ML19330A342

Fourth Set of Interrogatories Directed to Util Re Financial Qualifications.Includes Questions on Disciplinary Actions & Role of Houston Industries.Related Correspondence

ML19330A342
Person / Time
Site:	Allens Creek File:Houston Lighting and Power Company icon.png
Issue date:	07/08/1980
From:	Baker B AFFILIATION NOT ASSIGNED
To:	HOUSTON LIGHTING & POWER CO.
Shared Package
ML19330A343	List: ML19330A342 ML19330A346 ML19330A350
References
NUDOCS 8007170159
Download: ML19330A342 (9)

Text

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l act.xrEU tonnEggME UNITED STATES OF AE".ICA NUCLEAR REGULATORY COIGIISSION BEFORE THE ATOIGC SAFETY AND LICENSING SOAP.D I

In the Matter of $ DOCKET NUMBER 8

Houston Lighting & Power Co=pany $ 50-L66 4

(Allen's Creek Nuclear Generating S // .

Station, Unit 1) $  ;

ugge jull 41980 *

• l FOURTH SET OF INTES.ROGATORIES FROM FINANCIAL -

C.UALIFICATIONS INTIRVENORS TO HOUSTON LIGHTING 6 Chh'ge,e

' I '*** #

.ct '/

AND POWER stad Preface 4 N s.4 Pursuant to Section 2.760b of the Cor.cission's Rules of Practice, the Financial C.ualifications Intervenors pro-pound the following Interrogatories to HOUSTON LIGHTING &

POWER COMPANY (hereinafter " Applicant"). Each interrogatory should be answered separately and fully in writing under oath or affir..ation by the person or persons taking them no later thanfourteen flL) davs after service of these Interrogatories.

Inter- ocaterv FO-L.1 Please define the following ter=s as clearly, precisely, and unambiguously as possible. Define them as they are, have been, and will be used by officers of, enployees of, or wit-

/

800'nb \V1 DS03 50/i

e r ?(

FQ-L.1 . . . nesses on behalf of, Houston Lighting and Power or Houston Industries, in applications, briefs, exhibits, other docu=ents, or in hearings, before either the Texas Public

- Uti'11ty Co==1ssion or the Nuclear Regulatory Co==ission.

t If the =eaning of any ter= varies according to ti=e, place, or individual usage, please so specify. .

(a) Allowance for Funds Used During Construction (b) Construction Work In Progress (CWIP)

(c) rate base (d) rate of return on rate base (e) co==en equity (f) rate of return on co==on eccity (g) allowed return on co==on ecuity (h) percentage of CWI? allowed in 'the rate ' base (i) =agnitude of C?lI? expenditures allowed in the rate base (j) financial integrity (k) ability to attract capital on reasonable ter=s (1) internally generated funds

(=) externally generated funds .

.A. .

3 FQ-A.1 (n) interest coverage (o) balanced capital structure (p) net income (q) equity security (r) financial standards -

4 (s) investment tax credits Interrocatorv FO-L.2 Interrogatories FQ-E.2 through FQ-L.6 refer to Applicant's answegs to Doggett's First Set of Interrogatories (June 5, 1980).

Subsequent to consolidation of the financial qualifications con-centions, these interrogatories became theThird Set of Interroga-tories Fro = Financial Qualifications Intervenors (FQ-3), and have been're-numbered FQ-3 1 through FQ-3 21.

(a) how, if at all, has the problem of " rapidly increasing construction costs ," referred to in reply to FQ-3 6 as partly responsible for deferral of ACNGS, been a:eliorated since 1976?

(b) What change has there been in the "esnimates of the growth of electric peak load require =ents" since 1976? Provide the following specific infor=ation: 1970 projection of peak for 1971, 1972, . . . 1999, 2'000; 1971 projection of peak for 1972-2001; 1972 projection for thirty future years; etc. , through 1980 projec-tion. Also provide the actual peak for each year 1971 thrcugh 1980.

Interrocator FO-L.3 (a) What are the " program i=provenents learned from the experience on STNP (which) will be added to the ACNGS quality assurance program"? (reply to FQ-3 13) Please be as specific as possible.

.b-L (b) Does Applicant acknowledge the fact that there have .

FQ-L.3 bsen substantial construction deficiencies at STNP? =-:

Interrocatorv FQ-L.E (a) Has Applicant or its representative (contractor) construction personnel yet taken any disciplinary action against for harrassment or threatening of cuality control inspectors?

