FILE NO. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION/DECLARATION
WITH RESPECT TO RECIPROCAL SUPPORT AGREEMENT
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Northeast Utilities Service Company
107 Selden Street
Berlin, Connecticut 06037
North Atlantic Energy Northeast Nuclear Energy Company
Service Corporation 107 Selden Street
Route 1, Lafayette Road Berlin, Connecticut 06037
Seabrook, NH 03874
Connecticut Yankee
Yankee Atomic Electric Company Atomic Power Company
580 Main Street 107 Selden Street
Bolton, Massachusetts 01740 Berlin, Connecticut 06037
(Name of companies filing this statement
and addresses of principal executive offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities Service Company
107 Selden Street
Berlin, Connecticut 06037
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
John F. Opeka Jeffrey C. Miller, Esq.
Executive Vice President-Nuclear Assistant General Counsel
Northeast Utilities Service Company Northeast Utilities Service Company
107 Selden Street 107 Selden Street
Berlin, Connecticut 06037 Berlin, Connecticut 06037
Gerald Garfield, Esq.
Day, Berry & Howard
CityPlace
Hartford, Connecticut 06103-3499
<PAGE>
ITEM I
DESCRIPTION OF PROPOSED TRANSACTIONS
INTRODUCTION
1. Northeast Utilities Service Company ("NUSCO"), a Connecticut
corporation, Northeast Nuclear Energy Company ("NNECO"), a Connecticut
corporation, North Atlantic Energy Service Corporation ("North Atlantic"), a
New Hampshire corporation, Connecticut Yankee Atomic Power Company ("CYAPC"),
a Connecticut corporation and Yankee Atomic Electric Company ("YAEC"), a
Massachusetts corporation, are proposing to enter a Reciprocal Support
Agreement (the "Agreement") for temporary sharing of employees, equipment and
other resources. The Agreement allows for such sharing by the four nuclear
operators.
2. NNECO and North Atlantic are wholly owned electric utility and service
company subsidiaries of Northeast Utilities ("NU"), a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act"). NNECO operates and manages Millstone Units 1, 2, and 3, the three
nuclear power plants which comprise the Millstone Nuclear Power Station
located in Waterford, Connecticut (the "Millstone Units"). North Atlantic
operates and manages the Seabrook nuclear plant located in Seabrook, New
Hampshire ("Seabrook Station"). CYAPC and YAEC are electric utility
subsidiaries of NU and New England Electric System ("NEES"), each a
registered holding company under the Act. CYAPC owns and operates the
Connecticut Yankee Atomic Power Plant located in Haddam Neck, Connecticut
("Connecticut Yankee"), and YAEC owns and operates the Yankee Nuclear Power
Station located in Rowe, Massachusetts ("Yankee-Rowe").1 (Each of the
Millstone Units, Seabrook Station, Connecticut Yankee and Yankee-Rowe is
1
Yankee Rowe was shut down in 1992 and is presently being
decommissioned.
<PAGE>
referred to herein individually as a "Plant", and they are referred to
collectively as the "Plants"). NUSCO is a wholly owned service company
subsidiary of NU that provides legal, accounting and other administrative
services to companies in the NU System. NNECO, North Atlantic, CYAPC, YAEC,
and NUSCO (individually an "Applicant" and collectively the "Applicants"),
are "associate compan[ies]" under the Act.
3. NNECO, North Atlantic, CYAPC, and YAEC (individually an "Operator" and
collectively the "Operators") each has employees with specialized knowledge
and expertise regarding the operation of its Plants that they wish to make
available to the other Operators on a temporary basis in order to more
efficiently allocate resources and decrease costs. In addition to services,
each of the Operators has equipment that may occasionally be needed by
another Operator on a temporary basis, and the Operators may wish to make
this equipment available to each other in such circumstances. The Agreement
will provide increased economies and efficiencies and improved plant
reliability resulting from the sharing of resources and expertise. The
Agreement will not provide for the permanent acquisition or transfer of
equipment, spare parts or consumables contained in the inventory of any
Operator.
DESCRIPTION OF PROPOSED AGREEMENT
4. Under the Agreement, each Operator may temporarily provide technical
resources, personnel and equipment to any other Operator and be compensated
at "cost," as determined in accordance with the Act and the rules promulgated
thereunder. NUSCO will provide billing, accounting and other similar
services to facilitate the transactions among the Operators. NUSCO will be
compensated for its services by the Operators who receive equipment or
<PAGE>
services at "cost" determined in accordance with the Act and the rules
promulgated thereunder.
5. As required by Rule 89 under the Act, the Agreement contains a
provision mandating that it be terminated to the extent that performance may
conflict with any rule, regulation, or order of the Commission.
6. Both North Atlantic and NNECO have agreed to seek Commission approval
prior to providing services to entities other than the Joint Owners of their
respective nuclear units. Northeast Utilities, et al, H.C.A. Rel. No. 25565
(June 29, 1992). Northeast Nuclear Energy Company, H.C.A. Rel. No. 25950
(December 16, 1993). Therefore, because the Agreement provides that North
Atlantic may render services to entities other than the Seabrook Joint Owners
(namely NNECO, CYAPC and YAEC) and that NNECO may render services to entities
other than the Millstone Units (namely North Atlantic,
CYAPC and YAEC), the Agreement requires Commission approval.
