[Federal Register Volume 62, Number 24 (Wednesday, February 5, 1997)]
[Notices]
[Pages 5492-5494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2814]
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NUCLEAR REGULATORY COMMISSION
[Docket No. 50-443 (License No. NPF-86)]
North Atlantic Energy Service Corporation and Great Bay Power
Corporation (Seabrook Station, Unit No. 1); Exemption
I
North Atlantic Energy Service Corporation (North Atlantic or the
[[Page 5493]]
licensee) is a holder of Facility Operating License No. NPF-86, which
authorizes operation of Seabrook Station, Unit No. 1 (the facility or
Seabrook), at a steady-state reactor power level not in excess of 3411
megawatts thermal. The facility is a pressurized water reactor located
at the licensee's site in Rockingham County, New Hampshire. The license
provides among other things, that it is subject to all rules,
regulations, and orders of the U.S. Nuclear Regulatory Commission (the
Commission or NRC) now or hereafter in effect.
II
Great Bay Power Corporation (Great Bay) was established in 1994 as
a successor to EUA Power Corporation, which had filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. Great Bay
is a non-operating, 12.1324 percent co-owner of Seabrook and sells its
proportionate share of power from Seabrook on the wholesale electricity
market. Great Bay is an exempt wholesale generator as defined in the
Energy Policy Act of 1992.
On May 8, 1996, North Atlantic submitted to the NRC a request on
behalf of Great Bay for Commission consent to the indirect transfer of
control of Great Bay Power's interest in the Operating License.
Additional information relating to this request was submitted on
October 18 and December 9, 1996. Approval of the indirect transfer of
control of Great Bay would allow Great Bay, through the formation of
several subsidiaries and a merger, to become a wholly owned subsidiary
of a new holding company, Great Bay Holdings Corporation. The indirect
transfer of control of Great Bay's share of Seabrook is subject to NRC
approval pursuant to 10 CFR 50.80.
In its May 8, 1996, submittal, North Atlantic indicated that, after
the indirect transfer of control to the new holding company, Great Bay
would remain an electric utility as defined by the NRC in 10 CFR 50.2.
This conclusion is based on Great Bay's intended approach to market its
share of power from Seabrook (approximately 140 MWe) through the
implementation of long-term contracts. Great Bay believes that the
Federal Energy Regulatory Commission (FERC) would have the ultimate
regulatory authority to review rates for these contracts and, thus,
Great Bay would meet the definition of ``electric utility.''
When the NRC staff approved the plan for Great Bay's emergence from
bankruptcy in 1993, it did not explicitly address the issue of whether
Great Bay met the definition of ``electric utility.'' The staff
believed, however, that Great Bay would continue to be an electric
utility based upon its status as such prior to bankruptcy and upon the
expectation that the reorganized entity would be successful with
obtaining long-term contracts for the sale of most of its share of
power from Seabrook.
Notwithstanding the staff's earlier actions with respect to Great
Bay's emergence from bankruptcy, the staff now believes that Great Bay
does not meet the definition of ``electric utility.'' Great Bay has
successfully entered only one long-term contract, which is for 10 MWe.
Great Bay sells its remaining 130 MWe share of Seabrook power on the
spot wholesale market, which by definition is subject to market-set
rates. The staff believes that, although FERC may exercise general
regulatory oversight over spot market rates, such rates cannot be
considered to be ``rates established by * * * a separate regulatory
authority'' (emphasis added).
If Great Bay is no longer an electric utility, Great Bay is
required to meet the existing financial qualifications review
requirements of 10 CFR 50.33(f)(2). This section requires that ``the
applicant shall submit estimates for the first five years of operation
of the facility. The applicant shall also indicate the source(s) of
funds to cover these costs.'' Seabrook has an established operating
history and associated costs that are now a matter of record. Based on
a review of Great Bay's current financial statements submitted with its
May 8, 1996, submittal, and supplemental projections submitted on
October 18, 1996, the staff has concluded that Great Bay has complied
with the essential requirement of the existing standard, which is to
demonstrate reasonable assurance of obtaining its share of Seabrook
operating costs. Great Bay has projected operating income and cash flow
based on what appear to be reasonable projections of the spot market
price of and demand for power from Seabrook for the foreseeable future.
Great Bay indicates that these projections would be the same with or
without formation of the proposed holding company. Thus, Great Bay has
demonstrated that it possesses or has reasonable assurance of obtaining
the funds necessary to cover estimated operation costs for the period
of the license as required by 10 CFR 50.33(f)(2).
The requirements for indicating to the NRC how reasonable assurance
will be provided that funds will be available for decommissioning are
identified in 10 CFR 50.75, ``Reporting and recordkeeping requirements
for decommissioning planning.'' Acceptable methods for providing this
assurance are described at 10 CFR 50.75(e)(1) and the methods that may
be used by non-electric utilities are identified at 10 CFR 50.75(e)(2).
