ML20337A344

Application for Order Approving Indirect Transfers of Control of Licenses

ML20337A344
Person / Time
Site:	Palo Verde
Issue date:	12/02/2020
From:	Weber T Arizona Public Service Co
To:	Document Control Desk, Office of Nuclear Material Safety and Safeguards, Office of Nuclear Reactor Regulation
References
102-08207-TNW/MDD
Download: ML20337A344 (36)

Text

10 CFR 50.80 10 CFR 72.50 Palo Verde Nuclear Generating Station 5871 S. Wintersburg Road Tonopah, AZ 85354 623-393-5764 102-08207-TNW/MDD December 2, 2020 U.S. Nuclear Regulatory Commission Attn: Document Control Desk One White Flint North 11555 Rockville Pike Rockville, MD 20852-2738 (301) 415-7000

SUBJECT:

Palo Verde Nuclear Generating Station Units 1, 2, and 3 Docket Nos. STN 50-528, 50-529, and 50-530 Renewed Operating License Nos. NPF-41, NPF-51, NPF-74 Independent Spent Fuel Storage Installation Docket No. 72-44 Application for Order Approving Indirect Transfers of Control of Licenses In accordance with Section 184 of the Atomic Energy Act, 10 CFR 50.80, and 10 CFR 72.50, Arizona Public Service Company (APS), on behalf of Public Service Company of New Mexico (PNM), Avangrid, Inc. (Avangrid) and their corporate affiliates (together, Applicants), respectfully requests that the U.S. Nuclear Regulatory Commission (NRC) consent to the indirect transfers of PNMs co-owner licenses for Palo Verde Nuclear Generating Station, Units 1, 2, and 3 (PVNGS), and for the PVNGS Independent Spent Fuel Storage Installation. The information provided herein and in the attached is provided by PNM and Avangrid.

Applicants request that the NRC consent to these indirect transfers so that they can complete a transaction pursuant to an Agreement and Plan of Merger dated October 20, 2020, whereby PNM and its parent holding company would become indirect wholly owned subsidiaries of Avangrid. Information supporting this request for consent is included in the attached Application for Order Approving Indirect Transfers of Control of Licenses (Application), which is provided as Enclosure 1.

Avangrid is a New York corporation, and its shares are publicly traded on the New York Stock Exchange. Approximately 18.5% of the shares are widely held, with the vast majority of these shares held by institutional investors. Approximately 81.5% of the A member of the STARS Alliance LLC

&DOODZD\'LDEOR&DQ\RQ3DOR9HUGH:ROI&UHHN

102-08207 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Application for Order Approving Indirect Transfers of Control of Licenses Page 2 shares of Avangrid are owned by Iberdrola, S.A. (Iberdrola), a Sociedad Anónima organized under the laws of the Kingdom of Spain. 1 Iberdrolas shares are widely held and publicly traded on the Madrid Stock Exchange. It is one of the largest energy companies in the world with a market capitalization of $85 billion. Iberdrola is based in Spain, a close U.S. ally. The only known government-controlled entities with interests in Iberdrola are the Qatar Investment Authority, which owns approximately 8.69% of Iberdrola, and Norges Bank (the central bank of Norway), which owns approximately 3.43% of Iberdrola. Neither the Qatar Investment Authority nor Norges Bank has control over Iberdrola or Avangrid or is represented on their boards. Iberdrola has ownership interests in six operating reactors in Spain, one of which it operates.

Avangrid is a leading, sustainable energy company with approximately $35 billion in assets and operations in 24 U.S. states. With headquarters in Orange, Connecticut, Avangrid has two primary lines of business: Avangrid Networks, Inc. (Avangrid Networks) and Avangrid Renewables, LLC (Avangrid Renewables). Avangrid Networks, Inc. owns eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Avangrid Renewables owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs approximately 6,600 people. Avangrid supports the U.N.s Sustainable Development Goals and was named among the Worlds Most Ethical Companies in 2019 and 2020 by the Ethisphere Institute.

The proposed transaction is necessary and desirable because it provides benefits to PNMs customers, communities, employees and shareholders. The combined companies will provide greater opportunities to invest in the infrastructure and new technologies that will help PNM and its parent holding company and affiliates grow their business in the Southwest and navigate their transition to clean energy while continuing to provide safe and reliable electric service to its customers at a reasonable cost.

The information in the attached Application demonstrates: (1) PNM will continue to have the requisite managerial, technical, and financial qualifications to continue its role as a PVNGS licensee; (2) PNM will continue to provide reasonable assurance of funding for decommissioning PVNGS; (3) the terms of the PVNGS Licenses will not be affected; and (4) PNM has committed to adopting a Negation Action Plan in order to assure that the transfers requested in the Application will not result in any impermissible foreign ownership, control or domination (FOCD).

The Applicants respectfully request that the NRC review and complete action expeditiously on the enclosed Application and consent to the proposed transfers.

Applicants are prepared to work closely with the NRC Staff to facilitate the review of the 1 A Sociedad Anónima is a public limited company similar to a corporation under state laws within the United States.

102-08207 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Application for Order Approving Indirect Transfers of Control of Licenses Page 3 Application. Applicants request that the NRC issue an Order by July 1, 2021, authorizing the indirect transfers to take place at any time within one year after the effective date of the Order. Applicants will notify the NRC staff upon completion of the indirect transfer of control of the PNM licenses for PVNGS.

In summary, the proposed transfers will not be inimical to the common defense and security or result in any undue risk to public health and safety, and the transfers will be consistent with the requirements of the Atomic Energy Act and the NRC regulations.

As a courtesy, a copy of this submittal has been sent to the State of Arizona.

