ML23047A364
| ML23047A364 | |
| Person / Time | |
|---|---|
| Site: | Nine Mile Point  |
| Issue date: | 02/15/2023 |
| From: | O'Connor B Long Island Lighting Co, Long Island Power Authority |
| To: | Richard Guzman NRC/NRR/DORL/LPL1 |
| References | |
| Download: ML23047A364 (1) | |
Text
LIPA Long Island Power Authority Bobbi O'Connor General Counsel February 15, 2023 Via Email ATTN: Richard Guzman U.S. Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Rockville, MD 20852
Subject:
Request for Threshold Determination in re Planned Merger of the Long Island Power Authority and Long Island Lighting Company d/b/a LIPA
Dear Mr. Guzman:
The Long Island Power Authority (the "Authority") and its operating subsidiary, the Long Island Lighting Company d/b/a LIPA ("LILCO d/b/a LIPA") submit this letter requesting a Threshold Determination that, through a 1997-1998 review and authorization of the Authority's acquisition of LILCO d/b/a LIPA, the Nuclear Regulatory Commission ("NRC" or "Commission") already has considered and approved a transfer of control to the Authority over the 18% ownership and possessory interest in Nine Mile Point 2 ("NMP2"). 1 Therefore, the Authority and LILCO d/b/a LIPA request confirmation that a planned dissolution of LILCO d/b/a LIPA through merger with the Authority, through which the 18% ownership interest in NMP2 will be held by the Authority as the surviving entity, would not constitute a transfer of control requiring prior written consent pursuant to Section 184 of the Atomic Energy Act of 1954 and 10 C.F.R. § 50.80. Subject to the requested Threshold Determination, the Authority and LIPA plan to file a request for a conforming amendment of the Nine Mile Point 2, Renewed Facility Operating License No. NPF-69 ("Renewed FOL No. NPF-69")) under 10 C.F.R. § 50.90 in order to delete the co-licensee name "Long Island Lighting Company" and rename the co-licensee as the "Long Island Power Authority."
1997-1998 NRC Review and Approval of the Acquisition of LILCO by the Authority and Current Management of the 18% Minority Ownership Interest in NMP2, Through LILCO d/b/a LIPA, as the Wholly-Owned Operating Subsidiary of the Authority In 1997, the Long Island Lighting Company ("LILCO") informed the Commission that the Authority planned to acquire LILCO by purchasing its stock through a cash merger and resulting in LILCO becoming an operating subsidiary of the Authority. 2 At the time ofthis merger, LILCO owned and operated an electric transmission and distribution system on Long Island, a retail electric business on Long Island and an 18% share of NMP2. Further, it was explained that, upon 1
Nuclear Regulatory Commission, Direct License Transfer Order (December 29, 1997), ADAMS Accession No.
9801140014 ("Direct License Transfer Order").
2 Request for NRC Consent to LILCO's Indirect Transfer of Control Over its Interest in Nine Mile Point Nuclear Power Station, Unit 2, Docket No. 50-410, Operating License No. NPF-69 at 2-4 (Sept. 8, 1997) (Adams Accession No. ML I 7059B705).
333 Earle Ovington Boulevard
- Suite 403
- Uniondale, New York 11553
- www.lipower.org 3752203.2 045934 DD
acquisition, LILCO would be a wholly-owned operating subsidiary of the Authority and would conduct business as "LIPA. " 3 After review and public conunent, the NRC issued an order approving the application and transfer of control over the 18% minority ownership share in NMP2 to the Authority via its acquisition ofLILCO. 4 In particular, the Conunission explained that Staff review had determined that "the transfer of control of the license for NMP2, to the extent effected by the acquisition [by the Authority] and restructuring [of LILCO as an operating subsidiary of the Authority], is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission. " 5 Today, the NMP2 facility has two co-licensees: Constellation Energy Generation LLC
("Constellation") owns 82% of NMP2 and the remaining, minority 18% interest is owned by LILCO d/b/a LIP A. Constellation has exclusive responsibility and control over the physical possession, operation and maintenance of the facility. 6 As the parent to its wholly owned operating subsidiary, the Authority already exercises financial and operational control over LIL CO d/b/a LIP A, including the management of the 18% ownership interest in NMP2. All staffing of LILCO d/b/a LIPA is comprised of Authority employees, with control and oversight ofLILCO d/b/a LIPA by the Authority's Board of Trustees. Further, this control and oversight has included the exercise and fulfillment of rights and obligations, as well as assumption of liabilities, arising from holding the 18% ownership share ofNMP2.
Planned Dissolution of LILCO d/b/a LIPA Through Merger with the Authority After an extensive review, the Authority's Board of Trustees has determined that overall operations could be further simplified by consolidating the Authority and its operating subsidiary, LILCO d/b/a LIPA, into one merged entity, with the Authority as the surviving entity. Although the date of the transaction has not been set, the Authority is working towards consununation as early as possible in 2023.
The planned transaction involves an organizational restructuring by which the Authority's wholly-owned operating subsidiary, LILCO d/b/a LIPA, will be legally dissolved. The anticipated form of dissolution is through a merger of LILCO d/b/a LIPA with its parent entity, the Authority. As the surviving entity, the Authority will hold the 18% ownership and possessory interest in NMP2.
The dissolution of LILCO d/b/a LIPA with the Authority holding the 18% ownership and possessory interest for NMP2 does not result in a change in ownership or control ofNMP2. First, as previously noted, Constellation has exclusive responsibility and control over the physical possession, operation and maintenance of the NMP2. As such, the merger will not result in any changes in licensed activities, the management of the facility, or in the day-to-day operation of the facility. Payment of facility operating expenses in direct proportion to the 18% ownership will continue to be made by the Authority. In addition, the Authority will assume all liabilities currently 3
Id. at 9-14.
