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 July 21, 1995
Registrant;State of
Commission Incorporation IRS Employer
File No. Address and Telephone No. Identification No.
1-9760 Atlantic Energy, Inc. 22-2871471
P. O. Box 1264
6801 Black Horse Pike
Pleasantville, NJ 08232
(609) 645-4500
1-3559 Atlantic City Electric Company 21-0398280
(New Jersey)
P.O. Box 1264
6801 Black Horse Pike
Pleasantville, NJ 08232
(609) 645-4100
Item 5. Other Events
The following information updates certain matters
previously reported to the Securities and Exchange Commission under
item 1- Business of Part I of the Annual Report on Form 10-K for
1994, Part II of the Report on Form 10-Q for the quarter ended
March 31, 1995 and Item 5 of the Current Report on Form 8-K dated
June 15, 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 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 NRC that
each unit is sufficiently prepared to restart. ACE was advised that
on June 9, 1995, the NRC issued a Confirmatory Action Letter
documenting these commitments by PS. As previously reported, ACE
was advised that PS is engaged in a thorough assessment of
equipment issues that have affected Salem's operation and the
related management systems and 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.
ACE has been advised that while PS has not yet finalized
its analysis and assessment activities, it currently estimates that
Unit I will be ready to return to service in the first quarter of
1996 and Unit 2 during the second quarter of 1996, although no
assurances can be given. ACE has been advised that during the
outages, Unit 1 will undergo a previously scheduled refueling and
Unit 2 will undergo a partial refueling which will allow PS to
eliminate the full refueling for Unit 2 which had been scheduled
for 1996. PS has advised ACE that the restart plan is focused on
improving equipment reliability and operability. PS intends to
reduce maintenance and engineering backlogs of work and to
strengthen its management processes before it returns the units to
service.
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ACE has been advised that PS has developed and is
implementing a number of detailed action plans designed to improve
performance in 10 key areas: operations, management, engineering,
maintenance, outage activities, work controls, organizational
self-assessment, corrective action, equipment reliability and
training, and that before restarting the units, PS will complete a
thorough review of station systems and gain concurrence from the
NRC that these action plans have been satisfactorily completed. No
assurances can be given as to what actions the NRC might ultimately
take. Additionally, restart activities, if expended in the amounts
predicted by PS, will amount to approximately $2.9 million.
Replacement power costs to be incurred by ACE while the
units are out of service are expected to be approximately $1
million per month. In addition, ACE currently anticipates that the
1995 aggregate capacity factor of the five nuclear units in which
ACE owns a minority interest, will be below the 65% minimum annual
standard established by the New Jersey Board of Public Utilities
(BPU) and, as a result, would result in imposition of a performance
penalty for 1995. ACE currently estimates such aggregate capacity
factor for 1995 will amount to approximately 55.0%, assuming
operation of the other three nuclear units, as scheduled, which
would result in a penalty to ACE for 1995 of approximately $1.8
million. No assurances can be given as to what action, if any, the
BPU might ultimately take. ACE does not presently foresee any
shortage in available capacity to satisfy customer demands for
energy.
ACE has also been advised by PS that a previously
reported NRC enforcement conference - relating to incorrectly
positioned valves at Salem and a number of other apparent
violations related to the NRC's quality assurance criteria and
inadequate or ineffective corrective actions affecting
safety-related equipment and components - has been rescheduled for
July 28, 1995. ACE cannot predict what, if any, action the NRC may
take with respect to these apparent violations.
ACE has been further advised that PS has undertaken a
number of senior nuclear management changes, including the hiring
from outside of PS of a Senior Vice President - Nuclear operations,
a Senior Vice President - Nuclear Engineering, a General Manager -
Salem Operations, and a Director - Quality Assurance and Nuclear
Safety Review, and PS has asserted that it is committed to
achieving high standards of safety and operational performance for
its nuclear program.
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As a nonoperating minority owner, ACE believes that the
safe and expeditious restart of the Salem 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
whatever steps are necessary and reasonable for PS to effectively
and properly respond to concerns expressed by the NRC and to
restart the units in a timely manner. The Company has conveyed
these concerns directly to the management of PS.
Levelized Energy Clause
On July 7, 1995 the BPU approved a stipulation among the
parties and authorized a provisional increase of $37 million. The
new rates became effective for service rendered on or after July 7,
1995. Such provisional rates will remain in effect until a final
decision is made by the BPU, which is expected in the third quarter
of 1995. The requested increase is due primarily to increased
costs associated with purchase of energy and capacity from four
independent power producers under contracts approved by the BPU.
Included in the provisional rates is a reduction of $10 million
under ACE's Southern New Jersey Economic Initiative, which amount
is not recovered from customers. Also reflected is $20.6 million
of deferred costs, for which ACE will seek recovery in its next LEC
proceeding.
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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 City Electric Company
(Registrant)
Date: July 21, 1995 By: /s/ J. E. Franklin, II
J. E. Franklin, II
Senior Vice President, Secretary
and General Counsel
