ML20246F208
| ML20246F208 | |
| Person / Time | |
|---|---|
| Site: | Waterford  |
| Issue date: | 05/01/1989 |
| From: | LOUISIANA POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML20246B417 | List: |
| References | |
| NUDOCS 8905120167 | |
| Download: ML20246F208 (33) | |
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t UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION IN THE MATTER OF )
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LOUISIANA POWER & LIGHT COMPANY ) DOCKET NO. 50-382
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WATERFORD STEAM ELECTRIC STATION, UNIT 3 )
APPLICATION TO AMEND FACILITY OPERATING LICENSE No. NPF-38 TO AUTHORIZE SALE AND LEASEBACK TRANSACTION (S)
Louisiana Power & Light Company (LP&L) hereby applies in this Application for an amendment to Facility Operating License No. NPF-38 (License) to reflect one or more sale and leaseback transactions (for convenience of reference, the possible multiple sale and leaseback transactions and related documents and the participants in the transactions are herein referred to, other than in the language of the License amendment itself, in the singular; a brief summary of the transaction follows in Item 3) by LP&L with respect to a portion of its undivided ownership interest in the Waterford Steam Electric Station, Unit 3 (W3) in St. Charles Parish, Louisiana. LP&L is presently the sole owner and licensed operator of the W3 facility. Following the proposed sale and leaseback transaction, LP&L will continue in its present capacity with authority for, among other things, management, operation, 8905120167 090501 !.
PDR ADOCK 05000302 i P
PDR L
t service, maintenance, decommissioning, fuel procurement and disposal, repair and modification of W3. The License amendment-applied for herein' involves no significant hazards considerations.
- 1. Recuested Amendment LP&L currently owns and possesses a 100% undivided ownership' interest-in W3. LP&L proposes to enter into an i arrangement for-the sale and leaseback of a portion of its interest'in W3 as described below. LP&L specifically requests that the Director of the Office of Nuclear Reactor Regulation amend the License to reflect such transaction by adding a new paragraph 2.B.(6) as follows:
(a) LP&L is authorized to-transfer any portion of its 100% undivided ownership interest (up to and inclusive !
of $515 million of aggregate appraised value) in Waterford Steam Electric Station, Unit 3 (W3)'to equity investors, and at the same time to lease back from such equity investors such interests sold in the facility and receive from such equity' investors, l
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o consistent with LP&L's leases, the right to use and enjoy the benefits of the undivided ownership ]
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interests sold in the facility. The terms of the leases are for approximately 27 1/2 years subject to l
rights of renewal. Such sale and leaseback l 1
transactions are subject to the condition that the 1 I
equity investors and anyone else who may acquire an ;
interest under this transaction are prohibited from exercising directly or indirectly any control over (i)
W3, (ii) power or energy produced by W3 or (iii) the licensee of W3. Further, any rights acquired under l this authorization may be exercised only in compliance with and subject to the requirements and restrictions of this operating license, the Atomic Energy Act of 1954, as amended, and the Commission's regulations.
For purposes of this condition, the limitations of 10 C.F.R. S 50.81, as now in effect and as they may be subsequently amended, are fully applicable to the equity investors and any successors in interest to the i
l equity investors, as long as the License for W3 remains in effect.
I (b) LP&L is required to notify the NRC in writing {
prior to any change in (1) the terms or conditions o'f I
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t-any lease agreements executed as part of the above ;
authorized financial transactions or (ii) the existing property insurance coverages for W3, any of which changes as to (i) or (ii). would. materially alter the i
representations and conditions set forth in the i
Staff's Safety Evaluation Report attached to the NRC i letter dated [date to be supplied by the NRC). In i
addition, LP&L is required to notify the NRC of any action by equity investors or successors in interest to LP&L that may bave'an adverse effect'on the safe operation'of the facility.
- 2. Precedent The Nuclear Regulatory Commission (NRC) has previously approved sale and leaseback transactions involving nuclear generating plants. Approval for the first of such transactions was sought by Arizona Public Service Company on behalf of Public Service Company of New Mexico.(PNM) for a proposed sale and leaseback of a share of PNM's ownership interest in the Palo Verde Nuclear Unit 1. After reviewing the application, the NRC Staff concluded, for the reasons set out in NRC Policy Document SECY-85-367 (November 20, 1985), that the proposed transaction was acceptable to it.
