ML20055H523
| ML20055H523 | |
| Person / Time | |
|---|---|
| Site: | Catawba  |
| Issue date: | 07/24/1990 |
| From: | Hauser D DUKE POWER CO. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NUDOCS 9007260320 | |
| Download: ML20055H523 (190) | |
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PO lhr 3]Ih9 . Charintie, NC28212 y[ DUKE PnWER JJuly 24, 1990 Document Control Desk U.S. Nuclear Regulatory Commission Washington, D.C. 20555 RE: Co-Licensee. Relationship and Obligations for Decommissioning r'inancial Assurance for Catawba Nuclear Station Units 1 and 2, NRC Operating
. Licenses NPF-35 and NPF-52, NRC Docket Nos.
50-413-and-50-414
Dear,
Sir or Madam: The' Nuclear Regulatory Commission's.("NRC") decommissioning-ragulations require that, on or before July 26, 1990, all c production or utilization facility licensees submit to the NRC "information in the form of a report as_ described in (10 C.F.R.] Section 50.75 indicating how reasonable' assurance will be provided that funds will be available to decommission the facility."1/ The follewing information and exhibits addresses
'the_co-licensee relationship and obligations regarding decommissioning financial assurance for the Catawba Nuclear Station-(CNS) Units 1 and 2.
CNS is located in York County, South _ Carolina, approximately 17 miles west-southwest of Charlotte, North Carolina. The station.
.-is comprised of two' essentially identical units containing pressurized water reactors, each capable of producing greater than'3400 MWt. Operating license NPF-35 for Catawba Unit 1 (Unit
- 1) wasl issued in 1985 and expires in 2024. Operating license NPF-52 for-Catawba Unit 2 (Unit.2) was issued in 1986 and expires in 2026.
CNS is a jointly owned facility with five co-licensees. The co-owners, along with their legal ownership percentages, are: 1/ 10 C.F.R. Section 50.33(k)(2) 20 900724 h72gCk03o004g i I
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\. _f 'l Ownership
'Co-Owner Unit . Percentage Duke Power Company Unit 1 25.00% l North Carolina Electric ;
Membership Corporation Unit 1 56.25%' Saluda River Electric l Cooperative,-Inc. Unit 1 18,75% North Carolina Municipal Power Agency No.-1 Unit 2 75.00% ; Piedmont Municipal Power Agency Unit 2 25.00% j e
.The contractual arrangements for joint ownership of the CNS include a capacity exchange between the two units which entitles .
each of the co-owners to a specific portion of the electric power ! and energy produced by the station as a whole. In recognition of l
-this exchange arrangement, each co-owner has agreed, in the Catawba Restated Operating and Fuel Agreement, to. bear a j corresponding portion of the cost of decommissioning CNS. The l contractual obligation percentages for each of the co-owners for '!
providing decommissioning financial assurance are shown below: Contractual obligation for Providing Co-Owner Financial Assurance ! Duke Power Company 12.500% North Carolina Elec'.ric Membership 3 Corporation 28.125% .. Saluda River Elc.ctric Cooperative, Inc. 9.375% North Carolina Municipal' Power Agency'No. 1 37.500% ) Piedmont Municipal Power Agency 12.500% Total 100% , i Attached to this letter, shown as Exhibit A, is a summary of funding amounts for each of the co-owners. The minimum certification amount set out in 10 C.F.R. Section 50.75(c)(1), as
. escalated pursuant to 10 C.F.R. Section 50.75(c)(2), has been calculated on a consistent basis by each co-owner. Each co-owner has' established an external trust into which they will make j periodic-deposits to provide for future decommissioning costs.
Each co-owner has certified in the attached filing that they will i make deposits at least sufficient to meet the NRC filing requirements. O
l l ,*' g .. Page 3 N_JL 1 Included with this letter are the reports from each of the 1 co-owners which includes the certificates of financial assurance, external trust agreements and funding schedules with any-
. supporting. data related thereto. ,
1 Any additional-information concerning the subject matter of this letter may be obtained by contacting: David L. Hauser, Controller f Duke Power Company 422 S. Church Street, PB02K Charlotte, North Carolina 28242 Telephone: (704) 373-5963 Sincerely, M David L.
/
Hauser Q&
- Controller Attachments cc: Dr. K.N. Jabbour-- w/o Attachments
' Robert S. Wood - w/o Attachments f
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r: . DUKE POWER COMPANY. CO-LICENSEES
SUMMARY
SCHEDULE CATAWBA UNIT 1- === =========---- =-------_ = = = - - - - - - + - - - - - . - - - - - - - - - - - - - - - - - - = . --. a =- --======------ CONTRACTUAL FUNDING. OBLIGATION FUNDING FUNDING ~ AMOUNT CO-LICENSEE PERCENTAGE BASIS SOURCE (1990 Dollars)- Duke Power Company 12.500% 162,226,000 Site Specific Study 20,278,250 North Carolina Electric Membership Cooperative, Inc. 28.125% 137,340,000 10 C.F.R. Sections 38,626,875 50.75(c)(1) & 50.75(c)(2) Saluda River Electric Cooperative, Inc. 9.375% 137,'s40,000 10 C.F.R. Sections 12,875,625 50.75(c)(1) & 50.75(c)(2) North Carolina Municipal Power Agency No. 1 .37.500% 137,340,000 10 C.F.R.. Sections. 51,502,500 50.75(c)(1) & 50.75(c)(2) Piedmont Municipal Power Agency 12.500% 137,340,000 10 C.F.R. Sections 17,167,500 50.75(c)(1) & 50.75(c)(2) TOTALS 100.000% 140,450,750
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SUMMARY
SCHEDULE CATAWBA UNIT 2
- == =============_=------ _-__---_-__--__ ___=------ ____. __- ____===_
CONTRACTUAL FUNDING. OBLIGATION FUNDING FUNDING AMOUNT CO-LICENSEE PERCENTAGE BASIS SOURCE (1990 Dollars) Duke Power Company 12.500% 167,699,000 Site Specific Study. 20,962,375 North Carolina Electric Membership Cooperative, Inc. 28.125% 137,340,000 10 C.F.R. Sections 38,626,875 50.75(c)(1) & 50.75(c)(2) Saluda River Electric Cooperative, Inc.. 9.375% 137,340,00C 10 C.F.R. Sections 12,875,625 50.75(c)(1) & 50.75(c)(2) North Carolina Municipal Power Agency No. 1 37.500% 137,340,000 10 C.F.R. Sections 51,502,500 50.75(c)(1) & 50.75(c)(2) Piedmont Municipal Power Agency 12.500% 137,340,000 10 C.F.R. Sections 17,167,500 50.75(c)(1) & 50.75(c)(2) TOTALS 100.000% 141,174,875
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PO Bar331ML Charlotte, NC 2M(2 f DUKEPOWER July 24, 1990 ; q i Document Control Desk U.S. Nuclear Regulatory Commission , ' Washington, D.C. 20555 RE: Decommissioning Financial:Assuranco Certification Report for Duke Power Company, Co-Owner of Catawba ! Nuclear Station Units 1 and 2, NRC Operating Licenses NPF-35 and NPF-52, NRC Docket No.s 50-413 and 50-414
Dear Sir or Madam:
The Nuclear Regulatory Commission's-("NRC") regulations' require that, on or before July 26, 1990, all production or utilization facility licensees submit to the NRC "information in the form of a report as described in [10 C.F.R.] Section 50.75 indicating how es reasonable assurance will be provided that funds will be
- (,) - available to-decommission the facility."1/ The following Decommissioning Financial Assurance Certification' Report
-(" Report") addresses the Commission's decommissioning certification requirements applicable to Duke Power Company's ,
co-ownership portion of the Catawba Nuclear Station (CNS) (NRC-Docket No.s 50-413 and 50-414). Attached to this letter are-(1) Exhibit A, which is a photocopy of Duke's executed Master ' Decommissioning Trust Agreement for all its. nuclear stations including CNS; (2) Exhibit B, Duke's Calculation of Minimum ; Assurance Amount; (3) Exhibit C, Duke's Calculation of the Amount to be Externally Funded; and (4) Exhibit D which shows
. contributions to External Sinking Funds. Exhibits C and D are provided to the NRC for information purposes.
CNS Units 1 and 2 are PWRs that.have a capacity of greater than 3400 MWt, for which NRC operating licenses NPF-35 and NPF-52 will continue to be in effect on July 27, 1990. Duke has prepared a
' site-specific decommissioning cost estimate for CNS. Using the site-specific estimate, Duke will make periodic contributions to an external trust fund which meets the criteria of 10 C.F.R.
1/ 10 C.F.R. Section 50.33(k)(2). O
~ Page.2 'Nj/ .
Section~50.75(e)(1)(ii). Specifically, Duke Power will contribute to the external trust twelve and one-half percent ('12.59' of the cost estimated in the site-specific study for decommissioning the irradiated portion of the facility. The total cost for this portion of the decommissioning process is estimated at $162,226,000 (1990 dollars) for Unit 1 and
$167,699,000 (1990 dollars) for Unit 2. The total amount to be deposited, and the anticipated schedule of related expenditures,.
is shown on Exhibit C. The minimum certification amount set out in 10 C.F.R. Section. ! f
'50.75(c)(1), as escalated pursuant to 10 C.F.R. Section 50.75(c)(2), is estimated at $137,340,000 per unit (1990 dollars, except burial which is based on the most recent indices available), which is less than the site-specific cost estimate discussed above. .Accordingly, pursuant to 10 C.F.R. Section 50.75, Duke Power hereby' certifies that it will be providing :t financial assurance for_its contractual share of decommissioning '
in amounts greater than its contractual share of the decommissioning rule certification amount. Duke will make contributions to the external funds in the manner shown in ; Exhibit D. l
% With respect to the commencement of contributions, Duke currently
("/ N- utilizes a depreciation allowance to provide reserves for t p decommissioning. -Duke Power plans to file in 1991 general rate L cases with the North Carolina Utilities Commission, the South Carolina Public Service Commission and the Federal Energy. Regulatory Commission which will include a specific allowance for decommissioning funding using the external trust. Duke anticipates that orders from the Commissions' permitting rate ; collection for contributions to the external-fund as required by the NRC will be issued in late 1991. As noted, a copy of the
. executed trust agreement is provided herewith as Exhibit A.
In summary, this letter certifies that Duke Power will undertake ; funding ~ accumulating the necessary funds to cover its contractual share of the estimated costs of decommissioning CNS. If there are any questions, please contact David L. Hauser, Controller, E 422 S. Church Street, Charlotte, North Carolina 28242, (704) L 373-5963. S cerely, pign) WN David L. Hauser l Controller
,_ Attachments cc: Dr. K.N. Jabbour - w/o Attachments Robert S. Wood - w/o Attachments I
ll i ! EXHIBIT A i L l
- ;\ ,
I DUKE POWER COMPANY MASTER DECOMMISSIONING TRUST AGREEMENT FOR: ll OCONEE NUCLEAR STATION UNIT NO. 1 OCONEE NUCLEAR STATION UNIT NO. 2 OCONEE NUCLEAR STATION UNIT NO. 3 MCGUIRE NUCLEAR STATION UNIT NO. 1 MCGUIRE NUCLEAR STATION UNIT NO. 2 CATAWBA NUCLEAR STATION UNIT NO. 1 CATAWBA NUCLEAR STATION UNIT NO. 2 , i ' r (> t Dated: March 13 _ , 1990 0
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i 1 < ( 'Y TABLE OF CONTENTS C /- Page ARTICLE I. DEFINITIONS. 1.01 Definitions............................... 4
, ARTICLE II. MASTER TRUST PURPOSES, NAME AND' FUNDS.
2.01 Master Trust Purposes..................... 10 j 2.02 Establishment of Master Trust............. 11 . 2.03 Acceptance of-Appointment................. 11 ! 2.04 Name of Master Trust...................... 3 2.05 Segregation of Master Trust............... _12 2.06 Designation of Funds.....................,. 13 2.07- Duties of Authorized Representatives...... 13 2,08 No Authority to Conduct Business..........- 14 2.09 No-Transferability of Master Trust........ 14 ARTICLE III. CONTRIBUTIONS AND INCOME. 3.01 Initial Contribution...................... 14 i 3.02 Additional Contributiono.................. 15- , 3.03 Allocation of Net Income.................. 15-3.04 Subsequent Adjustments.................... 15 l () ARTICLE IV.. 4.01 DISTRIBUTIONS. Payment of Decommissioning Costs.......... 16 ' l 4.02 Payment of Expenses of 1 Administration.......................... 17 4.03 Fees...................................... 17 4.04 Liquidation of Investments................ 17 ARTICLE V.. TERMINATION.-
- 5.01' Termination of Funds'and Master Trust in General................. 18 5.02 Termination of Qualified Funds Upon Disqualification............. 18 5.03 Termination of Qualified Funds on Sale of P3 ants....................... 18 5.04 Distribution of Master Trust and Funds Upon Termination.............. 19 ARTICLE VI. TRUSTEES.
I L 6.01 Designation and Qualification (, of Successor Trustee (s)................. 19 6.02 Exoneration from Bond..................... 20 L 6.03 Resignation............................... 20 6.04 Transactions With Third Parties........... 21 6.05 Accounts and Reports...................... 21 4 l' L
i: 6.061 ' Tax Returns and Other Reports............. 22
/3 24 1 I? .6.07 Liability..........-.....-.....-..............
L4
-ARTICLE VII. INVESTMENTS.
7.01- Appointment of_ Investment Panager(s)...... 24 g 7.02 Direction by Investment Manager (s) ....... 26 l
- (
ARTICLE VIII. TRUSTEE'S GENERAL POWERS. 8.01' Extension of Obligations-and
" Negotiation of Claims................... 29 8.02 Registration'of Securities................ 29 8.03 Borrowing................................. 29. 4' 8.04 Retention and Removal of Professional and Employee Services..'.... 29 y 8.05 Powers of Trustee to Continue t Until-Final Distribution................. 29 8.06' ' Discretion in Exercise of Powers.......... 30 ;
ARTICLE IX. TRUSTIE'S INVESTMENT POWERS. t 9.01 ' Preservation of Principal.................. 31 9.02 Investment of Qualified Funds............. 31 , 9.03 Investment of Nonqualified Funds.......... 32 9.04 Cash Sweep Investments.................... 32 9.05 Management of Master Trust................ 33 G l (,,) ARTICLE X. MISCELLANEOUS. 10.01 Headings.- ................................ 33 , 10.02 Particula. Words.......................... 33 ! 10.03 Severability of Provisions................ 33 10.04' Delivery of Notices Under Agreement....... 34 10.05 Alterations and Amendments................ 34 L 10.06- Successors and .Sssigns.................... 35 10.07 Governing Law............................. 35 10.08 Accounting Year........................... 35 10.09 Counterparts.............................. 36 i EXHIBIT A. CERTIFICATE - EXHIBIT B. CONTRIBUTION CERTIFICATE l l
\
t DUKE POWER COMPANY MASTER DECOMMISSIONING TRUST AGREEMENT AGREEMENT made this 13 day of March, 1990, by and between DUKE POWER COMPANY, a North Carolina corporation AND TRUST COMPANY, M.A., a (" Company"), and WACBOVIA RANK national banking association having trust powers (" Trustee"). RECITALS OF THE COMPANY 4 WREREAS, the Company is the sole owner of the Oconee Nuclear Station, which consists of three nuclear power reacter unit t. ("Oconee Unit No. 1," "Oconee unit No. 2," and "Oconee Unit No. 3") and associsted faellitiest and
- WEEREAS, the Company is the sole ovner of the McGuire Nuclear Station, which consists of two nuclear power reactor Unit No. 1" and "McGuire Unit No. 2") and ;
units ("McGuire j associated Lacilities and WHEREAS, the Company has an undivided 12.5 percent interest in the production of two nuclear power reactor units at the Catawba Nuclear Station (" Catawba Unit No.1" . and " Catawba Unit No. 2") and associated facilities; and WEEREAS, the Company is "ubject to regulation by the , North Carolina Utilities Commission ("NCUC"), an agency of the State of North Carolina created and existing pursuant to N.C. Gen. Stat. $$ 62-10, ej sgq. , The South Carolina Public Service Commission ("SCPSC"), an agency of the State of South Carolina created and existing pursuant to S.C. Code Ann. $ 58-27-10, g Federal Energy Regulatory Commission ("TERC"), an se3., the agency of the United States Government created and existing (
pursuant to 42 U.S.C. $$ 7134 and 7171, and the Nuclear i Regulatory Commission ("NRC"), an agency of the United States government created and existing pursuant to 42 U.S.C. $ 5841: and l WEEREAS, the NRC has promulgated regulations (10 C.F.R. a 1
$$ 50.33(k), 50.75 and 50.82) which require that a holder of, or )
applicant for, a license to operate a nuclear power plant must provide finar.cial asnurance that monies will be available when , needed for required decommissioning activities; and WEEREAS, to comply with these regulations of the NRC, , among other ressens, the Company wishes to establish one or more i l trust funds to provide all or part of such financial assur6nce for decommissioning costs associated with the Plants: and WEEREAS, the NCUC, the SCPSC and the TIRC have . A permitted the company to include in its cost of service for f
\ ratemaking purposes certain amounts in order to provide monies for the Company's share of expenses with respect to the Company's ,
Plants: and l WHEREAS, pursuant to section 468A of the Internal Revenue . Code of 1986 (" Code"), certain Federal income tax benefits are available to the Company by creating and making contributions to qualified nuclear decommissioning reserve funds l associated with the Company's Plants; and WHEREAS, the Company wishes to establish both qualified , 1 nuclear decommissioning reserve funds and nonqualified nuclear l decommissioning reserve funds to hold monies for decommissioning the Plants: and
. ~ _ . . . - - - . . - - - - - - --.__. . . -
WHEREAS, the Company wishes to establish a Master Trust
for the collective investment of the assets of the qualified and nenqualified nuclear decommissioning reserve funds for the Plants, wherein each Fund shall constitute a separate trust under the Master Trust; and ,
WEEREAS, the assets of each of the qualified and nonqualified nuclear decommissioning reserve funds shall be deemed to have been transferred to a Master Trust to be held , hereunder for the benefit of such funds. RECITALS OF THE TRUSTEE WEEREAS, Wachovia Bank and Trust Company, N.A. 1"Wachovia" or the " Trustee"), is a national banking association , with trust powers and WHEREAS, Wachovia is willing to serve as trustee under the Master Trust on the terms and conditions herein set forth. NOW, THEREFORE, in consideration of the mutual promises herein contained, the Company hereby agrees to deliver to the Trustee and the Trustee hereby agrees to receive Contributions to 4 the Master Trust beginning on the date first written above: and TO BAVE AND TO BOLD such assets; and TO INVEST AND REINVEST the assets of the Master Trust as provided herein and
'!O PAY OR DISTRIBUTE f rom the Master Trust as provided
( herein IN TRUST NEVERTHELESS, for the uses and purposes and upon the terms and conditions as hereinafter set forth. O
I. DEFINITIONS 1.01 Definitions. As used in this Master Decommissioning Trust Agreement, the following terms shall have the following meanings: (1) " Agreement" shall mean and include this Master Decommissioning Trust Agreement as the same may be amended, , modified, or supplemented from time to time. . (2) " Authorized Representative" shall mean the persons designated pursuant to section 2.07 hereof. , (3) " Catawba Unit No. 1" shall mean the Company's , ownership interest in Unit No. 1 of the Catawba Nuclear Station.
" Catawba Unit No. 1 Nonqualified rund" shall ;
4 (4) consist of contributions by the Company for decommissioning , Catawba Unit No. 1 (but only to the extent such Contributions are ' !' not deposited and maintained in the Catawba Unit No. 1 Qualified Fund) plus earnings and appreciation thereon. (5) " Catawba Unit No. 1 Qualified Fund" shall mean the nuclear decommissioning reserve fund established fcr Catawba 7 Unit No. 1 pursuant to section 468A of the Code, and shall consist of Contributions by the Company for decommissioning Catawba Unit No. 1 plus earnings and appreciation thereon, the maximum amount of which is specified in a Schedule of Ruling Amounts with respect to Catawba Unit No. 1. (6) " Catawba Unit No. 2" shall mean the Company's ownership interest in Unit No. 2 of the Catawba Nuclear Station. (7) " Catawba Unit No. 2 Nonqualified Fund" shall Contributions by the Company for decommissioning consist of t 4
Catawba Unit No. 2 (but only to the extent such Contributions are not deposited and maintained in the Catawba Unit No. 2 Qualified l Tund) plus earnings and appreciation thereon. (8) " Catawba Unit No. 2 Qualified Fund" shall mean the nuclear decommissioning reserve fund established for Catawba , Unit No. 2 pursuant to section 468A of the Code, and shall consist of Contributions by the Company for decommissioning Catawba Unit No. 2 plus earnings and appreciation thereon, the maximum amount tof which is specified in a Schedule of Ruling Amounts with respect to Catawba Unit No. 2. . (9) " Certificate" shall mean a document properly completes and executed by an Authorized Representative of the Company and substantially in the fern of Exhibit A hereto. . (] (10) " Code" shall mean the Internal Revenue Co3e of V 1986, as the same may be amended from time to time. (11) " Commissions" shall mean the TERC, the NCUC, the NRC and the SCPSC, collectively. (12) " Company" shall mean Duke Power Company. (13) " Contribution" shall mean any contribution, cash or otherwise, made to the Funds. (14) " Decommissioning Collections" shall mean the 4 monies collected by the -Company from its customers for Decommissioning Costs associated with the Plants that are contributed to this Master Trust. (15) ' Decommissioning Costs" shall mean the expenses incurred in decommissioning the Plants. O 5-
i (16) " Excess Contribution" shall have the meaning set (
' ' forth in Section 3.04 hereof.
(17) "FIRC" shall mean the Federal Energy Regulate'ty Commission, as defined by 42 U.S.C. $$ 7134 and 7171. i (18) "TERC Subaccount" shall mean the portion of any Fund consisting of Decommissioning Collections under rates > established by the TERC plus earnings and appreciation thereon. i (19) " Fund" shall nean any one of the Qualified or
.Nonqualified Funds.
(20) "Tunds" shall mean the Qualified Funds and the Nonqualified Funds, collectively. , (21) " Investment Account" shall mean an account established by the Trustee pursuant to Section 7.01 hereof. ' I (22) " Investment Manager (s)" shall mean the fiduciary specified .in an Investment Manager Agreement (s), including any employee of the Company or its affiliated companies. - (23) " Investment Manager Agreement (s)" shall mean an agreement (s) between the Company and an Investment Manager (s) selected by ttle Company which agreement governs the investment management of all or a portion of the Master Trust. (24) " Master Trust" shall consist of the Contributions to the Funds by the Company pursuant to this Agreement together with the proceeds and reinvestment thereof. (25) "McGuire Unit No. 1" shall mean the Company's ownership interest in Unit No. 1 of the McGuire Nuclear Station. (26) "McGuire Unit No. 1 Nonqualified Fund" shall consist of Contributions by the Company for decommissioning
* .y .3 ,. . , , , ,,.. . -r. ,
I i McGuire Unit No.1 (but only to the extent such Contributions are (v I not deposited and maintained in the McGuire Unit No.1 Qualified Fund) plus ear.nings and appreciation thereon. (27) "McGuire Unit No. 'l Qualified Fund" shall mean the nuclear decommissioning reserve fund established for McGuire Unit No. 1 pursuant to section 468A of the Code, and shall consist of contributions by the company for decommissioning ! McGuire Unit No. 1 plus earnings and appreciation thereon, the m&ximum amount of which is specified in a Schedule of Ruling Amounts with respect to McGuire Unit No.1. . (28) "McGuire Unit No. 2" shall mean the Company's L ownership interest in Unit No. 2 csf the McGuire Nuclear Station. (79) "McGuire Unit No. 2 Nonqualified Fund" shall . consist of Contributions by the Company for decommiesioning , McGuire Unit No. 2 (but only to the extent such Contributions are not deposited and maintained in the McGuire Unit No. 2 Qualified Fund) plus earnings and appreciation thereon. (30) "McGuire Unit No. 2 Qualified Fund" shall mean the nuclear decommissioning reserve fund established for McGuire Unit No. 2 pursuant to section 468A of the Code, and shall consist of Contributions by the Company for decommissioning I McGuire Unit No. 2 plus earnings and appreciation thereon, the maximum amount of which is specified in a Schedule of Ruling Amounts with respect to McGuire Unit No. 2. (31) "NCUC" shall mean the North Carolina Utilities Commission, as defined in N.C. Gen. Stat. $$ 62-10, et s_eg. O
,-e - ., . - .
- .w.. , .,
-(32) "NCUC Subaceount" shall mean the portion of any i
Fund consisting of Decommissioning Collections under rates established by the NCUC plus earnings and appreciation thereon. (33) "Nonqualified Funds" shall mean the Oconee Unit i No. 1 Nonqualified Fund, the Oconee Unit No. 2 Nonqualified Fund, the Oconee Unit No. 3 Nonqualified Fund, the McGuire Unit No. 1 Nonqualified Fund, the McGuire Unit No. 2 Nonqualified Fund, the Catawba Unit No. 1 Nonqualified Fund, and the Catawba Unit No. 2 Nonqualified Fund. . (34) "NRC" shall mean the Nuclear Regulatory Commission, as defined in 42 U.S.C. $$ 5841. (3S) "O!; der" shall mean any order relating to the decommissioning the Plants issued by the TERC, the NCUC, SCPSC, or the NRC. l l (36) "Oconee Unit No. 1" shall mean the Company's l ownership interest in Unst No. 1 of the Oconee Nuclear Station. (37) "Oconee Unit No. 1 Nonqualified Fund" shall consist of Contributions by the Company for decommissioning Oconee Unit No. 1 (but only to the extent such Contributions are not deposited and maintained in the Oconee Unit No. 1 Qualified Fund) plus earnings and appreciation thereon. (38) "Oconee Unit No. 1 Qualified Fund" shall mean the nuclear decommissioning reserve fund established for Ocones Unit l l No. 1 pursuant to section 468A of the Code, and shall consist of Contributions by the Company for decommissioning Oconee Unit
-No. 1 plus earnings and appreciation thereon, the maximum amount of which is specified in a Schedule of Ruling Amounts with O' respect to Oconee Unit No. 1.
. . - . ~ -
t (- (39) "Oconee Unit No. 2" shall mean the Company's !
-('
I ownership interest in Unit No. 2 of the Oconee Nuclear Station. (40) *Oconee Unit No. 2 Nonqualified Fund" shall consist of Contributions by the company for decommissioning Oconee Unit No. 2 (but only to the extent such Contributions are not deposited and maintained in the Oconee Unit No. 2 Qualified , Fund) plus earnings and appreciation thereon.- ; (41) "Oconee Unit No. 2 Qualified Fund" shall mean the . nuclear decommissioning reserve fund established for Oconee Unit No. 2 pursuant to section 468A of the Code, and shall consist of contributions by the company for decommissioning Oconee Unit No. 2 plus- earnings and appreciation thereon, the maximum amount of which is specified in a Schedule of Ru?ing Amounts with , e 'respec: to Oconee Unit No. 2. ( (42) "Oconee Unit No. 3" sh&11 mean the Company's ownership interest in Unit No. 3 of the Oconee Nuclear Station. ,
-(43) "Oconee Unit No. 3 Nonqualified Fund" shall consist of Contributions by the Company for decommissioning Oconee Unit No. 3 (but only to the extent such Contributions are 3 not deposited and maintained in the Oconee Unit No. 3 Qualified Fund) plus earnings and appreciation thereon.
(44) "Oconee Unit No. 3 Qualified Fund" shall mean the nuclear decommissioning reserve fund established for Oconee Unit No. 3 pursuant to section 468A of the Code, and shall consist of Contributions by the company for decommissioning Oconee Unit , No. 3 plus earnings and appreciation thereon, the maximum pmount of ' which is specified in a Schedule of Ruling Amounts with respect to Oconee Unit No. 3. (45) " Plants" shall mean Oconee Unit No. 1, Oconee Unit No. 2, Oconee Unit No. 3, McGuire Unit No. 1, McGuire Unit No. 2, Catawba Unit No. 1, and Catawba Unit No. 2, collectively. (46) " Qualified Funds" shall mean the Oconee Unit ; No. 1 Qualified Fund, the Oconee Unit No. 2 Qualified Fund, the i Oconee Unit No. 3 Qualified Fund, the McGuire Unit No. 1 Qualified Fund, the McGuire Unit No. 2 Qualified Fund, the Catawba Unit No. 1 Qualified Fund and the Catawba Unit No. 2 Qualified Fund, collectively. (47) "SCPSC" shall mean The South Carolina Public service Commission, as defined in S.C. Code Ann. $$ 58-27-10, n
!!S.
- (48) "SCPSC Subaccount" shall mean the portion of any Fund con'41 sting of DecomT.issioning Collections under rates established by the SCPSC plus earnings and appreciation thereon.
(49) " Schedule of Ruling Amounts" shall have the C. meaning set forth in section 468A(d)(i) of the Code. (50) " Service" shall mean the Internal Revenue Service. (51) "Subaceounts" shall mean the FERC Subaccount, the NCUC Subaccount and the SCPSC Subaccount, collectively. (52) " Trustee" shall mean Wachovia Bank and Trust .
~ Company, N.A., or any successor appointed pursuant to Section 6.01 hereof.
II. MASTER TRUST PURPOSES, NAME AND FUNDS. 2.01 Master Trust Purposes. The exclusive purposes of this Master Trust are to hold funds for the contemplated decommissioning of the Plants, to constitute qualified and b nonqualified nuclear decommissioning reserve funds for the Plants (the Qualified Funds being established pursuant to Section 468A of the Code, any applicable successor provisions and the regulations thereunder) and to comply with any order. l 2.02 Establishment of Master Trust. By execution of this Agreement, the Company ' (a) establishes the Master Trust which shall be effective March ,,_, 1990, and which shall consist of such Contributions as may be delivered to the Trustee by the Company for the Funds. The Master Trust also shall include additional contributions, s.nd earnings and appreciation thereon; (b) establishes the runds, each of which shall constitute a~ trust consisting of such contributions ya may be delivered to the Trustee by the Company as designated for such Fund. Each Fund also shall include additional Contributions designated for such rund, and earnings and appreciation thereon; ; and (c) appoints Wachovia Bank and Trust Company, N.A., , r as Trustee of the Master Trust. 2.03 Acceptance of Appointment. Upon the terms and l conditions herein set forth, Wachovia Bank and Trust Company, N.A., accepts the appointment as Trustee of this Master Trust. l The Trustee shall hold all estate, right, title, and interest it , may acquire hereunder exclusively for the purposes set forth in this Article II. The Trustee shall receive any Contributions deposited with it by the Company and shall hold, manage, invest l
l l l and administer such contributions, together with earnings and appreciation thereon, in accordance with this Agreement. 2.04 Name of Master Trust. The Contributions received I by the Trustee from the Company together with the proceeds, l reinvestments and appreciation thereof shall constitute the " Duke Power Company Master Decommissioning Trust." 2.05 Segregation of Master Trust. The Master Trust ; shall be divided by the Trustee into the Fund (s) as follows: ! (a) Oconee Unit No. 1 Qualified Fund; (b) Oconee Unit No. 1 Nonqualified Fund; (c) Oconee Unit No. 2 Qualified Fund; (d) Oconee Unit No. 2 Nonqualified Fund; (e) Oconee Unit No. 3 Qualified Fund; (f) Oconee Unit No. 3 Nonqualified Fund; (g) McGuire Unit No. 1 Qualified Fund; (h} McGuire Unit No. 1 Nonqualified Fund; l E (i) McGuire Unit No. 2 Qualified Fund; (j) McGuire Unit No. 2 Nonqualified Fund; (k) Catawba Unit No. 1 Qualified Fund; (1) Catawba Unit No. 1 Nonqualified Fund; l (m) Catawba Unit No. 2 Qualified Fund; , (n) Catawba Unit No. 2 Nonqualified Fund; , In addition, each Fund shall be segregated by the Trustee into a FERC Subaccount, a NCUC Subaccount and a SCPSC Subaccount. ; The Trustee shall maintain such records as are necessary to reflect each Fund and Subaccount separately on its books from each other Fund and Subaccount.
2.06 Designation of runds. Upon (i) the initial Contribution to the Master Trust as specified in Section 3.01: (ii) any addition to the Master Trust pursuant to Section 3.02; (iii) any adjustment to the Funds pursuant to Section 3.04; or (iv) any withdrawal from the Master Trust for Decommissioning Costs pursuant to Section 4.0) or for administrative expenses pursuant to Section 4.02, the Company shall designate (in writing) the Fund (s) and the Subaccount(s) which are to be - or debited amount such Contribution, credited for the of withdrawal, addition or adjustment, and the Trustee shall credit or debit the Fund (s) and the Subaccount(s) in accordance with such designations provided, however, that if the Company fails to designate the Fund (s) or the Cubaceount(s) to which payment of administrative expenses is to be debited, such payment shall be debited pro rata (based upon the fair market value of each Fund and Subaccount) among all of the Funds and Subaceounts. 2.07 Duties of Authorized Representatives. The Company has empowered the Authorized Representatives and their delegates to act for the Company in all respects hereunder, including, without limitation, to direct the investment management of all assets of the Master Trust and to appoint Investment Managers. The Authorized Representatives may act as a group or may designate one or more Authorized Representative (s) or delegate (s) to perform the duties described in the foregoing sentence. The company shall provide the Trustee with a written statement setting forth the names and specimen signatures of the Authorized Representatives. The Authorized Representatives shall O _ _ . . _
I L provide the Trustee with a written statement setting forth the names and specimen signatures of any delegate of the Authorized l Representatives. Until otherwise notified in writing by the may rely upon any written notice, l Company, the Trustee l instruction, direction, certificate, or other communication i reasonably believed by it to be genuine and to be signed or certified by any one or more Authorized Representatives or their l I designated delegate (s), and the Trustee shall be under no duty to make any investigation or inquiry as to the truth or accuracy of any statement contained therein. 2,08 No Authority to Conduct Business. The purposes of this Master Trust are limited specifically to the matters set forth in Section 2.01 hereof. 2.09 No Transferability of Master Trust. The interest of the Company in the Master Trust is not transferable, whether voluntarily or involuntarily, by the Company nor subject to the. , claims of creditors of the - Company: provided, however, that any creditor of the Company as to which a Certificate has been. properly completed and submitted to the Trustee may assert a , claim directly against the Master Trust in an amount not to exceed the amount specified in such certificate. III. CONTRIBUTIONS AND INCOME 3.01 Initial Contribution. Upon'the establishment of this Master Trust on the date first written above, the Company i shall cause to be delivered to the Trustee an initial contribution.
