ML20216G390

SER on Proposed Merger Between Duquesne Light Co & Allegheny Power Sys,Inc

ML20216G390
Person / Time
Site:	Perry
Issue date:	03/11/1998
From:	NRC (Affiliation Not Assigned)
To:
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ML20216G377	List: ML20216G374 ML20216G382 ML20216G390
References
NUDOCS 9803190391
Download: ML20216G390 (3)

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,. g j NUCLEAR REGULATORY COMMISSION WASHINGTON, D,C. 30006 0001 SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION REGARDING PROPOSED MERGER DUQUESNE LIGHT COMPANY DOCKET NO. 50-440 PERRY NUCLEAR POWER PLANT. UNIT 1

1.0 INTRODUCTION

Under cover of a letter dated August 1,1997, Duquesne Light Company (DLC), requested the consent of the Nuclear Regulatory Commission (NRC) in connection with a proposed merger of the parent of DLC and Allegheny Power System, Inc. DLC, a wholly owned subsidiary of DQE, Inc., owns a 13.74-percent interest in the Perry Nuclear Power Plant, Unit 1 (PNPP). Under the proposed merger of DQE, Inc. and Allegheny Power System, Inc., DLC will become an indirect subsidiary of Allegheny Power System, Inc., which will change its name to Allegheny Energy Inc. (Allegheny Energy). The merger agreement provides that DQE, Inc. common stockholders will be entitled to exchange each DQE, Inc.. share for 1.12 shares of Aliegheny Energy stock.

After the merger, DLC will continue to be a public utility providing the same utility services as it ,

did immediately preceding the merger. DLC will continue to be a licensee of PNPP. No direct l transfer of the operating license or interest in PNPP will result from the proposed merger, j Cleveland Electric illuminating Company (CEI) and Centerior Service Company (CSC), which J are the operators responsible for the operation and maintenance of PNPP, will remain as the operators after the merger. Approval for the indirect transfer of the license to the extent ,

. effected by the proposed merger is being sought from the NRC pursuant to 10 CFR 50.80. j Pursuant to 10 CFR 50.80, the NRC may approve the transfer of the control of a license after notice to interested persons. Such approval is contingent upon the NRC's determination that the holder of the license following the transfer of control is qualifed to hold the license, and the transfer is otherwise consistent with applicable provisions of law, regulations, and orders of the NRC.

2.; FINANCIAL QUALIFICATIONS DLC will continue as a 13.74-percent owner of PNPP and will remain an electric utility engaged in the generation and distribution of electricity for wholesale and retail markets, the cost of which electricity is recovered through rates established by separate regulatory authorities.

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. 2- 1 DLC's application states that the proposed merger will have no effect on the funds available for DLC to carry out activities under the operating license. The Federal Energy Regulatory Commission will still regulate DLC's wholesale electric rates, and the Pennsylvania Public Utility  !

Commission will also maintain jurisdiction over the licensee's retail electric rates. In addition, the application states that the proposed merger will have no effect on DLC's capital structure or i capital costs and will not result in any change in DLC's wholesale or retail rates. Moreover, there will be no change in DLC's source of funds for operating costs and eventual i decommissioning costs for PNPP. As an electric utility, DLC is exempt from further financial qualifications review, pursuant to 10 CFR 50.33(f). l However, in view of the NRC's concem that a merger or restructuring can lead to a diminution of assets necessary for the safe operation and eventual decommissioning of a licensee's nuclear power plant, the NRC's practice has been to condition respective license transfer  ;

approvals upon a requirement that the licensee not transfer significant assets from the licensee to an affiliate without notifying the NRC.. This requirement assists the NRC in assuring that a  :

licensee will continue to maintain adequate resources to contribute to the safe operation and decommissioning of its facility. Thus, the following statement should be made a condition of the Order approving the application regarding the proposed merger and restructuring whereby DLC will become an indirect subsidiary of Allegheny Energy:  ;

i DLC shall provide the Director of the Office of Nuclear Reactor Regulation a copy l of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from DLC to its first- or second- tier parent, or to any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding ten percent (10%) of

. DLC's consolidated not utility plant, as recorded on DLC's books of accounts.

