SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 3, 1996
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Commission File Number 1-5324
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NORTHEAST UTILITIES
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2147929
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(State of other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
174 BRUSH HILL AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01090-0010
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(Address of principal executive officers) (Zip Code)
(413) 785-5871
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name of former address, if changed since last report)
Item 5. Other Events
1. Nuclear Operations
Millstone Unit 1, a 660-MW boiling water reactor, and Millstone Unit 2,
a 870-MW pressurized water reactor, are each owned 81 percent by The
Connecticut Light and Power Company ("CL&P") and 19 percent by Western
Massachusetts Electric Company ("WMECO"). Millstone 3, a 1154-MW pressurized
water reactor, is jointly owned by CL&P (52.93 percent), WMECO (12.24
percent), Public Service Company of New Hampshire ("PSNH") (2.85 percent) and
other New England utilities. CL&P, WMECO and PSNH are subsidiaries of
Northeast Utilities ("NU").
On June 6, 1996, the U. S. Nuclear Regulatory Commission ("NRC") issued
a letter to Northeast Utilities Service Company ("Company"), along with a
report containing the results of a recently completed NRC inspection of the
Millstone 1, 2 and 3 nuclear units. These three nuclear generating
facilities are currently off line while the Company takes the steps necessary
to respond to a series of earlier NRC letters requesting that the Company
submit certain information to the NRC prior to returning these units to
service ("the 50.54(f) letters").
The NRC's recent inspection report identifies a number of specific
potential violations of NRC requirements. Five such apparent violations,
involving Millstone Units 1 and 2, are being considered by the NRC for
escalated enforcement, which could include civil monetary penalties.
Based on these and other similar findings, the NRC stated in its June
6th letter that it has concluded that the corrective action program at
Millstone is not currently effective in resolving identified deficiencies.
Under the NRC's regulations, all nuclear licensees are required to establish
and maintain a corrective action program to identify and resolve conditions
that are adverse to quality. These conditions include equipment failures or
malfunctions, defective materials and deviations from license requirements,
regulations or procedures. The NRC's June 6 letter indicates that it will
require the Company to demonstrate the effectiveness of this program before
any of the Millstone units are restarted.
The NRC's most recent letter also outlines certain inspection activities
that it plans to undertake before the Millstone units are restarted. The
Company expects that these inspections will be conducted over a period of
weeks following submittal of the Company's response to the 50.54(f) letters.
Management's currently estimated targets for completing the work necessary to
respond to those letters are by mid-July 1996 for Millstone Unit 3, by the
end of the third quarter of 1996 for Millstone Unit 2 and by the end of the
fourth quarter for Millstone Unit 1.
The NRC is scheduled to conduct a public meeting on or about June 25,
1996, to discuss the plants that will be removed from, placed on, or remain
on, its "watch list" of facilities requiring additional regulatory attention.
Management believes that the three Millstone units will remain on the NRC's
watch list.
In addition to the foregoing, the NRC indicated in a letter dated May
21, 1996 that it plans to closely monitor the Company's actions to address
the concerns at each of the Millstone units. The NRC also requested that the
Company provide a comprehensive list of design and configuration deficiencies
identified at the units, along with a description of corrective actions taken
or planned to be taken in response. To support its review, the NRC requested
in the letter that the Company submit for each Millstone unit a detailed
description of the Company's plan for completion of the work required to
respond to the NRC's previous requests. The NRC requested that those plans
be submitted by June 20 for Millstone 3 and not later than 60 days prior to
the proposed restart of Millstone 1 and 2, respectively. After a preliminary
review of these plans, the NRC will hold a public meeting to facilitate its
staff's review.
Management cannot predict at this time the results of the NRC's future
inspection activities, the duration of the process for addressing the NRC's
June 6 letter to the NRC's satisfaction, the processes by which the NRC will
make its determinations that the various Millstone units are ready to
restart, or the dates that the Millstone units will either return to service
or be removed from the NRC's watch list. It is possible that the process
will include public hearings and meetings with or briefings of NRC
commissioners.
