L-14-122, Annual Financial Test for a Parent Company Guarantee
| ML14087A454 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley, Davis Besse, Perry, 07201043, 07200069 |
| Issue date: | 03/28/2014 |
| From: | Halnon G FirstEnergy Nuclear Operating Co |
| To: | Document Control Desk, Office of Nuclear Material Safety and Safeguards, Office of Nuclear Reactor Regulation |
| References | |
| L-14-122 | |
| Download: ML14087A454 (7) | |
Text
FENOC FtB Enqgy twc,eat Opwngco.p"ny--
341 WhitePondDr.
Akron,Ohio44320 March28,2014 L-14-122 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 BeaverValleyPowerStationISFSI DocketNo.72-1043 Davis-Besse NuclearPowerStationISFSI DocketNo.72-14 PerryNuclearPowerPlant DocketNo.50-440,LicenseNo.NPF-58 PerryNuclearPowerPlantISFSI DocketNo.72-69 AnnualFinancial Testfor a ParentCompanyGuarantee Enclosedis a copyof the annualFirstEnergy Corp.(FE)financialtestthatprovides assurance thatFE cansupportparentcompanyguarantees (PGs)associated withthe decommissioning fundingfor BeaverValleyPowerStation,UnitNo. 1 (BVPS-1);
Davis-Besse NuclearPowerStation(DBNPS)Independent SpentFuelStorage Installation (ISFSI); PerryNuclearPowerPlant(PNPP);and PerryNuclearPower PlantlSFSl. Thetestwas preparedin accordance with 10 CFR30,AppendixA, "CriteriaRelatingto Useof Financial Testsand ParentCompanyGuarantees for Providing Reasonable Assurance of Fundsfor Decommissioning." The PGs include a
$11millionPGforthe DBNPSandPNPPlSFSlsanda $125million PGfor BVPS-1 and PNPP.Thetestalsoprovidesassurance for a $155millionreplacement PGfor the current$125millionPGfor the powerplants,anda new$9.5millionPGfor the BeaverValleyPowerStation(BVPS)lSFSl. The $155millionreplacement PGfor BVPS-1andPNPP,andthe $9.5millionBVPSISFSIPG areexpected to be in place by the endof the secondquarter2014.
Thissubmittalprovidesthe requisite30-daynotification to the NuclearRegulatory Commission regarding amending the $125millionPG in accordance withSection14 of the PG.
BeaverValleyPowerStation,UnitNo. 1 BeaverValleyPowerStationISFSI Davis-Besse NuclearPowerStationISFSI PerryNuclearPowerPlant PerryNuclearPowerPlantISFSI L-14-122 Page2 The enclosurealsoincludesa reportby the FE independent accountants of theirreview of the FE financialtest.
Thereare no regulatory commitments containedin thissubmittal.lf thereare any questionsor if additional information is required,pleasecontactMr.ThomasA. Lentz, Manager FleetLicensing, at (330)315-6810.
Director,FleetRegulatory Affairs
Enclosure:
FirstEnergy Corp.Parent- Guarantee of Fundsfor Decommissioning:
LetterfromChiefFinancial Officerto Demonstrate Assurance Financial cc: NRCRegionlAdministrator NRCRegionlll Administrator NRCResidentInspector (BeaverValley)
NRCResidentInspector (Davis-Besse)
NRCResidentInspector (Perry)
NRCProjectManager(BeaverValley)
NRCProjectManager(Davis-Besse)
NRCProjectManager(Perry)
DirectorBRP/DEP SiteBRP/DEPRepresentative UtilityRadiologicalSafetyBoard
March28,2014 ATTN: DocumentControl Desk U.S. Nuclear RegulatoryCommission Washington,DC 20555-000I Subject;FirstEnergyCorp. Parent- Guaranteeof Fundsfor Decommissioning:
Letter from Chief FinancialOffrcer to DemonstrateFinancialAssurance I am the Senior Vice Presidentand Chief Financial Officer of FirstEnergy Corp., 76 South Main Street, Akron Ohio 44308,an Ohio corporation.This letter is in supporl of this firm's use of the financial test to demonstratefinancial assurance,as specifiedin 10 CFR Part 50 and CFR Part 72.
This firm is qualified to provide parentcompanyguarantees,up to $175.5million for the decommissioning costs of the following facilities owned or operatedby subsidiariesof this firm. The current cost estimate and the amountto be guaranteedare shownfor the following facilities:
Location of Current Amount to be Name of Facility Facility CostEstimates Guaranteed Beaver Valley Power Shippingport, PA $ 510,139,000 $ 90,000,000 Station.UnitNo. I LicenseNo. DPR-66 Perry Nuclear Power Plant Perry,OH $ 682,020,000 $ 65,000,000 LicenseNo. NPF-58 Davis-BesseNuclear OakHarbor,OH $ 4,639,427 $ 4,700,000 Power StationIndependent SpentFuel StorageInstallation DocketNo.T2-14 Perry Nuclear Power Plant Perry,OH $ 6,077,790 $ 6,300,000 IndependentSpentFuel StorageInstallation Docket No. 72-69 BeaverValley Power Shippingport, PA $ 9,104,297 $ 9,500,000 StationIndependentSpent Fuel StorageInstallation Docket No. 72-1043 FirstEnergyCorp. is required to file a Form l0-K with the U.S. Securitiesand ExchangeCommissionfor the latesthscal year.
