[Federal Register Volume 64, Number 247 (Monday, December 27, 1999)]
[Notices]
[Pages 72367-72369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33482]


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NUCLEAR REGULATORY COMMISSION

[Docket No. 50-423]


Northeast Nuclear Energy Company, et al. (Millstone Nuclear Power 
Station, Unit 3); Order Approving Application Regarding Merger of New 
England Electric System and the National Grid Group PLC

I

    Northeast Nuclear Energy Company is authorized to act as agent for 
the joint owners of the Millstone Nuclear Power Station, Unit 3 
(Millstone 3), and has exclusive responsibility and control over the 
physical construction, operation, and maintenance of the facility as 
reflected in Facility Operating License No. NPF-49. New England Power 
Company (NEP), one of the joint

[[Page 72368]]

owners, holds a 12.2-percent 1 possessory interest in 
Millstone 3. The U.S. Nuclear Regulatory Commission issued Facility 
Operating License No. NPF-49 on January 31, 1986, pursuant to Part 50 
of Title 10 of the Code of Federal Regulations (10 CFR Part 50). The 
facility is located in New London County, on the southern coast of the 
State of Connecticut.
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    \1\ A pending merger of New England Electric System with Eastern 
Utilities Associates, which owns Montaup Electric Company, would 
result in an increase in NEP's ownership interest in Millstone 3 to 
approximately 16.2 percent.
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II

    Under cover of a letter dated March 15, 1999, NEP, a subsidiary of 
New England Electric System (NEES), and National Grid Group plc 
(National Grid) submitted an application requesting approval of the 
transfer of control of the license, to the extent held by NEP in 
connection with its 12.2-percent ownership interest in Millstone 3, 
regarding a proposed change in the economic ownership of NEES. The 
application was supplemented May 20 and June 17, 1999 (collectively 
hereinafter ``the application'').
    NEP is incorporated in the Commonwealth of Massachusetts. NEES owns 
all of NEP's common stock and 99.71-percent of its voting securities, 
with the other 0.29-percent being owned by the public in the form of 
preferred stock with common voting rights. The requested transfer 
approval relates to a proposed merger in which NEES is to be acquired 
by National Grid, a British company. NEES and National Grid entered 
into a merger agreement on December 11, 1998.
    National Grid is a public limited company incorporated under the 
laws of England and Wales. It is the only transmission company in 
England and Wales and is an independent company created as a result of 
the privatization and restructuring of the British electric system in 
1990. The application states that National Grid, with its United 
Kingdom assets and through interconnections with Scotland and France 
and through its acquisitions of interests in transmission systems in 
other nations, is the largest privately owned transmission company in 
the world.
    National Grid has formed NGG Holdings LLC (NGG Holdings), a U.S. 
entity that is a limited liability company organized in Massachusetts 
and a wholly owned subsidiary of National Grid. NGG Holdings will merge 
with and into NEES, with NEES being the surviving entity from that 
transaction and maintaining its status as a U.S. entity subject to all 
applicable U.S. laws and regulations. The application states that, for 
tax purposes, immediately after the merger, NEES will be converted from 
a Massachusetts business trust into a corporation; specifically, NEES 
will be merged into a Massachusetts corporation to be named NEES 
Holdings, Inc., which will then be the surviving entity. The post-
acquisition capital structure of NEES Holdings, Inc., will be identical 
to the capital structure of NEES, and NEES Holdings, Inc., will become 
a wholly owned indirect subsidiary of National Grid, with NEP being a 
subsidiary of NEES Holdings, Inc., and thus also becoming an indirect 
subsidiary of National Grid. The application also provides details 
regarding several companies that will be created for various business 
reasons as intermediates between National Grid and NEES Holdings, Inc., 
after the merger is approved, and all of these companies will be either 
directly or indirectly wholly owned by National Grid. National Grid 
will register as a public utility holding company under the Public 
Utility Holding Company Act of 1935.
    Approval of the indirect license transfer that would result from 
the foregoing transactions was requested pursuant to 10 CFR 50.80. 
Notice of the application for approval and an opportunity for a hearing 
was published in the Federal Register on June 30, 1999 (64 FR 35191). 
Pursuant to such notice, joint Millstone 3 owners Connecticut Light and 
Power Company (CL&P) and Western Massachusetts Electric Company (WMECO) 
filed a timely intervention petition and hearing request. Following the 
submission of further pleadings by the applicants and petitioners, the 
Commission found that the petitioners had demonstrated standing and 
proffered two admissible issues (regarding foreign ownership and 
financial qualifications). The Commission set the case for hearing and 
issued a schedule for the proceeding. Subsequently, on November 4, 
1999, the petitioners filed a notice of withdrawal of their petitions 
to intervene, and the petitioners and the applicants jointly moved for 
termination of the proceeding due to a settlement reached between the 
parties. The Commission granted the motion on November 19, 1999. In 
doing so, it noted that the staff, in its review of transfer 
applications, examines financial qualifications and foreign ownership 
issues, and should consider concerns specifically raised in the 
proceeding relating to those matters when it takes action on the 
transfer application. North Atlantic Energy Service Corp., et al. 
(Seabrook, Unit 1 and Millstone Station, Unit 3), CLI-99-28, 50 NRC 
______, slip op. (Nov. 19, 1999). The staff has considered those 
concerns, which are addressed in the safety evaluation supporting this 
Order.
    Under 10 CFR 50.80, no license, or any right thereunder, 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 in the application, and other information 
before the Commission, the NRC staff has determined that the proposed 
merger of National Grid and NEES will not affect the qualifications of 
NEP as a holder of Facility Operating License NPF-49, and that the 
indirect transfer of the license, to the extent effected by the 
proposed merger, is otherwise consistent with applicable provisions of 
law, regulations, and orders issued by the Commission, subject to the 
conditions set forth herein. The foregoing findings are supported by a 
safety evaluation dated December 10, 1999.