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The Staff' concluded that because the lease expressl'y provided that the lessee, PNM, would_ continue'(1) to be licensed.to possess the facility, (2) to serve:as a participant under the facility operating agreement, and (3).to'have responsibility for:the payment of its' share of all taxes, insurance premiums, operating, maintenance and' decommissioning
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costs, Commission. approval of the proposed transaction did not present any public health and safety concerns. Id t at page.9. ;
i The Staff also concluded that because the " investor owner" 1
would not acquire any right to' electric power generated.at the j Palo Verde facility, and because the electricity generated by the facility would continue to be distributed in the same manner as set forth in the participation agreement relating to the facility, "the transaction does not present any antitrust considerations not previously. considered at the time of licensing. Thus, the Staff recommends that the Commission not require the licensing of the owner-trustee or the investors as part of the proposed. sale and leaseback transaction...." Id. l The Commission accepted the Staff's recommendation and on December 12, 1985 issued an order authorizing the requested amendment to PNM's operating license. See Arizona Public Service Company (Palo Verde Nuclear Generating Station, Unit 1), CLI-85-17, 22 NRC 875.(1985); see also 51 Fed. Reg. 1883 (1986).
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.I L-The NRC's conclusion that the proposed sale and leaseback transaction was acceptable under the Atomic Energy Act and the
,NRC' regulations was i
subject to the condition that the lessor and anyone else who may acquire an. interest.
under the transaction which is the subject of this application'are prohibited.from-exercising directly orLindirectly any control over the licensees of the Palo Verde nuclear facility._ For purposes of this condition, the limitations.in 10'C.F.R.
5 50.81, " Creditor Regulations,".as now in effect and as they may be subsequently amended are fully applicable to the named lessor and any successor in interest to that lessor as long as the license for the.Palo Verde nuclear facility remains in effect.
22 NRC at 876.1/ i Subsequent to its December 12, 1985 order authorizing the amendment to the Palo Verde operating license, the NRC issued several additional license amendments authorizing.similar sale and leaseback transactions concerning the Palo Verde facility. i 1/ Pursuant to 10 C.F.R. S 50.81, neither the owner trustee nor any equity investor nor any of their respective successors or assigns can take possession of the facility prior to either (1) the NRC issuing a license authorizing such possession or (2) ,
the NRC approving an appropriate license transfer subject to 10 j C.F.R. S 50.80.
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4 See, e,c., 51 Fed. Reg. 22247 (1986), 51 Fed. Reg. 30585 (1986), and 51 Fed. Reg. 47085 (1986).
In addition to approving sale and leaseback transactions involving the Palo Verde facility, the NRC has also approved sale and leaseback transactions with regard to at least three ,
other nuclear facilities. On March 16, 1987 the NRC approved an amendment to the license for the Perry Nuclear Power Plant I
Unit No. 1 (Perry Unit 1) in Lake County, Ohio, authorizing a sale and leaseback transaction by the Ohio Edison Company with regard to its thirty percent ownership interest in Perry Unit 1 )
and common facilities. See 52 Fed Reg. 9586 (1987). On September 23, 1987, the NRC issued a license amendment with respect to the license for the Beaver Valley Unit 2 Nuclear Facility to authorize sale and leaseback transactions by each of the four owners, Duquesne Light company, Ohio Edison Company, the Cleveland Electric Illuminating Company and the Toledo Edison Company. See 52 Fed. Reg. 37557 (1987).
More recently, the NRC approved an amendment to the operating license of the Grand Gulf Nuclear Station Unit 1 nuclear facility to authorize a sale and leaseback by System Energy Resources, Inc. (SERI), which is a sister company of LP&L, of a portion of SERI's ninety percent ownership interest
in Unit No. 1 of the Grand Gulf Nuclear Station (Grand Gulf 1). See 54 Fed. Reg. 1030 (1989).
As explained below, the proposed sale and leaseback transaction that forms the basis for this Application is substantially similar in all material respects to the transactions described in the Grand Gulf application. Page 3 of the LP&L Application-Declaration on Form U-1 filed with the Securities and Exchange Commission (SEC) on April 13, 1989 states that "[t]he terms of the proposed transactions are substantially similar to the recently completed transactions l involving the sale and leaseback by LP&L's associate company, System Energy Resources, Inc., of undivided ownership interests i in Unit No. 1 of the Grand Gulf Nuclear Electric Generating 1 Station...." The transaction described in this Application meets the conditions that the NRC and its Staff have found to be acceptable in previous transactions, and the License 1
amendment sought by this Application, and the conditions j therein, are the same in all material respects as those approved for the Grand Gulf transaction. )
- 3. Description of Proposed Transaction (s) 4 The Transaction: LP&L, a wholly-owned subsidiary of Middle
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South Utilities, Inc.~(MSU), a registered holding 1 company under the Public Utility' Holding Company Act of:1935, presently' owns a L3 00% undivided ownership interest in W3.. LP&L proposes to enter into a' transaction involving thefsale and leaseback pursuant.to a net lease of any portion.offits 100% undivided ownership interestEin W3-(up to and inclusive of $515 million of aggregate' appraised value). This proposal has previously been. submitted for' approval to the SEC and the Louisiana Public Service: Commission (LPSC).
