L-06-030, Application for Order Approving Indirect Transfer of Control of Licenses

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Application for Order Approving Indirect Transfer of Control of Licenses
ML061670079
Person / Time
Site: Beaver Valley, Davis Besse, Perry
Issue date: 06/06/2006
From: Leidich G
FirstEnergy Nuclear Operating Co
To:
Document Control Desk, Office of Nuclear Reactor Regulation
References
3237, L-06-030, PY-CEI/NRR-2944L
Download: ML061670079 (18)
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Text

FENOC I76 South Mo'n Street FirstEnergyNuclear OperatingCompany Akron. Ohio 44308 Gary . Leidich 330-384-5770 Presidentand Chief Nuclear Officer Fax: 330-384-5669 June __,2006 L-06-030 Serial Number 3237 PY-CEI/NRR-2944L 10 CFR 50.80 U.S. Nuclear Regulatory Commission Attention: Document Control Desk Director, Office of Nuclear Reactor Regulation Washington, DC 20555 Re: Beaver Valley Power Station, Unit Nos. 1 & 2, Docket Nos. 50-334, 50-412 Davis-Besse Nuclear Power Station, Unit No. 1, Docket No. 50-346 Perry Nuclear Power Plant, Unit No. 1, Docket No. 50-440 Application for Order Approving Indirect Transfer of Control of Licenses Pursuant to Section 184 of the Atomic Energy Act of 1954, as amended, and 10 CFR 50.80, FirstEnergy Nuclear Operating Company ("FENOC"), acting on behalf of FirstEnergy Nuclear Generation Corp. ("FENGenCo") and tirstEnergy Solutions Corp. ("FE Solutions"), hereby requests that the Nuclear Regulatory Commission ("NRC") consent to the indirect transfer of control of FENGenCo's licenses to own:

1. 100% of Beaver Valley Power Station, Unit No. 1 ("BVPS 1");
2. 60.8% of Beaver Valley Power Station, Unit No. 2 ("BVPS 2")(BVPS 1 and BVPS 2 collectively "BVPS");
3. 100% of Davis-Besse Nuclear Power Station, Unit No. 1 ("Davis-Besse");
4. 87.420% of Perry Nuclear Power Plant, Unit No. 1 ("Perry")(collectively the "Licenses").

FE Solutions and FENGenCo are both currently wholly owned direct subsidiaries of FirstEnergy Corp ("FirstEnergy"). The proposed internal restructuring would make FENGenCo: (1) a wholly owned direct subsidiary of FE Solutions; and (2) a wholly owned second-tier subsidiary of FirstEnergy. Exhibits A and B of the enclosed Application provide simplified before and after organizational charts. The proposed internal restructuring involves no changes to any of the facility licenses. Accordingly, no license amendments are requested in the enclosed Application.

Pf0o

June __, 2006 L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 2 of 3 The enclosed Application is a continuation of the reorganization that began with FENOC's May 18 and June 1, 2005 applications which were supplemented on July 15 and October 3, 2005 (collectively the "2005 Applications"). The NRC approved the transfer to FENGenCo on December 16, 2005.1 None of FENGenCo's qualifications to own the facilities is affected by the proposed indirect transfer. Specifically, FENGenCo's financial qualifications and decommissioning funding assurance will not change as part of the proposed transaction.

Through the enclosed Application, FENOC requests, on behalf of FE Solutions and FENGenCo, that the NRC consent to this proposed indirect transfer of control. The information contained in the enclosed Application demonstrates that, after the proposed indirect transfer of control, FENGenCo will continue to possess the requisite qualifications to own the Licenses.

FENOC is the licensed operator for BVPS, Davis-Besse, and Perry. The enclosed Application does not request, or involve any change to FENOC's continued operation of BVPS, Davis-Besse, or Perry. The enclosed Application does not request approval of any physical changes in the plant, or any changes to the conduct of operations at BVPS, Davis-Besse, or Perry. After transfer of the BVPS, Davis-Besse, and Perry licenses, FENOC will continue to operate and maintain each plant in accordance with its respective licensing basis.

Finally, the enclosed Application does not request any license amendments or make additional commitments to the NRC. The proposed indirect transfer of control will be consistent with the requirements set forth in the Act, NRC regulations, and the relevant NRC licenses and orders. It will neither have any adverse impact on the public health and safety, nor be inimical to the common defense and security. FENOC, therefore respectfully requests that the NRC consent to the indirect transfer of control in accordance with 10 CFR 50.80.

