-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q0B4YXkrfeGsmz/H6hwF9WESs9QHXx9+xu5q4PY8IHNxkp9WAmLrNIT9b29/nstD rOxYGB38kJclTWkxYV/KdA== 0000071932-99-000007.txt : 19990121 0000071932-99-000007.hdr.sgml : 19990121 ACCESSION NUMBER: 0000071932-99-000007 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NIAGARA MOHAWK POWER CORP /NY/ CENTRAL INDEX KEY: 0000071932 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 150265555 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: SEC FILE NUMBER: 070-09339 FILM NUMBER: 99508621 BUSINESS ADDRESS: STREET 1: 300 ERIE BLVD W CITY: SYRACUSE STATE: NY ZIP: 13202 BUSINESS PHONE: 3154741511 MAIL ADDRESS: STREET 1: 300 ERIE BLVD W CITY: SYRACUSE STATE: NY ZIP: 13202 FORMER COMPANY: FORMER CONFORMED NAME: CENTRAL NEW YORK POWER CORP DATE OF NAME CHANGE: 19710419 U-1/A 1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. Form U-1/A AMENDMENT NO. 2 TO FORM U-1 APPLICATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 Niagara Mohawk Holdings, Inc. 300 Erie Boulevard Syracuse, New York 13202 Gary Lavine, Esq. Terence A. Burke, Esq. c/o Niagara Mohawk Holdings, Inc. 300 Erie Boulevard West Syracuse, New York 13202 Telephone: (315) 428-6717 Copies to: Steven J. Agresta, Esq. Swidler Berlin Shereff Friedman, LLP 3000 K Street, N.W. Washington, D.C. 20007 Telephone (202) 424-7757 Janet Geldzahler, Esq. Sullivan & Cromwell 125 Broad Street New York, New York 10004 Telephone: (212) 558-4000 This Amendment No. 2 on Form U-1/A to the Form U-1 of Niagara Mohawk Holdings, Inc. is being filed for the purpose of amending Item 6 by adding the exhibits listed below. Item 6. Exhibits and Financial Statements. The following exhibits are being filed with this Amendment No. 2: EXHIBIT # DESCRIPTION FILING METHOD - --------- ----------- ------------- 16 Fees, Commissions, etc. Filed herewith in Connection with Reorganization 19 PSC Compliance Order Filed herewith 21 FERC Order of Approval Filed herewith 23 NRC Order Filed herewith SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Amendment No. 2 to be signed on its behalf by the undersigned thereunto duly authorized. Niagara Mohawk Holdings, Inc. Date: January 18, 1999 By /s/William F. Edwards _____________________________ William F. Edwards Senior Vice President Chief Financial Officer EX-16 2 EXHIBIT 16 Fees, Commissions and Expenses ------------------------------ Commission filing fee for the Registration Statement on Form S-4 $ 693,355 New York Stock Exchange Listing Fee $ 5,300 Legal Fees $ 430,000 Printing, Soliciting, Mailing and Broker Reimbursements $ 468,500 Stock Certificates $ 40,000 Miscellaneous $ 200,000 Total $ 1,837,155 EX-19 3 EXHIBIT 19 STATE OF NEW YORK PUBLIC SERVICE COMMISSION As a session of the Public Service Commission held in the City of Albany on September 16, 1998 COMMISSIONERS PRESENT: Maureen O. Helmer, Chairman John B. Daly Thomas J. Dunleavy James D. Bennett CASE 94-E-0098 - Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Niagara Mohawk Power Corporation for Electric Service CASE 94-E-0099 - Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Niagara Mohawk Power Corporation for Electric Street Lighting Service ORDER CONCERNING COMPLIANCE FILING REGARDING HOLDING COMPANY (Issued and Effective September 30, 1998) BY THE COMMISSION: BACKGROUND ---------- By letter dated July 22, 1998, Niagara Mohawk Power Corporation (Niagara Mohawk or the Company) notified the Commission of its intention to form a holding company called Niagara Mohawk Holdings, Inc. (Holdings). The company believes that its filing is in compliance with Opinion No. 98-8 (Case 94-E-0098, Opinion and Order Adopting Terms of Settlement Agreement Subject to Modifications and Conditions, Opinion No. 98-8 (issued March 20, 1998) and the PowerChoice Settlement Agreement (Agreement), conditionally approved therein, which provides it the option to form a holding company within one year of the Commission approval of the Agreement. Niagara Mohawk requests that, if we determine additional review is required, we treat the filing as a petition and approve it on an emergency basis under the State Administrative Procedure Act (SAPA). Niagara Mohawk is currently a regulated holding company where the regulated utility is the parent with unregulated and regulated subsidiaries. The PowerChoice Agreement, Section 9.1, allows Niagara Mohawk to continue this basic structure or, at its option, to form an unregulated holding company parent (Holdings) with regulated and unregulated subsidiaries. The unregulated subsidiaries would include Plum Street Enterprises, Inc. (Plum Street Enterprises' primary operating