(As filed April 25, 2000)
File No. 70 -9513
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 2
("POS-AMC")
to
FORM U-1
APPLICATION OR DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
ALLIANT ENERGY CORPORATION
222 West Washington Avenue
Madison, Wisconsin 53703
IES UTILITIES INC.
Alliant Tower
Cedar Rapids, Iowa 52401
(Names of companies filing this statement and addresses of
principal executive offices)
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ALLIANT ENERGY CORPORATION
(Name of top registered holding company parent)
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Edward M. Gleason
Vice President - Treasurer and
Corporate Secretary
Alliant Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703-0192
(Name and address of agent for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application or Declaration to:
Barbara J. Swan, General Counsel William T. Baker, Jr., Esq.
Alliant Energy Corporation Thelen Reid & Priest LLP
222 West Washington Avenue 40 West 57th Street
Madison, Wisconsin 53703-0192 New York, New York 10019
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Post-Effective Amendment No. 1, as filed in this proceeding on
November 24, 1999, is hereby amended and restated in its entirety to read as
follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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A. Background.
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By order dated October 26, 1999 (Holding Company Act Release No.
27096), Alliant Energy Corporation ("Alliant Energy"), a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act"), was authorized to acquire, indirectly through a newly-organized,
wholly-owned subsidiary, a 25% membership interest in Nuclear Management
Company, LLC ("NMC"), a Wisconsin limited liability company formed in February
1999 by three unaffiliated companies1 which own (or whose affiliates own)
nuclear power plant units located in Wisconsin and Minnesota for the purpose of
consolidating into one service organization the specialized nuclear power plant
personnel and resources of such companies. IES Utilities, Inc. ("IES"), a
public-utility subsidiary of Alliant Energy, was also authorized to enter into a
services agreement ("Services Agreement") and related employee lease agreement
with NMC pursuant to which IES provides services and specialized personnel to
NMC and, in turn, purchases from NMC various types of administrative and
technical services required in connection IES's operation of the Duane Arnold
Energy Center ("DAEC"), a 535 MW boiling water reactor located in Palo, Iowa, in
which IES holds a 70% ownership interest.
Specifically, the Services Agreement lists ten categories of support
services from which, subject to study by Service Development Teams, certain
basic support services ("Basic Services") would be identified which could be
provided by NMC on a centralized basis to IES and the other members of NMC (or
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1 The initial members of NMC were Northern States Power Company, WEC Nuclear
Corp., a subsidiary of Wisconsin Energy Corporation, and WPS Nuclear
Corporation, a subsidiary of WPS Resources.
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their utility affiliates) (collectively, the "NMC Plant Owners") on a cost
effective basis. In addition, the Services Agreement provides that NMC may offer
additional services ("Optional Services") to the members or the members'
affiliates.
IES and NMC now request approval to enter into a Nuclear Power Plant
Operating Services Agreement ("Operating Services Agreement"), the form of which
is filed herewith as Exhibit B-3, pursuant to which NMC would provide
operations, maintenance, capital improvement and decommissioning services
("Operating Services") to IES, as an owner of the DAEC. NMC will enter into
essentially identical Operating Services Agreements with each of the other NMC
Plant Owners. In the future, NMC may admit additional members and/or offer
similar types of operating services at competitive rates to third parties who
are not, and whose affiliates are not, members of NMC.
As more fully explained below, the Operating Services will be provided
to IES at cost, as determined in accordance with Rules 90 and 91, on terms that
are substantially the same as set forth in the existing Services Agreement,
which the Operating Services Agreement will replace. In this regard, although
IES and the other members of NMC could have requested the additional operating
services as Optional Services under the terms of the existing Services
Agreement, they concluded that, for purposes of making required submissions to
the Nuclear Regulatory Commission ("NRC") and in order to address
comprehensively the responsibilities of NMC for nuclear plant safety and certain
employee-related issues that will arise when NMC assumes responsibility for
operational (as opposed to purely administrative) functions at the nuclear
facilities, it was preferable to amend and restate the existing Services
Agreement.
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B. Description of Operating Services Agreement.
