01-6983. In the Matter of Northeast Nuclear Energy Company, et al., (Millstone Nuclear Power Station Unit Nos. 1, 2, and 3); Order Approving Transfer of Licenses and Conforming Amendments

I.

Northeast Nuclear Energy Company (NNECO) is a non-owner co-licensee of Facility Operating License No. DPR-21, which authorizes possession and maintenance but not operation of Millstone Nuclear Power Station, Unit 1 (MP1), and the licensed operator and non-owner of Facility Operating License Nos. DPR-65 and NPF-49, which authorize the possession, use, and operation of Millstone Nuclear Power Station, Unit 2 (MP2) and Unit 3 (MP3). The units are owned by various co-licensees as listed below. All three units (the facilities) are located at the licensees' site in New London County, Connecticut.

II.

Under cover of a letter dated August 31, 2000, NNECO submitted an application requesting approval of the proposed transfer of the facility operating licenses to the extent now held by NNECO, the licensed operator and non-owner of the facilities, and the co-licensee selling owners listed below holding ownership interests in the facilities to a new generating company, Dominion Nuclear Connecticut, Inc. (DNC). DNC is an indirect wholly owned subsidiary of Dominion Energy, which is in turn wholly owned by Dominion Resources, Inc. (DRI). NNECO also requested approval of conforming license amendments to reflect the transfer. Supplemental information was provided by submittals dated October 12 and November 8, 2000, and February 16, 2001. Hereinafter, the August 31, 2000, application and supplemental information will be referred to collectively as the “application.” The conforming amendments would remove NNECO and the transferring owners (listed below) from the facility operating licenses and would add Dominion Nuclear Connecticut, Inc. in its place. After completion of the proposed transfer, DNC will be the sole owner of, and be authorized to maintain, MP1, will be the sole owner and operator of MP2, and will hold a 93.4707% ownership interest in MP3 and will be the sole operator of MP3. Central Vermont Public Service Corporation (Central Vermont), which holds a 1.7303% ownership interest in MP3, and Massachusetts Municipal Wholesale Electric Company (Massachusetts Municipal), which holds a 4.7990% ownership interest in MP3, are the only licensee owners of MP3 that are not involved in the subject license transfers.

The following is a list of the licensees involved in the license transfers that hold ownership interests in MP1, MP2, and MP3, and their respective interests:

MP1 and MP2

The Connecticut Light and Power Company (CL&P) (81%)

Western Massachusetts Electric Company (WMECO) (19%)

M3

CL&P (52.9330%)

WMECO (12.2385%)

Public Service Co. of New Hampshire (2.8475%)

The United Illuminating Company (3.6850%)

New England Power Company (16.2140%)

Central Maine Power Company (2.5000%)

Chicopee Municipal Lighting Plant (1.3500%)

Connecticut Municipal Electric Energy Cooperative (1.0870%)

Vermont Electric Generation and Transmission Cooperative (0.3500%)

Fitchburg Gas & Electric Light Company (0.2170%)

Village of Lyndonville Electric Department (0.0487%)

NNECO requested approval of the transfer of facility operating licenses and conforming license amendments pursuant to 10 CFR 50.80 and 10 CFR 50.90. The staff published a notice of the request for approval and an opportunity for a hearing in the Federal Register on October 24, 2000 (65 FR 63630). The Commission received no comments or requests for hearing pursuant to the notice.

Under 10 CFR 50.80, no license, or any right thereunder, shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission shall give its consent in writing. Upon review of the information in the application, and relying upon the representations and agreements contained in the application, the NRC staff has determined that DNC is qualified to hold the licenses to the extent proposed in the application, and that the transfer of the licenses to DNC is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission, subject to the conditions set forth below. The NRC staff has further found that the application for the proposed license amendments complies with the standards and requirements of the Atomic Energy Act of 1954, as amended (the Act), and the Commission's rules and regulations set forth in 10 CFR Chapter I; the facility will operate in conformity with the application, the provisions of the Act, and the rules and regulations of the Commission; there is reasonable assurance that the activities authorized by the proposed license amendments can be conducted without endangering the health and safety of the public and that such activities will be conducted in compliance with the Commission's regulations; the issuance of the proposed license amendments will not be inimical to the common defense and security or to the health and safety of the public; and the issuance of the proposed amendments will be in accordance with 10 CFR Part 51 of the Commission's regulations and all applicable requirements have been satisfied.

The findings set forth above are supported by a safety evaluation dated March 9, 2001.

III.

Accordingly, pursuant to Sections 161b, 161i, 161o, and 184 of the Atomic Energy Act of 1954, as amended, 42 U.S.C 2201(b), 2201(i), 2201(o), and 2234; and 10 CFR 50.80, It Is Hereby Ordered that the transfer of the licenses as described herein to DNC is approved, subject to the following conditions:

(1) DNC shall not take any action that would cause DRI or its parent companies to void, cancel, or diminish DNC's commitment to have sufficient funds available to fund an extended shutdown of MP2 and MP3 as represented in the application for approval of the transfer of the licenses for MP2 and MP3.