3.0 TECHNICAL QUALIFICATIONS .

CEI and CSC, the only licensees of PNPP authorized to operate and maintain the facility, are not involved in the proposed merger. DLC has stated in its application that the proposed merger involves no change to either the management organization or technical personnel of CEI and CSC. Accordingly, the proposed merger does not raise any problematic technical qualificationa issues.

4.0 ANTITRUST Section 105c of the Atomic Energy Act of 1954, as amended (the Act), which requires the NRC to conduct antitrust reviews, applies to an application for a license to construct or operate a facility licensed under Section 103 of the Act. Although Allegheny Energy may become the second-tier holding company of a licensee for PNPP, i.e., may indirectly acquire control of the PNPP license, the application does not indicate that Allegheny Energy will be performing activities for which a license is needed. Since approval of the application would not involve the issuance of a license, the procedures under Section 105c do not apply, including the making of any 'significant changes' determination.

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, American Municipal Power-Ohio, Inc. (AMP-Ohio), filed comments dated November 7,1997, relating to the proposed merger. AMP-Ohio is a non-profit Ohio corporation with a membership 1 made up of municipalities within Ohio and West Virginia that own and operate electric utility systems, as well as some that operate generating facilities. Its primary purpose is to assist its member communities in meeting their electric power and energy reeeds. ]

During the licensing of PNPP, antitrust license conditions were attached to the PNPP license.

AMP-Ohio members are beneficiaries of these antitrust license conditions. These conditions require transmission access and impose an obligation on the licensees to provide certain types of power and support services, amo c /her things. !n its letter of November 7,1997, AMP-Ohio requested that the NRC requir gheny Power System, Inc. to affirm that it will abide by the PNPP antitrust license conditions, ms a condition to the NRC's approval of the application regarding the proposed merger.

Since DLC's application does not involve the issuance of a license under section 103 of the Act or otherwise, and Allegheny Power System, Inc. will not become a licensee as a result of the proposed merger, as stated earlier the antitrust review provisions in section 105c are not applicable in this case. In any event, how,ver, DLC's application does not seek any changes to the existing PNPP antitrust license conditions. The licensees subject to the antitrust license conditions of PNPP will remain subject to those conditions following the proposed merger.

Approval of the application will not result in any change in the existing antitrust license conditions, or affect the NRC's enforcement of such conditions. The staff concludes the condition requested by AMP-Ohio is not warranted.

5.0 FOREIGN OWNERSHIP. CONTROL. OR DOMINATION DLC indicated in its application that after the proposed merger, DLC will not be owned, l controlled, or dominated by an alien, foreign corporation, or foreign govemment. The NRC staff l' does not know or have reason to believe that consummation of the proposed merger will result in DLC being owned, controlled, or dominated by foreign interests.

6.0 CONCLUSION

S I In view of the foregoing, the NRC staff concludes that the proposed merger of Allegheny Power System, Inc. and DQE, Inc. will not adversely affect the financial qualifications of DLC with respect to the operation and decommissioning of PNPP. Also, there do not appear to be any problematic antitrust or foreign ownership considerations related to the PNPP license that would result from the proposed merger. Thus, the proposed merger will not affect the qualifications of DLC as a holder of the license, and the transfer of control of the license, to the extent effected by the proposed merger, is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission. Accordingly, with the condition discussed above relating to significant asset transfers, the NRC should approve the application regarding the proposed merger.

Principal Contributor: M.A. Dusaniwskyj Date: March 11, 1998

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, . Mr. l.sw W. Myers l 3

• Vice President - Nucle:r, Perry Centeri2r Service Company i

,g P.O. Box 97, A200  !

Perry, OH 44081  ;

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SUBJECT:

ORDER APPROVING APPLICATION REGARDING MERGER AGREEMENT BETWEEN DQE, INC. AND ALLEGHENY POWER SYSTEM, INC. AFFECTING ,

FACILITY LICENSE NO. NPF-58, PERRY NUCLEAR POWER PLANT, UNIT 1 )

(TAC NO. M99357) .

l

Dear Mr. Myers:

The enclosed Order is in response to a request dated August 1,1997, as supplemented i C Mar 30,1997, from Duquesne Light Company, for consent of the Nuclear Regulatory Co',imission (NRC), pursuant to Section 50.80 of Title 10 of the Code of Federal Regulations.