FENOC requests that the NRC review the enclosed Application on a schedule that will permit the issuance of NRC consent to the transfers of control as soon as practicable, and are prepared to work closely with the NRC Staff to help the application's review. Approval is requested by no later than August 14, 2006. Such consent should be immediately effective upon issuance and should permit the transfers at any time within one year.

Service upon FENOC of comments, hearing requests, intervention petitions or other pleadings should be made to Mr. David W. Jenkins, Esq., FirstEnergy Corp., 76 South Main Street, Mail Stop A-GO-18, Akron, Ohio 44308; telephone: (330) 384-5037; and email:

djenkins@firstenergycorp.com.

Order Superseding Order of November 15, 2005 Approving Transfer of Licenses and Conforming Amendments (December 16, 2005)("December 16 Order").

June __, 2006 L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 3 of 3 If there are any questions or if additional information is required, please contact Mr. Gregory A. Dunn, Manager - FENOC Fleet Licensing, at (330) 315-7243.

Sincerely, Ak4V11i0-L

Enclosures:

1. Application for Order Approving Indirect Transfer of Control of Licenses with Exhibits
2. Regulatory Commitments cc: Director, NRR NRC Region 1 Administrator NRC Region 3 Administrator Beaver Valley NRC Project Manager Davis-Besse NRC Project Manager Perry NRC Project Manager Beaver Valley NRC Senior Resident Inspector Davis-Besse NRC Senior Resident Inspector Perry NRC Senior Resident Inspector D.A. Allard, Director BRP/DEP L.E. Ryan, BRP/DEP N. Dragani, Executive Director, Ohio Emergency Management Agency, State of Ohio (NRC Liason)

Utility Radiological Review Board L-06-030 Serial Number 3237 PY-CEIINRR-2944L Page 1 of 14 Application for Order Approving Indirect Transfer of Control of Licenses June 6, 2006 submitted by FirstEnergy Nuclear Operating Company on behalf of FirstEnergy Nuclear Generation Corp.

and FirstEnergy Solutions Corp.

Beaver Valley Power Station, Unit Nos. 1 & 2, Docket Nos. 50-334 & 50-412, Davis-Besse Nuclear Power Station, Unit No. 1, Docket No. 50-346, and Perry Nuclear Power Plant, Unit No 1,Docket No. 50-440

Enclosure I L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 2 of 14 APPLICATION FOR ORDER APPROVING INDIRECT TRANSFER OF CONTROL OF LICENSES TABLE OF CONTENTS SECTION PAGE NO.

I. Introduction 4 II. Statement of Purpose of the Transfer and Nature of the Transaction Making the Transfer Necessary or Desirable 6 III. Supporting Information 6 A. Name of New Parent 6 B. Address 6 C. Description of Business or Occupation 6 D. Corporate Information 6

1. State of Incorporation and Place of Business 6
2. Directors and Principal Officers 7
3. No Foreign Ownership or Control 7
4. No Agency 8 E. Technical Qualifications. 8 F. Financial Qualifications 8 G. Decommissioning Funding 9 H. No Antitrust Considerations 9 I. Nuclear Insurance 9 J. Standard Contract for Disposal of Spent Nuclear Fuel 10 K. Agreement to Limit Access to Restricted Data 10 L. Environmental Review 10 IV. Effective Date 11 V. Conclusion 11

Enclosure I L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 3 of 14 List of Exhibits Affirmation of Gary R. Leidich Exhibit A Simplified Corporate Ownership Structure Before Transfer Exhibit B Simplified Corporate Ownership Structure After Transfer L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 4 of 14 I. INTRODUCTION Pursuant to Section 184 of the Atomic Energy Act of 1954, as amended ("the Act"), and 10 CFR 50.80, FirstEnergy Nuclear Operating Company ("FENOC"), acting on behalf of FirstEnergy Nuclear Generation Corp. ("FENGenCo") and FirstEnergy Solutions Corp. ("FE Solutions"), hereby requests that the Nuclear Regulatory Commission ("NRC") consent to the indirect transfer of control of FENGenCo's licenses to own:

1. 100% of Beaver Valley Power Station, Unit No. 1 ("BVPS 1");
2. 60.8% of Beaver Valley Power Station, Unit No. 2 ("BVPS 2")(BVPS 1 and BVPS 2 collectively "BVPS");
3. 100% of Davis-Besse Nuclear Power Station, Unit No. 1 ("Davis-Besse");
4. 87.420% of Perry Nuclear Power Plant, Unit No. 1 ("Perry")(collectively the "Licenses").