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,fm 3.02 Additional Contributions. From time to time af ter the initial Contribution to the Master Trust and prior to the termination of this Master Trust, the Company may make, and ]
l the Trustee shall accept, additional Contributions to the Master Trust to satisfy the purposes of this Master Trust as set forth in Section 2.01, which contributions may be made to the Qualified ! Funds or to the Nonqualified Funds. The company shall designate, pursuant to a Contribution Certificate substantially in the form of Exhibit B hereto, the Fund (s) and the Subaccount(s) which are to be credited for the amount of such Contribution. 3.03 Allocation of Income. The Trustee may pool the assets of the Funds for investment purposes and, upon so doing, may treat each Fund so pooled as having received or accrued a pro rata portion (based on the principal balances of the Funds so pooled) of the net income of the Master Trust (including appreciation) related to such pooled assets in any accounting year of the Master Trust. The Trustee shall maintain such records as are necessary to reflect the allocation of income and losses among the Funds and the Subaccounts in accordance with this Section 3.03. The Trustee may rely upon the written opinion of legal counsel of the Company with respect to any question arising under this Section 3.03, 3.04 Subsequent Adiustments. The Trustee and the Company understand and agree that the Contributions made by the Company to a Qualified Fund from time to time may exceed the amount permitted to be paid into such Fund (s) pursuant to section 468A of the Code and any regulations thereunder, based upon O +
changes in estimates, subsequent developments or any other event ! or occurrence which could not reasonably have been foreseen by the Company at the time such Contribution was made (" Excess contribution"). Upon receipt of a written directive of the Company signed by an Authorized Representative setting forth the i amount of the Excess Contribution to be transferred (" Excess Assets") from a Fund and stating that such Excess Contributions and any earnings and appreciation thereon should be transferred to one or more of the other Funds as specified or paid to any person or entity, including but not limited to the company, together with the legal opinion referred to below, the Trustee shall transfer or pay such Excess Contributions, as the case may be, to the Fund (s), person, or entity specified by the Company in the written directive. . In all cases, distributions of any Excess contributions i shall not be made unless, in the opinion of legal counsel to the L company, such distribution will not 3ead to disqualification of the Qualified Fund (s) from the application of section 468A of the Code and that such distribution will not constitute a violation of any Order. The Trustee and the Company further understand and agree that a transfer of monies among the Qualified Funds and the 1 l Nonqualified Funds may be necessary to effectuate the purposes of this Master Trust. IV. DISTRIBUTIONS 4.01 Payment of Decommissioning Costs. Upon receipt of a certificate, the Trustee shall make payment of
1 l p Decommissioning Costs to any person (inc3uding the company) for (}
\ goods provided or labor or other services rendered in connection with the decommissioning of the Plants.
4.02 Payment of Expenses of Administration. Upon receipt of a certificate, the Trustee shall make payments of administrative costs (including taxes, reasonable out-of-pocket expenses and trustee's fees) and other incidental expenses of the Master Trust (including legal, accounting and actuarial expenses) in connection with the operation of the Master Trust pursuant to this Agreement. All such administrative expenses and incidental expenses of the Master Trust shall be allocated proportionately among the Funds (based on the principal balance of each Fund) unless otherwise directed by the Company. The Trustee shall maintain such records as are necessary to reflect the allocation of costs and expenses in accordance with this Section 4.02. 4.03 Fees. The Trustee shall receive as exclusive compensation for its services pursuant to this Agreement those amounts specified in the fee schedule as may from time to time be agreed upon in writing by th'e Trustee and the Company. 4.04 Liquidation of Investments. At the direction of the Company or any Investment Manager, the Trustee shall sell or liquidate such investments of the Funds as may be specified. The proceeds of any such sale or liquidation shall be credited pro - rata to the Fund or Funds to which such investments were credited prior to such sale or liquidation. O -
r V. TERMINATION 5.01 Termination of runds and Master Trust in General. Each rund established hereunder shall terminate upon the earlier of: (1) substantial completion of the nuclear decommissioning of the Plant to which it relates (as defined in Treasury Regulations promulgated under Code section 468A), as evidenced by written notification of that fact to the Trustee by the Authorized Representativer or (ii) twenty-one (21) years after the death of the last survivor of each person who was an officer of the Company or of the Company's affiliated companies on January 1, 1990 and each of their descendants born on or prior to January 1, 1990. This Master Trust shall terminate upon the termination of all of the runds. 5.02 Termination of Qualified runds Upon i V -Disqualification. Notwithsta. ding the provisions of Section 5.01 hereof, the applicable portion of any Qualified rund shall 4 terminate upon its disqualification from the application of section 468A of the Code, whether pursuant to an administrative action on the pa.rt of the Service or the decision of any court of competent jurisdiction, but in no event earlier than the date on , which all available appeals have been either prosecuted or abandoned and the period of time for making any further appeals has elapsed. 5.03 Termination of Qualified runds on Sale of Plants. Notwithstanding the provisions of Section 5.01 hereof, and to the extent provided in Treasury Regulations promulgated under Code section 468A, the applicable portion of any Qualified i'
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Fund shall terminate upon the Company's sale or other disposition of all or a portion of its ownership interests in the Plants. and runds Upon 5.04 Distribution of Master Trust Termination. Upon termination of this Master Trust or any l Fund (s), the Trustee shall assist the Investment Manager (s) in l liquidating the assets of :he Master Trust or Fund (s), and distributing the then existing assets thereof (including accrued, accumulated and undistributed net income), less final Master. Trust or Fund administration expenses (including accrued taxes),
^
to the Company; provided, however, that no such distribution shall be made unless either (a) an Order has been issued which specifically authorizes such distribution or (b) the Trustee has received an opinion of legal counsel to the Company to the effect i-that no such order is necessary to authorize such distribution. VI. TRUSTEES i 6.01 g p onation and . Qualification of Successor Trustee (s). At any time during the term of this Master Trust, the Company shall have the right to remove the Trustee (at the Company's sole discretion) acting hereunder and appoint another qualified entity as a successor Trustee upon thirty (30) days' notice in writing to the Trustee, or upon such shorter notice as may be acceptable to the Trustee. In the event that the Trustae or any successor Trustee shall: (a) become insolvent or admit in writing its insolvency; (b) be unable or admit in writing its inability to pay its debts as such debts maturer (c) make a general assignment for the benefit of creditors; (d) have an involuntary petition in bankruptcy filed against its (e) commence
a case under or otherwise seek to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law, statute, or proceeding, or (f) resign, the Company shall appoint a Successor Trustee as soon as practicable. In the event of any such removal or resignation, the Trustee or Successor Trustee shall have the right to have its accounts settled as provided in Section 6.05 hereof. Any successor to the Company, as provided herein, shall have the same right to remove and to appoint any Trustee or Successor Trustee. ; Any Successor Trustee shall qualify by a duly acknowledged acceptance of this Master Trust, delivered to the Company. Upon acceptance of such appointment by the Succest.cy Trustee, the Trustee shall assign, transfer and pay over to such Successor Trustee the monies and properties then constituting the Master Trust. Any Successor Trustee shall have all the rights, L powers, duties ar.d obligations herein granted to the original l Trustee. 6.02 Exoneration from Bond. No bond or other security c I shall be exacted or required of any Trustee or Successor Trustee appointed pursuant to this Agreement. 6.03 Resionation. The Trustee or any Successor Trustee hereof may resign and be relieved as Trustee at any time , without prior application to or approval by or order of any court 1 i by a duly acknowledged instrument, which shall be delivered to l the Company by the Trustee no less than sixty (60) days prior to the effective date of the Trustee's resignation or upon such shorter notice as may be acceptable to the Company. If for any
g reason the Company cannot or does not act in the event of the
~t resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee.
6.04 Transactions With Third Parties. No person or organization dealing with the Trustee hereunder shall be required to inquire into or to investigate the person's or organization's authority for entering into any transaction or to see to the application of the proceeds of any such transaction. , 6.05 Accounts and Reports. The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder in accordance with L specifications of the Company, and all accounts, books and - records relating thereto shall be open to inspection and audit at , O all reasonable times by any person designated by the Company. V , Within 30 days folleving the close of each month, the Trustee L l shall file with the Compr.ny a written report setting forth all >
- i. Investments, receipts and disbursements and other transactions
- effected by it during the month and containing an exact
r 1 description of all cash and securities contributed, purchased, l sold or distributed and the cost or net proceeds of sale, and showing all cash, and securities and other investments held at the end of such month and the cost and fair market value of each ! item thereof as carried on the books of the Trustee. Such accounts and reports shall be based on the accrual method of reporting income and expenses and shall show the portion of the assets applicable to each Fund and Subaceount and also shall { . - - - . - .- , . . . . -- - -.
I identify all disbursements from each Fund and Subaccount made to pay Decommissioning Costs or Administrative Expenses. Within forty-five (45) days following the close of each year, the Trustee shall file with the Company an annual report containing all the information described above. Upon written request from the Company, the Trustee shall provide the Company and the Commissions with a written report which sets forth the f air market value of each of the Funds. The Trustee shall also provide the Company an opinion letter, in the form reasonably requested by the Company, stating that the Master Trust's accounting system satisfies all the requirements of the NRC and the Service. In addition to the foregoing, the Trustee shall submit reports and notices regarding the runds to the Company as may be O required under any applicable laws and regulations, rurther, the Trustee shall present testimony concerning the Funds in regulatory and other legal proceedings upon the request of the Company. All records and accounts maintained by the Trustee with respect to the Master Trust shall be preserved for s,uch period as may be required under any applicable law. Upon the expiration of any such required retention period, the Trustee shall- have the right to destroy such records and accounts after first notifying the Company in writing of its intention and transferring to the company any records and accounts requested by the Company. 6.06 Tax Returns and Other Reports. The Trustee shall prepare and timely file all Federal, state and local income or O
franchise tax returns or other reports (including estimated tax returns and information returns) as may be required from time to : time with respect to the Funds, and the company agrees to provide the Trustee in a timely manner with any information within its possession, and to cause the Investment Manager (s) to provide the Trustee with any information in its possession, whien is necessary to such filings. The Trustee shall prepare and submit to the Company in a timely manner all information requested by the Company regarding the Funds required to be included in the Company's Federal, state and local income tax returns or other reports (including estimated tax returns and information returns). The Trustee may employ independent certified public accountants or other tax counsel to prepare or review such returns and reports. The Trustee shall sign any tax returns or : l other reports where required by law to do so or arising out of the Trustee's responsibilities hereunder, and shall remit from the Master Trust appropriate payments or deposits of federali state and local income or frr.nchise taxes directly to the taxing agencies or authorized depositaries in a timely manner. Notwithstanding Section 6.07 hereof, any interest or penalty I charges assessed against the Funds under the Code, or pursuant to any similar state or local tax provisions, as a result of the ,
. Trustee's failure to comply with this Section 6.06 shall be borne-by the Trustee and not by the Funds or the Company. The Trustee shall notify the Company in writing within ten days of the commencement of any audit of any Fund's Federal, state, or local tax returns and shall participate with the Company on behalf of
. l 1
the Funds in such audits and related inquiries. The Trustee shall provide the Company with any additional information in its - possession regarding the Funds which may be requested by the Company to be furnished in an audit of the Company's Federal, state, or local tax returns. 1 6.07 Liability. The Trustee 3 hall not be liable for any acts, omissions or defaults of any agent (other than its officers and employees) or depository appointed or selected with reasonable care. The Trustee shall be liable only for such Trustee's own acts or omissions (and those of its officers and i employees) occasioned by the willfulness or negligence of such Trustee (or that of its officers and employees). Notwithstanding anything contained in this Agreement to the contrary, the Trustee agrees to refrain from authorizing or carrying out transactions that would constitute "self-dealing" under Code Section 468A(e)(5) or Code Section 4951 (or any applicable - successor provisions) . If the Trustee authorizes er carries out any transaction in violation of the provisions of L this paragraph, the Trustee (and not the - Master Trust or any l Fund) shall be litble for ary tax imposed on the Master Trust, , any Fund, or the Trustee pursuant to code Section 4951 (or any applicable successor provision) and for any loss or damage sustained by the Master Trust, any Fund, or the Company; provided, however, that the Trustee shall have no such liability with respect to transactions authorized or carried out pursuant r 30 specific written instructions of the Company or upon specific legal advice of counsel retained by the Master Trust or the Company. , l ~24-
I INVESTMENTS ( ( VII. 7.01 Appointment of Investment Manager (s). Initially, the Trustee shall have investment responsibility for this Master Trust. However, the Company may appoint one or more Investment . Managers to direct the investment of all or part of the Master l Trust. The Company shall also have the right to remove any such l Investment Manager (s). The appointment of an Investment Manager . shall be made in accordance with any procedures specified by the Company. Whenever such appointment is made, the Company shall provide written notice of such appointment. to the Trustee, shall specify.the portion of the Master Trust with respect to which an Investment Manager has been designated, and shall instruct the Trustee to segregate into an Investment Account those assets with respect to which that specific Investment Manager has been designated. Except as otherwise provided in this Agreement, to the extent that the Company authorizes an Investment Manager to direct the investment of an Investment Account, the Trustee shall be released and relieved of all investment duties, p responsibilities and liabilities customarily or statutorily incident to a trustee with respect to the Investment Account, and as- to such Investment Account, the Trustee shs11 act as custodian. An Investment Manager shall certify in writing to the l Trustee that it is qualified to act in the capacity provided under an Investment Manager Agreement, shall accept its appointment as Investment Manager, shall certify the identity of the person or persons authorized to give instructions or i directions to the Trustee on its beha3f, including specimen 7 r l . , . ,_ _ _ . _ . ~ . . _._
signatures, and shall undertake to perform the duties imposed on it under an Investment Manager Agreement. The Trustee may continue to rely upon all such certifications unless otherwise notified in writing by the Company or an Investment Manager, as the case may be. 7.02 Direction by Investment Manager (s). An Investment Manager designated by the Company to manage an Investment Account shall have authority to manage and to direct the acquisition and disposition of the assets of the Master Trust, or a portion thereof, as the case may be, and the Trustee l. l shall exercise the powers set forth in Article IX hereof only when,'if, and'in the manner directed by the Company in writing, and shall not be under any obligation to invest or otherwise l manage any assets in the Investment Account except as provided in l Section 9.04 hereof or as directed by the Company. An Investment g Manager shall have the power and authority, exercisable in its sole discretion at any time, and from time to time, to issue and place orders for the purchase or-sale of portfolio securities , directly ' with qualified brokers or dealers. The True. tee, upon proper notification from an Inves' ment c Manager (such notification being agreed to . by the Trustee and Investment Kar.a g e r ) , shall settle the transactions in accordance with the appropriate trading authorizations. Written notification of the issuance of each such authorization-shall be given promptly to the Trustee by an Investment Manager, and such Investment Manager shall cause the settlement of such transaction to be confirmed in writing to the Trustee, and to the Company, by the broker or dealer. Such r (
u
^ notification shall be proper authority for the Trustee to pay for a
portfolio securities purchased against receipt thereof and to deliver portfolio securities sold against payment therefor, as the case may be. All directions'to the Trustee by an Investment Manager shall be in writing and shall be signed by a person who has been certified.by such Investment Manager pursuant to Section 7.01. hereof as authorized to give instructions or directions to the Trustee. Should an Investment Manager at any time elect to place security transactions directly with a broker or dealer, the Trustee shall not recognize such transaction unless and until it has received instructions or confirmation of such fact from an Investment Manager. Should an Investment Manager direct the Trustee to utilize tha services of any person with regard to the O assets under .its management or control, such instructions shall Q l be in writing and shall specifically set forth the actions to be taken by the Trustee as to such services. In the event that an Investment Manager places security transactions directly or directs the utilization of a fervice, such Investment Manager 6 hall be solely responsible for the acts' of such persons. The sole duty of the Trustee as to such transactions shall be incident to its duties as custodian. ' The authority of an Investment Manager and the terms i and conditions of the appointment and retention of an Investment Manager (s) shall be the responsibility solely of the Company, and the Trustee shall not be deemed to be a party or to have any obligations under any agreement between the Company and p
l l Investment Manager. Any duty of supervision or review of .the acts, omissions, or overall perform ace of the Investment Manager (s) shall be the exclusive responsibility of the Company, and the Trustee shalA have no duty to review any securitics or other assets purchased by an Investment Manager, or to make suggestions to an Investment Manager or to the Company with i respect to the exercise or nonexercise of any power by an Investment Manager. Notwithstanding anything herein to the contrary, any investment authorization with respect to the Qualified Funds shall at all times be limited to investments permitted under Code ! Section 46BA and the regulations thereunder. Also
.notwithstanding anything herein to the contrary, the Trustee /] anall screen all investment decisions of the Investment Manager, V the Company, and the Trustee for conipliance with the investment standards communicated by the Company to the Trustee, ine',uding security type, quality code, and the identity of the issuer.
o If a security does not meet the specified standards, the Trustee l shall take all appropriate actien to prevent the security from being settled by the Master Trust. In auch case, the Trustee shall immediately notify the applicable Investment Manager, if l' l any, and the Company of such noncompliance. The Trustee shall take all necessary action to cause the Investment Manager to reverse, break, or rescind such a trade. If such a trade is the investment decision of an Investment Manager, the Investment I Manager shall be responsible for any loss or expense, and shall l ( receive any gain, resulting from such reversal. l
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..' 1 f .VIII. TRUSTEE'S GENERAL POWERS e
'The Trustee shall' have~, with respect to the Master-Trust, the following powers, all of which powers are fiduciary 'j 1
powers to be exercised in a fiduciary capacity and in the best' ] I interests of this Master Trust and the purposes hereof, namely: l 8.01 Extension of Obligations and Negotiation of Claims. To renew or extend the time of payment of- any obligation, secured or unsecured, payable to or by this Master >
- Trust, for as long a period or periods of time and on such terms as-the Trustee shall determine, and to adjust, settle, compromise e
and arbitrate claims or demands in favor of or against this
. Master Trust, including claims for taxes, upon such terms as the Trustee and the Company' may deem advisable, subject to the limitations contained-in Section 9.05 (regarding self-dealing).
'N 8.02 Registration of Secur(ties. To hold any stocks, 1
bonds, securities, or other property : the name of a nominee, in street- name, or by other title holding device, without a indication of trust. 8.03 Borrowing. To borrow money in. such amounts and upon 'such terms as the Company may authorize in writing - as necessary to carry out the purposes of this Master Trust.and to pledge any securities or other property for the repayment of any . such loan as the Company may direct. 8.04 -Retenti,on and Removal of Professional and Employee Services. To employ, retain and remove attorneys, accountents, custodians, engineers, contractors, clerks and agents as necessary and proper for the administration of this Master Trt.st. 1 a
L '
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- 8.05 Powers of ' Trustee to Continue Until- Final ,
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' Distribution. To exercise any of such powers after the date on L) which ' the' principal and income of the Master Trust shall have !
i become: distributable and until such time as the entire principal 1 of, and income from, the Master Trust shall have been actually distributed by the Trustee. It is intended that distribution of f the Master Trust or a Fund will occur as soon as possible upon l a termination of the Master Trust or Fund, subject, however, to the 'l y ( h limitations contained in Article V hereof. 8.06 Discretion in Exercise of Powers. To do any and all other' acts which the Trustee shall deem proper to effectuate l the powers specifically conferred upon it by this Agreement, + provided, however, that the Trustee may not do any act or participate in any transaction which would: td (1) Disqualify any Qualified Fund from the 7 T application of section 468A (or any applicable successor provision) of the Code; l (2) Contravene any provision of this Agreement; or (3) Violate the terms and conditions of any instructions provided in a written statement of the Company. IX. TRUSTEE'S INVESTMEN't POWERS The Trustee recognizes the authority of an Investment Manager to manage, invest, and reinvest the assets in an Investment Account pursuant to an Investment Manager Agreement and as provided in .Pticle VII of this Agreement, and the Trustee + agrees to enoperate with any Investment Manager as deemed i ___-----_-----__N---_.----_-----__-__-
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;W .. necessary to accomplish these tasks. Notwithstanding the
~ foregoing, to the extent that the assets cf the Master Trust have <
not been allocated to an Investment Accouttt under the investment ,. control of an Investment Manager, and to the extent the assets _of , the Master Trust have been allocated to an Investment Account but have not been' invested by an Investment Manager,;upon the written instructions of the' Company, the Trustee shall have the following
< investment powers all of which are fiduciary powers to be l:
executed in a fiduciary capacity and-in the best interest of this ;
' Master Trust and the purposes hereof, namely:
9.01 Preservation of Principal. To hold, manage, and' invest the assete of this Master Trust,in a manner designed to maximize and preserve the income and principal of this Master Trust for the purposes of this Master Trust, including the duty to ensure that all such assets are invested at all times, except L as otherwise provided in Sections 4.04, 5.04, 9.02 and 9.03. 9.02 Investment of Qualified Funds. To invest and ! reinvest all or part of the Qualified Funds, including any i undistributed income therefrom provided, however, that no such investment or reinvestment of the Qualified Funds may be made by the Trustee: (1) Unless such investment is permitted to be made by Code sections 501(c)(21)(B)(ii) and 468A(e)(4)(C), the regulations thereunder, and any applicable successor provisions; or (2) In any bank, savings and loan association, or l other financial institution whose deposits are O I
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.. not insured 'by the Federal Deposit Insurance 3
, Corporation, the Federal-Savings & Loan Insurance Corporation, or other comparable Federal agency; I or (3). Which would contravene any instructions issued by-the Company. . ;
In all cases, however, the . total ~ investments by- the i Trustee must be sufficiently liquid to enable the Master Trust to fulfill the purposes of the Master Trust and to satisfy t obligatj9ns of the Master Trust as such obligations become due. , 9.03 Investment of Nonqualified Funds. To invest and reinvest all or any part of the Nonqualified Funds, including any "l undistributed income therefrom, as directed by the Company. 9.04 Cash sweep Investments. To the extent that the m assets of the Master Trust have not been- invested by an Investment Manager on any given day, to invest such - uninvested L assets of the Master Trust as the Company may direct in= writing', subject to the limitations contained in this Article IX. ; 9.05 Management of Master Trust. To sell, exchange, partition, or otherwise dispose of all or any part of the Master Trust-at public or private sale, without prior application to, or-approval'by, or order of any court, upon such terms and in such manner and at such prices - as the Trustee shall determine; to J modify, renew or extend bonds, notes or other obligations or any [ installment of principal thereof or any interest due-thereon and L to waive any defaults in the performance of the terms and conditions-thereof; and to execute and deliver any and all bills O ;
x 3 j' r O of . sale, assignments, bonds or other instruments in connection ? V with these powers, all at such times, in such manner, and'upon i such te.rms and conditions as the Trustee may deem expedient to accomplish the purposes of this Master Trust as set forth in f Section 2.01. l; Notwithstanding anything contained in this Agreement to ( the contrary, the Trustee may not authorize or carry out any sale, exchange or other transaction which would constitute an act of "self-dealing" within the meaning of section 4951 of the Code, as such section is made applicable to the Qualified Funds ~ by section 468A(e)(5) of the Code, any regulations thereunder, and any applicable successor provision. X. MISCELLANEOUS L 10.01' Headines. The' section headings set forth in this Agreement and the Table of Contents are inserted for . ccnvenience. of reference only and shall be disregarded in ' the H L construction or interpretation of any of the provisions of this Agreement.. 10.02 Particular Words. Any word contained in the l text of this Agreement shall be read as.the singular or plural L and as the masculine, feminine, or neuter as may be applicable or permissible in the particular context. Unless otherwise l specifically stated, the word " person" shall be taken to mean and p I include an individual, partnership, association, trust, company, or corporation. 10.03 Severability of Provisions. Ef any provision of this Agreement or its application to any person or entity or in
.f:
i I f any circumstances shall. be invalid and unenforceable, the-application of such provision to persons and in circumstances . other.than those~as to which it is invalid or unenforceable and' the other' provisions of this Agreement, shall not be affected by such invalidity or unenforceability. ; 10.04 Delivery of Notices Under Agreement. -Any notice required by this--Agreement to be given to the Company . or _ the Trustee shall be deemed to have been properly given when mailed, postage prepaid, by registered or certified mail, to the person-to be notified as set forth below: If to the Company: Duke Power Company 422 S. Church Street Charlotte, North Carolina 28242 Attention: Corporate Secretary If'to the Trustee: WACHOVIA BANK AND TRUST COMPANY,' N.A. 301 N. Main Street Winston-Salem, North Carolina 27102 Attention: Ms. Jane Fisher Senior Vice President The Company or- the Trustee may change _ the ^above : address by-delivering notice thereof in writing to the other party. 10.05 Alterations and Amendments. Any alteration or amendment to this Agreement must be in writing and signed by the Company and the Trustee. The Trustee and.the Company. understand and agree that modifications or amendments may be required to this Agreement from time to time to effectuate the purpose of thin-Master Trust-and to comply with any Order, any changes in tax laws, regulations e' rulings (whether published or private) of _the Service and any similar state taxing authority, and any
5 other changes in the laws (including final regulations and published: or private rulings) applicable to the company or the Plants. This Agreement may be altered or amended .to the extent necessary or advisable to effect'uate such purposes or to comply
.with such Order or changes and to the extent deemed necessary or appropriate by the Company and consented to by the Trustee, including, without limitation, amendments to encompass decommissioning contributions with respect to other nuclear power :
-plants owned now or in the future by the company.
~
The Trustee shall have no duty to inquire or make any L investigation as to whether any proposed amendment, modification or alteration is consistent with this Section 10.05, but . the Trustee may decline to adopt such amendment, modification, or y alteration upon the advice of-legal counsel for the Trustee. ! The Company hereby declares that this Agreement is irrevocable and that the Company shall hereafter stand without i power to revoke, change or annul any of the provisions herein contained except as.provided in this Section 10.05. 10.06 Successors and Assions. Subject to the provisions of Sections 2.09 and 6.01, this Agreement shall be binding upon and inure to the benefit of the Company, the Trustee and their respective successors, assigns, personal representatives, executors and heirs. 10.07 Governing Law. The Master Trust is a North Carolina trust, and all questions pertaining to its validity, construction, and administration shall be determined in accordance with .the laws of the State of North Carolina to the extent not preempted by Federal law.
L e 10.08 Accounting Year; The-Master Trust shall operate on an. accounting year 'which coincides with the calendar year, January 1 through December 31.- 10.09 Counterparts. This Agreement may be executed in any number of counterparts, each-of which shall be an original, , with the same effect.as if the signatures thereto a'nd hereto were upon the same instrument. IN WITNESS WHEREOF, the Company and the Trustee have-set their hands and seals to this Agreement as of the day and year first above written. D POWER COMPANY ,
~
By < -- Vice Pre ent, Finance le Attest: Secretar G/' Title ; WAC IA BANK AND TRUST COMPANY, N.A m 8. ytw e Wu. +fes mitle
. k Attest: W P bbdsulTitl' Ahys// Jeere/ory COR/D322708 O
. ~ - , - - - - - . _ _ _ - _ - _ _ _
e i j d r STATE OF NORTH CAROLINA ) i COUNTY OF I, f A8aeE./ , a Notary Public in r the uris,piction, do hereby certify that n ih t smo : aforepaid and h' 7 j&wP who are personally known to me 'to be ttfe persons the foregoing Master Decommissioning Trust
. Agreement, who " execute 5 personally ap before' me i .the aforesaid 3
'-jurisdiction, and as 77t.s. &peared L / M wand h '
of . DUKE POWER COMPANY and by vir~tue of .the . power and Wuthority ' vested i,p.them, acknowledged the same to be the act and deed of D-M We > dem, hand they executed the same as such. O , Given under my hand and seal this day of Mp 4S,1990. [ NOTARIAL SEAL) MTb Notary Public, North Carolina My commission expires /#- /O - 9(8 , i O < l l 1 i LO l l l
-. - ... - -- . ~ -. .. . . - . - - - .. .
6 STATE OF NORTH CAROLINA )
) ss: ,
COUNTY Or 66.@ ) l I, daML . a Notary Public i d for'the aforesai j ri dKetion, 4oT hereby certify that h k o and 1 %nc.u . A who We personally. known M me M be the sons who xeYuted the' for go g Master Decompssioftt'ng Trust -' reement,. rsonall appea ed efore me in- the aforesaid urisdiction, and as nida ii udAmit andbhstnut be,pTbtTli of Wachovia Bank and'Tr Company, N. A. , and by virtue oVthe pcker ! - and authority vested in them, acknowledged the same to be the act- .
.i and' deed of Wachovia Bank and' Trust - Company, . N.u. , and they I l1 .
executed the same as such. Given under my hand and seal this 1% day of. ' hdL. , 1990. ; (NOTARIAL SEAL)
- :- - : ,,____ gQ ,
n...,v iiT,*.h'i,7....,,, ? Notaty Tublic, State o North' Car 611na' , a c eun:y c. oriy m b U '
~
[ Barbara B. Chape h My commission expires % Li a f.W 94 - c Mv commesvon eiei,es;siv mi. . . . 3 !O , O : l
p Exhibit A L CERTIFICATE NO. The. undersigned Authorized Representative of Duke Power l l Company (Company), a North Carolina corporation being duly 1 authorized and empowered to execute and deliver this certificate,
-hereby certifies to the Trustee of the Duke Power Company Master E , Decommissioning Trust (Master Trust), pursuant to Article IV of that certain Master Decommissioning- Trust. Agreement, dated
, 1990 (Agreement), between the Trustee- and the Company-as follows:
l (1) Attachment 1 hereto sets forth the amounts either invoiced to, or incurred by, or to be ! incurred by the Company or the Funds that are/will be due and owing to each payee listed (Payees) for: (a) goods or services provided in connection with decommissioning the Plant; or i (b) administrative costs of the. Master Trust (excluding costs arising from the p Company's furnishing of goods, services, l or facilities to the Master Trust and excluding compensation which is excessive or unnecessary to carry out the purposes of the Master Trust) , as evidenced by the invoice, contracts or agreements attached hereto; (2) all such amounts due and owing to the. Payees constitute Decommissioning Costs or - Administrative Expenses as described in Article IV of the Agreement; (3) all such amounts may be paid from the Master Trust without causing the Qualified Fund (s) to become disqualified f rom the application of Code section 468A or any applicable successor provision; and (4) all conditions precedent to the making of this withdrawal and disbursement set forth in any agreement between such Payees and the Company, if applicable, have been fulfilled. O l l 3; >
\
4
. (O,y Accr.rdingly, ' request is hereby made that the Trustee provide for the withdrawal of S from the (Oconee' Unit No.-1/.Oconee Unit No. 2/Oconee Unit No. 3/ McGuire Unit No. 1/
2) McGuire Unit No. 2/ Catawba Unit No. 1/ Catawba Unit No. ; specified in. the (Qualified Fund /Nonqualified- Fund) (Funds attached schedule) in order to permit payment of such zum to be ! made to the Payees. You are further requested to disburse'such sum,.once withdrawn, directly to such Payees in the following TRANSFER / ) on or before , manner: [ CHECK / WIRE 1
, 19_ .
WITNESS my hand this day of . 19_ . By
'O-ig Authorized Representative
( 1 e L . O P l-l Exhibit B Contribution Certificate No. The undersigned Authorized Representative' of Duke Power Company (" Company"), a North Carolina corporation, being duly authorized and empowered to- execute and deliver this ' Contribution Certificate, hereby certifies ts). the Trustee of the Duke Power Company Master Decommissioning Trust (" Master Trust"), pursuant II- of that certain Master Decommissioning Trust to Article Agreement, dated' March , 1990 (" Agreement"), between the Trustee and the Company as follows: A Contribution is hereby made of S to the- [Oconee Unit No. 1/Oconee Unit No. 2/Oconee Unit No. 3/McGuire Unit No. 1/McGuire Unit No. 2/ Catawba Unit-No. 1/ Catawba Unit No. 2) (Qualified Fund /Nonqualified shall be a21ocated among the Fund). Such amount FERC Subaccount, Subaccounts for such Fund as follows:
- NCUC Subaccount, $_ ; SCPSC Subaccount, S
S . Such Contribution is being made to the Master Trust by [ attached check / wire transfer / ). WITNESS my hand this day of , 19_ . By Authorized Representative t E-Contribu O - )
. o y
, i
.I 1
FEE SCHEDULE s1 The Trustee shall-be paid fees in accordance with.the schedules attached hereto until the Trustee and the Company agree' 't to revise such ' schedules except, however, that _ the ad valorem ,
-r charge will be calculated in combination with the assets in the Duke Power Company Master Trust (Retirement Trust) as if ' the assets in this Trust were added to the assets of tne existing ,
Retirement' Trust. l lu l s t
)
i
'r O
1 7 LADDITIONAL SERVICES
- Benefit Payments See esparate schedule
. .,Pg V and Tax Reporting Performance See separate schedule
. Measurement and Consulting l
Participant See separate schedule l
- Recordkeeping l
Technical Billable time plus out of pocket expense Consulting OTHER CHARGES For on.1tne access and PC downloading support, appropriate addidonal charges will - On Line Interface Support be made. Preparation of 8 50 each Form 990 Account Prorated ad valorem plus expenses Termination: Add!donal reasonable fees will bc cht.rged for services not covered by this schedule, Other ir i i 8 l l i
.ww 1/89 Page 3 - MasterTrust/ Directed Trust L
l
k 1 Futures See separate schedule 1
' Options - 8 50 for each transacdon on the purchase side -
H Farticipani14sns . Setup and Check ofluue.. $ 25 sach ~
- Annual Maintenance: Held IndividuaDy ...$ 25 each Held Couectively...$ 12 sach Foreign With. Account Setup.. .. . ..$ 50 each ,
J holding Recovery 3 ._ i
!! ems claimed .... ... $ 30 each l
- l
. 1 Wires 310 each .
Prory Handling See separate schedule and Pass Through ,; Voting. , ;
.l'\ ,1
~I NVESTMENT MANAGEMENT For daily sweeping and automatic invesenent of cash, a separate charge at the annua Automatic Cash rate of 3 .90 per $ 1,000 will be made based on the average da!!y STIF balance, g
. Investing
'i L!
For Investment Management, the following charges am made in addition to the
'. W Securities-standard service charges above.
Market Value . Rate per $1,000 ; First$ 500,000 ........ . .... ......... . $ 6.00 y 4.40 ,
' Next 1,500,000 . ..... .... ..... ..
Next 8,000.000 .. .... ... .. ......... 2.60 Next 40,000,000 . ... . 1.50 ', Over 50,000,000 .. . ........... ..... 1.20- , E4 L Inder and In applying the charges the value of the Pint Wachovia Stock Index Fund and th GIC Funds First Wachovia 01C Fund will be discounted 50 percent. -
,c In lieu of any other charges, an annual charge of 1.125 percent of the fair market .
Real Estate value of rzal estate is made. In First Wachovia's commingled fund this charge for. , p' real estate and a .25 percent charge for other assets in the fund are applied directly to the fund. A pardelpant in the fund will not be charged more than for individua! l' LY - investment services. In 11eu of any other charges, there is an annual charge of 1.20 percent of the fair
.. Timberland market value of timberland investments.
