, . . - - .

egRELATED CO.EES?CHDENCE

1

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C33 Eir-law orrices or

,

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DISHOP, LIBERMAN, COOK, PURCELL & REYNOLDSs IN NEW YORMimoo sevCNTEENTH STR E CT, N. W.

kNh,ti M S acoonwAssiNoTow, o. c. aoosea. eRoAoWAY(aoa) es7-esco

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,

June 19, 1984

Morton Margulies, Esq. Dr. Richard F. FosterChairman, Atomic Safety and Administrative Judge

Licensing Board Atomic Safety and LicensingU.S. Nuclear Regulatory Board

Commission U.S. Nuclear RegulatoryWashington, D.C. 20555 Commission

.Washington, D.C. 20555

Mr. Frederick J. ShonAdministrative JudgeAtomic Safety and Licensing

BoardU.S. Nuclear Regulatory

CommissionWashington, D.C. 20555

Re: Washington Public Power Supply System(WPPSS Nuclear Project No. 3)Docket No. 50-508-OL

Gentlemen:

Enclosed for your information is a letter'from theBonneville Power Administration to the. Managing Director.

'

of the Washington Public Power Supply System announcingthe initiation by BPA o2 a "public involvement process",

to assist BPA in evaluating'the construction schedulesfor WNP-l'and WNP-3. The letter indicates that BPA

| presently assumes that full construction will resume onWNP-1 and WNP-3 in July-1986 and July 1985, respectively.-

| We are providing copies of this BPA letter to theBoard mindful of our obligation to ' apprise the Board ofmatters which bear on issues before-itL

|_ Sincer ly

) J-| 8406250354 840619 Nicholk S Reynolds| PDR ADOCK 05000508 Counse fo e Applicant.0 PDR 1|'

~

Enclosurecc: -Service List- h

.. - .- .- - .. . . -. .

. - . . = . - - _- - - - - . . -

..

If

. or .

.

.

d.

-.Department of EnergyBonneville Power Adrninistration omCE OF THE ADeSTUTORP.O. Box 3621Ponland, Oregon 97208

JUN 8 - 19e4%, ,

BPWP-G-84-19

.

t

Mr. D. W. Mazur, Managing DirectorWashington Public Power Supply SystemP.O. Box 968Richland, Washington 99352,

; Dear Mr. Mazur:

As you know. the Bonneville Power Administration (BPA) is beginning the processof developing its budgets for Fiscal Years 1986 and 1987 and its rates for theperiod of July 1985 through September 1987. This is especially significantbecause we must make final decisions before the end of this year on the'assumptions to be used in our budgets and rates for those periods.

During the last few years, BPA has grown increasingly more sensitive-to public *

concern about major activities ve undertake. Therefore, we are beginning apublic involvement process to examine whether we should continue to use ourcurrent assumptions about WNP-1 and -3 construction schedules -in our 1986-1987budgets and rates. Our current assumptions are that full construction willresume on WNP-1 and -3 in July 1986 and July' 1985, respectively, and that theywill be in cosamercial operation in June _1991 and December 1989, respectively.1

'

We also assume that construction and fuel costs will be financed throughconventional financing.

To review these assumptions, we will conduct analyses similar to our. previousanalysis of Supply System projects which led to our recommendations to place

i WNP-1 and -3 in preservation status. We want to examine the funding levels weshould assume for the two plants for tLe next two years. In this public-process, we will also consider alternative schedule's for plant completion,-impacts on BPA races, and many other factors.

.

The.public involvement process will occur in three stages. First, we will askthe public, 'this month, to help us' refine the alternatives and methods weshould incorporate in our study. Second, those interested will be kept abreast

|> of the progress of the analysis while it,is underway. ' Third, we will solicitI . public response on the completed ~ analysis this fall before . refining = it and .

incorporating the _ results in our rates, budget and resource planning process,

: in December'.l

|

. . .

w yw- w er -% - 4. s .rm pWbr' d$><-g h hy + - V 1-- -4w-w w-C e

,-. __. . ._ . . . _ _ - - .

