ML20078C744

Affidavit of Jm Griffin on Behalf of Cajun Electric Power Cooperative,Inc.* Affidavit Re Past Performance of & Future Decommission Plans for Plant

ML20078C744
Person / Time
Site:	River Bend
Issue date:	01/19/1995
From:	Jeffery Griffin CAJUN ELECTRIC POWER COOPERATIVE, INC., UNITED ENERGY SERVICES CORP.
To:
Shared Package
ML20078C715	List: ML20078C713 ML20078C726 ML20078C744
References
93-680, NUDOCS 9501270096
Download: ML20078C744 (8)

Text

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UNITED STATES OF AMERICA

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\J NUCLEAR REGULATORY COMMISSION BEFORE THE In the Matter of ) Docket No. 50-458 Gulf States Utilities Co., et A1.) ASLBP No.93-680 j (River Bend Station, Unit 1) )

l AFFIDAVIT OF JOHN M. GRIFFIN ON BEHALF OF CAJUN ELECTRIC POWER COOPERATIVE, INC.

1. My name is John M. Griffin. My business address is United Energy Services Corporation, 1110 Northchase Parkway, Suite 200, Marietta, GA 30067.

2. I am president of United Energy Services Corporation

("UESC"), a management consulting firm which specializes in commercial nuclear and Department of Energy (" DOE") complex engagements providing operational, engineering and management consulting support. I earned a Bachelor of Science Degree in Naval Science from the United States Naval Academy in 1967. In addition, I have been a member of the Board of Directors of the gg American Nuclear Society and the Institute of Nuclear Operations (j National Nuclear Accrediting Board. While in the United States Navy, as an officer, I completed the Nuclear Propulsion Training Program.

3. In 1973 I joined Carolina Power and Light Company

("CP&L") as a Start-Up Manager for the Bronswick units. In 1976 I became the Assistant Manager of Nuclear Operations at the New York Power Authority. I supervised and provided direction to the corporate staff responsible for providing support for two nuclear sites, J.A. FitzPatrick and Indian Point No. 3, in the areas of operations, maintenance, performance, radiological controls, training, and in-service inspection.

4. In 1978 I joined Arkansas Power and Light Company ("APL")

as Manager of Nuclear Operations for Arkansas Nuclear One

("ANO"). In 1984 I became Senior Vice President, Generation, Transmission and Engineering for APL. I was responsible for production and transmission facilities, including the two nuclear units at ANO, four coal units, fifteen gas units, and two hydro facilities.

5. In 1988 I joined TENERA, LP, as Senicr Vice President responsible for the Management and Technical Services Division, which provided consulting services to the utility industry it: the areas of strategic maintenance, operations, outage management,

/ performance and business enhancement, strategic process management, risk assessment and nuclear safety services, l 9501270096 950127 PDR ADOCK 0500045B C pg (

licensing _and regulatory support, materials management, and plant '

life extension. I provided consulting services to utility O executive management. My projects have included development of a comprehensive utility business plan, organizational diagnostic evaluations and efficiency studies of several nv. lear organizations, serving as an advisor to senior teility management in preparing a utilities nuclear organization for initial operation, and performing a comprehensive review of the planning, conduct and assessment of a utility's mid-cycle and first refuel outages.

6. In 1994 I joined UESC as President. UESC, as discussed

. earlier, is a management consulting firm which specializes in i utility consulting. In my capacity as President of the company, l I utilize my comprehensive experience in electric utility operations in various positions, from plant start-up through executive management. My focus is on increased operations efficiency through the application of advanced financial and management concepts and information management tools.

7. My affidavit is sponsored on behalf of Cajun Electric Power Cooperative, Inc (" Cajun"). Cajun has a thirty percent ownership interest in River Bend Station related to its $ 1.6 billion investment in the facilities.