subsidiary is Plum Street Energy Marketing, Inc. Plum Street Energy Marketing, Inc. is being renamed Niagara Mohawk Energy Marketing, Inc., effective September 1, 1998.), Niagara Mohawk's energy services company (ESCO). In Opinion No. 98-8 (Opinion No. 98-8 at 10), we recognized that the PowerChoice Agreement "allows the company to operate as a holding Company " and approved Section 9.1 without modification. In addition, Section 9.2 of the PowerChoice Agreement provided for rules governing affiliate transactions and Section 9.3 provided standards of competitive conduct. Niagara Mohawk has chosen the holding company corporate structure option. Holdings will file for an exemption from the registration requirements of the Public Utility Holding Company Act of 1935, under Section 3(a)(1), due to its "predominantly intrastate" operations. The holding company will be formed through a share exchange. In its Compliance Filing (Appendix A, p. 63) pursuant to Opinion No. 98-8, the company explains the share exchange as follows: (1) each share of Niagara Mohawk Common Stock outstanding immediately prior to the effective time of the share exchange will be exchanged for one new share of Holdings common stock; (2) Holdings will become the owner of all outstanding Niagara Mohawk Common Stock; and (3) the shares of Holdings common stock held by Niagara Mohawk immediately prior to the share exchange will be canceled. As a result, upon completion of the share exchange, Holdings will become a holding company, Niagara Mohawk will become a subsidiary of Holdings, and all of Holdings common stock outstanding immediately after the share exchange will be owned by the former holders of Niagara Mohawk Common Stock immediately prior to the share exchange. Following the share exchange, certain of Niagara Mohawk's existing non-utility subsidiaries will be transferred to Holdings and become subsidiaries of Holdings. The PowerChoice Agreement, subject to limited exceptions, prohibits Niagara Mohawk, Holdings or any of its subsidiaries from owning generation within New York State. This aspect of the corporate structure protects against the exercise of vertical market power. Otherwise, there are no restrictions on the activities that Holdings may pursue. However, as explained in the filing (Appendix A, p. 60): Holdings will continue to seek to invest in the current lines of business and, through its subsidiaries, will engage in energy marketing and other energy-related activities. Although Holdings has not identified other specific business opportunities, it believes that such activities would likely include areas with which Niagara Mohawk is already familiar, such as information systems, environmental services, engineering services, financial services, meter reading, and billing and collection services. The filing further recognizes that Holdings must comply with the PowerChoice Agreement (Appendix A, pp. 75-77), including restrictions on dividend payments from the regulated utility to Holdings, restrictions on cross default provisions (no loans, guarantees or pledges for the benefit of Holdings and other Holdings subsidiaries), restrictions on affiliate transactions, and restrictions on Board and managerial interlocks between Niagara Mohawk and Holdings and other Holdings subsidiaries. Parties' Comments ----------------- Niagara Mohawk sent copies of the holding company filing to all the parties on the case service list. By comments dated August 18, 1998, Multiple Intervenors (MI) argues that Niagara Mohawk's holding company filing remains subject to approval under Section 70 of the Public Service Law (PSL) and that it does not meet any of the conditions necessary to be approved on an emergency basis under SAPA. It requests that the Commission issue an order establishing a schedule for comments on the filing. MI notes that other New York utility restructuring agreements more explicitly provided for Section 70 approval and included discussion of the plan for exchange of shares. Furthermore, MI is concerned that the holding company filing (Appendix A, pp. 64-65), allows for the transfer of assets to the holding company or any of its subsidiaries at not "less than fair consideration" whereas the PowerChoice Agreement, Section 9.2.2, explicitly indicates that "transfers of non-generation assets (or rights to use such assets) from RegCo to an affiliate will be priced at the higher of book value or fair market value." (MI comments, p. 3). In a reply letter dated August 27, 1998, Niagara Mohawk reiterates its justification for treating the filing as compliance as opposed to an unabbreviated Section 70 