More specifically, LP&L will sell a portion of its
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undivided ownership interest in W3 to a grantor trust under the terms of a participation agreement. The owner trustee of such trust, designated as such in a trust agreement between the, owner trustee and the equity invercor, will hold the title to the undivided ownership interest and will be the lessorfunder such trust (if there is more than one such trust created because of more than one institutional equity investor, the same owner trustee will serve as lessor under each such j The beneficiary of the trust will be the. equity j trust).
. investor. Pursuant to a lease the lessor, on behalf of such investor, will then lease the interest in W3 back to LP&L for an interim term of approximately 6 months and a basic term totalling approximately 27'1/2 years for stipulated rents. The i
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1 portion of LP&L's interest in W3 that is not acquired by the i l
owner trustee will be retained by LP&L.
Purchase Price: The sale of the undivided interest will be ]
at the fair market value of the undivided ownership interest as l l
established by an independent appraiser. The fair market value of the undivided ownership interest for which LP&L is seeking an equity commitment is expected to be $300-$350 million, and I
in no event more than $515 million.
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A portion of the lessor's cost is expected to be financed 1
by publicly offered or privately placed long-term bonds or notes issued by or on behalf of the lessor or possibly by a i l
special-purpose funding corporation. These debt issuances will be non-recourse to the lessor and equity investor and secured by a security interest in the undivided interest sold and an assignment of the lease and related documents. Interim financing may be provided by one or more domestic or foreign financial institutions under loans that will be non-recourse to the lessor or the equity investor.
l 4. Lease Term and Renewal Ontion: Concurrently with the sale by LP&L of the undivided interest, LP&L will enter into a lease with the owner trustee as lessor. It is contemplated that the
e lease will.have a basic term of approximately 27 1/2 years and may be preceded by an interim lease. term extending from/the closing date (scheduled-to be'on or.about June 30, 1989) to the commencement of the basic lease term.- Consistent with the estimated useful life of W3 as will be. determined by an independent appraiser, it'is contemplated the basic lease term will commence on December 30, 1989~and end on June 30, 2017.
LP&L can elect to renew the lease for certain renewal terms.
Interim rent will be payable on December 30, 1989 and basic rent will be payable semi-annually on December 30 and June'30 .
' i of each year, commencing June 30, 1990 and continuing until the 1 expiration of the basic lease term. Any renewal rent will also I
be paid semi-annually on December 30 and June 30.
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-Any such i rentals will in no event exceed a fair market rental.value.
LP&L will retain certain options to' purchase the undivided ownership interest, and will retain the right to effect an 1
early termination of the lease if LP&L's leasehold interest ]
becomes obsolete or uneconomic for LP&L's purposes. LP&L will have the option to purchase the undivided interest at specific times during the basic lease term, at the end of the basic lease term or at the end of any elected renewal term. LP&L also has the option, at any timeHon or after June .30, 1999, to terminate the lease and purchase the undivided ownership interest on a payment date if LP&L has made or'is planning or
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- g. s required to make a "significant' expenditure"'as defined in the transaction documents relating to the W3 sale and leaseback.
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- 5. . Lease Provisions:'.Because it is.a net lease, LP&L, as to the lessor, will continue to have all the responsibility.it has presently for management, operation, service, maintenance, decommissioning, fuel procurement and disposal, repair.and modification of W3 so that its condition and operating efficiency will be maintained and preserved in all.natorial' respects in accordance with prudent utility practice. In addition to these operation and maintenance costs, LP&L will be i
responsible for insurance, taxes, assessments'and other charges and liabilities relating to W3, including, without limitation, l decommissioning and modification. LP&L will have full use of the undivided ownership interest and the lessor will' warrant that, as long as the lease is not declared : to be in defa' ult, LP&L's use and possession of the undivided ownership interest j
'l will not be disturbed by the lessor or any person claiming by j or through the lessor. Each of the other parties to the transaction, including the equity investor, will acknowledge such right of quiet enjoyment.
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- 6. Oneratina Acreement t
LP&L presently owns, manages and operates W3. LP&L is the I i
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holder of a facility. operating'. license for W3,:.No. NPF-38, NRC-Docket No. 50-382, issued'by'the_NRC in connection.with'.LP&L's-ownership'and operation of W3. Because LP&L is the sole owner- l and operator of W3, there is no operating agreement in effect-for the facility. i On July 1, 1988 LP&L' filed'with the NRC an application,to l amend Facility Operating License No.'NPF-38 in order to effect the required regulatory approval by the NRC for'the transfer of
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operation (not ownership) of W3 to SERI utilizing an operating.
agreement between LP&L and SERI. On October '7, 1988 LP&L filed
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an application with the LPSC requesting the LPSC to approve q such operating agreemenc between LP&L and SERI by which SERI ;l would assume the management and operation, but not the .i .
