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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 31, 1997
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DELMARVA POWER & LIGHT COMPANY
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(Exact Name of Registrant as Specified in Charter)
Delaware and Virginia I-1405 51-0084283
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
800 King Street, P.O. Box 231, Wilmington, Delaware 19899
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 302-429-3448
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None
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
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Stockholder Vote on Merger
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On January 30, 1997, at a Special Meeting of Stockholders of Delmarva
Power & Light Company (the "Company"), the holders of the Company's Common
Stock, $2.25 par value per share (the "Common Stock") voted to approve the
Agreement and Plan of Merger, dated as of August 9, 1996, as amended and
restated as of December 26, 1996 (the "Merger Agreement"), by and among
Delmarva, Atlantic Energy, Inc. ("Atlantic"), Conectiv, Inc. and DS Sub,
Inc. The Merger Agreement covers the proposed merger of the Company and
Atlantic (the "Merger"), which originally was announced on August 12, 1996.
For the Merger Agreement to be approved, the holders of more than two-
thirds of the outstanding shares of Common Stock entitled to vote were
required to vote for approval the Merger Agreement. Out of 60,754,568
shares of Common Stock issued and outstanding and entitled to vote,
51,621,008.553 shares (84.97%) were represented in person or by proxy at
the Special Meeting. 49,681,023.314 shares (81.77%) of the Common Stock
voted for, 1,399,949.695 shares (2.30%) of the Common Stock voted against,
and 540,035.544 (.89%) shares of the Common Stock abstained from voting on
the approval of the Merger Agreement.
The holders of Common Stock also approved the Conectiv, Inc. Incentive
Compensation Plan (the "Plan"), which will become effective if and when the
Merger is consummated. The Plan is for the purpose of rewarding those
officers, key employees, consultants and advisors of Conectiv (the new
holding company following the Merger) and its subsidiaries, who are
responsible for Conectiv's and its subsidiaries' continued growth,
development and financial success. The affirmative vote of the holders of
a majority of the Common Stock present in person or by proxy and entitled
to vote was required for approval of the Plan. Out of 60,754,568 shares of
Common Stock issued and outstanding and entitled to vote, 51,621,008.553
shares (84.97%) of the Common Stock were present in person or by proxy at
the Special Meeting. 44,584,518.853 shares (86.37%) of the Common Stock
present in person or by proxy voted for, 4,850,149.546 shares (9.40%) of
the Common Stock present in person or by proxy voted against, and
2,186,019.154 shares (4.23%) of the Common Stock present in person or by
proxy abstained from voting on the approval of the Plan.
The following was released by the Company and Atlantic on January 30,
1997:
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ATLANTIC ENERGY, DELMARVA POWER
SHAREHOLDERS APPROVE MERGER THAT WILL
CREATE 'CONECTIV'
Egg Harbor Township, N.J. and Wilmington, DE, January 30, 1997--
Atlantic Energy and Delmarva Power & Light Company shareholders
today approved the
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proposed merger of the two companies, marking
a major milestone in the merger process that will result in a new
holding company named "Conectiv."
"We're gratified by the support shown by our shareholders in
approving this merger," said Delmarva Power Chairman, President
and Chief Executive Officer Howard Cosgrove. "It's clear that
they see this merger as a way for our two companies to become a
stronger company, better positioned to thrive in the energy
industry of tomorrow."
"This merger is the right thing to do at the right time and we've
found the right partner to forge into the 21st century with,"
agreed Atlantic Energy's Chairman and Chief Executive Officer
Jerrold L. Jacobs. "Atlantic Energy and Delmarva Power share a
common vision for the future and have a remarkably similar view
of what we need to do to be a strong regional competitor."
The proposed merger is now subject to approvals from various
regulatory agencies, principally the public utility commissions
in Delaware, New Jersey, Maryland, Pennsylvania and Virginia, the
Federal Energy Regulatory Commission, the Nuclear Regulatory
Commission and the Securities and Exchange Commission. The
companies are hopeful that the necessary approvals will be
obtained in about 12 months.
"We are eager to get the approval process wrapped up because we
think this merger will create clear and significant benefits for
our customers and our shareholders," Jacobs said. "This merger
represents a significant leap forward, creating competitive
advantages that neither of us could have achieved on our own."
"Conectiv's increased financial strength will create a stronger
company that has an opportunity to market its products over a
larger, more diverse region, generating increased shareholder
value," Cosgrove added. "That strength will help our business
grow and will allow us to create new sources of revenue and
shareholder value."
