File No. 070-09607
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________
AMENDMENT NO. 3
TO FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________________
Conectiv
Delmarva Power & Light Company
Atlantic City Electric Company
800 King Street
Wilmington, DE 19899
(Name of companies filing this statement and addresses
of principal executive offices)
__________________________________________________________________
Conectiv
(address above)
(Name of top registered holding company parent of declarant)
__________________________________
Philip S. Reese
Treasurer
Conectiv
(address above)
(Name and addresses of agents for service)
__________________________________
The Commission also is requested to send
copies of any communications in connection with this matter to:
John N. Estes III Peter F. Clark
Judith A. Center General Counsel
William C. Weeden Randall V. Griffin
Skadden, Arps, Slate, Meagher & Flom LLP Senior Counsel
1440 New York Avenue, N.W. Conectiv
Washington, D.C. 20005 (address above)
<PAGE>
I. DESCRIPTION OF THE PROPOSED TRANSACTION...................................1
A. Introduction.........................................................1
B. Description of the Parties ..........................................3
C. Description of the Peach Bottom Assets...............................4
D. Background on the Transaction........................................5
E. Benefits of the Transaction..........................................6
II. FEES, COMMISSIONS AND EXPENSES............................................9
III. APPLICABLE STATUTORY PROVISIONS...........................................9
IV. OTHER REGULATORY APPROVAL.................................................9
V. PROCEDURE................................................................10
VI. EXHIBITS AND FINANCIAL STATEMENTS........................................11
A. EXHIBITS............................................................11
B. FINANCIAL STATEMENTS................................................12
VII. INFORMATION AS TO ENVIRONMENTAL EFFECT...................................12
<PAGE>
The Application-Declaration, as previously filed, is hereby amended as follows:
I. DESCRIPTION OF THE PROPOSED TRANSACTION
A. Introduction
This Form U-1 Application/Declaration ("Application/Declaration")
seeks approvals pursuant to Section 12(d), of the Public Utility Holding Company
Act of 1935, as amended (the "Act"), and Rule 44 thereunder, relating to the
sale of certain utility assets by Conectiv, to PECO Energy Company ("PECO").
Specifically, Conectiv and its subsidiaries, Delmarva Power & Light Company
("DPL") and Atlantic City Electric Company ("ACE"), have proposed the joint sale
of a 7.51-percent (164 MW) ownership interest in the Peach Bottom Atomic Power
Station Units 2 and 3 ("Peach Bottom") to PECO, (the "Transaction"). PECO
presently owns 42.49 percent of Peach Bottom.
In exchange for their interests in Peach Bottom that are being sold to
PECO, ACE and DPL will each receive $2,550,000, plus 3.755 percent of the net
book value of the Nuclear Fuel Supplies as of the Closing Date and furthermore
PECO will assume various liabilities of ACE and DPL.1 The 3.755 percent of the
Nuclear Fuel Supplies which would qualify as Utility Assets (as defined in the
Act), as of the anticipated closing date would be worth approximately $10
million. It is estimated that the total proceeds from PECO to be shared by ACE
and DPL will be approximately $25.1 million. In addition, PECO will assume
essentially all of ACE and DPL's environmental and decommissioning liabilities
for Peach Bottom, in proportion to the ownership share being transferred. As
explained below, the Transaction is in the public interest and should be
approved as soon as practicable. The parties would like to complete the
Transaction as soon as possible and respectfully request Commission action by
May 10, 2000.
The sale to PECO is part of several interrelated transactions, whereby
PECO and a non-utility affiliate of Public Service Electric and Gas Company
("PSE&G") agreed to buy the interests of ACE and DPL in the various jointly
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1 Nuclear Fuel Supplies include the nuclear fuel assemblies in the reactor
core, natural uranium, converted uranium, enriched uranium and any other
form of any thereof, under contract or in inventory, and located at or in
transit to the Peach Bottom Station, as well as all nuclear fuel
constituents in all stages of the fuel cycle that are in the process of
production, conversion, enrichment or fabrication.
<PAGE>
owned nuclear plants ("Nuclear Assets").2 PECO will be purchasing a combined
7.51-percent ownership interest in Peach Bottom from ACE and DPL. The PSE&G
affiliate, PSEG Nuclear L.L.C. ("PSEG Nuclear"), also will be buying a combined
7.51-percent ownership interest in Peach Bottom from ACE and DPL.3 In addition,
PSEG Nuclear will be buying, in transactions that are separate from any
transaction for which this Application seeks approval, the additional minority
ownership interests in other nuclear plants. In each of the PSEG Nuclear
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2 ACE and DPL each own a minority ownership share in Salem Units 1 & 2, Salem
Peaking Unit, and Peach Bottom Units 2 and 3. Furthermore ACE is selling
its minority ownership share in Hope Creek Unit 1. Conectiv is conveying
all of their interests in the nuclear plants through a series of purchase
agreements dated as of September 27, 1999, which included agreements: by
and between ACE and PSEG Power LLC (relating to the Salem Station); by and
between DPL and PSEG Power LLC (relating to Salem Station); by and between
ACE and PSEG Power LLC (relating to Hope Creek Station); by and among ACE,
PECO Energy Company and PSEG Power LLC (relating to Peach Bottom Station);
by and among DPL, PECO Energy Company and PSEG Power LLC (relating to Peach
Bottom Station). The sales include the nuclear generating units themselves,
the nuclear decommissioning trust fund balances, nuclear fuel, and the
associated interests in land and other equipment, including the small
turbine at Salem that is primarily used for start-up and on-site power
needs.
3 Public Service Enterprise Group Incorporated (PSEG) is an exempt public
utility holding company. PSEG has two principal direct wholly-owned
subsidiaries: PSE&G and PSEG Energy Holdings Inc. PSE&G, a New Jersey
corporation, is an operating public utility company engaged principally in
the generation, transmission, distribution and sale of electric energy
service and in the transmission, distribution and sale of gas service in
New Jersey. PSE&G supplies electric and gas service in areas of New Jersey
in which approximately 5.5 million people, about 70% of the State's
population, reside. PSEG Power LLC ("PSEG Power") is a wholesale electric
generation and trading company operating in the Northeastern United States.
PSEG Power is a wholly owned subsidiary of Public Service Enterprise Group
that ACE and DPL expect will own all of the shares of PSEG Nuclear, PSEG
Fossil LLC and PSEG Energy Resources & Trade LLC. It is ACE and DPL's
understanding that at or before closing, PSEG Power will designate its
subsidiary, PSEG Nuclear, as the party which will actually receive the
ownership interests at closing. It is also ACE and DPL's understanding that
PSEG Nuclear ultimately will own all of PSE&G's nuclear facilities and will
operate those nuclear facilities for which PSE&G is currently the operator
(PSE&G may continue as operator for an interim period). PSEG Nuclear will
engage only in wholesale sales of electric power.
2
<PAGE>
transactions, however, the buyer is an exempt wholesale generator ("EWG").
Therefore, no Commission approval is required for those transactions under
Section 32 of the Act. In contrast, PECO is buying an ownership interest in
Peach Bottom, not through an EWG, but as an operating public utility. Commission
approval under Section 12(d) of the Act therefore is required for the sale to
PECO.
The New Jersey Board of Public Utilities ("NJBPU") must approve the
sale of ACE's interest in Peach Bottom. The Pennsylvania Public Utility
Commission ("PaPUC") must approve the sale by ACE and DPL, and purchase by PECO,
of the Peach Bottom interests. The Virginia State Corporation Commission
("VSCC") will review the proposed sale of Delmarva interests in the context of
its overall review of DPL's plan for the functional separation of generation
assets from transmission and distribution assets. Furthermore, pursuant to
Section 32 of the Act, all four of the state commissions that regulate ACE and
DPL - the NJBPU, Delaware Public Service Commission ("DPSC"), the Maryland
Public Service Commission ("MPSC"), and the VSCC - will be addressing the
related transactions in which an EWG owned by PSE&G will be buying interests in
this and other nuclear plants from ACE and DPL. The state commissions therefore
will be well informed regarding the proposed Peach Bottom transaction.
B. Description of the Parties
On March 1, 1998, Conectiv became a registered holding company under
the Act. Conectiv has two operating public utility subsidiaries: ACE and DPL.
ACE is a New Jersey corporation that distributes and sells electricity at retail
in southern New Jersey. ACE's retail service is regulated by the NJBPU. DPL is a
Delaware and Virginia corporation that distributes and sells electricity at
retail in portions of Delaware, Maryland and Virginia, and gas at retail in New
Castle County, Delaware. DPL's retail service is regulated by the DPSC, MPSC,
and the VSCC.
In addition, because of their ownership interest in Peach Bottom, both
ACE and DPL are subject to minimal regulation by the PaPUC. The PaPUC does not
regulate the electric rates of either ACE or DPL. Neither ACE nor DPL have any
retail utility customers in Pennsylvania, receive any gross operating revenue
for service rendered under a tariff filed with the PaPUC for intrastate service
within Pennsylvania, or operate any public utility facilities within
Pennsylvania. The PaPUC regulates ACE and DPL solely as holders of certificates
of public convenience and necessity regarding their partial interests in the
Peach Bottom plant, as well as certain other Pennsylvania generation assets.
3
<PAGE>
The Federal Energy Regulatory Commission ("FERC") also has regulatory
authority over the wholesale sales and transmission activities of DPL and ACE.
Excluding off-system sales not subject to price regulation, the percentage of
electric and gas utility operating revenues regulated by each regulatory
commission, for the year ended December 31, 1998, was as follows: NJBPU, 41.8%;
DPSC, 38.9%; MPSC, 14.5%; VSCC, 1.4%; and FERC, 3.4%.
Conectiv's total generation capacity is approximately 6,035 MW as of
December 31, 1998. The partial ownership interests in Peach Bottom being sold to
PECO provides approximately 2.7% of this capacity. DPL's and ACE's ownership
interests in the Nuclear Assets provided approximately 12% of Conectiv's total
installed capacity as of December 31, 1998. In 1998, kilowatt-hour output for
load from the jointly-owned Nuclear Assets provided 21% of the electricity used
by Conectiv's retail customers.
PECO is an electric and gas utility serving 1.5 million electric
customers in the five-county Philadelphia area and 400,000 natural gas customers
in four suburban counties.4 It is one of the nation's largest nuclear utility
operators, producing more than 33 billion kilowatt-hours of electricity in 1998
at its Limerick and Peach Bottom generating stations.
C. Description of the Peach Bottom Assets
The Peach Bottom nuclear power plant is located in York County,
Pennsylvania and has a summer capacity of 2,186 MW. ACE and DPL acquired their
interest in Peach Bottom on November 24, 1971, and they each own 164 MW, or 7.51
percent, of the plant. Conectiv as a whole therefore owns 328 MW, or 15.02
percent, half of which is being sold to PECO. The other co-owners of Peach
Bottom, PECO and PSE&G, each own approximately 42.49% of the facility.
- ---------------
4 PECO is a section 3(a)(2) exempt holding company. PECO has three utility
subsidiaries, one of which PECO Energy Power Company is a registered
holding company solely by virtue of its ownership of Susquehanna Power
Company ("Susquehanna"), an electric utility company that operates in two
states; a section 3(a)(1) exemption is not available to PECO Energy Power
Company because its operations are spread over two states. Susquehanna was
incorporated in Maryland while PECO Energy Power Company was incorporated
in Pennsylvania and owns Susquehanna. The sole function of PECO Energy
Power Company and its single electric public-utility subsidiary,
Susquehanna, is to hold joint title to the Conowingo Hydro-Electric Project
of Maryland and Pennsylvania.
4
<PAGE>
The following chart sets forth the original acquisition value and the
book value of ACE and DPL's interest in Peach Bottom before and after the
write-down.5
<TABLE>
<CAPTION>
Value of Peach Bottom Assets
- --------------------------------- -------------------------- ------------------ ----------------------
Company Plant in Actual Book Pro Forma
Service Value ($)6 Value As Of Without Third
December 31, Quarter Write Down
1999 ($)7 in Book Value($)8
- --------------------------------- -------------------------- ------------------ ----------------------
<S> <C> <C> <C>
Delmarva Power & Light Company 49,513,500 4,689,000 80,496,900
(DPL)
Atlantic City Electricity 47,400,500 4,705,000 72,413,700
Company (ACE)
Total Conectiv 96,914,000 9,394,000 152,910,600
- --------------------------------- -------------------------- ------------------ ----------------------
</TABLE>
- ---------------
5 The net book value of Peach Bottom and other plant-related assets including
inventories were written down to their estimated fair market value (net of
estimated selling costs) due to impairment. The write-down took place in
the third quarter of 1999. The extraordinary charge related to impaired
assets was determined in accordance with Statements of Financial Accounting
Standards ("SFAS") No. 121. The extraordinary charge was decreased by the
regulatory asset established for the amount of stranded costs expected to
be recovered through regulated electricity delivery rates.
6 This reflects the value recorded in 1974 on DPL and ACE's financial
statements for their respective ownership interest in Peach Bottom, as of
the in-service date of the facility.
7 This represents the 12/31/99 net book value per each Company's financial
statements which reflects a third quarter 1999 write-down to net realizable
value based on the purchase agreements of sale entered into that same
quarter. These agreements are attached hereto as Exhibit B-1 and Exhibit
B-2 respectively.
8 This is a pro forma amount representing the net book value prior to the
third quarter 1999 write-down. This net book value prior to the third
quarter 1999 write-down is greater than the Plant in Service Value due to
several capital projects that have been undertaken since the Plant was put
in service.
D. Background on the Transaction
As the Commission is well aware, the electric utility industry is in
the midst of a fundamental restructuring at both the federal and state levels.
The states in which Conectiv operates have been part of this effort. In
particular, New Jersey began retail choice on August 1, 1999. Delaware began
phasing in retail choice on October 1, 1999. Maryland is scheduled to begin
retail choice on July 1, 2000. Virginia will begin phasing in retail choice on
January 1, 2002.
