ML23212B248

Motion and Petition of CPS Energy and City of Austin

ML23212B248
Person / Time
Site:	South Texas, 07201041
Issue date:	07/31/2023
From:	Arth A, Blanton M, Lovett A, Morgan A, Perny A Austin Energy, Balch & Bingham, LLP, City Public Service, San Antonio, TX, City of Austin, TX, City of San Antonio, TX
To:	NRC/OCM
SECY RAS
References
72-1041-LT
Download: ML23212B248 (0)

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

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In the matter of: ) Docket Nos. STN 50-498

) STN-50-499 South Texas Project Units 1 and 2 ) 72-1041-LT

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MOTION TO DISMISS LICENSE TRANSFER APPLICATION, IMMEDIATELY STAY NRC PROCEEDINGS, AND PETITION TO INTERVENE OF THE CITY OF SAN ANTONIO, TEXAS ACTING BY AND THROUGH THE CITY PUBLIC SERVICE BOARD OF SAN ANTONIO AND CITY OF AUSTIN, TEXAS Pursuant to 10 C.F.R. §§ 2.309 and 2.323, the City of San Antonio, Texas acting by and through the City Public Service Board of San Antonio (CPS Energy), a Texas municipally-owned utility, and the City of Austin, Texas, d/b/a Austin Energy (Austin)two of the three licensed owners of South Texas Project Electric Generating Station (STP) holding a majority of the ownership interests in the facilitymove to immediately suspend this proceeding and all Nuclear Regulatory Commission (NRC) review of the June 12, 2023, Application for Order Approving Indirect Transfer of Control of Licenses (Application)1 submitted by STP Nuclear Operating Company (STPNOC) requesting approval to transfer NRG South Texas LPs (NRG) ownership interest in STP to Constellation Energy Generation, LLC (Constellation), (STPNOC, Constellation, NRG, and NRCs parent companies are collectively referred to herein as Applicants).

1 South Texas Project Units 1 and 2, Application for Order Approving Indirect Transfer of Control of Licenses (June 12, 2023) (ADAMS Accession No. ML23163A176). NRC published the notice of an opportunity for hearing on July 19, 2023. STP Nuclear Operating Company; South Texas Project, Units 1 and 2, and Associated ISFSI, Consideration of Approval of Indirect Transfer of Licenses and Conforming Amendments, 88 Fed. Reg. 46,192 (July 19, 2023).

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STP is jointly owned by NRG (44%), CPS Energy (40%), and Austin (16%) (collectively, the Participants). STPNOC is the licensed operator and agent for the Participants. Each of the Participants are licensed owners of STP, and representatives of each Participant comprise an Owners Committee that holds decision-making authority over matters affecting STP. While STPNOC has general authority to act on the Participants behalf in NRC licensing matters, it is required to obtain Owners Committee approval, which requires a vote of two or more Participants having in excess of 60% ownership, to submit any application to NRC. The Owners Committee did not direct or approve STPNOCs submission of the Application; consequently, STPNOC did not have authority to submit the Application. In fact, Austin and CPS Energy (56% of STPs ownership) objected to STPNOC communicating with Constellation regarding the transaction and to STPNOC making external communications regarding the transaction without approval from the Owners Committee. Instead, STPNOC filed the Application without authorization and requested expedited NRC review without any mention of Austins and CPS Energys joint letter objecting to the transfer and objecting to any future involvement by STPNOC in the transfer. The Application likewise describes the underlying transaction as being for the collective benefit of all the Participants but fails to mention that prior to the Application submittal, CPS Energy and Austin notified STPNOC of their opposition to the proposed transaction. CPS Energy has also filed litigation to enforce its right of first refusal (ROFR) to the interest NRG seeks to transfer to Constellation, which Austin has intervened in. If either ROFR is exercised, it would either moot or require material amendments to the Application.

The Commission should immediately suspend this proceeding and dismiss or require withdrawal of the Application by STPNOC. There is no basis to expend agency resourcesmuch less on an expedited four-and-a-half-month trackreviewing an Application that was submitted without authority and while CPS Energy and Austin are still evaluating their contractual ROFR option. Even 2

if NRG and Constellation were to resubmit an application without STPNOCs participation, the Commission has previously suspended a license transfer proceeding pending the outcome of a co-owners determination of whether or not to exercise a ROFR, and should also do so here.2 Likewise, the Commission should require Applicants to provide the certification contemplated by 10 C.F.R.

§ 50.80(b)(2)a written consent from the existing licensee or a certified copy of an order of judgment of a court of competent jurisdiction attesting to the persons right . . . to possession of the facility or site involvedbefore proceeding with any review of the transfer. In the alternative, CPS Energy requests to intervene and participate as a party in a hearing to challenge the Application on the bases set forth herein.

In accordance with 10 C.F.R. § 2.323(b), movants certify that they have made a sincere effort to confer with the Applicants regarding withdrawal of the Application or suspension of these proceeding pending CPS Energys and Austins ROFR determination, as requested in this motion. The parties have been unable to reach agreement; thus, Austins and CPS Energys motion is ripe for the Commissions determination.

I. BACKGROUND A. STP Ownership and STPNOCs Agency Authority CPS Energy and Austin have owned STP since it began operating in 1973 and currently hold a combined 56% of the STP ownership interest. In 2006, NRG acquired an interest in the facility, which it holds as tenant in common with CPS Energy and Austin pursuant to an ownership participation agreement (Participation Agreement) that defines the Participants respective rights 2

See Niagara Mohawk Power Corp., N.Y. State Elec. & Gas Corp., and AmerGen Energy Co., LLC (Nine Mile Point, Units 1 & 2), CLI-99-30, 50 NRC 333 (1999).

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and obligations to one another.3 The Participation Agreement establishes an Owners Committee made up of one primary and one alternate representative from each Participant.4 Among other things, the Owners Committee approves STPNOCs budget and provides direction to STPNOC.5 The Participation Agreement6 also gives incumbent owners a ROFR optiondiscussed more belowthat requires at least seven months notice before a Participant can sell their interest to an outside party and provides the opportunity to each Participant, if exercised within three months of such notice, to acquire some of or all of the interest proposed to be sold.7 In 1997, CPS Energy and Austin, along with then-owners Central Power and Light Company and Houston Lighting and Power Company, incorporated STPNOC to serve as the licensed operator and agent for the Participants.8 STPNOC is a Texas non-profit corporation with a board of directors appointed by the Participants. STPNOCs authority to act on behalf of the Participants is defined in the STP Operating Agreement (Operating Agreement).9 The Operating Agreement authorizes STPNOC to act on behalf of Participants in all matters related to NRC licensing of the South Texas Project . . . in accordance with . . . Participants Direction, which is expressed in the form of Owners 3

Ex. A, Amended and Restated South Texas Project Participation Agreement between City of San Antonio, Central Power and Light Co., Houston Lighting & Power Co., City of Austin (Nov. 17, 1997) (hereinafter Participation Agreement).

