ML18095A379

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Decommissioning Rept of Philadelphia Electric Co.
ML18095A379
Person / Time
Site: Peach Bottom, Salem  Constellation icon.png
Issue date: 07/20/1990
From: Rimerman M
PECO ENERGY CO., (FORMERLY PHILADELPHIA ELECTRIC
To:
Shared Package
ML18095A378 List:
References
NUDOCS 9008020101
Download: ML18095A379 (33)
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BEFORE THE UNITED STATES NUCLEAR REGULATORY.COMMISSION In The Matter Of Philadelphia Electric Company Public Service Electric & Gas Company .: Docket Nos. 50-272 Atlantic City Electric Company 50-311 Delmarva Power & Light Company (Salem Generating Station, .

Units 1 & 2)

Decommissioning Report of Philadelphia Electric Company In accordance with §§ 50.33(k) and 50.75(b) of the Regulations of the Nuclear Regulatory Commission ("Commission ... ), Philadelphia Electric Company ("Company") :.-hereby :submits this .Decommissioning" Report and states.as follows:

1) Salem Units 1 and 2 -are,owned jointly by .the Company (42.59%),-Public'Service Electric& Gas Company.,(42 ... 59%),- Atlantic City Electric Company ( 7 ~ 41%) and- 'Delaware* Power**& Light: -Company

( 7. 4*1%) . The Company has based this Decommissioning Report on satisfying its decommissioning financial assurance obligation to the extent of its 42.59% ownership interest in Salem Units 1 & 2. The other Salem owners are f~ling separate Reports .for their respective ownership interests.

2) The Company hereby certifies that financial assurance for decommissioning Salem Unit 1 is provided in the amount of 42.59% of

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$142.1 million or $60.S million. The calculation of this amount is set forth in Exhibit A-1 and was performed in accordance with the formula set forth in 10CFR §50.75(c).

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3) The Company hereby certifies that financial assurance for the decommissioning of Salem Unit 2 is provided in the amount of 42.59% of $142.1 million or $60.5 million. The calculation of this amount is set forth in Exhibit A-2 and was performed in accordance with the formula set forth in 10CFR §50.75(c).
4) The -company will provide financial *.assurance for decommissioning Salem Unit 1 by making payments at least annually into an external sinking fund which will be either a decommissioning escrow account or a nuclear decommissioning trust fund qualified under section 468A of the.Internal Revenue Code. of 1986.

5 )' The* Company presently *makes *and wilL_continue -'to .make...

- payments for Sa-lem* Unit' *--i' -into. .. a_; decommissioning- escrow_ .acco;unt __

established pursuant to 'a December:31,- 1984 Escrow Agreement-which

- is the *successor to a - previous .'Escrow -Agreement-,;es.tablished for the same purpose. A true and correct copy of the 1984 Escrow Agreement is -attath~d-hereto as Exhibit B-1. As of May 31, 1990, the Salem Unit 1 Decommissioning Escrow Account had a balance of $4,065,000.

  • 6)'The Company_presently makes and will continue to make payments for_ Salem Unit l into a qualified nuclear decommissioning trust fund which was established by an instrument dated March 14, 1988, a true and correct copy of which is attached hereto and marked Exhibit B-2. As of May 31,- 199*0, the Salem Unit-1 qualified nuclear decommissioning .trust fund had a balance of $7, 002, 000. A certification of the authority of the signatory to execute the

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escrow and trust instruments on behalf of the Company is attached hereto and marked Exhibit B-3.

7) The Company will provide financial: .assurance for decommissioning Salem Unit 2 by making payments at least annually into an external sinking fund which will.be either a decommissioning
  • escrow account or a *nuclear decommissioning,... trust fund quali,fied '**

under section 468A of the Internal Revenue Code of 1986.

8) The Company presently makes and will continue to make payments *for Salem Unit 2* into a decommissioning escrow account established by a December 31, 1984 Escrow Agreement which is the successor to a previous Escrow :Agre.emen.t.... establis.hed .for *the' l?a!Ile purpose. A. true* and correct , copy .. of. -the* -19.84 *Escrow Agreement ....is
  • attached h~reto as Exhibit £-1 .. As of.May 31, ~1990, *the Salem
  • Unit 2-*necommissioning E-scrow Acco.unt ...had . . a.-.balance of $2,725,000.  ; ...
9) The Company presently makes and will continue to make payments for Salem Unit 2 into a qualified nuclear decommissioning trust fund which was estaolished by an instrument dated March 14, 1988,*a true and correct copy.of which is .. attached.hereto and marked Exhibit B-4. As of May 31, 1990, the Salem Unit 2 trust fund had a balance of $6,140,000.

lO)'The Company anticipates**that the vast-majority of future

    • payments to* satisfy its decommissioning financial assurance obligations for Salem Units 1 and 2 will. be made into the qualified

4 decommissioning trust funds. The only circumstance under which payments will. be made into an escrow account would arise when the total amount of a contribution in a given year would exceed the amount which the Company may pay into the qualified decommissioning trust fund without jeopardizing the qualification of the trust fund under Section 468A of the Internal Revenue Code of 1986. Ih this case, the excess of the decommissioning payment would be deposited into the escrow account.

