ML20038C055

Affidavit of EA Nye Re Contention 25 on Financial Qualifications.Applicants Have Reasonable Plan to Finance Operation & Decommissioning of Plant.Certificate of Svc Encl

ML20038C055
Person / Time
Site:	Comanche Peak
Issue date:	11/20/1981
From:	Nye E TEXAS UTILITIES ELECTRIC CO. (TU ELECTRIC)
To:
Shared Package
ML20038C053	List: ML20038C052 ML20038C054 ML20038C055 ML20038C056 ML20038C057 ML20038C058 ML20038C059 ML20038C061 ML20038C063 ML20038C064
References
NUDOCS 8112090489
Download: ML20038C055 (11)

Text

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P, UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

TEXAS UTILITIES GENERATING ) Docket Nos. 50-445 COMPANY, et al.

) 50-446

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(Camanche Peak Stean Electric ) ( Application for Station, Units 1 and 2) ) Operating Licenses)

AFFIDAVIT OF ERLE A. NYE REGARDING CONTENTION 25 I, Erle A. Nye, being first duly sworn, do depose and say that I am employed by Texas Utilities Company in the position of Executive Vice President. I also serve as Chief Financial Officer of the Company. A statenent of my educational and professional qualifications is attached hereto as Attachnent A.

This affidavit addresses the issue of whether the Applicants are financially qualified to operate and decomnission the Comanche Peak nuclear power reactors.

The ownership interests in Comanche Peak are as follows: Texas Electric Service Company ("TESC0") 35-5/6%; Dallas Power & Light Company

("DP&L") 18-1/3%; Texas Power & Light Company ("TP&L") 31-1/2%; Brazos l

Electric Power Cooperative, Inc. ("Brazos") 3-4/5%; Texas Municipal Power Agency ("TMPA") 6-1/5%; and Tex-La Electric Cooperative of Texas, Inc.

(" Tex-La") 4-1/3%. Thus, TESCO, DP&L and TP&L collectively own 85-2/3% of Comanche Peak. Brazos, TMPA and Tex-La own the remaining 14-1/3%.

TESCO, DP&L and TP&L are the three operating subsidiaries of Texas Utilities Company, which is a utility holding company. TESCO, DP&L and TP&L are engaged principally in the generation, purchase, transnission, l 81120904e9 e123po

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distribution and sale of electric energy to residential, commercial and industrial customers in 67 Texas Counties. These three operating companies provide electric service to over 4 million people in the State of Texas.

Brazos is a generation and transmission electric power cooperative owned by 19 rural electric distribution cooperatives in Texas. Brazos was incorporated in 1941 under Texas law. Tex-La is a generation and transmission electric power cooperative owned by 7 rural electric distribution cooperatives. It was incorporated in 1979 under Texas law.

TMPA is a joint power agency created in 1975 under Texas law by the Texas cities of Bryan, Denton,: Garland and Greenville.

TESCO, DP&L, TP&L, Brazos and Tex-La are subject to the ratemaking authority of the Public Utility Commission of Texas ("PUC"). The PUC has original jurisdiction over electric rates and services in unincorporated areas and exclusive appellate jurisdiction to review the rate and service orders and ordinances of munic.ipalities. TMPA and each of the four cities c which created TMPA exercise original jurisdiction over the regulation of electric rates and service.

In order to set rates, the PUC utilizes a historical test year defined as the most recent 12 months for which utility operating data is available. Adjustments for known and measurable change are pennitted. An original cost, end-of-test-year rate base is used in determining an allowed return. Construction work in progress ("CWIP") may be included in rate base where necessary to the financial integrity of the utility. If CWIP is included in rate base, capitalization of an allowance for funds used during construction on the amount is discontinued. The practice of the PUC has been to allow full current recovery of the cost of fuel used in generating electricity.

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F Texas law and regulations applying to electric utilities, including rural electric cooperatives, provide that the PUC "shall fix its overall revenues at a level which will pemit [a] utility to recover its operating expenses together with a reasonable return on its invested capital." Texas Public Utility Regulatory Act, 539, Article 1446c of Vernon's Annotated Texas Statutes. Texas law also provides that the PUC shall set "just and reasonable rates" for utilities. Id., at 5 38.

