[Federal Register Volume 65, Number 196 (Tuesday, October 10, 2000)]
[Notices]
[Pages 60222-60223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25916]


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NUCLEAR REGULATORY COMMISSION

[Docket Nos. STN 50-528, STN 50-529, and STN 50-530]


Public Service Company of New Mexico (Palo Verde Nuclear 
Generating Station Units 1, 2, and 3); Order Approving Application 
Regarding Proposed Corporate Restructuring and Approving Conforming 
Amendments

I

    Public Service Company of New Mexico (PNM) holds minority ownership 
interests (both owned and leased) in Palo Verde Nuclear Generating 
Station (Palo Verde) Units 1, 2, and 3, and in connection therewith is 
a holder of Facility Operating Licenses Nos. NPF-41, NPF-51, and NPF-74 
for Palo Verde. The facility is located in Maricopa County, Arizona. 
Other co-licensees for Palo Verde are Arizona Public Service Company 
(APS) (owner or lessee of a 29.1 percent share of each of the three 
units), Salt River Project Agricultural Improvement and Power District 
(owner of a 17.49 percent share), El Paso Electric Company (owner of a 
15.8 percent share), Southern California Edison Company (owner of a 
15.8 percent share), Southern California Public Power Authority (owner 
of a 5.91 percent share), and Los Angeles Department of Water and Power 
(owner of a 5.70 percent share). APS is the licensed operator of the 
Palo Verde units. The remaining licensees hold possession-only 
licenses.

II

    Pursuant to Section 184 of the Atomic Energy Act of 1954, as 
amended, and 10 CFR 50.80, PNM filed an application dated March 3, 
2000, requesting approval of the indirect transfer of the Palo Verde 
licenses, to the extent held by PNM, to a new holding company, Manzano 
Corporation (Manzano). Supplemental information on this application was 
forwarded to the NRC by PNM's outside counsel, Shaw Pittman, in letters 
dated August 14, August 17, and September 7, 2000. Manzano, presently a 
subsidiary of PNM, was formed to implement the public utility 
restructuring requirements of the New Mexico Electric Utility Industry 
Restructuring Act of 1999. The proposed restructuring encompasses the 
formation of Manzano and Manzano becoming the holding company for PNM, 
the transfer by PNM of its electric and gas transmission and 
distribution businesses to an affiliated company to be named ``Public 
Service Company of New Mexico'' (with PNM and such affiliated company 
being under common control by Manzano), and a change in PNM's name to 
Manzano Energy Corporation (Manzano Energy). By application dated April 
26, 2000, APS requested approval, pursuant to 10 CFR 50.90, of proposed 
conforming amendments to reflect in the Palo Verde licenses the name 
change of PNM to Manzano Energy Corporation that will occur in 
connection with the restructuring. APS will retain its existing 
ownership interest in, and remain the licensed operator of Palo Verde 
after the restructuring of PNM, and is not otherwise involved in the 
restructuring. Similarly, none of the other co-licensees are involved 
in the restructuring of PNM. No physical changes to the facility or 
operational changes are being proposed in the applications filed by PNM 
and APS. Notice of the applications and an opportunity for hearing was 
published in the Federal Register on May 26, 2000 (65 FR 34370). No 
written comments or hearing requests were filed.
    Under 10 CFR 50.80, no license shall be transferred, directly or 
indirectly, through transfer of control of the license, unless the 
Commission gives its consent in writing. Upon review of the information 
submitted by PNM in its application, the supplements thereto, and other 
information before the Commission, the NRC staff has determined that 
the proposed restructuring will not affect the qualifications of PNM to 
hold the licenses referenced above to the same extent now held by PNM, 
and that the indirect transfer of the licenses, to the extent effected 
by the restructuring, is otherwise consistent with applicable 
provisions of law, regulations, and orders issued by the Commission, 
subject to the conditions set forth herein. The NRC staff has further 
found that the application for the proposed license amendments complies 
with the standards and requirements of the Atomic Energy Act of 1954, 
as amended, and the Commission's rules and regulations set forth in 10 
CFR Chapter I; the facility will operate in conformity with the 
application, the provisions of the Act and the rules and regulations of 
the Commission; there is reasonable assurance that the activities 
authorized by the proposed license amendments

[[Page 60223]]

can be conducted without endangering the health and safety of the 
public and that such activities will be conducted in compliance with 
the Commission's regulations; the issuance of the proposed license 
amendments will not be inimical to the common defense and security or 
to the health and safety of the public; and the issuance of the 
proposed amendments will be in accordance with 10 CFR Part 51 of the 
Commission's regulations and all applicable requirements have been 
satisfied. These findings are supported by a Safety Evaluation dated 
September 29, 2000.