1 ownership, of W3. Also on October 7, 1988, LP&L' filed an ex. J parte application with the City Council of the City of New Orleans.concerning such SERI-LP&L operating agreement that ]
requested the council to state its nonopposition to LP&L's entering into such operating agreement. These matters are currently pending.
7.. Reasons for Pronosed Transaction: LP&L proposes to use the net proceeds from the sale of the undivided ownership interest for the redemption, in whole or in part, prior to their l
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respective maturities, of one or more series of LP&L's outstanding first mortgage bonds at par pursuant to the I provisions of the LP&L mortgage and deed of trust, as I
supplemented and amended, that deal with the redemption of bonds with the proceeds of released property, and for other i
general corporate purposes. The series of LP&L's first 1 mortgage bonds currently being considered for whole or partial redemption include, but are not limited to, $35 million of the 15 1/4% series due December 1, 2014; $55 million of the 14 3/4% I series due November 1, 2014; $100 million of the 16% series due I
August 1, 1994; $100 million of the 13 1/4% series due March 1, i 2013; $50 million of the 13% series due September 1, 2013; and .
$100 million of the 12% series due March 1, 1993.
LP&L believes that the proposed sale and leaseback transaction will produce greater cost savings than might be i
achieved were LP&L to refund its outstanding high interest rate ;
first mortgage bonds by redemption using the proceeds of the 1 issuance and sale of other debt securities. Specifically, in a refunding situation, LP&L's outstanding high interest rate j
.1 first mortgage bonds would only be redeemable upon payment of ;
substantial redemption premiums (currently ranging from 2.86% j i
to 12.71% of the principal amount of the bonds, as to those i series specified above) and certain of such bond redemptions
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I would currently be precluded-until: expiration of related 4 i
financial no-call periods later'in 1989. Accordingly, LP&L believes that its proposed sale and. leaseback transaction, when viewed in' terms of other available. alternatives,'will permit' LP&L to achieve greater cost savings. .
- 8. Schedule for Sale and' Leaseback: LP&L currently. intends.to consummate the sale and leaseback' transaction on or about June !
. 3 0, 1989. Accordingly, LP&L respectfully requests the'NRC'to expeditiously publish the. required notice and to complete the-necessary review in order to issue the requested amendment in a timely fashion so as to permit the closing to occur on or about June 30, 1989. LP&L will promptly provide any additional information or assistance that the NRC Staff may require. LP&L j anticipates that all other necessary regulatory approvals will !
l be completed in time to meet the proposed June 30, 1989 approximate closing date.
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- 9. Sunnortinct Information: Neither the owner trustee nor the equity investor has been identified an of the time of filing this Application. Upon determination of an owner trustee and L the equity investor, LP&L will, as promptly as possible, provide to the NRC the information required by 10 C.F.R.
l 6 50.33(a) through (d). Upon the acceptance by LP&L of a l
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. I proposal from'an equity investor, LP&L will, as promptly as .
possible, provide.the NRC with'(1) the purchase price of the-I portion of W3 in respect of which such equity investor will make its initial commitment to invest and (2) the most recent publicly available annual and interim financial statements for such' equity' investor. i l
l 10. Antitrust Considerations: Because discussions with potential equity investorsLare continuing, the identity of the actual equity investor who will participate in.the proposed transactions is not yet known. However, affiliates and subsidiaries of electric utilities (singly or in joint venture with other. equity. investors and/or financial intermediaries) .;
are'an important potential source of equity investment for a 'l sale and leaseback transaction. . Participation by affiliates j and subsidiaries of electric utilities as an equity investor !
I therefore is possible. Nevertheless,-such participation would i
not present any antitrust consideration not previously l addressed in connection with issuance of the W3 operating l license.
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I Any potential equity investor, including one that might be 1
an affiliate and subsidiary of an electric utility, will be j 1
passive. . So long as the lease is in effect, any equity d) l i
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investor will_not have, by virtue of the lease, any right to W3' capacity orJassociated energy, and such capacity and energy
.will be utilized in the same manner as' is presently the case. !
Moreoverb participation by an equity investor will'have no j effect~on the operation of the plant or.the generation and transmission of' electricity.
In reviewing.the Palo Verde = sale and leaseback transactions, the NRC Staff concluded.that where, as here, the equity investor does not acquire the right to electric power generation at the facility, and where the electricity will continue to be distributed in the same manner as though no sale and leaseback transaction had'been' consummated, the' transaction does not present new antitrust considerations. SECY-85-367, at
- 9. The Staff made a similar determination with respect to the Perry Unit 1 and Grand Gulf 1 sale and leaseback transactions.
