L-13-051, Davis-Besee, ISFSI, Perry, ISFSI, Annual Financial Test for a Parent Company Guarantee

Davis-Besee, ISFSI, Perry, ISFSI, Annual Financial Test for a Parent Company Guarantee

ML13091A057
Person / Time
Site:	Beaver Valley, Davis Besse, Perry, 07200069
Issue date:	03/29/2013
From:	Halnon G FirstEnergy Nuclear Operating Co
To:	Office of Nuclear Material Safety and Safeguards, Office of Nuclear Reactor Regulation, Document Control Desk
References
L-13-051
Download: ML13091A057 (7)

Text

FENOC 341 White Pond Dr.

Akron, Ohio 44320

"*ffi March29,2013 L-13-051 1 0c F R 3 0 ATTN: DocumentControlDesk U.S.NuclearRegulatory Commission Washington, DC 20555-0001

SUBJECT:

BeaverValleyPowerStation,UnitNo. 1 DocketNo.50-334,LicenseNo.DPR-66 Davis-Besse NuclearPowerStationISFSI DocketNo.72-14 PerryNuclearPowerPlant DocketNo.50-440,LicenseNo.NPF-58 PerryNuclearPowerPlantISFSI DocketNo.72-69 AnnualFinancial Testfor a ParentCompany Guarantee Enclosedis a copyof the annualFirstEnergy Corp.(FE)financialtestthatprovides assurance that FE cansupport parent companyguarantees (PGs)associated withthe decommissioning fundingfor BeaverValleyPowerStation,UnitNo.1, Davis-Besse NuclearPowerStationIndependent SpentFuelStorageInstallation (lSFSl),Perry NuclearPowerPlant,and PerryNuclearPowerPlantlSFSl. Thetestwas preparedin accordance with 10 CFR30,AppendixA, "CriteriaRelatingto Useof Financial Tests and ParentCompanyGuarantees for Providing Reasonable Assuranceof Fundsfor Decommissioning." ThePGsinclude an $11millionPGforthe lSFSlsanda $95million PGforthe powerplants.Thetestalsoprovides assurance for a $125million replacement PGforthecurrent$95millionPGforthe powerplants.The$125million replacement PG is expectedto be in placeby the end of the secondquarter2013.

Theenclosure alsoincludesa reportby the FE independent accountants of theirreview of the FE financialtest.

BeaverValleyPowerStation,UnitNo. 1 Davis-Besse NuclearPowerStationISFSI PerryNuclearPowerPlant PerryNuclearPowerPlantISFSI L-13-051 Page2 Thereare no regulatory commitments containedin thissubmittal.lf thereare any questionsor if additional information pleasecontactMr.ThomasA. Lentz, is required, Manager - FleetLicensing,at (330) 315-6810.

Grego{pE{. Halnon Director,FleetRegulatory Affairs

Enclosure:

FirstEnergy Corp.Parent- Guarantee of Fundsfor Decommissioning:

LetterfromChiefFinancialOfficerto Demonstrate Assurance Financial cc: NRCRegionI Administrator NRCRegionlll Administrator NRCResidentInspector (BeaverValley)

NRCResidentInspector (Davis-Besse)

NRCResidentInspector(Perry)

NRCProjectManager(BeaverValley)

NRCProjectManager(Davis-Besse)

NRCProjectManager(Perry)

DirectorBRP/DEP SiteBRP/DEPRepresentative UtilityRadiological SafetyBoard

March28,2013 ATTN: DocumentControlDesk U.S.NuclearRegulatory Commission Washington, DC 20555-000I

Subject:

FirstEnergyCorp. Parent- Guaranteeof Funds for Decommissioning:

Letter from Chief Financial Officer to DemonstrateFinancial Assurance I am the SeniorVice PresidentandChief FinancialOfficer of FirstEnergyCotp.,76 SouthMain Street,Akron Ohio 44308,an Ohio corporation. This letteris in supportof this firm's useof the financialtestto demonsfrate financialassurance, asspecifiedin 10 CFRPart50 andCFRPart72.

This firm will guarantee,through parent companyguarantees, up to $136 million of the decommissioning costsof the following facilitiesownedor operatedby subsidiaries of this firm.

Thecurrentcostestimateandthe amountbeingguaranteed areshownfor the followingfacilities:

Location of Current AmountBeing Name of Facilitv Facility CostEstimates Guaranteed Beaver Valley Power Shippingport, PA 5507,927,560 $84,000,000 Station,Unit No. I LicenseNo. DPR-66 Perr), Nuclear Power Plant Perry,OH $679,590,000 $41,000,000 LicenseNo. NPF-58 Davis-BesseNuclear OakHarbor,OH $ 4,651,259 $4,700,000 Power Station Independent SpentFuel StorageInstallation DocketNo. 72-14 Perry Nuclear Power Plant Perry, OH $ 6,028,854 $ 6,300,000 IndependentSpentFuel StorageInstallation Docket No. 72-69 FirstEnergyCorp. is requiredto file a Form l0-K with the Securities and Exchange Commissionfor the latestfiscalvear.

The fiscal year of FirstEnergy Corp. ends on December31". The figures for the following items (Financial Test II: Alternative II) marked with double asterisks are derived from FirstEnerry Corp.'s independently audited, year-end financial statements and footnotes for the latest completedfiscal year endingDecember31, 2012.

I hereby certiff that the content of this letter is true and correct to the best of my knowledge.

F. Pearson ior Vice Presidentand Chief Financial Officer, FirstEnergyCorp.

arch28, 2013

FINAI{CIAL TEST: ALTERNATIVE II (10 CFR part 30 App. A. SectionII A.2.)