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Under the Operating Services Agreement, NMC shall act as agent of IES
and each of the other NMC Plant Owners (defined in the agreement as a
"Contracting Owner") in connection with the operation, management, maintenance,
and repair of the nuclear plants owned by the Contracting Owner, to make capital
improvements to the Contracting Owner's nuclear plant facilities, and to perform
decommissioning work required upon the retirement of such facilities. The
Contracting Owners shall, pursuant to NRC regulations, transfer operating
responsibility for the nuclear plants to NMC, subject to receipt of NRC
approval. Following the transfer, NMC shall be obligated to obtain and maintain
all necessary licenses required by the NRC and other governmental bodies. NMC,
as supplier of operating services to each Contracting Owner, shall have the sole
authority to make all decisions relating to the public health, safety, and
security of the nuclear facilities, including, without limitation, the decision
to reduce capacity or shut down a unit in order to protect the health, safety,
and security of the public and plant personnel. In addition, subject to the
limitations described immediately below, the Contracting Owners will grant NMC,
as their agent, the power and authority to execute, modify, amend or terminate
any contracts, licenses, purchase orders, or permits relating to the operations
of or capital improvements to a unit.
Notwithstanding the foregoing rights, responsibilities and authority of
NMC, NMC may not, without the prior written approval of a Contracting Owner: (a)
obligate the Contracting Owner to pay costs of operation or costs of capital
improvements that are either in excess of or materially different in scope from
the expenditures agreed to in the annual budget approved by the Contracting
Owner, (b) obligate the Contracting Owner to pay costs of capital improvements
that have not been approved in accordance with the Contracting Owner's policy
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requiring board of directors approval, (c) modify, amend or terminate any
contracts executed by a Contracting Owner that are in existence prior to the
effective date of the Operating Services Agreement, or (d) sell, encumber or
otherwise dispose of any property or equipment which comprises any nuclear
plant, except to the extent replaced by similar equipment or property of
comparable value. In addition, the Contracting Owner shall have exclusive
authority to direct NMC to retire a plant and commence decommissioning activity,
to operate a plant at a reduced capacity, and to review and approve contracts
that NMC may enter into with respect to acquisitions of equipment, property,
materials and inventories.
A Contracting Owner shall at all times during the term of the
agreement remain the owner of, and shall be entitled to all of, the capacity and
energy associated with any plant owned by such Contracting Owner. Further, the
Contracting Owner shall at all times (subject to NMC's exclusive right to shut
down a plant for safety reasons) have the right to determine the electric output
from a plant (i.e., dispatch control).
The agreement provides that, upon the effective date, a Contracting
Owner shall transfer to NMC its on-site non-union employees and contractors
responsible for the licensed obligations of its plant. In the event NMC
terminates any transferred employee within three years following the effective
date, the transferring Contracting Owner would be solely responsible for any
severance liabilities; thereafter, severance liabilities with respect to any
terminated employee would be allocated to all Contracting Owners based on the
amount of time such employee that was allocated to each plant operated by NMC.
NMC shall prepare each year an annual budget for operating expenses
and capital improvements for each plant for the following year, which shall be
subject to review and approval by the Contracting Owner. Any adjustments or
modifications to the budget during the budget year must be approved by the
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Contracting Owner. For the services performed by NMC, a Contracting Owner shall
be obligated to reimburse NMC for the costs of operation and costs of any
capital improvements. Costs of operation of a plant include salaries and
employee benefits, the direct cost of contractors engaged by NMC, all
administrative and overhead costs and an allocable portion of the return on and
of the investment by NMC in capital items owned by NMC, based on a composite of
the authorized overall pre-tax capital returns of the Contracting Owners, which
is currently 11.85%, plus the costs of inventory purchased by NMC for any
particular Contracting Owner. The agreement specifies certain allocators that
will be applied to costs in various service categories, including number of
labor hours, number of units and number of plants. All such costs of operation
shall be calculated and allocated in accordance with Rules 90 and 91.
It is not contemplated that NMC itself will acquire or own any
material capital items for use by NMC in connection with providing operating
services to any of the current NMC members' plants. Capital items relating to a
particular plant would, under normal circumstances, be acquired and owned
directly by the appropriate NMC Plant Owner. Examples of capital items that NMC
presently contemplates that it may acquire, to be used by NMC in connection with
providing operating services to the current NMC members' plants, include items
such as testing or diagnostic equipment that could be used in providing services
to multiple plants. Even in that case, however, the intent is to have NMC
utilize existing equipment that is already owned by an NMC Plant Owner, to the
extent that it may be available for use by others.
NMC's compensation under the agreement shall not be based in whole or
in part on the revenues, income or electrical output from operations of any
plant that it manages, nor shall NMC be responsible (except as agent for a
Contracting Owner) for supplying or procuring fuel or other resources necessary
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to operate, maintain and improve any plant. As indicated, the NMC Plant Owners
have agreed that the rate earned by NMC on investment in capital items owned by
NMC and used by NMC in connection with providing operating services should be
equal to the composite of the authorized overall pre-tax capital returns of the
Contracting Owners. The Contracting Owners believe that this is the appropriate
rate in view of the fact that the ownership of NMC is divided equally among four
unaffiliated entities, each of which is affiliated with one of the Contracting
Owners, and that NMC may also provide services to nuclear plant owners other
than the Contracting Owners. Further, if NMC's allowed return on investment in
capital items were set lower than the overall pre-tax capital returns of the
Contracting Owners, the Contracting Owners would effectively suffer a revenue
loss by deciding, in a particular case, to have NMC acquire and own a capital
item rather than one of the Contracting Owners.