If the NRC has any questions about the proposed transaction described in this letter and in the Application or wishes to obtain any additional information about the proposed transfers, please contact Michael DiLorenzo, APS Licensing Department Leader, at 623-393-3495.

Service upon the Applicants of any notices, comments, hearing requests, intervention petitions, or other pleadings should be made to:

Timothy P. Matthews Morgan, Lewis & Bockius LLP 1111 Pennsylvania Ave., NW Washington, D.C. 20005 Phone: 202.739.5524 E-mail: timothy.matthews@morganlewis.com Michael G. Green Pinnacle West Capital Corporation 400 North 5th Street Mail Station 8695 Phoenix, AZ 85004 Phone: 602.714.0450 E-mail: michael.green@pinnaclewest.com David L. Schwartz Latham & Watkins LLP 555 Eleventh Street, N.W.

Suite 1000 Washington, DC 20004-1304 Phone: 202.637.2125 E-mail: David.schwartz@lw.com



$771'RFXPHQW&RQWURO'HVN

861XFOHDU5HJXODWRU\&RPPLVVLRQ

$SSOLFDWLRQIRU2UGHU$SSURYLQJ,QGLUHFW7UDQVIHUVRI&RQWURORI/LFHQVHV

3DJH





50DVRQ%D\OHU-U

7URXWPDQ3HSSHU

+D[DOO3RLQW

WK)ORRU

5LFKPRQG9$

3KRQH

(PDLOPDVRQED\OHU#WURXWPDQFRP



/HRQDUG'6DQFKH]

3105HVRXUFHV,QF

6LOYHU$YHQXH6:

$OEXTXHUTXH1HZ0H[LFR

3KRQH

(PDLO/HRQDUG6DQFKH]#SQPUHVRXUFHVFRP



,QDGGLWLRQSOHDVHSODFHWKHDERYHLQGLYLGXDOVRQWKH15&FRUUHVSRQGHQFHGLVWULEXWLRQ

IRUDOOFRUUHVSRQGHQFHUHODWHGWRWKH$SSOLFDWLRQ



7KLVFRUUHVSRQGHQFHFRQWDLQVQRQHZUHJXODWRU\FRPPLWPHQWVRI$36RU310RWKHU

WKDQ310¶VFRPPLWPHQWWRLPSOHPHQWD1HJDWLRQ$FWLRQ3ODQWRDGGUHVV)2&'



6LQFHUHO\

 Digitally signed by Weber, Thomas

Weber, Thomas DN: cn=Weber, Thomas N(Z00499)

N(Z00499)

 Reason: I am approving this



N(Z00499) document Date: 2020.12.02 11:57:49 -07'00' 7KRPDV1:HEHU

'LUHFWRU1XFOHDU5HJXODWRU\$IIDLUV



(QFORVXUHV (QFORVXUH $SSOLFDWLRQIRU2UGHU$SSURYLQJ,QGLUHFW7UDQVIHUVRI

  &RQWURORI/LFHQVHV

 )LJXUH 6LPSOLILHG2UJDQL]DWLRQ&KDUW &XUUHQW 

 )LJXUH 6LPSOLILHG2UJDQL]DWLRQ&KDUW 3RVW7UDQVIHU 







FF 6$0RUULV  15&5HJLRQ,95HJLRQDO$GPLQLVWUDWRU

63/LQJDP 15&1553URMHFW0DQDJHUIRU391*6

&$3HDERG\ 15&6HQLRU5HVLGHQW,QVSHFWRUIRU391*6

%'*RUHW]NL $UL]RQD'HSDUWPHQWRI+HDOWK6HUYLFHV $'+6 +/-

%XUHDXRI5DGLDWLRQ&RQWURO



STATE OF NEW MEXICO )

) SS.

COUNTY OF BERNALILLO )

Patricia K. Collawn, being duly sworn according to law deposes and says:

I am Chairman, President and Chief Executive Officer of Public Service Company of New Mexico (PNM), and as such, I am familiar with the contents of this correspondence and the attachments thereto concerning the Palo Verde Nuclear Generating Station, Units 1, 2, and 3 (PVNGS), and the matters set forth therein regarding PNM and its affiliated companies are true and correct to the best of my knowledge, information and belief.

PL I t!(t__

Patricia K. Collawn Subscribed and Sworn to before me

STATE OF CONNECTICUT COUNTY OF NEW HAVEN Robert D. Kump, being duly sworn according to law deposes and says:

I am Deputy CEO of Avangrid, Inc. (Avangrid), and as such, I am familiar with the contents of this correspondence and the attachments thereto concerning the Palo Verde Nuclear Generating Station, Units 1, 2, and 3 (PVNGS), and the matters set forth therein regarding Avangrid and its affiliated companies are true and correct to the best of my knowledge, information and belief.

Subscribed and Sworn to before me this 1st day of December, 2020 Notary Public of the aunty of New Haven TALA1Nf% R. F~EJ.

NO'l'Mrf ~ -;~

Vt~~~~

Internal Use

ENCLOSURE 1 APPLICATION FOR ORDER APPROVING INDIRECT TRANSFERS OF CONTROL OF LICENSES Palo Verde Nuclear Generating Station Units 1, 2, and 3 Docket Nos. STN 50-528, 50-529, and 50-530 Renewed Operating License Nos. NPF-41, NPF-51, NPF-74 Independent Spent Fuel Storage Installation Docket No. 72-44

ENCLOSURE 1 Application for Order Approving Indirect Transfers of Control of Licenses Table of Contents Page

1. Introduction .....................................................................................................1

2. Statement of Purpose of Transfers and Nature of the Transaction Making the Transfers Necessary or Desirable ...............................................3

3. General Corporate Information Regarding NRC Licensees and Their Parent Companies......................................................................................................4