Atlantic Energy, headquartered in Egg Harbor Township, New
Jersey, is an investor owned holding company for Atlantic
Electric and several non-utility affiliates. Atlantic Electric,
a regulated electric utility, is Atlantic Energy's primary
subsidiary and makes up 94 percent of the company's total assets
of more than $2.6 billion. Atlantic Electric serves more than
473,000 customers in southern New Jersey. The company has nearly
$1 billion in annual revenues.
Together, the Atlantic Energy companies provide a wide variety of
energy-related products and services, including home energy
management, commercial utility services, energy system design and
construction, thermal energy services, natural gas and bulk power
marketing.
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Delmarva Power & Light Company is an investor-owned utility
providing service to approximately 440,000 electric customers and
100,000 gas customers. The company has more than $1 billion in
annual revenues and $3 billion in assets.
In addition, Delmarva Power owns and operates service-oriented
subsidiaries which offer regional home and business customers
heating, air-conditioning and mechanical services, electrical
contracting, various energy management services, and a growing
portfolio of energy-related products. The company is currently
pursuing the necessary approvals to provide telecommunications
services under a newly formed subsidiary.
In August 1996, Delmarva Power and Atlantic Energy announced
their intent to merge, calling the strategic pairing a "natural
fit."
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Update on the Salem Nuclear Generating Station Units 1 and 2
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The following information updates matters related to Salem Units 1 and
2 previously reported under "Item 1--Business" of Part I of the Company's
1995 Annual Report on Form 10-K, "Item 5--Other Information" of Part II of
the Company's Report on Form 10-Q for the quarters ended March 31, 1996,
June 30, 1996, and September 30, 1996, and "Item 5--Other Events" of the
Company's Current Reports on Form 8-K dated May 29, 1996, July 23, 1996,
and January 28, 1997. The following is excerpted from information reported
in a Current Report on Form 8-K dated January 29, 1997, filed by Public
Service Electric and Gas Company ("PSE&G"), the operator of the facility
referred to below.
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On January 29, 1997, the Nuclear Regulatory Commission (NRC) held
a public meeting and identified plants placed on the "NRC Watch
List", including Salem Units 1 and 2, which were identified as
Category 2 plants. In its press release issued following the
meeting, the NRC stated:
"The staff informed the Commission that the decision to
place the Salem units on the Watch List was not based
on any recent performance problems or decline; the
staff believes that Salem's efforts to achieve needed
improvements are correctly targeted and the NRC is
satisfied with the licensee's overall approach.
However, the staff noted that Salem should have been
placed on the Watch List previously because of Salem's
past safety performance. The staff also indicated that
the agency increased its attention and resources at
Salem commensurate with a Watch List plant. Finally,
the staff concluded That, notwithstanding the
improvements at
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Salem, it would not have been removed
from the Watch List at this time had it been previously
identified because it has yet to demonstrate a period
of safe performance at power".
The NRC has three classifications of facility monitoring. A
Category 3 facility is one which is having or has had significant
weaknesses that warrant maintaining the plant in a shutdown
condition until the licensee can demonstrate to the NRC that
adequate programs have both been established and implemented to
ensure substantial improvement; full NRC approval is required for
restart and the NRC will monitor closely. A Category 2 facility
is a plant that is authorized to operate but that the NRC will
monitor closely, although being operated in a manner that
adequately protects public health and safety, plants in this
category are having or have had weaknesses that warrant increased
NRC attention; a plant will remain in this category until the
licensee either demonstrates a period of improved performance, or
until a further deterioration of performance results in the plant
being placed in Category 3. A Category 1 facility is a plant that
has been removed from the Watch List.
More fully describing this NRC action, on January 27, 1997, the
NRC sent the following letter to PSE&G:
United States
Nuclear Regulatory Commission
Washington, D. C.
January 27, 1997
Mr. E. James Ferland
Chief Executive Officer
Public Service Electric and Gas Company
80 Park Plaza
Newark, NJ 07101
Dear Mr. Ferland:
On January 14, 15, and 17, 1997, NRC senior managers met to
evaluate the nuclear safety performance of operating reactors,
fuel facilities, and other materials licensees. The NRC conducts
this meeting semiannually to determine if the safety performance
of various licensees exhibits sufficient weaknesses to warrant
increased NRC attention. At the January 1997 Senior Management
Meeting (SMM), the Salem and Hope Creek Generating Stations were
discussed.
In our letter of January 29, 1996, James M. Taylor, the former
NRC Executive Director for Operations, advised you that at the
January 17-18, 1996 SMM, NRC
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senior managers concluded that
recent trends in performance at Hope Creek raised sufficient
concerns that we believed it would be appropriate to meet with
you to discuss these concerns. In that letter we also stated
that resolution of our performance concerns at Salem remained to
be demonstrated through sustained and reliable operations.
