ML20248D104

Forwards Response to Commission 890822 Order & New England Electric Sys Form 10-Q for Quarter Ending 890630 in Support of Part III of Response Re Insufficient Funding for Operating Plant

ML20248D104
Person / Time
Site:	Seabrook
Issue date:	09/26/1989
From:	Backus R BACKUS, MEYER & SOLOMON, SEACOAST ANTI-POLLUTION LEAGUE
To:	Chilk S NRC OFFICE OF THE SECRETARY (SECY)
Shared Package
ML20248D106	List: ML20248D104 ML20248D129
References
CON-#489-9232 OL, NUDOCS 8910040125
Download: ML20248D104 (6)

Text

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• September 26, 1989 Samuel J. Chilk Office of the Secretary United States Nuclear Regulatory Commission Washington, DC 20555 RE: In the Matter of Public Service Company of New Hampshire, et al.

(Seabrook Station, Unit 1)

Docket No.: 50-443-OL I) ear Mr. Chilk:

Enclosed please find the Response of the Seacoast Anti-Pollution i to the Commission's Procedural Order of August 22, 1989.

l l Since preparing the above, we have come across two additional pieces of information that we would like to have included as an attachment to our presentation. The first is a portion of the New England Electric Eystem Form 10-0 for the quarter ended June 30, 1989. In Note C to that report, attached hereto, New England Electric System, in commenting on the PSNH agreement to fund the MMWEC default, points out:

"There is a strong possibility that the $30 million that PSNH has agreed to provide will not be sufficient to fund MMWEC's share until commercial operation of the unit."

This appears to us to be material and pertinent to the comments

! made in Part III of the attached response, on other owner L defaults.

Secondly, we believe the Commission should have the benefit of a document just obtained by SAPL, and that is the Public Service Company [ Proposed] Disclosure Statement for Joint Plan of Reorganization, filed with the Bankruptcy Court on l

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Samuel J. Chilk l Page 2

! September 26, 1989 l

i September 15, 1989. Page 143 of that report, a copy of which is enclosed, states that:

" Effects of a Delay in the Seabrook Operation Date: To the Extent that the In-Service date is delayed beyond 1/1/90, the company would experience increases in the cost of fuel,

' purchased power, purchased capacity, operation and maintenance expense which would partially offset the increased revenues resulting from the [ proposed] 5.5% 1/1/90 rate increase. Public Service is currently paying approximately $50 million annually for interest expense on the First Mortgage and G&R' bonds. Subsequent to the reorganization, Public Service would have increased debt costs of about $70 million per annum, and Preferred Stock Dividend Requirements of about $23 million per annum.

It is unlikely that Seabrook could continne to meet its Seabrook obligations, pay its increased financina costs, and Day dividends unless Seabrook

. operates early in 1990, or Public Service obtains additional financina." (Emphasis added.)

Very truly yours,

?

R6bert A. Backus RAB:jsr Enclosures cc: Service List.

FEDERAL EXPRESS i

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File No. 1-3446

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'y MTs,f, SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

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, u .:n:,'~tl' .e FORM 10-Q kh.7 e 1 ys.,

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,' Quarterly Report Under Section 13 of

[.@N, Securities Exchange Act of 1934 1.'M a .s

_ (.:;p; { fi;< f For Quarter Ended June 30, 1989 Commission File Number 1-3446 m.A/p.

/t J u.qd k h New England Electric System a

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-') I 7 MASSACHUSETTS 04-16f3060 jfgjpf' -

(I.R.S. Employer

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[! . i incorporation or organization) m4 f 25 Research Drive Westborough, Massachusetts 01582

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- Registrant's telephone number, including area code - 508-366-9011 1

ygyan:

O)h-. N( E 4.R Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act fs of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to Th(I)g@l 14 p

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- such filing requirements for the past 90 days.

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wu Common Shares, par value $1 per share, authorized and outstanding:

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58,377,144 shares at June 30, 1989.

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M h., nGE 13 j 7%Sy"S HEH ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Notes to Unaudited Financial Statements i

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j h _,! Note C - Seabrook i Nuclear Unit - Continued court, PSNH agreed to provide, effective as of December 1988, up to ,i yl

$30 million to fund this share of pre-commercial operation costs.

a strong possibility that the $30 million

)I vill not be sufficient to fund HMWEC's share until comercial operation of that PSNH has agreed l

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'i; the unit.

The settlement described above includes the agreement of all former and

[ nast current joint owners, including NEP, not to sue PSNH for Seabrook related claims.

However, three current joint owners did not participate in A[ the settlement and certain Massachusetts municipal light departments claim A third party beneficiary rights against PSNH.

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$ Interveners have, in the past, petitioned the NRC for a review of the 6

financial qualifications of joint owners. These petitions have been denied, but one such petition is currently being considered by the NRC 3

j appeal board.