of .he indirect transfer of the Perry Nuclear Power Plant, Unit No.1, Facility Operating License No. NPF-58 to the extent held by Duquesne Light Company (DLC), that will cccur under a proposed merger of DQE, Inc. (the parent holding company of DLC) and Alleghen/ Power System, Inc. DOE, Inc. will become a wholly owned subsidiary of Allegheny Power System, ,

Inc., which will be renamed Allegheny Energy, Inc. DLC will remain a direct subsidiary of DQE, l Inc., but will become an indirect subsidiary of Allegheny Energy, Inc. The NRC staffs safety evaluation in support of the Order is also enclosed.

I The Order is being forwarded to the Office of the Federal Register for publication.

Sincerely,  !

Original signed by:

Douglas V. Pickett, Senior Project Manager Project Directorate lll-3 Division of Reactor Projects - lil/lV Docket No. 50-440 Office of Nuclear Reactor Regulation DISTRIBUTION SCollins/FMiraglia

Enclosures:

1. Ordar Docket File BBoger i

2. Safety Evaluation PUBLIC EAdensam (EGA1)

PD3-3 R/F GGrant, Rill i cc w4ncis: See next page OGC THiltz, OEDO i i

ACRS GHill(2)

DOCUMENT NAME: G:\ PERRY \PER99357.ORD SECY THarris (TLH3, SE only)

TEssig

' Ta veceive o espy of this document, indcote in the box: "C" = Copy without enclosures *E* = Copy with enclosures *N* = Noyagy 0FFICE PM:PDIII-3 f LA:PDIII-3 6 (A)D:PDIll-3 OGCtOP /A)

NAME DPickett &< EBarnhill P/ P RSavio* %F W DATE 03/ 4- /9 0$/04/98 02/ 8 /98 0)/ ln /98 F

, *See previous concurrence OFFICIAL RECORD COPY i

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2 NUCLEAR REEULATORY COMMISSION WASHINGTON, D.C. 30086 0001

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j 9***** March 11, 1998 l

Mr. Lew W. Myers l Vice President - Nuclear Perry Centerior Service Company P.O. Box 97, A200 l Perry OH 44081 i

l

SUBJECT:

ORDER APPROVING APPLICATION REGARDING MERGER AGREEMENT BETWEEN DQE,INC. AND ALLEGHENY POWER SYSTEM,INC. AFFECTING  !

FACILITY LICENSE NO. NPF-58, PERRY NUCLEAR POWER PLANT, UNIT 1 l (TAC NO. M99357)

Dear Mr. Myers:

The anclosed Order is in response to a re.;uest dated August 1,1997, as supplemented l October 30,1937, from Duquesne Light Corapanv for consent of the Nuclear Regulatory Commission (NRC), pursuant to Section 50.Bf O fitle 10 of the Code of Federal Reautations.

of the indirect transfer of the Perry Nuclear Power Plant, Unit No.1 Facility Operating License No. NPF-58 to the extent held by Duquesne Light Company (DLC), that will occur under a propoced merger of DQE, Inc. (the parent holding company of DLC) and Allegheny Power System, Inc. DQE, Inc. will become a wholly owned subsidiary of Allegheny Power System, Inc., which will be renamed Allegheny Energy, Inc. DLC will remain a direct subsidiary of DQE, Inc., but will become an indirect subsidiary of Allegheny Energy, Inc. The NRC staff's safety evaluation in support of the Order is also enclosed.

The Order is being forwarded to the Office of the Federal Register for publication.

Sincerely,

'% }~ V 0NN Douglas V. Pickett, Senior Project Manager Project Directorate 111-3 Division of Reactor Projects - fil/IV Office of Nuclear Reactor Regulation Docket No. 50-440

Enclosures:

1. Order

2. Safety Evaluation cc w/encis: See next page e

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L. Myers Pwv Nucle:r Power Pirnt, Units 1 cnd 2 3

Centerior Service Company cc:

Jay E. Silberg, Esq. James R. Wil!iams Shaw, Pittman, Potts & Trowbridge Chief of Staff 2300 N Street, NW. Ohio Emergency Management Agency Washington, DC 20037 2855 West Dublin Granville Road Columbus, OH 43235-2206 Mary E. O'Reilly Centerior Energy Corporation Mayor, Village of Perry 300 Madison Avenue 4203 Harper Street Toledo, OH 43652 Perry, OH 44081 Resident inspector's Office Roy P. Lessy, Jr.