5
<PAGE>
In light of these state utility restructuring initiatives, and the
evolving competitive marketplace, Conectiv made the strategic decision to divest
a substantial portion of its baseload generation assets, including its partial
ownership in Peach Bottom. Towards this end, ACE and DPL commenced the process
of auctioning their relatively small minority interests in these generation
assets during the early part of 1999. The companies envisioned two parallel
auctions - one involving the fossil plants, and the other involving nuclear
plants. The fossil auction has concluded; purchase agreements were signed with
the winning bidder on January 18, 2000. The closing process has commenced. This
Application relates to the sale of the nuclear plant.
As a threshold matter, ACE and DPL's minority interests in the Nuclear
Assets are subject to certain conditions contained in certain agreements among
the co-owners. Pursuant to these agreements, ACE and DPL have the right to
transfer their interests in the co-owned Nuclear Assets to non-co-owners,
subject to a right of first refusal by each of the co-owners. Because of this
right, and because PECO and PSE&G already owned interests in the Nuclear Assets
and were familiar with those units, PECO and PSE&G were the most logical buyers
for ACE and DPL's minority interests.
Notwithstanding this, the sale process for the nuclear power plants
initially took the form of an auction to meet the requirements imposed upon ACE
by the NJBPU. Standards for the auction were approved orally by the NJBPU at a
meeting on September 17, 1999, followed by a written order dated January 4,
2000. While DPL was not subject to regulation of NJBPU, it nevertheless adopted
the same standards for the sale of its interest in Peach Bottom.
On August 30, 1999, before Conectiv began opening and evaluating any
bids, PECO and PSE&G submitted a comprehensive proposal to purchase ACE and
DPL's interests in the Nuclear Assets. Specifically, PSEG Power offered to
acquire the combined ACE/DPL interests in Salem and also offered to purchase
ACE's interest in Hope Creek. PSEG Power and PECO each offered to purchase
one-half of the interests that ACE and DPL held in Peach Bottom.
As a result of its analysis of the proposal, as well as an evaluation
of the prices, terms and conditions of recent comparable nuclear asset sales,
Conectiv postponed the auction and began negotiating with PECO and PSE&G
regarding the terms of an acquisition of the Peach Bottom interests. On
September 27, 1999, Conectiv reached agreement with PECO and PSE&G regarding the
terms governing the Transaction, cancelled the auction and entered into purchase
agreements between ACE and PECO and between DPL and PECO. These agreements are
attached hereto as Exhibit B-1 and Exhibit B-2 respectively.
ACE has sought approval from the NJBPU for the sale of its interests
to PECO and PSE&G, including approval of the process used to effect the sale.
E. Benefits of the Transaction
The Transaction should be approved because it is the result of
arm's-length negotiations and is in the public interest. Conectiv explored
6
<PAGE>
potential avenues for disposing of the Peach Bottom ownership interests,
including conducting the initial stages of an auction. Conectiv concluded that
the terms offered by PECO were superior to what it was likely to achieve at
auction and negotiated those terms on an arm's-length basis in order to maximize
benefits for all of Conectiv's stakeholders.
Based upon the advice of a consulting firm hired to advise the company
(which included the delivery of a fairness opinion to Conectiv's board of
directors), who have reviewed several nuclear divestiture sales over the past
five years, management concluded that the Transaction presents both shareholders
and consumers with virtually unique benefits, in comparison to other nuclear
divestitures:
o Conectiv will avoid substantially all liability for the nuclear
decommissioning of Peach Bottom. In addition to removing its exposure to
the risk of future decommissioning costs, the Transaction will enable
Conectiv to avoid additional funding of the nuclear decommissioning trusts
which otherwise would likely have been required in a sale to a
non-co-owner.
o Conectiv's long-term exposure to the risk of potentially costly
environmental clean-up liability is minimized because PECO and PSE&G will
assume essentially all environmental liabilities associated with the
Nuclear Assets.9
- ---------------
9 Conectiv will continue to assume liability for pre-closing offsite
environmental risks associated with the Nuclear Assets, though none have
been identified at this time.
7
<PAGE>
o Conectiv was not required by PECO to agree to any above-market purchased
power contracts. Such contracts have been required in certain nuclear
divestitures. Avoiding this burden directly benefits customers, because it
is the customers who would ultimately bear any increased costs.
o ACE, consistent with New Jersey state law, will apply the proceeds it
receives from the sale of the Nuclear Assets to partially offset stranded
costs it will recover from its retail customers in New Jersey.10
In addition to these specific advantages, the Transaction offers
substantive overall long-term benefits for Conectiv, adding new financial
strength and decreasing exposure to risk. As a result, Conectiv will be
well-positioned to compete in the energy marketplace. By selling approximately
708 megawatts of nuclear generation, Conectiv expects to raise cash for internal
uses, including debt repayment and new investments that more closely conform
with Conectiv's competitive strategy. Conectiv intends to retain certain
generation plants that it considers to be strategic to its energy business and
necessary to assure reliability for its customers as electricity markets become
more competitive.
In sum, the Transaction plainly benefits the interests that the Act
was designed to protect. It therefore should be approved as soon as practicable.
The parties would like to complete the Transaction as soon as possible, and
respectfully request Commission action by April 14, 2000.
F. Discussion of Rules 53 and 54
Rule 54 promulgated under the Act states that in determining whether
to approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an Exempt Wholesale Generator ("EWG") or
a Foreign Utility Company ("FUCO"), or other transactions by such registered
holding company or its subsidiaries other than with respect to EWGs or FUCOs,
the Commission shall not consider the effect of the capitalization or earnings
- ---------------
10 The Transaction should not affect DPL's retail rates. Retail rates in
Delaware and Maryland are frozen for three to four years. The VSCC retains
jurisdiction over DPL's retail rates in Virginia. DPL will use the proceeds
for various activities consistent with its corporate strategy.
8
<PAGE>
of any subsidiary which is an EWG or a FUCO upon the registered holding company
system if Rules 53(a), (b), or (c) are satisfied. As demonstrated below, such
rules are satisfied.
Conectiv complies with Rule 53(a)(1) for the reason that its aggregate
investment in EWGs and FUCOs does not exceed 50% of Conectiv's retained earnings
for the four most recent quarterly periods set forth on Conectiv's Form 10-K or
Form 10-Q. Conectiv and its subsidiaries will maintain books and records to
identify the investments in earnings from EWGs and FUCOs in which they directly
or indirectly hold an interest, thereby satisfying Rule 53(a)(2). The books and
records of each such entity will be kept in conformity with United States
generally accepted accounting principles ("GAAP"). The financial statements also
will be prepared according to GAAP. In addition, Conectiv undertakes to provide
the Commission access to such books and records and financial statements as the
Commission may request. Conectiv is in compliance with Rule 53(a)(3) which
requires that no more than two percent of the employees of Conectiv's domestic
public-utility companies render services, directly or indirectly, to any EWGs or
FUCOs in the Conectiv System.
Conectiv, in connection with any Form U-1 seeking approval of EWG or
FUCO financing, will submit copies of such Form U-1 and every certificate filed
pursuant to Rule 24 with every federal, state or local regulator having
jurisdiction over the retail rates of the public utility companies in the
Conectiv holding company system. Rule 53(a)(4) correspondingly will be
satisfied. None of the conditions described in Rule 53(b) exists with respect to
Conectiv, thereby satisfying Rule 53(b) and making Rule 53(c) inapplicable. Rule
53(d) also does not apply.
II. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses to be incurred, directly or
indirectly, by Conectiv or any associate company thereof in connection with the
proposed Transaction are estimated as follows:
Fees of Conectiv $ 0
Fees of outside counsel............ $ 55,000
Miscellaneous expenses $ 0
TOTAL.............................. $ 55,000
* to be filed by amendment.
III. APPLICABLE STATUTORY PROVISIONS
The properties are utility assets within the meaning of the definition
in Section 2(a)(18) of the Act. Section 12(d) of the Act and Rule 44 under the
Act apply to the sale of the Peach Bottom interest in the ownership of electric
generating assets.
If the Commission considers the proposed future transactions to
require any authorization, approval or exemption, under any section of the Act
for Rule or Regulation other than those cited herein above, such authorization,
approval or exemption is hereby requested.
IV. OTHER REGULATORY APPROVAL
The Transaction is subject to approval by other federal and state
agencies. On or about December 14, 1999, Conectiv filed a Pre-merger
9
<PAGE>
Notification and Report Form with the Antitrust Division of the Department of
Justice ("DOJ") and the Federal Trade Commission (the "FTC") pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"). On
January 4, 2000, Conectiv received early termination of the applicable waiting
period under the HSR Act. Termination was effective as of the phone call
received on that date. A copy of the application and written confirmation of the
termination are attached as exhibits.
Both the Nuclear Regulatory Commission and the FERC have approved the
Transaction. In addition, the PaPUC has approved the purchase by PECO of
interests of ACE and DPL. The NJBPU must approve the sale of ACE's interest in
Peach Bottom. The VSCC must review the Transaction in the broader context of
considering an overall plan for the functional separation of generation,
transmission and distribution activities. Copies of all of these applications
and orders for all but the NJBPU and VSCC are attached as exhibits.
V. PROCEDURE
Conectiv requests that the Commission issue and publish, not later
than April 14, 2000, the requisite notice under Rule 23 with respect to the
filing of this Application/Declaration. Conectiv further requests that such
notice specify a date no later than May 10, 2000 as the date after which the
Commission may issue an order approving the transaction addressed herein.
Conectiv (1) waives a recommended decision by a hearing officer or
other responsible officer of the Commission; (2) consents that the Staff of the
Division of Investment Management may assist in the preparation of the
Commission's order; and (3) requests that there be no waiting period between the
issuance of the Commission's order and its effectiveness.
10
<PAGE>
VI. EXHIBITS AND FINANCIAL STATEMENTS
A. EXHIBITS Tab
A-1 Not Applicable
B-1 Purchase Agreement By And Among Atlantic City Electric Company, PECO Energy
Company and PSEG Power LLC, Dated as of September 27,
1999.......................................................................
B-2 Purchase Agreement By And Among Delmarva Power & Light Company, PECO Energy
Company and PSEG Power LLC, Dated as of September 27,
1999.......................................................................
C-1 Not Applicable.............................................................
D-1 NJ State Application.......................................................
D-2 NJ State Order (to be filed by amendment)..................................
D-3 PA State Application.......................................................
D-4 PA State Order.............................................................
D-5 VA State Application.......................................................
D-6 VA State Order (to be filed by amendment)..................................
D-7 FERC Application...........................................................
D-8 FERC Order.................................................................
D-9 NRC Application............................................................
D-10 NRC Order..................................................................
D-11 FTC Hart-Scott-Rodino Application..........................................
D-12 FTC Hart-Scott-Rodino Approval.............................................
E-1 Not Applicable.............................................................
F-1 Opinion of Counsel (to be filed by amendment)..............................
11
<PAGE>
G-1 Not Applicable.............................................................
H-1 Not Applicable.............................................................
I-1 Proposed Form of Notice....................................................
B. FINANCIAL STATEMENTS
FS-1 Delmarva Power & Light Company Pro Forma Consolidated Statements of
Income.....................................................................
FS-2 Delmarva Power & Light Company Pro Forma Consolidated Balance Sheets
(Exhibit FS-3 to Conectiv's Form U-1 Declaration under The Public Utility
Holding Company Act of 1935, File no. 070-09655, and incorporated herein by
reference).................................................................
FS-3 Atlantic City Electric Company Pro Forma Consolidated Statements of
Income.....................................................................
FS-4 Atlantic City Electric Company Pro Forma Consolidated Balance Sheets
(Exhibit FS-5 to Conectiv's Form U-1 Declaration under The Public Utility
Holding Company Act of 1935, File no. 070-09655, and incorporated herein by
reference)................................................................
FS-5 Conectiv Pro Forma Consolidated Statements of Income......................
FS-6 Conectiv Pro Forma Consolidated Balance Sheets (Exhibit FS-1 to Conectiv's
Form U-1 Declaration under The Public Utility Holding Company Act of 1935,
File no. 070-09655, and incorporated herein by reference)..................
FS-7 Conectiv Consolidated Financial Data Schedule (include in electronic
submission only) (Exhibit FS-4 to Conectiv's Post-Effective Amendment No.
7 to Form U-1 Declaration under The Public Utility Holding Company Act of
1935, File no. 070-09095, and incorporated herein by reference)............
FS-8 Notes to Financial Statements..............................................
12
<PAGE>
There have been no material changes, not in the ordinary course of
business, since the date of the financial statements filed herewith.
VII. INFORMATION AS TO ENVIRONMENTAL EFFECT
The proposed transactions do not involve major federal action having a
significant effect on the human environment. No other federal agency has
prepared or is preparing an environmental impact statement with respect to the
transaction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the undersigned companies
have duly caused this amended Application/Declaration to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: May 24, 2000
Conectiv
_____________________________
By: /s/ Name
Title:
Delmarva Power & Light Company
_____________________________
By: /s/ Name
Title:
Atlantic City Electric Company
_____________________________
By: /s/ Name
Title:
<PAGE>
EXHIBIT I-1
SECURITIES AND EXCHANGE COMMISSION
Conectiv, a holding company registered under the Public Utility
Holding Company Act of 1935 (the "Act") located at 800 King Street, Wilmington,
DE 19899, and its subsidiaries has filed an Application-Declaration under
Sections 12(d) and Rule 44 of the Act.
Conectiv and its subsidiaries Delmarva Power & Light Company ("DPL")
and Atlantic City Electric Company ("ACE") have proposed the joint sale of a
7.51 percent (164 MW) ownership interest in the Peach Bottom Atomic Power
Station Units 2 and 3 ("Peach Bottom") to PECO Energy Company ("PECO"). PECO
presently owns approximately a 42.49 percent interest in Peach Bottom. In
exchange for their interests that are being sold to PECO in Peach Bottom, ACE
and DPL will each receive $2,550,000, plus 3.755 percent of the net book value
of the Nuclear Fuel Supplies as of the Closing Date. The estimated proceeds from
this transaction are expected to be approximately $25.1 million.
