ML19347D809

Forwards Application for Amend to CPPR-117,adding Piedmont Municipal Power Agency as co-owner & co-applicant of Facility.Encl Agreements & Audited Financial Statements Available in Central Files Only

ML19347D809
Person / Time
Site:	Catawba
Issue date:	04/08/1981
From:	Porter W DUKE POWER CO.
To:	Harold Denton Office of Nuclear Reactor Regulation
Shared Package
ML19240B474	List: ML19347D809 ML19347D810
References
NUDOCS 8104130572
Download: ML19347D809 (9)

Text

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'e DUEE Powzu GOMPANY LEGAL DEPA.RTMENT__

(,f P. O. Box M 33189 GH ART.OTTE, N. G. 28242 l

WILLIA 04 LARRY PORTER (704) 373 4825 Anoc.m u. ~ coo .6 April 8,1981 e ,N 4 s  %'-

Mr. Harold P. Denton, Director 3 o bF ,

Office of Nuclear Reactor Regulation H li ) y u U. S. Nuclear Regulatory Commission p y O 19815'9 Washington, D. C. 20555 E

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Re: Duke Power Company D M Catawba Nuclear Station s -

Y Units 1 and 2 N (Docket Nos. 50-413 and 50-414)

Dear Mr. Denton:

Duke Power Company (Duke) is presently the holder of NRC Construction Permits CPPR-116 for Unit 1 of the Catawba Nuclear Station (Catawba 1) and CPPR-117 for Unit 2 of the Catawba Nuclear Station (Catawba 2). On October 18, 1978, the NRC issued Amendment No. I to CPPR-117 to add North Carolina Municipal Power Agency Number 1 as a co-owner of Catawba 2 and co-applicant for the facility. On December 23, 1980, the NRC issued Amendment No. 1 to CPPR-116 to add North Carolina Electric Membership Corporation and Saluda River Electric Cooperative, Inc. ,

as co-owners of Catawba 1 and co-applicants for the facility.

Duke and Piedmont Municipal Power Agency (PMPA) have executed agreements dated August 1, 1980 for the purchase of a 25% undivided ownership in Catawba 2 by PMPA. PMPA, in this transaction, represents twenty (20) South Carolina municipalities in the Duke service area. PMPA is a public body corporate and politic organized as a joint agency by its member municipalities in South Caroina pursuant to Act No. 473 of the Acts and Joint Resolutions of the General Assembly of the State of South Carolina, Regular Session of 1978, as amended by Act No.176 of the Acts and Joint Resolutions of the State of South Carolina, Regular Session of 1979 (collectively the

" Act") , known as the Joint Municipal Electric Power arid Energy Act, to undertake to plan , finance , develop , acquire, purchase, construct, reconstruct, improve, enlarge, own, operate and maintain facilities for the generation, transmission, sale and supply of electric power and energy.

Title 10, Code of Federal Regulations, Section 50.90 requires that an application be made to the NRC for the amendment of a license or a construction permit. Accordingly, enclosed is an " Application for Amendment i

of Construction Permit No. CPPR-117 Adding Co-Owners and Co-Applicants."

l This Application seeks to have PMPA included as a co-owner and co-applicant I for Catawba 2 consistent with the agreements entered into by Duke and 1

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.,e r' Mr. Harold R. Denton Page Two April 8,1981 PMPA. An executed original and twenty (20) conformed copies of the Application are enclosed with this Application.

There are three basic documents that reflect the details of the agreement between the parties: (1) the Purchase, Construction, and Ownership Agreement (the Sales Agreement) which provides for the terms of the sale and covers the construction period through Commercial Operation; (2) the Interconnection Agreement which provides for the exchange of power between the Catawba Units and between the Catawba Units and other nuclear units; and (3) the Operating and Fuel Agreement which provides for the operation and fueling of Catawba. A copy of such documents, executed by the parties and dated as of August 1,1980, is enclosed.

A lawsuit has been filed in South Carolina testing the constitutionality of the enabling legislation and the purchase of 25% of Catawba by PMPA under South Carolina law. PMPA believes that such lawsuit will be favorably resolved and the parties will keep the NRC advised of developments. Closing is anticipated on or about December 1, 1981. This date is of the utmost importance and, therefore, expedited review of this Application is requested.

Title 10, Code of Federal Regulations, Part 50, Appendix L, requires that certain information required by the Attorney General for antitrust review be prepared and forwarded to the NRC. Twenty (20) copies of such information are enclosed with this letter. The Department of Justice and NRC approval of this transaction is a necessary condition precedent to the closing.