U O. Nuclear Regulatory Commission Akin, Gump, Strauss, Hauer P.O. Box 331 and Feld, L.L.P.

Perry, OH 44081-0331 1333 New Hampshire Ave., NW.

Suite 400 Regional Administrator, Region lil Washington, DC 20006 U.S. Nuclear Regulatory Commission 801 Warrenville Road Radiological Health Program Lisle,IL 60532-4531 Ohio Department of Health P.O. Box 118 Lake County Prosecutor Columbus, OH 43266-0118 Lake County Administration Bldg.

105 Main Street Ohio Environmental Protection Painesville, OH 44077 Agency DERR-Compliance Unit Sue Hiatt ATTN: Mr. Zack A. Clayton OCRE Interim Representative P.O. Box 1049 8275 Munson Columbus, OH 43266-0149 Mentor, OH 44060 Chairman Terry J. Lodge, Esq. Perry Township Board of Trustees 618 N. Michigan Street, Suite 105 3750 Center Road, Box 65 Toledo, OH 43624 Perry, OH 44081 Ashtabula County Prosecutor State of Ohio 25 West Jefferson Street Public Utilities Commission Jefferson, OH 44047 East Broad Street Columbus, OH 43266-0573 Henry L. Hegrat Regulatory Affairs Manager William R. Kanda, Jr., Plant Manager Cleveland Electric illuminating Co. Cleveland Electric liluminating Co.

Perry Nuclear Power Plant Perry Nuclear Power Plant P.O. Box 97, A210 P.O. Box 97, SB306 Perry, OH 44081 Perry, OH 44081

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Donna Owens, Director Ohio Department of Commerce Division of Industrial Compliance Bureau of Operations & Maintenance 6606 Tussing Road P.O. Box 4009 Reynoldsburg, OH 43068-9009 Mayor, Vailage of North Perry North Perry Village Hall 4778 Lockwood Road North Perry Village, OH 44081 Attorney General Department of Attorney General 30 East Broad Street Columbus, OH 43216 4

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7590-01-P UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION in the Matter of )

)

THE CLEVELAND ELECTRIC ) Docket No. 50-440 ILLUMINATING COMPANY )

CENTERIOR SERVICE COMPANY )

DUQUESNE LIGHT COMPANY )

OHIO EDISON COMPANY )

OES NUCLEAR, INC. )

PENNSYLVANIA POWER COMPANY )

TOLEDO EDISON COMPANY )

)

(Peny Nuclear Power Plant, Unit 1) )

ORDER APPROVING APPLICATION REGARDING MERGER AGREEMENT BETWEEN DOE, INC. AND ALLEGHENY POWER SYSTEM, INC.

1.

The Cleveland Electric illuminating Company (CEI), Centerior Service Company (CSC),

Duquesne Light Company (DLC), Ohio Edison Company, OES Nuclear, Inc., Pennsylvania Power Company, and Toledo Edison Company are the licensees of Perry Nuclear Power Plant, Unit 1 (PNPP). CEI and CSC act as agents for the other licensees and have exclusive responsibility for and control over the physical construction, operation, and maintenance of PNPP as reflected in Facility Operating License No. NPF-58. The Nuclear Regulatory Commission (NRC) issued License No. NPF-58 on March 18,1986, pursuant to Part 50 of Title 10 of the Cgic of Federal Reaulations (10 CFR Part 50). The faci;;ty is located on the shores of Lake Erie in Lake County, Ohio, approximately.35 miles northeast of Cleveland, Ohio.

II.

Under cover of a letter dated August 1,1997, DLC submitted an application for consent under 10 CFR 50.80 regarding a proposed merger of DQE, Inc. (the parent holding company of DLC), and Allegheny Power System, Inc. which would result in DQE, Inc. becoming a wholly I l

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. owned subsidiary of Allegheny Power System, Inc. Allegheny Power System, Inc. would change its name to Allegheny Energy, Inc. (Allegheny Energy). CEl, CSC, Ohio Edison Company, OES Nuclear, Inc., Pennsylvania Power Company, and Toledo Edison Company are not involved in the merger. Supplemental information was submitted by letter dated -

October 30,1997.