petition. In addition, Niagara Mohawk explains that MI took the asset transfer language out of context, noting that the filing (Appendix A, p. 76) summarizes all of the provisions of the PowerChoice Agreement regarding affiliate transactions, "including the requirements in Section 9.2.2 regarding valuation transfers of non-generation assets (or rights to use such assets) from RegCo to an affiliate." Niagara Mohawk believes it adequately incorporated the PowerChoice Agreement provisions in its holding company filing. DISCUSSION ---------- The PowerChoice Agreement (Opinion No. 98-8 at 10) allows the company to operate as a holding company and we approved the corporate structure sections of the Agreement without modification. Niagara Mohawk's proposed holding company is consistent with the structure contemplated in the PowerChoice Agreement. Thus, no additional approval process is required. The holding company structure provides Niagara Mohawk additional flexibility to deal with the increasingly competitive market. This flexibility will allow the holding company to access financial markets more quickly and pursue investment opportunities without the advance approval under PSL Section 69 and Section 107. At the same time, the PowerChoice Agreement places restrictions on Niagara Mohawk and Holdings to insulate the regulated operations from unregulated operations and protect ratepayers. MI is correct to note that the transfer of assets between Niagara Mohawk and Holdings, or its affiliates, should occur at the higher of book value or fair market value. Niagara Mohawk's response to MI indicates the company's intent to apply the provisions of the PowerChoice Agreement in forming the holding company. Where there may be discrepancies between Niagara Mohawk's filing and the PowerChoice Agreement, as noted by MI, the PowerChoice Agreement shall govern. CONCLUSION ---------- Niagara Mohawk's filing is in compliance with the PowerChoice Agreement and Opinion No. 98-8 and, therefore, is approved. If there are minor discrepancies between the filing and the PowerChoice Agreement, the Agreement governs. As we have determined that this is a compliance filing, Niagara Mohawk's alternative request for approval under Section 70 of the PSL and an accompanying request for emergency action under SAPA is unnecessary. The Commission orders: - ----------------------- 1. Niagara Mohawk Power Corporation's filing concerning the formation of a holding company is approved as provided herein. 2. These proceedings are continued. By the Commission, (SIGNED) By: /s/John C. Crary _____________________________ John C. Crary Secretary EX-21 4 EXHIBIT 21 FEDERAL ENERGY REGULATORY COMMISSION WASHINGTON, D.C. 20426 September 30, 1998 Docket No. EC98-47-000 Niagara Mohawk Power Corporation Attention: Paul J. Kaleta, Esq. Vice President and General Counsel 300 Erie Boulevard West Syracuse, New York 13202 Dear Mr. Kaleta: On July 22, 1998, you filed an application under section 203 of the Federal Power Act seeking Commission authorization for a proposed corporate restructuring of Niagara Mohawk Power Corporation (Niagara Mohawk). Under the proposed corporate restructuring, Niagara Mohawk will become a wholly-owned subsidiary of a new holding company, Niagara Mohawk Holdings, Inc. (Holdings), through an exchange of the outstanding shares of Niagara Mohawk's common stock on a share-for-share basis for shares of Holdings' common stock. Through this exchange, the present equity owners of Niagara Mohawk will become the equity owners of Holdings. Notice of the filing was published in the Federal Register, with comments, protests, or interventions due on or before August 26, 1998. The New York Public Service Commission (New York Commission) filed a notice of intervention and comments that raised no substantive issues. Multiple Intervenors filed a motion to intervene and protest raising two issues. (Multiple Intervenors is an association of sixty large commercial and industrial energy users in New York). First, Multiple Intervenors asks that the Commission condition its approval of the proposed restructuring plan on approval of that plan by the New York Commission. Second, Multiple Intervenors asserts that the application improperly fails to incorporate certain conditions into the restructuring plan that were set forth in the PowerChoice Settlement Agreement that was approved by the New York Commission, and asks that this Commission predicate its approval of the plan on the incorporation of those conditions. Under Rule 214(c)(1) of the Commission's Rules of Practice and Procedure (18 C.F.R. 385.214 (1998)), the notice