EXHIBIT D-7
U. S. Nuclear Regulatory Commission
Enclosure to PE&RAS 99-074
Page 1 of 6
UNITED STATES OF AMERICA
NUCLEAR REGULATORY COMMISSION
In the Matter of )
)
Carolina Power & Light Company )
) Docket Nos. 50-261, 50-324,
Brunswick Steam Electric Plant, Units 1 & 2 ) 50-325, 50-400, and 72-0003
H. B. Robinson Steam Electric Plant Unit 2 )
Shearon Harris Nuclear Power Plant, and )
H.B. Robinson Independent Spent Fuel )
Storage Installation )
APPLICATION FOR CONSENT TO INDIRECT TRANSFERS OF CONTROL
REGARDING OPERATING LICENSES NOS. DPR-23, DPR-62, DPR-71, AND NPF-63
FOR BRUNSWICK, UNITS 1 & 2, ROBINSON AND HARRIS, AND
MATERIALS LICENSE NO. SNM-2502 FOR THE ROBINSON ISFSI
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INTRODUCTION AND BACKGROUND
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Carolina Power & Light Company ("CP&L") is the holder of Facility
Operating License No. DPR-23, dated July 31, 1970 ("Operating License DPR-23").
Operating License DPR-23 authorizes CP&L to possess, use and operate H. B.
Robinson Steam Electric Plant Unit 2 ("Robinson") in accordance with the
procedures and limitations set forth in the operating license.
CP&L and the North Carolina Eastern Municipal Power Agency are the
holders of Facility Operating License No. DPR-62, dated November 27, 1974
("Operating License DPR-62"). Operating License DPR-62 authorizes the holders to
possess, use and operate Brunswick Steam Electric Plant Unit 2 ("Brunswick Unit
2") in accordance with the procedures and limitations set forth in the operating
license.
CP&L and the North Carolina Eastern Municipal Power Agency are the
holders of Facility Operating License No. DPR-71, dated November 12, 1976
("Operating License DPR-71"). Operating License DPR-71 authorizes the holders to
possess, use and operate Brunswick Steam Electric Plant Unit 1 ("Brunswick Unit
1") in accordance with the procedures and limitations set forth in the operating
license.
CP&L and the North Carolina Eastern Municipal Power Agency are the
holders of Facility Operating License No. NPF-63, dated January 12, 1987
("Operating License NPF-63"). Operating License NPF-63 authorizes the holders to
possess, use and operate Shearon Harris Nuclear Power Plant ("Harris") in
accordance with the procedures and limitations set forth in the operating
license.
CP&L is the holder of Materials License No. SMN-2502, dated August 13,
1986. License No. SMN-2502 authorizes CP&L to store Robinson spent fuel in the
Robinson Independent Spent Fuel Storage Installation ("Robinson ISFSI") in
accordance with the procedures and limitations set forth in the license.
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U. S. Nuclear Regulatory Commission
Enclosure to PE&RAS 99-074
Page 2 of 6
The purpose of this Application is to request the consent of the
Nuclear Regulatory Commission ("NRC") under 10 C.F.R. ss.ss. 50.80 and 72.50 to
the indirect transfers of control of CP&L's interests in the operating licenses
for Robinson, Brunswick Unit 1, Brunswick Unit 2, and Harris (collectively, with
the Robinson ISFSI, "CP&L Nuclear Units") and the materials license for the
Robinson ISFSI that will occur under the proposed corporate restructuring of
CP&L. CP&L owns a 100% interest in Robinson and the Robinson ISFSI. CP&L owns an
81.67% interest in Brunswick Units 1 & 2, and owns an 83.83% interest in Harris.
CP&L is the operator of all CP&L Nuclear Units. CP&L's ownership interests in,
and its operation of, the CP&L Nuclear Units will not change.
Under the proposed restructuring, a new holding company, CP&L
Holdings, Inc. ("Holdings"), will be formed. The current holders of CP&L common
stock will receive, on a one-for-one basis, shares of common stock of Holdings,
and CP&L will become a wholly-owned subsidiary of Holdings. This restructuring
will result in the indirect transfer of control of the interests held by CP&L in
Operating Licenses Nos. DPR-23, DPR-62, DPR-71, and NPF-63, and Materials
License No. SNM-2502 to Holdings. A copy of the Proxy Statement and Prospectus
(which includes details concerning the formation of Holdings) is incorporated
with this Application as Exhibit A.