The Application-Declaration and any amendments thereto are available
for public inspection through the Commission's office of Public Reference.
Interested persons wishing to comment or request a hearing should submit their
views in writing by February 29, 2000, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on the Applicant-Declarant
at the address specified above. Proof of service (by affidavit or, in the case
of an attorney at law, by certificate) should be filed with the request. Any
request for hearing shall identify specifically the issues of fact or law that
are disputed. A person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or order issued in this manner.
After said date, the Application-Declaration, as filed or as it may be amended,
may be permitted to become effective.
For the Commission by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
Harrisburg, PA. 17105-3265
Public Meeting held May 11, 2000
Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
Nora Mead Brownell
Aaron Wilson, Jr.
Terrance J. Fitzpatrick
Joint Application of PECO Energy Company Docket Number:
Public Service Electric & Gas Company, Atlantic A-11055OF0149
City Electric Company and Delmarva Power & A-110550F0150
Light Company for approval to transfer A-96379F2000
Ownership Shares of the Peach Bottom Atomic A-96380F2000
Power Station
ORDER
BY THE COMMISSION,
By the Joint Application filed on December 16, 1999, PECO Energy
Company ("PECO"), Public Service Electric & Gas Company ("PSE&G"), Atlantic City
Electric Company ("ACE") and Delmarva Power & Light Company ("Delmarva") seek
approval to transfer from ACE and Delmarva their Respective Ownership Shares of
the Peach Bottom Atomic Power Station ("Peach Bottom") to PECO and PSEG Power,
an affiliate of PSE&G, Docketed at A-11055OF0149 and A-110550FOISO. Also
requested, in connection with this transfer, is the approval of the abandonment
of service of Peach Bottom by ACE and Delmarva, Docketed at A-96379F2000 and
A-9638OF2000 respectively.
<PAGE>
ACE is a corporation organized and existing under the laws of the
State of New Jersey and is a wholly owned subsidiary of Conectiv. ACE has no
retail utility customers in Pennsylvania, Delmarva is a corporation organized
and existing under the laws of the State of Delaware and is a wholly owned
subsidiary of Conectiv. Delmarva has no retail utility customers in
Pennsylvania. PECO is a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania. PECO furnishes electric generation, transmission
and distribution service and also furnishes retail natural gas services within
its authorized electric and gas service territories in Southeastern Pennsylvania
under and subject to the jurisdiction of the Commission. PSE&G is a corporation
organized and existing under the laws of the State of New Jersey. PSE&G has no
retail utility customers in Pennsylvania. PSEG Power is a wholly owned
subsidiary of Public Service Enterprise Group that will own all of the shares of
PSEG Nuclear. PSEG Nuclear will own all of PSE&G's nuclear facilities and will
operate those nuclear facilities for which PSE&G is currently the operator. PSEG
Nuclear will engage only in wholesale sales of electric power and, therefore,
will not be a public utility within the meaning of the Public Utility Code.
Currently PECO and PSE&G each have a 42.49% ownership share in Peach
Bottom and ACE and Delmarva each have a 7.5 1 % ownership share in Peach Bottom.
This filing deals with the proposed transfers (by sale) by ACE and
Delmarva of all of their interests in the real and personal property comprising
Peach Bottom, their nuclear fuel supplies for Peach Bottom and their qualified
and non-qualified decommissioning funds for Peach Bottom. PECO and PSEG Power
will each purchase one-half of ACE's and Delmarva's ownership share, giving each
company an additional 7.51% ownership share in Peach Bottom. PECO and PSEG Power
agree to assume certain liabilities and obligations of ACE and Delmarva with
respect to Peach Bottom, including decommissioning liabilities and obligations.
<PAGE>
PECO and PSEG Power each agree to pay ACE $2,550,000 (for a total
purchase price of S5.1 million) and 3.755% of the net book value of the nuclear
fuel supplies at Peach Bottom at the date of closing. Also, PECO and PSEG Power
each agree to pay Delmarva $2,550,000 (for a total purchase price of $5.1
million) and 3.755% of the net book value of the nuclear fuel supplies at Peach
Bottom at the date of closing.
After closing on both agreements, PECO and PSEG Power will each have a
50% ownership share of Peach Bottom. PECO will continue to operate Peach Bottom
Station and hold the Facility Operating Licenses from the Nuclear Regulatory
Commission.
ACE and Delmarva each hold Certificates of Public Convenience (at
Application Docket Nos. 96379 and 96380, respectively) issued by the Commission
for the purpose of authorizing them to hold ownership interests in Peach Bottom.
In connection with-the transfer of ownership interest in Peach Bottom, the
parties request approval of the Commission of its abandonment of each of these
Certificates of Public Convenience. On February 12, 2000, notice of this Joint
Application was published in the Pennsylvania Bulletin setting February 28, 2000
as the date for the filing of interventions and protests. On February 28, 2000,
the Office of Consumer Advocate ("OCA") filed its Notice of Intervention and
Comments on the Joint Application.
The OCA generally stated that it wanted to ensure that Pennsylvania
retail customers would not be burdened with certain costs, including nuclear
decommissioning costs, associated with the PECO acquisition of an additional
portion of Peach Bottom.
Specifically, the OCA states that under PECO's Restructuring
Settlement, Docket No. R-00973953, that after January 1, 2004, PECO is permitted
to request recovery of additional nuclear decommissioning expense under certain
circumstances. The OCA states that PECO implemented these provisions of the
Settlement through the Nuclear Decommissioning Adjustment Clause ("NDCA"). The
NDCA contains a base level of expense for each unit based on PECO's pre-existing
ownership share of that unit at the close of the restructuring proceeding. For
Peach Bottom, the nuclear decommissioning costs are based on PECO's 42.49%
ownership share. The OCA submits that PECO's ratepayers should only be
responsible for PECO's nuclear decommissioning costs, and other nuclear costs,
associated with the original 42-49% ownership share of Peach Bottom.
<PAGE>
PECO states that it and OCA have been engaged in discussions to
resolve the issues raised in the OCA's comments. Based on those discussions,
PECO and the OCA have come to terms on certain PECO commitments that resolve the
OCA's concerns.
On April 25, 2000, PECO filed its Reply Comments to the OCA's
Comments, and on May 1, 2000, the OCA filed a letter advising the Commission
that it does not oppose the approval of the Application as modified by PECO's
commitments in its Reply Comments.
PECO agrees to the following modifications to its Application:
(1) PECO will not seek to recover, through Pennsylvania retail
electric distribution rates, the costs associated with the ownership and
operation of any fractional interest in Peach Bottom that it did not hold on
December 31, 1999 ("PECO's Pre-Existing Nuclear Interest in Peach Bottom"). For
purposes of this section, such costs include, inter alia, nuclear
decommissioning expense obligations, but do not include nuclear-related costs
included in purchased power costs, or other nuclear costs. To the extent
otherwise not prohibited by the 'Distribution Rate Cap established pursuant to
the settlement of PECO's restructuring case at Docket Nos. R-00973953 and
P-00971265 (the "Restructuring Settlement"), the settlement of PECO's merger
proceeding at Docket No. A11055OF0147 (the "Merger Settlement"), or the
Generation Rate Cap established under the 1998 Electric Restructuring
Settlement, PECO shall not be precluded from recovery of purchased power costs
related to nuclear generation or other nuclear-related costs, that are incurred
by PECO based on market pricing principles.
(2) Except as specifically provided herein, nothing in the commitments
made by PECO in this docket is intended to limit or otherwise modify PECO's
rights to seek recovery through Pennsylvania retail electric rates of nuclear
decommissioning costs associated with PECO's Pre-Existing Nuclear Interest in
Peach Bottom, in accordance with PECO's Restructuring Settlement or its Merger
Settlement.
(3) To the extent permitted under applicable law, separate
decommissioning trust funds, or sub-funds, shall be established for the
decommissioning liability associated with the fractional interest in Peach
Bottom acquired by PECO in this transaction (the "Acquired Peach Bottom Nuclear
Interest"). To the extent permitted under applicable law, each Acquired Peach
Bottom Nuclear Interest fund or subfund shall be maintained separately and apart
from the decommissioning funds established and existing for PECO's Pre-Existing
Nuclear Interest ("PECO's Pre-Existing Nuclear Interest Funds"). No part of the
cost of decommissioning the Acquired Peach Bottom Nuclear Interest shall be paid
from PECO's Pre-Existing Nuclear Interest Funds.
<PAGE>
(4) Nothing in the commitments is intended to modify or affect the
rights and commitments set forth in the Merger Settlement, and in particular as
set forth in paragraphs 15 and 17 of the Merger Settlement,. which deal with
additional aspects of nuclear decommissioning costs and other nuclear costs.
(5) Nothing in the commitments is designed to prevent PECO from
entering into purchase power agreements with any entity, affiliated or
otherwise, for the procurement of nuclear generation.
PECO avers that the proposed transfer is in the public interest
because the transfer will assure continuity of ownership by the existing
majority owners of Peach Bottom or their affiliates under and pursuant to the
terms of the existing Owners' Agreement; the transfer will assure the continued
safe and reliable operation of Peach. Bottom by the existing NRC-licensed
operator; and the transfer will assure that the entire ownership interest in
Peach Bottom is retained by strong, financially sound and well-managed entities
that are fully capable of providing the funds necessary for the safe, reliable,
reasonable and efficient operation and eventual decommissioning of Peach Bottom.
PECO contends that the proposed transfer of the Ownership Shares in
Peach Bottom will have no adverse effect on competition or result in any
unlawful exercise of marker power which would prevent retail electricity
customers in Pennsylvania from obtaining the benefits of a properly functioning
and workable competitive retail electricity market.
The Commission has examined the Application and has determined that it
appears to be necessary or proper for the service, accommodation, convenience,
or safety of the public; THEREFORE,
IT IS ORDERED:
1. That the Application, as modified by PECO in its Reply Comments
dated April 25, 2000, to transfer from Atlantic City Electric Company and
Delmarva Power & Light Company their Respective Ownership Shares of the Peach
Bottom Atomic Power Station to PECO Energy Company and Public Service Electric &
Gas Company, at Docket Nos. A-11055OF0149 and A-110550FOl50, is hereby approved
consistent with the findings in this Order.
<PAGE>
2. That the Application concerning the Abandonment by Atlantic City
Electric Company and Delmarva Power & Light Company of the service authorized by
Certificates of Public Convenience, granted at Application Docket Nos. A-96379
and A-96380, respectively, is hereby approved.
3. That the Commission approval extends to the transfer by Atlantic
City Electric Company and Delmarva Power & Light Company of their respective
nuclear decommissioning trust fund balances.
BY THE COMMISSION,
James J. McNulty
Secretary
(SEAL)
ORDER ADOPTED: May 11, 2000
ORDER ENTERED: MAY 11, 2000
90 FERC PARAGRAPH 61,268
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: James J. Hoecker, Chairman;
William L. Massey, Linda Breathitt,
and Curt Hebert, Jr.
Atlantic City Electric Company
Delmarva Power & Light Company Docket No. EC00-34-000
PECO Energy Company
Atlantic City Electric Company
Delmarva Power & Light Company Docket No. EC00-35-000
PSEG Nuclear LLC
ORDER APPROVING DISPOSITION OF
JURISDICTIONAL FACILITIES
(Issued March 17, 2000)
I. Introduction
On December 9, 1999, Atlantic City Electric Company (Atlantic City), Delmarva
Power & Light Company (Delmarva), PECO Energy Company (PECO Energy), and PSEG
Nuclear LLC (PSEG Nuclear) (collectively, Applicants) filed two separate
applications 1 under section 203 of the Federal Power Act (FPA)2 requesting
Commission authorization for Atlantic City and Delmarva to sell, and PECO Energy
and PSEG Nuclear to purchase, ownership interests in certain jurisdictional
facilities associated with three nuclear power plants. Atlantic City and
Delmarva propose to sell to PECO Energy a portion of their interests in Peach
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1 Atlantic City, Delmarva and PECO Energy filed an application in Docket No.
EC00-34-000. Atlantic City, Delmarva and PSEG Nuclear filed an application
in Docket No. EC00-35-000.
2 16 U.S.C. section 824b (1994).
<PAGE>
Bottom Atomic Power Station (Peach Bottom). In addition, Atlantic City and
Delmarva propose to sell to PSEG Nuclear a portion of their interests in Peach
Bottom, and all of their interests in Salem Nuclear Generating Station (Salem)
and Hope Creek Nuclear Generating Station (Hope Creek).
As discussed below, the Commission will approve the transactions as
consistent with the public interest.
II. Background
A. Atlantic City
Atlantic City is a public utility that owns and operates electric
generation, transmission and distribution facilities that it uses to supply
retail electric services in the state of New Jersey and to provide wholesale
services through the eastern interconnection. It is a wholly-owned subsidiary of
Conectiv, a registered public utility holding company under the Public Utility
Holding Company Act (PUHCA). Atlantic City owns, in whole or in part, 1,303 MW
of capacity in fossil-fired generating stations and 390 MW of capacity in
nuclear generating stations. It is a member of the Pennsylvania-New
Jersey-Maryland (PJM) Power Pool.
B. Delmarva
Delmarva is a public utility that owns and operates electric
generation, transmission and distribution facilities that it uses to supply
retail electric services in the Delmarva Peninsula 3 and wholesale services
throughout the eastern interconnection. Delmarva is also a wholly-owned
subsidiary of Conectiv. Delmarva owns, in whole or in part, 2,373 MW of capacity
in fossil-fired generating stations and 328 MW of capacity in nuclear generating
stations. It is a member of the PJM Power Pool.