4. Technical Qualifications ..................................................................................7

5. Financial Qualifications ...................................................................................7

6. Restricted Data ...............................................................................................8

7. Other Nuclear Regulatory Issues ....................................................................9

8. Requested Review Schedule and Other Required Approvals.......................10

9. Environmental Considerations ......................................................................11

10. Summary .....................................................................................................11 General Corporate Information Regarding PNM and Its Parent Companies Negation Action Plan (Foreign Ownership, Control or Domination) Form of Unanimous Written Consent of Sole Shareholder to Amendment to Bylaws i

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 1 of 11

1. Introduction In accordance with Section 184 of the Atomic Energy Act, 10 CFR 50.80, and 10 CFR 72.50, Arizona Public Service Company (APS), on behalf of Public Service Company of New Mexico (PNM), Avangrid, Inc. (Avangrid) and their corporate affiliates (together, Applicants), respectfully requests that the U.S. Nuclear Regulatory Commission (NRC) consent to the indirect transfers of PNMs co-owner licenses for Palo Verde Nuclear Generating Station, Units 1, 2, and 3 (PVNGS), and for the PVNGS Independent Spent Fuel Storage Installation. The information provided herein is provided by PNM and Avangrid.

Applicants request that the NRC consent to these indirect transfers so that they can complete a transaction pursuant to an Agreement and Plan of Merger dated October 20, 2020, whereby PNM and its parent holding company, PNM Resources, Inc.

(PNMR) would become indirect wholly owned subsidiaries of Avangrid. Promptly following closing, as part of the proposed transaction, Avangrid would transfer PNMR to Avangrid Networks, Inc. (Avangrid Networks), which holds all of Avangrids interests in public utilities in the U.S.

Avangrid is a New York corporation and is publicly traded on the New York Stock Exchange. 18.5% of the shares are widely held, with the vast majority of these shares held by institutional investors. 81.5% of the shares of Avangrid are owned by Iberdrola, S.A. (Iberdrola), a Sociedad Anónima organized under the laws of the Kingdom of

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 2 of 11 Spain. 1 Iberdrolas shares are widely held and publicly traded on the Madrid Stock Exchange. It is one of the largest energy companies in the world with a market capitalization of $85 billion. Iberdrola is based in Spain, a close U.S. ally. The only known government-controlled entities with interests in Iberdrola are the Qatar Investment Authority, which owns approximately 8.69% of Iberdrola, and Norges Bank (the central bank of Norway), which owns approximately 3.43% of Iberdrola. Neither the Qatar Investment Authority nor Norges Bank has control over Iberdrola or Avangrid or is represented on their boards. Iberdrola has ownership interests in six operating reactors in Spain, one of which it operates.

Avangrid is a leading, sustainable energy company with approximately $35 billion in assets and operations in 24 U.S. states. With headquarters in Orange, Connecticut, Avangrid has two primary lines of business: Avangrid Networks and Avangrid Renewables, LLC (Avangrid Renewables). Avangrid Networks owns eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Avangrid Renewables owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs approximately 6,600 people. Avangrid supports the U.N.s Sustainable Development Goals and was named among the Worlds Most Ethical Companies in 2019 and 2020 by the Ethisphere Institute.

The proposed transaction is necessary and desirable, because it provides 1 A Sociedad Anónima is a public limited company similar to a corporation under state laws within the United States.

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 3 of 11 benefits to PNMs customers, communities, employees and shareholders. The combined companies will provide greater opportunities to invest in the infrastructure and new technologies that will help PNM and its parent holding company and affiliates grow their business in the Southwest and navigate their transition to clean energy while continuing to provide safe and reliable electric service to its customers at a reasonable cost.

The information in this Application demonstrates: (1) PNM will continue to have the requisite managerial, technical, and financial qualifications to continue its role as a PVNGS licensee; (2) PNM will continue to provide reasonable assurance of funding for decommissioning PVNGS; (3) the terms of the PVNGS Licenses will not be affected; and (4) PNM has committed to adopting a Negation Action Plan (NAP) in order to assure that the transfers requested in the Application will not result in any impermissible foreign ownership, control or domination.

In summary, the proposed transfers will not be inimical to the common defense and security or result in any undue risk to public health and safety, and the transfers will be consistent with the requirements of the Atomic Energy Act and the NRC regulations.

2. Statement of Purpose of Transfers and Nature of the Transaction Making the Transfers Necessary or Desirable The purpose of the proposed transfers is to authorize the completion of a merger, whereby PNM would become an indirect wholly owned subsidiary of Avangrid. The merger was unanimously approved by the Board of Directors of PNM Resources, Inc.,

which is PNMs parent holding company. PNM believes the merger is in the best

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 4 of 11 interests of its customers, communities, employees and shareholders. As a result of the transaction, PNM shareholders will receive approximately $4.3 billion in cash.

3. General Corporate Information Regarding PNM and Its Parent Companies

a. General Corporate Information and Description of Business In accordance with the requirements of 10 CFR 50.33(d)(3), general corporate information regarding PNM and its parent companies following the merger is provided in . PNM would remain a wholly owned subsidiary of PNM Resources, Inc.

(PNMR), which would be directly owned by Avangrid Networks. Avangrid Networks is a direct wholly owned subsidiary of Avangrid.

b. No Foreign Ownership, Control or Domination As noted above, 81.5% of the voting shares of Avangrid are owned by Iberdrola.

In order to address and negate the possibility of any foreign ownership, control or domination (FOCD) of the PVNGS licenses, PNM will adopt a Negation Action Plan to address FOCD. Notably, PNM holds minority co-owner interests in PVNGS, which are currently 10.2%. As such, PNM has voting rights under the Arizona Nuclear Power Project Participation Agreement which sets forth the rights of co-owners with respect to PVNGS. However, PNM does not exercise control over the PVNGS licenses taken as a whole. Rather, APS is the licensed operator and exercises primary control over nuclear safety and security relating to PVNGS.

