L-14-122, Annual Financial Test for a Parent Company Guarantee
| ML14087A454 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley, Davis Besse, Perry, 07201043, 07200069 (DPR-066, NPF-058) |
| 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 White Pond Dr.
Akron, Ohio 44320 March 28,2014 L-14-122 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555-0001
SUBJECT:
Beaver Valley Power Station, Unit No. 1 Docket No. 50-334, License No. DPR-66 Beaver Valley Power Station ISFSI Docket No. 72-1043 Davis-Besse Nuclear Power Station ISFSI Docket No.72-14 Perry Nuclear Power Plant Docket No. 50-440, License No. NPF-58 Perry Nuclear Power Plant ISFSI Docket No. 72-69 Annual Financial Test for a Parent Company Guarantee 10 cFR 30 Enclosed is a copy of the annual FirstEnergy Corp. (FE) financial test that provides assurance that FE can support parent company guarantees (PGs) associated with the decommissioning funding for Beaver Valley Power Station, Unit No. 1 (BVPS-1);
Davis-Besse Nuclear Power Station (DBNPS) Independent Spent Fuel Storage Installation (ISFSI);
Perry Nuclear Power Plant (PNPP);
and Perry Nuclear Power Plant lSFSl. The test was prepared in accordance with 10 CFR 30, Appendix A, "Criteria Relating to Use of Financial Tests and Parent Company Guarantees for Providing Reasonable Assurance of Funds for Decommissioning."
The PGs include a
$11 million PG for the DBNPS and PNPP lSFSls and a $125 million PG for BVPS-1 and PNPP. The test also provides assurance for a $155 million replacement PG for the current $125 million PG for the power plants, and a new $9.5 million PG for the Beaver Valley Power Station (BVPS) lSFSl. The $155 million replacement PG for BVPS-1 and PNPP, and the $9.5 million BVPS ISFSI PG are expected to be in place by the end of the second quarter 2014.
This submittal provides the requisite 30-day notification to the Nuclear Regulatory Commission regarding amending the $125 million PG in accordance with Section 14 of the PG.
Beaver Valley Power Station, Unit No. 1 Beaver Valley Power Station ISFSI Davis-Besse Nuclear Power Station ISFSI Perry Nuclear Power Plant Perry Nuclear Power Plant ISFSI L-14-122 Page 2 The enclosure also includes a report by the FE independent accountants of their review of the FE financial test.
There are no regulatory commitments contained in this submittal. lf there are any questions or if additional information is required, please contact Mr. Thomas A. Lentz, Manager
- Fleet Licensing, at (330) 315-6810.
- Director, Fleet Regulatory Affairs
Enclosure:
FirstEnergy Corp. Parent - Guarantee of Funds for Decommissioning:
Letter from Chief Financial Officer to Demonstrate Financial Assurance cc: NRC Region lAdministrator NRC Region lll Administrator NRC Resident Inspector (Beaver Valley)
NRC Resident Inspector (Davis-Besse)
NRC Resident Inspector (Perry)
NRC Project Manager (Beaver Valley)
NRC Project Manager (Davis-Besse)
NRC Project Manager (Perry)
Director BRP/DEP Site BRP/DEP Representative Utility Radiological Safety Board
March28,2014 ATTN: Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555-000 I Subject; FirstEnergy Corp. Parent - Guarantee of Funds for Decommissioning:
Letter from Chief Financial Offrcer to Demonstrate Financial Assurance I am the Senior Vice President and 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 demonstrate financial assurance, as specified in 10 CFR Part 50 and CFR Part 72.
This firm is qualified to provide parent company guarantees, up to $175.5 million for the decommissioning costs of the following facilities owned or operated by subsidiaries of this firm. The current cost estimate and the amount to be guaranteed are shown for the following facilities:
Name of Facility Beaver Valley Power Station. UnitNo. I License No. DPR-66 Perry Nuclear Power Plant License No. NPF-58 Davis-Besse Nuclear Power Station Independent Spent Fuel Storage Installation DocketNo. T2-14 Perry Nuclear Power Plant Independent Spent Fuel Storage Installation Docket No. 72-69 Beaver Valley Power Station Independent Spent Fuel Storage Installation Docket No. 72-1043 Shippingport, PA
$ 510,139,000 Location of Facility Perry, OH Oak Harbor, OH Current Cost Estimates
$ 682,020,000
$ 4,639,427 Amount to be Guaranteed 90,000,000
$ 65,000,000 4,700,000 Perry, OH
$ 6,077,790 6,300,000 Shippingport, PA 9,104,297 9,500,000 FirstEnergy Corp. is required to file a Form l0-K with the U.S. Securities and Exchange Commission for the latest hscal 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 asterisks are derived from FirstEnergy Corp.'s independently audited, year-end financial statements and f,ootnotes for tlte latest cotnpleted fiscal year ending December 3 r. 2013.
I lqeby certifr that the content of this letter is true and correct to the best ofmy knowledge.
Senior Vice President and Chief Financial Offrcer, FirstEnergy Corp.
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. Guaranteed amount for the following Units:
Beaver Valley Power Station, Unit No. l, License No. DPR-66 Beaver Valley Power Station, ISFSI Perry Nuclear Power Plant, License No. NPF-58 Davis-Besse Nuclear Power Station, ISFSI Perry Nuclear Power Plant, ISFSI
- 2. Current bond rating ofmost recent unsecured issuance ofthis firm Rating Name of Rating Service Date of issuance of bond Date of maturity of bond
- +5. Tangible Net Worth
- 6. Total assets in the United States (required only ifless than 90 percent of firm's assets are located in the United States) 4,
$ l7s.s Baa3 Moody's 315120t3 3lt5/2018 &
3trs12023
$ 2,130
- 7. Is Line 5 at least $21 million?
- 8. Is line 5 at least 6 times line l?
9.
See line 9 below Ygs No X
X X
10.
I l.
Are at least 90 percent of the frm's assets located in the United States?
If not, complete line 10.
Is line 6 at least 6 times line l?
Is the rating specified on ljne 2 "BBB" or better (if issued by Standard and Poor's) or "Baa" or better (if issued by Moody's)?
- Denotes figures derived from financial statments.
- Tangible Net Worth is defined as FirstEnergy Corp. total equity minus goodwill, patents, hademarks and copyrights; and FirstEnergy Corp.'s net book value for Beaver Valley Power Station, Unit No. I and 2, Perry Nuclear Power Plant and Davis-Besse Nuclear Power Station.
FIRSTENERGY CORP.
YEAR ENDED DECEMBER 3I, 2013 Dollars in Millions Line Number in CFO's Letter Total Equity Less:
Goodwill, Patents, Trademarks and Copyrights Other Intangible Assets Net Book Value Beaver Valley Power Station, Unit No. I Net Book Value Beaver Valley Power Station, Unit No, 2 Net Book Value Perry Nuclear Power Plant Net Book Value Davis-Besse Nuclear Power Station 5 -
Tangible Net Worth Per Financial Statements 12,695 s
6,447 807 q
588 407 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 accordance with the U.S. Nuclear Regulatory Commission (the "NRC") Regulations 10 C.F.& Section 5o.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 engagement was conducted in aecordance with 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's financial 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 engaged to 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.
PricewaterhouseCoopers LLP, zoo Public Square, tSth Floor, Cleueland, OH 44tt4-z3ot T: (zt6) 875 3ooo, 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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PricewaterhouseCoopers LLP March e8, zor4