11) Schedules of payments for implementing the method of providing assurance ot theavailability*of.funds.for decommissioning Salem .. Uni ts 1 and 2, .. including the applicat-ion of previously 'made payments, are set forth in Exhibits C-1 .and C-2*;. respect:ively.
12. The Company will.annually adjust the certification amounts provided in Paragraphs *2 and 3 above using the formula in

§50.75(c)(2). Adjustments to the schedules of payments set forth in Exhibits C-1 and C-2 will be made at least once every five years to reflect the adjustments to the certification amounts made in prior r-*. :.. . ~:

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PHILADELPHIA ELECTRIC COMPANY

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EXHIBIT A-1 Summary of Data, Formulas and Sources Used to Calculate

.NRC Minimum Decommissioning Cost Salem Generating Station, Unit 1 Base Cccst

$105MM fc*r P > 3400Mwt; ($75-+ O.OC>9P>MM for 1200 < P < 3400 Mwt Base Cost Escalation Escalation Factor= 0.65L + 0.13E + 0.22B where L, E, and B are escalation factors for labor energy and waste burial charges, respectively.

Energy Cost Escalation E = 0. 58x <fqri(~'fts> + O. 42x (~" l~...J"

. where P aY-1~ F are .prc*~uc~r .price i*Y1dexes fccr:.pc*wer aY1d '.fuel, respect i.vely.

Labor, L: 1986 = 130.5 9/1989 = 158.3 Escalation Factor = 1.213027 Energy, E: 1986 P=111.9; F=82 12/1989 P = 115.4; F = 68.1 Escalation Factor= 0.946946 Burial, B: 1986 = 1 12/1989 = 2.007 Escalation Factor= 2.007 Base Cost Escalation= 1.353111 Base Cost: Salem Unit 1 - $105,000,000 at 3411 Mwt Escalated Cost: Salem Unit 1 - $142,076,700

  • 'Phi*l*ade1*phia El*ectric**OwY1ership* Pccrtic*Y-1*-:of*:*Esc.alated Cc*st 42.59% x $142,076,700 = $60,510,467

,. ' 1 10 CFR Parts 50.33 and 50.75 NRC Regulatory G*.lide DG-1003, "Ass1.1ring the Availability c*f' Ftll'"ids f'c*r Decornmissiol'"iing Nuclear Reactors" Mol'"1thly Labor Revie" 11 Ernplc*yme*s'"1t Cost Il'"1dex, Private Nc1 l'"1f'arrn Workers, C*:*rnpe*s'"1sat ion" - N*:*rtheast Region September 1989 Prcrducer Price I*ndexes, Producer Price Indexes f'or Cr:rrnmodity Groupil'"1gs al'"1d I*s'"1dividual Items" Codes 0543 ai'"1d 0573 f'c.-r industrial power and light "fuel oils, Mid-Atlantic Region December 1989 NUREG-1307, "Rep*:*rt Ol'"1 Waste Burial Charges", Revisioi'"1 1

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EXHIBIT A-2 Summary of Data, Formulas and Sources Used to Calculate NRC Minimum Decommissioning Cost Salem Generating Station, Unit 2 Base Cost

$105MM for P > 3400Mwt; ($75 + 0.009P)MM for 1200 < P < 3400 Mwt Base Cost Escalation Escalation Factor= 0.65L + 0.13E + 0.22B where L, E, and B are escalation factors for labor energy and waste burial charges, respectively.

Energy Cost Escalation E = o. 58x <rw.!?'qJi;. + o. 42x <~~/~fJc::.

where ~ and F are protiucer price indexes for power fuel, respectively.