7. Temporary sharing of resources and personnel between nuclear units is
similar to the emergency provision of resources that occurs routinely on an
informal basis throughout the nuclear industry. The Agreement is a logical
extension and formalization of that informal procedure and clearly is in the
interest of both security holders and customers. See also Rule 87(b)(2),
which explicitly authorizes a subsidiary of a registered holding company to
"perform services or construction for, or sell good to, an associate company
thereof, if:... (2) such services, construction or goods are reasonably
required by such associate to meet a breakdown or other emergency, and the
parties believe, in good faith, that, under the conditions then existing,
such transaction will be to the advantage of such associate."
8. Except in accordance with the Act, neither NU nor any subsidiary
thereof (a) has acquired an ownership interest in an exempt wholesale
generator ("EWG") or a foreign utility company ("FUCO") as defined in
<PAGE>
Sections 32 and 33 of the Act, or (b) now is or as a consequence of the
transactions proposed herein will become a party to, or has or will as a
consequence of the transactions proposed herein have a right under, a
service, sales, or construction contract with an exempt wholesale generator
or a foreign utility company. None of the proceeds from the transactions
proposed herein will be used by the Companies to acquire any securities of,
or any interest in, an exempt wholesale generator or a foreign utility
company.
The NU system is in compliance with Rule 53(a), (b), and (c), as
demonstrated by the following determinations:
(i) NU's aggregate investment in EWGs and FUCOs (i.e., amounts invested in
or committed to be invested in EWGs and FUCOs, for which there is recourse
to NU) does not exceed 50% of the NU system's consolidated retained
earnings as reported for the four most recent quarterly periods on NU's
Form 10-K and 10-Qs. As of June 30, 1995. NU's aggregate investment in
EWGs and FUCOs was approximately $18,365,000, which amount equaled 1.9% of
the NU system's consolidated retained earnings of approximately
$965,102,000 as of such date.
(ii) Encoe Partners (NU's only EWG or FUCO at this time) maintains books
and records, and prepares financial statements in accordance with Rule
53(a)(2). Furthermore, NU has undertaken to provide the Commission access
to such books and records and financial statements, as it may request.
(iii) No employees of the NU system's public utility companies have
rendered services to Encoe Partners.
<PAGE>
(iv) NU has submitted (a) a copy of each Form U-1 and Rule 24 certificate
that has been filed with the Commission under Rule 53 and (b) a copy of
Item 9 of Form U5S and Exhibits G and H thereof to each state regulator
having jurisdiction over the retail rates of the NU system public utility
companies.
(v) Neither NU nor any NU subsidiary has been the subject of a bankruptcy
or similar proceeding unless a plan of reorganization has been confirmed in
such proceeding. In addition, NU's average consolidated retained earnings
for the four most recent quarterly periods has not decreased by 10% or more
from the average for the previous four quarterly periods.
(vi) In the previous fiscal year, NU did not report operating losses
attributable to its investment in Encoe Partners, unless such losses did
not exceed 5 percent of NU's consolidated retained earnings.
ITEM II
FEES, COMMISSION, AND EXPENSES
9. The estimated amounts of fees, commissions and expenses paid or
incurred, or to be paid or incurred, directly or indirectly, by the
Applicants with respect to this Agreement will not exceed $15,000. None of
such fees, commissions or expenses will be paid to any associate company or
affiliate of the Applicants except for financial and other services performed
at cost by NU, and except that C. Duane Blinn, a member of the firm of Day,
Berry & Howard, counsel to the Applicants, is Assistant Secretary of CYAPC,
an affiliate, and the estimate of fees set forth above will include payment
to be made to that firm for legal services in connection with the
transactions proposed in this Agreement.
<PAGE>
ITEM III
APPLICABLE STATUTORY PROVISIONS
10. The following sections of the Act and associated Rules are or may be
applicable to the Agreement described herein:
Section of
The Act Applicability of Section
13(b) Sharing of services and resources among Operators, who
are subsidiaries of NU or NEES.
13(f) Sharing of services and resources among Operators, who
are subsidiaries of NU or NEES
Rules Issued by
SEC Pursuant
To The Act Applicability of Rule
Rule 80 Sharing of services and resources among Operators, who are
subsidiaries of NU or NEES
Rule 89 Sharing of services and resources among Operators, who are
subsidiaries of NU or NEES
Rule 90 Sharing of services and resources among Operators, who are
subsidiaries of NU or NEES
Rule 91 Sharing of services and resources among Operators, who are
subsidiaries of NU or NEES
The Applicants hereby request the Commission's approval pursuant to the
foregoing provisions of the Act and rules thereunder, as well as any other
provisions of the Act or rules that may be applicable.
<PAGE>
ITEM IV
REGULATORY APPROVALS
11. Except for the Commission's approval of this Application/Declaration,
no approval is required from any state or Federal authority for the
execution, delivery and performance of the Agreement and the transactions
contemplated thereby.