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3 The Delmarva Peninsula includes Delaware, the Eastern Shores counties of
Maryland, and Virginia.
2
<PAGE>
C. PECO Energy
PECO Energy is a public utility that serves approximately 1.5 million
electricity customers and provides natural gas service to more than 400,000
customers in Pennsylvania. It owns approximately 9,200 MW of generating
capacity. PECO Energy is a member of the PJM Power Pool. PECO Energy also has
ownership interests in the following jurisdictional subsidiaries: 1) AmerGen
Energy Company L.L.C. (AmerGen), a limited liability company formed to acquire
and operate nuclear power plants in the United States; 2) Horizon Energy, Inc.
d/b/a Exelon Energy, a power marketer; 3) PECO Energy Power Company; 4)
Susquehanna Electric Company; and 5) Susquehanna Power Company.
D. PSEG Nuclear
PSEG Nuclear is a wholly-owned subsidiary of PSEG Power LLC (PSEG
Power), whose parent is Public Service Enterprise Group Incorporated, an exempt
public utility holding company under PUHCA. PSEG Nuclear was formed to acquire
the nuclear generating facilities of Public Service Electric & Gas Company
(PSE&G). 4 PSEG Nuclear will sell all of the power and energy from its
generation to PSEG Energy Resources & Trade LLC (PSEG Energy), a wholly-owned
subsidiary of PSEG Power.
E. Description of the Proposed Transaction
Atlantic City and Delmarva will transfer their interests in Peach
Bottom, Salem Nuclear, and Hope Creek to PECO Energy and PSEG Nuclear.
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4 On September 29, 1999, the Commission approved the transfer of all of the
nuclear facilities owned by PSE&G to PSEG Nuclear. See Public Service
Electric & Gas Co., et al., 88 FERC paragraph 61,299 (1999).
3
<PAGE>
1. Peach Bottom
Peach Bottom is a nuclear plant located in York County, Pennsylvania.
It has a summer capacity of 2,186 MW. Atlantic City and Delmarva each own a 7.51
percent interest in Peach Bottom. PECO Energy and PSE&G each own a 42.49 percent
interest in that facility. Atlantic City and Delmarva both will transfer
one-half of their interests (3.755 percent each) to PSEG Nuclear. Atlantic City
and Delmarva both will transfer the other one-half of their interests (3.755
percent each) to PECO Energy. After the proposed transactions, PECO Energy and
PSEG Nuclear each will own a fifty percent interest in Peach Bottom. PECO Energy
currently operates and will continue to operate Peach Bottom after the
transaction.
2. Salem
Salem is a nuclear plant located in Salem County, New Jersey. It has a
summer capacity of 2,240 MW. Atlantic City and Delmarva each own a 7.41 percent
interest in Salem. PECO Energy and PSE&G each own a 42.59 percent interest in
Salem. Under the proposed transaction, Atlantic City and Delmarva both will
transfer their interests to PSEG Nuclear. After the transaction, PECO Energy
will continue to own a 42.59 percent interest and PSEG Nuclear will own a 57.41
percent interest in Salem (following the transfer of the facility from PSE&G to
PSEG Nuclear). PSE&G currently operates Salem and PSEG Nuclear will operate the
facility after the transfer.
3. Hope Creek
Hope Creek is a nuclear plant located in Salem County, New Jersey. It
has a summer capacity of 1,019 MW. Atlantic City owns a five percent interest in
Hope Creek and PSE&G owns a ninety-five percent interest in Hope Creek. Under
the proposed transaction, Atlantic City will transfer its interest to PSEG
Nuclear. After the transaction, PSEG Nuclear will own a 100 percent interest in
Hope Creek (following the transfer of the facility from PSE&G to PSEG Nuclear).
PSE&G currently operates Hope Creek and PSEG Nuclear will operate the facility
after the transfer.
4
<PAGE>
III. Notices and Interventions
Notices of the Applicants' filings were published in the Federal
Register, 64 Fed. Reg. 72,334 and 64 Fed. Reg. 72,335 (1999) in Docket Nos.
EC00-34-000 and EC00-35-000, respectively, with motions to intervene and
protests due on or before January 10, 2000. The Virginia State Corporation
Commission (Virginia Commission) filed a notice of intervention, and timely
motions to intervene and protests were filed by Delaware Municipal Electric
Corporation, Inc. (Delaware Municipal) in both dockets.5 Delmarva filed an
answer to Delaware Municipal's motions to intervene and protests. Delmarva
opposes Delaware Municipal's request to intervene on behalf of its members other
than Seaford. We address the protests and answer below.
IV. Discussion
A. Procedural Matters
Pursuant to Rule 214 of the Commission's Rules of Practice and
Procedure,6 the Virginia Commission's notice of intervention serves to make it
a party to these proceedings. Notwithstanding Delmarva's opposition to Delaware
Municipal's motion to intervene on behalf of its members (with the exception of
Seaford), we find that good cause exists to grant the motion to intervene.
Although we do not generally permit answers to protests,7 we find good cause to
allow Delmarva's answer since it has helped to clarify the issues.
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5 The members of Delaware Municipal are the Delaware Cities and Towns of
Newark, New Castle, Seaford, Milford, Lewes, Smyrna, Clayton, Middletown,
and Dover, Delaware. However, Delaware Municipal is not seeking intervenor
status for Dover in this proceeding.
6 See 18 C.F.R. sections 385.214 (1999).
7 See 18 C.F.R. sections 385.213 (1999).
5
<PAGE>
B. Analysis of the Section 203 Application
Section 203(a) of the FPA provides, in relevant part, as follows:
No public utility shall sell, lease, or otherwise dispose of the
whole of its facilities subject to the jurisdiction of the
Commission, or any part thereof of a value in excess of $50,000,
or by any means whatsoever, directly or indirectly, merge or
consolidate such facilities or any part thereof with those of any
other person, or purchase, acquire, or take any security of any
other public utility, without first having secured an order of
the Commission authorizing it to do so.
16 U.S.C. section 824b(a) (1994).
For the reasons discussed below, we find that Applicants' proposed
transactions, together with Applicants' proposed commitments, are consistent
with the public interest.
1. Effect on Competition
Applicants claim that the proposed transactions will not adversely
affect competition in the relevant geographic markets. They also state that the
transactions will facilitate the restructuring of the electric power industry in
the Mid-Atlantic region. Applicants submitted a competitive screen analysis
consistent with the Department of Justice/Federal Trade Commission Merger
Guidelines (Guidelines), which the Commission adopted in the Merger Policy
Statement as the analytical framework for evaluating the effect of a proposed
merger on competition.8 Applicants' analysis reveals changes in market
- ---------------
8 See Inquiry Concerning the Commission's Merger Policy Under the Federal
Power Act: Policy Statement, Order No. 592, 61 Fed. Reg. 68,595 (1996),
FERC Stats. & Regs. paragraph 31,044 at 30,117-18 (1996), order on
reconsideration, Order No. 592-A, 62 Fed. Reg. 33,341 (1997), 79 FERC
paragraph 61,321 (1997) (Merger Policy Statement).
6
<PAGE>
concentration below the thresholds contained in the Guidelines. Furthermore,
there is no evidence in this proceeding that there are barriers to entry that
could prevent competitors from entering the market in the long term.
Accordingly, the Commission finds that the proposed transactions will
not adversely affect competition. We further note that no party in this
proceeding claims that the proposed transactions will have an adverse effect on
competition.
2. Effect on Rates
a. Applicants' Position
Applicants state that the proposed transactions will not adversely
affect wholesale rates because PECO Energy does not have any captive or
cost-based wholesale power sales customers and Atlantic City has no wholesale
customers. In addition, Applicants state that PSEG Nuclear's wholesale rates
will not be affected because it will sell all of the power from the nuclear
plants to PSEG Energy.9
Applicants also state that Delmarva serves ten wholesale customers
under full or partial requirements contracts. Eight of these customers are
served under contracts with fixed demand and energy charges without fuel
clauses. Delmarva provides partial requirements service to the Seaford and the
City of Berlin, Maryland (Berlin) under contracts containing a fuel clause. The
Seaford and Berlin contracts will terminate in 2003 and 2001, respectively.
Applicants state that the energy supplied to Seaford will be replaced by
interchange or power purchases at PJM market rates, which may result in energy
prices lower or higher than Seaford's current rates. However, Applicants add
that nothing in Seaford's contract obligates Delmarva to provide Seaford service
from any particular generating units. Although Applicants claim that the impact
of the proposed transaction on Seaford's rates would be de minimis, Applicants
propose an open season that would allow Seaford to terminate its contract as of
the date of closing of the proposed transaction or within fourteen months
- ---------------
9 88 FERC at 61,916.
7
<PAGE>
thereafter, and to execute new contracts with Applicants or another supplier. In
addition, Delmarva commits that it will not seek stranded costs from Seaford.
b. Delaware Municipal's Protest
Delaware Municipal states that the proposed transfer of the facilities
will increase charges to one of its members, Seaford, by approximately one
million dollars per year for the remaining term of its four-year contract with
Delmarva. According to Delaware Municipal, if Delmarva purchases power at
market-based rates that contain higher energy charges than Seaford's existing
contract, these higher costs will be automatically passed through Seaford's fuel
adjustment clause. Accordingly, Delaware Municipal argues that the proposed open
season is inadequate, and requests that Delmarva be required to freeze Seaford's
energy charge at the 1999 average energy rate for the duration of the contract
term.
Delaware Municipal also requests that the Commission require Delmarva
to reduce its demand charges and to file a cost-of-service study to reflect the
effect of adjustments for accumulated depreciation, accumulated deferred income
taxes, accumulated deferred investment tax credits and rate of return.
c. Commission Determination
We will deny Delaware Municipal's request for a hold harmless
provision, a rate freeze and a reduction in demand charges. Pursuant to
Applicants' open season proposal, Seaford is free to terminate its contract as
of the date of closing of the proposed transaction or within fourteen months
thereafter, and to execute new contracts with Applicants or another supplier.
Additionally, Seaford has no contractual right to receive service from specific
generating resources, such as Peach Bottom, Salem and Hope Creek, nor does the
contract prevent the acquisition or sale of facilities by Delmarva. Therefore,
we find that Applicants' specific open season guarantee, coupled with their
commitment not to seek stranded costs from Seaford, satisfy the Commission's
ratepayer protection concerns.
With respect to Delaware Municipal's concern over fuel cost increases,
the Commission does not require applicants under section 203 to insulate their
8
<PAGE>
customers from the rate effects of non-merger-related events such as increases
in fuel costs pursuant to a fuel adjustment clause as a part of a contract.10
Moreover, with respect to Delaware Municipal's request for a
cost-of-service filing, this is not the appropriate proceeding to consider
whether Delmarva's transmission rates continue to be just and reasonable.11 If
Delaware Municipal believes that the overall level of its rates is excessive, it
may file a complaint with the Commission.12
We also find that the proposed transactions will not adversely affect
transmission rates. Atlantic City, Delmarva and PECO Energy are members of PJM
and will provide transmission service pursuant to the PJM Open Access
Transmission Tariff (PJM Tariff). 13 PSEG Nuclear will sell all of the power
from the nuclear plants to PSEG Energy and PSEG Energy is required to use
transmission service purchased pursuant to the PJM Tariff.14 Accordingly, we
conclude that the proposed transactions will have no adverse affect on rates.
- ---------------
10 See New York State Electric & Gas Corp., 86 FERC paragraph 61,020 at
61,053, order denying reh'g, 86 FERC paragraph 61,284 at 62,022-23 (1999).
See also Jersey Central Power & Light Co., 87 FERC paragraph 61,014 at
61,038 (1999). Delaware Municipal may file a complaint under section 206 of
the FPA, 16 U.S.C. section 824e (1994), if it believes that the fuel
adjustment clause needs to be revised as a result of the proposed
transaction.
11 See Niagara Mohawk Power Corporation, 87 FERC paragraph 61,283 at 62,138
(1999).
12 Id.
13 Pennsylvania-New Jersey-Maryland Interconnection, et al., 81 FERC paragraph
61,257 at 62,236 (1997), reh'g pending.
14 88 FERC at 61,916.
9
<PAGE>
3. Effect on Regulation
Applicants state that the transactions will not impair the
effectiveness of Federal or State regulation. They state that Atlantic City,
Delmarva, PECO Energy and PSEG Nuclear will remain subject to the Commission's
jurisdiction for wholesale sales, and Atlantic City, Delmarva and PECO Energy
will remain subject to state regulatory jurisdiction for retail energy sales.
Applicants also state that the proposed transactions will not result in any
transfer of jurisdiction from this Commission to the Security and Exchange
Commission.
Accordingly, we find that the proposed transactions will not have an
adverse effect on regulation.
4. Accounting
The sale of the facilities constitutes the sale of an operating unit
or system that is to be accounted for by Atlantic City and Delmarva in
accordance with the provisions of Electric Plant Instruction 5, Electric Plant
Purchased or Sold, and cleared through Account 102, Electric Plant Purchased or
Sold.15 Atlantic City and Delmarva must file their journal accounting entries
for the transaction within six months of the transaction.
The Commission orders:
(A) The proposed disposition of jurisdictional facilities is hereby
authorized as discussed in the body of this order.
(B) The foregoing authorization is without prejudice to the authority
of the Commission or any other regulatory body with respect to rates, service,
accounts, valuation, estimates or determinations of cost or any other matter
whatsoever now pending or which may come before the Commission.
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15 See 18 C.F.R. Part 101 (1999).
10
<PAGE>
(C) Nothing in this order shall be construed to imply acquiescence in
any estimate or determination of cost or any valuation of property claimed or
asserted.
(D) The Commission retains authority under sections 203(b) of the FPA
to issue supplemental orders as appropriate.
(E) Applicants are hereby directed to submit their accounting for the
proposed transaction within six months of the consummation of the transaction.
(F) Applicants shall promptly notify the Commission of the date the
disposition of the jurisdictional facilities is consummated.