(?Q-3 15) If so, please give details.

(b)

What scecific steps have been taken ac STNp to insure that "all personnel shall be encouraged and cold how to report any incidents of this type (harrassment of QC inspectors)...

without fear of disciplinary action." as outlined in reply to Will these sa=e steps be taken at ACNGS?

Interro,gatory FQ-3 15?

Interrocatorv FO-E.5 stated (a) In reply to FQ-3 17 through FQ-3 20 Applicant h remote

.in each case that it "does not make plans based en suc speculation." What possibility raised by Int _rrogatory does Applica..t consider " remote", that Applicant or its contractor would " engage in substandard construction practices," er that it would "ever experience a shortage of funds."

What level of probability does Applicant consider (b)

'"re=ote"?

Interrocaterv FQ-L.6 the estimate of Applicants reply to FQ-3 21 implies that construction costs-included in SER Supplement No. 2 (March 1979) was two years out of date even though the "esti= ate is reviewed .

be at least annually and may/ reviewed = ore often. . .".

,

5 FQ-A.6 (a) Is this 2=pression correct?

(b) When was the last esti= ate made befcre March '79?

(c) What was this estimate?

(d) Was this esti= ate provided to the NRC Staff? When?

Interrozatorv FO-E.7 Applicant's answers to Interrogatories FQ-1.E and FQ-1.5 indicate that Applicant has given little or no thought to the costs associated with unexpected premature shutdown of the facility (a la Three Mile Island) or even to the inevitable costs of waste storage and disposal.

(a) Does Applicant acknowled;e any responsibility for meeting these costs associated with protecting the public health and safety?

(b)- If so, what does Applicant consider that responsibility to be?

(c) Does Applicant consider 8300 tillion in property insurance adecuate to protect its financial integrity against a loss-of-plant accident?

Interrocaterv FO-L.8 Several witnesses for EL&P in ?UC Docket 2676 (EL&P rate increase) testified that a large part of the construction cost was overruns at STNP/ attributable to changes in "the regulations".

Vice-president Oprea in particular complained that since 1973 There had been a cuadrupling effect of regulatory cuidelines that affect what you do and you have to do some retrofitting or retro-engineering in regard to meeting guidelines.

(Tran. 225)

Later he explained wTat he =eant by " quadrupling effect":

That means that we go for naybe eighty or so regulations up to well over four hundred some odd reculations that we have to comply with. . . . (?iC 2673, Tran. 292)

6 PQ-L.8 (a) What specific " regulations" is Mr. Oprea referring to?

(b) Please identify any regulations which have led to cost increases at STMP. Please include a list of thespecific changes in construction which were candated by each particular change in.or add- '

ition to, regulations, and the cost of those changes in construction.

(c) What is the total cost to Applicant of changes in regu-lations affecting STNP?

4 Interrocaterv FC-L.o In PUC 2676 HL&P officer Hollis Dean was asked what would be the effect of " whittling down" the allowed level of CWIP from the recuested 100% to 90%, 80%, etc. He replied, "You can go through it all the way down to zero and I'll say that we're dead if you got down What did Mr. Dean mean by the phrase "we're there." '(Tran. E98) dead"?

Interrecatorv FC-L.10 In PUC 2676 "L&P officer Dean agreed with the state =ent that "unless the overa ll package of co=pensation meets various guidelines of financial integrity, the Company'will be unable to raise additional capital." (Tran. 5E2)

What are the "various guidelines" referred to ain this statement, and what values of these cuidelines are censidered

! to be necessary? Se specific and inclusive in replying.

Incerrocatorv FO-L.ll In FUC 2676, investment banker Iugene Meyer, testif:ing on 1

! behalf of HL&P, made the following state =ents:

I would rank HL&P in the top five in this country in tha utility industrv so far as inflexibility as to future fidan-cing recuire=ents, and this ste=s pri=arily from the enormous I

l

7 FQ-4.ll . . . absolute a=ount of dollars that this Company needs to raise as it goes into the next one, two, and three years. Thus, I place it easily in the top five in the least amount of flexi-bility. It's hard to imagine a conth going by over the next two years where this Co= pny will not either be selling some for= of security or co= leting the preparation for the next

=onths sale of them." Tran. 585)

The Double A rating should give the Co=pany as wide a market into which to sell its debt securities as is necessary to finance the program. I do not believe that is so of an A rating, given the absolute size of EL&F.'s program. (Tran. 586)

I'll warn you that I think there is a first class chance this co=pany will not raise all the capital it needs with either an A-rating through the -n-kets that I see in the next two or three years ahead, especially given the size of its construction budget. I think that is one first-class ga=ble , to ga=ble that this co=pany can get the job done with an A-rating. (Tran. 620)

(a) Does Applicant agree with these statements of its witness, Mr. Meyer?

