ML15034A312

Submittal of Commitment for Parent Company Guarantee and Request to Discontinue Existing Parent Support Agreement

ML15034A312
Person / Time
Site:	Kewaunee
Issue date:	01/28/2015
From:	Stoddard D Dominion, Dominion Energy Kewaunee
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
15-001
Download: ML15034A312 (10)

Text

Dominion Energy Kewaunee, Inc.

5000 Dominion Boulevard, Glen Allen, VA 23060 "om irion Web Address: www.dom.com January 28, 2015 ATTN: Document Control Desk Serial No.15-001 U. S. Nuclear Regulatory Commission LIC/CDS/R0 Washington, DC 20555-0001 Docket No.: 50-305 License No.: DPR-43 DOMINION ENERGY KEWAUNEE, INC.

KEWAUNEE POWER STATION SUBMITTAL OF COMMITMENT FOR PARENT COMPANY GUARANTEE AND REQUEST TO DISCONTINUE EXISTING PARENT SUPPORT AGREEMENT By letter dated April 4, 2013 (Reference 1), Dominion Energy Kewaunee, Inc. (DEK) requested exemptions, pursuant to 10 CFR 50.12, from 10 CFR 50.82(a)(8)(i)(A) and 50.75(h)(1)(iv) for Kewaunee Power Station (KPS). The exemptions were requested to allow DEK to use funds from the KPS decommissioning trust fund (Trust) for irradiated fuel management.

By letter dated November 6, 2013 (Reference 2), DEK provided supplemental information in support of the exemption requests. In the supplement, DEK agreed that in lieu of an existing Parent Support Agreement, DEK would provide a letter from its ultimate parent, Dominion Resources, Inc. (DRI), making the following commitments:

1. In the event that additional financial assurance beyond the amounts contained in the remaining Trust Fund for KPS is required pursuant to NRC regulations to complete radiological decommissioning and spent fuel management at KPS, DRI will provide or (if already existing) increase a parent company guarantee to provide a total in parental assurance of up to 10% of the remaining Trust Fund balance or

$60 million, whichever is less.

2. Any parent company guarantee provided pursuant to this commitment will comply with applicable NRC requirements in 10 CFR 50.75(e)(1)(iii) and Appendix A to 10 CFR Part 30.

3. DRI will provide ongoing information pertaining to its continuing ability to provide additional financial assurance by submitting by March 31 of each year in connection with DEK's annual financial assurance status report, (1) information demonstrating the results of the financial test in either Paragraph II.A.1 or Paragraph II.A.2 of Appendix A to 10 CFR Part 30 for the immediately preceding calendar year; and (2) a letter from its independent certified public accountant attesting to the data and accuracy of the financial test.1 1 DEK is aware that the American Institute of Certified Public Accountants (AICPA) has informed the NRC that certified public accountants are precluded from issuing any form of report or assurance on matters related to solvency. [See ADAMS Accession No. ML13094A316].

Serial No.15-001 Submit Commitment and Discontinue Support Agreement Page 2 of 3

4. DRI will not modify or withdraw these commitments without prior written NRC consent.

5. DRI agrees that it would be subject to the NRC's authority to issue such orders as may be necessary to enforce DRI's commitments.

The NRC granted the requested exemptions on May 21, 2014 (Reference 3).

The executed letter from DRI reflecting the commitments above is provided as to this letter.

DEK's November 6, 2013 letter to the NRC stated that the commitments listed above "would replace the Support Agreement, which would be terminated upon NRC approval of the exemption request." That Support Agreement, which was put in place when DEK acquired KPS, is subject to a condition in the Commission's June 10, 2004 Order (Reference 4) that approved the transfer of the KPS operating license to DEK. The condition prohibits DEK from taking action to cause DRI to void, cancel or diminish the Support Agreement. While this condition does not explicitly prevent DRI from replacing the Support Agreement with the new commitment letter attached hereto, DEK is conservatively requesting NRC's written concurrence with the termination of the Support Agreement.

In accordance with Commitment 3 above, DEK will initiate the annual submission of information pertaining to its continuing ability to provide additional financial assurance in a separate letter by March 31, 2015.

If you have any questions or require additional information please contact Mr. Craig Sly at 804-273-2784.

Very truly yours, Daniel G. Stoddard Senior Vice President - Nuclear Operations

References:

1. Letter from D. G. Stoddard (DEK) to NRC Document Control Desk, "Request for Exemption from 10 CFR 50.82(a)(8)(i)(A) and 50.75(h)(1)(iv)," dated April 4, 2013.