PROCEDURE
(a) Commission action on this Application/Declaration is requested by
December 1, 1995.
(b) The Applicants hereby waive a recommended decision by a hearing
officer or other responsible officer of the Commission, unless the
Application/Declaration is opposed by Staff or another party.
(c) The Applicants hereby consent to having the Division of Investment
Management, Office of Public Utility Regulation assist in the preparation of
the Commission's decision and/or order and hereby request that the
Commission's order become effective forthwith upon issuance.
ITEM VI
EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
B. Reciprocal Support Agreement Among NNECO, North Atlantic, CYAPC,
YAEC, and NUSCO.
F. Opinion of Counsel.
G. Financial Data Schedule.
The Applicants hereby request that the requirements of the
instructions to Form U-1 with respect to the furnishing of a
Financial Data Schedule be waived in this instance because the
<PAGE>
transactions that will take place pursuant to the Agreement will
not have any material effect on any of the financial data
required to be furnished in such schedule.
H. Proposed Form of Notice under Public Utility Holding Company Act
of 1935.
(b) Financial Statements
The Applicants hereby request that the requirements of the
instructions to Form U-1 with respect to financial statements be
waived in this instance because the transactions that will take
place pursuant to the Agreement will not have any material effect
on the financial statements of any of the Applicants.
ITEM VII
INFORMATION AS TO ENVIRONMENTAL EFFECTS
(a) The Agreement described herein involves the sharing of expertise and
resources among the Operators. As such, the issuance of an order by the
Commission with respect to this Application is not a major federal action
significantly affecting the quality of the human environment.
(b) No.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned applicants have duly caused this
Application to be signed on its behalf by the undersigned officers hereunto
duly authorized.
Dated: September 18, 1995
Northeast Nuclear Energy Company
By /s/ John F. Opeka
John F. Opeka
Executive Vice President - Nuclear
North Atlantic Energy Service Corporation
By /s/ John F. Opeka
John F. Opeka
Executive Vice President - Nuclear
Connecticut Yankee Atomic Power Company
By /s/ John F. Opeka
John F. Opeka
Executive Vice President
Yankee Atomic Electric Company
By /s/ John F. Opeka
John F. Opeka
Director
Northeast Utilities Service Company
By /s/ John F. Opeka
John F. Opeka
Executive Vice President - Nuclear
<PAGE>
Exhibit B
DRAFT
9/18/95
RECIPROCAL SUPPORT AGREEMENT AMONG
NORTHEAST NUCLEAR ENERGY COMPANY,
NORTH ATLANTIC ENERGY SERVICE CORPORATION,
CONNECTICUT YANKEE ATOMIC POWER COMPANY,
YANKEE ATOMIC ELECTRIC COMPANY AND
NORTHEAST UTILITIES SERVICE COMPANY
This Reciprocal Support Agreement is made as of _________,
1995, by and among Northeast Nuclear Energy Company ("NNECO"), a
Connecticut corporation, North Atlantic Energy Service
Corporation ("NAESCO"), a New Hampshire corporation, Connecticut
Yankee Atomic Power Company ("CYAPC"), a Connecticut corporation,
Yankee Atomic Electric Company ("YAEC"), a Massachusetts
corporation, acting by and through its Nuclear Services Division
("NSD"), and Northeast Utilities Service Company ("NUSCO"), a
Connecticut corporation.
WHEREAS, NNECO is a wholly owned service company subsidiary
of Northeast Utilities ("NU") that operates and manages Millstone
Units 1, 2, and 3 (individually a "Millstone Unit" and
collectively the "Millstone Units"); and
WHEREAS, NAESCO is a wholly owned service company subsidiary
of NU that operates and manages Seabrook Station (Seabrook); and
WHEREAS, CYAPC is an electric utility affiliate of NU and
New England Electric System ("NEES") that owns and operates the
Connecticut Yankee Atomic Power Plant ("Connecticut Yankee"); and
WHEREAS, YAEC is an electric utility affiliate of NU and
NEES that owns the Yankee Nuclear Power Station ("Yankee Nuclear
Power Station") and, acting through NSD, provides technical
services to Yankee Nuclear Power Station and other nuclear
facilities (each of the Millstone Units, Seabrook, Connecticut
Yankee and Yankee Nuclear Power Station being referred to herein
as a "Nuclear Plant" and collectively as the "Nuclear Plants");
and
WHEREAS, NUSCO is a wholly owned service company subsidiary
of NU that provides legal, accounting and other administrative
services to companies in the NU system; and
WHEREAS, NNECO, NAESCO, CYAPC AND YAEC (each an "Operator"
and collectively the "Operators") each has employees with
specialized knowledge and expertise regarding nuclear plant
procurement, engineering, licensing, construction, operations,
maintenance, decommissioning, design, inspection, testing,
planning and other relevant and related skills that they wish to
make available to each other in a mutually cooperative fashion;
<PAGE>
and
WHEREAS, each of the Operators has certain equipment, tools,
and components that are used in connection with plant operation
or maintenance (excluding specifically equipment, spare parts and
consumables held in inventory) (collectively "Equipment"), on
hand for use in its Nuclear Plant that may be required by another
Operator from time to time in the course of operating and
maintaining its Nuclear Plant, and the Operators are willing to
make Equipment available to each other in a mutually cooperative
fashion to meet their respective needs; and
WHEREAS, increased economies and efficiencies and improved
plant reliability will result from the sharing of expertise,
technical resources, personnel and Equipment by and among the
Operators;
NOW THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the
Operators and NUSCO (each a "party" and collectively the
"Parties") agree as follows:
ARTICLE I - SERVICES AND EQUIPMENT
Section 1.1 - Any Operator may request another Operator to
make available, on a temporary basis, specified personnel, or
personnel having specified expertise, to assist the requesting
Operator in any aspect of the requesting Operator's procurement,
engineering, licensing, construction, operation, maintenance,
decommissioning, design, inspection, testing or planning
activities or other relevant and related skills (collectively
"Operator Services"). Additionally, any Operator may request
another Operator to furnish, for temporary use and not for
permanent transfer or installation, a specified article, kind, or
quality of Equipment to meet the requesting Operator's needs. It
is not intended that this Agreement be used as a vehicle for the
permanent acquisition or use of Equipment by any Nuclear Plant.