A closing date later than December 1,1981 will be to the disadvantage of all parties . Accordingly, we also request expedited consideration of this matter.

Also enclosed are the latest audited financial statements of the ten (10)

South Carolina municipalities participating as members of PMPA in the purchase of 25% of Catawba 2.

The parties have endeavored to submit full and complete information. If additional information is required or further discussion is necessary, please contact the undersigned in order that the December 1981 closing date may be attained.

Very truly yours,

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. Lameh/ *1 Enclosures

.,cm' Mr. Harold R. Denton Page Three April 8,1981 cc: Steve C. Griffith, Jr.

Vice President and General Counsel Duke Power Company Legal Department Post Office Box 33189 Charlotte, North Carolina 28242 (704) 373-4380 Ellen T. Ruff Assistant General Counsel Duke Power Company Legal Department Post Office Box 33189 Charlotte, North Carolina 28242 (704) 373-7102 O. Wayne Corley McNair, Glenn, Konduros, Corley, Singletary, Porter & Dibble Attorneys and Counselors at Law Post Office Box 11390 Columbia, South Carolina 29211 (803) 799-9800 James N. Horwood '

Spiegel and McDiarmid 312 Watergate Building 2600 Virginia Avenue, N.W.

Washington, D.S. 20037 (202) 333-4500

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CATAWBA NUCLEAR STATION UNIT NO. 2 Information Concerning Financial Qualifications of Municipal Applicant Piedmont Municipal Power Agency ("PMPA")

QUESTION A Provide a detailed statement of the projected sources of funds and respective dollar amounts for each applicant's contributions to the Power Company's Plant 1 and 2 capital costs. Include a detailed explanation of the assumptions upon which the projected sources of funds are based.

Response

PMPA's 25 percent undivided ownership interest in Catawba Unit 2 (the

" Project") will be financed through the issuance of tax-exempt revenue bonds. The estimated capital costs, principal amount of bonds required and assumptions used in developing such estimates are included in Exhibit A.1.

QUESTION B If the applicant is to finance its ownership share with bonds, indicate the source of funds for payment of interest charges and principal.

Response

PMPA has executed Project Power Sales Agreements with its Participants providing for the sale to the Participants of Project output. These agreements will, in the aggregate, provide for payment of the principal of and interest on such bonds (to the extent not capitalized and paid from bond proceeds) . Each Participant will pay its Participant's share of the Monthly Project Power Costs which, as defined, include the payment of such principal and interest.

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The obligations of each Participant to make payments to PMPA under the Project Power Sales Agreement will be an expense of its electric system, and the Participant will not be required to make payments to PMPA other than from the operating revenues of its electric system. Each Participant will covenant in the Project Power Sales Agreement that it will fix and charge rates for electric service supplied from its electric system sufficient to meet all of its obligations under the Project Power Sales Agreement and to pay any and all other amounts payable from such revenues including costs of operation and costs of meeting its obligation to pay the principal of and interest on any bonds, notes or other evidences of indebtedness heretofore or hereafter i issued by the Participant which are secured in any manner by a pledge of the revenue of its electric system.

Exhibit B.1 is the form of the Project Power Sales Agreement executed between PMPA and each Participant. Section 1 therein defines Monthly Project Power Costs. Additionally, Articles 4, 5 and 6 therein respectively provide for the sale of the Participant's share of Project output, the source of payments and the obligations of the Participants relating to such payments.

Exhibit B.2 is the form of the Supplemental Power Sales Agreement executed between PMPA and each Participant.

QUESTION C Describe the nature, amount, rating, and success of the applicant's most recent revenue and general obligation bond sales . Indicate the current total outstanding indebtedness in each category for each entity.

1 Response-PMPA has not heretofore issued any such bonds.

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QUESTION D Provide copies of the most recent Financial Statements for the applicants.

Response

Exhibits D.1 through D.10 are copies of the most recent financial statements of the municipalities which are Participants in the proposed Project.

QUESTION E Is each participant's percentage ownership share in the facility equal to its percentage entitlement in the electrical capacity and output of the plant? If not, explain the difference (s) and any resultant effect on any participant's obligation to provide its share of design and construction costs.

Response

Yes, they are equal.