4 Ex. A, Participation Agreement, Section 9.2.

5 Ex. A, Participation Agreement, Section 9.3.

6 The ROFR provisions of the Participation Agreement were supplemented by several subsequent agreements. The contractual history of the Participation Agreement and the relationship between these subsequent agreements is set forth in detail in the litigation filed by CPS Energy. See Ex. J, Plaintiffs Original Petition, Case No. 23-F-0279, Matagorda County 130th District Court (June 20, 2023) (hereinafter the Matagorda County Petition). Austins petition to intervene in the Matagorda County litigation is also attached hereto. See Ex. M, City of Austins Petition in Intervention, Case No. 23-7-0279, Matagorda County 130th District Court (July 31, 2023).

7 Ex. A, Participation Agreement, Section 17.2.

8 See Order Approving Application Regarding the Formation of an Operating Company and Transfer of Operating Authority (Apr. 8, 1997) (ADAMS Accession No. ML20137U353).

9 Ex. B, South Texas Project Operating Agreement, between City of San Antonio, Texas, acting through the City Public Service Board of San Antonio, Central Power and Light Co., Houston Lighting & Power Co., City of Austin, and STP Nuclear Operating Company (Nov. 17, 1997) (hereinafter Operating Agreement).

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Committee approval.10 Pursuant to the Participation Agreement, [t]he Owners Committee shall . . .

[a]pprove and join, where necessary, any application or amended application to the Nuclear Regulatory Commission or other regulatory authority.11 Approval from the Owners Committee requires agreement of the representatives of two or more Participants having in excess of sixty percent (60%) interest.12 Neither STPNOC nor NRG sought or obtained approval of the Owners Committee prior to STPNOC submitting the Application.

B. Proposed Transaction and Application On June 1, 2023, Constellation announced that they had signed an agreement to buy NRCs 44% stake in STP (Proposed Transaction). 13 Austin and CPS Energy learned about the Proposed Transaction the day Constellation publicly announced it and learned that STPNOC had briefed plant employees on the transaction without notifying CPS Energy or Austin.14 The next day, Austin and CPS Energy wrote letters to NRG and Constellation objecting to the sale without notice or opportunity to exercise their ROFR option.15 STPNOC was copied on the letters, and Austin and CPS Energy also wrote STPNOC separately to direct their agent to refrain from expressing views regarding the proposed transaction that be [sic] inconsistent with the owners rights under the participation agreement, and objecting to STPNOC officers and employees communicating with Constellation .

10 Ex. B, Operating Agreement, Sections 1.5 and 2.1.

11 Ex. A, Participation Agreement, Section 9.3.6.

12 Ex. A, Participation Agreement, Section 9.4.

13 Constellation Press Release, Constellation to Acquire Ownership Stake in Texas Nuclear Plant from NRG Energy (June 1, 2023) available at https://www.constellationenergy.com/newsroom/2023/Constellation-to-Acquire-Ownership-Stake-in-Texas-Nuclear-Plant-from-NRG-Energy.html.

14 Ex. D, Declaration of Cory Kuchinsky, ¶ 4 (hereinafter Kuchinsky Declaration); Ex. G, Letter from CPS Energy and Austin to STPNOC, Re: Announced Sale of NRG Energy Inc.s Ownership Stake in the South Texas Project (June 2, 2023).

15 Ex. E, Letter from CPS Energy and Austin to NRG Energy Inc., Re: Announced Sale of NRG Energy Inc.s Ownership Stake in the South Texas Project (June 2, 2023); Ex. F, Letter from CPS Energy and Austin to Constellation Energy Corp., Re: Announced Acquisition of NRG Energy Inc.s Ownership Stake in the South Texas Project (June 2, 2023).

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. . in connection with the announced transaction, unless authorized by the Owners Committee.16 STPNOC responded to Austin and CPS Energy that Constellation plans to have the license transfer application submitted to the NRC by Thursday [June 8, 2023].17 A week later, in contravention of the direction from Austin and CPS Energy, STPNOC submitted the Application, without obtaining Owners Committee approval,18 requesting expedited review of the Proposed Transaction by November 1, 2023. The Application represents that [t]he Participants . . . have interests in the corporate governance of STPNOC, which is the licensed operator for STP; [t]he Participants have authorized STPNOC to act on their behalf to have exclusive responsibility for the control over the physical construction, operation, and maintenance of the Facility; [t]he proposed license transfers are necessary and desirable; and STPNOC and the STP Participants will benefit from CEGs participation in STP.19 The Application does not mention CPS Energys or Austins objection to the Proposed Transaction, their unexpired ROFR option, or their letter to STPNOC directing STPNOC to stop communicating with Constellation without Owners Committee approval. Prior to filing this motion, CPS Energy and Austin requested that STPNOC withdraw the Application, which STPNOC declined to do.20 II. MOTION TO DISMISS THE APPLICATION The Application was submitted without the requisite approval of the STP Owners Committee; consequently, STPNOC did not have authority to sign and submit the Application. STPNOC also 16 Ex. G, Letter from CPS Energy and Austin to NRG Energy Inc., Re: Announced Sale of NRG Energy Inc.s Ownership Stake in the South Texas Project (June 2, 2023).

17 Ex. H, Letter from STPNOC to CPS Energy and Austin (June 5, 2023).

18 Ex. C, Declaration of Larry Blaylock, ¶¶ 9-10 (hereinafter Blaylock Declaration).

19 Application, at 1, 3.

20 Ex. O, Letter from STPNOC to CPS Energy and Austin (July 30, 2023).

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does not have authority to request that NRC modify the STP licensing basis to reduce an owners parental support obligations.21 STPNOCs suggestions in the Application that it was acting in its normal role as agent for all the Participants and that the underlying transaction is for the benefit of all the Participants are inaccurate. The Owners Committee has not voted to direct STPNOC to submit the Application, and STPNOC was in receipt of a letter from 56% of the ownership interest objecting to STPNOCs involvement in the transaction. NRG does not have authority under the Operating Agreement to unilaterally direct STPNOC to submit the Application.22 Constellation is not a party to any of the STP ownership or operating agreements and has no authority to direct STPNOCs activities.

STPNOCs failure to obtain the requisite authority to submit the Application and STPNOCs characterization of the transfer as within the scope of its agency authority and for the benefit of all the Participantswhile the majority of STPs ownership was actively objecting to the transfer and directing STPNOC to stop communicating with Constellationprovides grounds for dismissal of the Application.

III. MOTION TO STAY THE PROCEEDINGS AND SUSPEND NRC REVIEW OF THE APPLICATION A. The Commission should suspend all review and adjudicatory proceedings on any application related to this transaction until CPS Energy and/or Austin have determined whether or not to exercise their ROFR.

Even if NRG and Constellation submit a new application seeking approval of the transfer without STPNOCs participation, NRC should not spend any resources reviewing such an application given that CPS Energy and Austin have not had an opportunity to determine whether or not to exercise 21 As addressed below, the Application requests that NRCs upstream affiliate and parent be allowed to terminate the existing $120 million support agreements that are currently required by NRC. Application, Encl. 1, at 9.