SUMMARY

g 8. In this affidavit, I discuss the past marginal performance of the River Bend Station, how this past performance has necessitated an elevated level of operations and maintenance

("O&M") expenditures, and that these expenditures will continue to be required for several years in order to safely operate the r units and to effect the necessary changes at the station to improve future performance. I further discuss the need for adequate funding to maintain a nuclear facility in a safe shutdown condition and to effect a transition to some form of decommissioned status.

9. Gulf States Utilities Co. ("GSU") and Entergy Operations, Inc. ("EOI") have stated that should adequate funds not be available due to GSU bankruptcy, they would purw2e additional funding through the regulatory process or tne courts.

This pursuit will be lengthy and in all likelihood contested, further adding to the length of time needed to resolve it. Even after a lengthy process there is no guarantee that adequate funding for the safe operation or shutdown of River Bend will be provided. I conclude that given these uncertainties and the continuing need for adequate funding during the potentially lengthy process, that it is reasonable for the Nuclear Regulatory '

Commission ("NRC") to require Entergy Corporation, the parent of both GSU and EOI, to guarantee all of their obligations.

O

PAST POOR PERFORMANCE OF RIVER BEND HAS NECESSITATED AN ELEVATED LEVEL OF OEM FUNDING Ow 10. River Bend has experienced a long period of deteriorating performance which was, prior to 1994, marginally acceptable to the NRC. In the NRC March 8, 1994 Systematic Assessment of Licensee Performance ("SALP") report, the averaged ratings for River Bend were 2.50. The NRC stated that "the reasons for this overall decline in performance have been the lack of clear management expectations, oversight, and control of.

plant activities." The River Bend average capacity factor for the three year period 1991 through 1993 was 57% compared to an industry average of 72%. The production costs for River Bend have averaged 48.38 mills per Kwhr for the three year period 1991 through 1993 which is 70% higher than a nuclear plant of similar design and size.

11. The events that have occurred at River Bend during this period of declining performance prompted EOI to take aggressive remedial actions. EOI has characterized root causes that state

"(1) management skille have not kept pace with the level of change required, (2) planning, goal setting, performance monitoring, and management feedback have not been effective, (3) problem identification and problem solving methods have not been consistently applied to improve performance, and (4) critical station work processes are inefficient and have allowed backlogs of work to occur." These performance issues occurred while GSU had funds to safely operate River Bend.

HIGH LEVELS OF OEM FUNDING WILL BE REQUIRED FOR SEVERAL YEARS

12. EOI has implemented a Near-Term Performance Impovement Plan ("NTPIP") and a Long-Term Performance Improvement Plan

("LTPIP") to address these concerns. My review indicates that the overall cost of operations and maintenance of River Bend will continue to remain at high levels while these improvement initiatives are implemented. These expenditures will continue to be required for several years in order to safely operate the  !

units and to effect the necessary changes at the station to improve future performance.

l

, 13. In the NTPIP, EOI explains that a number of internal i and external assessments " identified five recurring performance l issues. These are planning and management effectiveness, human i resource effectiveness, work effectiveness, and efficiency, design information and engineering support, and organizational norms (problem solving)." The strategic goals of the performance improvement plans are directed at improving River Bend performance in these areas. The actual likelihood of meeting these ambitious goals is unlikely when looking at River Bend's overall performance and comparing the success of other nuclear facilities performance during similar "get well" initiatives.

O 14. The River Bend LTPIP delineates strategic goals in the areas of Safety / Regulatory, Operating Performance and Cost.

The Safety / Regulatory goal is to achieve top quartile performance as measured by SALP scores, with a 1995 target of 2.125. The ability of River Bend to achieve this average rating will be

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\_ dependent upon the continued availability of elevated levels of O&M funding, corporate support, and elimination of unplanned events.

15. The Operating Performance goal is to achieve top quartile performance as measured by capacity factor with targets for 1994 of 55.6%, 1995 of 69.4% and 1996 of 78.1%. In order to achieve these goals River Bend will require an average capacity factor near the industry average for 1991 through 1993 of 72%.

Historically, River Bend has not been able to sustain that level of performance and only exceeded it in 1991 immediately prior to the identification by River Bend of serious performance concerns.

