File No. 70-9101
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1 TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO SALES OF CERTAIN GOODS UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CONNECTICUT YANKEE ATOMIC POWER COMPANY
107 Selden Street
Berlin, CT 06037
(Name of company or companies filing this statement and addresses of
principal executive offices)
NORTHEAST UTILITIES
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent of each applicant or
declarant)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities
P. O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Jeffrey C. Miller, Esq. John J. Roman
Assistant General Counsel Vice President and Controller
Northeast Utilities Service Co. Northeast Utilities Service Co.
107 Selden Street 107 Selden Street
Berlin, CT 06037 Berlin, CT 06037
The Application/Declaration in this proceeding is hereby amended in its
entirety as follows:
1. Authorization to Make Certain Sales to Associated Companies
The Connecticut Yankee Atomic Power Company (the "Applicant"), an
electric utility subsidiary of Northeast Utilities ("NU") and New England
Electric System ("NEES") under the Public Utility Holding Company Act of 1935
(the "Act"), hereby requests approval to sell certain of its remaining goods,
as defined under Rule 80(b) of the Act, and certain contract rights related
to previously purchased nuclear fuel for fair market value to both
non-associate and associate companies, including but not limited to Northeast
Nuclear Energy Company, through December 31, 2002. In light of the unusual
circumstances, discussed more fully below, the Applicant believes that an
exemption in this case from the "at cost" standards of Rule 90, to the extent
required, is appropriate and fair under the standards of Section 13(b)(2).
On December 4, 1996, the board of directors of the Applicant voted
unanimously to cease permanently the production of power at its Connecticut
Yankee nuclear plant ("CY"), located in Haddam, Connecticut. The Applicant
has undertaken a number of regulatory filings intended to implement the
decommissioning of the unit, including filings at both the Federal Energy
Regulatory Commission and the Nuclear Regulatory Commission. As part of the
decommissioning and dismantlement process, the Applicant intends to sell
various goods to other companies, including subsidiaries of NU and NEES in
order to achieve the most economic shutdown of CY. These goods generally
include (i) equipment, such as valves, pumps, motors, turbines or the
simulator, which were formerly in service or waiting to be installed prior to
the decision to shutdown the plant, (ii) materials and supplies inventory,
such as nuts, bolts, pipes, pipe fitting, protective clothing and plastics
needed to perform radiological work at the site and (iii) consumables, such
as office supplies or furniture.
Based on the Applicant's review of sales of similar items, including
sales by other utilities implementing decommissioning plans for nuclear
plants, it is expected that these items have a fair market value that is
substantially below the Applicant's book cost of these goods. In particular,
the Applicant currently estimates that the total amount of goods, with an
aggregate book or net book value of $46 million, could be sold for an
aggregate amount of approximately $4 to $4.5 million. These amounts may
increase as the Applicant implements its decommissioning plan, but the
Applicant does not expect that the aggregate amount of goods to be sold to
associate companies will exceed a fair market value of $10 million. If the
Applicant is prohibited from offering these goods to associate companies at
competitive prices, it will substantially limit the pool of potential bidders
and hinder its ability to economically wind down its business activities.
As part of the decommissioning process, the Applicant also intends to
sell to non-associate and associate companies credits it has received for the
enrichment process performed on previously purchased nuclear fuel. Since the
original cost of this enrichment process is significantly more than the
credits the Applicant has received, the Applicant also requests the
flexibility under this Application to offer these credits to both
non-associate and associate companies at fair market value.
The Applicant has various methods to assure that the prices charged to
associate companies are fair. In the case of commonly available inventory,
documentation of the current market price would provide a readily verifiable
fair value market value. In other cases fair market value could be
determined through a comparison of recent transactions, manufacturers' quotes
or independent appraisals. Furthermore, the Applicant proposes to file with
the Commission within 45 days of the close of any fiscal quarter in which
sales to associates are completed an accounting pursuant to Rule 24 of the
prices of such sales and the method used to determine the fair market value
of the sale. Accordingly, the Applicant hereby requests an exemption under
Section 13(b)(2) of the Act from the "cost" requirements of Rule 90 to attain
the flexibility to offer and sell these items at fair market value to both
non-associated and associated companies through December 31, 2002.