Labor, L: 1986 = 130.5 9/1989 = 158.3 Escalation Factor= 1.213027 Energy, E: 1986 P=111.9; F=82 12/1989 P = 115.4; F = 68. 1 Escalation Factor= 0.946946 Burial, B: 1986 = 1 12/1989 = 2.l)(>7 Escalatio~ Factor= 2.007 Base Cost Escalation= 1.353111 Base Cost: Salem Unit 2 - $105,000,000 at 3411 Mwt Escalated Cost: Salem Unit 2 - $142,076,700 Philadelphia Electric Ownership Portion of Escalated Cost 42.59% x $142,076,700 = $60,510,467

( t t I 10 CFR Parts 50.33 and 50.75 NRC Regulatory Guide DG-1003, "Ass1.1ring the Availability of Fi.irids for DecommissioY-riY-1g Nuclear Reactors" Monthly Labc*r Revielo'>, 11 Err1ploymeY-1t Cost IY-1dex, Private NoY-rfarrn Workers, Compe*nsatic*Y-1 11 *-Northeast Regior1 September 1'38'3 Producer Price IY-1dexes, "Pr*:*ducer Price Irrde>:es for Commodity GroupiY-1gs aY-1d IY-1dividual Items" Codes 0543 arid 0573 for industrial power and light fuel oils, Mid-Atlantic Region December 1'38'3 NUREG-1307, "Report c*r1 Waste Burial Charges", Revision 1

i ' I e EXHIBIT B-1 Date '

ESCROW AGREEMENT FOR QUALIFIED DECOMMISSIONING "FUND First Pennsylvania Bank N.A. is hereby directed to establish a Qualified Decommissioning Fund in the name of Philadelphia Electric Company, and to deposit therein and hold in escrow such monies as shall be transmitted to it from time to time for this purpose by Philadelphia Electric Company. It is intended that this Fund shall comply with Section 468 A of the Internal Revenue Code of 1954 to the fullest extent possible.

Accordingly, this Escrow Agreement may be amended or revoked at any time as may be necessary to permit Philadelphia Electric Company to comply with whatever requirements may hereafter be adopted by the Internal Revenue Service or the Department of the Treasury.

ll . First Pennsylvania Bank N. A. shall divide the Fund

  • /"') ii]J i<-, i* nto su b accoun t s, wi* th aL!ff*eoara t e su b accoun t t o b. e creat:e
  • d f or r~iL:--- each nuclear generating pt£it which is to be decommissioned in the future by Philadelphia Electric Comp.any. First Pennsylvania Bank N.A. shall invest all monies in the Fund, including income on the investments, and shall otherwise deal .with the Fund as follows:
  • 1) Select and invest all funds in (tax free) securities issued by the Commonwealth of Pennsylvania, its political subdivisions, agencies and authorities, with the limita-tions that the securities purchased should at a minimum be rated Single A with maturi-ties in the 8 to 12 year range.

2} Purchases should be in securities whose price is near par rather than discounted. This approach is suggested in order to minimize the amount of capital gains taxes to he paid on appreciation.

3) Provide safekeeping for securities in the account.
4) Register securities in nominee name or maintain in bearer form.
5) Collect the principal of all securities as they mature, are redeemed or sold.
6) Make transfers from income to principal of the fund account for rei~vestment.
  • 7) Maintain a record of securities held including all purchases and sales thereof, and furnish the Philadelphia Electric Company .. Treasurer or Assis-tant Treasurer with a monthly statement of receipts and disbursements of principal and income, and annually, a list of securities held in the account including approximate market values.
8) Supply the Treasurer or Assistant Treasurer of Philadelphia Electric Company, confirmations of trades as soon as possible after trade is completed.
9) Collect all interest and other income from the securities held under this agreement.
10) Except for taxes, bank fees and other expenses associated with the operation of the fund account First Pennsylvania Bank N.A. will permit funds to be paid out of the account only upon presentation by the Philadelphia Electric Company to First Pennsylvania Bank N.A. of a certificate signed by its President or one of its Vice ~residents and its Treasurer or an Assistant Treasurer requesting such payment.

Philadelphia Electric Company will indemnify and hold harmless the F1rst Pennsylvania Bank N.A. from and against all liabilities, losses and other expenses arising in any way connected with its reliance upon the above mentioned certificate, and First Pennsylvania Bank N.A. shall have no duty to verify signatures on such certificate.

First Pennsylvania Bank N.A. 's compensation for this service shall be based upon market values at an annual rate of:

$6.50 per $1,000. on the first $1,000,000.

$5.00 per $1,000. on the next $5,000,000.

$4.00 per $1,000. on the next $10,000,000.

$2.50 per $1,000. on the balance.

to be taken quarter-annually at the end of each calendar quarter.

In the event any special services are required, First Pennsylvania

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Bank N.A. shall be compensated in accordance with a separate agreernen t.

It is understood that this Agreement may be modified by mutual consent, in writing and this arrang~~ent may be terminated by either party by giving written notice to the other party.