The Texas PUC has adopted substantive rules governing the setting of electric rates. F!!C ftule 052.02.03.031 provides for the rate base to be used in the establishmen't of rates, and PUC Rule 052.02.03.033 governs rate

.. struc ture. This letter Rule provides that the PUC "shall fix the overall revenue requirements' at a level which will permit [a] utility to recover

? its allowable operating expenses together with a fair and reasonable return on its capital investment." Further, PUC Rule 052.02.03.032, governing cost of service and rate of return provides that "[t]he return shall be reasonably sufficient to assure confidence in the financial integrity of the utility and shall be adequate, under efficient and economical management, to maintain its credit and attract the capital necessary for the proper discharge of its public duties".

The results of actions by the Texas PUC since it assumed rate jurisdiction over the owners which are regulated by it are provided through the Rate Developments table attached hereto as Attachment B. That table reflects for DP&L that the most recent rates on rate base and common equity were 10.99% and 16.00%, respectively (test year ending ' June 30,1980); for TESCO that the most recent rates of return on rate base and common equity authorized were 11.312% and 15.50%, respectively (test year ending March 31, 1980); for TP8L that the most recent rates of return on rate base and a

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common equity authorized were 11.33% and 15.71%, respectively (test year ending December 31,1980). Brazos and Tex-La have completed no rate case before the Texas PUC; Brazos because its first rate case is pending, and Tex-La because it is a new entity. There is no reason to believe that the i Texas POC will treat Brazos and Tex-La materially different than it treats TESCO, DP&L and TP&L.

The sole purpose of the operation of Comanche Peak will be the production of electricity. The facility will be a productive asset, and therefore should qualify as property used and useful in public utility service. Accordingly, the cost of construction will be included in rate base and the owners subject to PUC regulation will recover through rates a return on investment. The same regulatory treatment will provide recovery of all fixed and variable operating and maintenance expenses.

Estimates of the total annual costs for operating and maintenance expenses for both Comanche Peak units are set forth in Table 20.1 in the NRC Staff's Safety Evaluation Report, NUREG-0797 (July 1981). However, because the estimates are separate for Unit 1 and Unit 2, they should be reflected as covering the period 1983-89 for Unit 1 and 1985-91 for Unit 2.

As so modified, SER Table 20.1 is correct and accurate. For conservatism, the estimates are presented for plant factors ot 50%, 60% and 70%. These estimates include all costs associated with the capital investment, taxes, operation and maintenance (including nuclear fuel). Decommissioning costs ,

are included as a component of depreciation expense.

For purposes of estimating decommissioning costs, Applicants have assumed that Comanche Peak will be decommissioned by immediate dismantl ement. Applicants have adopted the methodology and estimated per unit costs presented in NUREG/CR-0130, the NRC reference analysis for PWR l

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decomissioning. The maximum cost of decommissioning using the immediate dismantlement method was estimated in NUREG/CR-0130 to be $42 million (1978 dollars). Applicants therefore estimate the decommissioning costs for Comanche Peak to be approximately $55 million (1981 dollars), derived by escalating the estimate in NUREG/CR-0130 at 10% per year for three years.

In conclusion, I believe that Applicants have a reasonable plan to finance the operation and decommissioning of Comanche Peak. Applicants plan to recover the costs of operation and decommissioning through rates paid for sales of power and energy generated by Comanche Peak. TESCO, DP8L, TP&L, Brazos and Tex-La will recover these costs through rates established by the Texas PUC. TMPA will recover these costs through rates established by it.

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Erle A. Nye Subscribed and sworn to before me thisg?e day of November 1981.

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Attachment A ERLE A. HYE STATEMENT OF EDUCATIONAL AND PROFESSIONAL nUALIFICATIONS POSITION: Executive ' lice President and Chief Financial Officer of Texas Utilities Company FORMAL EDUCATION: BSEE, Texas A&M University J.D., Southern Methodist University EXPERIENCE:

1980 - Present Executive Vice President and Chief Financial Officer of Texas Utilities Company, has management responsibility for the finance, accounting, corporate secreterial and adtainstrative areas of the company's operations.

1875 - 1980 Vice President of Dallas Power & Light Company, at DP&L responsibilites included the legal, rate, regulatory, financial and accounting functions.