Prior to making a request for Operator Services or Equipment, an
Operator shall give appropriate consideration to whether it would
be more advantageous to obtain such services or equipment from a
third party vendor (instead of from another Operator) in light of
relevant factors, such as cost, delivery schedule, design,
quality, warranty protection and assurance of supply.
Section 1.2 - Any Operator receiving a request for Operator
Services or Equipment shall make reasonable efforts to
accommodate such request, subject to the receiving Operator's own
needs and requirements and the availability of appropriate
personnel or Equipment, as the case may be. No Operator shall be
required to comply with a request for Operator Services or
Equipment, but each Operator shall cooperate in good faith with
the other Operators to maximize the potential benefits of this
Agreement to all Operators by making requested personnel
available on a temporary basis or providing available Equipment
on a temporary basis when it is reasonably possible to do so.
All Operator Services and Equipment will be furnished on a
mutually agreeable schedule pursuant to a master purchase order
<PAGE>
or service request issued by the Operator requesting the Operator
Services or Equipment that refers to this Agreement and
incorporates its terms by reference. A copy of such master
purchase order or service request shall be sent to NUSCO at the
time Operator Services are requested. Any Equipment that is
furnished in a decontaminated condition shall be returned to the
furnishing Operator in the same condition. Any Equipment that is
furnished in a contaminated condition may be returned to the
furnishing Operator in the same condition.
Section 1.3 - Personnel of an Operator who are made
available to another Operator to provide Operator Services shall
at all times remain the employees of the Operator who makes them
available and shall not become employees of the requesting
Operator, but such personnel shall be subject to the supervision
and control of the requesting Operator while Operator Services
are being provided at the requesting Operator's Nuclear Plant.
Except as explicitly provided in this Agreement, no Operator who
receives Operator Services shall become responsible for any
wages, salary, benefits, expenses or other costs associated with
the personnel providing such Operator Services, all of which
shall remain the responsibility of the Operator who is furnishing
such Operator Services.
ARTICLE II - PAYMENT FOR SERVICES
Section 2.1 - Any Operator that furnishes Operator Services
or Equipment to another Operator shall provide a report to NUSCO
or through the Northeast Utilities financial system (currently
the "Management Information and Budgeting System") (with a copy
to the Operator who received the Operator Services or the
Equipment) no later than the twentieth (20th) day after the end
of each calendar month in which Operator Services or Equipment
are provided containing a statement of cost reflecting the
following factors or information for such calendar month: (A) in
the case of Operator Services, (1) the name and cost control
center of each employee who furnished Operator Services; (2) a
description of the Operator Services furnished by each employee;
(3) the direct labor costs for the period; and (4) a statement of
any out-of-pocket costs reasonably incurred at each cost control
center; and (B) in the case of Equipment, (1) a description of
the Equipment furnished; (2) the operating cost of such
equipment; and (3) the cost of any shipping, handling, insurance,
storage or other operating costs associated with its delivery to
the requesting Operator.
Section 2.2 - Within ten (10) days after receipt of such
report, the Operator who received such Operator Services or
Equipment will be invoiced by the furnishing Operator or through
the Northeast Utilities financial system for all direct costs
reflected in such report (including, but not limited to, wages,
salaries and out-of-pocket costs in the case of Operator
Services, and operating costs, plus the cost of shipping,
handling, insurance and other costs in the case of Equipment),
which will be payable directly to the Operator who furnished the
Operator Services or Equipment within 30 days after receipt of
such invoice. NUSCO may take such actions as it deems
appropriate to verify the information contained in any cost
<PAGE>
report or invoice furnished hereunder.