See Safety Evaluation Report, Amendment 2 to License No.
NPF-58, Docket No. 50-440, at pages 2-3 (March 16, 1987), and Safety Evaluation Report, Amendment 54 to License No. NPF-29, Docket No. 50-416, at pages 2-3 (December 19, 1988). LP&L concludes that no further antitrust review is therefore required in the present case.
- 11. Zoreion Ownershin Considerations: Because the equity I
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investor is as yet unknown, it is possible that such equity 1 investor may be " owned," " controlled" or " dominated" by a foreign corporation as those terms are used in Section 103(d) of the Atomic Energy Act. With regard to the Palo Verde sale and leaseback transaction, the NRC Staff took the position that if no license were required for the " investor owners" in the transaction, the prohibition of Section 103(d) of the Act need not be addressed. The Staff also noted that even if a license were required, Section 103(d) would not bar the Palo Verde sale and leaseback transaction, because the words " owned,"
" controlled" or " dominated" refer to situations in which the will of one party is subjugated to the will of another and the congressional intent in enacting Section 103(d) was to prevent situations in which an alien would have the power to control the actions of the licensee. The Staff specifically concluded l on the basis of the facts in Palo Verde that "no such relationship exists under the proposed transaction by ownership or otherwise." SECY-85-367 at 9-10, footnote 7. The December ;
i 12, 1985 order issued by the Commission tacitly accepted the l Staff's position with regard to foreign ownership l
considerations. See Palo Verde, 22 NRC 875. The Grand Gulf license amendment involved comparable conditions and did not include the licensing of the equity investors.
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LP&L respectfully submits that, for the same reasons underlying the decisions in Palo Verde and Grand Gulf, the potential for foreign control of an equity investor in the instant case should not prohibit the proposed License amendment. Under the proposed sale and leaseback transaction in this Application, LP&L would not be subject to the will of any equity investor. Indeed, the proposed license conditions l make it clear that the equity investor will have no power to l influence, either directly or indirectly, LP&L's actions with respect to W3.2/
- 12. Responsibility for Manacement of Waterford 3: As l
explained above, the sale and leaseback transaction proposed in this Application and License amendment will not change in any way the responsibilities, obligations or authority of LP&L as the exclusive licensee under Facility Operating License No. l l
NPF-38 authorized to operate and maintain the plant. LP&L is and will remain solely responsible to the NRC for the proper operation and maintenance of the plant. i
, 2/ Of course, any foreign investors would be subject to Section 103(d) if, upon expiration or termination of the lease, LP&L ;
did not repurchase the undivided ownership interest and the equity investor then sought approval to operate the plant.
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4 In compliance with the requirements of 10 C.F.R. S 50.81, only LP&L (or LP&L and SERI if the proposed operating agreement is approved) will be authorized to " possess" the facility.
Neither the owner trustee nor the equity investor will be able to (1) restrict or inhibit compliance with the safety, security, or other regulations of the Commission, (2) control the use or disposal of nuclear fuel, or (3) have any right to use or direct the use of W3 or any other part of W3. Although certain legal title will reside with the owner trustee, and the owner trustee and the equity investor will have certain rights with regard to entry onto the W3 property, the control, supervision and responsibility for the operation of W3 will be unchanged by the sale and leaseback transaction.
- 13. Environmental Considerations: The proposed conveyance of an undivided ownership interest in W3 to the owner trustee and-
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the receipt by LP&L from the owner trustee of a lease covering j such interest in W3 involves no design or physical change to the plant, no change in the trar ission or other associated facilities, no change in types or amounts of effluents, no change in the potential for accidental releases, no change in the authorized power level of W3, and no change to individual or cumulative occupational exposures. Accordingly, approval of LP&L's requested License amendment does not present any new or unreviewed environmental issues.
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- 14. No Significant Hazards Considerations: LP&L's proposed License amendment would revise Facility Operating License No. i NPF-38 to reflect a sale and leaseback transaction by LP&L as previounly described. The License amendment would be subject j j
to the condition that neither the owner trustee.nor the equity l investor could exercise any control, either directly or j 1
indirectly, over LP&L. LP&L would continue its present ]
responsibility as the s: ole licensee authorized to operate and maintain the plant and would remain exclusively responsible for all safety decisions. There would be no physical change to the j 1
plant, no change to operating procedures, and no change to the operating organization or personnel as a result of the sale and leaseback transaction described in this Application. As such, j the proposed change involves no significant hazards considera-tions. The same result would obtain if, and when, the proposed l SERI-LP&L operating agreement were approved. )
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l In the context of the three standards for the issuance of a license amendment contained in 10 C.F.R. G 50.92, LP&L respectfully shows:
(a) the proposed amendment to the License to reflect the sale and leaseback transaction does not involve a significant increase in the probability or consequences of an accident
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previously evaluated.--The proposed amendment would not result in any physical changes to the facility, and'all Operating )
i Procedures,. Limiting Condit' ions for Operation, Limiting Safety )
System settings, .and Safety Limits as specified in the Technical Specifications to Facility Operating License No.
