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 October 19, 1995
Registrant;
Commission State of 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
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 Report on Form 10-Q for the quarter
ended June 30, 1995 and Item 5 of the Current Report on Form 8-K
dated June 15, 1995 and July 21, 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 the NRC that each unit is sufficiently prepared
to restart.
As previously reported, a Salem enforcement conference
was held on July 28, 1995 related to certain violations of NRC
requirements. The violations included valves that were
incorrectly positioned following a plant modification in May,
1993, non-conservatisms in setpoints for a pressurizer
overpressure protection system and several examples of inadequate
root cause determination of events, leading to insufficient
corrective actions at Salem. PS has further advised that on
October 16, 1995, the NRC proposed cumulative civil penalties of
$600,000 related to these violations. ACE was advised by PS on
October 17, 1995 that PS will not challenge the proposed $600,000
penalty imposed by the NRC.
As previously reported, PS has advised ACE that PS is
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 further advised ACE that PS has completed an
examination of Salem Unit 1 and its assessment of Unit 2 is
continuing. Work has commenced on systems critical to Salem 1
and is continuing, including those common with Unit 2, with more
than 25% of the work activities completed, while others have been
initiated. While PS had previously estimated that Unit 1 would
return to service in the first quarter of 1996, as a result of
its completed assessment PS now expects Unit 1 to return to
service in the second quarter of 1996, assuming receipt of the
required NRC authorization, although no assurances can be given.
PS has advised ACE that the work scope assessment for Unit 2
is currently scheduled for completion in November 1995. PS
expects to present its final work scope assessment of both units
to the NRC in mid-December 1995. PS advises that since some of
the work being performed relates to systems serving both units,
the additional time needed for Unit 1 does not necessarily mean
that the current second quarter 1996 return estimate for Unit 2
will also be extended, although no assurance can be given by PS.
During the outages, Unit 1 will undergo a previously scheduled
refueling outage and Unit 2 will undergo a partial refueling
which will allow PS to eliminate a full refueling outage for Unit
2 scheduled for 1996.
ACE has been advised that PS now estimates the total
additional 1995 operating and maintenance expenses associated
with Salem restart activities will amount to approximately
$50.3 million. If expended in the amounts predicted by PS, ACE's
share of restart expenses in 1995 will amount to approximately
$3.7 million. PS has advised that the increase in its original
estimate results from additional overtime expenses projected
through year-end. Additional costs for 1996 will not be
determined by PS until after the assessment of Unit 2 has been
completed and final restart plans have been developed.
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.
Assuming operation of the other three nuclear units as scheduled,
the 1995 penalty to ACE is estimated at approximately $1.8
million.
PS asserts that it is committed to achieving high standards
of safety and operational performance for its nuclear program and
has recently undertaken a number of senior management changes.
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 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 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: October 19, 1995