Section 2.3 - All amounts invoiced for Operator Services or
Equipment provided under this Agreement shall be billed "at
cost", as defined in the Public Utility Holding Company Act of
1935 (the "Act") and the rules and regulations promulgated
thereunder. The indirect and overhead costs associated with
Operator Services (including without limitation costs of capital)
shall be calculated and allocated on a reasonable and equitable
basis in accordance with the requirements of the Act, and shall
be invoiced periodically by the Operator furnishing such Operator
Services or Equipment, by NUSCO or through the Northeast
Utilities financial system to each Operator who received Operator
Services hereunder, but in no event later than January 31 of each
calendar year for the preceding calendar year. All such invoices
shall be payable in the amounts and to the Operators specified
therein within thirty (30) days after receipt.
Section 2.4 - It is the intention of the Parties that
NUSCO's role under this Agreement shall be limited to the
billing, accounting and facilitating activities specifically
described herein ("NUSCO Services"), and NUSCO shall not provide
any other services, unless NUSCO is requested to provide Operator
Services by another Operator. Furthermore, to the extent
possible, all NUSCO Services shall be accomplished automatically
through the NU financial system. All NUSCO Services provided
hereunder and not otherwise provided under any other agreement
shall be billed "at cost" to the Operators who receive Operator
Services or Equipment hereunder during each calendar year.
Direct charges will be made for NUSCO Services where a direct
assignment of cost is possible. Charges for NUSCO Services not
directly assignable (including without limitation costs of
capital) shall be calculated and allocated on a periodic basis
(but no less frequently than annually) by NUSCO on a reasonable
and equitable basis in accordance with the requirements of the
Act. NUSCO shall allocate costs for NUSCO Services not directly
assignable among the Operators in proportion to the direct
charges made for NUSCO Services received by each Operator during
the relevant period. Each Operator that received Operator
Services or Equipment during a calendar year shall be invoiced
for the cost of NUSCO Services no later than January 31 of the
following year, and all such invoices shall be payable within
thirty (30) days after receipt.
Section 2.5 - In order to permit each of the Operators to
make informed decisions about possible requests for Operator
Services and Equipment hereunder, on or before November 1 of each
calendar year (or in the case of the calendar year in which this
Agreement becomes effective, within thirty (30) days after the
effective date of this Agreement), each Operator and NUSCO shall
provide a written notice to each other Operator and to NUSCO of
the categories of expense that will be included in indirect and
overhead costs for the next calendar year (or for the remainder
of the calendar year in the case of the calendar year in which
this Agreement becomes effective) identified by cost control
center or other appropriate means. Billings for indirect and
overhead costs during the next calendar year (or for the
remainder of the calendar year in the case of the calendar year
<PAGE>
in which this Agreement becomes effective) shall be made in a
manner consistent with such notices. Billings for indirect and
overhead costs may be based upon reasonable estimates, subject to
true-up no later than March 1 of the following calendar year.
Section 2.6 - Each of the Operators and NUSCO shall keep
complete and accurate accounts of all receipts and expenditures
hereunder in respect of Operator Services, NUSCO Services
(collectively with Operator Services, the "Services") and
Equipment in accordance with the regulations of the Securities
and Exchange Commission ("SEC") and the Uniform System of
Accounts prescribed for Public Utilities and Licensees subject to
the provisions of the Federal Power Act, as amended from time to
time.
Section 2.7 - All sales, use, excise, gross receipts,
franchise or other similar taxes which may be applicable to the
Services or Equipment provided by any Party to another Party
shall be borne by the recipient of such Services or Equipment.
In no event shall any Party be responsible for any federal, state
or local income tax of any other Party incurred with respect to
Services or Equipment.
Section 2.8 - Any joint owner, participant or shareholder in
a Unit that has received Operator Services or Equipment may, at
its expense, perform or cause to be performed an audit of the
accounts and records of the furnishing Operator and/or NUSCO
relating solely to the performance of such Operator's or NUSCO's
obligations under this Agreement at such Operator's or NUSCO's
offices, at reasonable times, by an independent public accountant
or other representative; provided that any such audit shall not
include the right to examine any accounts or records of such
Operator or NUSCO which are not related to such Operator's or
NUSCO's billings to such Nuclear Plant under this Agreement.
ARTICLE III - STANDARD OF PERFORMANCE
Section 3.1 - Each Operator and NUSCO shall, at all times
during the term of this Agreement perform Services and furnish
Equipment in accordance with the standard of "Prudent Utility
Practice." As used herein, the term "Prudent Utility Practice"
shall, at a particular time, mean any of the practices, methods
or acts which, in the exercise of reasonable judgment in the
light of the facts known to an Operator or NUSCO at the time the
decision was made, could have been expected to accomplish the
desired result at a reasonable cost and consistent with federal
and state legal, licensing and regulatory requirements,
environmental considerations, reliability, safety and expedition
and taking into account the interests of all affected Parties.
In determining whether any practice, method or act is in
accordance with Prudent Utility Practice, due consideration shall
be given to the fact that the design and other aspects of the
operation of nuclear electric generating units involve the
application of advancing technology and are subject to changing
regulatory and environmental limitations. Prudent Utility
Practice is not intended to be limited to the optimum practice,
method or act to the exclusion of all others but rather to
encompass a spectrum of possible practices, methods of acts,
<PAGE>
including those involving the use of new concepts or technology.
