ML20128P224

Forwards Analysis of Financial Qualifications & Antitrust Reviews & Input to SER on Proposal to NRC by Houston Lighting & Power Co

ML20128P224
Person / Time
Site:	South Texas
Issue date:	10/10/1996
From:	Matthews D NRC (Affiliation Not Assigned)
To:	Beckner W NRC (Affiliation Not Assigned)
References
A, NUDOCS 9610170181
Download: ML20128P224 (5)

Text

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!I k UNITED STATES r s y NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20606-0001

!  % # October 10, 1996 MEMORANDUM T0: William D. Beckner, Director

] Project Directorate IV-1

Division of Reactor Projects III/IV j Office of Nuclear Reactor Regulation I FRON: David B. Matthews, Branch Chief Generic Issues & Environmental

! Projects Branch  !

! Division of Reactor Program Management j Office of Nuclear Reactor Regulation

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SUBJECT:

FINANCIAL QUALIFICATIONS AND ANTITRUST REVIEW l 0F PROPOSED FORMATION OF SOUTH TEXAS PROJECT 1 i OPERATING COMPANY (DOCKET NOS. 50-498 & 50-499) l The attached analysis constitutes our financial qualifications and antitrust

! reviews and input to the SER on the proposal dated August 23, 1996 to the NRC by Houston Lighting and Power Company (HLP) on behalf of itself and for the

! City Public Services Board of San Antonio (CPS), Central Power and Light i Company (CPL), and the City of Austin (Austin), as co-owners of the 2-unit i

South Texas Project (STP) to form an operating company (OPCO), which would become the licensed operator for STP. Upon approval and issuance of the requested license amendments, the owners will remain on the STP licenses.

Note that a recent revision to NRR procedures requires that the license amendment issued to approve this change must be signed by the Director, Office of Nuclear Reactor Regulation (See memorandum on this subject dated December  !

28, 1995 from W. Russell to D. Crutchfield and R. Zimmerman.). '

The basis of this review is i 50.80(a), which states, "No license for a 1 production or utilization facility, or any right thereunder, shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of the license to any person, unless the Commission shall give its consent in writing."

With respect to our financial qualifications review, we conclude that the proposed acquisition should be approved, based on the fact that OPC0 is merely an additional licensee, and subject to the condition that the NRC receive and review a copy of the operating agreement among the owners that will govern the rights and responsibilities of the owners and OPCO. The current owners, all of which are and will remain electric utilities as defined in 10 CFR 50.2, will remain as licensees, and, thus, there will be no change to these licensees' financial qualifications that would result from the proposed formation of the operating company.

Contacts: RobhrtWood, 415-1255 (for financial qualifications) gg i Michael J. Davis, 415-1016 (for antitrust) p 38sa Ms85P NRC FILE CENTER COPY l

i W. Beckner -2_ October 10, 1996 With respect to our antitrust review, we conclude that the formation of the i operating company as outlined by HLP in its August 23, 1996, letter does not appear to. adversely impact the bulk power services market served by STP.

Therefore, the staff has determined that no further statutory antitrust review pursrant to Section 105 of the Atomic Energy Act and 10 CFR 2.101(e) is required.

Note that this review pertains only to the request to amend STP's operating licenses to add OPC0 as operator of STP. A subsequest discussion between HLP and staff held on September 12, 1996, concerning HLP's plans to restructure itself will be reviewed when HLP submits an application for approval of an amendment to the STP licenses to reflect such restructuring action.

Attachment:

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INPUT TO SER ON THE FORMATION OF AN OPERATING COMPANY FOR THE SOUTH TEXAS PROJECT

1. BACKGROUND Houston Lighting and Power Company (HLP) on behalf of itself and for the City Public Services Board of San Antonio (CPS), Central Power and Light Company (CPL), and the City of Austin (Austin), as co-owners of the 2-unit South Texas Project (STP), applied to the NRC on August 23, 1996, to form an operating company (OPCO), which would become the licensed operator for STP.

Upon issuance of the license amendments, OPC0 would become the licensed operator for STP and would have exclusive control over the operation and maintenance of STP. The co-owners would continue to remain on the STP licenses as owners and would continue to own the assets of STP in the same respective percentages as before the issuance of the license amendments.