22 Ex. A, Participation Agreement, Section 9.4.

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their ROFR option afforded to them by the Participation Agreement, as supplemented by the various agreements described in the Matagorda County Petition.

If exercised, the ROFR would moot or require substantial changes to the Application.23 Section 17 of the Participation Agreement provides as follows:

17.2 At least seven (7) months prior to the date on which the intended transfer is to be consummated, the Participant desiring to transfer shall serve written notice of its intention to do so upon all of the Participants. Such notice shall contain the proposed date of transfer and the terms and conditions of the transfer.

17.3 Each Participant shall have the option to acquire all or any part of the interest to be transferred and shall exercise said option by serving written notice of its intention upon the Participant desiring to transfer and on the remaining Participants within three (3) months after service of the written notice of intention to transfer given pursuant to Section 17.2 hereof.24 The sale agreement between Constellation and NRG specifically recognizes this right:

(a) . . . Except for this Agreement and the Participation Agreement, there is no voting trust or agreement, partnership agreement, pledge agreement, buy-sell agreement, right of first refusal, preemptive right or proxy relating to any equity securities of the Company.

(b) Except as set forth on Schedule 3.4 and in the Participation Agreement, all of the Equity has been duly authorized, validly issued, fully paid and nonassessable, and shall be, at the Closing, free and clear of all Liens [including rights of first refusal].

(c) The Company [NRG] owns good and valid title to the undivided interest set forth on Schedule 3.4(c) as tenants-in-common in the Facility and the Site (the Sellers Interests). No other Person owns any interest in or has any right to acquire the Sellers Interests, except as set forth in the Participation Agreement, including Section 17 thereof. The Company holds no other assets other than the Sellers Interests.25 23 The Participation Agreement allows the incumbent Participants to acquire all or part of the interest being transferred.

Ex. A, Participation Agreement, Section 17.3. Accordingly, NRG may not ultimately transfer any of its interest to Constellation, which would moot the Application. Alternatively, NRG may transfer some to Constellation and some to CPS Energy and/or Austin, in which case the Application would need to be revised to reflect the actual interest transferred and the financial qualifications of CPS Energy and Austin to increase their ownership share.

24 Ex. A, Participation Agreement, Sections 17.2 and 17.3.

25 Equity Purchase Agreement, by and among Constellation Energy Generation, LLC, and Texas Genco GP, LLC, Texas Genco LP, LLC, at Section 3.2 (May 31, 2023) (hereinafter Equity Purchase Agreement) available at https://www.sec.gov/Archives/edgar/data/1013871/000110465923067085/tm2317549d1_ex2-1.htm.

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NRG did not provide CPS Energy or Austin with the notice required by the Participation Agreement.26 Since learning of the Proposed Transaction on June 1, 2023, CPS Energy has been working diligently to evaluate the ROFR based on public information regarding the proposed sale.27 Austin likewise is still evaluating its ability to exercise the ROFR. As municipal entities, CPS Energy and Austin need time to evaluate their ability to finance any offer and obtain internal and external stakeholder approvals,28 hence the three-month period called for by the Participation Agreement. If either Participant exercises its option to purchase some or all of NRCs 44% stake, any transfer application on the current Constellation purchase would be mooted or materially altered to reflect the actual disposition of NRCs ownership interest.

The Commission has previously suspended a similar license transfer proceeding pending a determination by a plants owners of whether to avail themselves of a ROFR under existing governing agreements.29 In that proceeding, Niagara Mohawk Power Corporation and New York State Electric and Gas Corporation (NYSEG) sought NRC approval to transfer their ownership interests in Nine Mile Point to AmerGen Energy Company.30 The other owners opposed the license transfer application, among other reasons, because they had an unexpired ROFR.31 The Commission suspended that proceeding pending the co-owners determination of whether to avail themselves of their purchase rights. The Commission noted, [w]e believe it would not be sensible to require the expenditure of 26 Ex. D, Kuchinsky Declaration, at ¶¶ 4, 7. The Participation Agreement requires notice of the proposed date of transfer and the terms and conditions of the transfer. Ex. A, Participation Agreement, Section 17.2. As of the date of this filing, NRG has not provided the full terms of its agreement with Constellation or the anticipated closing date. Ex. D, Kuchinsky Declaration, at ¶ 7.

27 Ex. D, Kuchinsky Declaration, at ¶¶ 5-6, 8.

28 Ex. D, Kuchinsky Declaration, at ¶ 8.

29 Nine Mile Point, CLI-99-30, 50 NRC 333.

30 Id. at 338.

31 Id. at 339.

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both public and co-owner funds on a proceeding, part or all of which may well be rendered moot in the immediate future.32 The Commission also acknowledged that if one of the owners exercised its ROFR, the entire license transfer proceeding may be rendered moot.33 For all the same reasons, the Commission should not expend agency resources on the Proposed Transactionmuch less on an expedited review schedule that NRC generally reserves for simple transfers with no unusual licensing or transactional arrangements.34 NRC should stay this proceeding 32 Id. at 343.

33 Id. at 343 n.8. Following exercise of the ROFR, the owners disputed whether their exercise of the ROFR mooted the original application or NRC should continue its review. See Notification of Exercise of Right of First Refusal (Dec.

27, 1999) (ADAMS Accession No. ML003679386); Niagara Mohawk Power Corp. Response to Notification of Exercise of Right of First Refusal (Jan 3, 2000) (ADAMS Accession No. ML003672866); AmerGens Response to RG&Es Notification of Exercise of Right of First Refusal and Request for Lifting Temporary Suspension (Jan. 7, 2000) (ADAMS Accession No. ML003672864). NRC staff never issued an order approving the application, which AmerGen ultimately withdrew following direction from the New York Public Service Commission that the selling owners should conduct a competitive bid process. See AmerGen, Withdrawal of Application for Indirect Transfers of Licenses of Nine Mile Point, Units 1 and 2 (May 24, 2000) (ADAMS Accession No. ML003719665).

34 NRC internal guidance requires that, during initial acceptance review, [t]he PM will determine whether the applicant has provided the basis for its schedule request and whether the schedule request is reasonable. LIC-107, Procedures for Handling License Transfers, Rev. 3, Section 4.1.4 (July 13, 2020) (ADAMS Accession No. ML20010F469). Based on historical NRC performance, staff can typically complete its review of a straightforward § 50.80 application in about six months; however, more complicated deal structures or significant changes to existing financial or operational structures will generally result in longer staff review times. Compare, e.g., Safety Evaluation Related to the Indirect License Transfer of Control of Renewed Facility Operating License No. NPF-14, Renewed Facility Operating License No. NPF-22 and the General License for the Independent Spent Fuel Storage Installation Sesquehanna Steam Electric Station, Units 1 and 2 (Mar. 31, 2023) (ADAMS Accession No. ML23073A107) (taking six months for indirect transfer review following reorganization); Safety Evaluation Related to the EnergySolutions, LLC Request for Indirect Transfer of Control of License Nos. DPR-39, DPR-48, DPR-45, and DPR-43, and the General Licenses for the Associated Independent Spent Fuel Storage Installations for Zion Nuclear Power Station, Units 1 and 2, Three Mile Island Nuclear Station, Unit 2, La Crosse Boiling Water Reactor, and Kewaunee Power Station; Radioactive Materials License No. 39-35044-02; and Export Licenses XW010/04 and XW018/01 (May 3, 2022) (ADAMS Accession No. ML22076A012) (taking just under six months for indirect transfer review following change in governance of a parent company) to Order Approving Transfer of Licenses and Draft Conforming Administrative License Amendments (Nov.