(2) The Selling Owners of MP2 and MP3 shall transfer to the DNC decommissioning trusts for MP2 and MP3 at the time the Selling Owners' interests in the Millstone licenses are transferred to DNC, all of the Selling Owners' accumulated decommissioning trust funds for MP2 and MP3. Immediately following such transfer, the amounts in the DNC decommissioning trusts must, with respect to the interests in MP2 and MP3 transferred from the Selling Owners that DNC would then hold, be at a level no less than the formula amounts under 10 CFR 50.75.

(3) On the closing date of the transfer of the Selling Owners' interests in MP1 to DNC, DNC shall: (1) obtain from the Selling Owners of MP1 the decommissioning trust fund for MP1 in an amount no less than $268,300,000; and (2) receive a parent company guarantee pursuant to 10 CFR 50.75(e)(1)(iii)(B) (to be updated annually as required under 10 CFR 50.75(f)(1) and 50.82(a)(8)(iv), unless otherwise approved by the NRC) in an amount which, when combined with the decommissioning trust fund for MP1, equals a total of the site-specific decommissioning funding cost as of the closing date of the transfer as estimated (in year 2000 dollars) in accordance with 10 CFR 50.82 (including the use of a 2 percent annual real rate of return as provided in 10 CFR 50.75(e)(1)(i)).

(4) The decommissioning trust agreement for MP1, MP2, and MP3 at the time the transfer of the units to DNC is effected and thereafter, are subject to the following conditions:

(a) The decommissioning trust agreement must be in a form acceptable to the NRC.

(b) With respect to the decommissioning trust funds, investment in the securities or other obligations of DRI or its affiliates, successors, or assigns are prohibited. Except for investments tied to market indexes or other non-nuclear-sector mutual funds, investments in any entity owning one or more nuclear power plants are prohibited.

(c) The decommissioning trust agreement must provide that no disbursements or payments from the trusts, other than for ordinary administrative expenses, shall be made by the trustee until the trustee has first given the Director of the Office of Nuclear Reactor Regulation 30 days prior written notice of payment. The decommissioning trust agreement shall further contain a provision that no disbursements or payments from the trusts shall be made if the trustee receives prior written notice of objection from the NRC.

(d) The decommissioning trust agreement must provide that the agreement cannot be amended in any material respect without 30 days prior written notification to the Director of the Office of Nuclear Reactor Regulation.

(e) The appropriate section of the decommissioning trust agreement shall state that the trustee, investment advisor, or anyone else directing the investments made in the trusts shall adhere to a “Prudent Investor” standard, as specified in 18 CFR 35.32(a)(3) of the Federal Energy Regulatory Commission's regulations.

(5) DNC shall take all necessary steps to ensure that the decommissioning trusts are maintained in accordance with the application for approval of the transfer of the MP1, MP2, and MP3 licenses and the requirements of this Order approving the transfer, and consistent with the safety evaluation supporting this Order.

(6) Before the completion of the transfer of MP1, MP2, and MP3, to it, DNC shall provide the Director of the Office of Nuclear Reactor Regulation, satisfactory documentary evidence that DNC has obtained the appropriate amount of financial insurance required of licensees under 10 CFR Part 140, and the property insurance required of licensees under 10 CFR 50.54(w) of the Commission's regulations.

(7) After receipt of all required regulatory approvals of the transfer of MP1, MP2, and MP3, DNC shall inform the Director of the Office of Nuclear Reactor Regulation, in writing, of such receipt within 5 business days, and of the date of the closing of the transfer no later than 7 business days prior to the date of the closing. Should the transfer of the licenses not be completed by March 9, 2002, this Order shall become null and void; however, upon written application and for good cause shown, the date may be extended in writing.

It Is Further Ordered that, consistent with 10 CFR 2.1315(b), license amendments that make changes, as indicated in Enclosure 2 to the cover letter forwarding this Order, to conform the licenses to reflect the subject license transfers are approved. The amendments shall be issued and made effective at the time the proposed license transfers are completed.

This Order is effective upon issuance.

For further details with respect to this Order, see the initial application dated August 31, 2000, and supplemental submittals dated October 12 and November 8, 2000, and February 16, 2001, and the safety evaluation dated March 9, 2001, which are available for public inspection at the Commission's Public Document Room, located at One White Flint North, 11555 Rockville Pike (first floor), Rockville, Maryland, and accessible electronically through the ADAMS Public Electronic Reading Room link at the NRC Web site(http://www.nrc.gov).

Dated at Rockville, Maryland this 9th day of March 2001.

For The Nuclear Regulatory Commission.

Samuel J. Collins,

Director, Office of Nuclear Reactor Regulation.