PHILADELPHIA ELECTRIC COMPANY

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Treasurer (Title) 2301 Market Street Philadelphia, Pa. 19101 ACCEPTED:

FIRST PENNSYLVANIA BANK N.A.

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EXHIBIT B-2 SALEM GENERATING STATION UNIT 1 QUALIFIED NUCLEAR DECOMMISSIONING FUND PHILADELPHIA ELECTRIC COMPANY ("PECo"), intending* to be legally bound, does hereby establish the following trust, to be known as the Salem Generating Station Unit 1 Qualified Nuclear Decommissioning Fund (the "Fund;'), and PECo does hereby name FIRST PENNSYLVANIA BANK N.A. as Trustee thereof:

I. GENERAL DEFINITIONS A. The following terms which are used herein shall -have the same meaning as used in Section 468A of the i Internal Revenue Code of 1986, as amended (or the corresponding I

  • provisions of succeeding law), and the final Treasury Regulations issued thereunder (hereinafter collectively II referred to as "§468A"): I "administrative costs and other incidental expenses" "nuclear power plant" "nuclear decommissioning fund" "nuclear decommissioning costs" "self-dealing" B. The words "written instrument" shall refer to any instrument issued to Trustee by PECo making appropriate

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reference to this Fund and believed in good faith by the Trustee to be signed by any of the persons.authorized to act on PECo's behalf hereunder.

C. The phrase 11 as .PECo may direct 11 or any s.imilar language referring to instructions *which- PECo may give, shall include an oral communication to Trustee by a person or

-: persons believed in good faith by the Trustee to be any of the persons authorized to act on PECo's behalf hereunder.

D. -For .. purposes of :paragraphs B and C hereof, -

PECo _shall.. provide .. to .Trustee a, .written .-:-instrument *stating the names of--..-per.sons_ authorized: from "time' to *time "to :*act *on ,-PECo **s* -

  • behalf *hereunder, and, containing* specimen signatures_ of 'such authorized persons. - Until _notified in writing .to, the contrary
  • by PECo_, *Trustee., :s_hal1 be fully *pr:ot.ected in ..relying upon and acting in accordance with any oral or written notice, instruction, -direction, certificate or other communication believed by Trustee to be genuine and to be signed or given by any such authorized person and Trustee shall be under no duty to make any investigation -_or: inquiry as to _**the' truth or accuracy of any statement contained therein or to the authority of the .person signing or giving such communication.

II. PURPOSE PECo is the owner of an undivided 42.59% interest in the nuclear power plant known as Salem Generating Station, Unit 1 ("Salem Unit l") and is establishing this Fund as the nuclear decommissioning fund for Salem Unit 1, satisfying the qualification requirements under §468A, for .the exclusive purpose of providing funds contemplated by*PECo as necessary or appropriate for decommissioning Salem Unit 1.

This Fund is being established in order to avail PECo of certain Federal income tax benefits arising under

§468A, and shall be operated and maintained in a manner consistent therewith.

III. TRUST ASSETS Fo~ the purpose hereinabove described, PECo shall from time to time transfer and. *.assign to: this Fund, .by written instrument, such property as PECo .. deems*. appropr:iate, to be

  • held, administered and *distributed by Trustee in- accordance
  • with the provisions hereof.

IV. DISTRIBUTIONS OF INCOME AND PRINCIPAL The income and principal of this Fund shall, except as provided in paragraph .c hereof / ..:be -us.ed exclusively:

  • for the decommissioning costs of Salem Unit. 1 as identified from time to time by PECo. In connection therewith, income and principal may also be used to pay the administrative costs and other incidental expenses of this Fund.

e e A. Until otherwise directed by PECo, Trustee shall, after paying to persons or companies other than PECo the

, .administrative costs. and other incidental . expenses of this Fund, accumulate all of the remaining *income, if any, and add it to *the principal of this Fund annually .or. more frequently, as PECo may direct from time to time.

B. To the extent of the assets held in the Fund, Trustee shall pay nuclear decommissioning costs of Salem Unit 1 to such persons,. in such. .amounts., .at .such times .and* in such manner as<<.it may from time .to time .be: dir.ected by PECo....

  • C. Trustee shall distribute~.to. PECo, :to such.

persons,* in such .amounts.,* at such*times and.*in such*mannecas PECo.mayfrom*time to:timedirect,. any assets*of:this Fund*

.determined by* PECo to. be,unnecessary to *ef.fectuate .the:*purpose of this Fund.

