ML20247E883

Safety Evaluation Supporting Amend 20 to License NPF-62

ML20247E883
Person / Time
Site:	Clinton
Issue date:	03/27/1989
From:	Office of Nuclear Reactor Regulation
To:
Shared Package
ML20247E862	List: ML20247E856 ML20247E873 ML20247E883
References
NUDOCS 8904030260
Download: ML20247E883 (4)

Text

_ _ _ _ _ _ _ _ _ _ - - ___ _ _

em

1. • o g UNtTED STATES i

,8 o NUCLEAR REGULATORY COMMISSION 5 't j WASHINGTON, D. C. 20655

.....}

SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION SUPPORTING AMENDMENT NO. 20 TO FACILITY OPERATING LICENSE NO. NPF-62 CLINTON POWER STATION, UNIT NO.1 ILLIN0IS POWER COMPANY DOCKET NO. 50-461

1.0 INTRODUCTION

By letter from D. P. Hall November 2,1988 (Ref.1), Illinoischanges

, license Power wereCompany (IP),fortothe proposed USNRC, Clinton dated Power Station (CPS) to support the proposed merger of Soyland Power Cooperative (Soyland) and Western Illinois Power Cooperative (WIPCO). Enclosed were copies of the most recent financial statements from Soyland and WIPCO, a copy of the agreement under which Soyland's merger with WIPC0 will take place, and a description of the financial structure of Soyland following its merger with WIPCO. In addition, copies of IP's most recent Securities and Exchange Commission 8-K,10-Q, and 10-K forms and copies of IP's, Soyland's and WIPCO's most recent Annual Reports were provided.

The requested changes to the license are administrative in nature, deleting references to WIPC0 in the Operating License for the Clinton Power Station.

The change will consolidate the interests that the current two minority owners of CPS have into one operating company. IP's ownership share in CPS will not change nor will IP's role as project manager.

2.0 EVALUATION - FINANCIAL QUALIFICATIONS The Staff's concern from a financial qualifications standpoint is that the merger not have a negative impact on the availability of the cooperative's share of all costs of safe plant operation and maintenance. The cooperatives have confirmed to the staff that the new, merged Soyland will continue to set its own rates for service as at present and that such rates are established at a level to cover all costs of service, including safe nuclear plant operation. The U.S. Rural Electrification Administration reviews the cooperative's rates to assure that they are sufficient to cover all of the cooperative's financial obligations, including the pro rata share of Clinton costs in this case.

The licensees state in their application that the merger of WIPC0 and Soyland (into Soyland) will not result in the transfer of the Clinton license to any entity not currently a Clinton licensee. They also commit that the new Soyland will assume full responsibility for all Clinton financial obligations currently being discharged by WIPCO. The proposed merger will not affect the ownership share of the lead licensee, Illinois Power Company, and will not i flf$h 0f5Nf5 m

affect its role as project manager. The new Soyland will continue to make payment of its combined pro rata share of all Clinton expenses to Illinois Power under the provisions of the existing joint ownership participation agreement.

In accordance with our review, we have concluded that the proposed merger will not have a negative effect on funds available for Clinton. The proposal provides for the full satisfaction of the combined Clinton obligations of Soyland and WIPCO. Therefore, the Staff's financial qualifications concerns regarding the propnsed merger are satisfied.

3.0 EVALUATION - ANTITRUST CONSIDERATIONS In its antitrust m yiew of nuclear plant licensees, the staff is concerned with activities by ifcensees or prospective licensees that may create or maintain inconsistencies with the antitrust laws. Both Soyland and WIPC0 have been reviewed by the staff during the operating license review of Clinton which was completed in February 1982. The initial operating license antitrust review of the two minority co-owners addressed each licensee as individual  ;

entities; however, the prospective combination of the two minority co-owners -

that would result from the proposed merger of Soyland and WIPCO was addressed by the staff in its " Updated Finding of No Significant Antitrust Changes" (Updated Review) in September of 1985. In its Updated Review, the staff concluded that, "The combination of the two systems should result in cost efficiencies normally associated with membership in an operating pool once Soyland becomes a generating entity, i.e., when Clinton comes on line.

The more efficient Soyland/WIPC0 has the potential to provide stronger competition in the Illinois bulk power industry, partic-ularly in its dealings with larger more fully integrated power systems." (UpdatedReview,p.18)

In its review of the amendment request, the staff considered whether or not the merger would spawn a new licensee with added market power (i.e., more than Soyland or WIPCO individually) and whether or not the new licensee would abuse any newfound market power. The staff addressed what, if any, competitive impact this new entity may have on the production and allocation of power and energy from Clinton as well as any corollary effect upon bulk power supply resulting from the changes in the new entity's competitive activities. Based upon the existing market structure and the projected structure of the Illinois electric bulk power market after the merger in question, as well as the performance and current market positions of each of the merging parties, it appears that the surviving power entity, Soyland Power Cooperative, will gain additional market power and be better able to compete in a market characterized by large, fully integrated electric power systems. In arriving at this conclusion, the staff considered the following factors:

l

1. WIPC0 has been financially unstable over the last several years and is not in a position to aggressively seek new customers on its own (i.e., a strong competitor is not being eliminated by the merger).

2. No instances of abuse of market power were attributed to Soyland or WIPC0 during the operating license antitrust review.

3. Soyland and WIPCO signed a joint pooling agreement in January of 1985. The pooling agreement combined personnel, electric power loads and power supplies of the two coops. Since the consummation of the pooling agreement, the two coops have operated as one entity. The Soyland/WIPC0 combination has strengthened the market position of new Soyland Power Cooperative in the Illinois electric bulk power market.

A. Illinois Power Company is still the major supplier of bulk power services in the area of the state served by Soyland and WIPCO.

Mureover, new Soyland will not be a major player in the electric bulk power market in a state that is presently served by four large privately owned electric utility systems -- Illinois Power Company, Central Illinois Public Service Company, Commonwealth Edison Company and Central Illinois Light Company.

5. Notice of the proposed merger and request for amendment was published in the Federal Register in November 1988 with a request for public comment. No comments were received.

We believe the combination of Soyland and WIPC0 into one entity will provide economies of production and administration to the surviving entity and also provide added impetus to the competitive process in the Illinois electric pcwer industry by strengthening new Soyland's position vis-a-vis more dominant power systems operating in the state. For the reasons discussed above, we believe the proposed amendment requesting approval of the merger of Soyland and WIPC0 and the deletion of WIPC0 from the Clinton operating license is acceptable from an antitrust point of view.

4.0 ENVIRONMENTAL CONSIDERATION

Pursuant to 10 CFR 51.21., 51.32, and 51.35, an environmental assessment and finding of no significant impact have been prepared and published in the Federal Register on March 27, 1989 (54 FR 12511). Based upon the environmental assessnent, the Comission has determined that the issuance of this amendment will not have a significant effect on the quality of the human environment and that no environmental impact statement need be prepared.

5.0 CONCLUSION

We have concluded, based on the considerations discussed above, that: (1) there is reasonable assurance that the health and safety of the public will not be endangered by operation in the proposed manner, and (2) such activities will be conducted in compliance with the Commission's regulations and the issuance of this amendment will not be inimical to the common defense and security or to the health and safety of the public.

1

l ..

m

6.0 REFERENCES

1. Letter from D.P. Hall (IP) to USNRC dated November 2,1988 "Clinton Power Station Request for Amendment to facility Operating License NPF-62."

Prinicipal Contributor: William Lambe, PTSB Dated: March 27,1989

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