NRC to monitor Comanche Peak during EFH bankruptcy proceedings

By Kathryn Jones

Editor

Photo courtesy Nuclear Regulatory Commission

Photo courtesy Nuclear Regulatory Commission

Corporate bankruptcies involving nuclear power plants aren’t common, but they also aren’t new, either.

Comanche Peak is the most recent nuclear power plant to be involved in a Chapter 11 bankruptcy proceeding, but it’s not the first.

That record belongs to the Seabrook Nuclear Power Plant in New Hampshire. The utility that owned a big chunk of the Seabrook plant filed for bankruptcy in 1988 due to construction delays and billions of dollars in debt. In doing so, it became the first utility to file Chapter 11 since the Great Depression.

Then in 2011, the owner of the Diablo Canyon Power Plant, Pacific Gas & Electric Co., filed for bankruptcy. Diablo Canyon is located near Avila Beach, Calif.

Both plants continued to operate as their parent companies went through Chapter 11 proceedings.

Even so, the Nuclear Regulatory Commission recently said it will keep a close eye on the bankruptcy proceedings involving Comanche Peak’s parent company, Dallas-based Energy Future Holdings. The state’s largest power company filed for Chapter 11 bankruptcy protection on April 29 to restructure $40 billion in debt.

Under the restructuring plan, units Luminant Generation – operator of Comanche Peak — and TXU Energy would be split off from the parent company and transferred to first-lien lenders. Oncor, the regulated electric delivery business, is not part of the Chapter 11 filing.

Lara Uselding, public affairs officer for the NRC’s Region IV office in Arlington, said in a prepared statement that the NRC has been “actively monitoring the situation” since EFH last year told the Securities and Exchange Commission it may have “difficulties meeting debt obligations.”

“NRC staff has looked at any potential impacts on plant safety and security, the decommissioning fund and the implementation of post-Fukushima (the Japanese power plant damaged by a tsunami) action items,” she said. “We determined the plant continues to be sufficiently funded.

“Based on NRC management visits to the Texas plant and monthly calls and meetings with company executives at the NRC Region IV office, the NRC has been assured EFH’s financial issues will not have a negative impact on the safe operation of the plant,” Uselding added.

She said staff from NRC’s regional office in Arlington will “continue to conduct inspections and assessments to ensure public health and safety is maintained. They will also evaluate whether the financial conditions are impacting plant staffing, maintenance activities and emergency preparedness capabilities.”

The NRC also has reminded the company it must continue to meet requirements of its operating license, she added.

For example, EFH/Luminant must have a financial support agreement of $250 million “to ensure operating and maintenance costs for the two reactors can be met for a year,” Uselding said.

In addition, EFH and Luminant must inform the NRC before transferring significant funds — greater than 10 percent of total accounts — away from Luminant, she continued.

“Once a new corporate entity is established, the firm must notify the NRC to begin the license transfer process,” Uselding said.

The plant currently is in compliance with the NRC’s decommissioning funding assurance requirements, she added. The NRC will work with the bankruptcy authorities to ensure decommissioning funds are “insulated from creditor claims,” Uselding explained.

Two NRC resident inspectors live in the local community and work at the plant.

“They are the agency’s eyes and ears at the plant and their daily oversight helps to ensure the plant continues to be operated safely, and protects public health and the environment,” Uselding said.

Energy Future Holdings said it expected normal day-to-day operations to continue during the restructuring.

“This restructuring is focused on our balance sheet, not our operations,” EFH Chief Executive Officer John Young said in a prepared statement released after the bankruptcy filing.

Luminant “will continue to provide safe, reliable energy and TXU Energy will continue to provide best-in-class customer service and innovative energy solutions. We will maintain our commitment to operational excellence in a competitive energy market,” Young added.

 

 

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