L-11-385, Replacement of Parental Guaranty

Replacement of Parental Guaranty

ML113640029
Person / Time
Site:	Beaver Valley, Perry
Issue date:	12/29/2011
From:	Sena P FirstEnergy Nuclear Operating Co
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
L-11-385
Download: ML113640029 (8)

Text

FENOC _-- 76 South Main Street FirstEnergyNucleat Aperating Company Akron,Ohio 44308 Peter P. Serlalll Presidentand ChiefOperatingOfficer December 29,2011 L-11-385 10 cFR 50.75 ATTN:Document ControlDesk U. S. NuclearRegulatory Commission Washington, DC 20555-0001

SUBJECT:

BeaverValleyPowerStation,UnitNo. 1 DocketNo.50-334,LicenseNo. DPR-66 PerryNuclearPowerPlant DocketNo.50-440,LicenseNo.NPF-58 Replacement of ParentalGuaranty By fetterdatedJune24,2011(Accession No.ML111751678), FirstEnergyNuclear Operating Company(FENOC), on behalfof FirstEnergy Corp.(FE)and FirstEnergy NuclearGeneration Corp.(FENGenCo), provided noticeto the NuclearRegulatory Commission (NRC)that FE andFENGenCo intendedto cancelandextinguish the

$15 million Parental GuarantydatedMarch4, 2010. FE and FENGenCo sought NRC's priorwrittenconsentto cancelthe existing$15 millionParentalGuarantyand replaceit witha $95millionParental Guaranty datedJune14,2011.However, the June14,201',

ParentalGuarantywouldnottakeeffectuntilNRCissuedwrittenconsent.

NRChas not issuedwrittenconsent,and as such,the June 14,2011profferedParental Guarantynevertookeffect.In orderto assurethatadequatefinancialassurance for decommissioning is promptly provided, FE is replacingthe profferedParental Guaranty witha ParentalGuarantythat is immediately effective.Pursuantto Paragraph 13 of the March4,2010Parental Guaranty,the $15millionParental Guaranty may be cancelled 120daysafternoticeis providedto the NRC. Baseduponthe June24,2011notice,the

$15 millionGuarantyhas nowbeencancelled, andthis is acknowledged in the enclosed replacement $95 millionParentalGuarantydatedDecember19,2011.The December19,2011ParentalGuarantyreplacesboththe ParentalGuarantydated March4,2010 andthe ParentalGuarantydatedJune 14,2011,whichnevertookeffect.

The certification that FE meetsthe applicable was providedas Enclosure financialtest C to FENOC'sJune24,2011 letter.Thefinancialtestwasconductedbasedon 2010FE audited financial results.

BeaverValleyPowerStation,UnitNo. 1 PerryNuclearPowerPlant L-11-385 Page2 of 2 Thereare no regulatorycommitments containedin this letter. lf thereare any questionsor if additionalinformationis required,pleasecontactMr. PhilH. Lashley,Superuisor - Fleet Licensing, at (330)315-6808.

Sincerely,

/)

lhH PeterP. Sena,lll

-lr

Enclosure:

ParentalGuaranty cc: NRCRegionlAdministrator NRCRegionlll Administrator NRCResidentInspectorforBeaverValley PowerStation NRCResidentInspectorfor PerryNuclearPower Plant NRC ProjectManagerfor BeaverValleyPowerStation NRC ProjectManagerfor PerryNuclearPowerPlant DirectorBRP/DEP Site BRP/DEPRepresentative

Enclosure L-11-385 ParentalGuaranty (FivePagesFollow)

PARENTAL GUARANTY GUARANTY,datedasof Decemb",11 ,2011,madebyFirstEnergy Corp.,anohio corporation (the"Guarantor')to Guarantor'sindirect,wholly-owned FirstEnergy subsidiary, Nuclear Generation Corp, ("FENGenCo').

