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 December 14, 1995
Registrant;State of
Commission Incorporation IRS Employer
File No. Address and Telephone No. Identification No.
1-9760 Atlantic Energy, Inc. 22-2871471
(New Jersey)
6801 Black Horse Pike
Egg Harbor Township, NJ 08234
(609) 645-4500
1-3559 Atlantic City Electric Company 21-0398280
(New Jersey)
P.O. Box 1264
6801 Black Horse Pike
Egg Harbor Township, NJ 08234
(609) 645-4100
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Item 5. Other Events.
The following information updates certain matters previously
reported to the Securities and Exchange Commission under Part I,
Item 1 - Business of the Annual Report on Form 10-K for 1994,
Part II of the Quarterly Reports on Form 10-Q for the quarters
ended June 30, 1995 and September 30, 1995 and Item 5 of the
Current Reports on Form 8-K dated June 15, 1995, July 21, 1995
and October 19, 1995 of Atlantic Energy, Inc. and Atlantic City
Electric Company (ACE).
Salem Station
ACE is a 7.41% owner of the Salem Nuclear Generating Station
(Salem). As previously reported, ACE was advised by Public
Service Electric & Gas Company (PS), the operator of Salem, that
Salem Unit 1 and Salem Unit 2 were taken out of service on May
16, 1995 and June 7, 1995, respectively, and that PS subsequently
informed the Nuclear Regulatory Commission (NRC) that it had
determined to keep the Salem units shut down pending review and
resolution of certain equipment and management issues, and
agreement by the NRC that each unit is sufficiently prepared to
restart. PS further advised ACE that PS received a Confirmatory
Action Letter from the NRC dated June 9, 1995 documenting these
commitments by PS.
As previously reported, PS has advised ACE that PS has been
engaged in an assessment of Salem to identify the scope of work
necessary to achieve safe, sustained and reliable operation. PS
has stated that it will keep the units off line until it is
satisfied that they are ready to return to service and operate
reliably over the long term.
PS has further advised ACE that PS has completed an
examination of Salem Unit 1 and Salem Unit 2. On December 11,
1995, PS presented its restart plan for both Salem units to the
NRC at a public meeting. PS has advised ACE that, based upon this
assessment, PS continues to estimate that Salem Unit 1 will
return to service in the second quarter of 1996. PS has advised
ACE that Salem Unit 2, previously expected to return to service
in the second quarter of 1996, is now expected to return to
service in the third quarter of 1996. As previously reported,
during these outages Salem Unit 1 will undergo a scheduled
refueling and Salem Unit 2 will undergo a partial refueling which
will allow PS to eliminate a full refueling outage for Salem Unit
2 originally scheduled for 1996.
As previously reported, ACE estimates that its share of
estimated 1995 operating and maintenance expenses associated with
Salem restart activities will amount to approximately $3.7
million. ACE currently estimates that, based on PS estimates for
the return of Salem Unit 2, its portion of estimated operating
and maintenance expenses associated with Salem restart activities
for 1996 will be approximately $3.8 million and its share of
additional capital costs for 1996 related to the restart
activities will be approximately $1.3 million.
Hope Creek
ACE is a 5% owner in the Hope Creek Nuclear Generating
Station (Hope Creek) and has been advised by PS, operator of Hope
Creek, that Hope Creek went into a refueling and maintenance
outage on November 11, 1995. PS has advised ACE, that by letter
dated December 1, 1995, the NRC informed PS of the results of the
Plant Performance Review done by the NRC covering the period
April 23, 1995 to October 21, 1995. The results indicate a
continued decline in plant performance. PS has further advised
ACE that PS will be extending the refueling and maintenance
outage until February 1996 to include the implementation of
corrective actions to eliminate operational deficiencies noted by
the NRC and detected by PS through self assessment. The NRC in
their letter requested a management meeting prior to restart to
allow PS to present their self assessment of the progress made
during the outage and of the readiness of the unit for restart.
In addition, the NRC has a Readiness Assessment Team Inspection
of Hope Creek scheduled for January 1996. No assurances can be
given as to what action, if any, the NRC might take or when the
Hope Creek unit will be restarted.
As previously reported, ACE was notified by PS that on July
8, 1995, during a manual shutdown of Hope Creek, operators
partially opened a valve to repair control room ventilation
equipment and inadvertently reduced the effectiveness of the
shutdown cooling system. The positioning of the valve and the
resulting temperature change violated plant procedures and
technical specifications, although the impact of the event to
plant safety was minimal. On July 31, 1995, NRC staff met with
plant management concerning this issue and subsequently decided
to assign a special inspection team to independently evaluate
this event as well as PS's response to it, including PS's
procedures and training for operator handling of abnormal
conditions. ACE was advised by PS that on September 25, 1995, the
NRC's special inspection team issued its report and identified
several areas where operator and senior plant management
performance during this event was inadequate. The NRC enforcement
conference was held on November 6, 1995, and then on December 12,
1995 the NRC issued a Notice of Violation and Proposed Imposition
of Civil Penalty of $100,000 fine for the alleged violations. PS
has advised ACE that they will not contest the alleged violations
and will pay the fine as proposed.
Replacement Power Costs and Nuclear Performance Penalty
The incremental replacement power costs being incurred by
ACE during the restart activities discussed above are
approximately $0.5 million per month for each of the Salem units
and approximately $0.4 million per month for the Hope Creek unit.
ACE currently anticipates that the 1995 aggregate capacity
factor of the five nuclear units in which ACE owns a minority
interest will range from 57% to 58%, which is below the 65%
minimum annual standard established by the New Jersey Board of
Public Utilities. Assuming operation of the remaining two
nuclear units as scheduled, the 1995 nuclear performance penalty
to ACE is estimated to be $1.5 million. Based on the PS estimates
for the restart of the Salem units and the Hope Creek unit
discussed above, ACE estimates the 1996 aggregate nuclear
capacity factor will be approximately 57%, and would result in a
nuclear performance penalty of $1.3 million in 1996.
As a nonoperating minority owner, ACE believes that the safe
and expeditious restart of the Salem and Hope Creek units is of
utmost importance to the customers of ACE and the shareholders of
the Company, and ACE continues to actively encourage PS to take
all steps necessary and reasonable to effectively and properly
respond to concerns expressed by the NRC and to restart the units
in a timely manner. The Company continues to convey these
concerns directly to the management of PS.
ACE continues to evaluate the legal, regulatory and
administrative implications of these events. At this time, it is
impossible to predict what action may be taken, if any, by
participation in any regulatory, administrative or civil
proceedings which, if commenced, may affect the outcome of these
matters and the ultimate responsibility for ACE for its share of
such costs and penalties.
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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.
Atlantic Energy, Inc.
Atlantic City Electric Company
(Registrant)
By: /s/ J. E. Franklin II
J. E. Franklin II
Vice President, Secretary and General Counsel
Atlantic Energy, Inc.
Senior Vice President, Secretary and General Counsel
Atlantic City Electric Company
Date: December 14, 1995