[ADAMS Accession No. ML13098A031]

2, Letter from D. G. Stoddard to NRC Document Control Desk, "Supplement to Request for Exemptions from 10 CFR 50.82(a)(8)(i)(A) and 50.75(h)(1)(iv)," dated November 6, 2013. [ADAMS Accession No. ML13312A916]

Serial No.15-001 Submit Commitment and Discontinue Support Agreement Page 3 of 3

3. Letter from C. Gratton (NRC) to D. A. Heacock (DEK), "Kewaunee Power Station -

Exemptions to the Requirements of 10 CFR Part 50, Section 50.82(a)(8)(i)(A) and Section 50.75(h)(1)(iv) (TAC No. MF1438)," dated May 21, 2014. [ADAMS Accession No. ML13337A287]

4. Letter from C. F. Lyon (NRC) to D. A. Christian (DEK), "Kewaunee Nuclear Power Plant - Order Approving the Transfer of the Facility Operating License from Nuclear Management Company, LLC. Wisconsin Public Service Corporation, and Wisconsin Power and Light Company to Dominion Energy Kewaunee, Inc. (TAC No. MC1595)," dated June 10, 2004. [ADAMS Accession No. ML041280012]

Enclosure:

1. Commitment Letter from Dominion Resources, Inc. to U.S. NRC Commitments made by this letter: See Enclosure 1.

cc: Regional Administrator, Region III U. S. Nuclear Regulatory Commission 2443 Warrenville Road Suite 210 Lisle, IL 60532-4352 Mr. W. C. Huffman Jr., Project Manager U.S. Nuclear Regulatory Commission One White Flint North, Mail Stop 08-D15 11555 Rockville Pike Rockville, MD 20852-2738 Mr. Ted Carter, Senior Project Manager U.S. Nuclear Regulatory Commission Two White Flint North, Mail Stop T-8 F5 11545 Rockville Pike Rockville, MD 20852-2738 Public Service Commission of Wisconsin Electric Division P.O. Box 7854 Madison, WI 53707

Serial No.15-001 ENCLOSURE 1 Commitment Letter from Dominion Resources, Inc. to U.S. NRC KEWAUNEE POWER STATION DOMINION ENERGY KEWAUNEE, INC.

G. Scott Hetzer Dominion Senior Vice President and Treasurer Dominion Resources, Inc.

120 Tredegar Street, Richmond, VA 23219 Mailing Address: P.O. Box 26532 Richmond, VA 23261 January 6, 2015 U.S. Nuclear Regulatory Commission Attention: Document Control Desk Washington, DC 20555-0001 Re: Kewaunee Power Station Docket No. 50-305; License No. DPR-43

Dear Sir or Madam:

I am the Treasurer and an officer of Dominion Resources, Inc. (DRI), located at 120 Tredegar Street, Richmond, Virginia 23219, and the ultimate parent company of Dominion Energy Kewaunee, Inc. (DEK). DRI is submitting this letter and its attachments to the U.S. Nuclear Regulatory Commission (NRC) reflecting the commitments that were provided in support of DEK's "Request for Exemptions from 10 CFR 50.82(a)(8)(i)(A) and 50.75(h)(1)(iv)," dated April 4, 2013 (Exemption Request),

which the NRC granted on May 21, 2014.

In consideration of the NRC's approval of DEK's Exemption Request and consent to terminate the Support Agreement Between Dominion Resources, Inc. and Dominion Energy Kewaunee, Inc., dated as of July 5, 2005, DRI states as follows:

1. In the event that additional financial assurance beyond the amounts contained in the remaining nuclear decommissioning trust fund (Trust Fund) for the Kewaunee Power Station (KPS) is required pursuant to NRC regulations to complete radiological decommissioning and spent fuel management at KPS, DRI will provide or (if already existing) increase a parent company guarantee to provide a total in parental assurance of up to 10% of the remaining Trust Fund balance or $60 million, whichever is less.

2. Any parent company guarantee provided pursuant to this commitment will comply with applicable NRC requirements in 10 CFR 50.75(e)(1)(iii) and Appendix A to 10 CFR Part 30.

3. DRI will provide ongoing information pertaining to its continuing ability to provide additional financial assurance by submitting by March 31 of each year in connection with DEK's annual financial assurance status report, (1) information demonstrating the results of the financial test in either Paragraph II.A.1 or Paragraph II.A.2 of Appendix A to 10 CFR Part 30 for the immediately preceding

calendar year; and (2) a letter from its independent certified public accountant attesting to the data and accuracy of the financial test.

4. DRI will not modify or withdraw these commitments without prior written NRC consent.

5. DRI agrees that it would be subject to the NRC's authority to issue such orders as may be necessary to enforce DRI's commitments.

These commitments became effective and enforceable on the date on which the NRC approved DEK's Exemption Request. DEK seeks NRC's concurrence that it may now terminate the July 5, 2005 Parent Support Agreement.

DRI is required to file a Form 10K with the U.S. Securities and Exchange Commission.

A worksheet based on DRI's independently audited, year-end financial statements and footnotes for the 12-month period ended December 31, 2013, is provided as Attachment 1 demonstrating that DRI is currently qualified under NRC's criteria to issue a parent company guarantee of up to $60 million. A supporting letter from DRI's independent certified public accountant is provided as Attachment 2.

