of its total assets) and the potential significant. level of revenues to be derived from the sale of Seabrook Station electricity by PSNH, PSNH intends to make

'every available effort to protent that asset. Even if a bankruptcy proceeding were to' intervene, PSNH has no intention of rejecting it's contractual obligations under the Joint Ownership Agreement or abandoning its interest in Seabrook-Station. In the event of bankruptcy, PSNH, as debtor in possession, will have access to a cash flow from its continuing utility operations substantially equivalent to that currently generated by thore operations and must be assumed to have access to external corrowings for

' administration expenses. These combined resources would be more than sufficient to meet PSNH's share of the Seabrook Station low power operating costs (as enumerated above) due in principal part because PSNH would have been temporarily relieved of the obligation to pay interest charges on its outstanding unsecuted indebtedness incurred prior to the institution of the proceedings. If Seabrook Station were subsequently shut down, these resources would similarly be sufficient to' cover PSNH's share of the shutdown costs enumerated above. Furthermore, if Seabrook Station were

.i i

1 1

I shut.down.after completion of-low-power testing,'it is j a- reasonable.to conclude that because of:the presence of.the ]

nuclear-fuel and the NRC license conditions with respect.

thereto,uPSNH's obligation'to~Seabrook Station could not be avoided byLit, as a; debtor in possession'(Midlantic National 1 Bank v. New Jersey Dept. of Environmental Resources, 474 'l U.S 494 (1986)) and-that the cost of meeting those.

obligations would be.an administration expense (In re Sterns, 68 B.R. 774 (D. Me. 1987)).

Given.the nature of the on-going utility operations of PSNH after~an assumed bankruptcy filing and the ability and obligation of:PSNH, as debtor'in possession, to. fulfill its commitments to the Seabrook' Project and its present.

intention to do so, PSNH cannot hypothesize.any plausible situation in which those obligations would remain unpaid.

i l

1 i

i l

l L

( - - . - - - - . --- -

l , i

-Enclosure to NYN-87104 TABLE 1_

1' NEW HAMPSHIRE YANKEE SEABROOK STATION - UNIT 1 INCREMENTAL COSTS FOR LOW POWER OPERATION

• Activity Mobilization 6. Low Power Total Cost Area 'Heatup Preparation -Heatup Testing (By Cost Area)'

Manpower -

1,000,S50. 572,000 667,600 2,240,150 Material. 45,900 69,700. 157,800 273,400 Electric -

572,100 572,100 1,144,200 Power **

1,046,450 ' 1,213,800 1,397,500 3,657,750 l Total ('By -

Activity) =========

• The current budget for Seabrook Station averages $10 million per month.

• • Electrical power service to Seabrook Station during the test program will all be purchased from PSdH.

l

h , 3.i; O',' ,

i

'T' 1

. Enclosure to NYN-87104

~

[ '

TABLE 2 is

- )r <

W.

U '

-Owner' Ownersh'ip Share-

,j, .

m :Public.Se'vice r Company of'New Hampshire . . .

35.56942%

,The United. Illuminating Company 17.50000 EUA; Power-Corporation-12.13240 Massachusetts Municipal Wholesale

'c t

' Electric; company- '

11.59340

!New England, Power. Company.) 9.95766 1

, 1Thel Connecticut. Light-and' Power

,..s , .. Company.' 4.05985

• Canal Electric Company 3 ~. 52317 .

MontaupiElectric: Company. 2.99989  !

New Hampshire Electric Cooperative, ,

.Inc. .

2.17391

, ~ Vermont Electric: Generation and [d

. Transmission. Cooperative,.Inc. O'.41259 ,

Taunton Municipal Lighting Plant' O.10034 ,f i

, Hudson Light and Power Department 0.07737o}

..., .3 100.00000%lj

.3 4

'd a

l 1

J 1

l

.i q

l 1

1 l

-- .- . . . _ _ _ _ _ _ _ _ . _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _. __ _ -. J

,) f s

., M

<n C3 .4 i

0 C*

- 4%:-

u 7

\

\

M D vs D

I c-

! E l

l

_ _ _ _ _ __ . . . _ _ .