Section 3.2 - ALL OPERATOR SERVICES AND EQUIPMENT FURNISHED
HEREUNDER SHALL BE FURNISHED "AS IS, WHERE IS" WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO QUALITY,
MERCHANTABILITY, FITNESS FOR INTENDED PURPOSE, ABSENCE OF
DEFECTS, OR OTHERWISE. Any Operator providing Equipment to
another Operator shall assign to the receiving Operator any
manufacturer's, vendor's or supplier's warranty that is
assignable and assist the receiving Operator in the enforcement
of such warranty.
ARTICLE IV - EFFECTIVE DATE, TERM AND MODIFICATIONS
Section 4.1 - The term of this Agreement shall commence as
of the date hereof, and, unless earlier terminated in accordance
with the provisions of this Article, shall continue in effect
until the last to expire of the NRC operating licenses for the
Nuclear Plants. Any Party to this Agreement may terminate its
participation hereunder, with or without cause, upon written
notice given not less than ninety (90) days prior to the
effective date of such termination.
Section 4.2 - This Agreement shall also be subject to
termination and shall terminate, without any action by any Party,
to the extent and from the time that performance may conflict
with the Act or with any rule, regulation or order of the SEC
adopted before or after the making hereof. Notwithstanding the
foregoing, the Parties will use reasonable efforts to negotiate
any amendments to this Agreement which are necessary for this
Agreement to comply with the Act or any rule, regulation or order
thereunder.
Section 4.3 - Modifications to the terms of this Agreement
may be made at any time only by written agreement among the
Parties.
ARTICLE V - LIMITATION OF LIABILITY AND SET-OFF
Section 5.1 - Notwithstanding any provision of this
Agreement to the contrary, for and in consideration of the fact
that each of the Parties is undertaking its responsibility for
the Services or Equipment provided hereunder without compensation
or charge other than recovery of its costs for those Services or
Equipment, no Party, nor any shareholder or joint owner on its
behalf, shall be entitled to recover from any other Party, or the
directors, trustees, officers, employees, agents or affiliates of
such other Party (or the directors, trustees, officers, employees
or agents of such affiliates) (collectively, the "Protected
Parties") any damages resulting from the performance or non-
performance of its responsibilities hereunder or for any damage
to any Nuclear Plant, any curtailment of power, or any other
damages of any kind, including direct, incidental, consequential,
special, indirect or punitive damages, whether occurring during
the course of the provision of Services or Equipment hereunder or
otherwise or arising out of the performance or non-performance of
this Agreement, unless such damages shall have resulted directly
from the willful misconduct of such other Party, or, to the
<PAGE>
extent legally attributable to such Party, directly from the
willful misconduct of a Protected Party.
Section 5.2 - Notwithstanding any provision of this
Agreement to the contrary, all provisions of this Agreement
providing for limitation of, or protection against, liability
shall apply to the full extent permitted by law, regardless of
fault, and shall survive either termination pursuant to this
Agreement or expiration.
ARTICLE VI - ASSIGNMENT AND THIRD PARTY BENEFICIARIES
Section 6.1 - This Agreement shall be binding upon and inure
to the benefit of each of the Parties and their successors and
permitted assigns. None of the Parties shall assign its rights
or obligations hereunder without the prior written consent of the
other Parties, and any attempted assignment in violation of this
provision shall be null and void.
Section 6.2 - The provisions of this Agreement are solely
for the benefit of the Parties and are not intended to benefit or
create rights in any third parties, except for the benefits
accruing to Protected Parties under Section 5.1.
ARTICLE VII - MISCELLANEOUS
Section 7.1 - This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut
regardless of any conflicts of laws provision to the contrary.
Section 7.2 - EXCEPT AS SET FORTH IN SECTION 3.1, NO
WARRANTIES OF ANY KIND, WHETHER STATUTORY, EXPRESS, WRITTEN, ORAL
OR IMPLIED (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
QUALITY, ABSENCE OF DEFECTS, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE) SHALL APPLY TO THE SERVICES OR EQUIPMENT
FURNISHED HEREUNDER. The foregoing shall not be deemed to affect
in any manner any warranties provided by manufacturers, vendors
or suppliers.
Section 7.3 - This Agreement constitutes the entire
agreement of the Parties with respect to the furnishing of
Services or Equipment hereunder.
Section 7.4 - This Agreement shall be subject to the
approval of any federal or state regulatory body whose approval
is a legal prerequisite to its execution, delivery, and
performance.
Section 7.5 - Notices and other communications required or
permitted to be given or made under this Agreement shall be in
writing, and shall be deemed to have been duly made or given when
delivered personally or when made or given by telex, telegraph or
telecopier, or certified or first class mail, prepaid, at the
address shown for each Party in Exhibit A hereto, or at such
<PAGE>
other address as a Party may from time to time designate by a
written notice that complies with this Section 7.5.
Section 7.6 - In the event that any clause or provision of
this Agreement, or any part thereof, shall be declared invalid or
unenforceable by any regulatory body or court having
jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remaining portions
of this Agreement.