In SECY-14-0089 dated August 20, 2014, the NRC staff assembled a thorough assessment of FOCD issues including various precedents. For example, in Enclosure 3 to this SECY (pages 16-17) the NRC staff discussed precedents, where minority owners

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 5 of 11 were 100% foreign-owned. National Grid Group plc, a British company, acquired 100%

indirect ownership of New England Power, which had a 9.9% ownership interest in Seabrook Station, Unit 1 and a 12.2% interest in Millstone Nuclear Power Station, Unit 3. New Scottish Power, plc, a Scottish company, acquired PacifiCorp, which held a 2.5% interest in the Trojan Nuclear Plant.

The NRC staff concluded that these examples did not constitute 100% foreign ownership of the Seabrook, Millstone or Trojan licenses. Rather, the licenses for these facilities should be considered as a whole. The NRC staff stated:

Where there are multiple plant owners who are individually licensed, as with the Seabrook and Trojan plants, the license authorizing plant operation and other activities under AEA Section 103 must necessarily be construed as the collective group of licenses. Thus, in both Seabrook and Trojan, the total foreign ownership percentage for the plant license was well below 100 percent.

Thus, under the NRC staffs approach to assessing the amount and extent of potential FOCD, the PVNGS licenses should be treated as having less than a 10.2%

foreign interest (81.5% of 10.2%) when considering the appropriate menu of negation measures that should be adopted. Notably, the owners of the other 89.8% of PVNGS are U.S. companies that are not subject to foreign ownership, control or domination.

PNMs NAP hinges on assuring that the exercise of PNMs rights with respect to PVNGS are delegated to and held under U.S. citizen control. Under the NAP, PNM commits that the President of PNM will be a U.S. citizen and provides that the common shareholders of PNM (PNMR) will consent to amend the Bylaws of PNM to provide that authority over PNMs interests in PVNGS be delegated to the President of PNM, a U.S. citizen. As a practical matter, the PNM President is expected to delegate authority

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 6 of 11 to one or more designated PNM representatives for PVNGS co-owner matters, and these representatives also must be U.S. citizens under the supervision of the PNM President.

As additional measures to assure independent U.S. control, the amendment to the Bylaws specifically provides that the common shareholders cannot remove the PNM President or fail to reappoint the PNM President based upon a decision made with respect to PVNGS. This assures independent U.S. control of the PNM licenses for PVNGS. Also, the President will sign a certificate acknowledging the FOCD duties owed to the NRC and the United States. The only rights with respect to PVNGS that will be retained by the PNM Board of Directors are:

1. A decision to permanently cease the operations of any PVNGS unit.

2. A decision to seek license renewal for any PVNGS Unit.

3. A decision to dispose of any PNM interest in any PVNGS Unit.

The rights to consult with and direct the President on these three issues will not include implementation of a decision on any issue. The Directors of PNM are and will remain U.S. citizens, and their limited rights with respect PVNGS do not constitute FOCD.

Finally, Applicants note that Spain is an ally of the United States, a member of the Nuclear Suppliers Group, and a party to the Treaty on the Non-Proliferation of Nuclear Weapons. Indirect ownership of PNM by a global company headquartered in Spain would not be inimical to the common defense and security or result in any undue risk to public health and safety.

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 7 of 11

c. No Agency As the licensed entity with possession and responsibility for operating PVNGS, APS will continue to act for itself and the other PVNGS co-owners. Neither APS nor PNM is acting as the agent or representative of any other person in the proposed indirect transfers of the licenses.

4. Technical Qualifications APS will continue to be the entity licensed to operate PVNGS, and its technical qualifications will be entirely unaffected by the proposed indirect license transfers.

5. Financial Qualifications The proposed indirect transfers will not have any effect on the financial qualifications of any of the current NRC licensees. Nevertheless, under 10 CFR 50.80(b)(1)(i), an application for a license transfer must contain all the requested information related to financial qualifications as required by 10 CFR 50.33. Thus, Applicants provide the following financial information.

An electric utility as defined in 10 CFR 50.2 is exempted from the requirement to submit financial qualifications information under 10 CFR 50.33(f). An electric utility is any entity that generates or distributes electricity and which recovers the cost of this electricity, either directly or indirectly, through rates established by the entity itself or by a separate regulatory authority. PNM is an electric utility as defined in 10 CFR 50.2, because it recovers the cost of electricity through rates established by the New Mexico Public Regulation Commission, and it will continue to do so following the proposed license transfers. As such, the presumption that PNM is financially qualified remains

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 8 of 11 unchanged, and PNM continues to be exempt from the financial qualifications information requirements pursuant to 10 CFR 50.33(f) and in accordance with Section III.1.b of NUREG-1577, Rev. 1. Given this presumption of financial qualification, the NRC should conclude that there is reasonable assurance that PNM will continue to meet its obligations to provide funding for PVNGS.

PNM maintains nuclear decommissioning trust funds (NDTs) that are held in accounts that are segregated from PNMs assets and outside the administrative control of PNM or its affiliates. The current dollar values of the balances in these NDTs exceed PNMs share (10.2%) of the NRC minimum formula amount for each PVNGS unit calculated pursuant to 10 CFR 50.75(c), without taking into account expected earnings as permitted by NRCs regulations. As such, PNM satisfies the prepayment method of providing reasonable assure for the funding of decommissioning as set forth in 10 CFR 50.75(e)(1)(i) and 72.30(e)(1). PNMs balances as of December 31, 2018, were reported in APSs biennial Consolidated Decommissioning Funding Status Report -

2018 dated March 29, 2019 (ADAMS Accession No. ML19088A281). An updated report is expected to be filed in March 2021, and PNMs ongoing compliance with the decommissioning funding assurance requirements will continue to be subject to NRC review.

