FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report February 23, 1996
PECO Energy Company
(Exact name of registrant as specified in its charter)
Pennsylvania 1-1401 23-0970240
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) file number) Identification
Number)
2301 Market Street, Philadelphia, Pennsylvania 19101
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 215-841-5746
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ITEM 5. OTHER EVENTS
As previously reported, Units No. 1 and No. 2 at Salem Generating
Station (Salem) have been shutdown since May 16, 1995 and June 7, 1995,
respectively. Since that time, Public Service Electric & Gas (PSE&G) has been
engaged in an assessment of each unit to identify and complete the work
necessary to restart the units. On February 22, 1996, the Company was informed
by PSE&G of the following:
"As a part of PSE&G's comprehensive review, an extensive examination is
being performed on the steam generators, which are large heat exchangers used to
produce steam to drive the turbines. Within the industry, certain pressurized
water nuclear units other than Salem have experienced cracking in a sufficient
number of the steam generator tubes to require various modifications to these
tubes and replacement of the steam generators in some cases. Until the current
outage, regular periodic inspections of the steam generators for each Salem unit
has resulted in repairs of a small number of tubes well within NRC limits. As a
result of the experience of other utilities with cracking in steam generator
tubes, in April 1995 the NRC issued a generic letter to all utilities with
pressurized water reactors. This generic letter requested utilities with
pressurized water reactors to conduct steam generator examinations with
inspection devices capable of detecting evidence of degradation. Subsequently,
PSE&G conducted steam generator inspections of the Salem units using the latest
technology available, including a new, more sensitive, eddy current testing
device.
With respect to Salem 1, the most recent inspection of the steam
generators is not complete, but partial results from eddy current inspections in
February 1996 using this new technology show indications of degradation in a
significant number of tubes. The inspections are continuing and PSE&G has
decided to remove several tubes for laboratory examination to confirm the
results of the inspections. Removal of the tubes should be completed in March
and preliminary results of the state of the Salem 1 tubes from the subsequent
laboratory examinations should be known in April. However, based on the results
of inspections to date, PSE&G has concluded that the Salem 1 outage, which was
expected to be completed in the second quarter of 1996, will be required to be
extended for a substantial additional period to evaluate the state of the steam
generators and to subsequently determine an appropriate course of action.
Degradation of steam generators in PWRs has become an increasing concern for the
nuclear industry. Nationally and internationally, utilities have undertaken
actions to repair or replace steam generators. In the extreme, degradation of
steam generators has contributed to the retirement of several American nuclear
power reactors. After the Salem 1 tubes are fully examined, PSE&G will be able
to evaluate its course of action in light of NRC and other industry
requirements.
The examination of the Salem 2 steam generators was completed in
January 1996 using the same testing device as used in Salem 1. The results of
the Salem 2 inspection are being reviewed again to confirm their results in
light of the experience with Salem 1. Although this review has not yet been
completed, results to date appear to confirm that the condition of the Salem 2
steam generators is well within current repair limits at the present time. PSE&G
will also remove tubes from the Salem 2 steam generators for laboratory analysis
to further confirm the results of this testing.
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PSE&G had planned to return Salem 1 to service in the second quarter of
1996 and Salem 2 in the third quarter of 1996. As a result of the extent of the
recently discovered degradation in the Salem 1 steam generators, PSE&G is
focusing its efforts on the return of Salem 2 to service in the third quarter.
The conduct of the additional steam generator inspections and testing on Salem 2
is not expected to adversely affect the timing of its restart. However, the
timing of the restart is subject to completion of the requirements of the
restart plan to the satisfaction of PSE&G and the NRC as will as to the normal
uncertainties associated with such a substantial review and improvement of the
systems of a large nuclear unit, so that no assurance can be given that the
projected return date will be met."
Based on PSE&G's estimates, PECO Energy expects to incur and expense at
least $85 million in 1996 for increased costs related to the Salem shutdown,
subject to change as a result of the steam generator inspection results.
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SIGNATURES
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.
PECO ENERGY COMPANY
/s/ J.B. Mitchell
---------------------------------
J.B. Mitchell
Vice President - Finance
and Treasurer
February 23, 1996