WITNEgS ETH:

WHEREAS,FENGenCois anindirect,wholly-ownedsubsidiaryof the Guarantorand hasa 100%undividedownershipinterestin BeaverValleyPowerStation,UnitNo. I C'BVPSl') and57.42%of theundividedownershipof thePerryNuclear PowerPlant("Pert');

WHEREAS,theNRChaspromulgated regulations in Title 10,ChapterI of theCodeof FederalRegulations C'CFR'),Part50 whichrequirethata holdero{ or anapplicantfor, a license issuedpursuantto 10 CFRPart50provideassurance thatfundswill be availablewhenneeded for requireddecommissioning activities; WHEREAS,theGuarantor receivessubstantial indirectbenefitsfrom owningits indirect subsidiary, FENCenCo(whichbenefitsareherebyacknowledged), andaccordinglR desiresto executeanddeliverthisGuarantyin orderto providefinancialassurance for FENGenCo's obligationsfor thedecommissioning of BVPSI andPerryasrequiredby 10CFRPart50; WHEREAS,theGuarantor previouslyenteredinto a GuarantydatedMarch4,2010, whichit intendsto revokeandreplacewiththisGuaranty; WHEREAS,theGuarantor previouslyentered into a Guarantydatedasof June14,2071, whichwasintendedto takeeffect,replaceandsupersede theprior GuarantydatedMatch4,2070, uponreceiptof theprior writtenconsentof theNRC; WHEREAS,NRCneverprovidedtherequiredpriorwrittenconsentfor theJune14,2011 Guarantyto takeeffect,replaceandsupersede thepriorGuaranty datedMarrch4,2010; WHEREAS,theMarch4, 2010Guaranty will becomevoidby virtueof theNotice submittedto NRCon June24,2011,thepassage 120daysfollowingsuchNoticeasprovidedfor in Paragraph 13of suchGuarantydated March4,2010andupontheexeeution of thisGuaranty; and WHEREAS,theGuarantoris enteringinto this Guarantyto replaceboth theGuaranty datedMarch4,2010,whichis nowvoid,andtheJune74,2011GuarantR whichnevertook effect, NOW,THEREFORE, in considerationof theforegoingandoiherbenefitsaccruingto the Guarantor,thereceiptandsufliciencyof whichareherebyacknowledged, the Guarantorhereby makesthe following representations andwarrantiesto FENGenCoandherebycovenantsand agreesasfollows:

1. The Guarantor hasfull authorityandcapacityto enterinto thisGuarantyunder its bylaws, andthelawsof theStateof Ohio,its stateof incorporation.

articlesof incorporation, Guarantor hasapprovalfrom its Boardof Directorsto enterintothisGuaranty, Page I

a L. This Guaranty is beingissuedsothatFENGenCo will bein compliance with regulations issuedby the Nuclear Regulatory Commission (NRC), an agency of theU.S. Government, pursuantto theAtomisEnergyAct of 1954,asamended, andtheEnergyReorganization Act of 1974.TheNRC haspromulgated regulations in Title 10,ChapterI of theCodeof Federal Regulations, Part50,whichrequirethata holderof, or anapplicantfor, a licenseissued pursuant to 10CFRPart50provideassurance thatfundswill be availablewhenneededfor requireddecommissiontng activities.

3. This Guaranty is issuedto providefinancialassurance for decommissioning activitiesfor BVPSl, DocketNo.50-334,LicenseNo. DPR-66,andPerry,LicenseNo. NPF-58,Docket No. 50-440,asrequiredby 10 CFRPart50. Thedecommissioning costsfor BVPS1 and Perryareguaranteed in theamountof $95million.

4, The Guarantor will meetor exceedthecriteriafromFinancialTestll.A.2 from 10CFRPart 30,AppendixA andagreesto notifuFENGenCo andtheNRC of anychanges in its abilityto meettheAppendixA criteriain compliancewith thenotificationrequirements asspeoifiedin 10CFRPart50. SpecificallStheGuarantor will possess:

(aXr) A cun'entratingof its seniorunsecuned debtratingof BBB- or higherasissuedby Standard andPoor's,or Baa3or higherasmtedby Moody's;and (ii) Tangiblenetwo$h is at least$10million andat leastsix tirnesthecurrent decommissioning costestimate or Guamntyamount;and (iii) Assetslocatedin theUnitedStatesamounting to at least90percentof its total assets or at leastsix timesthecunentdecommissioning costor Guaranty amount,

5. The Guatantor hasanindirectmajoritycontrolof thevotingstockin FENGenCo.

FENGenCo is locatedat 76 SouthMain Street,Akron,Ohio44308.FBNGenCo ownsthe BVPS1 facitity,LicenseNo. DPR-66andhasan87,42% interest the in Perry facilitn LicenseNo. NFP-58.

6. Theterm"decommissioning activities"asusedhereinrefersto theactivitiesrequiredby 10 CFRPart50 for decommissioning of thefacilitiesidentifiedabove.