FE Solutions and FENGenCo are both currently wholly owned direct subsidiaries of FirstEnergy Corp ("FirstEnergy"). The proposed internal restructuring would make FENGenCo: (1) a wholly owned direct subsidiary of FE Solutions; and (2) a wholly owned second-tier subsidiary ofFirstEnergy. Exhibits A and B provide simplified before and after Organizational charts. The proposed internal restructuring involves no changes to any of the facility licenses. Accordingly, no license amendments are requested in this Application.

This Application is a continuation of the reorganization that began with FENOC's May 18 and June 1, 2005 applications which were supplemented on July 15 and October 3, 2005 (collectively the "2005 Applications"). The NRC approved the transfer to FENGenCo on

Enclosure I L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 5 of 14 December 16, 2005.1 None ofFENGenCo's qualifications to own the facilities is affected by the proposed indirect transfer. Specifically, FENGenCo's financial qualifications and decommissioning funding assurance will not change as part of the proposed transaction.

FENOC requests, on behalf of FE Solutions and FENGenCo, that the NRC consent to this proposed indirect transfer of control. The information contained in this Application demonstrates that, after the proposed indirect transfer of control, FENGenCo will continue to possess the requisite qualifications to own the Licenses.

FENOC is the licensed operator for BVPS, Davis-Besse, and Perry. This application does not request, or involve any change to FENOC's continued operation of BVPS, Davis-Besse, or Perry. This application does not request approval of any physical changes in the plant, or any changes to the conduct of operations at BVPS, Davis-Besse, or Perry. After transfer of the BVPS, Davis-Besse, and Perry licenses, FENOC will continue to operate and maintain each plant in accordance with its respective licensing basis.

Finally, this Application does not request any license amendments or make additional commitments to the NRC. The proposed indirect transfer of control will be consistent with the requirements set forth in the Act, NRC regulations, and the relevant NRC licenses and orders. It will neither have any adverse impact on the public health and safety, nor be inimical to the common defense and security. FENOC, therefore respectfully requests that the NRC consent to the indirect transfer of control in accordance with 10 CFR 50.80.

Order Superseding Order of November 15, 2005 Approving Transfer of Licenses and Conforming Amendments (December 16, 2005)("December 16 Order").

Enclosure I L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 6 of 14 II. STATEMENT OF PURPOSE OF THE TRANSFER AND NATURE OF THE TRANSACTION MAKING THE TRANSFER NECESSARY OR DESIRABLE The proposed restructuring consolidates all of FirstEnergy's merchant generation subsidiaries into a single intermediate holding company, FE Solutions. FE Solutions plans to pursue its own independent credit rating. In August 2005, Congress passed the Energy Policy Act of 2005, repealing the Public Utility Holding Company Act of 1935 effective February 8, 2006, which repeal facilitates this consolidation.

III. SUPPORTING INFORMATION A. Name of New Parent FirstEnergy Solutions Corp.

B. Address 395 Ghent Road Akron, Ohio 44333 C. Description of Business or Occupation FirstEnergy established FE Solutions as the affiliate responsible for the purchase and sale of electricity in competitive markets. FENGenCo currently sells the entire output of its plants to FE Solutions pursuant to a Purchased Power Agreement ("PPA") approved by the Federal Energy Regulatory Commission (the ,FERC'). The proposed indirect transfer will have no impact on that PPA.

D. Corporate Information

1. State of Incorporation and Place of Business FE Solutions is an Ohio corporation. FE Solutions's principal place of business is also Ohio.

