As filed with the Securities and Exchange Commission on October 12, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT - SEPTEMBER 30, 1999
Commission Registrant, State of Incorporation I.R.S. Employer
File Number Address and Telephone Number Identification No.
- ----------- ----------------------------------- ------------------
0-25595 NIAGARA MOHAWK HOLDINGS, INC. 16-1549726
(a New York corporation)
300 Erie Boulevard West
Syracuse, New York 13202
Telephone 315-474-1511
1-2987 NIAGARA MOHAWK POWER CORPORATION 15-0265555
(a New York corporation)
300 Erie Boulevard West
Syracuse, New York 13202
Telephone 315-474-1511
<PAGE>
Item 5. Other Events
--------------------
(a) On September 30, 1999, the U.S. Nuclear Regulatory Commission (NRC)
released its mid-cycle plant performance review of Niagara Mohawk Power
Corporation's nuclear plants. An NRC public meeting will take place on
October 22, 1999, where recent plant performance will be reviewed. See
letter from NRC regarding Mid-cycle Plant Performance Review - Nine Mile
Point Nuclear Station attached (Exhibit No. 99-1).
(b) On October 6, 1999, Niagara Mohawk Power Corporation issued a press
release regarding an agreement to sell its Albany oil and gas-fired
electric generating station. See press release attached
(Exhibit No. 99-2).
Item 7. Financial Statements and Exhibits
- ------------------------------------------
Exhibits - Following is the list of Exhibits furnished in accordance with
the provisions of Item 601 of Regulation S-K, filed as part of this current
report on Form 8-K.
Exhibit No. 99-1 - Letter from Nuclear Regulatory Commission regarding Mid-cycle
Plant Performance Review - Nine Mile Point Nuclear Station.
Exhibit No. 99-2 - Press release issued on October 6, 1999, relating to Niagara
Mohawk Power Corporation's agreement to sell its Albany oil and gas-fired
electric generating station.
<PAGE>
NIAGARA MOHAWK HOLDINGS, INC. AND SUBSIDIARY COMPANIES
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
NIAGARA MOHAWK HOLDINGS, INC.
-----------------------------
(Registrant)
Date: October 12, 1999 By: /s/Steven W. Tasker
--------------------
Steven W. Tasker
Vice President-Controller and
Principal Accounting Officer,
in his respective capacities
as such
NIAGARA MOHAWK POWER CORPORATION
--------------------------------
Registrant)
Date: October 12, 1999 By: /s/Steven W. Tasker
-------------------
Steven W. Tasker
Vice President-Controller and
Principal Accounting Officer,
in his respective capacities
as such
<PAGE>
EXHIBIT INDEX
-------------
Following is the index of Exhibits furnished in accordance with the provisions
of Item 601 of Regulation S-K, filed as part of this current report on Form 8-K.
Exhibit No. 99-1 - Letter from Nuclear Regulatory Commission regarding Mid-cycle
Plant Performance Review - Nine Mile Point Nuclear Station (without enclosures).
Exhibit No. 99-2 - Press release issued on October 6, 1999, relating to Niagara
Mohawk Power Corporation's agreement to sell its Albany oil and gas-fired
electric generating station.
EXHIBIT NO. 99-1
United States
NUCLEAR REGULATORY COMMISSION
REGION 1
475 Allendale Road
King of Prussia, Pennsylvania 19406-1415
September 30, 1999
Mr. John H. Mueller
Chief Nuclear Officer
Niagara Mohawk Power Corporation
Nine Mile Point Nuclear Station
Operations Building, 2nd Floor
P.O. Box 63
Lycoming, NY 13093
SUBJECT: MID-CYCLE PLANT PERFORMANCE REVIEW - NINE MILE POINT
NUCLEAR STATION
Dear Mr. Mueller:
On September 16, 1999, the NRC staff completed the mid-cycle Plant Performance
Review (PPR) of your Nine Mile Point Nuclear Station. The staff conducted
these reviews for all operating nuclear power plants to integrate performance
information and to plan for inspection activities at your facility over the
next six months. Normally, the focus of the mid-cycle PPR would be limited to
identifying changes in performance over the last six months, and to allocate
inspection resources accordingly. However, since we plan to conduct a public
meeting to discuss performance following this review, we also have included
assessment results from the review process in this letter. At the public
meeting, we will discuss performance insights from both this letter and our
April 9, 1999 letter which forwarded the results of the last full PPR.