6. Restricted Data This Application does not contain any Restricted Data or other classified National Security Information, and it is not expected that any such information will become involved in the licensed activities of PNM. However, in the event that such information

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 9 of 11 does become involved, and in accordance with Section 145(a) of the AEA and 10 CFR 50.37, Agreement Limiting Access to Classified Information, PNM agrees that it will appropriately safeguard such information and will not permit any individual to have access to such information until the individual has been appropriately approved for such access under the provisions of 10 CFR Part 25, Access Authorization, and/or Part 95, Facility Security Clearance and Safeguarding of National Security Information and Restricted Data.

7. Other Nuclear Regulatory Issues

a. Price-Anderson Indemnity and Nuclear Insurance The NRCs Price-Anderson indemnity agreement for PVNGS includes PNM. The licensees for PVNGS will continue to maintain offsite nuclear liability coverage and onsite property damage insurance coverage, in accordance the requirements of 10 CFR 50.54(w) and 10 CFR 140.11. The annual filings required by 10 CFR 50.54(w)(3) and 10 CFR 140.21 will continue to be made.

b. Standard Contract for Disposal of Spent Nuclear Fuel APS maintains and will continue to maintain the Standard Contract for Disposal of Spent Nuclear Fuel and/or High Level Waste with the Department of Energy (DOE) for the disposal of spent nuclear fuel to be performed by the DOE (Standard Contract),

including all rights and obligations under that contract for all of the PVNGS owners.

c. Exclusion Area Control The proposed indirect license transfers have no impact upon the authority of APS with respect to the PVNGS exclusion area. APS will continue to have the required

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 10 of 11 authority, continue to meet its obligations, and continue to comply with all requirements relating to its exclusion area, entirely unaffected by the proposed indirect transfers.

d. QA Program The QA Program for PVNGS will not be affected by the proposed indirect transfers of control. No changes to the QA Program are expected in connection with the proposed transfers, and any changes that do occur in the ordinary course of business will be made in accordance with 10 CFR 50.54(a).

e. Continuation of the Current Licensing Basis The proposed indirect transfers will have no impact on the licensing basis for PVNGS.

8. Requested Review Schedule and Other Required Approvals The Applicants respectfully request that the NRC review and complete action expeditiously on the enclosed Application. The Applicants are prepared to work closely with the NRC Staff to facilitate the review of the Application. The Applicants request that the NRC issue an Order by July 1, 2021 authorizing the transfers to take place at any time within one year of the effective date of the Order. The proposed transaction requires regulatory filings with the Federal Energy Regulatory Commission, the Committee on Foreign Investment in the United States, the Federal Communication Commission, the New Mexico Public Regulation Commission and the Public Utility Commission of Texas. The parties to the proposed transaction are seeking to obtain these regulatory approvals as soon as possible so that they can consummate the proposed transaction as early as possible in 2021.

Enclosure 1 Application for Order Approving Indirect Transfers of Control of Licenses Page 11 of 11

9. Environmental Considerations This Application is exempt from environmental review, because it falls within the categorical exclusion appearing at 10 CFR 51.22(c)(21), Approvals of direct or indirect transfers of any license issued by NRC and any associated amendments required to reflect the approval of a direct or indirect transfer of an NRC license, for which neither an Environmental Assessment nor an Environmental Impact Statement is required.

10. Summary In summary, the proposed indirect license transfers will be consistent with the requirements of the Atomic Energy Act, NRC regulations, and regulatory guidance. The ongoing operation of PVNGS will be unaffected by the proposed indirect transfers of control, so there will be no adverse impact on public health and safety. APS is technically qualified and will remain technically qualified without regard to the license transfers. The proposed transfers also will not impact the financial status of PNM, and PNM will remain financially qualified. The transfers of PNMs licenses for PVNGS will not be inimical to the common defense and security and will not involve foreign ownership, control or domination. FOCD negation measures assure that U.S. control will be exercised over the PNM licenses. Applicants therefore request that the NRC consent to the indirect transfers in accordance with 10 CFR 50.80 and 72.50.

Attachment 1 GENERAL CORPORATE INFORMATION REGARDING PNM AND ITS CURRENT AND FUTURE PARENT COMPANIES

Attachment 1 Page 1 of 6 NAME: Public Service Company of New Mexico STATE OF New Mexico FORMATION:

BUSINESS ADDRESS: 414 Silver Ave. SW Albuquerque, New Mexico 87102-3289 BOARD OF DIRECTORS: Patricia K. Collawn, Chairman Ronald N. Darnell Charles N. Eldred Chris M. Olson Joseph D. Tarry OFFICERS: Patricia K. Collawn, President and Chief Executive Officer Charles N. Eldred, Executive Vice President, Corporate Development and Finance Patrick V. Apodaca, Senior Vice President, General Counsel, and Secretary Ronald N. Darnell, Senior Vice President, Public Policy Chris M. Olson, Senior Vice President, Utility Operations Joseph D. Tarry, Senior Vice President and Chief Financial Officer Elisabeth A. Eden, Vice President and Chief Information Officer Thomas G. Fallgren, Vice President, PNM Generation Todd Fridley, Vice President, NM Operations Michael P. Mertz, Vice President and Treasurer Henry E. Monroy, Vice President and Corporate Controller Julie Rowey, Vice President, Chief Customer Officer Becky R. Teague, Vice President, Human Resources

Attachment 1 Page 2 of 6 NAME: PNM Resources, Inc.

