ML19275A232

Forwards Util Response to NRC 790925 Ltr Requesting Addl Financial Info.Discusses Const Program Cost Estimates, Kw/Hour Sales Projections,Fossil Fuel Cost Adjustments Clause & Target Capitalization Ratios

ML19275A232
Person / Time
Site:	Seabrook
Issue date:	09/28/1979
From:	Ritsher J ROPES & GRAY
To:	Rubenstein L Office of Nuclear Reactor Regulation
References
NUDOCS 7910030358
Download: ML19275A232 (9)

Text

1 ropes & GRAY 225 FRANKLIN STREET BOSTON 02110 canst ADontss"ROPGR ALOR anta COOC 617 423 6600 TELE x asu*e sta gaosig September 28, 1979 l-L. S. Rubenstein, Branch Chief Light ' dater Reactors, Branch #4 Division of Project Management United States Nuclear Regulatory Commission Washington, D.C. 20555 Re: Public Service Ccmpany of New Hampshire, Docket Nos. 50 443 and 50 444; Staff Request for Additional Financial Information dated July 17, 1979: outstanding Items

Dear Mr. Rubenstein:

I enclose twenty-five copies of the response of The United Illuminating Company to the item referred to in your letter of September 25, 1979 By letters dated September 21 and September 27, 1979 I furnished to you the one remaining item on the Public Service Company of New Hampshire list. I hope to be res-ponding to the other three inquiries in the very near future.

Very truly yours, J pN . A. Ritsher I

JAR:vml Enclosures n ec: Attached List

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P00R~0RIGINAL Copies to:

3 E. Tupper Kinder, Esqu' ire Alan S. Rosenthal, Chairman As'sistant Attorney General Atomic. Safety and Licensing Environmental Protection Division Appeal Board ,

Office of the Attorney General U.S. Nuclear Regulatory Coc=ission ,208 State House Annex Washington, D.C. 20555 Concord, New Hampshire 03301 Dr. John H. Buck Karin P. Sheldon, Esquire Atomic Safety and Licensing Sheldon Harmen, Roisman & Weiss Appeal Board U.S. Nuclear Regulatory Cor-impien suite 566 1725 I Street. N.W. ,

Washington, D.C. 20555 .

Washington, D.C. 20000 Michael C. Farrar, Esquire Atomic Safety and Licensing Dr. Ernest O. Salo Appeal Board Professor of Fisheries Research Institute U.S. Nuclear Regulatory Commission Colle'ge Washington , D. C . 20555 of Fisheries University of Washington Seattle, Washington 98195 Ivan W. Smith, Esquire Atomic Safety and Licensing

• Dr. Kenneth A. McCollum Board Fanel U.S. Nuclear Regulatory Commission 1107 Wes: Knapp Street 20555 Stillwater, Oklahoma 74074 Washingt on , D . C .

Robert A. Backus, Esquire Joseph F. Tubridy, Esquire O'Neill Backus Spielman 410.0 Cathedral Avenue, N.W.

Washington, D.C. 20016 116 Lowell Street 03105 Manchester, New Hampshire Dr. Marvin M. Mann Laurie 3urt, Esquire Atomic Safety and Licensing Assistant Attorney General Board Fanel -

U.S. Nuclear Regulatory Commission .One Ashburton Place Boston, Massachusetts 02108 Washington,. D.C. 20555 Lawrence Brenner, Esquire Office of the Executive Legal

.. Director U.S. Nuclear Regulatory Cc= mission Washington, D.C. 20555 i^,?~Z6h9 -

!a DOCKET NOS. 50-443 & 50-444 SEABROOK STATION, UNITS 1 AND 2 NRC REQUEST FOR ADDITIONAL FINANCIAL INFORMATION ADDITIONAL RESPONSE OF THE UNITED ILLUMINATING COMPANY September 28, 1979

THE UNITED ILLUMlNATING COMPANY

1. (4a.) The attachment is a source of funds statement, and list of underlying assumptions, based on assumed retention of 16.4% ownership in the Seabrook units.

2. (4a.) The assumption of interest rate on short-term borrowings has been modified to 9 1/2% in 1980.

The assumptions of interest rate on long-term debt and dividend rate on preferred stock have been modified to 11% for 1979 and 10% thereaf ter.