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i

7 Department of Energy**g Bonneville Power Administration.,-

PublicinvolvementP.O. Box 12999

| Portland, Oregon 97212

JU:| 0 g my

'a '''Y '* * ALP OPPORTUNITY FOR INVOLVEMENT l

Issue: Washington Nuclear Plants (WNP) 1 and 3. '

Action: BPA is reviewing its assumptions about the schedules for WNP 1 and 3.

Public Directly Affected: Northwest citizens.

Background: Construction work on Washington Public Power Supply System'sWashington Nuclear Plant 1 (WNP 1) and 3 (WNP 3) is now delayed. BPA hasassumed construction of WNP 1 will resume on July 1,1986, and construction ofWNP 3 will resume on July 1, 1985. BPA is now reviewing these assumptions tosee if they should continue to be used for BPA's 1985 rates and 1986-7 budgets.

Opportunities for Involvement: The enclosed Issue Alert describes the studyBPA intends to undertake, the issues we intend to address, and the process wewill follow.

This month, we would like the public to comument on our Study Plan: ouri proposed approach our study, including the methodology and variables we intend

to address. We will accept comments on the Study Plan through July 2, 1984.; The draft Studf Plan is enclosed.

On June 20 - 29, we will hold public meetings throughout the region todescribe the Study Plan and accept cosament. Meeting dates and locations arelisted en the back of this letter.

In each city, we will hold two different forums. First', we will hold a " townhall" meeting, at which we will describe our Study Plan and accept generalpublic coseent. Second, we will hold a technical workshop, where we will askparticipants to give us more detailed commer.t on our methodology, variables,and treatment of issues wnich cannot be handled through quantitativeanalysis. You are welcome to attend either meeting, or both.

We will perform our_ analysis this summer. This September, we will issue ouranalysis for public review..

! '

For Further Information Contact: BPA Area'or District Manager in your-locality, or the Public Involvement office in Portland, 503-230-3478.Toll-free lines: 800-452-8429 for Oregon outside of Portland; 800-547-6048for Washington, Idato, Montana, Utah, Nevada, Wyoming, and California.

;-| .%

f3'_' k 9 '

Donna L. Geiger

.

Public Involvement Manager

Enclosures_ _

,-- , _. __ . - . __ __ - _ ._ _ .___ -_

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Planning for Twow%..m ~ - aT .. .Northwest Nuclear ,

Power Plants CD% ' J"

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:.:ng:$mi &.:: m . n : , c.".c :;v

NSr ~1, Introduction - x~~- '-

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In 1984. the Bonneville Power. , . ( y; , . . t . . . , [ ;

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.

Administration will have to reconsider ,

d 'Miyd%h. 4,its'M ] sthe future of two Northwest nuclear '' - . c . ~ . ,a -

.

-.:.+ , . . -'

power projects. We want to hear your '

R h.g - ' 'Af [ _ -'$ '',' |'

views.

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The issues revolve around the costs , if'.f ~ . l * '' ' -P ' ?

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$ W.".' t ? M -and schedules for compieting the two t..F.

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7Washington Public Power Supply J'r i

System nuclear power plants now on =- e

dslayed construction schedules.d -Q> wJ' % h ' ' [*# * 7,,1

-

.

Whether the projects are accelerated, .-c'+ t 1. % 2 -

m %c. . , ,*..<>i.,* '

' mi . . . .-go forward on current schedules, or

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are further delayed or terminated, will -

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significantly affect BPA budgets for 'rffiscal years 1986 and 1987 and BPA . p.iD.a %).Y, - ' j '%.e-fu-l Q

-

V AM D ~t "-J.g, # [' N, . - - "#4'

'-rates for the period Julyg ~ % f f -N. .& #7 [- .. M..., a$8. 0.N..Nm U

. 1985-October 1987. BPA must make'

.- r .. n. i : ' .: g.y,;y. ,, sh 9.y. *' .i $. 'M

.

a.n . ,3Al%. ' <d, g ~1..1 -iM. '.