of intervention and the timely, unopposed motion to intervene serve to make the New York Commission and Multiple Intervenors parties to this proceeding. Your application is approved as consistent with the public interest, with one condition. Costs incurred by public utilities in connection with the formation of a holding company should be classified as non-operating expenses, and recorded in Account 426.5 (Other Deductions), because they do not relate to the utility operations of the public utilities. (See Wisconsin Electric Power Company, et al., 74 FERC 61,069 at 61,192 (1996), order on reh'g, 79 FERC 61,158 (1997)). Therefore, the transaction will be accounted for as follows: Niagara Mohawk must charge transaction costs associated with the formation of the holding company to Account 426.5 (Other Deductions), if the costs are not passed on to the holding company. Multiple Intervenors' protest is denied. The proposed restructuring will not go forward without the approval of the New York Commission; therefore, there is no need for this Commission expressly to condition its approval on Niagara Mohawk's obtaining the New York Commission's approval. Additionally, the application indicated that Niagara Mohawk is well aware of its commitments under the PowerChoice Settlement Agreement, and, in any event, these conditions are properly within the purview of the New York Commission, which approved the settlement and the conditions. This Commission anticipates that Niagara Mohawk will abide by those commitments, and so no additional, express condition is necessary. By direction of the Commission. Linwood A. Watson, Jr. Acting Secretary EX-23 5 EXHIBIT 23 UNITED STATES OF AMERICA ------------------------ NUCLEAR REGULATORY COMMISSION ----------------------------- In the Matter of ) ) NIAGARA MOHAWK POWER ) Docket Nos. 50-220 CORPORATION ) and 50-410 ) (Nine Mile Point Nuclear Station ) Unit Nos. 1 and 2) ) ORDER APPROVING APPLICATION REGARDING RESTRUCTURING OF NIAGARA MOHAWK POWER CORPORATION BY ESTABLISHMENT OF A HOLDING COMPANY AFFECTING LICENSES NOS. DPR-63 AND NPF-69, NINE MILE POINT NUCLEAR STATION, UNIT NOS. 1 AND 2 1. Niagara Mohawk Power Corporation (NMPC or the licensee) is licensed by the U.S. Nuclear Regulatory Commission (NRC or Commission) to possess, maintain, and operate the Nine Mile Point Nuclear Station, Units 1 and 2 (NMP1 and NMP2, or collectively, the facility), under Facility Operating License No. DPR-63, issued by the Commission on December 26, 1974, and Facility Operating License No. NPF-69, issued by the Commission on July 2, 1987. NMPC fully owns NMP1, is a 41-percent co-owner of NMP2, and acts as agent for the other co-owners of NMP2. The other co-owners of NMP2, who may possess but not operate NMP2, are New York State Electric & Gas Corporation with an 18-percent interest, Long Island Lighting Company with an 18-percent interest, Rochester Gas and Electric Corporation with a 14-percent interest, and Central Hudson Gas & Electric Corporation with a 9-percent interest. The facility is located in the town of Scriba, Oswego, New York. II. Under cover of a letter dated July 21, 1998, NMPC submitted an application for consent by the Commission, pursuant to 10 CFR 50.80, regarding a proposed corporate restructuring action that would result in the indirect transfer of the operating licenses for the facility to the extent held by NMPC. The application was supplemented October 23, 1998. Under the proposed restructuring, NMPC would become a subsidiary of a new holding company, Niagara Mohawk Holdings, Inc., created by NMPC in accordance with a Settlement Agreement reached with the New York Public Service Commission (PSC Case Nos. 94-E-0098 and 94-E-0099), dated October 10, 1997, and revised March 19, 1998. In addition, certain of NMPC's non-utility subsidiaries would be transferred to the holding company. According to the application, each share of NMPC's common stock would be exchanged for one share of common stock of the holding company. NMPC's outstanding preferred stock would not be exchanged. Under this restructuring, NMPC would divest all of its hydro and fossil generation assets by auction, but would retain its nuclear assets, and would continue to be an "electric utility" as defined in 10 CFR 50.2 engaged in the transmission, distribution and , through NMP1 and NMP2, the generation of electricity. NMPC would continue to be the owner of NMP1 and co-owner of NMP2 and would continue to operate both NMP1 and NMP2. No direct transfer of the operating licenses or ownership interests in the facility would result from the proposed restructuring. The transaction