18, 2020) (ADAMS Accession No. ML20297A325) (taking one year for approval following several application supplements including changes in organizational structure); Safety Evaluation Related to the Exelon Generation Company, LLC Request for Indirect Transfer of Control of Renewed Facility Operating License Nos. NPF-72, NPF-77, NPF-37, NPF-66, DPR-53, DPR-69, DPR-19, DPR-25, DPR-59, NPF-11, NPF-18, NPF-39, NPF-85, DPR-63, NPF-69, DPR-29, DPR-30, DPR-18, DPR-70, DPR-75, and DPR-50 Facility Operating License Nos. NPF-62, DPR-2, DPR-12, DPR-39 and DPR-48 Subsequent Renewed Facility Operating License Nos. DPR-44 and DPR-56 Renewed Materials License No. SNM-2505 and the General Licenses for the Independent Spent Fuel Storage Installations (Nov. 16, 2021) (ADAMS Accession No. ML21277A248) (taking over eight months to secure approval of a spin transaction modifying corporate organization and operational responsibility). Of course, changes to the transaction and § 50.80 application following submittal and docketing inhibits staffs ability to complete its review on the schedule set forth in the acceptance letter. See NRC staff email to STPNOC, Acceptance of Request for Indirect Transfer of Licenses and Conforming Amendments, 2 (July 7, 2023) (ADAMS Accession No. ML23191A010).

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and defer NRC staffs review until, at a minimum, CPS Energy and Austin determine whether to avail themselves of their respective ROFR. While NRG has not provided Austin and CPS Energy with the contractually required information,35 CPS Energy and Austin are nevertheless diligently working to evaluate their respective ROFR options and commit to provide the Commission with notice of their ROFR decisions promptly after they are finalized. CPS Energy is working to have a final decision by September 1, 2023.36 As the Commission previously concluded, a temporary suspension in these circumstances does not run counter to the policy underpinnings of the Subpart M processparticularly where, as here, the Equity Purchase Agreement between NRG and Constellation recognizes the Participants ROFR and allows up to fifteen months for closing.37 There is no reason for the Commission or NRC staff to prioritize, much less expedite, review of this transfer over other competing licensing matters until CPS Energy and Austin have a chance to evaluate their respective ROFR rights and, if they elect to exercise, to notify NRG and the Commission of their decision to purchase all, or a portion of, NRCs 44% ownership share in STP.

B. The fact that Constellation or NRG might dispute Austins or CPS Energys ROFR is irrelevant.

NRG wrote to Austin and CPS Energy that NRG has every intention of honoring the provisions of the Participation Agreement.38 That said, it is possible, if not likely, that NRG will object to CPS Energy and/or Austins potential ROFR exercise and the matter will devolve into a contractual dispute and further litigation. To preserve its rights, CPS Energy already initiated a lawsuit by filing the Matagorda County Petition on June 20, 2023 seeking declaratory judgment and specific 35 Ex. D, Kuchinsky Declaration, at ¶¶ 6-7.

36 Ex. D, Kuchinsky Declaration, at ¶ 9.

37 Equity Purchase Agreement, Sections 3.2 and 11.1(b)(i)(A).

38 Ex. I, Letter from NRG Energy to CPS Energy and Austin, at 1 (June 4, 2023).

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performance to enforce the Participation Agreement.39 Austin has now intervened in that lawsuit.40 By agreement, NRCs deadline to answer or otherwise respond to CPS Energys Matagorda County Petition is August 15, 2023, and as such, NRG has not responded to the Matagorda County Petition nor has NRG provided CPS Energy or Austin with any official position articulating how NRG believes its sale agreement with Constellation can be reconciled with CPS Energys and Austins ROFR.

The possibility of a contractual dispute does not change the necessity of a stay or somehow put a ROFR dispute beyond the scope of matters NRC should consider. In any license transfer proceeding, particularly one with multiple plant owners and an independent operator, NRCs review certainly includes confirmation that the transfer is being made in accordance with existing facility agreements.41 In an analogous case, the Commission suspended the Nine Mile Point proceeding over the objections of Niagara Mohawk and NYSEG (the would-be sellers) and AmerGen (the would-be buyer) that NRC should not hold up the license transfer based upon an interpretation of a contract among the parties.42 They asserted that NRC should ignore purely contractual matter[s] raised by the objecting co-39 See Ex. J, Matagorda County Petition. On the same day, CPS Energy notified NRG formally that the Proposed Transaction triggered CPS Energys ROFR and directed NRG to provide CPS Energy with the notice and information contemplated by the Participation Agreement, including the proposed date of the transfer and the full terms and conditions of the transfer. Ex. K, Letter from Dykema Gossett PLLC to NRG South Texas LP, NRG Energy, Inc., and Texas Genco GP, LLC, Re: Right of First Refusal Relating to Proposed Sale of South Texas Project Interest (June 20, 2023). CPS Energy likewise notified STPNOC of the litigation and renewed its objection to STPNOCs communication with Constellation in connection with the Proposed Transaction. Ex. L, Letter from CPS Energy to STPNOC, Re: Litigation Involving NRG South Texas, LPs Ownership Interest in the South Texas Project (June 23, 2023). As of the date of this filing, neither NRG nor STPNOC have responded to these letters. Ex. D, Kuchinsky Declaration, at ¶ 7.

40 Ex. M, City of Austins Petition in Intervention, Case No. 23-7-0279, Matagorda County 130th District Court (July 31, 2023).

41 See, e.g., Safety Evaluation, Georgia Power Company, Vogtle Electric Generating Plant, Units 1 and 2, at 1 (Mar. 17, 1997) (explaining staffs review of the operating agreements between Georgia Power and Southern Nuclear Operating Company in connection with the requested transfer of operational authority to Southern Nuclear).

42 Niagara Mohawk and NYSEG Answer to Petition of Central Hudson Gas & Electric, Long Island Power Authority, and Rochester Gas and Electric for Leave to Intervene and Request for Hearing, at 5 (Nov. 2, 1999) (ADAMS Accession No. ML20217H944) (hereinafter Niagara Mohawk Answer). See also Answer of AmerGen Energy Company, LLC to the Petition of Central Hudson Gas and Elec. Co., et al., for Leave to Intervene and Request for a Hearing (Nov. 3, 1999) (ADAMS Accession No. ML993190381) ([T]his issue relates solely to the contractual relationship between the parties, and therefore, it falls outside the scope of this proceeding.).