7. For valuereceivedfrom FENGenCoandpursuantto the authorityconferreduponthe Guarantor,theGuarantorguarantees thatif FENGenCofails to performthorequired decommissioning activities,asrequiredby LicenseNo.DPR-66andLicenseNo.NPF-58, dueto lackof funds,theGuarantor shall:

(a) provideall fundsnecessaty, up to theamountof this Guarantyto carryout the requiredactivities,or (b) setup a trustfundin favorof FENGenCo in theamountof thisgparAnty amount for theseactivities.

8. TheGuarantor agfeesto submitrevisedfinancialstatements, financialtestdata,anda special auditor'sreportandreconcilingschedule to theNRC annuallywithin 90 daysof thecloseof theparentGuarantor's fiscalyear.

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9. The GuarantorandFENGenCoagreethatif theGuarantorfails to meetthe ftnancialtest criteriaat anytimeafterthisGuarantyisestablished, theGuarantor andFENGenCo shall send,within 90 daysof theendof thefiscalyearin whichtheGuarantor failsto meetthe financialtestcriteria,by certifiedmail,noticeto theNRC. If FENGenCo failsto provide alternative financialassurance asspecified in 10 CFR Part 50, as applicable, andobtain writtenapprovalof suchassurance fromtheNRCwithin 180daysof theendof suchfiscal year,thoGuarantor shallprovidesuchalternative financialas$urance in thenameof FENGenCoor makefull paymentundertheGuarantyto a standby trust e.stablished by FENGenCo.

10. Independent of anynotificationunderparagaph8 above,if theNRCdetermines for any reasonthattheGuarantor no longermeetsthefinancialtestcriteriaor thatit is disallowed fromcontinuingasa Guarantor for thefacilitiesunderLicenseNo. DPR-66andLicenseNo' NFP-58,theGuarantor agreesthatwithin90 daysafterbeingnotifiedby theNRC of such determination, analternative financialassurance mechanism asspecifiedin 10 CFRPart50 asapplicable, shallbe established by theGuarantor in thenameof FENGenCo unless FENGenCo hasdoneso.

11, TheGuarantor aswell asits successors andassigns shallremainboundjointly andseverally underthisGuaranty notwithstanding anyor all of thefollowing:amendment or modification of licenseorNRC-approved decommissioning fundingplanfor thatfaoility,theextension or reductionof thetimeof perfonnance of requiredactivities,or anyothermodificationor alterationof anobligationof FENGenCo pursuantto 10 CFRPart50.

12. The Guarantor agreesthatit will beliablefor all litigationcostsincunedbyFENGenCoor the NRC in anysucce"ssful effort to enforcetheagteement againstthe Guarantor.

13. TheGuarantor agreesto remainboundunderthisGuaranty for aslongasFENGenCo must complywith theapplicabte financialassurance requirements of 10CFRPart50,for the previouslylistedfacilities,exceptthatthisGuaranty maybecancelled andextinguished or the amountof the Guarantyspecifiedin Paragraph 3 maybe amended by theagteement of Guarantor andFENGenCo with thepriorwrittenconsentof theNRC,andexceptthatthe Guarantor maycancelthisGuaranty by sendingnoticeby certifiedmail to theNRC andto FBNGenCo, suchcancellation to becomeeffectiveno earlierthan120daysafterreceiptof suchnoticeby boththeNRC andFENGonCo asevidenced by iherefurnreceipts,andexcept thatthis Guaranty maybebe cancelled andextinguished at anytimeif it is replaced by a Guarantyin a greateramountthantheamountspecifiedin Paragraph 3 hereof. If FENGenCo failsto providealternative frnancialBssurance asspecifiedin 10CFRPart50,asapplicable, andobtainwr{ttenapprovalof suchassurance within 120daysafterthe sendingof the above noticeby theGuarantor,theGuarantorshallprovidesuchalternativefinancialassurance.

14. TheGuarantor expressly waivesnoticeof acceptance of this Guaranty by theNRC or by FENGenCo.TheGuarantor alsoexpressly waivesnoticeof amendments or modificationof thedecommissioning requirements andof amendments or modifications of thelicenses.

15. The Guarantor files financialreportswith theU.S.Securities andExchange Commission (SEC),whichareavailableto NRC andneednotbe submittedseparately in accordance with 10cFR 50.71(b).