3. (4d.) On June 29, 1S79 the Company completed arrange-ments for a revolving credit agreement aggre-gating $75,000,000, in addition to the

$50,000,000 of bank lines of credit, extending until June 29, 1981. Under the agreement, the Company has the option to convert any of the borrowings outstanding on June 29, 1981 into a term loan with paymeats due in four substan-tially equal consecutive semi-annual installments commencing on December 31, 1981 and ending on June 30, 1983.

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4. (4 f. ) Copies of testimony of James F. Cobey, Jr.

in 1978 rate case (Connecticut Public Utilities Control Authority Cocket No. 780701) were in-cluded in Item 3 of " Additional Response of The United Illuminating Company" dated July 27, 1979.

THE UNITED ILLUMINATING COMPANY By irf+nJJ '

/ Executive Cobey, Jr. / '

James F. Vice President-Finance and Administration and Treasurer STATE OF CONNECTICUT )

New Haven September 27, 1979 COUNTY OF NEW HAVEN )

Personally appeared James F. Cobey, Jr., known to me to be the Executive Vice President-Finance and Administration and Treasurer of The United Illuminating Company, and made sth to the truth of the foregoing statements, which he signe ' >re me.

Notary Public My Commission Expires: March 1, 1980 1 ',2 253

. s THE UNITED ILLUMINATING COMPANY Pro For=a Sources of Tunds for System-Wide Construction Expenditures and Capital Structure During Period of Construction of Subject Nuclear Power Plant

1. The Construction program cost estimates:

(A) Are based on the assumption that UI will sell 3.5% of its ownership share of each of the Seabrook units effective January 1, 1980, retaining its 3.3% and 3.685% ownership shares in Pilgrim Unit #2 and Millstone Unit #3, respectively.

(B) Are based on the latest cost and cash flow estimates supplir.d by the participants responsible for construction of the units.

Seabrook Units No. I and 2, being conetructed by Public Service Company of New Hampshire, are presently scheduled for ec==ercial operation in 1983 and 1985; Millstone Unit No. 3, being con-structed by Northeast Utilities, is presently scheduled for com=ercial operation in 1986; and Pilgrim Unit No. 2, being constructed by Boston Edison Company, is presently scheduled for coemercial operation in 1985.

(C) Include cost of nuclear fuel for the four nuclear plants; thus, fuel leasing, if utilized, w- 'd reduce the amount of capital to be raised by the Company.

(D) Include no expenditures for generating capacity subsequent to the four nuclear units.

(E) Include allowance for funds used during construction at a 9.4%

rate for 1979 and 1980 and a 8.3% rate for 1981-1985.

2. Kilowatt-hour sales are projected to increase at annual rates of growth of approx 1=ately 2.6% for 1979, 2.1% for 1980, 2.9% for I

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1981, 2.6% for 1982 and 2.7% thereafter. The rate of growth is considered the lower edge of the band width containing the probable rate of growth.

3. The amount of internal funds provided is based on a 13.3% return on common equitv. This is the rate of return approved by the Connecticut Public Utilities Control Authority in its rate decision rendered December 20, 1978.

4. Modifications of current Connecticut Public Utilities Control Authority practices denying inclusion of any CWIP in rate base and requiring flow-through of income tax benefits arising from accelerated tax depreciation and other timing differences relating to capital construction as well as the first 4% of the investment tax credit are not includt d.

5. A fossil fuel eist adjust =ent clause will continue in effect.

6. No income is ir:1uded for possible sales of capacity to other utilities.

7. Co= mon stoci. dividends are assumed to increase by 12c per share per year.

8. The common stock dividend payment ratio is on average 70".

9. Financing assumptions are based on the following:

(A) Target capitalization ratios: common stock 35*, preferred stock 13%, long-term debt 50%. These ratios will vary depending cn the amounts, timing and mix of external financings.

(B) Interest rate of 11% for short-ters borrowings for 1979; 9h" for 1980; and 11" thereafter.

(C) Interest rate of 10" for additional icng-ters debt for 1979; and 10T, thereafter.

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(D) Dividend rate of 10% for additional preferred stock.

(E) Coc=en stock sales (including those pursuant to the dividend reinvestment plan) at $30.00 per share.