,. 9 , l Page 2. Master Trust / Directed Trust o'- .
_ _ . _ . _ ~ . _ _ _ . _ _ _ _ ._ ._ __ - . . .. ._ SCHEDULE OF FEES O Master Trust / Directed Trust t This schedule applies to funds for which First Wachovla serves as Trustee or Custo- < dian. Charges art quoted on an annual basis but at First Wachovia's discretion may ! be charged mort frequently on a prorsta basis. When there art extraordinary consid. erstions, costs or economics for an account, fees different from those in this schedule may be appilcable. STANDARD SERVICES An ad valorum fee is assessed for all basic services related to custody of funds,in. Ad Valorem vestment b} e.n Investment Manager and periodic nports, he minimum charge is Charges 3 2.500, In applying these charges, distributions made during the period will be added back to the market value. The following is the schedule of charges: Rate per $ 1,000 Market Value - First S 500,000 ........... ..... .. ... $ 5.00 Next 1 J00,000.......... ........ 2.60 , 8,000.000 1.40 Next ..... ......... 4 0,000.000 ........ ............. ..... .70 Next Next 50,000.000 ........... .......... 40 Over 100,000,000 ... ................... .35 i ne value of Glcs held for retirement plans will be discounted 75 percent in apply. Guaranteed Investment ing the ad valorum charges shown above. O!Cs held for savingsAhrift plans w Contracts be discounted. Commingled in lieu of the ad valorem charges shown above, commingled funds of other banks a Funds charged at a flat rate of 51.200 per fund plus $25 per transaction. Mortgages, If management services are required in the administration of mortgages, notes Notes, mal estate lsasebacks, a 1/4 of one percent acceptances fee plus 1/4 of one percent Leasebacks annually will be charged. SPECIAL CUSTODY AND ACCOUNTING SERVICES For AssetPools: $ 750 each Master Trust Plan Accounting i For Plan Accounts: First 5.... .....No Charge Next 5 .... ..$ 500 each Next 5 ....$ 300 each Over15 . 8 200each Global Custody See separate schedule O FExn
' SCHEDULE OF FEES O Performance Measurement and Consulting I
STANDARD SERVICES ' Prerequisite Annual Charges Perfbrmance Service Base Fee + Per Account Reports None 4 5 500 l Basic Summary Report None
. 8 3,000 $ 700-Complete Repon Package Completc $ 2,000 $ 500 TUCS Reports Universe and Style Reports Repon Package
$ 2,000 0 Master Trust Report Universe and .
t Style Repons MasterTmst 8 3,000 $ 300 l Consulting Services - Total Pund Executive ! Summary Repon
$ 2,000. 3 1,000 Investment Manager TotalPund Exec.
l utive Summary and Fund Evaluation NOTES > l 1he per account charps do not apply to inactive accounts retained in system for historical stums. ' Addidonal time and expense charges will be made for backloading of custom repons requidng manual preparation or extensive programming, services not covend by this achedule. I-O >= WEun
Jt. i <
.+
1 EXHIBIT-B>
. \-
\ / ,
o Calculation of Minintmi Assurance Amount
, -. Per Unit.
, for
, , Catawba Nuclear Station '
North Carolina Regions ' Labor (L) = South Energy (E).= South Atlantic
, . Waste. Burial (B) = South Carolina ;
For PWR Unit
- L= 1.153 ,
E= 0.901
- B =' 2.007
, PWR Escalation Factor = l' e' 'q . 0.65(1.153) + 0.13(0.901) + .22(2.007) a 1.308
) _____._
u- -! Base Amount for PWR Greater than or Equal to 3400 MWt = p $105,000,000 Escalated' Amount for Unit:
$105,060,000 X 1.308 = $137,340,000
============
- Reflects most recent year-end factors available.
m , I' l -'
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LJ J . CATAidBA NDCIIAR STATION Site Specific Study StummarT (ibliars in ttxxasands) _
/- - - UNIT l / / UNIT 2. -/
NONCONTAM1WRTED UNIT CONTAMIWATED NONCONTAMINATED UNIT CALENDAR CONTAMINATED COSTS 70fRL COSTS COSTS TUTAL YEAR COSTS 163 -
$ 163 $
2024 $ $ 202S 2,375 - 2,375 - 3,804 - 3,804 3,804 - 3,804 2026 4,266 4,266 4,266 - 4,266-20I1 4,266 - 4,266 4,266 - 4,266 2028 825 9,075 4,266 - 1,266 2029 8,250 4,781 32,131 11,976 2,259 14,235 2030 27,350 8,488 53,738 32,678 8,325 41,003 2031 4S,250 8,488 53,738 46,809 12,466 59,275 2032 45,250 3,990 23,8 % 37,938 10,928 48,866 2033 19,906 719 1,625 71,632 6,338 71,970 2034 1,346
- 64 19 83 2035 -
26,851 189,077 167,699 40,335 208,034 Custs at 1001 162,226 Duke's Contractual 12.5% 12.5% 12.5% 12.5% 12.5% Obligation Percentage' 12.51 3,356 23,635 $ 20, % 2 $ 5,042 $ 26,001 Duke's Costs $ 20,278 $ $ _______.____ _____ - - - - - - - = = = =
= ========- _. __ _____________
m x Fantnote: 1). The costs are shown in 1990 dollars. $
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.y 3 .
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~
~ .
3 I
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~L L;.
DUKE POWER C0 WANY - ; CATAWBA N0 CLEAR STATI0lt
. CONTRIBUTIONS TO EITERNAL SINKI E FUND Total External Fund -
/ Unit 1 / / Unit 2 /
Year Contribution Interest Catauba Exp Balance' Year. Contribution . Interest. Catauba Exp Balance 1990 12.5 0 0 12.5 1990 12.5 0 0 12.5 1991 0.0 1 0 13.0 1991 0.0 1 0 13.0 1992 1,244.0 1 0 1,258.0 1992 1,254.0 1 0 1,'67.0 2 1993 1,244.0 57 0 2,558.0 1993 1,254.0 57 0 2,578.0 1994 1,244.0 115 0 3,918.0 1994 1,254.0 116 0 3,948.0 1995 1,244.0 176 0 5,338.0 1995 -1,254.0 178 0 5,380.0 1996 1,244.0 240 0 6,822.0 1996. 1,254.0 242 0 6,875.0 1997 1,244.0 307 0 8,373.0 1997 1,254.0 309 - 0 8,439.0. 1998 1,244.0 377 0 9,994.0 1998 1,254.0 '380 0 10,072.0 1999 1,244.0 450 0 11,688.0 1999 1,254.0 453 0 H ,779.0' ' 2000 1,244.0 526 0 13,458.0 2000 1,254.0 530 0 13,563.0 2001 1,244.0 606 'O 15,308.0 2001 1,254.0 610 0 15,427.0 2002 1,244.0 689 0 17,241.0 2002 1,254.0 694 0 17,375.0 2003 1,244.0 776 0 19,261.0 2003 1,254.0 782 0 19,411.0 2004 1,244.0 867 0 21,371.0 2004 1,254.0 873 0 21,538.0 2005 1,244.0 %2 0 23,577.0 2005 1,254.0 %9 0 23,761.0 - 2006 1,244.0 1,%1 0 25,882.0 2006 1,254.0 1,%9 0 26,004.0 2007 1,244.0 1,165 0 28,291.0 2007 1,254.0 1,174 0 28,512.0 2008 1,244.0 1,273 0 30,808.0 2008 1,254.0 1,283 0 31,049.0 2009 1,244.0 1,386 0 33,439.0 2009 1,254.0 1,397 0 33,700.0 2010 1,244.0 1,505 0 36,187.0 2010 1,254.0 1,516 0 36,470.0 2011 1,244.0 1,628 0 39,060.0 2011 1,254.0 1,641 0 39,365.0 2012 1,244.0 1,758 0 42,062.9 2012 1,254.0 1,771 0 42,390.0 2013 1,244.0 1,893 0 45,199.0 2013 1,254.0 1,908 0 45,552.0 2014 1,244.0 -2,034 0 48,4T'.0 - 2014- 1,254.0 2,050 0- 48,855.0 2015 1,244.0 2,181 0 51,902.0 2015 1,254.0 2,198 0 52,307.0. 2016 1,244.0 2,336 0 55,482.0 2016 1,254 ? 2,354 0 55,915.0 2017 1,244.0 2,497 0 59,222.0 .2017 1,254.0 2,516 ' O 59,685.0 2018 1,244.0 2,665 0 63,132.0 2018 '1,254.0 2,686' O 63,625.0 2019 1,244.0 2,842 0. 67,217.0 2019 1,254.0 2,863 0 67,742.0 2 rn 2020 1,244.0 3,025 0 71,485.0 2020 1,254.0' 3,048 0 72,044.0 - $5 2021 1,244.0 3,217 0 75,946.0: 2021. 1,254.0 3,'42 2 0' 76,540.6 sE i 2022 1,244.0 3,418 0 80,608.0 2022 1,254.0 3,444 0 81,238.0 oQ
*y fV
. .. . . - . . . L. .. ..-, - . ,;, ,n
e . . e ' - DUKE POWER CONPANY-CATAWBA NUCLEAR STATION l ColmtIBtTTIONS 70 EXTERNAL SINKING FUND . Total External Fund Unit 1- / / Unit 2 /
/ Catauba Exp Balance Catauba Exp Ba3ance' Year Contribution Interest Year contribution Interest 85,479.0 2023 1,254.0 3,656 0 86,147.0 2023 1,244.0 .3,621 0 90,479.0 2024 1,254.0 3,877 0 91,278.0' 2024 1,244.0 3,847 (91) 93,165.0 2025 1,254.0- 4,107 0 .%,639.0 2025 0.0 4,072 (1,386) 95,038.0 2026 '1,254.0 4,349 (2,319) 99,922.0 --
2026 0.0 4,192 (2,319)
% ,597.0 2027 0.0 4,497 (2,718) 101,701.0 2027 0.0 4,277 (2,718) 98,104.0 2028 0.0 4,577 (2,840) 103,437.0 -
l 2028 0.0 4,347 (2,840)
% ,778.0 2029 0.0 4,655 (2,968) 105,124.0 2029 0.0 4,415 (5,740) 81,249.0 2030 0.0 4,731 (8,707) 101,147.0 2030 0.0 4,355 (19,885) 50,526.0 2031 0.0 4,552 (24,828) 80,871.0 2031 0.0 3,656 (34,379) 16,873.0 2032 0.0 3,639 (37,164) 47,347.0 2032 0.0 2,274 (35,926) 1,117.0 2033 0.0 2,131 (31,476) 18,001.0 2033 0.0 759 (16,516) 0.0 2034 0.0 810 (18,755) 55.0 2034 0.0 50 (1,167) 0 2035 0.0 2 (58) 0 2035 0.0 0 0 0.0 43,8 % .0 87,938.0 (131,834.0)' O.0 41,067.0 81,900.0 (122,%7.0)
Footnotes: 1). Amounts are rounded to thousands of dollars
- 2) Columns may not total due to rounding.
3). h matributicms of $12.5 for Units 1 and 2 were made to establish the qualified trust funds for each Unit. 4). The funding balance of $122,%7 and $131,834 for Units 1 and 2 respectively are tir* future amounts for Duke's 12.5% w ntractual obligation for contaminated costs (See Exhibit C). This 7m yy schedule assumes an inflation and an after tax earnings rate of 4.51. m ~.
.n v.
, , .6 i )
- NORTH CAROLINA - 4 ELECTRIC MEMBERSHIP CORPORNflON
.. 3400 Sumnet Boulevard, P.O. Box 27306, Raleigh, North Carolina 27611 7306 919/ 872 0800 j'"
dd' ' July 26, 1990 f Document Control Desk U.S. Nuclear Regulatory Commission i Washington D.C. 20555 Re Decomissioning Financial Assurance 1 Certification Report for Docket No. 3
Dear Sir or Madam:
a ~ North Carolina Electric. Members hip Corporation (NCEMC) hereby submits this Decomissioning Financialt Assutance Certification Report (Report) in compliance. ;. with 10 C.F.R. Sections 50.33(k) and 50.75(b). This: report addresses the j comission's. decomissioning financing requirements applicable- to the Catawba ' Nuclear StationL Unit 1 (CMawba Unit No. 1), and to the Catawba Nuclear i Station, Unit'2;(Catawb. Unit No. 2). 3 q
'Both units are; pressurized water reactors capable of producing greater than- l -[
N_e [ 3400 MWt. , License No.'NPF-35 and License No. NPF-52 are currently and will continue to be in effect on July 26, 1990 for Catawba Unit No I and Catawba-1 4 l Unit No. 2, respectively. This Report is submitted on behalf.of NCEMC which i; 'has an-undivided 28.125 percent 1 interest in the production of these two units.
;In accordance=with.10 C.F.R. Section 50.75(c), NCEMC hereby certifies that
. financial assurance for decomissioning Catawba Unit No. 1 is provided in the amount of $38,626,875, and that financial assurance for decomissioning Catawba i Unit No. 2 is provided in the amount of $38,626,875. The calculation of this amount is set forth in Exhibit A and complies with the formula set forth in d 10 C.F.R. Section 50.75(c). J NCEMC will' accumulate such financial assurance funds in an external sinking fund'in accordance with 10 C.F.R. Section 50.75(e), a copy of which instrument ]
is attached hereto as Exhibit B. Attached as Exhibit C to this Report is a schedule for implementing the method of providing financial assurance for decomf ssioning Catawba Unit No. 1 and Catawba Unit No. 2 in the form of-contributions to be made at least annually to an external sinking fund a beginning in 1990. 1 NORTH CAROLINA ELECTRIC MEMBERSHIP CORPORATION By: 84wr/
- O Wayne If. Keller
! Executive Vice President i 1
3; g?Y y
- a. ,
D'~x - ' N: p EXHIBIT A CALCULATION OF MINIMUM ASSURANCE AMOUNT: CATAWBA NUCLEAR STATION,-UNIT 1-AND UNIT -
?
, r North Carolina Regions ,
Labor'(L) =.. South , s Energyf(E) = South Atlantic- '.
. Waste Burial (B) = South Carolina-t For PWR Unit *'
L= 1.153 E= .901
- ]B = 2.007 PWR Escalation Factor =
10.65(1.153) + 0.13(0.901) + .22(2.007) = 1.308.. I
^
Catawba ~ ' Catawba-Unit No. 1 Unit No. 2 { ) Base' amount'for-PWRgreaterthanor . . L l\ equal to 3400 MWt $105,000,000 $105,000,000 L
' Multiply bysPWR Escalation Factor- x l'.308 x 1.308K q
- Escalated amount for Unit 137,340,000- 137,'340,000
'NCEMC interest in Unit x1.28125 x .28125' L Financial assurance provided by NCEMC ~$ 38,626,875 $ 38,626,875 ,
p
'* Reflects most recent year-end factors available.
i 5 h ' - . w_/ l' 1,
FXMIJIT B
'~5 , NORTH CAROLINA ELECTRIC MEMBERSHIP CORPORATION 5 ;
CATAWBA STATION NUCLEAR DECOMMISSIONING TRUST t TRUST AGREEMENT This Trust Agreement, dated June 12, 1990 by and between North Carolina ,
-Electric Membership Corporation, a North Carolina corporation, as grantor
("NCJMC" or " Grantor"), and Wachovia Bank and Trust Company, N.A. as trustee 3 ("Tructce"). t WHEREAS, NCEMC is an electric power cooperative engaged in the business of supplying electric power for-its members, all of whom are rural electric distribution cooperatives; and-WHEREAS, NCEMC has an undivided 28.125 percent interest in the production of two nuclear power reactor units at the Catawba Nuclear Station (" Catawba
-Unit No. 1" rnd " Catawba Unit No. 2") and associated facilities; and WHEREA's, the Nuclear Regulatory Commission ("NRC"), an agency of the United-Stata9 government, has promulgated regulations which require that the holder.of, or applicant for, a license to operate a nuclear power plant must provide financial assurance that monies will be available when needed for required decommissioning activities; and l- LJ WHEREAS, to comply with these regulations of the NRC, among other reasons, NCEMC wishes to establish reserve funds to provide such financial assurance for
. decommissioning costs associated with Catawba Unit No. 1 and Catawba Unit No.
2; and WHEREAS, NCEMC desires to create a trust that will serve as the
- aforementioned reserve funds with such funds being a " Grantor Trust" under the Internal Revenue Code of 1986 as amended; and WHEREAS, Trustee is a national bank with trust powers and is willing to actLas trustee of such trust, and to accept the duties and obligations imposed upon it hereunder, in consideration of the promises and.the compensation agreed
'to' hereunder; NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH, that in consideration of cthe mutual covenants contained herein, the parties hereto hereby create a trust
-(tho'" Trust") as follcws:
I. TRANSFER IN TRUST 1.1 NCEMC establishes the Trust which shall be effective June 12, 1990, and which shall consist of such Contributions as may be delivered to the
. g sj Trustee by NCEMC for the Funds. The Trust also shall include additional 1 contributions, and earnings and appreciation thereon.
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i 2-a ( 1.2 - NCEMC establishes the Funds, ~ each of which shall constitute a trust I
~_/' consisting of such Contributions as may be delivered to the Trustee by NCEMC as designated in writing-for such Fund. Each Fund shall include additional contributions designated for such Fund, and earnings and appreciation thereon.
1.3 Grantor, and any other person or entity, may'at any time add other property-acceptable to Trustee to the Trust by conveyance, assignment, or any other mode of transfer. .Such property when received and accepted by Trustee shall become part of the Trust and shall be subject to all'the terms and conditions,of this Trust Agreement. All income of whatever' source or kind from the Trust shall be considered a part of the Trust.
'i 1.4.-Grantor hereby appoints Wachovia Bank and Trust Company, N.A. as f Trustee of this Trust and Wachovia Bank and Trust Company, N.A. hereby accepts l appointment as Trustee of this Trust and of each of the Funds. The Trustee '
shall hold all estate, right, title and interest it may acquire hereunder exclusively for.the purpose set forth in this Agreement. 1.5 The Trust shall be divided into the Fund (s) as follows:
- a. Catawba Unit No. 1 Fund
- b. Catawba Unit No. 2 Pund The Trustee shall maintain such records as necessary to reflect each Fund separately on its books from each other Fund.
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\ II.- ADMINISTRATION OF TRUST 2.1 'The Trust shall be administered so as to conserve and protect the Trust, to earn and accumulate the net income therefrom, for the sole purpose of l
assuring that funds will be available to pay for the decommissioning'of Catawba Unit No. 1 and Catawba Unit No. 2. Trustee shall invest and reinvest Trust assets in furtherance of this purpose and in accordance with investment. guidelines agreed to between Grantor and Trustee. Such Trust investments shall be made in accordance with Investment Guidelines attached hereto as Exhibit 1. 2.2 In investing and administering the Trust, the1 Trustee shall exercise the judgment and care, under the circumstances then prevailing, that persons of prudence, discretion, and intelligence exercise in the management of similar i trusts with sbnilar purposes. No parttof the Trust shall be invested in any securities from which Trustee may derive any benefit ir. its nonfiduciary aanacity other than short-term investments in a common fund or short-term money. snement instruments. The Trustee shall not provide banking services from it shall-derive a financial benefit except for such banking services as be necessary and reasonable to carry out the purposes of the Trust and compensation to the Trustee for such banking services shall be customary reasonable in the market for such services. The banking services allowed his paragraph are: ! a. checking accounts l f'~') b. savings accounts I
\_,/ c. safekeeping services
i l t 7 No part'of the Trust _shall be invested in a manner from which NCEMC may ( j- derive any benefit in any_ capacity other than as the beneficiary of this Trust. The Trust shall not be used to enter into, carry on, or engage in any business, or to acquire any direct or indirect interest in any business other than as.a
-shareholder or creditor.
2.3 Initially, the Trustee shall have investment responsibility for the Trust.-_-However, the Grantor or Authorized Representative (as defined and
.cescribed in Section 3.4 hereof) may: appoint one or more Investment Managers to
-direct the investment of all or a part of the Trust. The Grantor or Authorized Representative shall have the right to remove such Investment Manager. .Such appointment or removal shall be made in accordance with procedures adopted b'y ,
the Grantor. To_the extent the Grantor appoints an Investment Manager to direct the investment of an investment account, the Trustee shall be released and relieved
.of all investment duties and responsibilities-2.4 Subject to the restrictions set forth herein and to the discharge of Trustee's fiduciary obligations, Trustee shall have the power to do all acts, institute all proceedings, and exercise all rights, powers, and privilages that an absolute owner of the Trust _would have. -In any civil proceeding between the Trustee, as plaintiff, and any defendant, such defendant may not assert as a i defense that the Trustee had acted ultra vires.
2.5- Subject to the foregoing limitations, the Trustee is authorized to A' . acquire overy kind of property, real, personal, or mixed, and to make every s ~j - type of investment, specifically including, but not limited to, corporate ) obligations and securities of every kind, preferred or common stocks, and ! interest in investment trusts, mutual funds and common or collective funds. 2.6 Subject to the foregoing limitations,-Trustee may compromise, settle, submit to arbitration, release with or without consideration, or otherwise adjust claims in favor of or against the Trust, and make all payments necessary therefor from any Trust funds in Trustee's possession. 2.7 Trustee shall promptly transmit or cause to be transmitted a copy of any notices, reports, or other communications in respect of the Trust to Grantor or its designee. 2.8 It is the intention and expectation of the parties that (a) the Trust will be a " grantor trust" for federal and state income tax purposes, pursuant to the rules of Section 671 and following sections of the Internal Revenue Code of 1986, as amended, and (b) accordingly, Grantor and not the Trust will be deemed the owner of the Trust for income tax purposes, and Grantor will be l required to report all items of income, gain, loss deduction and credit ' L attributable to the Trust on its federal income tax return and pay taxes so calculated. To the extent the Trust does incur any tax liability, however, Grantor shall promptly reimburse Trustee so as to restore the Trust to the I position it would-have been in had the Trust not incurred such tax liability. < l fr) III. RIGHTS RETAINED BY GRANTOR Q)
- l. 3.1 Grantor shall have the right, exercisable in Grantor's sole
l- ; and without.the approval of any other party, to acquire the property
~
discret; .
)' constituting the Trust Estate at any time, by directing Trustee in writing to
~ /- exchange such property for property of an equivalent value owned and designated by Grantor. Such right is retained and held by Grantor in a nonfiduciary capacity and is not held and need not be exercised in a fiduciary capacity. '
3.2 Grantor shall have the right to direct Trustee in writing to take or refrain from taking any action with respect to the Trust Estate, as long as
.such action or inaction is consistent with the duties of Grantor and Trustee under this Trust Agreement.
3.3 On receipt of any written direction described in Section 3.1 or Section 3.2, Trustee shall comply therewith and shall'not incur any licbility by reason of so doing. t i 3.4 The Grantor has empowered the Authorized Representatives _and their delegates to act for the Grantor in all respects hereunder including the appointment of an Investment Manager and the rights and duties of the Grantor >l under this Article-III. The Grantor shall provide the Trustee with a written j statement setting forth the names and specimen signatures of the Authorized' s Representatives. Until otherwise notified in writing by the Grantor, the Trustee may rely on any written notice, instruction, direction, certificate or other communication reasonably believed by it to be genuine and to be signed or ' certified by one or more Authorized Representatives and the Trustee shall be under no duty or obligation to make an investigation or inquiry as to the truth or accuracy of any statement contained therein.
,y-I l=# IV. TRUST DISTRIBUTIONS i
4.1 For purposes of this Trust Agreement, the term " Decommissioning- j Costs" shall encompass all reasonable costs and expenses (including overhead) associated with the closing of Catawba Unit No. 1 and Catawba Unit No. 2 that are incurred for goods provided or labor or other services rendered in connection with ensuring that the final disposition of'the Catawba Station site and any radioactive material (other than spent fuel) is accomplished safely, in compliance with all applicable state and federal laws. Decommissioning costs shall include payments to any person including Grantor. 4.2 If, at any time, Grantor shall have made any payment for Decommissioning Costs, then, upon receipt of Grantor's written certification
-(which may be made by the Authorized Representative) that it has made such payment, Trustee shall make a distribution in the amount of such payment to Grantor from the Trust Eqtate (without regard to any distinction between principal and income of the Trust). The Grantor shall designate in writing the Fund (s) which are to be debited for such withdrawal, provided however, if the company fails to designate the Fund (s) such payment shall be debited pro rata.
If the Trust is insuf ficient to provide for such reimbursement, then Trustee shall make a reimbursement to the extent of the Trust and shall make further ' reimbursement of the balance as Funds become available. 4.3 If, at any time, Grantor shall certify in writing to Trustee that it
/
,_'} shall, within the succeeding 90 days, be required to make an expenditure for i/
m Decommissioning Costs and that it would be burdensome for Grantor to make such expenditure from its own funds, then Trustee shall advance to Grantor on an ,
5-
,_ ' interest-free basis an amount equal to th'e anticipated amount of such
( ), expenditure. At the time such expenditure is actu",1y made by Grantor, Grantor
\- ' ~ shall provide Trustee with written certification t.areof. To the extent the expenditure erceeds the amount of the advance, Trustee shall make an additional distribution pursuant to Section 4.2; to the extent the advance exceeds the amount of the expenditure, Grantor shall repay the balance with interest at the rate of seven percent per annum. If such Decommissioning Costs are not incurred within the succeeding 90 days, Grantor shall repay such advance in full with interest at seven percent per annum.
4.4 Upon direction by Grantor, the Trustee shall make payments of administrative costs (including reasonable out of pocket expenses, trustee compensation and fees) and other incidental expenses of the Trust (including legal, accounting and actuarial expenses) in conns-tion with the operation of the Trust pursuant to this Agreement. Any such direction shall designate in writing the Fund (s) which are to be debited for such withdrawal, provided however, if the company fails to designate the Fund (s) such payment shall be I debited pro rata. I V. TERMINATION 5.1 This Trust will terminate upon the earlier of the following two dates:
- a. the date Grantor provides Trustee with a written certification, g-'( approved in writing by the appropriate regulatory agency or agencies,
! / 09claring that both Catawba Unit No. I and Catawba Unit No. 2 are
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fully decommissioned and that no further Decommissioning Costs will be incurred, and
- b. the date 21 years after the death of the last survivor of an employee of NCEMC 1 May 31, 1990, together with all their lineal descendante living on the date of this Agren ent.
5.2 Upon termination of the Trust, Trustee shall distribute the balance i of'the Trust Estate to any other trust, if any, designated by Grantor that has
.been established to assist in financing the decommissioning of any electric generating station in which Grantor has an ownership interest. If no such trust exists, Trustee sha.1 distribute the balance af ter payment of all fees and expenses of the Trust Estate to Grantor and shall provide a final accounting to the Grantor.
5.3 If for any other reason this Trust is terminated by law prior to the date of its scheduled termination under Section 5.1, subject to the order of i the appropriate regulatory agency or agencies the Trustee shall distribute the balance of the Trust 'o or for the benefit of Grantor, to the extent lawfully
; permitted by the circumstances giving rise to such termination.
I' 5.4 Nothing contained in this Article V shall be deemed to impose on Grantor or Trustee any liability or obligation in the event that the Trust created hereby is terminated (whether by operation of law or otherwise) other i
> /,_h__ than expressly in accordance with the terms of this Article V.
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; .6-I' VI. TRUSTEE i / .
L( ) 6.1 Trustee shall have the right to resign at any time, with or without : reason or cause, upon sixty (60) days' prior written notice to Grantor. l Following such resignation, Trustee shall cease to have any further obligation j hereunder (except that Trustee agrees reasonably to cooperate with Grantor and ' with any successor trustee in transferring the Trust and the administration of the Trust to a successor trustee), but the provisions of Section 6.3 hereof shall continue in effect and shall survive any such resignation. Effective ' with any such resignation, Grantor shall have the right to designate and appoint a successor trustee or trustees to act hereunder, provided that'such ; successor trustee may not be the Grantor nor may the successor trustees have as a member the Grantor. If such successor is not appointed following the above , period of time the Trustee shall have the right to petition a court of f competent jurisdiction for the appointment of a successor. 6.2 Grantor shall have the right to remove Trustee and to appoint a l successor trustee or trustees (provided that such successor may not be nor i consist of Grantor), with or without reason or cause, upon thirty (30) days' prior notice to Trustee. Following such removal, Trustee shall cease to have any further obligations or rights hereunder, except that the provisions of Section 6.3 hereof shall continue in effect and shall survive any such removal. 6.3 The Trust and Grantor will indemnify and save Trustee harmless f rom any and all liability, claims,_ costs, and/or damages for which Trustee may c become liable as a result of or arising in any manner from Trustee's acts in , its capacity as Trustee pursuant to this Trust Agreement (other than any
-[~T arising as a result of Trustee's willful breach of its express obligations \s,) hereunder or Trustee's gross negligence or willful misconduct).
6.4 Trustee shall receive as compensation for its services hereunder fees i calculated in accordance with the Schedule attached hereto entitled " Fee Schedule." If the term of the Trustee shall end prior to the end of an accounting year, the compensation shall be prorated. The Fee Schedule may be amended with agreement by the Trustee and the Grantor. Such compensation shall ' be paid by the Grantor. The Trustee shall also be entitled to reimbursement for all fees paid in the administration of the Trust that are necessary and reasonable. If such compensation or fees are not paid by the Grantor within ninety days (90) of billing, the Trustee may (following ten days written notice to the Grantor) charge the Trust and collect its compensation or reimbursement for fees. 6.5 Trustee shall not be liable to the Trust or to Grantor for any cause or matter relating to its administration of the Trust under this Trust Agreement, except for willful breach of Trustee's express obligations hereunder or Trustee's negligence or misconduct, and except for any default in the ' performance of the duties and obligations which it has undertaken in this individual capacity, pursuant to the Trust Agreement and related documents. 6.6 The parties hereto recognize and agree that Trustee may serve as trustee of other trusts similar to the Trust, and bearing similar names to the Trust, in order to facilitate decommissioning of electric generating stations; -
-/~~ provided however, that the name of the Trust shall be distinguished from that . -) . ; of such other trust by an appropriate designation. In no event shall the various trusts so created be considered to be a single trust or be construed in
7 any manner or for any reason to be other than independent trusts. The Trustee may serve as Trustee for other trusts of other entities where trust assets are
- .- to be used to pay for the decommissioning of Catawba Station. These tructs are to be held separate and apart from this Trust. This Trust shall not be construed in any manner or for any reason to be other than an independent trust.
VII. DEFINITIONS 7.1 For purposes of this Agreement the following terms shall have the following meanings:
- a. " Agreement" shall mean and include the Trust Agreement as the same may be amended, modified or supplemented from time to time,
- b. " Catawba Unit No. 1" chall mean the Grantor's interest in Unit No. 1 of Catawba Nuclear Station.
- c. " Catawba Unit No. 2" shall mean the Grantor's interest in Unit No. 2 of Catawba Nuclear Station.
- d. " Code" shall mean the Internal Revenue Code of 1986, as the same may be amended from time to time.
- e. " Contribution" shall mean any contribution, cash or otherwise, made to the Fund (s).
- f. "Pund" sb-ll mean the Nuclear Decommissioning Reserve Fund established for either Catawba Unit No. 1 or Catawba Unit No. 2 consisting of contributions by the Grantor plus earnings and appreciation thereon,
- g. " Grantor" shall mean North Carolina Electric Membership Corporation, a North Carolina corporation.
- h. " Investment Manager (s)" shall mean the fiduciary specified in Investment Management Agreement including any employee of the Grantor. The Investment Manager shall be appointed and directed under the terms of an Investment Manager Agreement between the Investment Manager and the Grantor. The Inewstment Manager shall be responsible for the investment of all or a part of the assets of the Trust.
- 1. " Trustee" shall mean Wachovia Bank and Trust Company, N.A., or any successor appointed pursuant to this Trust Agreement.
VIII. MISCELLANEOUS 8.1 All references herein to " Grantor" shall be to NCEMC or to the lawful successors to its interest in Catacha Unit No. 1 and Catawba Unit No. 2, as the case may be. NCEhc shall not transfer cil or any part of its beneficial interest .in this Trust or its status as Grancor to any other person or entity without both (a) lawfully transferring its corresponding ownership interest in
!, I 1
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Catawba Unit No. 1 and Catawba Unit No. 2 to such person or entity, and (b)
/ '\ obtaining the approval of the Nuclear Regulatory Commission or such other
) regulatory body as may be responsible for overseeing the Nuclear i
J Decommissionings of NCEMC. 8.2 If, at any time, the Trust shall prove insufficient to satisfy all l the just debts or obligations (including any obligation to pay taxes) of the D Trust, Grantor shall be fully liable for the amount of the jnsufficiency, and a r judgment creditor of the Trust may proceed directly against the assets of ! Grantor for the purpose of collecting such amount. The Trustee holds these assets in Trust and shall have no personal nor corporate responsibility for decommissioning activity other than as Trustee set forth herein. 8.3 Grantor shall not have legal title to any part of the Truct. The Trust shall not be liable for the debts of Grantor, nor be subject to seizure by any. creditor of Grantor under any writ or proceedings'at' law or in equity. '-; Except as provided in 8.1, Grantor shall not have the pu tr to sell, assign, transfer, encumber, or in any manner anticipate its inte.iest in the Trust. Except as provided in 8.1, an attempted transfer of the rights and interest of Grantor in the Trust or under this Trust Agreement shall not cause this Trust Agreement to terminate, but shall nonetheless be wholly ineffective. B.4 Except as otherwise specifically provided herein, this Trust Agreement shall inure to the sole benefit of and be binding upon Grantor. 8.5 This Trust shall be irrevocable. Any provision of this Trust Agreement other'than Section 8.3 may be amended in any respect by the unanimous agreement of Grantor and Trustee. Section 8.3 may not be amended. All lV F amendments shall be in writing and shall be effective only upon being signed by the Grantor and Trustee. ' 8.6 In the event that any court shall make a final determination that' this Trust instrument or any part hereof is invalid with regard to the distribution of all or any part of the Trust, then the Trust or that part thereof, as the case may be, shall r., vert to Grantor or its successor in interest, or as otherwise required by order of the court or appropriate regulatory body. 8.7 As used herein the plural shall include the singular and the singular the plural, and the use of any gender shall be applicable to all genders. 8.8 This document may be executed in multiple originals, and the aggregate of such originals shall be deemed to be the agreement of the parties. B.9 All notices required or permitted hereunder shall be in writing and shall be delivered personally or mailed by first-class registered or certified mail, postage pre-paid, or if promptly confirmed by mail as provided above,
' dispatched by any other written communication, addressed to the following or their designee:
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a., .In the case of Grantor, to: [,) lg_,/, - Mr. Wayne D. Keller, Executive Vice President ; 4 North Carolina Electric Membership Corporation. N". 3400 Sumner Boulevard P. O. Box 27306 i
.Raleigh,'NC 27611
, , s b. In the case of Trustee, to: p Ms. Jane Fisher, Senior Vice President g Wachovia Bank and Trust company,-N.A. ! 301 North Main Street i Post Office Box 3099 ! Winston-Salem, NC 27102 ; 8.10 This Trust Agreement shall in all respects be governed by; and 3 construed in accordance with, the laws of the State of North Carolina, l including all matters of construction, validity,'and performance. To the- i extent' consistent with the laws of the State of North Carolina, this Trust. ' Agreement shall be construed so as to make the Trust qualify as a " grantor - trust" for purposes of United States income taxation. ,
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j 4 IN WITNESS WHEREOF, the parties to have caused this Trust Agreement to be !