Enclosure 1 L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 7 of 14

2. Directors and Principal Officers The following individuals, whom are U.S. citizens, are the directors of FE Solutions:

Anthony J. Alexander Gary R. Leidich Richard H. Marsh Guy L. Pipitone The following individuals, whom are U.S. citizens, are the principal officers of FE Solutions:

Guy L. Pipitone President Richard H. Marsh Senior Vice President and Chief Financial Officer Leila L. Vespoli Senior Vice President and General Counsel Charles D. Lasky Vice President Alfred G. Roth Vice President Donald R. Schneider Vice President Harvey L. Wagner Vice President and Controller Arthur W. Yuan Vice President David W. Whitehead Corporate Secretary James F. Pearson Treasurer

3. No Foreign Ownership or Control After the proposed indirect transfer, FENGenCo will be a wholly owned subsidiary of FE Solutions, and a wholly owned second-tier subsidiary of FirstEnergy. The shares of common stock of FirstEnergy are publicly traded on the New York Stock Exchange and are widely held.

The directors and principal officers of FENGenCo, FE Solutions, and FirstEnergy are U.S.

citizens. Section 13 of the Securities and Exchange Act of 1934, as amended, 15 U.S.C. 78m(d),

requires that a person or entity that owns or controls more than 5% of the stock of a company must file notice with the Securities and Exchange Commission (SEC). The analysis presented in the Foreign Ownership and Control section of the 2005 Applications have not changed. As such,

Enclosure I L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page8 of 14 FirstEnergy, FE Solutions, and FENGenCo are not owned, controlled or dominated by an alien, a foreign corporation, or a foreign government.

4. No Agency In seeking to become the parent of the owner of the Licenses, FE Solutions is not acting as the agent or representative of any other person or entity.

E. Technical Qualifications The technical qualifications of FENOC are not affected by the proposed transfers of control. There will be no physical changes to BVPS, Davis-Besse, or Perry and no changes in the day-to-day operations of FENOC in connection with the transfers of control. FENOC will at all times remain the licensed operator of BVPS, Davis-Besse, and Perry, and there will be no changes in the FENOC senior management team resulting from the proposed license transfers.

F. Financial Qualifications Information regarding FENGenCo's financial qualifications was provided in the 2005 Applications and accompanying exhibits. By letter dated May 30, 2006 (BVPS letter L-06-071, Davis-Besse letter Serial Number 3261, and Perry letter PY-CEI/NRR-2957L) FENOC submitted revised FENGenCo financial information. Though the revised information shows a reduction in the FENGenCo pro-forma income statements, adequate net income remains to ensure the viability of FENGenCo operations. The proposed indirect transfer of control of licenses does not alter FENGenCo's ongoing financial qualifications, and FENGenCo will remain financially qualified. In particular, FENGenCo has entered into a Power Supply Agreement (PSA) that provides substantial revenue which is more than adequate to recover its maintenance, operating, and capital costs for the transferred assets as anticipated in the 2005 Applications. In addition, FirstEnergy has entered into a $400 million financial support

Enclosure 1 L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 9 of 14 agreement directly with FENGenCo, and this will remain in place unaffected by the proposed indirect transfers.

G. Decommissioning Funding Similarly, the decommissioning funding assurance analysis and the applicable exhibits approved by the December 16 Order remains unchanged. The decommissioning funding assurance requirements for the licenses continues to be satisfied because: (1) all of the 2005 trust fund contributions referenced in the June 1, 2005 application were made; (2) FirstEnergy will continue to make all future required contributions; and (3) the parent guarantee directly from FirstEnergy to FENGenCo referenced in the May 18, 2005 application remains unchanged.

H. No Antitrust Considerations In accordance with the Commission's decision in Kansas Gas andElectric Company (Wolf Creek Generating Station, Unit 1), CLI-99-19, 49 N.R.C. 441 (1999), antitrust reviews of license transfer applications after initial licensing are not required by the AEA. See also 10 CFR 50.80(b);

Final Rule, Antitrust Review Authority: Clarification, 65 Fed. Reg. 44,649 (July 19, 2000). The existing antitrust conditions in the licenses are not affected by this application. The proposed 2

transfer does not change the antitrust conditions approved in the December 16 Order.

I. Nuclear Insurance The proposed indirect transfer of control does not affect the existing Price-Anderson indemnity agreement for Beaver Valley, Davis-Besse, or Perry, and does not affect the required 2 Notice that AMP Ohio and City of Cleveland requested a heiring based on this issue. On January 31, 2006, the Commission declined to grant that hearing. FirstEnergy Nuclear Operating Company (Beaver Valley, Unit Nos. 1 and 2, Davis-Besse Power Station, Unit No. 1, and Perry Nuclear Power Plant, Unit No. 1), CLI-06-02. Accordingly, the Order is final.