10. S.E.C. and Trust Indenture coverages:

1979 1980 1981 1982 1983 1984 1985 Trust Indenture 2.1 2.9 2.6 2.5 2.7 2.8 2.9 S.E.C. 2.4 3.1 2.8 2.7 2.8 3.0 3.1 r

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Applicant: The _Urdtd t ilumlnaQptCompany_ Nuclear Plants , Scabr ewik FRO FukHA SoukCES OF FtNDS Faut S'iSTFH-WibE C WSTRUCTION EXPENDITURES AND CAPITAL STkut'111EE DURINi FE2IOD OF C(HSTRUCTitH OF SUBitIT NUCI EAR POWER Pl ANT fHil.I.lONS OF Dol.IARS) s 1979 1980 1981 1982 1981 190% 1985 EXTERNAL. FINANCING Canmauen s t oc k $ .7 $ 31.0 $ 31.0 $ l.0 $ 11.0 $ l.0 $ l.0 Prelested stewh 15.0 -

20.0 20.0 - - -

1.seig- t erm .lebt 30.0 40.0 40.0 40.0 40.0 40.0 -

Notes payable 16.2 (26.3) ll.h) 14.3 (17.7) { 6) (l.5) tapenne of la. sue ( 8) (.4) (.6) (.8) (d) - -

101 Al. FX1LkNAL tlHDS 81.8 44.3 89.) 75.2 52.9 40.4 (2.5)

IlfltitNAl.l.Y 8;ENtMATED CASil Net inreuse 31.6 31.6 16.5 44.0 47.7 51.0 55.1 lema. prefersed divlJenJs 5.8 6.3 6.1 8.8 10.1 RO.l 10.1 renemon dividenJa 15.7 16.) 19.9 21.6 27.7 28.8 29.9 ket a li.e.1 Ea r ningu 30.1 9.2 10.5 12.1 9.9 14.4 15.1 twierred Tames 2.0 .4 - - - - -

Investment T.am Credit - Jeferred .5 2.5 - - -

Depreclatlun and amorttzatlun 15.I 15.2 15.5 16.I 20.9 2 B.5 25.0 1.e m s: AIDC 15.0 19.2 26.0 11.9 21.8 21.1 9.5 T(frAI. IN TERNAL ttWDS 12.7 8.1 -

(s.5) 7. 0 14.5 30.6 otties- Sousces (Uses) uf Funds (9.8) 35.7 (2.0) (2.0) (2.0) (2.0) (2.0)

TOTAL tlatri $gg $g $ gf.J $ gjQ $Q $y $JM C4NSTNUCTION EXIIHulTURES Nuclear Power Plants $ 69.5 $ 16.0 $ 66.9 $ 56.4 $ 42.8 $ 12.1 $ 8.4 othes 11.2 8.1 8.4 9.3 9.4 10.1 11.0 TOTAL. CtHS1kHCTitN4 EXPT.NDITUkES $ gg,j $gM $ ])d $ 6).2 $ )Z $jW $ %j Subject nu lear plant $gM $ MM $gM $Q $ $ly $J syrhtM CAPITAL k gU!ktHM rS medemption of H.itusing SunJs 4.0 4.0 12.0 4.0 5.7 10.7 3.7 sted.mptlini el Ses tal Prefer red - - - - - -

1. 0 10f Al. CAPITAL Nt))UINF.HEl(TS $M $ gSd $ g],J $Q $M $M $2Q CAP R I Al. S1WUCI't!RE long-tesm alebt $260.5 4 8 . 11 % $296.5 48.6% $l24.5 46.5% $360.5 46.9% $194.8 46.9% $424.3 47.8% $420.4 46.9%

PseferrcJ seosk 85.0 15.9% 85.0 14.0% 105.0 15.02 125.0 16.1% 125.0 14.81 125.0 14.1% 122.0 11.tI

~,_ Consmus equit y 108.5 15.1% 228.1 17.4% 269.2 18.5% 282.4 16.8% 122.9 18.1% 118.0 38.11 154.l 19,5%

1W AI. 534.0 609.8 698.7 767.9 842.7 887.1 896.5 s 4 N

Ne rlE: llels peu fuima source of funds reflecas 16.4% ownernielp in Seal,snok 1.y tiee applicant.

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