V. POWERS OF TRUSTEE Trustee shall have the following powers in addition to those vested in it by law and granted to it elsewhere hereunder, which powers shall continue until actual distribution of the assets of this Fund:

1. To retain all or any part of the assets held hereunder, and to invest, reinvest and keep invested any part I

I of such assets as PECo may direct from time to time, but only in the manner permitted under §468A.

2. To sell or exchange any asset held hereunder on such terms and conditions and in such manner as PECo may direct from time to time.
3. To hold or register assets in street name, the name of its nominee or in bearer form, or by any other title holding device, without disclosing any fiduciary relationship.
4. To retain and pay from the *Fund attorneys, accountants and investment counsel for advice and other professional services .

.5. To "Compromise any. claims, .including claims for taxes, by-*or ~against :the. Fund. on .such .terms .. and .. conditions

  • and in such manner as PECo may direct from time to time.

In carrying out its investment powers, Trustee shall not be liable for any losses sustained by the Fund by reason of the purchase, retention, sale or exchange of any investment made in good :faith and ~in accordance** with. the provisions of this Fund.

VI. DISQUALIFICATION

..This. Fund . shall not engage in., ....and .Trustee shall not permit this Fund to engage in, any acts of self-dealing or any other acts that are contrary to the purpose or stated terms of this Fund.

VII. SITUS This Fund has been.executed in the Commonwealth of Pennsylvania, which is hereby designated as the Fund's situs, and all questions pertaining to the validity, construction and administration of this Fund shall be determined in accordance with the laws.of Pennsylvania, regardless of the jurisdiction in* which. the Fund may at** any

  • time actually ~be* *administered; provided~ however,* that this*

, Fund. shall at. all times .be .. maintained in . .the United States.

VIII. TRUSTEE

.PECO does hereby .. appoint FIRST PENNSYLVANIA BANK N.A. as Trustee hereunder, and it shall receive compensation for the performance of its services hereunder in accordance with the agreement entered into with PECo contemporaneously herewith relating to such compensation. All such compensation shall .constitute .a charge against the. Fund ..uriti.l.paid.

Trustee shall have the right.to.resign without prior application to or approval by or order of any court by written notice to PECo. PECo shall I

have the right at any time

      • and **fTom-*time *to time to*'*remove* the Trustee**then *serving

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hereunder and *appoint a successor.Trustee to*serve. Each such successor shall have the same powers, rights, duties, discretions and immunities . as are confer.red. upon the original Trustee hereunder.

No Trustee serving hereunder shall.be required to file bond or enter security in any jurisdiction, any rule or law to the contrary notwithstanding.

Trustee shall not be responsible for the

  • sufficiency* of the trust *assets to ... effect.the ... decommiss.ioning __
  • of Salei:ri Unit *1, '.for.*.the .. use**or. application. of any- monies *or property held in the Fund:when disbursed* in.conformity
  • *r* t herewi-th, Q*Or*.*~*.f o.r
  • the . ~qual.if:icat ion .. :of. *any . costs, .:.f.ees_ o.r expenses paid 'f'rom the Fund *as .nuclear. decommissioning..costSi

£or purposes of §468A.

Trustae shall *not be* liabl~, ~xcept .for gross-

. negligence, .for any acts, omissions or defaults of any agent appointed or selected with reasonable care; Trustee shall also not be liable for any acts taken or not taken at the direction of or upon the instruction ~f PECo, whether such directions or instructions are delivered orally or by written instrument.

IX. POWER OF AMENDMENT AND REVOCATION .

PECo does hereby reserve the right, at any time or times, by written instrument, to alter, amend or revoke this Fund in whole or in part; provided, however, that no such instrument shall modify the rights, duties or immunities of the Trustee without its consent.

IN WITNESS WHEREOF, PECo has caused its duly authorized officers to sign and seal this instrument this f ~'i'--C<.,.

day of March, 1988.

Attest: PHILADELPHIA E;I::/E}CTRIC COMPANY I _.

By~ a1/,i~L,{/"f,~

Morton Rimerman

Title:

Ass# t Secretary

Title:

Vice President

[Corporate Seal]

Intending*to be*legally bound, Trustee does hereby

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..accept .the .trust hereinabove set for~and agrees to carry out its provisions. . ~

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FIRST PENNSYLVANI~ BA.NK"-~

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By:

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  • ASS'T ;;,.~~;°'~*' **

Title:

Title: ~(v15 i~NIJ U,c.e::.

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COMMONWEALTH OF PENNSYLVANIA SS.

COUNTY OF PHILADELPHIA On the /f'11- day of March, 1988, before me, the

  • subscriber, a Notary Public in and for .the 'Commonwealth and County aforesaid, personally appeared the above-named Morton W.