NPF-38 will remain unchanged.- LP&L.will continue to be responsible for tho' operation:of the plant and there will be no changes made in the operating organization or the personnel as a result of the proposed sale and leaseback transaction.
(b) The proposed amendment to authorize a sale and leaseback transaction will not create the possibility of a new or different kind of accident from any; accident previously !
i evaluated. The design and design-bases of W3 remain. !
unchanged. Accordingly, the current plant safety analyses will i
remain complete and accurate when addressing the licensing j bases and in analyzing plant response and consequences.
Additionally, the Operating Procedures, Limiting conditions for Operation, Limiting Safety System Settings, and. Safety Limits as set out in Technical Specifications for Facility Operating License NPF-38 will remain unchanged. Thus, the plant i I conditions for which the design bases and accident analyses were performed continue to be valid.
(c) The proposed amendmentaof the License to authorize a j i
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1 sale andsleaseback transaction will not involve a'significant i d
reduction in the margin of safety. The' plant safety margins l d
for W3.are established through Limiting. conditions for .j operation,. Limiting Safety System Settings,-and Safety Limits, as contained in the Technical Specifications ~for Facility
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Operating License NPF-38. The proposed License amendment will l effect no. change in either the physical design of.the plant or any of th'ese safety margins as specified in the Technical Specifications, and there will,'accordingly, be no' change to any of the margins of safety.
'As a result of the above analysis,'LP&L concludes that the proposed-License amendment complies with'tt)e standards contained in 10 C.F.R. 5 50.92(c).and, therefore, the amendment does not involve a significant hazards consideration.
Summary . ;
The proposed sale and leaseback transaction described in this Application is substantially the same in all material 1
respects as the transactions previously approved by the l Commission with respect to Grand Gulf 1. The basic term of the lease is approximately 27 1/2 years, subject to certain renewal 1 l options, and LP&L has a fair market value purchase option at
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the end of the basic lease term, each renewal term, and certain other purchase options.
In the transaction documents to be developed, LP&L, as to the lessor and equity investor, will continue to have all the responsibility LP&L currently exercises for management, operation, service, decommissioning, fuel procurement and disposal, repair and modification of W3 so that its condition and operating efficiency will be maintained and preserved in all material respects in accordance with prudent utility practice. LP&L will have full use of the undivided ownership interest and the lessor will warrant that, as long as the lease is not declared to be in default, LP&L's use and possession of the undivided: ownership interest will not be interrupted by the lessor or any person claiming by or through the lessor. Each of the other parties to the transaction, including the equity investor, will acknowledge such right of quiet enjoyment. All rights acquired by the lessor and equity investor, their 1
respective successors and assigns, in and to W3 may, in each I case, be exercised only in coinpliance with and subject to the ,
l same requirements and restrictions as would apply to LP&L pursuant to the provisions of the applicable Commission license, the Atomic Energy Act, and the Commission's regulations. The lessor and equity investor will acknowledge i
in the transaction documents that their taking possession of any part of W3 will be subject to all applicable requirements concerning the issuance of a license by the Commission authorizing such possession or the transfer of the Commission license authorizing LP&L to possess an interest in W3 upon application for a transfer of such license as required by applicable law.
As shown by the foregoing discussion, LP&L's application for an amendment to its License to authorize a sale and leaseback transaction is similar in all material respects to that in the Grand Gulf 1 matter. The basic economic considerations that motivated the Grand Gulf 1 sale and leaseback transactions also motivated LP&L's request for a License amendment in this Application. The proposed sale and leaseback transaction will result in substantial long-term savings as the result of the lower cost of capital made available by the transaction.
WHEREFORE, LP&L requests that the Director of Nuclear Reactor Regulation grant the License amendment requested in I Section 1 hereof or in such other form and/or subject to such other conditions in addition to those stated in such Section 1 as the Director may deem appropriate.
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4 ATTACHMENT A NPF-38-96
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- p. f m.
G.
The issuance of this license will not be inimical to the common defense and security or to the health and safety of the public; H. After weighing the environmental, economic, technical, and other benefits of the facility against environmental and other costs, and after considering available alternatives, the issuance of the Facility Operating License No. NPF-38, sub.iect to the conditions for protection of the environment set forth in the Environmental Protection Plan attached as Appendix B, is in accordance with 10 CFR i
' Part 51 of the Commission's regulations and all applicable requirements have been satisfied; and I. The receipt, possession, and use of source, byproduct, and special nuclear material as authorized by this license will be~in accordance {
with the Commission's regulations in 10 CFR Parts 30, 40 and 70, except that an exemption to the provisions of 10 CFR 70.24 is granted as described in Supplement No. 8 to the' Safety Evaluation Report. This exemption is authorized under 10 CFR 70.24(d) and will not endanger life or property or the conmon defense and security and is otherwise -
in the public interest.