Four automatic reactor shutdowns (scrams) occurred since the full PPR. Unit 1
completed its Cycle 15 refueling outage in June 1999 and operated at full power
until July 23, when the unit scrammed while performing post-maintenance testing
on the turbine control mechanical pressure regulator. On August 1, during plant
start-up, the unit scrammed because of electronic noise on several intermediate
range neutron monitors. Following repairs, the unit was returned to service and
remained at full power through the end of this period. Unit 2 scrammed on
April 24 due to a failure of a relay in the generator protection circuit, and
again on June 24 due to a failure in the master feedwater control circuit. Both
of these scrams involved coincident equipment malfunctions which complicated
plant shutdown and recovery efforts. Unit 2 was briefly returned to power
following the June 24 scram and then shut down on July 3 to troubleshoot reactor
core isolation cooling (RCIC) system problems. Following repairs, the unit was
returned to power operation on July 23, 1999, and remained at full power through
the end of the period.
During the full PPR assessment, we noted that operator control of plant
evolutions was safe and conservative. Human performance and work control were
improving, but problems in these areas required continued management attention.
Since the full PPR, operator performance remained safe and conservative.
However, we observed additional performance problems in several areas. A number
of longstanding equipment reliability and material condition problems challenged
plant operations. While operator response to these challenges was adequate,
some operator performance deficiencies were noted. In addition, shortcomings in
maintenance procedures, planning and work control, and the implementation of
engineering support require your continued attention. A number of these
problems were indicative of weaknesses in management oversight and the
corrective action program. Plant support functions in the areas of radiological
controls, chemistry, security, and emergency preparedness continued to be
effective.
Major plant evolutions were effectively managed and operator performance during
routine evolutions and plant transients was safe and conservative. However, the
equipment performance problems experienced during recent plant transients
challenged the operators and exposed weaknesses in the areas of teamwork,
communications, and procedure usage. The limited scope of post-trip reviews and
human performance evaluations delayed thorough identification of these
weaknesses.
Some of the recent operator challenges caused by equipment degradation resulted
from deficiencies in the maintenance area. Specifically, deficiencies in
maintenance procedures, work planning and scheduling, and work control reduced
the overall effectiveness of the maintenance program. In addition, there were
instances where poor communications and maintenance work practices adversely
impacted equipment performance, most notably with maintenance performed to
address containment isolation check valve position indication problems. The
station performed several effective self-assessments which identified these
maintenance program shortcomings. However, corrective actions, to date, have
yet to yield significant results.
Engineering performance was mixed since the full PPR. Technical evaluations
and oversight of the Unit 1 core shroud repairs were well performed. However,
weaknesses in engineering support led to repeat failures and reduced reliability
of some important plant systems. The most notable example was the poorly
coordinated engineering effort associated with RCIC system maintenance.
Additional attention is warranted to address several other deficiencies in the
engineering area, such as, incomplete modification packages, untimely
modification field installations, and discrepancies in the Inservice Inspection
and Inservice Testing programs.
As reflected in the results of the full PPR, radiation protection and
radioactive waste/material management programs were well implemented. Security
and safeguards programs were executed in a manner that protected public health
and safety. Emergency preparedness program requirements were effectively
exercised during a drill and during an actual fire at an adjacent nuclear
facility. Housekeeping practices continued to be appropriate and the
corrective action program was effectively implemented in the plant support
area.
As noted above, performance declined in several areas. Accordingly, we plan to
conduct additional inspections beyond the core inspection program over the next
six months to better understand the causes contributing to the decline.
Enclosure 1 contains a historical listing of plant issues, referred to as the
Plant Issues Matrix (PIM), that were considered during this PPR process to
arrive at an integrated review of licensee performance trends. The PIM
includes items summarized from inspection reports or other docketed
correspondence between the NRC and Nine Mile Point Units 1 & 2 from October 1,
1998 to September 30, 1999. As noted above, greater emphasis was placed on
those issues identified in the past six months during this performance review.
The NRC does not attempt to document all aspects of licensee programs and
performance that may be functioning appropriately. Rather, the NRC only
documents issues that the NRC believes warrant management attention or
represent noteworthy aspects of performance.
This letter advises you of our plans for future inspection activities at your
facility so that you will have an opportunity to prepare for these inspections.
It will also allow you to provide us with feedback on any planned inspections
which may conflict with plant activities. Enclosure 2 details our inspection
plan through March 2000 to coincide with the scheduled implementation of the
revised reactor oversight process in April 2000. The rationale or basis for
each inspection outside the core inspection program is discussed above so that
you are aware of the reason for emphasis in these program areas. Resident
inspections are not listed due to their ongoing and continuous nature.