would not involve any change in the responsibility for nuclear operations within NMPC. Officer responsibilities at the holding company level would be primarily administrative and financial in nature and would not involve operational matters related to NMP1 or NMP2. No NMPC nuclear management positions would be changed as a result of the corporate restructuring. A Notice of Consideration of Approval of Application Regarding Proposed Corporate Restructuring was published in the Federal Register on September 9, ------- -------- 1998 (63 FR 48254), and an Environmental Assessment and Finding of No Significant Impact was published in the Federal Register on September 23, 1998 ------- -------- (63 FR 50931). Under 10 CFR 50.80, no license shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission shall give its consent in writing. Upon review of the information submitted in the application of July 21, 1998, as supplemented by letter dated October 23, 1998, the NRC staff has determined that the restructuring of NMPC by establishment of a holding company structure will not affect the qualifications of NMPC as the holder of the license for NMP1, and as a holder of the license for NMP2, and that the transfer of control of the licenses, to the extent effected by the proposed restructuring, is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission, subject to the conditions set forth herein. These findings are supported by a safety evaluation dated December 11, 1998. III. Accordingly, pursuant to Sections 161b, 161i, 161o, and 184 of the Atomic Energy Act of 1954, as amended, 42 USC 2201(b), 2201(i), 2201(o), and 2234, and 10 CFR 50.80, IT IS HEREBY ORDERED that the Commission approves the application regarding the proposed restructuring of NMPC by the establishment of a holding company structure, subject to the following: (1) NMPC shall provide the Director, Office of Nuclear Reactor Regulation, a copy of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from NMPC to its proposed parent, or to any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding 10 percent (10%) of NMPC's consolidated net utility plant as recorded on NMPC's books of account; and (2) should the restructuring of NMPC as described herein, not be completed by December 10, 1999, this Order shall become null and void, provided, however, on application and for good cause shown, such date may be extended. This Order is effective upon issuance. IV. By January 11, 1999, any person whose interest may be affected by this Order may file in accordance with the Commission's rules of practice set forth in Subpart M of 10 CFR Part 2 a request for a hearing and petition for leave to intervene with respect to issuance of the Order. Such requests and petitions must comply with the requirements set forth in 10 CFR 2.1306, and should address the considerations contained in 10 CFR 2.1308(a). Untimely requests and petitions may be denied, as provided in 10 CFR 2.1308(b), unless good cause for failure to file on time is established. In addition, an untimely request or petition should address the factors that the Commission will also consider, in reviewing untimely requests or petitions, set forth in 10 CFR 2.1308(b)(1)-(2). Requests for a hearing and petitions for leave to intervene should be served upon Mr. John H. Mueller, Chief Nuclear Officer, Niagara Mohawk Power Corporation, Nine Mile Point Nuclear Station, Operations Building, Second Floor, P.O. Box 63, Lycoming, New York 13093; the General Counsel, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555; and the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555-0001, Attention: Rulemakings and Adjudications Staff, in accordance with 10 CFR 2.1313. The Commission will issue a notice or order granting or denying a hearing request or intervention petition, designating the issues for any hearing that will be held and designating the Presiding Officer. A notice granting a hearing will be published in the Federal Register and served on the parties to ------- -------- the hearing. For further details with respect to this Order, see the application for approval filed by NMPC under cover of a letter dated July 21, 1998, from John H. Mueller of NMPC, as supplemented by letter dated October 23, 1998, and the safety evaluation dated December 11, 1998, which are available for public inspection at the Commission's Public Document Room, the Gelman Building, 2120 L Street, NW., Washington, DC, and at the local public document room located at the Reference and Documents Department, Penfield Library, State University of New York, Oswego, New York 13126. Dated at