Under the proposed merger, DLC will become an indirect subsidiary of Allegheny Energy by reason of DQE, Inc. becoming a subsidiary of Allegheny Energy. DLC and the other current licensees will continue to hold the license, and no direct transfer of the license will Gtalt from the merger. On October 21,1997, a Notice of Consideration of Approval of Application Regarding Proposed Corporate Restructuring was published in the Federal Register (62 FR 54655). An Environmental Assessment and Finding of No Significant impact was published in the Federal Register on October 21,1997 (62 FR 54657).

Under 10 CFR 50.80, no license shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission gives its consent in writing. Upon review of the information submitted in the application and letters of August 1,1997, and October 30,1997, the NRC staff has determined that the proposed merger will not affect the l l

qualifications of DLC as holder of Facility Operating License No. NPF-58, and that the transfer i

of control of the license, to the extent effected by the proposed merger, is otherwise consistent  ;

with applicable provisions of law, regulations, and orders issued by the Commission, subject to the conditions set forth herein. These findings are supported by a safety evaluation dated March 11, 1998.

Ill.

Accordingly, pursuant to Sections 161b,1611,161o, and 184 of the Atomic Energy Act of 1954, as amended; 42 USC $$ 2201(b),2201(i),2201(o), and 2234; and 10 CFR 50.80, IT

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, IS HEREBY ORDERED that the Commission approves the application regarding the merger agreement between DOE, Inc. and Allegheny Power System, Inc. subject to the following:

(1) DLC shall provide the Director of the Office of Nuclear Reactor Regulation with a copy of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from DLC to its first- or second- tier 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 of DLC's consolidated not utility plant, as recorded on DLC's books of account; and (2) should the merger not be completed by December 31,1998, this Order shall become null and void, unless upon application and for good cause shown, this date is extended.

This Order is effective upon issuance.

IV.

By April 17, 1998 , any person adversely affected by this Order may file a request for a hearing with respect to issuance of the Order. Any person requesting a hearing shall set forth with particularity how such person's interest is adversely affected by this Order and shall address the criteria set forth in 10 CFR 2.714(d).

If a hearing is to be held, the Comm.ission will issue an order designating the time and I

place of such hearing.

The issue to be considered at any such hearing shall be whether this Order should be sustained.

Any request for a hearing must be filed with the Secretary of the Commission, U.S.

Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemakings and Adjudications Staff, or may be delivered to the Commission's Public Document Room, the Gelman Building,2120 L Street, NW., Washington, DC, by the above date. Copies should also

a-j be sent to the Office of the General Counsel and to the Director, ONice of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, and to John O'Neill, Esq., Shaw, Pittman, Potts and Trowbridge,2300 N Street, NW., Washington, DC 20037, attorney for the licensee.

For further details with respect to this action, see DLC's application dated August 1, 1997, ar'd supplemental letter dated October 30,1997, and the safety evaluation dated

&rch 11,1998 , which are available for public inspection at the Commissions's Public Document Room, the Gelman Building,2120 L Street, NW., Washington, DC, and at the local public document room located at the Perry Public Library,3753 Main Street, Perry, OH.

FOR THE NUCLEAR REGULATORY COMMISSION MMD senusu.comns Samuel J. Collins, Director Office of Nuclear Reactor Regulation D'ated at Rockville, Maryland, this lith day of March 1998.

DOCUMENT NAME: G:\ PERRY \PER99357.ORD Ta receive a copy of this document. Indicate in the box: "C" = Copy without enclosures "E" = Copy with enclosures "N" = No copy n OFFICE PDill-3:PM , p E TECH ED PDill-3:LA E PGEB:(A)BC OGCMT NAME DPickett ' BCalure* EBamhill Qff- TEssig* , %. H1h4 DATE 03/ G /98 02/26 /98 03/46/98 02/03 /98 _ Ohlj/98 mammmmmeumummmmmmmmmum e ammmmmmmmmmmmu mmiu muupsudiimumummmum ununu OFFICE PDill-3:(A)D E DRPW:(A)D (A)AD:ADPR N f NAME RSavio" EAdensam* BBo9er* 8'SCo W DATE 02/08/98 02/18/98 02/20/98 / 03/\\/98

• See previous concurrence 0 OFFICIAL RECORD COPY

e  !

