ML003719602

Letter Forwarding March 31, 2000 Order Issued by the Public Service Commission of Wisconsin Which Approved the Nuclear Power Plant Operating Services Agreement Between Wisconsin Electric Power Company and Nuclear Management Company, LLC

ML003719602
Person / Time
Site:	Point Beach
Issue date:	05/19/2000
From:	Reddemann M Wisconsin Electric Power Co
To:	NRC/OCIO/IMD/RMB
References
+sispmjr200506, -RFPFR, FOIA/PA-2005-0236, NPL 2000-0223
Download: ML003719602 (8)

Text

MARK E. REDDEMANN Wisconsin Electric Site Vice President A WISCONSIN ENERGY COMPANY Point Beach Nuclear Plant 6610 Nuclear Rd.

Two Rivers, WI 54241 Phone 920-755-7627 NPL 2000-0223 May 19, 2000 10 CFR 50.80 Document Control Desk U.S. NUCLEAR REGULATORY COMMISSION Mail Station P 1-37 Washington, DC 20555 Ladies/Gentlemen:

DOCKETS 50-266, 50-301 AND 72-005 RECEIPT OF REGULATORY APPROVALS FOR TRANSFER OF OPERATING AUTHORITY POINT BEACH NUCLEAR PLANT, UNITS 1 AND 2 By letter dated May 15, 2000, the Nuclear Regulatory Commission issued an Order approving the transfer of operating authority under Facility Operating Licenses Nos. DPR-24 and DPR-27, held by Wisconsin Electric Power Company for Point Beach Nuclear Plant, Units 1 and 2, to the Nuclear Management Company, LLC. The Order also approved conforming license amendments, which will be issued and made effective at the time the transfer is completed.

The Order approved the proposed transfer subject to two conditions. The first condition requires Wisconsin Electric Power Company to inform the Director of the Office of Nuclear Reactor Regulation, in writing, within five business days after the receipt of all required regulatory approvals of the transfer of operating authority to Nuclear Management Company, LLC and of the date of the transfer no later than 7 business days prior to the transfer. The purpose of this letter is to comply with the first part of this Order condition.

On March 31, 2000, as required by applicable Wisconsin Statutes, the Public Service Commission of Wisconsin approved the Nuclear Power Plant Operating Services Agreement between Wisconsin Electric Power Company and Nuclear Management Company, LLC. A copy of the Order issued by the Public Service Commission of Wisconsin is attached for your information.

No additional regulatory authorities are required to approve the transfer of operating authority from Wisconsin Electric Power Company to Nuclear Management Company, LLC. Therefore, all regulatory approvals required to consummate the transfer of operating authority for Point Beach Nuclear Plant to Nuclear Management Company, LLC have been received by Wisconsin Electric Power Company, as of the date of the Nuclear Regulatory Commission's Order of May 15, 2000.

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NPL 2000-0223 May 19, 2000 Page 2 If you have any questions or require additional information please contact us.

Sincerely, 7artkE. eddemann Site Vice President Point Beach Nuclear Plant JG/tat Attachment Subscribed to and sworn before me this H1, day of May, 2000 S

Notary-blic,_ State of Wisconsin /i My commission expires / //

S7.- "cc: .N4RC Regional Administrator NRC Project Manager NRC Resident Inspector PSCW NRC Director, Office of Nuclear Reactor Regulation

Date Mailed March 31, 2000 BEFORE THE PUBLIC SERVICE COMMISSION OF WISCONSIN Application for Approval of Services Agreement Between Wisconsin Electric Power Company, Wisconsin Public Service Corporation, and 05-AE-101 Nuclear Management Company, LLC Order On November 24, 1999, Wisconsin Electric Power Company (WEPCO) and Wisconsin Public Service Corporation (WPSC) each requested approval of a Services Agreement with Nuclear Management Company, LLC (NMC), 700 First Street, Hudson, Wisconsin. A supplement to the filing was made on February 28, 2000.

WEC Nuclear Corporation (WEC-N), WPS Nuclear Corporation (WPS-N), and Northern States Power Company (NSP) formed NMC on February 25, 19991. WEC-N and WEPCO are wholly owned subsidiaries of Wisconsin Energy Corporation (WEC). WPS-N and WPSC are wholly owned subsidiaries of WPS Resources Corporation (WPSR).

NMC is therefore a nonutility affiliate of each of the applicants, as defined in Wis. Stat.

§ 196.795(1)0). WEPCO and NMC, and WPSC and NMC, are each affiliated interests as defined in Wis. Stat. § 196.52.

WEPCO and WPSC have each requested approval of a Nuclear Power Plant Operating Services Agreement (NPPOSA) with NMC. These agreements are identical in all material aspects2 . The NPPOSA for WEPCO and WPSC are Attachments A and B to this order.

1 Alliant Energy Corporation became a member of the NMC on November 23, 1999.

2 Exhibit 1 to the WPSC application includes some terminology variances pertinent to the Kewaunee facility.

Docket 05-AE-101 In docket 05-AE-100, the Commission approved service agreements and employee lease agreements that allowed the NMC to provide certain nuclear power plant services to its members using utility resources and employees. Under the NPPOSA, the NMC will be using its own employees, as well as some utility employees, to provide a broader range of services than previously approved. The NPPOSA is structured to provide these services to the member utilities at the NMC's cost, including a return on and of capital.

When the NPPOSA becomes effective, it will replace the service agreements approved in docket 05-AE- 100 3. The lease agreements approved in that docket will remain in effect until the non-represented employees are transferred to the NMC. This may occur at the end of 2000, according to the supplemental filing made on February 28, 2000.