/\ executed by their duly authorized respectivo officers as of the date and year j .(
first written above. ; i NORTH CAROLINA ELECTRIC MEMBERSHIP CORPORATIO , GRANTOR By: f86)mt . Wayne D( Keller I Executive Vice President ATTEST: s ' C# 3 -
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Secretary f WACHO B AND TRUST COMPANY, N.A., TRUS EE By: be Jane . Fisher 2 ) Sen r Vice President ATTEST:
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i EXHIB7T 1 i I f( ) STATEMENT OF GENERAL INVESTMENT OBJECTIVES AND GUIDELINES l A _/s I FOR THE l 1 NORTH CAROLINA ELECTRIC MEMBERSHIP CORPORATION i i CATAWBA STATION NUCLEAR DECOMMISSIONING TRUST The Trustee, subject to these general investment objectives and guidelines, 1 4 will' exercise full investment discretion over the Trust portfolio. The overall investment objective for the Trust portfolio ist j i
- 1. To achieve the highest return possible commensurate with the maintenance of a high quality, liquid portfolio comprised of fixed income securities <
-- subject to the guidelines set forth herein.
A. Return is defined as interedt earnings, realized capital gains / losses and unrealized appreciation / depreciation. .
- 2. As a guideline the Trustee shall att mpt to obtain returns, in accordance '
with I above which equal or exceed the assumed rate of return for the units covered by the Trust. '
\
GENERAL INVESTMENT GUIDELINES
- 1. Fixed income securities should be limited to the following:
- A. Obligations of the Federal Government and other federal agencies.
B. Commercial paper rated A-1 or P-1 by Standard & Poor's and/or Moody's at the time of purchase. ; C. Bankers acceptances and certificates of deposit issued by larger banks, which are considered to be of high quality based on analysis by the Trustee. D.: Corporate obligations, other than commercial paper, should be rated "AA" or better by at least two rating agencies at the time of [ purchase (Standard & Poor's, Moody's or Fitch). ' E. Investment vehicles and common funds offered by the Trustee bank, subject to appropriate quality analysis by the Trustee. A common fund may be appropriate if at least 90 percent of issues meet the criteria set forth herein.
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2 STATEMENT OF GENERAL INVESTMENT OBJECTIVES AND GUIDELINES FOR THE NCEMC NUCLEAR DECOKMISSIONING TRUST PORTFOLIO MANAGEMENT GUIDELINE
- 1. Diversificat$on:
A. The portfolio should include a balanced commitment to several sectors of the acbt market which the Trustee believes will provide prudent diversification and, therefore, reduce risk. B. No purchase or holding as evidenced by any single issuer should represent more than 10 percent (at the greater of cost or market value) of the assets under management, excluding obligations of the Federal Government and other federal agencies.
- 2. Marketability of Holdings:
A. The portfolio should include securities which have sufficient marketability to permit timely and effective purchase or sales, and for which accurate prices can be obtained. This would also allow for orderly liquidations in the case of unanticipated decommissioning expenses.
- 3. Maturities:
A. General Rule: Government and federal agency obligations shall have maturities which do not exceed 10 years. Corporate obligations shall have maturities which do not exceed 3 years. The average matur'.y of the total portfolio shall not generally average more than approximately 7 years.
- 4. Trading:
A. The Trustee has full discretion as to the brokers utilized to effect trades.
- 5. Turnover:
A. Other than purchase and redemption of short term securities it is expected that the Trustee would not realize excessive turnover. However, active management should be utilized to preserve principal and enhance the total return wnen deemed appropriate. PROHIBITED TRANSACTIONS
- 1. No individual purchase should be made of any security issued by the Company or any subsidiary of the Company, as well as that of the Trustee.
1
L , i, l 1 FIRST WACHOVIA
/(_)v SCHEDULE OF FEES NUCLEAR DECOMMISSIONING IV.GS l
This schedule applies to funds for which First Wachovia serves as Trustee or Custodian. Charges are quoted on an annual basis but at First Wachovia's discretion may be charged mere frequently on a prorata basis. ) I. BASIC SERVICES For all basic services related to the custody of funds, investment by the Investment Manager and periodic reports, the following ad valorem charges apply. Market Value Rate Per $1,000 First $ 500,000 $ 5.00 Next 1,500,000 2.60 Next 8,000,000 1.40 Next 40,000,000 .70 Next 50,000,000 .50 over 100,000,000 .35 lD I V. l II. UNITIZED 1
$750.00 Per Pool First Five Plants No Charge Next Five $ 500.00 (each)
Next Five $ 300.00 (each) III. TAX LOT ACCOUNTING
$ 10.00 Per Security Transaction IV. INCOME TAX PREPARATION r
$ 80.00 Per Hour V. CHECK CHARGES FOR EXPENSES
$ 5.00 For the Preparation of each Check O
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l ]: : VI. WIRE TRANSTER CHARGES 'l
$'10.00 Each VII. OTHER CHARCES j j
Programming for Special Reports - $75.00'Per. Hour' All line charges for on-line processing and PC downloading would be charged back to the client. 'l i V ',
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VIII.' INVESTMENT MANAGEMENT Market Value Rate Per $1,000
.j First $_ 500,000 $ 6.00 i Next 1,500,000 4.40 :
8,000,000 Next 2.60 Next- 40,000,000 1.50 Over 50,000,000 1.20 ) l af i v Y
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g V) ( North Carolina Electric Membership Corporation at the regular quarterly meeting of the Board of Directors on June 12, 1990 Re: Authorized Representatives - Nuclear Decommissioning Trust Fund Adopted: June 12, 1990
..... ***. 2 .**.. ** ****...............
WHEREAS, the Board of Directors has appointed Wachovia Bank and Trust Company, N.A. Trustee of the North Carolina Electric Membership Co'rporation Catawba Station Nuclear Decommissioning Trust; and WHEREAS, the Trust Agreement provides, among other things, that NCEMC shall pr' vide the Trustee with a written statement setting forth the names and specimen signatures of Authorized Representatives who are empowered to act for NCEMC 10 all respects under the Trust Agreement; NOW, THEREFORE, BE IT RESOLVED that the Board of Directors appoints the following Authorized Representatives, and until otherwise notified in writing by NCEMC, the Trustee may rely on any written notice, instruction, direction or certificate signed by any one of the following: ( Wayne D. Keller Executive Vice President ' h~ ' ha l
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( / / Oreste V. Baffi Manager, Finance & Accounting f /h dj j, Terrence W. Ryan ---I- b ~' Manager, Power Supply ' L. E. Waters N k@lhb _ Director of Finance [ I certify that I am Secretary of the Board of Directors of North Carolina Electric Membership Corporation and that the foregoing is a true and correct excerpt from the minutes of the Board of Directors meeting of that organization l held on June 12, 1990, and that the action reflected therein has been neither l_ rescinded nor modified. 1 In witness whereof, I have hereunto set my hand and affixed the seal of the Corporation this 12th day of June, 1990. s i A (
< ^ !G) Bob L. McDuM ie, Secretary (Corporate Seal)
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/^ EXHIBIT C (a) . CONTRIBUTIONS TO EXTERNAL SINKING FUND CATAWBA UNI? NO. 1 i Non-Qualified External Fund l Interest Year Contribution at 4.5% Balance 1990 $2,116,917 $ 0 $ 2,116,917 1991 2,116,917 95,261 4,329,095 .
1992 2,116,917 194,800 6,640,822 1993 2,116,917 298,837 9,056,576 1994 2,116,917 407,546 11,581,038 1995 2,116,917 521,147 14,219,102 1996 2,116,917 639,860 16,975,879 1997 2,116,917 763,915 19,856,710 1998 2,116,917 893,552 22,867,179 1999 2,116,917 1,029,023 26,013,119 , 2000 2,116,917 1,170,590 29,300,627 2001 2,116,917 1,318,528 32,736,072 2002 2,116,917 1,473,123 36,326,112 2003 2,116,917 1,634,675 40,077,704 7s 2004 2,116,917 1,803,497 43,998,118 ( ) 2005 2,116,917 1,979,915 48,094,950
\/ 2006 2,116,917 2,164,273 52,376,140 2007 2,116,917 2,356,926 56,849,983 2008 2,116,917 2,558,249 61,525,149 2009 2,116,917 2,768,632 66,410,698 2010 2,116,917 2,988,481 71,516,097 2011 2,116,917 3,218,224 76,851,238 2012 2,116,917 3,458,306 82,426,461 2013 2,116,917 3,709,191 88,252,568 2014 2,116,917 3,971,366 94,340,851 2015' 2,116,917 4,245,338 100,703,106 2016 2,116,917 4,531,640 107,351,663 2017 2,116,917 4,830,825 114,299,405 2018 2,116,917 5,143,473 121,559,795 2019 2,116,917 5,470,191 129,146,903 2020 2,116,917 5,811,611 137,075,431 2021 2,116,917 6,168,394 145,360,742 2022 2,116,917 6,541,233 154,018,892 2023 2,116,917 6,930,850 163,066,659 2024 2,116,917 7,338,000 172,521,576 Note - The inflation rate and the rate of return are assumed to be equal.
)
l Peo, 2 of 2 l [} (_/ EXHIBIT C CONTRIBUTIONS TO EXTERNAL SINKING FUND CATAWBA UNIT NO. 2 Non-Qualified External Fund 2 i i l Interect Year Contribution at 4.b% Balance 1990 $2,069,366 $ 0 $ 2,069,366 1991 2,069,366 93,121 4,231,853 l 1992 2,069,366 190,433 6,491,653 1993 2,069,366 292,124 8,853,143 1994 2,069,366 398,391 11,320,901 l 1995 2,069,366 509,441 13,899,",07 l 1996 2,069,366 625,487 10,594,560 ' 1997 2,069,366 746,755 19,410,681 , 1998 2,069,366 873,481 22,353,528 1999 2,069,366 1,005,909 25,428,803 2000 2,069,366 1,144,296 28,642,465 2001 2,069,366 1,288,911 32,000,742 2002 2,069,366 1,440,033 35,510,141 2003 2,069,366 1,597,956 39,177,463
,~s 2004 2,069,366 1,762,986 43,009,815
' N 2005 2,069,366 1,935,442 47,014,623
! K- I 2006 2,069,366 2,115,658 51,199,647 2007 2,069,366 2,303,984 55,572,997 2008 2,069,366 2,500,785 60,143,148 2009 2,069,366 2,706,442 64,918,956 2010 2,069,366 2,921,353 69,909,675 2011 2,069,366 3,145,935 75,124,976 2012 2,069,366 3,380,624 80,574,966
.2013 2,069,366 3,625,873 86,270,205 :
2014 2,069,366 3,882,159 92,221,731 2015 2,069,366 4,149,978 98,441,075 2016 2,069,366 4,429,848 104,940,289 2017 2,069,366 4,722,313 111,731,968 2018 2,069,366 5,027,939 118,829,272 2019 2,069,366 5,347,317 126,245,956 2020 2,069,366 5,681,068 133,996,390 2021 2,069,366 6,029,838 142,095,593
- 2022 2,069,366 6,394,?C2' 150,559,261 2023 2,069,366 6,775,U67 159,403,794 2024 2,069,366 7,173,171 168,646,330 2025 2,069,366 7,589,085 178,304,781 2026 2,069,366 8,023,715 188,397,862
. () Note - The inflation rate and the rate of return
(,/ are assumed to be equal. l l
; North Carolina Electric Membership Corporation m_f at the regular quarterly meetfng of the Board of Directors on June 12, 1990 Re: Nuclear Decommissioning Trust Pund Adopted: June 12, 1990 '
WHEREAS, the Nuclear Regulatory Commission ("NRC") has promulgated regulations which require that the holder of a license to operate a nuclear power plant must provide financial assurance that monies will be available when needed for required decommissioning activities; and j WHEREAS, to comply with these regulations of the NRC, among other reasons, NCEMC wishes to establish reserve funds to provide such financial assurance for decommissioning costs associated with Catawba Unit No. 1 and Catawba Unit No. 2; and i WHEREAS, NCEMC desires to create a trust that will serve as the aforementioned reserve funds; and
, ~ . WHEREAS, Wachovia Bank and Trust Company, N.A. is a national bank with
, ~; N_ /'
) trust powers and is wjlling to act as trustee of such trust; NOW, THEREFORE, BE IT RESOLVED that the Board of Directors appoints Wachovia Bank and Trust Company, N.A. Trustee of the North Carolina Electric Membership Corporation Catawba Station Nuclear Decommissioning Trust; . and '
t BE IT FURTHER RESOLVED that the Board of Directors authorizes the Executive Vice President to execute such Trust' Agreement, and to execute such other reports and certificates as may be required from time to time by the Nuclear Regulatory Commissior., I certify that I am Secretary of the Board of Directors of North Carolina Electric Membership Corporation and that the foregoing is a true and correct excerpt from the minutes of the Board of Directors meeting of that organization held on June 12, 1990,'and that the action reflected therein has been neither rescinded nor modified. In witness whereof, I have hereunto set my hand and affixed the seal of the Corporation this 12th day of June, 1990.
-se r~') Bob L. McP6f fie, Secretary
('# / (Corporate Seal)
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O UNITED STATES OF AMERICA NUCLEAR REGUIATORY COMMISSION Report and certification C.gncern:.no Financial Assurance I for Nuclear Decommiss:,onina Costa submitted by North Carolina Municipal Power Acency Nn=her 1 (Catawba Units 1 and 2) h Pursuant to 10 C.F.R. Sections 50.33 (k) (1) and 50.75(b), North Carolina Municipal Power Agency Number 1 (" Power Agency") j hereby submits its Report and Certification concerning financial ; assurance for nuclear decommissioning costs of the Catawba Nuclear Station (Facility Licenses Nos. NPF-35 and NPF-52). This Report and Certification describes Power Agency's cost responsibility for decommissioning costs and sets forth the
! ) method selected by Power Agency, pursuant to the Commission's Regulations, of providing financial assurance for decommissioning.
A. Power Aaency's Cost ResDonsibility for Decommissionina Power Agency is a public body and body corporate and politic organized under the laws of the State of North Carolina for_the purpose, among other things, of acquiring, owning and - operating facilities for the generation and transmission of g electric power and energy. Power Agency is the all requirements ' bulk power supplier to 19 cities and towns in North Carolina that have entered into Project Power Sales Agreements and Supplemental Power Salas Agreements with Power Agency. O
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In 1978, Power Agency acquired a 75% undivided ownership interest in Unit No. 2 at the Catawba Nuclear Station pursuant to contracts entered into with Duke Power Company (" Duke"). Each of the Units of the Catawba Station contains a Westinghouse pressurized water reactor nuclear steam supply system, and each Unit has a licensed thermal power rating of 3,411 MWt. Catawba , Unit 1 began commercial operation on June 29, 1985, and Catawba l Unit 2 began commercial operation on August 19, 1986. Other
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co-owners of the Catawba Nuclear Station are: Piedmont M.:nicipal Power Agency (25% ownership interest in Unit 2); North Carolina Electric Membership Corporation (56.25% canership interest in Unit 1); Saluda River Electric Cooperative, Inc. (28.125% ownership interest in Unit 1); and Duke (25% ownership interest in Unit 1). The contractual arrangements for joint ownership of the Catawba Nuclear Station include a capacity exchange between the two Units which entitles each of the co-owners to a specific portion of-the electric power and energy produced by the Station l as a whole. In recognition of this exchange arrangement, each co-owner has agreed to bear a corresponding portion of the cost of decommissioning Catawba Unit 1, Catawba Unit 2 and the Catawba Station as a whole. Pursuant to the exchange arrangement, Power Agency is entitled to 37.5% of the electric power and energy produced by the Catawba Station. Correspondingly, under Section 20.2 of the Operation and Fuel Agreement between Duke and Power Agency, Power Agency is obligated to pay 37.5% of the cost to 1
,u
i decommission the entire Catawba Station, or any portion (or Unit) thereof. A copy of Article 20 of the operation and Fuel Agreement is attached as Appendix A. i B. Method of Providina Financial Assurance for l Decommissionina Power Agency hereby certifies that financial assurance 1 for its share of the cost of decommissioning catawba. Unit 1 and Catawba Unit 2 is provided in the amount of $51,502,500 (1990 dollars) for each such Unit. This amount represents Power Agency's 37.5% share of the minimum financial assurance amount of '
$137,340,000 for each o* the Catawba Units. 'The minimum financial assurance amount for each Catawba Unit is equal to the amount of $105 million (January 1986 dollars) per unit set forth L
() in 10 C.F.R. i 50.75(c) (1) , escalated to January 1, 1990 in accordance with the formula set forth in 10 C.F.R. 5 50.75(c) (2) . The calculation of the minimum financial assurance amount is shown in detail in Appendix B. The minimum financial assurance amount will be recalculated annually. ; The method by which Power Agency will provide financial ; assurance for its share of the cost of decommissioning the Catawba Station is the establishment of two external sinking- , funds into which deposits will be made annually. These external I sinking funds have been established in the form of two decommissioning trust funds: the Catawba Unit No. 1 Decommissioning Trust Fund and the Catawba Unit No. 2 Decommissioning Trucc Fund. These trust funds are satablished
,(-
.t under the terms of a Decommissioning Trust Agreement effective as of June 29, 1990 between Power Agency and Wachovia Bank & Trust Company, N.A. of Winston-Salem, North Carolina ("Wachovia"). A copy of the Decommissioning Trust Agreement is attached as Appendix C. Wachovia is a national bank having authority to act as a trustee, and its trust operations are regulated by the office of the Comptroller of the currency. The Decommissioning Trust Agreement was executed on Power Agency's behalf by its Chairman and Assistant Secretary-Treasurer, each of whom was duly authorized by Resolution A-7-90 adopted by Power Agency's Board of Commissioners on June 20, 1990, which resolution is attached as Appendix D. Section 8.2 of the Decommissioning Trust Agreement describes the " Permitted Investments" in which trust t fund monies may be invested. Power Agency intends that any such if ) '
investments shall satisfy the criteria stated in Section 2.2.4 of the NRC's Regulatory Guide 1.159, " Assuring the Availability of Funds for Decommissioning Nuclear Reactors" (prepublication release of May, 1990). Attached as Appendix E is a copy of the I opinion of Poyner & Spruill, counsel to Power Agency, to the affect that, under North Carolina law, assets in the Decommissioning Trust Funds should not be subject to claims of I ! creditors of the trustee, Power Agency or a third party entitled l
- to payment from a Decommissioning Trust Fund, except to the l extent that such creditors were entitled to payment from the Decommissioning Trust Fund.
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Power Agency will make deposits into the Decommissioning l l Trust Funds at least annually. The first such deposit will be i made on or before December 31, 1990. Attached as Appendix F is the schedule of deposits that will inplemont the method of
.providing financial assurance for decommissioning described above. The assumptions supporting this schedule of deposits are ,
set forth in Appendix F. As shown in Appendix F, these deposits l (and investment earnings) are projected to result in sufficient monies being on deposit to meet Power Agency's share of the minimum financial assurance amount for Catawba Unit 1 and Catawba Unit 2, escalated to the month in which the operating license for each of the Catawba Units expires. (The calculation of the minimum financial assurance amount, escalated to the month in
. () which the operating license for each Catawba Unit expires, is shown on Appendix B.) At least every five years, Power Agency i
l will recalculate the schedule of annual deposits to reflect'the effects of actual experience and changes in projected values for inflation and fund earnings. G
1 i L ! i (~ l ( C. Further Infermation l Any additional information concerning the subject matter l of the foregoing Decommissioning Report and Certification nay be
, obtained by contacting: , s Mr. William H. Batt Assistant Secretary - Treasurer North Carolina Municipal Power Agency Number 1 P.O. Box 29513 ,
Raleigh, North Carolina 27626-0513 Telephone: (919) 832-9924 Submitted this / 6 Ud day of July, 1990 t NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1 By: > (' = Q, . cs a 2*L (Title) 3 e 4 l ; !-{)\ \.
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Report and Certification Concerning Financial Assurance for Nuclear Decommissioning Costs Submitted by North Carolina Municipal Power Agency Number 1 (Catawba Units 1 and 2) , l LIST OF APPENDICES I Appendix A A copy of Article 20 of the operation j and Fuel Agreement between North Carolina Municipal Power Agency Number 1 and Duke Power Company. Appendix B Calculation of Minimum Financial j Assurance Amounts for Catawba Unit 1 and . Catawba Unit 2. , Appendix C A copy of the Decommissioning Trust Agreement between North Carolina Municipal Power Agency Number 1 and Wachovia Bank & Trust company, N.A. O Appendix D A copy of Resolution R-7-90 of Power Agency's Board of Commissioners (adopted June 20, 1990). Appendix E Opinion of Poyner & Spruill, counsel to Power Agency, concerning the Decommissioning Trust Funds. i i Appendix F Schedule of Deposits to the Decommissioning Trust Funds. { O
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( Appendix A A copy of Article 20 of the Operation and Fuel Agreement between North Carolina Municipal Agency Number 1 and Duke Power > Company. I t i I O r l O { l
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O DUKE POWER COMPANY NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1 O , RESTATED , i OPERATING AND FUEL AGREEMENT , \ Dated June 21, 1982 , 1 l l 0
99 19.3 Costs of Termination Duke shall submit a monthly statement to Power Agency covering the l. costs of termination and payment therefor shall be due and payable as of the I- date of such statement. Such costs shall be payable by Power Agency as operation and maintenance costs in accordance with Sections 7.1(D) and 7.1(E) hereof. Interest carrying charges will accrue on any such payment due but not received by Duke within 15 calendar days from the date of the statement. f The interest carrying charge shall be at a rate equal to one percent per month. Unless full payment of any amount due hereunder is received within 60 days of the date payable, the Party failing to make the payment due shall be in default and the provisions of Article 18 hereof shall apply. ARTICLE 20 DECOMMISSIONING 20.1 General The Owners, with the concurrence of NCEMC and Saluda River, may, at [ any time, decide to decommission Unit 1 or Unit 2 or the entire Catawba Nuclear Station. Any Owner may require that the question of whether or not to decommission be submitted to arbitration pursuant to Article 14. If such issue is~ submitted to arbitration, the Arbitrator shall consider economic and any other relevant factors in making his decision, i 20.2 Costs of Decommissioning In consideration of the Catawba Reliability Exchange, pursuant to the Interconnection Agreement, the NCEMC Interconnection Agreement and the Saluda
. River Interconnection Agreement, Duke and the Buyers shall bear all costs I
incurred for decommissioning in proportion to their respective ownership I interests in two Catawba Units for whatever period of time is necessary, whether pursuant to regulatory requirements or otherwise, to complete the
I 100 fecomissioning process so that no further expenditure of funds is required. W Decommissioning costs shall include, but not be limited to, any costs which ' must be provided for in advance of decommissioning, and any costs which are incurred during or after decommissioning, whether such costs result from 5 regulatory requirements or otherwise. 20.3 Decommissioning Agreement After the decision to decommission has been made, Duke and the Buyers shall arrange, pursuant to an agreement (the " Decommissioning Agreement")
. separate from this Agreement, to carry out the decommissioning of the Catawba Wlj Nuclear Station, or either of its Units, by Duke or some other qualified engineers and/or contractors. Such agreement shall contain the provisions sot forth in Section 20.2 hereof. If Duke is to carry out the decommissioning, the Decommissioning Agreement shall contain the provisions of Article 13 and Section 22.10(C) of this Agreement, the NCEMC Operating Agreement and the Saluda River Operating Agreement and the provisions of the Sales Agreement, the NCEMC Sales Agreement and the Saluda River Sales Agreement with respect to Duke acting as engineer-contractor and shall contain no provision which is inconsistent with any term of this Agreement, the NCEMC Dperating Agreement or
-the Saluda River Operating Agreement or the Sales Agreement, the NCEMC Sales Agreement or the Saluda River Sales Agreement with respect to Duke acting as engineer-contractor.
20.4 Repurchase In the event the Catawba Nuclear Station, or either of its Units, is L E 55 l decommissioned, Duke shall have the right of first refusal to purchase any l materials, parts, supplies or other facilities therefrom. The proceeds of such rOsale to Duke, or of any sale to any other entity, shall be credited to Duke and the Buyers. Power Agency's share shall be 37.5% of the proceeds of such sale. l
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,, :t '; r Appendix B Calculation of Minimum Financial Assurance Amounts for Catawba Unit 1 and Catawba Unit 2.
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Appsndix B NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER ONE f-~< Calculation of Minimum Financial Assurance , ( ). Amounts for Catawba Unit 1 and Catawba Unit 2 (Page 1 of 2) A.- Minimum Financial Assurance Amounts in 1990 Dollars
- 1. NRC minimum in January 1986 dollars (10 C.F.R.$. 50.75 (c) (1)) for a PWR greater than or equal to 3,400 MWt = $105 million per unit
- 2. 1986 amount escalated to January 1990:
- a. $105 million times adjustment factor
- b. Adjustment factor from 1986 base values (10 C.F.R.5 50.75 (c)(2)) = ,
.65L + .13E + .22B, where (i) L = 147.3/127.7 = 1.153 (ii) E = .58P + .42F, where P = 113.8/119.3 = .954 s F = 68.1/82 = .830
( (.58 * .954) + (.42 * .830) = .902 (iii) B = 2.007/1 = 2.007 (iv) Factor = (.65
- 1.153) + (.13 * .902) + (.22
- 2.007) =
1.308
- c. January 1990 amount = $105,000,000
- 1.308 = $137,340,000 per i unit
- d. Power Agency's 37.5% share = $51,502,500 per unit B. Minimita Financial Assurance Amount Escalated to Month of Expiration of Operating Licenses I:
- 1. Catawba Unit 1 ,
- a. $51,502,500 times adjustment factor
- b. Adjustment factor = (1+E)n, where
[ (i) E = escalation factor of 4.5% per year l (ii) n = period in years from January 1, 1990 to December 1, !. 2024 = 34.91667 (iii) Factor = (1 + .045) 34.91667 = 4.65026
- c. December 1, 2024 amount = $51,502,500
- 4.65026 = $239,500,000 l
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x Appendix B' NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER ONE Calculation of Minimum Financial Assurance Amounts for Catawba Unit 1 and Catawba Unit 2 (Page 2 of 2)
- 2. Catavba Unit 2
- a. 151,502,500 times adjustment factor
- b. Adjustment factor = (1 + E)", where (1) E = escalation factor of 4.5% per year (ii) n = pefiod in years from January 1,1990 to February 1, 2026 =
36.08333
-(iii) Factor = (1 + .045) 36.08333 = 4.89530
- c. February 1, 2026 amount = $51,502,500
- 4.89530 = $252,120,000 O
O (B6F/664)
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<- Appendix c I A copy of the Decommissioning Trust-Agreement between North Carolina Municipal Power Agency Number 1 and Woc'novia Bank & Trust Company.
1 I % s , 4
L CERTIFICATE I, William H. Batt, Assistant Secretary-Treasurer of North Carolina Municipal Power Agency Number 1 (" Power Agency"), hereby certify that: I am charged with the duty of keeping and have
; custody of the minutes and official- records of Power Agency; attached hereto is a full, true and complete copy of the Decommissioning Trust Agreement approved by the Board of Ccmmissioners (the " Board") of Power Agency at a regular meeting of the Board duly called and held on June 20, 1990; and said
[
' Decommissioning Trust Agreement has not been amended, ihOdified, superseded or repealed and is in full force and effect as of the date hereof. i IN WITNESS WHEREOF, I have hereunto set my hand and the seal
- O of Power Agency this /s,[ day of July,1990.
b \ 4% b a i, '\ '-f?/*)s s /T William H. Batt Assistant Secretary-Treasurer (SEAL)
Attachment:
Decommissioning Trust Agreement O
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t (.' DECOMMISSIONING TRUST AGREEMENT 7 NTHIS TRUST AGREEMENT (" Agreement") made and entered into this hb day of June, 1990, effective as of the 29th day of June, 1990, by and between NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER' 1, a public body and body corporate and politic organized and existing under and by virtue of the laws of the State of North Car.olina ("the Power Agency") , as Grantor, and WACHOVIA BANK & TRUST COMPANY, N. A. , a banking corporation having treet powers with' its principal office located in Winston-Salem, North Carolina (the
" Trustee"), as Trustee.
HIIHEEEEIH: THAT WHEREAS, the Power Agency is the owner of a seventy-five percent (75%) undivided ownership interest in a nuclear power plant' and associated facilities known as Catawba Unit No. 2; and l WHEREAS, pursuant to the Restated Operating and Fuel- Agreement between the Power Agency and Duke Power Company dated as of June 21, 1982, the Power Agency is obligated to pay thirty-seven and one-half percanc (37.5%) of the costs of operations, maintenance, fueling, capital additions, and decommissioning of the Catawba Nuclear Station, which consists of Catawbe Unit No. 1 and Catawba Unit No. 2; and WHEREAS, the plant and associated facilities in which the Power Agency has undivided ownership interests are subject to the jurisdiction of the United States Nuclear Regulatory Commission (the "NRC"), an agency of-the United States Government; and 9
l. ARTICLE I TRANSFER AND ACCEPTANCE 1.1 Transfer to Trustee. The Power Agency hereby grants,. releases, assigns, transfers, conveys and delivers unto the Trustee all of that property specifically set forth and described in Schedules "A" an'd "B" attached hereto and by reference incorporated 1 herein and made a part hereof, which S.hedules bear the signature of the Power Agency and the Trustee, to have and to hold the same,- in trust, for the uses and purposes and subject to the terms, provisions,-conditions and powers hereinafter set forth. 1.2 Accentance by Trustee. The Trustee hereby acknowledges receipt of all that property described in and on Schedules "A" and "B", all of said property being sometimes hereinafter referred to as the " Trust Estate" or " Trust Property," and the Trustee hereby agrees to hold, manage and distribute the same as from time to time constituted, upon the terms, provisions and conditions hereinafter set out. The Power Agency-may also, from time to time and at any time hereafter, contribute additional property to the Trustee to be held under the terms hereof, subject to the provisions of Section 5.2 of this Agreement. 1.3 Instrmaants of Further Assurance. The Power Agency will, upon reasonable request of the Trustee, execute, acknowledge and deliver such further instruments and do such further acts as may be . necessary or proper b transfer any of the property intended to be O _ _
(f) " Disbursement Certificate" shall mean a document properly
- completed and executed by an Authorized Representative of the Power
[ Agency and delivered to the Trustee, certifying that the amounts shown therein to be paid are Qualified Costs incurred hereunder, in the form of Exhibit A hereto. (g) " Trust Fund" shall mean any one of the separate trust U funds established hereunder, and " Trust Fundd" shall mean all of the trust funds established hereunder, collectively, as listed on the. separate schedules attached to this Agreement, as such-schrdules.may be supplemented from time to time by the Power Agency ^ by written notice to the Trustee. (h) " Future Orders" shall mean any orders of the NRC or any federal or state agency having jurisdiction over the Power Agency's ownership interests in~the Plants, or any federal ry; state laws adopted in connection with the retention, investment and utilization of-funds for the costs of decommissioning any of the Plants herein described, which are applicable to the Power Agency. (i) " Investment Manager" shall mean any fiduciary or fiduciaries designated as an Investment Manager hereunder by the Power' Agency. ] (j) "NRC" shall mean the United States Nuclear Regulatory Commission, an agency of the United States Government, and its successors and assigns. (k) " Plant" shall mean the Power Agency's undivided ownership interests in and to each, and " Plants" shall mean the Power Agency's undivided ownership interests in and to all, of the ~ { t '
p Agreement, including cash, dividends,. income, interest, proceeds n
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and other receipts of or from the Trust Estate or Trust Property. (q)- " Withdrawal Certificate" shall mean a document properly completed and executed by an Authorized-Representative of the Power Agency and delivered to the Trustee, in the form of Exhibit B i hereto, certifying that the amounts shown therein have been paid by i 4 the Power Agency as Decommissioning Costs hereunder. 2.2. Meanina of other Terms. Except when the context otherwise requires, words importing the singular number shall include the plural number and vice versa, and words importing perso.a shall include firms, associations, partnerships,- l l corporations, and other entities. All references herein to l ! Articles, Sections and other subdivisions refer to the corresponding Articles, Sections and other subdivisions-of this
. Agreement; and the words "herein", " hereof", "hereby", " hereunder" and'words of similar import refer to-this Agreement as a whole and {
not to any.particular Article,_Section or subdivision hereof. ARTICLE III PURPOSE OF T3UST AGREEMENT; ESTABLISHMENT OF SEPARATE TRUSTS 3.1 Intent and Purnose of Trust Aareement. The Power Agency's intent in establishing this Trust and the separate Trust Funds hereunder is, among other purposes, to comply with the applicable NRC regulations regardaing decommissioning costs, and with any future regulatione or orders by or from any federal or state agency or any court of competent jurisdiction to which the O ~7-
and decommissioning, including Decommissioning costs, .of the Catawba Nuclear Station, which 8.ncludes the nuclear power L facilities known as Catawba Unit No. 1 and which is identified and described in License Number NPF* 35 issued by the NRC, which license e currently expires December 6, 1026. (b) Catawba Unit No. 2 D.tcommissionino Trust Fund. Pursuant U
' to the Restated Operating and Fuel Agreement, the Power Agency is obligated to pay thirty-seven and one-half percent (37.5%) of the.
= costs of operations, maintenance, fueling, capital additions, and decommissioning, including Decommissioning Costs, of the Catawba Nuclear Station, which includes the nuclear power facilities known as Catawba Unit No. 2 and which is identified and described in License Number NPF-52 issued by the NRC, which license currently expires February 24, 2026.
.O 3.4 Samarate Records. Comminalina of Investments. The initial contribution by the Power Agency to each of the two (2) separate Trust Funds is described on Schedules "A" and "B" hereof.