At the January 1997, SMM the discussion regarding Hope Creek
considered the additional insights gained from our monitoring of
plant performance since the January 1996 SMM. Based on these
discussions it was concluded that the corrective actions you are
taking have been effective in addressing our concerns regarding
adverse trends in performance at Hope Creek. A summary of NRC
discussions related to Hope Creek follows:
Steps taken by management to address both human
performance and equipment issues over the past year
have resulted in an overall improvement in plant
operations.
Management has consistently exhibited a conservative
approach to decision making. Progress has been made in
communicating higher standards and lowering
significantly the threshold for identification of
problems. Numerous staffing changes and an extensive
training and requalification initiative have led to
improved control of plant activities by operators.
This is significant since the negative trend discussed
in the January 1996 SMM was most notably evidenced by
several significant events where operators failed to
properly control plant evolutions. Overall personnel
error rates have declined significantly.
The station is well along in addressing previously
identified problems with technical specification and
surveillance procedure discrepancies. Overall material
condition of the plant is good as illustrated by
improved plant operating performance. This improvement
stemmed, to a large degree, from work accomplished
during an extended outage completed in early 1996.
Maintenance and engineering backlogs are well
understood and prioritized but they constitute a
continuing challenge to the station. Continuing
attention is also needed to improve operator staffing
levels which were reduced somewhat during the station's
operator requalification initiative.
The senior managers also discussed the Salem facility. As
described in more detail in the following paragraphs, Salem was
designated as a Category 2 plant, not due to any performance
problems or decline during this evaluation period, but due to a
change in senior management judgement [sic] as described in the
fourth paragraph below. A summary of NRC discussions related to
Salem follows:
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Both Units 1 and 2 were shut down to address
significant equipment and human performance problems in
mid-1995, An NRC Confirmatory Action Letter issued at
the time established actions required before restart of
the Units.
A strong management team has been assembled by PSE&G;
it has been in place for most of the outage. A much
lower problem reporting threshold has been established
and management has been aggressive in addressing root
causes. Significant staffing changes have been made.
Operations and maintenance staffs have completed
extensive training and requalification programs to both
reinforce fundamental skills and establish higher
safety standards. Steps have been taken to strengthen
station self assessment, corrective action and work
control processes. As a result, the number and
significance of personnel errors have declined.
Operators have demonstrated improved ownership of the
plant and conservative decision making.
The outage scope has been extensive. Numerous plant
components have been refurbished or replaced with the
more reliable equipment in both safety-related and
balance-of-plant systems. Operator work-arounds are
being addressed. A comprehensive, pre-startup test
program is underway to assure repair work has been
effective. Engineering organizations are providing
stronger support on equipment and design issues as
evidenced by completion of a recent licensing basis
conformance review.
The senior managers thoroughly discussed current
activities at Salem and the basis for past SMM
decisions. The conclusion was that the scope and depth
of the problems that existed at Salem prior to the dual
unit shutdown warranted categorizing it as a Category 2
facility indicating need for increased NRC attention.
Past decisions regarding Salem's status were influenced
by current licensee management's recognition of
problems and efforts being made to address them. As a
practical matter, given the extent of these problems
and the scope of activities, the agency increased its
attention to Salem and applied resources commensurate
with a plant in a Category 2, status. As a
consequence, senior managers reviewed Salem performance
using the Category 2 plant removal matrix. The
managers concluded, notwithstanding the significant
steps being taken and results achieved to date, Salem
would not be removed from Category 2 status if it had
previously been categorized as such. A key
consideration in the removal matrix is
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assessment of plant and integrated station performance
at power which has yet to occur.
In summary, the decision was made to recognize that
Salem should have been placed on the watch list
previously and that it would not have been removed at
this point. As such, Salem is being classified as a
Category 2 facility at this time. This classification
is not intended to suggest that licensee actions
underway at Salem to achieve needed improvements are
incorrectly targeted. NRC is satisfied with the
overall approach and will be monitoring closely the
progress to achieve the planned improvements.
An NRC Commission meeting, open to the public, has been scheduled
to be held in the Commissioners' Conference Room in Rockville,
Maryland, on January 29, 1997, at 10:00 a.m. to review the
results of the latest meeting of NRC senior managers. Mr. Hubert
Miller, the Region I Regional Administrator, has discussed the
bases for our conclusions with regard to Hope Creek and Salem
with members of your staff.
If you have any questions regarding this matter, do not hesitate
to call me.
Sincerely,
HUGH L. THOMPSON, JR.
Hugh L. Thompson, Jr.
Acting Executive Director
for Operations
Dock Nos.: 50-272
50-311
50-354
cc: See next page
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Delmarva Power & Light Company
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(Registrant)
Date: January 31, 1997 /s/DALE G. STOODLEY
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Dale G. Stoodley
Vice President and
General Counsel
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