Rockville, Maryland this 11th day of December 1998. FOR THE NUCLEAR REGULATORY COMMISSION Samuel J. Collins, Director Office of Nuclear Reactor Regulation SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION PROPOSED CORPORATE - -------------------------------------------------------------------------------- RESTUCTURING ------------ OF NIAGARA MOHAWK POWER CORPORATION ----------------------------------- DOCKET NOS. 50-220 AND 50-410 ----------------------------- NINE MILE POINT NUCLEAR STATION, UNIT NOS. 1 & 2 ------------------------------------------------ 1.0 INTRODUCTION ------------ Under cover of a letter dated July 21, 1998, Niagara Mohawk Power Corporation (NMPC) submitted an application, which was supplemented by letter dated October 23, 1998, for consent by the U.S. Nuclear Regulatory Commission (NRC or the Commission), pursuant to 10 CFR 50.80, regarding a proposed restructuring action that would result in the indirect transfer of the operating licenses for Nine Mile Point Nuclear Station, Units Nos. 1 and 2 (NMP1 and NMP2, or collectively, the facility), to the extent held by NMPC. The restructuring action would result in NMPC becoming a wholly owned subsidiary of Niagara Mohawk Holdings, Inc., a New York State corporation. In addition, certain of NMPC's non-utility subsidiaries would be transferred to the holding company. NMPC fully owns NMP1, is a 41-percent owner of NMP2, and acts as agent for the other NMP2 co-owners. NMPC maintains and operates both units. The other co-owners of NMP2-Central Hudson Gas & Electric Corporation, Rochester Gas & Electric Corporation, New York State Electric & Gas Corporation, and Long Island Lighting Company-are not involved in the proposed restructuring of NMPC. The proposed restructuring is consistent with a Settlement Agreement with the New York State Public Service Commission (PSC Case Nos. 94-E-0098 and 94-E-0099) dated October 10, 1997, and revised March 19, 1998, regarding implementation of the state's restructuring goals. Under the proposed restructuring plan, the outstanding shares of NMPC common stock will be exchanged on a share-for-share basis for holding company common stock, such that all the outstanding common stock of NMPC will be owned by the holding company. No exchange of NMPC's outstanding preferred stock is planned. After the restructuring, NMPC will continue to be an electric utility as defined in 10 CFR 50.2, according to the application, providing the same utility services as it did prior to the restructuring. The Settlement Agreement calls for NMPC to divest itself of its fossil and hydro generation assets. NMP1 and NMP2 will remain part of NMPC's regulated business. Pursuant to 10 CFR 50.80, the Commission may approve the transfer of the control of a license, after notice to interested persons. Such action is contingent upon the Commission's determination that the holder of the license following the transfer of control is qualified to hold the license, and that the transfer is otherwise consistent with applicable provisions of law, regulations, and orders of the Commission. 2.0 FINANCIAL QUALIFICATIONS ANALYSIS --------------------------------- NMPC states in its application that following the proposed restructuring NMPC will continue to be an electric utility engaged in transmission, distribution, and through NMP1 and NMP2, the generation of electricity. NMPC will continue to be the owner of NMP1, a co-owner of NMP2, and the operator of both NMP1 and NMP2. NMPC will continue to recover the costs of owning and operating the facility through competitive transition charges. Wholesale and retail rates will continue to be regulated by the New York State Public Service Commission and the Federal Energy Regulatory Commission. The application states that the proposed restructuring will not adversely affect the ability of NMPC to meet (1) its financial obligations with respect to future operating and capital requirements, or (2) its funding obligations with respect to decommissioning funding. As an electric utility, NMPC is exempt from further financial qualifications review, pursuant to 10 CFR 50.33(f). However, in view of the NRC's concern that restructuring can lead to a diminution of assets necessary for the safe operation and decommissioning of a licensee's nuclear facilities, it is the NRC's practice to condition license transfer approvals upon a requirement that a licensee not transfer significant assets from itself to an affiliate without first notifying the NRC. This requirement assists the NRC in assuring that the licensee will continue to maintain adequate resources to contribute to the safe