STATE OF New Mexico FORMATION:

BUSINESS ADDRESS: 414 Silver Ave. SW Albuquerque, New Mexico 87102-3289 BOARD OF DIRECTORS: Patricia K. Collawn, Chairman Vicky A. Bailey Norman P. Becker E. Renae Conley Alan J. Fohrer Sidney M. Gutierrez James A. Hughes Maureen T. Mullarkey Donald K. Schwanz Bruce W. Wilkinson OFFICERS: Patricia K. Collawn, President and Chief Executive Officer Charles N. Eldred, Executive Vice President, Corporate Development and Finance Patrick V. Apodaca, Senior Vice President, General Counsel, and Secretary Ronald N. Darnell, Senior Vice President, Public Policy Chris M. Olson, Senior Vice President, Utility Operations Joseph D. Tarry, Senior Vice President and Chief Financial Officer Elisabeth A. Eden, Vice President and Chief Information Officer Michael P. Mertz, Vice President and Treasurer Henry E. Monroy, Vice President and Corporate Controller Becky R. Teague, Vice President, Human Resources

Attachment 1 Page 3 of 6 NAME: Avangrid Networks, Inc.

STATE OF Maine FORMATION:

BUSINESS ADDRESS: 180 Marsh Hill Road Orange, Connecticut 06477 One City Center, 5th Floor Portland, ME 04101 BOARD OF DIRECTORS: Armando Martínez Anthony Marone III Sara J. Burns Betsy Henley-Cohn Joanne Mahoney Ignacio Sánchez-Galán Tabernero Harvey G. Stenger Scott Tremble OFFICERS: Anthony Marone III, President and Chief Executive Officer Richard J. DeJong, Director - Internal Audit Robert Fitzgerald, Vice President, Controller and Treasurer Andrew M. Jacobs, Chief Compliance Officer Noelle M. Kinsch, Vice President General Counsel and Secretary Carlisle Tuggey, Clerk Giancarlo Vassao de Souza, Chief Operating Officer

Attachment 1 Page 4 of 6 NAME: Avangrid, Inc.

STATE OF New York FORMATION:

BUSINESS ADDRESS: 180 Marsh Hill Road Orange, Connecticut 06477 José Ignacio Sánchez Galán, Chairman BOARD OF DIRECTORS: John E. Baldacci, Vice Chairman Dennis V. Arriola Daniel Alcain Lopez Pedro Azagra Blazquez Santiago Martinez Garrido José ngel Marra Rodríguez Jose Sainz Armada Robert Duffy Teresa Herbert Patricia Jacobs John L. Lahey Alan D. Solomont Elizabeth Timm OFFICERS: Dennis V. Arriola, Chief Executive Officer Robert D. Kump, President, Deputy Chief Executive Officer Douglas K. Stuver, Chief Financial Officer, Principal Financial Officer And Senior Vice President Scott M. Tremble, Senior Vice President - Controller, Principal Accounting Officer R. Scott Mahoney, Senior Vice President - General Counsel and Corporate Secretary Peter T. Church, Senior Vice President - Human Resources & Corporate Administration Ignacio Estella, Senior Vice President - Corporate Development Manuel Gonzalez, Senior Vice President - Chief of Staff Ray Cardella - Vice President - Internal Audit Howard Coon - Vice President - Treasurer Brian Harrell - Chief Security Officer Alistair Raymond - Vice President - Chief Compliance Officer Elizabeth Riotte - Deputy General Counsel and Assistant Corporate Secretary Leonard Rodriguez - Regulatory Compliance Officer Steven Stites - Vice President - Tax

Attachment 1 Page 5 of 6 Section 16 and Executive Dennis V. Arriola Officers identified in Peter Church AVANGRID Annual Report Alejandro de Hoz García-Bellido by the AVANGRID Board: Ignacio Estella David T. Flanagan Robert Kump R. Scott Mahoney Anthony Marone Franklyn Reynolds Douglas Stuver Carl Taylor Scott Tremble

Attachment 1 Page 6 of 6 NAME: Iberdrola, S.A.

COUNTRY OF Spain FORMATION:

BUSINESS ADDRESS: Plaza Euskadi, 5 - 48009 Bilbao Spain José Ignacio Sánchez Galán, Chairman BOARD OF DIRECTORS: Juan Manuel González Serna.

Inigo Víctor de Oriol Ibarra Samantha Barber María Helena Antolín Raybaud José Walfredo Fernández Manuel Moreu Munaiz Xabier Sagredo Ormaza Francisco Martínez Córcoles Anthony L. Gardner Sara de la Rica Goiricelaya Nicola Mary Brewer Regina Helena Jorge Nunes ngel Jesús Acebes Paniagua OFFICERS: José Ignacio Sánchez Galán, Chief Executive Officer Francisco Martínez Córcoles, Business CEO José Sainz Armada, General Finance, Control and Resources Director Santiago Martínez Garrido, Director of Legal Services Xabier Viteri Solaun, Director of the Renewable Energy Business Armando Martínez Martínez, Director of the Networks Business Aitor Moso Raigoso, Director of the Liberalised Business Pedro Azagra Blázquez, Chief Development Officer Juan Carlos Rebollo Liceaga, Risk Management and Internal Assurance Director Sonsoles Rubio Reinoso, Internal Audit Director

Attachment 2 NEGATION ACTION PLAN (FOREIGN OWNERSHIP, CONTROL OR DOMINATION)