,- some rveliminary decisions before v -

y 9.' yi . :g.. . .a q ,g.:L 44g.*5 .

to p~e .ga_yg.. .vg

n.:.y 4,..g?the end of t*:is year about budgets g i4.;

and rates for those periods. S -

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g|4 .%h i:b.,. j .f i.m ,.GQf ffgj:gg+.b,]Q.|$ W.?L a.bQQ,;This issue is important to allJ''.C:. .

. TIM- W.of us in the Northwest. We'

k %.. U...'i. Y.- '. X., .*.*.A. W,A Y, h?s (... a h sv 4 4& W %{:: W,.*are anxious to hear from all - &n.

. .,.v . yginterested groups and .- %n

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M.' ]S .( [ g)'' ' i'fFor the purposes of planning, BPA O.[I 53

.

*"~*i"~. -/' A ~Y - n .continues to assume that 4- ' *? -

':'. h h p~f k'-

construction will resume July 1,1985, { V .3 s4 @ ./3t,: g .

--

' - N.on Washington Nuclear Plant 3 at & ;' g' A-

W Y i ' ZW; ,,.. g g.% $. 4 : N. . @. e"' Satsop, near Grays Harbor in western : '

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Washington, and that commercial f . 3 4, - n .f - 4<operation of this unit will begin in e % i Ep.s ' ~g. p' --

-

J'

. i ffa- a e .- + > - . -- - ' e - '*-4 - ^

December 1989. BPA assumes a July~

,

1,1986 resumption of construction on Consauccon of Washeg!on NucJear Pfant (WNP) 3 at Sa: sop r'as been & sece 1981 it a 75%,'

WNP 1 at Hanford in eastern compJees.

1.1

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WNP 1. at Hantora. wasnm; ton. a 63% compete anc is currency screcuec to cegm cceratmg m 1991.

Northwest Electnc Power Planning ; sufficient to pay all of its own costs Forecasting: Anything Butand Conservation Act of 1980 (the and to repay the Treasury, with an EXaCf Science'Regional Act), gave lead interest, the lion's share of the costresponsibility for planning the of the region's Federal multi-purposeregion's power future. dams. These included all of the costs

The forecasts that led to constructionassociated with power productioni

f the expensive =ciear and coatHydro Base pius a large part of tne costsassociated with irngation. projects in this region had to beI,

made 10 years or more before those,

There was a day when hydropower -i ,

,

units could be brought on line. It' ' -cheap hydrepower - alone was The original BPA wholesale rate of 2: takes a long time to get such unitssufficient to meet the regions power ms!!s (two. tenths of 1 cent) per licensed and built.; ,

'need5- kilowatthour was enough for 8PA to

i pay its way - with some left over -; Grand Coulee and Bonneville and 28for many years. It turned out that the region's powerother big Federal multi-purpose dams

- built not just for power, but for annem were woMng we a clou@flood control and navigation and By 1965, BPA rates had to be crystal ball. They failed to foresee the

. irrigation as well- produced the increased, slowly at first, dramatically impact of higher costs on usage.

' cheapest power. But many non. in recent years. The increases came They failed to foresee the rapidI growth of the conservation ethic, orFederal, poweronly dams produced partly because of higher costs

| inexpensive power, too. This made associated with hydro additions and | all of the potential for cost-effective;

conservation and fuel substitutionI slectricity cheap for customers of expansion of the BPA transmissioni |'

public and pnvate power alike in the system, but mainly because of | (e.g. wood stoves). They failed to|

Northwest. increasingly expensive nuclear I foresee the recent nationwide,

)additiccs to the region's power ! downturn m the economy, a downturn

! that hit the Northwest harder thanBPA was created by Act of Congress supply. i

in 1937 to sell the Federal power. other regions. So their forecasts -

8PA built none of the dams -just Low-cost hydro nevertheless stil! 8 '**Y' S * * " " * '

"the transmission lines and related provides 80 percent of the region's fdifacilities needed to bring the Federal power supply, and this hydro basepower to market. But BPA was keeps Northwest power costs well percent - turned out to be too high.