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owners, including the unexpired ROFR and an assertion that the licensed operator in that case also acted outside the scope of its agency authority.43 According to Niagara Mohawk and NYSEG, the Commissions sole focus is radiological health and safety, and any underlying contractual disputes between co-owners in nuclear facilities ordinarily should be resolved by the appropriate state, local, or federal court.44 The Commission disagreed and suspended the proceeding on the basis of the objecting owners unexpired ROFR.45 The fact that NRG may also object to Austins or CPS Energys ROFR exercise does not change the applicability of the Commissions precedent or the underlying institutional logic for deferring NRC action to afford Austin and CPS Energy time to evaluate their ROFR. Indeed, the likelihood of an amicable resolution ostensibly depends on the portion of NRCs 44% share that Austin or CPS Energy seek to acquirewhich they cannot immediately provide to NRG given the nature of their municipal decision-making processes. 46 Common sense and prudent allocation of agency resources dictate that, until CPS Energy and Austin have a chance to evaluate and potentially present an offer to NRG, there is no reason for NRC to conduct an expedited review and hearing process for a transaction that could be mooted or materially changed in the near term.

Austin and CPS Energy are not asking the Commission to decide the merits of a commercial dispute regarding either Austins or CPS Energys respective ROFR rights, but neither should the Commission effectively allow NRG and Constellation to ignore the ROFR by approving the Proposed Transaction on an expedited basis notwithstanding the pendency of a dispute regarding Applicants authority to transfer the license in the first place. Under the ordinary application of the Commissions 43 Niagara Mohawk Answer, at 4-7.

44 Id. (quoting Gulf States Utilities Company (River Bend Station), LBP-94-3, 39 NRC 31, 39 n.5 (1994)).

45 Nine Mile Point, CLI-99-30, 50 NRC at 343.

46 Ex. D, Kuchinsky Declaration, at ¶¶ 5-6, 8.

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Subpart M rules, once NRC staff issues an order approving the transaction, Constellation would be free to close at risk, subject to the Commissions authority to resolve Austins and CPS Energys arguments after closing.47 Thus, NRC neutrality to a commercial dispute simply allows Constellation to maintain an expedited closing schedule and makes it more difficult for the municipal Participants to enforce their rights under the plant ownership agreements. Moreover, if CPS Energy and/or Austin exercise their ROFR but NRG and Constellation refuse to amend their application, CPS Energy and/or Austin will need to promptly submit their own license transfer application.

In other words, there is no neutral position the Commission can take. As the applicants requesting expedited § 50.80 approval, STPNOC, NRG, and Constellation bear the burden of demonstrating their entitlement to effectuate the transfer, especially on an accelerated timetable that warrants staffs prioritization over competing licensing reviews. Any neutrality the Commission exercises should be to preserve the status quowhich in this case is to preserve the rights of the majority municipal Participants who have owned STP since the beginning and who negotiated a ROFR option precisely to protect themselves in this situation.48 There is no regulatory logic in Subpart M or otherwise for the Commission to functionally endorse and rapidly approve an outsiders transaction over the incumbent owners attempt to exercise 47 10 C.F.R. § 2.1316(a). See, e.g., Order Approving Indirect Transfer of Licenses (May 3, 2022) (ADAMS Accession No. ML22076A011); Order Approving Indirect Transfer of Licenses and Draft Conforming License Amendments (Nov. 11, 2016) (ADAMS Accession No. ML21277A192).

48 In an analogous situation, NRC staff refused to approve transfer of the Bellefonte construction permit until the applicant-buyer demonstrated its right to acquire an ownership interest in the facility. See NRC Staff Response to Nuclear Development Letter Dated Sept. 11, 2020 (Nov. 3, 2020) (ADAMS Accession No. ML20286A172). The applicant claimed that the incumbent owner-licensee (TVA) was in violation of a sale agreement requiring TVA to transfer Bellefonte to the buyer. See Nuclear Development, LLC, Response to Request for Supplemental Information, at 8 (Aug. 28, 2019) (ADAMS Accession No. ML19240A382). Notwithstanding the pendency of litigation brought by the buyer to enforce the sale agreement, NRC staff withheld its approval of the transfer until the applicant demonstrated its entitlement to ownership and possession of the facility. In other words, NRC did not treat applicants sale agreement and contractual arguments that a sale agreement allowed it to transfer the license over the licensees objections as the status quo. Rather, pending resolution of the underlying commercial dispute, NRC staff maintained the rights of the existing licensee-owner to possess the facility and the license.

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their rights, simply because the outsider was the first to file an application and request expedited review. When the Commission created Subpart M, it explained that staff action on license transfer requests should not be delayed except for sound reasons and [t]he Commission relies on the staff, subject to Commission oversight, to exercise good judgment in this regard.49 Here, good judgment dictates, at a minimum, waiting to allow CPS Energy and Austin to finish evaluating their respective ROFR option. The Commission should not apply Subpart Ms principles in a way that allows an applicant to march forward with an accelerated review schedule simply because it asked staff to do so without disclosing material facts that would have allowed staff to exercise informed judgment on the appropriateness of that expedited review.

The Commission should afford CPS Energy and Austin time to finish reviewing their respective ROFR option. There is no value in expending the agencys resources on an expedited review of Constellations transaction before the municipal Participants can even make a final ROFR decisionall the more so because Constellation signed the sale agreement with full knowledge of Austins and CPS Energys ROFR option and agreed that closing could occur as late as the third quarter of 2024.

C. The Commission should require Applicants to provide the certification contemplated by § 50.80(b)(2) as a condition to review of the Application.

As further basis for CPS Energys and Austins motion to stay, the Commission should suspend this proceeding and staffs review and approval of the Application until Applicants have provided NRC with Austins and CPS Energys written consent or a court order demonstrating NRCs entitlement to transfer its licensed interest in STP, as contemplated by 10 C.F.R. § 50.80(b)(2).

49 Streamlined Hearing Process for NRC Approval of License Transfers, 63 Fed. Reg. 66,721, 66,725-26 (Dec. 3, 1998)

(emphasis added).

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Section 50.80(b)(2) states that [t]he Commission may require any person who submits an application for [a license transfer] to file a written consent from the existing licensee or a certified copy of an order or judgment of a court of competent jurisdiction attesting to the persons right . . . to possession of the facility or site involved.50 Requiring the applicants to submit written consent or a court order under § 50.80(b)(2) promotes the orderly transfer of control of NRC licenses and ensures that there is no confusion over which parties have responsibility to fulfill the license obligations. If an applicant cannot obtain consent, they must have a court order that confirms their right to possession of the licensed interest (pending litigation is not enough).51 NRC has previously required an applicant to make this § 50.80(b)(2) showing in precisely this circumstancewhen requesting a license transfer without consent from the existing licensee. In 2018, Nuclear Development, LLC submitted an application for transfer of the Bellefonte construction permits from TVA to itself.52 Because it was apparent from the application that the existing licensee did not join or support the application, staff invoked § 50.80(b)(2) during acceptance review. As staff explained:

The NRC staff notes that the [] transfer application was submitted solely by [applicant]

and not jointly with the current licensee, TVA. License transfer applications are typically submitted under oath and affirmation jointly by the current licensee and the transferee, or alternatively, by the transferee with a statement from the current licensee that it supports the application. . . . .