The fiscal year of FirstEnergy Corp. ends on December 3 I 't. The figures for the following items (Financial Test II: Altemative II) marked with double asterisksare derived from FirstEnergy Corp.'s independently audited, year-end financial statementsand f,ootnotesfor tlte latest cotnpleted fiscal year ending December 3r .2 0 1 3 .
I lqeby certifr that the contentof this letter is true and correctto the bestofmy knowledge.
SeniorVice Presidentand Chief FinancialOffrcer, FirstEnergyCorp.
March28,2014
FINANCIAL TEST: ALTERNATIVE II (r0 CF'R part 30 App. A.Section II A.2.)
FirstEnergy Corp. Parent Guarantee of Funds for Decommissioning Dollars in Millions
- l. Guaranteedamountfor the following Units: $ l7s.s Beaver Valley Power Station,Unit No. l, LicenseNo. DPR-66 BeaverValley Power Station,ISFSI Perry Nuclear Power Plant,LicenseNo. NPF-58 Davis-BesseNuclear Power Station,ISFSI Perry Nuclear Power Plant,ISFSI
- 2. Currentbond rating ofmost recentunsecuredissuanceofthis firm Rating Baa3 Name of Rating Service Moody's Date of issuanceof bond 315120t3 4, Date of maturity of bond 3lt5/2018&
3trs12023
- +5. TangibleNet Worth $ 2,130
- 6. Total assetsin the United States(requiredonly ifless than 90 percent of firm's assetsare locatedin the United States) Seeline9 below Ygs No
- 7. Is Line5 at least$21million? X
- 8. Is line5 at least6 timesline l? X 9 . Are at least90 percentof the frm's assetslocatedin the United States? X If not, completeline 10.
1 0 .Is line 6 at least6 times line l?
I l . Is the rating specifiedon ljne 2 "BBB" or better(if issuedby Standard and Poor's)or "Baa" or better(if issuedby Moody's)?
- Denotesfigures derived from financial statments.
- Tangible Net Worth is defined as FirstEnergy Corp. total equity minus goodwill, patents,hademarksand copyrights; and FirstEnergy Corp.'snet book value for Beaver Valley Power Station,Unit No. I and 2, Perry Nuclear Power Plant and Davis-BesseNuclear Power Station.
FIRSTENERGYCORP.
YEAR ENDEDDECEMBER3I, 2013 Dollarsin Millions Per Financial Line Number in CFO's Letter Statements Total Equity $ 12,695 Less: Goodwill, Patents,Trademarksand Copyrights s 6,447 Other IntangibleAssets $ 588 q 407 Net Book Value BeaverValley Power Station,Unit No. I Net Book Value BeaverValley Power Station,Unit No, 2 $
Net Book Value Perry Nuclear PowerPlant $
Net Book Value Davis-BesseNuclear Power Station $ 807 5- TangibleNet Worth $ 2,130
_3 wc Report of Independent Accountants To FirstEnergr Corp.:
l{e have performed t}e procedures enumerated below, which were agreed to by management of FirstEnerry Corp. (the Company) solely to assist you in waluating the Company's compliance with the financial test as of December 31, 2013 performed in accordancewith the U.S. Nuclear Regulatory Commission(the "NRC") Regulations10 C.F.& Section5o.75(e)GXiiiXB) and ro C.F.& Section Zz.go(eXz) as mandated by the Parent Company Guarantees.Management is responsible for the Companls compliance with those requirements. This agreed-upon procedures engagementwas conducted in aecordancewith attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding tle sufficiency of the procedures described below either for the purpose for which this report has been requested or for any otherpurpose.
Forthe purpose of this repot, we have:
- r. Read the letter, dated March 28, 2oL4, from your Senior Vice President and Chief Financial Officer to the NRC regarding the $IZS.S million Parental Guarantees and performed the following procedures, which were applied as explained below:
A. Traced and agreed the amounts in the column "Per Fhancial Statements", to a schedule prepared by the Company from its audited financial statements noting no differences.
B. Traced and agreed the amount in ttre column "Per CFO's Letter" to line item *5 in the Company's Financial Test: Alternative II.
C. Recomputed the Tangible Net Worth by subtracting the Company's goodwill, patents, trademarks, copyrights; and FirstEnerry Corp.'s net book value of Beaver Valley Power Station, Unit No. r and z, Davis-Besse Nuclear Power Station and Perry Nuclear Power Plant from the Company's stockholders' equity noting no differences.
D. Inquired of the Vice President, Controller and Chief Accounting Officer regarding whether any off balance sheet transactions exist that could materially adversely affect the ability of the Company to pay decommissioning costs. He responded that all material off-balance sheet transactions have been disclosed in the Company'sfinancial statements as filed in its zor3 Annual Report on Form 1o-K and he does not believe that any of the off-balance sheet transactions will materially adversely affect the Company's ability to pay decommissioning costs. We did not perform any ftrrther prccedures to substantiate management's response.
E. We compared the bond ratings per line z of the Letter to information obtained as of Mareh 28,2oL4 from an external, publicly available source as follows:
Ratins ner line z of the Letter Ratins per external source E:rternal Source Baag Baa3 Moodt's We were not engagedto and did not conduct an examination, the objective of which would be the expression of an opinion on compliance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
PricewaterhouseCoopersLLP, zoo Public Square, tSth Floor, Cleueland,OH 44tt4-z3ot T: (zt6) 8753ooo, F: (zt6) 566 7846,www.pwc.com/us
This report is intended solely for the information and use of management of ttre Company and is not intended to be and should not be used by anyone other than these specified parties.
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PricewaterhouseCoopersLLP March e8, zor4