,

required to sell the power at rates below the national average. | !

- .. . _ .- - - _

..

,

y soeve we As==g w so mm sr we , *am

Forecasts If not all, what part? BPA has studiedthree basic scenanos, in which zero

,SPA Wholesale Rates percent,50 percent or 100 percent ofPreference Customers.to We are now forecasting three levels ,

investor-owned utility load growth is '

of growth - base (the level we think, placed on BPA. For planningDate A most likely to occur), low and high, '

purposes, we currently assume 50and we study alternatives to cover allimpercent. I

three levels at lowest economic cost. !' ' ' "Financing i

We have developed a resourcei

12r2045 32s| strategy which was presented to the !

region in May 1984, describing the Financing opportunities can change. i

actions BPA proposes to take on new Long-term conventional financing12r2or74 sai i,

conservation and renewable stretches out payments over the'

.72e |,

12r20r7sresources to respond to these eWed life of the projects, much

; conditions of uncertainty. An issue like a home mortgage. That kind of- Alert on that subject is among those financing dned up for the Supply i

ioms2 is I listed on the last page. System as a result legal challenges!i related to its nuclear projects.

2.2 |nmesWill long term conventional financing '

>

be available when construction I. Poshg am d* *",, y* M E* * C ''" M' Nresumes on WNP 1 and 3 or will i,,

,,a _ a m Vanables and Uncertainties.

financing have to be accomplishedunderlies all power planning. tnrougn other methods? A second

method, financing directly fromCurrent BPA revenues, would

SPA rates rose espety n 1979-83 as Sucoty SysemP' ***'Y ***" "'8 h*' ''''' ' ' * ''"i and other new cosa were Wded nio 'he rate casa D8Pene m on m years, followed by lower rates once| Unoer current assumprom BPA expe: s to hoe

future ram neresses near the rate of effarai. the projects were completed. A thirdThe Regional Act gave BPA possibility would spread outresponsibility for acquiring all the payments longer than direct revenue

The Mam. issues;:

power nece.a,y to su,,,y on,s ,,, financing, but not ,iong ,new loads the utilities of the region - conventional bond financing. That

We would like the public involvement investor-owned and publicly owned - would be for the Supply System toprogram to focus on some major apply for. There are current go into the short-term bond markpt. Aissues related to these two r.uclear indications the region's utilities will key question here is whether BPAplants. But we recognize that some not place the full amount of future can promise to pay off Supplymembers of the public will also wish load growth on BPA. System debts if legal problems

to discuss the Supply System or,,

nuclear energy in general, and we .. :,.

* * ' ' " '. .,

'

Average Residential Retail Rates by Region -

*(Cents perkWh Propocad for 1984) .

An imposing array of variables and I

uncertainties underlie all powerplanning. As we have seen trora h 10.17 10.98recent history, all utilities including <

BPA are vulnerable to events which )change the forecasted demand for / 4.4power. Forecasts cannot be counted kupon with the certainty they once ( 7 95 i

6.50 'couid.

| 7.54More flexibility to meet various levels __

of growth has become necessary in .,

7.97SPA's planning for the future's8 31 6.70uncertain outiook.

8.3410,07, ,;'

in its WNP 1 and 3 studies, BPA will -'

c;nsider a large number ofuncertainties and vanables, including

,

! forecasts, dependence on BPA for *locludes Newen

power supply, financing options andA . .

.a.

_ _ _ -.