Rimerman and L. S'. i3 ,,... Je.,- , known to me or satisfactorily proved to.be the Vice President and As~istaBt Secretary of Philadelphia Electric Company, and in due form of law acknowledgedthe establishment .of the Salem.Generating Station Unit l Qualified Nuclear Decommissioning .Fund. on .behalf of ..

Philadelphia Electric Company and.desired that *the.samemight be recorded as such.

WITNESS. my hand *.and seal the .day ,and year aforesaid.

CERTIFICATION OF AUTHORITY PHILADELPHIA ELECTRIC COMPANY I, M. D. Lyons, Assistant Secretary of Philadelphia Electric Company ("Company"), do hereby certify that on June 25, 1990 Corbin A. McNeill, Jr., President and Chief Operating Officer of the Company executed a certain document confirming and ratifying the authority of certain officers of the Company to execute on behalf of the Company documents relating to the establishment of funds for the decommissioning of the Company's nuclear facilities as follows:

This will confirm and ratify the authority of M. W.

Rimerman as Treasurer of the Company to execute on behalf of the Company a certain Escrow Agreement for Qualifying

. Decommissioning *Fund dated December 31, 1984 for the Company's nuclear units, the authority of M. W. Rimerman as a Vice President of the Company to execute on behalf of the Company certain instruments dated March 14, 1988 relating to the establishment of Nuclear Decommissioning Trust Funds for Peach Bottom Units 2 and 3, Salem Units 1 and 2, and Limerick Unit 1 and the authority of M. W. Rimerman as a Vice President of the Company to execute on behalf of the Company for Limerick Unit 2 a similar instrument for such purpose.

/s/ c. A. McNeill, Jr.

President and Chief Operating Officer WITNESS, my hand and the seal of Philadelphia Electric Company this 15th.day of '}~ , 1990.

Exhibit B-3

.., e e EXHIBIT B-4 SALEM GENERATING STATION UNIT 2 QUALIFIED NUCLEAR DECOMMISSIONING FUND

.*PHILADELPHIA ELECTRIC COMPANY (-"PECo") , * .intending_ to be legally bound, does her~by establish the following _trust, to be known as the Salem Generating Station Unit 2 Qualified Nuclear Decommissioning Fund (the "Fund"), .and PECo does hereby name FIRST -PENNSYLVANIA BANK N.A .. as ..Trustee.thereof:

I. GENERAL DEFINITIONS A. The. following terms which are used herein shall have the* same meaning *as* used in' s*ection 468A of* the Internal Revenue Code of 198.6, :as amended .. (or the .. corresponding '!"*

    • provisions* oE'.succeeding *law), :and** the *.final'.Treasury 0

Regulations .iss:ued thereunder (hereinafter .. collectively referred to as "§468A"):

"administrative costs and other incidental expenses" "nuclear power plant" "nuclear decommissioning fund" "nuclear decommissioning costs" "self-dealing" B. The words "written instrument" shall refer to any instrument issued to Trustee by PECo making appropriate

ref er*ence

  • to this Fund and believed in good* faith by the Trustee to be signed by any of the persons authorized to act on PECo's behalf hereunder.

C. The phrase 11 as -. *PEC0 11

~may_:direct 11 or any

  • s imi 1 ar .1 anguage ref err.ing.- -to instruct ions *which: PECo *may :*give; shall include an oral communication to Trustee by a person or pers*ons*'believed in good faith by the Trustee to be any of the

.persons authorized to act on PECo's behalf hereunder.

D. *  : For_ purposes.-,of _parag.raphs B ... and _C hereof, ..

PECo .sha11.pr.ovide ..to *.Trus.tee a**wr.itten -instrument stating*. the names .of_ persons .authorized-- from time :to _time *:to,. act ::.on.-PEco*' s

.: ... ,.b.ehalf..,her,eunO.er.,: .and.,.containing.. specimen .. signatur.e.s .of*-.. such _,_

.authorized persons ......Until notified. in ..wr.iting .. to the ...contrary.

.by PECo:; .Trustee .. shall . . be.: fully. :protected:.in..-r.elying:.*~.upon .and acting -in* accordance with any -oral or written notice, instruction, direction, certificate or other communication

.believed by Trustee to be genuine and to be signed or given by any such authorized person and Trustee shall be under no duty to make any investigation *:or. inquiry *as**.to:.the*:truth or -

accuracy* of -any statement* contained ther.ein* *or. :to* the *authority of the person signing or giving such communication.