Please provide information regarding [applicants] right to possess the Bellefonte site.

This information should include written consent from the existing licensee (TVA) or a certified copy of an order or judgment of a court of competent jurisdiction attesting to 50 10 C.F.R. § 50.80(b)(2).

51 See NRC Staff Response to Nuclear Development Letter Dated Sept. 11, 2020 (Nov. 3, 2020) (ADAMS Accession No. ML20286A172).

52 Nuclear Development, LLC, Application for Order Approving Construction Permit Transfers and Conforming Administrative Construction Permit Amendments (Nov. 13, 2018) (ADAMS Accession No. ML18318A428).

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[applicants] right to possession of the Bellefonte site as described in 10 CFR 50.80(b)(2).53 Nuclear Development (the applicant) urged staff to review and approve its application because TVA was in violation of a sale agreement, Nuclear Development had sued to enforce it, and NRC should not consider the contractual dispute.54 While NRC staff eventually docketed the application for review, it refused to issue an order approving the application until the applicant demonstrated its entitlement to possess the facility and licenses.55 NRC should do the same here. While NRC has already docketed this Application, staff did so without apparently knowing that the current licensees and majority owners object to the Proposed Transaction and did not authorize STPNOC to submit the Application. Even if staffs review is allowed to continue while CPS Energy and Austin evaluate their respective ROFR, NRC staff should not issue an order approving the transfer until the Applicants have either obtained CPS Energys and Austins consent or a court order demonstrating Constellations entitlement to possess a 44% tenancy-in-common interest in STP.

NRCs consent to the transfer is not sufficient given that the Participation Agreement, as supplemented by the various agreements described in the Matagorda County Petition, restricts NRCs ability transfer ownership in STP until CPS Energy and Austin have either exercised or waived their ROFR. Nor is this situation equivalent to the hostile takeover of NRG Energy, Inc. that Constellations predecessor, Exelon, attempted in 2009 (seeking, indirectly, to acquire the same NRG ownership 53 Supplemental Information Needed, Construction Permit Transfer, Amendment Request, and Exemption Request, Bellefonte Nuclear Plant, Units 1 and 2, at 5 (Apr. 5, 2019) (ADAMS Accession No. ML18348B064).

54 Nuclear Development, LLC, Response to Request for Supplemental Information, at 8 (Aug. 28, 2019) (ADAMS Accession No. ML19240A382); Nuclear Development, LLC, Supplement to Application for Order Approving Construction Permit Transfers (Sept. 11, 2020) (ADAMS Accession No. ML20255A204).

55 Status of NRC Staffs Review of Nuclear Development, LLC Application for Order Approving Construction Permit Transfers (Aug. 31, 2020) (ADAMS Accession No. ML20230A369); NRC Staff Response to Nuclear Development Letter Dated Sept. 11, 2020 (Nov. 3, 2020) (ADAMS Accession No. ML20286A172).

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interest that is the subject of the current Application).56 There, NRC staff docketed Exelons § 50.80 application over NRCs objections;57 however, if Exelons corporate takeover had succeeded, it would have had the existing licensees consent because the shareholders would have accepted its tender offer and Exelon would have controlled NRCs parent company and board of directors.58 Not so here, unless Constellation agrees that its ability to consummate the Proposed Transaction requires the consent of CPS Energy and Austin. And while staff docketed Exelons hostile application and published a Federal Register notice (five months after Exelon submitted the application),59 staff did not issue an order approving the application (much less on the four-month approval schedule Exelon requested) before Exelon obtained NRG shareholders consent.60 Nor did the Commission ever weigh in because Exelon withdrew the application after NRG Energys shareholders rejected Exelons tender offer.61 Accordingly, NRC staff should exercise the discretion afforded to it under § 50.80(b)(2) and should suspend its review or approval of the Application until the Applicants have obtained CPS Energys and Austins consent or a court order demonstrating Constellations entitlement to hold a 44% tenancy-in-common ownership interest in STP. If the current circumstances do not implicate the 56 See Exelon Generation Company, LLC, Application for Approval of Indirect Transfer of Control of Licenses (Jan. 29, 2009) (ADAMS Accession No. ML090420400).

57 Preliminary Response to License Transfer Application Submitted by Exelon Corporation (Feb. 4, 2009) (ADAMS Accession No. ML090570266).

58 Moreover, Exelon could not have effectuated the tender offer (that would give it consent) without first obtaining NRC approval, since the tender offer itself would have indirectly transferred control of the STP licenses. Exelon Generating Co., Application for Approval of Indirect Transfer of Control of Licenses, 2-3 (Jan. 29, 2009) (ADAMS Accession No. ML090420400).

59 Notice of Consideration of Approval of Application Regarding Proposed Merger of NRG Energy, Inc. and Exelon Corporation, and Indirect Transfers of NRG South Texas LPs Facility Operating License, 74 Fed. Reg. 32,967 (July 9, 2009).

60 See Exelon Generation Company, LLC, Application for Approval of Indirect Transfer of Control of Licenses, 4 (Jan.

29, 2009) (ADAMS Accession No. ML090420400).

61 See Exelon Corp. Form 8-K (July 21, 2009) available at https://www.sec.gov/Archives/edgar/data/1109357/000119312509152288/0001193125-09-152288-index.html; Notice of Withdrawal of Application for Indirect Transfer of Control of Facility Operating Licenses South Texas Project, Units 1 and 2, 74 Fed. Reg. 46,630 (Sept. 10, 2009).

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need for a § 50.80(b)(2) showing by the Applicants, it is difficult to imagine one that would. A basic tenet of regulatory interpretation is that the Commission will not read its regulations in a way that renders them meaningless.62 Requiring Applicants to obtain the municipal Participants consent or a court order confirming their right to transfer NRCs interest promotes the orderly transfer of the STP licenses, maintains NRCs control over the timing and structure of the transfer, and avoids the confusion that would inevitably ensue if NRC were faced with dueling license transfer applications or if Constellations transfer must be unwound by a court after the fact.

