SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 29, 1997
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
State of New Jersey 1-9120 22-2625848
(State or other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
80 Park Plaza, P.O. Box 1171
Newark, New Jersey 07101-1171
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-430-7000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Exact name of registrant as specified in its charter)
State of New Jersey 1-973 22-1212800
(State or other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
80 Park Plaza, P.O. Box 570
Newark, New Jersey 07101-0570
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-430-7000
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Item 5. Other Events.
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The following information updates certain matters previously reported to the
Securities and Exchange Commission under Item 1 - Business of Part I and under
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operation ("MD&A") of the Annual Reports on Form 10-K for the year ended
December 31, 1995; and under Item 2 - MD&A of Part I and under Item 5 - Other
Information of Part II of the Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996 of Public Service Electric and
Gas Company ("PSE&G") and of its parent, Public Service Enterprise Group
Incorporated.
PSE&G - Nuclear Operations
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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 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.
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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
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
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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 as described in the fourth
paragraph below. A summary of NRC discussions related to Salem follows:
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
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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 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
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By R. EDWIN SELOVER
------------------------------------------------
R. Edwin Selover
Vice President and General Counsel
Public Service Enterprise Group Incorporated
Senior Vice President and General Counsel
Public Service Electric and Gas Company
Date: January 29, 1997