- 2. Pursuant to approval by the Nuclear Regulatory Commission at a meeting on March 15, 1985, the license for fuel loading and low power testing, ;
License No. NPF-26, issued on December 18, 1984, is superseded by Facility !
Operating License No. NPF-38 hereby issued to the Louisiana Power and Light Company (the licensee) to read as follows:
A. This license applies to the Waterford Steam Electric Station, Unit i 3, a pressurized water reactor and associated equipment (the facility), '
owned by Louisiana Power and Light Company (the licensee). The facility is located on the licensee's site in St. Charles Parish, Louisiana and is described in the Louisiana Power and Light Company Final Safety Analysis Report as amended, and the Environmental Report as amended.
B.
Sub,iect to the conditions and requirements incorporated herein, the Commission hereby licenses Louisiana Power and Light Company (LP&L):
- 1. Pursuant to Section 103 of the Act and 10 CFR Part 50, to possess, use and operate the facility at the designated location in St. Charles Parish, Louisiana in accordance with the procedures and limitations set forth in this license;
- 2. Pursuant to the Act and 10 CFR Part 70, to receive, possess, and use at any time special nuclear material as reactor fuel, in accordance with the limitations for storage and amounts required for reactor operation, as described in the Final Safety Analysis Report, as supplemented and amended throuah Amendment 36; l .
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.e.
- 3. Pursuant to the Act and 10 CFR Parts 30, 40, and 70, to receive, '
possess, and use at any time any byproduct, source and special nuclear material as sealed neutron sources for reactor startup, J
sealed sources for reactor instrumentation and radiation monitoring equipment calibration, and as fission detectors in amounts as required; 4
Pursuant to the Act and 10 CFR Parts 30, 40, and 70, to receive, ;
possess, and use in amounts as required any byproduct, source or j special nuclear material without restriction to chemical or 1 physical form, for sample analysis or instrument calibration or i
associated with radioactive apparatus or components; and j
- 5. Pursuant to the Act and 10 CFR Parts 30, 40, and 70, to possess, '
but not separat'e, such byproduct and special nuclear materials as may be produced by the operation of the facility authorized j herein.
]
C. This license shall be deemed to contain and is subject to the l conditions specified in the Commission's regulations set forth in !
10 CFR Chapter I and is subject to all applicable provisions of the I Act and to the rules, regulations and orders of the Comission now or hereafter in effect; and is subject to the additional conditions )
specified or incorporated below: i
)
- 1. Maximum Power Level "
i The licensee is authorized to operate the facility at reactor ;
core power levels not in excess of 3390 megawatts thermal l (100% power) in accordance with the conditions specified herein l and in Attachment 1 to this license. The items identified in 1 Attachment 1 to this license shall be completed as specified.
Attachment 1 is hereby incorporated into this license.
- 2. Technical Specifications and Environmental Protection Plan The Technical Specifications contained in the attached Appendix A and the Environmental Protectinn Plan contained in the attached Appendix B, are hereby incorporated in this license.
The licensee shall operate the facility in accordance with the Technical Specifications and the Environmental Protection Plan.
- 3. Antitrust Conditions The licensee shall comply with the antitrust conditions in l Appendix C to this license.
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6 ATTACfIMENT B NPF-38-96 i
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The issuance of this license will not be inimical to the common defense and security or to the health and safety of the public; l H. After weighing the environmental, economic, technical, and other l benefits of the facility against environmental and other costs, l and af ter considering available alternatives, the issuance of the Facility Operating License No. NPF-38, sub.iect tn the conditions for prntection of the environment set forth in the Environmental Protection Plan attached as Appendix B, is in accordance with 10 CFR Part 51 of the Commission's regulations and all applicable requirements have been satisfied; and
- 1. The receipt, possession, and use of source, byproduct, and special nuclear material as authorized by this license will be in accordance with the Commission's regulations in 10 CFR Parts 30, 40 and 70, except that an exemption to the provisions of 10 CFR 70.24 is granted as described in Supplement No. 8 to the Safety Evaluation Report. This exemption is authorized under 10 CFR 70.24(d) and will not endanger life or property or the common defense and security and is otherwise in the public interest.
2.