The Trustee shall maintain separate records for each separate Trust-Fund and shall credit thereto the prorata. share of all income of. the Trust and charge thereto the prorata share of all expenses (other than expenses solely attributable to a particular Plant which shall be expenses charged solely to the separate Trust Fund named for such Plant and any losses. Unless otherwise instructed in writing by the Power Agency, however, nothing contained in this Section 3.4 or elsewhere herein shall be deemed to require the Trustee to segregate or separately invest the assets of the __ ._ _1 __ _ _ _ _ _ _ _ _ -_ - _ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ' - - - - ~ - - ~ - - - - - - ~ - - ~ ~ ~
to direct the disbursement of payments for Decommissioning costs, the Trustee shall make payments from the separate Trust Funds as the NRC or other then appropriate' entity having-jurisdiction shall direct in writing, whether to third parties or to the Power . Agency.. ARTICL's V GENERAL PROVISIONS RELATING TO '1HE TRUST 5.1 Alterations and Amendmenta. The~ Power-Agency and the Trustee understand and agree that modifications or amendments.may be required to this Agreement from time to time to effectuate the-purposes of this Agreement and to comply with amendments to or' changes in NRC rules and regulations, any Future Orders, and any other_ changes in the laws applicable to the Power Agency, the Plants or this Trust. One of the purposes of this Trust.is to comply with applicable NRC regulations concerning- nuclear decommissioning costs, and the Power Agency expressly reserves'the-right to amend or modify the Trust Agreement from time to time to-conform as necessary or appropriate to any rulings-or requests of the-NRC applicable thereto. The Power Agency and the Trustee may amend - this Agreement to the extent' necessary or desirable to ef fectuate such purpose or to comply with such Future Orders or changes. This -Agreement also may be modified or amended to effectuate the handling of investments and administrative reports and details. Any modification or amendment to this Agreement shall be by an instrument in writing signed by the Power Agency, the Trustee and filed with the NRC or other then appropriate entity 9 -u- { l l _ . . ~
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rinvolved, and requ'esting payment of such excess amount, the Trustee (b. shall distribute such excess amount to the Power Agency. The i delivery of such a certificate by the Power Agency shall constitute l the certification of the Power Agency that all required consents. and approvals to such distribution, if any, have been obtained. 5.4 No Transferability of Interest in Any Trust. Except as provided in Sections 6.1 and'6.2, the interest of the Power Agency in any Trust hereunder is not transferable, whether voluntarily or involuntarily, 'by the Power Agency, nor subject to the claires of-general' or secured creditors of the Power Agency; provided, i however, .that any creditor of the Power Agency as to which a Disbursement certificate for a separate Trust Fund has been properly completed and submitted to the Trustee may assert a claim 4 directly against such separate Trust Fund in an amount not to exceed the amount specified in,such Disbursement Certificate. In th; s cant of an attempted transfer by the Power Agency. of its interest . herein, or by any-third. party of its interest herein, whether. voluntarily or involuntarily by the Power Agency, a third , party or otherwise, the Power Agency's ability to direct payment of any portion of the Trust Estate shall cease and thereafter payments from the Trust or any separate Trust Fund shall be made solely in accordance with the written direction of the NRC or other appropriate entity having jurisdiction. 5.5 No Authority to Conduct BumIness. The purpose of this Trust Agreement is limited to the matters set forth herein and this O LI _13_ l l l
(c) Upon an applicable rule or order of the NRC or other then ( i appropriate entity having jurisdiction, or a final' decision of any ~ court of competent jurisdiction,.that a Trust Fund for a Plant for
.which a separate Trust Fund is created and named hereunder is no '
longer required, but in such event only upon written notification by the' Power Agency to the Trustee within thirty (30) days of such 4 rule, order or final decision that the Power Agency' desires to terminate such separate Trust Fund; (d) Upon the distribution for the purposes of such separate' Trust Fund as provided herein of all the assets and property then I held by the Trustee in a separate Trust Fund created and named hereunder. The termination of any separate Trust Fund hereunder shall not affect.or cause the termination of this Trust Agreement or any r other separate Trust Fund hereunder, and this Trust Agreemant shall terminate only when all of the separate Trust Funds hereunder have 4 terminated and all assets held by the Trv-*ee hereunder have been
' distributed.
6.2 Distribution of Trust Assets Unon Termination. Upon termination of each separate Trust Fund hereunder, the Trustee shall distribute the entire remaining amount of assets then held by
.it in such Trust Fund, if any, including all accrued, accumulated l and undistributed not income, to the Power Agency, or otherwise as-the Power Agency may direct in writing within thirty (30) days of termination. i 15-l>
y ' l: s l
- (u l K.s( Trust Estate for the purposes'of this Trust, or to the Power Agency
.or'as-the Power Agency directs, upon termination, and the payment o
If g and discharge of all-debts, liabilities and obligations of the Trust, the Trustee shall have no further duties.or obligations y !1 hereunder. C + -ARTICLE VII GENERAL PROVISIONS RELATED TO THE TRUSTEE d 7.1 Manacement of Trust Prooerty. The Trustee shall hold,- manage, invest and reinvest the Trust Property and shall accumulate in the Trust and allocate .prorata to each - separate Trust Fund (based on the principal balances of each Trust Fund)- all net income,' after payment of expenses and other disbursements as herein provided, from the Trust Property and add the same to the-principal ; of each separate Trust Fund annually. The Trustee accepts and undertakes to discharge the Trust and the separate Trust Funds i created by: this Agreement, upon the- terms, provisions and conditions hereof. 7.2 commenmation of Trustee.- The Trustee shall receive as compensation for its services hereunder those amounts as set out and agreed to in a letter of even date herewith from the Trustee to the Power Agency signed by the parties hereto. Such compensation may be adjusted from time to time in such amounts as may be agreed upon in writing by the Trustee and the Power Agency. 7.3 Payment of Fxnenses of Administration. Subject to the written approval of the Power Agency, which shall not be J.'
i F 4 it n ' accounts, books and records relating thereto shall be open ' to ij . inspection and audit at all reasonable time by any person
-i decignated by the Power Agency.
7.5 Pinancial Statements. The Trustee shall furnish monthly' l financial statements for each separate Trust . Fund to the Power Agency' not later than the seventh (7th) business day of the L ; L - following month, or.at'such other less frequent interval as the Power Agency may require. The financial statements shall show the financial condition of the separate Trust Fund, including without' s limitation, the market value of the assets, and the receipts, income, expenses, disbursements and other transactions of.each separate Trust Fund for the period.since the preceding statement. Financial statements may be approved by the Power Agency. by ' written L notice. thereof to the Trustee and the Power Agency's failure te object to any such financial statement within six (6) months of its receipt of the annual audited statements of the separate Trust Funds shall constitute the Power Agency's approval O traof. The
-approval of any such financial stateme.it shall constitute a full and complete discharge of the Trustee au to all matters set 1 orth in such financial statement; provided, hciwever, that the forectoing shall not relieve or absolve the Trustee from any liability I associated with a failure to perform its fiduciary responsibilities. The financial statements of each separate Trust Fund shall be audited annually by the firm of independent certified public accountants then employed by the Power Agency or by any l other firm of independent certified public accountants selected by O ~19-l L l
- .- - . . . . . - . . . ~ . - -. . .-- . - . - . - .- -
i transaction or.to'see to the application of the proceeds of any
.O such transaction. Any person dealing with the Trustee shall be fully protected in relying upon the Trustee's certificate that it has authority to take any action'under this Trust Agreement. No person dealing with the Trustee shall be required to'following the application by the Trustee of any money or property which may be paid or transferred to the Trustee.
7' 8 Exoneration from Bond and Court Returns. The Trustee shall not be required to give bond or surety and shall not be required to file any inventory or appraisal or any annual or other . returns or reports with any court whatsoever; provided, however, i that the Trustee'shall furnish the financial statements and reports to the Power Agency as provided in Sections 7.5 and 7.6, hereof' . 79 Removal of Trustee. The Power Agency may at any time ~! remove the Trustee then serving and appoint a qualified successor Trustee by instrument in writing signed by the Power Agency and delivered to the then serving Trustee, which instrument shall
- designate and appoint the successor Trustee and which shall be l effective no later than sixty (60) days from the date thereof or upon such shorter notice as may be acceptable to the then serving Trustee, provided that the successor Trustee has signified its acceptance of such appJintment by instrument in writing delivered to the Power Agency and the then serving Trustee. Any Trustee so removed shall promptly deliver all property then held by it hereunder to the successor Trustee so appointed and shall thereafter be relieved of any further duties and ebligations O t
TQ as. if originally named Trustee herein; but the retiring Trustee shall nevertheless, when requested in writing by the successor Trustee or the Power Agency, and upon payment of lawful fees, charges and disbursements then unpaid, if any, execute and deliver an appropriate instrument or instruments conveying and transidering to such successor Trustee, upon the trusts herein expressed,-all the estates, properties, rights, powers, and trusts of such retiring Trustee, and shall duly assign, transfer; and deliver to such successor Trustee all property and money held by it hereunder.- 7.13 Successor Trustee. No successor Trustee shall be required to inquire into or audit, and shall have no liability for, the acts or doings of any predecessor Trustee or be required to make any claims against any predecessor Trustee, and any successor Trustee- shall have and may exercise any and all of the. powers, privileges, immunities, and exemptions herein conferred upon the original Trustee as fully and to the same extent as if such successor originally had been named as a Trustee hereunder. 7.14 Future Orders. The Power Agency shall promptly advise the Trustee in writing of the existence of any Future orders of which Power Agency is aware having the effect of imposing new or . different responsibilities on the Trustee under this Agreement. 7.15 certain Duties and Reanonsibilities of the Trustee. (a) In the absence of bad faith on its part, the Trustee may rely conclusively upon certificates or opinions furnished to the
'Irustee and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions which by any l
direction signed, prepared or furnished by an authorized repre-sentative of the Power Agency, or by a verbal, telephonic or electronic facsimile request. or order confirmed within such-reasonable time as may be required by the Trustee by such a written
=
. request or direction, and any action of the Board of Commissioners of the Power Agency shall be sufficiently evidenced by a certificate attesting to such action signed by the Power Agency's secretary'or assistant secretary; (b) Whenever in the administration of the Trust or any separate Trust Fund created under this Agreement the Trustee shall deem-it desirable that a' matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee-(unless other evidence.be herein specifically prescribed) may, in the absence of bad faith or willful. neglect on its part, rely upon the certificate of an Authorized Representative of the Power Agency;
, (c) The Trustee may consult with legal counsel and any written advice or opinion of such counsel shall be full and complete -authorization for the Trustee to act in accordance therewith. The Trustee shall not be liable for and shall be protected against any action taken or omitted by it hereunder in good falth and in reliance thereon, except to the extent the _ Trustee is negligent in selecting counsel. (d) The Trustee shall be under no obligation to exercise any [ of the rights or powers vested in it by this Agreement at the request or direction of the Power Agency pursuant to this 9 l
statement contained in any such certification, direction or V instructions. To the extent the assets of the Trust Funds have not I
~been invested at the direction of the Power Agency on any given day, the Trustee shall invest such uninvested assets including any uninvested cash, in permitted investments described in Section 8.2,. -
from which such investments or cash (including any earnings
. thereon) may be withdrawn on a daily basis. The Power Agency and r-the Trustee shall establish appropriate ' systems, guidelines and procedures'in order to effectuate such handling of investments by' the Trustee nereunder.
8.2 Limitations on Investments. Initially the Power Agency . intends that investments under this Trust be limited to those permitted from time to time by Resolution R-16-78 and, to the - l-l
' extent not inconsistent therewith, by the State of North Carolina and its political subdivisions for public funds, and intends to
' establish policies, procedures, guidelines and restrictions for -
handling investments under this Trust, which it may from time to ' time modify, change or supplement by . written direction to the ' Trustee (the " Investment Policy") . To the extent permitted by applicable law,-the Power Agency may, by notice to the Trustee, ' expand, contract or otherwise change the Investment Policy. The Power Agency has determined that investments under this Trust may include, but shall not necessarily be limited to, the following described assets and securities (" Permitted Investments"): (a) Direct obligations of, or obligations the principal of l and interest on which are unconditionally guaranteed by, the United l (
4 shall mature within nine (9) months from the date it was entered ( into and shall be . fully secured on a erket value basis by- ; obligations described' in subparagraphs a, b, c, or'd of this paragraph which mature not later than ten (10) years from the date the repurchase agreement was entered into. (f) Bank time deposits evidenced by certificates of deposit, and bankers' acceptances, issued by any bank, trust company - or - national banking association whose principal place of business-is i
'in the State of North Carolina, provided that the aggregate of such bank time deposits. and bankers' acceptances issued by any bank, L
trust company or banking association do not exceed at any one time fif ty per centum (50%) of the aggregate of the capital stock, surplus - and undivided profits of- such bank, trust company or
- banking association and provided further that such capital stock, O. -surplus and undivided profits shall not be less than Twenty Million -
Dollars ($20,000,000); and (g) Bank time deposits evidenced by certificates of deposit, and bankers' acceptances, issued by - any bank, trust company or l national banking association which is.a member of the Federal Reserve system and authorized to do business in any' state of the- I United States of America other than the State of North Carolina,
. provided that the aggregate of such bank time deposits and bankers' acceptance issued by any bank, trust company or banking association do not exceed at any one time twenty-five per cent (25%) of the aggregate of the capital stock, surplus and undivided profits of such. bank, trust company or banking association and provided
p " investment manager accounts" and, if it'does so, it shall appoint V an. ind'ividual, partnership, association or corporation as Investment Manager to manage that portion of any separate Trust
. Fund so segregated.
Written notice of any such appointment and/or removal shall be given to the Trustee and the Investment Manager so appointed'. The appointment shall. be accomplished using an investment manager agreement signed by the Power' Agency and the-Investment Manager and acknowledged by the Trustee. As long as the - 3 Investment Manager is acting as such, the Investment Manager shall-have ' full authority to direct the acquisition, retention and disposition.of the assets which from time to time constitute the investment manager account being managed.by the Investment Manager and except as otherwise set forth in this Section 8.4, the Trustee ( shall have no duty or obligation to review the assets which from L time to time constitute such investment manager account. The Trustee may assume that .any investment manager account. previously established and the appointment of any Investment L Manager for that account continues in full force until receipt.of ; L written notice to the contrary from the Power Agency. Pending receipt of directions from the Investment Manager, any cash received by the Trustee from . time to time for any investment L l~ manager account shall be invested upon receipt in Permitted !. Investments from which such cash (including any earnings thereon) may be withdrawn on a daily basis. So long as the Investment Manager is directing the investments in an investment manager account, the Trustee shall have no duty or obligation to make any 1 1 1 l L _.
=______ . _ _ _
L the Investment Manager to purchase or sell securities directly to 1 a broker or dealer under a power'of attorney. k ARTICLE IX TRUSTEE'S POWERS 9 '.1 Powers'of the Trustee. In the management,- care and disposition of- this Trust and the separate Trust Funds, the Trustee hereunder, subject to the specific provisions hereof, shall have _ the discretionary power to do all things and to execute such' L instruments as may be deemed necessary or proper, including, but not limited to, the following powers, all of which may be exercised without order of or report to any court: (a) Subject to the provisions of Article VIII of this Agreement, to invest and reinvest all Trust Property and other cash making up a part of the Trust Estate as the Trustee shall deem advisable; , (b)' To sell, exchange or otherwise dispose of any property at any time held or acquired under this Trust or any Separate Trust Fund, at ' public or private sale, for cash or other terms and conditions, without advertisement, including the right to lease and to grant options to buy for any term notwithstanding the period of the Trust and to transfer or convey any_ such property or any interest therein in fee simple absolute or otherwise, free and clear of trust; (c) To retain for investment for such time as the Trustee deems advisable any property transferred to this Trust by the Power 9 l
~
f agents, if such employment is deemed necessary, and to pay reasonable cospensation for their services; i (1) To compromise, settle, arbitrate, sue or defend. abandon or adjust any claim or demand by or against the Trust or any separate Trust Fund, and to agree to any rescission or modification of any contract or agreement affecting the Trust or any separate Trust Fund; (j) To perform any act authorized, permitted, or required under any instruments relating to or forming a part of the Trust Estate whether in the nature of an approval, consent, demand, or notice thereunder or otherwise, unless such act would require the consent of the Power Agency in accordance with the express provisions of this Agreement; (k) To make.contracte and to execute instruments, under. seal: or otherwise, as may be necessary in the exercise of the. powers herein granted; (1) .To pay taxes, assessments, compensation of the Trustee and other expenses incurred in the collection, care, administration and protection of.the Trust Estate; (m) To determine, irrespective of statute or rule of law, what items shall be fairly and equitably charged or credited to income and what items to principal, and to so allocate or apportion receipts and expenditures, regardless of whether such items are charged as credited. to income and principal as provided in Chapter 37 of the General Statutes of North Carolina. e ! I
_ givent if l delivered by hand or when mailed by : registered ' or it certifled mail, return receipt requested, postage prepaid,.to the h parties hereto as follows: l If to the Power Acency:
. North Carolina Municipal Power Agency No. 1 1427 Meadowwood Boulevard i Post Office ~ Box 29513 L .Raleigh, North Carolina 27626-0513 Attention: General Manager l-If to the Trustee:
l . . l Wachovia Bank & Trust company,'N.A. First Wachovia Employee Benefit Services t 301 North Main Street Winston-Salem, North Carolina 27510 ! or at such other address or addresses, or to the attention of such other person or persons, as the Power Agency or the Trustees may hereafter notify the other party in accordance herewith. ' 10.5 Fiscal-Year. .The fiscal year of the Trust shall and on.
, December 31 of each year.
10.6 Successors and Assiqrns. This Agreement shall be binding upon and inure to the benefit of the Power Agency, the Trustee, and . their respective successors and assigns.
\
10.7 cc aterparts. This Agreement may be executed in any ' number of counterparts, each of which shall be an. original, but. 'i such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the Power Agency and the Trustee have each
' hereunto caused their respective corporate names and seals to be p i
- affixed and this Agreement to be executed and delivered by and .
j' l l o \
.~, ,. . . . . . .. . .. . .- .-. .- - -. - - . . . -
3 7 SCHEDULE A. r mi
$ . CATAWBA UNIT NO. 1 DECOMMISSIONING TRUST FUND I
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-i NORTH CAROLINA MUNICIPAL POWER WACHOVIA BANK & TRUST COMPANY AGENCY NUMBER.'1 By: By:
Chairman Senior Vice President O l b .- . -
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1 It Appendix D ,
., 1 l
"' 1 A copy of Resolution R-7-90 of Power-Agency's l Board of Commissioners-(adopted June 20,- . l 1990).
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R-7-90 RESOLUTION OF THE BOARD OF COMMISSIONERS OF
' NORTH CAROLINA' MUNICIPAL POWER AGENCY NUMBER 1
' AUTHORIZING THE FILING OF A FINANCIAL ASSURANCE-PLAN FOR THE DECOMMISSIONING OF THE CATAWBA NUCLEAR STATION, APPROVING A FORM OF DECOMMISSIONING TRUST AGREEMENT AND APPOINTING A TRUSTEE THEREUNDER North Carolina Municipal Power - Agency Number 1 (" Power Agency") is the owner of a seventy-five percent (75%) undivided ownership-interest-in a nuclear powered electric generating: unit and associated facilities known'as Catawba Unit No. 2; and WHEREAS, pursuant to the Restated Operating and Fuel Agreement between Power Agency and Duke Power Company dated as~of June 21, 1982, Power Agency is obligated to pay thirty-seven and one-half
. percent (37.5%) of the costs of operations, maintenance, fueling, capital' additions, and decommissioning of the Catawba Nuclear
' Station, which consists of Catawba Unit No. 1, Catawba Unit'No. 2 and certain common-facilities; and WHEREAS, the generating unit and associated facilities in
, which Power Agency has undivided ownership interests are subject to the jurisdiction of the United States Nuclear Regulatory Commission
.(the "NRC"), an agency of the United States Government; and WHEREAS, pursuant to - the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, the NRC has promulgated regulations in Title 10, Chapter 1 of the Code of Federal Regulations, Part 50 (the " Regulations") , which require that a holder of, or an applicant for, a license to operate a nuclear power plant provide certain financial assurance that funds will be available when needed for required decommissioning costs and activities; and
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- 6. Wachovia Bank & Trust Company, N. A. ,- is hereby appointed Trustee under and in accordance with the terms of .the Decommissioning Trust Agreement.
- 7. A copy of the financial assurance plan and the Decommissioning Trust Agreement shall be filed with the minutes of the meeting..
- 8. This Resolution shall become ef fective upon its adoption.
Adopted this m day of June , 1990. O : mm_..m_.-.__-_.mm. m_ .-._-___m__m._mm_cs.-__m.__m---.u--.______.m_. t.-----
,{'--
Appendix E Opinion of Poyner & Spruill,. counsel to Power-Agency ~, concerning.the Decommissioning' Trust Funds. O 4 O , 1
I ' ' 3!- v.iii Q-w POYNER & SPRUILL -l
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ATTORNEYS AT LAW
- , FRANKLIN AT WESTERN
'? POST OFFICC BOK 353 I ROCKY MOUNT NC 27808 0353 >d
-(919) 446-2341 l
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June 29, 1990 ; Board of Commissioners ;
,A North Carolina Municipal *
*() Power Agency Number 1 Post Office Box 29513
} '
Ir .Ralci.gh, North Carolina 27626-0513
-Re: North Carolina Municipal Power Agency Number 1 Decommissioning Trust Agreement' a
Gentlemen: We have examined a copy of the Decommissioning Trust Agreement -l
-(the " Agreement") of'the North Carolina Municipal Power Agency Number 1- (the " Power Agency") . that is to be used to establish 'an 1 external trust fund as required by Title 10, Chapter 1 of.the-Code -
of Federal Regulations, Part 50, to provide for.thr payment ~of a
-portion'of Decommissioning Costs of the Power Agency as defined in and pursuant'to the1 Agreement. We have.also examined such other related matters of North Carolina and federal law as we have deemed i
. necessary to render our opinion . herein. Capitalized; terms'used herein-have-the same meaning as in the Agreement.
Based upon the provisions of currently existing North Carolina and federal law, we are of the opinion that:
- 1. A creditor of the Trustee should not be able to reach the assets comprising the Trust Estate to apply toward or to satisfy. .
any independent liability of the Trustee not connected with and not' -t 3
.A : arising from the administration of the Trust and the duties of the Trustee thereunder; i
POYNER & SPRUILL 9 Page 2 June 29, 1990
- 2. A creditor of a third party who is entitled to be paid from the Trust Estate for services rendered or labor performed in connection with Decommissioning Costs should not be able to reach the assets comprising the Trust Estate to apply toward or to satisfy any liability of such third party to such creditor except to the same extent, and subject tc ine same limitations, that such third party would be entitled to payment from the Trust Estate; and
- 3. A creditor of the Power Agency should not be able to reach the assets comprising the Trust Estate to apply toward or to satisfy any liabili'.y of Pcwe'_ Agency to such creditor except to the same extent, and subject to the same limitations, that the Power Agency is entitled to withdraw assets from the Trust Cstste for its own benefit or upon a reversion of the Trust Estate to Power Agency as provided in and pursuant to the terms of the Agreement.
In rendering the opinic:is expressed above, we have assumed that the Power Agency will be solvent immediately prior to the making of any transfer or c.ontribution to the Trust and will not be rendered insolvent by :he making of any such transfer or contribution. We have also assumed that the making of any such transfer or contribution to the Trust will not constitute a fraudulent conveyance under North Carolina or federal law. We are admitted to practice only in the State of North Carolina. We express no opininn as to matters under er involving the law of any jurisdiction other than tne laws of the United States and the State of North Carolina. Very truly yours, r-- ! SLC/jws 140lll\0WE\SLC00101.LI'r 9
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/ Appendix F
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-i l Schedule of Deposits to the Decommissioning
- Trust Funde, i l 2 I . t n f 2 k f 5 4 5 1 l L
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v ; File: EN1FeS WORTM CAsellen lefulCIPet, pqREe AEfeCT menEn 1 Sete: 21 h 99 plek: FMT1e Projected iggeretion of Entervet eccesseiestening Ftrafe flee: 10:es det Bech: EF-5158-PG4 AA Coteste aucteer stetten user: Jme (Sete) Case: GRC Winienee to Enternet Ftrus Catanes t>tt ? Cetente imit 2 Erafig Ensig . Arousel Interest Fasuf Assuset Interest Ftruf neceauptions Teer severusse [1] Earnings setence sevenues til Earninge telence escesueleelentne: 10,159 (21 1998 10,M3 (23 amit 1 1991 1,23B 752 12,933 1,23B M1 12,998 Cast Estleete (amt seinime)(13 S13T 348 1992 1,2B B1 15,052 1,233 82T 14,43 Teer of Estlante b 1993 1,238 1,019 - 17,389 1,238 961 1,1M M,363 18,795 eperettme Licence Evtretion 12/4/20M 1994 1,238 ' 1,165 19,713 1,2M Projected Cost e6M ,46T 1995 1,23B 1,322 22,273 1,23B 1,36 21,199 mesney mere of (>ist (3T.5X) S239,500 1996 1,23B 1,40B 24,999 1,23B 1,41e 23.0% 199T 1,233 1,605 27,9e3 1,233 1,591 26.485 Imit 2 1995 1,23B 1,0% 38,995 1,23B 1,TF5 29,688 Cost E;tlerete (Ent stinteese)(1) S13T 348 1999 1,23B 2,055 34,2 5 1,2M 1,9 71 32,99T Teer of Estleete b 2000 1,23B 2,2e9 3T,796 1,2M 2,1M 2,481 36,325 39,964 epareting Licence Empiretien 2/24/2926 2001 1,23B 2,49T 41,531 1,2M Pr2jected Cost 9672,321 2082 1,2M 2,748 45,549 1,2M 2,638 43,841 mesney spiere of Cost (37.5X) S252,128 2es3 1,23B 2,998 49,746 1,238 2.889 47,989 Re4 1,23B 3,2F4 M ,258 1,23B 3,158 52,365 estes: Re5 1,23B 3,56T 59,963 1,23B 3,444 57,948 sersamleelenine Cost Escotetten 4.58B 2006 1,23B 3,BM 64,181 1,23B 3,748 62,935 Imerest Earnings 4.5eE 208T 1,233 4,212 49,631 1,233 4,OT2 67,345 2em 1,233 4,5(4 75,4M 1,238 4,418 73,001 til E.tlante Deses en um..W TK-~ acep 1,2B 4,944 et,61e 1.2M 4,755 M,825 1986 dettere, eccetated to 1990 2010 1,23B 5,345 M ,292 1,23B 5,177 85,448 turside. 2011 1,23B 5,TF3 95,213 1,2M 5,594 92,2T3 2012 1,2M 6.229 102.881 1,23B 6,833 99,549 2013 1,23B 6,TM 110,634 1,238 6,511 107,298 20 % 1,23B 7,231 119,105 1,23B T,915 115,551 2015 1,2B T,782 128,1M 1,2M 7,551 1M,341 2C4 1,238 8,388 137,738 1,2M 8,122 133 Mt 201T 1,238 8,993 .MT,961 1,23B 8,731 M3,6M 2018 1,238 9.458 158,853 1,238 9,375 154,200 2019 1,23B 10,366 1M,442 1,238 18,899 185,595 2920 1,238 11,128 182,821 1,238 19,804 1TT,63T 2021 1,233 11,924 195,983 1,23B 11.58T 19s,462 2022 1,23B 12,TM ' 210,950 1,238 12,42e 204.121 2e23 1,238 13,890 224,929 1,238 13,308 218,66T 2024 1,135 (31 13,436 239,500 1,238 %,2% 234,159 2025 e e 1,238 15,261 250,658 2026 e e 193 143 1,358 752,120 totots 47,981 186,556 43,446 196,514 [U Arouset rewevuseo collected ,n eqpset senthly amenetts. 121 trenefer frase inteniet fisui ef fective 12/31/99. (3) Eleven senttis. [4] One mantle.
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l UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Report and Certification Concerning Financial Assurance i i for Nuclear Decommissioning Costs submitted _by Q Jmont Municipal Power Agency
. (Catawba Units 1 and 2)
Pursuant to 10 C.F.R. Sections 50.33(k)(1) and 50.75(b), ' Piedmont Municipal Power Agency (" Agency") hereby submits its Report and Certification concerning financial assurance for nuclear decommissioning costs of the Catawba Nuclear Station (Facility Licenses Nos. NPF-35 and NPF-52). This Report and Certification describes the Agency's responsibility for J'~'g . Jecommissioning costs and sets forth the method selected by the
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Agency, pursuant to the Commission's Regulations, of providing financial assurance for decommissioning. A. Agency's Costs Responsibility for Decommissioning The Agency is a public body and body corporate and politic organized under the laws of the State of South Carolina for the , purpose, among other things, of acquiring, owning and operating facilities for the generation and transmission of electric power and energy. The Agency is the all requirements bulk power supplier to 10 cities and towns in South Carolina which have j entered into Project Power Sales Agreements and Supplemental L Power Sales Agreements with the Agency. The Agency acquired a 25% undivided ownership interest in Unit No. 2 at the Catawba Nuclear Station pursuant to contracts (O l 1 entered into with Duke Power Company (" Duke") . Other co-owners of the Catawba Nuclear Station are: North Carolina Power Agency
O Number 1 (75% ownership interest in Unit 2): North Carolina Electric Membership Corporation ,(56.25% ownership interest in Unit 1): Sa' uo River Electric Cooperative, Inc. (28.125% ownership int cent .n Unit 1); and Duke (25% ownership interest in Unit 1). The contractual arrangements for joint ownership of the Catawba Nuclear Satalon include a capacity exchange between the two Units which entitles each of the co-owners to a specific portion of the electric power and energy produced by the Station as a whole. In recognition of this exchange arrangement, each co-owner has agreed to hear a corresponding portion of the cost of decommissioning Catawba Unit 1, Catawba Unit 2 and the Catawba Station as a whole. Accordingly, under the terms of an Operation and Fuel Agreement between Duke and the Agency, the Agency is obligated to pay 12.5% of the cost to decommission the entire Catawba Station, or any portion (or Unit) thereof. B. Method of Providing Financial Assurance for Decommis sioning The Agency hereby certifies that financial assurance for its share of the cost of decommissioning Catawba Unit i and Catawba Unit 2 is provided in the amount of $17,167,500 (1990 dollars) for each such Unit. This amount represents the Agency's 12.5% share of the minimum financial ass trance amount of $137,340,000 for each of the Catawba Units. The minimum financial assurance amount for each Catawba Unit is equal to the amount of $105 O- million (January 1986 dollars) per unit set forth in 10 C.F.R. 50.75(c)(1), escalated to January 1, 1990 in accordance with the formula set forth in 10 C.F.R. 50.75(c)(2). The minimum
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I financial assurance amount will be recalculated annua '/. I i The method by which the Agency will provide financial l assurance for its share of the cost of decommissioning the I Catawba Station is the establishment of an external sinking fund. This external sinking fund has been established as a. decommissioning trust fund composed of a Unit 1 account and a j Unit 2 account. The trust fund is established under the terms of a Decommissioning Trust Agreement ef fective as of June 21, 1990 between the Agency and Citizens & Southern National Bank of South Carolina ("C&S"). A copy of the Decommissioning Trust Agreement is attached as Appendix A.- C&S is a national bank having authority to act as trustee, and its trust operations are ; l,s)^
\_,/- regulated by the Office of the Comptroller of the Currency. The i Decommissioning - Trust Agreement was executed on the Agency's behalf by its General Manager. Attached as Appendix B is a copy of the opinion of McNair Law Firm, P.A., counsel to the Agency, to the effect that assets in the Decommissioning Trust Fund should not be subject to claims of creditors of the trustee, the -
Agency or a third party entitled to payment from the Decommissioning Trust Fund, except to the extent that such creditors were entitled to payment from the Decommissioning Trust i Fund. The Agency will make deposits into the Decommissioning Trust Fund at least annually. The first such deposit will be made on t} V or bef ore December 31, 1990. Attached as Appendix C (pages 1 and
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L}i described soove. The assumptions supporting this schedule of deposits are set forth in Appendix D. At least every five years, the Agency will recalculate the schedule of annual deposits to reflect the effects of actual experience and changes in projected values for inflation and fund earnings. PIEDMONT MUNICIPAL POWER AGENCY By: N ! 7 3 Pina6ce Director 1
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' DECOMMISSIONING TRUST AGREEMENT % i, -
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- TABLE OF CONTENTS l \
\v/ PAGE ARTICLE I. TRANSFER AND ACCEPTANCE 1.1 Transfer to Trustee............................ 1 ! 1.2 Acceptance by Trustee.......................... 2 , 1.3 Instruments of Further Assurance.............. 2 ARTICLE II. DEFINITIONS i 2.1 Certain Terms Defined....................-...... 2 2.2 Meaning of Other Terms......................... 5 ARTICLE III. PURPOSE OF TRUST AGREEMENT; ESTABLISHMENT OF SEPARATE ACCOUNTS 3.1 Intent and Purpose of Trust Agreement.......... 5 3.2 Separate Accounts.............................. 6 3.3 Separate Records, No Commingling of Accounts... 6 ARTICLE IV. DISPOSITIVE PROVISIONS 4.1 Payment of Nuclear Decommissioning Costs....... 7 ARTICLE V. GENERAL PROVISIONS RELATING TO THE TRUST [m) (_/ 5.1 Alterations and Amendments..................... 7 5.2 Additions to Trust............................. 8 5.3 Return of Excess Funds......................... 8 5.4 No Transferability of Interest in Any Account..- 8 5.5 No Authority to Conduct Business............... 8 ARTICLE VI. TERMINATION , 6.1 Time of Termination............................ 8 6.2 Distribution of Trust Assets Upon Termination.. 9 6.3 Certification by Agency........................ 9 6.4 Continuation of Trust For Winding Up........... 9 ARTICLE VII. GENERAL PROVISIONS RELATED TO THE TRUSTEE 7.1 Management of Trust Property................... 10 7.2 Compensation of Trustee........................ 10 7.3 Payment of Expenses of Administration.......... 10 7.4 Accounts and Reports........................... 10 7.5 Financial Statements; Annual Audit............. 10 7.6 Tax Information Returns and Other Reports...... 11 7.7 Transactions with Third Parties................ 11 7.8 Removal of Trustee............................. 11 7.9 Resignation of Trustee......................... 12 je~ 7.10 Appointment of Successor Trustee............... 12 e (-
7.11 Acceptance of Appointment by Successor Trustee. 7.12 Successor Trustee.............................. 12 7.13 Reliance on Statement by Trustee............... 12 7.14 Future Orders....... .......................... 12 7.15 Certain Duties and Responsibilities of the Trustee...................................... 13 7.16 Certain Rights of Trustee...................... 13 ARTICLE VIII. LIMITATIONS ON AND DIRECTIONS TO TRUSTEE AS TO INVESTMENTS 8.1 Investment by Direction of Agt ney. . . . . . . . . . . . . . 14 8.2 Limitations on Investments..................... 14 8.3 Certain Duties of Trustee as to Agency-Directed Investments......................... 14 8.4 Appointment of Investment Manager.............. 15 ARTICLE IX. TRUSTEE'S POWERS 9.1 Powers of the Trustee.......................... 16 ARTICLE X. CONTINGENT REVOCABILITY 10.1 Revocation of Trust............................ '17 ARTICLE XI. MISCELLANEOUS PROVISIONS 11.1 Headings....................................... 18
; 11.2 Severability................................... 18 11.3 Governing Law.................................. 18 11.4 Notices........................................ 18 11.5 Fiscal Year.................................... 19 11.6 Successors and Assigns......................... 19 11.7 Counterparts........ .......................... 19 i
I I DECOMMISSIONING TRUST AGREEMENT N THIS TRUST AGREEMENT (" Agreement") made and entered into c'j l ,' as of the 21st day of June,1990, by and between Piedmont Municipal Power Agency, a public body and body corporate and politic organized and existing under and by virtue of the laws of the State of South Carolina ("the Agency") , as Grantor, and Citizens and Southern National Bank of South Carolina, a national banking association having trust powers with its principal office located in South Carolina (the " Trustee"), as Trustee. H I I E E E E E I H: WHEREAS, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, the United States Nuclear Regulatory Commission (the "NRC") has promulgated regulations -in Title 10, Chapter 1 of the Code of . Federal Regulations, Part 50, which require that a holder of, or an applicant for, a license to operate a nuclear power plant provide certain financial assurance that funds will be available when needed for required decommissioning costs and activities; and WHEREAS, the Agency, in order to comply with the foregoing regulations, and in order to provide funds for its pro rata share of the future decommissioning costs of the radioactive portions of the plants hereinafter described, desires to establish this trust and to place funds hereunder to provide financial assurance for such future decommissioning costs; and p l WHEREAS, the Agency has selected the Trustee to act as the Trustee hereunder; and l: WHEREAS, the Trustee is willing to act and serve as Trustee hereunder. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Agency hereby agrees to convey, and the Trustee hereby agrees to accept, all that property specifically set forth and described =in Schedules A and B hereto, to have and to hold the same in trust, nevertheless, for the uses and purposes and subject to the terms, provisions, conditions and , powers hereinafter set forth. ARTICLE I TRANSFER AND ACCEPTANCE 1.1 Transfer to Trustee. The Agency hereby grants, releases, assigns, transfers, conveys and delivers unto the Trustee all of that. property specifically set forth and described in Schedules A and B hereto, which Schedules bear the signature of the Agency and the Trustee, to have and to hold the same in trust for the uses and purposes and subject to the terms, provisions, conditions and powers hereinafter set forth. O J
f , 1.2 Acceetance by Trustee. The Trustee hereby acknowledges receipt of all that property described in and on Schedules A and B hereto, all of said proporty being sometimes
. . hereinafter referred to as the " Trust Estate" or " Trust Property,"
and the Trustee hereby agrees to hold, manage and distribute the same as from time to time constituted, upon the terms, provisions and conditions hereinafter set out. 1.3 Instruments of Further Assurancq. The Agen:y will, upon reasonable request of the Trustee, execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or proper to transfer anv of the property intended to be covered hereby and to vest the Trust Estate in the Trustee, its successors and assigns. ARTICLE Il DEFINITIONS 2.1 Certain Terms Defined. For all pu'. poses of this Agreement, unless the context otherwise requires, the following terms shall have the following meanings: (a) " Account" shall mean either one of the separate accounts established hereunder, and " Accounts" shall mean both of the accounts established hereunder, collectively. (b) "Acreement" or " Trust Aareement" shall mean and include this Agreement as it may from time to time be amended, modified or supplemented. (c) "Acenev" shall mean the Piedmont Municipal Power Agency, a public body and body corporate and politic organized and existing under and by virtue of the laws of the State of South Carolina, and its successors or assigns. (d) " Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time. (e) "Decommissionina costs" shall mean the expenses incurred or to be incurred in the future by the Agency in decommissioning the radioactive portions of the Plants. (f) " Disbursement certificate" shall mean a document properly completed and executed by an authorized representative of the Agency and delivered to the Trustee, certifying that the amounts shown therein to be paid are Qualified costs incurred hereunder. (g) " Duke" shall mean Duke Power Company, its successors or assigns.