2. Other Matters
Except in accordance with the Act, neither NU nor any subsidiary thereof (1)
has acquired an ownership interest in an exempt wholesale generator ("EWG")
or a foreign utility company ("FUCO") as defined in Sections 32 and 33 of the
Act, or (2) now is or, as a consequence of the transactions proposed herein,
have a right under, a service, sales or construction contract with an EWG or
FUCO. None of the proceeds from the transactions proposed herein will be
used by the NU system companies to acquire any securities of, or any interest
in, an EWG or FUCO.
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 (e.g. amounts invested
in or committed to be invested in EWGs and FUCOs, for which there is recourse
to NU) does not exceed 50 percent of NU system's consolidated retained
earnings as reported for the four most recent quarterly periods on NU's Form
10-K and 10-Qs. At September 30, 1997, the ratio of such investment ($78
million) to such consolidated retained earnings ($702 million) was 11.1
percent.
(ii) Encoe Partners, Central Termica San Miguel de Tucuman, S.A. Ave
Fenix and Plantas Eolicas, S. A. (NU's only EWGs or FUCOs at this
time)(collectively, "EWGs/FUCOs") maintain books and records and prepare
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 the EWGs/FUCOs.
(iv) NU has submitted (1) a copy of each Form U-1 and Rule 24
certificates that have been filed with the Commission under Rule 53 and (b)
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, although NU's average
consolidated retained earnings ("CREs") for the four most recent quarterly
periods has decreased by 10 percent or more from the average for the previous
four quarterly periods (at 9/30/96, NU's CREs were $941 million; at 9/30/97,
NU's CREs were $702 million), NU's aggregate investment in EWGs/FUCOs at such
date ($78 million) did not exceed two percent of NU's consolidated capital
invested in utility operations ($133.7 million).
(vi) In the previous fiscal year, NU's operating losses attributable to
its investment in the EWGs/FUCOs did not exceed 5 percent of NU's
consolidated retained earnings.
Neither NEES nor any of its subsidiaries currently has an ownership
interest in an EWG or FUCO. Additionally, neither NEES nor any of its
subsidiaries is a party to, or has any rights under, a service, sales, or
construction agreement with an EWG or FUCO. None of the proceeds from the
transactions proposed herein will be used by the NEES companies to acquire
any securities of, or any interest in, an EWG or FUCO. Please refer to the
Commission's order (HCAR 35-26504) for the NEES companies' authority to make
potential investments in EWGs and FUCOs. NEES and its subsidiaries shall
comply with the requirements of such order and Rules 53 and 54 under the Act
in connection with EWG and FUCO acquisitions and financings.
Item 2. Fees, Commissions and Expenses
No fees, commissions or expenses have been paid or will be paid or
incurred in connection with the proposed transactions, other than routine
expenses for legal, financial and other services billed to the Applicant at
cost by NUSCO.
Item 3. Applicable Statutory Provisions
Sections 12(f) and 13(b) of the Act and Rules 23, 54, 80(b), 87(b)1, 90
and 91 thereunder are or may be applicable to the proposed transactions. To
the extent any other sections of the Act may be applicable to the proposed
transaction, the Applicant request appropriate orders thereunder.
Item 4. Regulatory Approval
The Applicant believes that except for the approval of the Commission,
no other federal or state regulatory approvals are required in order to carry
out the transactions contemplated by this Application/Declaration.
Item 5. Procedure
It is respectfully requested that the Commission enter not later than
February 15, 1998 an appropriate order granting and permitting this
Application/Declaration to become effective.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The
Office of Public Utility Regulation within the Division of Investment
Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no 30 day waiting
period between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectively requested that any such
order be made effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements
(a) Exhibits
1. Opinion of Counsel.*
2. Proposed Form of Notice under the Act.*
3. Financial Data Schedules - Financial Data Schedules have not
been included because this transaction is not expected to have any material
pro forma effects on the financial statements of the Applicant.
(b) Financial Statements. Financial statements have not been included
because this transaction is not expected to have any material pro forma
effects on the financial statements of the Applicant.
* Filed with original Application.
Item 7. Information as to Environmental Effects
The issuance of an order with respect to this Application/Declaration
will not constitute a major federal action significantly affecting the
quality of the human environment. No other federal agency has prepared or is
preparing an environmental impact statement with respect to the proposed
transaction.
SIGNATURES
Pursuant to the requirements of the Act, the undersigned company has
duly caused this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
CONNECTICUT YANKEE ATOMIC POWER COMPANY
By: /s/John J. Roman
Its Vice President and Controller
Dated: January 15, 1998