Pursuant to approval by the Nuclear Regulatory Commission at a meeting on March 15, 1985, the license for fuel loading and low power testing, License No. NPF-26, issued on December 18, 1984, is superseded by Facility a Operating License No. NPF-38 hereby issued to the Louisiana Power and Light Company (the licensee) to read as follows:
A. This license applies to the Waterford Steam Electric Station, Unit 3, a pressurized water reactor and associated equipment (the facility), I, owned by Louisiana Power and Light Company (the licensee). The l facility is located on the licensee's site in St. Charles Parish, j Louisiana and is described in the Louisiana Power and Light Company i Final Safety Analysis Report as amended, and the Environmental Report as amended.
B.
Subject to the conditions and requirements incorporated herein, the Commission hereby. licenses Louisiana Power and Light Company (LP&L):
{
- 1. Pursuant to Section 103 of the Act'and_10 CFR Part 50, to i
i possess, use and operate the facility at the designated location ;
in St. Charles Parish, Louisiana in accordance with the procedures .j and limitations set forth in this license;
- 2. Pursuant to the Act and'10 CFR Part 70, to receive, possess, and use at any time special nuclear material as reactor fuel, in accordance with the limitations for storage and amounts 3 j
required for reactor operatinn, as described in the Final '
Safety Analysis Report, as supplemented and amended throuch Amendment 36; i
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- 3. Pursuant to the Act and 10 CFR Parts 30, 40, and 70, to receive, possess, and use at any time any byproduct, source and special nuclear material as sealed neutron ' sources for reactor startup, l sealed sources for reactor instrumentation and radiation !
monitoring equipment calibration, and as fission detectors in '
amounts as required; 4
Pursuant to the Act and 10 CFR Parts 30, 40, and 70, to receive, possess, and use in amounts as required any byproduct, source or special nuclear material without restriction to chemical or {
1 physical form, for sample analysis or instrument calibration or associated with radioactive apparatus or compenents; and S.
Pursuant to the Act and 10 CFR Parts 30, 40, and 70, to possess, l but not separat'e, such byproduct and special nuclear materials as may be produced by the operation of the facility authorized herein.
M- fo .
( twb 7 e xT Faom Fe i \ e m o s a c e r sl C. This license shall be deemed to contain and is subject to the conditions specified in the Comission's regulations set forth in 10 CFR Chapter I and is subject to all applicable provisions of the Act and to the rules, regulations and orders of the Comission now or hereafter in effect; and is subject to the additional conditions specified or incorporated below:
- 1. Maximum Power Level The licensee is authorized to operate the facility at reactor core power levels not in excess of 3390 megawatts thermal (100% power) in accordance with the conditions specified herein and in Attachment 1 to this license. The items identified in Attachment 1 to this license shall be completed as specified.
Attachment 1 is hereby incorporated into this license.
- 2. Technica_1 Specifications and Environmental Protection Plan The Technical Specifications contained in the attached Appendix A and the Environmental Protection Plan contained in the attached Appendix B, are hereby incorporated in this license.
The licensee shall operate the facility in accordance with the Technical Specifications and the Environmental Protection Plan.
- 3. Antitrust Conditions The licensee shall comply with the antitrust conditions in Appendix C to this license.
, j o
(a) LP&L is authorized to transfer any portion of its 100%
undivided ownership interest (up to and inclusive of $515 million of aggregate appraised value) in Waterford Steam Electric Station, Unit 3 (W3) to equity investors, and at the same time to lease back from such equity investors such interests sold in the facility and receive from such equity investors, consistent with LP&L's leases, the right to use and enjoy the benefits of the undivided ownership interests sold in the facility. The terms of the leases are for approximately 27 1/2 years subject to rights 1
of renewal. Such sale and leaseback transactions are subject to )
the condition that the equity investors and anyone else who may acquire an interest under this transaction are prohibited from exercising directly or indirectly any control over (i) W3, J
(ii) power or energy produced by W3 or (iii) the licensee of W3.
Further, any rights acquired under this authorization may be exercised only in compliance with and subject to the requirements and restrictions of this operating license, the Atomic Energy Act !
of 1954, as amended, and the Commission's regulations. For purposes of this condition, the limitations of 10 C.F.R. 0 50.81, as now in effect and as they may be subsequently amended, are fully applicable to the equity investors and any successors in l l
interest to the equity investors, as long as the License for W3 I remains in effect.
( (b) LP&L is required to notify the NRC in writing prior to any change in (i) the terms or conditions of any lease agreements i
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executed as part of the above authorized financial transactions or (ii) the existing property insurance coverages for W3, any of which changes as to (i) or (ii) would materially alter the representations and conditions set forth in the Staff's Safety Evaluation Report attached to the NRC letter dated [date to be supplied by the NRC]. In addition, LP&L is required to notify the NRC of any action by equity investors or successors in interest to LP&L that may have an adverse effect on the safe operation of the facility.
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