If Great Bay is no longer an electric utility, it does not meet the
requirements of 10 CFR 50.75(e)(2) in that it does not have a surety
bond or other surety method in place to provide additional assurance
for decommissioning funding. Great Bay, however, does contribute to an
external sinking fund, which alone would satisfy the requirements of 10
CFR 50.75 if Great Bay in fact were an electric utility, as it asserts.
Great Bay has stated that the current value of Great Bay's share of the
decommissioning liability in 1995 dollars is approximately $50.2
million. As of December 31, 1995, its accumulated decommissioning
reserve was approximately $5.1 million. Great Bay also has in place $10
million in decommissioning costs guaranteed by Eastern Utility
Associates, Great Bay's former corporate parent. However, Great Bay has
not provided assurance as required under 10 CFR 50.75(e)(2). In its
October 18, 1996, submittal, Great Bay indicated that the projected
cash on hand at the end of the current fiscal year would be sufficient
to cover most of the $50.2 million that is not otherwise offset by the
$5.1 million reserve and the $10 million guarantee.
III
Great Bay currently is a stand-alone entity; that is, it is not
itself a subsidiary of another organization and it has no subsidiary
organizations (other than those recently formed to effect the proposed
corporate reorganization). Great Bay has requested Commission approval
of the indirect transfer of control of its interest in the Seabrook
Operating License. This approval would permit Great Bay to become a
wholly owned subsidiary of a new entity, Great Bay Holdings
Corporation. The current owners of Great Bay would exchange their
equity interest in Great Bay for equity interest in the holding
corporation; thus, the current owners would own Great Bay indirectly
rather than directly. The Great Bay interest in the Seabrook Operating
License would remain directly with Great Bay. Great Bay indicated that
the proposed restructuring would protect Great Bay's status as a
wholesale electric generator and allow management to develop
opportunities in additional electricity markets through the holding
company, thus, potentially improving Great Bay's financial position.
The staff is, of course, particularly interested in Great Bay's
longer-term
[[Page 5494]]
financial viability with respect to Great Bay's share of operation and
decommissioning costs of Seabrook. The staff believes that Great Bay's
financial viability will not be diminished but instead likely will be
enhanced by the formation of the holding company. By approving the
indirect transfer of control now, the staff believes that Great Bay
could be in a stronger position to meet both the financial
qualifications and decommissioning rules.
Thus, to allow the staff to act upon, without further delay, Great
Bay's request for approval of indirect transfer of control of Great
Bay, and at the same time afford Great Bay a reasonable opportunity to
implement a suitable decommissioning funding assurance method required
of a non-electric utility, the staff is granting Great Bay a 6-month
exemption from compliance with the provisions 10 CFR 50.75(e)(2)
pertaining to the additional surety arrangements for decommissioning
funding assurance for non-electric utility licensees. If, within the
effective period of this exemption, Great Bay has been unable to
establish itself as an electric utility as defined in 10 CFR 50.2,
Great Bay then must obtain a surety bond or other allowable
decommissioning funding assurance mechanism for non-electric utility
licensees meeting all of the requirements of 10 CFR 50.75(e)(2).
The Commission has determined that pursuant to 10 CFR 50.12(a)(1),
this exemption is authorized by law, will not present an undue risk to
the public health and safety, and is consistent with the common defense
and security. The Commission further has determined that special
circumstances as provided in 10 CFR 50.12(a)(2)(ii) and 10 CFR
50.12(a)(2)(v) are present justifying the exemption. Under criterion
(ii), special circumstances exist in that application of the regulation
in this particular circumstance is not necessary, for the 6-month
period, to achieve the underlying purpose of the rule, which is to
ensure that funds are available for decommissioning at the end of the
license term or in the event of premature shutdown. Here, Great Bay's
projected 1996 cash position is nearly sufficient to cover the unfunded
decommissioning costs, and its cash position is not likely to
deteriorate substantially during the period of the exemption.
Further, under criterion (v), special circumstances exist because
the exemption provides only temporary relief from the applicable
regulation(s), and Great Bay has made a good faith effort to comply
with 10 CFR 50.75 by making payment into an external sinking fund based
on its good faith belief that it is an electric utility.
Pursuant to 10 CFR 51.32, the Commission has determined that
granting this Exemption will not have a significant impact on the
environment (62 FR 3316).
This Exemption is effective upon issuance and shall expire 6 months
from the date of issue.
Dated at Rockville, Maryland, this 22nd day of January 1997.
For the Nuclear Regulatory Commission.
Frank J. Miraglia,
Acting Director, Office of Nuclear Reactor Regulation.
[FR Doc. 97-2814 Filed 2-4-97; 8:45 am]
BILLING CODE 7590-01-P