QUESTION F Describe the rate-setting authority of the applicants and how that authority may be used to ensure the satisfaction of financial obligations under the Power Company Purchase and Ownership Participation i Agreements . l

Response

The authority of PMPA to set rates for the supply of power and energy l

to the Participants is set forth in Act No. 473 of the Acts and Joint Resolutions of the General Assembly of the State of South Carolina, Regular l

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Session of 1978, as amended by Act No.176 of the Acts and Joint Resolutions of the General Assembly of the State of South Carolina, Regular Session of 1979, known as the Joint Municipal Electric Power and Energy Act. In particular, the Act authorizes joint agencies such as PMPA "To fix, charge and collect rents, rates, fees and charges for electric power or energy and other services, facilities and commodities sold, furnished or supplied through any project." Under the Interconnection and Operating and Fuel Agreements between PMPA and Duke Power Company , PMPA covenants to set rates adequate to cover all its costs (Interconnection Agreement, Section 28.1(A);

Operating and Fuel Agreement, Section 17.1( A)] . These obligations are embodied in the agreements between PMPA and its Participants (Project Power Sales Agreement, Section 6; Supplemental Power Sales Agreement, Section 6).

No regulatory approvals are required by PMPA in setting rates to its Participants. The Participants, as municipalities of the State of South Carolina, have authority to establish their own retail rates for service to their customers . In the Act, the State of South Carolina covenants and agrees that so long as any bonds of PMPA are outstanding and unpaid, the State will not limit or alter the rights of any participant or of PMPA to establish , maintain, revise , charge and collect electric rates to fulfill the terms of any agreement relating to the Project.

QUESTION G Describe any special requirements that the municipality must meet in order to finance the project. Also, show that action that has been taken to meet these requirements.

Response

A lawsuit testing the constitutionality of the South Carolina legislation Y

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under which PMPA was formed (identified in the response to Question F above) has been fHed.

In . addition , as recognized in Section 3.1(F) of the Purchase, Construction and Ownership Agreement between PMPA and Duke Power Company , other regulatory approvals unrelated to PMPA's financial qualifications are pre-conditions to closing. All such applications are currently being prepared by Duke Power Company and/or PMPA.

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TOTAL ESTIMATED PRINCIPAL AHOUNT OF BONDS PROPOSED PROJECT .

$(000) l .

Catawba Nuclear Station - 25% Ownership in Unit 2 Estimate of January 14, 1981 (2)

I Estimate of August 14, 1980 (1) 9% nonds 101 Bonde 11% Bonde Direct Construction Cost $265,964 $304,776 Initial Fuel Cores 24,514 21,391 Reload Fuel (3) 18,240 14,004 Power Agency Other Costa During Construction (4) 7,500 7,500 c

Power Agency Initial Working Capital (5) 15,700 15,700

$331,918 $363,371 $363,371 $363,371 Subtotal Special Reserve Pond (6) $ 15,000 $ 15,000 $ 15,000 $ 15,000 nond Discount and Issuance Costs (7) 22.330 23,625 25,200 26,845 Debt Service Reserve Account (8) 63,162 66,825 79,200 92,807 Reserve and Contingency Fund (9) 6,316 6,683 7,920 9,281 Net Interest During Construction (10) 199,274 199,496 229,309 259,696 Total Estimated Principal Amount .

of Bonde $638,000 $675,000 $720,000 $767,000

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- (1) As shown in Preliminary Engineering Report based upon closing on April 1, 1981.

. (2) Based upon revised estimates provided by Duke for Catawba Station construction costs and costa

,! of the initini core and reload fuel. Assumes closing on October 1, 1981, i (3) Entimated amounts sufficient to make payments for Reload Fuel for Unit I and Unit 2 for the first 4 year following the scheduled Date of Commercial operation of each unit.

!! (4) Includes reimbursement to PHPA Hembers for funda advanced to PHPA, conts incidental to closing j with Duke, and estimate of PMPA'c administrative, engineering and legal costs during construction.

(5) Estimated PHPA initist working capital requirements for all-requirements power supply including m *a requirements under the Rond Resolution and the Project Agreements plus an allowance for additional $$

Project contingencies. *7 (6) To be held in encrow pursuant to the Interconnection Agreement. o (7) Three and one-half percent (3.5%) of the total estimated principal , amount of bonds.

(8) Reserve Account requirement based on 1.1 times maximum annunt interest. ,,

(9) Initial funding of Renerve and Contingency Fund based on ten percent (10%) of estimated Reserve Account requirement.

(10) Cross interest during construction at the indicated bond interest rate on total estimated principal i amount of bonds untti January 1,1987, less estimated interest earnings at the indicated bond interest ra'te on unexpended construction funds and at a 1% higher rate on Project reserve funds.

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