ML20248M299

Safety Evaluation Approving Application Re Restructuring of Central Maine Power Co by Establishment of Holding Company

ML20248M299
Person / Time
Site:	Millstone
Issue date:	06/02/1998
From:	NRC (Affiliation Not Assigned)
To:
Shared Package
ML20248M280	List: ML20248M279 ML20248M286 ML20248M299
References
NUDOCS 9806150265
Download: ML20248M299 (3)

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SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION PROPOSED CORPORATE RESTRUCTURING OF CENTRAL MAINE POWER COMPANY DOCKET NO. 50-423 MILLSTONE NUCLEAR POWER STATION. UNIT 3

1.0 INTRODUCTION

. By application dated March 4,1998, Central Maine Power Company (CMP), through its counsel, Mr. Kevin P. Gallen, of Morgan, Lewis and Bockius, informed the U.S. Nuclear Regulatory Commission (NRC) that a corporate restructuring of CMP had been proposed that will result in the creation of a holding company (under the temporary name HoldCo) organized under the laws of the State of Maine. CMP and its existing nonutility subsidiaries will become wholly owned subsidiaries of HoldCo. CMP owns a 2.5 percent interest in the Millstone Nuclear Power Station, i Unit 3 (Millstone 3). Under the restructuring, the holders of CMP common stock will become the holders of common stock of the holding company on a share-for-share basis. After the restructuring, CMP will continue to be a public utility providing the same utility services as it did immediately before the reorganization CMP will continue to be a licensee of Millstone 3, and no direct transfer of the license or interests in the unit will result from the proposed restructuring.

Approval for the indirect transfer of control of the license resulting from the restructuring is being 1 sought from the NRC pursuant to Tit:e 10 of the Code of Federal Regulations (10 CFR) j Section 50.80. I Pursuant to 10 CFR 50.80, the Commission may approve the transfer of the control of a licer.se, l after notice to interested persons. ' Such action is contingent upon the Commission's i determination that the holder of the license following the transfer of control is qualified to hold the license and the transfer is ctherwise consistent with applicable provisions of law, regulations, and orders of the Commission.

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2.0 FINANCIAL QUALIFICATIONS ANALYSIS

According to CMP's application, folhwing the proposed restructuring, CMP will continue as a 2.5 percent owner of Millstone 3 and wi!! 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 markets. The Federal Energy Regulatory Commission will still regulate CMP's wholesale electric rates, and the Maine Public Utilities Commission (MPUC) will also maintain jurisdiction over the licensee's retail electric rates.

The application states that the proposed restructuring will have no impact on the revenues and expenses of CPM regarding the operation of Millstone 3 and that decommissioning funding will

j. not be affected. As an electric utility, CMP is exempt from further financial qualifications review, l

pursuant to 10 CFR 50.33(f). However, in view of the NRC's concern that restructuring 9906150265 990602 W PDR ADOCK 05000423 '

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can lead to a diminution of assets necessary for the safe operation and decommissioning of a i

' licensee's nuclear power plant, the NRC's practice has been to condition license transfer approvals upon a requirement that the licensee not transfer significant assets from the licensee to an affiliate without first notifying the NRC. This requirement assists the NRC in assuring that a j licensee will continue to maintain adequate resources to contribute to the safe operation and '

- decommissioning of its facility. Thus, the following should be made a condition of the Order approving the application regarding the proposed restructuring:

1 CMP shall provide the Director of the Office of Nuclear Reactor Regulation a copy

- of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from CMP to its proposed parent, or to any other affiliated )

company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding 10 percent (10%) of CMP's consolidated net utility plant, as recorded on CMP's books of accounts. )

3.0 TECHNICAL QUALIFICATIONS Nonheast Nuchar Energy Company (NNECO), a co-owner of Millstone 3, has exclusive authority I under the license to operate the facility. NNECO is not involved in the proposed restructuring of CMP, CMP confirmed in its application that there will be no change as a result of the proposed restructuring in the operational or management personnel of Millstone 3. Since the proposed restructuring does not involve any transfer of operational authority under the license to CMP or its proposed holding company, a review of its technical qualifications is not necessary.

4.0 ANTITRUST REVIEW

Section 105 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 opsrate a facility under Section 103. Although HoldCo may become the holding company of CMP, a licensee for Millstone 3, i.e., may indirectly acquire control of the license (to the extent held by CMP), CMP's application does not indicate that HoldCo will be performing activities for which a license is needed. Since approval of the appliodion would not involve the issuance of a license, the procedures under Section 105 regarding antitrust reviews do not apply, including the making of any "significant changes" determination..

5.0 FOREIGN OWNERSHIP. CONTROL. OR DOMINATION The licensee indicated in its application that after restructuring is implemented, HoldCo will become the sole holder of CMP outstanding common stock and that the current holders of CMP's common stock will become holders of the common stock of HoldCo on a share-for share basis. Thus, the previous holders of CMP common stock will own HoldCo common stock in the same proportion as they held CMP common stock. The application also states all of the directors and officers of HoldCo and CMP will be U.S. citizens. According to the application, CMP is not '

now, and will not be following the proposed restructuring, owned, controlled, or dominated by an

alien, foreign corporation, or foreign govemment. The staff does not know or have reason to L - believe otherwise.-

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6.0 CONCLUSION

S In view of the foregoing, the NRC staff concludes that the proposed restructuring of CMP by creation of a holding company will not adversc!y affect the financial qualifications of CMP with respect to the operation and decommissioning of Millstone 3. Also, there do not sppear to be any problematic antitrust or foreign ownership considerations that would result from the proposed restructuring. Thus, the proposed restructuring will not affect the qualifications of CMP as a holder of the license for Millstone 3, and the transfer of control of the license, to the extent effected by the proposed restructuring, is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission pursuant thereto. Accordingly, the NRC should approve the application regarding the proposed restructuring, subject to the condition discussed above conceming significant asset transfers.

Principal Contributor: A. F. McKeigney Date: June 2, 1998 l

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