16. The Cost Performance goal is to achieve top quartile performance as measured by Mills per Kwhr with targets for 1994 of 41.7, 1995 of 30.9 and 1996 of 26.6. This goal will require achieving the projected capacity factor goals while reducing the O&M funding significantly, which if implemented, will impact the achievement of the SALP target gonis due to the lack of effective improvement of management and human performance.

17. There were numerous notices of violations issued in 1994, the proposed imposition of multiple civil penalties, and a scram in September, 1994 that kept River Bend off-line for fg several weeks. These types of events will all have an impact on

( achieving the desired 1995 SALP rating along with the successful completion and validation of the effectiveness of the NTPIP and the LTPIP.

18. EOI has achieved success at another marginal facility, ANO, similar to that defined by the strategic goals in the LTPIP, but only at significant cost and over a five to six year period.

EOI can achieve the kind of results desired at River Bend, but not in a two to three year period forecast.

19. My understanding is that it is admitted that EOI is not a utility and, by itself, it does not meet the NRC's financial qualifications test for licensees. My further understanding is that it is admitted that GSU is financially threatened by the Cajun lawsuit. Without a financial commitment to GSU by the Entergy Corporation, there may be a significant reduction in the O&M funding necessary to ensure safe operation of River Bend.  !

The significant potential for reduced funding and lack of a

" safety net" in the event of adverse financial conditions at GSU has significant ramifications that will impact River Bend's long term safety performance.

NEED FOR ADEQUATE FUNDING TO MAINTAIN SAFE SHUTDOWN CONDITION

20. If a decision is made by Entergy to retire and decommission River Bond should GSU cease to fund River Bend, EOI will require significant snutdown funding in the magnitude of $90

to $110 million for up to the first two years. The need for adequate funding to maintain a nuclear facility in a safe f')

v shutdown condition, for the transition to a possession only license (" POL") and ultimately for decommissioning is a lengthy process which still is uncharted waters for a 940 MWe unit with nearly ten years of operational life expended, such as River Bend. No plant owner has as yet completed the full decontamination and decommissioning process for a similar unit.

21. A POL for River Bend would require the systems that protect the spent fuel and control radioactivity to be maintained. The level of O&M funding for River Bend after issuance of a POL is estimated to be $20 to $30 million per year.

Due to the lack of a DOE High Level Waste Repository or a Monitored Retrievable Storage Facility, in accordance with the Nuclear Waste Policy Act of 1982, Public Law 97-425, the continuing on-site responsibility for safestore of fuel and facilities will cause an additional impact on River Bend's operational costs until the new federal facility opens. This continued cost may well be present until well after the first decade of the next century.

ADEQUATE FUNDS NOT AVAILABLE DUE TO G8U BANKRUPTCY ,

22. GSU and EOI have stated that should adequate funds not be available due to GSU bankruptcy, they would pursue additional funding through the regulatory process or from the bankruptcy court. This may prove to be a more difficult task than the ,

O- challenges that faced Public Service of New Hampshire or El Paso Electric Company since in neither of those cases did the operator j

i seek to shut down the facility. A bankruptcy court has never ruled on shutdown costs.

23. As I understand it, there are no provisions by the parent company Entergy Corporation, to provide funding to the licensee, EOI, to safely operate the facility should GSU be l unable to meet its funding obligations under its agreement with EOI. The potential dependence on the jurisdiction of the  ;

bankruptcy court to ensure that the funds necessary arc available ,

for safe operation is putting the burden of public safety on a  !

third party which is not an expert in nuclear plant l decommissioning and safety issues.

24. In Cajun's " worst case scenario," with GSU bankrupt and financially unable to fund safe operations, the NRC should not rely on the bankruptcy court to approve shutdown funds and decommissioning costs, which cost GSU estimates to be $382.0 million in 1990 dollars). At the present time, the decommissioning trust is only funded to a level of $16.0 million.