(b) Would Applicant be able to sell A-rated bonds in suffi-cient quantities to cover construction costs of ACNGS?

(c) Would Applicant be able to sell sufficient A-rated bonds even if no CWIP were allowed in the rate base?

(d) Please provide basis for answers to parts (b) and (c) of this Interrogatory.

Interrocatore FO-L.12 Dr. Steven Sherwin, testifying on behalf of elk? in FUC 2676, spoke of the accident a Three Mile Island as follows:

If a ce=pany loses one of its generators, as happened to General Public Utilities , and then doesn't have sufficient spare capacity to =ect its custo=er requirements, it is forced into purchasing power on a large scale basis. And, as you may recall, the Pennsylvania Cc= mission was not i==e-diately willing to grant that ec=pany reimburse =ent for the increased purchase power cost.

We ec=puted, our office, that it would have taken 118 days only, without rei= burse =ent of the increased purchase power cost, before the entire ecuity of all General Public Utility subsidiary would have been wiped out. (Tran. 529)

. . r ,

8 (a) Does Applicant consider that the Texas FUC would FQ-L.12' p automatically provide "rei=bursement of the increased purchase l

power cost" as well as the cleanup costs in the event of such a financially devastating accident at ACNGS?

If (b) If so, what is the basis for such a belief?

not, does Applicant have any plan for avoiding bankruptcy in I the event of such an accident?

i Interrocaterv FO L.13_

In FUC 2676, ELi? Comptroller R.S. Letbetter testified i

that "if you continue your construction program without recogn z-7 the centinuing operations cf the Company.

ing CWIp, it will affect i

' In other words, it will not be able to fund its payroll. =eet its What precisely nor=al operation expenses, or anything." (Tran. 966) did Mr. Letbetter =ean by the phrase "without recognicing CWIp"?

Interrocaterv FO-a.11 _

Schedule C-4 of the pre-filing package submitted by Applicant in FUC 2676 is a list of " Projects in Construction Works In Progress Ixpenditures to in Excess of $100,000 as of March 31, 1979."

" Install Unit 1 - Allen's Creek" are given as S130,669.000, which of ecnstruction!

was over ten percent of the total estimated cost (a) Is this figure correct?

is the most current figure on expenditures to install (b) What Unit 1? When was this figure last. updated?

( c)

Please give as complete a breakdown as possible of the components of the CWIP expenditures to date en ACNGS.

(d)

How does Applicant expect to reco;er these costs if .

in this proceeding before tk NRC?

'it is denied a construction per=1t 2-

o 9

Interrocaterv FO-L.15 In answer to previous interrogatories, Applicant stated that Mr. Hollis Dean would testify as to Applicant's financial cualifications, but that he had not yet prepared his testimony or identified the docu=ents upon which he will rely.

(a) Will Mr. Dean be prepared to explicate, repudiate or defend the testi=cny of other witnesses on behalf of HL&P in past, current, and future rate proceedings before the FUC?

(b) Will Mr. Dean provide Intervenors with copies of documents upon which his testi=ony is based as they beco=e available to him?

Interrocaterv 70-L.16 It is =y understanding that Houston Lighting and Power is a wholly ~ owned subsidiary of a ec=pany called Housten Industries (HI).

(a) Is this understanding correct? If not, what is the exact relationship of HL&P to HI?

(b) Is HI subject to regulation by the NRC? How?

(c) Is EI subject to regulation by the PUC? 2cw?

(d) Could HL&P survive the financial failure of HI?

(e) Is it possible for' financial difficulties within HI as a whole to affect financial integrity of HL&??

(f) Are construction bonds sold by HLk?. HI, or both?

(g) Which co=pany would be -liable for da= ages caused by routine operation or by an accident at one of HL&P's licensed nuclear facilities?

(h) What role does EI play in monitorring and directing HLk?'s nuclear plant construction?

FOR THE INTERVINORS July 8, 1980

'A]) h)

Eryan StL. Baker cc All Ph::ies