Note 0 - Coal Ship Arbitration

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. s NEEI is a 51 percent owner of New England Collier Company (NECCO),

4 unincorporated joint venture with Keystone Shipping Co. (Keystone), a

49. percent owner. HECCO owns the Energy Independence, a coal-carrying

!s The Energy ship, and contracts with Keystone for the ship's operation.

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]g Independence is chartered to NEP through 2008.

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I In 1987, NEEI received a demand for arbitration from Keystone alleging that NEEI had breached its duty, as joint venturer, concerning the charter j hire rates paid by NEP for the Energy Independence during 1983 through i

. .o 1987. Keystone seeks damages in the amount of approximately Arbitration hearings526 million on

_c $g plus punitive damages, costs and attorneys' fees.NEEI rejects Keystone's claims

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Keystone's claims began in October 1988.

t and is asserting substantial legal and equitable defenses at the hearings, j

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. QQ g j which are continuing during 1989.

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Due to disagreement among the parties, no charter hire rate has been r )d~ set for 1988 or 1989 NEP has comenced arbitration against NECCO for F Pending a determination of the charter hire rates for 1988 and 1989. On the motion of

,r, decision, NEP has been paying NECCO at an estiniated rate.

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" NEEI and NEP, the United States District Court for the District of

.m Massachusetts has consolidated the arbitration between NEP and NECCO with if, the arbitration between Keystone and NEEI described above.

W Under the Joint Venture Agreement between NEEI and Keystone, NEEI has p^< y$ the option to buy out Keystone's interest in NECCO at any time for a 4 contractually agreed-on price. In addition, under the Time Charter between J M K NEP and NECCO, NEP has the option to terminate the charter and offer to

& purchase the Energy Independence for a predetermined price. The total s[. M m8n $g ny;f s s# .

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r UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE

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} Chapter 11 1 In re ) Case No. 88-00043

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- Public Service Company of )

New Hampshire, )

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Debtor )

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PUBLIC SERVICE COMPANY'S [ PROPOSED) DISCIDSURE STATEMENT FOR JOINT PLAN OF REORGANIZATION OF PUBLIC SERVICE COMPANY, THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS, AND THE OFFICIAL COMMITTEE OF EOUITY SECURITY HOLDERS ( S e p t.c n b e r 1 5 _. 1989)

Public Service Company of New Hampshire submits the attached

[ Pro' posed) Disclosure Statement for Joint Plan of Reorganization of Public Service Company of New Hampshire, the Official

! Corsittee of Unsecured Creditors, and the Official Cormittee of Equity Security Holders.

Dated: Sept. 15, 1989 PUBLIC SERVICE COMPANY OF pHIRE

'. , W RICHARD LEVIN, ISAAC M. PACHULSKI and DON WILLENBURG, Members of STUTMAN, TREISTER & GLATT Professional' Corporation 3699 Wilshire Blvd., Suite 900 Los Angeles, California 90010 Of Counsel: Telephone: (213) 251-5100 and SULI4WAY, HOLLIS & SODEN One International Place 9 Capitol Street Suite 4200 Concord, New Hampshire 03301 Boston, Massachusetts 02110 Telephone: (603) 224-2341 Telephone: (617) 951-7599 Attorneys for Public Service Company of New Hampshire

snately 75% of the SPP expense. 'Ihe second group is renegotiated to a level of rates repre-senting about 60% of the existing rates. The renegotiated rate levelis conditional on the Rate p

Plan; additional rate increases are available if the renegotiations are not successful.

o The vel CO Merrimack Contract is rejected or renegotiated. In the In-Service case, a replace-ment contract is used as settlement of the claim resultmg from the rejection or of the renegotia-I tion. Terms urder the new contract are similar, but increased by 8.5%. In the Cancellation

'. case, no claim is projected. It is anticipated that any actual claim arising out of rejection L.

would be offset with the collection of higher rates, l

o The NHEC Buyback Agreement is renegotiated. The resale service agreement with the NHEC is continued at an averege wholesale rate of 6.50 cents per KWH (including transmission charges).' In the Seabrook In-Service Case, the renegotiation of the NHEC Buyback Agree-1[

ment is assumed to result in a loss of 25 MW in wholesale sales to NHEC.

Effects of a Delay in the Seabrook Operation Date: To the extent that the In-Service date is .

1 delayed beyond 1/1/90, the company would experience increases in the cost of fuel, purchased

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, power, purchased capacity, operation and maintenance expense which would panially offset t

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the increased revenues resulting from the 5.5% 1/1/90 rate increase. Public Service is cur.

. rently paying approximately $50 million annually for interest expense on the First Mongage and G&R bonds. Subsequent to the reorganization, Public Service would have increased debt costs of about $70 million per annum, and Preferred Stock Dividend Requirements of about

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) $23 million per annum. It is tmlikely that Public Service could continue to meet its Seabrook obligations, pay its increased fmancing costs, and pay dividends unless Seabrook operates

[ carly in 1990, or Public Service obtains additional fmancing.

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o Preferred Stock and Debt maturities occturing within the forecast period are assumed to be re-issued at the same rates.

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