ML20125B917

Discusses Conversion of Provisional Operating License to full-term Operating License Under Provisions of 10CFR20.57(a)

ML20125B917
Person / Time
Site:	Monticello
Issue date:	01/17/1973
From:	Engelhardt T US ATOMIC ENERGY COMMISSION (AEC)
To:	Giambusso A US ATOMIC ENERGY COMMISSION (AEC)
Shared Package
ML20125B919	List: ML20125B917 ML20125B930
References
NUDOCS 9212100213
Download: ML20125B917 (2)

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I January 17, 1973 r2i-;bb

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A. Giambusso, Deputy Director for Reactor Projects Directorate of Licensing CONVERSION OF PROVISIONAL OPERATING LICENSE TO FULL-TERM OPERATING LICENSE - FINDING OF FINANCIAL QUALIFICATION Mr. Skovholt's January 4,1973 memorandtsn requested an explanation of the OGC detennination that a financial analysis of the licensee, Horthern States Power Company (NSP), and a finding under 10 CFR 550.57(a) of financial qualification, among other things, was necessary to support the conversion of the llonticello provisional operating license (POL) to a full-tem operating license (FTL).

' Because a financial analysis and finding of financial responsibility ,

was made two years ago whan the POL was issued to NSP, it could be argued that a financial analysis, etc., are unnecessary at this

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time. Based on'a review of the Monticello circumstances, it is manifest that a ft:rther analysis and finding are necessary.

The Comission regulations governing the issuance of the Monticello POL were set forth in certain provisions of 10 CFR 550.57 in effect prior to March 1970 (since deleted fmm Part 50). These regula-tions provided that the term of the POL was limited to 18 months and that the Applicant must be financially responsible to engage in the activities authorized by the 50L, namely, operate the reactor for an 18-month period. Consistent with this requirement, the Atomic Safety and Licensing Board (ASLB) in its initial decision dated August 1970 found:

The Applicant estimates an average annual cost of

$8.8 million for each of the first five years of operation. The record indicates that the

- Applicant's operating revenues will be ample to-cover these costs. (Initial Decision, p.15)

The regulatory staff's safety evaluation report was the basis for the ASLB's findings. It also discussed only the first five years of operation (see page 56).

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l A.Giambusso Jan. 17.-1973-Since the finding necessary to support the issuance of the FTL

i. is that the licensee is financially responsible to operate-the i- reactor for 40 years and. thereafter, to decomission the reactor.

it is obvious that the POL financial- analysis and finding of financial responsibility will not suffice for~this-purpose.*

f Your inquiry also questions whether or_ not it will' be necessary ,

to undergo a financial review in every case involving conversion of a POL to a FTL. Assuming _ the'same circumstances as those discussed above, the question is answered in the.affinnative.

Original Signed by Thbmn r; Engeihardt Thomas F. Engelhardt

< Chief Hearing Counsel L

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• It shotld be noted that investor-owned utilities:are in the midst of unprecedented construction programs _ that have caused these companies to resort continuously to the bond and . stock markets for financing. -In such circumstances ~

(NSP is no exception), the~ financial. posture of a utility can change-significantly from year to year. 3 omcc > .... 0GC. ,. . ....Or .. % . . , , , , , ,

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