1972 - 1975 Manager of Corporate Services and Legal Counsel, Dallas Power & Light Company.

1969 - 1972 Manager of Legal Services & Legal Counsel, Dallas Power & Light Company.

1966 - 1969 Executive Assistant, Dallas Power & Light Company.

1960 - 1966 Engineer, Dallas Power & Light Company.

MEMBER - Financial Executives Institute Society of Rate Of Return Analysis Fin 6ncial Committee of the Edison Electric Institute

Attachment 8 i DA1.LAS POWER & LICHT COMPANY -

RATE DEVE14PHENTS 4

I I Cranted Docket #1526 (000's) Docket #2572 (000'el Docket #3460 (000's)

Test year utillaed (Historical 12 months ended) 09-30-77 12-31-78 Annual amount of revenue incrases requested. 06-30-80 I

test-year basta (000's) $76,862 Date petition filed $57,096 $80,638 12-28-77 04-27-79 09-26-80 Annual amount cf revenue increase allowed-test year baats (000's) $41,639 $37,200 .$56,269 Percent increase in revenues allowed 13.02 9.7%

Date of final order 05-08-78 11.4%

10-16-79 02-26-81 Effective date (date Revenue Rffected) 06-28-78 10-26-79 03-02-81 Rate base finding (000's) (Original Cost) $675,214 $845,594 Construction work in progress included in $921,899 Rate base (000's) $87,749 $194,588 $243,568 Rate of return on rate base authorized 9.35% 10.02%

Rate of return on common equity authorised 10.992 13.751 14.50Z 16.001 Revenus Effect (000's)

Ameeant received in year granted 8.5.590 $ 7,163 Amount received in subsequent year $56,797 reflects

$ 35,870 $31,267 amortization of the rate (If not available, annualized amounto received in year granted) increase for the year granted; subsequent year not available because of timing.

Note: As of 11-20-81, rtete were no pending requeste.

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Attachment B TEXAS POWER & LIGHT COMPANY RATE IP.VEIAPPENTS i

Cranted Docket #178 (G00's) Docket #1517 (000's) Docket #3006 (000's) Docket #3780 (000's)

Test year utill ed (Historical 12 montho ended) 09-30-76 09-30-77 09-30-79 Annual amount of revenue increase requested- 12-31-80 test-year basis (000's) $134,841 Date petition illed $118,483 $124,053 $197,961 12-22-76 12-21-77 01-04-80 03-06-81 Annual amount of revenue increase allowed-test year basta (000's) $58,243 $41,222 $81,876 $57,083 Percent increase in revenues allowed 11.59% 6.80% 10.05%

Date of final order 04-25-77 05-08-78 5.611 04-29-80 08-05-81 Effective date (date Revenue Effected) 06-12-77 06-01-78(Rural) 05-27-80 08-08-81 Rate base finding (000's) (Original cost) $1,382,715 $1,489,618 $1.735,537 Construction work in progress included in $1.941,705 Rate base (000's) $188.955 $92,010 $187,252 $286,659 Rate of return on rate base authorised 9.86% 9.99% 10.91%

Rate of return on common equity authorised ,13.75% 43.75%

11.91%

15.50% 15.71%

Revenue Effect (000's) .

Amoe t received in year granted Not Available Amoet received in subsequent year Not Available $51,365 $18,367 (If not available, annualized amounts Not Available Not Available $85,596 Not Available recalved in year granted)

Note: As of 11-20-81, there were no pending requests.

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Attachment B TEXAS ELECTRIC SERVICE COMPANY RATE DEVELOPMENTS Cranted Docket #527 (000's) Docket #1903 (OCO's) Docket #2606 (000's) Docket #3250 (000's)

Test year utillsed (Historical 12 months ended) 03-31-77 03-31-78 03-31-79 Annual amount of revenue increase requested- 03-31-80 test-year beels (000's) $ 79.053 $109,969 $ 87,997 Deta petition i11ed 06-29-77 05-30-78

$122.904 05-17-79 05-15-80 Annual amount of revenue increase alloued-test year beste (000's) $43,772 $37,936 $ 37,909 $69,390 Percent increase in revenues allowed 13.22 8.4% 7.6%