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16. This Guarantyandthe rightsandobligationsof theFENCenCoandthe Guarantorhereunder, shallbegoverned by andconstrued in accordance with thedomesticlawsof theStateof Ohio withoutgivingeffectto anychoiceor conflict-of-law provisionor rule (whetherof Ohioor anyother jurisdiction) thatwouldcausetheapplication of thelawsof anyjurisdictionother thanthe Ohio. The GuarantorandtheFENGenCoeachconsentto the exclusivejurisdiction andvenueof anystateor federalcourtwithin theStateof Ohio for adjudicationof anysuit, claim,actionor otherproceeding at law or in equityrelatingto this Guaranty, or to any hansactioncontemplated hereby.The GuarantorandFENGenCoeachaccept,generallyand unconditionally,the exclusivejurisdietionandvenueof the aforesaidcourtsandwaiveany objectionasto venue,andanydefenseofforum nonconveniens.TheGuarantorhereby irrevocablyconsentsto theserviceof processout of anyof the aforementioned courtsin any suchactionor proceedingby thomailingof copiesthereofby registered or cerlifiedmail, postageprepaid,to the Guarantor at its address setforthoppositeits signature below,such serviceto becomeeffective30 daysaftersuchmailing.Nothinghereinshallaffectthelight of FENGenCo to seryeprocess in anyothermannerpermittedby law or to commence legal proceedings or otherwiseproceedagainsttheGuarantor in anyother jurisdiction. The Guarantorherebyirrevocablywaivesanyobjectionwhichit maynow or hereafterhaveto the layng of venueof anyof theaforesaid actionsor proceedings arisingout of or in comection with the Guarantybroughtin the courtsreferredto aboveandherebyfurlheriuevocably waivesandagrees not to pleador claimin anysuchcourtthatanysuchactionor proceeding broughtin anysuchcourthasbeenbroughtin aninconvenient forum.

17. All noticesandothercommunications hereunder shallbemadeto FirstEnergy Corp.'sChief FinancialOfficerandGeneralCounselat 76 SouthMain Street,Akron,Ohio44308.

18, It is intendedthatthisGuarantyshallreplacetheexistingGuarantydatedMarch4, 2010, whichwill be cancelled, revokedandrescinded with no furtherforceandeffectby virtueof theNoticeprovidedto NRC on June24,2011and uponexecutionof this Guaranty.The Guaranty datedJune14,2011nevertookeffect,because theconditionprecedent to its effectiveness (prior written consentof theNRC to therevocationof theGuarantydated March4,2010)wasnevermet;theGuaranty datedJune14,2011is nowvoid. This replacement Guarantyshallbe effectiveimmediately.

19. If it is everdetermined thattheGuarantydatedMarch4,2010remainsenforceable andnot properlycancelled, revokedandrescinded with no fuither forceand effect, than the amount of this Guaranty specifiedin Paragraph 3 hereofshallbereduced by theamount($15million) specifiedin Paragraph 3 of theGuaranty datedMarch4,2010, If it is everdetermined that theGuaranty datedJune14,2010becameeffectiveandcontinues to be enforceable, thanthe amountof thisCuarantyspecifiedin Paragraph 3 hereofshallbereducedby thoamount

($95million) specifiedin Paragraph 3 of theGuaranty datedJune14,2011.For avoidance of doubt,theintentof theforegoingprovisionsis to assure thattheamountof decommissioning liability guaranteed by FirstEnergy Corp.pursuantto anyandall ParentalGuaranties thatare or maybeenforceable asof thedatesetforthbelowshallbe,andshall not in any case exceed, thetotalamount($95million) specifiedin Paragraph 3 hereof.

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I herebycertifi thatthisGuarantyis trueandconectto thebestof my knowledge.

Erfectiveaur",T 11,Totl

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Vice President & Treasurer STATEOF OHIO COIJNTYOF SUMMIT Subscribed,and sworrylome,a NotaryPublic,in andfor theCity/CountyandStateabove named,thisI q tl-aay ot jdll .,"zott, Mycommission Expir *, tl a llf AA t 6 A.Suclttol lllcirelo RosldotSummttCottntt ilolarrPubllo,Shteol(lih l*ycornmisrmn aplr06t08128/2010 Vice President & Corporate Secretary STATEOF OHIO COUNTYOF SUMMIT Subscribed andswggato me,a NotaryPublic,in andfor theCity/CountyandStateabove named, this 14 aayorlgl,zott, My Commission Expires:

KELLYINOERSOTL NOTARYPUBLIC. STATEOFO{O Recordodin WayneCounty MyommtsslonexphesNov.22,2O14 Page5