II. PURPOSE PECo is the*owner of an undivided *42.59% interest in* the nuclear power plant known *as Salem Generating Station, Unit 2 ("Salem Unit 2") and is establishing this Fund as the nuclear .decommissioning .fund for Salem .Unit .2, satisfying the

.. qualification. requirements under. §468A, for :the exclusive*

purpose of.providing funds contemplated by PECo as necessary:or appropriate for decommissioning Salem Unit 2.

This Fund is being established in order to avail PECo -0f certain Federal income tax benefits arising under

§468A, and shall be operated and maintained in a manner consistent therewith .

. I I I . . : .TRUST. ASSETS

.,For -:he purpose .. he.r.e.inabove,, described., . P.ECo .shall

. -.from .time . .to,.time.,tr.ans.fer.:and~ :assign .. to .this .*Fund,. by ..written

  • instrument,: such. property. as ..PECo. deems :*appropriate, *to. be held, *administered "and :distributed* by Trustee in a*cco*rdance * -
  • with the provisions hereof.

IV. DISTRIBUTIONS OF INCOME AND PRINCIPAL The income and principal of this Fund shall, except as provided in paragraph. C her.eof, .. be used exclusively for: . the decommissioning *costs of Salem*~.unit 2: as identified-.:*.

from time to ti~e by PECo. In connection therewith, income and principal may also be used to pay the administrative costs and.

other*-in:cidenta1 expenses *of *this Fund.

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A. Until otherwise directed by PECo, Trustee

. shall, after paying to persons or* companies* *other than PECo the

.administrative costs and other incidental .expenses of this Fund, . accumulate all of the remaining,. income, if any, and. add it to the principal of this Fund annually or more frequently, as PECo may direct from time to time.

B. To the extent of the assets held in the Fund, Trustee shall pay nuclear decommissioning costs of Salem Unit 2 to such ..persons, in .such ... amounts, .at,.sU:ch times -and in -

such manner. as it may from .time to time be .directed by 'PECo ..

c. Trustee shall distribute.to PECo,. to such persons, in such -amounts.,. at *such times. and* in* such manner as
  • PECo may. fr.om. time to .time direct,,. *any .assets .of this Fund
determ_ined
  • by.:J?ECo' . :t.o .. be,:unnecess.ar:y.*.to"effectuate....the. pur,p0se I

of this Fund.

V. POWERS OF TRUSTEE Trustee shall have the following powers in addition to those vested in it by law and;granted to it el_sewl1.ere .hereunder, which powers . shalL.continue until actual*:*

distribution of the assets of this Fund:

1. To retain all or any part of the assets held hereunder, .and to invest, reinvest and keep invested any part h

of such assets as PECo may direct from time to time, but only in the manner permitted under §468A.

2. To sell or exchange any asset held hereunder on such terms and conditions and.in.such,manner as PECo may direct from time to time.
3. To hold or register assets in street name, the name of its nominee or in bearer form, or by any other title ho1ding device, without disclosing any fiduciary relationship.
4.
  • To reta.in and pay from the _Fund. attorneys, ac.countants and investment counsel for advice* and- other professional services.
5. *To compromise any claims~- *:including claims -

for taxes, by or against. the ._Fund on __ such .terms and conditions and in such manner as PECo may direct from time to time.

In carrying out its investment powers, Trustee shall not be liable for any losses sustained by the Fund by reason of the purchase, retention, sale or *exchange of any investment made in good-faith and.in accordance with the provisions of this Fund.

VI. DISQUALIFICATION This Fund shall not engage in, and Trustee shall not permit this Fund to engage in, any acts of self-dealing or any other acts that are.contrary to*the purpose or stated terms of this Fund.

VII. SITUS This Fund has been executed--in the.Commonwealth*

of Pennsylvania, which is hereby designated as the Fund's situs, and all questions pertaining to the validity,

construction and administration of this Fund shall be determined in accordance with the laws of Pennsylvania,
  • regardless. of the jurisdiction* in*. which ,the. Fund may at. any:

time. actually be .administered,_ .provided; .... howev.er.1-- that* ~this -

.Fund. shall- :at all times -~.b.e :mainta:ined.. in* the United :States; VIII. TRUSTEE

- _PECO does ~ereby .:appoint:.FIRST .. PENNSYLVANIA.-.BANK N.A. as Trustee hereunder, and it shall receive compensation for the performance of its services hereunder in accordance with the agreement entered into with PECo contemporaneously herewith relating to such compensation. All such compensation shall constitute a charge.against the. Fund.~until paid ..