II. FINANCIAL QUALIFICATIONS

Based on the information provided in HLP's application, the staff finds that there will be no near-term substantive change in the owners' financial ability

to contribute appropriately to the operations and decommissioning of the STP

' units as a result of the proposed formation of OPC0. Each of the owners would

remain an " electric utility" as defined in 10 CFR 50.2, engaged in the

generation, transmission, and distribution of electric energy for wholesale and retail sale, subject to the rate regulation of the Texas Public Utility

Commission. Thus, pursuant to 10 CFR 50.33(f), the owners are exempt from j further financial qualifications review as electric utilities.

1 i Because the application requests only that OPC0 be added to the STP licenses, I

and that the current owners will remain on the STP licenses and will continue to be financially responsible for the safe operation and decommissioning of the STP units, the staff believes that HLP's application should be approved.

However, this conclusion is conditioned upon the NRC's receipt and review of

! the Operating Agreement that the owners intend to execute with respect to the

! rights and responsibilities of the owners and OPCO. If, upon NRC review, the NRC determines that the Operating Agreement is in substantial conformance with the representations made in the~ August 23, 1996, application, this condition j will be removed.

l III. ANTITRUST i In its amendment request submitted August 23, 1996, HLP stated that the plan for OPC0 to operate STP would not impact the existing ownership of STP or the 4

existing ownership of or entitlement to power from the facility. OPC0 is to

! be solely dedicated to the operation of STP and will not be involved in the marketing or brokering of power from the facility. HLP further stated that i the designation of OPC0 as the entity authorized to use and operate STP would 1

not alter the existing antitrust license conditions, which would remain applicable to all the owners. HLP concluded that the requested amendments

! would have no impact on the local market for electricity and would raise no i antitrust issues affecting that market.

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The staff has specific procedures for reviewing new non-owner operators which call for the institution of a license condition prohibiting the new non-owner operator from engaging in marketing or brokering power or energy from the facility and holding the existing owners responsible and accountable for the actions of the operator. When this license condition is included in the amendment request the staff normally will not conduct a formal antitrust review of the proposed new facility operator. HLP's amendment request includes such a license condition for each STP unit.

The amendment request has been reviewed by the staff for any competitive implications and the proposed restructuring, given the information available to the staff, does not appear to adversely impact the bulk power services market served by STP. The staff has determined that no further statutory antitrust review pursuant to Section 105 of the Atomic Energy Act and 10 CFR 2.101(e) is required.

IV. FOREIGN OWNERSHIP OPC0 will be owned only by HLP, CPS, CPL, and Austin. Currently, none of these entities is owned, controlled, or dominated by any alien, foreign corporation, or foreign government. Thus, the proposed formation of OPC0 will not result in OPC0 being owned, controlled, or dominated by any alien, foreign corporation, or foreign government.

V. CONCLUSIONS In view of the foregoing, the staff concludes that HLP's proposed formation of an operating company over STP, on behalf of itself and STP's other owners, will not adversely affect the financial qualifications of the owners with respect to the operation and decommissioning of the STP units. Also, there do not appear to be any antitrust or foreign ownership considerations related to the STP licenses that would result from OPC0's formation and operation of STP.

However, because OPCO's relationship to its owners and to STP will be legally defined by and documented in an Operating Agreement that the owners have not yet submitted to the NRC, the staff recommands that approval of the owners' August 23, 1996 request be conditioned upon NRC receipt and review of such agreement.

I t W. Beckner -2_ October 10, 1996 With respect to our antitrust review, we conclude that the formation of the operating company as outlined by HLP in its August 23, 1996, letter does not appear to adversely impact the bulk power services market served by STP.

Therefore, the staff has determined that no further statutory antitrust review pursuant to Section 105 of the Atomic Energy Act and 10 CFR 2.101(e) is required.

Note that this review pertains only to the request to amend STP's operating licenses to add OPC0 as operator of STP. A subsequest discussion between HLP and staff held on September 12, 1996, concerning HLP's plans to restructure itself will be reviewed when HLP submits an application for approval of an amendment to the STP licenses to reflect such restructuring action.

Att'achment:

As stated DISTRIBUTION:

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