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i. i s l (h) " Future Orders" shall mean any orders of the NRC or
, any federal or state agency having jurisdiction over the Agency and
) the Plants, or any federal or state laws adopted in connection with
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- the retention, investment and utilization of funds for the costs of i
-decommissioning any of the plants, which are applicable to the Agency.
(i) " Government oblications" shall mean any of the following, if and to the extent that the same are at the time legal - for the investment of funds of the Agency: (i) Direct obligations of, -or obligations the principal of and interest on which are unconditionally ; guaranteed by, the United States of America; (ii) Bonds, debentures, notes, participation ; certificates or other evidences of indebtedness issued, or the principal of and interest on which are -; unconditionally guaranteed, by the Bank for Cooperatives, the Federal Intermediate Credit Bank, the Federal Home Loan Bank System, the Export-Import Bank of the United States, the Federal Financing Bank, the Federal- Land Banks, the Federal National Mortgage Asr.ociation, the United States Postal Service or any othar agency or instrumentality of, or corporation wholly owned by, the-United States of America;
,s (iii) New Housing Authority Bonds or Project Notes >
\ issued by public agencies or municipalities and fully i . ld secured as to the pay.nent of both principal and interest by a pledge of annual contributions to be paid.by the United States of America or any agency thereof; and j '
(iv) Direct and general obligations, to the payment of which the full faith and credit of the issuer is pledged, of the State of' South Carolina or any political ' subdivision thereof that at the time of investment are assigned by any nationally recognized bond rating agency a rating that denotes investment characteristics at least equal to the investment characteristics of a security presently rated by either Moody's Investors Service, Inc. or Standard & Poor's Corporation as "A"; provided, however, that in no event shall the term " Government obligations" include any obligation of or security issued by the Agency or by any member or affiliate of the Agency. (j) " Investment Manacer" shall mean any fiduciary or fiduciaries designated as an Investment Manager hereunder by the Agency. A 3
i i t (k) "Investrent Securities" shall mean any of the
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following, if and to the extent that the same are at the time lecal " (s_/ ) for the investment of funds of the Agency: ; (i) Government Obligations; (ii) Bank time deposits, evidenced by certificates of deposit and bankers' acceptances issued by any bank, trust company or national banking association whose principal place of business is in the State of South Carolina, provided that the bank time deposits and bankers' acceptances issued by anv bank, trust company or banking association and owned by the Agency do not exceed at any one time 50% of the cepital stock, surplus and undivided profits of such bank, trust company or banking association, and provided f.urthe r , that such capital stock, surplus and undivided profits shall not be less than $20,000,000; , (iii)' Bank time deposits, evidenced by certificates of deposit, and bankers' acceptances issued by any bank, trust company or national banking association that is a member of the Federal Reserve System and authorized to do business in any state of the United States of America, provided that the bank time deposits and bankers' . acceptance issued by any bank, trust company or banking " association and owned by the Agency do not exceed 25% of the capital stock, surplus and undivided profits of such 7,) x' bank, trust company or banking association, and provided _ further that such capital stock, surplus and undivided profits shall not be less than $50,000,000; and 1 i (iv) Any repurchase agreement with any bank, savings and loan association, credit union or trust company organized under the laws of any state of the United l States of America or any national b,anking association or ~
. government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal-Reserve Bank of New York, which agreement is secured by Government Obligations; t
L provided, however that in no event shall the term " Investment-Securities" include any obligation of or security issued by Duke or the Agency or any member or affiliate of Duke or the Agency.- (1) " ERG" shall mean the United States Nuclear Regulatory Commission, an agency of the United States Government, and its successors and assigns. (m) "Elfult" shall mean each, and " Plants" shall mean both of the nuclear power plants described in Section 3.2 hereof. p 4 t,
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(n) " Qualified _ Costs" shall mean costs incurred,
, directly or indirectly, from time to time by the Agency in the ,
'w','i decommissioning of the radioactive portions of a Plant or Plants including Decommissioning costs and the costs of studies to determine Decommissioning Costs.
(o) " Trust" shall mean the Trust created and established (p) " Trustee" shall mean Citizens and Southern National Bank of South Carolina, the original trustee named herein, and ~ its successors and assigns, which shall be deemed to include any bank . or trust company into which it may hereafter be merged or consolidated. Trustee shall a.. s o mean any successor Trustee - subsequently appointed under the provisions of this Agreement. (q) " Trust Estate" or " Trust Procerty" shall mean all of the property held from time to time by the Trustee under this Agreement. (r) " Withdrawal Certificate" shall mean a document properly completed and executed by an authorized representative of the Agency and delivered to the Trustee, certifying that the amounts shown therein have been paid by the Agency as Qualified Costs hereunder. 2.2 Meanina of Other Terms. Except when the context , otherwise requires, words importing the singular number shall (_) include the plural number and vice versa, and words importing
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persons shall include firms, associations and corporations. All references herein to Articles, Sections and other ' subdivisions refer to the corresponding Articles, Sections and other subdivisions of this Agreement; and the words "herein," " hereof,"
"hereby," " hereunder" and words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. .
ARTIqJ III PURPOSE OF TRUST AGREEMENT; E PABLISHMENT OF SEPARATE ACCOUNTS 1' 3.1 Intent and Purcose of Trust Aareement. The Agency's intent in establishing the Trust is (i) to provide the Agency's pro rata share of funds for contemplated future Decommissioning costs associated with the radioactive portions of the Plants, and (ii) to l- comply with the applicable NRC regulations and any future l regulations or orders by or from any federal or state agency or any court of competent jurisdiction to which the Agency is subject with respect to such decommissioning. Therefore, the Agency intends that the Trust continue until such-time as all of the Agency's decommissioning obligations, requirements or costs with respect to the Plants are satisfied, as determined by the Agency, or until 0 (D V
I cuch' timo oc tho NRC or other then appropriate jurisdiction- over the Agency determines that such decommissioninentity g h i
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obligations, requirements Trust is no longer required. or costs have been satisfied and that the V Toward those ends, the purpose of this Trust to related Agreement the is to provide funds to pay for Qualified Costs Agency's obligations i in connection regulations with respectdecommissioning the Plants, and towith comply wit to such decommissioning, and the Trust Property and all net income therefrom shall be held and distributed for such purposes only, and for no other uses or purposes, and upon termination used, as hereinafter provided, all Trust Property not so if any, snc?I be returned to the Agency. 3.2 Seoarate Accounts. separate Accounts hereunder, oneThe Trustee for each shall establish two Plant described, each such Account to be known as follows:as hereinafter (a) The " Nuclear Reactor Account" Unit One Decommissioning the " Unit one Account") which is being established for
, the purpos(e of providing 12.5% of the funds for decomm radioactive Nuclear portions Station (" UnitofOne"'
the Plant known as Unit One, Catawba portions of the nuclear power, which consists facilities of the identified andradioactive described expires December 6,in 2024. License Number NPF-35 issued by the NRC, whic Account-is described on Schedule A hereto.The initial contributio (b) The " Nuclear Reactor Unit 1 Two Decommissioning
, Account" the purpose (the of " Unit.Two providing Account") which is being established for 12.5%
1 '(d ) decommissioning Two, Catawba Nuclear the radioactive Station of the funds required portions of the Plant known as Unit for ! (" Unit Two"), which consists of the described in License Number NPF-52 issued by the NR L currently expires February 24, 2026. the Unit Two Account is described on Schedule,B hereto.The initial contribution The Agency owns a 25% undivided interest in Unit Two and owns no interest in Unit One: however, pursuant between the Agency and Duke, which owns no interest in Unit Two andto an agreem owns a 25% undivided interest in Unit One, the Agency and Duke have agreed that the Agency shall be responsible for providing 12.5% of the each funds of thereuired units.for decommissioning the radioactive portions of . 3.3 Secarate Records, No Comminalina of Accounts. initial contribution by the Agency to each of the AccountsThe is described on Schedules A and B hereto. The Trustee separate records for each Account and shall creditshall maintain thereto the income of the Account and
~ Account and any losses of the Account. charge thereto all expenses of the The Trustee shall at all 6
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i times keep the assets of each Account segregated from the assets of the other Account and shall never commingle such assets.
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ARTICLE IV DISPOSITIVE PROVISIONS
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4.1 Pavnent of Nuclear Decommissionina Costs. The Trustee ~shall make payments of Qualified Costs in accordance with the following procedures: . (a) Disbursements to Third Par Qqs. The Trustee shall make payments of Qualified Costs to any person (other than the Agency) for goods provided or labor or other services rendered to the Agency in connection with the decommissioning of a Plant on the date specified in a Disbursement certificate. (b) Reimbursement to the Acency. The Trustee shall make payments to the Agency in reimbursement of Qualified Costs actually incurred by the Agency, and paid to any other person, on tne date specified in'a Withdrawal Certificate from the Agency. The Trustee shall be under no duty to inquire into the correctness or accuracy of matters contained in any properly executed Disbursement Certificate or Withdrawal Certificate. , ARTICLE V GENERAL PROVISIONS RELATING TO THE TRUST l
,o 5.1 Alterations and Amendments. The Agency and the ! I Trustee understand and agree that modifications or amendments may
) V be required to thid Agreement from time to time to effectuate the l purposes of this Agreement and to comply with amendments to or changes in NRC rules and regulations, any Future Orders and any other changes in the laws applicable to the Agency, the Plants or the Trust. One of the purposes of this Agreement is to comply with applicable NRC regulations, and the Agency expressly reserves the right to amend and modify this Trust. Agreement to conform as necessary or appropriate to any rulings or requests of the NRC applicable hereto. The Agency and the Trustee may amend this Agreement to the extent necessary or desirable to effectuate such purpose or to comply with such Future Orders or changes;'provided, , however, the Trustee may decline to adopt any such amendment, if ' such amendment materially increases the expenses or responsibility of the Trustee and no adequate provision is made to compensate the Trustee for such increase, or if the Trustee would be unable, with reasonable effort, to comply with its duties hereunder as so amended. This Agreement also may be modified or amended to effectuate the handling of investments and administrative reports and details. Any modification or amendment to this Agreement shall be by an instrument in writing signed by the Agency and the ! Trustee. The Trustee shall have no duty to inquire or make any investigations as to whether any proposed amendment is consistent Q ,/ l L
i with this Section, however, the Agency shall furnish the Trustee, if it so requires, evidence that all necessary approvals to such amendment have been obtained. 5.2 Additions to Trust. From time to time prior to the termination of the Trust hereunder, the Agency may make, and the Trustee shall accept, additional contributions of funds to the Accounts. The making of such a contribution by the Agency shall constitute the certification of the Agency that all necessary consents and approvals to such contribution, if any are required, have been obtained. 5.3 Peturn of Exce ss Funds. From time to time prior to the termination of this Trusu Agreement, the Agency may determine that the funds in an Account exceed the amount required for the Decommissioning costs of tne related Plant. Upon de)ivery of-a written certification of the Agency to the Trustee stat.ng that an amount in an Account is not needed to pay the Decommissioning Costs of the related Plant, specifying the amount and the Account or Accounts involved, and requesting payment of such excess amount, the Trustee shall distribute such excess amount to the Agency. The delivery of such a certificate by the Agency shall constitute the certification of the Agency that all necessary orders, consents and approvals to such distribution have been obtained. 5.4 No Transferability of Interest in Any Account. The interest of the Agency in any Account hereunder is not transferable, whether voluntarily or involuntarily, by the Agency, nor subject to the claims of general or secured creditors of the O.- L Agency; provided, however, that any creditor of the Agency as to which a Disbursement Certificate for an Account-has been properly completed and submitted to the Trustee may assert a claim directly against such ltecount in an amount not to exceed either the amount specified in such Disbursement certificate or the amount of such Account then available to pay Decommissioning Costs. 5.5 No Authority to Conduct Busin*ess. The purpose of this Trust Agreement is limited to the matters set forth herein and this Agreement shall not be construed to confer upon the Trustee any authority to conduct business. ARTICLE VI TERMINATION 6.1 Time of Te rminat ion. Each separate Account hereunder shall continue until terminated upon the first to occur of the following events: (a) Upon the substantial completion of the nuclear decommissioning of the radioactive portions of a Plant for which that Account was established hereunder, as evidenced by a written 8 I
L.. . certification of such substantial completion executed by the Agency ( 7 , and delivered to the Trustee.
! I v' (b) Upon transfer by the Agency of its obligations in connection with decommissioning a plant for which an Account was established hereunder, as evidenced by a written certification of such transfer executed by the Agency and delivered to the Trustee.
(c) Upon an applicable rule or order of the NRC or other federal or state agency of competent jurisdiction, or a final decision of any court of competent jurisdiction, that an Account for a Plant for which an Account was established hereunder is no longer required, but in such event only upon notification by the Agency to the Trustee that.the Agency desires to terminate such Account. (d) Upon the distribution for the purposes of such Account as provided herein of all or substantially all of the assets and property then held by the Trustee in an Account established hereunder. The termination of any separate Account hereunder shall not affect nor cause the termination of this Trust Agreement. This
- Trust Agreement shall terminate when both of the Accounts hereunder have terminated and all assets held by the Trustee hereunder have been dis'iributed.
73 6.2 Distribution of Trust Assets Uoon Termination. Upon i } termination of each separate Account hereunder, the Trustee shall l V distribute the entire remaining amount of and all assets then held l by it in such Account, if any, including all accrued, accumulated and undistributed net income, to the Agency, er as the Agency may direct. 6.3 Certification by Acenev. Any certification by the Agency to the Trustee hereunder shall direct the Trustee under which of the subparagraphs of Section 6.1 a termination has or is about to take place, shall request the Trustee to make a termination distribution hereunder and shall direct the Trustee as to the delivery of any property to be distributed; it being understood and agreed by the Agency that the Trustee shall be under no duty or obligation to inquire into or determine when and if a termination has occurred hereunder and that the Trustee shall make I any termination distribution only in reliance upon the Agency's certification. 6.4 Continuation of Trust For Windine Uo. After the termination of any separate Account or of both of the Accounts, and for the purpose of liquidating and winding up its affairs, the Trustee shall continue to act as such until its duties have been I fully performed Upon the distribution of all of the Trust Estate for the purposes of the Trust created hereunder or to the Agency, O 9 b
Cnd tho pnym:nt obligations and dicchcrgo of all debts, of the Trust, or obligations hereunder. the Trustee shall have noliabilities and furcher duties [
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/ ARTICLE VII GENERAL PROVISIONS RELATED TO THE TRUSTEE 7.1 Manacement of Trust Property.
and undertakes upon the terms, to discharge provisions andtheconditions Trust created by this AgreementThe T hereof. The Trustee shall hold, manage, invest and reinvest the Trust Property as provided net incomeherein and shall accumulate in each separate Account, all after payment of expenses and other disbursements as ' herein of prov,ided the Account from the Account and add the same annually. to the 7.2 Compensation of Trustee. 1 as its compensation for its services hereunder those amounts setThe out and agreed to in a letter of even date herewith from the Trustee to the Agency signed by the parties hereto. Such compensation may be adjusted from time to time in the future such the amounts as may be agreed upon in writing by the Trustee in Agency. and 7.3 Payment of Excenses of Administration. of a Disbursement certificate the Trustee shall be authorized toUpon re make payments from the Trust Estate of all administrative costs reasonably incurred by it in the performance of its duties under this Agreement legal, accounting including, but not and actuarial limited to, Trustee's fees, expenses, L (' brokerage fees and commissions, expenses reasonable incurred by the out-of-pocket expenses and other incidental ' Trustee in connection with the administration of the Trust established hereunder. also authorized to make payments from the TrustThe administrative costs Trustee Estate is of all including, but not 11aited incurredto, by orMeon behalf of the Agency accountants, actuaries fees and expenses of consultants, attorneys, Investment Managers and other advisors a,nd agents, general administrative fees and costs and any be appropriate for other fees and expenses determined by the Agency to payment from the Trusts, upon written request from the written Agency, or to reimburse th2 Agency therefor upon its request. ' 7.4 Accounts and Recorts. The Trustee shall keep accurate and detailed records and accounts of all investments, receipts and disbursements and other transactions hereunder and all accounts, inspectionbooks and records and audit at all relating thereto shall be open to designated by the Agency. reasonable times by any person 7.5 Financial Statements; Annual Audit. The Trustee shall furnish monthly financial statements for each Account to the 10 .
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l t-Agency not later than the tenth business day of the following month. The financial statements shall show the financial condition ("i of the Account, including without limitation, the market value of i") the assets, and the receipts, income, expenses, disbursements and other transactions of the Account for the period since the preceding statement. The financial statements of the entire Trust shall be audited annually by the independent certified public accountants then employed by the Agency or by other independent certified public accountants selected by the Agency for such purposes, and the Trustee agrees to make available and furnish such information as may be required for such audit and to cooperate fully therein. 7.6 Tax Information Returns and Other Reoorts. The-Agency represents to the Trustee that it believes the Trust created hereunder is exempt from taxes under current law and regulations. ' However, the Trustee agrees to prepare or cause to be prepared such I income or other tax information returns and reports as may be required from time to time, and shall provide copies thereof to the Agency for review in advance of their filing. Upon request of the Agency, the Trustee shall provide to the Agency all statements, documents, lists or other information used by the Trustee in 1 connection with the preparation of such returns. The Trustee sball i also sign all such information returns which may be required and file them or cause them to be filed with the appropriate government agencies. The Trustee shall cooperate with all- requests made by regulatory agencies and shall provide copies to the Agency in advance of all information submitted to regulatory agencies. At , r~T the Agency's request, the Trustee shall testify with respect to the l
!] Trust and the Accounts in proceedings before regulatory agencies.
7.7 Transactions with Third Parties. No person or organization dealing with the Trustee hereunder shall be required to inquire into or to investigate its authority for entering into any transaction or to see to the application of the proceeds of any such transaction. 7.8 Removal of Trustee. The Agency may at any time remove the Trustee then serving and appoint a qualified successor Trustee by instrument in writing signed by the Agency and delivered to the then serving Trustee, which instrument shall designate and appoint the successor Trustee and which shall be effective no later than 90 days from the date thereof or upon such shorter notice as l may be designated by the Agency to the Trustee, provided that the i successor Trustee has signified its acceptance of such appointment by instrument in writing delivered to the Agency and the - then serving Trustee. Any Trustee so removed shall promptly deliver all property then held by it hereunder to the successor Trustee so appointed and shall thereafter be relieved of any further duties and obligations hereunder. ! 11 V i
7.9 Resicnation of Trustee. Any Trustee then serving hereunder may at any time resign upon 90 days' notice, or upon such shorter notice as may be acceptable to the Agency, by an instrument in writing, signed by it and delivered to the Agency, and such resignation shall become effective upon the appointment of the qualified successor Trustee by the Agency as provided herein. 7.10 Aeoointment of Successor.. Trustee. In the event the Trustee should resign, then the Agency shall appoint a successor Trustee, by instrument in writing, signed by it, and delivered to s7h successor and to the Trustee. Should the Agency f ail or refuse within 90 days so to appoint such successor, then such successor may be appoiraed by order of any court of competent jurisdiction, upon applicatien of the Agency, or the then serving Trustee or of any other person interested in the Trust. 7.11 Acceptance of Accointment by Successor Trustee. Any successor Trustee appointed hereunder shall execute an instrument accepting such appointment hereunder and shall deliver one counterpart thereof to the Agency and, in case of a resignation or removal, one to the retiring Trustee. Thereupon such successor Trustee shall, without any further act, become vested with all the estates, properties, rights, powers, trusts and duties of its predecessor in the Trust hereunder with like effect as if originally named Trustee herein; but the retiring Trustee shall nevertheless, when requested in writing by the successor Trustee or the Agency, and upon payment of lawful charges and disbursements then unpaid, if any, execute and deliver an appropriate instrument or instruments conveying and transferring to such successor Trustee upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by it hereunder. 7.12 Successor Trustee. No successor Trustee shall be required to inquire into or audit- the acts or doings of any predecessor Trustee or to make any claims ag'ainst any predecessor Trustee, and any successor Trustee shall have and may exercise any and all of the powers, privileges, immunities and exemptions herein conferred upon the original Trustee as fully and to the same extent as if such successor originally had been named as a Trustee hereunder. 7.13 Reliance on Statement by Trustee. Any person dealing with the Trustee shall be fully protected in relying upon the Trustee's certificate that it has authority to take any action
.under this Trust Agreement.
7.14 Future Orders. The Agency shall promptly advise the Trustee in writing of the existence of any Future Orders having the effect of imposing new or dif ferent responsibilities on the Trustee under this Agreement. 12 1 1
7.15 Certain Duties and Reseensibilities of the Trustee N (a) In the absence of bad f aith on its part, the Trustee ( may conclusively rely upon certificates furnished to the Trustee and conforming to the requirements of this Agreement; but in the case of any such certificates which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall have no duty to examine the same to determine whether they conform to the requirements of this Agreement unless the representative of the Trustee involved with the certificate in question has actual knowledge that any statement made therein is not true. (b) No provision of this Agreement shall be construed to i relieve the Trustee from liability for its own gross negligent action, its own gross negligent failure to act, or its own willful misconduct, except that (i) this Subsection shall not be construed - to limit the effect of Subsection (a) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a responsible officer of Trustee, unless it 'shall be proved that the Trustee was negligent in ascertaining the pertinent i facts or was otherwise negligent in making the judgment; and (iii) no provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in ' the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. C(. 7.16 Certain Richts of Trustee. provided in Se: tion 7.15 hereof: Except as otherwis.e (a) Any request or direction of the Agency mentioned ! herein shall be sufficiently evidenced by a written request or direction signed, prepared or furnished by an authorized representative of the Agency or a verbal or telephonic request or order confirmed within a reasonable time by duch a written request i or direction, and any action of the Board of Directors of the l Agency may be sufficiently evidenced by a certificate of the [ Agency's secretary or assistant secretary; [ (b) Whenever in the administration of the Trust created l under this Agreement the Trustee shall deem it desirable that a matter be proved ' or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad f aith
- l. on its part, rely upon the certificate of an authorized i representative of the Agency; and (c) The Trustee may consult with legal counsel and the written advice of such counsel or any opinion of such counsel shall be full and complete authorization and protection in respect of any 13 d-
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.\;.
action taken or emitted by it hereunder in good faith and in reliance thereon.
.j' ARTICLE VIII -V LIMITATIONS ON AND DIRECTIONS TO TRUSTEE AS TO INVESTMENTS I 8.1 Investment by Direction of Acency. Anything herein to the contrary notwithstanding, unless and until otherwise instructed by the Agency, the Trustee shall invest and reinvest all of the Trust Property as directed by the Agency. The Agency shall, i by appropriate certificate signed by it and delivered to the '
Trustee, provide the Trustee with written notice of its officers,
. employees and agents who are authorized to direct the acquisition, 1
retention and disposition of the investments hereunder, and the i Trustee shall be protected in relying on all directions and instructions received from any such person or persons. To the extent the assets of the Accounts have not been invested at the direction of the Agency on any given day, the Trustee shall invest I such uninvested assets as the Agency may direct in writing. I Pending' receipt of directions from the Agency, any cash received by ! the Trustee from time to time for any Account shall be invested j upon receipt in investments from which such cash may be withdrawn on a daily basis. The Agency and the Trustee shall establish , appropriate systems, guidelines and procedures in order to i effectuate such handling of investments hereunder. In-the event i that the Trustee is at any time directed by the Agency to manage the investment of the Trust Estate, the Trustee shall invest and I reinvest the principal and income of the Accounts, in accordance
- with general investment guidelines established by the Age.ncy, as from time to time modified, and the. provisions of Section 8.2 V[ ) hereof and in investing, reinvesting, exchanging, selling and I managing the Accounts, the Trustee shall discharge its duties with the care, skill, prudence and diligence under the circumstances .:
l then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims. 8.2 Limitations on Investments. The Agency intends that the assets of the Accounts be invested and reinvested solely in J Investuent Securities which shall mature, or be subject to i redemption at the option of the holder thereof, within ten years from the date of such investment or reinvestment and intends to establish policies, procedures, guidelines and restrictions for handling investments under this Trust, which it may from-time to timo modify, change or supplement by written direction to the Trustee. 8.3 Certain Duties of Trustee as to Acencv-Directed Investments. So long as the Agency is directing the investments hereunder, the Trustee shall have no duty or obligation to make any recommendations with respect to the acquisition, retention and disposition thereof, and shall have no liability or responsibility to'the Agency or the Trust for acting on the direction of, or for failure to act in the absence of direction from, the Agency. However, the- Trustee shall review the transactions of the Agency i 'b 14 l '
I l 1 and the. Trust Funds on a daily basis for the purpose of determining whether' any assets acquired er to be acquired are permissible
'N investments under the guidelines established by the Agency for the ,
(") . Accounts, as from. time to time modified, or the provisions of
.Section 8.2 hereof and shall notify the Agency within one business l
day by telephone, confirmed in writing, if it determines as a - result of any such daily review that an investment is not permitted under either the guidelines established for the-Accounts or the provisions of Section 8.2 hereof. The Trustee shall advise the Agency of information it receives from an issuer or similar source regarding calls, redemptions, purchase offers and similar matters - relating-to assets held in any Account hereunder. 8.4 Accointment of Investment Manacer. The Agency shall l have the right from time to time to appoint and remove one or more , Investment Managers for any Account held hereunder and to direct- ! the segregation of any part or all of any such Account into one or i more accounts to be known as " investment manager accounts" and, if the ' Agency does so, the Agency shall appoint an individual, I partnership, association or corporation as Investment Manager to manage the portion of any Account so segregated. Written notice of any such appointment and/or removal shall be given to the Trustee. and the Investment Manager so appointed. The appointment shall be accomplished using an investment manager agreement signed by the Agency and the Investment Manager and acknowledged by the Trustee.. As long as the Investment Manager is acting, the Investment Manager shall have full authority to direct the acquisition, retention and disposition of the assets from time to time comprising the n investment manager account being managed by the Investment Manager,- e I and except as otherwise set forth herein, the Trustee shall have no ! M duty or obligation to review the assets from time to time comprising such investment manager account, or to make any recommendations with respect to the acquisition, retention and disposition thereof. , The Trustee shall have no liability or responsibility to he Agency or the Trust for acting on the direction of, or for failure to act in the absence of directions from, the Investment Manager for any investment manager account. The Trustee may assume that any investment manager account previously established and the appointment of any Investment Manager for that account continues-in force until receipt of written notice to the contrary from the Agency. Pending receipt of directions from the Investment Manager, any cash received by the Trustee from time to time for any investment manager account shall be invested upon receipt 'in investments from which such cash may be withdrawn on a daily basis. So long as the Investment Manager is directing the investments in an investment manager account, the Trustee shall have no duty or obligation to make any reccmmendations with respect to the acquisition, retention and disposition thereof, and shall have no liability or responsibility to the Agrency or the Trust for acting ' on the direction of, or for failure to act in the absenes of te
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direction from, the Investment Manager. However, the Trustee shall review the transactions of the Investment Manager and the Accounts J ( N. on a daily basis for the purpose of determining whether any assets (") acquired or to be acquired are permissible investments under the guidelines established by the Agency for the Accounts, as from time to time modified, or the provisions of Section 8.2 hereof and shall notify the-Agency and the Investment Manager within one business day by telephone, confirmed in writing, if it determines as a result of any such daily review that an investment is not permitted under either the guidelines established for the Accounts or the provisions of Section 8.2 hereof. The Trustee shall advise the Investment Manager of information it receives from an issuer or similar source regarding calls, redemptions, purchase offers and similar matters relating to assets held in any Account hereunder. The Agency will indomnify the Trustee and hold it harmless from any liability or expense in connection with or arising out of (i) any action taken or omitted or any investment of the investment manager account made by the Trustee at the direction of the Investment Manager, or (ii) any action taken by the Trustee pursuant to notification of an order issued by an Investment Manager to purchase or sell securities directly to a broker or dealer under a power of attorney. ARTICLE IX TRUSTEE'S POWERS 9.1 Powers of the Trustee. In the management, care and , disposition of this Trust, the Trustee hereunder, subject to the l e' specific provisions hereof, shall have the power to do all things L ') (T and to execute such instruments as may be deemed necessary or proper, including, but not limited to, the following powers, all of l which may be exercised without order of or report to any court: (a) To invest and reinvest all the property and cash making up a part of the Trust Estate as directed by the Agency, or i the Investment Manager, as the case may be, i,n such securities and investments as the Agency, or the Investment Manager, as the case , may be, specifies; l (b) To sell, exchange or otherwise dispose of any l property at any time held or acquired under this Trust Agreement, i at public or private sale, for cash or on terms, without advertisement; (c) To retain for investment any property transferred to the Accounts by the Agency, without regard to any law now or hereaf ter in force limiting the investments of fiduciaries, and the Trustee shall be under no obligation to diversify the investments of the Accounts; s
, 16 .\ w,l
t
.i (d) To collect, receive and hold any and all money and cs other property of whatsoever kind or nature due to or owing or 'l )- belonging to the Trust; LJ (e) To vote in person or by proxy and to agree to or take any other action in regard to any reorganization, merger, consolidation, liquidation, bankruptcy or other procedure or proceeding affecting any stock, bond, note or other security held hereunder; ,
(f) To register any stock, bond or other security in the name of any nominee, without the addition of words indicating that such security is held in a fiduciary capacity; but accurate records , shall be maintained showing that such security is a Trust asset, and the Trustee shall be responsible for the acts of such nominee; (g) Subject to approval of the Agency, to employ, retain and remove attorneys, accountants, insurance consultants, custodians, engineers and other agents, if such employment be-deemed necessary, and to pay reasonable compensation for their-services; (h) To compromise, settle or adjust any claim or demand by or against the Trust, and to agree to any rescission or , modification of any contract or agreement affecting the Trust; ' (i) To perform any act authorized, permitted or required under any instruments relating to or forming a part of the Trust [ ,T Estate whether in the nature of an approval, consent, demand or
- V' notice thereunder or otherwise, unless such act would require the l consent of the Agency; and (j) To do and perform any acts or things and only those acts or things necessary or appropriate for the conservation and protection of the Trust Estate.
ARTICLE X CONTINGENT REVOCABILITY 10.1 Revocation of Trust.- Anything herein to the contrary notwithstanding, until such time es NRC approval and acceptance of the decommissioning funding plar.s of the Plants and of this Trust are obtained, and accepted by the Agency, the Agency reserves the right to terminate this Trust in wht,le o in part, and to provide financial assurance for its pro rata share of the costs of decommissioning the radioactive portions of the Plants by or through means other than this Trust.