As a result of the new corporate structure, Holdings will be able to
respond more effectively to increased competition in the energy industry. The
holding company structure more fully separates the operations of the regulated
and unregulated businesses, making it is easier to analyze and value individual
lines of business, and providing greater flexibility in establishing and
financing new business initiatives. CP&L will continue to be subject to the
jurisdiction of the North Carolina Utilities Commission, the South Carolina
Public Service Commission, and the Federal Energy Regulatory Commission. The
change in ownership will not adversely affect CP&L's financial condition.
The restructuring will have no adverse effect on either the technical
management or operation of CP&L Nuclear Units. The technical qualifications of
CP&L will be unaffected because the technical and management organization
currently responsible for operating CP&L Nuclear Units will remain responsible
for the operation and maintenance of the four nuclear units and the Robinson
ISFSI after the restructuring.
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U. S. Nuclear Regulatory Commission
Enclosure to PE&RAS 99-074
Page 3 of 6
In addition to the NRC's review, the proposed restructuring must be
approved by the shareholders of CP&L, and must be reviewed and approved by other
Federal and state agencies, including the Federal Energy Regulatory Commission,
the Securities and Exchange Commission, the North Carolina Utilities Commission
and the South Carolina Public Service Commission.
Part I below sets forth the information required by 10 C.F.R. ss.ss.
50.80 and 72.50 with respect to the proposed transfers. Part II discusses the
effective date for the license transfers.
I. INFORMATION FOR INDIRECT TRANSFERS OF CONTROL
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General Information Concerning CP&L
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Name and Address
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Carolina Power & Light Company
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
Description Of Business
-----------------------
Following the reorganization, CP&L will be a wholly-owned subsidiary
of Holdings. Its purpose will remain the same as it is now, which is to engage
principally in the generation, transmission, distribution and sale of electric
energy in North Carolina and South Carolina to residential, commercial and
industrial customers for their own use and to wholesale customers for resale.
Organization And Management
---------------------------
CP&L is - and will remain after the restructuring - a corporation
organized and existing under the laws of the State of North Carolina. All of
CP&L's directors and principal officers are citizens of the United States. At
the effective time of the reorganization, the incumbent directors of CP&L will
also become the directors of Holdings.
Following the proposed restructuring, CP&L will not be owned,
controlled or dominated by an alien, foreign corporation or foreign government.
CP&L is not acting as an agent or representative of any other person in this
request for consent to the indirect transfer of control of the licenses.
Technical Qualifications
------------------------
The proposed restructuring involves no change to either the management
organization or technical personnel of CP&L responsible for operating and
maintaining CP&L Nuclear Units. Both before and after the reorganization,
essentially the same CP&L nuclear organization and staff will be responsible for
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U. S. Nuclear Regulatory Commission
Enclosure to PE&RAS 99-074
Page 4 of 6
the operation and maintenance of CP&L Nuclear Units. Therefore, the technical
qualifications of CP&L to carry out its responsibilities under Operating
Licenses Nos. DPR-23, DPR-62, DPR-71, and NPF-63, and Materials License No.
SNM-2502 will remain unchanged and will not be adversely affected by the
proposed restructuring.
Financial Qualifications
------------------------
After the proposed restructuring, CP&L will continue to generate,
transmit and distribute electricity and recover the cost of this electricity
through rates authorized by the North Carolina Utilities Commission and the
South Carolina Public Service Commission, and by the Federal Energy Regulatory
Commission for wholesale transactions. Therefore, CP&L will continue to meet the
definition of electric utility set forth in 10 C.F.R. ss. 50.2. Accordingly, its
financial qualifications are presumed by 10 C.F.R. ss. 50.33(f) and no specific
demonstration of financial qualifications is required.
The financial information required of an applicant to prove its
qualification to maintain and operate an ISFSI is set out in 10 C.F.R. ss.
72.22(e). The information requested by 10 C.F.R. ss. 72.22(e)(1) is not needed
because the ISFSI has already been constructed, and the information requested by
10 C.F.R. ss. 72.22(e)(3) is covered by decommissioning funding discussed below.
The remaining item for which an applicant must establish financial
qualifications is the "[e]stimated operating costs over the planned life of the
ISFSI" (10 C.F.R. ss. 72.22(e)(2)). The same rate-making process that provides
reasonable assurance electric utilities will have the funds necessary to safely
operate a facility under 10 CFR Part 50 provides equal assurance that CP&L will
have sufficient funds to cover the operating costs of the ISFSI over its planned
life.