I hereby certify that I am duly authorized to execute this letter on behalf of Dominion Resources, Inc. and the content of this letter is true and correct to the best of my knowledge.

Sin~

ly'/Y' Senior Vice Presidenit &./IFeasurer, Dominion Resources,n.

Attachments:

1. Financial Test

2. Independent Accountants Report on Applying Agreed-Upon Procedures

Attachment I FINANCIAL TEST Paragraph II. A.2 of Appendix A to 10 CFR Part 30 A. Maximum Guarantee Amount for Facility License No. DPR-43: $60 million B. Dominion Resources, Inc. issued a total of $1,650,000,000 in unsecured senior notes, split among three tranches, on November 17, 2014 as follows: $700M 5 year; $500M 10 year; $450M 30 year. Each of these issues were rated BBB+ by Standard and Poor's and Baa2 by Moody's at the time of issuance and maintain those ratings today.

C. DRI's tangible net worth (millions of dollars):

Total Equity $11,642 Less: Net Book Value of the Nuclear Facility and Site (KPS)

Goodwill of the Nuclear Facility and Site (KPS)

(i) Total Net Worth $11,642 Less: Goodwill 3,086 Intangible Assets 560 (ii) Tangible Net Worth $ 7,996 DRI Total Assets $ 50,096 Less: Foreign Assets Total US Assets $ 50,096 FINANCIAL TESTS YES NO

1. Is line C (ii) at least $21 Million? M] El

2. Is line C (i) at least 6 times the guarantee amount of $60 million?

3. a. Are at least 90 percent of the firm's assets located in the U.S.?

or,

b. Is line C (i) at least 6 times the guarantee amount of $60 million? M] 11

4. a. Are bond ratings BBB (including +/- adjustments) or above as issued by Standard and Poor's LI or,

b. Are bond ratings Baa (including +/- adjustments) or above as issued by Moody's

[] El I hereby certify that the content of this Financial Test: Paragraph II.A.2 of Appendix A to 10 CFR Part 30 is true and correct to the best of my knowledge.

Senior Vice Prdside t 8A-reasurer, Dominion Resources I

D elo itteo Deloitte & Touche LLP Suite 820 901 East Byrd Street Richmond, VA 23219 USA Tel: +1 804 697 1500 Fax: +1 804 697 1825 www.deloitte.com INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Board of Directors and Shareholders of Dominion Resources, Inc.

Richmond, Virginia We have performed the procedures enumerated below regarding the data used by Dominion Resources, Inc. ("Dominion" or the "Company"), as parent company of Dominion Energy Kewaunee, Inc., licensed operator of the Kewaunee Power Station ("KPS"), solely to assist the U.S. Nuclear Regulatory Commission in evaluating the Company's compliance with the financial test to demonstrate financial assurance for the year ended December 31, 2013, as specified in Appendix A to Part 30 of the U.S. Nuclear Regulatory Commission's Code of Federal Regulations (the "financial test"), included as Attachment 1 to the financial assurance letter dated January 6, 2015 from Scott Hetzer, Senior Vice President Tax and Treasury of Dominion Resources, Inc. to the U.S. Nuclear Regulatory Commission (the "Financial Assurance Letter"). Dominion's management is responsible for the financial test and compliance with associated requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

The procedures that we performed and related findings are as follows:

1. We compared the bond rating in Attachment I to the Company's Financial Assurance Letter to third-party sources, noting no differences.

2. We compared amounts identified as "Total Equity", "Goodwill", "Intangible Assets", and "DRI Total Assets" in Attachment 1 to the Company's Financial Assurance Letter to the Company's consolidated financial statements as of December 31, 2013, on which we have issued our report dated February 27, 2014, noting no differences.

3. We compared amounts identified as "Net Book Value of the Nuclear Facility and Site (KPS)", "Goodwill of the Nuclear Facility and Site (KPS), and Member of Deloitte Touche Tohmatsu

"Foreign Assets" in Attachment I of the Company's Financial Assurance Letter to corresponding amounts in a schedule or report prepared by the Company as of December 31, 2013, noting no differences.

4. We recomputed the mathematical accuracy of the amounts identified as "Total Net Worth", "Tangible Net Worth", and "Total US Assets" in Attachment 1 to the Company's Financial Assurance Letter, noting no differences.

With respect to procedures outlined in Paragraph II.B of Appendix A of 10 CFR Part 30 of the U.S. Nuclear Regulatory Commission's 10 CFR Part 30, professional standards preclude us from providing any form of report or assurance on matters relating to solvency. Accordingly, no such form of report or assurance is provided.

We were not engaged to, and did not, perform an examination, the objective of which would be the expression of an opinion on the accompanying Financial Assurance Letter dated January 6, 2015. 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.

This report is intended solely for the information and use of the board of directors and management of the Company and Dominion Energy, Inc., and the U.S. Nuclear Regulatory Commission, and is not intended to be and should not be used by anyone other than these specified parties.

January 22, 2015