/'~% 17
7 ARTICLE XI
,- MISCELLANEOUS PROVISIONS i 1
(_/ 11.1 Headinos. All Article and Section headings set forth in this Agreement are for convenience only and shall not be deemed to be a part of this Agreement for any other purpose and shall not be taken as in any way limiting or interpreting any Section or Subsection of this Agreement. 11.2 Severability. In the event any provision of this j Agreement or its application to any person or in any circumstance shall be invalid or unenforceable to any extent, the remainder of ; this Agreement, or the application of such provision _to persons or ' circumstances other than those as to which it is held invalid Tn: i unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest oxtent permitted by law. ; 11.3 Governino Law. This Agreement is entered into and executed in the State of South Carolina, and all questions ; j pertaining to its validity, construction and administration shall l be governed by and determined in accordance with the laws of the ' State of South Carolina. 11.4 Notices. All written notices required to be given by this Agreement shall be deemed to have been properly given if delivered by hand or when mailed by registered or certified mail,
.,s return receipt requested, postage prepaid, to the parties hereto es '/ \
follows:
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If to the Acency: ! Piedmont Municipal Power Agency 121 Village Drive- { Greer, South Carolina 29651 ! Attention: Neil J. Keane, F%nancial Director and Treasurer i Copy to: McNair Law Firm, P.A. l'th Floor, 1301 Gervais Street Columbia, South Carolina 2?201 Attention: O. Wayne Corley, Esq. If to the Trustee: Citizens and Southern National Bank of South Carolina Corporate Trust Department 295 Greystone Blvd. Columbia, SC 29210 ' Attention: Catherine Summey f ( 18
I i l 1 or at such other address or addresses, or to the attention of such i (N other parson or persons, as the Agency or the Trustee may hereaf ter I () notify the other party in accordance herewith, l 11.5 Fiscal Year. The fiscal year of the Trust shall end on December 31 of each year. 11.6 Successors and Assictns. Subject to the provisions l of Sections 5.4, 7.8, 7.9, 7.10 and 7.11, this Agreement shall be binding upon and inure to the benefit of the Agency, the Trustee and their respective successors and assigns. 11.7 Countercarts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the Agency and the Trustee have each hereunto caused their respective corporate names and seals to be affixed and this Agreement to be executed and delivered by and through their duly authori::ed officers, all as of the day and year first above written. PIE ONT MUNICIPAL POWER AGENCY
, By: - - -
e-% ( Its: C.--.l ( e' -A%_, ( i Attest: ~ Its G A - 4 w
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(CORPORATE SEAL) The Citizens and' Southern National Bank of sy: Its: (61iMm V Gu e b &xoJ Wiktt~ Attest: 4..iotane vie. rr. 1a.nt 17(CORPORATE s: SEAL) 19 -(~ i g
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< McNAIR LAW FIRM, P. A. j ATT00thtY$ AND COVNSSLORS AT LAW
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E Mr; Neil J. Keane
' Finance Director and Treasurer Piedmont: Municipal Power Agency 121 Village Drive Greer, South Carolina 1.. <
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Dear Mr. Keane:
O . premium, You hava asked our opinion as to whether monies on deposit in
. the Decommissioning Fund may be used to pay principal, interest and if any, on electric revenue bonds issued' by Piedmont
;' Municipal Power Agency pursuant to the provisions of the General Bond i<esolution adopted August 14, lw and amended and restated on 4 ' December 6, 1984.
- y Section 5.2 provides "There are hereby pledged for the payment of.the principal of, premium, if any, and interest on the Bonds in
.accordance with their terms and the provisions of the Resolution, subiect oniv to the erovisions 'of the Resolution recuirina or permittina the annlication thereof for~the ournoses ahd - on tha terms and conditions set forth in the Resolution'(1) the proceeds
,y of the sale of Bonds when held. in the funds established by the Resolution, (ii) the . Revenues and (iii) all! funds established by the ' Resolution, including the Investment Securities, if any, credited thereto and-the income therefrom." nnnhasis added.
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Section 5.6 of the General Bond Resolution provides " Monies on-S 1 deposit in the Decommissioning Fund attributable to a Project shall be Project. ann 11ed to the Cost to PMPA of decommissioning or retiring such
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If the monies and value of Investment Securities in the Decommissioning Fund attributable to a Project shall exceed the amount required to be on deposit therein for such Project, the 1 amourtt of Erohasis such excess shall be transferred to the Revenue Fund." added. [ It is our opinion that monies deposited in the Decommissioning
' Fund may not be used to pay principal, interest and premium, if 4 ,
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. < ,v-t Mr. Neil-J. Keane LIO Page 2 V. June 29, 1990 !
l' , any, on electric revenue bonds issued by PMPA pursuant to the ' .'c. provisions of the General Bond Resolution to the extent such funds ! are needed to pay. the cost of decommissioning such project. Any
' amounts in excess of the cost of decommissioning such Project, may be transferred from the' Decommissioning Fund.to the Revenue Fund 1
and: used in accordance with the provisions of the' General Bond" Resolution relating to the Revenue Fund. ' Should you need anything additional, please call. With kind regards, I am
= l 7 qvNAIR LAW FIRM, .
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al , Tl;; " g CCdu/)T") App 3ndix.C ( paga - 1 )' e . (' gp pocy systryo0 ENDING-s_ Snit 81 Raaloactive INTE P.E S T
~~~ ' '
' YEAR DEPOSITS EARh!NGS B AL At:CE -f
-COST 1900 5 137,340 1939 000
.4.50% 1990 536.796 86 1,424
~ INFLATION RATE ,
,, -COST 12/1/2024 5 639,667 1991~ 530- '135- -2,099 ,
~
1992 530 '189 2,827
79 333 1993 53o 24S 3,613 P .S. P A SHARE!
.79,033 1994 530 311 4',463
.F i na l value- 5,330 s Begining Balance 800 L19 9 5 - 530 3 79 452- 6,371 -'
1496 .530 1997 539 531 7,441 19981 539 617 B,597 t
'kEINVEST RATE S.00% 1999 530 709 9,845 !
1990-1999 6.50% 2000 539 657 11,041 i 2000-2024 2001 530 735 '12 315 2002 539 818 13,672 2003 530 006 15,117 2004 539 1,000 16,655 2005- 539 1,100 18,294 2006 53c 1,207 20:040' 2007 53c 1,320 21,699 2008 539 1,441- 23,67?
^
2009 530 1,570 25,987 l '
- 1. 2010 5 3c- 1,707 28,232-2011 53c 1,053 30,624 lfemt 2012 539 2,00e 33,171
) -- 2013 539 2,174 35,883 2014 530 2,350 38,772 2015 539 .2,538 .41,848-L 2016 539 2,738 45,124 2017 539 2,951 48,614 2018 539 3,177 52,330 h 3,419 56,288 2019 539, 2020 539 3,676 60,503 2021 539 3,950 64,992 2022 539 4,242 69,773 2023 530 4,553 74,664 2024 494 4,475 79,833 TOTAL 1*,613 60,220 79,833 e
9
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C C OU A) 7 U ppendix A C (page 2) B; $ #"'#" " "*"" Unit #2 Racioactive YEAR LEPOSITS INTEREST EARNINGS ENDING ELLANCE CGST lo9e 5 137,340 1 59 60C INFLATION RATE 4 . 5 M. Ic90 521.223 85 1,406 COST 2/./2026 5 672,321 1991 521 133 2,061 1;c2 521 166 2,768 PMPA SbuE E4,040 1993 'l 242 3,531 k Final Value 84,04J Icas 521 303 4,356 5,246 L' e p i n i n g Belance 600 1cc5 521 369 Ic;t 521 441 t,208 1977 521 517 7,247 REIm EST RATE ic 4 E 521 601 8,368 19;- E.00% icac 521 69C 4,59C 20C0- 6 . 5 0 ;. 2C00 521 640 10.741 2001 521 715 11,477 2002 521 795 13,294 2003 521 861 14,696 2004 521 972 16 ,16 c 2005 521 1,0 6c 17,7S0 2C06 521 1,173 19,474 2007 521 1,233 21,278 2008 521 1,40C 23,199 2004 521 1,525 25,245 2010 521 1,658 27,424 2C11 521 1,6 0 C 29,745 9 2012 2013 2 C 14 521 521 521 1,c50 2,111 2,282 32,21e 34,649 37 652 2015 521 2,464 40,637 2C16 521 2,658 43,617 2017 521 2,865 47,203 2018 521 3,085 50,810 2C19 521 3,320 54,650 2020 521 3,569 58,741 2021 521 3,835 63,097 2022 521 4,118 67,737 2023 521 4,'20 72,676 2024 521 4,741 77,940 2025 521 5,083 83,544 2026 43 453 84,040 TO T A L 18,807 64,433 84,040 0
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t Appendix D (} Decommissioning Cost of Radioactive Portion Catawba Nuclear Station Based on NRC Minimum Assumptions The Agency's projected annual decommissioning fund deposits for
~
tho radioactive portion of the Catawba Plants are based on the following:
- 1. The NRC estimated cost to decommission the nuclear portion of each unit.is $105,000,000 (stated in January 1986 dollars). :
- 2. Using past inflation rates, the January 1986 price was pro-jected forward to 1990 and came to $137,340,000 pur unit.
- 3. PMPA's share of the decommissioning cost must be on hand by December 1, 2024, for Unit IJ, and February 1, 2026, for Unit 2, which.is immediately prior to the current expiration dates of the respective operating licenses.
- 4. The above mentioned decommissioning costs will escalate at 4.5% per year from 1990 through 2024 and 2026 respectively.
- 5. Interest earnings are assumed to_ average 8% per year for 10 years and 6.5% per' year thereafter (the resulting 200 basis point spread between' assumed earnings and assumed inflation rates represents an approximation of hirhorical experience).
Given the above assumptions, the Agency's annual deposits to the decommissioning fund trust accounts were computed to be: Unit 1 (thru 12/1/24) 538,796 Unit 2 (thru 2/1/26) 521,223 Total Unit'1 and Unit 2 1,060,019 O
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w - , UNITED STATES NUCLEAR REGULATORY COMMISSION o
-DECOMMISSIONING REPORT {
[' . Submitted by > N SALUDA RIVER ELECTRIC COOPERATIVE, INC. Saluda River Electric Cooperative, Inc. (the " Company") hereby submits this Decommissioning Report in compliance with 10 C.F.R. j
- Sections 50.33(k) and 50.75(b). (
The Company owns an 18.'75% undivided. ownership interest in Unit 1 of the Catawba Nuclear Station, a two-unit nuclear power i l generation facility constructed by Duke Power Company (" Duke"). Other co-owners and legal ownership percentages of the_ Catawba Nuclear Station are: a North Carolina Electric Membership Corporation (56.25% O ownership interest in Unit 1) LV Duke Power Company (25% ownership interest in Unit 1) North Carolina Municipal Power Agency Number 1 (75% l-l ownership interest in Unit 2) . Piedmont Municipal Power Agency (25% ownership interest in Unit 2) 1 The contractual arrangements for joint ownership of the Catawba Nuclear Station include a capacity exchange between the two Units which entitles each of the co-owners to a specific portion of l the electric power and energy produced by the Station as a whole. In recognition of this exchange arrangement, each co-owner has agreed to bear a corresponding portion of the cost of decommissioning Catawba Unit 1, Catawba Unit 2 and the Catawba Nuclear Station as a whole. Accordingly, under the terms of an
( , t [V (- Operation and Fuel Agreement between Duke and the company, the t Compnv is obligated to' pay 9.375% of the cost to decommission the
> entire Catawba Nuclear Station, or any portion (or Unit) thereof.
s The Company hereby certifies that financial assurance for its i share of the cost of decommissioning Units 1 and 2 is provided in ( i o the amount of $12,875,625 (1990 dollars) for each Unit. This- <k i 7 amount represents the Company's 9.375% share of the minimum- t y3 financial assurance amount of $137,340,000 for each of the Catawba H Units. The minimum financial assurance amount for each Catawba: 1
/
!) Unit is equal to the amount of $105 million (January 1986 dollars)- ( l per unit set forth in 10 C.F.R. 50. 75 (c) (1) , escalated to January 1,-1990, in accordance with the formula set forth in 10 C.F.R.- I 50.75 (c) (2) . A calculation of the minimum financial assurance 1: amount is attached hereto as Exhibit A. The minimum financial 1 assurance amount will be recalculated annually. . .; The method by which the Company will provide financial ;i l-h 1 assurance for its share of the cost of decommissioning the Catawba - j Nuclear Station is the establishment of an external sinking fund in ,; accordance with 10 C.F.R. 50.75 (e) . This external sinking fund has j u
.been established as a Nuclear Decommissioning Trust Fund composed G s\'
of a'. Unit 1 account and.a Unit 2 account. The trust fund is q. established under the ' terms of a Master Nuclear Decommissioning } [ Trust Agreement effective as of June 28, 1990 between the Company T and The Palmetto Bank; Laurens, South Carolina. A copy of the Master Nuclear Decommissioning Trust Agreement is attached hereto , l as Exhibit C. The Company will make deposits into the Nuclear
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i .- - . - - _ _ _ _ _ _ _ _ . - - - - . . - . - - . _ _ _ _ . - - _ . _ _ . _ _ . - - - -
.k i .,
y ; 1 of, i . N^N Decommissioning Trust Fund at least annually. The first such-ld f f.; , deposit will be made on or before December 31, 1990. Attached as ' yli Exhibit B is a summary of . key assumptior.s supporting the annual funding amount required to provide financial assurance for the decommissioning costs described above. At least every five years, the Company will recalculate the annual funding requirement to reflect the effects of actual experience and changes in projected values for inflation and fund earnings. SALUDA IVER ELECTRIC COOPERATI , IN By: / J eph W.)pilho'llan'd
/ >
W(t E ecutive Vice-Presiden nd General Manager
. D
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j A.
'l Cl EXHIBIT A~
l l SALUDA RIVER ELECTRIC COOPERATIVE,'INC. ; GALQyLATION OF MINIMUM ASSURANCE AMOUNT CATAWBA NUCLEAR STATION, UNIT 1 AND UNIT 2 l Catawba Catawba i Unit No. 1- Unit No.2 Base amount for PWR greater than or $105,000,000 $105,000,000 ; equal! to 3400 MWt-PWR Escalation Factor (1) x- 1.308 x 1.'308-Escalated amount'for Unit 137,340,000 137.340,000,
-Company. interest in. Unit x .09375 x .09375
' Financial assurance required $12,875,625 $12,875,625
=========== ===========-
Annual-funding requirements (2) $378,695 $3 57 ',655 i (-(
' Escalation" (1),-Escalation Factors for PWR Unit
- Jan 1986 Jan 1990 Factor
'( L) Labor (South) 127.7 147.2 1.153-(P): Power (South Atlantic) 119.3 113.8 0.954
'(F) Light Fuel Oil (Code.0573)' 82.0 68.1 0.830"
.(E) Energy (South Atlantic) 0.902
~ (B) Waste- Burial :(South Carolina) 1.0 2.007 2.007 i
I40% Escalation Factor 1.'308 ,
=====
i
>
- Reflects most recent year-end factors available.
~(
'(2)iSee. Exhibit B.-
i A
\ --- __ = _ = ~ = _ _ -- :-__-___
4
'1
+ 1
;[I .
Exhibit B-- )
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SALUDA RIVER ELECTRIC COOPERATIVE, INC. h , 1 , NUCLEAR DECOMMISSIONING TRUST FUND ,
SUMMARY
-OF KEY ASSUHPTIONS i f :1 ' 'i' ' jj j , Inflation Factors t-Annual inflation rate 4 '. 5 % ' . 1 Y J l . 1_ 1 Barninas Factor , Annual gross earnings rate 7.05% - o 1 L Less . Annual trustee management fees . E at 4% rate .28
- ( u s
6.77 Less . Annual federal income taxes-at 34% rate 2.30 a U ' Annual net earnings' rate 4.'47% Li
'l w
L Annual External-Fundina Requirements: : i, Unit 1-(until 2024) $378,695 _ Unit 2 (until 2026) 357,655 3 h , Total $736,350 ; ! [ ?[ '
+
1 1 3 o .
i-n.-,, , , - ,,,,,, ,,,,,, , . EXHIBIT C iiE G SALUDA RIVER ELECTRIC COOPERATIVE, INC. MASTER NUCLEAR DECOMMISSIONING TRUST AGREEMENT O O
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TABLE OF CONTENTS
- 3 SFCTION .PAGE l ARTICLE l' - TITLE-PURPOSE-POLICY-EFFECT. . .. . . .. . 2 1.1' Name :. . . . , , . . . . . . . . . . . . .
. .- . . . . . .. 2
> '1. 2 = Definitions. . . . . . . - . . . . . . . . . . . . .. . . . .
2 ARTICLE 2 - ESTABLISHMENT- OF TRUST . . . . . . .. . . 5 2.1 . Purpose ... . . . . . . . . . . . . . . ... . .. . . 5 2.2 Separate Trusts . .. . . . . . . . . . . .; .. . . . . . 6 H2.3. Domestic! Trust . . . . .. . . . . . . . . .. . . . . 6-l2 . 4 Contributions'. . .. . . . . . . . . . . . . . . . . . . 6 2.5 Merger, Consolidation, and Affiliated Companies . -. . . 6
- 2.6 Equitable Shares . . . . . . . . . . . . . . . .. . . - 7 2.7 Valuationst . . . . . . . . .. . .. . . - . . . .. . . . 7 2.8 10ther, Records and Returns . . . . . . . . . . . . . . . 8 2'.9' No--Transferability of Trust . . .. . . . .. . . . . . 9 n ARTICLE 3 - ADMINISTRATION OF FUNDS . . . . . . . . . . 9 l3.1- Disbursement of Assets . . . . . .. . . . . . . . . .- 9 3.2 Excess Funds .. . . . . . . . . . . . . . . . . . . . . . 9 13.3 Transfer!of: Ownership . . . . . . . . . . - . .. .. . . . 9-3.4- Reliance on. Company . . . . . . . . . . . . . . . . . . 10 3.5 Duty?to Enforce Claims- . . . . . . . . . . . . . . . . 10 ARTICLE 4 -' MANAGEMENT OF' ASSETS . . . . . . . . . . . 10
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4.1 Asset Managers . .. . .. . . . . . . . . . . . . . . 10 1 4 '.' 2 Investment Discretion . . . . . . . . . . . . . .. . . . 10 4.3 Limitations-on Investment and other Discretion . -. . . 11 4.4- ' Responsibility for Diversification . .. . . . . . . . . 11 ARTICLE 5 - RESPONSIBILITY FOR DIRECTED FUNDS . . . . . 11 5.1- Responsibility for Selection of Agents . . . . . . . . 11 5.2 Trustee Not Responsible for Investments in Directed Funds . .. . . . . . . . . . . . . .. . . 11 5.3 Investment Vehicles . . . . . . . . . . . . . . . . . . 12 5.4- Reliance on Asset Manager . . . . . . . . . . . . . - . . 12
- 5. 5 ' Merger of Funds . . . . . . . . . . . . . . . . . . . . 12 5 .~ 6 - -Restrictions on Transfer . . . . . . . . . . . . . . . 13
- This Table of Contents.is for the convenience of the parties only and is not a part of the attached Agreement.
i.
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, ,d~w . TABLE OF CONTENTS (continueQ1 ,
l %. SECTION PAGE
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ARTICLE 6 - POWERS OF ASSET MANAGERS . . . ... . . . 13
, 6.1 General Powers . . . . . . . . . . . . . . . . . . . . 13 l 6.2 Additional Powers of Trustee . . . . . . . . . . . . . 15 6.3 Prior Consent . . . . . . . . . . . . . . . . . . . . - . 16 ARTICLE 7.- RECORDS AND ACCOUNTS OF TRUSTE: . . -. . . . 16
-7.1' Records . .c . . . . . . . . . . . . . . . . . . . . . 16 7.2 Monthly Account . . . . . . . . . . . .. . . . . . . . 16-7.3 Account Stated- . .. . . . . . . . . . . . . . . . . . 16
, 7.4 Judicial'Accountings . . . . . .. . . . . . . . . . . 16 1 h 7.5 Necessary Parties . . . . . . . . . . . . . . . . . . . 17 ; 1 ARTICLE 8~- COMPENSATION, TAXES AND EXPENSES . . . . . 171 1 8 .1. Compensation and Expenses . . . . . . . . . . . . . . . 17 8.2 . Taxes . . .. . . . . . . . . . . . . -. . . . . . . . . 17 t'% . 8. 3 ' . Allocation -. -. .. . . . . . . . . . . . . . . . - . . 17 t (_- -- t ARTICLE 9 - RESIGNATION OR REMOVAL OF TRUSTEE . . . . . 17- ! l 9.1 Resignation o'r Removal . . . . . . . . . . . . . . . .'17 L 9.2 Designation'of a Successor .. . . . . . . . . . . . . 18. 9.3 Reserve for Expenses . . . . . . . . . . . . . . . . .. 18 ARTICLE 10 = AMENDMENT OR TERMINATION . . . . . .. . . 18 10.1 Amendment . . .. . . . . . . . . . . . . . . . . . . . 18 -i
.10.2 Termination ... . . . . . . . . . . . . . . . . . . . . 18 10.3 Trustee's Authority to Survive Termination . . . .. . . 19 10.4 Anti-Diversion . . . . . . . . . . . . . . . . . . . . 19 10.5 Trustee's Reliance . . . . . . . . .. . . . . . . . . . 19 7
ARTICLE 11 - AUTHORITIES . . . . . . . . . . . . . . . 19 fil.1 Company.. . . . . . . . . . . . . . . . . . . . . . . . 19 11.2 Subsidiary or Affiliate . . . . . . . . . . . . . . . . 19 11.3 Authorized Person . . . . . . . . . . . . . . . . . . . 20 11.4 . Investment. Manager . . . . . . . . . . . . . . . . . -. 2 0 11.5 Form of Communications . . . . . . . . . . . . . . . 20
. l' ) . 11.6 Continuation of Authority . . . . . . . . . . . . . . . 20 ,
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-( TABLE OF CONTENTS (continuedl. j
.SECTION PAGE 4- l
'.A*TICLE 12 - GENERAL PROVISIONS . .. . . . . . . . . . . 20 12.1 Governing Law . . . .. .. . . . . . . . . . . . . . . 20 12.2 Submission to Jurisdiction . . . . . -. . . . . . . . 20 12.3 Entire Agreement . . . . . . . . . . . . . . . . ., . 21 12.4 Reliance on Experts . . . . . . . . . . . . . . . . . . 21 ~!
12.5 Successor to the Trustee . . . . . . . . . . . . . . .: . 21= , 12.6 Notices-. . . . .. . . . . .. . . . . . . . . . . . . 21'
'12.7 . Descriptive' Headings . . . . . . . . . . . . . . . . . . 21 i
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! \ k} ' . s . SALUDA RIVER ELECTRIC COOPT?.ATIVE. INC. MASTER NUCLEAR DECOMMISSIONING TRUST AGREEMENT THIS AGREEMENT made '. this >R A day of Jm , 1990, of and between SALUDA RIVER ELECTRIC COOPERATIVE, INC., a South Carolina
- Cooperative Corporation, ('? Company") and THE PALMETTO BANK,
- (" Trustee").
H1IHEEEETH: WHEREAS, Saluda River Electric Cooperative, Inc. has a 18.75% undivided interest in Unit No. 1 and a 9.375% undivided ownership interest in_certain common support facilities as well as a 9.375% interest in the production ~of two (2) nuclear power reactor units at the Catawba Nuclear Station (" Catawba Unit No. 1" and " Catawba
~
Unit No.-2"), a nuclear generating station in York County, South Carolina, which-will be decommissioned in the future; and
- WHEREAS, Saluda River Electric Cooperative, Inc. desires to make provision for the payment of the decommissioning costs of their interest in the nuclear generating station described herein'and other interests that may be acquired in the future in other nuclear units, pursuant to the applicable statutory -and regulatory
, requirements [as now: published in 53 Fed. Reg. 24049-24051 (1988)
'(to be codified 10 C;F.R. 5550.33(k), 50.75)), but including any successor legislation and regulation applicable to Saluda River
-Electric Cooperative's financial responsibility to . provide decommissioning funds-(and to meet its obligations to the Nuclear Regulatory Commission,.other governmental bodies and the general public in connection with decommissioning); and WHEREAS, Saluda -River Electric Cooperative, Inc. desires to establish a separateLdecommissioning trust fund for each Nuclear Power Plant (as hereinafter defined) described on Schedule I; and
-WHEREAS, Trustee is willing to act as Trustee of such trust, and to
-accept the duties and obligations-imposed upon it hereunder, in consideration of the premises and the compensation agreed hereunder; NOW, THEREFORE, Saluda River Electric Cooperative, Inc. and The Palmetto: Bank declare and agree that The Palmetto Bank will receive, hold and administer all sums of money or other property as shall from time to time be contributed or paid over to it hereunder, IN TRUST, upon all of the following terms and conditions:
f ARTICLE 1.- Title-Purcose-Policy-Effect
> :1.1. Hamg. _ The master decommissioning trust established hereunder shell be known as the "Saluda River Electric Cooperative, Inc.
Master Nuclear Decommissioning Trust Agreement" and is sometimes hereinafter referred to as the " Trust" or " Trust Agreement". l'. 2. ' Definitions. Where used in_ this Agreement and Declaration of Trust, unless the context otherwise requires or unless otherwise expressly provided: (1) " Authorized Person" shall mean-the officer or of ficers of the Company, or such other persons as may be authorized by the Board of Trustees, acting jointly, severally or designated to represent the Company and take any action required or authorized to be taken by the Company under this Agreement, the identity of whom shall be certified to the Trustee in accordance with Article 11. (2) " Accounting Period" shall mean either the twelve consecutive months coincident with the tax year (annual Accounting Period) or a calendar month (monthly Accounting Period) or' shorter period within any such year or month-in which the Trustee accepts appointment as Trustee hereunder or ceases to act as Trustee for any reason. (3) " Administrative Costs and Other Incidental Expenses" or
" Administrative Expenses" shall mean all reasonable ordinary and necessary expenses incurred in connection with the operation and administration of a Fund, including any state or local tax imposed on the _ Company or the Fund which is' attributable to the _ income or the assets of a Fund, reasonable '
legal- fees and expenses, accounting fees and expenses, actuarial fees and expenses, investment- management fees, indemnification costs incurred by 'the company and .all reasonable fees and expenses of the Trustee arising out of. the administration of a Fund'. (4) " Agreement" or " Trust Agreement" shall mean all of the provisions of this instrument (including Schedules I and II) and of all other instruments amendatory hereof. (5) " Asset Manager" shall mean the Trustee (other than for purposes of Article 5), the Company or an Investment Manager, individually or collectively as the context shall require, with respect to those assets held in an Investment Account over which it exercises, or t o the extent it is authorized ta exercise, discretionary investment authority or control. (6) " Bank Business Day" shall mean a day on which the Trur, tee O is open for business. 2 l h
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/
(7) " Bank" shall mean The Palmetto' Bank. (8) " Board of Trustees" shall mean the Board of Trustees of the company. (9)- " Code" shall mean the Internal Revenue Code of 1986, as amended. from time to time, and regulations promulgated thereunder. (10) " Company" shall mean Saluda River Electric Cooperative, Inc. or any successor thereto. To the extent that any_ subsidiary or affiliate of the- Company elects to adopt the Trust as a funding vehicle for a nuclear decommissioning fund established by it by executing a joinder agreement in the form satisfactory to the Trustee and the Company, " company" shall-. .
-include such subsidiary or af filiate, as the context shall require, except as specifically provided to the contrary in Section 2.5.
(11) " Contributions" shall mean amounts contributed by the Company to a Fund. (12) " Decommission" or " Decommissioning" shall mean all activities to remove a Nuclear Power Plant safely from service and to reduce residual radioactivity to a level that permits release of the property for unrestricted use and termination of license. (13)- " Decommissioning Costs" shall mean all costs and expenses incurred by the Company to Decommission, including expenses incurred in connection with the entombment, decontamination, dismantlement, removal and disposal of the structures, systems and' components of a Nuclear Power Plant that has= permanently ceased the production of electric energy. Such term includes expenses incurred in connection with the preparation for Decommissioning, such as engineering and other planning expenses, and expenses incurred after the actual Decommissioning occurs, such as. physical security and radiation monitoring expenses, and all similar expenditures. Final determination of what constitutes a Decommissioning Cost shall be determined in accordance with federal regulations or by the Company. (14)- " Directed Fund" shall mean any Fund or Investment Account or part thereof subject to the discretionary management and-control of the company or any Investment Manager. (15) " Discretionary Fund" shall mean any Fund or Investment Account or part thereof, subject to the discretionary management and control of the Trustee.
- (16) " Equitable Share" shall mean the interest, if any, of a Fund in any Investment Account.
3 e l l- _ - - ___ - -______-__-__________ _ _ -_-____-____ _ _ . _ _ _ _ _ _ . _ _ _ _ _ _ __ ___ -_
(17) " Excess' Contributions" shall mean Contributions-designated as Excess Contributions pursuant to Section 2,4. (18) " Excess Funds".shall mean the money and other property set aside' and accumulated in a Fund which, subsequent to substantial completion of Decommissioning are not required to satisfy the Company?s share of the Decommissioning Costs. (19)- " Fund" shall mean all cash 'or other property contributed 4 or paid to the Trustee hereunder in respect of a separate Nuclear Power Plant, -all investments made therewith and proceeds thereof and all earnings and profits thereon, less payments, transfers or other distributions made by the= Trustee,-as authorized herein. (20) " General Trust" shall mean any common, commingled. or collective trust created and maintained by Bank in which;one or more of the Funds is eligible to participate. (21) " Instructions" shall mean written and manually signed instructions of any two Authorized Persons or Asset Manager.
" Instructions" shall also include " Instructions Received By.
Any Other Means" provided that the parties' hereto shall have agreed in a manually signed writing to the form, the means of transmission and the means of identification- of such
' Instructions. " Instructions Received by Any other Means" shall include but - shall not be limited to, (1) oral instructions (confirmed in writing) and (ii) instructions received by computer, electronic instruction system or telecommunications terminals (including telex, TWX, f acsir 4.le -
transmission or bankswire). (22)'" Investment Account" shall mean each pool of' assets.in the Trust.in which one or more of the. Funds has an-interest during an Accounting Period. (23) " Investment Manager" shall mean a domestic bank - or insurance company or an investment adviser registered under g the Investment Adviser's Act of 1940. (24) '" Investment Vehicle" shall mean any common, collective or commingled trust, investment conpany, corporation functioning
,as an investment intermediary, insurance contract, partnership, joint venture or other entity or arrangement to which,- or pursuant to which, assets of a Fund may be transferred or.in which a Fund has an interest, beneficial or otherwise.
(25) " Master Nuclear Decommissioning Trust Agreement" shall
, mean the Trust and shall includo each Fund established hereunder.
O 4 1
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m , i c V5 (?6) " Nuclear Power Plant" shall_mean a nuclear _ power reactor
'() that is used predominantly in' the trade or business of the furnishing or sale of electric; energy, including individual-j 3
reactors located at a multi-reactor site. t (27) " Payment Certificate" shal~1 mean a written authorization i of the Company signed by two' Authorized Persons. t (28) " Person" shall mean'a natural person, trust, estate, 'I i corporation of any kind or purpose, mutual company, commission, joint-stock company, unincorporated organization, ; association, partnership, joint venture, employee ! organization, committee, board, participant, beneficiary,- trustee,.-partner, or venturer acting- in an individual, fiduciary or representative capacity, as the context may require. I a'
. (29) "Section" shall mean a section of the Agreement.
l-l l (30) " Tax Year" shall _ mean the company's tax year used in filing its federal income l tax returns. [ l (31) " Time or Demand Deposits" shall mean checking accounts, certificates of deposit or other time or demand deposits. The term does not include common or collective trust funds. ) d D (32) " Trustee" shall mean Bank as Trustee of the Trust and 1 each separate Fund established hereunder.- 1 (33) " Valuation Date" shall mean the last Bank Business Day of , p each _ monthly Accounting Period and each annual Accounting Period ' or any other date agreed to- be the Trustee' and the ;j Company. - The Plural of,any term shall have a meaning corresponding to.the j singular thereof as so defined and any neuter pronoun used herein [ shall include the masculine or feminine, as the context may. require. 1 l ARTICLE 2. Establishment of Trust [ 2.1. Eurcose. The Master Nuclear Decommissioning Trust Acgeement is entablished to help fund the Company's share of the , a Decotranissioning Costs associated with certain Nuclear Power Plants in which the company has a direct ownership interest or ownership rights and . decommissioning cost responsibility. Except as may otherwise be permitted by law, at' no time prior to the satisfaction of all Decommissioning Costs. and Administrative Expenses of a Nuclear Power Plant with respect to which a Fund has been eO 5
1 E
;t' r% .
'(U [ established shall any part of such Fund or the Equitable Share of such Fund'in any Investment Account established under the Trust be used for, or diverted to, any other purposes. 3
-2.2. Seoarate Trusta. A separate Fund shall be established for l each Nuclear -Power Plant described in Schedule I, or hereafter L acquired by the Company. Each Fund established' hereunder shall j L
constitute a separate trust and shall be held and administered i ~ pursuant to the terms of the Agreement to defray the Decommissioning Costs and Administrative Expenses associated with ! y the Nuclear ~ Power Plant with respect to which the Fund w a s .- a t established. o ! t 2.3. Domestic Trust. The Trust shall at all times be maintained as a domestic trust in the United States.