Trustee:shall*have-the z~ght~to *resign without prior\application to or approval by or order of any court by written notice to PECo. PECo shall have the right at any time

'. : .** "*- * -- * -*- ., .. _.-*,:and*-~f:rom*'"time*"to*~*time*-*to*~rremove *the Trustee**r:theff*"s*erving

- 6 -

I"

  • '"hereunder**and*appoint a . successor Trustee*to**serve;* Each such successor shall have the same powers, .rights, duties, discretions and immunities as are *conferred ..upon the original Trustee hereunder.

No Trustee. serving. hereunder *shall be required. to.

file bond or enter security in any jurisdiction, any rule or law to the contrary notwithstanding.

Trustee shall not be responsible for the sufficiency of the trust .assets to .effect .. the .decommissioning ..

,of Salem Unit- 2; .. for -~the . .use or ..,application .*o.f. any monies .or

    • .property held .in. the 'Fund* when ~disburs:ed *in* conformity *

. * -* :-,:herewith,,*, or* for .. the .. qualification -,of *any *costs, *fees: :.or*

.. expenses .paid: from*the .Fund. .as:,nuc.lear,,.decommissioning.. casts for purposes. of §468A.

Trustee shall not,.be .liable, except for. grass negligence, for any acts, omissions *or defaults of any agent

.appo.inted or selected with reasonable care; Trustee shall also not be liable for any acts taken or not taken at the direction of .or upon the instruction of PECo., whether .... such *.directions .or

  • instructions - are* delivered .*orally or* by :written* instrument.

IX. POWER OF AMENDMENT AND REVOCATION PECo does hereby reserve the right, at any time or times, by written instrument, to alter, amend or revoke this

- \

Fund in whole or in part; provided, however, that no such

..instrument shall modify the rights, duties or immunities of the

.Trustee without its consent.

IN -WITNESS WHEREOF., ..PECo has- ,caused. its duly authorized officers to sign and seal this instrument this l4~

day of March, 1988.

Attest: COMPANY

Title:

- Hi i t a:t Secretary

Title:

Vice President.

[Corporate Seal]

Intending to: *be legally bound, Trustee does hereby a*ccept*the -trust he"!:"einabove set f o\th nd agrees to carry out its provisions. \

FIRST P~,YL~

Title~

COMMONWEALTH OF PENNSYLVANIA SS.

COUNTY OF PHILADELPHIA On the !Ljrl- day of March, 1988, before me, the subscriber, a *Notary Public in and. fo-r. the *.Commonweal th *and .

County aforesaid, personally appeared the above-named Morton W.

. Rimerman .and . L . $. a rtde r I , known to me or* satisfactorily proved to be the Vice President and Ase~stant Secretary of Philadelphia Electric Company, and in due form of law acknowledged the.establishment of the.Salem Generating Station Unit 2 Qualified Nuclear.Decommissioning.Fund:on behalf of

. ,Philadelphia .. Electric ::Company :.and ..desir.ed . that. the *.same.-.might.

be recorded. as such .

. *.. WITNESS my .hand-.and .. seal ..the .day and* year .. -.afo.resa-id:

  • eSchedule of Paymerd:: s EXHIBIT C--1 Salem Generating Station, Unit 1 NRC Minimum Amount <Exhibit A-1> $60,510,467 Remaining Years for Collection of Decommissioning Costs 1990 - 2016 26 Minimum Deposit per Year $2,327,326 /year h Prepaid Balance in External Funds

, at December 31, 1989 *$10, 176, 902 Number of Years of Minimum Deposits Included in Prepaid Balance 4.37 1994 Depc*sit $1,466,215 Total Deposits 1995 - 2016 at $2,327,326/year $48,873,839 Total Deposits Available for Decommissioning ( 1) '.i;60, 516, '356

=

(1) Reflects funds availabl~ to decommission Salem Unit 1 and 50~ of Common Plant

lhedule c<<f Payments Salem Generating Station~

Unit 2 EXHIBIT C:>--;=:

NRC Minimum Amount <Exhibit A-2) $60,510,467 Remaining Years for Collection of Decommissioning Costs 1990 - 2020 30 Minimum Deposit per Year $2,017,016 /year Prepaid Balance in External Funds at December 31, 1989 $8,034,497 Number of Years of Minimum Deposits Included in Prepaid Balance 3.98 1993 Deposit $40,340 Total Deposits 1994 - 2020 at $2,017,016/year $52,442,405 Total Deposits Available for Decommissioning ( 1) $60,*517, 242

=

(1) Reflects funds available to decommission Salem Unit 2 and 50% of Common Plant

ATTACHMENT 4 DECOMMISSIONING REPORT*~AND CERTIFICATION OF FINANCIAL ASSURANCE FOR LIMERICK GENERATING STATION, UNITS 1 AND 2

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