If circumstances arise which cause us to change this inspection plan, we will
contact you to discuss the change as soon as possible. Please contact Michele
G. Evans at 610-337-5224 with any questions.
Sincerely,
Original Signed by:
Richard V. Crlenjak, Deputy Director
Division of Reactor Projects
Docket Nos. 50-220, 50-410
License Nos. DPR-63, NPF-69
Enclosures:
1. Plant Issues Matrix
2. Inspection Plan
EXHIBIT NO. 99-2
NIAGARA MOHAWK REACHES AGREEMENT
TO SELL ALBANY STEAM STATION
SYRACUSE, Oct. 6 - Niagara Mohawk Power Corp., a wholly owned subsidiary of
Niagara Mohawk Holdings, Inc. (NYSE: NMK), today announced an agreement to sell
its Albany oil and gas-fired electric generating station to PSEG Power LLC for
$47.5 million. The sale price is 1.3 times the plant's book value of
approximately $36 million. Niagara Mohawk could also receive up to an
additional $11.5 million if PSEG Power chooses to pursue redevelopment of the
Albany Steam Station.
PSEG Power is a wholesale electric generation and trading company operating in
the northeastern United States. PSEG Power is an unregulated subsidiary of
Public Service Enterprise Group, Inc. (NYSE: PEG), a diversified energy company
headquartered in Newark, N.J.
Under a transition power contract in place through September 2003, Niagara
Mohawk will purchase electricity from PSEG Power at prices consistent with
those negotiated in its POWERCHOICE regulatory agreement.
As part of the agreement, PSEG Power will accept the current collective
bargaining agreement with the International Brotherhood of Electrical Workers
Local 97 and will offer to continue employment for employees at the Albany
Steam Station.
"We are very pleased with the results of this sale," said William E. Davis,
Niagara Mohawk's chairman and chief executive officer. "For the past 47 years
the Albany Steam Station has been an important part of our commitment to deliver
safe and reliable power to our customers. We're pleased that PSEG Power is the
successful bidder. We believe their commitment to invest in the competitive
electric generation business offers the best opportunity for the Albany Steam
Station to continue as a power producer and employer," Davis said.
Frank Cassidy, president of PSEG Power said, "The purchase of the Albany plant,
similar in design and operation to our own Sewaren plant, gives PSEG Power its
first entry into a new and important power pool. Our plant operation and
electric trading experience will allow us to both maximize the operation of the
plant and participate in the ongoing development of the power pool."
"We look forward to working with the employees as we integrate the Albany plant
into PSEG Power's portfolio and consider future expansion at the site," added
Cassidy.
The sale is subject to approval by the New York Public Service Commission and
various federal agencies. Niagara Mohawk expects to complete the transaction in
the first quarter of 2000.
"Proceeds from this sale will be used to accelerate the retirement of capital,
consistent with our plan to create value for our shareholders," said Davis.
Albany Steam Station is a 400-megawatt plant on the west shore of the Hudson
River in the town of Bethlehem, N.Y., three miles south of Albany. In operation
since 1952, the plant was originally built to burn coal. It was converted to
oil in 1970, and natural gas capability was added in 1981.
Last November, Niagara Mohawk filed an application with the New York State Board
on Electric Generation Siting and the Environment to redevelop the Albany Steam
Station. Niagara Mohawk proposed to increase the plant's generating capacity to
750 megawatts, while substantially reducing air emissions and Hudson River water
usage. A 'Certification of Completeness' of the application is currently
pending at the Siting Board. PSEG Power will consider continuation of the
redevelopment efforts.
The agreement to sell the Albany Steam Station is the latest successful step in
the divestiture of Niagara Mohawk's generating facilities, one of the major
elements of the company's POWERCHOICE plan to reduce prices and promote
competition. So far this year, the company has completed the sale of its
coal-fired and hydroelectric generating stations, and has announced agreements
to sell its Oswego Steam Station, Nine Mile Point One Nuclear Unit, and its
41-percent share of the Nine Mile Point Two Nuclear Unit.
Investment bankers, Merrill Lynch & Co. and Donaldson, Lufkin & Jenrette
Securities, are serving as Niagara Mohawk's financial advisors for the Albany
Steam Station sale.
Niagara Mohawk Power Corp. is an energy services company that provides
electricity to more than 1.5 million customers across 24,000 square miles of
Upstate New York. The company also delivers natural gas to more than 500,000
customers over 4,500 square miles of eastern, central and northern New York.