IV. PETITION TO INTERVENE AND REQUEST FOR HEARING In the alternative, pursuant to 10 C.F.R. § 2.309, CPS Energy and Austin respectfully request that they be admitted as parties to the instant proceeding and that the Commission initiate a hearing on the contentions set forth herein. 10 C.F.R. § 2.309(a) provides that the Commission will grant a petition if it determines that the requestor/petitioner has standing and has proposed at least one admissible contention meeting the requirements of 10 C.F.R. § 2.309(f).63 CPS Energy and Austin are actively working with Applicants to put in place a protective order to govern the use of the confidential financial Enclosure 5A to the Application. If necessary, CPS Energy and Austin will promptly supplement their contentions based on information in Enclosure 5A following entry of a protective order governing its use in this proceeding.

A. CPS Energy and Austin Have Standing to Intervene in the Instant Proceeding.

To evaluate standing under 10 C.F.R. § 2.309(d), the Commission uses judicial concepts of standing, which require the party to (1) allege an injury in fact that is (2) fairly traceable to the 62 See Hydro Resources, Inc., CLI-06-11, 63 NRC 483, 491 (2006) (citing Silverman v. Eastrich Multiple Investor Fund, 51 F.3d 28, 31 (3d Cir. 1995)).

63 10 C.F.R. § 2.309(a).

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challenged action and (3) is likely to be redressed by a favorable decision.64 As owners of STP and parties to the Participation Agreement, STPNOCs Operating Agreement, and the NRC licenses, Austin and CPS Energy easily meet this standard.

CPS Energy is a Texas municipally-owned utility owned by the City of San Antonio. The City of Austin d/b/a Austin Energy is a Texas municipally-owned utility. CPS Energy and Austin are two of the original licensed owners of STP, and thus have a direct financial stake in STP. Further, their rights under the Participation Agreement, as supplemented by the various agreements described in the Matagorda County Petition, and STPNOCs Operating Agreement have been ignored by the Applicants. As noted above, CPS Energy and Austin dispute STPNOCs authority to submit the Application under the Participation Agreement and STPNOCs Operating Agreement. Their interest in the conduct of STPNOCa company they incorporated and to which they have delegated the responsibility (subject to approval of the Owners Committee) of representing their interests before the NRCis sufficient to provide standing here. Likewise, CPS Energy and Austin dispute NRCs authority to transfer its ownership interest to Constellation (and submit an application asking NRC for approval of that Proposed Transaction) without honoring their ROFR. Applicants deprivation of Austins and CPS Energys rights under the Participation Agreement is itself an injury traceable to Applicants conduct.

Even in the unlikely event that neither Austin nor CPS Energy exercise their ROFR, any transfer of control of NRCs ownership to Constellation would directly affect Austin and CPS Energy as joint owners of STP. The proposed Application harms their existing ownership interest by seeking to modify and reduce the parental support obligations associated with NRCs 44% ownership share 64 See Fla. Power & Light Co. (Turkey Point Nuclear Generating Plant, Units 3 and 4), CLI-15-25, 82 NRC 389, 394 (2015); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

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by $30 million. Those actions would increase the risk of being forced to assume a greater-than-expected share of . . . operating and decommissioning costs.65 That is a financial injury that would not exist absent the Application. Even putting aside the budgetary risk created by the reduced parental commitment, the inability of one Participant to cover its share of operating costs ultimately puts the other Participants in the situation of having to either make up that defaulting Participants cost or address the safety implications of insufficient operational funding. Indeed, the Operating Agreement specifically gives STPNOC the authority to take appropriate measures to protect public health and safety as a result of a Participants payment default.66 As the Commission has stated, it is hard to conceive of an entity more entitled to claim standing in a license transfer case than a co-licensee whose costs may rise . . . as a result of an ill-funded license transfer. This kind of situation justifies standing based on real-world consequences that conceivably could harm petitioners and entitle them to a hearing.67 Each of these harms is redressable by the Commission. Accordingly, Austin and CPS Energy have standing to intervene and participate as a party in this proceeding.

B. Contention 1: STPNOC lacks authority to submit the Application.

For the reasons set forth herein, STPNOC did not have authority to submit the Application.

STPNOCs lack of authority to submit the Application provides grounds for dismissal or, in the alternative, a hearing to determine whether STPNOC acted within the scope of its agency authority in its submissions and representations to NRC.

65 Nine Mile Point, CLI-99-30, 50 NRC at 341 (quoting North Atlantic Energy Service Corp. (Seabrook Station, Unit 1), CLI-99-6, 49 NRC 201, 215 (Mar. 5, 1999)).

66 Ex. B, Operating Agreement, Section 5.3.

67 Nine Mile Point, CLI-99-30, 50 NRC at 341 (internal quotations omitted).

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C. Contention 2: NRG does not have authority to transfer its ownership interest to Constellation.

For the reasons set forth herein, NRG does not have authority to transfer its ownership interest to Constellation until Austin and CPS Energy have had an opportunity to determine whether to exercise their respective ROFR option. Further, if either Austin or CPS Energy exercise their ROFR with regard to all or a portion of NRCs 44% ownership share in STP, then NRG would be precluded from transferring the same interest to Constellation, the transaction could not be consummated as presently proposed, and the Application could not be approved as submitted. As stated above, Austin and CPS Energy will notify the Commission promptly following completion of their ROFR evaluation.

D. Contention 3: STPNOC and NRG do not have authority to diminish the parental support commitments associated with NRCs 44% share.

Because NRG and Constellation are not electric utilities subject to cost of service ratemaking, Applicants must demonstrate Constellations financial wherewithal after the transfer to cover facility operating costs.68 NRG South Texas LPs sole asset is its 44% interest in STP.69 Accordingly, as stated in the Application, upstream affiliates of NRG currently provide two overlapping $120 million support agreements to backstop NRCs share of facility operating costs (Support Agreements).70 Pursuant to the terms of those Support Agreements, NRG and its affiliates may not modify or cancel the Support Agreements without prior written consent of the Director of the Office of Nuclear Reactor Regulation (NRR).71 That restriction dates back to NRCs conditional 68 10 C.F.R. § 50.33(f)(2); NUREG-1577, Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance, Rev. 1, 10 (Dec. 2001) (ADAMS Accession No. ML013330264).

69 Equity Purchase Agreement, Section 3.4(c).

70 Application, Encl. 4, at 9 n.4.

71 Application for Order Approving Indirect Transfer of Control of Licenses (May 3, 2007) (ADAMS Accession No. ML071340049), Att. 4, Support Agreement of NRG Energy, Inc. & Support Agreement of NRG Texas LLC, Sections 11 of both Support Agreements.