Section 7.7 - Any number of counterparts of this Agreement
may be executed and each shall have the same force and effect as
the original.
Section 7.8 - Nothing contained herein shall evidence any
intent to effect a change in control of any of the Nuclear Plants
operated by the Parties.
Section 7.9 - Nothing contained herein shall be deemed to
abrogate, modify or amend the provision of any existing agreement
by or among any of the Parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, by their respective officers
thereunto duly authorized, all as of the day and year first above
written.
NORTHEAST NUCLEAR ENERGY
COMPANY
By_________________________
Name:
Title:
NORTH ATLANTIC ENERGY
SERVICE CORPORATION
By_________________________
Name:
Title:
CONNECTICUT YANKEE ATOMIC
POWER COMPANY
By_________________________
Name:
Title:
YANKEE ATOMIC ELECTRIC
COMPANY
By_________________________
Name:
Title:
NORTHEAST UTILITIES SERVICE
COMPANY
By_________________________
Name:
Title:
<PAGE>
EXHIBIT A
Northeast Nuclear Energy Company
P.O. Box 270
Hartford, CT 06141-0270
Attention:
With a copy to:
North Atlantic Energy Service Corporation
P.O. Box 300
Seabrook, NH 03874
Attention:
With a copy to:
Connecticut Yankee Atomic Power Company
P.O. Box 270
Hartford, CT 06141-0270
Attention:
With a copy to:
Yankee Atomic Electric Company
580 Main Street
Bolton, MA 01742
Attention:
With a copy to:
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Attention:
With a copy to:
<PAGE>
Exhibit F
OPINION OF DAY, BERRY & HOWARD
COUNSEL FOR APPLICANTS
________, ___ 1995
Securities and Exchange Commission
450 Fifth Street
Judiciary Plaza
Washington, D.C. 20549
Re: Northeast Utilities Service Company
Northeast Nuclear Energy Company
North Atlantic Energy Service Corporation
Connecticut Yankee Atomic Power Company
Yankee Atomic Electric Company
File No. 70-
Ladies and Gentlemen:
We have acted as counsel to Northeast Utilities Service Company, Northeast
Nuclear Energy Company, North Atlantic Energy Service Corporation,
Connecticut Yankee Atomic Power Company and Yankee Atomic Electric Company
(the "Applicants"), in connection with those transactions contemplated in an
application/declaration on Form U-1 (the "Application") regarding a proposed
Reciprocal Support Agreement between and among the Applicants (the
"Agreement"). This opinion is given to you with respect to such transactions
pursuant to your Instructions as to Exhibits to applications and declarations
filed on Form U-1. Except as otherwise defined herein, terms used herein
shall have the meanings given them in the Agreement.
We have examined such documents, corporate records and other instruments as
we have deemed necessary or advisable for the purposes of this opinion. We
have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of natural persons and
the conformity to originals of documents submitted to us as copies.
The opinions set forth herein are qualified in their entirety as follows:
(a) every opinion rendered herein is expressly subject to the consummation of
such transactions in accordance with the Agreement; (b) no opinion is
expressed as to any laws other than the federal laws of the United States and
the laws of the State of Connecticut, the State of New Hampshire and the
Commonwealth of Massachusetts; (c) the opinion expressed in paragraph 3 is
based solely upon the opinion of Jeffrey C. Miller, Assistant General Counsel
for Northeast Utilities Service Company and the opinion of Robert A. Bersak,
Assistant General Counsel for Public Service Company of New Hampshire. We
express no opinion as to such matters except to the extent covered by such
opinions and subject to the qualifications and assumptions contained in such
opinions.
Based on and subject to the foregoing, we are of the opinion that:
<PAGE>
Securities and Exchange Commission
September 19, 1995
Page 2
1. All state laws applicable to the transactions contemplated by the
Agreement will have been complied with at the time the Commission issues an
order permitting the Application to become effective.
2. The Applicants are validly incorporated and duly existing.
3. The transactions contemplated by the Agreement will not violate the
legal rights of the holders of any securities issued by the Applicants or any
associate company thereof.
This opinion may be relied on by the Commission in connection with the
preparation of its decision in this matter.
Very truly yours,
Day, Berry & Howard
Exhibit H
PROPOSED FORM OF NOTICE
[RELEASE NO. ______]
PROPOSED RECIPROCAL SUPPORT AGREEMENT
____________, 199
Northeast Utilities Service Company ("NUSCO"), a Connecticut corporation,
Northeast Nuclear Energy Company ("NNECO"), a Connecticut corporation, North
Atlantic Energy Service Corporation ("North Atlantic"), a New Hampshire
corporation, Connecticut Yankee Atomic Power Company ("CYAPC"), a Connecticut
corporation and Yankee Atomic Electric Company ("YAEC"), a Massachusetts
corporation, and (collectively, the "Applicants" and each an "Applicant"),
have filed an application/declaration with this Commission pursuant to
Section 13(b) of the Act and Rule 89 thereunder and certain other provisions
of the Act and the Commission's rules thereunder. NUSCO NNECO and CYAPC are
located at 107 Selden Street, Berlin, Connecticut 06037. North Atlantic is
located at Route 1, Lafayette Road, Seabrook, New Hampshire 03874 and YAEC is
located at 580 Main Street, Bolton, Massachusetts 01740.