By the Commission.
( S E A L )
Linwood A. Watson, Jr.,
Acting Secretary.
11
UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D.C. 20555-0001
April 21, 2000
Mr. James A. Hutton
Director-Licensing, MC 62A-11
PECO Energy Company
Nuclear Group Headquarters
Correspondence Control Desk
P.O. Box No. 195
Wayne, PA 19087-0195
Re: Order Approving the Transfer of Licenses for Peach Bottom Atomic Power
Station, Units 2 and 3, to the Extent Currently Held by Atlantic City
Electric Company and Delmarva Power and Light Company, to PECO Energy
Company and PSEG Nuclear Limited Liability Company and Conforming
Amendments (TAC Nos. MA7802 and MA7803), Docket No.s 50-277 and 50-278
Dear Mr. Hutton:
The enclosed Order is being issued in response to your application
dated December 21, 1999, as supplemented February 11, March 2, and March 16,
2000, by PECO Energy Company (PECO), requesting approval of the transfer of the
licenses for the Peach Bottom Atomic Power Station, Units 2 and 3, to the extent
they are held by Atlantic City Electric Company and Delmarva Power and Light
Company, to PECO and PSEG Nuclear Limited Liability Company and approval of
conforming amendments pursuant to Sections 50.80 and 50.90 of Title 10 of the
Code of Federal Regulations. The enclosed Order consents to the proposed
transfer, subject to the conditions described therein. The Order also approves
<PAGE>
the enclosed conforming license amendments to be issued and made effective when
the transfer is completed.
Also enclosed is our related safety evaluation. The Order has been
forwarded to the Office of the Federal Register for publication.
Sincerely,
Bartholomew C. Buckley, Sr. Project
Manager, Section 2
Project Directorate I
Division of Licensing Project
Management
Office of Nuclear Reactor Regulation
Enclosures
cc:
J.W. Durham, Sr., Esquire Resident Inspector
Sr. V.P. & General Counsel U.S. Nuclear Regulatory Commission
PECO Energy Company Peach Bottom Atomic Power Station
2301 Market Street, S26-1 P.O. Box 399
Philadelphia, PA 19101 Delta, PA 17314
PECO Energy Company Regional Administrator, Region 1
ATTN: Mr. J. Doering, Vice U.S. Nuclear Regulatory Commission
President 475 Allendale Road
Peach Bottom Atomic Power Station King of Prussia, PA 19406
1848 Lay Road
Delta, PA 17314
PECO Energy Company Mr. Roland Fletcher
ATTN: Regulatory Engineer, A$-5S Department of Environment
Peach Bottom Atomic Power Station 201 West Preston Street
Chief Engineer Baltimore, MD 21201
1848 Lay Road
Delta, PA 17314
<PAGE>
A.F. Kirby, III Dr. Judith Johnsrud
External Operations - Nuclear National Energy Committee
Delmarva Power & Light Company Sierra Club
P.O. Box 231 433 Orlando Avenue
Wilmington, DE 19899 State College, PA 16803
PECO Energy Company
Plant Manager
Peach Bottom Atomic Power Station
1848 Lay Road
Delta, PA 17314
Chief-Division of Nuclear Safety Manager-Financial Control &
PA Dept. of Environmental Co-Owner Affairs
Resources Public Service Electric and Gas
P.O. Box 8469 Company
Harrisburg, PA 17105-8469 P.O. Box 236
Hancocks Bridge, NJ 08038-0236
Board of Supervisors Manager-Peach Bottom Licensing
Peach Bottom Township PECO Energy Company
R.D. #1 Nuclear Group Headquarters
Delta, PA 17314 Correspondence Control Desk
P.O. Box No. 195
Wayne, PA 19087-0195
Public Service Commission of
Maryland
Engineering Division
Chief Engineer
6 St. Paul Center
Baltimore, MD 21202-6806
Mr. Richard McLean
Power Plant and Environmental
Review Division
Department of Natural Resources
B-3, Tawes State Office Building
Annapolis, MD 21401
<PAGE>
7590-01-P
UNITED STATES OF AMERICA
NUCLEAR REGULATORY COMMISSION
- ------------------------- x
In the Matter of
:
PECO ENERGY COMPANY Docket Nos. 50-277 and 50-278
:
PUBLIC SERVICE ELECTRIC AND
GAS COMPANY : ORDER APPROVING
TRANSFER OF LICENSES
DELMARVA POWER AND LIGHT : AND CONFORMING
COMPANY AMENDMENTS
ATLANTIC CITY ELECTRIC :
COMPANY
:
(Peach Bottom Atomic Power
Station, Units 2 and 3) :
- ------------------------- x
I.
PECO Energy Company ("PECO"), Public Service Electric and Gas Company
("PSE&G"), Delmarva Power and Light Company ("DP&L"), and Atlantic City Electric
Company ("ACE") are the joint owners of the Peach Bottom Atomic Power Station,
Units 2 and 3 ("Peach Bottom"), located in York County, Pennsylvania. They hold
Facility Operating Licenses Nos. DPR-44 and DPR-56 issued by the U.S. Nuclear
Regulatory Commission ("NRC" or "Commission") on October 25, 1973, and July 2,
1974, respectively, pursuant to Part 50 of Title 10 of the Code of Federal
Regulations (110 CFR Part 50). Under these licenses, PECO (currently owner of
42.49 percent of each Peach Bottom unit) is authorized to possess, use, and
operate the Peach Bottom units. The current, non-operating ownership interests
of the other joint owners for each Peach Bottom unit are as follows: PSE&G,
42.49 percent; DP&L, 7.51 percent; and ACE, 7.51 percent.
II.
By an application dated December 21, 1999, which was supplemented on
February 11, March 2, and March 16, 2000 (collectively referred to herein as the
application), PECO, PSE&G, PSEG Nuclear Limited Liability Company ("PSEG
Nuclear"), DP&L, and ACE, requested approval by the NRC of the transfer to PECO
and PSEG Nuclear of the Peach Bottom licenses, to the extent held by DP&L and
ACE, in conjunction with the proposed acquisition of DP&L's and ACE's ownership
interests in the Peach Bottom units by PECO and PSEG Nuclear. According to the
application, depending upon the timing of regulatory approvals sought by PSEG
Nuclear concerning other transfer matters not involving DP&L and ACE, as an
interim step the interests of DP&L and ACE to be acquired by PSEG Nuclear may be
transferred first to PSE&G, and then to PSEG Nuclear. No physical changes or
significant changes in the day-to-day management and operations of the Peach
Bottom units are proposed in the application. The proposed transfer does not
involve any change with respect to the exclusive operating authority of the
Peach Bottom units, currently held by PECO.
PECO also requested approval of conforming license amendments to
reflect the transfer. The amendments would replace references to DP&L and ACE,
with PSEG Nuclear.
Approval of the transfer and conforming license amendments was
requested pursuant to 10 CFR 50.80 and 50.90. A notice of the application for
transfer approval as well as the request for amendments and an opportunity for a
hearing was published in the Federal Register on February 18, 2000 (65 FR 8451).
No hearing requests were filed.
Pursuant to 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 gives its consent in writing. After reviewing the
information submitted in the application and other information before the
Commission, the NRC staff has determined that PECO and PSEG Nuclear are
qualified to hold the licenses for each Peach Bottom unit, to the same extent
the licenses are now held by DP&L and ACE and that the transfer of the licenses,
as previously described herein, is otherwise consistent with applicable
provisions of law, regulations, and orders issued by the Commission, subject to
the conditions described 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 (the "Act"), and the
Commission's rules and regulations set forth in 10 CFR Chapter 1; 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. 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 license 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 April 21, 2000.
III.
Accordingly, pursuant to Sections 161b, 161i, and 184 of the Atomic
Energy Act of 1954, as amended, 42 U.S.C. sections 2201(b), 2201(i), and 2234;
and 10 CFR 50.80, IT IS HEREBY ORDERED that the license transfers from DP&L and
ACE to PECO and PSEG Nuclear referenced above are approved, subject to the
following conditions:
1. Any interim transaction described in the application whereby DP&L's and
ACE's interests in Peach Bottom Units 2 and 3 are first acquired by PSE&G,
or any other entity prior to the acquisition by PSEG Nuclear of such
interest, shall not result in the acquisition, possession, or use of Peach
Bottom Units 2 and 3, or any activity for which a license is required under
the Atomic Energy Act of 1954, as amended, by any entity other than PSEG
Nuclear, unless such result is expressly approved by a separate order upon
further application. This Order shall not be deemed to provide consent
under 10 CFR 50.80 to the transfer of the licenses for Peach Bottom Units 2
and 3 with respect to DP&L's and ACE's interests in Peach Bottom Units 2
and 3 to any entities other than PECO and PSEG Nuclear.
2. ACE and DP&L will transfer on or about the closing date to the respective
PECO and PSEG Nuclear decommissioning trusts in equal shares a minimum of
$42.4 million for Peach Bottom Unit 2, and $43.7 million for Peach Bottom
Unit 3.
3. The decommissioning trust agreement(s) for Peach Bottom Units 2 and 3 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 PSE&G 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 shall be made by the
trustee until the trustee has first given the NRC 30 days notice of
the payment. In addition, no disbursements or payments from the trust
shall be made if the trustee receives prior written notice of
objection from the Director, Office of Nuclear Reactor Regulation.
d. The trust agreement shall not be modified in any material respect
without prior written notification to the Director, 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.
4. After receipt of all required regulatory approvals of the subject
transfer, PECO shall inform the Director, Office of Nuclear Reactor
Regulation, in writing of such receipt, and of the date of closing of
the transfer no later than 7 business days prior to the date of
closing. Should the transfer not be completed by December 31, 2000,
this Order shall become null and void, provided, however, on
application and for good cause shown, such date may be extended.
IT IS FURTHER ORDERED that, consistent with 10 CFR 2.1315(b), license
amendments that make changes, as indicated in Enclosure 2 to the cover letter
forwarding this Order, to conform each Peach Bottom license to reflect the
subject transfers are approved Such amendments shall be issued and made
effective at the time the proposed license transfer is completed.
This Order is effective upon issuance.
For further details with respect to this Order, see the transfer
application dated December 21, 1999, and supplements dated February 11, March 2,
and March 16, 2000, which are available for public inspection at the
Commission's Public Document Room, the Gelman Building, 2120 L Street, NW.,
Washington, DC. Publically available records will be accessible electronically
from the ADAMS Public Library component on the NRC Web site, http://www.nrc.gov
(the Electronic Reading Room).
Dated at Rockville, Maryland, this 21st day of April 2000.
FOR THE NUCLEAR REGULATORY COMMISSION
Samuel J. Collins, Director
Office of Nuclear Reactor Regulation
<PAGE>
UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D.C. 20555-0001
PECO ENERGY COMPANY
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
DELMARVA POWER AND LIGHT COMPANY
ATLANTIC CITY ELECTRIC COMPANY
DOCKET NO. 50-277
PEACH BOTTOM ATOMIC POWER STATION, UNIT NO. 2
AMENDMENT TO FACILITY OPERATING LICENSE
Amendment No.
License No. DPR-44
1. The Nuclear Regulatory Commission (the Commission) has found that:
A. The application for amendment filed by PECO Energy Company, et al.
(the licensee) dated December 21, 1999, as supplemented February 11,
March 2, and March 16, 2000, complies with the standards and
requirements of the Atomic Energy Act of 1954, as amended (the Act),
and the Commission's rules and regulations set forth in 10 CFR Chapter
1;
B. The facility will operate in conformity with the application, the
provisions of the Act, and the rules and regulations of the
Commission;
C. There is reasonable assurance: (i) that the activities authorized by
this amendment can be conducted without endangering the health and
safety of the public, and (ii) that such activities will be conducted
in compliance with the Commission's regulations set forth in 10 CFR
Chapter 1;
D. The issuance of this amendment will not be inimical to the common
defense and security or to the health and safety of the public; and
E. The issuance of this amendment is in accordance with 10 CFR Part 51 of
the Commission's regulations and all applicable requirements have been
satisfied.
2. Accordingly, Facility Operating License No. DPR-44 is hereby amended as
indicated in the attachments hereto.
3. This license amendment is effective as of its date of issuance and shall be
implemented within 30 days of issuance.
FOR THE NUCLEAR REGULATORY COMMISSION
Samuel J. Collins, Director
Office of Nuclear Reactor Regulation
Attachment: Changes to License DPR-44
Date of Issuance:
<PAGE>
ATTACHMENT TO LICENSE AMENDMENT NO.
FACILITY OPERATING LICENSE NO. DPR-44
DOCKET NO. 50-277
Replace the following pages of the Facility Operating License with the
attached revised pages. The revised pages are identified by amendment number and
contain marginal lines indicating the areas of change.