A Contracting Owner may terminate the agreement, without cause, upon
one full calendar year's notice, or for cause in the event of any unremedied
material breach, which includes the failure by either party to make any payment
required under the terms of the agreement, or the failure of either party to
perform its material undertakings.
No changes will be made in the way in which NMC maintains its books
and records and system of accounts, as previously directed by the Commission in
the October 26, 1999 order. Further, no change in the types of services or
methods of allocating costs to associate companies, or, except as previously
provided, in the types of companies for which it agrees to provide services,
shall be made unless and until NMC shall first have given the Commission written
notice of the proposed change not less than 60 days prior to the proposed
effectiveness of any such change. If, upon receipt of any such notice, the
Commission shall notify NMC within the 60-day period that a question exists as
to whether the proposed change is consistent with the provisions of Section 13
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of the Act, or any rule, regulation or order thereunder, then the proposed
change shall not become effective unless and until NMC shall have filed with the
Commission an appropriate application regarding such proposed change and the
Commission shall have authorized such change.
The Applicants represent that NMC will not become an "electric utility
company," as defined in Section 2(a)(3) of the Act, by reason of the performance
of its duties and responsibilities under the Operating Services Agreement. In
this regard, the Commission has previously considered the status of other
similar nuclear operating companies that have been formed to perform the same
functions as NMC and has concurred that such companies would not be "electric
utility companies" if they did not have full operating control over any nuclear
power station, did not function as a utility (i.e., did not make sales of
electricity), and did not receive fees for their services other than
reimbursement of costs.2
ITEM 2. FEES COMMISSIONS AND EXPENSES.
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The estimated fees, commissions and expenses to be incurred in
connection with the filing of this Post-Effective Amendment is $5,000.
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2 See STP Nuclear Operating Co., SEC No-Action Letter dated June 18, 1997,
1997 SEC No-Act. LEXIS 686, and Wolf Creek Operating Corp., SEC No-Action
Letter dated December 11, 1995, 1995 SEC No-Act. LEXIS 918. The rights,
responsibilities and duties of NMC under the Operating Services Agreement
are similarly limited, consistent in all material respects with the
agreements which the Division of Investment Management reviewed in
connection with the no-action letter requests in those cases.
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ITEM 4. REGULATORY APPROVAL.
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No state commission and no federal commission, other than this
Commission, has jurisdiction over the transaction proposed herein as it relates
to Alliant, IES or NMC. Certain of the NMC Plant Owners (other than IES) applied
for and received authorizations from the Wisconsin and Minnesota public service
commissions to enter into the Operating Services Agreement. The Iowa Utilities
Board granted a waiver of its jurisdiction under certain reorganization
provisions of Iowa law, as applicable to the proposed transaction; it did not
specifically review or consider the Operating Services Agreement or the
transactions contemplated thereunder. All NMC Plant Owners will require NRC
approval to transfer operating licenses to NMC.
ITEM 5. PROCEDURE.
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Applicants request that the Commission's supplemental order in this
proceeding be issued as soon as is permitted by the Rules and that there be no
30-day waiting period between the issuance of the Commission's supplemental
order and the date on which it is to become effective. Applicants submit that it
is unnecessary that the Commission publish a notice of the proposed transaction
as all aspects thereof were contemplated as a part of the original transaction
approved in the Commission's October 26, 1999 order. Applicants hereby waive a
recommended decision by a hearing or other responsible officer of the Commission
and consent that the Division of Investment Management may assist with the
preparation of the Commission's decision and/or order with respect to this
matter unless such Division opposes the matters covered hereby.
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ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
---------------------------------
The following additional exhibit is filed as a part of this
Post-Effective Amendment:
(a) Exhibits
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B-3 Form of Nuclear Power Plant Operating Services Agreement.
(Previously filed).
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this Application
or Declaration filed herein to be signed on their behalf by the undersigned
thereunto duly authorized.
ALLIANT ENERGY CORPORATION
By: /s/ Edward M. Gleason.
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Name: Edward M. Gleason
Title: Vice President - Treasurer and
Corporate Secretary
IES UTILITIES, INC.
By: /s/ Edward M. Gleason.
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Name: Edward M. Gleason
Title: Vice President - Treasurer and
Corporate Secretary
Date: April 25, 2000
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