PUR8UIT OF ADEQUATE FUNDS WILL BE A LENGTHY PROCESS

25. In a non-emergency situation, should River Bend be shut down in accordance with its shut down procedures, there may not O be funds to implement the shut down plan. The NRC requires that

an application for termination of a license be made within two years following permanent cessation of operations. The

[~' application must be accompanied by a proposed decommissioning plan. This pursuit will be lengthy and in all likelihood contested, further adding to the length of time to resolve and impacting on River Bend O&M costs. And even after this lengthy process, there is no guarantee that adequate funding for the safe operation or safe shutdown of River Bend will be~provided.

26. EOI is not a utility and does not meet the NRC financial qualifications test on its own. EOI is responsible for the safe operations of River Bend while working on behalf of a subsidiary company (GSU) under the Entergy Corporation umbr.lla.

The lack of financial capability on the part of EOI leave' it vulnerable to the ability of GSU to fund its operation ..d subsequent decisions of the Public Service Commission which regulates GSU. The purpose of the NRC financial qualifications rule does not permit an admittedly financially unqualified EOI to be added to the Operating license as the operator with funding supplied solely by an owner which may be unable to fund safe operations of the facility. While GSU " anticipates" funds would be available, it would be prudent for the NRC to condition approval of the license amendments on an Entergy guarantee for GSU's obligations.

27. Where licensed subsidiaries are financially troubled, the Commission should require the parent corporation to guarantee the subsidiaries' obligations. To return River Bend to

7. s g acceptable levels of performance or shut the unit down, EOI will require a corporate commitment of support for the necessary resources and funding required for safe operation of River Bend.

CONCLUSION

28. To return River Bend to acceptable levels of performance or to achieve safe shut down, EOI will require continued elevated levels of resources and funding. O&M costs based on similar facilities experiencing similar difficulties, show significantly increased expenditures followed by a period of years of increased O&M costs above those preceding the implementation of large improvement programs. Based on those experiences, the issue is whether there is a more reasonable assurance that funding for safe operations will be available (i.e., an Entergy Cgrporation guarantee of GSU's obligations).

29. The operating agreements that runs only between GSU and EOI does not obligate or require Entergy to provide any funding for the operation of River Bend and EOI must look to GSU as the solo source of those funds. River Bend has consistently maintained high operating and maintenance costs with load factors that are not equal to the industry average. The current Near  ;

Term and Long Term Improvement Plans at River Bend focus on management effectiveness issues and concerns that potentially will need corporate and non-rate-base funding to complete.

O Should the Louisiana Public Service Commission find that the root

causes of the current River Bend problems and issues were avoidable, the corrective action costs may not be borne by ratepayers. GSU and EOI will need to have access to alternative O' operating funds for safe operations of River Bend.

30. In light of River Bend's operating history briefly discussed earlier, it is not credible that no specific actions would be taken other that the usual and normal operation and maintenance of the plant" if GSU goes bankrupt. Even in the best of situations, today's regulatory, competition and corporate pressures are forcing the nuclear industry to change the way business is conducted.

31. I conclude that given these uncertainties and the continuing need for adequate funding during the potentially lengthy process of restoration or shut down, that it is reasonable for the NRC to require Entergy Corporation, the parent of both GSU and EOI, to provide this funding until such time as the matter is resolved. A determination adverse to GSU in the Cajun litigation, or a GSU bankruptcy would likely prevent GSU from providing the funds necessary to safely operate River Bend.

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UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION In the Matter of ) Docket No. 50-458 Gulf States Utilities Co., 31 A1.) ASLBP No.93-680 (River Bend Station, Unit 1) )

City of Washington )

) ss:

District of Columbia )

I, John M. Griffin, certify that the attached affidavit was prepared by me and under my direct supervision and that the matters contained in such affidavit are true and correct to the best of my information, knowledge, and belief. -

/,

J { l JOHN M. GRIFFIN ff f ,r / ,

'w/ L& l SUBSCRIBED AND SWORN TO BEFORE ME THIS

/QADAY OF JANUARY, 1995

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