operation and decommissioning of its facilities. To this end, NMPC has submitted the following statement by letter dated October 23, 1998: NMPC will provide the Director of the Office of Nuclear Reactor Regulation a copy of any application, at the time it is filed, to transfer (excluding grants of security interests or liens) from NMPC to its proposed parent, or to any other affiliated company, facilities for the production, transmission, or distribution of electric energy having a depreciated book value exceeding ten percent (10%) of NMPC's consolidated net utility plant as recorded on NMPC's book of accounts. With the foregoing a condition of approval, the NRC staff finds that NMPC will remain financially qualified to hold the facility licenses following the proposed restructuring. 3.0 TECHNICAL QUALIFICATIONS ------------------------ NMPC stated in its application that the new holding company structure will not affect the management of nuclear operations or NMPC's technical qualifications. NMPC will remain as a discreet and separate entity under the new holding company structure and will continue to be responsible for facility operations and meeting the technical qualifications requirements of the operating licenses. No NMPC nuclear management positions will be changed as a prerequisite or direct result of the corporate restructuring. Accordingly, the NRC staff concludes that the proposed restructuring will not impact the technical qualifications of NMPC. 4.0 ANTITRUST --------- Section 105c of the Atomic Energy Act of 1954, as amended (the Act), requires the Commission to conduct an antitrust review in connection with an application for a license to construct or operate a facility under Section 103. NMP1 was licensed under Section 104b and, as a result, is not subject to an antitrust review by the NRC staff in connection with the application regarding the proposed restructuring. NMP2 was licensed under Section 103 of the Act. However, although the proposed new holding company may indirectly acquire control of the facility licenses, it will not be performing activities for which a license is needed. Since approval of the application would not involve the issuance of a license, the procedures under Section 105c do not apply, including the making of any "significant changes" determination. Therefore, there is no need to conduct any antitrust review at this time. 5.0 FOREIGN OWNERSHIP, CONTROL, OR DOMINATION ----------------------------------------- NMPC states in its application for consent that the current holders of NMPC common stock will become holders of the common stock of its proposed parent, Niagara Mohawk Holdings, Inc., on a share-for-share basis. Therefore, by reason of the restructuring, there will be no change in the owners or percentage of shares owned. NMPC states that shares of common stock currently held in foreign accounts represent less than 0.1 percent of the total outstanding shares. Also, all members of the Boards of Directors of NMPC and Niagara Mohawk Holdings, Inc. are U.S. citizens. According to the application, NMPC is not now, and following the proposed restructuring, will not be owned, controlled, or dominated by an alien, foreign corporation, or foreign government. The NRC staff does not know or have reason to believe that the proposed restructuring will result in NMPC being owned, controlled, or dominated by foreign interests. 6.0 ENVIRONMENTAL CONSIDERATION --------------------------- Pursuant to 10 CFR 51.21 and 51.35, an environmental assessment and finding of no significant impact was published in the Federal Register on September 23, ------- -------- 1998 (63 FR 50931). 7.0 CONCLUSIONS ----------- In view of the foregoing, the NRC staff concludes that the proposed restructuring of NMPC by creation of a holding company will not adversely affect the financial or technical qualifications of NMPC with respect to the operation and decommissioning of NMP1 or NMP2. Also, there do not appear to be any problematic antitrust or foreign ownership considerations that would arise from the proposed restructuring. Thus, the proposed restructuring will not affect the qualifications of NMPC as the holder of the license for NMP1 and co-holder of the license for NMP2 and the transfer of control of the licenses, to the extent effected by the proposed restructuring, is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission. Accordingly, with the condition discussed above relating to significant asset transfers, the proposed action should be approved. Principal Contributors: M. Davis D. Hood Date: December 11, 1998 -----END PRIVACY-ENHANCED MESSAGE-----