FirstEnergyCorp. Parent Guaranteeof Fundsfor Decommissioning Dollars in Millions

1. Guaranteedamount for the following Units: $136

. Beaver Valley Power Station,Unit No. l, LicenseNo. DPR-66 o Perry Nuclear Power Plant, LicenseNo. NPF-58

. Davis-BesseNuclear Power Station,ISFSI o Perry Nuclear Power Plant, ISFSI

2. Current bond rating of most recent unsecuredissuanceof this firm Rating Baa3 Name of Rating Service Moody's

3. Date of issuanceof bond 3/512013

4. Date of maturity of bond 3lr5l20r8&

3lrs/2023

• t 5 . Tangible Net Worth $3,673

• 6. Total assetsin the United States(required only if less than 90 percent of firm's assetsare located in the United States) SeeLine 9 Below Yes No

7. Is line 5 at least$21million? X

8. Is line 5 at least6 timesline l? X

9. Are at least90 percentof firm's assetslocated in theUnitedStates? If not,completeline 10. X 1 0 . Is line 6 at least6 timesline l? N/A I l. Is the ratingspecifiedon line 2 "BBB" or better (if issuedby Standard & Poor's)or "Baa" or (if Better issuedby Moody's)?

• Denotesfiguresderivedfrom financialstatements.

• • TangibleNet Worth is definedasFirstEnergyCorp.total equltyminusgoodwill,patents,fiademarksand copyrights;andFirstEnergyCorp.'snetbookvaluefor BeaverValleyPowerStation,Unit No. 1,Perry NuclearPowerPlantandDavis-Besse NuclearPowerStation.

FIRSTENERGY CORP.

YEAR EI\IDEDDECEMBER 3I,2OI2 Dollarsin Millions PerFinancial Line Numberin CFO'sLeffer Statements Total Equity $ 13,093 Less: Goodwill,Patents,TrademarksandCopyrights $ 6,447 OtherIntangibleAssets $ 702 Net Book ValueBeaverValleyPowerStation,Unit No. I $ 420 Net BookValuePerryNuclearPowerPlant $ 1,028 Net BookValueDavis-Besse NuclearPowerStation $ 823 5- TangibleNet Worth s 3.673

ft wc Report of Independent Accountants To FirstEnergy Corp.:

We have performed the proceduresenumeratedbelow, which were ?Sreedto by PanagqTnentof solelyto assistyou in evaluating the Company's-compliancewith the FirstEnefuy Corp. (the iompany)'zoL2performedin financial i*t ur of becembu:rstl accordancewith the U.S. Nuclear Regulatory Commission (the "NRC") Regirlationsio C.F.R,Section So.ZS(eXrXiiiXB) and ro C.F.R,-Section for the Zz.So(e)(z) ai mandated by ile Parent Company Guarantees.Managementis responsible Company'scompliancewith those requirements. This agreed-u_pon procedures engagementwas conducted in accordancewith attestafron standards esta'blisheaUy tne American Institute of Certified PublicAccountants. The sufficiency of these procedruesis solelythe responsilility g{those pqqet specifiedin this report. Consequetttly,*u -"k" no representati,onregarding-thesufficiency of the t'rocedures descri6edbelow f# the purpose foi which this report hasbeen requested or for any other pur?ose. "iti.t Forthe purpose of this report, we have:

1. Read the letter, dated March 28, 2o13, from your Senior Vice President and Chief Financial Officer to the NRC regarding ihe $-iSO miilion Parental Guarantees and performed the following procedures,which were applied as explained below:

A. Traced and agreed the amounts in the column "Per Financial Statements", to a schedule preplred by the Company from its audited financial statements noting no differences.

B. Traced and agreedthe amount in the column "Per CFO's Letter" to line item #5 in the Company'sFinancial Test: Alternative II.

Recomputedthe Tangible Net Worth by subtracting the Company's go-odwill,patents, trademarks, copyrights;

-Unii and FirstEneigy Corp.'s net book value of Beaver Valley power Station, No. r, Davis-BessI-Nuclear Power Station and Perry Nuclear Power Plant from the Company'sstockholders' equitynoting no differences.

D . Inquired of the Vice President, Controller and Chief Accounting--Officer regarding whither any off balance sheet transactions exist that could materially advgrsely affect the ability lt tn.,Company to pay decommissioning cosJg. He_responded that all material off-bul"o.e shdettransactions have been disJlosedin the Company'sfinancial statements as filed in its 2012 Annual Report on Form lo-K and he does not believe that any of the off-balance sheet transictions will materially adversely affgct the Company's ability to pay decommissionitg costs. We did not perform any further proceduresto substantiatemanagement'sresponse.

E. Reviewed the bond rating including in the Company's Financial Test: Alternative II noting that it meets the riquir"-.ttlt of Regulation ro C.F.R. 30, APpendix A,Section II.A.z(i).

We were not engagedto and did not conduct an examination, the objective of which would be the orpression of utioii"ion on compliance.Accordingly, we do not e)q)resssuch an opinion. Hadwe performed additional procedureJ,other matters --idttt have come to our attention that would have been reported to you.

PricewaterhouseCoopers LLP, zoo PublicSquare, tSth Floor,Cleueland,OH 44tt4-z3ot T (zt6) 8ZSSooo, F: (zt6) 5667846,www.pwc.com/us

-L pwe This report is intended solely forthe infonnation and use of managemggt of the Company and is not intend6d to be and should nbt be used by anyone other than these specifiedparties.

Cnry,J'L I*L(

PricewaterhouseCoopersLLP March 28, zor3