Date of final order 10.05%

11-02-77 10-16-78 10-16-79 10-03-80 Effective date (date Revenue affected) 11-22-77 10-26-78 10-23-25 10-14-80 Rate base finding (000's) (Original Cost) $952,451 $1,107,025 $1,287.719 $1.373,810 Construction work in progrees included in Rate base (000's) $154,889 $130,347 $216,et Rate of return on rate base authorized $269.040 9.78% 10.0441 10.:r? il 11.3122 j Rate of return on common equity authorised

• 13.5% 13.75% 14.5% 15.50%

l l Revenue Rffeet (000's) l Amment received in year granted Not Available Not Available $8,215 Amoet received in subsequent year $12,909 Not Available Not Available Not Available $77,454 (If not available, annualised amounts received in year granted)

Note: As of 11-20-81, there were no pending requests.

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

TEXAS UTILITIES GENERATING ) Docket Nos. 50-445 COMPANY, et al .

) 50-446

)

(Comanche Peak Steam Electric ) ( Application for Station, Units 1 and 2) ) Operating Licenses)  ;

CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing " Applicants' Answer In Support of The NRC Staff's Motion For Summary Disposition l of Contencion 25 (Financial . Qualifications)" and Prefiled Testimony on Contentions 9 and 25 and Board . Question 2 in the above-captioned matter were served upon the follower persons by deposit in the United States mail, first class postage prepaid or by express delivery (*) this 20th day of November 1981:

• Marshall E. Miller, Esq. Chairman, Atomic Safety and Chairman, Atomic Safety and Licensing Appeal Panel Licensing Board U.S. Nuclear Regulatory U.S. Nuclear Regul atory Commission Commission Washington, D.C. 20555 Washington, D.C. 20555

• Na rj orie Ulman Rothschil d, Esq.

• D r . Kenneth A. McCollom Office of the Executive Dean, Division of Engineering, Legal Director Architecture and Technology U.S. Nucl ear Regul atory Okl ahcma State University Commission Stillwater, Oklahoma 74074 Washington, D.C. 20555

• Dr. Richard Cole, Member David J. Preister, Esq.

Atomic Safety and Licensing Assistant Attorney General Board Environmental Protection U.S. Nuclear Regulatory Division Commission P.O. Box 12548 Washington D.C. 20555 Capitol Station Austin, Texas 78711 Chairman, Atomic Safety and Licensing Board Panel *J. Marshall Gilmore U.S. Nucl ear Regul atory 1060 W. Pipeline Road Commission Hurst, Texas 76053 Washington, D.C. 20555

• Mrs. Juanita Ellis Mr. Chase R. Stephens President, CASE Docketing & Service Branch 1426 South Polk Street U.S. Nuclear Regul atory Dallas, Texas 75224 Commission '

Washington, D.C. 20555 J -

William A. Horin '

cc: Homer C. Schmidt Spencer C. Relyea, Esq.

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COLKETED USNRC UNITED STATES OF AMERICA .g g g g g NUCLEAR REGULATORY COMMISSION E U? SECRETARY BEFORE THE ATOMIC SAFETY AND LICENSING. BOARD & SERVICE u.,aHCH In the Matter of )

)

TEXAS UTILITIES G'ENERATING ) Docket Nos. 50-445- and COMPANY, et al. ) 50-446

)

(Comanche Peak Steam Electric)

Station, Units 1 and 2) )

STIPULATION In consideration of the following Stipulation, Citizens for Fair Utility Regulation ("CFUR") hereby voluntarily withdraws Contention 9 from litigation in this proceeding.- It is agreed that this Stipulation is contingent upon its acceptance by the NRC Staff and upon dismissal of Contention 9 by the Licensing

, Board. It is also agreed that nothing in this Stipulation shall prevent modification of the Stipulation and/or the operating criteria for Comanche Peak if NRC Regulations change or if Applicants determine that there is a better method than_that outlined below to achieve the objective.

It is agreed between CFUR and Applicants that Applicants will operate Comanche Peak such that dose commitments from planned gaseous radioactive batch releases are as low as is i'

reasonably achievable. Applicants shall take meterology,-

demography and batch characteristics into consideration in I

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achieving this objective. Applicants will include this Stipulation-in the Final Safety Analysis Report-for Comanche

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& 45 Cit ens for air Utility Regulation 3

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1 Date: November 20, 1981 i

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