The incremental direct and replacement power costs associated with the
current Millstone outages will depend on the length of time that each unit
remains out of service, which is not known at this time. As of June 13,
1996, NU's management has identified approximately $60 million of direct
costs for projects associated with the extended outages (the majority of
which are for projects which have been accelerated from planned future
outages), and an additional approximately $40 million of direct costs
specifically associated with the NRC reviews. The corresponding amounts for
CL&P and WMECO are $48 million and $32 million, and $12 million and $8
million, respectively. It is likely these costs will increase as additional
projects are identified by NU or the NRC. NU had reserved approximately $38
million, of which CL&P's share was $31 million and WMECO's share was $7
million, in the first quarter of 1996 with respect to the costs associated
with the NRC reviews.
Combined replacement power costs for the three Millstone units are
estimated at $21 million to $27 million per month.
Management believes there is a risk, particularly in Connecticut, that
it will be difficult to meet peak demand this summer if all three Millstone
units, and perhaps CY, are out of service during the hottest weather. To
reduce this risk, the NU system is taking a range of demand and supply
actions. The aggregate cost of these actions in 1996 is estimated to be $45
million for NU, the majority of which will be expended in Connecticut.
On May 17, 1996, the NRC issued to the Company a letter indicating that
recent inspections of the Connecticut Yankee ("CY") nuclear unit revealed
issues that were similar to those previously identified at Millstone Station.
In light of these findings, the NRC requested that CY submit by May 30, 1996
a comprehensive list of design and configuration deficiencies identified at
CY, along with a description of the actions taken in response to the
deficiencies.
On May 30, 1996, CY filed with the NRC the information requested in the
NRC's May 17th letter. In its response, CY expressed its view that although
several specific issues identified at CY are similar to those at Millstone
Unit 1, the findings do not reach the same level as those identified at that
facility. Further, CY stated its belief that the fundamental problems that
exist at Millstone Unit 1 are not present at CY. Management cannot, at this
time, predict the NRC's response to CY's filing. The NRC has indicated that
it will schedule a public meeting to facilitate its review of the submittal.
Operations at CY have not been restricted by these developments.
CY, a 575-MW pressurized water reactor, is jointly owned by CL&P
(34.5 percent), WMECO (9.5 percent), PSNH (5.0 percent) and other New England
utilities.
Management cannot predict the possible loss or range of loss any company
may incur as a result of NRC actions related to the operation of the
Millstone units or CY. Management believes that there is a significant
exposure to nonrecovery of material amounts of the total incremental costs.
For further information, see "Electric Operations - Nuclear Operations"
in NU's, CL&P's, WMECO's and PSNH's 1995 Form 10-K, Form 8-K dated March 30,
1996, and Form 10-Q for the quarterly period ended March 31, 1996.
2. New Hampshire Rates
On June 3, 1996, the New Hampshire Public Utilities Commission (NHPUC)
ordered PSNH to refund $41.5 million, which amount includes $5 million of
interest, related to small power producer (SPP) costs which had been
previously collected over the past 3 1/2 years through the fuel and purchased
power adjustment clause (FPPAC). The refund, which will be made by crediting
customer bills over the next year, slightly exceeds amounts scheduled to be
collected under PSNH's previously approved 5.5 percent rate increase which
was also implemented on June 1, 1996. As a result of the order, PSNH will
not be able to recover deferred SPP costs in the future whenever the FPPAC
rate would be positive. Management expects that PSNH will be allowed future
recovery of these amounts. A detailed written decision is expected by July
1, 1996, at which time PSNH may be in a better position to evaluate the
NHPUC's decision. For further information, see "Rates - New Hampshire Retail
Rates - NUGs" and "- Unamortized PSNH Amortization Costs" in NU's and in
PSNH's 1995 Form 10-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHEAST UTILITIES
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Registrant
Date June 14, 1996 By /s/John H. Forsgren
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John H. Forsgren
Executive Vice President and
Chief Financial Officer