4 be sent to the Office of the General Counsel and to the Director, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, and to John O'Neill, Esq., Shaw, Pittman, Potts and Trowbridge, 2300 N Street, NW., Washington, ,DC 20037, attorney br the licensee. l For further details with respect to this action, see DLC's application dated August 1, j 1997, and supplemental letter dated October 30,1997, and the safety evaluation dated l Nrth 11,1998 , which are available for public inspection at the Commissions's Public i

Document Room, the Gelman Building, 2120 L Street, NW., Washington. DC, and at the local i public document room located at the Perry Public Library, 3753 Main Street, Perry, OH. i FOR THE NUCLEAR REGULATORY COMMISSION I

f irector Office of Nuclear Reactor Regulation bated at Rockville, Maryland, this lith day of March 1998.

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UNITED STATES g ,

NUCLEAR REEULATORY COMMISSION WASHINGTON, D.C. 3000HOM SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION REGARDING PROPOSED MERGER DUQUESNE LIGHT COMPANY DOCKET NO. 50-440 PERRY NUCLEAR POWER PLANT. UNIT 1

1.0 INTRODUCTION

' Under cover of a letter dated August 1,1997, Duquesne Light Company (DLC), requested the consent of the Nuclear Regulatory Commission (NRC) in connection with a proposed merger of the parent of DLC and Allegheny Power System, Inc. DLC, a wholly owned subsidiary of DQE,  !

inc., owns a 13.74-percent interest in the Perry Nuclear Power Plant, Unit 1 (PNPP). Under the i proposed merger of DQE, Inc. and Allegheny Power System, Inc., DLC will become un indirect  !

subsidiary of Allegheny Power System, Inc., which will change its name to Allegheny Energy Inc. (Allegheny Energy). The merger agreement provides that DQE, Inc. common stockholders will be entitled to exchange each DQE, Inc.. share for 1.12 shares of AJiegheny Energy stock.

fler the merger, DLC will continue to be a public utility providing the same utility services as it did immediately preceding the merger. DLC will continue to be a licensee of PNPP. No direct transfer of the operating license or interest in PNPP will result from the proposed merger.

Cleveland Electric illuminating Company (CEI) and Centerior Service Company (CSC), which are the operators responsible for the operation a,d maintenance of PNPP, will remain as the operators after the merger. Approval for the indiret.1 transfer of the license to the extent effected by the proposed me; jer is being sought from the NRC pursuant to 10 CFR 50.80.

Pursuant to 10 CFR 50.80, the NRC may approve the transfer of the control of a license after notice to interested persons. Such approval is contingent upon the NRC's determination that the holder of the license following the transfer of control is qualified to hold the license, and the transfer is otherwise consistent with applicable provisions of law, regulations, and orders of the NRC.

2.0 FINANCIAL QUALIFICATIONS DLC will continue as a 13.74-percent owner of PNPP and will remain an electric utility engaged in the generation and distribution of electricity for wholesale and retail markets, the cost of which electricity is recovered through rates established by separate regulatory atthorities.

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, l DLC's application states that the proposed merger will have no effect on the funds available for DLC to carry out activities under the operating license. The Federal Energy Regulatory Commission will still regulate DLC's wholesale electric rates, and the Pennsylvania Public Utility Commission will also maintain jurisdiction over the licensee's retail electric rates. In addition, ,

the application states that the proposed merger will have no effect on DLC's capital structure or capital costs and will not result in any change in DLC's wholesale or retail rates. Moreover, there will be no change in DLC's source of funds for operating costs and eventual decommissioning costs for PNPP. As an electric utility, DLC is exempt from further financial  ;

qualifications review, pursuant to 10 CFR 50.33(f).