4 Direct License Transfer Order at 2.
s Id.
6 The current terms for the management and operation ofNMP2 are set forth in Section 3.1 of the Second Amended and Restated Operating Agreement for Nine Mile Point Unit No. 2 Nuclear Generating Facility between Nine Mile Point, its affiliate Exelon Generation Company, LLC ("ExGen") and Long Island Lighting Company (d/b/a/ LIPA), executed on July 19, 2019, as amended on February I, 2022.
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held by LILCO d/b/a LIPA, including any liabilities directly related to the 18% ownership interest inNMP2.
NRC Precedent Confirming Merger of Parent and Subsidiaries Does Not Transfer Control Requiring Prior Written Consent The NRC has previously found that "as possessors of the authority that accompanies 100%
ownership of a corporation, the parent company and its owners and senior management necessarily could exercise, if they so desired, the ultimate decisional authority on all matters pertaining to the use of the license. " 7 Absent restrictions on the authority of the parent to oversee and manage the decisions of its operating subsidiary, the NRC has found that a parent has control over the operating subsidiary. 8 In line with this precedent, the NRC has recognized and already reviewed and approved the exercise of control, by the Authority, over the 18% ownership interest in NMP2.
With prior consent for the exercise of control by the Authority already granted, the planned merger between the Authority and its operating subsidiary, LIL CO d/b/a LIPA, does not result in a change in the control over the 18% minority interest in NMP2.
In a similar vein, the Commission has addressed a threshold determination with respect to the merger and dissolution of one subsidiary into another subsidiary entity, each holding minority interests. 9 In this threshold determination, the licensed operator of a decommissioned pressurized water reactor in Wiscassett, Maine, the Maine Yankee Atomic Power Company ("MYAPC"),
requested confirmation as to the effect of a merger/dissolution reorganization for two subsidiaries with minority interests. 10 The proposed merger involved the merger of one subsidiary minority interest holder, MPS, holding a 7% ownership interest with and into a second minority interest holder-Bangor Hydro Electric Company (BHE) holding a 5% ownership interest. 11 The surviving entity, BHE, would then hold a 12% minority interest. The NRC relied upon the finding, within the Staff Evaluation, that such a merger/dissolution transaction involving a minority interest would not constitute a transfer of control requiring prior consent under 10 C.F.R. § 50.80. 12 In making this decision, the Staff Evaluation emphasized that the overall minority interest remained the same (i.e., 12%) and that "no changes in licensed activities, the management of the facility, or in the day-to-day operation of the facility will result from the proposed acquisition." 13 Further, the Staff Evaluation noted that operating expenses would continue to be paid in accordance with the ownership interests and current operating expenses (in that case decommissioning and spent fuel management costs) would be paid by the surviving entity. 14 While shifting from a merger of two subsidiaries to a parent/operating subsidiary merger, the overall inquiry into the effect of the merger remains applicable to the planned merger between the 1
See Evaluation of and Threshold Determination on the Share Purchase Agreement Between Toshiba Corporation and Brookfield WEC Holdings LLC at 4-5 Adams Accession No. ML18073A224 (Mar. 18, 2018) quoting Safety Light Corp.
(Bloomsburg Site Decontamination), ALAB-931, 31 NRC 350, 367 (1990).
- Id.
9 See Maine Yankee Atomic Power Company - Threshold Determination of Indirect License Transfer Due to Proposed Merger of Maine Public Service Co. and Bangor Hydro Electric Co. (TAC No. L24748), Adams Accession No. ML! 3281 A936 (Oct. 8, 2013).
10 Id., Staff Evaluation by the Office ofNuclear Reactor Regulation Determination. at p. I.
11 Id. atpp. 1-2.
12 Id.
13 Id. at p. 2.
1, Id.
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Authority and LILCO d/b/a LIPA. As with the MPS/BHE merger, there will be no change in licensed activities, management of NMP2 or its day-to-day operations. Simply, control and operations of NMP2 will not change because of a merger and dissolution of LILCO d/b/a LIPA into the Authority and continuation of the 18% minority ownership interest with the Authority.
Request For the reasons set forth above, the Long Island Power Authority and Long Island Lighting Company d/b/a LIP A request that the NRC issue a Threshold Determination confirming that the planned merger ofLILCO d/b/a LIPA with the Authority, as described above, does not give rise to an unauthorized transfer of control for which prior written consent of the NRC would be required under Section 184 of the Atomic Energy Act and 10 C.F.R. § 50.80. In particular, the NRC already has reviewed and granted written consent to the Authority's exercise of control over the 18%
ownership share in NMP2 as part of the 1997-1998 acquisition of LILCO d/b/a LIPA by the Authority. Furthermore, the merger of LILCO d/b/a LIPA with the Authority will not change licensed activities, management or operations of NMP2. Should the Commission grant this Threshold Determination, the Authority will expeditiously submit an application, under 10 C.F.R.
§ 50.90 for a conforming amendment of Operating License No. NPF-69 to reflect the Long Island Power Authority as co-licensee.
As a final matter, the Authority and LILCO d/b/a LIPA respectfully request expedited review and action on this matter. If the NRC has questions or requires additional information, please contact us as soon as possible.
Sincerely, Bobbi J. O'Connor General Counsel cc: David Dardis, Constellation Energy 4