III

    Accordingly, pursuant to Sections 161b, 161i, 161o, and 184 of the 
Atomic Energy Act of 1954 (AEA), as amended, 42 U.S.C. 2201(b), 
2201(i), 2201(o), and 2234; and 10 CFR 50.80, It Is Hereby Ordered that 
the indirect license transfer referenced above is approved, subject to 
the following conditions:
    (1) No later than the time the proposed merger with National Grid 
is consummated, NEP shall establish and make operational a Special 
Nuclear Committee, as described in the application, having the 
composition, authority, responsibilities, and obligations specified in 
the application, provided, however, the Special Nuclear Committee may 
also have exclusive authority on behalf of NEP over taking any action 
which is ordered by the NRC or any other agency or court of competent 
jurisdiction. No material changes with respect to the Special Nuclear 
Committee may be made without the prior written consent of the 
Director, Office of Nuclear Reactor Regulation. The foregoing 
provisions may be modified by the Commission upon application and for 
good cause shown.
    (2) The Special Nuclear Committee shall have the responsibility and 
exclusive authority to ensure, and shall ensure, that the business and 
activities of NEP with respect to the Millstone 3 license are at all 
times conducted in a manner consistent with the protection of the 
public health and safety and

[[Page 72369]]

common defense and security of the United States.
    (3) NEP shall 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 NEP to 
its direct or indirect 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 percent) of NEP's consolidated net utility plant, as recorded on 
its books of account.
    (4) Should the proposed merger not be completed by December 30, 
2000, this Order shall become null and void, provided, however, upon 
application and for good cause shown, such date may be extended.
    This Order is effective upon issuance.
    For further details with respect to this Order, see the initial 
application dated March 15, 1999, and the supplements dated May 20 and 
June 17, 1999, and the safety evaluation dated December 10, 1999, which 
are available for public inspection at the Commission's Public Document 
Room, the Gelman Building, 2120 L Street, NW., Washington, DC, and 
accessible electronically through the ADAMS Public Electronic Reading 
Room link at the NRC Web site http://www.nrc.gov.

    Dated at Rockville, Maryland, this 10th day of December 1999.

    For the Nuclear Regulatory Commission.
Roy P. Zimmerman,
Acting Director, Office of Nuclear Reactor Regulation.
[FR Doc. 99-33482 Filed 12-23-99; 8:45 am]
BILLING CODE 7590-01-P