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approval of the original $120 million support agreement provided by Texas Genco during earlier transfers and reorganizations of what has now become NRCs 44% share. In staffs order issued April 4, 2005 (2005 Order), it approved the transfer subject to the following condition:

Texas Genco shall take no action to cause Texas Genco LLC, or its successors and assigns, to void, cancel, or modify its $120 million contingency commitment to Texas Genco, as represented in the application, or cause it to fail to perform or impair its performance under the commitment, or remove or interfere with Texas Gencos ability to draw upon the commitment, without the prior written consent of the Director of the Office of Nuclear Reactor Regulation. An executed copy of the Support Agreement shall be submitted to the NRC no later than 30 days after completion of the indirect license transfers. Also, Texas Genco shall inform the NRC in writing any time that it draws upon the $120 million commitment. 72 When NRG Energy acquired Texas Gencos interest in STP, the sale agreement specifically required NRG Energy to assume effective as of the Closing Date the obligations of Genco under the Support Agreement, dated as of April 13, 2005.73 And NRC reiterated that its approval of the transfer remained subject to NRCs maintenance of the $120 million support agreement and the conditions imposed by staffs 2005 Order.74 The current Application requests NRCs prior written consent to void and cancel the existing April 11, 2006, and November 2, 2006, Support Agreements with NRG [Energy Inc.] and NRG Texas LLC, upon closing of the Transaction.75 Constellation is proposing to replace the Support Agreements 72 Order Approving Application Regarding Proposed Acquisition, 3 (Apr. 4, 2005) (ADAMS Accession No. ML050800505); Safety Evaluation Related to Indirect License Transfers Resulting from Indirect Transfer of Ownership of Texas Genco, LP, at 5-6 (Apr. 4, 2005) (ADAMS Accession No. ML050950286).

73 Acquisition Agreement among Texas Genco LLC NRG Energy, Inc. and the Direct and Indirect Owners of Texas Genco LLC, at Section 6.5(c) (Sep. 30, 2005) available at https://www.sec.gov/Archives/edgar/data/1013871/000095012305011735/y13218exv2w1.htm.

74 Order Approving Application Regarding Proposed Acquisition, Safety Evaluation, at 4-5 (Jan. 12, 2006) (ADAMS Accession No. ML053630163). So too when NRG later requested a threshold determination that its upstream reorganization of NRG and corresponding addition and modification to the existing $120 million support agreement, NRC staff confirmed that the condition in staffs 2005 Order remains applicable. Modification of Financial Support Agreement; Threshold Review of Corporate Restructuring Undertaken by NRG Energy, Inc. (Nov. 2, 2006) (ADAMS Accession No. ML061110194) (Staff reissued the letter to include a signature by the NRR director, in compliance with the condition in staffs 2005 order).

75 Application, Encl. 1, at 9.

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with an intracompany debt agreement, whereby [Constellation] will commit to provide up to $90 million in credit, if necessary, to [NRG South Texas LP], to satisfy the need for funding its pro rata share of STPs ongoing operating and maintenance expenses.76 In addition to reducing financial support by $30 million, Constellations agreement also does not conform to the conditions set forth staffs April 2005 Order. Per its terms, the Constellation agreement can be amended or modified any time by providing prior written notice to the Director of NRR, and the agreement shall terminate

[without notice or approval] at such time as [Constellation] is no longer the direct or indirect owner of any of the shares or other ownership interest in [NRG] or whenever the Facility permanently ceases commercial operations and certification is made as to the permanent removal of fuel from the reactor vessels.77 The Application reduces the financial resources available to support NRCs 44% share of STP ownership responsibilities. Neither STPNOC nor NRG has the authority to terminate NRCs regulatory commitment set forth in the current Support Agreements and the 2005 Order without Owners Committee approval. The Participation Agreement states, [t]he Owners Committee shall . . .

[a]pprove and join, where necessary, any application or amended application to the Nuclear Regulatory Commission.78 The fact that STPNOC originally made the regulatory commitment on behalf of NRCs predecessors and its affiliates and parent companies does not avoid the need for Owners Committee approval to submit an application asking NRC to amend or terminate that regulatory commitment.79 Of course, in addition to satisfying NRCs financial review, parental support 76 Application, Encl. 1, at 8.

77 Application, Encl. 6, at Section 9.

78 Ex. A, Participation Agreement, Section 9.3.6.

79 See STPNOC, Application for Order Approving Indirect Control of Licenses, Application, at 20 (Oct. 12, 2004)

(ADAMS Accession No. ML042890380); STPNOC, Notice Regarding NRG Energy, Inc. Corporate Restructuring Affecting NRG South Texas LP and Request for Consent to Support Agreement Modifications (Apr. 13, 2006)

(ADAMS Accession No. ML061110194); STPNOC, Application for Order Approving Indirect Transfer of Control 24

of a special purpose entity with no other assets beyond STP is necessary to protect CPS Energys and Austins interests in STP too. The Owners Committee did not authorize Applicants to submit an application requesting termination of NRCs longstanding parental support obligations in a manner that reduces the NRC regulatory commitment and increases the risk to the other Participants.

Accordingly, the Application is deficient because Applicants do not have authority to terminate and reduce NRCs existing regulatory commitment to maintain the $120 million support agreements under the terms set forth in the 2005 Order.

V. CONCLUSION For the foregoing reasons, CPS Energy and Austin respectfully request that the Commission dismiss the Application and defer any review of any application seeking approval of the Proposed Transaction until CPS Energy and Austin can complete their ROFR reviews. The Commission should condition its review or approval of any application in connection with the Proposed Transaction on the Applicants submission of the certification contemplated by § 50.80(b)(2). In the alternative, CPS Energy and Austin request to be admitted as parties and request that the Commission set for hearing the contentions set forth herein.

of Licenses (May 3, 2007) (ADAMS Accession No. ML071340049); Ex. A, Participation Agreement, Section 9.4 (All decisions reached by the Owners Committee on matters concerning the South Texas Project . . . shall be binding upon all Participants.).

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Respectfully submitted,

/Signed electronically by Alan D. Lovett/

M. Stanford Blanton Alan D. Lovett BALCH & BINGHAM LLP 1710 Sixth Avenue North Birmingham, AL 35203-2015 (205) 226-3417 Counsel for City of San Antonio, Texas (205) 226-8769 acting by and through the City Public sblanton@balch.com Service Board of San Antonio alovett@balch.com

/Executed in Accord with 10 C.F.R. § 2.304(d)/

Anne L. Morgan, City Attorney Andrew J. Perny, Chief, Utilities and Regulatory Division Ariane Arth, Assistant City Attorney City of Austin - Law Department P.O. Box 1546 Austin, Texas 78767-1546 Telephone: (512) 974-3454 Facsimile: (512) 974-1311 Counsel for City of Austin, Texas Andy.Perny@austintexas.gov d/b/a Austin Energy Ariane.Arth@austintexas.gov July 31, 2023 26

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

)

)

)

)

)

South Texas Project Units 1 and 2 ) Docket Nos. STN 50-498

) STN-50-499

) 72-1041-LT

)

)

CERTIFICATE OF SERVICE I hereby certify that the foregoing Motion and Petition to Intervene of CPS Energy and Austin, and all related exhibits and attachments thereto, have been served through the E-Filing system on the participants in the above-captioned proceeding this 31st day of July 2023.

/signed electronically by Alan D. Lovett/

Alan D. Lovett BALCH &BINGHAM LLP 1710 Sixth Avenue North Birmingham, AL 35203-2015 (205) 226-8769 alovett@balch.com Counsel for CPS Energy

[certificate of service]