.2.4. Contributions. From time to time, the Company shall make j Contributions to a Fund. The Company shall determine the amount of Contributions to.be allocated to each Fund. The Trustee shall have no responsibility to any Person for enforcing payment of any ~,
~
Contributions to,.:or-for the timing, computation, deductibility or amount. thereof,. or for the adequacy of the Fund or the funding . standards . adopted 1 by the company to meet or discharge any
~
Decommissioning Costs. or other liabilities in connection with a . Nuclear Power Plant. If any contributions or part thereof are i y subsequently determined by the company in its sole and absolute discretion to-be Excess Contributions, the company shall deliver a i Payment. Certificate to the Trustee for the withdrawal of Excess Contributions, advising the Trustee of the amount of the Excess Contributions, and the Trustee shall pay over to.or on the order of the Company.the amount stated therein. 2.5. Mercer. Consolidation, and Affiliated Comoanies. (1) Any nuclear decommissioning fund established by a subs 1 diary or an affiliate of the Company, may be funded, in whole or in part, through the Trust if this Agreement has been duly.. adopted by the board of directors of the subsidiary or affiliate of-the Company, such subsidiary or affiliate has i executed - a . joinder agreement in a form acceptable to the 4 i Trustee and: the- Company -and the Board of Trustees. has _ I consented thereto. Each fund established by the subsidiary or affiliate shall be maintained by a separate Fund under all of- ! I l the terms of the Agreement; orovided, however, when the Trust l .has been -' adopted by any subsidiary or affiliate of the l Company, such subsidiary or affiliate shall be bound-by all . . decisions, Instructions, actions and directions of the company
- l. or the Authorized Persons or an Asset Manager appointed by any ,
of them under or affecting this Agreement, and the Trustee shall be fully protected by the Company and such subsidiary or affiliate in relying upon such decisions, Instructions, nV actions and directions. The Trustee shall not be required to give notice to or to obtain the consent of any subsidiary or l 6
O affiliate with respect to any action to be taken by the Trustee pursuant to this Agreement, and the Company shall have the sole authority to enforce this Agreement on behalf of any subsidiary or affiliate. (2) A corporation with which the Company is merged or a corporation or other legal entity which acquires substantially all the assets of the Company shall become the company for purposes of this Agreement, and every reference in this Agreement to the Company will be treated as a reference to that surviving or purchasing corporation or other legal entity. (3) If the Company is liquidated, merged, or consolidated with another company or other legal entity and the Company's successor chooses not to discharge the Company's duties under this Agreement, the Trust nevertheless will survive and the Trust Fund will continue in trust under the terms of this Agreement. In such a case, the Trustee or such person or persons as it may select will succeed to the functions of the Company under this Agreement, including the function of naming successor Trustees. (4) The merger or consolidation of the Trust with, or a transfer of assets or liabilities from this Trust to, another trust or fund is permitted unless the transfer would violate 9 any statutory or regulatory requirement regarding funds reserved for nuclear decommissioning. 2.6. Ecuitable Shares. If at any time the Company advises the Trustee that the separate Funds may be commingled for investment purposes, hereunder, the Trustee shall establish on its books and records one or more Investment Accounts to facilitate the commingling of such investments and shall maintain a separate account reflecting the Equitable Share of each participating Fund, or part thereof, in each Investment Account. The Company shall provide the Trustee with current information in order that the Trustee may determine such Equitable Shares. Each of the Funds participating therein shall have a separate, proportionate and undivided interest in each asset in the Investment Account, but, for the convenience of the Company, the Trustee may describe such ownership interest in terms of " units." A 7und or an Investment Account may be divided into such onn or more sub-funds or accounts or described in a different manner on any books kept or reports rendered by the Trustee without in any way affecting the duties or responsibilities of the Trustee under the provisions of this Agreement. 2.7. Valuations. The Trustee shall determine the value of the assets of each Fund as of each Valuation Date. Assets will be valued at their market values at the close of business on the Valuation Date, or, in the absence of readily ascertainable market 7
P s values, at such values as the Trustee shall determine in accordance
-with nethods consistently followed and uniformly applied.
~
x -
.2.8. Other._ Records and Returns.
.(1) Except as the Trustee may otherwise agree in writing, the Trustee shall not be required to maintain any additional records or accounts with respect, to: any Fund. The preparation, filing, making' and accuracy . of any: periodic returns or reports or deposits required to be filed or made on
% , account of a Fund with any federal, state ! or local taxing authority shall be the sole responsibility of the Company and the Trustee's responsibility under this Agreement shall-be S ' limited to signing any return on which . its signature is required to secure a timely filing at' the direction - of an
- y Authorized Person and disbursing funds to pay such taxes and
" < expenses incurred in connection'with or. arising out of the 4
preparation or filing of such returns from the designated Fund pursuant to a Payment Certificate. (2) The Trustee, however, will prepare tax accountings and provide the Company all relevant tax information in order.for. the Company to prepare and file appropriate forms with any federal, state, or local taxing authorities, including but not limited to the Internal Revenue Service, it being the intention of the company that this Trust should be taxed as a E grantor trust for federal income tax purposes pursuant to-s 5671, et seq., of the Code, as amended, and accordingly, the
$ , Company and'the Trust will be deemed the owner of the Trust Estate, and Company will be required to report all items of l' income, gain, loss daduction and credit attributable to the O Trust on its federal income tax return. To the extent the Trust does incur any tax liability, however, Company shall l', promptly reimburse Trustee so as to restore the Trust Estate to the position it would have been in had the Trust not incurred such tax liability.
4 Mc (3) In the event that company becomes an " eligible taxpayer" under section 468A (or any successor provision) of the
# Internal Revenue Code thereby enabling Company to establish a-p
='
qualified . nuclear decommissioning ~ reserve fund under that section, then the Trust shall not terminate, but shall operate
- under the provisions of section 468A- (or any successor provision) of the Internal Revenue Code once approved by the l Commissioner of Internal Revenue. If required in order to comply with Section 468A (or any successor provision) of the Internal Revenue Code, Trust funds held and accumulated prior 0: to qualification under that section shall be segregated from o those contributed af ter qualification in a separate trust. In that event, separate accounting and separate funding will be observed.
O 8 s . - 3
l l No Trarsferability of Trust. The interest of the Company-in. O
.2.9 the . Trust- is. not . transferable, whether voluntarily or involuntarily, by. the Company l nor subject to the claims of creditors of the-Company; providsj, however, that any creditor cf the Company ' as - to which a Payment Certificate has been properly completed and submitted to the Trustee may assert a claim directly against-the Trust in an amount not to exceed the amount specified
-in-such Payment' Certificate.
ARTICLE.3 Administration of Funds 3.l', Disbursement of - Apsets. Upon the delivery of a Payment
-Certificate, the Trustee shall deliver moneys in a Fund, free of
' trust, to or on the order of two Authorized Persons. The Payment Certificate shall include:
-(l) the name and address of the person or entity to whom payment-is due (which may be the-Company);
(2) the amount of . money -to be paid or assets to be transferred; (3) the Fund against which the payment is to be charged; and (4) wire transfer instructions if transfer of funds is to be by_ wire transfer. The Payment Certificate need not disclose the purpose for which the payment or transfer'is'being made. The Company shall be solely responsible for ensuring that ' assets of a Fund are disbursed
-hereunder' solely for the purposes of paying Decommissioning Costs' and Administrative Expenses.to the Company as Excess Contributions or' Excess Funds, or to a successor trustee in connection with the transfer of an ownership interest'in a Nuclear Power Plant.
3.2. Eggess Funds. Upon the termination of any Fund pursuant to Article;10, Excess Funds, if any, shall revert to the Company. 3.3. Transfer of Ownershio. If the Company's direct ownership interest in any Nuclear Power Plant is sold, exchanged, or otherwise disposed'of, in whole or in part, the Company shall so notify the Trustee. The Trustee may enter into a separate trust agreement with the Company's ' successor in interest containing substantially the same terms set forth herein and shall transfer the amount stated in the Payment Certificate to the separate trust. In the event'that the Company's successor selects another trustee to. administer the separate-trust, the Trustee shall transfer the amount specified in the Payment Certificate to the transferee trustee,- and the Trustee shall have no further duties or 9 I
i l #) obligations in connection with ' respect to the amount transferred or
^dM with. respect to_the transferee trust. .
3.4. Reliance on Company. The Trustee shall not be responsible for the form or content ofi any Payment Certificate delivered to it under any-provision of the Agreement. The Trtstee shall charge such transfer of--asr,ets against such-one or more-of the Funds as 4 the Payment Certificate shall direct. Each direction to the Trustee in a Payment Certificate shall constitute a certification by the Company that such direction is in accordance with applicable laws and- regulations, the terms of this Agreement, and all requisite consents, waivers or approvals of the company or any ; other Person'have been duly and validly obtained, given or waived, i as the case may be. The Trustee may rely conclusively on any such certificate and shall have no duty to make any independent inquiry or, investigation before acting upon any direction contained therein. 3.5. Duty to Enforce Claims. The Trustee shall have no duty to t commence or maintain any action, suit or legal proceeding on behalf of the Trust or any Fund unless the Trustee has been directed to do so by the Company and unless the Trustee is either. in possession of ' funds sufficient for such purpose or unless it has been indemnified by the company, to its satisfaction, for counsel fees, costs and . 1 other expenses and liabilities to which it, in its-sole judgment, f-may be subjected by beginning or maintaining such action, suit or lt legal proceeding. L 's l l ARTICLE 4. Manaaement of Assets 4.1. Asset Manaaers. Discretionary authority for the management and control of assets from time to time held in a Fund or allocated i to an Investment Account may be retained, allocated or delegated, as the case may be, for one or more purposes, to and among Asset Managers by the Company, in its absolute discretion. The terms and ,
- conditions of appointment, authority and retention of any Asset '
Manager shall be the sole responsibility of the Company. The Company shall promptly notify the Trustee in writing of the appointment or removal of an Asset Manager. 4.2. Investment Discretion. Subject to the provisions of Section 4.3, the asseta of a Fund or an Investment Account shall be
' invested and reinvested, without distinction between principal and income, at.such time or times in such investments and pursuant to y such investment strategies or courses of action and in such shares
~
and proportions, as the Asset Manager responsible therefore, or the ! Company, in its sole discretion, shall deem advisable. 10
- c. ,
't
[ i
. 4 . 3 '. Limitations on Investment and Other Discretion.
The-Company
- b may, by written instructions signed by two Authorized Persons limit,' restrict or impose guidelines affecting the exercise of-the discretion - hereinabove conferred on any Asset . Manager, ' and any assets of a Fund shall be invested only when they are not currently required to pay Decommissioning Costs and Administrative Expenses.
~
i Any_ limitations, restrictions or guidelines applicable to. the
; Trustee,'as Asset Manager, shall be communicated in writing to the r"
Trustee. The Trustee shall have no responsibility with respect-to. the formulation of any funding policy or any investment or diversification policies embodied-therein. The Company shall.be' solely responsible for communicating and monitoring adherence to any limitations or guidelines imposed on any other Asset Manager by this Agreement or the Company or applicable law, and the' Trustee-shall' have no' responsibility for communicating any such limitations or guidelines to any other Asset Manager. 4.4.. ResDonsibility for Diversification. The Company shall be responsible for determining the diversification policy, if -any, for a Fund, for monitoring adherence by the Asset Managers (other than the Trustee) ..to such policy, and for advising the Asset . Managers with respect to any other limitations or investmentsin any Fund-L imposed on such Fund by the company or applicable statute + or
. regulation. .
1 ll l ARTICLE 5. I I Resnonsibility for Directed Funds. I 5.1. Resoonsibility for Selection of Acents. All transactions of any kind or nature in or from a Directed Fund shall.be made upon such terms and conditions and from or through such principals and agents as the Asaet Manager shall direct. L l: 5.2. Trustee Not Resoonsible for Investments in Directed Fundg.
- The Trustee shall be under no specific duty or obligation to review or.to' question-any direction of any Asset Manager, or to review securities or any c other property held in any Directed Fund - with respect-to prudence or proper diversification or compliance with any , limitation of any kind or nature on the Asset Manager?s
-authority, or to make any suggestions or recommendations to ;the Company or the Asset Manager with resp 9ct to the retentioni or-investment'=of any assets of any Directe> Fund, and shall have no authority to'take any action or to refrain from taking any action:
withL respect to any asset of a Directed Fund unless and until.it is ! directed to' do so by the Asset Manager. Notwithstanding the-
' foregoing, the Trustee and the Company may from time to time agree that.the Trustee shall furnish reports to the Company on a weekly
, , 'or other periodic basis, showing whether a review by the Trustee of l 4 transactions affecting the Assets of a Directed Fund during the: C. week or other period preceding the review revealed any deviation l 11 i
i from specified investment guidelines or limitations applicable to such Directed Pund. To the extent that the Trustee agrees to i s furnish such reports the Trustee shall be responsible for
- exercising. reasonable care in performing such reviews, preparing y such reports and communicating them to the company. The Trustee shall be entitled to additional compensation pursuant to section ,
8.1 hereof, i 5.3. Investment Vehicles. Any Investment Vehicle, or interest therein, acquired by or transferred to the Trustee upon the directions of the Asset Manager shall be allocated to the lL j appropriate Directed Fund, and the Trustee's duties and ! responsibilities under this Agreement.shall not be increased or l- otherwise 'affected thereby. The Trustee shall be responsible solely for the safekeeping of the evidence of the Fund's ownership l of or interest or participation in such Investment Vehicle. 5.4. Reliance on Asset Manaaer. The Trustee shall be required I under this Agreement to execute documents, to settle transactions, , to take action on behalf of or in the name of the Fund and to make I and receive payments on the direction of the Asset Manager..'The l Trustee may rely on the Instructions of the Asset Manager as i confirmation (1) that the investment is authorized under the terms of this Agreement and any other agreement or law affecting the Asset Manager's authority to deal with the Directed Fund, (ii) that lp any contract, agency, joinder, adoption, participation or ,(y partnership agreement, dead, assignment or other document of any kind which the Trustee is required to execute to effectuate the > transaction has been reviewed by the Asset Manager and, to the extent it deems advisable and prudent, its counsel, (iii) that such !. instrument' or. document is in proper form for execution by the L Trustee, . (iv) - that, where appropriate, insurance protecting the l Fund against loss or liability has been or will be maintained in - the name of or for the benefit of tha Trustee, and (v) that all . other acts to perfect and protect the Fund's rights have been .i taken, and the Trustee shall have no duty to make any independent inquiry or investigation as to any of the foregoing before acting upon such. instructions. .; I 5.5. Mercer of Funds. The Trustee shall not have any discretionary responsibility or authority to manage or control any assets held in a Directed Fund upon the resignation or removal of an Asset Manager unless'and until it has been notified in writing by the Company that the Asset Manager's authority has terminated and that such
. Directed Fund's assets are to be integrated with the Discretionary ,
Fund. Such notice shall not be deemed effective until two bank
' business days after it has been received by the Trustee. The Trustee shall not be-liable for any losses to the Fund resulting from the disposition of any investment made by the Asset Manager or for the retention of any illiquid or unmarketable investment or any investment which is not widely publicly traded or for the holding of any other investment acquired by the Asset Manager if the i Trustee is unable to dispose of such investment because of any 12
. . - - - =- . . - - - - . . .
f
, t b- - restrictions' imposed by the Securities Act' of 1933 or -other federal
- or state law, or if an orderly liquidation of such investment is ,
impractical under prevailing conditions, or for failure to comply with any investment limitations imposed pursuant to Section 4.3, or for any 'other violation of the terms of this - Agreement or .
- u. applicable law as-a result of the addition of Directed Fund assets f to the Discretionary Fund.
5.6 Restrictions on Transfer. Nothing herein shall.be deemed te ; empower any Asset Manager to direct the Trustee ;to transfer any E asset of a Directed Fund to itself, except for purposes enumerated
- in paragraph.(12) and (13) of Section 6.1.
f ARTICLE 6. [: : L Powers of Asset Manaaers 6.1. General Powers. Without in any way limiting the powers and
' 'discretions conferred upon any Asset. Manager by cthe. other provisions of this Agreement or by law, each Asset Manager shall be vested with the following powers and discretions with respect to the ' assets of the Trust subject to its management .and control -
(which powers may be limited by written direction from the Company
; q signed by two Authorized Persons), and, upon the directions of the p3 Asset: Managers of a Directed Fund, the Trustee shall make, execute,
' M' acknowledge and deliver any and all documents of transfer and conveyance.and any and all other instruments that may be necessary
-ore appropriate to enable such Asset Manager to carry out such
" powers and'discretions:
(1) to sell, exchange, convey, transfer or otherwise dispose of any property by private contract or at'public auction, and no person dealing with the Asset Manager shall be bound to see t to the application of the purchase money or to inquire into i the validity, expediency or propriety of ' any such' sale or other disposition; (2) to enter into contracts or to make commitments either o ;alone or in company with others to sell or acquire property; (3) to purchase or sell, write or issue, puts, calls or other L options, covered or uncovered, to enter into financial futures contracts, forward placement contracts and standby contracts, and in connection therewith, to deposit, hold (or direct Bank,
.as Trustee or in its individual capacity, to deposit or hold)
L or pledge assets of a Fund; l(4) to purchase part interests in real property or in
> mortgages on real property wherever such real property may be situated; 13 1
2 i;i " , p 7 ik-N
- p ,
, n; (5) p.y
?
Q.
/e duration real property; of-the Trust any real property or-part inte .
6 (6)- to delegate to a manger or the holder or-holders . ; property interest majority in any oilreal property or mortgage on .of a . n or in any mineral 'or - gas properties, -thereal ' L, . i (, ' management and operation o,f any part interest in such property
~
or properties (including the authority to sell . such -part -; s ' or the holder or holders of such majority -interes . - '['
' (7) ,
y !4 subject to.the suspension of any voting rights as a any broker loan or similar agreement); to give generall .or special proxies or substitution; to powers of attorney with or without' power of exercise any p' conversion. privileges, subscription rights'~ or other. options and to make any payments. i incidental thereto; to consent to or otherwise' participate in' f corporate reorganizations or other changes affecting corporate securities-and to delegate discretionary powers and to pay I
+
assessments to exercise any or charges in connection therewith; and genera.anyj of the powers lly. stocks, bonds, securities or other property;of an owner with respect to (8)
,-7 the purpose of acquiring or holding title to property (
[t direct the Trustee to organize such corporations or to appoint an ancillary purpose) ;- trustee acceptable to the Trustee for such (9) u L corporations and selected and retained solely becaus inclusion in, and'in~accordance with, used indices of such securities, one or more commonly-with ' the objective of . the overall performance of such designated index;prov , _(10) partner, or joint venture;to enter into any partnership, as a general or lim i (11) to purchase units or certificates- issued by . an i.v.stment company or pooled trust or comparable entity; (12) company issuing an insurance contract;to transfer money or oth (13) to a common,' collective or commingled trust fund exem tax under the code maintained by an Asset Manager or an designated by the company, to be held and invested all of the terms and conditions thereof, and such trust shall 14 m x
j 1 t i f m be deemed adopted as part of the Trust to the extent that assets of a Fund are invested therein; orovided, however, that
-] .(
any transfer from a Directed Fuad to the General Trust may be made only with prior approval of the Trustee and shall be invested only in one or more short term investment funds , established from time to time thereunder; and (14) to be reimbursed for the reasonable expenses incurred in exercising any of the foregoing powers or to pay the C reasonable expenses incurred by any agent, manager'or trustee appointed pursuant hereto provided such expenses are approved by company, , 6.2. Additional Powers of Trustee. In addition, the Trustee is ; L hereby authorized: (1) to register any securities held for any Fund in its own
, name or in the name of a nominee and to hold any securities in ,
bearer form, and to combine certificates representing such securities with certificates of the same issue held by the ' Trustee in other fiduciary or representative capacities or as agent for customers, or to deposit or to arrange for the deposit of such securities in any qualified central depository even though, when so deposited, such securities may be merged and held in bulk.in the name of the nominee of such depository with other securities deposited therein by other depositors, p or to deposit or arrange for the deposit of any securities ( issued by the United States government, or any agency or instrumentality thereof, with a Federal Reserve Bank, but the haoks and records of the Trustee shall at all times show that all such investments are part of the Fund; (2) to charge their reasonable expenses and reasonable compensation against the Fund, and to. confer upon any such depository the powers conferred upon the Trustee by paragraph (1) of this Section 6. 2 - as well as the. power to appoint subagents and depositories, wherever situated, in connection with the retention of securities or other property with ' approval of company; (3) to deposit funds in interest-bearing account deposits maintained by Bank or savings certificates issued by Bank, in
.its separate. corporate capacity, or in any other banking institution affiliated with Pank; (4) . to compromise or otherwise adjust all claims in favor of or against a Fund; (5) to make any 644t.ribution or transfer of assets in cash or in kind as the Trustee, in its discretion, shall determine; (6) to maintain and operate one or more market inventory funds as a vehicle to exchange securities among Discretionary 15
f f and Directed Funds without allenating the property from the [] V Trust; (7) to hold for a reasonable period uninvested cash awaiting investment and such additional cash balances as it shall deem
, reasonable or necessary, without incurring any liability for the payment of interest thereon.
6.3. Prior Consent. The discretionary powers conferred under paragraphs (3), (4), (5),-(6), (8), (9), (10), (11), (12) and (13), of Section 6.1 shall be exercised only with the prior written
. consent of the company signed by two Authorized Persons.
ARTICLE 7. Records and Accounts of Trestqc 7.1. Records. The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements and other transactions in each Fund and all accounts, books and records relating thereto shall be open to inspection and audit at all l ' reasonable times during normal business hours by any Person ' designated by the company.
/ 7. 2. Monthly Act@ jut. Within ten (10) days following the close of C each monthly Ach nting Period, the Trustee shall file with the ^
Company, a written account setting forth the receipts and disbursements of each Fund and the investments and other transactions effected by it upon its own authority or pursuant to the directions of any Person as herein provided during the Account i Period. 7.3. Account Stated. Upon the expiration of three hundred sixt)- five (365) days from the-date of filing any monthly account with-the Company, the Trustee shall be released and discharged by - ti e : Company from all liability and further accountability to t to Company or any other Person with respect to .such accountisq and tae propriety of all acts and failures to act of the Trustee reflected ! in such account, except with respect to any such acte or , transactions as to which the Company shall, within such 365-ccy period, file with the Trustee specific written objections. Notwithstanding the provisions of this Sectior '/ . 3, Trustea -shall i not be relieved from any liability associated with a failure to .
- _ perform its fiduciary responsibilities.
L l 7.4'. Judicial Accountinas. Nothing herein shall in any way limit the Trustee's right to bring any action or proceeding in a court of competent jurisdiction to settle its account or for such other relief as it may deem appropriate. 16
p 7.5. Necessary Parties. No Person other than the Company shall be a necessary party in any proceeding under Section 7.4 or may (] require the Trustee to account or may institute any other actit or proceeding against the Trustee. > ARTICLE 8. ; Compensation. Taxes and Expensos 8.1. Comnensation and Expenses. Any reasonable expenses incurred ' by the Trustee in connection with the Master Nuclear Decommissioning Trust Agreement and any Fund established hereunder, , including but not limited to reasonable fees for legal services , rendered to the Trustee, such reasonable compensation to the Trustee as shall be agreed upon, in writing, from time to time between the Trustee and the company, and all other proper charges , and disbursements of the Trustee, shall be charged to and paid as Administrative Expenses from the appropriate Fund upon notice to j l the company withor.t the issuance of a payment Certificate. Trustee ' fees for the first three (3) years of the Agreement shall be in accordance with Schedule II (Fee Schedule) attached hereto. The Fee Schedule may then be adjusted annually as of the Agreement : anniversary date upon Trustee's submittal of requested fee revisions at least sixty (60) days prior to the anniversary date of this Agreement, and Company's acceptance thereof, or upon G negotiation of acceptable fee revisions. Anything in the preceding i V sentence to the contrary notwithstanding, the Tru stee's entitlement thereto shall constitute a lien on the assets ef the Fund and the company shall reimburse the Trustee for any such expenses if for any reason such expenses are ' not paid out of the Fund. The l Trustee's entitlement to reimbursement hereunder shall not be l affected.by the resignation or removal of the Trustee or by the " termination of the Agreement or of any Fund. 8.2. Taxes. All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws, domestic or foreign, upon any Fund or the income thereof shall be paid from the Fund upon the subminsion to the Trustee of a Payment certificate. i 8.3. Allocation. Any tax or expense paid from or incurred l hareunder which is specifically allocable to more than one Fund shall be charged against such Funds in a manner which the Company , shall determine to be equitable and appropriate in its sole and absolute discretion. ARTICLE 9.
- Resianation or Removal of Trustee 9.1. Resianation or Removal. The Trustee may be removed by the
, h. l company at any time upon twenty (20) days' notice in writing to the v 17 v
Trustee. The Trustee may resign at any time upon twenty (20) days' notice in writing to the Company. 9.2. Designation gf a Successor. Upon the removal or resignation of the Trustee, the Company shall either appoint a successor trustee who shall have the same powers and duties as those conferred upon the Trustee hereunder, and upon acceptance of such appointment by the successor trustee, the Trustee shall assign, transfer and pay over the Funds then held under the Trust to such successor trustee. If, for any reason, the company cannot or does not act promptly to appoint a successor trustee in the event of the resignation or removal of the Trustoe, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee. Any expenses incurred by the Trustee in connection therewith shall be charged to and paid as an Administrative Expense, c 9.3. Reserve for Excenses. The Trustee is authorized to reservo such amount as to it may seem advisable for payments of its reasonable fees and expenses in connection with the settlecent of its account or otherwise, and any balance of such reserve remaining after the payment of such reasonable fees and expenses shall be paid over in accordance with the directions of the company under Section 9.2. ARTICLE 10. Amenc' ment or Termination 10.1. Amendment. Subject to the provisions of Section 10.4 hereof, the company reserves the right at any time and from time to time to amend, in whole or in part, any or all of the provisions of this Agreement by notice thereof in writing delivered to the Trustee; orovided, however, no amendment which affects the rights, duties or responsibilities of the Trustee may be made without its prior written consent, which shall not be unreasonably withheld. The Company hereby declares that this Agreement is irrevocable and that the company shall hereafter stand without power to revoke, change or annul any of the provisions herein contained except as provided in this Section 10.1. 10.2. Termination. The Company reserves the right to terminate any Fund established under this Agreement by notice in writing thereof delivered to the Trustee, upon the satisfaction of the purpose for which the Fund was established or a change in any applicable law or regulation removing the desirability or necessity of maintaining an externally segregated fund to provide for Decommissioning. In the event of termination, the Trustee shall dispose of the Fund, after the payment of or other provision for all of its reasonable expenses (including any compensation to which the Trustee may be entitled), in accordance with the Payment Certificate delivered to O-- Trustee in connection with the termination. Any other provisions q 18
( ( of this Agreement to the contrary notwithstanding each Fund establish under this Trust shall terminate no later than twenty-one ' (21) years af ter the death of the last curvivor of each person who ; was an officer of the company or of the company's affiliated companies on January 1, 1990 and each of their descendants born on < or prior to January 1, 1990. This Master Trust shall terminate upon termination of all the Funds. In the event that such termination results from the removal of the Trustee, then such disposition shall be implemented in accordance with the provisions of Article 9. , 10.3. Trustee's Authority to Sul: vive Termination. Until the final , distribution of each Fund or until terminated, the Trustee shall i continue to have and may exercise all of the powers and discretions conferred upon it by this Agreement. 10.4. Anti-Diversion. No amendment or termination shall permit or - authorize any part, other than excess Contributions or Excess Funds, of any Fund to be used for or diverted to purposes other , than those described in Section 2.1, prior to the substantial , completion (within the meaning of the applicable regulations) of Decommissioning. ! 10.5. Trustee's Reliance. The Trustee shall be entitled to assume l without further inquiry that any notices, regulatory approvals or s procedures required to be given, obtained and observed, as the case O may be, have been given, obtained or observed and that any action y ' taken by the Company under this Article 10 does not violate the provisions of Section 10.4.. l ARTI%E 11. l Authorities l 11.1. Comoanv. Whenever the provisions of this Agreement specifically require or permit any action to be taken by "the l ( Company," such action must be authorized by the Board of Trustees, by a Person to whom such authority has been delegated by the Board of Trustees or by two Authorized Persons. Any resolution adopted by the Board of Trustees designating Authorized Persons or other evidence of such authorization shall be certified to the Trustee by the Secretary or an Assistant Secretary of the Company under its corporate seal and the Trustee may rely upon any authorization co certified until revoked er modified by a further action of the Board of Trustees similarly certified to the Trustee. 11.2. Subsidiary or Af filiate. Any action required or permitted to be taken under this Agreement by a subsidiary or affiliate of the i company shall be given by the Board of Trustees thereof in the l manner described in Section 11.1. 19 l
n ( ) 11.3. Authorized Persons. The Company shall furnish the Trustee v from time to time with a list of the names and signatures of all Persons authorized to act as Authorized Persons or in any other manner authorized to issue orders, notices, requests, Instructions and objections to the Trustee pursuant to the provisions of this , Agreement. Any such list shall be certified by the Secretary or an Assistant Secretary of the Company and may be relied upon for accuracy and completeness by the Trustee. Each such Person who is ' authorized to delegate or allocate its authority shall thereupon furnish the Trustee with a list of the names and signatures of those individuals who are authorized, jointly or saverally, to act for such Person hereunder, and the Trustee shall be fully protected in acting upon any notices, Instructions or directions received from any of them. ; 11.4. Investment Manager. The Company shall cause each Investment Manager to furn sh the Trustee from time to time with the names and signatures of those persons authorized to direct the Trustee on its behalf hereunder. 11.5. Form of Communicatigng. Any agreement between the Company and any Person (including an Investment Manager) or any other provision of this Agreement to the contrary notwithstanding, all i notices, Instructions, and other communications to the Trustee ! shall be in writing or in such other form, including transmission l by electronic means through the facilities of third parties or otherwise, specifically agreed to in writing by the Trustee. The t( Trustee shall not be responsible to the Company or any other Person i i for any errors or inaccuracies in any notices, Instructions, or other communications, or for acting in accordance therewith. 13,6. Continuation of Authority. The Trustee shall have the right to assume, in the absence of written notico to the contrary, that ! no event constituting a change in or terminating the authority of any Authorized Person, including, but not limited to, any i I Investment Manager or any Person designated under the procedures specified in Section 12.3 has occurred, l ARTICLE 12. General Provisions l-l 12.1. Governina Law. This Agreement has been entered into by the l Trustee in the State of' South Carolina and shall be administered, construed and enforced according to the laws thereof. l 12.2. Submission to Jurisdiction. To the extent that any claim or I controversy shall arise out of the execution, delivery, l performance, administration, construction or enforcement of this I Agreement, or the disposition of the assets held in trust , . hereunder, Bank agrees that the courts and administrative agencies
\ of the State of South Carolina and its subdivisions shall have 20 ,
-m x' !
\
r jurisdiction to the same extent as if Bank were a South Carolina { V) . banking corporation. For such purpose only, Bank agrees to accept, without objection to form, manner or subject matter, service of process by registered mail directed to: The Palmetto Bank 101 West Main Street Laurens, SC 29360 or to such other address as Bank shall have notified the company in accordance with Section 12.7 not less than thirty (30) days prior to the delivery of such service of process. The foregoing consent , I to service of process is not intended nor shall it be construed to extend to any claim, controversy, cause of action or other matters, l other than as stated in this Section 12.2. ! j 12.3. Entire Aareement. The Trustee's duties and resoonsibilities to the Con.pany .or any other Person interested therein shall be I limited to those specifically set forth in this Agreement. 12.4. B.eliance on Exocrts. The Trustee may consult with experts ; (who may be experts employed by the Company), including legal counsel, appraisers, pricing services, accountants or actuaries, 3 selected by it with due care with respect to the meaning and construction. of this Agreement or any provision hereof, or concerning its powers and duties hereunder, and shall bc fully ( protected for any action taken or omitted by it in good faith i pursuant to or on the basis of the opinion of such expert, i 12.5. Successor to the Trustee. Any successor, by merger or 1 otherwise, to substantially all of the trust business of Bank shall : automatically and without further action become the Trustee l hereunder, subject to all the terms and conditions and entitled to l all the benefits and immunities hereof. j l 12.6. Notices. All noticea, reports, annual accounts and'other communications to the Company, Investment Manager, or any other Person shall be deemed to have been duly given if mailed, postage l prepaid, or delivered in hand to such Person at its address ; appearing on the records of the Trustee, which address shall be J filed with the Trustee at the time of the estrblishment of the l Trust and shall be kept current thereafter by the company. All i directions, Instructions, notices, statements, objections and other communications to the Trustee shall be deemed to have been given ' when received by the Trustee at its offices. 12.7. Descriotive Headinas. The Captions in this Agreement are solely for convenience of reference and shall not define or limit the provisions-hereof. l 21
\' .
_)' IN WITNESS WHEREOF, the parties hereto have caused this Agreement I fu to be executed by their respective officers thereunto duly ' '4 authorized and their corporate seals to be hereunto affixed and attested to as of the day and year first above written. ! g ,. , .
+
1 i: (Corporate Seal) SALUDA RIVER ELECTRIC COOPERATIVE, INC. (" Company") m ;- Attest: a[b N ,t By: J I M
., its: M . It's: ,//g t!
T (Corporate Seal) THE PALMETTO BANK (" Trustee") Attest, 'NchUs.m Its: ey: l Ma W. 607 X,' Its: i 4 l10
- i !:.
t i. l(d I-l' (
; 5'?
1,
SCHEDULE I Catawba Unit I Fund I Catawba Unit II Fund ; a J B f I I F
- t. .
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h l i 4 (. , it + (. i l - l' 1 l
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' w ' ~ * - +-~y + o,m, - _ , , , , , , , . _ _ . _ , , _
I t
/ -
SCHEDULE II
-(s .
, Annual trustee fees based on fair market value of ,
investments in trust at year-end: On first $500,000 .65 of 1% On next $500,000 .50 of 1% , On.next~ $4,000,000 .30 of 1% ! Over $5,000,000 .0005 of 1Y ! i
't b
e f (- , p l h v l u 1 l L l. I.
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i
* - - + - ~ ,.--u.. -
. _______._________._____________________________.___________m______i
i 6-29-90 RESOLUTION Whereas, Federal Regulations, as promttigated by the Nuclear Regulatory Commission, require that Saluda River Electric Cooperative provide financial assurance that funds sufficient to pay its share of the anticipated costs of decommissioning Catawba Units one and Two will be available at such time as said units are decommissioned; and Whereas, Saluda's management has determined that the establishment and periodic funding of an external trust fund or funds is the most viable alternative available for providing the necessary financial assurance; and Whereas, the initial deposit to such fund will be in the approximate amount of $340,000 and subsequent deposits will be mado in amounts sufficient, in combination with earnings thereo.4, to pay the anticipated costs of decommissioning Saluda's interest in said units; and Whereas Saluda's current investment policies limit the investment of its funde in specified securities; and Whereas, given the long-term nature of the liability being provided for, it is prudent financial management to invest the proceeds of the~ funds in government-insured securities; and Whereas, Saluda's Board, after reviewing proposals from six different financial institutions, selected the Palmetto Bank of Laurens, South Carolina to be its trustee for said trust fund or funds. l
f9 U 2 j Now, Therefore, Be It Resolved that the Board of Trustees of Saluda River Electric Cooperative does hereby authorize the Executive Vice President and General Manager to este%ish a Nuclear Decommissioning Trust Fund with the Palmetto Lank as trustee and authorizes the Executive Vice President, the General Counsel for , Saluda River Electric. Cooperative, and its chief financial officer to act as the designated representatives of Saluda River in ' dealings with the Palmetto Bank as trustee, including investment directives. I, Ralph M. Settle,- Secretary of Saluda River Electric Cooperative, Inc. do hereby certify that , the above is a true and correct copy of a Resolution from the minutes of the Board Meeting held on the 28th day of June 1990, i \ ECYnb N. ' i l 'd Ralph M. Fettle i \ l L L l L}}