Remove Pages Insert Pages
------------ ------------
1 1
2 2
4 4
5 5
-- 6
<PAGE>
UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D.C. 20555-0001
PECO ENERGY COMPANY
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
PSEG NUCLEAR LLC
DOCKET NO, 50-277
PEACH BOTTOM ATOMIC POWER STATION, UNIT 2
FACILITY OPERATING LICENSE
License No. DPR-44
Amendment No. 1
1. The Atomic Energy Commission (the Commission) having found that:
A. The application for license filed by PECO Energy Company. formerly
Philadelphia Electric Company, Public Service Electric and Gas Company
and PSEG Nuclear LLC (the licensees), complies with the standards and
requirements of the Atomic Energy Act of 1954, as amended (the Act).
and the Commission's rules and regulations set forth in 10 CFR Chapter
I and all required notifications to other agencies or bodies have been
duly made;
B. Construction of the Peach Bottom Atomic Power Station, Unit 2 (the
facility) has been substantially completed in conformity with
Construction Permit No CPPR-37 and the application, as amended. the
provisions of the Act and the rules and regulations of the Commission;
C. The facility will operate in conformity with the application, as
amended.provisions of the Act. and the rules and regulations of the
Commission;
D. There is reasonable assurance: (1) that the activities authorized by
this amended operating license can be conducted without endangering
the health and safety of the public, and (2) that such activities will
be conducted in compliance with the rules and regulations of the
Commission;
E. PECO Energy Company is technically qualified and the licensees are
financially qualified to engage in the activities authorized by this
amended operating license in accordance with the rules and regulations
of the Commission;
F. The licensees have satisfied the applicable provisions of 10 CFR Part
140, "Financial Protection Requirements and Indemnity Agreements," of
the Commission's regulations;
G. The issuance of this amended operating license will not be inimical to
the common defense and security or to the health and safety of the
public;
H. After weighing the environmental, economic, technical, and other
benefits of the facility against environmental costs and considering
available alternatives, the issuance of Amendment No. 1 to Facility
Operating License No. DPR-44 is in accordance with 10 CFR Part 50,
Appendix D, of the Commission's regulations and all applicable
requirements of said Appendix D have been satisfied; and
I. The receipt, possession, and use of source, by-product and special
nuclear material as authorized by this license will be in accordance
with the Commission's regulations in 10 CFR Parts 30, 40. and 70,
including 10 CFR Section 30.33, 40.32, and 70.23 and 70.31.
2. Amendment No. 1 to Facility Operating License No. DPR-44 issued to the PECO
Energy Company (PECO), formerly Philadelphia Electric Company, Public
Service Electric and Gas Company (PSE&G), and PSEG Nuclear LLC, is hereby
amended in its entirety to read as follows:
A. This amended license applies to the Peach Bottom Atomic Power Station,
Unit 2, a single cycle, forced circulation, boiling water nuclear
reactor and associated equipment (the facility), owned by the
licensees and operated by PECO Energy Company. The facility is located
in Peach Bottom, York County, Pennsylvania and is described in the
"Final Safety Analysis Report" as supplemented and amended and the
Environmental Report as supplemented and amended.
B. Subject to the conditions and requirements incorporated herein the
Commission hereby licenses:
(1) PECO, Energy Company. pursuant to Section 104b of the Act and 10
CFR Part 50, "Licensing of Production and Utilization
Facilities," to possess, use, and operate the facility, PSE&G and
PSEG Nuclear LLC to possess the facility at the designated
location in Peach Bottom, York County, Pennsylvania in accordance
with the procedures and limitations set forth in this license;
(2) PECO Energy Company, pursuant to the Act and 10 CFR Part 70, to
receive, possess and use at any time special nuclear material as
reactor fuel, in accordance with the limitations for storage and
amounts required for reactor operation, as described in the Final
Safety Analysis Report, as supplemented and amended;
(3) PECO Energy Company, pursuant to the Act and 10 CFR Parts 30, 40,
and 70 to receive, possess and use at any time any byproduct,
source and special nuclear material as sealed neutron sources for
reactor startup, sealed sources for reactor instrumentation and
radiation monitoring equipment calibration, and as fission
detectors in amounts as required;
(4) PECO Energy Company, pursuant to the Act and 10 CFR Parts 30, 40
and 70 to receive, possess and use in amounts as required any
byproduct, source, or special nuclear material without
<PAGE>
(3) Physical Protection
The licensee shall fully implement and maintain in effect all
provisions of the Com mission-approved physical security, guard
training and qualification, and safeguards contingency plans
including amendments made pursuant to provisions of the
Miscellaneous Amendments and Search Requirements revisions to 10
CFR 73.55 (51 FR 27817 and 27822) and to the authority of 10 CFR
50.90 and 10 CFR 50.54(p). The plans, which contain Safeguards
Information protected under 10 CFR 73.21, are entitled: "Peach
Bottom Atomic Power Station, Units 2 and 3, Physical Security
Plan," with revisions submitted through December 16, 1987; "Peach
Bottom Atomic Power Station, Units 2 and 3 Plant Security
Personnel Training and Qualification Plan," with revisions
submitted through July 9, 1986; and "Peach Bottom Atomic Power
Station, Units 2 and 3 Safeguards Contingency Plan," with
revisions submitted through March 10, 1981. Changes made in
accordance with 10 CFR 73.55 shall be implemented in accordance
with the schedule set forth therein.
(4) The licensee shall implement and maintain in effect all
provisions of the approved fire protection program as described
in the Updated Final Safety Analysis Report for the facility, and
as approved in the NRC SER dated May 23, 1979 and Supplements
dated August 14, September 15, October 10 and November 24, 1980,
and in the NRC SERs dated September 16, 1993 and August 24, 1994,
subject to the following provision:
The licensee may make changes to the approved fire protection
program without prior approval of the Commission only if those
changes would not adversely affect the ability to achieve and
maintain safe shutdown in the event of a fire.
(5) License Transfer Conditions
a) The decommissioning trust agreement shall provide that:
1) 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.
2) Investments in the securities or other obligations of
PSE&G 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.
3) No disbursements or payments from the trust shall be
made by the trustee until the trustee has first given
the NRC 30 days notice of the payment. In addition, no
disbursements or payments from the trust shall be made
if the trustee receives prior written notice of
objection from the Director, Office of Nuclear Reactor
Regulation.
4) The trust agreement shall not be modified in any
material respect without prior written notification to
the Director, Office of Nuclear Reactor Regulation.
5) 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.
3. This amended license is subject to the following conditions for the
protection of the environment:
A. To the extent matters related to thermal discharges are treated
therein, operation of Peach Bottom Atomic Power Station Unit No. 2
will be governed by NPDES Permit No. PA 0009733, as now in effect and
as hereafter amended. Questions pertaining to conformance thereto
shall be referred to and shall be determined by the NPDES Permit
issuing or enforcement authority, as appropriate.
B. In the event of any modification of the NPIDES Permit related to
thermal .discharges or the establishment (or amendment) of altemative
effluent limitations established pursuant to Section 316 of the
Federal Water Pollution Control Act, the licensees shall inform the
NRC and analyze any associated changes in or to the Station, its
components, its operation or in the discharge of effluents therefrom.
If such change would entail any modification to this license, or any
Technical Specifications which are part of this license, or present an
unreviewed safety question or involve an environmental impact
different than analyzed in the Final Environmental Statement, the
licensees shall file with the NRC, as applicable, an appropriate
analysis of any such change on facility safety, and/or an analysis of
any such change on the environmental impacts and on the overall
cost-benefit balance for facility operation set forth in the Final
Environmental Statement and a request for an amendment to the
operating license, if required by the Commission's regulations. As
used in this Condition 3.B, Final Environmental Statement means the
NRC Staff Final Environmental Statement related to Operation of Peach
Bottom Atomic Power Station Units Nos. 2 and 3 dated April 1973, as
modified by (1) the Initial Decision of the Atomic Safety and
Licensing Board dated September 14, 1973, (2) the Supplemental Initial
Decision of the Atomic Safety and Licensing Board dated June 14, 1974,
(3) the Decision of the Atomic Safety and Licehsing Appeal Board dated
July 5, 1974, (4) the Memorandum and Order of the Commission dated
August 8, 1974, (5) any further modification resulting from further
review by the Appeal Board and by the Commission, if any, and (6) any
Environmental Impact Appraisal which has been or may be issued by the
NRC since the FES was published in April 1973.
4. This license is effective as of the date of issuance and shall expire at
midnight on August 8, 2013.
FOR THE ATOMIC ENERGY COMMISSION
Original Signed by R. C. DeYoung, for
A. Giambusso, Deputy Director
for Reactor Projects
Directorate of Licensing
Attachments:
Appendices A and B -
Technical Specifications
Date of Issuance: October 25, 1973
<PAGE>
UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D.C. 20555-0001
PECO ENERGY COMPANY
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
DELMARVA POWER AND LIGHT COMPANY
ATLANTIC CITY ELECTRIC COMPANY
DOCKET NO. 50-278
PEACH BOTTOM ATOMIC-POWER STATION, UNIT NO. 3
AMENDMENT TO FACILITY OPERATING LICENSE
---------------------------------------
Amendment No.
License No. DPR-56
1. The Nuclear Regulatory Commission (the Commission) has found that:
A. The application for amendment filed by PECO Energy Company, et al.
(the licensee) dated December 21, 1999, as supplemented February 11,
March 2, and March 16, 2000, complies with the standards and
requirements of the Atomic Energy Act of 1954, as amended (the Act),
and the Commission's rules and regulations set forth in 10 CFR Chapter
1;
B. The facility will operate in conformity with the application, the
provisions of the Act, and the rules and regulations of the
Commission;
C. There is reasonable assurance: (i) that the activities authorized by
this amendment can be conducted without endangering the health and
safety of the public, and (ii) that such activities will be conducted
in compliance with the Commission's regulations set forth in 10 CFR
Chapter 1;
D. The issuance of this amendment will not be inimical to the common
defense and security or to the health and safety of the public; and
E. The issuance of this amendment is in accordance with 10 CFR Part 51 of
the Commission's regulations and all applicable requirements have been
satisfied.
2. Accordingly, Facility Operating License No. DPR-56 is hereby amended as
indicated in the attachments hereto.
3. The license amendment is effective as of its date of issuance and shall be
implemented within 30 days.
FOR THE NUCLEAR REGULATORY
COMMISSION
Samuel J. Collins, Director
Office of Nuclear Reactor Regulation
Attachment: Changes to License DPR-56
Date of Issuance:
<PAGE>
ATTACHMENT TO LICENSE AMENDMENT NO.
FACILITY OPERATING LICENSE NO. DPR-44
DOCKET NO. 50-278
Replace the following pages of the Facility Operating License with the
attached revised pages. The revised pages are identified by amendment number and
contain marginal lines indicating the areas of change.
Remove Pages Insert Pages
------------ ------------
1 1
2 2
3a --
4 4
5 5
-- 6
<PAGE>
UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D.C. 20555-0001
PECO ENERGY COMPANY
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
PSEG NUCLEAR LLC
DOCKET NO. 50-278
PEACH BUTOM ATOMIC POWER STATION, UNIT 3
FACILITY OPERATING LICENSE
License No. DPR-56
1. The Atomic Energy Commission (the Commission) having found that:
A. The application for license filed by PECO Energy Company. formerly
Philadelphia Electric Company, Public Service Electric and Gas
Company, a PSEG Nuclear LLC (the licensees), complies with the
standards and requirements of the Atomic Energy Act of 1954, as
amended (the Act). and Commission's rules and regulations set forth in
10 CFR Chapter I and all required notifications to other agencies or
bodies have been duly made;
B. Construction of the Peach Bottom Atomic Power Station. Unit 3 (the
facility) has been substantially completed in conformity with
Construction Permit No. CPPR-38 and the application, as amended, the
provisions of the Act and the rules and regulations of the Commission;
C. The facility will operate in conformity with the applicatio, as
amended, provisions of the Act, and the rules and regulations of the
Commission;
D. There is reasonable assurance: (1) that the activities authorized by
this operating license can be conducted without endangering the health
and safe of the public, and (2) that such activities will be conducted
in compliance with the rules and regulations of the Commission;
E. PECO Energy Company is technically qualified and the licensees are
financially qualified to engage in the activities authorized by this
amended operating license in accordance with the rules and regulations
of the Commission;
F. The licensees have satisfied the applicable provisions of 10 CFR Part
140, "Financial Protection Requirements and Indemnity Agreements," of
the Commission's regulations:
G. The issuance of this operating license will not be inimical to the
common defense and security or to the health and safety of the public;
H. After weighing the environmental, economic. technical, and other
benefits of the facility against environmental costs and considering
available alternatives, the issuance of Facility Operating License No.
DPR-56 is in accordance with 10 CFR Part 50, Appendix D, of the
Commission's regulations and all applicable requirements of said
Appendix D have been satisfied; and
I. The receipt, possession. and use of source, by-product and special
nuclear material as authorized by this license will be in accordance
with the Commission's regulations in 10 CFR Parts 30, 40, and 70,
including 10 CFR Section 30.33, 40.32, and 70.23 and 70.31.
2. Facility Operating License No. DPR-56 is hereby issued to the PECO Energy
Company (PECO), formerly Philadelphia Electric Company, Public Service
Electric and Gas Company (PSE&G), and PSEG Nuclear LLC, is hereby amended
in its entirety to read as follows:
A. This license applies to the Peach Bottom Atomic Power Station, Unit 3,
a single cycle, forced circulation, boiling water nuclear reactor and
associated equipment (the facility), owned by the licensees and
operated by PECO Energy Company. The facility is located in Peach
Bottom, York County, Pennsylvania and is described in the "Final
Safety Analysis Report" as supplemented and amended and the
Environmental Report as supplemented and amended.
B. Subject to the conditions and requirements incorporated herein, the
Commission hereby licenses:
(1) PECO Energy Company, pursuant to Section 104b of the Act and 10
CFR Part 50, "Licensing of Production and Utilization
Facilities," to possess. use, and operate the facility, PSE&G and
PSEG Nuclear LLC to possess the facility at the designated
location in Peach Bottom. York County, Pennsylvania in accordance
with the procedures and limitations set forth in this license;
(2) PECO Energy Company, pursuant to the Act and 10 CFR Part 70, to
receive, possess and use at any time special nuclear material as
reactor fuel, in accordance with the limitations for storage and
amounts required for reactor operation, as described in the Final
Safety Analysis Report, as supplemented and amended:
(3) PECO Energy Company. pursuant to the Act and 10 CFR Parts 30,
40,and 70 to receive, possess and use at any time any byproduct,
source and special nuclear material as sealed neutron sources for
reactor startup, sealed sources for reactor instrumentation and
radiation monitoring equipment calibration, and as fission
detectors in amounts as required;
(4) PECO Energy Company, pursuant to the Act and 10 CFR Parts 30, 40
and 70 to receive, possess and use in amounts as required any
byproduct, source, or special nuclear material without
restriction to chemical or physical form for sample analysis or
instrument calibration or when associated with radioactive
apparatus or components;
<PAGE>
(3) Physical Protection
The license shall fully impleffient and maintain in effect all
provisions of the Commission-approved physical security, guard
training and qualification, and safeguards contingency plans
including amendments made pursuant to provisions of the
Miscellaneous Amendments and Search Requirements revisions to 10
CFR 73.55 (51 FR 27817 and 27822) and to the authority of 10 CFR
50.90 and 10 CFR 50.54(p). The plans, which contain Safeguards
Information protected under 10 CFR 73.21, are entitled: "Peach
Bottom Atomic Power Station, Units 2 and 3, Physical Security
Plan," with revisions submitted through December 16,1987; "Peach
Bottom Atomic Power Station, Units 2 and 3 Plant Security
Personnel Training and Qualification Plan," with revisions
submitted through July 9, 1986; and "Peach Bottom Atomic Power
Station, Units 2 and 3 Safeguards Contingency Plan," with
revisions submitted through March 10, 1981. Changes made in
accordance with 10 CFR 73.55 shall be implemented in accordance
with the schedule set forth therein.