Enclosure I L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 10 of 14 nuclear property damage insurance pursuant to 10 CFR 50.54(w) and nuclear energy liability insurance pursuant to Section 170 of the Act and 10 CFR Part 140.

J. Standard Contract for Disposal of Spent Nuclear Fuel The proposed indirect transfer of control does not affect the existing standard contracts to which FENGenCo is a party.

K. Agreement to Limit Access to Restricted Data This application does not involve any Restricted Data or other classified defense information. Furthermore, it is not expected that any such information will be raised or required by the licensed activities at BVPS, Davis-Besse, or Perry. In the event that licensed activities do involve Restricted Data in the future, FENGenCo continues to agree that it will appropriately safeguard such information. Restricted or classified defense information will not be provided to any individual until the Office of Personnel Management investigates and reports to the NRC on the character, associations, and loyalty of such individual, and the NRC determines that permitting such person to have access to Restricted Data will not endanger the common defense and security of the United States.

L. Environmental Review The proposed indirect transfer will not result in any change in the types, or any increase in the amounts, of any effluents that may be released off-site, and will not cause any increase in individual or cumulative occupational radiation exposure. Further, the NRC has determined in 10 CFR 51.22(c)(21) that license transfers are categorically exempt from further environmental review. Accordingly, the indirect license transfer will involve no significant environmental impact.

L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 11 of 14 IV. EFFECTIVE DATE The Applicant requests that the NRC review this application on a schedule that will permit issuance of an order consenting to the requested indirect license transfer as promptly as possible, and in any event on or before August 14, 2006. Such consent should be immediately effective upon issuance and should permit the transfer to occur any time within one year.

V. CONCLUSION For the reasons stated above, the Applicant respectfully submits that the proposed indirect transfer of FENGenCo's ownership interests in BVPS, Davis-Besse, and Perry is consistent with the requirements set forth in the ABA, NRC regulations, and the relevant NRC licenses and orders. The Applicant therefore respectfully requests that, in accordance with Section 184 of the AEA and 10 CFR 50.80, the NRC consent to the indirect transfers.

Enclosure 1, Affirmation L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 12 of 14 Affirmation I, Gary R. Leidich, being duly sworn, state that I am the President and Chief Nuclear Officer for FirstEnergy Nuclear Operating Company ("FENOC"), that I am authorized to sign and file this application with the Nuclear Regulatory Commission on behalf of FENOC and its affiliates, and that the statements made and the matters set forth herein pertaining to FENOC and its affiliates are true and correct to the best of my knowledge, information, and belief.

FirstEnergy Nuclear Operating Company GaryR Liich President and Chief Nuclear Officer STATE OF _h_ _ _

COUNTY OF LakC, Subscribed and sworn to before me, a Notary Public, in and for the County and State above named, this j.j~i day of -jtkn ,,-oQ &.

My Commission Expires: ",l'1/og

-~-~-~*  :

N~

KAREN L. J01-INSON Notary Public, State of Ohio MyCommission Expires 2/5/08 Recorded In Lake County.

Enclosure 1, Exhibit A L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 13 of 14 Exhibit A Simplified Corporate Ownership Structure Before Transfer FirstEnergy Corp.

,Ik FE Solutions FENOC FENGenCo

Enclosure 1, Exhibit B L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 14 of 14 Exhibit B Simplified Corporate Ownership Structure After Transfer FirstEnergy Corp.

FE Solutions FENOC FENGenCo

-0 Enclosure 2 L-06-030 Serial Number 3237 PY-CEI/NRR-2944L Page 1 of I Regulatory Commitments The following list identifies those actions committed to by the FirstEnergy Nuclear Operating Company (FENOC) for the Beaver Valley Power Station, Unit Nos. 1 & 2, Davis-Besse Nuclear Power Station, Unit 1, and Perry Nuclear Power Plant, Unit No. 1 in this document. Any other actions discussed.in the submittal represent intended or planned actions by FENOC. They are described only as information and are not regulatory commitments. Please notify Mr. Gregory A. Dunn, Manager - FENOC, Fleet Licensing, at (330) 315-7243 for any questions regarding this document or associated regulatory commitments.

Commitment Due Date No commitments have been generated by this N/A submittal.

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