NNECO and North Atlantic are wholly owned electric utility and service
company subsidiaries of Northeast Utilities ("NU"), a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act"). NNECO operates and manages Millstone Units 1, 2, and 3, the three
nuclear power plants which comprise the Millstone Nuclear Power Station
located in Waterford, Connecticut (the "Millstone Units"). North Atlantic
operates and manages the Seabrook nuclear plant located in Seabrook, New
Hampshire ("Seabrook Station"). CYAPC and YAEC are electric utility
subsidiaries of NU and New England Electric System ("NEES"), each a
registered holding company under the Act. CYAPC owns and operates the
Connecticut Yankee Atomic Power Plant located in Haddam Neck, Connecticut
("Connecticut Yankee"), and YAEC owns and operates the Yankee Nuclear Power
Station located in Rowe, Massachusetts ("Yankee-Rowe").1 (Each of the
Millstone Units, Seabrook Station, Connecticut Yankee and Yankee-Rowe is
referred to herein individually as a "Plant", and they are referred to
collectively as the "Plants"). NUSCO is a wholly owned service company
subsidiary of NU that provides legal, accounting and other administrative
services to companies in the NU System. NNECO, North Atlantic, CYAPC, YAEC,
and NUSCO (individually an "Applicant" and collectively the "Applicants"),
are "associate compan[ies]" under the Act.
The Applicants are proposing to enter into a Reciprocal Support Agreement
(the "Agreement") for the temporary sharing of employees, equipment and other
resources by the four nuclear operators.
NNECO, North Atlantic, CYAPC, and YAEC (individually an "Operator" and
collectively the "Operators") each has employees with specialized knowledge
and expertise regarding the operation of its Plant(s) that they wish to make
available on a temporary
1
Yankee Rowe was shut down in 1992 and is presently being
decommissioned.
<PAGE>
- 2 -
basis to the other Operators in order to more efficiently allocate resources
and decrease costs. In addition to services, each of the Operators has
equipment that may occasionally be needed by another Operator on a temporary
basis, and the Operators may wish to make this equipment available to each
other in such circumstances. The Agreement will provide increased economies
and efficiencies and improved plant reliability resulting from the sharing of
resources and expertise. The Agreement will not provide for the permanent
acquisition or transfer of equipment, spare parts or consumables contained in
the inventory of any Operator.
DESCRIPTION OF PROPOSED AGREEMENT
Under the Agreement, each Operator may temporarily provide technical
resources, personnel and equipment to any other Operator and be compensated
at "cost," as determined in accordance with the Act and the rules promulgated
thereunder. NUSCO will provide billing, accounting and other similar
services to facilitate the transactions among the Operators. NUSCO will be
compensated for its services by the Operators who receive equipment or
services at "cost" determined in accordance with the Act and the rules
promulgated thereunder.
As required by Rule 89 under the Act, the Agreement contains a provision
mandating that it be terminated to the extent that performance may conflict
with any rule, regulation, or order of the Commission.
Both North Atlantic and NNECO have agreed to seek Commission approval prior
to providing services to entities other than the Joint Owners of their
respective nuclear units. Northeast Utilities, et al, H.C.A. Rel. No. 25565
(June 29, 1992). Northeast Nuclear Energy Company, H.C.A. Rel. No. 25950
(December 16, 1993). Therefore, because the Agreement provides that North
Atlantic may render services to entities other than the Seabrook Joint Owners
(namely NNECO, CYAPC and YAEC) and that NNECO may render services to entities
other than the Millstone Units (namely North Atlantic, CYAPC and YAEC), the
Agreement requires Commission approval.
Sharing of resources and personnel between nuclear units is similar to the
emergency transfer of resources that occurs routinely on an informal basis
throughout the nuclear industry. The Applicant asserts that the Agreement is
a logical extension and formalization of that informal procedure and is in
the interest of both security holders and customers.
The Applicants state that they intend to request the Commission's approval,
pursuant to the application/declaration, of all transactions contemplated
under the Agreement, whether under the enumerated sections of the Act and the
rules thereunder or otherwise.
The application/declaration and any amendments thereto are available for
public inspection through the Commission's Office of Public Reference. Any
interested persons wishing to comment or request a hearing on the
application/declaration should submit their views in writing by ___________,
1995, to the Secretary, Securities and Exchange Commission, Washington, D.C.
20549, and serve a copy on the Applicants at the addresses specified above.
Proof of service (by affidavit or, in the case of an attorney at law, by
certificate) should be filed with the request. Any request for hearing shall
identify specifically the isact or law that are disputed. A person
<PAGE>
- 3 -
who so requests will be notified of any hearing, if ordered, and will receive
a copy of any notice or order issued in this matter. After said date, the
application/declaration, as filed or as it may be further amended, may be
granted.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