Under section 2.1 (a) of the NPPOSA, the NMC has the authority to take all actions necessary to obtain or maintain any licenses or permits required by any regulatory body relating to the plant, as defined in the NPPOSA. Under section 6.1 of the NPPOSA, if any work performed by the NMC is not completed in a manner consistent with the standard of good utility practice, as defined in the NPPOSA, any reperformance of the service will be at the sole expense of the contracting member. This practice is inconsistent with general industry practice where a contractor is typically liable for rework expenses equal to the value of the contract work being performed. The parties have stated that this practice is, at this time, reasonable as the cost of carrying such insurance is expected to be greater than the cost of rework charged to member utilities.

Section 3.4 of the NPPOSA and Section 8 of Exhibit B indicate that the contracting owners agree to provide to the NMC such services as communications access and support, 3 Dated September 4, 1999.

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Docket 05-AE-101 transportation support, payroll and personnel assistance, and may also include services relating to accounting, engineering, environmental and land management of the site. Although not stated in this new agreement, any services provided to the NMC by WEPCO or WPSC and which benefit more than just the providing utility should be priced at the greater of the utility's fully allocated cost (including a reasonable return) 4 or the fair market value.

Section I of Exhibit A requires the NMC to develop and maintain written guidelines to govern the methods and procedures for charging and allocating costs. The NMC is also required to subject transactions to internal auditing procedures on a periodic basis for compliance with NPPOSA, guidelines and orders and rules established by regulatory agencies. Copies of any written guidelines or internal audits findings by the NMC should be provided to the Commission to aid in monitoring affiliated interest concerns.

This application is approved subject to the following conditions:

1. Any subsequent changes to either NPPOSA (Attachment A or B) including exhibit B shall be approved by the Commission before becoming effective.

2. Copies of any written guidelines that are developed, or findings from internal audits required by Section I of Exhibit A, shall be provided to the Commission within 30 days of development or completion.

3. The employee lease agreement (Attachment C) 5 shall remain in effect until the covered employees are transferred to direct employment with the NMC. WEPCO and WPSC shall notify the Commission of the effective date of transfer and the termination of this agreement.

4 The return should be based on each utility's authorized pre-tax return.

5 Although the attached agreement is for WIEPCO, the agreement with WPSC is identical.

3

Docket 05-AE-101

4. NMC shall notify Commission staff within 15 days after entering into the first agreement to provide services to each non-member. A copy of the contract shall be provided within 30 days.

5. Any services provided to the NMC by WEPCO or WPSC and which benefit more than just the providing utility shall be priced at the greater of the utility's fully allocated cost (including the authorized pre-tax return) or the fair market value.

6. The fully allocated costs process used for member companies will also be applied to services to non-member companies.

7. Liability for the provision of services to non-member companies will be born by NMC and none of the cost will be born by member utilities.

8. The utility and NMC will prepare their billings in sufficient detail to enable Commission staff to perform a detailed review of costs and for the Commission to determine which costs are appropriate for inclusion in utility rates. Such items as start-up costs, administrative oversight costs, costs from resources obtained from other utilities, and costs that have been disallowed in a rate case shall be listed separately.

9. NMC shall provide an annual reconciliation of the costs incurred either by NMC and/or billed to NMC by each utility to the charges billed to each utility, retained by NMC, or billed to third parties (detailed by the categories noted above) to the Commission by April 1 each year.

10. The NMC shall fulfill the requirements of any order point that is outstanding and applicable to any of the member utilities at the time of issuance of this order and is affected by the terms of the NPPOSA.

4

Docket 05-AE-101

11. At such time as the NMC offers contract services to non-member utilities, the NMC shall perform an analysis to determine whether it would be cost effective to obtain rework insurance for its member utilities compared to the historic cost of rework charged to the member utilities. The NMC shall supply a copy of the final analysis to the Commission within 15 days of the analysis being completed.

12. If the NMC is terminated by the member utilities, any costs incurred to reassign nuclear licenses and re-staff the plants shall not be born by utility ratepayers without specific Commission review and approval.

13. The Commission shall have full access to the books and records of the NMC.

14. Approval of this agreement is not a determination by the Commission that the charges are just and reasonable.

15. As authorized in Wis. Stat. §§ 196.02, 196.52, and 196.795, this order is expressly conditioned upon the reserve power of the Commission to revise and amend its terms and conditions to protect and promote the public interest.

Dated at Madison, Wisconsin, March 30, 2000 By the Commission:

[Original Signed by]

Lynda L. Dorr Secretary to the Commission LLD:DCB:bap:G:\Order\Pending\05-AE- 101 See attached Notice of Appeal Rights 5

Docket 05-AE-101 Notice of Appeal Rights Notice is hereby given that a person aggrieved by the foregoing decision has the fight to file a petition for judicial review as provided in Wis. Stat. § 227.53. The petition must be filed within 30 days after the date of mailing of this decision. That date is shown on the first page. If there is no date on the first page, the date of mailing is shown immediately above the signature line.

The Public Service Commission of Wisconsin must be named as respondent in the petition for judicial review.

Notice is further given that, if the foregoing decision is an order following a proceeding which is a contested case as defined in Wis. Stat. § 227.01(3), a person aggrieved by the order has the further right to file one petition for rehearing as provided in Wis.

Stat. § 227.49. The petition must be filed within 20 days of the date of mailing of this decision.

If this decision is an order after rehearing, a person aggrieved who wishes to appeal must seek judicial review rather than rehearing.

A second petition for rehearing is not an option.

This general notice is for the purpose of ensuring compliance with Wis. Stat. § 227.48(2), and does not constitute a conclusion or admission that any particular party or person is necessarily aggrieved or that any particular decision or order is final or judicially reviewable.

Revised 9/28/98 6