1 -

|( -%--

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Public Involvement Steps: . ; - : f .,; =~'

2 3&.}n.Q u.T?::4 4 ' ~ | N: M u. s..:.~^ - - |- - ~ -

''

The public invokement program for be sent in aavance to individuals and We excect to complete evaluacon ofWNP 1 and 3 wrH stuctve sental stecs. groups we know to be it'terested in au commens and announce ourFirst will come meeangs and technical matters, and to anyone else conclusions by November 15,scrkshops to review the assumptions who requests one. Requests should

1and the methodology we are Ussng to be directed to your nearest BPA area 1

update the studres on which current office or the Publoc Invokement Office BM rs not now proposing any cnange

schedules for resuming construccon at BPAk Portland headquanets. A Ist in me current schedules for WNP 1eM 1 Should N current imw ieadwere based. of these offices is incluoed on page8.to proposals for change, the

Workshops wsH be held in the following in early July we wtli evaluate 5, ,7,ent ic may becsties at specific Dmes and places to comments from this first round ofb2 announced: ggggg,gg_

meetings, along with wntten commentsrecened by that time. Work to update

Portland. Oregon: June 20 21 the studies will be done dunng the At mis time, se are only reviewing anaEugene. Oregon: June 21-22 summet By late August, we will offer updaang the studies on wnscn currentMissoula. Mcntana: June 25 bnefings on the intenm results of these ccnstruction schedules for WNP 1 andBurley. Idaho: June 26 new studies. In Septembei: we wrH 3 were based. We are doing this soRichland. Washington: June 27-28 publictze the results and request that when we make budget and ratesSeattle Washington: June 28-29 further public comments Thus, the cec:ssons we can be sure they are

public sont simply be presented with based on the best possibleMost of the meetngs wiH include our conclusions relatne to WNP 1 and int:rmation. Our review also willevening sessions for the consentence 3, but will have a chan'ce to parDcipate evaluate the costs of terminaDon ofof those who cannot attend cunng the at an stages. The public will be etmer or both WNP 1 and 3 comparedday Daytsme workshops, for aH who evolved in determining the to compienon on the current or somewish to attend, wsH be soecsaHy methodology to be used, the studies otner schedule. We wsH keen thedssigned for those planning to provide to be performed. and the interpretation pubhc fully informed of newtechnicalinformation. A study plan wsU that may be placed on results. onbrmacon as at is developed.

Financial StudI83 We also will do an analysis of BPA's i Other Topicsdebt coverage - the ratio of revenues

We will assess the availability and to interest costs - and other factors Our primary need in this publicdebt service costs for three kinds of that affect bond ratings given by thefinancing (conventional bonds, short- rating agencies. involvement undertaking is to get

comments specific to the WNP 1 andterm bonds, revenue financing). We 3 costs and schedule assumptionswill link each to the scenarios related The buoget impact for each scenario

for our rates and budget12 timing of the projects. We currently will be assessed anew, as will the

determinations in the near term. Butplan to make a variety of other impact on owners (the participating as notec, we also will listen to -

financial assessments including one investor. owned utilities). 3that identifies BPA's fixed anddiscretionary costs. Our last such Finally, the potential impact on BPA |

System or nuclear energy in general..

assessment showed about 87 percent fmances from altemative outcomg of j These broader concerns may includeof BPA's annual obligations to be current litigation will get a fresh look.

matters such as the institutionalnorWiscretionary or fixed. There are a number of lawsuits

currently involving WNP 3 and the nature of the Supply System, the ii

licensing process and *

We will do a cash flow analysis to terminated projects WNP 4 and 5show BPA's ability to handle WNP 1 that necessarily complicate the decommissioning theories and costs,

;

and 3 payments for each scenario financial assessment of both WNP 1while at the same time getting and 3. socio/ economic impacts of project

,

repayments to the U.S. Treasury back i

on schedule. SPA has fallen behind Uncertainty surrounding possibleAnd if anyone wishes to comment on

and is making major efforts to catch liabilites of BPA and other projecth WM5 W me m M |

up on these overdue payments. sponsors also must be taken into '

Regional Plan and the Fish andTimeliness, risk, and other pertinent account in determining a prudent *

WJdlife Plan, we will be listening.characteristics of each potential couca for the two protects,financing mechanism will bereviewed.