(4) The licensee shall implement and maintain in effect all
provisions of the approved fire protection program as described
in the Updated Final Safety Analysis Report for the facility, and
as approved in the NRC SER dated May 23, 1979 and Supplements
dated August 14, September 15, October 10 and November 24, 1980,
and in the NRC SERs dated September 16, 1993 and August 24, 1994,
subject to the following provision:
The licensee may make changes to the approved fire protection
program without prior approval of the Commission only if those
changes would not adversely affect the ability to achieve and
maintain safe shutdown in the event of a fire.
License Transfer Conditions
a) The decommissioning trust agreement shall provide that:
1) 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.
2) Investments in the securities or other obligations of PSE&G
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.
3) No disbursements or payments from the trust shall be made by
the trustee until the trustee has first given the NRC 30
days notice of the payment. In addition, no disbursements or
payments from the trust shall be made if the trustee
receives prior written notice of objection from the
Director, Office of Nuclear Reactor Regulation.
4) The trust agreement shall not be modified in any material
respect without prior written notification to the Director,
Office of Nuclear Reactor Regulation.
5) 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 regulations.
<PAGE>
3. This license is subject to the f ollowing conditions for the protection of
the environment;
A. To the extent matters related to thermal discharges are treated
therein, operation of Peach Bottom Atomic Power Station Unit 3 will be
governed by NPDES Permit No. PA 0009733, as now in effect and as
hereafter amended. Questions pertaining to conformance thereto shall
be referred to and shall be determined by the NPDES Permit issuing or
enforcement authority, as appropriate.
B. In the event of any modification of the NPDES Permit related to
thermal discharges or the establishment (or amendment) of alternative
effluent limitations established pursuant to Section 316 of the
Federal Water Pollution Control Act, the licensees shall inform the
NRC and analyze any associated changes in or to the Station, its
components, its operation or in the discharge of effluents therefrom.
If such change would entail any modification to this license, or any
Technical Specifications which are part of this license, or present an
unreviewed safety question or involve an environmental impact
different than analyzed in the Final Environmental Statement, the
licensees shall file with the NRC, as applicable, an appropriate
analysis of any such change on facility safety, and/or an analysis of
any such change on the environmental impacts and on the overall
cost-benefit balance for facility operation set forth in the Final
Environmental Statement and a request for an amendment to the
operating license, if required by the Commission's regulations. As
used in this Condition 3.13, Final Environmental Statement means the
NRC Staff Final Environmental Statement related to Operation of Peach
Bottom Atomic Power Station Units Nos. 2 and 3 dated April 1973, as
modified by (1) the Initial Decision of the Atomic Safety and
Licensing Board dated September 14, 1973, (2) the Supplemental Initial
Decision of the Atomic Safety and Licensing Board dated June 14, 1974,
(3) the Decision of the Atomic Safety and Licensing Appeal Board dated
July 5, 1974, (4) the Memorandum and Order of the Commission dated
August 8, 1974, (5) any further modification resulting from further
review by the Appeal Board and by the Commission, it any, and (6) any
Environmental Impact Appraisal which has been or may be issued by the
NRC since the FES was published in April 1973.
4. This license is effective as of the date of issuance and shall expire
at midnight on July 2, 2014.
FOR THE ATOMIC ENERGY COMMISSION
Original Signed by Roger Boyd, for
A. Giambusso, Deputy Director for
Reactor Projects
Directorate of Licensing
Attachments:
Amended pages to Appendices A and B
DPR-44 & DPR-56 Technical Specifications
Date of Issuance: July 2, 1974
<PAGE>
UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D.C. 20555-0001
SAFETY EVALUATION BY THE OFFICE OF NUCLEAR REACTOR REGULATION
PROPOSED TRANSFER OF OWNERSHIP INTERESTS OF
ATLANTIC CITY ELECTRIC COMPANY AND DELMARVA POWER & LIGHT COMPANY
TO PSEG NUCLEAR LIMITED LIABILITY COMPANY AND PECO ENERGY COMPANY
SALEM NUCLEAR GENERATING STATION, UNIT NOS. 1 AND 2.
HOPE CREEK GENERATING STATION, AND PEACH BOTTOM ATOMIC POWER
STATION, UNIT NOS. 2 AND 3
DOCKET NOS. 50-272, 50-311, 50-354, 50-277, AND 50-278
1.0 INTRODUCTION
By application dated December 20, 1999, as supplemented February 11
and February 25, 2000, Public Service Electric and Gas Company (PSE&G), PSEG
Nuclear Limited Liability Company (PSEG Nuclear), Atlantic City Electric Company
(ACE), and Delmarva Power and Light Company (DP&L) (collectively referred to
herein as the PSE&G application), requested Nuclear Regulatory Commission (NRC)
approval to transfer Facility Operating Licenses Nos. DPR-70 and DPR-75 for the
Salem Nuclear Generating Station, Units 1 and 2 (Salem), and Facility Operating
License No. NPF-57 for the Hope Creek Generating Station (Hope Creek), to the
extent the licenses are held by ACE and DP&L, to PSEG Nuclear.
In addition, by application dated December 21, 1999, as supplemented
February 11, March 2, and March 16,2000, PECO, Energy Company (PECO), PSE&G,
PSEG Nuclear, ACE, and DP&L (collectively referred to herein as the PECO
application), requested NRC approval to transfer Facility Operating Licenses
Nos. DPR-44 and DPR-56 for the Peach Bottom Atomic Power Station, Units 2 and 3
(Peach Bottom), to the extent the licenses are held by ACE and DP&L, to PECO and
PSEG Nuclear.
The PSE&G application and the PECO, application (collectively referred
to herein as the applications) also requested approval of conforming license
amendments to reflect the proposed license transfers. Both applications
requested the license transfers and conforrning license amendments pursuant to
Sections 50.80 and 50.90 of Title 10 of the Code of Federal Regulations (10
CFR).
The transfers were requested in connection with purchase agreements
executed on September 27, 1999, regarding all of ACE's and DP&L's nuclear
generating ownership interests. ACE and DP&L agreed to transfer their combined
14.82-percent interest in Salem and ACE's 5-percent interest in Hope Creek to
PSEG Power Limited Liability Company (PSEG Power), the parent of PSEG Nuclear.
In other agreements, PECO and PSEG Power have agreed to purchase ACE's
7.51-percent interest and DP&L's 7.51-percent interest in Peach Bottom. The
purchase agreements allow PSEG Power to assign its right to purchase the shares
to PSEG Nuclear.
PSE&G is an electric utility as defined in 10 CFR 50.2, and currently
owns 42.59-percent interests in Salem, a 95-percent interest in Hope Creek, and
42.49-percent interests in Peach Bottom. On June 4, 1999, PSE&G applied to the
NFIC for consent to transfer its ownership interests in and operating authority
under the licenses for Salem and Hope Creek to a newly formed nuclear generating
affiliate, PSEG Nuclear. A separate PECO application dated July 1, 1999,
concerned the transfer of PSE&G's ownership interest in Peach Bottom to PSEG
Nuclear. The NRC approved the relevant license transfers by Orders dated
February 16, 2000. However, these transfers have not been completed as of the
date of this evaluation. The restructuring of the Public Service Enterprise
Group Incorporated (PSE&G's current parent company) organization also includes
the creation of a new wholesale generation holding company, PSEG Power LLC,
which will collectively own the organization's generation assets. The
subsidiaries of PSEG Power will be (1) PSEG Nuclear, which will own and operate
Salem and Hope Creek and own the PSEG interest in Peach Bottom; (2) PSEG Fossil
LLC, which will own the organization's non-nuclear generating assets; and (3)
PSEG Energy Resources and Trade LLC (PSEG ERT), which will market power. All of
the above companies will be wholly owned subsidiaries of Public Service
Enterprise Group Incorporated. PSEG Nuclear will not meet the definition of an
electric utility in 10 CFR 50.2.
PECO is an electric utility as defined in 10 CFR 50.2 and currently
owns 42.49-percent interests in Peach Bottom and is the licensed operator of
Peach Bottom. PECO also holds 42.59-percent non-operating interests in Salem.
The transfer of the minority interests presently owned by ACE and DP&L
will have no impact on the management or operation of the plants, according to
the applications.
2.0 FINANCIAL QUALIFICATIONS ANALYSIS
After the proposed transfers of the Peach Bottom licenses, and
assuming the initial transfer of PSE&G's interests to PSEG Nuclear have been
completed in connection with the July 1, 1999, application referenced earlier,
PECO and - PSEG Nuclear will each hold 50-percent ownership interests in Peach
Bottom, - and PECO will remain the licensed operator of Peach Bottom. PECO will
remain an electric utility as defined by 10 CFR 50.2, subject to rate regulation
by the Pennsylvania Public Utility Commission and the Federal Energy Regulatory
Commission. Accordingly, as an electric uflity, its financial qualifications are
presumed to be adequate by 10 CFR 50.33(f) and no other demonstration of
financial qualifications is required.
After the proposed transfers of the Salem and Hope Creek licenses, and
assuming the initial transfer of PSE&G's interests to PSEG Nuclear have been
completed in connection with the June 4, 1999, application referenced earlier,
PSEG Nuclear will have an ownership interest of 57.41 percent in Salem and will
own 100 percent of Hope Creek. PECO, will own the remaining 42.59-percent
interest in the Salem facility. PSEG Nuclear will be the licensed operator of
the Salem and Hope Creek plants, assuming again the completion of the initial
transfers, notwithstanding the DP&L and/or ACE transfers.
Since PSEG Nuclear will not qualify as an "electric utility" for
purposes of 10 CFR 50.2, it must demonstrate, in accordance with 10 CFR
50.33(f)(2), that it possesses or has reasonable assurance of obtaining the
funds necessary to cover the plants' operating costs by submitting estimates for
total annual operating costs for each of the first 5 years of operation and a
description of the sources of f u nds to cover these costs.
In the applications of June 4 (Salem and Hope Creek) and July 1, 1999
(Peach Bottom), to transfer PSE&G's interests in Salem, Hope Creek, and Peach
Bottom to the newly formed PSEG Nuclear, cost estimates and estimated income
statements were submitted. In acquiring the ownership interests of ACE and DP&L,
PSEG Nuclear is increasing its ownership share in the five nuclear units, and
its operating costs will increase proportionally. PSEG Nuclear is likewise
proportionally increasing its entitlements to capacity and energy from the five
units. In the current application of December 20, 1999, PSE&G stated that the
income statement and cash flow projection included in the June 4, 1999, transfer
application, "incorporated business models and assumptions that included 5000 MW
of projected addiflonal generation capacity, specifically including (and
modeling) acquisition of the additional nuclear generation interests to be
obtained from ACE and DP&L from both cost and revenue perspectives." The
application further states, "Income Statement and Cash Flow Projection
previously provided remains a valid indicator of the financial qualifications of
PSEG Nuclear to obtain the interests here at issue." - In reviewing the
applications dated June 4 and July 1, 1999, the staff concluded that the
proposed license transfers should be approved because the information in the
applications had provided reasonable assurance that PSEG Nuclear will be able to
obtain adequate funding to own, operate, and decommission Salem and Hope Creek
with respect to PSEG Nuclear's proposed ownership interests, and to be
financially qualified to own its proposed interests in Peach Bottom. The staff
is incorporating by reference its February 16, 2000, safety evaluation (SE)
supporting these conclusions.
The staff has evaluated the information in the current applications
and has determined that th projections of revenues and expenses for the proposed
increased ownership shares resulting; from PSEG Nuclear's proposed purchase of
the subject ownership interests of ACE and DP& do not materially change the
staff's earlier analysis and conclusions regarding PSEG Nuclear' financial
qualifications reflected in the Orders dated February 16, 2000, and provide a
basis fc the staff to conclude that PSEG Nuclear will be able to obtain adequate
funding to own, operate, and decommission (as more fully discussed later in this
SE) Salem, Hope Creek, an( Peach Bottom with respect to the additional ownership
interests being acquired. Therefore, the staff finds that PSEG Nuclear, as a
newly-formed entity, is financially qualified under 10 CFR 50.33(f)(3) having
made the necessary demonstration thereunder, to hold the license for Salem, Hope
Creek, and Peach Bottom with respect to the additional ownership interests
proposed to be acquired by PSEG Nuclear from DP&L and/or ACE. Furthermore, PECO,
as an electric utility is financially qualified to hold the Peach Bottom
licenses with respect to the increased ownership interests to be acquired from
DP&L and ACE.
3.0 DECOMMISSIONING FUNDING
The NRC has determined that the requirements to provide assurance of
decommissioning funding and provision of an adequate amount of decommissioning
funding are necessary to ensure the adequate protection of public health and
safety.
The following decommissioning funding analysis is based on the
information provided in the PSE&G and PECO applications.