We understand that, in connection with recent restructuring and
mergers of other licensees, the NRC has required that they be kept informed of
subsequent asset transfers. If this is required with respect to this
restructuring, CP&L is willing to commit to provide the NRC a copy of any
application required to filed with the North Carolina or South Carolina Public
Utility Commissions, to transfer (excluding grants of security interests or
liens) from CP&L to Holdings or any other affiliated company, facilities for the
production, transmission or distribution of electric energy having a depreciated
book value exceeding ten percent of CP&L's consolidated net utility plant, as
recorded on its books of account.
Decommissioning Funding
-----------------------
NRC regulations require information showing "reasonable assurance ...
that funds will be available to decommission the facility." 10 C.F.R. ss.
50.33(k). CP&L is providing financial assurance for decommissioning its
ownership interests in CP&L Nuclear Units through external sinking trust funds
in which deposits are made at least annually. After the restructuring, CP&L will
remain responsible for the decommissioning liabilities associated with its
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U. S. Nuclear Regulatory Commission
Enclosure to PE&RAS 99-074
Page 5 of 6
ownership interests in CP&L Nuclear Units and will continue to fund its
decommissioning trusts for the four nuclear units in accordance with NRC
regulations and the requirements of the North Carolina Utilities Commission and
the South Carolina Public Service Commission.
Antitrust Considerations
------------------------
The Atomic Energy Act only provides for an antitrust review in
connection with a construction permit application and, where there have been
"significant changes" from the time of the construction permit, in connection
with the initial operating license application. 42 U.S.C. ss. 2135(c). As the
Commission recently decided in its review of the license transfer application of
Wolf Creek Generation Station, Unit 1, antitrust reviews of post-operating
license transfer applications are neither required nor authorized by the Atomic
Energy Act.1 Accordingly, no antitrust review is required with respect to the
indirect transfers of control that would result from CP&L's reorganization.
Statement Of Purposes For The Transfer And The Nature Of The
Transaction Necessitating Or Making The License Transfer Desirable
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The purpose of the restructuring is to better position CP&L for the
rapidly changing electric and gas industries due to federal and state
initiatives and market changes. The proposed holding company structure will also
provide greater flexibility in establishing and financing new business
initiatives. The holding company structure more fully separates the operations
of regulated and unregulated businesses, making it easier to analyze and value
individual lines of business. See Exhibit A at 8-9.
Restricted Data
---------------
This application does not contain any Restricted Data or other
classified defense information, and it is not expected that any will become
involved. However, in the event that such information does become involved, CP&L
agrees that it will appropriately safeguard such information and will not permit
any individual to have access to Restricted Data until the Office of Personnel
Management (the successor to the Civil Service Commission) shall have made an
investigation and reported to the NRC on the character, associations, and
loyalty of the individual, and the NRC has determined that permitting such
person to have access to Restricted Data will not endanger the common defense
and security of the United States.
No Environmental Impact
-----------------------
The restructuring does not involve any change to the nuclear plant
operations or equipment of CP&L Nuclear Units and does not change any
environmental impact previously evaluated in the Final Environmental Statements
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1 See Kansas Gas and Electric Co. (Wolf Creek Generating Station, Unit
1), CLI-99-19, 49 NRC __ (June 18, 1999).
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U. S. Nuclear Regulatory Commission
Enclosure to PE&RAS 99-074
Page 6 of 6
for the CP&L Nuclear Units. Accordingly, this application involves no
significant environmental impact.
II. EFFECTIVE DATE
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The proposed restructuring involves the approval of the shareholders
of CP&L and other regulatory authorities in addition to the NRC. These other
regulatory authorities include the Federal Energy Regulatory Commission, the
Securities and Exchange Commission, the North Carolina Utilities Commission, and
the South Carolina Public Service Commission. Until all regulatory approvals
have been obtained and the restructuring is complete, the indirect transfer
cannot be implemented. Therefore, CP&L requests the NRC to approve the proposed
transfer and make it effective at the time the restructuring is complete. CP&L
intends to implement the restructuring as soon as reasonably possible after all
necessary approvals have been obtained (expected by December 31, 1999).
Therefore, the NRC is requested to review and approve this application by
December 15, 1999 and allow 12 months for the transfer to be implemented.
CONCLUSION
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For the foregoing reasons, the NRC is requested to consent to the
indirect transfers of control that would be result from the corporate
restructuring regarding the interests held by CP&L in Operating Licenses Nos.
DPR-23, DPR-62, DPR-71, and NPF-63, and Materials License No. SNM-2502.