Attachment 2 Page 1 of 3 Rev. 0, [Month], 2021 PUBLIC SERVICE COMPANY OF NEW MEXICO NEGATION ACTION PLAN I. INTRODUCTION

a. The following Negation Action Plan (the Plan) provides requirements and guidance to ensure negation of potential foreign ownership, control or domination (FOCD) over Renewed Operating License Nos. NPF-41, NPF-51, NPF-74, Palo Verde Nuclear Generating Station Units 1, 2, and 3, Docket Nos. STN 50-528, 50-529, and 50-530 (PVNGS) (the Facility Licenses) and the associated general license for the PVNGS Independent Spent Fuel Storage Installation, Docket No. 72-44 (ISFSI) (the Licenses) to possess, maintain, and operate PVNGS and the ISFSI (collectively, the PVNGS Facility). The Licenses have been issued by the U.S. Nuclear Regulatory Commission (NRC) and are subject to the FOCD restrictions set forth in 10 CFR 50.38. Public Service Company of New Mexico (PNM) is licensed as a co-owner and currently holds a 10.2% interest in each PVNGS Unit. PNM is not authorized to operate PVNGS. This Plan implements measures to fully negate FOCD with respect to matters involving the Licenses and nuclear safety and security of the PVNGS Facility. The same measures negate potential foreign influence.

b. This Plan describes the controls implemented to assure that any rights exercised by PNM with respect to PVNGS are not subject to FOCD within the meaning of 10 CFR 50.38 and Section 103.d of the Atomic Energy Act of 1954, as amended (Section 103.d of the Act).

c. PNM is a wholly-owned subsidiary of PNM Resources, Inc., which is a wholly-owned subsidiary of Avangrid Networks, Inc., which, in turn, is a wholly-owned subsidiary of Avangrid, Inc. Avangrid, Inc. is owned 81.5% by Iberdrola, S.A.

(Iberdrola), a Sociedad Anónima organized under the laws of the Kingdom of Spain. 1

d. This Plan has been developed using the guidance provided by the NRC's "Final Standard Review Plan on Foreign Ownership, Control, or Domination," 64 FR 52355 (September 28, 1999) (FOCD SRP). Defense in depth is provided through a number of measures in order to ensure that there is U.S. control over matters relating to nuclear safety and security. These measures effectively negate the risk that any foreign person or entity might exercise control, domination, or influence over matters that are required to be under U.S. control pursuant to the terms of 10 CFR 50.38.

e. The negation measures are implemented primarily through a written consent of PNMs shareholder to amend the PNM Bylaws. Additional requirements and further details regarding implementation of the negation measures are included in this Plan.

1 A Sociedad Anónima is a public limited company similar to a corporation under state laws within the United States.

Attachment 2 Page 2 of 3

f. Upon acceptance of this Plan, changes to this Plan may only be made upon the recommendation of PNM's President. However, any proposed change that would result in a decrease in the effectiveness of this Plan will not be implemented without the prior approval of the NRC.

g. The FOCD negation measures described in this Plan have been implemented in a written consent of PNMs shareholder to amend the PNM Bylaws to provide for the delegation of authority to PNMs President. PNM will provide NRC with 30 days prior written notice before implementing any material changes to the FOCD negation measures.

II. GOVERNANCE OF PNM WITH RESPECT TO PVNGS

a. PNM is a New Mexico Corporation. Its ultimate U.S. parent company, Avangrid, Inc., is 81.5% owned by Iberdrola. In order to negate any potential for FOCD, PNMs shareholder has issued a written consent to amend Article IV, Section 2 of PNMs Bylaws to provide as follows:

The President shall be a citizen of the United States and shall be delegated exclusive authority with respect to the Corporations rights associated with its interests in, and owner licenses issued by the United States Nuclear Regulatory Commission (NRC) for, Palo Verde Nuclear Generating Station Units 1, 2, and 3, Docket Nos. STN 50-528, 50-529, and 50-530 (PVNGS).

The President shall have the exclusive authority to exercise the rights of the Corporation with respect to any decision to approve the following actions and may delegate such authority to one or more U.S. citizen under the supervision of the President:

(i) any matter that, in view of U.S. laws or regulations, requires or makes it reasonably necessary to assure U.S. control; (ii) any matter relating to nuclear safety, security or reliability, including the following matters:

(1) implementation or compliance with any NRC generic letter, bulletin, order, confirmatory order or similar requirement issued by the NRC; (2) prevention or mitigation of a nuclear event or incident or the unauthorized release of radioactive material; (3) placement or restoration of the plant in a safe condition following any nuclear event or incident; (4) compliance with the Atomic Energy Act of 1954 (as in effect from time to time), the Energy Reorganization Act of 1974 (as in effect from time to time), or any NRC rule; (5) obtaining of, or compliance with, any specific license issued by the NRC and its technical specifications;

Attachment 2 Page 3 of 3 (6) conformance with a specific Final Safety Analysis Report, or other licensing basis document; and (7) implementation of security plans and procedures, control of security information, administration of access to controlled security information, and compliance with government clearance requirements regarding access to restricted data; and (iii) any other issue reasonably determined by the President, in the Presidents prudent exercise of discretion, to be an exigent nuclear safety, security or reliability issue.

The Board of Directors may consult with and direct the President with respect to the rights of the Corporation with respect to PVNGS regarding the following limited decisions that may be made by the PVNGS co-owners, but not including any implementation of the decision:

1. A decision to permanently cease the operations of any PVNGS unit.

2. A decision to seek license renewal for any PVNGS Unit.

3. A decision to dispose of any PNM interest in any PVNGS Unit.

The common shareholders shall not remove the President from office or fail to reappoint the President based solely upon any decision made by the President exercising the delegated authority specified herein with respect to PVNGS.

b. In order to underscore the special role of the President of PNM in assuring U.S.

control is exercised to comply with NRC requirements, the President of PNM will execute a certificate acknowledging the protective measures undertaken by PNM, as reflected in this Plan and the Bylaws. The certificate provides as follows:

By execution of this Certificate, I acknowledge the protective measures that have been taken by Public Service Company of New Mexico (PNM) through adoption and implementation of the provisions in PNMs Amended Bylaws (Bylaws), which delegate authority to the PNM President, in order to protect against and negate the potential of any foreign ownership, control or domination of PVNGS within the meaning of 10 CFR 50.38.

