THE NEW 5 J N Foe U 5

tioned whether SCE could deliver

on a promise to reduce rates 10%

within six months of the acquisi­

tion, an SOC&E spokesman said.

San Diego would be liable for a

$25 million penalty if it voluntari­

ly withdraws from the agreement

with Tucson.Edison has left its offer on the

table, Phelps said, and is "extreme­

ly puzzled" about why it wasturned down. "Our deal offers

such benefits; not even tonegotiate seems incredible," he

said. SCE decided to make a pitch

to SOC&E stockholders via full­

page ads September 9 in the LosAngeles TImes and the San Diego

Union, extolling the benefits of a

combined SOC&E/SCE. And

SCE bought 1,000 shares of San

Diego's stock in order to get its

hands on a register of thecompany's stockholders to com­

municate with them directly.The president of SCE's

cogeneration subsidiary, Mission

Energy, also purchased SDG&E

stock and has sought unsuccess­

fully to get the register of stock­

holders. James Pignatelli, bought

the stock voluntarily with his own

money, Phelps said, to protect hisfather's 3,200 share investment in

SDG&E. In SDG&E's view, Pig­

natelli is simply operating as an

agent of SCE.The question scheduled to be

put to a San Diego Superior court

judge October 17 is whether

SIX:;&E must deliver the list. As a

stockholder, SCE argues that it is

entitled to the information under

California's corporation code.

SIX:;&E refuses, alleging that SCE

NOVember 1988

is holding the shares illegally be­cause of a prohibition in

California's public utility code

against one utility owning stock

of another utility without CPUC

approval. SCE counters that it is a

holding company, not a utility.San Diego has asked the CPUC to

review SCE's ownership ofSOC&E stock and to intervene

before the Superior Court.Edison hasn't decided what it

will communicate to SOC&E

stockholders if the list is made

available, but Phelps conceded a

tender offer is "one of a wide

range of options. There are a set of

circumstances that make this

transaction notably beneficial

from a shareholder and customer

standpoint-it should be done,"he said.

Barry Burdett of Tucson Electric

suggested that SCE currently hasa clear advantage in communicat­ing with San Diego stockholders.

Under SEC regulations, the merg­

ing companies are prohibited

from giving stockholders detailed

information about the benefits of

the merger until a proxy state­

ment has been sent, he said.

"Paper will be flying around

here like snow in Minneapolis in

November," a source at the

California PUC observed of the

merger free-for-all in southernCalifornia. There are no dates set

yet for CPUC hearings on the San

Diego/Tucson merger proposal,but there are reports that there

will be a full house of intervenors

in the proceeding.

A hearing before the Arizona

Corporation Commission is set

for April 10, and FERC said at a

late September meeting it would

put its consideration of the matter

on an expedited schedule and

issue a decision by April 26, 1989.-Sonya Bruce

WPPSS, Here We Go, Again

Vermont High CourtLets Seven UtilitiesOff Seabrook Hook

AVennont Supreme Court ruling

that released seven utilities from

contractual obligations relating to

the Seabrook nuclear plant has

raised the hopes of Massachusettsutilities that want to void their con­

tracts for power from the troublednuclear plant.

While the MassachusettsSupreme Judicial Court hasupheld the validity of participa­

tion agreements by utilities in thatstate, sources suggest the Ver­

mont ruling has set the stage for

arguments that the Seabrook con­

tracts are only enforceable if every

utility is validly bound.

The Vermont court said the

utilities' participation in

Seabrook-through contracts

with the Massachusetts MunicipalWholesale Electric Co.-was animpermissible delegation ofauthority, since none of the Ver­

mont municipal utilities and co­ops held a seat on the M:!vfWEC

board. The high court said the

utilities could not legally abrogate

fiduciary and management

responsibilities as they had with

the MMWEC contracts.

5

THE NEW 5 I N Foe U 5r-------.---------r---------.----------~-------------...

The September 27 ruling stemsfrom a case filed in Vermont Supe­

rior Court in October 1985 by the

Department of Public Service on

behalf of the Vermont Electric Co­

op and the Village of Stowe. Notall those Vermont utilities that arenow released from their Seabrook

contracts originally supported theplaintiffs' contention that agree­ments with MMWEC were in­valid. General manager Bill Smith

said the Washington Electric Co­op in East Montpelier, Vermont.was a defendant in the 1985 case,

but in early 1988 sided with the

plaintiffs.In its ruling, the Vermont court

referred to an Oregon lawsuit,filed in connection with Oregon

participant obligations with

respect to WPPSS nuclear projects4 and 5. In that case, Oregonratepayers argued that theirmunicipal utility had no legisla­tive authority to sign a participa­tion agreement with WPPSS.

A spokeswoman at the North­

east Public Power Association

noted that the WPPSS example

has also been raised, since the

Oregon participants (which had

had their contractual obligationsto WPPSS upheld by the OregonSupreme Court) were later

released from those otherwisevalid contracts when theWashington Supreme Court ruledthat Washington utilities were par­ticipating in WPPSS without legal

authority to do so.

An attorney for the Hull (Mass.)

Municipal Light Plant has alreadyannounced plans to use the Ver­

mont ruling in a new appeal and

--6

others may follow. "Our boardwould not bring a frivolous law­

suit," according to Roger Beellje,manager of the Groton (Mass.)Electric Light Dept. "But given agood legal argument and a fair

shot at winning, our utility boardwould seek to get out of payingfor a plant that's not operating."

-S011ya Bruce

Seabrook Is First

New NuclearDecommissioningRules Plaz.ue PublicService at NewHampshire

The Nuclear Regulatory Commis­sion ruled in late September thatPublic ServiceCo. of NewHampshire would have to show, aspart of the conditions for obtaininga low-power license for its Seabrook

nuclear plant, that it will have themoney available to decommission

the plant after it runs at low power,

and also full power, if the NRC sub­

sequently grants the plant a licenseto do so.

For PSNH, the new rules arejust another lap in their seemingly

endless marathon to get Seabrookup and running; but for thenuclear industry as a whole, theNRC's new decommissioningrules, which took effect in July,will force financial managers to

certify that all their decommis­sioning ducks are in a row, and

that they are sitting on enough

golden eggs to finance removal of

plants from service when the timecomes.

The rules require all nuclear

plant licensees to submit to the

Commission, by July 27, 1990, adecommissioning funding plan or

a certification of financial as­surance for decommissioning.

Applications for plant licenses arealso required to present a plan orcertification, which is the origin ofthe NRC's Seabrook ruling, al­

though the Commission in its

order also made reference to

PSNH's "unique" circumstances,

presumably referring to the fact

that the company has filed Chap­ter 11.

Keith Steyer of the Office ofNuclear Regulatory Research of

the NRC says utilities "vary allover the map" in their prepared­ness to comply with the regula­tions. Previous NRC regs con­tained very little on decommis­sioning, he notes. Depending onthe kind of reactor involved,

Steyer says the new rules are like­

ly to mean utilities will have to setaside around $4 to $5 million an­

nually for about 30 years to cover

decommissioning costs. Sixty

years is the acceptable time framefor decommissioning set forth inthe regulations.

Steyer points out that the dif­ference in whether utilities areready to comply with the rules ismost likely to be a function' oftheir financial health; the fiscally

robust ones are likely to beprepared; weaker ones may have

problems. He says some utilities

have earmarked funds for decom­

missioning by putting them into

The Electricity Journal