dowever, in view of the NRC's concem that a merger or restructuring can lead to a diminution of assets necessary for the safe operation and eventual decommissioning of a licensee's nuclear power plant, the NRC's practice has been to condition respective license transfer approvals upon a requirement that the licensee not transfer significant assets from the licensee to an affiliate without notifying the NRC.. This requEement assists the NRC in assuring that a licensee will continue to maintain adequate researces to contribute to the safe operation and decommissioning of its facility. Thus, the following statement should be made a condition of the order approving the application regarding the proposed merger and restructuring whereby DLC 1 will become an indirect subsidiary of Allegheny Energy:

DLC 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 DLC to its first- or second- tier parent, or to any other l affiliated company, facilities for the production, transmission, or distribution of j electric energy having a depreciated book value exceeding ten percent (10%) of DLC's consolidated net utility plant, as recorded on DLC's books of accounts.

3.0 TECHNICAL QUALIFICATIONS ,

CEI and CSC, the only licensees of PNPP authorized to operate and maintain the facility, are not involved in the proposed merger. DLC has stated in its application that the proposed merger involves no change to either the management organization or technical personnel of CEI and CSC. Accordingly, the proposed merger does not raise any problematic technical qualifications issues.

4.0 6NTITRUST Section 105c of the Atomic Energy Act of 1954, as amended (the Act), which requires the NRC to conduct antitrust reviews, applies to an application for a license to construct or operate a facility licensed under Section 103 of the Act. Although Allegheny Energy may become the second-tier holding company of a licensee for PNPP, i.e., may indirectly acquire control of the PNPP license, the application does not indicate that Allegheny Energy will be performing activities for which a license is needed. Since approval of the application would not involve the issuance of a license, the procedures under Section 105c do not apply, including the making of any "significant changes" determination.

, American Municipal Power-Ohio, Inc. (AMP-Ohio), filed commer.ts dated November 7,1997, relating to the proposed merger. AMP-Ohio is a non-profit Ohio corporation with a membership made up of municipalities within Ohio and West Virginia that own and operate electric utility systems, as well as some that operate generating facilities. Its primary purpose is to assist its member communities in meeting tneir electric power and energy needs.

During the licensing of PNPP, antitrust license conditions were attached to the PNPP license.

AMP-Ohio members are beneficiaries of these antitrust license conditions. These conditions require transmission access and impose an obligation on the licensees to provide certain types of power and support services, among other things. In its letter of November 7,1997, AMP- 1 Ohio requested that the NRC require Allegheny Power System, Inc. to affirm that it will abide by )

the PNPP antitrust license conditions, as a condition to the NRC's approval of the application  !

regarding the proposed merger, i Since DLC's application does not involve the issuance of a license under section 103 of the Act or otherwise, and Allegheny Power System, Inc. will not become a licensee as a result of the proposed merger, as stated ea lier the antitrust review provisions in section 105c are not appliv,le in this case. In any event, however, DLC's application does not seek any changes to the existing PNPP antitrust license conditions. The licensees subject to the antitrust license conditions of PNPP will remain subject to those conditions following the proposed merger.

Approval of the application will not result in any change in the existing antitrust license conditions, or affect the NRC's enforcement of such conditions. The staff concludes the condition requested by AMP-Ohio is not warranted.

5.0 FOREIGN OWNERSHIP. CONTROL. OR DOMINATION DLC indicated in its application that after the proposed merger, DLC will not be owned, controlled, or dominated by an alien, foreign corporation, or foreign govemment. The NRC staff does not know or have reason to believe that consummation of the proposed merger will result in DLC being owned, controlled, or dominated by foreign interests.

6.0 CONCLUSION

S in view of the foregoing, the NRC staff concludes that the proposed merger of Allegheny Power System, Inc. and DQE, Inc. will not adversely affect the financial qualifications of DLC with respect to the operation and decommissioning of PNPP. Also, there do not appear to be any problematic antitrust or foreign ownership considerations related to the PNPP license that would result from the proposed merger. Thus, the proposed merger will not affect the qualifications of DLC as a holder of the license, and the transfer of control of the license, to the extent effected by the proposed merger, is otherwise consistent with applicable provisions of law, reguictions, and orders issued by the Commission. Accordingly, with the condition discussed abovs relating to significant asset transfers, the NRC should approve the application  ;

regarding the proposed merger.

Pf./Moal Contributor. M.A. Dusaniwskyj Dak @ rch 11, 1998