I further acknowledge that I have a special role to assure that actions taken by PNM be in compliance with its Bylaws, and acknowledge that the United States Government has placed its reliance on me as a United States citizen to exercise my best efforts in performing this special role. I will promptly report any foreign control, domination or influence issue to the NRC and the operator of PVNGS.

Attachment 3 FORM OF UNANIMOUS WRITTEN CONSENT OF SOLE SHAREHOLDER TO AMENDMENT TO BYLAWS

Attachment 3 Page 1 of 3 UNANIMOUS WRITTEN CONSENT OF SOLE SHAREHOLDER TO AMENDMENT TO BYLAWS OF PUBLIC SERVICE COMPANY OF NEW MEXICO UNANIMOUS WRITTEN CONSENT OF SOLE SHAREHOLDER TO AMENDMENT TO BYLAWS OF PUBLIC SERVICE COMPANY OF NEW MEXICO dated as of ____, 2021 (Amendment), executed by PNM Resources, Inc. (PNMR), as the holder of all of the shares of Common Stock of Public Service Company of New Mexico (PNM).

WHEREAS, on May 17, 2002, pursuant to the provisions of NMSA 1978, Section 53 4 (2001), the shareholders of PNM adopted PNMs Articles of Amendment to its Restated Articles of Incorporation (the Articles) and adopted and amended its Bylaws, both effective May 31, 2002, with all 39,117,799 shares of Common Stock voting in favor; WHEREAS, PNMR is the holder of all of the shares of Common Stock of PNM; WHEREAS, pursuant to Article VII.A of the Articles, the common shareholders of PNM are authorized to amend the Bylaws; WHEREAS, PNMR has entered into a merger agreement pursuant to which it would become ultimately majority owned by a foreign company and desires to address and eliminate any potential for foreign ownership, control or domination of the licenses issued by the United States Nuclear Regulatory Commission (NRC) for Palo Verde Nuclear Generating Station Units 1, 2, and 3, Docket Nos. STN 50-528, 50-529, and 50-530 (PVNGS);

WHEREAS, PNMR desires to amend the Bylaws to delegate exclusive authority to the President of PNM to exercise the rights associated with PNMs 10.2% interests and possessory or owner licenses for PVNGS, or any other lesser or greater interests that PNM may possess in the future, subject to certain limited exceptions; NOW, THEREFORE, in consideration of the foregoing premises, PNMR adopts the following amendment to the Bylaws of PNM:

1. Defined terms used herein and not otherwise defined shall have the meanings ascribed to them in the Bylaws.

2. Article IV, SECTION 2. PRESIDENT is amended to add the following at the end of the Section:

The President shall be a citizen of the United States and shall be delegated exclusive authority with respect to the Corporations rights associated with its interests in, and owner licenses issued by the United States Nuclear Regulatory Commission (NRC) for, Palo Verde Nuclear Generating Station Units 1, 2, and 3, Docket Nos. STN 50-528, 50-529, and 50-530 (PVNGS).

The President shall have the exclusive authority to exercise the rights of the Corporation with respect to any decision to approve the following actions and may delegate such authority to one or more U.S. citizen under the supervision of the President:

(i) any matter that, in view of U.S. laws or regulations, requires or makes it reasonably necessary to assure U.S. control;

Attachment 3 Page 2 of 3 (ii) any matter relating to nuclear safety, security or reliability, including the following matters:

(1) implementation or compliance with any NRC generic letter, bulletin, order, confirmatory order or similar requirement issued by the NRC; (2) prevention or mitigation of a nuclear event or incident or the unauthorized release of radioactive material; (3) placement or restoration of the plant in a safe condition following any nuclear event or incident; (4) compliance with the Atomic Energy Act of 1954 (as in effect from time to time), the Energy Reorganization Act of 1974 (as in effect from time to time), or any NRC rule; (5) obtaining of, or compliance with, any specific license issued by the NRC and its technical specifications; (6) conformance with a specific Final Safety Analysis Report, or other licensing basis document; and (7) implementation of security plans and procedures, control of security information, administration of access to controlled security information, and compliance with government clearance requirements regarding access to restricted data; and (iii) any other issue reasonably determined by the President, in the Presidents prudent exercise of discretion, to be an exigent nuclear safety, security or reliability issue.

The Board of Directors may consult with and direct the President with respect to the rights of the Corporation with respect to PVNGS regarding the following limited decisions that may be made by the PVNGS co-owners, but not including any implementation of the decision:

1. A decision to permanently cease the operations of any PVNGS unit.

2. A decision to seek license renewal for any PVNGS Unit.

3. A decision to dispose of any PNM interest in any PVNGS Unit.

The common shareholders shall not remove the President from office or fail to reappoint the President based solely upon any decision made by the President exercising the delegated authority specified herein with respect to PVNGS.

Attachment 3 Page 3 of 3 PNM RESOURCES, INC.

By: ______________

Patricia K. Collawn Chairman, President and Chief Executive Officer Dated: ______, 2021

Figure 1 - Simplified Organization Chart (Current)

Shareholders NYSE PNM Resources, Inc.

Public Service Company of New Mexico

Figure 2 - Simplified Organization Chart (Post-Transfer)

Shareholders Madrid Stock Exchange Shareholders NYSE Iberdrola, S.A.

18.5% 81.5%

Avangrid, Inc.

Avangrid Networks, Inc.

PNM Resources, Inc.

Public Service Company of New Mexico