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 application 
regarding the proposed restructuring of PNM and indirect license 
transfers is approved, subject to the following conditions:
    1. Manzano Energy 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 Manzano Energy 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 Manzano Energy's consolidated net utility plant, as 
recorded on Manzano Energy's books of account.
    2. Manzano Energy shall continue to provide decommissioning funding 
assurance, to be held in its decommissioning trusts for Palo Verde 
Units 1, 2, and 3, from the date of the indirect license transfers, as 
represented in the respective March 3, 2000, application, as 
supplemented. In addition, Manzano Energy shall ensure that contractual 
arrangements with its transmission and distribution affiliate to obtain 
necessary decommissioning funds for Palo Verde through non-bypassable 
charges will be established and maintained until the decommissioning 
trusts are fully funded.
    3. Manzano Energy shall enter into an agreement with its 
transmission and distribution affiliate that shall require the deposit 
of funds collected for decommissioning funding from wires charges into 
Manzano Energy's decommissioning trust accounts. A copy of the 
agreement shall be forwarded to the NRC prior to the completion of the 
proposed restructuring of PNM.
    4. Manzano Energy shall take all necessary steps to ensure that its 
decommissioning trusts are maintained in accordance with the March 3, 
2000, application, as supplemented, and the requirements of this Order 
approving the respective indirect transfers, and consistent with the 
safety evaluation supporting this Order.
    5. Manzano Energy shall inform the Director of the Office of 
Nuclear Reactor Regulation within 30 days of approval by the New Mexico 
Public Regulation Commission of the stranded cost mechanism of 
recovering decommissioning costs. Within such 30-day period, Manzano 
Energy shall state the total decommissioning costs subject to stranded 
cost recovery and the schedule for funding decommissioning costs.
    6. Manzano Energy's decommissioning trust agreements for each of 
the three units shall provide that:
    a. The use of assets in both the qualified and non-qualified funds 
shall be limited to expenses related to decommissioning of the unit as 
defined by the NRC in its regulations and issuances, and as provided in 
the unit's license and any amendments thereto. However, upon completion 
of decommissioning, as defined above, the assets may be used for any 
purpose authorized by law.
    b. Investments in the securities or other obligations of Manzano 
Energy or affiliates thereof, or their successors or assigns, shall be 
prohibited. In addition, except for investments tied to market indexes 
or other non-nuclear sector mutual funds, investments in any entity 
owning one or more nuclear power plants shall be prohibited.
    c. No disbursements or payments from the trust, other than for 
ordinary administrative expenses, shall be made by the trustee unless 
the trustee has first given the NRC 30 days prior written notice of the 
payment. In addition, no such disbursements or payments from the trust 
shall be made if the trustee receives prior written notice of objection 
from the Director of the Office of Nuclear Reactor Regulation.
    d. The trust agreement shall not be modified in any material 
respect without 30 days prior written notification to the Director of 
the Office of Nuclear Reactor Regulation.
    e. The trustee, investment advisor, or anyone else directing the 
investments made in the trust shall adhere to a ``prudent investor'' 
standard, as specified in 18 CFR 35.32(3) of the Federal Energy 
Regulatory Commission's regulations.
    It is further ordered That, consistent with 10 CFR 2.1315(b), 
license amendments as indicated in Enclosure 2 to the cover letter 
forwarding this Order to reflect the subject restructuring action and 
conditions of this Order are approved. The amendments shall be issued 
and made effective at the time the proposed restructuring action is 
completed.
    This Order is effective upon issuance.
    For further details with respect to this action, see the initial 
application dated March 3, 2000, supplemental application and 
submittals dated April 26, August 14, August 17, and September 7, 2000, 
and the Safety Evaluation dated September 29, 2000, which are available 
for public inspection at the Commission's Public Document Room, located 
at One White Flint North, 11555 Rockville Pike (first floor), 
Rockville, Maryland, 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 29th day of September 2000.

    For the Nuclear Regulatory Commission.
Samuel J. Collins,
Director, Office of Nuclear Reactor Regulation.
[FR Doc. 00-25916 Filed 10-6-00; 8:45 am]
BILLING CODE 7590-01-U