The PECO application states that the proposed transfer of the ACE and
DP&L ownership interests in Peach Bottom will have no effect on the ability of
PECO or PSEG Nuclear to fund decommissioning of the units. PECO will continue to
fund its current 42.49-percent share of decommissioning costs through annual
nonbypassable wire charges authorized by the Pennsylvania Public Utility
Commission. Similarly, PSEG Nuclear will continue to fund its current
42.49-percent share of decommissioning costs through annual nonbypassable
charges authorized by the New Jersey Board of Public Utilities.
The ACE and DP&L nuclear decommissioning trust funds associated with
their combined 15.02-percent ownership of Peach Bottom will be transferred at
closure to the PECO and PSEG Nuclear decommissioning trusts, with PECO and PSEG
Nuclear each receiving half of the transferred funds. As of the expected closing
date of the transfer, ACE and DP&L will have accumulated approximately $42.4
million and $43.7 million, for Peach Bottom Units 2 and 3, respectively.
Enclosure 3 of the PECO application dated December 21, 1999, provides the
applicants' calculation of the NRC's formula amount for radiological
decommissioning of $371.0 million for each unit, of which ACE and DP&L's
15.02-percent share is approximately $55.7 million. Enclosure 4 of the PECO
application shows that, even with no additional contributions to the funds, when
earnings are credited, as allowed by 10 CFR 50.75(e), at a 2percent annual
after-tax real rate of return through the remaining term of the units' licenses,
the amount in the funds will exceed ACE and DP&L's $55.7 million share of the
NRC's formula amount for the 10 CFR 50.75(b) and (c) radiological
decontamination and decommissioning requirements.
The PSE&G application states that the proposed transfer of ACE and
DP&L shares of Salem and Hope Creek to PSEG Nuclear will have no effect on the
financial assurance for decommissioning the units. The proposed transfer will
not affect the current funding mechanisms for PECO's current 42.59-percent share
of Salem or for PSE&G's current 42.59percent share of Salem and 95-percent share
of Hope Creek. The ACE and DP&L trust funds will be transferred to PSEG Nuclear
at closing of the transfer.
Appendix 6 of the PSE&G application dated December 20, 1999, shows
that as of the end of 1999, ACE and/or DP&L have accumulated decommissioning
funding of approximately $41.9 million for Salem Unit 1, $31.0 million for Salem
Unit 2, and $9.9 million for Hope Creek. Appendix 6 to the application also
provides the applicants' calculation of the NRC's formula amounts for
radiological decommissioning as $290.7 million each for Salem Units 1 and 2, and
.$360 million for Hope Creek. The combined ACE and DP&L share of this total is
$43.1 million each for Salem Units I and 2, and $18 million for Hope Creek.
Tables included in Appendix 6 to the application show that, even with no
additional contributions to the funds, when earnings are credited, as allowed by
10 CFR 50.75(e), at a 2-percent annual after tax real rate of return through the
remaining terms of the units'licenses, the amount in the funds will exceed ACE
and DP&L's shares of the NRC formula amounts for Salem and Hope Creek for the 10
CFR 50.75(b) and (c) radiological decontamination and decommissioning
requirements.
The staff verified the calculations provided by the applicants and
agrees that the decommissioning trust funds associated with the DP&L and ACE
ownership shares of Salem, Hope Creek, and Peach Bottom are fully funded. Based
on the discussion above, the staff concludes that the applicants have complied
with the requirements of 10 CFR 50.75(b) with respect to the amount of
decommissioning funding they must provide. However, to ensure that the transfer
of decommissioning funds will occur as stated in the applications, the staff
concludes that the Orders approving the license transfers must contain the
following conditions:
For the Salem Order:
(1) ACE and DP&L will transfer on or about the closing date to the respective
PSEG Nuclear decommissioning trusts a minimum of $41.9 million for Salem
Unit 1, and $31.0 million for Salem Unit 2.
For the Hope Creek Order:
(1) ACE will transfer onor about the closing date to the PSEG Nuclear
decommissioning trusts for Hope Creek, a minimum of $9.9 million.
For the Peach Bottom Order:
(1) ACE and DP&L will transfer on or about the closing date to the respective
PECO and PSEG Nuclear decommissioning trusts in equal shares a minimum of
$42.4 million for Peach Bottom Unit 2, and $43.7 million for Peach Bottom
Unit 3.
The NRC staff also concludes that, given the considerations discussed
herein, the proposed funding mechanisms provide reasonable assurance of
decommissioning funding in accordance with 10 CFR 50.75(e), provided that the
Orders approving the license transfers contain the following condition (note,
this condition is applicable to the Orders for Salem, Hope Creek, and Peach
Bottom and has also been added as a license condition for each of the five
units):
(2) The decommissioning trust agreement for each of the five 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 PSE&G 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 shall be made by the
trustee until the trustee has first given the NRC 30 days notice of
the payment. In addition, no disbursements or payments from the trust
shall be made if the trustee receives prior written notice of
objection from the Director, Office of Nuclear Reactor Regulation.
d. The trust agreement shall not be modified in any material respect
without prior written notification to the Director, 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.
4.0 TECHNICAL QUALIFICATIONS
According to the PSE&G application, the proposed transfers of the ACE
and/or DP&L ownership interests in Salem and Hope Creek to PSEG Nuclear will not
result in any change in the operation of Salem and Hope Creek. The proposed
transfers will not result in any changes in the technical aspects of the Salem
and Hope Creek Facility Operating Licenses or Technical Specifications, or any
change in the technical qualifications of personnel involved in the maintenance
and operation of the facilities. The personnel at PSEG Nuclear that will have
control over the licensed activities at Salem and Hope Creek will not change as
a result of the transfers. There will also be no other changes in the management
or operations of Salem and Hope Creek as a result of the transfers.
According to the PECO application, the proposed transfers of the ACE
and DP&L ownership interests in Peach Bottom to PECO and PSEG Nuclear will not
result in any change in the operation of Peach Bottom. The proposed transfers
will not result in any changes in the technical aspects of the Peach Bottom
Facility Operating Licenses or Technical Specifications, or any change to the
technical qualifications of personnel involved in the maintenance and operation
of the facility. The personnel at PECO, having control over the licensed
activities at Peach Bottom will not change as a result of the transfers. There
will also be no other changes in the management or operations of the Peach
Bottom facility as a result of the transfers.
In light of the foregoing, the proposed transfers, which involve no
transfer of operational authority under any license, require no review of the
technical qualifications of the licensed operators.
5.0 ANTITRUST
The Atomic Energy Act does not require or authorize antitrust reviews
of post-operating-license transfer applications. Kansas Gas and Electric Co.,
et-91--(Wolf Creek Generating Station Unit 1), CLI-99-19, 49 NRC 441 (1999).
Since the transfer application was submitted after the Salem, Hope Creek, and
Peach Bottom operating licenses were issued, no antitrust review is required or
authorized.
6.0 FOREIGN OWNERSHIP, CONTROL OR DOMINATION
The applications provided information on the directors and company
officers of each of the new affiliated companies as required by 10 CFR 50.33(d).
The shares of common stock of PECO and Public Service Enterprise Group, Inc.
(Enterprise), the holding company that owns PSEG Power, which in turn owns PSEG
Nuclear, are publicly traded and widely held. The applications state that the
directors and officers of PECO, PSEG Nuclear, PSEG Power, and Enterprise are US
citizens and that neither PECO, PSEG Nuclear, PSEG Power, nor Enterprise is
owned, controlled, or dominated by any alien, foreign corporation, or foreign
government. The NRC staff has no reason~ to believe otherwise.
7.0 INSURANCE
According to the applications, after the transfer of ACE's and DP&L's
interests to PECO and PSEG Nuclear, conforming changes in nuclear liability and
nuclear property coverage and in the Price-Anderson indemnity agreements with
respect to Salem, Hope Creek, and Peach Bottom will be made. The staff finds
that, based on information discussed in the financial qualifications section,
PECO and PSEG Nuclear will retain the ability to pay the pro-rata increase in
deferred premiums in compliance with 10 CFR 140.21.
8.0 CONFORMING AMENDMENTS
8.1 Introduction
As described in the applications dated December 20, 1999, and December
21, 1999, PSE&G requested approval of license amendments for Salem and Hope
Creek, and PECO requested approval of license amendments for Peach Bottom
pursuant to 10 CFR 50.90. These amendments would be administrative in nature and
would conform the operating licenses for each of the five units as applicable to
reflect the proposed license transfers.
Notice of the application for approval of the license transfers and
approval of the conforming license amendments was published in the Federal
Registe for Salem, Hope Creek, and Peact Bottom on February 18, 2000 (65 FIR
8452, 65 FIR 8453, and 65 FIR 8451, respectively). No hearing requests or
comments were received. The PSE&G submittals dated February I I and February 25,
2000, and the PECO submittals dated February 11, March 2, and March 16, 2000,
did not expand the scope of the application as initially published in the
Federal Register.
In addition to the license conditions that would be added as discussed in
Section 3.0 above, the changes to each of the licenses would be as follows:
1. For Salem (License Nos. DPR-70 and DPR-75), references to ACE and DP&L
would be removed, and PSEG Nuclear would be added. The revised licenses
would reflect that PSE&G, PECO, and PSEG Nuclear are the licensees.
2. For Hope Creek (License No. NPF-57), references to ACE would be removed,
and PSEG Nuclear would be added. The revised license would reflect that
PSE&G and PSEG Nuclear are the licensees.
3. For Peach Bottom (License Nos. DPR-44 and DPR-56), references to ACE and
DP&L would be removed, and PSEG Nuclear would be added. The revised
licenses would reflect that PECO, PSE&G, and PSEG Nuclear are the
licensees.
If the transfer of the licenses for Salem, Hope Creek, and Peach
Bottom, to the extent they are currently held by PSE&G, to PSEG Nuclear (as
described in the Orders dated February 16, 2000), are completed prior to the
license transfers discussed in this SE, PSE&G would not be shown as a licensee
on the final issued license pages.
8.2 Evaluation
The proposed conforming amendments for Salem, Hope Creek, and Peach
Bottom do no more than accurately reflect the approved transfer actions, which
are subject to certain conditions set forth in the orders approving the
transfers, and that were identified and discussed earlier in this SE. The
amendments involve no safety questions and are administrative in nature. The NRC
staff finds that the proposed amendments are acceptable.
8.3 State Consultation
In accordance with the Commission's regulations, the New Jersey State
Official was notified of the proposed issuance of the amendments for Salem and
Hope Creek, and the Pennsylvania State official was notified of the proposed
issuance of the amendments for Peach Bottom. The State officials had no
comments.
8.4 Conclusion With Respect To the Conforming Amendments
The Commission has concluded, based on the considerations discussed
herein, that (1) there is reasonable assurance that the health and safety of the
public will not be endangered by operation in the proposed manner, (2) such
activities will be conducted in compliance with the Commission's regulations,
and (3) the issuance of the amendments will not be inimical to the common
defense and security or to the health and safety of the public.
9.0 ENVIRONMENTAL CONSIDERATION
The subject applications are for approval of the transfer of licenses
issued by the NRC and approval of conforming amendments. Accordingly, the
actions involved meet the eligibility criteria for categorical exclusion set
forth in 10 CFR 51.22(c)(21). Pursuantto10CFR 51.22(b), no environmental impact
statement or environmental assessment need be prepared in connection with
approval of the applications.
10.0 CONCLUSIONS
For the reasons discussed above, the staff concludes that PECO is
financially qualified to holc the licenses for Peach Bottom Units 2 and 3 with
respect to the 7.51-percent ownership share being transferred to it by ACE and
DP&L. Likewise, the staff concludes that PSEG Nuclear is qualified to hold the
licenses for Peach Bottom Units 2 and 3 with respect to the 7.51-percent
ownership share in Peach Bottom being transferred to it by ACE and DP&L. The
staff also concludes that PSEG Nuclear is financially qualified to hold the
licenses for Salem Units 1 and 2 with respect to the 14.82-percent combined ACE
and DP&L ownership share being transferred to it by ACE and DP&L. In addition,
the staff concludes that PSEG Nuclear is financially qualified to hold the
license for Hope Creek with respect to the 5-percent ownership, share being
transferred to it by ACE.
Also, there do not appear to be any problematic antitrust or foreign ownership
considerations related to the Salem, Hope Creek, and Peach Bottom licenses as a
result of the transfer. Thus, the staff finds that PECO and PSEG Nuclear are
qualified to hold the above licenses with respect to the ownership interests
being transferred from ACE and DP&L and the transfer of the licenses, to the
extent described above, is otherwise consistent with applicable provisions of
law, regulations, and orders issued by the Commission.
Principal Contributors: M. Davis
R. Pelton
R. Ennis
Date: April 21, 2000
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
Washington, D.C. 20580
March 9, 2000
Brian C. Mohr, Esq.
Skadden, Arps, Slate, Meagher & Flom
Four Times Square
New York, NY 10036
Re: EARLY TERMINATION GRANTED
Transaction Identification Number 20001037
Public Service Enterprise Group Inc./Conectiv
Dear Mr. Mohr:
The request for early termination of the waiting period is granted effective
January 4, 2000 4:30 PM with respect to the proposed acquisition by Public
Service Enterprise Group Inc. of certain assets of Delmarva Power & Light
Company; Atlantic City Electric Company from Conectiv. Early termination of the
waiting period is provided by Section 7A(b)(2) of the Clayton Act and Sections
803.10(b) and 803.11(c) of the Premerger Notification Rules.
Notice of this termination will be published in the Federal Register in
accordance with Section 7a(b)(2) of the Clayton Act and Section 803.11(c) of the
Premerger Notification Rules and on the Federal Trade Commission's internet site
[http://www.ftc.gov/bc/earlyterm/index.html].
If you have any questions concerning this matter, please contact me at (202)
326-2844.
Sincerely,
Sandra M. Peay
Senior Contact Representative
Premerger Notification Office
Bureau of Competition
